No. 04- 14 -00807- CV

__________________________________________________________________

IN THE COURT OF APPEALS

FOURTH COURT OF APPEALS DISTRICT OF TEXAS

SAN ANTONIO, TEXAS

__________________________________________________________________

BRAD AERY, ET AL.,

Appellants

v.

HOSKINS, INC., ET AL.,

Appellees.

__________________________________________________________________

On Appeal from 36th District Court of McMullen County, Texas

Trial Court Cause No. M- 12 -0045- CV -A

Honorable Starr Boldrick Bauer, Presiding

__________________________________________________________________

BRIEF OF APPELLEE AURORA RESOURCES CORPORATION

__________________________________________________________________

Roberta S. Dohse

State Bar No. 05955400

rdohse@hfdlaw.com

Conner R. Jackson

State Bar No. 24087786

cjackson@hfdlaw.com

H OBLIT D ARLING R ALLS H ERNANDEZ

& H UDLOW

, LLP

2000 Frost Bank Plaza

802 N. Carancahua

Corpus Christi, TX 78401

(361) 888-9392

(361) 888-9187 (facsimile)

Counsel for Appellee

Aurora Resources Corporation ACCEPTED

04-14-00807-CV

FOURTH COURT OF APPEALS

SAN ANTONIO, TEXAS

5/20/2015 4:00:54 PM

KEITH HOTTLE

CLERKii Identities of Parties and Counsel

Pursuant to T EX

. R. A PP

. P. 38.1(a), Appellee Aurora Resources Corporation

submit s the following list of the names and last known addresses of all parties and

their counsel at trial and on appeal:

Appellant s / Plaintiffs Brad Aery

Randi Aery

Counsel for the

Aery Appellant

s Dan Pozza

State Bar No. 16224800

Dan.pozza@yahoo.com

Law Offices of Dan Pozza

239 E. Commerce Street

San Antonio, TX 78205

- 2923

(210) 226

- 8888

(210) 224

- 6373 (facsimile)

Trial Counsel for the

Aery Appellants Marc K. Whyte

State Bar No. 24056526

whytemarc@gmail.com

Whyte, PLLC

209 Tuttle

San Antonio, TX 78209

(210) 340

- 9877

(210) 344

- 9899 (facsimile)

Melanie Hessler Phipps

State Bar No. 24032416

mphipps@kplegal.com

Kustoff & Phipps, LLP

4103 Parkdale Street

San Antonio, TX 78229

- 2520

(210) 614

- 9444

(210) 614

- 9464 (facsimile)iii John George, Jr

. State Bar No. 24051944

jgeorgejr@bmpllp.com

Matthew F. Wymer

State Bar No. 24005234

mwymer@bmpllp.com

Bierne Maynard & Parson, LLP

112 East Pecan Street, Suite 2750

San Antonio, TX 78205

(210) 582

- 0220

(210) 582

- 0231 (facsimile)

Appellants/Intervenors : The J.L. House Tr ust

Lloyd House

Robert Eugene House

Magdalen House

Judith Ann House

Wayne House

Jimmy R. House

Edna Pawelek Ulbrich

Peter James Pawelek

Jesse Pawelek

Ruby Pawelek Schumacher

Elizabeth Pawelek Reich

Roy Mitchell Pawelek

Darlene Robinson Williams

Diane Fischer Casey

Mary Kay Fischer Adams

Arley House

Counsel for

the House Appellants : Rosemarie Kanusky

State Bar No. 00790999

Rosemary.kanusky@nortonrosefulgright.com

John W. Weber, Jr.

State Bar No. 21046500

John.weber@nortonrosefulbright.com

Jeffrey A. Webb

State Bar No. 24053544

Jeff.webb@nortonrosefulbright.comiv 300 Convent, Suite 2100

San Antonio, TX 78205

(210) 224

- 5575

(210) 270

- 7205 (facs imile)

Trial Counsel for

the House Appellants: John W. Weber, Jr.

State Bar No. 21046500

John.weber@nortonrosefulbright.com

Jeffrey A. Webb

State Bar No. 24053544

Jeff.webb@nortonrosefulbright.com

300 Convent, Suite 2100

San Antonio, TX 78205

(210) 224

- 5575

(210) 270

- 7205 (facsimile)

Appellees/Defendants: C. Clifton Hoskins

Hoskins, Inc.

Trudy Day

Counsel for

the se Hoskins Appellees : C. David Kinder

State Bar No. 11432550

dkinder@dykema.com

Corey F. Wehmeyer

State Bar No. 24051903

cwehmeyer@dykema.com

Amy Davis

State Bar No. 24074114

adavis@dykema.com

Benjamin Robertson

State Bar No. 24083748

brobertson@dykema.com

Lindsay Scaief Riley

State Bar No. 24083799

lriley@dykema.com

Ellen B. Mitchell

State Bar No. 14208875

emitchell@dykema.comv Dykema Cox Smith

112 East Pecan, Suite 1800

San Antonio, TX 78205

(210) 554

- 5500

(210) 226

- 8395 (facsimile)

and Michael C. Sartori

State Bar N o . 176555 00

michael@msartori.com

Law Office of Michael C. Sartori

P.O. Box 1222

502A Houston Street

George West, TX 78022

(361) 449

- 2691

(361) 449

- 2380 (facsimile)

Appellees/Defendants: Leonard Hoskins

Counsel for

Leonard Hoskins David L. Ylitalo

State Bar No. 2215 5 500

dylitalo@coatsrose.com

Coats Rose PC

1020 Northeast Loop 410, Suite 800

San Antonio, TX 78209

(210) 224

- 7098

(210) 212

- 5698 (facsimile)

Appellees/Defendants: Lee A nn Kulka

Lee Roy Hoskins, III

Andrea Jurica

Counsel for

Kulka, Hoskins and Jurica

Appellees: Peter E. Hosey

State Bar No. 10027500

phosey@jw.com

Julia W. Mann

State Bar No. 00791171vi jmann@jw.com

Jackson Walker, L.L.P.

