Co-author Ethan Wood
In Texas losing a title dispute doesn’t mean you committed myriad heinous torts by asserting your rights in the first place. The test: Were you reasonable in bringing your colorable but not correct claim? So says Dorfman v. J P Morgan Chase Bank, NA.
The title dispute
In 1929, the Moravitses conveyed mineral interests in Karnes County to McMullen. McMullen conveyed the executive right to McMullen Oil & Royalty Company but retained the royalties. McMullen’s royalty interest passed to his wife when he died and then to the Langille Trust.
The Moravits sons sued to cancel the 1929 deed. McMullen Oil disclaimed any interest in the tract. A 1944 judgment (not recorded until 1991) canceled the 1929 deed. The interests of McMullen Oil and the Langille Trust ended up in the Red Crest Trust, JP Morgan as trustee.
In 2010, Orca approached JP Morgan to lease the tract in question and other tracts that might have already been leased. The Orca landman mentioned to JP Morgan that “there seems to be a problem with the title” but as far as JP Morgan was concerned, “nothing in [their] records [showed] that the Red Crest Trust did not own that acreage.” JP Morgan leased to Orca, and refused to execute a quitclaim demanded by the Moravits sucessors. Litigation ensued.
The tort claims
The Moravits successors won on their trespass to try title, to quiet title, and declaratory judgment claims. They also made several tort claims—slander of title; negligence, gross negligence and negligent hiring, retention, or supervision; and tortious interference with property rights and existing and prospective contractual relationships. The trial court granted summary judgment to JP Morgan and Orca on those claims and the Fort Worth Court of Appeals agreed. Here’s why:
Slander of title
Slander of title requires evidence that:
(1) the plaintiff possesses an interest in the property slandered,
(2) the defendant published a false statement about title to the property,
(3) the statement was published with legal malice, and
(4) the publication caused the loss of a specific sale.
Elements 1 and 2 were established, but the court concluded that element 3—legal malice—was not present. JP Morgan and Orca had a reasonable belief that Red Crest Trust’s title was good. Although they were aware that there might be “a problem with the title,” there was no evidence that they acted deliberately without belief that JP Morgan had a reasonable claim to title. Item 4 failed as well. The Moravits successors also could not establish that they lost a specific sale.
The negligence claims turned in large part on whether JP Morgan and Orca owed any duty to the plaintiffs. Because they had a reasonable basis for their claim to title, they owed no duty to the plaintiffs to not cloud their title or to quitclaim their possible interests.
Tortious interference with property rights requires interference with one’s property rights without just cause or legal excuse. JP Morgan and Orca had “just cause” because they had a reasonable belief that JP Morgan’s title was good.
Interference with existing contractual relationships requires a willful and intentional act of interference with an existing contract. Again, because JP Morgan and Orca believed the Red Crest Trust had good title, they could not have willfully and intentionally interfered with an existing contract.
Interference with prospective contractual relationships requires an independently tortious act to prevent a relationship from occurring. Because the Moravits successors’ other tort claims failed, there was no independently tortious act.
With the lopsided rejection of Colorado Proposition 112, oil and gas workers in that state can return to work happy. Had it passed, there were other options, one in the cosmos and one in Montana.