ConocoPhillips Co. v. Koopmann
547 S.W.3d 858
| Tex. | 2018Background
- In 1996 Lois Strieber conveyed a 120-acre tract to Lorene Koopmann but reserved a 15‑year, one‑half non‑participating royalty interest (NPRI) "and as long thereafter as there is production in paying or commercial quantities," with a savings clause allowing lease maintenance by shut‑in royalties or similar payments.
- Koopmann later conveyed mineral interests to her children; Burlington leased the tract (with an option extended by a $24,000 payment) and pooled it in a larger unit; no production occurred by the 15‑year anniversary (Dec. 27, 2011), but production began two months later.
- Koopmanns sued for declaratory judgment claiming the NPRI expired on Dec. 27, 2011; they also asserted breach of contract and tort claims against Burlington; Burlington sought dismissal under Tex. R. Civ. P. 91a and summary judgment invoking Tex. Nat. Res. Code § 91.402 (title‑dispute safe harbor for withholding payments).
- The trial court ruled for the Koopmanns on the declaratory claim and denied Burlington’s Rule 91a motion (but later granted summary judgment on the non‑declaratory claims); the court of appeals affirmed in part, reversed in part, and remanded on ambiguity of the savings clause.
- The Texas Supreme Court addressed: (1) whether the rule against perpetuities (the Rule) invalidated the Koopmanns’ future interest created by Strieber’s reservation; (2) whether the deed’s savings clause preserved Strieber/Burlington’s interest; (3) whether § 91.402 precludes a common‑law breach‑of‑contract claim; and (4) entitlement to Rule 91a attorney’s fees.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the Rule invalidates Koopmanns’ future interest created by Strieber’s reservation | Koopmanns: the future interest vested in interest (akin to a possibility of reverter/vested remainder) and thus is valid | Burlington: reservation created a springing executory interest uncertain to vest within the Rule and thus void (Peveto controls) | Court: In oil & gas context, where grantee is ascertainable and preceding estate is certain to terminate, the Rule does not invalidate the grantee’s future interest; affirmed on different grounds than court of appeals |
| Interpretation of the deed’s savings clause ("shut‑in royalties or other similar payments") — did Burlington’s $24,000 lease‑extension payment qualify? | Koopmanns: bonus/extension payment is not similar to a shut‑in royalty; payments must substitute for production or occur during secondary term | Burlington/Strieber: $24,000 functioned like a shut‑in or prepaid delay rental and therefore satisfied the savings clause | Court: Savings clause is ambiguous as to "other similar payments"; remand for factfinder to determine intent |
| Whether Tex. Nat. Res. Code § 91.402(b) precludes a lessor’s common‑law breach‑of‑contract claim | Koopmanns: § 91.402 was not meant to bar common‑law contract claims; statute protects royalty owners but does not abrogate contract remedies absent clear legislative intent | Burlington: statute provides a comprehensive scheme governing payment timing and title disputes and should displace common‑law claims | Court: Abrogation of common‑law remedies requires clear legislative intent; § 91.402 does not preclude a breach‑of‑contract claim under the controlling lease; court of appeals affirmed on this point |
| Whether Burlington is entitled to attorney’s fees under Tex. R. Civ. P. 91a because it later prevailed on summary judgment | Burlington: same arguments were ultimately successful on summary judgment, so it should be the "prevailing party" under Rule 91a and recover fees | Koopmanns: 91a fees apply only to prevailing on the Rule 91a motion itself; Burlington’s motion was denied and not timely appealed | Court: Fee award to Koopmanns affirmed — 91a fees attach only when the movant prevails on the motion; later summary judgment does not convert an earlier denial into a win on the motion |
Key Cases Cited
- BP Am. Prod. Co. v. Laddex, Ltd., 513 S.W.3d 476 (Tex. 2017) (describes Rule against perpetuities and favoring constructions that validate instruments)
- Peveto v. Starkey, 645 S.W.2d 770 (Tex. 1982) (held certain royalty conveyance violated the Rule because the future interest might not vest within the permitted period)
- Bagby v. Bredthauer, 627 S.W.2d 190 (Tex. Civ. App. 1981) (developed two‑grant fiction treating a reservation as a regrant to avoid a Rule problem)
- Rosson v. Bennett, 294 S.W. 660 (Tex. 1927) (recognizes typical oil‑and‑gas lease can create a fee simple determinable not violative of the Rule)
- Luckel v. White, 819 S.W.2d 459 (Tex. 1991) (discusses possibility of reverter vesting at creation and not subject to the Rule)
- El Dorado Land Co. v. City of McKinney, 395 S.W.3d 798 (Tex. 2013) (treats reversionary interests and explains vesting of possibilities of reverter)
- Concord Oil Co. v. Pennzoil Expl. & Prod. Co., 966 S.W.2d 451 (Tex. 1998) (interpreted Natural Resources Code scheme and held statute precluded common‑law claim for prejudgment interest)