112 E. Pecan Street, Suite 2400

San Antonio, TX 78205

(210) 978

- 7700

(210) 978

- 7790 (facsimile)

Appellee/Defendant: Blake C. Hoskins

Counsel for Blake C. Hoskins: Ezra A. Johnson

State Bar No. 24065499

ejohnson@ufjblaw.com

Joseph B.C. Fitzsimons

State Bar No. 07099100

jfitzsimons@ufjblaw.com

J. Byron “Trace” Burton, III

State Bar No. 24031776

tburton@ufjblaw.com

Uhl, Fitzsimons, Jewett & Burton, PLLC

4040 Broadway, Suite 430

San Antonio, TX 78209

(210) 829

- 1660

(210) 829

- 1641 (facsimile)

Appellee/Defendant: Brent C. Hoskins

Counsel for Brent C. Ho skins: David W. Navarro

State Bar No. 24027683

dnavarro@hsfblaw.com

Brendon C. Holm

State Bar No. 24087737

bholm@hsfblaw.com

Hornberge r Sheehan Fuller Bieter

Wittenberg & Garza Incorporated

The Quarry Heights Building

7373 Broadway, Suite 300

San Antonio, TX 78209

(210) 271

- 1700

(210) 271

- 174 0 (facsimile)vii

Appellee/Defendant: Hazel Q . Hoskins

(in her individual and representative

capacities)

Counsel for Hazel Q . Hoskins: Michael C. Sartori

State Bar No. 17655500

michael@msartori.com

Law Office of Michael C. Sartori

P.O. Box 1222

502A Houston Street

George West, TX 78022

(361) 449

- 2691

(361) 449

- 2380 (facsimile)

Appellee /Defendant : Jane Hoskins

Counsel for Jane W. Hoskins : Benjamin F. Youngblood

, III

State Bar No. 22213700

bfy@prodigy.net

Benjamin F. Youngblood III, P.L.L.C.

8207 Callaghan Road, Suite 100

San Antonio, TX 78230

(210) 308

- 9829

(210) 308

- 9854 (facsimile)

Appellee /Third Party Defendant : Aurora Resources Corporation

Counsel for Aurora

Resources Corporation: Roberta S. Dohse

State Bar No. 05955400

rdohse@hfdlaw.com

Conner R. Jackson

State Bar No. 24087786

cjackson@hfdlaw.com

H OBLIT D ARLING R ALLS H ERNANDEZ

& H UDLOW

, LLP

2000 Frost Bank Plaza

802 N. Carancahua

Corpus Christi, TX 78401

(361) 888

- 9392

(361) 888

- 9187 (facsimile)viii

Appellees/Third Party

Defendants: Armadillo E&P,Inc.

(f/k/a Texoz E& P II, Inc.)

Sea Eagle Ford, LLC

Sundance Energy, Inc.

Counsel for Armadillo E & P, Inc.,

Sea Eagle Ford & LLC

Sundance Energy, Inc .: Bruce D. Oakley

State Bar No. 15156900

Bruce. oakley@hoganlovells.com

Robert L. Pillow

State Bar N. 24080315

Robert.pillow@hoganlovells.com

Hogan Lovells US LLP

700 Louisiana Street, Suite 4300

Houston, TX 77002

(713) 632

- 1420

(713) 632

- 1401 (facsimile)

Appellee/Third Party Defendant: Texoz E&P I, Inc.

Counsel for Texoz E&P I, Inc. : Jason A. Newman

State Bar No. 24048689

Jaso n.newman@bakerbotts.com

Baker Botts L.L.P.

One Shell Plaza

910 Louisiana Street

Houston, TX 77002

- 4995

(713) 229

- 1720

(713) 229

- 2720 (facsimile)ix Table of Contents

Identities of Parties & C ounsel

................................ ................................ ...... ii

Table of Contents

................................ ................................ .......................... ix

Index of Authorities

................................ ................................ ...................... x i

Cases

................................ ................................ .............................. xi, xii

Statutes

................................ ................................ ................................ xii

Rules

................................ ................................ ................................ ... xii

Statement of the Case

................................ ................................ .................. xii i

Statement Regarding Oral Argument

................................ .......................... x v

Issues Presented

................................ ................................ ........................... x v

Adoption and Incorporation of Brief of Appellees C. Clifton Hoskins

and Hoskins, Inc.

