Consolidated Petroleum Partners I, LLC v. Frank Tindle--Appeal from 392nd District Court of Henderson County

NO. 12-03-00308-CV

IN THE COURT OF APPEALS

TWELFTH COURT OF APPEALS DISTRICT

TYLER, TEXAS

CONSOLIDATED PETROLEUM APPEAL FROM THE 392ND

PARTNERS, I, LLC,

APPELLANT

V. JUDICIAL DISTRICT COURT OF

FRANK TINDLE,

APPELLEE HENDERSON COUNTY, TEXAS

OPINION

Consolidated Petroleum Partners I, L.L.C. appeals the trial court s partial summary judgment entered in favor of Frank Tindle. // Consolidated raises four issues on appeal. We affirm.

BackgroundOn June 15, 2001, Tindle and Consolidated entered into a written agreement governing the acquisition and disposition of certain oil, gas, and mineral leases in the Weesatche Area ( WA ) of Goliad County. Paragraph 5 of the agreement set forth that Tindle would fund a portion of the estimated WA leasehold acquisition costs as follows:

5. Participant agrees to provide funding in the amount of $200,000 contemporaneously with execution and delivery of this Agreement. The amount funded and the considerations provided above are in contemplation of funding a portion of the $494,187.29 amount shown on Exhibit A. ($200,000 Divided by $494,187.29 equals Participant s .404704% of 8/8ths ownership in WA)[.] Participant and CPP agree that the Amount shown on Exhibit A is an estimate based on negotiated terms and is subject to modifications, however[,] participant in no way is obligated to fund in excess of the $200,000 amount unless mutually agreed upon.

The parties further agreed that Tindle would be entitled to the following compensation:

....

1b. Reimbursement of lease acquisition costs (based on Participant s factor of .404704% of 8/8ths) funded by Participant attributable to each lease;

....

1d. The overriding royalty interest . . . will be delivered to Participant as soon as reasonably practical after lease acquisition. With respect to the cash consideration provided in [Paragraph 1b above], such amounts (determined on a lease by lease basis) will be paid to Participant upon the earlier to occur of (i) disposition of such lease or (ii) inclusion of such lease within a drilling unit by CPP. For these purposes, disposition of a lease means a sale of a lease to a third party.

Consolidated entered into similar agreements with other participants, who contributed various percentages of the total leasehold acquisition cost. //

Consolidated acquired multiple leases in the WA, but, following the drilling of a dry hole, sold all of the leases to a third party for $275,000.00. Subsequently, Consolidated distributed a portion of the sales proceeds to Tindle in the amount of $86,689.40.

Tindle filed the instant suit claiming Consolidated breached its contract with him by not repaying him the $200,000.00 he contributed toward the leasehold acquisition costs. Tindle subsequently moved for partial summary judgment on his breach of contract claim. Consolidated responded to Tindle s motion, contending not only that Tindle s interpretation of the contract was flawed, but also that the total leasehold acquisition costs were greater than the estimated $494,187.29 figure upon which Tindle s participation factor was based and were, in fact, $613,544.27.

On March 19, 2003, the trial court conducted a hearing on Tindle s motion for partial summary judgment. On March 21, 2003, the trial court granted Tindle s motion, ordering that he be awarded the difference between his $200,000.00 funding contribution and the $86,689.40 already paid to him by Consolidated. The court reserved issues pertaining to attorney s fees and the value of the overriding royalty interest for trial. //

Tindle later nonsuited his claims related to the respective values of the mineral acreage fee and the overriding royalty interest. On August 4, 2003, a trial was conducted on attorney s fees. The trial court signed its final judgment on August 5, 2003, in which it awarded Tindle breach of contract damages of $113,311.00, attorney s fees for both trial and appeal, and both prejudgment and post-judgment interest. Consolidated filed a motion for new trial, which the trial court denied. This appeal followed.

Standard of Review

In reviewing a traditional motion for summary judgment, this court must apply the standards established in Nixon v. Mr. Property Management Co., 690 S.W.2d 546, 548-49 (Tex. 1985), which are as follows:

1. The movant for summary judgment has the burden of showing that there is no genuine issue of material fact and that it is entitled to judgment as a matter of law;

2. In deciding whether there is a disputed material fact issue precluding summary judgment, evidence favorable to the non-movant will be taken as true;

