Face Challenges Confidently

494 Daven Corp. v. TARH E & P Holdings, L.P

Tuesday, September 1st, 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.
 
Daven Corp. v. TARH E & P Holdings, L.P.  held that mineral interests can be subject to partition-in-kind when the weight of the expert testimony is such that a jury could reasonably believe such partition-in-kind is fair under the circumstances.  Texas American Resources, LLC, et al., (“TAR”) and the three Beren brothers, et al., (“Beren”) were cotenants in the deep rights under eleven oil and gas leases covering approximately 5,000 acres.  When they could not agree on a plan for development, TAR sued Beren for partition-in-kind.  The trial court entered judgment on the jury’s verdict that the property was susceptible to fair and equitable partition-in-kind, which would result in an award of 3,500 acres to TAR and 1,500 acres to Beren.  Beren argued on appeal that the trial court erred in failing to submit its proposed jury instruction and that the jury’s finding that the property was subject to a partition-in-kind was against the great weight and preponderance of the evidence.
 
The question and instructions submitted were not in controversy.  Together, they placed the burden on Beren (opposing partition-in-kind) to meet the burden of proof on the threshold question in a partition-in-kind.  Is the property “susceptible of partition” or “incapable of partition” because a “fair and equitable division” cannot be made?   Beren complained that the trial court refused to give an additional instruction to the effect that “it is the general rule that known mineral lands, because of elements of uncertainty, not resolvable at a reasonable cost, are not capable of fair division.”
 
Beren’s proposed instruction was improper because it was a direct comment on the weight of the evidence.  Instead of asking the jury to determine whether the property was known mineral land, and whether there was uncertainty, not resolvable at reasonable cost, about the quantity or quality of minerals at different locations, the jury instruction improperly directed the jury that these facts were established.   Beren’s proposed instruction was extracted from White v. Smyth,  which recites a litany of all of the issues that make a partition-in-kind of minerals problematic.   The court recognized the general rules that partition-in-kind is favored, minerals are subject to partition-in-kind, and that it is presumed, in the absence of proof to the contrary, that minerals are equally distributed and that a partition-in-kind will not result in an inequitable distribution of the mineral estate.   Although the facts in White made the property incapable of partition-in-kind, it did not mean the same result must follow in every case.
 
The jury heard competent yet conflicting expert testimony and scientific evidence concerning whether the property was susceptible to a fair partition-in-kind.  TAR and Beren both had expert testimony regarding the nature of the mineral interests in the property.  The jury could have reasonably chosen to give more credibility to TAR’s witness over Beren’s which would weigh in favor of fair partition-in-kind.  Thus, the trial court’s judgment in ordering partition-in-kind of the mineral interest was affirmed.
 
The significance of this case is that it highlights the precedents that hold known mineral interests may be subject to partition-in-kind in certain circumstances.