Tommy Yowell v. Granite Operating Company And Granite Operating Company and Apache Corporation v. Peyton Royalties, L.P., 07-17-00112-CV

Background

Plaintiffs (the Yowells) sued to establish that an overriding royalty interest (ORRI) reserved in a 1986 lease attached to a 2007 lease; defendants included Granite/Apache, PAC, and the Peyton Group.
The trial court granted summary judgment for defendants; this Court initially affirmed and held the ORRI violated the rule against perpetuities (RAP) and was not reformable under §5.043.
The Texas Supreme Court affirmed that the ORRI is a real property interest that violates the RAP but held §5.043 authorizes reformation to cure a RAP violation and is not subject to a four‑year limitations bar; it remanded for further proceedings.
On remand, this Court concluded the ORRI can be reformed to comply with the RAP by limiting its vesting period (e.g., to 21 years after a life in being) but remanded to the trial court to develop evidence of the creator’s intent and to effectuate reformation under Tex. Prop. Code §5.043.
The Court reversed the trial court’s grants of summary judgment for Granite/Apache and PAC on the Yowells’ claims, rejected limitations and other defense theories on the present record, affirmed denial of certain movants’ claims as unripe, and addressed cross‑motions between Granite/Apache and Peyton (including proportionate‑reduction, money‑had‑and‑received, unjust enrichment, and attorneys’ fees).

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
1) Can an ORRI that violates the RAP be reformed under Tex. Prop. Code §5.043?	Yowells: §5.043 allows reformation to limit vesting (e.g., to 21 years after death of Jay D. Haber) and effect creator's intent.	Granite/Apache/PAC: The contingency structure cannot be cured; reformation won’t make contingencies vest within lives‑plus‑21.	Yes. §5.043 applies; interest may be reformed within RAP limits; remanded to trial court to determine creator’s intent and reform instrument.
2) Was summary judgment proper for Granite/Apache and PAC on the Yowells’ override claim?	Yowells: They hold a present property interest in the 2007 lease and can seek declaratory relief.	Granite/Apache/PAC: ORRI extinguished or did not attach; RAP bars interest; other defenses (adverse possession, waiver, etc.).	Trial court erred—summary judgment reversed as to Granite/Apache and PAC; Yowells have a present property interest and reformation is available.
3) Is the Yowells’ declaratory action time‑barred under statutes of limitations (four‑year residual or breach‑of‑contract rules)?	Yowells: Declaratory relief recognizes a present property interest; §5.043 reformation is a remedy, not an "action" subject to the residual four‑year limitations; breach‑of‑contract limitation inapplicable.	Defendants: Action is contract‑based or a reformation action subject to the four‑year residual limitations.	No. Action not barred; Supreme Court held reformation under §5.043 is not subject to the residual four‑year statute and the Yowells’ declaratory claim is not merely a contract claim.
4) Is Granite/Apache entitled to a declaratory judgment that Peyton must proportionately reduce its ORRI now?	Granite/Apache: Contract (proportionate reduction clause) obligates Peyton to proportionately reduce its ORRI if prior‑ORRI owners recover.	Peyton: Obligation is contingent and unripe until Yowells actually recover an interest; no justiciable controversy.	Declaratory relief premature. Trial court correctly denied Granite/Apache’s MSJ; but erred in granting Peyton’s MSJ on that claim—matter reversed and remanded for further proceedings.

Key Cases Cited

Peveto v. Starkey, 645 S.W.2d 770 (Tex. 1982) (states the lives‑in‑being plus 21 years rule).
Stubbs v. Stubbs, 447 S.W.2d 954 (Tex. App.—Waco 1969) (RAP requires vesting, if at all, within lives in being plus 21 years).
Sun Oil Co. v. Madeley, 626 S.W.2d 726 (Tex. 1981) (treatment of non‑possessory royalty interests and related property principles).
Cincinnati Life Ins. Co. v. Cates, 927 S.W.2d 623 (Tex. 1996) (appellate review must consider all summary‑judgment grounds that were dispositive below).
Colquitt v. Eureka Producing Co., 63 S.W.2d 1018 (Tex. Comm’n App. 1933) (suit to recover royalty interest is an action to recover an interest in land for limitations purposes).
King Ranch, Inc. v. Chapman, 118 S.W.3d 742 (Tex. 2003) (no‑evidence summary‑judgment standard).
Laidlaw Waste Sys. (Dallas), Inc. v. City of Wilmer, 904 S.W.2d 656 (Tex. 1995) (evidentiary limits on summary judgment; arguments in pleadings not competent evidence).
Burlington N. R.R. Co. v. Sw. Elec. Power Co., 925 S.W.2d 92 (Tex. App.—Texarkana 1996) (unjust enrichment/quasi‑contract principles).