Milagro Exploration, LLC v. Glenn A. Ralston and Dorothy Ralston
13-14-00421-CV
| Tex. App. | Mar 2, 2017Background
- In 2006 Milagro (successor to Petrohawk) and the Ralstons executed a Surface Facility Site Agreement granting Milagro surface rights to one acre to operate an amine plant; term five years with two five-year renewals and a clause requiring removal of equipment within six months after termination and site restoration.
- The agreement expired November 8, 2011; Milagro’s director later learned of the expiration but Milagro continued some plant operations and access into 2012; Ralston’s counsel warned Milagro in March 2012 not to enter the property under threat of criminal trespass.
- Milagro shut down the plant around June 2012 but had intermittent access to remove equipment; Ralston valued the plant at $400,000.
- Milagro sued in September 2012 for declaratory relief, breach of contract, unlawful lockout, writ of reentry, injunctive relief, and fees; bench trial occurred December 19, 2013.
- Trial court entered judgment finding Milagro’s reentry right expired 180 days after lease expiration, Milagro had no right to reenter to remove equipment, and the amine plant belonged to Ralston; attorney’s fees denied and costs assessed against Milagro.
- On appeal the court reviewed legal-sufficiency of the trial court’s findings of law and reversed in part, holding Milagro had a contractual six-month reentry right and that Milagro owned the amine plant; the case was remanded for further proceedings consistent with that ruling.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Milagro retained a contractual right to reenter the property for six months after agreement termination to remove equipment | Agreement expressly grants Milagro six months after termination to remove equipment and restore site; Ralston blocked access in March 2012, breaching contract | Trial court treated reentry right as expired and concluded Milagro had no right to reenter after 180 days | Court held the contractual six-month reentry right was clear and Milagro had the right to enter Nov 2011–May 2012; trial court erred in denying reentry/right-to-remove claim |
| Whether title to the amine plant vested in Ralston (trial court found plant belonged to Ralston) | Milagro argued it undisputedly owned the amine plant and the agreement contains no reversion/forfeiture of equipment to landowner; Ralston did not plead abandonment or adverse ownership | Trial court found the plant belonged to Ralston (implicitly treating unremoved equipment as Ralston’s) | Court held evidence conclusively established Milagro’s ownership; Ralston failed to plead or prove abandonment or a contractual transfer, so finding was legally insufficient |
Key Cases Cited
- Elliott-Williams Co., Inc. v. Diaz, 9 S.W.3d 801 (Tex. 1999) (contract construction is a question of law; intent controls)
- City of Keller v. Wilson, 168 S.W.3d 802 (Tex. 2005) (standards for legal-sufficiency review)
- Sterner v. Marathon Oil Co., 767 S.W.2d 686 (Tex. 1989) (approach when challenging fact findings as a matter of law)
- Trenolone v. Cook Exploration Co., 166 S.W.3d 495 (Tex. App.—Texarkana 2005) (definition and elements of abandonment)
- Sunray DX Oil Co. v. Texaco, Inc., 417 S.W.2d 424 (Tex. App.—El Paso 1967) (distinguished by court; involved oil-and-gas lease facts and long nonuse)