Charles A. Howell, Jr., Independent Executor of the Estate of Virginia Collier Howell v. Aspect Resources, LLC--Appeal from 60th District Court of Jefferson County
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In The
Court of Appeals
Ninth District of Texas at Beaumont
_________________
NO. 09-10-00349-CV
_________________
CHARLES A. HOWELL, JR., INDEPENDENT EXECUTOR
OF THE ESTATE OF VIRGINIA COLLIER HOWELL, Appellant
V.
ASPECT RESOURCES, LLC, Appellee
________________________________________________________________________
On Appeal from the 60th District Court
Jefferson County, Texas
Trial Cause No. B-165,028
________________________________________________________________________
MEMORANDUM OPINION
On motion for rehearing, we withdraw our opinion of August 11, 2011, and
substitute this opinion.
Appellant, Charles A. Howell, appeals the trial court’s grant of summary judgment
in favor of Aspect Resources, LLC. Howell argues that genuine issues of material fact
exist which preclude summary judgment in this case. We affirm the judgment of the trial
court.
1
BACKGROUND
On September 28, 1999, Aspect Resources LLC (Aspect) entered into a lease
agreement with Virginia Collier Howell (V.H.), whereby Aspect leased oil and gas
interests in three separate tracts of land from V.H. On the first anniversary of the lease,
Aspect failed to pay the delay rental required to perpetuate the lease in lieu of the
commencement of drilling operations. Pursuant to its terms, the 1999 lease automatically
terminated on September 28, 2000. In May 2001, V.H. filed suit alleging that after the
1999 lease terminated, Aspect offered her certain payments to execute new leases of her
mineral interests in the three tracts of land previously leased by Aspect, as well as her
mineral interests in a fourth tract of land. V.H. alleged that she accepted Aspect’s offer
to lease the four tracts, had leases prepared, and executed the new leases on February 1,
2001 (the 2001 leases). V.H. further alleged that after she executed the 2001 leases,
Aspect “failed and refused to make such payment due thereunder and . . . failed and
refused to release the prior lease which terminated on September 28, 2000.”
Based on these alleged facts, V.H. asserted causes of action for declaratory relief
seeking to have the court construe her rights under the leases, breach of contract, breach
of the duty of good faith and fair dealing, and negligence. Aspect filed a general denial.
The record before us indicates that no further action was taken in the case for several
years. V.H. died in 2005 and her suit was dismissed for want of prosecution on July 28,
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2008. The suit was reinstated in August 2008 on the motion of Charles A. Howell
(Howell), as independent executor of the Estate of V.H.
In 2010, Aspect filed an amended answer and motion for traditional summary
judgment and no evidence summary judgment. In its motion for summary judgment,
Aspect argued that the statute of frauds precluded Howell’s claim for breach of contract,
that the claim for declaratory judgment failed because it was derivative of the breach of
contract claim, that no written agreement supported Howell’s claim for breach of the duty
of good faith and fair dealing, that there was no fiduciary relationship between V.H. and
Aspect, and there was no duty upon which the negligence claim could be based. The trial
court granted summary judgment in favor of Aspect on all claims and this appeal
followed.
STANDARD OF REVIEW
We review the trial court’s grant of summary judgment de novo.
Valence
Operating Co. v. Dorsett, 164 S.W.3d 656, 661 (Tex. 2005). “In reviewing a traditional
motion for summary judgment, we must determine whether the summary judgment proof
establishes as a matter of law that there is no genuine issue of material fact as to one or
more of the essential elements of the plaintiff’s cause of action or whether the defendant
has conclusively established all elements of an affirmative defense.” Garrod Invs., Inc. v.
Schlegel, 139 S.W.3d 759, 762 (Tex. App.—Corpus Christi 2004, no pet.); see Tex. R.
Civ. P. 166a(c); KPMG Peat Marwick v. Harrison Cnty. Hous. Fin. Corp., 988 S.W.2d
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746, 748 (Tex. 1999).
