### NUMBER 13 - 19 - 00431 - CV 

## COURT OF APPEALS THIRTEENTH DISTRICT OF TEXAS CORPUS CHRISTI
– EDINBURG

KEVIN MARTIN, JAMIE MARTIN , AND ASHLEY LUSK, Appellant s ,
v. ROSETTA RESOURCES OPERATING, LP , Appellee.
On appeal from the 156 th District Court of Live Oak County, Texas.



## MEMORANDUM OPINION
Before Chief Justice Contreras and Justices Longoria and Perkes Memorandum Opinion by Chief Justice Contreras In this appeal, we are once again called on to interpret and apply “opaquely worded” “cryptic language” in an oil and gas lease. See Burlington Res. Oil & Gas Co. v. Tex. Crude Energy, LLC , 573 S.W.3d 198, 210 n.10 (Tex. 2019) ; see also Devon Energy Prod. Co. v. Sheppard , No. 13

- 19

- 00036

- CV, 2020 WL 3478680, at *20 (Tex. App.

—2 Corpus Christi

– Edinburg June 25, 2020, no pet. h.) (mem. op.). App ellants Kevin Martin, Jamie Martin, and Ashley Lusk (the Martins) sued appellee Rosetta Resources Operating, LP (Rosetta) , and t he trial court granted summary judgment in favor of Rosetta. The M artins argue this was error because: (1) the subject lease s required Rosetta to protect their undrilled property against drain age; (2) the lease unambiguously required Rosetta to “either spud an offset w[e]ll or release the acreage within 12 months of drainage”; and (3) there is no fact issue as to Rosetta’s obligation s under the lease . We reverse and remand

. I. B ACKGROUND The Martins , landowners in Live Oak County, entered into mineral lease agreements (the Martin L eases) with Mesquite Production Inc. (Mesquite) in 2001 and 2006 . The leases each contained several addenda including the following Addendum 18 : Not withstanding anyt hing contained herein to the contrary, it is further agreed that in the event a well is drilled on or in a unit containing part of this acreage or is drilled on acreage adjoining this Lease, the Lessor [sic] , or its agent(s) shall protect the Lessee’s [sic] undrilled a creage from drainage and in the opinions of reasonable and prudent operations, drainage is occurring on the un

- drilled acreage, even though the draining well is located over three hundred thirty (330) feet from the un

- drilled acreage, the Lessee shall spud an offset well on said un

- drilled acreage or on a unit containing said acreage within twelve (12) months from the date the drainage began or release the acreage which is un

- drilled or is not a part of a unit which is held by production. In 200 7 , Mesquite assigned its rights unde r the leases to Rosett a

. The following year, Rosetta, along with Newfield Exploration Co

. and Dynamic Production, Inc. ( collectivel y Newfield ), establish ed a pooled unit (the Martin Unit) which included some of the Martin L e ases as well as portions of several dozen other unrelated leases

. In 2008, Newfield drilled a 17,000

- foot well in an area of the Martin Unit which is also covered by the original Martin Leases (the GU

- 1 Well) , and th at well began producing natural gas

.3 In 2009, Newfield established a n unrelated pooled unit nearby (the Simmons Unit) , and it drilled a well on that unit (the Simmons

- 1 Well). T he Simmons

- 1 Well is 1.5 miles away from the GU

- 1 Well and is not on property adjoining or adjacent to the Martin Unit

. T he Simmons Unit is separated from the Martin Leases by two twenty

- acre tract s: one to the north of the Simmons Unit (Tract 3584) and another one to its east (Tract 3842)

. The Martins filed the underlying suit in 2014 against Rosetta and Newfield, claiming in part that the defendants breached their contractual dut ies under Addendum 18 of the leases to protect the Martin Leases from drainage by the Simmons

- 1 Well. Newfield filed a motion for no - evidence and traditional summary judgment in February of 2015 , contending partly that the Martins’ contract claim fails because the Simmons

- 1 Well was not drilled on the Martin Leases or on land adjoining the Martin Leases

. The trial court granted that motion , and we affirmed the ruling

. Martin v. Newfield Expl. Co. , No. 13

- 17

- 00104

- CV, 2018 WL 1633574, at * 3

– 4 (Tex. App.

