Sola Energy Sources, LLC v. Silverbow Resources Operating, LLC ( 2023 )

Affirmed and Memorandum Opinion filed May 25, 2023
In The
Fourteenth Court of Appeals
NO. 14-21-00315-CV
SOLA ENERGY SOURCES, LLC, Appellant
V.
SILVERBOW RESOURCES OPERATING, LLC, Appellee
On Appeal from the 127th District Court
Harris County, Texas
Trial Court Cause No. 2019-14596
MEMORANDUM OPINION
Appellee Silverbow Resources Operating, LLC (Silverbow) sued appellant
Sola Energy Resources, LLC (Sola) for breach of contract, specific performance,
and promissory estoppel based on a written agreement for the purchase of three oil
and gas wells located in Louisiana. Silverbow alleged that Sola breached the contract
by failing to assume its plugging and abandonment liabilities associated with the
wells. Ultimately, the trial court granted Silverbow’s traditional motion for summary
judgment and awarded attorney’s fees. On appeal, Sola brings three issues,
challenging (1) subject matter jurisdiction, (2) the trial court’s grant of summary
judgment, and (3) the trial court’s award of attorney’s fees. Concluding that the trial
court properly granted summary judgment and awarded attorney’s fees, we affirm.
Background
On March 25, 2016, Sola entered into the Purchase and Sale Agreement with
Silverbow 1 to purchase Masters Creek Field located in Vernon, Rapides, Avoyelles,
Sabine, and Evangeline Parishes in Louisiana. The property acquired by Sola
contained wells and facilities that had been shut in or temporarily or permanently
shut in or permanently abandoned. Of the property acquired, there are three oil and
gas wells that form the basis of this suit: (1) USA 2 #1, API No. 1711520145, (2)
USA 11 #1, API No. 1711520146, and (3) Hudson 2 #1, API No. 1711520144; these
oil and gas wells were conveyed without express or implied warranty of title.
Pursuant to the terms of the Purchase Agreement, Sola “expressly assume[d]
and accept[ed] sole responsibility for and agree[d] to pay all costs and expenses
associated with Plugging and Abandonment of all wells and facilities associated with
the Properties.” Plugging and Abandonment was defined as
all decommissioning activities and obligations as are required by [l]aws
. . . including all plugging, replugging and abandonment; facility
dismantlement and removal; pipeline and flowing removal;
dismantlement and removal of any and all platforms and other property
of any kind related to or associated with operations or activities
1
In the Purchase Agreement, Sola is the “buyer” and Swift Energy Operating, LLC,
Swenco-Western, LLC, and GASRS LLC are collectively the “sellers.” As part of the Purchase
Agreement, Sola was aware and acknowledged that Swift Energy, Swenco, and GASRS were
debtors-in-possession under Chapter 11 of the United States Bankruptcy Code proceedings.
Swenco-Western and GASRS were direct subsidiary entities of Swift Energy. Swift Energy
underwent a bankruptcy and restructuring organizational plan and was later renamed Silverbow
on June 30, 2017. GASRS merged into Silverbow on June 16, 2020, and Swenco merged into
Silverbow on August 17, 2020. For purposes of this discussion, we will refer to Swift Energy,
Swenco, and GASRS collectively as Silverbow.
2
conducted on the Properties; and site clearance, site restoration and site
remediation to the satisfaction required by any Law, lease, or
agreement.
On June 28, 2016, the Bureau of Land Management filed a proof of claim
against Silverbow in bankruptcy court, asserting that Silverbow had unperformed
plugging and abandonment obligations for multiple oil and gas wells (including the
three aforementioned wells acquired by Sola). The Bureau of Land Management
required Silverbow to plug wells no longer capable of producing and reclaim the
surface for each particular operation and estimated that the cost to plug each well
would be $300,000.
Silverbow’s vice president, chief financial officer, and general counsel
attested that Silverbow “communicated multiple times to Sola through Silverbow’s
business and legal departments, demanding Sola plug and abandon the wells and
reclaim the surface.” Silverbow also sent formal written notices to Sola in May 2018
through Silverbow’s legal department and again through outside counsel on July 30,
2018 and February 5, 2019. Silverbow’s demands went unanswered, and Silverbow
sued Sola for breach of contract, specific performance, and promissory estoppel.
