*1 EXPLORATION, DUNCAN LAND &
INC., Appellant, Tommy LITTLEPAGE, Appellee.
Nо. 2-97-172-CV. Texas, Appeals Court of Worth. Fort Dec. Rehearing Overruled Feb. *4 Dallas, Green, Ap- Long, Kevin D. for
Pat pellant. Miller,
Shannon, Gracey, & Anne Ratliff Sweatt, Worth, Gardner, L. Donald Fort Graham, P.C., Sweatt, Appellee. for Donald C.J., CAYCE, Before in and to said LIVINGSTON Tierra tract shall revert to BRIGHAM, JJ. assignment Owner. Each executed and delivered to Tierra hereunder shall contain OPINION provisions concerning such termination reversion, LIVINGSTON, providing such Judge. ter- mination and reversion shall be effective I. INTRODUCTION upon filing of an affidavit Owner in Appellant Exploration, Duncan Land & Young County, the Deed Records of Texas (Duncan) appeals Inc. from the trial court’s production that no commercial of oil or setting jury’s order aside the verdict in Dun- has been obtained from such tract for (Little- against Tommy Littlepage can’s suit (90) period ninety days. excess of page) for removal of cloud on title any savings The lease did not contain relating slander title to Duncan’s interest Thus, clauses. if: Duncan’s lease terminated an oil points, lease. three (1) production there was no commercial setting claims the trial court erred days; quantities in excess of 90 Lit- aside the verdict because there was sufficient tlepage asserting filed affidavit the lack of an jury’s findings evidence to that: County Young in the deed rec- producing gas did not cease *5 ords. quantities days; period commercial fоr a of 90 (2) title; Littlepage slandered Duncan’s and gas exploration oil Duncan is a small and attorney’s Duncan was entitled to fees. company by Brian owned and Diane Duncan. Littlepage cross-points raises five in the case, During period the relevant to this the points: event this court sustains Duncan’s company Duncans ran the from their home jury’s finding concerning the cessation (tele- personal possessions and utilized their production quantities in commercial on) phone, computer, so to run the and busi- great weight preponderance charge any filings ness. Diane was in that evidence; factually and there is insuffi- required by were the Texas Railroad Com- findings cient to support evidence the jury’s (Railroad Commission). such, mission Di- As concerning reasonably prudent operator, a monthly reports ane P-1 filed that showed title, damages, attorney’s slander fees. production the amount of from the well and points, We sustain Duncan’s reverse the trial any amount sold. judgment, LMepage’s court’s overrule cross- operated produced the well and in points, judgment jury’s on the render quantities years commercial for several de- findings. spite problems. intermittent salt water
II. FACTUAL BACKGROUND Taylor oil Much of the was sold Gas 1979, Littlepage acquired In an in Company. interest continued to file the P-1 Diane gas in an oil and lease on a 40-acre tract reports, but sometimes estimated 4, 1986, Young County, August Texas. On precise getting amounts instead of mea- Littlepage agreement entered into farmout 1992, pumper. surements from the well (Tierra). Energy, with Tierra Inc. Little- tubing prob- Duncan discovered a downhole page and assignment Tierra executed an production. lem that hindered The well also 1, gas the oil and lease on December 1986. began producing gas.” “sour assigned Tierra drilled and then its well Then, 1992, complained in May neighbor lease, agreement, in interest the farmout to the Railroad Commission about the smell agree- well to Duncan The 1987. farmout hydrogen May in the On sulfide area. provision: following ment contained the Railroad Commission ordered testing AND well “shut-in” for until the well com- TERMINATION REVERSION X. plied prohibits with Rule that Statewide In the event that 20 or 40 acre tract producing parts well from more than 100 assigned to Tierra hereunder shall fail to million. hydrogen per 16 Tex. sulfide produce gas quantities oil in commercial Ajdmin. (effective 1, 1976), § 3.36 Jan. period from a well situated thereon for a Code <http://www.sos.state.tx.us/tac/16/l/3/3.36. days, ninety interest Tierra said tract shall terminate all interest html>. The Railroad Commission first test- existing on the well to gas May ed two sweeteners 1992. This test revealed ed the well problem. Duncan also sоur million, solve the which parts hydrogen per sulfide $20,000 to invest arranged for three friends parameters of Statewide Rule was within in the exchange for a interest each in 1/8 The Railroad Commission then ordered 36. well. test, July another conducted
again parts hydrogen revealed about 92/93 Meanwhile, early Thus, per million. neither test sulfide tubing and sour of the well’s learned Rule showed results in excess of Ford, Hugh problems pumper, his asked eye apprize him of keep an the well and on method used for the second tied to any changes own well was because his test did not meet the Railroad Commission’s production well. on Duncan’s requirements, a third test. so ordered May order in or June learned of shut-in test, 29, 1992, again This third done October manager, operations his 1992 and asked per parts hydrogen about 94 sulfide showed inquires Hugh Bedingfield, to some make The received million. Railroad Commission Bedingfield production. into well’s testi- the results the third test November up looked numbers on fied he lifted the shut-in order immediate- computer and found that the well was ly. shut-in Duncan received notice Bedingfield quantities. producing in minimal had on December order been removed Littlepage. this information to related later, concluding apparently Some time Despite the existence of the Railroad Com- producing in had not been well order, periodically mission’s shut-in quantities, consulted commercial operated during period well shut-in attorney and then filed his affidavit with his 1992) *6 (May 1992 to in November Decem- and reversion on lease termination produce quantities order in to commercial controverting Duncan filed a ber keep the in Duncan was lease effect. January 1993. Soon thereaf- on affidavit open able well let the flow for to the oil out, ter, pulled and he Duncan’s investors capable it periods short because was flow- against Littlepage for slander of filed suit ing naturally necessity pump- without the title, title, a cloud his breach of removal of trial, ing it ground. out of the At both Brian contract, declaratory judgment that and for a that, if and Diane testified someone had leasehold. had been no reversion of the there up original the looked either the amended lawsuit, the Little- Before he was served with P-ls,1 reports have the would shown that attorney, through offered to with- page, his through- production there was from the well get if Duncan could the draw the affidavit Both that nev- out 1992. testified there was days. running up and in 60 Duncan well 90-day period May a from er to October 1992 counter- the offer. then declined produce in which the well did not oil. Brian profits stemming from Dun- for lost claimed lease, аlso testified that the with a cloud on Littlepage’s services can’s failure to use well title, $2,000, only but its could be sold for by required as their contract. $400,000 if that the well itself worth