Lakota Energy Limited Partnership v. Merit Management Partners I, L.P. Merit Energy Partners III, L.P. And Merit Energy Company, LLC
02-13-00057-CV
| Tex. App. | Nov 17, 2016Background
- Merit sold a package of nonoperating oil-and-gas interests (Lot 85) at auction in 2000; conveyances and catalog described overriding royalties and listed Exhibits A (leases) and B (wells, with most working-interest entries as 0.00).
- Lakota purchased Lot 85 after post-bid negotiation, received royalty payments, and performed limited due diligence focused on wells (not title to Exhibit A leases); later discovered fourth-party offers for working interests and questioned what had been conveyed.
- Merit filed suit seeking a declaration/quiet title to the Exhibit A leases (alternatively reformation and restitution), asserting it retained working/leasehold interests; Lakota counterclaimed to quiet title and asserted conversion, trespass, and statutory claims.
- After a four-day jury trial, the jury found the conveyances did not convey the disputed working/leasehold interests to Lakota; the trial court entered judgment quieting title in Merit.
- Lakota appealed, arguing the conveyances were unambiguous and should have been decided by the court (not the jury) and that the court erred in admitting expert testimony; Merit appealed the denial of attorney’s fees under the UDJA.
Issues
| Issue | Plaintiff's Argument (Lakota) | Defendant's Argument (Merit) | Held |
|---|---|---|---|
| Whether conveyances were unambiguous and thus a question of law for the court | Conveyances clearly conveyed all interests within pooled units; court should construe documents as a matter of law and not submit to the jury | Submission was proper; or Lakota invited submission by requesting jury question | Waived/invited by Lakota: Lakota requested substantially similar jury question and didn’t object; issue waived on appeal |
| Admissibility of expert testimony about conveyance meaning | Interpretation is pure question of law; expert testimony on meaning was improper | Experts gave background and intent testimony; evidence admissible and/or cumulative | Preserved but harmless: motions in limine preserved objection; any erroneous admission was cumulative and did not control verdict |
| Entitlement to attorney’s fees under UDJA for declaratory relief/quiet title | (Merit) UDJA entitlement; fees equitable and justified given declaratory claim | (Lakota) Suit effectively sought to quiet title/trespass-to-try-title, barring UDJA fees | Merit’s suit adjudicated possessory title (trespass-to-try-title); UDJA fees not recoverable for such title dispute; trial court did not err in awarding none |
| Whether expert testimony required exclusion when interpretation is legal | Lakota: experts’ legal opinions invaded court’s province | Merit: testimony on intent and customary industry practice relevant; some testimony limited by trial court | Even if some legal-opinion testimony should have been excluded, admission was harmless because it was cumulative |
Key Cases Cited
- Paradigm Oil, Inc. v. Retamco Operating, 372 S.W.3d 177 (Tex. 2012) (distinguishes working vs. nonworking interests and explains nature of royalty/operating interests)
- Bowden v. Phillips Petroleum Co., 247 S.W.3d 690 (Tex. 2008) (ambiguity in instrument permits consideration of extrinsic evidence)
- Wackenhut Corp. v. Gutierrez, 453 S.W.3d 917 (Tex. 2015) (denied pretrial no-evidence summary-judgment does not preserve no-evidence objection to jury-charge question)
- Gee v. Liberty Mut. Fire Ins. Co., 765 S.W.2d 394 (Tex. 1989) (erroneously admitted evidence requires reversal only when it controlled the judgment)
- Burbage v. Burbage, 447 S.W.3d 249 (Tex. 2014) (preservation rules are important and not trivial)
- Bocquet v. Herring, 972 S.W.2d 19 (Tex. 1998) (attorney’s fees under UDJA are discretionary)