................................ ................................ ............................. 1

Statement of Facts

................................ ................................ .......................... 2

A. Aurora Serves as Operator for Wells Located on the

Hoskins and Ray Tracts

................................ .............................. 2

B. Appellants Sued Aurora for, among other thin gs, the

Nonpayment of Royalties

................................ ........................... 3

C. As Noted in the Hoskins Appellees’ Statement of Fact s

, the Trial Cour t Granted Summary Judgment in Favor of

Hoskins, and Declared Appellants Did Not Have the

NPIRs in Production from the Hoskins and Ray Tracts

............ 4

D. Aurora’s Traditional Motion for Partial Summary

Judgment was Granted on a Derivative Ba sis

............................ 5

Summary of the Argument

................................ ................................ ............. 5

Argument and Authorities

................................ ................................ ............... 6

A. The Trial Court Properly Granted Derivative Summary

Judgment in Favor of Aurora, as the Granting of

Summary Judgment in Favor of the Hoskins Appellees

Disposed of any Basis for Recovery A gainst Aurora

................ 7x 1. Appellants are Not “Payees” as Defined in the Statute

Authorizing Non

- Payment of Oil and Gas Royalties

as a Cause of Action

................................ .............................. 7

2. A ny Benefit or Money Retained by Aurora Would

Not Belong to Appellants

................................ ...................... 8

3. Any Alleged Tortious Interference Could Not Have

Damaged Appellants

................................ ........................... 10

4. Appellants Had No Possession of or Interest in the

Property Claimed to Have Been Converted

........................ 12

Conclusion

................................ ................................ ................................ ... 13

Prayer

................................ ................................ ................................ ........... 14

Certificate of Compliance

................................ ................................ ............ 15

Certificate of Service

................................ ................................ .............. 15

- 16

Appendix

................................ ................................ ................................ ....... 1 7xi Index of Authorities

Cases

Baty v. Protech Ins. Agency

, 63 S .W.3d 841 (Tex. App.

— Houston [14th Dist.] 2001, pet. denied)

......... 11

Best Buy v. Barrera

, 248 S.W.3d 160 (Tex. 2007) (per curiam)

................................ ...................... 9

Cristobal v. Allen

, 2010 Tex. App. LEXIS 5829 (Tex. App.

— Houston [1st Dist.] 2010)

........ 10

Delz v. Winfrey,

16 S.W. 111 (Tex. 189 1 )

................................ ................................ ......... 11, 13

Heldenfels Bros., Inc. v. City of Corpus Christi

, 832 S.W.2d 39 (Tex. 1992)

................................ ................................ ....... 9, 10

J.P. Morgan Chase Bank, N.A. v. Texas Contract Carpet, Inc.

, 302 S.W.3d 515 (Tex. App.

— Austin 2009, no pet.)

................................ .. 12

Long Island Owner’s Ass’n, Inc. v. Davidson

, 965 S.W.2d 674, 684 (Tex. App.

— Corpus Christi 1998, pet. denied)

.......... 6

Massey v. Armco Steel Co.

, 652 S.W.2d 932 (Tex. 1983)

................................ ................................ ......... 11

MGA Ins. Co. v. Charles R. Chesnutt, P.C.

, 358 S.W.3d 808, (Tex. App.

— Dallas 2012, no pet.)

................................ ..... 9

Staats v. Miller

, 240 S.W.2d 342 (Tex. Civ. App.

— Amarillo 1951)

, rev’d on other

grounds

, 150 Tex. 581, 243 S.W.2d 686 ( Tex. 1951)

................................ .. 12

Staats v. Miller

, 243 S.W.2d 686 (Tex. 1951)

................................ ................................ ..... 9, 10

Stonebridge Life Ins. Co. v. Pitts

, 236 S.W.3d 201 (Tex. 2007) (per curiam)

................................ ...................... 9xii

Tri

- State Chems., Inc. v. Western Organics, Inc

., 83 S.W.3d 189 (Tex. App.

— Amarillo 2002, pet. denied)

........................ 9, 10

Victoria Bank & Trust Co. v. Brady

, 811 S.W.2d 931 (Tex. 1991)

................................ ................................ ......... 10

Wal

- Mart Stores, Inc. v. Sturges

, 52 S.W.3d 711 (Tex. 2001)

................................ ................................ ........... 11

Statutes

T EX

. N AT

. R ES C ODE A NN

. § 91 .401 (West 20 05 )

................................ ........... 8

T EX

. N AT

. R ES C ODE A NN

. § 91

. 401(1) (West 2005 )

................................ ...... 8

T EX

. N AT

. R ES C ODE A NN

. § 91 .402 (West 20 05 )

................................ ........... 8

T EX

. N AT

. R ES C ODE A NN

. § 91 .403 (West 2005 )

................................ ........... 8

T EX

. N AT

. R ES C ODE A NN

. § 91 .404 (West 20 05 )

................................ ........... 8

T EX

. N AT

. R ES C ODE A NN

. § 91

. 404 (c) (West 20 05 )

................................ ...... 8

Rules

T EX

. R. A PP

. P. 9.4

................................ ................................ ........................ 15

T EX

. R. A PP

. P. 9.4(i)

................................ ................................ .................... 15

T EX

. R. A PP

. P. 38.1(a)

................................ ................................ ........................ ii

T EX

. R. A PP

. P. 38. 2

................................ ................................ ............................ 1xiii STATEMENT OF THE CASE

Appellee Aurora Resources Corporation (“Aurora”) (T hird P arty D efendant

below) adopts by reference and incorporates as though fully set forth herein the

Statement of the Case provided in the Brief of Appellees C. Clifton Hoskins and

Hoskins, Inc.