trial, he Littlepage acknowledged At did producing 50 bar- was reworked and about (1) filing speak before the not: to Duncan day. rels of aoil (2) affidavit; endeavor to check personally by gas being produced in the shut-in order was lifted No- amount After well; expenses inquire as to Duncan’s efforts Brian Duncan renewed vember gas. Bedingfield even ac- producing the new on the in to court investors to drill a well royal- received knowledged that property. believed the well lease Duncan gas produced ty for if check November 1992 profitable could more he reworked be Bedingfield testified that the couple from well. drilled a well a well new and/or an come from October 1992 away. install- check would have yards regard, In this suit, correcting readings, estimates. These initial During pendency Duncan sent slightly production reports than showed more of P-1 the Railroad Commission revised set original reports. monthly reports showing for 1992 the actual sale of that have disregard would been extracted Inc.’s title with reckless for from during preceding the well rights Explora- months. Land & tion, Inc., thereby specific causing a loss position аlso altered the he took of a sale or sales. during deposition production his no ex- —that during isted period May from to Decem- that, say mind, ber 1992—to his mini- Answer: Yes. quantities being mal produced amounted to production. that, Littlepage testified Question No. 4: whether there was no or minimal damages, any, What if you do find were production, he believed the well was not Tommy Littlepage’s caused slander of producing in quantity, commercial Duncan Land Exploration & Inc.’s title to reasonably prudent operator not would have Exploration the Duncan &Land produced light the well in shut-in —McClus- key No. 1 Well? Littlepage’s order. opinions were echoed witness, expert Larry Hulsey, his who con- tended Duncan failed take into consider- You are instructed that the amount of expenses ation several when making his com- damages, any, if to be awarded should quantities opined mercial calculations and damages compen- those which would
that, event, any reasonably prudent op- sate Exploration, Duncan Land & Inc. produced erator would not have the well prejudice for the loss or suffered as a light of the shut-in order. result of the slander of title. jury appeal,
Relevant this answered (certain following questions pertinent in- $39,000. Answer: included): are structions Question No.l: Question Nо. 13: you Do find Duncan Land & What is the reasonable fee for neces- Exploration McCluskey No. 1 Well — sary Explora- services of Duncan Land & produce ceased quantities commercial tion, case, attorney Inc.’s in this stated in ninety day period between *7 and dollars cents? 1,1992 1,1992? June and December
preparation For a. and trial. gas $41,500.
An oil and pro- well has to “ceased Answer: duce oil or quantities” commercial appeal Appeals. For an b. to the Court of produce if ceases profit. it to at a If an $10,000. Answer: produces oil and profit, well even making responding appli- e. For an to small, operating over marketing and ex- cation of Supreme for writ error to the penses, produces quan- it in commercial Court of Texas. tities, though may repay never its $5,000. Answer: cost, and enterprise may the as a whole prove unprofitable. If application grant- d. for writ of error is Supreme
ed the Court of Texas. Answer: “It did not cease.” $2,500. Answer: judgment The trial court rendered on the Question No. 3: 1996, jury’s September 20, verdict on and you Tommy Littlepage Do find that 13, judgment January entered its final on Exploration, slandered Duncan Land & (1) 1997, awarding $39,000in Duncan: actual Explora- Inc.s title to the Duncan Land & damages $56,458.75 prejudgment and in- McCluskey 1No. Well? terest; (2) title to its interest in the lease- tion— (3) hold; $57,500 As used herein of slander title means and for accrued and future publishing disparaging 1997, false or attorneys words January fees. On about Exploration, Duncan Land & judgment trial court issued its corrected re- (JNOV). if a A court render JNOV prejudgment interest trial during the amount proper. $17,458.75. would have been to directed verdict P. A motion for JNOV See Tex.R. Civ. 301. Littlepage his for new trial filed motion granted is con- when the evidence should correct, modify, and alternative motion to judgment is party and one entitled to clusive judgment February and on reform the Inc. Mancorp, as matter of law. See his motion on Febru- and first amended (Tex. 226, 227-28 Culpepper, 802 S.W.2d (1) ary 20, claiming regarding: error 1990). if was A JNOV will be affirmed there (2) evidence; admission and exclusion or, support no to an issue converse- evidence (3) charge; the lack of evidence to sus- as ly, an issue if the evidence established (4) verdict; weight tain to evidence Quinn, Corp. v. matter of law. See Exxon (5) fees; verdict; attorney’s sustain the and (Tex.1987); Navarette v. S.W.2d (6) prejudgment interest. Dist., Indep. Temple Sch. S.W.2d Littlepage’s Duncan filed its answer to mo- (Tex.1986). If is more than a there 18, 1997, tion March sub- supporting competent evidence scintilla of support his brief in of his motion on mitted upheld jury’s finding, it must be and the brief, March his Mancorp, 802 will be reversed. See JNOV (1) production in contended: Duncan’s viola- 227-28; Navarette, at 706 S.W.2d at against public tion the shut-in order was making 309. In the determination of wheth- establishing pro- policy, precluding it from er a scintilla of evidence there more than quantities duction in commercial as a matter jury have the find- on which could made (2) law; there was no evidence or insuffi- light ing, must view evidence cient evidence slandered finding, considering favorable to the most title; no Duncan’s there was evidence or only supporting the evidence inferences jury’s insufficient evidence finding rejecting evidence $39,000 or, finding damages the alterna- contrary finding. inferences tive, the award constituted a recov- double 227-28; Navarette, Mancorp, 802 S.W.2d at ery; attorney’s improperly fees were Declaratory Judgments awarded under or, alternative, Act in the there no evi- disregard A court trial cannot necessity dence of of attor- reasonableness JNOV) (and jury’s it is
ney’s answer enter because fees. great weight preponderance 2, 1997, May granted On trial court Alm v. Aluminum the evidence. See Co. motion, Littlepage’s judgment, vacated the (Tex.1986). Am., judgment final entered its modified de- why it When the trial court states no reason claring: presents granted mul JNOV and motion probative force there is evidence of *8 tiple grounds on which JNOV should be findings jury, sustain certain the granted, appellant the has the burden of contrary jury’s Question to the answer tо showing judgment be sus the cannot law, No. 1 is established as a matter of grounds in on the stated the tained of Ques- jury’s findings that the answer to County Drainage motion. See Fort Bend 3, 4, 1, of tions Nos. and 13 the verdict (Tex. Sbrusch, 392, 818 394 Dist. v. S.W.2d judg- should be set aside and modified 1991). rendered, as a matter of ment should law, Land and that Plaintiff Duncan & determining In a “no-evidence” Inc., nothing.
