Dynamic Production, Inc. v. Cima Energy Ltd, 4:17-cv-01032

Background

North Shore purportedly exercised an Option Agreement and drilled a producing well (the "Well") in Goliad County; production sales to CIMA began Jan 2010.
Dynamic later received an oil & gas lease from the Harkins family for the parcel containing the Well (Dynamic Lease) and litigated ownership in the "Goliad Suit" against North Shore.
The Texas Supreme Court ultimately held the Option Agreement did not include the Well tract and effectively reinstated Dynamic’s lease.
Dynamic sued CIMA (Dec 19, 2016) for conversion and related claims based on CIMA’s purchases of production from North Shore.
Magistrate Judge Palermo recommended splitting the summary-judgment outcomes: dismiss conversion claims older than two years before filing (limitations), grant conversion liability for purchases on/after Dec 19, 2014, and deny CIMA’s motion on other grounds; the district court adopted the R&R.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether conversion claims against CIMA accruing before Dec 19, 2014 are tolled by pendency/outcome of Goliad Suit	Tolling applies because Dynamic was prevented from suing while ownership remained litigated; collateral estoppel/pendency justified tolling	Limitations began at each alleged conversion (each purchase); plaintiff was not prevented from suing CIMA and tolling doctrines do not apply	Claims for conversion arising before Dec 19, 2014 are time-barred; limitation accrues at each conversion and tolling was not available
Whether Dynamic established ownership of the Production as a matter of law	Dynamic’s lease and Texas Supreme Court decision establish ownership	CIMA argued burden wrongly placed on it and the Supreme Court decision did not affirmatively establish ownership	Court held Dynamic met its summary-judgment burden: Dynamic owns the production based on the lease terms and the Texas Supreme Court ruling
Whether CIMA qualifies as a good-faith purchaser under TBCC §2.403(b) because Dynamic "acquiesced"/entrusted production to North Shore	Dynamic did not acquiesce; it sued North Shore for conversion, so it did not entrust possession	CIMA contends Dynamic’s conduct/omissions and North Shore’s public filings could reasonably show entrustment, barring recovery	Court found no acquiescence after CIMA learned of Dynamic’s conversion suit (Sept 2011); Dynamic entitled to summary judgment on purchases on/after Dec 19, 2014; CIMA’s entrustment/ good-faith defense fails as to post-2014 purchases
Whether CIMA’s motion for partial judgment on the pleadings (attorneys’ fees) should be granted	N/A (no objection to R&R here)	CIMA sought dismissal of attorneys’ fees claim on pleadings	Court adopted R&R: CIMA’s motion denied as untimely

Key Cases Cited

Cavitt v. Amsler, 242 S.W. 246 (Tex. Civ. App. 1922) (discusses narrow tolling where plaintiff is "prevented" from suing)
Rogers v. Ricane Enters., Inc., 930 S.W.2d 157 (Tex. App.—Amarillo 1996) (ownership need not be finally established for conversion claim to accrue)
Murphy v. Campbell, 964 S.W.2d 265 (Tex. 1997) (preferable to abate second suit rather than toll limitations because plaintiff chose to delay)
SWEPI, L.P. v. Camden Res., Inc., 139 S.W.3d 332 (Tex. App.—San Antonio 2004) (collateral estoppel is an affirmative, waivable defense)