Cade v. Cosgrove
430 S.W.3d 488
Tex. App.2014Background
- In October 2006 Michael and Billie Cade sold Arlington property to Charles and Barbara Cosgrove; the sales contract expressly stated the Cades would retain all mineral rights, but the recorded warranty deed omitted any mineral reservation and conveyed the minerals to the Cosgroves' trust.
- After closing the Cades continued actions consistent with ownership of the minerals (updating address with lessee Chesapeake; receiving shut-in royalty checks in 2009 and 2010; Chesapeake’s 2010 letter treating them as royalty owners).
- In December 2010 the Cades learned Chesapeake had sent royalty deposit forms to Cosgrove; they requested a correction deed but Cosgrove refused, asserting she did not believe she owned the minerals.
- The Cades sued in February 2011 seeking declaratory relief (reformation), breach of the closing agreement, tortious interference, civil theft, and other relief; both parties moved for summary judgment.
- The trial court granted Cosgrove’s summary judgment and denied the Cades’; this appeal challenges those rulings and the trial court’s denial of Cosgrove’s request for attorney’s fees.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the merger doctrine bars using the contract to reform the deed | Cades: deed omitted mineral reservation by mistake; contract controls and deed should be reformed | Cosgrove: merger doctrine makes deed the final expression, barring reliance on contract | Court: Merger does not bar reformation when parties allege mutual mistake; summary judgment for Cosgrove on this ground reversed |
| Whether the statute of limitations bars the Cades’ reformation claim | Cades: discovery rule/rebuttable presumption applies; they did not discover the omission until Dec 2010 | Cosgrove: presumption of immediate knowledge starts limitations at deed execution (2006); claim time-barred | Court: presumption rebuttable; discovery rule applies to mutual mistake; fact issue exists when Cades knew or should have known; summary judgment for Cosgrove on limitations reversed |
| Whether Cades were entitled to summary judgment on reformation | Cades: presented evidence of mistake and conduct showing they retained minerals | Cosgrove: Cades cannot prove they did not know or should not have known earlier | Court: Evidence raises fact issues about knowledge/diligence; Cades did not prove entitlement as a matter of law; SJ denied for Cades affirmed |
| Whether Cades are entitled to specific performance (correction deed) for breach of closing agreement | Cades: closing agreement obligates parties to correct errors; seek specific performance/correction deed | Cosgrove: (implicitly) correction deed inappropriate to alter substantive conveyance; no summary judgment on that ground raised | Court: Correction deeds are limited to facial/caption errors; rescission/reformation, not a correction deed, is proper for substantive mineral conveyance; Cades not entitled to specific performance as requested |
Key Cases Cited
- Martin v. Miles, 321 S.W.2d 62 (Tex. 1959) (reformation may be available where parties were mutually mistaken; payment of royalties can raise fact issue about discovery)
- McClung v. Lawrence, 430 S.W.2d 179 (Tex. 1968) (reaffirming reformation may be available despite long delay when mistake as to legal effect exists)
- Sullivan v. Barnett, 471 S.W.2d 39 (Tex. 1971) (presumption of grantor’s immediate knowledge is rebuttable; subsequent conduct may excuse delay)
- Brown v. Havard, 593 S.W.2d 939 (Tex. 1980) (ambiguous reservation language can preclude charging a party with knowledge as a matter of law)
- Lesley v. Veterans Land Bd., 352 S.W.3d 479 (Tex. 2011) (whether reformation claim is barred by limitations is fact-specific; discovery rule may apply)