Sola filed a motion to dismiss Silverbow’s claims alleging that the trial court
did not have subject matter jurisdiction to decide the case because the oil and gas
wells were located in Louisiana. The trial court denied Sola’s motion. Subsequently,
Silverbow filed a traditional motion for summary judgment on its breach of contract
claim seeking damages caused by Sola’s breach or specific performance. The trial
court granted an interlocutory summary judgment ordering Sola to either (1) plug,
abandon, and reclaim the surface areas of wells USA 2 #1, USA 11 #1, and Hudson
2 #1 or pay Silverbow to plug, abandon, and reclaim the surface areas of the wells.
Sola then filed a motion for traditional summary judgment on Silverbow’s request
for attorney’s fees, which was granted. Ultimately, the trial court vacated the order
3
in favor of Sola and signed a final judgment awarding Silverbow attorney’s fees.
Sola timely filed its notice of appeal.
Discussion
As discussed above, Sola brings three issues on appeal. We first address
whether the trial court properly exercised subject matter jurisdiction. In doing so, we
discuss the applicability of the law of the case doctrine. We then turn to Sola’s
argument that summary judgment was inappropriate in this case. And finally, we
determine whether the trial court erred in awarding attorney’s fees.
I. Did the Trial Court Properly Exercise Subject Matter
Jurisdiction?
In its first issue, Sola contends that “because the wells are located in
Louisiana, the trial court had no subject matter jurisdiction over the controversy.”
Silverbow urges that the law of the case doctrine bars Sola from relitigating this
issue. While the law of the case doctrine is not mandatory or jurisdictional, we
exercise our discretion to consider it here because: (1) it is raised by Silverbow and
(2) we need not reach the merits of Sola’s subject matter jurisdiction argument if the
doctrine applies. See City of Houston v. Jackson, 192 S.W.3d 764, 769 (Tex. 2006).
A. Law of the Case
The law of the case doctrine mandates that the ruling of an appellate court on
a question of law raised on appeal will be regarded as the law of the case in all
subsequent proceedings unless clearly erroneous. See In re Prudential Sec., Inc., 159
S.W.3d 279, 283 (Tex. App.—Houston [14th Dist.] 2005, orig. proceeding) (citing
Briscoe v. Goodmark Corp., 102 S.W.3d 714, 716 (Tex. 2003)). The law of the case
applies only to questions of law and does not apply to questions of fact. See Hudson
v. Wakefield, 711 S.W.2d 628, 630 (Tex. 1986). The law of the case applies if the
facts in the second trial are substantially the same as in the first trial or so nearly the
4
same that they do not materially affect the legal issues involved in the second trial.
J.O. Lockridge Gen. Contractors, Inc. v. Morgan, 848 S.W.2d 248, 250 (Tex.
App.—Dallas 1993, writ denied) (citing Berryman v. El Paso Nat. Gas Co., 838
S.W.2d 610, 614 (Tex. App.—Corpus Christi 1992, n.w.h.)). The doctrine’s intent
is to achieve uniformity of decision as well as judicial economy and efficiency. See
id.; see also In re L.R., 416 S.W.3d 675, 677 (Tex. App.—Houston [14th Dist.] 2013,
no pet.) (citing Paradigm Oil, Inv. v. Retamco Operating, Inc., 372 S.W.3d 177, 182
(Tex. 2012)).
Prior to the case before us, Sola filed a petition for writ of mandamus in this
court. In re Sola Energy Res., LLC, No. 14-19-00493-CV, 2019 WL 3121841, at *1
(Tex. App.—Houston [14th Dist.] July 16, 2019) (mem op.).2 Denial of a mandamus
petition does not necessarily establish law of the case. See Chambers v. O’Quinn,
242 S.W.3d 30, 32 (Tex. 2007). A writ of mandamus is discretionary, so its denial
without comment on the merits does not prevent an appellate court from considering
the matter in a subsequent appeal. Id. When applying the doctrine, “the decision to
revisit the conclusion is left to the discretion of the court under the particular
circumstances.” Jackson, 192 S.W.3d at 769.
Our memorandum opinion denying Sola’s petition briefly explained the
nature of its jurisdictional complaint and concluded: “Because [Sola] has not
established that the trial court lacks subject matter jurisdiction, we deny the petition
for writ of mandamus.” See In re Sola, 2019 WL 3121841, at *1. This conclusion is
not a comment on the merits of Sola’s petition because it does not explain our
reasons for denying mandamus relief. See In re L.R., 416 S.W.3d at 677 (declining
to apply the law of the case doctrine when denial of the mother’s mandamus petition
2
Sola also filed a petition for writ of mandamus in the Supreme Court of Texas, which was
denied. See In re Sola Energy Resources, LLC, No. 19-00655 (Tex. Nov. 6, 2020) (mem op.).