We review the evidence in the light most favorable to the
nonmovant and indulge all reasonable inferences in favor of the nonmovant. Dorsett,
164 S.W.3d at 661.
A no-evidence motion for summary judgment must state there is no evidence to
support one or more specific elements of a claim or defense on which the nonmovant has
the burden of proof at trial. See Tex. R. Civ. P. 166a(i); Thomas v. Omar Invs., Inc., 156
S.W.3d 681, 684 (Tex. App.—Dallas 2005, no pet.). We will affirm the trial court’s
granting of a no-evidence summary judgment if the record shows one of the following:
(1) there is no evidence on a challenged element of a cause of action; (2) the evidence
offered to prove the challenged element is no more than a scintilla; (3) the evidence
establishes the opposite of the challenged element; or (4) the court is barred by law or the
rules of evidence from considering the only evidence offered to prove the challenged
element. See City of Keller v. Wilson, 168 S.W.3d 802, 810 (Tex. 2005).
ANALYSIS
On appeal, Howell argues that the trial court erred in granting summary judgment
because genuine issues of material fact exist. Specifically, Howell argues the 1999 lease
agreement executed by both parties, and the 2001 lease agreements, executed by V.H.,
preclude the application of the statute of frauds, or at the very least constitute partial
performance, taking the agreements out of the statute of frauds.
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Howell argues
additionally that the negligence action is based on a recognized duty to release an expired
lease.
Statute of Frauds
The statute of frauds is an affirmative defense. Garrod Invs., Inc., 139 S.W.3d at
763. The statute of frauds requires a contract for the sale of real estate to be “(1) in
writing; and (2) signed by the person to be charged with the promise or agreement or by
someone lawfully authorized to sign for him.” Tex. Bus. & Com. Code Ann. §
26.01(a)(1)-(2), (b)(4) (West 2009). Pursuant to the statute of frauds, the written
agreement must be “complete within itself in every material detail and . . . contain all of
the essential elements of the agreement so that the contract can be ascertained from the
writings without resort to oral testimony.” EP Operating Co. v. MJC Energy Co., 883
S.W.2d 263, 267 (Tex. App.—Corpus Christi 1994, writ denied). Mineral interests and
oil and gas leases concerning those interests are treated as real property interests subject
to the statute of frauds. Exxon Corp. v. Breezevale Ltd., 82 S.W.3d 429, 436-37 (Tex.
App.—Dallas 2002, pet. denied); see also Tex. Bus. & Com. Code Ann. § 26.01; Hill v.
Heritage Res., Inc., 964 S.W.2d 89, 134 (Tex. App.—El Paso 1997, pet. denied); EP
Operating Co., 883 S.W.2d at 267; see also Mobil Exploration & Producing U.S. Inc. v.
McDonald, 810 S.W.2d 887, 890 (Tex. App.—Beaumont 1991, writ denied). Whether a
contract meets the requirements of the statute of frauds is a question of law. Bratcher v.
Dozier, 346 S.W.2d 795, 796 (Tex. 1961); West Beach Marina, Ltd. v. Erdeljac, 94
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S.W.3d 248, 264 (Tex. App.—Austin 2002, no pet.). It is the signature of the person to
be charged with the promise that authenticates the document as reliable evidence of that
person’s agreement to the transaction. Sterrett v. Jacobs, 118 S.W.3d 877, 880 (Tex.
App.—Texarkana 2003, pet. denied). The party to be charged with the promise in this
case is Aspect.
The summary judgment record establishes that the 1999 lease was in writing and
signed by both parties. Additionally, we note that Aspect concedes on appeal that it
entered into the written lease with V.H. in 1999. However, the 2001 leases prepared by
V.H. were never signed by Aspect. In his response to Aspect’s motion for summary
judgment, Howell submitted the following as evidence of Aspect’s agreement to enter
into the 2001 leases: (1) ownership reports establishing the mineral interests of Aspect in
the three tracts of land under the 1999 lease, set to expire in 2002, (2) a fax addressed to
Howell’s attorney, Robert Wade, from Mike Dubisson,1 (3) the 2001 leases prepared and
executed by V.H., and (4) an affidavit executed by Howell.
The ownership reports on the original three tracts of land list Aspect’s mineral
interests in those tracts resulting from the 1999 lease, which was set to expire in 2002.
The fax to Wade from Dubisson, which appears to have been sent in 2001, states, “I was
told that this is another Howell tract to be leased. It may be identical to one already
1
The summary judgment record does not establish the identity of Mike Dubisson.
