After four stops at the lower courts, Kenneth Hahn v. ConocoPhillips has been resolved by the Supreme Court of Texas. The Court opined on the effect of two instruments often used to clarify land titles in Texas:  ratifications of an oil and gas lease and stipulations of interests.  

See this post for background. And remember: These brief posts are not presented as fulsome discussions of the cases we report on. We promise not to “hallucinate”, as with AI and 1960’s rock-and-rollers, but we can’t discuss every nuance and detail of these often long and complicated decisions.   

The result

The Supreme Court reversed a court of appeals judgment favoring Hahn. Hahn’s NRPI was reduced to a floating interest as a result of a Stipulation between the parties but not as a result of a Ratification. It’s complicated. Read on.

The facts

Briefly stated: Hahn owned a 1/8 NPRI in “Tract A” and ratified a subsequently negotiated oil and gas lease from mineral owners the Gipses to ConocoPhillips which paid a ¼ royalty.  After the Gips lease was pooled title questions arose. At the request of ConocoPhillips, Hahn executed a “Ratification of Oil Gas and Mineral Lease” and he and the Gipses executed a “Stipulation of Interest’’.

The Ratification

An NPRI owner like Hahn has the option to ratify or repudiate a lease containing provisions which as to his interest the executive right owner has no authority to insert into the lease. But if an NPRI owner ratifies a pooling agreement (or a lease with such an agreement) his interest is bound by the entire agreement. He cannot accept provisions that benefit him and reject provisions that are detrimental to him.

The Gips lease’s royalty provision did not apply to Hahn’s nonpossessory interest in production because of the different nature of those property interests. An NPRI is neither ownership of the mineral fee nor a fractional title to the mineral fee. It is not leasable. The standard lease provision obligating the lessee to pay royalty to the mineral fee owner does not also apply to a pre-existing fixed NPRI and does not create an NPRI that floats with the lease royalty.

Because Hahn’s royalty interest was fixed it remained constant regardless of the royalty in the subsequently negotiated Gips lease.

The Stipulation

This instrument told a different story. The Stipulation included a cross-conveyance of interests between Hahn and the Gipses. Stipulations are favored in the law as a way to avoid litigation and clarify land titles. The parties agreed that if the Stipulation was effective, Hahn’s NPRI would float with the lease royalty. On its way to finding the Stipulation to be enforceable, the Court discussed in detail what is required for a written contract to satisfy the Statute of Frauds (See pp. 14 -16).

The Stipulation referred to the NPRI reserved to Hahn in the Gips deed as a 1/8 “of royalty”. Thus, the Stipulation changed Hahn’s NPRI from fixed to floating.

Clarifying Ellison

The Court clarified its ruling in Concho Resources v. Ellison regarding the effect of a stipulation of title:

  1. No proof of subjective uncertainty of the parties is required to make a stipulation enforceable, and
  • Stipulations are not limited to agreements establishing the physical location of a property boundary.

Roberta Flack RIP

Kouatli v. Endeavor Energy Resources L.P.  offers valuable (and obvious) lessons on how NOT to perform a Master Service Agreement in the oil patch (or, per Billly Bob and friends, “The Patch”), to wit:

  1. Don’t bother to comply with the most basic and unambiguous requirements of the contract.
  2. Take informality for granted.
  3. Assume that if your counterparty ignores those most basic and unambiguous requirements for 10 years the court will force him to keep on doing it.

The litigants were parties to an MSA which provided:

  1. When Operator (Endeavor) desired work to be performed by Contractor (Kouatli), Operator will request a Work Order, which could also be a purchase order, letter, memorandum or other document, or it may be oral.
  2. Upon acceptance of the Work Order, Contractor will commence performance of the work.
  3. A requested Work Order “shall be” confirmed in writing within three business days by Contractor.   
  4. Any Work Order not in conformity with the MSA “shall be null and void”.
  5. The MSA constituted the entire understanding between the parties and would supersede all negotiations, prior discussions, prior agreements and understandings relating to the subject matter.
  6. The MSA could not be modified or amended except by express written consent.

None of this is surprise to those who deal in MSAs.

