## IN THE SUPREME COURT O F TEX AS

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. 13-0199

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O N P E T I T I O N F O R R E V I E W F R O M T H E C O U R T O F A P P E A L S F O R T H E S E C O N D D I S T R I C T O F T E X A S

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Argued October 15, 2014

J U S T I C E G U Z M A N delivere d the opinion of the Court
This oil and g as dispute involves a cha lleng e to the validity of a mineral lease and require s
that we once ag ain examine the contours of the duty the executive-rig ht holder (executive) owes to

a non-par ticipating roy alty interest holder (non-e x ecutive)

. Her e, the non-executive claims the
executive procur ed a mineral lease in derog ation of a duty of g ood faith owed to her. Although we

rec og nize an executive has broad discretion in neg otiating the terms of a mineral lease , we have long
held that, in doing so, the executive owes the non-executive a duty of u t m ost g ood faith and fair dealing

. Thoug h we have rar ely had occa sion to explore the scope of this duty , we have explained that, unlike a ty

pical fiduc iary rela tionship, the ex ecutive is not require d to wholly subordinate itsinterests in favor of the non-executive if their interests conflict. As we have articula ted the duty , the

executive has autonomy in neg otiating the terms of a mineral lease but does not have absolute
discretion to deter

mine the value of the non-executive interest. I n this way , the duty imposed on the
executive s trikes a balanc e between the parties’ b ar gained- for rights. Although the para meters of
the duty are imprecise, at bottom, the executive is pr ohibited f rom eng ag ing in a cts of self-de aling that unfairly

diminis h the value of

the non-e x ecutive inter est.
I n the prese nt case , which involves an oil and g as lease on near ly two-thousand acr es of land
in north Texas, the non-executive contends that the executive brea ched its duty by executing a
min eral lease on terms that included a sub-marke t roy alty rate , which the executive and
non-executive would share equally , in ex ch an ge for an above- marke t bonus pay able only to the
executive. The non- executive furthe r alleg es that the lesse e ac ted in c oncer t w ith the executive in
fac ilitating the brea ch and that the executive’s ill-gotten g ains wer e fra udulently transfe rre d to third parties. The trial court g rante d a take- nothing summary judgme n t o n all claims, but the court of

appea ls rever sed the judg ment in significa nt part base d on the exist ence of fa ct issues. On appe al to this Court, t he par ties seek a definitive articulation of the executive’s duty as
it perta ins to any obliga tion to maxi miz e the roy alty terms in a mineral lease

. Given the rela tive rig hts and interests at play , no bri ght line rule can compre hensively or completely delineate the
boundarie s of the executive’s duty

. Rather, in deter mining whether an executive has fulfilled its duty of utmost good faith and fair dealing in executing a mineral lea se, the lea se and the circ umstances
of its e x ecution must be considere d as a whole, and the failure to neg otiate a marke t-rate roy alty is
but one rele vant fac tor. Simpl y put, the executive’s failure to obtain a marke t-rate roy alty does not

2conclusively establish a brea ch of duty , nor is it totally irrele vant. On the rec ord befor e the Court,

we hold that fac t questions prec lude summary j u d gm ent as to the non-executive’s brea ch-of -duty
claim ag ainst the executive. We there fore aff irm that portion of the court of appea ls’ judgme nt and

rema nd the brea ch-of

-dut y claim to the trial court. We further conclude , howeve r, that summary judgme nt was proper as to the claims ag ains t t h e rema ining defe ndants and there fore reve rse that portion of the court of appea ls’ judgme nt and rende r judgme nt that the non-executive take nothing
on those claims.

I. F actual and Proc edural Backgroun d
Be tty L ou Br adshaw holds a non-par ticipating roy alty interest in approximately 1,773 acr es
of a near ly 2,000 acr e parc el of land in Hood County , Texas known as the Mitchel l Ranch. A

non-par ticipating r oy alty

interest is

an interest in the g ross p roduction of oil, g as, and other minerals car ved out of the mineral fee estate as a free ro y al t y , which does not car ry with it the rig ht to participa te in the execution of, the [b] onus pay able for, or the delay renta ls to acc rue under oil, g as, and miner al lease s executed by the owner

of the minera l fee estate.
L ee J ones, J r., Non-Participating Royalty , 26 T E X

. L

. R E V

. 569, 569 (1948) (footnote omitted); see
also Plainsman Trading Co. v. Crews , 898 S.W .2d 786, 789-90 (Tex. 1995). I n oil and g as parla nce,
the owner of a non-par

ticipating roy alty interest is re fe rr ed t o as a non-executive interest holder,
while t he holder of t he leasing pri v i l ege , t y p i cally the m inera l fee owner , is the ex ecutive interest
holder. I n this division of rig hts, the executive has the power to make and amend lease s aff ecting 1

S e e I n r e B a s s , 1 1 3 S

. W

. 3 d 7 3 5 , 7 4 5 ( T e x
. 2 0 0 3 ) ( “ B y d e f i n i t i o n , a l l n o n - p a r t i c i p a t i n g r o y a l t y i n t e r e s t s a r e 1

n o n - e x e c u t i v e i n t e r e s t s
. ” ) ; R

. H e m i n g w a y , L A W O F O IL A N D G A S , § 2

. 2 ( 3 d e d

. 1 9 9 1 ) ( “ T h e p o w e r t o l e a s e , s o m e t i m e s r e f e r r e d t o a s t h e e x e c u t i v e r i g h t , i s t h e r i g h t t o t r a n s f e r t h e d e v e l o p m e n t r i g h t s o f t h e m i n e r a l e s t a t e t o a n o t h e r
. S u c h p o w e r m a y b e e x e r c i s e d a s a n i n c i d e n t o f t h e o w n e r s h i p o f t h e m i n e r a l e s t a t e o w n e d b y t h e h o l d e r o f t h e p o w e r t o 3the enjoy

ment of the non-e x ecutive’ s interests.