However, Aspect did not object to this summary judgment evidence and we presume that
Mike Dubisson was Aspect’s attorney or other authorized representative.
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provided. (I lost my copy).” The fax is signed, “Mike[.]” An ownership report on a
fourth tract of land owned by V.H. reflects no current lease on the property. In his
affidavit, Howell stated that the 2001 leases and memos, attached to Howell’s response
motion as Exhibit E, were true and correct copies thereof and were negotiated and
executed by him on February 1, 2001, as attorney-in-fact for his mother, V.H. Howell
further stated that the leases were executed by him on behalf of V.H. “in acceptance of
and in detrimental reliance on an offer by Defendant Aspect Resources, LLC to lease all
four tracts described therein for $1,000.00 per acre.”
The evidence submitted by Howell establishes only that the parties may have
entered into negotiations for new mineral lease agreements. The written agreements are
not signed by Aspect or any agents authorized to sign on behalf of Aspect. There is no
written evidence of Aspect’s offer or agreement to be bound by the transaction. See
Sterrett, 118 S.W.3d at 880. We find the evidence submitted by Howell insufficient to
establish compliance with the statute of frauds. See EP Operating Co., 883 S.W.2d at
267-68.
Partial Performance
Howell argues alternatively that even if the offered evidence is insufficient to
establish compliance with the statute of frauds, it is evidence of partial performance,
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which prevents Aspect from asserting the statute of frauds as a defense. 2 “A contract
containing mutual obligations that has been reduced to writing and signed by one of the
parties can be accepted by the non-signing party by their conduct, thus making it a
binding agreement on both parties.” MG Bldg. Materials, Ltd. v. Moses Lopez Custom
Homes, Inc., 179 S.W.3d 51, 62 (Tex. App.—San Antonio 2005, pet. denied). Under the
partial performance exception to the statute of frauds, agreements that do not meet the
requirements of the statute of frauds, but have been partly performed, may be enforced in
equity if denial of enforcement would amount to a virtual fraud. Elizondo v. Gomez, 957
S.W.2d 862, 864 (Tex. App.—San Antonio 1997, writ denied).
The fraud arises when there is strong evidence establishing the existence of
an agreement and its terms, the party acting in reliance on the contract has
suffered a substantial detriment for which he has no adequate remedy, and
the other party, if permitted to plead the statute, would reap an unearned
benefit. The partial performance must be “unequivocally referable to the
agreement and corroborative of the fact that a contract actually was made.”
The acts of performance relied upon to take a parol contract out of the
statute of frauds must be such as could have been done with no other design
than to fulfill the particular agreement sought to be enforced; otherwise,
they do not tend to prove the existence of the parol agreement relied upon
by the plaintiff.
Exxon Corp., 82 S.W.3d at 439-40 (citations omitted).
Howell argues that the 2001 leases prepared by V.H. are evidence of partial
performance sufficient to raise a fact issue as to this exception and prevent Aspect from
2
Aspect incorrectly argues that Howell did not raise a partial performance
counter-defense in his response to Aspect’s motion for summary judgment. Howell
expressly raised this counter-defense in his response to Aspect’s motion for summary
judgment. Therefore, we will address the merits of this argument.
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asserting the statute of frauds as a defense to the alleged lease agreements. The partial
performance exception has been applied to take an agreement out of the statute of frauds
when a lessee has (1) paid consideration, (2) taken possession of the lessor’s land, and (2)
made valuable improvements to the lessor’s land such that the lessee would be defrauded
if the agreement were not enforced. See Hooks v. Bridgewater, 229 S.W. 1114, 1116
(Tex. 1921); see also Zeecon Wireless Internet, LLC v. McEwen, No. 03-08-00214-CV,
2010 WL 521111, at *2 (Tex. App.—Austin Feb. 12, 2010, no pet.) (mem. op.); Lovett v.
Lovett, 283 S.W.3d 391, 393-94 (Tex. App.—Waco 2008, pet. denied); J & J Sys., Inc. v.
Towers of Tex., Inc., 833 S.W.2d 532, 534 (Tex. App.—Eastland 1991), rev’d on other
grounds, 834 S.W.2d 1 (Tex. 1992); Carmack v. Beltway Dev. Co., 701 S.W.2d 37, 40
(Tex. App.—Dallas 1985, no writ).
