Face Challenges Confidently

421 Glencrest Res., LLC v. Ellis

Friday, September 4th, 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.
Glencrest Res., LLC v. Ellis, No. 02–12–00060–CV, 2012 WL 3500324 (Tex. App.—Fort Worth Aug. 16, 2012, no pet.) (mem. op.),  refused to certify claims for bonus raised by a group of urban lessors as a class action.  In 2005 and 2006, at the request of the residents of Glencrest Neighborhood Association in Fort Worth, Glencrest Resources, LLC (“Glencrest”) was established to represent the neighborhood in obtaining leases of their property for exploration in the Barnett Shale.  Glencrest advertised $3,000 bonus payments per acre with a $750 minimum bonus payment, held approximately 100 neighborhood meeting, and, as a result, obtained leases from more than 3,000 residents.   Pamela Ellis (“Ellis”), a Glencrest neighborhood resident, attended a meeting in 2006 and signed a lease with Glencrest.  Ellis sued Glencrest in 2007 when she still had not received her bonus payment, which she claimed Glencrest promised to pay within several weeks of the December 2006 meeting.
In 2008, when Glencrest was financially able to pay, it contacted landowners with a proposition—ratify the original three-year lease and receive a $3,000 per acre bonus, or amend their original lease for an extended five-year term and receive a $6,500 per acre bonus.  A few landowners refused to ratify their leases altogether and a few chose to ratify their original three-year leases, but most chose to extend their leases to a five-year primary term.
Ellis sought to certify her suit as a class action, adding ‘‘[a]ny person who, from January 1, 2006, through April 30, 2008, entered into an oil, gas, and mineral lease with . . . Glencrest . . . and has not received a bonus payment.’”   Glencrest opposed Ellis’s request for certification, claiming individual issues (including whether an individual landowner was offered performance but refused, had signed a lease with more than one entity, or had taken action to prevent performance) predominated over common issues.  The trial court certified the class action and defined the class to exclude landowners who had signed competing leases, those who were paid their bonus, those who had title issues that prevented them from conveying an interest in the oil and gas lease, those who ratified their three-year term leases, and those who entered into extended five-year term leases.
On appeal, the court considered whether Ellis had met her burden in proving that “questions of law or fact common to the members of the class predominate over any questions affecting only individual members,”  including the trial court’s finding that the predominant issues would be whether there was a breach of each contract.  The court found that because none of the written leases contained information regarding the payment of bonuses, a determination of breach would necessarily include the exact terms of each oral contract.   The evidence before the trial court indicated that there were approximately 100 neighborhood meetings at which bonus payments were discussed; a landowner who had attended two or three of the meetings testified he was never told a time period in which he would be paid; and only Ellis testified that she expected to be paid within weeks of the December 2006 meeting.  Therefore, Ellis failed to show there was a predominance of common issues, and the trial court abused its discretion in certifying the case as a class action.
The significance of this case is the court’s holding that the trial court abused its discretion in certifying a class action of landowner/lessors, even when the landowner/lessors’ written leases were identical, because the predominant issue was breach of contract under oral agreements.