Teon Management, LLC v. TURQUOISE BAY CORP.
357 S.W.3d 719
| Tex. App. | 2012Background
- Four wells on seven leases; Turquoise Bay sought declaratory relief on operator status and lease validity after McFarland & Scobey bankruptcy and Railroad Commission shut-in; Teon Management and Republic Oil & Gas challenged leases and ownership; jury found Turquoise Bay timely reworked three wells; trial court declared some leases valid and Turquoise Bay as operator, and awarded Turquoise Bay suspended production payments and fees; Teon appealed on multiple grounds.
- Leases involved Nichols No. 2, Nichols No. 3, Elkin-Nichols Unit No. 1-1, and Elkin-Nichols Unit No. 2-1; Elkin-Nichols Unit No. 2-1 leases terminated for land; Turquoise Bay asserted ongoing leases and proper operation.
- Turquoise Bay argued DJ was proper to determine title; Teon challenged DJ, seeking trespass to try title; the trial court refused to dismiss DJ action; appeal proceeded with TT title framework.
- Court ultimately treated as trespass to try title for resolution of title question; Teon argued for DJ; record showed Turquoise Bay possession and superior title as to disputed leases; fees awarded to Turquoise Bay were contested.
- On rehearing, opinion withdrawn and substituted; final holding: TT title proper; Turquoise Bay entitled to title and prior possession; attorney’s fees to Turquoise Bay not recoverable; repudiation by lessors excused Turquoise Bay’s timely reworking obligation on Nichols No. 3; portions of judgment affirmed in part and reversed and rendered in part.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether declaratory judgment was proper or trespass to try title required | Turquoise Bay—DJ appropriate as title dispute resolved | Teon—title dispute requires TT action | Trespass to try title proper (DJ inappropriate for title issue) |
| Attorney's fees recoverable in trespass to try title action | Turquoise Bay sought fees under DJ framework | Fees not available in TT title actions | Attorney's fees not recoverable; issue sustained; moot as to fee award |
| Effect of repudiation on duty to commence reworking operations | repudiation by lessors excuses delay | claims of repudiation disputed | Repudiation excused delay; second cessation period not fatal to Turquoise Bay's defense |
| Turquoise Bay's proof of title via prior possession and chain of title | Turquoise Bay had prima facie title and prior possession | Teon failed to show better title | Turquoise Bay proved superior title and prior possession; Teon’s challenges rejected |
Key Cases Cited
- Martin v. Amerman, 133 S.W.3d 262 (Tex. 2004) (distinguishes DJ from TT where title is at issue)
- Ridge Oil Co. v. Guinn Investments, Inc., 148 S.W.3d 143 (Tex. 2004) (DJ proper in certain lease-duration disputes; fees awarded)
- Marshall v. BP Am. Prod. Co., 288 S.W.3d 430 (Tex.App.-San Antonio 2008) (title dispute with lease construction issues; DJ allowed or TT considered)
- Natural Gas Pipeline Co. of Am. v. Pool, 30 S.W.3d 618 (Tex.App.-Amarillo 2000) (TT action; impact on title determination and relief)
- Veterans Land Bd. v. Lesley, 281 S.W.3d 602 (Tex.App.-Eastland 2009) (treats title disputes and declaratory relief; TT framework)