Br adshaw inherited her roy alty interest from her pare nts, J .A. and L ota Fa y Driskill, who had

rese rved the interest in two deeds that wer e executed in 1960 to convey the surfa ce and all mineral
int er est s, including leasing privileg es, to third parties. The deeds descr ibed the rese rved roy alty
interest as an undivided one-ha lf of any future roy alty and limit ed the executive rig ht by mandating
that any such roy alt y b e “not less than” one-e ighth. Thus, under the 1960 deeds, the rese rved 2
interest was not cappe d, and the minimum interest the Driskills rese rved was a one-sixteenth share of g ross production.
A one-e ighth roy alty appea rs to have been commonplace in the g ener al era in which t h e
1960 deeds wer e executed. As one commentator wrote in a well-re g arde d article , “The usual roy alty
i s 1 / 8 , and this fac t is so g ener ally known that judicial knowledg e may be taken of it.” J ones , 2 6

T E X

. L

. R E V

. at 575-76 (citations omitted); see also Schlittler v. Smith , 101 S.W .2d 543, 544-45 (Tex. 1937) (sug g esting that one-e ighth roy alty was ty pical at that time). I ndeed, so standa rd wa s

l e a s e
. ” ) ; s e e a l s o D a y & C o

. v

. T e x l a n d P e t r o l e u m , I

n c

. , 7 8 6 S

. W

. 2 d 6 6 7 , 6 6 9 ( T e x
. 1 9 9 0 )

.
T h e t h r e e a p p l i c a b l e p r o v i s i o n s o f t h e 1 9 6 0 d e e d s r e a d a s f o l l o w s : 2

“ T h e G r a n t o r s h e r e i n r e s e r v e u n t o t h e m s e l v e s , t h e i r h e i r s a n d a s s i g n s , a n d e x c e p t f r o m t h i s c o n v e y a n c e a n u n d i v i d e d o n e - h a l f ( 1 / 2 ) R o y a l t y ( b e i n g e q u a l t o n o t l e s s t h a n a n u n d i v i d e d
o n e - s i x t e e n t y [ s i c ] ( 1 / 1 6 ) [ ) ] o f a l l t h e o i l , g a s a n d / o r o t h e r m i n e r a l s i n , t o a n d u n d e r o r t h a t m a y b e p r o d u c e d

. . . . ”

“ S a i d i n t e r e s t h e r e b y r e s e r v e d i s a N o n - P a r t i c i p a t i n g R o y a l t y
. . . . G r a n t e e h e r e i n , h i s h e i r s a n d
a s s i g n s , s h a l l h a v e t h e r i g h t t o l e a s e s a i d l a n d f o r o i l , g a s a n d o t h e r m i n e r a l s p r o v i d e d , h o w e v e r , t h a t
a l l s u c h l e a s e s s h a l l p r o v i d e f o r R o y a l t y o f n o t l e s s t h a n o n e - e i g h t [ s i c ] ( 1 / 8 )

. ”

“ I n t h e e v e n t o i l , g a s o r o t h e r m i n e r a l s a r e p r o d u c e d f r o m s a i d l a n d , t h e n s a i d G r a n t o r s , t h e i r h e i r s a n d
a s s i g n s , s h a l l r e c e i v e n o t l e s s t h a n o n e - s i x t e e n t h ( 1 / 1 6 ) p o r t i o n ( b e i n g e q u a l t o o n e - h a l f ( 1 / 2 ) o f t h e c u s t o m a r y o n e - e i g h t h ( 1 / 8 ) R o y a l t y ) o f t h e e n t i r e g r o s s p r o d u c t i o n a n d / o r s u c h n e t p r o c e e d s a s h e r e i n a b o v e p r o v i d e d

. ”
4a one-e ighth roy alty that it wa s assumed to be the defa ult minimum: “I f the g rant or rese rvation is
silent as to the minimum roy alty to be rese rved in subsequent lease s, utmost fair dealing would seem to require the re serva tion of a roy alty of at least the usual 1/8.” J ones, 26 T E X

. L

. R E V

. at 575-76.

Ho we v er , it was not unusual to rese rve an interest in a roy alty of “not less than” the customary

one-e ighth to allow the non- executive to share in enhanc ed roy alties secur ed by the executive:
The common prac tice

. . . is to include an express provision in the g rant or rese rvation of non-par

ticipating roy alt y to the eff ect that subsequent lease s shall provide for a roy alty of not less than the usual 1/8. Such a provision would seem to aff ord the non-par

ticipating owner ample protec tion and entitle him to a share in any roy alty , as such, in excess of the usual 1/8.
Id

. at 576. Thus, the l angua ge an d s tructure employ ed in the 1960 deeds was neither unusual nor particula rly idiosy ncra tic.
As it happens, Br adshaw alleg es that, as a result of marke t trends and larg er economic forc es,
the customary roy alty had incre ased to one -four th by J uly 2005. At that time, Wise Asset held the
surfa ce and mineral estate interests in the Mitchell Ran ch b u t n o development had commence d.

Br adshaw claims that at least one company had approa ched her during that time period and offe red

to pay a one-f

ourth roy alty to lease and develop the proper ty

. As a non-executive, Br adshaw had no authority to de velop the proper ty or neg otiate the terms of a mineral lease , and the r ecor d does not
disclose whether this putative offe r was ultimately communicated to Wis e Asset or what otherwise
beca me of it.

Howeve r, a fewmonths later, an individual named G ary Humphrey s contrac ted with Wise
Asset to purcha se the entire Mitchell Ranch trac t, including the mineral estate, for $18,943,000. No

roy alty app ea rs t o have been a part of that contra ct. The contract permitted Humphrey s to extend

5the 90-day te r mination option three times by pay ing Wis e Asset $100,000 for eac h 30-day extension.
On Fe bruar

y 14, 2006, afte r having exercised all three extension opportunities, Humphrey s assig ned his interest in the Mitchell Ranch contra ct to Texas Shepco, L P , a limit ed partne rship

manag ed by R.J

. Sikes. I n an ag ree ment dated the same day , Humphrey s executed a contra ct with

P et er Be n n i s , president of a bank in Kee ne, to jointly develop the Mitchell Ranch. Humphrey s 3

ag ree d to pay Be nnis 40% of any roy alty interests and also assig ned 40% of his interest in the
Mitchell Ranch contra ct to Be nnis. Be nnis there afte r neg otiated with Chesapea ke Energ y to sell the
Mitchel l R an ch an d informed Humphrey s that Chesapea ke “will pay $250,000 over the contra ct price and g ive us 1/16 or 6.25% of the larg e trac t and 12.5% of the smaller trac ts.” I n o rder to

consummate a deal, howeve r, Be nnis war ned Humphrey s, “We need to g et the contra ct back in our
control” from Sikes. Be nnis specula ted that the contra ct could be re- assig ned if they wer e to return the orig inal pay

ment for the a ssignment a nd g rant Sikes a 1% overr iding r oy alty interest. Sikes, for his part, was evidently uninte re s t ed i n either re- assig ning the contra ct to Humphrey s or neg otiating with Chesapea ke Energ y
. As Be nnis was pressing Humphrey s, Sikes was
neg otiating a deal with R an ge Resource s Corp. on behalf of Texas Shepco. Contemporaneously , Sikes enter ed into a partne rship ag ree ment with R

