It looks like what you’d expect: a bunch of litigants spending lots of time at a courthouse in Goliad, Texas, with no end in sight. After much “sprawl” in Harkins v. Northshore Energy it came down to the meaning of this property description (call it Tract 2): “Being 1,210 acres of land, more or less, out of 1,673 acres out of the … Survey, … , being the same land described in [the Export Lease]”.
To answer the question you have to ask, What does “being the same land described …” modify? the 1,210 acres or the 1,673 acres? Both interpretations are reasonable, said the court.
The Northshore Option
Northshore had the exclusive right to acquire one or more leases on a portion of Harkins’ property described above.
With the objective of securing a lease on a 169.9 acre tract within Tract 2, Northshore paid Hawkins money but the parties never signed a formal lease. Nevertheless, Northshore spent $700,000 drilling and completing a successful well on the 169.9 acres.
Hawkins, on advice from his landman, came to believe that the well had been drilled on a 400.15 acre tract excluded from the Option Agreement.
Harkins gave Dynamic a seismic permit on the 1673.69 acres and a lease on the 400.15. The lease was based on the form that was part of the Option Agreement. With the smell of litigation in the air, Harkins assigned its causes of action against Northshore to Dynamic and Dynamic agreed to indemnify Harkins for liability arising out the Option Agreement.
Northshore sued Harkins and Dynamic to quiet title, contending that the Option Agreement contained a scriviner’s error in that the parties intended the agreement to cover the land on which the well was drilled. Northshore later changed its theory and contended that the 400.15 acre tract was in fact included in the Option Agreement. Northshore also accused Dynamic of tortious interference, “conscious and malicious geophysical trespass” and other claims. Not to be outdone, Harkins and Dynamic counterclaimed.
Everybody moved for summary judgment, each requesting relief on more legal issues than you care to read about in this short post.
The trial court ruled:
- Dynamic did not have a right to conduct exploratory operations on either tract identified in the Option Agreement,
- The lease from Harkins to Dynamic covering the 400.19 acres was removed as a cloud on Northshore’s title,
- Harkins shall execute and return leases to Northshore on 570.941 acres and on 169.9 acres.
After all that hard work, the parties went to trial, where Northshore won a verdict for $709,000 in actual damages, $1,.148,000 in exemplary damages, and $400,000 in legal fees. To no one’s surprise, Dynamic appealed.
Back to the Beginning
Read the opinion for the court’s analysis of “… being the same land as …”. Of the myriad of rules to guide a court when construing property descriptions, several applied here. The court concluded that the description was ambiguous and remanded the entire case to the trial court to, essentially, start over. Everything after the summary judgment was for naught.
In retrospect, which is where we are now, the scrivener could have simplified the description. A period after “Texas” and then “The 1,210/1,673 acres being the same land described in the Export Lease.” might have fixed the problem.
I wish the court had explained why Northshore drilled a well without a lease.
Newsworthy posts are about judgments and verdicts, winners and losers. That’s what we trial lawyers enjoy doing if that’s what our client wants. There’s another way. Here is an ode to settlement.