5
did not comment on the merits); see also Siemens AG v. Houston Cas. Co., 127
S.W.3d 436, 442 (Tex. App.—Dallas 2004, pet. dism’d) (denial of mandamus
petition did not constitute law of the case where court stated that relator “failed to
show itself entitled to the relief requested”).
In the case before us, we decline to apply the law of the case doctrine because
our prior decision did not explain our reasons for denying Sola’s mandamus relief.
Accordingly, we turn to our analysis of whether the trial court properly exercised
jurisdiction over the controversy.
B. Subject Matter Jurisdiction
Sola claims that the trial court lacked jurisdiction to adjudicate the dispute
between Sola and Silverbow because the property at issue is located in Louisiana.
Silverbow argues that its breach of contract claim is an in personam action that does
not concern the title or ownership interest in the three wells at issue. We agree.
Subject matter jurisdiction is “essential to a court’s power to decide a case.”
City of Houston v. Rhule, 417 S.W.3d 440, 442 (Tex. 2013) (quoting Bland Indep.
Sch. Dist. v. Blue, 34 S.W.3d 547, 553–54 (Tex. 2000)). A trial court has subject
matter jurisdiction “when the nature of the case falls within the general category of
cases the court is empowered, under applicable statutory and constitutional
provisions, to adjudicate.” Diocese of Galveston-Hous. v. Stone, 892 S.W.2d 169,
174 (Tex. App.—Houston [14th Dist.] 1994, orig. proceeding). A court acting
without such power commits fundamental error. See Tex. Ass’n of Bus. v. Tex. Air
Control Bd., 852 S.W.2d 440, 443–44 (Tex. 1993). A judgment rendered without
subject matter jurisdiction cannot be considered final. Dubai Petrol. Co. v. Kazi, 12
S.W.3d 71, 76 (Tex. 2000) (citing Restatement (Second) of Judgments § 12 cmt. b
(1982)).
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Texas courts have no subject matter jurisdiction to adjudicate title to realty in
another state or country. See, e.g., Trutec Oil & Gas, Inc. v. Western Atlas Int’l, Inc.,
194 S.W.3d 580, 583 (Tex. App.—Houston [14th Dist.] 2006, no pet.) (citing Holt
v. Guerguin, 163 S.W. 10, 12 (1914)); Kelly Oil Co., Inc. v. Svetlik, 975 S.W.2d 762,
764 (Tex. App.—Corpus Christi 1998, pet. denied); Miller v. Miller, 715 S.W.2d
786, 788 (Tex. App.—Austin 1986, writ ref’d n.r.e.). But a Texas court with
jurisdiction over the parties may enforce a party’s personal or contractual obligation
that indirectly involves property in another state. See Devon Energy Prod. Co., L.P.
v. KCS Res., LLC, 450 S.W.3d 203, 216 (Tex. App.—Houston [14th Dist.] 2014, pet
denied) (citing Tex. & Pac. Ry. Co. v. Gay, 26 S.W. 599, 605–06 (Tex. 1894)).
Subject matter jurisdiction presents a question of law that we review de novo. See
Tex. Dep’t of Transp. v. A.P.I. Pipe & Supply, LLC, 397 S.W.3d 162, 166 (Tex.
2013); see also Mayhew v. Town of Sunnyvale, 964 S.W.2d 922, 928 (Tex. 1998).
Sola’s motion to dismiss attacking the trial court’s ability to exercise subject
matter jurisdiction is the functional equivalent of a plea to the jurisdiction. Anderson
v. City of San Antonio, 120 S.W.3d 5, 7 (Tex. App.—San Antonio 2003, pet. denied).
A plea to the jurisdiction challenges the trial court’s authority to determine the
subject matter of a cause of action. Blue, 34 S.W.3d at 554. In deciding a plea to the
jurisdiction, a court must not weigh the claims’ merits and should consider only the
plaintiff’s pleadings and the evidence pertinent to the jurisdictional inquiry. Cnty. of
Cameron v. Brown, 80 S.W.3d 549, 555 (Tex. 2002). When considering a trial
court’s order on a plea to the jurisdiction, we first review the plaintiff’s pleadings.
