Southern Management Services, Inc. v. SM Energy Company
2013 Tex. App. LEXIS 2144
| Tex. App. | 2013Background
- Southern Management Services, Inc. appeals a summary judgment in favor of SM Energy Company regarding costs for operating oil and gas leases in Nacogdoches County.
- JOA between EnCana and Goodrich designated SM’s predecessor as operator; EnCana later assigned its interests to Southern, making Southern a 30% working interest owner.
- SM sent Southern renewal cost-shares with attached cost sheets; Southern signed and elected to participate but did not pay its share.
- SM sued in 2011 for a sworn account and breach of contract; initial affidavit and invoices claimed $536,690.35 due from Southern.
- Southern answered with a general denial, later filed a verified denial to the original account, and also asserted defenses about contract validity and the nature of the charges.
- Amended pleadings and amended sworn account in 2011–2012 reduced and revised the claimed balance; the amended account was supported by Greg Little’s affidavit.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the sworn account supports recovery as a matter of law | SM contends the amended account is based on a contract for costs and is properly supported by a sworn affidavit. | Southern argues there is no valid contract and the account lacks proper itemization and connection to goods/services. | Yes; SM entitled to judgment on the sworn account. |
| Whether the amended account requires a new sworn denial | Amended account changed substantially; no second sworn denial was necessary to sustain judgment. | Southern argues amended account requires renewed denial to defeat the amended claim. | Second sworn denial required; but judgment still affirmed due to proof of debt remaining uncontested. |
| Whether SM established a valid contract binding Southern for its proportionate share | JOA amendments and Southern’s consent created a binding obligation to bear costs. | Southern was not a signatory to the JOA or assignment; argues lack of contract evidence and definition of its share. | Yes; valid, enforceable contract existed. |
| Whether the judgment properly disposed of third-party defendants | Judgment only addressed Southern; did not adjudicate EnCana and Goodrich claims. | Final judgment language purported to dispose of all parties; disposal of third-party claims was error. | Judgment reversed concerning third-party disposals; remanded for proper adjudication. |
Key Cases Cited
- Rizk v. Fin. Guardian Ins. Agency, Inc., 584 S.W.2d 860 (Tex. 1979) (sworn accounts; Rule 185 framework; prima facie evidence and avoiding denial)
- Vance v. Holloway, 689 S.W.2d 403 (Tex. 1985) (costs for developing and operating oil and gas interests may support sworn accounts)
- Fortinberry v. Freeway Lumber Co., 453 S.W.2d 849 (Tex. Civ. App.—Houston [1st Dist.] 1970) (substantial amendments to an account require renewed sworn denial)
- Enernational Corp. v. Exploitation Eng’rs, Inc., 705 S.W.2d 749 (Tex. App.—Houston [1st Dist.] 1986) (old rule on itemization relaxed; sufficiency under Rule 185)
- Ritzell v. Espeche, 87 S.W.3d 536 (Tex. 2002) (final judgment analysis; disposition of all claims and parties)
- Lehmann v. Har-Con Corp., 39 S.W.3d 191 (Tex. 2001) (finality of judgment; language indicates finality and potential error)
- Moriarty v. Williams, 752 S.W.2d 610 (Tex. App.—El Paso 1988) (amendments; denial specificity and new venue facts)