Harvey Vorwerk, dba Cen-Tex Petroleum Company v. GSI Oil & Gas, Inc., et al.--Appeal from 20th District Court of Milam County

cv2-061 IN THE COURT OF APPEALS, THIRD DISTRICT OF TEXAS,
AT AUSTIN
NO. 3-92-061-CV
HARVEY VORWERK, DBA CEN-TEX PETROLEUM COMPANY,

APPELLANT

 
vs.
GSI OIL & GAS, INC.; CHRISTOPHER J. WELLS; PETER W. WELLS;
JOHN H. WELLS; LUCY WELLS TIERNEY; JULIA W. NESOM;
ELIZABETH BONNET MARKLAND; HARRIET BONNET MCGONIGLE;
ELEANOR H. BONNET; JOHN C. CULPEPPER, JR.;
JANE HENDERSON NORCROSS; JOHN B. HENDERSON, JR.;
PETER WELLS; SARAH WELLS; AGNES H. BEARD; CAROL WELLS;
HAMILTON MOORE BONNET TRUST; AND TOM H. WELLS, JR.,

APPELLEES

 
FROM THE DISTRICT COURT OF MILAM COUNTY, 20TH JUDICIAL DISTRICT
NO. 22,148, HONORABLE CHARLES E. LANCE, JUDGE PRESIDING

This appeal arises from a suit to terminate an oil and gas lease. Harvey Vorwerk, dba Cen-Tex Petroleum Company, the lessee, appeals the judgment of the district court of Milam County terminating the subject lease and awarding the lessor, GSI Oil & Gas, Inc. and others, attorney's fees. Vorwerk also appeals the portion of the judgment awarding him damages on a counterclaim for conversion. We will affirm the judgment in part, and reverse it in part.

 
THE CONTROVERSY

In 1981, Vorwerk obtained rights as lessee of the Cen-Tex (Henderson) Lease (the "lease"), which is the subject of the present controversy. Vorwerk subsequently drilled two wells on the leased property and installed equipment necessary for production according to the terms of the lease.

In 1986, disputes arose between Vorwerk and the original holders of the lease. The original lessors demanded that Vorwerk surrender the lease, citing Vorwerk's failure to meet the production requirements specified in the lease. (1) Following repeated refusals by Vorwerk to surrender the lease, the original lessors filed an Affidavit of Forfeiture to terminate the lease with Vorwerk in 1988.

The original lessors subsequently entered into a "top-lease" (2) arrangement with GSI in 1989, which covered the same mineral interests covered by Vorwerk's lease. In August of 1989, GSI obtained control of the lease through the Texas Railroad Commission and took physical possession of the leased property. GSI brought the present action to obtain a declaratory judgment terminating the lease under the Texas Uniform Declaratory Judgments Act (3) (the "Act") and seeking damages for lost production and damage to oil and gas reserves. Pursuant to the Act, GSI also requested attorney's fees totaling $50,000. See 37.009. Vorwerk filed a counterclaim alleging that GSI unlawfully converted the equipment remaining on the leased property when it obtained control of the lease in 1989 and requesting damages for the value of the equipment allegedly converted.

Following a trial on the merits, the jury returned answers favorable to GSI on its termination claim, but found the amount of attorney's fees due GSI was zero. The jury also returned answers favorable to Vorwerk on his conversion claim. Based on these findings, the trial court rendered judgment terminating the lease. Pursuant to GSI's motion to disregard jury findings, the trial court disregarded the jury's finding of zero as to attorney's fees and awarded GSI $45,000 in attorney's fees. The trial court also disregarded the jury's $39,580 valuation of the equipment GSI converted and instead awarded Vorwerk $25,930 for the value of the converted equipment. From this final judgment, Vorwerk appeals.

 
DISCUSSION

Vorwerk asserts three points of error complaining of the trial court's judgment terminating the lease and awarding GSI $45,000 in attorney's fees, and the court's order granting GSI's motion to disregard the jury's findings concerning damages on Vorwerk's conversion claim.

