416 Bomar Oil & Gas, Inc. v. Loyd
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.
Bomar Oil and Gas, Inc. v. Loyd, 381 S.W.3d 689 (Tex. App.—Amarillo 2012, pet. denied) held an operator was collaterally estopped from disputing a landowner’s royalty interest because the parties had stipulated in prior litigation as to that royalty interest. Loyd, an unleased co-tenant, disputed the after payout revenue interest Bomar Oil and Gas, Inc. (“Bomar”) attributed to him. Bomar’s division order attributed a .3055556 interest to Loyd, who believed he owned an approximate .4 interest. Loyd sued Bomar for an accounting, but the parties agreed before trial that Loyd’s interest was .305555. The jury used this amount to calculate damages for Loyd, and Bomar appealed. The appeals court reduced the damages award slightly and noted Loyd owned a .3055555 interest. Later, in a different operator’s division order for a different horizon, but on the same land, Loyd stated his interest was .2. Based on this division order, Bomar revoked its prior division order and withheld payment on the difference from Loyd. Loyd sued Bomar again, the trial court granted Loyd summary judgment that his ownership interest was .305555, and Bomar appealed.
The Amarillo Court of Appeals affirmed on the grounds of collateral estoppel, which “prevents parties from relitigating ultimate issues of fact previously litigated.” The parties’ stipulation in the prior suit was sufficient for collateral estoppel because when the court accepted the stipulation, it “becomes conclusive as to the fact conceded.” The jury’s recognition of the stipulated interest in determining damages as well as the appellate court’s acknowledgment in its opinion further supported the finality. Because the parties to both suits were the same and Loyd’s ownership interest was an “ultimate fact,” the issue had been fully and fairly litigated and accepted by the parties, the trial court, the jury, and the appellate court. Therefore, Bomar was estopped from relitigating Loyd’s interest as a matter of law.
The appeals court also relied on collateral estoppel in denying Bomar’s contentions that Bomar was entitled to revoke its division order and pay Loyd for the lesser amount. Although division orders are generally revocable, the stipulation conclusively established Loyd’s underlying mineral interest at the higher amount.
Finally, the appeals court upheld the award of attorney’s fees for Loyd, holding that while attorney’s fees cannot accrue in title disputes, the dispute must be “legitimate,” which the current dispute was not, due to the collateral estoppel.
This case is significant because it elevates a division order to a judicial determination of interest that will support a collateral estoppel. Even if the parties stipulate to an interest without an evidentiary hearing, the stipulation may be considered a final fact determination, preventing future litigation on the issue.