Exploration, take only point, are the evidence we to consider III. STANDARDSOF REVIEW support the find and inferences that tend to ing disregard all evidence and inferences Although Littlepage’s motion and was contrary. Hornsby, See Leitch v. 935 entitled motion for new trial and alternative the (Tex.1996). 114, 118 If is more modify, there motion to correct reform the S.W.2d support such evidence to judgment, judgment trial was than a scintilla of the court’s finding, is as a matter the the claim sufficient judgment akin to a non obstante veredicto 326 law, any challenges merely go
of to the IV. DISCUSSION weight to be the See id. accorded evidence. present and Littlepage points cross-points myriad on issues related to attacking If an appellant is the questions by jury three answered the sufficiency finding of an to a adverse answer production in affirmative: was there com- proof, on which he had the burden .(2) quantities; mercial did slander Supreme Texas has Court stated title; Duncan’s was entitled must, law, appellant aas matter of overcоme so, attorney’s doing fees. In Duncan and two hurdles. Victoria & See Bank Trust Co. Littlepage basically agree the court’s .trial (Tex.1991). Brady, v. 811 940 S.W.2d judgment probably modified final was en- First, the must record be examined for evi pro- tered because the court found Duncan’s supports finding, ignor dence that while order, duction was violation the shut-in Second, ing contrary. all evidence to the if precluding produc- establishing Duncan from is support there no evidence to the fact find However, par- tion as a matter of law. answer, er’s then the entire record must be judgment ties as treat one in which no examined if the contrary proposition to see grounds given the rulings were made. id.; established as a matter of law. See Sbrusch, Therefore, See 818 at 394. S.W.2d Co., Sterner v. Marathon Oil S.W.2d 767 parties address all issues raised Lit- (Tex.1989). 690 tlepage’s motion trial for new and alternative correct, modify, motion to and reform the An assertion that the evidence is judgment way points of Duncan’s finding “insufficient” to a fact means Littlepage’s reply Along points. See id. supporting finding that the evidence is so parties, with the court’s we believe trial contrary weak the evidence to the is so probably judgment modified final was én- overwhelming that the answer be set should produc- ground tered on the that Duncan’s aside and a See new triаl ordered. Garza v. tion violation of shut-in order Alviar, (Tex.1965). 395 (“the We contrary jurys Ques- to the answer to required are to consider all of the evidence in law”), tion No. 1 is as a established matter in making the case this determination. See jury’s findings such that as to slander Carr, Corp. attorney’s automatically title and fee’s failed. Jaffe Aircraft (Tex.1993). judgment final also modified probative states “there is no evidence reviewing point asserting findings jury,” force to sustain certain “against great weight that an answer is production. judgment i.e. establish The evidence, preponderance” of we must finding did not state whether the evidence evidence, weigh consider and all of the both theory public policy or a was based prove the evidence that tends to the exis Therefore, true lack of evidence. because tence a vital fact as well as evidence specific, the trial was not court’s order disprove tends to its existence. Ames v. appellee’s must address all raised in issues Ames, (Tex.1989), 158-59 appealed by motion Duncan. See id. denied, cert. 110 S.Ct. U.S. A. PRODUCTION (1990); Bain, L.Ed.2d Cain v. (Tex.1986). considering So point, In its first Duncan claims the trial evidence, contrary finding if a is so to the granting court there erred JNOV because *9 great weight preponderance the evi support jury’s is sufficient evidence to the mаnifestly unjust, point dence as to be the Question 1 answer to No. and because the sustained, regardless be should whether contrary to the or the answer is not evidence (1) is support Specifically, there some evidence to it. See law. Duncan contends: Lit- Prewitt, illegality v. 159 320 tlepage appeal Tex. S.W.2d raise on be- Watson cannot Estate, (1959); trial;2 King’s pleaded proved In re 150 816 Tex. cause it was not at (2) (1951). 662, 244 661 its violation of the Railroad Commission S.W.2d supplemental issue first 2. Duncan raised this for the time in a brief.