. Crist Vial on April 10, 2006, for oil and g as development. On that same day , Sikes also formed Steadfa st Financ ial L L C, and beca me its

T h e a g r e e m e n t r e a d , i n p a r t : “ G a r y H u m p h r e y s a n d P e t e r G

. B e n n i s h e r e b y a g r e e t o p a r t i c i p a t e i n t h e 3 d e v e l o p m e n t o f t h e M i t c h e l l R a n c h p r o j e c t

. G a r y H u m p h r e y s a g r e e s t o p a y P e t e r G

. B e n n i s 4 0 % o f a n y r o y a l t y i n t e r e s t s , O R R I [ o v e r r i d i n g r o y a l t y i n t e r e s t s ] o r c o n t r a c t i n t e r e s t s f o r n e g o t i a t i n g t h i s R a n c h s u r f a c e a n d m i n e r a l e s t a t e
. G H w i l l
e x e c u t e o r c a u s e t o b e e x e c u t e d a p p r o p r i a t e d o c u m e n t s t o t r a n s f e r s u c h 4 0 % i n t e r e s t i n t h e a m o u n t s r e t a i n e d b y G H i n a n y d e a l i n g o n t h e R a n c h p r o j e c t

. ” 6manag ing member. There afte r, Humphrey s terminated the Fe bruar y 2006 assig nment t o Texas 4 Shepco and assig ned his in t er est in the Mitchell Ranch contra ct to Steadfa st. Be nnis expressed
frustra tion at the turn of events, be lieving tha t Humphrey s had miscalcula ted, if not misled him. 5

I n purcha se documents for the Mitchell Ranch, Steadfa st pledg ed to “honor and uphold any
interest Be tty L ou Br adshaw is deter mined to be entitled to in the Property .” Howeve r, the leg al and
financ ial implications of B radsha w’s interest beca

me of incre asing conce rn. I n an April 12, 2006,
emai l t o Hu m phrey s, David Shipman, an attorney for Steadfa st, expressed uncer tainty about “the interpre tation of the Be tty L ou Br adshaw deed” and the possibili ty that she could “bring suit” based

on the deed’ s lang uag e. L ooking to avoid such litigation, Shipman wrote to Humphrey s, “Steadf ast
is willi ng to enter into a le ase ag ree ment with y ourself and honor a lease ag ree ment for Bra dshaw
in the same amount in order for y ou to fulfill y our fiduciary duty to Br adshaw as the executive
mineral estate interest.” Continui ng , Shipman sug g ested Steadfa st’s “best alterna tive to avoid litigation re g arding the Br adshaw interest” would be to attain a one-f ourth roy alty

. As Shipman
articula ted the proposal, “Steadf ast is willing to offe r a 25% roy alty interest lease ag ree ment for y our
1/16 mineral estate and two hundred thousand as a bonus pay ment pay able upon closing .” Shipman

S t e a d f a s t h a s n o t i f

i e d t h e C o u r t t h a t i t s n a m e h a s c h a n g e d t o “ K C M F i n a n c i a l , L L C

. ” F o r c o n s i s t e n c y w i t h 4 t h e n a m i n g c o n v e n t i o n s e m p l o y e d i n t h e l o w e r c o u r t s , a n d t o a v o i d c o n f u s i o n , w e w i l l c o n t i n u e t o r e f e r t o K C M F i n a n c i a l a s S t e a d f

a s t f o r p u r p o s e s o f o u r a n a l y s i s
.
I n a n e m a i l t o W a y n e G i f f o r d o f E X C O R e s o u r c e s , B e n n i s w r o t e : “ I t ’ s b e e n a f i a s c o
. G a r y s i g n e d a d o c u m e n t 5 t h a t f o u l e d m y d e a l a n d I w a s o n t h e b r i n k o f l i t i g a t i o n
. . . . B o t t o m l i n e i s t h a t R a n g e R e s o u r c e s i s b u y i n g t h e w h o l e d e a l l a n d [ s i c ] a n d t a k i n g a l e a s e

– t h e y w i l l p u t t h r e e w e l l s d o w n w i t h i n t h e f i r s t 1 2 m o n t h s
. I w a s h o p i n g f o r t h e C h e s a p e a k e d e a l t o m a k e b u t G a r y s c r e w e d u p a p e r f e c t l y g r e a t o p p o r t u n i t y f o r u s a l l

. ” W h a t e v e r B e n n i s ’ s g r i e v a n c e s h a d b e e n , h e a p p e a r s t o h a v e b e e n p l a c a t e d b y a s t i p u l a t i o n a n d a m e n d m e n t o f c o n t r a c t e x e c u t e d o n A p r i l 1 8 , 2 0 0 6 , i n w h i c h h e a c k n o w l e d g e d t h e a s s i g n m e n t t o S t e a d f a s t a n d a c c e p t e d a n a m e n d m e n t o f t h e a s s i g n m e n t c o n t r a c t t h a t a l l o w e d h i m t o p a r t i c i p a t e i n t h e p r o c e e d s o f a n y s u b s e q u e n t s a l e o r , i f n o s a l e c l o s e d , e s c r o w f u n d s
. 7also noted, howeve r, that Br adshaw , as the non-executive interest holder, was entitled to “no Bonus

Money ” if the mineral estate is develope d by a lessee. Sikes and Vial also acknow ledg ed that

Br adshawwould not share in a bonus.
There afte r, a series of transac tions and neg otiations culminated in a mineral lease on terms

t h at Br adshaw considere d to be less than favor able, an event which prec ipitated the underly ing
lawsuit. On April 27, 2006, Steadfa st closed on the Mitchell Ranch contra ct and, in quick

succ es sion, sold the surfa ce estate to Rang e Resource s and executed a mineral lease with Rang e
Production I , L

