Bauer v. Braxton Min. III

689 S.W.3d 633

Robert Scott BAUER and Braxton Minerals II, LLC, Appellants

v.BRAXTON MINERALS III, LLC, Appellee

No. 02-23-00269-CV

Court of Appeals of Texas, Fort Worth.

Delivered: April 18, 2024

On Appeal from the 141st District Court, Tarrant County, Texas, Trial Court No. 141-313791-19, HON. JOHN P. CHUPP, Judge

ATTORNEYS FOR APPELLANTS: LANCE H. "LUKE" BESHARA, MILO S. BOBBITT, PATEL GAINES, PLLC, FORT WORTH, TEXAS.

ATTORNEYS FOR APPELLEE: JASON BOATRIGHT, JOSEPH M. COX, DUANE MORRIS LLP, DALLAS, TEXAS.

Before Sudderth, C.J.; Birdwell and Wallach, JJ.

OPINION

Opinion by Justice Wallach

Braxton Minerals III, LLC (BM3) sued Braxton Minerals II, LLC (BM2) and Robert Scott Bauer (Bauer) (collectively Appellants) in district court in Tarrant County. BM3 alleged that Appellants failed to comply with their representations and contractual obligations to transfer oil, gas, and mineral interests (collectively mineral interests) to BM3 in West Virginia, resulting in BM3 not owning the mineral interests to such properties and not receiving royalty payments for production from the properties. BM3 asked the court (1) to order that the disputed mineral deeds be reformed to show BM3’s ownership, (2) to order specific performance for Appellants to transfer and assign the disputed mineral interests and royalties to BM3, and (3) to issue declaratory relief that BM3 is the rightful owner of the disputed mineral interests and award past and future royalty payments from the properties to BM3. BM3 asserted causes of action for fraud and fraudulent inducement, unjust enrichment, imposition of a constructive trust, and money had and received, and temporary and permanent injunctive relief regarding reformation of the disputed mineral deeds and recovery of past and future royalty payments. BM3 also sought recovery of attorney’s fees.

Appellants counterclaimed against BM3 alleging that BM3, acting in concert with one of Appellants’ managers, defrauded them in the transactions involved in BM3’s claims and sought damages for (1) fraud and wrongful taking of the mineral interests in West Virginia and royalty payments therefrom, (2) unjust enrichment, (3) money had and received, and (4) attorney’s fees. Appellants did not seek to have any property interests transferred or deeds reformed. The trial court granted summary judgment for BM3 on its claims for affirmative relief, denied Appellants' summary judgment motion on their counterclaim, and after conducting a bench trial on attorney’s fees, awarded final judgment in favor of BM3, incorporating its earlier summary judgment rulings.¹

Appellants appeal from the trial court's final judgment, raising ten issues with subparts. Appellants’ first issue challenges the trial court’s subject matter jurisdiction. Because we sustain Appellants’ first issue, we will reverse the judgment of the trial court in favor of BM3 on its claims for affirmative relief against Appellants and dismiss BM3’s case for want of jurisdiction. Appellants’ issues 2 through 9² challenging the trial court’s judgment regarding BM3’s claims for affirmative relief are mooted by our holding on issue one, and we need not address them. See Tex. R. App. P. 47.1.

Appellants’ issue ten challenges the trial court’s denial of their summary judgment on their counterclaim for damages. We overrule this issue as well because the trial court had no jurisdiction over the counterclaim. Therefore, we will dismiss Appellants’ counterclaim for want of jurisdiction.

I. Standards of Review and Legal Principles

[1–3] When a party challenges the subject matter jurisdiction of the trial court on appeal but fails to adequately brief it, we have a duty to determine whether the trial court had subject matter jurisdiction. Jarvis v. Feild, 327 S.W.3d 918, 924 (Tex. App.—Corpus Christi-Edinburg 2010, no pet.).³ In reviewing a challenge to the court’s subject matter jurisdiction, we may review the pleadings and any other evidence relevant to the subject matter jurisdiction issue. Bland Indep. Sch. Dist. v. Blue, 34 S.W.3d 547, 554 (Tex. 2000); Devon Energy Prod. Co. v. KCS Res., LLC, 450 S.W.3d 203, 210 (Tex. App.—Houston [14th Dist.] 2014, pet. denied). Whether a trial court has subject matter jurisdiction is a question of law, which we review de novo. Tex. Dep’t of Parks & Wildlife v. Miranda, 133 S.W.3d 217, 226 (Tex. 2004); Danish Leasegroup, Inc. v. York Oil & Gas Mgmt., Inc., 362 S.W.3d 220, 223 (Tex. App.—Dallas 2012, no pet.).