327 facially agree- illegality not indicated because was shut-in order did not affect the lease (3) pleadings. City ment; the See Ter produce plaintiffs it on ceased to never (Tex. McFarland, 809, 811 rell v. 766 S.W.2d quantities period days. for a of 90 commercial writ), disapproved no on App.-Dallas argues as Littlepage proper was a JNOV by, Dev. grounds Dallas Mkt. Ctr. Co. pro- other illegal matter of law because Duncan’s (Tex.1997). Liedeker, 958 S.W.2d production. be In duction cannot commercial alternative, way argues, by Littlepage the applicable case law A review of the cross-point, jury’s its that the answer is first case at hand leads to and the facts the great weight preponderance the (1) illegality, anas affir several conclusions: the evidence. defense, normally is in connec raised mative face; that is invalid on its tion with a contract Illegality 1. Failure to Plead (2) the Supreme Texas Court fashioned waived af- reasons; Duncan contends illegality exception public policy for illegality by pleading firmative defense of not (3) fit case at hand does not under (1) argues: it at trial. illegality exception. framework anticipatorily pled the shut-in order its First, not the lease this is a situation where petition required first so that he was not to fact, Littlepage In illegal itself on face. is its permit plead illegality; to Duncan to base by the terms of the lease seeks to enforce illegal a of action on its own conduct is cause should not be able to arguing that Duncan contrary public policy; illegality to illegal satisfying the gain from his conduct in by was tried consent. Thus, lease. this is not normal terms However, Littlepage illegal contract case. Rule of 94 lists ille- Texas Civil Procedure by arguing such that attempts to couch it as gality must as an affirmative defense that be anticipatorily pled existence of pled it waived. or else is by referring order to it its the shut-in Supreme Texas Court has fashioned an ex- petition petition. The mentions the shut-in ception: majeure possible force order and outlines illegal [I]f nature of to the dоcument defense, facially it show but does not upon sought be to relied be enforced is illegal, less itself was much contract apparent plaintiffs pleadings, from the it is Thus, illegal. we Duncan’s necessary illegality specially not be illegality exception does not find that pleaded by rely the defendant in order to Terrell, apply. City 766 S.W.2d at See upon it as defense. Apparel Corp., El Lewkowicz v. Paso (Tex.1981) added); public argues also (emphasis S.W.2d Ltd., and that policy review of this issue Fogel, see also Shoemake v. warrants (Tex.1992); by light Phillips, consent. Phillips v. issue was tried (Tex.1991). willingness to address supreme 789-90 In Lewkow- court’s S.W.2d icz, appeal, appellant illegality illegality for first time on failed raise trial; by of the trial consent pleading its or in its motion for new stretch the confines parties tried the yet, find that illegality to be raised doctrine to the court allowed Lewkowicz, appeal. illegality by consent. An issue is time issue of the first See party introduces The extended the tried consent when court is in exception an issue that not to cover the defenses of evidence affirmative immunity pleadings objec parental penalty, respectively, in the written cluded pleadings. lack of See reasoning tion made that because reasoned that Meeks, 67; agreement illеgal P. Bell v. “[pjleading an on its face in Tex.R. Civ. (Tex.1987). 179, 179-80 Affirmative defenses anticipates and that effect the defense” properly even if not plainly not con tried consent enforce a “courts will Reed, object.” pleaded. Bowles v. parties if do not tract even *10 1995, 652, Shoemake, 937; writ de Phillips, (Tex.App.-Waco 820 659-60 826 S.W.2d nied). is issue not has the defense at at 789. one court ana “When S.W.2d properly pleaded brought is before lyzed exception still waiver but found 328 by court active jur-
trial of both assistance The Railroad Commission does not have parties, it will considered have be to been to isdiction void contracts. See id. Nor does properly raised to trial court.” Id. power it have to determine title or to land property rights:
Here, Brian Duncan took the acknowledged produced stand that he [The Railroad Commission] invested the well violation of the Railroad Commis where, powers with broad to or determine Thereafter, Littlepage sion shut-in order. whether, drilled, may be wells how Hulsey production contended that the gas may produced. oil much or be itBut violation of the shut-in order could not consti authority not does have to determine quantities tute in commercial be ownership gas, pro- of oil or or how the reasonably prudent producer cause a would gas ceeds from the oil or sale of should be risk losing not of the or severance line apportioned among people who contend Thus, by violating their license the order. was, is, actually being produced or Duncan’s actions were before the court and from beneath their land. Moreover, jury. illegality question is a 267-68; see, Killings- Id. at e.g., Jones v. jury law such of that a instruction was unnec worth, (Tex.1966) (hold 325, 403 S.W.2d 328 See, essary. Vinson, e.g., Graphilter Corp. v. ing “[t]he no Railroad Commission has 952, 954 (Tex.Civ.App.-Dallas power rights”); property determine Nale n.r.e.) 1975, writ (upholding refd JNOV Carroll, 555, 743, v. 155 289 Tex. S.W.2d 745 ground illegal the contract was as a (1956) (finding regulations “[r]ules Enter., law); matter of see also Transit Inc. of the Railroad cannot Commission effect Inc., Supply, v. Addicks Tire & Auto 725 change property rights”); or transfer 459, (Tex.App.-Houston [1st S.W.2d 462 Magnolia Co. v. Petroleum Railroad writ). 1987, Although Littlepage Dist.] no Commn., 96, 170 189, 190-91 141 Tex. S.W.2d plead failed to the affirmative defense of (1943) (stating that Railroad Commission illegality, illegality we find issue of adjudicate not questions “does undertake to Thus, by tried consent. the mer turn to rights possession”); of title see also point. its of Duncan’s first Inc., Gray Payne, v. Helmerich & 834 Illegal 579, 1992, 2. The (Tex.App.-Amarillo Acts Rule and the Effect S.W.2d 582 denied); of the Shut-in Order on the Lease writ Estate Grimes v. Dorchester Co., Producing Gas 203 whether, We must decide as mattеr of n.r.e.). (Tex.App.-Amarillo writ refd law, the Railroad Commission’s shut-in order Thus, the existence of the Railroad Commis precluded from producing itself, order, shut-in sion’s did not affect quantities. commercial Duncan contends: lease, rights of Duncan and Little- (1) the Railroad Commission does not under- page under the lease. adjudicate property rights; take provi- Railroad interpose Commission cannot question We move to the of whether leases; illegality sions does not policy public preclude should Duncan’s recov agreement render lease void. ery. Littlepage argues applicability public policy counters that dictates that a rule, the unlawful which no acts states that party prove, cannot recover where it must as predicated upon admittedly an action claim, part of its its own act or See, act party asserting unlawful it. transaction. Love, e.g., Rodriquez v. S.W.2d 1993, writ); (Tex.App.