We construe the pleadings in the plaintiff’s favor and look to the pleader’s intent. Id.To determine the nature of Silverbow’s claims, we turn to Silverbow’s last live
pleading, and the relevant evidence in the record.
While Silverbow’s claims “indirectly involve[] property in another state,” a
7
review of the facts alleged in the pleadings, the causes of action, and the evidence
pertinent to the jurisdictional inquiry points to a finding that Silverbow’s core
complaint is that Silverbow was seeking to enforce rights granted under the Purchase
Agreement, which required Sola to plug and abandon oil and gas wells and reclaim
the surface. Silverbow was not seeking a transfer of leasehold rights as was the case
in Carmichael. See Carmichael v. Delta Drilling Co., 243 S.W.2d 458, 460 (Tex.
Civ. App.—Texarkana 1951, writ ref’d) (explaining that the plaintiffs sought an
assignment of an undivided one-fourth interest in a lease on land located in Indiana
held in the name of the defendant). Neither was Silverbow seeking a conveyance or
adjudication of title as in Miller. See Miller v. Miller, 715 S.W.2d 786, 789 (Tex.
App.—Austin 1986, writ ref’d n.r.e.) (explaining that the cross-claimant sought a
declaration that title to Oklahoma property passed to him under the will at issue).
Thus, the trial court was not required to determine title to land in Louisiana
and no relief was sought requiring the transfer of title to land in Louisiana. See
Hartman v. Sirgo Operating, Inc., 863 S.W.2d 764, 767 (Tex. App.—El Paso 1993,
writ denied). Accordingly, we overrule Sola’s first issue and find that the trial court
properly exercised subject matter jurisdiction because Silverbow’s suit did not
require the adjudication of property interests outside of Texas.
II. Did the Trial Court Err in Granting Summary Judgment?
In its second issue, Sola asserts the trial court erred in granting summary
judgment favoring Silverbow because Silverbow failed to establish: (1) it has
standing to sue; (2) Sola is the title owner; (3) the plugging obligation under the
agreement matured; and (4) it suffered damages. We disagree.
We review a trial court’s grant of summary judgment under a de novo
standard. Ferguson v. Bldg. Materials Corp. of Am., 295 S.W.3d 642, 644 (Tex.
8
2009) (per curiam). In a traditional motion for summary judgment, the movant bears
the burden of showing that there is no genuine issue of material fact and that it is
entitled to judgment as a matter of law. Tex. R. Civ. P. 166a(c); Mann Frankfort
Stein & Lipp Advisors, Inc. v. Fielding, 289 S.W.3d 844, 848 (Tex. 2009). We take
as true all evidence favorable to the nonmovant, indulging every reasonable
inference and resolving any doubts in the nonmovant’s favor. Valence Operating
Co. v. Dorsett, 164 S.W.3d 656, 661 (Tex. 2005). The nonmovant has no burden to
respond to a traditional motion for summary judgment unless the movant
conclusively establishes each element of its cause of action or defense as a matter of
law. Rhone–Poulenc, Inc. v. Steel, 997 S.W.2d 217, 222–23 (Tex. 1999).
A. Standing
Sola contends that Silverbow did not have standing because Silverbow was
“not a signator” to the Purchase Agreement. Though not explicitly articulated, we
suspect that Sola’s argument is that there is no privity of contract between the parties.
Standing is a component of the trial court’s subject matter jurisdiction. Tex.
Air Control Bd., 852 S.W.2d at 445–46. As a component of subject matter
jurisdiction, it cannot be waived, and it cannot be conferred by agreement. See id.
(holding standing cannot be waived); In re K.K.C., 292 S.W.3d 788, 790 (Tex.
App.—Beaumont 2009, no pet.) (holding “[a] party generally cannot confer or
obtain standing by consent or agreement”). “A plaintiff has standing when it is
personally aggrieved, regardless of whether it is acting with legal authority. . . .”
Austin Nursing Ctr. v. Lovato, 171 S.W.3d 845, 848 (Tex. 2005) (quoting Nootsie
Ltd. v. Williamson Cnty. Appraisal Dist., 925 S.W.2d 659, 661 (Tex. 1996)).
Standing pertains to a person’s justiciable interest in a suit. Austin Nursing Ctr., 171
S.W.3d at 848. The issue of standing focuses on whether a party has a sufficient
relationship with the lawsuit so as to have a justiciable interest in its outcome. Id. at
9
849.
