481 In re Freestone Underground Storage, Inc

Richard F. Brown

 
The following is not a legal opinion.  You should consult your attorney if the case may be of significance to you.
 
In re Freestone Underground Storage, Inc.   held that venue in a suit for termination of a saltwater disposal lease was mandatory in the county where the land was located.  The lease gave lessee the right to use a saltwater disposal well and underground salt caverns on lessor’s property.    The lease contained elements of both a mineral lease and a lease of real property, but the actual dispute involved only the exercise of a renewal notice and whether or not the lease had terminated.    The issue was whether venue in the suit was mandatory in the county where the land was located.
 
Lessee argued that venue was mandatory under Section 15.011 of the Texas Civil Practice and Remedies Code.    Lessor relied upon Yzaguirre v. KCS Res. Inc.   in which the Texas Supreme Court held that not all cases involving mineral leases must be brought under the mandatory venue statute.   “Yzaguirre concerned royalty payments, and the Texas Supreme Court concluded that the issue of the correct amount of royalty payments under such a lease did ‘not involve recovering real property or quieting title.’”    The court concluded that the case before it involved the continued existence of the saltwater disposal lease as a property interest, and therefore Yzaguirre was distinguishable.  “If the lease in this case is a mineral lease, the dispute concerns whether the fee simple reverted to [lessor]; therefore, Section 15.011 applies.”
 
The court expressly refused to rule as to whether the saltwater disposal lease was a mineral lease, because if it was not, then it was a lease of real estate, and venue was also mandatory in the county where the land was located under Section 15.0115 of the Texas Civil Practice and Remedies Code.
 
The significance of the case is the discussion distinguishing Yzaguirre and the holding that venue for termination of a saltwater disposal lease is in the county where the land is located.