613 Goss v. Addax Minerals Fund, LP, 07-14-00167-CV, 2016 WL 1612918 (Tex. App.—Amarillo Apr. 21, 2016, pet. denied)

Monday, November 7th, 2016

Richard F. Brown

The following is not a legal opinion. You should consult your attorney if the case may be of significance to you.

Goss v. Addax Minerals Fund, LP, 07-14-00167-CV, 2016 WL 1612918 (Tex. App.—Amarillo Apr. 21, 2016, pet. denied) (mem. op.) (Reformation of deed, discovery rule, and limitations) held that the discovery rule does not apply to defer the accrual of a cause of action to correct a plainly evident omission on the face of an unambiguous deed. The parties aligned as successors-in-interest to Grantor and Grantee under a 1994 deed. The contract for sale expressly provided that Grantee was to receive all of the minerals. The 1994 deed, prepared by the title company, reserved and excepted the minerals, and Grantee saw the deed in 1994. In 2005, Grantee talked to the title company about the minerals, and on November 30, 2005, the title company “fixed” the problem by filing an affidavit reciting that the reservation of the minerals to Grantor was a scrivener’s error. Grantee apparently believed and relied upon the title company’s assurance that the affidavit confirmed Grantee’s title and ownership in the minerals. In March, 2012, Grantor leased the minerals. In April 2013, Grantee sued alleging the 1994 deed unambiguously conveyed the minerals to Grantee (alternatively the deed was ambiguous), for reformation, to quiet title, asserting that the cause of action accrued in March 2012, and that the discovery rule applied. The minerals were awarded to Grantor on motion for summary judgment.

The format of the deed generally followed the State Bar of Texas real estate form deed. The granting clause conveyed “the property . . . except as to the reservations from and exceptions to warranty.” The deed then provided:

RESERVATIONS FROM AND EXCEPTIONS TO CONVEYANCE AND WARRANTY: Reservations, restrictions and easements of record, and current year ad valorem taxes. LESS, SAVE AND EXCEPT HEREFROM ALL OIL, GAS AND OTHER MINREALS, IN, UNDER AND PRODUCED FROM THE ABOVE DESCRIBED PROPERTY.

Because there were no minerals outstanding in any other party, it did not matter whether the provision as to minerals was construed to be a reservation or exception. Either way, the minerals did not pass to Grantee, and therefore Grantor either reserved the minerals or still owned the minerals.

The court also rejected Grantee’s alternative argument that the deed was ambiguous. Grantee contended that the “subject to” language in the deed’s granting clause was intended only to limit the warranty of title. The court held that this alternative reading of the deed was unreasonable. A deed is ambiguous only if application of established rules of construction leaves the instrument susceptible to more than one meaning, and the two meanings must each be reasonable.

A claim for reformation of a voidable deed is subject to a four-year limitations period. “A plainly evident omission on an unambiguous deed’s face is not a type of injury for which the discovery rule is available.” The court also held that even if the discovery rule did apply, Grantee had actual knowledge of the issue more than four years before suit was filed and was required to timely file regardless of Grantee’s subjective belief concerning the effect of the deed.

This is a deed construction case that appears to follow established precedent as to whether the discovery rule will apply to plainly evident omissions from deeds.