II. Analysis

[4–10] We start with the basic principle that Texas courts have no jurisdiction to adjudicate title to real property in other jurisdictions. Fox v. Fox, No. 14-18-00672-CV, 2020 WL 1265366, at *3 (Tex. App.— Houston [14th Dist.] March 17, 2020, no pet.); Trutec OU & Gas, Inc. v. W. Atlas Int'l, Inc., 194 S.W.3d 580, 583 (Tex. App.—Houston [14th Dist.] 2006, no pet.); Carmichael v. Delta Drilling Co., 243 S.W.2d 458, 460 (Tex. App.—Texarkana 1951, writ ref’d); Holt v. Guerguin, 106 Tex. 185, 163 S.W. 10, 12 (1914). This rule applies to interests in oil and gas leases and mineral interests in other jurisdictions. Devon Energy, 450 S.W.3d at 216; Trutec, 194 S.W.3d at 583; Kelly Oil Co. v. Svetlik, 975 S.W.2d 762, 764 (Tex. App.— Corpus Christi 1998, pet denied); Carmichael, 243 S.W.2d at 460. However, if a Texas court has jurisdiction over the parties, it may enforce a party’s personal or contractual obligation that indirectly involves property in another state, such as when a Texas court compels a party over whom it has jurisdiction to execute a conveyance of a real property interest located in another state. To determine the extent to which title and possession are involved, and thereby implicate jurisdiction, we look to the nature of the suit, the injury complained of, and the relief sought, together with any relevant evidence. Fox, 2020 WL 1265366, at *3; Devon Energy, 450 S.W.3d at 216; Trutec, 194 S.W.3d at 583–88. Regardless of how a party frames its pleadings, we look to the basis upon which it seeks to recover judgment. If the gist or gravamen of a claim involves adjudication of title to foreign real property interests, the Texas court lacks subject matter jurisdiction. Fox, 2020 WL 1265366, at *3; Merit Mgmt. Partners I, L.P. v. Noelke, 266 S.W.3d 637, 646–47 (Tex. App.—Austin 2008, no pet.). If ownership of foreign jurisdiction real property interests is more than incidental or collateral to the claims and measure of recovery, then the court lacks jurisdiction. Noelke, 266 S.W.3d at 646–47.

Applying these standards, how do the pleadings of the parties in this case speak to the jurisdictional issue? From the discussion of the pleadings set forth above, we hold that the pleadings demonstrate that the trial court did not have subject matter jurisdiction of the claims raised by BM3 and that its claims for affirmative relief should be dismissed for want of subject matter jurisdiction. Likewise, we hold that the trial court did not have jurisdiction of the Appellants’ counterclaim.

A. BM3’s claims

We find the following cases to be instinctive, starting with Danish Leasegroup, which involved oil and gas leases in Kentucky. 362 S.W.3d at 222. Danish Leasegroup was offered working interests in oil and gas leases in Kentucky, which it ac- cepted in return for a $750,000 payment to OAG/York, who was to use the funds to purchase working interests for Danish Leasegroup’s benefit. OAG/York accepted the payment and sent statements to Danish Leasegroup showing its working interests in the leases. Danish Leasegroup then received a percentage of income from the working interests and distributed those funds to its investors. Thereafter, Danish Leasegroup sought assurances from OAG/ York regarding its title to the Kentucky working interests, and OAG/York denied having transferred title to the interests and denied any agreement to do so. Danish Leasegroup sued OAG/York for failing to transfer title to the working interests and for damages flowing therefrom. Id. The causes of action asserted by Danish Leasegroup were for

• violation of state and federal securities acts (fraudulently inducing the payment of the $750,000 for the working interests),

• statutory and common law fraud for the same conduct and failing to transfer title to the working interests,

• negligent misrepresentation in providing guidance on whether to purchase the working interests,

• breach of contract for failing to transfer the working interests as agreed,

• unjust enrichment as a result of failing to transfer the title to the working interests,

• breach of fiduciary duty for failing to transfer title to the working interests,

• civil conspiracy to defraud Danish Leasegroup of its title to the working interests,

• injunctive relief to preserve the working interests at issue,

• an accounting, and

• constructive trust and receivership to protect the un-transferred working interests.

Id. at 224–25.

In holding that these allegations required an impermissible determination of title to foreign real property interests, our sister court stated:

Throughout appellant’s pleadings, it repeatedly ties its causes of action to "the working interests it never received" and the failure by OAG and York to "transfer title to the working interests." At its core, appellant’s complaint is that it had working interests in oil and gas leases in Kentucky and title to the working interests has not been transferred. Thus, in order to determine whether the causes of action have merit, the trial court would first be required to adjudicate title to the oil and gas interests in Kentucky, which appellant claims to own but OAG denies. This the court cannot do. See Trutec, 194 S.W.3d at 586[ &] n.6 (noting Trutec’s claims for breach of contract, specific performance, conversion, breach of fiduciary duty, constructive trust, and accounting were all based on whether it had an oil and gas interest); see also Kelly, 975 S.W.2d at 763 (holding claims for breach of contract and conversion...