 

1. Termination of the Henderson Lease

In his third point of error, Vorwerk contends that the trial court erroneously ruled that the lease had expired. The jury found that Vorwerk failed to meet the sixty-day requirement in the lease, (4) but also found that GSI repudiated the lease on July 30, 1987. (5) Pursuant to GSI's motion to disregard jury findings, the trial court disregarded the jury's answer to Jury Question No. 7 on repudiation and rendered judgment that the subject lease had expired based on the jury's answer to Jury Question No. 1.

Vorwerk essentially attacks the trial court's judgment on two fronts. First, Vorwerk asserts that the form of Jury Question No. 1 is defective because it did not require the jury to find that production or other operations ceased for sixty consecutive days. Because the jury charge omitted this element of the lease's production requirement, Vorwerk contends that the jury's answer was insufficient to terminate the lease. In the alternative, Vorwerk contends that the trial court erred in disregarding the jury's finding that GSI repudiated the lease. Based on this finding, Vorwerk argues, the trial court should not have rendered judgment terminating the lease because the jury's finding of a sixty-day or longer production lapse did not indicate whether the lapse occurred before or after the date GSI repudiated. (6) We conclude that Vorwerk's contentions are without merit.

Vorwerk's point of error essentially attacks the form of the question submitted to the jury. However, the trial court has significant discretion in deciding whether explanatory terms and definitions in jury instructions are sufficient to enable the jury to render a just verdict. K-Mart Corp. Store No. 7441 v. Trotti, 677 S.W.2d 632, 636 (Tex. App.--Houston [1st Dist.]), rev'd on other grounds, 686 S.W.2d 593 (Tex. 1984). Furthermore, if the meaning of a term used in the judge's instruction to the jury is clear from the evidence, no explanatory instruction is necessary as long as the term is not a legal term needing definition. City of San Antonio v. Dunn, 796 S.W.2d 258, 263 (Tex. App.--San Antonio 1990, writ denied). Based on the evidence at trial, we believe that the meaning of Jury Question No. 1 was clear, and that the jury understood the terms of the question to require proof that the production ceased for sixty consecutive days. (7) Furthermore, while the question submitted to the jury did not expressly inquire into the time-frame of the sixty-day production lapse, the evidence at trial clearly demonstrated that there was at least one sixty-day lapse prior to July 30, 1987, the date that the jury found that GSI repudiated the lease. (8)

In order to reverse a case on an error in the jury charge, an appellant must show harmful error. Boatland of Houston, Inc. v. Baily, 609 S.W.2d 743, 749-50 (Tex. 1980). In determining harm, we must consider the entire record, including the parties' pleadings, the evidence, and the entire charge. Island Recreational Dev. Corp. v. Republic of Tex. Sav. Ass'n, 710 S.W.2d 551, 555 (Tex. 1986). Despite the fact that the question submitted to the jury did not expressly inquire into the time-frame of the cessation or whether the sixty-day lapse involved consecutive days, we conclude that, based on the evidence and entire jury charge, there was no error that was "reasonably calculated to cause and probably did cause rendition of an improper judgment in the case." Tex. R. App. P. 81(b). Accordingly, we overrule Vorwerk's third point of error.

 

2. Attorney's Fees

In his first point of error, Vorwerk questions the trial court's order granting GSI's motion to disregard the jury's answer as to the reasonable amount of attorney's fees due GSI. In answer to Jury Question No. 5, the jury found that GSI was not due any attorney's fees. (9) Pursuant to GSI's motion to disregard the jury's negative finding on attorney's fees, the trial court ruled that there was no evidence supporting the jury's answer to Jury Question No. 5 and, accordingly, disregarded the jury's answer. In place of the jury's answer, the trial court substituted its own finding of $45,000 in reasonable attorney's fees based, according to the court, on conclusive evidence in the record. Vorwerk contends that the trial court erred in disregarding the jury's answer to Jury Question No. 5 and substituting its own finding of $45,000 in reasonable attorney's fees. We agree.