This court has previously explained that “while the question of whether a party
is entitled to sue on a contract is often informally referred to as a question of
‘standing,’ it is not truly a standing issue because it does not affect the jurisdiction
of the court; it is, instead, a decision on the merits.” Heartland Holdings Inc. v. U.S.
Trust Co. of Tex., 316 S.W.3d 1, 6–7 (Tex. App.—Houston [14th Dist.] 2010, no
pet.) (citing Yasuda Fire & Marine Ins. Co. of Am. v. Criaco, 225 S.W.3d 894, 898
(Tex. App.—Houston [14th Dist.] 2007, no pet.)). A challenge to a party’s privity of
contract is a challenge to capacity, not standing, and requires compliance with rule
93 of the Texas Rules of Civil Procedure. See John C. Flood of DC, Inc. v.
SuperMedia, L.L.C., 408 S.W.3d 645, 650 (Tex. App.—Dallas 2013, pet. denied).
Unlike standing which may be raised at any time, a challenge to a party’s capacity
must be raised by a verified pleading in the trial court. See Tex. R. Civ. P. 93(1), (2).
Thus, in the case before us, the proper inquiry is not whether Silverbow has
standing to bring this action, but rather whether it can recover in the capacity in
which it sued, i.e., Silverbow. See Nine Greenway Ltd. v. Heard, Goggan, Blair &
Williams, 875 S.W.2d 784, 787 (Tex. App.—Houston [1st Dist.] 1994, writ denied).
We need not address whether Silverbow could recover in the capacity in
which it sued because Sola waived this argument by failing to comply with the
requirements of Rule 93 to challenge capacity and cannot raise this issue for the first
time on appeal. See Tex. R. Civ. P. 93 (“A pleading setting up any of the following
matters, unless the truth of such matter appears of record, shall be verified by
affidavit. That the plaintiff has not legal capacity to sue.”); Tex. R. App. P. 33.1.
Accordingly, we overrule Sola’s standing argument.
B. Ownership/Transfer of Title
10
Sola suggests that summary judgment was improper because Silverbow failed
to establish “ownership” or “transfer of title.” On the record before us, Silverbow
sued Sola for breach of contract 3, specific performance4, and promissory estoppel.5
Therefore, on summary judgment, Silverbow was required to show that there was
no genuine issue of material fact on its claims and that it was entitled to judgment as
a matter of law. See Tex. R. Civ. P. 166a(c).
Notwithstanding Sola’s contention, none of Silverbow’s claims against Sola
required it to establish “ownership” or “transfer of title.” See id. (“A party seeking
to recover upon a claim . . . may . . . move with or without supporting affidavits for
a summary judgment in his favor upon all or any part thereof.”) Accordingly, we
overrule Sola’s argument that Silverbow failed to establish ownership or transfer of
title because Silverbow was not required to do so.
C. Ripeness
Sola posits that the trial court erred in granting Silverbow’s summary
judgment because Silverbow’s breach of contract was “not ripe for adjudication.”
3
To prevail on a breach of contract claim, a party must establish the following elements:
(1) a valid contract existed between the plaintiff and the defendant, (2) the plaintiff tendered
performance or was excused from doing so, (3) the defendant breached the terms of the contract,
and (4) the plaintiff sustained damages as a result of the defendant’s breach. West v. Triple B
Servs., LLP, 264 S.W.3d 440, 446 (Tex. App.—Houston [14th Dist.] 2008, no pet.).
4
Specific performance is an equitable remedy that may be awarded upon a showing of
breach of contract. Blue Moon Venture, L.L.C. v. Horvitz, No. 14-09-00459-CV, 2010 WL
4013533, at *1 (Tex. App.—Houston [14th Dist.] Oct. 14, 2010, no pet.) (mem. op.) (citing
Stafford v. S. Vanity Magazine, Inc., 231 S.W.3d 530, 535 (Tex. App.—Dallas 2007, pet. denied)).
“A party seeking specific performance must plead and prove (1) compliance with the contract
including tender of performance unless excused by the defendant’s breach or repudiation and (2)
the readiness, willingness, and ability to perform at relevant times.” Id. (citing DiGiuseppe v.
Lawler, 269 S.W.3d 588, 593–94, 601 (Tex. 2008)).