— Corpus Christi

– Edinburg Apr. 5, 2018, pet. denied) (mem. op.)

. 1 A ssuming but not deciding that Newfield had a duty under the leases to prevent drainage and to spud an offset well in certain circumstances , we concluded that such duty was not triggered by drilling on the Simmons Unit because the Simmons Unit does not “ adjoin ” the Martin Leases

. Id. at *4 (“[T] he Simmons Unit is not ‘ acreage adjoining ’ the Martin Leases because Tract 3584 separates the two pieces of acreage .”). W e further held that the Martins failed to preserve : (1) their argument that “ the duty to protect the non

- unitized Martin Leases acres from drainage was triggered when the [GU

- 1 Well] was drilled in 2008 ” and (2) their argument that Addendum 18 is ambiguous

. Id. (noting that neither argument was made in the Martins’

1 We take judicial notice of the records filed in the earlier appeal. See T EX

. R. E VID

. 201; Estate of York , 934 S.W.2d 848, 851 (Tex. App.

— Corpus Christi

– Edinburg 1996, writ denied).4 response to Newfield ’s summary judgment moti on ; instead, the Martin s “ focused their arguments on whether Newfield ’ s duty to protect against drainage was triggered when Newfield began drilling the Simmons Unit, not the Martin Unit ” )

. Rosetta moved for summary judgment on March 24, 2017 . As to the Martins’ contract claim, Rosetta made the same argument as Newfield

— i.e., that the duty prescribed in Addendum 18 was not triggered by the drilling of the Simmons

- 1 Well because that well was not located on the Martin Leases , on a unit including the leases, or on land adjoining the l ea ses. At a status hearing o n April 8, 2019, the Martins ’ counsel asserted that Rosetta ’s contractual obligation to protect the undrilled portions of the Martin Leases from drainage was triggered not by the drilling on the Simmons Unit, but rather, by the drilling of the GU

1 Well. The trial court requested additional briefing on that issue

. On May 8, 2019, the Martins filed a second amended petition reiterating the cla im counsel made at the status hearing

— i.e., that Rosetta’s duty under Addendum 18 of the leases was triggered by the drilling of the GU

- 1 Well , not the drilling of the Simmons

- 1 Well

. T he second amended petition continued to allege that the drilling o f the Simmons

1 Well was the a ctivity which caused the drainage on t he Martin Leases. The Martins also filed a motion for partial summary judgment making the same argument. The Martins’ motion for partial summary judgment also argued, “in the alternative,” that Addendum 18 is ambiguous and that there are fact issues regarding whether the duties set forth therein were triggered. Without holding a ny further hearing s , t he trial court signed a judgment on June 10, 2019, granting Rosetta’s motion for summary judgment and dismissing all of the Martins’ claims with prejudice. This appeal followed.5 II. D ISCUSSION A. Standard of Review and Applicable Law We review summary judgments de novo. Scripps NP Operating, LLC v. Carter , 573 S.W.3d 781, 790 (Tex. 2019). When , as here, both parties move for summary judgment and the trial court grants one motion and denies the other, 2 we review all the summary judgmen t evidence, determine all issues presented, and render the judgment the trial court should have rendered. Merriman v. XTO Energy, Inc. , 407 S.W.3d 244, 248 (Tex. 2013). A movant for traditional summary judgment has the burden to establish that no genuine i ssue of a material fact exists and that it is entitled to judgment as a matter of law. T EX

. R. C IV

. P. 166a(c); Amedisys, Inc. v. Kingwood Home Health Care, LLC , 437 S.W.3d 507, 511 (Tex. 2014). “ Issues not expressly presented to the trial court by written motion, answer or other response shall not be considered on appeal as grounds for reversal. ” T EX

. R. C IV

. P. 166a(c)

. Similarly, we may not affirm summary judgment on grounds not raised in the summary judgment motion

. Henkel v. Norman , 441 S.W.3d 249, 251 n.1 (Tex. 2014) (per curiam) (citing Stiles v. Resolution Tr. Corp. , 867 S.W.2d 24, 26 (Tex. 1993)). If a mineral lease is unambiguous, then we construe it as a matter of law, seeking to enforce the intention of the parties as expressed the rein. Tittizer v. Union Gas Corp. , 171 S.W.3d 857, 860 (Tex. 2005) (per curiam). We examine and consider the entire