. P

. (c o llectively , Rang e). Neither of the Rang e entities was rela ted to or aff iliated with Steadfast or Sikes, and the y wer e re prese nted in the transa ction by separ ate c ounsel.
Under the mineral-le ase terms, Steadfa st rese rved a one-e ighth roy alty and obtained a lease
bonus of $7,505 per acr e. Given the acr eag e involved, the lease bonus totaled more than $13 milli on
for the portion of the proper ty burdene d by Br adshaw ’s interest. I n acc ordanc e with the terms of the 1960 deeds, B radsha

w was e ntitled to a one-sixt eenth inter est in the g ross production (one -half of
the one-e ighth roy alty rese rved in the mineral lease ), but did not share in any part of the bonus. The

rema ining ha lf of the r oy alty rese rved in the miner al lease belong ed to Steadfa st.
Steadfa st immediately assig ned part of i t s o n e- six teenth roy alty interest to Be nnis, who i n

turn conveyed part of his interest to Ronny Korb, a bank colleag ue who repor tedly broker ed Be nnis’s
in tr o d u c ti o n to Humphrey s. Sometime later, Steadfa st assig ned parts of its rema ining roy alty inter e s t

to R.J

. and Kathy Sikes, R. Crist Vial, Gre g and Pam L ouvier, Roge r Sikes and Christy Rome, and

8Dac ota I nvestment Holding s, L .L .P. (collectively , the Roy alty Owner s).

I n J anuar y 2007, Br adshaw filed sui t alleg ing that Steadfa st, as ex ecutive, had vi o l at ed i t s
fiduciar y duty to her, as a non-executive interest holder, when it enter ed into the mineral lease with Rang e. Br adshaw further asser ted that Rang e conspired with Steadfa st and aided and abetted the
brea ch. Although the roy alty provided in the mineral lease meets the minimum roy alty require d by
the 1960 deeds, Br adshaw asser ted that a one-e ighth roy alty was below marke t in Hood County and
that a one-f

ourth roy alty had become standard. Acc ording to Br adshaw , Steadfa st eng ag ed in
self-de aling by obtaining an exorbitant bonus pay ment at the expense of secur ing a highe r roy alty

. Be cause Br adshaw had no interest in the bonus pay ment, she contends the trade -off diminis hed the
value of her inter est.
As an initial matter, Br adshaw filed a motion for partial summary judgme nt, arg uing that the
deeds provided for a “f

ra ction of a roy alty ” that entitled her to a minimum one-sixteenth roy alty , rathe r than a fixed one-sixteenth “fr actional roy alty .” Stated more simply , Br adshaw arg ued that her
interest established a m i n imum entitlement to whateve r roy alty was ultimately neg otiated, as

o pposed to fix ing a set roy alty of one-ha lf of a one-e ighth roy alty

. The trial court ag reed wi t h

Br adshaw , and the court of appea ls aff irmed in an ag ree d interlocutory appea l. See Range Res. Corp.
v. Bradshaw , 266 S.W .3d 490, 491 (Tex. App.—For t Worth 2008, pet. denied). 6

I n amende d petitions filed some two y ear s afte r the dispositi on of the interlocutory appea l,

A t t h i s p o i n t i n t h e l i t i g a t i o n , t h e r e d o e s n o t a p p e a r t o b e a n y d i s p u t e t h a t t h e n o n - p a r t i c i p a t i n g r o y a l t y i n t e r e s t 6

r e s e r v e d i n t h e 1 9 6 0 d e e d s i s a f r a c t i o n o f a r o y a l t y t h a t m a y f l o a t a b o v e t h e f

l o o r s p e c i f

i e d i n t h e l e a s e
. 9Br adshaw added fra udulent-transf

er claims ag ainst the Roy alty Owner s, Be nnis, and Korb, alleg ing
that the transf

ers we re ma de for

less than re asonably

equivalent va lue and Steadfa st w as insolvent

or made insolvent by the transfe rs. See T E X

. B U S

. & C O M

. C O D E §§ 24.005(a) (2), .006. Br adshaw
further soug ht a constructive trust on the proce eds of the roy alty interests Steadfa st had transfe rre d
to them.
After considering the defe ndants’ various traditional and no-evide nce motions for summary judgme nt, the trial court g rante d a take- nothing judgme nt without stating its g rounds. Bradshaw v. Steadfa st Fin., L.L.C

. , No. C2007009, 2010 WL 10911092 (355th Dist. Ct., Hood County , Tex. Aug

. 13, 2010). The court of appea ls reve rsed and rema nded as to all claims except for those rela ted

to Be nnis and Korb. 395 S.W.3d 348, 376 (Tex. App.—Fort Worth 2013).

I n reve rsing the summary judgme nt, the court of appea ls focuse d heavily on Steadfa st’s duty

to Br adshaw and the alleg ed brea ch, which underg irds all of Br adshaw ’s claims. After an exhaustive
discourse on the evoluti on of t he per tinent case law, the c ourt held: (1) St eadf ast owes Bra dshaw

a fiduciar y duty of “utmost g ood faith”; (2) a g enuine is s u e o f m at er i al fac t exis ts as to whether
Steadfa st brea ched its duty to Br adshaw in neg otiating the terms of the m inera l lease with Rang e;
and (3 ) t he doctrine of estoppel by deed does not prec lude Br adshaw from arg uing that Steadfa st
brea ched its fiducia

ry duty

. Id . at 370-371.

More summarily , the court found that Rang e was not entitled to summary judgme nt beca use (1) “the underly ing tort—Steadfast’s alleg ed brea ch of duty —is the basis for Br ad shaw’s civil

cons p i racy and aiding and abetting claims ag ainst Rang e” and (2) leg al j ustification and privil eg e

are aff irmative defenses that Rang e did not conclusively establish. Id. at 372. The court likewise

10deter

mined that the Roy alty Owner s wer e not enti t led to summary judgme nt on Br adshaw ’s
constructive- trust and fra udulent-transf

er claims beca

use a fac t question rema ined conce rning
whether Steadfa st breac hed its duty to Bra dshaw in the fir st instance. Id. at 375-76.

