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In the case of ConocoPhillips Co. v. Koopmann the Texas Supreme Court held that the Rule Against Perpetuities (“the Rule”) did not void a 15-year non-participating royalty interest that was reserved in a deed. In doing so, the Court changed the way the Rule applies to oil and gas deeds.

The Rule is a complicated legal subject and this case makes significant changes in how the Rule applies in Texas. Note that the Supreme Court explicitly limited the holding of this case to “future interests in the oil and gas context.” The case is significant for these reasons:

  • The Supreme Court rejected the long-held distinction of a future interest created via reservation versus one created via grant in the oil and gas context.
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In the recent opinion of Knopf v Gray, the Texas Supreme Court instructs as to the essence of a life estate under Texas law. Whatever specific words are used to create a life estate, a testator must express three ideas:

  • Any land granted is subject to the limitations that it not be sold;
  • That the grantee take care of the land; and
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A January 2018 case from the Texas Supreme Court, JP Morgan Chase Bank, N.A. v. Orca Assets GP, LLC, the Court dealt with justifiable reliance which is an element of a common law fraud and negligent misrepresentation claim. In this case, there were too many “red flags” for the plaintiff to show justifiable reliance with respect to certain oil and gas leases.

Background

This case involved mineral interests in various tracts throughout the Eagle Ford Shale adding up to about 40,000 acres owned by The Red Crest Trust. JP Morgan Chase Bank was the trustee. A  JP Morgan employee, Phillip Mettham, was responsible for leasing the trust’s Eagle Ford interests.

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The recent case of Hardaway v. Nixon, decided by the San Antonio Court of Appeals, provides an example of the doctrine of adverse possession as it relates to co-tenants. The trial court granted summary judgment in favor of the landowners claiming adverse possession. The Court of Appeals reversed and held that a presumption of ouster could not be affirmed on summary judgment merely on proof of long-continued possession — 75 years — even in the absence of a claim of ownership by the non-possessory co-tenants. According to the Court, no evidence was presented in the summary judgment record that the owners undertook “unequivocal, unmistakable, and hostile acts” and mere possession and lack of a claim of ownership by non-possessory co-tenants was not sufficient to “disseize” the non-possessory co-tenants.

Texas Property Law: Adverse Possession Against a Cotenant

Under Texas law, adverse possession with respect to a co-tenant requires proof of “ouster” or “repudiation” of the co-tenant’s claim to ownership. Ouster/repudiation is generally shown by various “unequivocal, unmistakable, and hostile acts” taken by the tenant in possession to oust or disseize the non-possessory co-tenant, but can also be shown by long continued possession. Aside from actually fencing, locking, and taking other “hostile” acts to repudiate a co-tenant, there are two other circumstances in which Texas courts have recognized ouster/repudiation and notice:

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Under Texas law, the Statute of Frauds requires that contracts regarding the sale of lands be in writing. There are some exceptions to this “in writing” requirement, particularly if the buyer has partially performed under the contract. The case of Zaragoza v. Jessen  provides a good reminder of the principles underlying the Statute of Frauds and the partial performance exception.

Statute of Frauds

The Statute of Frauds is codified at Tex. Bus. & Comm. Code § 26.01(a) & (b) which states, in pertinent part:

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A recent case from the Houston Court of Appeals reminds us that, at least in Texas, if you are renting a house and you walk over broken concrete for months, you cannot sue your landlord if you fall on the broken concrete. See Phillips v. Abraham, 517 S.W.3d 355 (Tex.Civ.App. – Houston [14th Dist.] 2017, no pet.). The broken concrete is going to be deemed “open and obvious” at that point and, if no exceptions apply, you will not recover a judgment against your landlord. The case is a victory for common sense.

Facts of Case

During 2012 and 2013, the plaintiff leased a house in Friendswood from the owners and signed a written residential lease. In January 2013, the plaintiff lost his footing and fell while attempting to walk up the driveway which, according to the plaintiff, “was in disrepair with many loose and broken rocks.” As a result of the fall, the plaintiff claims that he broke his back. He sued for negligence and sought exemplary damages based on alleged gross negligence of the landlord.

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In 1924, Cora McCrabb (along with two co-owners) owned 1,448.50 acres of farm and pasture land. In that same year, Cora executed her Last Will and Testament, bequeathing all of her “farm lands and pasture lands” equally to her three grandchildren, Jessie, J.F., and Mary Lee McCrabb. Cora gave the residue of her estate to only one of the grandchildren, Jessie.

In 1927, Cora and her co-owners sold the 1,448.50 acres of “farm lands and pasture lands” in fee simple to J. L. Dubose. Dubose simultaneously conveyed to Cora and her co-owners an undivided one-half interest in the oil, gas, and minerals in and under the 1,448.50 acres of farm lands and pasture lands. Cora did not change her Last Will and Testament. Cora died in 1929.

Many years later, in 2013, the heirs of J.F. and Mary McCrabb filed a petition for a declaration that Cora’s share of the undivided mineral interest under the “farm lands and pasture lands” passed equally to all three grandchildren. The heirs of Jessie McCrabb filed a counterclaim asking for a declaration that Cora’s entire mineral interest passed to Jessie McCrabb alone pursuant to the residuary clause in the 1924 Last Will and Testament. The trial court sided with the heirs of Jesse McCrabb.

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In a recent case, FP Stores Inc. v. Tramontina US, Inc., the Houston Court of Appeals provided guidance, for the first time, on what constitutes “bad faith” by a commercial landlord that fails or refuses to return a security deposit.

Facts of the Case


The FP Stores case involved a sublease for commercial premises located in Sugar Land, Texas. The original lease was signed in 2010 for the entire premises. Thereafter, several subleases were signed for various portions of the premises. In this case, the relevant sublessor was FP Stores, the sublessee was Tramontina US, Inc. and the master lessor was ProLogis Texas II, LLC.

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A recent Texas Supreme Court case, Allen-Pieroni v. Pieroni, teaches that the proper measure of damages for a slander of title suit is the difference between the lost contract price on the property and the fair market value when the slanderous cloud on title is removed.

Texas Slander of Title: Facts of Case

Marc Pieroni was married for 10 years to Bonnie Pieroni. When they divorced, Mr. Pieroni (“Marc”) agreed to pay a total lump sum to the former Mrs. Pieroni (“Bonnie”) of $500,000 in $10,000 increments. Marc never failed to pay and was never in default of his obligations under the divorce decree. Ultimately, Marc paid Bonnie the entire $500,000 by August of 2013.

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A recent Texas case decided by the San Antonio Court of Appeals, Texas Outfitters Limited, LLC v. Nicholson, offers some lessons on an executive rights owner’s fiduciary duties to the non-executive mineral owner in the context of oil and gas leases. At trial, the executive interest owner, Texas Outfitters, was found to have breached its fiduciary duty and a judgment of $867,654.32 was awarded to the non-executive.

What is “The Executive Right”?

Under Texas law and under the laws of most states, real property can have two co-existing estates – the surface estate and the mineral estate (covering minerals, oil, and gas below the surface). As the Texas Supreme Court has held, the property rights granted by the mineral estate are a “bundle” of rights and one of the “sticks” in the bundle is called the “executive right.” In general, the executive right is the right to make decisions affecting the exploration and development of the mineral estate and, more specifically, is the right to decide whether to execute a mineral lease and to determine the terms of the lease. These concepts were discussed by the Texas Supreme Court in Lesley v. Veterans Land Board of Texas, 352 S.W.3d 479 (Tex. 2011). As discussed in this article, holders of the executive rights sometimes owe fiduciary duties to any non-executive co-tenants.