The position of Aurora in this appeal is directly dependent upon this Court’s

decisi on as to the merits of the M otion for S ummary J udgment (CR 1 at 11

- 64) by

C. Clifton Hoskins and Hoskins, Inc. (“Hoskins”) and the subsequent amended

motion ( CR 1 at 194

- 381 ) . The trial court entered an O rder grant ing H oskins’

A mended Motion for S ummary J udgment on August 4, 2014

. CR 4 at 1077

- 81 ;

Appendix at A.

Aurora file d its Motion for Summary Judgment on August 25, 2014,

following the trial court’s O rder on Hoskins’ Motion for Summary Judgment

. CR

4 at 1155

- 1256.

On September 18, 2014, t he trial court entered a series of orders, effectively

resolving nearly all outstanding issues and facilitating F inal J udgment in the case.

The rulings included an Order denying the Joint Motion for S ummary Judgmen t

filed by Aery and House (CR 5 at 1656), an Order denying Aery’s and House’s

Joint No Evidence Motion for Summary Judgment as to C

. Clifton Hoskins’ and

Blake Hoskins’ Counterclaims (CR 5 at 1654), an Order sustaining objections toxiv

certain of Hoskins’ summary judgment evidence (CR 5 at 1658), an d an Order

granting Hoskins’s Objection and Motion to Strike certain of Aery and House’s

summary judgment evidence (CR 5 at 1651

- 52)

.

Also a mong the numerous Orders entered on September 18, 2014, was the

trial court’s Order on Derivative Summary Judgment Motions Based on the August

4, 2014 Order . CR 5 at 1631

- 3 3 ; Appendix at B . This Order granted summary

judgment in favor of numerous parties, including Aurora. Id

.

The parties subsequently dismissed cross

- claims. See, e.g

., Texoz E&P I,

Inc. and Aurora’s Joint Motion for Entry of Proposed Order Dismissing

Crossclaims dated September 2 4

, 2014 (CR 5 at 1669

- 72 ). An Order dismissing

those cross

- claims was entered October 21, 2014. CR 5 at 1 6 85

- 86 ; Appendix at

C

. Aurora also nonsuited its countercl aim for declaratory relief on September 26,

2014 . SR at 4

- 7

. The trial court granted this request for nonsuit in the Final

Judgment entered on October 21, 2014

. CR 5 at 1707 ; Appendix at D

.

Ultimately, all pending cross

- cla ims and counterclaims were d ismissed,

nonsuited or otherwise resolved, enabling the Court to enter a F inal J udgment as to

all claims on October 21, 2014

. C R 5 at 1705

- 1716 ; Appendix at D . That Final

Judgment sets out in detail the rationale for its finality, and resolve s any remaining

issues associated with any su mmary judgment filed by Hoskins. CR 5 at 1705

- 07;

Appendix at D

. That Final Judgment also clarifies that the Order grantingxv

summary judgment in favor of Aurora, and others, is derivative of the ruling in

favor of Hoskins

. CR 5 at 1706 ; Appendix at D

. Appellants’ N o tice of A ppeal

was timely filed. CR 5 at 1718

- 2 2

.

In accord with the foregoing , Aurora is aligned with the position of Hoskins

in this appeal.

STATEMENT REGARDING ORAL ARGUMENT

Appellee Aurora Resources Corporation does not believe that oral argument

would be of assistance to the Court, as the facts are undisputed and the issues

presented are wholly a matter of construction of deeds and conveyances.

However, in the event that the Court elects t o grant Appellants’ request for oral

argument, Appellee Aurora Resources Corporation requests the opportunity to

participate therein and present argument as well.

ISSUES PRESENTED

Appellants identify two issues on appeal. Aurora adopts the position of

Hoskins, that there is really only one issue to be resolved:

The ultimate issue presented is whether the 1966 deed from Sam

Quinn to James House, which described only the 623.93

- acre Quinn

Tract, also conveyed Quinn’s one

- quarter ( 1/4 ) non

- participating

in terests in royalties (“ NPIRs ”) in the separate Ray T ract and Hoskins

Tract.No. 04

- 14

- 00807

- CV

__________________________________________________________________

IN THE COURT OF APPEALS

FOURTH COURT OF APPEALS DISTRICT OF TEXAS

SAN ANTONIO, TEXAS

__________________________________________________________________

BRAD AERY, ET AL.,

Appellants

v.

HOSKINS, INC., ET AL.,

Appellees.

__________________________________________________________________

On A ppeal from 36th District Court of McMullen County, Texas

Tri a l Court Cause No. M

- 12

- 0045

- CV

- A

Honorable Starr Boldrick Bauer, Presiding

__________________________________________________________________

BRIEF OF APPELLEE AURORA RESOURCES CORPORATION

__________________________________________________________________

TO THE HONORABLE COURT OF APPEALS:

COMES NOW Appellee, Aurora Resources Corporation (“Aurora”), and

respectfully submits this its Brief of Appellee pursuant to Rule 38.2 of the Texas

Rule s of Appellate Procedure, and would respectfully show the Court as follows:

I. ADOPTION AND INCORPORATION OF

BRIEF OF APPELLEES C. CLIFTON HOSKINS AND HOSKINS, INC.

Because Aurora’s position in the underlyin g litigation and in this appeal is

clearly derivative of the position of Hoskins , Appellee Aurora hereby adopts and2

incorporates by reference the Brief of Appellees C. Clifton Hoskins a nd Hoskins,

Inc. , including the Statement of Facts, Standard of Review, Argument and

Authorities. To the extent additional specific reference is required as to Aurora,

that is included below, as an addition to the facts and argument set forth by

Hoskins.