5
The elements of promissory estoppel are: (1) a promise, (2) foreseeability of reliance by
the promisor, (3) substantial and reasonable reliance by the promisee to its detriment, and (4)
enforcing the promise is necessary to avoid injustice. Sipco Servs. Marine v. Wyatt Field Serv. Co.,
857 S.W.2d 602, 605 (Tex. App.—Houston [1st Dist.] 1993, no writ).
11
We disagree.
As explained above, the elements of a breach of contract action are: (1) a valid
contract existed between the plaintiff and the defendant, (2) the plaintiff tendered
performance or was excused from doing so, (3) the defendant breached the terms of
the contract, and (4) the plaintiff sustained damages as a result of the defendant’s
breach. See West v. Triple B Servs., LLP, 264 S.W.3d 440, 446 (Tex. App.—Houston
[14th Dist.] 2008, no pet.). A breach occurs when a party fails or refuses to do
something the party has promised to do. Id. It is well-settled that an action for breach
of contract accrues immediately upon breach. Barker v. Eckman, 213 S.W.3d 306,
311 (Tex. 2006); Stine v. Stewart, 80 S.W.3d 586, 592 (Tex. 2002).
Here, the parties entered into a written contract whereby Sola assumed and
accepted “sole and exclusive responsibility for and agree[d] to pay all costs and
expenses associated with Plugging and Abandonment of all wells and facilities
associated with the Properties.” In Silverbow’s amended petition, it averred that the
“Bureau of Land Management . . . issued a demand to [Silverbow] that the Subject
Wells be plugged and abandoned.” In response, Silverbow “notified Sola in writing
of this demand along with a reminder that these obligations were its sole
responsibility.” Silverbow’s demands went unanswered, and there is no evidence in
the record that Sola complied with its contractual obligations.
Accordingly, we conclude Sola’s argument is without merit because there is
legally sufficient evidence that Sola breached the terms of the Purchase Agreement
when it failed to plug and abandon the wells.
D. Damages
In its final argument, Sola contends there was “no dispositive summary
judgment evidence that Silverbow suffered any damages.” To recover on summary
12
judgment, Silverbow was required to establish conclusively the damages actually
sustained as a result of the breach. See Clear Lake City Water Auth. v. Friendswood
Dev. Co., 344 S.W.3d 514, 523 (Tex. App.—Houston [14th Dist.] 2011, pet. denied);
see also McKnight v. Hill & Hill Exterminators, Inc., 689 S.W.2d 206, 209 (Tex.
1985). The ultimate goal in measuring damages for a breach of contract claim is to
provide just compensation for any loss or damage actually sustained as a result of
the breach. See Mays v. Pierce, 203 S.W.3d 564, 577 (Tex. App.—Houston [14th
Dist.] 2006, pet. denied); Walden v. Affiliated Computer Servs., Inc., 97 S.W.3d 303,
328 (Tex. App.—Houston [14th Dist.] 2003, pet. denied). The normal measure of
damages in a breach of contract case is the benefit-of-the-bargain measure, the
purpose of which is to restore the injured party to the economic position it would
have been in had the contract been performed. SAVA Gumarska in Kemijska
Industria D.D. v. Advanced Polymer Scis., Inc., 128 S.W.3d 304, 317 n.6 (Tex.
App.—Dallas 2004, no pet.). A trial court has discretion to award damages within
the range of the evidence presented at trial. City of Hous. v. Harris Cnty. Outdoor
Adver. Ass’n, 879 S.W.2d 322, 334 (Tex. App.—Houston [14th Dist.] 1994, writ
denied).
In the present case, Silverbow adduced evidence in its summary judgment
motion that the Bureau of Land Management estimated that the cost to plug wells
was $300,000 per well. Therefore, the Bureau of Land Management estimate for the
plugging and abandonment of all three wells was $900,000. Silverbow also
presented evidence of reasonable estimates it obtained to plug and abandon the three
wells from Delta Seaboard, LLC. Specifically, Delta Seaboard placed a bid to plug
and abandon the USA 2 #1 well for $136,025, the USA 11 #1 for $154,450, and the
Hudson 2 #1 for $146,825. The total bid to plug and abandon the three wells was
$437,300. Based on the evidence presented, the trial court ordered Sola to either (1)
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plug and abandon and reclaim the surface area of wells USA 2 #1, USA 11 #1, and
Hudson 2 #1 or pay Silverbow $437,300 to plug and abandon and reclaim the surface
areas of the wells.