2 Much of the Martins’ motion for partial summary judgment is devoted not toward affirmatively establishing their own entitlement to judgment as a matter of law, but rather toward refuting the arguments made by Rosetta in its previous summary judgment motion

. In any event, t he trial court implicitly denied the Martins’ motion for partial summary judgment by dismissing all of their claims. We will consider all of the summary judgment pleadings filed by both pa rties to determine the proper disposition.6 writing in an effort to harmonize and give effect to all its provisions so that none will be rendered meaningless. J.M. Davidson, Inc. v. We bster , 128 S.W.3d 223, 229 (Tex. 2003). B. Analysis Addendum 18 suffers from both a lack of accuracy and a lack of clarity

. Its most glaring defect is its apparent misidentification o f which party owes the conditional “ duty to protect ” undrilled acreage from drainage

. Rosetta concedes that the purpose of Addendum 18 is to ensure that the Martins do not bear the risk of drainage to their property caused by nearby drilling activity. Bu t the actual language of the a ddendum unequivocally imposes the conditional duty to protect on the “ Lessor , or its agent(s )”

—
a nd th e Martins are the lessors

. Th is unambiguous language is rep eated in each of the Martin Leases. Rosetta concedes that this is a “scrivener’s error” and that Addendum 18

“ should have ” i nstead i mposed a conditional duty on the “Lessee” to protect the undrilled lease acreage

. 3 Neither party cites any authority establishing that contractual language may be interpreted to mean the diametric opposite of what it actually says merely because the parties mutually intended that result. See Burlington Res. , 573 S.W.3d at 203 (noting tha t our duty in construing a mineral lease is to “ascertain the true intentions of the parties as expressed in the writing itself ” (emphasis added)). That said , Rosetta never argued in its summary judgment pleadings that Addendum 18 is unenforceable or that the Martins’ claims fail for th is reason. Accordingly, we may not affirm the summary judgment on

3 Elsewhere in its brief, Rosetta contends that “ the Lease language is part of a standard, industry

wide form contract used for decades .” Indeed, the Martin Leases appear to be based on a form oil and gas lease known in the industry for a century as “Producers 88.” See, e.g. , Elliott v. Davis , 553 S.W.2d 223, 224 (Tex. App.

— Amarillo 1977, writ ref ’ d n.r.e.) ; Maynard v. Gilliam , 225 S.W. 818, 820 (Tex. App.

— Fort Worth 1920, no writ)

. But t he adde nda to the leases, including Addendum 18 , are not part of that form. The parties cite no cases, and we find none, interpreting or applying any of the specific l anguage at issue here.7 grounds that the leases do not impose any duty to protect from drainage on Rosetta in any circumstances

. See Henkel , 441 S.W.3d at 251 n. 1

. A second fault in the language of Addendum 18 is found in its description of the lessee’s obligation to “spud an offset well” 4 within twelve months of drainage or release undrilled acreag e

. Rosetta argues that this clause is intended to define “ the nature and quality of the drainage necessary for the protective measures to apply .” In other words , its obligation to “spud an offset well” is conditional an d is triggered only when two events

occur : (1) a well is drilled on or in a unit containing the lease or on adjoining lands; and (2) “ drainage is occur ring ” on the undrilled acreage as determined by “the opinions of reasonable and prudent operations.” If this was in fact the parties’ intent , then the language used in A ddendum 18 appears to be out of order or incomplete

. In particular, as written, the a ddendum does not limit the duty to spud an offset well t o situation s where “drainage is occurring” because there is no conditional language

— such as “if” or “in the event ”

— directly pertaining to that claus e

. 5 Notwithstanding the Addendum’s grammatical and logical errors, the parties appear to agree that it imposes d ut ies on Rosetta , when certain specified circumstances are present , to both (1) protect the undrilled Martin acreage from drainage , and (2) spud an offset well or release the undrilled acreage

. We will address each obligation in turn.