II. STATEMENT OF FACTS

Appellee has adopted and i ncorporate d by refe rence the undisputed facts

contained in the Brief of Appellees C. Clifton Hoskins and Hoskins, Inc. This

includes those facts pertaining to the conveyance of the various deeds and

instruments relating to ownership of and royalty interests in the estates o f the

various tracts comprising 2.471.8

- acre ranch ( “The Ranch ”) , as well as any others

set out in Hoskins’ Statement of Facts. Aurora would add the following facts

which are specific to Aurora.

A

. Aurora Serves as Operator for Wells Located on the Hoskins and

Ray Tracts

.

Aurora became involved in this case as result of serving as operator for

various producing wells on the Hoskins and Ray Tract s

. CR 1 at 77

- 78

. Part of

Aurora’s obligations as operator include the proper and timely payment of royalties

on the production from these wells.3

B. Appellants Sued Aurora for, among other things, the Nonpayment

of Royalties.

On January 10, 2014, The James House Family filed its Original Petition in

Interven tion, Third

- Party Petition, and Application for Injunctive Relief, nam ing

Aurora and others as Th ird

- Party Defendant s

. CR 1 at 6 6

. The James House

Family identifie s causes of action for trespass to try title to the mineral estate,

conversion, declaratory relief, a request for injunctive relief, and a claim for the

nonpayment of oil and gas proceeds or interest. All cause s of action allege the

same fundamental compla int: non

- pa yment of oil and gas royalties. CR 1 at 78

- 83

et seq

.

Shortly thereafter , the Aery Appellants amended their Petition to add several

Defendants, including Aurora . Aery similarly raised claims for conversion and

accounting, unjust enrichment and money had and received, and violation of

Chapter 91 of the Texas Natura l Resources Code

. CR 1 at 155

- 16 6

. The Aery

Appellants also requested declaratory judgment

, claiming t hey were entitled to

royalties related to oil and gas production from the Hos kins and Ray Tract s in the

past, present, and future

, and that the NP IR was a valid and existing contractual

right

, passed to the Aery Appellants upon their purchase of the Quinn Tract

. CR 1

at 161

, et seq.

Appellants ’ live pleadings, which mirror one another, allege the following

causes of action against Aurora: conversion and conspiracy to commit the same;4

unjust enrichment and money had & received; tortious interference with existing

and prospective contracts, and co nspiracy to commit the same; and, pursuant to

Chapter 91 of the Texas Natural Resources Code, non

- payment of oil and gas

proceeds

. CR 3 at 1016

- 1031 et seq. ( Aery live P etition ); CR 3 at 1033

- 1059 et

seq. ( House live Plea in Intervention and Third Party Petition). Appellants’ live

pleadings also seek declaratory and injunctive relief

. CR 3 at 1022, 1024

- 25 ; CR 3

at 10 47

- 48, 1052

- 54

.

C

. As Noted in the Hoskins Appellees’ Statement of Fact, t he Trial

Court Granted Summary Judgment in Favor of Hoskins, and

Declared Appellants Did Not Have the NPI R s in Production f ro m

the Hoskins and Ray Tracts

.

On August 4, 2014, Jud g e Starr Boldrick Bauer signed and entered an order

granting the declaratory relief sought in Defendant C. Clifton Hoskins’s First

Amended Motio n for Partial Summary Judgment

. CR 4 at 1077

- 1078 ; Appendix at

A

. The Court ordered and declared that:

The February 9, 1966 Deed from Sam E. Quinn to James L. House

conveying the lands of the 623.93

- acre Quinn Tract (Vol. 95, pg. 451)

did not convey Sam E. Quinn’s non

- participating royalty interests in

the Ray Tract and Hoskins Tract, original l y established and described

in that certain November 7, 1963 Partition and Royalty Deed (Vol. 95,

pg. 357) and sub sequently conveyed to Hazel Hoskins and L.R.

Hoskins by that certain February 11, 1966 Deed from Sam E. Quinn

to L. R. Hoskins and Hazel Hoskins conveying his non

- participating

royalty interests in Ray Tract and Hoskins Tract.

Id.5

In conjunction with thi s declaration, the Court further ordered that the House

and Aery Appellants take nothing on th eir declaratory judgment claims. CR 4 at

1078 ; Appendix at A

.

D

. Aurora’s Traditional Motion for Partial Summary Judgment was

Granted on a Derivative Basis.

As further noted above, based upon the trial court’s ruling as to Hoskins,

A urora moved for summary judgment, arguing that claims raised against Aurora

all derived from the claims against Hoskins and therefore held no merit. CR 4 at

1155

- 1255 et seq

. The trial court granted Aurora’s Traditional Motion for Partial

Summary Judgment and several other summary judgment motions on this same

derivative basis. CR 5 at 1631

- 33 ; Appendix a t B.

III

. SUMMARY OF ARGUMENT

Aurora has adopted in its entirety the argument and authorities set forth by

the Hoskins A ppellees in their Brief. The trial court did not err when it granted

summary judgment and derivative summary judgment in favor of Appellees,

including Aurora.

