Samson Exploration, LLC (Formerly Samson Lone Star, L.P.) v. T.S. Reed Properties, Inc.
521 S.W.3d 766
| Tex. | 2017Background
- Samson Exploration (lessee) unilaterally created and amended pooled gas units on adjacent East Texas leases; amendments changed subsurface depth boundaries and produced overlapping pooled units.
- Original Black Stone Minerals unit produced from two wells; Samson amended the unit (renamed DuJay1) to a deeper depth, excluding the first well; some lessors accepted royalties after the amendment.
- Samson later designated a new DuJay-A unit encompassing depths that overlapped the DuJay1 unit and included a third well; the DuJay-A designation lacked an intended lower-depth limit (alleged scrivener's error).
- Samson paid royalties for the overlapping second well only to DuJay1 claimants; Reed (Overlapping Unit) claimants sued for breach of contract to recover royalties on that well.
- Trial court awarded damages to both groups; court of appeals reversed as to the unpooling claimants based on ratification (Hooks) and affirmed liability to Overlapping Unit claimants but remanded limited-damages issues; Texas Supreme Court affirmed the court of appeals.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether ineffective cross-conveyance of title (overlap) invalidates contract claims for royalties | Overlapping claimants: contract to pay royalties is enforceable regardless of title technicalities | Samson: pooling must effect cross-conveyance; overlapping pooling is impossible and voids royalty obligation | Court: Ineffective conveyance/title defects do not defeat breach-of-contract recovery; contract enforcement allowed |
| Whether Samson is barred by quasi-estoppel or scrivener's-error reformation | Samson: estoppel or reformation excuses or limits obligations due to mistake and prior communications | Overlapping claimants: no evidence of opposing party's inconsistent conduct or mutual mistake | Court: Quasi-estoppel and reformation defenses fail as a matter of law (no mutual mistake; claimants did not behave inconsistently) |
| Whether Samson can recoup prior royalty payments from DuJay1 (reimbursement/disgorgement) | Samson: prior payments were good-faith overpayments; should be reimbursed pro rata if DuJay-A liability imposed | DuJay1 claimants: payments were voluntary with full knowledge; no fraud or duress | Court: Samson cannot recover; voluntary-payment rule bars reimbursement; Samson must pay DuJay-A royalties from its working interest |
| Whether DuJay1 unpooling claimants preserved and are barred by ratification (Hooks) | Unpooling claimants: Samson waived ratification defense or some claimants lacked notice so Hooks doesn't apply | Samson: claimants ratified by accepting royalties and/or joined suit after being informed; defense preserved | Court: Samson preserved the defense; Hooks controls — claimants received notice (or equivalent via amended petition), accepted royalties, and thus ratified the amendment; unpooling claims fail |
Key Cases Cited
- Hooks v. Samson Lone Star, Ltd. P'ship, 457 S.W.3d 52 (Tex. 2015) (ratification found where lessors received notice of a unit amendment, accepted royalties, and did not challenge the amendment)
- Veal v. Thomason, 159 S.W.2d 472 (Tex. 1942) (describing pooling/unitization as effecting a cross-conveyance of royalty interests and examining joinder/title consequences)
- Montgomery v. Rittersbacher, 424 S.W.2d 210 (Tex. 1968) (pooling authority limits and effect on nonparticipating royalty interests)
- Minchen v. Fields, 345 S.W.2d 282 (Tex. 1961) (unitization effects cross-conveyance among owners)
- Clear Creek Basin Authority v. City of Houston, 589 S.W.2d 671 (Tex. 1979) (summary-judgment preservation: nonmovant must expressly present issues in trial court to avoid waiver)