Be nnis and Korb, howeve r, far ed better on appea l than the other defe n d an t s
. T he court
aff irmed summary

judgme nt in their favor because: ( 1) B ennis obtained his roy alty interest at the

same time Steadfa st executed its ag ree ments with Rang e (the signific ance of w hich is not explained); (2) there is no evidenc e that Be nnis eng ag ed in fra ud or that Br adshaw had any interest in his roy alty , including the portion assig ned to Korb; and (3) Br ad shaw had abandone d her fra udulent-transf

er claims ag ainst them. Id. at 376. Although Steadfa st, Rang e, and the Roy alty Owner s have pe titioned this Court f or revie w,
the cour t of appe als’ judg ment in favor of Be nnis and Korb is uncha lleng ed.
II. Discussion
A. Standard of

Review
We revie w a g rant of summary judgme nt de novo. Nall v. Plunkett , 404 S.W

. 3d 552, 555 (Tex. 2013). I n a traditional summary -judg ment motion, a movant must state specific g rounds, and

a defe ndant who conclusively neg ates at l ea s t o n e es sential element of a cause of action or conclusively establishes all the elements of an aff irmative defe nse is entitled to summary judgme nt.
Id. (citing T E X

. R. C I V

. P. 166a(c )). I n a no-evide nce s u m m ar y -judg ment motion, the movant

co n tends that no evidenc e supports one or more essential elements of a claim for whi ch t h e

non m o v an t woul d bear the burden of proof at trial. T E X

. R. C I V

. P. 166a(i). The trial court must

g rant the motion unless the nonmovant raises a g enuine issue of materia l fac t o n eac h challeng ed

11element. Hamilton v. W ilson , 249 S.W .3d 425, 426 (Tex. 2008) (citing T E X

. R. C I V

. P. 166a(i))

. B. Su bstantive Law on Duty
The threshold issue in this case is whether evidenc e exis ts from which a jury could conclude
that Steadfa st brea ched a duty to Br adshaw in neg otiating the terms of the mineral lease with Rang e. Among other arg uments, Steadfa st contends that there is no per se duty to obtain the highe st possible

roy alty and that, as a matter o f l aw , i t p roperly discharg ed its duty to Br adshaw by obtaining the
minimum roy alty require d by the 1960 deeds. Br adshaw responds, ho we v er , that there is at least

some evidenc e Steadfa st eng ag ed in self-de aling to her detriment by secur ing a larg e bonus for itself
in e x chang e for a below-ma rket roy alty . I n Br adshaw ’s view, Steadf ast’s actions are repug nant to
the spirit and i n t en t o f the roy alty rese rvation in the 1960 deeds, which she alleg es expressly contemplate the non-par

ticipating r oy alty

interest holder

sharing in market incr ease s.
The rela tionship betwee n an executive and a non-executive was first descr ibed in a 1937
commission of appea ls decision adopted by this Court, Schl i t t l er v. Smith , 101 S.W .2d 543 (Tex. 1937). Wit h respe ct to the rela tionship betwee n the executive-rig hts holder and the non-executive,
we obse rved in Schlittler that “self- interest on the pa rt of the g rante e may

be trusted to prote ct the

g rantor as to the amount of roy alty rese rved.” Id. at 545. I mportantly , we added, “Of course , there
should be the utmost fair dea ling on the pa rt of the g rante e in this reg ard.” Id. Thirty y ear s later, we specific ally addre ssed t h e cl ose and depende nt nature of the
rela tionship. I n A n d

r et t a v. W

est , the executive had amende d the mineral lease to permit a
comp en s atory roy alty , but neither notified the non-par ticipating roy alty interest holder about the
amendment nor share d the proce eds. 415 S.W .2d 638, 641 (Tex. 1967). We acknow ledg ed that an

12executive “has the power to make and amend lease s aff ecting the enjoy

ment of a non-par

ticipating

roy alty interest owned by another ,” but said that this power g ives rise to a “conf idential rela tionship”
betwee n them. Id. I n view of t h at re l ationship, the executive was held to be acc ountable to the
non-executive for

the latter’ s one-f

ourth share of the c ompensatory roy alty pay ments. Id.
The executive’s duty took cente r stag e in Manges v. Guerra , a case involving particula rly

eg reg ious acts of self-de aling by the executive. 673 S.W .2d 180, 182-84 (Tex. 1984). I n Manges , the Guer ra family owned a mineral interest i n co-te nancy with Clint on Mang es, who held the
executive rig hts. Mang es exercised his authority as executive to execute mineral lease s on terms that

wer e highly unfavor able to his co-te nants. Specifica lly , Mang es made the lease with himself, ag ree d

to a $5 nominal bonus for ne arly 26,000 acr es of land, and dealt with the entire mineral interest so
that he rec eived benef

its that the non-executives did not rec eive. Id

. The Guer ras sued, arg

uing that Mang es brea ched his duty to them. We ag ree d, observing that “[t] he duty of utmost g ood faith owed by an executive has been settled since Schlittler .” Id. at 183. We further elabor ated that “[the] duty [of utmost g ood faith] require s the holder of the executive rig ht, Mang es in this case , to acquir e for
the non-e x ecutive e very

benef it that he exacts for himself.” Id. at 183-84.

I n HECI Exploration Co. v. Neel , we d es cribed Andretta as having rec og nized a ty pe of
fiduciar y rela tionship betwee n an executive and a non-executive. 982 S.W .2d 881, 888 (Tex. 1998).

We explained that Andretta h el d that “a fiduciar y rela tionship exis ts betwee n an owner of the
executive rig hts and nonparticipa ting roy alty owner s in Andre tta’s position” beca use the executive has the powe r to make a

nd amend the le ase a

nd there by

aff ect the la tter’s rig hts. Id

. I n a mo re re cent discussion of the issue, we reiter ated that the executive owes the

13non-executive a fiduciar y duty and, relying on Manges , define d that duty as an obliga tion to “ac quire

ever y benef it” for the non-executive that the executive “would acquir e for himself.” In re Bass, 113
S.W .3d 735, 745 (Tex. 2003).

I mportantly , though the rela tionship betwee n an executive and a non -executive has been
descr ibed as fiduciar

y in nature , the executive is not require d to g rant priority to the non-executive’s
interest. Although “[a] fiduciar y duty often

. . . require s a [fiduciary ] to place the interest of the other
party befor e his own,” we have clar ified that our prec edent in Andretta , HECI , and Manges did not incorpora te this requireme nt as part of the executive’s duty

. Lesley v . Veterans Land Bd. of State , 352 S.W .3d 479, 490 (Tex. 2011). Rather, as stated in Manges , “the executive’s duty is to ‘ac quire
for the non-executive ever y benef it that he exacts for himself.’” Id. (quoting Manges , 673 S.W .2d

at 183). This limit ation distinguishes the executive’s duty from a more para digma tic fiduciar y
rela tionship, like principal and ag ent. See Floors Unlimited, Inc. v. Fieldcrest Cannon, Inc ., 55 F.3d 181, 188 (5th Cir. 1995) (“U nder Texas law, a fiduciar y duty will not be lightly cre ated, as it imposes extraordinary duties. The party owing the duty in a fiduciar y rela tionship must put the interests of
the bene ficiar

y ahea d of its own if the nee d arises.” ).

