Great Western Drilling, Ltd. v. Pathfinder Oil & Gas, Inc. and Cathlind Energy, LLC
568 S.W.3d 148
| Tex. App. | 2017Background
- Great Western sent a June 1, 2004 letter offering Pathfinder a 25% working interest in new leases and asked for acceptance within 48 hours; Pathfinder signed and returned the letter within that period.
- The letter reserved certain conditions: Pathfinder would assume third‑party obligations (the Kennedys) and could not assign without Great Western’s written consent; a formal participation agreement/JOA and AFE were to be prepared "as soon as reasonably possible."
- Disputes arose over the percentage (Pathfinder sought 28%), timing and content of the JOA and AFE, and assignment/consent rights; Great Western alleges it withdrew the offer after an October 28 conference call and sent a withdrawal letter the next day; Pathfinder returned signed documents and a check on October 29.
- Great Western sued for a declaratory judgment that the June 1 letter was not enforceable; Pathfinder counterclaimed for breach and sought specific performance; the parties stipulated that if Pathfinder proved an enforceable contract and breach, its remedy would be specific performance (with accounting mechanics agreed).
- The trial court submitted only contract and breach issues to the jury (refused Great Western’s requested question on whether Pathfinder was "ready, willing, and able" to perform); the jury found the letter enforceable and that Great Western breached; trial court ordered specific performance and awarded revenue and fees.
- On appeal, the court reversed, holding the trial court abused its discretion by refusing to submit a jury question on Pathfinder’s readiness/willingness/ability to perform, a contested element necessary for awarding specific performance; because that error was harmful, the court rendered judgment that Pathfinder take nothing.
Issues
| Issue | Pathfinder's Argument | Great Western's Argument | Held |
|---|---|---|---|
| Whether the stipulation eliminated the need to prove readiness/willingness/ability for specific performance | Stipulation limited issues to existence and breach; specific performance was the agreed remedy, so no separate proof of readiness was required | Stipulation did not eliminate equitable elements; Pathfinder still had burden to prove entitlement (including readiness/willingness/ability) | Stipulation did not obviate the readiness/willingness/ability requirement; Pathfinder still had to prove entitlement to equitable relief |
| Whether the trial court erred by refusing a jury question on readiness/willingness/ability | The element was unnecessary under the stipulation | The element was contested factually and should have been submitted to the jury | Trial court abused discretion by failing to submit the question because evidence raised a fact issue |
| Whether Pathfinder proved it was ready, willing, and able to perform (financial ability to meet AFE/drilling costs) | Pathfinder pointed to returning signed AFE/JOA and payment of $9,968.98 and argued it was prepared to proceed | Great Western pointed to Pathfinder’s renegotiation attempts, lack of proof of credit/escrow/line of credit, and evidence of cash shortage | The record lacked conclusive proof of Pathfinder’s financial ability; fact question existed and jury should have decided it |
| Remedy and disposition (should court render or remand) | Pathfinder argued no need for further factfinding; specific performance awarded below | Great Western sought reversal because omission of jury question was harmful | Court reversed and rendered judgment that Pathfinder take nothing because the case was fully developed and the error was harmful |
Key Cases Cited
- DiGiuseppe v. Lawler, 269 S.W.3d 588 (Tex. 2008) (party seeking specific performance must prove readiness, willingness, and ability to perform)
- J.M. Davidson, Inc. v. Webster, 128 S.W.3d 223 (Tex. 2003) (contract construction: give effect to all provisions)
- El Paso Field Servs., L.P. v. MasTec N. Am., Inc., 389 S.W.3d 802 (Tex. 2012) (clarifies when contract language is unambiguous and construed as a matter of law)
- Italian Cowboy Partners, Ltd. v. Prudential Ins. Co. of Am., 341 S.W.3d 323 (Tex. 2011) (contract interpretation principles)
- Coker v. Coker, 650 S.W.2d 391 (Tex. 1983) (objective: ascertain parties’ intent from the instrument)