Texas Outfitters Limited, LLC v. Nicholson (Opinion)Annotate this Case
The Supreme Court affirmed the decision of the court of appeals affirming the judgment of the trial court finding that the holder of the executive right to lease a mineral estate violated its duty of utmost good faith and fair dealing by refusing to lease in contravention of the non-executive's known wishes, holding that legally sufficient evidence supported the trial court's finding.
The executive right inherent in mineral ownership encompasses the right to execute oil and gas leases. The Supreme Court has previously held that the executive's duty owed to the non-executive mineral- or royalty-interest owners of utmost faith and fair dealing requires that the executive not engage in acts of self-dealing that unfairly diminish the value of the non-executive interest. Here, Plaintiff sued the executive, alleging that, as holder of the executive rights to certain mineral interests, the executive breached the duty of utmost good faith and fair dealing by refusing to enter a lease. The trial court rendered judgment for Plaintiffs. The court of appeals affirmed. The Supreme Court affirmed, holding that Plaintiffs met their burden to show that the executive engaged in acts of self-dealing that unfairly diminished the value of Plaintiffs' non-executive interest.