3. Every reasonable inference must be indulged in favor of the non-movant and any doubts resolved in its favor.

See id.; May v. Nacogdoches Mem l Hosp., 61 S.W.3d 623, 628 (Tex. App. Tyler 2001, no pet.). For a party to prevail on a motion for summary judgment, he must conclusively establish the absence of any genuine question of material fact and that he is entitled to judgment as a matter of law. Tex. R. Civ. P. 166a(c). A movant must either negate at least one essential element of the nonmovant's cause of action or prove all essential elements of an affirmative defense. See Randall's Food Markets, Inc. v. Johnson, 891 S.W.2d 640, 644 (Tex. 1995); see also MMP, Ltd. v. Jones, 710 S.W.2d 59, 60 (Tex. 1986). Since the burden of proof is on the movant, and all doubts about the existence of a genuine issue of a material fact are resolved against the movant, we must view the evidence and its reasonable inferences in the light most favorable to the nonmovant. See Great Am. Reserve Ins. Co. v. San Antonio Plumbing Supply Co., 391 S.W.2d 41, 47 (Tex. 1965). We are not required to ascertain the credibility of affiants or to determine the weight of evidence in the affidavits, depositions, exhibits, and other summary judgment proof. See Gulbenkian v. Penn, 252 S.W.2d 929, 932 (Tex. 1952). The only question is whether or not an issue of material fact is presented. See Tex. R. Civ. P. 166a(c).

Once the movant has established a right to summary judgment, the nonmovant has the burden to respond to the motion for summary judgment and present to the trial court any issues that would preclude summary judgment. See, e.g., City of Houston v. Clear Creek Basin Authority, 589 S.W.2d 671, 678-79 (Tex. 1979). All theories in support of or in opposition to a motion for summary judgment must be presented in writing to the trial court. See Tex. R. Civ. P. 166a(c).

Contractual Interpretation

In its first and second issues, and in portions of its third and fourth issues, Consolidated argues that the trial court erred in granting Tindle s motion for partial summary judgment because it improperly interpreted the contract between the parties and, as a result, improperly awarded damages to Tindle. Specifically, Consolidated argues that the agreement did not obligate it to repay Tindle the entirety of his funding contribution toward the lease acquisition costs if the leases were sold for a loss, but rather, Tindle was only entitled to be reimbursed the percentage of his participation factor based on sales proceeds from the leases as each was sold. Consolidated also argues that a material fact issue existed as to the leasehold acquisition costs and, therefore, as to the percentage comprising Tindle s participation factor.

In construing a written contract, the primary concern of the court is to ascertain the true intentions of the parties as expressed in the instrument. Coker v. Coker, 650 S.W.2d 391, 393 (Tex. 1983); see also Nat l Union Fire Ins. Co. of Pittsburgh, PA v. CBI Industries, Inc., 907 S.W.2d 517, 520 (Tex. 1995). To achieve this objective, courts should examine and consider the entire writing in an effort to harmonize and give effect to all the provisions of the contract so that none will be rendered meaningless. Id. No single provision taken alone will be given controlling effect; rather, all the provisions must be considered with reference to the whole instrument. Id.; Myers v. Gulf Coast Minerals Mgmt. Corp., 361 S.W.2d 193, 196 (Tex. 1962).

If the written instrument is so worded that it can be given a certain or definite legal meaning or interpretation, then it is not ambiguous, and the court will construe the contract as a matter of law. Coker, 361 S.W.2d at 393. However, when a contract s meaning is uncertain and doubtful or is reasonably susceptible to more than one meaning, it is ambiguous, and summary judgment is improper. See id.; Calhoun v. Killian, 888 S.W.2d 51, 54 (Tex. App. Tyler 1994, writ denied) (if a written document is ambiguous, it cannot support a summary judgment because its meaning raises a fact issue, even if the parties fail to plead ambiguity). An ambiguity may be either patent or latent. See CBI, 907 S.W.2d at 520. A patent ambiguity is evident on the face of the contract. Id. A latent ambiguity arises when a contract that is unambiguous on its face is applied to the subject matter, and an ambiguity appears by reason of some collateral matter. See id. //

The interpretation of an unambiguous contract is a question of law, which we review de novo. See MCI Telecommunications Corp. v. Texas Utilities Elec. Co., 995 S.W.2d 647, 650 (Tex. 1999). Ambiguity does not arise simply because the parties advance conflicting interpretations of the contract; rather, for an ambiguity to exist, both interpretations must be reasonable. Lopez v. Munoz, Hockema & Reed, L.L.P., 22 S.W.3d 857, 861 (Tex. 2000).

In interpreting a contract, we must presume that the parties thereto intended every clause to have some effect; therefore, we consider each part of the document with every other part of the document so that the effect and meaning of one part on any other part may be determined. See Birnbaum v. Swepi LP, 48 S.W.3d 254, 257 (Tex. App. San Antonio 2001, pet. denied). Moreover, we give terms their plain, ordinary, and generally accepted meaning unless the instrument shows that the parties used such terms in a technical or different sense. Id. Finally, we enforce an unambiguous agreement as written. Id. We are not permitted to rewrite an agreement to mean something it did not. Id. We cannot change the contract simply because we or one of the parties comes to dislike its provisions or thinks that something else is needed in it. Id. Parties to a contract are masters of their own choices and are entitled to select what terms and provisions to include in or omit from a contract. Id. Here, while neither party argues that the agreement is ambiguous, each interprets its language differently, and neither concedes that its interpretation of the relevant passages is any less reasonable than the other party s interpretation of the same. At the heart of the issue is Tindle s participation factor and its function as outlined by the terms of the agreement.

