398 Conley v. Comstock Oil & Gas, LP

Thursday, September 3rd, 2015

Richard F. Brown

 
The following is not a legal opinion.  You should consult your attorney if the case may be of significance to you.
 
Conley v. Comstock Oil & Gas, LP, 356 S.W.3d 755 (Tex. App.—Beaumont 2012, no pet.) held that title could be established under common law adverse possession by an oil and gas operator and discussed the area adversely possessed by oil and gas operations.  Certain landowners (“Landowners”) granted oil and gas leases to Comstock Oil & Gas, LP (“Comstock”), and Comstock formed a pooled unit (“Hamman Unit”) that included parts of various surveys in which the Landowners claimed title.  Margaret Brush Conley and other plaintiffs (collectively “Conley”) claimed ownership of minerals underlying the Escobeda Survey (“Escobeda”), but the exact location of the Escobeda was disputed.  Various issues involving title and boundaries related to the Escobeda had been litigated in two previous cases—the Collins case in 1916 and the Kilgore case in 2000—before this suit was filed in 2007.
 
Comstock moved for summary judgment on multiple grounds, including superior title as a matter of law by operation of the doctrine of presumed lost deed.
 
“Since it is not consistent with human experience for one really owning property of value to assert no claim thereto, but to acquiesce for a long period of time in an unfounded, hostile claim, the rule is sound which permits the inference that an apparent owner has parted with his title from evidence, first, of a long-asserted and open claim, adverse to that of the apparent owner; second, of nonclaim by the apparent owner; and third, of acquiescence by the apparent owner in the adverse claim.”
 
“The doctrine of presumed lost deed or grant, which is also referred to as title by circumstantial evidence, has been described as a common law form of adverse possession.”  “The doctrine has been applied to establish title in a party who failed to prove title under the adverse possession statutes.”  Moreover, “[t]he presumption of a lost grant or conveyance may be established as a matter of law under circumstances where the deeds are ancient and the evidence is undisputed.”  Here, although the boundaries of the Escobeda had been disputed in Collins and Kilgore, those cases involved other lands, and not the lands that were the subject of this suit.  The court stated that this “long period of time in which the Escobeda grantees were claiming the neighboring land supports a conclusion that they acquiesced in the claims of the persons who claimed title under the fifteen ancient surveys at issue in this case.”  Further, since the evidence was undisputed that there was never an attempt to assert ownership over the tracts that were the subject of this suit, the court held that the presumption of a lost grant applied as a matter of law.
 
The court also considered Comstock’s statutory adverse possession claims to support the summary judgment granted for Comstock.  Because the trial court did not specify the basis for its adverse possession holding, the court considered adverse possession under the three, five, and ten year statutes of limitations.  The three and five year claims were limited to adverse possession on the part of the land included in the 704‑acre Hamman Unit on which Comstock was operating wells.  The distinguishing element of the three year statute of limitations requires that the claim be “under title or color of title.”  Here, the evidence was insufficient as to whether the land certificate for an 1878 survey was filed before the Constitution of 1876 was ratified.  Accordingly, the court held that the three year statute of limitations was not satisfied.
 
In order to establish adverse possession on the basis of the five year statute of limitations, the distinguishing element is payment of “applicable taxes.”  In addition, adverse possession of the severed mineral estate required proof of both drilling and production.  The court held that there was no evidence to conclusively establish whether production had commenced from the Hamman Unit more than five years before the suit was filed, and therefore, the five year statute of limitations was not satisfied.
 
The motion for summary judgment under the ten year statute of limitations applied to all of the land allegedly included in the Escobeda Survey.  To satisfy an adverse possession claim on the basis of the ten year statute of limitations, the distinguishing element is peaceable and adverse possession for the ten-year statutory period.  When adverse possession is asserted under a duly registered deed, the claim extends to the boundaries of the deed.  The record showed that twenty-two wells were drilled, and there was continuous production of oil and gas for a period of at least ten years prior to the initiation of this suit, with only a few temporary cessations of production.  Accordingly, the court held that Comstock had established adverse possession of the Hamman Unit.
 
Conley asserted that Comstock’s adverse possession could only extend to the boundaries of the lease.  The court held that the Landowners’ adverse possession commenced prior to the severance of the minerals to Comstock, and the continued possession of the surface inured to the benefit of the mineral owners.
 
Ordinarily, because the motion for summary judgment was based solely upon mineral production with supporting documents, the record would be inadequate because there was apparently no document describing the real property for the Landowners’ broader claim.  However, because the court found a presumed grant, it held there was no reversible error in also granting the summary judgment for the Landowners.
 
This was a complex case, and there were also interesting issues related to tribal sovereign immunity, stare decisis, res judicata, and boundary disputes.  The most significant part of the case is the further definition of the acts required and the extent of adverse possession under the ten-year statute and an oil and gas lease.