Verde Minerals, LLC v. Burlington Resources Oil and Gas Company, LP, 2:16-cv-00463

Plaintiffs (Verde Minerals and individual plaintiffs) sued Burlington (operator/leaseholder) and co-defendants claiming entitlement to mineral/royalty proceeds under the Mattison Deeds and seeking (1) a statutory claim for nonpayment of oil and gas proceeds under Tex. Nat. Res. Code § 91.404(c) and (2) declaratory relief as to title and rights.
Burlington moved to dismiss under Rule 12(b)(6), arguing Verde’s nonpayment claim is premature because Burlington lawfully withheld payments due to a title dispute and because declaratory relief is an improper vehicle for adjudicating Texas title issues or is otherwise moot.
The court applied Twombly/Iqbal pleading standards and viewed facts in the light most favorable to Verde but required plausible facts showing a violation of § 91.402/91.404.
Burlington had leased and produced from the tract, paid co-defendants, and received notice from Verde asserting a competing mineral/royalty interest; Burlington asserted a reasonable doubt as to Verde’s title and withheld payments under the statute’s safe-harbor.
The court concluded Verde failed to plead facts permitting a reasonable inference that Burlington violated payment requirements (§ 91.402), so the statutory nonpayment claim was dismissed.
Because the substantive claim was dismissed and no present controversy remained between Verde and Burlington, the court also dismissed Verde’s declaratory-judgment claim and denied leave to amend.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether Verde stated a cause of action for nonpayment under Tex. Nat. Res. Code § 91.404(c)	Statute creates a cause of action for a payee for nonpayment of proceeds	Burlington lawfully withheld payments under § 91.402 because a title dispute and reasonable doubt existed	Dismissed — withholding permitted; nonpayment claim not adequately pleaded
Whether the DJA allows Verde to obtain declaratory relief on title/royalty rights against Burlington	Verde sought declaratory relief to establish Mattison Deeds conveyed mineral/royalty interests	Burlington: title disputes over real property cannot be resolved by declaratory judgment here and the claim is moot following dismissal of substantive claim	Dismissed — no present controversy; declaratory relief denied

Bell Atl. Corp. v. Twombly, 550 U.S. 544 (establishes plausibility pleading standard)
Lormand v. US Unwired, Inc., 565 F.3d 228 (5th Cir. 2009) (pleading standards and favorable inferences on motion to dismiss)
ConocoPhillips Co. v. Koopman, 547 S.W.3d 858 (Tex. 2018) (discusses § 91.402 title-dispute/withholding rules)
Concord Oil Co. v. Pennzoil Exploration & Prod. Co., 966 S.W.2d 451 (recognizes mineral owner as a ‘payee’ and discusses obligations under title disputes)
Leavitt v. Ballard Exploration Co., Inc., 540 S.W.3d 164 (Tex. App.—Houston [1st Dist.] 2017) (operator entitled to withhold royalty distributions during title dispute)