-El We first address Railroad v. Paso Farha Elam, ability Commission’s to affect a be (Tex.Civ.App. lease n.r.e.). private two tween entities. The Railroad -Fort refd Worth writ Little- power page rights Commission’s is not from the derived also notes that remain contract subject Texas Constitution. See Railroad Commn. valid loss exercise of Austin, City police Texas v. powers. Railroad Commission’s See (Tex.1975). Waldschmidt, legislative It City comes from New Braunfels (1918). powers jurisdiction. grants id. Tex. 207 S.W. 305-06 Dun- *11 However, lifting party the shut-in a that a instead can counters that contract order, an- the Railroad Commission ordered performed have manner is could test, test, the then after merely other and another illegal rendered because was not test, of Rule 36. second showed no violation performed illegal in an Estate manner. See Grimes, 203; also see Cor and six end after three tests the Groves, Intl., porate Leasing Inc. v. months, conclusively that record shows the (Tex.App.-Fort Worth actually in never violation the well was denied). writ Duncan also that viola asserts only for the Rule was the reason which orders are tions of Railroad Commission in the involvement Railroad Commission’s exclusively under the Texas sanctionable Although acknowledge place. we that first Natural Resources Code. right had the to the Railroad Commission investigate presence gas of sour in the the gas oil lease are Parties to an and safety the public policy (public name of and presumed knowledge to have contracted with gas preservation and conservation oil and law and the the Railroad Commission’s resources) and that Duncan had to endure powers. Co. rules and See Atkinson Gas v. efforts, рlodding the Railroad Commission’s Albrecht, (Tex.App.-Cor 878 S.W.2d ironic exces- we believe it would be both pus denied); Hydrocarbon Christi writ under punish sive to Duncan a second time Management, Exploration, Inc. v. Tracker public guise policy the of new and different Inc., (Tex.App.-Amarillo rule) (the was mired in a illegal acts when he writ). 1993, no The Railroad Commission’s largely complex situation that was Catch-22 laws, rules, powers authority include to set out of control. his punish and orders then violators those rules, laws, way any orders. See Tex. not or in do condone We Nat. Res. (Ver 85.202(b), However, §§ 86.042, approve 86.221 we of Duncan’s actions. Code Ann. 1993) he (outlining powers recognize options, non of Railroad Com Duncan had two viable conservation); mission area of oil and could violate the shut-in either order Commn., Harrington keep lose Railroad or abide the order and his lease (Tex.1964). powers Other admin include the lease.3 The dissent cites various right to to pipeline, sever the seal the Duncan could have used istrative remedies forfeiture, well, acknowledge compel produc preserve or revoke a his lease. we While remedies, generally record er’s license. See id. of these existence buy money did not have the to shows Duncan Although acknowledge improрriety well, an for the much less hire sweeteners actions, authority of Duncan’s Rail- attorney pursue various administrative Commission, general applicabil- road guarantee he of suc when had no remedies rule, ity acts we conclude that apparent action. cess need such extraordinary of this circumstances case not Hindsight and Duncan could 20/20 public policy preclude dictate should not sepa take expected have it would three recovery Duncan from as matter of law. tests, to period of six months rate over First, the circumstances of this case merit remedy situation, especially when Here, party special consideration. a third passed well each test that was administered. notified Railroad Commission there Second, Littlepage coming an odor from Duncan’s we do not believe was well. questionable setting property, ever foot on should rewarded for his own Before suit, brought Although Duncan this preemptively Railroad Commission shut-in actions. effect, Thus, was, essentially his are defensive nature. the well. or- claims Duncan was purposes, to shut-in well investi- For all intents dered his before gation Upon testing suit “fired had undertaken. forced to file after been essence, well, by filing first shot” his affidavit. In Railroad Commission deter- the Railroad Corn- the well not in of Rule seeks use mined violation money buy Dun- great lengths sweeteners. Brian went to at trial show economically problems can it was not feasible could have solved its with the testified period. during spent it had the shut-in Commission much faster if Railroad *12 330
mission as an applied order offensive tool to wrest such to certain bars as ratifica- tion, election, keep acquiescence, well from Duncan. acceptance We do not of believe this is the Id. Railroad Commission’s de- benefits.” We quasi-estoppel believe use, signed equity Littlepage nor do we think applies should likewise here. should not Duncan, Littlepage, benefit, has, reward by penalizing be by accepting able to as he jury when royalty payments, that heard this case to waiting verdict and then until af- Littlepage’s determined actions were ter the shut-in had mali- been released and until See, Austin, e.g., City sweeteners, cious. 524 after Duncan had installed the S.W.2d of Grimes, 267-68; at non-production Estate 707 file his S.W.2d at affidavit. of 203-04. Third, we believe this court should tread
Further, Littlepage’s lightly reviewing inherently private, malicious when prevent re-acquiring acts should him from involving matters ownership contractual the lease. The following agree record includes the of “land.”4 While we the violation of against matter, evidence that wоrks him: inherently public Rule 36 is an Dun- - relationship Littlepage can’s with sepa- Littlepage knew the well continued to apart relationship rate and from its with the produce operations manager, because his Railroad Commission. should not Bedingfield, so; told him bootstrap be able to himself onto the Rail- him -Bedingfield never told there was inherently public powers road Commission’s months, production only per- several advantage in take of Duncan connection haps production; minimal inherently See, private with e.g., their lease. - Littlepage received and cashed checks Austin, 267-68; City 524 at Estate of production during period off the the time Grimes, 707 S.W.2d at This 203-04. would says he production; now there was no private quasi-condemnation pow- amount to a -Bedingfield told about the By way example, only er. lessor a who received; income he had nonproduction needs a few week’s to obtain -Littlepage inquiry made no into Dun- power reversion of a lease could such a abuse operating filing can’s costs before the affi- by reporting the lessee to the Railroad Com- davit; mission, resulting in preemptive shut-in -Littlepage filed his affidavit non- jeopardize order that would the lessee’s abili- production in 1992 December of before he ty to retain lease. While this does not Bedingfield’s report received appear here, the case the fact to be remains 1993; in March of Duncan satisfied the terms the lease -Littlepage filed his affidavit after the to Littlepage as it related and the determina- shut-in order was lifted and after Duncan of, for, any penalization tion other ancil- gas had the two installed sweeteners. lary matters, including violation shut- A party