The partial performance exception to the statute of frauds has also been applied to
prevent application of the statute when the lessor fully performs and the lessee knowingly
accepts the benefits of the lease and partly performs. Carmack, 701 S.W.2d at 40; see
also Reeves Furniture Co. v. Simms, 59 S.W.2d 262, 263-64 (Tex. Civ. App.—Texarkana
1933, writ dism’d). A lessor may also be entitled to enforce an oral agreement if lessor
shows performance of the agreement by delivery of possession to the lessee and a
detrimental change of position for which the lessor has no adequate remedy.
See
Carmack, 701 S.W.2d at 40; see also Newsom v. Newsom, 378 S.W.2d 842, 844-45 (Tex.
1964).
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We conclude the evidence presented in Howell’s response to the summary
judgment motion is insufficient to raise a genuine issue of material fact as to partial
performance. Howell has not presented evidence that Aspect took possession of the four
tracts following Howell’s execution of the 2001 lease agreements or otherwise accepted
any benefits under or partially performed under the 2001 lease agreements.
While
Howell asserts that Aspect caused its competitors to believe that the original three tracts
would be leased by Aspect until 2002, this does not constitute evidence of a benefit
received or performance under the alleged 2001 lease agreements, but rather relates to
Howell’s claim that Aspect did not timely release the 1999 leases after they terminated.
The trial court properly found that Howell’s breach of contract claim, as it relates to the
alleged 2001 lease agreements, is barred by the statute of frauds.
Negligence
In his original petition, Howell asserted a general negligence cause of action. In
its motion for summary judgment, Aspect argued it was entitled to judgment on Howell’s
negligence claim because no duty was breached under Texas law. In response, Howell
argued that his negligence claim was based on Aspect’s breach of a duty to release an
expired lease.
“In determining whether a cause of action in negligence exists, the threshold
inquiry is whether the defendants owed the plaintiffs a legal duty.” Smith v. Merritt, 940
S.W.2d 602, 604 (Tex. 1997). In Texas, a lessee is under a duty to release of record an
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expired oil and gas lease. Kidd v. Hoggett, 331 S.W.2d 515, 517 (Tex. Civ. App.—San
Antonio 1959, writ ref’d n.r.e.). If the duty is imposed by the parties’ lease, the action
rests in contract. Id.; see also Holman v. Meridian Oil, Inc., 988 S.W.2d 802, 808 (Tex.
App.—San Antonio 1999, pet. denied). However, a lessee remains subject to a common
law duty to release an expired lease even when the lessee is not required to do so under
the express provisions of the lease. See Kidd, 331 S.W.2d at 517. Generally, breach of
this common law duty gives rise to a cause of action for slander of title. Sw. Guar. Trust
Co. v. Hardy Road 13.4 Joint Venture, 981 S.W.2d 951, 954 (Tex. App.—Houston [1st
Dist.] 1998, pet. denied); see also Ellis v. Waldrop, 656 S.W.2d 902, 905 (Tex. 1983)
(“[A] cause of action to recover damages for the failure to release a purported, though not
actual, property interest is a cause of action for slander of title.”). To prove a cause of
action for slander of title, a plaintiff must prove (1) the uttering and publishing of the
disparaging words, (2) that they were false, (3) that they were malicious, (4) that the
plaintiff sustained special damages as a result, and (5) that the plaintiff possessed an
interest in the property disparaged. Taub v. Houston Pipeline Co., 75 S.W.3d 606, 616
(Tex. App.—Texarkana 2002, pet. denied) (citing Hill v. Heritage Res., Inc., 964 S.W.2d
89, 109-10, 115-16 (Tex. App.—El Paso 1997, pet. denied)). Additionally, to recover
damages arising from breach of either a contractual or common law duty to release
acreage under an expired mineral lease, a plaintiff must prove the loss of a specific sale.
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Modern Exploration, Inc. v. Maddison, 708 S.W.2d 872, 877 (Tex. App.—Corpus Christi
1986, no writ); see also Taub, 75 S.W.3d at 616; Holman, 988 S.W.2d at 808.
