Face Challenges Confidently

336 Ramsey v. Grizzle

Monday, August 31st, 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.
Ramsey v. Grizzle, 313 S.W.3d 498 (Tex. App.—Texarkana 2010, no pet.) held that a lease termination claim based upon the continuous operations clause must be tried as an action in trespass to try title. The lease was beyond the primary term and production from the lease well was intermittent for several years.  The lease was for the specified term:

[A]nd as long thereafter as operations, as hereinafter defined, are conducted upon said land with no cessation for more than ninety (90) consecutive days. . . . Whenever used in this lease the word “operations” shall mean operations for and any of the following: drilling, testing, completing, reworking, recompleting, deepening, plugging back or repairing of a well in search for or in an endeavor to obtain production of oil, gas, sulphur or other minerals, excavating a mine, production of oil, gas, sulphur or other mineral, whether or not in paying quantities.

There were multiple parties and multiple claims, but, simplified, lessor sought a declaration that the lease had terminated and lessee sought a declaration that the lease continued to be in force and effect. Extensive, detailed, and conflicting testimony and evidence was admitted for several different time periods during which it was alleged that there was no production and no operations sufficient to preserve the lease. The case was tried as if it were a suit with competing claims for declaratory judgment. The issue as submitted to the jury placed the burden on lessor to prove that lessee had failed to commence drilling or operations on the well within 90 days after the well ceased to produce oil and gas.  The jury answered “no.”
The court recognized that placing the burden of proof was essentially outcome- determinative in this case. The court determined that the case could only be tried in trespass to try title. The court reasoned that the termination of a fee simple determinable determined title to the mineral estate and that trespass to try title is generally the exclusive method in Texas for adjudicating disputed claims to real property. “When the suit does not involve the construction or validity of deeds or other documents of title, the suit is not one for declaratory judgment.”
The court determined to analyze the case as a trespass to try title case, regardless of the form or classification of the suit by the parties. The court stretched to find all the necessary elements required by the statutory proceeding, principally as to the requirements that the lessee must prove up his own title.
The court considered lessee’s title to effectively be an undisputed issue. Therefore, the court focused on cessation of operations and the possible termination of that title as the real issue. There was not a dispute about the nature of the operations in this case. After citing existing authority for the principle that offsite preparatory work is not sufficient, but work on site is sufficient, the court found that this case turned on the credibility of the evidence. There is a useful summary of the kinds of evidence that both sides used to present their case (e.g., Texas Railroad Commission records, pumper records, electric bills, equipment and service invoices, testimony, etc.). The evidence presented by lessee was weak, but good enough to secure a favorable jury finding, and the court refused to hold that the finding was against the great weight and preponderance of the evidence.
Lessee won, but the court reversed the award of over $49,000.00 in attorney’s fees awarded to lessee. The recovery of attorney’s fees under a trespass to try title suit is barred because there is no provision for recovery of fees in the Texas Property Code.
The significance of the case is the clear holding that a lease termination case based on the continuous operations clause must be tried as an action in trespass to try title. Notwithstanding this case, it is unlikely that a case tried under another theory can meet the formal requirements of a proceeding in trespass to try title. The case is also useful in suggesting the sources of possible evidence on lease termination, and it offers hope to any lessee whose operations “went to hell.” Finally, the case continues the recent spate of decisions returning to trespass to try title as the method of determining title claims in Texas, with the consequence that the prevailing party is denied the recovery of attorney’s fees which otherwise may have been recoverable in a suit for a declaratory judgment.