order, should not be allowed to assert should be left to the Railroad Com- rights inconsistently Grimes, privileges with his mission. See Estate 707 S.W.2d previous Robinson, positions. See v.Wils at 203-04. (Tex.App.Houston 782-83 Additionally, if we the trial allow court’s w.r.m., granted [14th writ Dist.] essence, stand, are, re-writing JNOV to (Tex.1997)). theory The parties’ asking is lease. us to apply should quasi-estoppel where it would private says: if purely read lease as it this be unconscionable to allow someone to main position tain a inconsistent to one which he “In ... tract ... shall the event acquired, accepted which produce he benefit. fail to oil or commercial quantities ... “Quasi-estoppel produce id. a term or shall violation of Commn., (Tex. 1963). illegal illegality 4. We note that and the acts rule exclusively prevent words, have almost been invoked to appears other it courts in oil and private entity against bringing from claima оnly cases have invoked the acts rule Commission, private entity. Railroad not another entity doing private so when favored See, Smith, e.g., Whittington F.Supp. id. the Railroad Commission. See (E.D.Tex.1936); L & G Oil Co. v. Railroad well, may operation any Railroad Shut-in Order from Commission period days of law the well is ... for a the interest found as a matter *13 quantities. Hydrocar producing paying terminate. in shall Inc., 432 n. Management, 861 at bon S.W.2d may we not do. This Archer, 4; Skelly v. 163 Tex. see also Oil Co. reasons, public policy these we find For (1962) rehg). (op. 783 preclude the rule do not and acts (1) Here, the well Duncan testified: Brian recovering Duncan from the well. operated May to De periodically was from operating minimal ex Quantities cember 1992 with in 3. Production Commercial nature and penses due to the of the well cross-points, In two of his Little- (2) business; produced the Duncan’s well (1) argues: jury’s finding produc page in only profit to make enough a small quantities tion in commercial is (3) lease; and he would order sustain the great weight preponderance and of the evi if profit still a had included have made he (2) dence; factually and is there insufficient expenses brought up Little- various other support jury’s evidence to affirmative addition, intro page’s expert. In Question Jury concerning 2 answer to No. original duced the and revised P-ls submit reasonably prudent operator a whether Commission, all ted to the Railroad which operate continue to would the well. Texas producing never stopped show that the well consistently two-prong a courts use test Beding- 90-day period. Littlepage for a producing paying, whether a well in decide is acknowledged not field even the P-ls did commercial, quantities.5 or See Garcia v. 90-day period production. a of no show King, 139 Tex. 164 511-12 S.W.2d fact, acknowledged Bedingfield Littlepage re (1942) (finding “produce” that word is in for royalty ceived a check November 1992 synonymous phrase “producing with the in during period gas produced question. in First, paying quantities”). a court asks contrary jury’s finding is We hold the not so pay whether the is sufficient to great preponderance of the weight to the one, profit, the lessee a a small even over the unjust. manifestly See evidence as to be operating marketing expenses, although Watson, 816; King’s at 320 In re S.W.2d drilling the cost of never well Estate, at 661. Lit- 244 We overrule S.W.2d 511-12; at repaid. Hydrocarbon See id. tlepage’s cross-point.6 first Inc., Management, 861 at 432 n. 4. S.W.2d Second, if prong the first is answered in the affirmative, not, the court whether or asks B. OF TITLE SLANDER circumstances, relevant
under all a reason- point, In its there second contends ably operator оp- prudent would continue to support the factually is sufficient evidence to in erate the well manner in which it is jury’s Questions 4 re- 3 and answer to No. being operated for purpose making garding of title and the award of profit slander merely speculation. and not See $39,000 Koontz, reply special damages. In his Tex. S.W.2d Clifton 684, (1959); points cross-points, Hydrocarbon Management, and his third fourth (1) Inc., Littlepage at contends: there is no evidence 432 n. 4. Whether an oil quantities factually producing paying is or insufficient evidence to well fact, jury’s ordinarily question finding is but it is slandered where title; a small has been Duncan’s there is evidence of profit shown that realized Inc., argues Hydrocarbon Management, inap- test 5. the traditional See n. we testimo- Yet, at 432 ny note Duncans propriate this he as to lease. offers no real reasonably prudent operator would that a Moreover, Littlepage used this substitute. test operated keep have the well in order to the lease Thus, apply we trial. choose to traditional profits drilling potential upon and realize unique test to this rather lease. expert That and his of opined new well. reasonably prudent have would not that a Having upheld jury’s finding produc- jurys finding operated the well does not mean the cease, Garza, quantitiеs commercial did not tion in factually insufficient. Littlepage’s cross-point. address second S.W.2d at 823. need not special damages; alternative, (Tex.1964). Littlepage then special damages award of constitutes an recanted its concession that malice was impermissible recovery. double deemed argued found and that Duncan point Having waived its as to actual malice. To recover an action for slander record, reviewed the we find that the case title, 1) party allege prove: must was submitted disregard” on a “reckless uttering publishing disparaging standard, appeal, standard controls on 2) 3) words; 4) falsity; malice; special dam and Duncan did not waive ap- this issue on 5) ages; possession of an estate or interest peal. See id. 6) property disparaged; the loss of a *14 specific sale. See Jennings, Williams v. 755 The Littlepage evidence at trial reveals 874, (Tex.App.-Houston 879 [14th attempting exercised little care to ascer- denied). Dist.] writ Three of these legal tain the true factual and status of the malice, appeal: elements are at issue on spe filing well before During his affidavit. damages, cial specific and loss of a sale. 1994,Littlepage middle of “keep had Ford an eye Bedingfield on well” and had make a 1. Malice cursory Then, check of the P-ls.8 months In the context of a slander of title lifted, later and the shut-in order was after action, type required of malice “legal is Littlepage decided file to his affidavit without malice”, “merely which means the act personally cheeking whether the well was must have been deliberate conduct without actually producing gas, determining without reasonable cause.” Id. at 882. operating expenses, Duncan’s without re- charge jury, submitted to the which was not cheeking production Bedingfield any with objected to, Littlepage asked whether acted employees, other talking and without to Bri- disregard.” with “reckless This is a form of an Duncan himself to find out true status malice,” required “actual which is for Moreover, Bedingfield lease. admit- exemplary damages.7 See American Natl. Littlepage royalty ted that received a cheek Bank & Trust Co. v. First Wisconsin Mort gas produced during period ques- Trust, (Tex.Civ. gage 577 S.W.2d tion the month he filed his affidavit. before App.-Beaumont n.r.e.), writ refd disap Littlepage’s expertise Given in the area and proved grounds by, on other Stewart Title repercussions the severe associated with the (Tex. Sterling, Guar. Co. v. affidavit, filing of the this is evidence of 1991). disregard. reckless parties disagree The as to the effect this
