534 S.W.3d 490
Tex. App.2017Background
- Dispute over ownership of a 1/4 mineral interest underlying 1,058-acre "Las Piedras Ranch." ConocoPhillips held leases signed by the Older Generation (1993, 1997) and paid royalties to them; Leon Jr. and Minerva (the Grandchildren) did not sign the leases.
- Chain of title: Leonor (grandmother) devised a life estate in "all of my right, title and interest in and to Ranch 'Las Piedras'" to her son Leon Oscar, Sr., with remainder to his children (Leon Jr., Minerva, Rosalinda) at his death. Question whether that life estate included Leonor’s 1/8 mineral interest.
- Grandchildren sued ConocoPhillips (and others) seeking declaration they each own a 1/12 mineral interest, that ConocoPhillips’s leases do not bind those interests (they were contingent remaindermen who did not sign), and a cotenancy accounting under Chapter 91.
- Trial court granted summary judgment to Grandchildren on title and on cotenancy accounting, found leases ineffective as to Grandchildren’s interests, awarded each Grandchild ≈ $3.76M plus prejudgment interest and attorneys’ fees; ConocoPhillips and Rodolfo appealed.
- Appellate court affirmed in all respects except to reform a clerical error (award to incapacitated Minerva should be to her guardian). Key disputes on appeal: will construction (scope of "Ranch Las Piedras" and whether minerals were included), accrual/limitations, affirmative defenses (ratification, estoppel), calculation of accounting, and attorneys’ fees.
Issues
| Issue | Plaintiff's Argument (Grandchildren) | Defendant's Argument (ConocoPhillips / Rodolfo) | Held |
|---|---|---|---|
| Title / scope of Leonor's life estate (did "Ranch Las Piedras" include minerals?) | Will language "all of my right, title and interest" is unambiguous and includes both surface and minerals; no reservation of minerals. | "Ranch Las Piedras" referred only to surface by surrounding circumstances and family practice of reserving minerals; extrinsic evidence shows Leonor intended surface only. | Will is unambiguous; within four corners it conveys all interests (including minerals). Grandchildren established title; leases ineffective as to their mineral interests. |
| Accrual / Statute of Limitations | Claims accrued at life tenant's death (Nov. 27, 2006) when remainder vested; suit filed 2010 was timely. | Claims accrued earlier (when leases were signed and production/royalties paid), so 2010 suit is time-barred. | Remaindermen rule applies: limitations did not run until life tenant's death; claims timely. |
| Ratification / Equitable Estoppel | Grandchildren did not ratify leases; alleged ratifications were signed by Leon Sr., not Leon Jr.; division orders were signed in fiduciary/executor capacity. Offers to IRS and estate claims sought unpaid proceeds, not affirming leases. | Grandchildren took benefits and actions that ratified or estopped them from denying lease validity. | Material disputed facts and documentary evidence show no ratification by Leon Jr.; estoppel theory fails. Trial court did not err denying summary judgment on these defenses. |
| Cotenancy accounting & calculation of recoverable proceeds; deductions (start date, acquisition costs, royalties, cost of capital) | Grandchildren entitled to accounting from production; Leases ineffective against them so they are unleased cotenants; adjust accounting to exclude basic lease royalties and other improper deductions. | Accounting should start later; Conoco may deduct acquisition costs, full lease royalties (22.5%), and allocable cost of capital/interest. | Court adopted Grandchildren’s adjustments. Accounting run from ConocoPhillips’ 1995 acquisition; basic lease royalties excluded against Grandchildren’ s share (only non-participating royalties apply); acquisition costs and cost-of-capital interest disallowed. |
| Attorneys' fees and prejudgment interest | Fees recoverable under Tex. Nat. Res. Code §91.406 for Chapter 91 claim; amount (including multiplier) reasonable given complexity and contingency. | Fees not recoverable on trespass-to-try-title; amount and multiplier unsupported. | Fees recoverable under Chapter 91; trial court’s detailed findings and multiplier were not an abuse of discretion. Pre-judgment interest allowed because no legitimate title dispute. |
Key Cases Cited
- San Antonio Area Found. v. Lang, 35 S.W.3d 636 (Tex. 2000) (when a will term is susceptible to more than one meaning, extrinsic evidence may be considered)
- Martin v. Amerman, 133 S.W.3d 262 (Tex. 2004) (trespass to try title is the usual method to resolve chains of title)
- Longoria v. Lasater, 292 S.W.3d 156 (Tex. App.—San Antonio 2009) (in title disputes, deeds and instruments in chain are construed as a matter of law)
- Sharp v. Fowler, 252 S.W.2d 153 (Tex. 1952) (absent express mineral reservation, a conveyance of land includes underlying minerals)
- Valence Operating Co. v. Dorsett, 164 S.W.3d 656 (Tex. 2005) (de novo review when both parties move for summary judgment)
- Prize Energy Resources, L.P. v. Cliff Hoskins, Inc., 345 S.W.3d 537 (Tex. App.—San Antonio 2011) (cotenant producing minerals must account for value taken less necessary and reasonable costs)
- Estate of McWhorter v. Wooten, 622 S.W.2d 844 (Tex. 1981) (limitations on remainderman's interest do not run until life tenant's death)
- Cox v. Davison, 397 S.W.2d 200 (Tex. 1965) (interest generally may not be deducted in cotenancy accounting)