Kouatli sued for breach of the MSA alleging that Endeavor failed to remit payment for 16 invoices. Endeavor’s motion for summary judgment stated that Kouatli had no evidence that:

  1. The work described in the invoices was requested by Endeavor either through a written Work Order or an oral request confirmed in writing,
  2.  Kouatli correctly performed the work described in each invoice in compliance with the MSA and a Work Order, and
  3. An authorized officer of both parties agreed to waive compliance with the requirements of the MSA with respect to the work described in the invoices.

Endeavor thus asserted that there was no evidence of:

  1. Fulfillment of a condition precedent (written Work Order or written confirmation of a verbal Work Order)
  2. Kouatli’s performance, or
  3. Breach by Endeavor.

Koualtli responded by affidavit testimony that:

  1. The work was verbally authorized,
  2. Kouatli submitted daily reports that described the work, and
  3. Endeavor’s representatives signed each report thereby accepting and confirming the work.

Endeavor objected for evidentiary reasons having nothing to do our purposes here (see p. 2 of the opinion).

The trial court dismissed Kouatli’s suit.

On appeal Kouatli argued that the manner of conduct by which the parties operated for 10 years precluded enforcement of requirements of the MSA. The court determined that there was no legal authority that Endeavor’s conduct precluded Kouatli from enforcing the MSA related to the work.

Kouatli did not expressly argue that he fulfilled or was excused from fulfilling the alleged condition precedent (submission of a Work Order or written confirmation) nor did he argue that confirmation was not a condition precedent. Koutali admitted that he never submitted written confirmation of any verbal Work Order.

The affidavit did not raise a genuine issue of fact on Kouatli’s own performance under the MSA. The affidavit was devoid of facts to support Endeavor’s waiver of the contract requirements.

The result: Kouatli (it appears) did a lot of work in return for nothing.

Your musical interludes, a carnival of covers:

Bob Dylan by Sam Bush and Jerry Douglas

Bob Dylan by Pete Townshend

Beatles by Michael Jackson

Eurythmics by Toni Lindgren

By Stephen A. Cooney

Who owns produced water in Texas?  And what is produced water anyway – oil and gas waste and part of the mineral estate, or groundwater and part of the surface estate?  We may be closer to an answer to these questions now that the Texas Supreme Court has agreed to hear a highly anticipated case out of Reeves County. 

Produced water, a byproduct of oil and gas activities, has historically been treated as waste and disposed.  However, recycling technologies have made produced water a potentially valuable commodity. 

In Cactus Water Services, LLC v. COG Operating, LLC, COG acquired oil and gas leasehold rights covering 37,000 acres in Reeves County.  Thereafter, Cactus Water entered “Produced Water Lease Agreements” with a surface owner covering the same property and included the produced water generated from COG’s oil and gas activities.  The agreements provide that Cactus has “the right to sell all water produced from oil and gas wells” under the property.  COG sued, seeking a declaratory judgment that it has the sole right to the produced water through its mineral leases and common law.  Cactus countersued, claiming its right to the produced water because it is groundwater, which belongs to the surface owner.  The district court agreed with COG; Cactus has “no rights in or to the product stream from COG’s wells.”  Cactus appealed and the El Paso Court of Appeals, in a 2 to 1 decision, affirmed the district court decision.   COG asserts that it owns all matter incidental to the product stream, including produced water, which makes it part of the mineral estate.  Cactus Water asserts that groundwater is groundwater, no matter how dirty it is – and it is well-established that groundwater is part of the surface estate. 

With the evolution of treatment and recycling technologies, this conflict was inevitable.  This case could have extraordinary implications for the oil and gas industry, water transactions, water resources and of course to landowners with oil and gas operations on their property.  This continues a line of monumental water law cases the Texas Supreme Court has heard and ruled on in just the last 15 years.  See Gray Reed’s articles and blog posts on this topic here:

Who Owns Produced Water in Texas? – Energy & the Law Blog post, September 2023, in which we discuss the opinion and he dissent in the court of appeals decision.

Produced Water – Groundwater or Waste? – Gray Reed Legal Alert, August 2023

Produced Water in Texas – Waste or Groundwater? Who Owns It? – Gray Reed Insights, February 2020

Your musical interlude.

Alas, we might never know. Opiela v. Railroad Commission of Texas and Magnolia Oil & Gas Operating, was a challenge to the Commission’s authority to issue permits for allocation wells and wells drilled under Production Sharing Agreements. The parties have submitted a Joint Unopposed Motion For Reversal and Remand Pursuant to the Parties’ Settlement, which the Court granted.