defective respective submission has on their Littlepage argues that the fact appellate briefs, original burdens. In their attorney that he negates consulted with his Littlepage both Duncan and argued finding their of malice. See Humble Oil & Ref. respective positions Luckel, (Tex.Civ. under a malice Co. v. standard, Littlepage w.o.m.) (find raising with App.-Galveston the issue of writ refd charge the defective conceding ing that “le no malice where defendant consulted gal malice” was deemed found in favor of the with counsel and acted with bona fide belief original judgment, legally if there acquired). was that title had been Duncan con factually good sufficient evidence to it. tends faith reliance on counsel is an Thereafter, See Tex.R. Civ. P. 279. its affirmative defense and that failed brief, reply plead faith, Duncan contended good the failure to to it so was waived. See object (Tex. charge Foster, the defective meant the case Murren v. writ). was tried under an App.-Amarillo actual malice standard ar controlling and that this ap gues standard is by the issue was tried consent. Howev Ins., peal. er, See Allen v. American Natl. good because faith was a fact issue for the trial, granted Littlepage 7. Before production, the trial court 8. This check showed some but Little- that, page partial summary judgment admitted at trial at the time of his on the issue of exem- deposition, he believed that there had been no plary damages. production. Little- and overrule point pellant’s second not tried jury, find the issue was we cross-points. fourth page’s third and See id. therefore waived. consent was attorney event, appears Littlepage’s ATTORNEY’S FEES IV. Little- merely based on filed the affidavit We have al- page’s recitation of the facts. contends point, third In its ready Littlepage’s lack of effort found be properly awarded attorney’s fees were facts is evidence of reckless uncover those judgment declaratory for a cause it filed suit Thus, say that disregard. we cannot withdraw his affida Littlepage’s offer to legally disregard is jury’s finding of reckless attorney’s right extinguish his not vit does great weight of the insufficient attorney’s fees Littlepage contends fees. jury’s finding of Having found the evidence. declaratory because a were not recoverable evidence, supported was malice the circum judgment improper under special damages for loss turn to the issues of offer to withdraw his stances because specific of a sale. unnecessary. the award rendered affidavit Also, cross-point, ar fifth his Damages Special and Loss
II.
factually
evidence of
gues
insufficient
there
*15
Specific
of a
Sale
necessity оf the at
the reasonableness
segrega
torney’s
fees and no evidence
damages
dam
Special
are those
tion of the same.
naturally,
reason
ages
proximately,
ably
alleged
slander. See
result from
Declaratory
Propriety of Suit for
Williams,
to
at 884.
In order
755 S.W.2d
Judgment
damages,
plaintiff must
special
recover
specific, pending
of a
sale
prove the loss
attor
to be awarded
In order
Belo
slander. See A.H.
was defeated
fees,
the fees were
ney’s
party
must show
(Tex.
Sanders,
145, 146
Corp. v.
632 S.W.2d
a suit for
during
prosecution
incurred
Williams,
1982);
A
Here,
of the deal.
Littlepage argues Duncan:
sought declaratory
solely
relief
to obtain at
Necessity
3. Reasonableness and
fees;
torney’s
legal
raised no
issue
pertaining
In
cross-point, Littlepage argues
to the
his fifth
validity
construction or
factually
the lease.
there is no evidence or
Duncan’s actions for
insufficient
necessity
removal of a cloud
evidence of the
on title and slander of
reasonableness
title
attorney’s
preclude
argues
did not
of Duncan’s
fees. He
bringing
him from
an
also
action
declaratory
for
Duncan is
judgment
prejudgment
not entitled to
inter-
where the circum
disagree
est.
ripe
stances of the case made it
We
both
for declarato
with
contentions.
McRae,
ry relief. See
2. Offer to Withdraw the Affidavit supporting finding is so weak or the argues also contrary his offer to overwhelming evidence to the is so affidavit, withdraw his made soon after the that the answer should be set aside and a filed, precludes suit Garza, the award of attor new trial ordered.” 395 S.W.2d at ney’s position, fees. of his prejudg Little- 823. We also find that the award of page cites a involving line of cases suits ment interest was not an abuse of discretion gas in violation produced dence that it disregard with which light the reckless of ac- on its causes prevail shut-in order filing the affidavit. See Littlepage acted Therefore, (Tex. Littlepage. Price, tion Hext v. Littlepage, recovering against McRae, from writ); is barred App.-Amarillo law, its causes of because as a matter of Littlepage’s at 356. We overrule illegal op- Duncan’s predicated on action are cross-point. fifth of the shut-in of the well violation eration Conclusion VI. order. points and Having Duncan’s sustained long held of Texas has Supreme The Court re- Littlepage’s cross-points, we overruled orders have that Railroad Commission entry final modi- court’s of its
verse the trial
and that
and effect of law
same force
findings,
jury’s
judgment, reinstate the
fied
illegal.10
orders is
rules and
violation of such
Duncan on
judgment
in favor of
and enter
rule enunciated
Another well-established
trial
findings in accordance with the
those
century ago is that
supreme court over a
22,1997 judgment.
January
court’s
recover a claim
will lie to
“no action
plaintiff
damages,
if to establish
CAYCE,
dissenting opinion.
filed a
C.J.
transaction,
illegal
requires aid from an
Justice,
CAYCE,
necessity
showing
dissenting.
or in
Chief
is under the
illegal
upon
depending
an
act
manner
majority’s holding that a
I dissent. The
party.”11 Applying these
he is a
which
operate an oil and
lessee
continue to
law,
trial court was con-
rules of
settled
of a Railroad Commission
well
violation
that, notwithstanding the
find
strained to
of the lease
shut-in order to avoid reversion
verdict, Duncan
from recov-
jury’s
is barred
recovery against
and then
the lessor
obtain
against Lit-
ery
its causes of action
because
predicated
action
on the
on a cause of
by evidence that
tlepage
established
were
contrary
production is
to settled Texas law
gas in
illegally produced
violation
public policy.
and sound
order.
a Railroad Commission shut-in
The Railroad Commission ordered
acknowledges
majority
alleged
Although the
McCluskey No. 1
shut-in for
well
*17
validity
the rule of law derived
of
pursuant
of
Rule 36
continued
violations
Statewide
supreme court decisions
long-standing
authority granted to it under sections
from
85.202(b)
recovery
of action
prohibiting
for causes
of the Natural Re-
86.042 and
acts, they wholly abandon
illegal
operating the
based on
sources Code.9 Duncan admits
order,
As an infe-
precedent
of those decisions.
in violation of the shut-in
and it is
well
court,
absolutely
follow
are
bound to
rely
evi-
rior
we
undisputed that Duncan must
on
7,
(effective
Id.