The trial court correctly determined that the Aery and House Appellants did

not acquire non

- participating interest s in royalties (“NPIRs”) in the Hoskins and

R a y tracts. The agreement upon which Appellants base their claim is contractual

in nature. Texas re cognizes that cross

- conveyances of royalty interests in a

pooling situation can be valid, but they do not create appurtenant interests in land6

not directly owned. Instead, they create a pooled royalty interest in gross. 1 Under

the circumstances of this case, three individual tracts continued to exist, not just

one.

Therefore, the Aery and House A ppellants are not entitled to royalty on

production from the Hoskins and Ray Tracts. All claims against Aurora are

without merit, as the trial court properly found. As a matter of law, derivative

summary judgment was properly granted in favor of Aurora. The trial court’s

judgment should in all things be affirmed.

I V. ARGUMENT AND AUTHORITIES

Aurora Resources Corporation herein incorporates by reference th e

“Argument and Aut h orities” contained in Appellee C. Clifton Hoskins’ Brief . For

the reasons set forth therein, t he transfer of property to Appellants through the

Quinn Deed d id not expressly convey Quinn’s NPIRs in the Ray Tract or the

Hoskins Tract . F urther, it did not impliedly convey Quinn’s NPIRs in the Ray

Tract or the Hoskins Tract as appurtenances

.

Appellee Aurora Resources also adds the following argument appropriate to

the derivative claims asserted by Appellants against Aurora.

1 A n appurtenant interest attaches to the land; an interest in gross is personal and does not pass

with the land. See Long Island Owner’s Ass’n, Inc. v. Davidson , 965 S.W.2d 674, 684 (Tex.

App.

— Corpus Christi 1998, pet. denied).7

A. The Trial Court Properly G ra nted Derivative Summary

Judgment in Favor of Aurora, as the G rant ing of Summary

J udgment in Favor of the Hoskins A ppellees D isposed of any

Basis for R ecovery A gainst Aurora.

In their Opening Brief, Appellants do not address the appropriateness of the

derivative summary judgment granted by the trial court in favor of Aurora.

Nevertheless, in the event that Appellants challenge this grant of summary

judgment in favor of Aurora or any other Appellee

, Appellee Aurora would refer

this Court to its underlying Motion for Partial Traditional Summary Judgment (CR

4 at 1155

- 125 5 )

, which sets out in detail the basis on which the trial court could

properly rule that all causes of action and relief sought from Aurora are premis ed

upon Appellants’ entitlement to royalties . The tri a l court properly declared

Appellants had no interest in the Hoskins or Ray Tracts. Appellants therefore have

no basis for claiming that they have not properly been paid for royalty interests

they do n ot possess.

1. Appellants are Not “Payees” as Defined in the Stat ute

Authorizing Non

- Payment of Oil and Gas Royalties as a Cause

of Action.

Aurora was properly granted summary judgment regarding Appellants’

claims of non

- payment of oil and gas royalties on the basis that Appellants are not

entitled to payments of oil and gas royalties in dispute, and thus are not “payees” as

defined by the statute establishing a cause of action for non

- payment of oil and gas

royalties.8

Nonpayment of oil and gas proceeds or interest is a statutory cause of actio n

provided in Section 91.404 of the Texas Natural Resources Code whereby a

statutorily

- defined “payee” “ has a cause of action for nonpayment of oil or gas

proceeds or i nterest on those proceeds as required Section 91.402 or 91.403 of [the

Texas Natural Resource Code]...

. ” T EX

. N AT

. R ES

. C ODE A NN . §91.404 (c) (West

20 05 ) . The trial court correctly determined that Appellants are not “payees.”

Texas Natural Resources Code Chapter 91, Subchapter J, Payment For

Proceeds Of Sale, defines “payee” as “any person or persons legally entitled to

payment from the proceeds derived from the sale of oil or gas from an oil or gas

well located in this state.” T EX

. N AT

. R ES C ODE A NN

. § 91.401(1) (West 2005 )

.

Appellants are not legally entitled to payment of proceeds derived from the sale of

oil or gas from wells located on either the Ray or Hoskins Tracts of the Ranch, as

they have no NP IR s or other royalty in terests therein. CR 4 at 1077

- 78 ; Appendix

at A

. Appellants are therefore not “payees” as defined by §91.401, and summary

judgment in favor of Aurora was properly granted as to Appellants’ claims for non

payment of oil and gas royalties

. T EX

. N AT

. R ES C ODE A NN

. § 91.401(1) (West

20 05 )

.

2. A ny Benefit or Money Retained by Aurora Would Not Belong

to Appellants

.

Appellants further asserted a claim against Aurora for unjust enrichment and

money had and received

. CR 3 at 10 23 ; CR 3 at 10 49

. Even if Aurora has9

retained any benefit from this dispute , which it denies, it would not be to the

detriment of Appellants , who have no interest in the disputed royalties.

Unjust enrichment is a theory of recovery that applies when a defendant has

obtaine d a benefit from the plaintiff by fraud, duress, or the taking of an undue

advantage. See Heldenfels Bros., Inc. v. City of Corpus Christi , 832 S.W.2d 39, 41

(Tex. 1992). Unjust enrichment may take the form of the unjust retention of a

benefit to the detriment of another person or the unlawful retention of money or of

other personal property belonging to another person. Tri

- State Chems., Inc. v.

Western Organics, Inc

., 83 S.W.3d 189, 199 (Tex. App.

— Amarillo 2002, pet.

denied)

.

Similarly, a claim for money had and received requires proof that a

defendant holds money which belongs to the plaintiff in equity and good

conscience. MGA Ins. Co. v. Charles R. Chesnutt, P.C.

