Ellison v. Three Rivers Acquisition LLC et al., on remand from the Texas Supreme Court, is the third round of a boundary dispute between mineral lessees in Irion County.
For the history of Ms. Ellison’s odyssey from court to court to court, see our 2019 post discussing the first Court of Appeals decision, and our 2021 post discussing the Supreme Court decision. But first,
Ms. Ellison: Lessee of one of the tracts at issue, plaintiff in the trespass to try title action alleging the boundary stipulation was void.
Samson: Lessee of the Suggs lease on the adjoining tract; its landman negotiated the boundary stipulation with her late husband.
Three Rivers: Acquired the Suggs lease and wells from Samson.
Concho: Acquired the Suggs lease and wells from Three Rivers.
The Supreme Court had held that the boundary stipulation at the heart of this dispute was valid and that the defendants conclusively established their ratification defense, and remanded to the Court of Appeals.
In addressing Concho’s breach of contract counterclaim, the Court noted the Supreme Court’s holding in favor of Concho that the absence of the contemplated “more formal and recordable document” was not fatal to the ratification defense. The Supreme Court held that “in light of the boundary stipulation and the signed 2008 letter, Ellison as a matter of law ratified the boundary line in the stipulation as the boundary of Ellison’s leasehold.” The Court overruled Ellison’s issue related to the existence of a contract.
Meeting of the minds
Ellison contended that the 2008 letter was unenforceable as a contract because there was no “meeting of the minds” as to all the material terms. Specifically, terms such as consideration, effective date, grantee identification, warranty of title information, specific well location, and the “form of the Second Document were missing” Because Ellison’s denial was not verified, Ellison waived this argument.
Ellison argued that the lack of an effective date meant that the contract was void. However, the material terms of a contract are determined on a case-by-case basis. And Ellison failed to present an argument as to why an effective date would be considered an essential material term.
Ellison provided no support for her contentions that title warranties should be an essential term, and that the well’s location was material to the contract.
Ellison argued that Concho, as assignee of Samson’s lease, lacked standing to sue for breach of contract because the cause of action was never assigned to Concho. But because Concho had acquired all of Samson’s assets related to the 2008 letter agreement, it necessarily obtained privity with the contract. As an assignee of Samson’s contract, Concho had standing.
Ellison asserted that the 2008 letter was illegal and thus unenforceable as against public policy, because Concho made misrepresentations in an attempt a “land grab” to “steal” her land and oil. However, “When the illegality does not appear on the face of the contract, it will not be held illegal and thus void unless the facts showing its illegality are before the court.”
The 2008 letter was not facially illegal; it merely set out boundaries and sought acceptance of the boundary line as set forth in the stipulation. Accordingly, Ellison had the burden to plead and prove the illegality, which she did not do. Ellison waived her illegality claim.
The Court reversed Concho’s $493K damage and $850K attorney fee award because the Property Owner Rule to establish damages does not apply when specialized knowledge is required.
And there were evidentiary and jury charge issues not relevant to this discussion.