Apr.
the commission."
§
the valid orders
16
3.36
tion
9. See
Code
of
of
Admin.
Tex.
1995),
chttp://
(emphasis supplied).
§ 86.221
www.sos.state.tx.us/tac/16/1/3/3,36.html>.
Sec-
provides:
Comm’n.,
tion 86.042
Harrington
375 S.W.2d
v. Railroad
10.
adopt
rules
The commission shall
and enforce
1964);
892,
(Tex.
v. Rail
L & G Oil Co.
898
see
to:
and orders
Comm’n.,
187,
(Tex.1963)
193
368 S.W.2d
road
(1)
gas;
prevent
waste of
and
consеrve
(“Rules
Commission
and orders of the Railroad
drilling
gas
prevent the waste of
authority
are
of a statute
considered
under
made
piping and
producing operations and in the
they
principles
were the acts
as if
under
same
gas;
distribution of
Legislature_”);
Gas Co. v.
Automatic
780,
(Tex.Civ.App.-
Dudding,
782
189 S.W.2d
accomplish
purposes
this
otherwise
1945) ("The
rules and orders of
Texarkana
chapter.
have the
... are
Commission
Railroad
1993).
(Vernon
§ 86.042
Res.Code
Nat.
Ann.
Tex.
'd,
1,
law_"),
145 Tex.
force of
aff
85.202(b) states:
Section
517 (1946).
(b)
things
all
neces-
The commission shall do
gas
sary
oil and
for the conservation of
Johnson,
Gulf,
Ry.
71 Tex.
Co. v.
C. & S.F.
may
gas
prevention
oil and
of waste of
(1888) (emphasis supplied);
603
9 S.W.
may
adopt
and orders as
be neces-
other rules
Gilstrap, 143 Tex.
187
see Kokernot
sary
purposes.
for those
Landman,
(1945);
88
85.202(b).
370
Beer v.
per-
§
86.221 states: “No
Id.
Section
(1895).
S.W.
gas
viola-
Tex.
may produce
well in
son
from
apply
lease,
by
obeying
losing
the rules of law established
the law and
violating
lease,
higher
keeping
the law
courts.12 We have no discretion to
Dun-
do
justified
otherwise,
violating
can
keep
was
the law to
though
may
even
abhor the
losing
from
the lease. This result diminishes
result
a case.13
engender
the rule of
disrespect
law
will
Moreover,
weight
ap
of intermediate
agencies
respon-
state
entrusted with the
pellate
authority
court
in this state is uni
sibility
enforcing
the law.
formly contrary
majority’s holding.14
to the
duty
encourage
It is our constitutional
by
While we are not bound
the decisions of
respect
observance of the law and
for those
courts, they
our sister
“should be accorded
it,17
uphold
who
and enforce
not find excuses
weight
such a measure of
and influence as
deliberately
for those who
choose to trans-
they may
receive,
intrinsically
be
entitled to
gress the law. The Railroad Commission
duty
being
of the court
to conform its
law;
shut-in order had the force and effect of
‘general
decision to what is called the
current
thus,
Duncan’s intentional
authority1
‘preponderance
or the
of authori
illegal.
in violation of this order was
Texas
ty.’”15
there is no indication in
illegal
law does not condone this
act because
majority opinion
that the decisions of our
protect
property
it was committed to
consulted,
sister courts were
or accorded
right.18
contractual
Nor is it a defense that
weight whatsoever.
the shut-in order was
issued
the basis of
Yet,
egregious aspect
the most
ma-
the.
By
information that
false or
incorrect.19
jority’s opinion
holding
illegal
is its
that an
excusing Duncan’s violation of the shut-in
act
excused when
is committed for
reasons,
rewarding
order for such
and then
purpose
protecting private
contract or
illegally flaunting
Duncan for
the order
property
Notwithstanding
interests.
the fact
allowing
money damages
Duncan to recover
squarely rejected
that this rationale has been
conduct,
for claims based on its
analogous
the courts of this
state
majority encourages others
treat
the or-
cases,16
majority
concludes that when
regulatory agencies
ders of state
with the
“complex
contempt
faced with the
Catch
situation”
same
as Duncan.20
Black,
See,
Kokernot,
Henry Campbell
(court
e.g.,
12. See
The Law Judi-
a law violator from dam- ages on a cause of action based on the viola- tion a Railroad Commission order. Nor does Grimes majority’s proposi- statutory penalties tion that the existence of violating Railroad Commission orders precludes deny- the courts of this state from DUNBAR, Appellant, Bonita S. ing recovery alleged to a law violator for the breach of an oil and contract on the basis Rather, the Grimes court of common law.
merely well-recognized reiteratеd the rule MEDICINE, BAYLOR COLLEGE OF that the actions of the Railroad Commission Inc., Inc., Technologies, Zonagen, BCM not, themselves, “are of con- determinative Fulbright Jaworski, & and The Wood questions,” pooling tractual and held that a Capital Company, Appel lands Venture agreement illegal simply was not rendered lees. performed
because have been in an No. 01-96-00958-CV has not con- illegal manner.31 agreement tended that the farmout with Texas, Appeals Court of illegal Duncan was rendered because Duncan (1st Dist.). Houston performed agreement illegal in an man- ner; only contends Duncan’s Dec. in violation of the shut-in therefore, and, order was should not recovery
serve as the basis for the of dam- ages against Littlepage. The Grimes opinion
does not this issue. address right
The trial court was to set aside the verdict in favor of Duncan because it was admittedly illegal
based on its conduct in knowingly willfully operating a well violation of a Railroad Commission shut-in majority opinion reversing
order. The this ruling potently wrong; public it disserves
policy authority and undermines the *20 agency responsible regulating
state
gas industry
protecting
public
oil
Grimes,
Majority op.
at 330.