, 358 S.W.3d 808, 813

(Tex. App.

— Dallas 2012, no pet.)

. It is an equitable doctrine applied to prevent

unjust enrichment. Id.; see Stonebridge Life Ins. Co. v. Pitts

, 236 S.W.3d 201, 203

at n.1 (Tex. 2007) (per curiam). A plaintiff must show that the defendant holds

money or its equivalent that in equity and good conscience belongs to the

plaintiff

. Best Buy v. Barrera

, 248 S.W.3d 160, 162

– 163 (Tex. 2007) (per

curiam); Staats v. Miller

, 243 S.W.2d 686, 687 ( Tex. 1951) ; see Tri

- State Chems

. ,

83 S.W.3d at 194

- 95 (equivalent of money may be recovered).10

Appellants have no royalty interest in production from the Hoskins or Ray

Tracts. As such, any money or other benefit Aurora may hold from production of

oil and gas on the Ray Tract or the Hoskins Tract, which Aurora denies, does not

belong to Appellants either legally or in equity. See Staats , 243 S.W.2d at 687;

Tri

- State Chems

. , 83 S.W.3d at 199. As the oil and gas

, or any monetary

equivalent such as royalties

, do not belong to Appellants , any withholding or

benefit received by Aurora has not been obtained from Appellants

. See Cristobal

v. Allen , 2010 Tex. App. LEXIS 5829, *16

- 17 (Tex. App.

— Houston [1st Dist.]

2010) (citing Heldenfels Bros., Inc., 832 S.W.2d at 41). As Appellants are not an

aggrieved party, summary judgment was properly granted in favor of Aurora with

respect to Appellants ’ causes of action of unjust enrichment and money had and

received.

3. Any Alleged Tortious Interference C ould Not Have Damage d

Appellants

.

The elements of a cause of action for tortious interference with an existing

contract are: (1) the existence of a contract subject to interference; (2) a willful and

intentional act of interference; (3) such act was a proximate cause of damage; and

(4) actual damage or loss occurred. Victoria Bank & Trust Co. v. Brady

, 811

S.W.2d 931, 939 (Tex. 1991)

.

The elements of a cause of action for tortious interference with a prospective

contract are: (1) a reasonable probability that the parties would have entered into a11

con tractual relationship; (2) an “independently tortious or unlawful” act by the

defendant that prevented the relationship from occurring; (3) the defendant did

such act with a conscious desire to prevent the relationship from occurring or knew

that the inter ference was certain

, or substantially certain

, to occur as a result of his

conduct; and (4) the plaintiff suffered actual harm or damage as a result of the

defendant's interference. Wal

- Mart Stores, Inc. v. Sturges

, 52 S.W.3d 711, 726

(Tex. 2001) ; Baty v. Protech Ins. Agency

, 63 S.W.3d 841, 860 (Tex. App.

—

Houston [14th Dist.] 2001, pet. denied)

.

Finally, a conspiracy is a combination by two or more persons to accomplish

an unlawful purpose or to accomplish a lawful purpose by unlawful means.

Massey v. A rmco Steel Co.

, 652 S.W.2d 932, 934 (Tex. 1983) . The essential

elements of a conspiracy include one or more unlawful, overt act and damages as

the proximate result. Id . If a plaintiff is incapable of sustaining a separate action

against a defendant on account of the matter complained of, then a charge of

conspiracy will not sustain it alone. Delz v. Winfrey, 16 S.W. 111, 112 (Tex.

189 1 ). In other words, the act complained of as accomplished or attempted to be

accomplished through the conspiracy must be actionable itself. Id.

Aurora has done no tortious act, much less an intentional act of interference,

and has not caused damages to Appellants. Appellants have no royalty interests in

production from the Hoskins or Ray Tracts

. CR 4 at 1077

- 78 ; Appendix at A

.12

Because Appellants had no such interests, they cannot as a matter of law have

suffered any damages from the nonpayment of monies to which they are not

entitled.

Because an element of Appellants ’ tortious interference claim fails as a

mat ter of law, and the alleged tortious conduct underlying Appellants ’ claim for

conspiracy is not actionable, summary judgment in favor of Aurora disposing of

Appellants’ claims of tortious interference and conspiracy to commit the same was

properly granted

.

4

. Appellants Had No Possession of or Interest in the Property

Claimed to Have Been Converted.

Conversion is an offense against the possession of property. St aats v. Miller

,

24 0 S.W.2d 342, 345 (Tex. Civ. App.

— A marillo 1951)

, rev’d on other grounds

,

150 Tex. 581, 243 S.W.2d 686 ( Tex. 1951) . If the plaintiff did not or does not

own, possess, or have the right to possession of property, the plaintiff has no

property interest and cannot sue for conversion. J.P. Morga n Chase Bank, N.A. v.

Texas Contract Carpet, Inc.

, 302 S.W.3d 515, 536

- 39 (Tex. App.

— Austin 2009,

no pet.)

. This is self

- evident. Here, t he property in question, oil and gas produced

from the Ray and Hoskins Tracts, is not the property of Appellants

. CR 4 at 1077

-

78 ; Appendix at A

. As such, a claim that Aurora converted property in which

Appellants have no possessory rights or entitlement of any other nature necessarily13

fails

. Moreover, as Appellants ’ conversion claims cannot be sustained, neither can

Appellants ’ claims of conspiracy to commit conversion. See Delz , 16 S.W. at 112.

