360 F. Supp. 3d 600
S.D. Tex.2019Background
- Verde Minerals sues as putative class representative claiming successors to 1920s Mattison deeds were entitled to a pro rata share of one-half of all oil, gas, or minerals produced from a ~2,092-acre property in Live Oak County, TX, and that current owners 1893 Oil & Gas, Ltd. and ELP2 Minerals, Ltd. withheld royalties.
- Chain: 1912 Plympton purchase from Green Owners (vendor’s lien with a release-for-payment clause) → USIR acquisition and subdivision into numbered tracts → 1917 USIR→Mattison deed (reserve of 1/4 to USIR) → Mattison sold small surface parcels plus a fractional share of one-half of proceeds by tract to Becken/West (the “Mattison Deeds”).
- Early 1920s litigation and USIR bankruptcy produced releases of certain tracts from the vendor’s lien; Green Owners later sued in Houston v. Stanford and obtained a default judgment but did not take mineral possession by production.
- Defendants trace title through later conveyances (Alamo, Vaughan) and currently lease and produce oil and gas (since ~2010) and argue Mattison grantees’ instruments failed (Statute of Frauds, Rule Against Perpetuities), were voided by vendor’s lien or adverse possession, or are time-barred.
- The Court: (1) denied Defendants’ summary judgment, (2) held the Mattison Deeds conveyed a floating royalty interest (not a full mineral estate), (3) rejected Statute of Frauds, perpetuities, vendor-lien reversion, adverse-possession, laches and most limitations defenses as bars to Verde’s timely claims, and (4) granted Verde leave to amend.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Statute of Frauds — are the Mattison Deeds sufficiently described? | Mattison Deeds reference tract/plat language and maps — adequate identification by reference to USIR plat. | Deeds lack metes-and-bounds or an existing "Edward Mattison Survey" at the time; cannot identify acres. | Denied Defendants' challenge — description can be fixed by reference to USIR map/tract scheme; Statute of Frauds does not void conveyances. |
| Nature of interest conveyed — mineral fee, royalty, or personal covenant? | Verde: deeds convey mineral interest or at least a royalty (share of proceeds). | Defendants: deeds create only a personal covenant or nothing; not a real property interest. | Held Mattison conveyed a floating (fraction-of-royalty) royalty interest, not full mineral estate; covenant language does not defeat transfer. |
| Vendor's lien / delayed vesting — did Plympton vendor’s lien prevent vesting of Mattison grantees’ interests? | Verde: Lien Release Clause freed specific tracts; released tracts passed free of lien and grantees’ interests survived. | Defendants: full fee did not vest until all notes paid; unextinguished lien reclaimed lands in bankruptcy/foreclosure, voiding Mattison grants. | Court rejects Defendants — deed language and parties’ prior conduct show released tracts left the vendor’s lien; foreclosure did not void released-tract conveyances. |
| Adverse possession / production defense and statute of limitations / laches | Verde: claims are continuing breaches; timely for royalties within 4 years of filing; not barred by laches. | Defendants: they or predecessors obtained title by adverse possession (Houston judgment, production/adverse possession) and Verde’s claims are time-barred or equitably barred. | Court rejects adverse-possession and laches defenses; royalty-holders cannot be defeated by surface/lessor possession or by lessee production adverse-possession; statute of limitations bars only pre-2012 royalties (4-year window applies). |
Key Cases Cited
- Long Trusts v. Griffin, 222 S.W.3d 412 (Tex. 2006) (oil and gas interests are real property subject to Statute of Frauds)
- Morrow v. Shotwell, 477 S.W.2d 538 (Tex. 1972) (description must identify land with reasonable certainty; may be by reference)
- Westland Oil Dev. Corp. v. Gulf Oil Corp., 637 S.W.2d 903 (Tex. 1982) (nucleus-of-description; give liberal construction to uphold conveyance by reference)
- Hysaw v. Dawkins, 483 S.W.3d 1 (Tex. 2016) (deed construction is by four-corners; no magic words required for royalty/mineral interests)
- Lyle v. Jane Guinn Revocable Trust, 365 S.W.3d 341 (Tex. App.—Houston [1st Dist.] 2010) (agreements to pay a share of profits can create a royalty interest)
- Natural Gas Pipeline Co. of America v. Pool, 124 S.W.3d 188 (Tex. 2003) (lessee continuation of production can establish adverse possession of leasehold after lease termination)
- BP Am. Prod. Co. v. Marshall, 342 S.W.3d 59 (Tex. 2011) (elements of adverse possession; payments and operation may be hostile assertion of leasehold)
- ConocoPhillips Co. v. Koopmann, 547 S.W.3d 858 (Tex. 2018) (rule against perpetuities and instruction to adopt interpretation avoiding invalidity)