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Ridge Oil Co. v. Guinn Invs., Inc.

Supreme Court of Texas

April 2, 2003, Argued ; September 3, 2004, Delivered

NO. 02-0599

Opinion

 [*146]  In this oil and gas case, two lessees obtained working interests under a single  [*147]  lease through assignments. Guinn Investments, Inc. is the lessee as to the Guinn tract, and Ridge Oil Company, Inc. is the lessee as to the adjoining Ridge tract. Ridge shut in the only two producing wells, both located on the Ridge tract, for approximately ninety days and subsequently executed new leases with the owners of the possibility of reverter of the mineral interest in the Ridge tract. Among the numerous issues presented, we hold 1) the temporary cessation of production doctrine applies when there is more than one lessee under a single lease, 2) production permanently ceased from the Ridge tract when the new leases between Ridge and the owners of the Ridge tract became effective, 3) Guinn was not conducting operations on the lease sufficient to sustain the lease at the time production permanently [**2]  ceased or thereafter, and 4) Guinn is not entitled to prevail on its claims for tortious interference, fraud, or the imposition of a constructive trust.

Because the trial court did not err in granting summary judgment for Ridge, we reverse the court of appeals' judgment 1 and render judgment for Ridge.

Guinn sued Ridge and Ridge's vice president, Bryan Woodward, who was also one of its two shareholders. Guinn's pleadings sought to remove a cloud upon and quiet title to the interest it held under an oil and gas lease and sought a declaration that the lease was valid. In the alternative, Guinn sought damages and a constructive trust.

Guinn and Ridge were both lessees under a 1937 oil and gas lease. The lease covered two adjoining 160-acre tracts, which we will call the Guinn tract and the Ridge tract for ease of reference. Through various assignments, Guinn became a partial assignee under the lease, obtaining the lessee's rights and obligations with respect to the 160-acre [**3]  Guinn tract. Through other assignments, Ridge also became a partial assignee, obtaining the lessee's rights and obligations with respect to the 160-acre Ridge tract. Although the record is not entirely clear, the parties agree that the possibility of reverter of the mineral interest in each tract has become separate as well. The successors to the lessor's interest in the Guinn tract have no interest in the Ridge tract, and the successors to the lessor's interest in the Ridge tract have no interest in the Guinn tract. Ridge's brief asserts that both the working interests and the mineral estates with regard to the two tracts have been "partitioned," and Guinn does not dispute that. As the court of appeals noted, "It is undisputed that Ridge Oil's lessors were not the lessors of the Guinn tract." 2 None of the lessors are parties to this suit, with the exception of Ridge, who obtained a percentage of the possibility of reverter of the mineral estate on the Ridge tract.

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148 S.W.3d 143 *; 2004 Tex. LEXIS 784 **; 47 Tex. Sup. J. 1080; 161 Oil & Gas Rep. 1135

RIDGE OIL COMPANY, INC. AND BRYAN A. WOODWARD, PETITIONERS, v. GUINN INVESTMENTS, INC., RESPONDENT

Subsequent History: Rehearing denied by Ridge Oil Co. v. Guinn Invs., 2004 Tex. LEXIS 1335 (Tex., Dec. 3, 2004)

Prior History: ON PETITION FOR REVIEW FROM THE COURT OF APPEALS FOR THE SECOND DISTRICT OF TEXAS.

Guinn Invs. v. Ridge Oil Co., 73 S.W.3d 523, 2002 Tex. App. LEXIS 2659 (Tex. App. Fort Worth, 2002)

Disposition: Reversed and rendered.

CORE TERMS

lease, tract, lessee, terminated, cessation, oil, attorney's fees, court of appeals, new lease, lessors, drilling, mineral, temporary, mineral interest, trial court, surrender, overriding royalty interest, ceased, summary judgment, equitable, assignee, possibility of reverter, oil and gas lease, primary term, permanently, contends, expired, paying quantities, producing, covering

Contracts Law, Types of Contracts, Lease Agreements, General Overview, Real Property Law, Landlord & Tenant, Assignments, Energy & Utilities Law, Financing, Grants & Reservations, Assignments & Subleases, Leases & Licenses, Assignment, Release & Surrender, Oil & Gas, Forfeiture Clauses, Federal Oil & Gas Leases, Extensions & Terminations, Abandonment & Termination, Savings Clauses, Royalties, Oil, Gas & Mineral Interests, Royalty Interests, Leasehold Royalty Clauses, Estates, Future Interests, Reversions & Reverter, Mining, Royalty Clauses, Overriding Royalties, Landlord's Remedies & Rights, Power to Reenter & Terminate, Breach, Anticipatory Repudiation, Termination Notices, Torts, Lessees & Lessors, Liabilities of Lessors, Lease Cancellation, Civil Procedure, Declaratory Judgments, State Declaratory Judgments, Judgments, Trials, Jury Trials, Province of Court & Jury, Costs & Attorney Fees, Attorney Fees & Expenses, Reasonable Fees, Discretionary Jurisdiction, Remedies, Judicial Officers, Judges, Discretionary Powers, Criminal Law & Procedure, Sentencing, Forfeitures, Proceedings, Basis of Recovery, Statutory Awards, Appeals, Standards of Review, Abuse of Discretion