I n evalua ting whether an executive has brea ched a duty owed to a non-executive, evidenc e

o f s elf-dealing can be pivotal. See , e.g ., Lesley , 352 S.W .3d at 491 (re counting the “per v as i v e
sel f- dealing ” invol ved in Manges ). When we have declined t o find a breac h of t he duty , we have

g ener ally observe d the absenc e of self-de aling

. See In re B a s s , 1 1 3 S .W.3d at 745 (“What
differ entiates this case from Manges , howeve r, is that no evidenc e of self-de aling exis ts here .”). The
intermediate appellate courts have proce eded simil arly

. See, e.g. , Hlavinka v. Hancoc k , 116 S.W .3d

144 1 2 , 4 2 1 (Tex

. App.—Corpus Christi 2003, pet. denied) (finding no brea ch due to the absence o f

self-de aling ), disapproved of on other grounds by Lesley , 352 S.W .3d at 491 & n.78 (obser ving that
executive may be liable for ref usal to lease minerals “[i] f the ref usal is arbitra

ry or motivated by selfinterest to the non-e x ecutive’ s detriment”)

. Self-dea ling has most c ommonly been observe d in situations where the executive employ s

a leg al contrivanc e to benef it h i m s el f, a close familial rela tion, or both. This was most rea dily

appar ent in Manges , but it has also been a fea ture of a

multit ude of othe r Texas ca ses. 7

As the foreg oing discussion alludes, t he value of a non-par ticipating roy alty interest is not
left exclusively to the whims of the executive. Lesley , 352 S.W .3d at 487 (“The law has never left
non-executive interest owner s whol l y at t h e m ercy of the executive.”)

. To the contra ry , while an
executive may be understood to have considera ble latitude, the executive lacks unbridled discretion.
Our jurisprudenc e in this are a of the law emer g ed in rec og nition of the potential for abuse inhere nt
in this division o f ri gh t s. I n the absenc e of a fiduciar y -like duty of utmost g ood faith and fair dealing , an i l l -i ntentioned or indiffer ent executive holder could signific antly compromise or
exti ng uish the value of a non-executive interest. Id

. (“I f the exclusive rig ht to lease the minerals
could be exercised arbitra

rily or to the non-executive’s detriment, the executive power could destroy
all value in the non-executive interest, appropr iating its benef its for himself or others.”)

. Thus, while

S e e , e

. g

. , D e a r i n g , I

n c

. v

. S p i l l e r , 8 2 4 S

. W

. 2 d 7 2 8 , 7 3 0 , 7 3 3 ( T e x
. A p p
. — F o r t W o r t h 1 9 9 2 , w r i t d e n i e d ) 7 ( f i n d i n g s i m i l a r l y ) ; M i m s v

. B e a l l , 8 1 0 S

. W

. 2 d 8 7 6 , 8 8 0 ( T e x
. A p p
. — T e x a r k a n a 1 9 9 1 , n o w r i t ) ( f i n d i n g t h a t s e l f

- d e a l i n g o c c u r r e d w h e n t h e e x e c u t i v e e n t e r e d i n t o l e a s e s w i t h f a m i l y m e m b e r s o r f

a m i l y - o w n e d c o m p a n i e s , a t i n f e r i o r t e r m s t h a n c o u l d b e o b t a i n e d t h r o u g h a r m ’ s - l e n g t h t r a n s a c t i o n s ) ; P o r t w o o d v

. B u c k a l e w , 5 2 1 S

. W

. 2 d 9 0 4 , 9 0 9

- 1 0 ( T e x
. C i v
. A p p
. — T y l e r 1 9 7 5 , w r i t r e f ’ d n
. r
. e
. ) ( f i n d i n g s e l f

- d e a l i n g w h e n t h e e x e c u t i v e k e p t o v e r r i d i n g r o y a l t i e s a n d b o n u s e s f o r i t s e l f i n s t e a d o f d i s t r i b u t i n g t h e m t o n o n - e x e c u t i v e s )

. 15an executive has a larg ely unfetter ed hand in neg otiating and structuring a m i nera l lease , that

discretion is c ircumscr ibed by the duty owed to a non-executive. See Manges , 673 S.W .2d at 183.

I f t he semantics surrounding the nature of t his duty have shifte d subtly over the y ear s, this
much is clea

r: An executive owes a non-executive a duty that prohibits s el f-de aling but does not require the executive to subjuga te its interests to those of the non-executive. Thus, in a scer taining
whether the executive brea ched its duty to the non-executive, the controlling inquiry is whether the

execu t i v e eng ag ed in acts of self-de aling that unfairly diminis hed the value of the non-executive
interest. Althou gh t h e co ntours of the duty rema in somewhat indisti nct, these tenets g uide our analy sis of the claims bef ore us. 8

C. Breac h of

F idu ciary Duty
The crux of Br adshaw ’s claim is that Steadfa st eng ag ed in self-de aling at her expense. Whil e
the parties ag ree th at S teadf ast owes Br adshaw a duty of utmost g ood faith and fair dealing , they

sug g est that the availability of a highe r roy alty rate can be cate g orica lly included in or excluded from the scope of that duty . We disag ree
. When an executive neg otiates a mineral lease , my riad components of any g iven arr ang ement

can aff ect the overa ll value of a mineral lease , including the rig hts to rec eive roy alties, delay renta ls

W e h a v e a c k n o w l e d g e d t h a t a p r e c i s e , a l l

- e n c o m p a s s i n g d e f i n i t i o n o f “ f

i d u c i a r y d u t y ” h a s p r o v e n e l u s i v e : 8

F i d u c i a r y d u t i e s a r e i m p o s e d b y c o u r t s o n s o m e r e l a t i o n s h i p s b e c a u s e o f t h e i r s p e c i a l n a t u r e
. W e r e c o u n t e d i n K i n z b a c h T o o l C o