The lawsuit, with potentially game-changing ramifications for PSA’s and allocation wells, attracted attention from the horizontal well drilling community (which includes just about everybody in the business in Texas) and we have reported it regularly: First on the trial court result, second on the Austin Court of Appeals result, and finally on the Supreme Court briefing. Those posts will tell you a lot about the dispute.

Because outsiders like you and me (or at least me) are not privy to the black box that is the parties’ settlement agreement, we don’t know what the parties truly believed about the strength of their respective cases.

What does it mean? It’s been business as usual at the Commission since the suit was filed. Time will tell if that changes. Parties in the future can be guided by the opinion of the Austin court: What they said and declined to say about, among others, the “65 percent rule”, the Commission’s authority to evaluate a permit applicant’s good faith claim to the right to drill a well, the Commission’s authority to resolve title issues, and the relationship between pooling and PSA’s.

Your musical interlude

The message in RSM Production Corporation v. Gaz du Cameroun SA: According to the federal Fifth Circuit, an arbitration tribunal’s construction of a contract and the arbitration rules governing the dispute “hold, however good, bad, or ugly.” Translation: Good for one party, bad or ugly for the other, just like the courthouse.

RSM was granted an oil concession with the Republic of Cameroon giving RSM the right to explore and develop hydrocarbons in the Logbaba Block. RSM and Guz du Cameroun (GdC) entered into farmin and joint operating agreements. GdC was the operator. The farmin granted RSM 100% participating interest in the concession in exchange for GdC’s agreement to operate. After GdC recovered 100% of drilling costs out of 100% of production revenues (“Payout”), the would share 60% to GdC, 40% to RSM.

A dispute arose over the payout calculation. The parties arbitrated, applying Texas Law and International Chamber of Commerce Rules. RSM had three claims. The tribunal ruled in favor of RSM on “Claim 1” and awarded $10 million+ in damages. The tribunal deemed RSM’s Claims 2 and 3 as moot, having ruled for RSM on Claim 1.

GdC contested the Partial Final Award.  An Addendum to Partial Final Award corrected Claim 1 and considered Claims 2 and 3. GdC prevailed on the merits of the contested claims, reducing RSM’s award by $4 million+.

Under ICC Rule 36, an arbitrator may correct a clerical, computational, or typographical error “or errors of similar nature”. Was GdC’s request a correction of law, which would exceed the tribunal’s authority, or a correction of a fact, which was within the bounds of Rule 36?

RSM sued in district court to vacate to the Addendum. That court vacated the part of the Addendum that reduced RSM’s recovery, concluding that the tribunal exceeded its powers by conducting a “merits re-do”.

GdC appealed, maintaining that the district court failed to apply the courts’ well-established, highly deferential approach to judicial review of arbitral awards. The court of appeal reversed, upholding the tribunal’s Addendum.

The court’s saw its task as determining the limits of an arbitrator’s power to reconsider a previously issued decision. (FYI, ICC Rule 36 is similar to the American Arbitration Association Rule 40.) So long as an arbitral award draws its essence from the contract, a court must uphold the award even if it was based on error. Convincing a court of even a grave error is not enough to justify vacatur.

Rule 36 prohibits redetermination of the merits of a dispute. The court concluded that the tribunal not only had the contractual authority to correct computational errors but also had the authority to determine what constituted a computational error in the first place.

The tribunal classified its error in the Partial Final Award as computational. The agreement established the tribunal’s authority to construe the meaning of the ICC rules themselves and whether an error truly is computational or not.

The tribunal had both the authority to correct computational errors and the more foundational authority to determine what counted as one in the first place. Rule 36 was broad enough to authorize the tribunal to analyze its ruling regarding RSM’s Claim 1 to determine whether a computational error occurred. The tribunal concluded that the authority to correct computational errors is within Rule 36’s purview and the tribunal had the authority to determine whether the error was computational or something else.

Musical interludes: artists you could have seen had you attended the 2025 30A Songwriters Festival:

Chuck Cannon (Chuck wrote it. It’s a “songwiters” festival)

Maddie Font

Lera Lynn

Austin Jenckes

Tia Sillers

Gina Venier

In In the Matter of Offshore Oil Services, Inc., Offshore owned and operated the M/V Anna. Offshore sued Island Operating Company for exoneration and/or limitation of liability for a personal injury claim by an employee of Island. The question (after a series of earlier rulings): After reaching a settlement with the employee of Island, did Offshore retain the right under the Louisiana Oilfield Anti-Indemnity Act to require Island to defend and indemnify Offshore for its losses?