Tindle s participation factor is explained in paragraph 5 of the agreement. The participation factor is a percentage determined by dividing Tindle s funding contribution, $200,000, by the total leasehold acquisition costs, which were estimated in the agreement, but had yet to be finally determined at its signing.

The compensation at issue relates to the amount of reimbursement due Tindle of the leasehold acquisition costs. According to paragraph 1b, this compensation is based on Tindle s participation factor. The agreement further states that such compensation will be determined on a lease by lease basis and paid to Tindle upon the sale of the lease to a third party. It is undisputed that all leases at issue were sold to a third party.

Consolidated argues that the intent of the parties, as evidenced by the language of the agreement, was that, upon the sale of each lease, Tindle would be reimbursed a portion of the sales proceeds based on his participation factor. Tindle argues that the agreement s language evidences the parties intent that Tindle be reimbursed the portion of the lease acquisition costs he funded attributable to each lease at the time that lease was sold to a third party. Having read the agreement, we agree with the parties that the agreement is not ambiguous. However, we are unable to conclude that Consolidated s interpretation of the contract language is reasonable.

The agreement never references sales proceeds. While paragraph 1d of the agreement states that the compensation due Tindle is to be paid upon the sale of the lease to a third party and determined on a lease by lease basis, such language does not serve to alter the manner of calculating the amount of reimbursement owed Tindle for his contribution to the total lease acquisition costs as outlined in paragraph 1b. The language used in paragraph 1d, given its plain meaning, does not contradict the language used in paragraph 1b.

Paragraph 1b plainly states that Tindle will receive reimbursement of the lease acquisition costs he funded, which, as paragraph 5 states, is determined by multiplying the total lease acquisition costs by Tindle s participation factor. To reimburse means to pay back or compensate (a person) for money spent, or losses or damages incurred. The American Heritage Dictionary 1042 (2nd Col. Ed. 1982). Thus, Consolidated was obligated to repay Tindle the portion of the lease acquisition costs he funded.

Paragraph 1d sets forth when the compensation in paragraph 1b will become due and owing. It states that such compensation will be paid on a lease by lease basis when the leases are sold to a third party. Since multiple leases are contemplated earlier in the agreement, it is reasonable that the total compensation from paragraph 1b would not be due upon the sale of the first lease if the remaining leases had yet to be sold. Rather, as the agreement states, such compensation would be paid on a lease by lease basis. As Consolidated notes in its brief, were the leases not sold to a third party, Tindle would not be entitled to payment.

We next consider whether the trial court properly awarded Tindle $113,311.00. Consolidated argues that a material fact issue existed as to the lease acquisition costs and, thus, as to the percentage comprising Tindle s participation factor as well. However, the amount Tindle funded, $200,000.00, is a constant. Thus, no matter what the total lease acquisition costs were, when the amount of lease acquisition costs is multiplied by the percentage determined from dividing $200,000 by the lease acquisition costs, the product will always be $200,000.00. // Therefore, while there may exist a fact issue as to the amount of the total lease acquisition costs, that fact issue is not material as it has no bearing on the amount of money to which Tindle was entitled as reimbursement pursuant to the agreement.

The record in the case at hand reflects that upon the sale of all the subject leases, Consolidated paid Tindle $86,689.40. The contract indicates that upon the sale of the leases, Consolidated was to pay Tindle the portion of the lease acquisition costs he funded, $200,000.00. Thus, since there was a breach of the agreement by Consolidated, the trial court s award of $113,311.00 allowed Tindle to receive the benefit of the bargain. // See, e.g., Prudential Securities, Inc. v. Haugland, 973 S.W.2d 394, 396 (Tex. App. El Paso 1998, pet. denied) (elements of breach of contract); Hart v. Moore, 952 S.W.2d 90, 97 (Tex. App. Amarillo 1997, writ denied) (expectancy damages, similar to benefit of the bargain recoveries, award damages for the reasonably expected value of the contract). Therefore, we hold that there did not exist a material issue of fact, and the trial court properly granted summary judgment in Tindle s favor. Consolidated s first and second issues are overruled. Consolidated s third and fourth issues are overruled in part.

Attorneys Fees

In parts of his third and fourth issues, Consolidated states that the trial court erred in awarding attorney s fees to Tindle. Consolidated has raised no argument in support of this contention and has, therefore, waived such an argument on appeal. See Tex. R. App. P. 38.1(h). The remainder of Consolidated s third and fourth issues are overruled.

Disposition

Having overruled Consolidated s issues one, two, three, and four, we affirm the trial court s judgment.

SAM GRIFFITH

Justice

Opinion delivered March 9, 2005.

Panel consisted of Worthen, C.J., Griffith, J., and DeVasto, J.

(PUBLISH)