Accordingly, Silverbow has presented sufficient evidence to support its claim
for damages, and the trial court was within its discretion to award damages within
the range of evidence presented. See O & B Farms, Inc. v. Black, 300 S.W.3d 418,
422 (Tex. App.—Houston [14th Dist.] 2009, pet. denied) (“Damages must be
established with reasonable certainty, not mathematical precision.”) We overrule
Sola’s second issue and find that the trial court properly granted summary judgment
on Silverbow’s breach of contract claim.
III. Did the Trial Court Err in Awarding Attorney’s Fees?
In Sola’s third issue, it protests the trial court awarding Silverbow $84,948.88
for attorney’s fees, $25,000 for Silverbow’s successful appeal at the Texas Court of
Appeals, and $20,000 for Silverbow’s successful appeal at the Supreme Court of
Texas. Sola posits that (1) the language of the indemnity provision does not allow
for the recovery of attorney’s fees, (2) Silverbow was not authorized to recover
attorney’s fees in a breach of contract claim against a limited liability company, and
(3) the trial court’s order was unenforceable because the award of appellate
attorney’s fees was unconditional. Silverbow contends that the broad language of
the Purchase Agreement is sufficient to cover losses, costs, and expenses (including
attorney’s fees) resulting from Sola’s “ownership or operation” of the well, and Sola
mischaracterizes the trial court’s order. We conclude that the broad language of the
Purchase Agreement permitted recovery of attorney’s fees, and the award of
appellate attorney’s fees was not unconditional.
Generally, an award or denial of attorney’s fees is reviewed under an abuse of
discretion standard. Travelers Indem. Co. of Conn. v. Mayfield, 923 S.W.2d 590, 592
14
(Tex. 1996); Oake v. Collin Cnty., 692 S.W.2d 454, 455 (Tex. 1985); Pyles v. United
Servs. Auto. Ass’n, 804 S.W.2d 163, 164 (Tex. App.—Houston [14th Dist.] 1991,
writ denied). “The test for abuse of discretion is whether the trial court’s decision
was arbitrary or unreasonable.” See Pyles, 804 S.W.2d at 164. Attorney’s fees may
not be recovered from an opposing party unless provided for by statute or contract
between the parties. Mayfield, 923 S.W.2d at 593. Texas adheres to the American
Rule for the award of attorney’s fees, under which attorney’s fees are recoverable in
a suit only if permitted by statute or by contract. See, e.g., Akin, Gump, Strauss,
Hauer & Feld, L.L.P. v. Nat’l Dev. & Rsch. Corp., 299 S.W.3d 106, 120 (Tex. 2009);
Tony Gullo Motors I, L.P. v. Chapa, 212 S.W.3d 299, 310–11 (Tex. 2006).
A. Broad Language of Purchase Agreement Permitted Recovery of
Attorney’s Fees
The Purchase Agreement identifies at least three separate provisions relating
Sola’s responsibility to hold Silverbow harmless from “claims” arising out of Sola’s
ownership and operation of the wells contained on the Property. In its relevant
portions, the Purchase Agreement provides:
16. Indemnities . . . [Sola] releases [Silverbow], from and shall protect,
defend, indemnify and hold [Silverbow] harmless from and against and
assumes: (i) [a]ll losses and claims relating to, arising out of, or
connected with, directly or indirectly, ownership or operation of the
properties or any part thereof, or this transaction, prior to, on, or after
the effect time (no matter when asserted); [and] (ii) losses relating to
. . . (D) breach of contract. . . . and/or (G) environmental claims whether
arising or accruing prior to, on, or after the effective time.
22. Plugging and Abandonment. [Sola] expressly assumes and
accepts sole and exclusive responsibility for and agrees to pay all costs
and expenses associated with Plugging and Abandonment of all wells
. . . and may not claim the fact that Plugging and Abandonment
operations are not complete or that additional costs and expenses are
required to complete Plugging and Abandonment operations. . . . [Sola]
releases [Silverbow] from and shall fully protect, defend, indemnify,
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and hold [Silverbow] harmless from and against any and all losses and
claims relating to, arising out of, or connected with, directly or
indirectly, plugging and abandonment operations, no matter whether
arising before, on or after the effective time and without regard to any
negligence, strict liability or other fault of [Silverbow] and/or its
predecessors-in-interest.