Says the United States District Court for the Eastern District of Louisiana, No.

On its journey to reach that result, the Court reviewed a short history of recent LOAIA cases involving efforts by settling parties to obtain indemnity. The Court held that Tanksley v. Gulf Oil Corporation is still good law in Louisiana. What does that mean?

The LOAIA nullifies oilfield indemnity provisions that purport to provide for defense or indemnity against loss or liability for damages or bodily injury caused by the sole or concurrent negligence or fault of the indemnitee.

In Tanksley, Chevron (f/k/a Gulf, in case you forgot) sought indemnity from its contractor related to injuries suffered by the contractor’s employee. Chevron and the employee Tanksley agreed to settle without involving the contractor. Chevron sought a trial to determine it was not at fault. The Fifth Circuit determined that Chevron was not entitled to an adjudication of its fault because it voluntarily foreclosed such a determination by settling with the employee. Without a finding that Chevron was free from fault, the LOAIA nullified Chevron’s indemnification rights. In arriving at its result, the Fifth Circuit relied on the Louisiana Supreme Court’s answer to a certified question.

In Tanksley, Chevron was the indemnitee. A subsequent Fifth Circuit case, American Home Insurance Company v. Chevron USA and several Louisiana state appellate court decisions did not overrule Tanksley. For example, in American Home the indemnitor, not the indemnitee, settled with the underlying plaintiff. Those are distinguishing facts.

The court granted Island’s motion to dismiss all of Offshore’s claims.

Garth Hudson RIP

Here’s a more low key Garth

MDC Enegy LLC v. Crosby Energy Services Inc. et al. was an indemnity dispute in which the players were many and the facts complicated.

But first

Gray Reed’s own Mitch Ackal and Jeremy Walter will present an entertaining and informative webinar on Texas Business Courts on January 29 at noon. Use this link to learn about the presentation and RSVP.

Here is the report on the case, with lots of details omitted:

There were two Master Services and Supply Contracts:

  • Between MOF as “Contractor” and MDC as “Company”; 
  • Between Crosby as “Contractor” and MDC as “Company”. That agreement included MDC affiliate Reeves in the “Company Group”.

In a suit by an employee of MOF against Crosby and its employee Marrufo, Crosby/Marrufo demanded contractual defense and indemnity from MDC and its related entities. Crosby/Marrufo were performing under both agreements and claimed to be additional insureds as subcontractors under the Crosby-MDC agreement.  

Crosby/Marrufo’s contention: MOF was a Contractor of MDC but also a subcontractor of the MDC entities under the Crosby-MDC agreement and therefore included in the definition of “Company Group”. Because MOF was part of the Company Group, Crosby/Marrufo as “Contractor” were entitled to be indemnified by the MDC entities.

MDC’s contention: It owed no indemnity because MOF was MDC’s Contractor, and “Company Group” included only subcontractors. (The parties agreed that if MOF was not a subcontractor of any entity included in the definition of “Company Group” then the MDC entities were not required to defend Crosby/Marrufo.)  

The Question:

Did MOF fall within the definition of ”Company Group” in the Crosby-MDC agreement? That depended on the interpretation of “subcontractor” as used in the Crosby-MDC agreement.

What is a “subcontractor” anyway?

The Court interpreted the plain and ordinary meaning of the unambiguous contract term “subcontractor”, which Merriam-Webster defines as “an individual or business firm contracted to perform part or all of another’s contract”. Black’s Law Dictionary and the Fifth Circuit pretty much agree.

The Crosby-MDC agreement used “Contractor” to refer to Crosby and “contractor” when the word did not mean Crosby.  “Subcontractor” appeared in both agreements as a defined term in the definition of Contractor Group. “Subcontractor” was defined to mean contractors retained by Crosby.

The record was devoid of evidence that MOF’s work comported with the definition of “subcontractor” under the Crosby-MDC agreement. The evidence demonstrated that MOF was not a subcontractor of any entity listed in the agreement’s definition of “Company Group”. The court referred to “creative but ultimately unpersuasive arguments” to overcome the absence of a contract from which Crosby took a portion.

The Texas mineral lien statute.