The trial court may properly disregard a jury finding only if the finding has no support in the evidence or if it is immaterial. United States Fire Ins. Co. v. Twin City Concrete, Inc., 684 S.W.2d 171, 173 (Tex. App.--Houston [14th Dist.] 1984, no writ). Furthermore, the trial court may substitute its own finding for the jury's finding only to the extent that the substituted finding is supported by conclusive evidence. Texas Paper Stock Co. v. Corpus Christi Food City, Inc., 609 S.W.2d 259, 261 (Tex. Civ. App.--Corpus Christi 1980, no writ). In the present case, therefore, even if the trial court were correct in ruling that there was no evidence supporting the jury's finding of zero as to attorney's fees, GSI was left without a fact finding on the quantitative amount of reasonable attorney's fees absent conclusive evidence establishing such amount as a matter of law. GSI argues that the trial court's substituted finding of $45,000 in attorney's fees was supported by conclusive evidence and, therefore, the trial court did not err in substituting its own finding for the jury's finding. We disagree with GSI's contention.

The only evidence presented at trial on the issue of attorney's fees was the expert testimony of Mr. Lloyd Muennink, GSI's trial counsel. Vorwerk cross-examined Mr. Muennink, but did not present any additional evidence on the issue. Under the facts of this case, expert testimony on attorney's fees cannot be deemed conclusive. Coward v. Gateway Nat'l Bank, 525 S.W.2d 857, 858 (Tex. 1975). Mr. Muennink's testimony did nothing more than create a factual issue for the trier of fact to determine. Smith v. Smith, 757 S.W.2d 422, 424-25 (Tex. App.--Dallas 1988, writ denied). As a result, the jury was entitled to accept or reject, in part or in whole, Mr. Muennink's expert testimony as to the amount of attorney's fees due GSI. We conclude, therefore, that the trial court erred in substituting its finding of $45,000 in attorney's fees for the jury's original finding, and that the trial court's action in disregarding the jury's original finding left GSI without a finding to support an award of attorney's fees. (10) Accordingly, we sustain Vorwerk's first point of error.

 

3. Damages for Conversion

Vorwerk's second point of error arises from his counterclaim for wrongful conversion. The jury returned answers finding for Vorwerk on his counterclaim and valuing the converted equipment at $39,580. (11) The jury's valuation of the equipment apparently covered the equipment located at both wells on the lease. Pursuant to GSI's motion to disregard jury findings, the trial court disregarded the jury's answer to Jury Question No. 11 and substituted its own finding of $25,930, which was apparently the value of the equipment located at the first well only. The court concluded that there was no evidence supporting the conversion of equipment located at the second well and, therefore, ordered that the jury's answer to Jury Question No. 11 be replaced by a figure representing the value of the equipment at the first well. Vorwerk contends that the trial court erred by granting GSI's motion to disregard. We agree.

As we previously stated, the trial court can only disregard a jury finding if the finding is unsupported by any evidence in the record. Thus, if the jury's finding is supported by more than a "scintilla" of evidence in the record, the trial court must let the jury's finding stand or order a new trial. Navarette v. Temple Indep. Sch. Dist., 706 S.W.2d 308, 309 (Tex. 1986). At trial, Vorwerk's expert witness testified that the value of the equipment located at both wells on the lease was $39,580, which is identical to the jury's answer to Jury Question No. 11. Furthermore, the evidence that Vorwerk presented to prove conversion did not distinguish between the two wells. (12) We believe that this evidence constitutes more than a scintilla of evidence supporting the jury's finding of $39,580 as the value of the equipment GSI converted. (13) Accordingly, we sustain Vorwerk's second point of error.