4 An offset well is “[a] n existing wellbore close to a proposed well that provides information for planning the proposed well. ” S CHLUMBERGER O ILFIELD G LOSSARY , https://www.glossary.oilfield.slb.com/ en/ Terms/ o/ offset_well.aspx (last visited Sept. 28 , 2020). “Spud” means “[t] o start the well drilling process by removing rock, dirt and other sedimentary material with the drill bit. ” Id. , https:// www.glossary.oilfield.slb.com/ Terms/ s/ spud.aspx (last visited Sep t . 28 , 2020).
5 As discussed further herein, t he contractual obligation to “protect” the undrilled acr eage from drainage is clearly made conditional on a well having been drilled “on or in a unit containing part of this acreage ” or “ on acreage adjoining this Lease.” But the obligation to spud an offset well is set forth independently from the obligation to protect from drainage , and the two duties are separated by the “opinions of reasonable and prudent operations” clause , which does not itself contain conditional language.8 First , t he duty to protect undrilled lease lands from drainage is triggered only “in the event a well is drilled on or in a unit containing part of this acreage or is drilled on acreage adjoining this Lease

. . . .” In the 2018 appeal, we held that the drilling of the Simmons

- 1 W ell did not satisfy this condition because the Simmons Unit does not adjoin the Martin Leases. Martin , 2018 WL 1633574, at * 3

– 4. Rosetta argues that we are therefore bound under res judicata principle s to reject the Martins’ arguments in this case. See Hallco Tex., Inc. v. McMullen County , 221 S.W.3d 50, 58 (Tex. 2006) (“The doctrine of res judicata, or claim preclusion, bars a second action by parties and their privies on matters actually litigated in a previous suit, as well as claims which, through the exercise of diligence, could have been litigated in a prior suit.”). That is true to the extent the Martins argue , as they did in their original petition, that Rosetta’s duty to protect was triggered by the drilling of the Simmons

- 1 Well

. However, as noted , the Martins filed a second amended petition in 2019 arguing instead that the duty to protect was triggered by the drilling of the GU

- 1 Well, not the Simmons

- 1 W ell. 6 It is undisputed that t he GU

- 1 Well (unlike the Simmons

- 1 Well) is located “on or in a unit containing part of” the Martin Leases. Therefore, under the plain language of Addendum 18, the drilling of the GU

- 1

6 Rosetta moved to strike the Martins’ second amended petitio n, arguing it was untimely filed and that the Martins did not obtain leave to amend

. See T EX

. R. C IV

. P. 63 (providing that “any pleadings, responses or pleas offered for filing within seven days of the date of trial or thereafter

. . . shall be filed only after leave of the judge is obtained, which leave shall be granted by the judge unless there is a showing that such filing will operate as a surprise to the opposite party ”)

. However, the April 8, 2019 hearing was a status hearing, not a final hearing on Rosetta’s summary judgment motion, and the record does not show that Rosetta’s summary judgment motion was ever set for hearing. See Cotten v. Briley , 517 S.W.3d 177, 185 (Tex. App.

— Texarkana 2017, no pet.) (“A summary judgment hearing is a trial under Rule 63.” (citing Goswami v. Metro. Sav. & Loan Ass ’ n , 751 S.W.2d 487, 490 (Tex. 1988) ) )

. Moreover, t he record does not contain a ruling on the motion to strike ; Rosetta does not argue on appeal that the second amended petition should have been struc k ; and Rosetta has not shown that the filing of the second amended petition caused surprise. Therefore, we presume that the second amended petition was properly filed

. See Goswami , 751 S.W.2d at 490 (“ Since the record is silent of any basis to conclude tha t the amended petition was not considered by the trial court, and inasmuch as [appell ee ] has not shown surprise or prejudice, leave of court is presumed. ”).9 Well triggered Rosetta’s obligation to “protect [the Martins’] undrilled acreage from drainage .” Rosetta emphasizes that t he GU

- 1 Well is not alleged to have caused any drainage on the Martins’ undrilled property. But that is immaterial. Addendum 18 does not state, implicitly or explicitly, that the duties prescribed therein are triggered only by the drilling of wells which cause drainage. Nor does it state or imply that the dut y to protect from drainage is limited only to drainage caused by the well which triggered the duty. Instead, Addendum 18 places upon the lessee a general duty to protect the undrilled land against all drainage whenever a well is drilled on that land or any adjoining property , without regard to which drilling activity was causing the drainage

