History
  • No items yet
midpage
629 S.W.3d 189
Tex.
2021
Read the full case

Background

  • Strickhausen owns 50% of minerals on a tract; her lease forbids any pooling "under any circumstances" without her express written consent. BPX later acquired the leases for adjoining tracts that permit pooling.
  • BPX pooled Strickhausen’s tract into the "White Kitchen Unit No. 4" and drilled the WK Unit 4 No. 1H well that produced under adjacent tracts.
  • BPX repeatedly sought Strickhausen’s written ratification; her counsel objected in writing, requested information, and negotiated a settlement while asserting her anti-pooling rights.
  • Despite the dispute, BPX sent royalty checks labeled "WK UNIT 4 1H" (calculated on a pooled basis); Strickhausen deposited the checks but continued to contest the pooling and ultimately sued for breach of the lease.
  • The trial court granted interlocutory summary judgment for BPX, finding Strickhausen ratified the pooling by cashing checks; the court of appeals reversed on the ratification issue.
  • The Texas Supreme Court affirmed the court of appeals: summary judgment for BPX was improper because the totality of objective circumstances did not clearly establish implied ratification as a matter of law.

Issues

Issue Plaintiff's Argument (BPX) Defendant's Argument (Strickhausen) Held
Whether acceptance of royalties calculated on a pooled basis is implied ratification of an unauthorized pooling as a matter of law Acceptance of pooled royalties constitutes ratification; therefore summary judgment is proper Depositing checks did not show intent to ratify because she repeatedly objected, negotiated a settlement, and was owed royalties regardless of pooling Reversed: acceptance alone did not clearly evidence ratification as a matter of law given contrary objective evidence
Whether a bright-line rule should treat any act inconsistent with avoiding a contract as ratification Any act inconsistent with avoiding a contract (e.g., accepting benefits) should establish ratification Such a categorical rule would ignore contract formation and written anti-pooling language; intent must be judged from all circumstances Rejected: ratification requires examination of totality of circumstances; no automatic rule that acceptance of pooled payments always ratifies
Effect of an express lease clause prohibiting pooling without written consent on implied-ratification analysis Clause does not preclude ratification by conduct The explicit "no pooling without express written consent" clause makes implied consent less likely and must be considered Held that the clause is highly relevant; it weighs against finding implied ratification absent clear evidence

Key Cases Cited

  • Key Operating & Equip., Inc. v. Hegar, 435 S.W.3d 794 (Tex. 2014) (defining pooling and emphasizing lease authorization requirement)
  • Hooks v. Samson Lone Star, Ltd. P’ship, 457 S.W.3d 52 (Tex. 2015) (ratification found where acceptance of payments plus refusal to challenge supported ratification as a matter of law)
  • Samson Expl., LLC v. T.S. Reed Props., Inc., 521 S.W.3d 766 (Tex. 2017) (continued acceptance of payments after notice supported ratification there)
  • Montgomery v. Rittersbacher, 424 S.W.2d 210 (Tex. 1968) (royalty acceptance can ratify pooling; context mattered in that case)
  • Kramer v. Kastleman, 508 S.W.3d 211 (Tex. 2017) (accepting benefits does not always constitute clear acquiescence; context- and estoppel-focused inquiry)
  • Land Title Co. of Dallas v. F. M. Stigler, Inc., 609 S.W.2d 754 (Tex. 1980) (ratification extends to the entire transaction; cannot ratify beneficial parts and disavow detrimental parts)
Read the full case

Case Details

Case Name: Bpx Operating Company, Bpx Properties (Na) Lp, Segundo Navarro Drilling, Ltd., First Rock I, LLC, Ef Non-Op, LLC, and South Texas Shale, Llc v. Margaret Ann Strickhausen
Court Name: Texas Supreme Court
Date Published: Jun 11, 2021
Citations: 629 S.W.3d 189; 19-0567
Docket Number: 19-0567
Court Abbreviation: Tex.
Log In