 
CONCLUSION

We reverse that portion of the judgment awarding GSI and the other appellees attorney's fees in the amount of $45,000, and render judgment that GSI and the other appellees take nothing on his claim for attorney's fees. We also reverse that portion of the judgment that awards Vorwerk damages in the amount of $25,930 for conversion of its property and render judgment that Vorwerk recover damages for conversion in the amount of $39,580 from GSI and the other appellees. We affirm the remainder of the judgment.

 

Mack Kidd, Justice

[Before Justices Powers, Kidd and B. A. Smith]

Reversed and Rendered in Part; Affirmed in Part

Filed: April 14, 1993

[Do Not Publish]

1. Paragraph 6 of the lease provided for automatic termination of the lease if the lessee (Vorwerk) failed to either produce, drill, or rework the wells on the leased property for 60 consecutive days or more.

2. A "top lease" is a mineral rights lease made before a prior lease covering the same interests has expired and, thus, overlaps the term of the former lease.

3. Tex. Civ. Prac. & Rem. Code Ann. 37.001-.011 (West Supp. 1993).

4. Jury Question No. 1:

 

Do you find from a preponderance of the evidence that at any time from April 1, 1986 through October 5, 1989, there was a period of 60 days or more, in which there was neither production nor operations for drilling or reworking the CEN-TEX WELL No. 1 or No. 2 occurring on the CEN-TEX (HENDERSON) LEASE?

 

ANSWER "YES" OR "NO"

ANSWER: YES

5. Jury Question No. 7:

 

When, if at all, did the lessors repudiate the (Pemberton) Cen-Tex Henderson lease?

 

"Repudiate" means to unequivocally communicate to the lessee by word or conduct that the lease is no longer in force; and that the lessee no longer has any rights under the lease.

 

Answer By Stating the earlier month, day, and year, if any:

 

July 30, 1987

6. Vorwerk's argument relies on general principles of contract law. Once one party repudiates a contract, the other party is released from fulfilling its obligations under the contract. NRG Exploration, Inc. v. Rauch, 671 S.W.2d 649 (Tex. App.--Austin 1984, writ ref'd n.r.e.).

7. At trial, Vorwerk's own expert witness provided a detailed explanation of the sixty-day provision to the jury, including the fact that the sixty days had to be consecutive.

8. At trial, GSI introduced reports by the Texas Railroad Commission showing no production in the last half of 1986 and all of 1987. GSI also elicited testimony from Vorwerk's own expert indicating that there was no production on the lease from June 12, 1986 to September 2, 1986, a period which exceeded the sixty-day limit.

9. Jury Question No. 5:

 

What sum of money, if any, do you find is owed to GSI OIL & GAS, INC., by CEN-TEX PETROLEUM COMPANY, for attorneys' fees incurred by the necessity of hiring attorneys to pursue the subject causes of action?

 

ANSWER $ 0

10. We believe that the appropriate course of action in this case would have been for the trial court to grant a new trial. According to the record, GSI did not preserve this option by either conditionally moving for a new trial or conditionally asserting the right through cross-points in its appellate brief. Basin Operating Co. v. Valley Steel Prods., 620 S.W.2d 773, 776 (Tex. App.--Dallas 1981, writ ref'd n.r.e.).

11. Jury Question No. 8:

 

Do you find by a preponderance of the evidence that GSI wrongfully exercised dominion and control over Harvey Vorwerk's equipment and tubing on the Henderson Lease?

 

Answer "we do" or "we do not": we do

 

Jury Question No. 11:

 

What do you find to be the fair monetary value, if any, of the equipment and casing on the Cen-Tex (Henderson) Lease?

 

ANSWER: $ 39,580

12. The testimony of Mr. James Lampley, GSI's operations manager, indicated that GSI refused to return any of Vorwerk's equipment, and did not distinguish between the equipment at the two wells.

13. GSI argues in its brief that both parties stipulated that Vorwerk's conversion claim would exclude the equipment located at the second well. There is no evidence of this stipulation in the record and, in any event, GSI did not object at trial when Vorwerk introduced evidence concerning the second well. See Tex. R. Civ. P. 11.