Based on the foregoing, summary judgment was properly entered in favor of

Aurora and against Appellants’ claims for conversion and conspiracy to commit

conversion.

V . CONCLU SION

The trial court’s Order granting summary judgment in favor of C. Clifton

Hoskins and Hoskins, Inc. reflects the proper construction and interpretation of the

relevant deeds and conveyances as it relates to the royalty interests at issue

.

Because the issue centers on the interpretation and construction of written deed and

agreements, the question presented is inherently one of law, and the trial court was

within its rights and discretion to make such a ruling.

Appellants raise no argume nt in their Opening Brief regarding the fitness of

the trial court in granting derivative summary judgment

. A ppellants’ claims,

including those against Aurora, are entirely conditioned upon ownership of

relevant royalty interests . The trial court determi ned those interests do not belong

to Appellants . The trial court further acted proper l y, and in accordance with

controlling legal principles

, by granting derivative summary judgment in favor of

Aurora and all other appellees. Accordingly, as to Aurora an d all other appellees,

the Final Judgment entered by the trial court should be upheld in all respects.14 VI . PRAYER

WHEREFORE, Appellee Aurora Resources Corporation respectfully

requests that the trial court’s judgment in all things be affirmed , including th e

granting of summary judgment in favor of Appellee Aurora. Appellee further

prays for such other and further relief to which it may be justly entitled.

Respectfully submitted,

H OBLIT D ARLING R ALLS H ERNANDEZ

& H UDLOW

, LLP

2000 Frost Bank Plaza

802 N. Carancahua

Corpus Christi, TX 78401

(361) 888

- 9392

(361) 888

- 9187 (facsimile)

/s/ Roberta S. Dohse

Roberta S. Dohse

State Bar No. 05955400

rdohse@hfdlaw.com

Conner R. Jackson

State Bar No. 24087786

cjackson@hfdlaw.com

Counsel for Appellee

Aurora Resources Corporation15 C ERTIFICATE O F C OMPLIANCE

I hereby certify that this Appellees’ Brief has been computer

- generated,

using Word by Microsoft, in 14

- point f ont, Times New Roman , in accord with

T EX

. R. A PP

. P . 9.4, and that the number of words in this document totals

approximately 2,92 0 , excluding the caption, identity of parties and counsel,

statement regarding oral argument, table of contents, index of authorities,

statement of the case, statement of issues presented, statement of jurisdiction,

statement of procedural history, signatur es, proof of service, this certificate of

compliance, and any appendix (as is permitted by and in compliance with Tex. R.

App. P. 9.4(i)).

/s/ Roberta S. Dohse

Roberta S. Dohse

Counsel for Appellees

C ERTIFICATE OF S ERVICE

I hereby certify that a true and correct copy of Appellees’ Brief has been

forwarded to all counsel of record, via U.S. Postal Services, Certified Mail, return

receipt requested, and/or via electronic filing, on this the 20 th day of May , 2015

.

Dan Pozza

Law Offices of Dan Pozza

239 E. Commerce Street

San Antonio, TX 78205

- 2923

Marc K. Whyte

Whyte, PLLC

209 Tuttle

San Antonio, TX 78209

Melanie Hessler Phipps

Kustoff & Phipps, LLP

4103 Parkdale Street

San Antonio, TX 78229

- 2520 John George, Jr.

Matthew F. Wymer

Bierne Maynard & Parson, LLP

112 East Pecan Street, Suite 2750

San Antonio, TX 78205

Rosemarie Kanusky

John W. Weber, Jr.

Jeffrey A. Webb

Norton Rose Fulbright

300 Convent St. , Suite 2100

San Antonio, TX 7820516

C. David Kinder

Corey F. Wehmeyer

Amy Davis

Benjamin Robertson

Lindsay Scaief Riley

Ellen B. Mitchell

Dykema Cox Smith

112 East Pecan, Suite 1800

San Antonio, TX 78205

Michael C. Sartori

Law Office of Michael C. Sartori

P.O. Box 1222

502A Houston Street

George West, TX 78022

David L. Ylitalo

Coats Rose PC

1020 Northeast Loop 410, Suite 800

San Antonio, TX 78209 Peter E. Hosey

Julia W. Mann

Jackson Walker, L.L.P.

112 E. Pecan Street, Suite 2400

San Antonio, TX 78205

Ezra A. Johnson

Joseph B.C. Fitzsimon s

J. Byron “Trace” Burton, III

Uhl, Fitzsimons, Jewett

& Burton, PLLC

4040 Broadway, Suite 430

San Antonio, TX 78209

/s/ Roberta S. Dohse

Roberta S. Dohse17 

## A PPENDIX

Exhibit A Order Granting Defendant C. Clifton Hoskin’s First Amended Motion

for Partial Summary Judgment (August 4, 2014) (CR 4 at 1077

- 81)

Exhibit B Order on Derivative Summary Judgment Motions Based on August 4,

2014 Order (September 18, 2014) (CR 5 at 1631

- 33)

Exhibit C Agreed Order Dismissing Texoz E&P I, Inc.’s and Aurora Resources

Corporation’s Cross

- Claims for Contribution Without Prejudice

(October 21, 2014) (CR 5 at 1685

- 86)

Exhibit D Final Judgment (entered October 21, 2014) (CR 5 at 1705

- 1716)