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ConocoPhillips Co. v. Koopmann

Supreme Court of Texas

December 5, 2017, Argued; March 23, 2018, Opinion Delivered

NO. 16-0662

Opinion

 [*862]  In this case, we must determine whether the common law rule against perpetuities invalidates a grantee's future interest in the grantor's reserved non-participating royalty interest. We hold that it does not, but on grounds different from those expressed by the court of appeals. However, we hold that the reservation's savings clause is ambiguous and affirm the court of appeals' remand on this issue. In addition, we hold that section 91.402 of the Texas Natural Resources Code does not preclude a lessor's common law claim for breach of contract. Finally, we affirm the court of appeals' judgment as to attorney's fees pursuant to Texas Rule of Civil Procedure 91a.

I. Background

In 1996, Lois Strieber conveyed, by warranty deed, fee simple title to a 120-acre tract of land in Dewitt County to Lorene Koopmann and her late husband. The deed included the following language:

RESERVATIONS FROM AND EXCEPTIONS TO CONVEYANCE AND WARRANTY:

1. There is EXCEPTED from this conveyance and RESERVED to the Grantor and her heirs and assigns for the term hereinafter set forth one-half (1/2) [**2]  of the royalties from the production of oil, gas . . . and all other minerals . . . which reserved royalty interest is a non-participating  [*863]  interest and is reserved for the limited term of 15 years from the date of this Deed and as long thereafter as there is production in paying or commercial quantities of oil, gas, or said other minerals from said land or lands pooled therewith. If at the expiration of 15 years from the date of this Deed, oil, gas, or said other minerals are not being produced or mined from said land . . . this reserved royalty interest shall be null and void and the Grantor's rights in such reserved royalty shall terminate. It is expressly understood, however, that if any oil, gas, or mineral or mining lease covering said land . . . is maintained in force and effect by payment of shut-in royalties or any other similar payments made to the lessors or royalty holder in lieu of actual production while there is located on the lease or land pooled therewith a well or mine capable of producing oil, gas, or other minerals in paying or commercial quantities but shut-in for lack of market or any other reason, then . . . it will be considered that production in paying or commercial [**3]  quantities is being obtained from the land herein conveyed.

Thus, Strieber reserved a fifteen-year, one-half non-participating royalty interest (the NPRI), which could be extended "as long thereafter as there is production in paying or commercial quantities" under an oil and gas lease. The deed was dated December 27, 1996. Lorene Koopmann later executed a gift mineral deed conveying an undivided two-thirds of her mineral interest to her two children (together, the Koopmanns).

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547 S.W.3d 858 *; 2018 Tex. LEXIS 247 **; 61 Tex. Sup. J. 605; 2018 WL 1440639

CONOCOPHILLIPS COMPANY AND BURLINGTON RESOURCES OIL & GAS CO., L.P., PETITIONERS, v. RALPH WADE KOOPMANN, KAREN MARIE KOENIG, LORENE H. KOOPMANN, AND LOIS STRIEBER, INDIVIDUALLY AND AS EXECUTRIX OF THE ESTATE OF JERRY STRIEBER, RESPONDENTS

Prior History:  [**1] ON PETITION FOR REVIEW FROM THE COURT OF APPEALS FOR THE THIRTEENTH DISTRICT OF TEXAS.

ConocoPhillips Co. v. Koopmann, 542 S.W.3d 643, 2016 Tex. App. LEXIS 5278 (Tex. App. Corpus Christi, May 19, 2016)

CORE TERMS

lease, future interest, deed, reservation, royalty, vest, executory interest, court of appeals, shut-in, trial court, minerals, saving clause, grantor, summary judgment, perpetuities, oil, motion to dismiss, paying, oil and gas, commercial quantity, attorney's fees, alienability, ambiguous, terminate, conveyed, parties, possibility of reverter, primary term, lessee, non-declaratory

Civil Procedure, Summary Judgment, Motions for Summary Judgment, Cross Motions, Appeals, Summary Judgment Review, Standards of Review, Burdens of Proof, Movant Persuasion & Proof, Constitutional Law, State Constitutional Operation, Real Property Law, Estates, Future Interests, Invalid Restraints & Rule Against Perpetuities, Energy & Utilities Law, Discovery, Exploration & Recovery, Exploration Obligations & Rights, Deeds, Construction & Interpretation, Oil, Gas & Mineral Interests, Conveyances, Rule Against Perpetuities, Leases & Licenses, Executory Interests, Reversions & Reverter, Remainders, Leases & Licenses, Implied Duties, Concurrent & Successive Interests, Mineral Interests, Lapse & Reversion, Contracts Law, Contract Interpretation, Ambiguities & Contra Proferentem, Intent, Royalties, Shut In Royalty Clauses, Royalties, Collection & Payment, Royalty Interests, Governments, Legislation, Interpretation, Statutory Remedies & Rights, Business & Corporate Compliance, Contract Formation, Contracts Law, Contract Formation, Defenses, Public Policy Violations, Breach, Breach of Contract Actions, Responses, Defenses, Demurrers & Objections, Motions to Dismiss, Pleading & Practice, Motion Practice, Time Limitations, Attorney Fees & Expenses, Basis of Recovery, Statutory Awards, Sanctions, Baseless Filings, Frivolous Lawsuits