. v

. C o r b e t t

- W

a l l a c e C o r

p
. t h a t t h e “ t e r m ‘ f

i d u c i a r y ’ i s d e r i v e d f

r o m t h e c i v i l l a w
. W e r e c o g n i z e d t h a t i t “ i s i m p o s s i b l e t o g i v e a d e f i n i t i o n o f t h e t e r m t h a t i s c o m p r e h e n s i v e e n o u g h t o c o v e r a l l c a s e s
. ” W e s a i d , “ [ g ] e n e r a l l y s p e a k i n g , i t a p p l i e s t o a n y p e r s o n w h o o c c u p i e s a p o s i t i o n o f p e c u l i a r c o n f

i d e n c e t o w a r d s a n o t h e r
. I t r e f e r s t o i n t e g r i t y a n d f

i d e l i t y
. I t
c o n t e m p l a t e s f

a i r d e a l i n g a n d g o o d f

a i t h , r a t h e r t h a n l e g a l o b l i g a t i o n , a s t h e b a s i s o f t h e t r a n s a c t i o n
. ”

J o h n s o n v

. B r e w e r & P r i t c h a r d , P

. C

. , 7 3 S

. W

. 3 d 1 9 3 , 1 9 9 ( T e x
. 2 0 0 2 ) ( a l t e r a t i o n i n o r i g i n a l ) ( f o o t n o t e s o m i t t e d )

. 16and bonuses, and other provisions like the number and place ment of wells. Non-e x ecutive interest

holders may benef

it from som e but not all of these pote ntial terms. The int ere sts of t he ex ecutive
and the non-executive may there fore be aligned in s o m e respects but not others. Knowing that to
be the case , we have long held that the executive may discharg e its duty to the non-executive without

y ielding entirely to the non-executive’s best interests. To hold that the executive must obtain the highe st roy alty available would not only contra vene our prec edent, it would also unduly impinge the executive’s rig ht to make and a mend lease s.
Be that as it may , the g oing rate for a roy alty interest is not altog ether immaterial. When an
executive has discretion to neg otiate the terms of a mineral lease , and thus aff ect t h e v alue of the

non-par ticipating roy alty interest, the executive’s discretion is tempere d by the duty of utmost g ood
faith and fair dealing

. As previously discussed, we h av e d escr ibed the duty as requiring the
executive “t o ac q u i re for the non-executive ever y benef it that he exacts for himself.” Id

. As
articula ted, the executive’s duty is dece ptively simple i n i t s ex plication, but not nece ssarily straig htforwa

rd in its application.

I n the prese nt case , it appea rs, at least superf

icially , that the executive’s d u t y h as been
satisfied beca

use Br adshaw and Steadfa st enjoy exactly the s am e ro y al ty under the terms of the
mineral lease Steadfa st neg otiated with Rang e (one- half of a one-e ighth roy alty ). Howeve r, the issue
is more complicated than it a ppear s at first blush be cause the non-executive interest is not fix ed in
the 1960 deeds and, instead, a minimum roy alty is specifie d. Acc ording ly , (1) the executive has no
discretion to neg otiate a lease for less than a one-e ighth roy alty , which must be share d equally
betwee n the executive and non-executive; (2) the non-executive has some expectation of benef itting

17from im proved market conditions ; and (3) the ex ecutive is i m bued with discretion in neg otiating 9
the terms of a mineral lease but must “ac quire for the non-executive ever y benef it that he exacts for
himself.” Given that the executive and non-executive often do not sha re in a ll the same economic
benef its that might be derive d from a mineral lease (or even equally in the share d benef its), this beg s
the question as to how an executive could “ac quire for the non-executive ever y benef it that he exacts
for himself” without forfe iting its rig hts or compromising its own e conomic position. Obviously , obtaining the same royalty in a mineral lease does not automati ca l l y equate to acquir ing the same benefit from the mineral lease

. On the other hand, the executive here indisputably holds the rig h t t o o btain benef its, such as bonuses and delay renta ls, in which the
non-executive has absolutely no i n t er es t

. This situation thus prese nts a conundrum that require s
balanc ing the bundle of rig hts that comprise a mineral estate. See Altman v. Blake , 712 S.W .2d 117,
1 1 8 (Tex

. 1986) (“The re are five essential attributes of a sever ed mineral estate: (1) the ri gh t t o develop (the rig ht of ingr ess and eg ress), (2) the rig ht to lease (the executive rig ht), (3) the rig ht to

rec eive bonus pa

y ments, (4) the r ight to rec eive delay renta ls, [and] ( 5) the rig ht to rece ive roy alty

pay m en t s .”). Although (and perha ps beca use) eac h stick in the bundle of rig hts is sever able and distinct, whether the executive has obtained “eve ry benef it” for the non-executive as it has for itself

cannot be deter

mined in a vacuum. Cf. R. Heming way , L A W O F O I L A N D G A S , § 2.2 (3rd ed. 1991) (“In the ex erc ise of the powe r to lease , the holder of the power

is fac ed with decisions concerning
when the power should be exercised, the g ener al terms and conditions to be included i n t h e

S e e J o n e s , 2 6 T E X

. L

. R E V

. a t 5 7 6 ( o b s e r v i n g t h a t t h e “ c o m m o n p r a c t i c e ” o f r e q u i r i n g “ a r o y a l t y o f n o t l e s s 9 t h a n t h e u s u a l 1 / 8 ” p r o t e c t s a n o n - p a r t i c i p a t i n g r o y a l t y i n t e r e s t o w n e r a n d “ e n t i t l e [ s ] h i m t o a s h a r e i n a n y r o y a l t y , a s s u c h , i n e x c e s s o f t h e u s u a l 1 / 8 ” )

. 18transac tion, an d wh et her he may rese rve economic benef its in a form in which the owner of the

non-par ticipating interest will not share .”). Her e, the alleg ati o n i s that the executive has misappropriate d what would have been a share d benef it (a marke t-rat e r o y a lt

y in te r e s t) a n d c onverte d
it into a benef

it rese rved only unto itself (an enhanc ed bonus), with the intent to diminis h the value
of B radsha

w’s roy alty

interest. I f prove d, such conduc t is the essence of self- dealing

. When a rese rved roy alty is to be share d equall y , as i t i s here , we cannot conclude that the
executive’s duty can be satisfied mere ly by obtaining some roy alty or even no roy alty

. I n either case , the roy alty would be the “same ” for both the executive and non-executive, but that has no meaning
without ref

ere nce to other benef

its the executive may have secur ed and in which the non-executive
has no intere st. 1 0

Moreove r, beca

use the parties here barg ained for an unfix ed roy alty with a floor and no cap,

we cannot conclude that mere ly obtaining the minimally acc eptable roy alty discharg es, as a matter
of law, the executive’s duty