46. Indemnities Applicability. The release, defense, indemnification
and hold harmless provisions provided for in this agreement shall be
applicable whether or not the claims, demands, suits, causes of action,
losses, damages, liabilities, fines, penalties and costs (including
attorneys’ fees and costs of litigation) in question arose solely or in part
from the active, passive or concurrent negligence, strict liability, breach
of duty, . . . or other fault of any indemnified party, or from any pre-
existing defect. [original in all caps].
In construing a written contract, “our primary concern is to ascertain the
intentions of the parties as expressed in the instrument.” Valence Operating Co. v.
Dorsett, 164 S.W.3d 656, 662 (Tex. 2005); J.M. Davidson, Inc. v. Webster, 128
S.W.3d 223, 229 (Tex. 2003). The record before us establishes that the plain
language of the written agreement is clear that Sola agreed to “protect, defend,
indemnify and hold [Silverbow] harmless” from losses and claims relating to or
arising out of plugging and abandonment operations, as well as breach of contract
and environmental claims. Sola accepted “sole and exclusive responsibility for and
agreed to pay all costs and expenses associated with plugging and abandonment of
all wells and facilities associated with the Properties.” When Silverbow notified Sola
of its plugging and abandonment obligation, Sola breached the Purchase Agreement
by failing to perform in accordance with the terms of the agreement. Because the
Purchase Agreement provides that Sola assumed sole responsibility for holding
Silverbow harmless from losses relating to breach of contract or environmental
claims, the trial court did not abuse its discretion in awarding Silverbow attorney’s
fees for enforcing Sola’s plugging and abandonment obligations as contemplated in
the Purchase Agreement. See, e.g., Devon SFS Operating, Inc. v. First Seismic Corp.
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No. 01–04–00077–CV, 2006 WL 374257, at *8 (Tex. App.—Houston [1st Dist.]
Feb. 16, 2006, no pet.) (mem. op.) (holding broad and inclusive indemnity provision
permitted recovery of attorney’s fees).
Accordingly, we find that the broad language of the Purchase Agreement
provided for Silverbow’s recovery of attorney’s fees against Sola.
B. Statutory Attorney’s Fees Inapplicable
We need not address Sola’s contention that attorney’s fees are not recoverable
against a limited liability company because Silverbow’s claim for attorney’s fees
arises out of contract and not statute. See Alta Mesa Holdings, L.P. v. Ives, 488
S.W.3d 438, 452–53 (Tex. App.—Houston [14th Dist.] 2016, pet. denied).
C. Award of Appellate Attorney’s Fees Was Not Unconditional
Sola complains that the award of appellate attorney’s fees was not conditioned
on Silverbow’s success in the appeal. We review a trial court’s award of appellate
attorney’s fees under the abuse of discretion standard. In re Ford Motor Co., 988
S.W.2d 714, 721 (Tex. 1998). A trial court abuses its discretion when it acts
“arbitrarily, unreasonably, or without reference to legal principles.” Berkel & Co.
Contractors, Inc. v. Lee, 612 S.W.3d 280, 287 (Tex. 2020). “A trial court may not
penalize a party for taking a successful appeal.” Keith v. Keith, 221 S.W.3d 156, 171
(Tex. App.—Houston [1st Dist.] 2006, no pet.). Thus, an unconditional award of
appellate attorney’s fees is improper. Id. Trial courts “must condition the award of
appellate attorney’s fees upon the appellant’s unsuccessful appeal.” Id.On the record before us, the trial court ordered Sola to pay Silverbow $25,000
in attorney’s fees “for Silverbow’s successful appeal at the Texas Court of Appeals”
and $20,000 in attorney’s fees “for Silverbow’s successful appeal at the Supreme
Court of Texas.” Thus, the award of appellate attorney’s fees were not unconditional;
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they were conditioned upon “Silverbow’s success” or put another way, Sola’s
unsuccessful appeal. Thus, the trial court did not abuse its discretion in awarding
Silverbow appellate attorney’s fees contingent upon on their success in our court or
the Texas Supreme Court. Because Sola does not challenge the reasonableness of
the amount that was awarded, we do not address that issue.
Accordingly, we overrule Sola’s third issue and find that Silverbow was
entitled to attorney’s fees as provided in the written contract, and the trial court did
not abuse its discretion in awarding appellate attorney’s fees because the award was
conditioned upon Silverbow’s success on appeal.
Conclusion
We affirm the trial’s court judgment as challenged on appeal.
/s/ Frances Bourliot
Justice
Panel consists of Justices Bourliot, Hassan, and Wilson.
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