MOF did not meet the statute’s definition of “mineral subcontractor’. There was no contractual relationship between MOF or MDC on the one hand and any MDC entity on the other. The statute requires a contractual link between the principal party (Party A), mineral contractor (Party B), and mineral subcontractor (Party C) in order to meet the definition.

The evidence demonstrated that MOF was a Contractor, not a subcontractor. MOF was not included in the definition of Company Group in the Crosby-MDC agreement for whose conduct MDC owed Crosby/Marrufo indemnity.  

The result

MDC had no duty to defend, indemnify and provide insurance coverage to Crosby/Marrufo.

Peter Yarrow RIP

Sam Moore RIP

For the Osage Indian Tribe, it’s more like “IMBY if you pay me”.  In the latest interation of United States and Osage Minerals Council v. Osage Wind LLC et al the US District Court for the Eastern District of Oklahoma awarded a judgment for damages against the defendants. Much more important was the order for injunctive relief in the form of a mandate that defendants remove 84 wind towers from Indian lands in Osage County as the remedy for defendants’ continuing trespass over the land. Removal is estimated by defendants to cost a whopping $259 million.   

The takeaway: Asking for forgiveness later rather than asking for permission first is not always the most clever path to action.

The District Court, affirmed on appeal, had already found the defendants liable on the plaintiff United States and intervenor Osage Mineral Council’s claims of conversion, trespass and continuing trespass. We described the underlying facts and the ruling in our report on the first District Court order.

The Court also awarded damages of $242,000+ for conversion of extracted minerals and $66,000+ for trespass for the value of a mineral lease defendants should have obtained before constructing the 84-tower wind farm.

The Court heard from three experts who testified about the value of extracted mineral material, in particular limestone, and the value of the lease that defendants failed to obtain before extracting material from the mineral estate. The defendants found themselves buried in a literal and figurative hole dug by their very own selves when the Court found in the earlier proceeding that the defendants were liable for continuing trespass by failing to obtain a lease despite repeated requests from the Osage Tribe.

The court denied defendants’ request that it order the removal only of backfill and replace it with substitute materials as a more narrowly tailored remedy for trespass. The court noted that the harm resulting from defendants’ continuing trespass is not only the continued use of backfill but also the interference with the Osage Nation’s sovereignty by the presence of the towers. The court referred to this effort as “a backdoor attempt to seek reconsideration of the prior grant of injunctive relief”.

In response to the defendants’ claim that removal would take 18 months the court allowed 12 months, citing provisions in the surface leases that required defendants to remove all wind power facilities within 12 months of the expiration or termination of the surface lease.

The Court agreed with the defendants that it would not be appropriate to award both injunctive and monetary damages for the continuing trespass.

Considering the upcoming “regime change”, your musical interlude.

It looks like they do. In Held et al v. State of Montana the Montana Supreme Court declared the “MEPA Limitation” unconstitutional. The plaintiffs were 16 youths, ages 2 to 18 at the time of filing.

The MEPA Limitation

The Montana Environmental Policy Act (MEPA) is a regulatory structure first enacted in 1971 for the purpose of protecting the environmental resources of the State. Prior to granting permits for oil, gas and coal activities the State conducts environmental reviews under MEPA.

The MEPA Limitation, enacted in 2023, provides that except for narrowly defined exceptions, those environmental reviews “may not include a review of actual or potential impacts beyond Montana’s borders. It may not include actual or potential impact on the regional, national or global in nature.” After the MEPA Limitation was enacted, state agencies stopped analyzing environmental impacts resulting from permitted activities.

The Constitution

Montana’s Constitution guarantees to each citizen “a fundamental right to a clean and healthful environment”. Plaintiffs’ suit alleged that such right includes “a stable climate system that sustains human lives and liberties” and the right was being violated.

The Constitution further requires the Legislature to “provide adequate remedies for the protection of the environmental life support system from degradation and provide adequate remedies to prevent unreasonable depletion and degradation of natural resources.”

The opinion

Telegraphing where it was headed, the Court opened by citing a federal Ninth Circuit opinion lamenting the perils of climate change, unprecedented global warming, and “overwhelming scientific evidence and consensus” that warming is “a direct result of greenhouse gas emissions, primarily from CO2 released from human extraction and burning of fossil fuels.”