. Rosetta argues on appeal that t he drilling of the GU

- 1 W ell “ cannot create an absolute obligation to protect against drainage caused by any subsequently drilled well. ” It argues that “[s] uch an interpretation is illogical, especially given that drainage did not allegedly occur until the Simmons Well was drilled much later, on non

- adjacent land. ” We do not find such terms illogical or unreasonable. Rosetta offers no reason for why the original lessee could not have agreed to protect the undrilled acreage from drainage whenever a nearby well is drilled, eve n if that particular well was not causing drainage at the time

. In response to the Martins’ motion for partial summary judgment , Rosetta contended that the new argument raised in the Martins’ amended petition

— i.e., that the duty to protect from drainage was triggered by the drilling of the GU

- 1 Well

— is barred by claim preclusion. On appeal, Rosetta contends that the Martins’ ambiguity arguments are barred by claim preclusion. With respect to both claim preclusion issues , Rosetta contends that the Martins could have, but did not, raise th e se arguments in the earlier10 summary judgment proceedings involving Newfield. See id. We disagree that these argument s are barred by claim preclusion. As the Martins note on appeal, Rosetta is the only entity that owns a leasehold interest in the undrilled portion s of the Martin Leases

— the drainage of which Addendum 18 is designed to protect against. Newfield does not own such an interest and so its obligations under the leases

are en tirely different from Rosetta’s

. 7 Even if Rosetta and Newfield had identical leasehold interests , Rosetta did not join in Newfield’s summary judgment motion and the earlier summary judgment proceedings did not concern Rosetta

. We will not hold that the Martins

are precluded from raising certain arguments against Rosetta merely because they failed to raise them earlier in the same proceeding a gainst a differently

- situated defendant. We next address the a ddendum’s provision that Rosetta “shall spud an offset well” or release undrilled acreage in certain circumstances. T he parties appear to view this obligation as being triggered by the same events giving rise to the more general duty to protect from drainage

— i.e., it is triggered by the drilling of a well on or in a unit containing the lease or on adjoining land. We have already held that the drilling of GU

- 1 Well satisfies this condition. We observe that , under the parties’ construction, another condition arguably applies to this obligation

— specifically, it is triggered only when “ in the opinions of reasonable and prudent operations, drainage is occurring on the un

- drilled acreage, even though the draining well is located over three hundred

- thirty (330) feet from the undrilled acreage .” There is no dispute that “drainage [was] occurring” on the undrilled

7 As noted, we assumed but did not decide in the 2018 appeal that Newfield had a duty under Addendum 18 to protect the Martins’ unleased acreage from drainage in the specified cir cu mstances

. See Martin v. Newfield Expl. Co. , No. 13

- 17

- 00104

- CV, 2018 WL 1633 574, at * 3

– 4 (Tex. App.

— Corpus Christi

– Edinburg Apr. 5, 2018, pet. denied) (mem. op.)

. We merely held that that this duty was not triggered by the drilling on the Simmons Unit. See id. The issue of whether the duty was triggered by the drilling of the GU

1 Well was not litigated.11 portions of the Martin Leases. Therefore, under the plain language of the lease, Rosetta was obligated to either (1) spud an offset well within twelve months of drainage or (2) release the undrilled acreage

. Again, the fact that the drainage to the Martin Leases was caused by the Simmons

- 1 Well ra ther than the GU

- 1 Well does not alter the obligation s of the lessee as provided in Addendum 18

. Considering the allegations made in the Martins’ second amended petition, we conclude that Rosetta ’s obligations to protect the undrilled Martin acreage from drainage and to spud an offset well or release the acreage were triggered. Accordingly, the trial court erred in granting Rosetta’s summary judgment motion

. We sustain the Martins’ issues on appea l. I II

. C ONCLUSION The trial court’s judgment is reversed. We remand with instructions to grant the Martins’ motion for partial summary judgment and for further proceedings consistent with this opinion. DORI CONTRERAS Chief Justice Delivered and filed the 1st day of October , 2020.