Howell did not allege that Aspect breached any express provisions of the 1999
lease by its failure to release the expired lease. Likewise, Howell did not argue in the
summary judgment proceedings that Aspect’s duty to release the expired lease was
contractual in nature. Rather, in response to Aspect’s motion for summary judgment,
Howell asserted that “[t]he duty to release an expired lease has been established in Texas
case law[,]” and Aspect’s “failure to satisfy that duty raises an issue of Defendant’s
negligence.” Howell contended that but for V.H.’s reliance on Aspect’s offer to execute
the 2001 leases and Aspect’s “misleading its competitors to believe that the three tracts
would be under lease to [Aspect] until September 28, 2002, [V.H.] would have leased the
tracts to [Aspect’s] competitors[.]” In support of his response, Howell submitted an
affidavit executed by Dick Shanor, “an independent contractor working for SKH Energy
Partners, II, LP, and subsidiaries acquiring and holding for development oil and gas
leases[.]” Shanor stated that had SKH known in late 2000 and early 2001 that Howell
tracts were available, SKH would have offered and paid $1,000.00 per acre for the
Howell tracts.
On appeal, Howell initially argued that Aspect breached its common law duty to
release the expired lease creating a fact issue on Howell’s negligence claim. In his reply
brief, Howell argues for the first time, that Aspect’s failure to release the 1999 lease
12
constituted a breach of the prior lease agreement. However, we may not reverse the trial
court’s grant of summary judgment based on grounds not expressly set forth in Howell’s
response to Aspect’s motion for summary judgment. Garrod Invs. Inc., 139 S.W.3d at
765 (citing Tex. R. Civ. P. 166a(c)); see also City of Houston v. Clear Creek Basin Auth.,
589 S.W.2d 671, 677 (Tex. 1979). We note additionally that Howell does not point to
any specific provision of the 1999 lease that was purportedly breached by Aspect’s
failure to file a written release prior to the filing of this suit in 2001.
While the Shanor affidavit may have raised a fact issue on the damages element of
a cause of action for breach of contract or slander of title based on Aspect’s alleged
failure to release the expired lease, Howell did not plead that Aspect’s failure to release
the expired lease constituted a breach of contract or slander of title. See Modern
Exploration, 708 S.W.2d at 877; see also Taub, 75 S.W.3d at 616; Holman, 988 S.W.2d
at 808. The pleadings define the lawsuit, give notice of the facts and legal theories of the
case, restrict the trial court in rendering judgment, and form the basis of appellate review.
See Erisman v. Thompson, 167 S.W.2d 731, 733 (Tex. 1943) (noting that pleadings
define lawsuit and determine issues for trial). Howell pled his cause of action as one for
negligence. That is the cause of action that was addressed by the parties in the summary
judgment proceedings and the cause of action upon which the trial court granted
judgment.
Howell has cited no authority that supports his contention that he may
maintain a cause of action in negligence for breach of the duty to release acreage under
13
an expired lease. Under these circumstances, we find the trial court properly granted
summary judgment on Howell’s negligence claim.
Conclusion
We find the trial court properly determined the alleged 2001 lease agreements
were barred by the statute of frauds. Howell did not assert in the trial court that any
provisions of the 1999 lease were breached. Therefore, the trial court properly granted
summary judgment on Howell’s breach of contract claim. Howell’s breach of contract
claim and request for declaratory relief fail as a matter of law. Howell failed to establish
a viable cause of action in negligence for breach of the common law duty to release
acreage under an expired lease. Therefore, the trial court properly granted summary
judgment on Howell’s negligence claim. We affirm the judgment of the trial court.3
AFFIRMED.
___________________________
CHARLES KREGER
Justice
Submitted on March 30, 2011
Opinion Delivered September 22, 2011
Before McKeithen, C.J., Kreger and Horton, JJ.
3
On appeal, Howell does not challenge the trial court’s ruling on his claim for
breach of the duty of good faith and fair dealing. Therefore we have not reviewed the
court’s ruling on this issue. See McCoy v. Rogers, 240 S.W.3d 267, 272 (Tex. App.—
Houston [1st Dist.] 2007, pet. denied); see also Tex. R. App. P. 38.1(e), (h).
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