The Court then affirmed this 100+-page Findings of Fact, Conclusions of Law and Order from the district court. The Order included over 60 pages of factual findings, some that appear to be rather far-fetched, including testimony from experts and the plaintiffs themselves and conclusions drawn from a number of sources, including the UN’s Intergovernmental Panel on Climate Change reports. The Supreme Court referred to those findings as ‘undisputed”. It appears that the State made virtually no effort to controvert the plaintiffs’ evidence at the trial court.

The State’s unsuccessful arguments (among others):

  • The framers could not have intended to include an environment degraded from the effects of climate change because they did not specifically discuss climate change or other global issues when adopting the provision.

Rejected. A Constitution “is not a straitjacket but a living thing designed to meet the needs of a progressive society and capable of being expanded to embrace more extensive relations” and cited examples of situations not existing at the adoption of earlier constitutions that were nevertheless covered.  

  • Plaintiffs did not have standing to sue.

Rejected. They had a sufficient personal stake in their inalienable right to a clean and healthful environment to justify the right to sue.

  • Plaintiffs must prove that the MEPA Limitation has in fact caused climate change.

Rejected. The argument was misplaced; that was not the focus of the suit.

  • Even if Montana addressed its contribution to climate change it would still be a problem if the rest of the world will not reduce emissions.

Rejected. Again that was not the focus of the suit.

  • It is only a procedural statute that cannot cause harm to constitutional rights.

Rejected.

Commentary

There will be more of these kinds of suits.

The ruling drew praise from environmentalists and scorn by industry commentators such as Doug Sheridan.

Your musical interlude

In Mistretta v. Hilcorp Energy Company, unleased mineral owner Mistretta sued Hilcorp alleging failure to provide requested production and well cost information pertaining to an oil well operated by Hilcorp. The well was in a unit established in accordance with the Louisiana Conservation Act.  The issue: Do La. R.S 30:103.1 and 103.2 require one notice or two before the operator loses its right to recover costs from the owner?

Under the Act, each mineral owner in a drilling unit is responsible for its share of development and operation costs. To prevent free riding, the Act provides a mechanism for sharing the risk that the well, once drilled, will not produce enough to cover drilling costs. If the operator gives the opportunity to participate in drilling the well and the unleased mineral owner declines, the operator can recover out of production the nonparticipating owner’s share of drilling costs.  

The statute (paraphrased)

103.1: The operator must report to owners of unleased mineral interests by a sworn, detailed itemized statement of costs of drilling, completing and equipping within 90 days from completion of the well. and then send quarterly reports thereafter on costs and revenues, or within 90 calendar days after receiving a request from an unleased mineral owner in writing, whichever is later. Communications must be by certified mail.

103.2:   Whenever the operator permits 90 days to elapse from completion of the well and 30 additional days to elapse from date of receipt of written notice from the owner calling attention to the operator’s failure to comply with 103.1, the operator will forfeit his right to demand contribution from the owner for the costs of the drilling operations of the well.

Operative dates would be helpful:

  • September 3, 2022:  Completion of the well.
  • December 7, 2022: Mistretta’s written notice received.
  • February 16, 2023: Hillcorp’s email response.
  • February 20, 2023: Hillcorp’s certified mail response.
  • There was no second written request from Mistretta

Mistretta contended that express unambiguous language of 103.1 and 103.2 requires that after 90 days had passed following the completion of the well and after 30 days have passed after the operator received notice from the unleased owner requesting reports, 103.2 takes effect resulting in forfeiture of the operator’s right to recover drilling costs. Hillcorp’s response was not timely under 103.2 (coming more than 30 days after receipt of Mistretta’s notice).

The ruling – two requests required

The court did not buy Mistretta’s interpretation of the statute. 103.1 must be read in conjunction with 103.2 and when read together the statute requires two separate notices, an initial request seeking information and another notice advising the operator that it had failed to provide the required information. The operator’s obligation under 103.1 does not arise until the request is made for such a report.103.2 provides for the passage of an additional 30 days after the owner has sent the operator a notice calling attention to its failure to comply with 103.1 before it takes effect and results in forfeiture.

Reading 103.1 in conjunction 103.2, the 103.2 penalty provision was not triggered due to Mistretta’s failure to comply with a second notice requirement mandated by 103.2.

The court added that 103.2 is a penalty statute. Penalty statutes are penal in nature and should be strictly construed.

Your musical interlude