. Rather, the subject transac t i o n m u st be viewed as a whole in
deter min i n g wh et h er the terms of a mineral lease , including the neg otiated roy alty , ref lect the

T h i s p o i n t i s i l l u s t r a t e d b y t h e f a c t s o f P o r t w o o d v

. B u c k a l e w , 5 2 1 S

. W

. 2 d 9 0 4 ( T e x
. C i v
. A p p
. — T y l e r 1 9 7 5 , 10

w r i t r e f ’ d n
. r
. e
. )

. T h e d i s p u t e i n P o r t w o o d i n v o l v e d h e i r s w h o , b y v i r t u e o f a p a r t i t i o n d e e d , h a d a r i g h t t o p a r t i c i p a t e i n a l l r o y a l t i e s a n d b o n u s e s f o r a n u n d i v i d e d m i n e r a l e s t a t e b u t d i d n o t h a v e t h e r i g h t t o s h a r e i n s u r f a c e d a m a g e s t o t h e p a r t i t i o n e d s u r f

a c e e s t a t e
. I

d

. a t 9 0 9

. T h e s u r f

a c e l a n d o w n e r s n e g o t i a t e d s e v e r a l m i n e r a l l e a s e s i n w h i c h t h e y t o o k f o r t h e m s e l v e s o v e r r i d i n g r o y a l t i e s a n d c a s h b o n u s e s c l a s s i f i e d a s s u r f

a c e d a m a g e s
. I

d

. T h e c o u r t c o n c l u d e d t h a t t h e r e c o r d
c o n c l u s i v e l y e s t a b l i s h e d s e l f

- d e a l i n g i n t h e r e c e i p t o f t h e s e “ s u r f a c e d a m a g e s , ” c i t i n g e v i d e n c e t h a t t h e r e c e i p t o f s u c h
s u b s t a n t i a l c o m p e n s a t i o n f o r s u r f a c e d a m a g e s ( 1 ) w a s n o t c u s t o m a r y , ( 2 ) r e f l e c t e d a p r a c t i c e a l m o s t u n h e a r d o f i n t h e i n d u s t r y , ( 3 ) w a s i n c o n s i s t e n t w i t h t h e s u r f a c e - e s t a t e o w n e r ’ s s t a n d a r d p r a c t i c e s i n s e c u r i n g m i n e r a l l e a s e s o n p r o p e r t y n o t b u r d e n e d b y t h e n o n - e x e c u t i v e ’ s i n t e r e s t , a n d ( 4 ) w o u l d n o t r e a s o n a b l y h a v e b e e n a n t i c i p a t e d b y a n o r d i n a r i l y p r u d e n t l a n d o w n e r
. I

d

. a t 9 1 0 , 9 1 6

. M o r e o v e r , t h e c o u r t o b s e r v e d t h e a b s e n c e o f e v i d e n c e i n d i c a t i n g t h a t r o y a l t i e s a n d b o n u s e s c o u l d o n l y b e s e c u r e d a s s u r f a c e d a m a g e s , a s o p p o s e d t o r o y a l t i e s a n d b o n u s e s i n u r i n g t o t h e b e n e f i t o f b o t h t h e e x e c u t i v e a n d n o n - e x e c u t i v e u n d e r t h e t e r m s o f t h e p a r t i t i o n d e e d

. I d

. a t 9 1 8

.

19executive’s utmost g ood faith and fair dealing vis-à-vis the non-executive. Although in many case s

this will be a fac t question, we do not fore close the possibili ty that brea ch of duty may be deter mined

as a matter of law, depending on the evidenc e in a particula r case
. Howeve r, we are unable to make
such a de termination here

. Reviewing the rec o rd in the light most favor able to Br adshaw , as we must, there is some
evidenc e in the summary -judg ment rec ord to cre at e a fact issue on Br adshaw ’s claim that the

one- eighth roy alty Steadfa st neg otiated was artificia lly low, the bonus Steadfa st rec eived was unusually high, a nd Steadfa st intended to minim ize the benef it shared with B radsha

w.
I n response to th e s u

mm a r y - ju d g me nt motions, Br adshaw produce d evidenc e that, in an April
2006 email, lega l counsel for Steadfa st offe red Humphrey s a one-qua rter roy alty interest during

neg otiations for the Mitchell Ranch assig nment. Moreove r, the summary -judg ment evid ence
sug g ests that a roy alty of one-f ourth was not uncommon in the ar ea
. Bennis, the bank president,
testified d u ri n g his deposition that roy alty rate s in the are a had been as high as one-qua rter.
Br adshaw also tes t i fi ed via aff idavit that, in J uly 2005, she receive d an offer to lease the M itchell
Ranch minera l es t at e fo r a one-f ourth roy alty

. Br adshaw further produce d five lease s in which

opera tors had ag ree d to pay a one-qua rter roy alty to landowner s in Hood County near the time of the Rang e lea se. Two of

these lea ses with a one- quarte r ra te involved Rang e Production. Reg arding the bonus, Br adshaw produce d the affidavit of a landman in Hood C ounty who

aver red that the bonus was “excessive and many times highe r than the lease bo n u ses which wer e usually and customarily being paid in the Ba rnett Shale during this time period in Hood County and
the surrounding are a.” The landman also stated: “I t is appar ent that the artificia lly low roy alty was
20in exchang e for the artificia lly inflated bonus.” Fur thermore , during neg otiations, various par ties openly acknow ledg ed that proce ed s from the lease bonus would not be share d with Br adshaw

. Steadfa st’s leg al counsel expressly noted that fac t in his A pril 2006 email to Humphrey s, and Vial
made a simil ar acknow ledg ment in an undated letter to Sikes, ostensibly penned ahea d of the April
2006 transac tion with R ang e. Vial wr ote:
As I mentioned on the phone, there are numerous advanta g es to conver ting the 1/16th undivided mineral intere st into a roy alty interest. First, this int ere st is burdened by the Be tty Br adshaw interest. L ikely lawsuit if y ou don’t lease it. Second, if no lease , then no bonus of $250,000.00 in hand. ( Note: None of which goes to Bradshaw ). (Emphasis adde d.)
There is thus some evidenc e that a one-qua rter rate was at least attainable, if not ubiquitous,
and that the deal may have been delibera tely structure d to reduc e the roy alty in favor of benef its that
would not be share d wit h Br adshaw

. To be fair, there is also evidenc e supporting contra ry
conclusions and infere nces, but none that we are permitted to consider in light of the applicable
standard of revie w. Be cause some evidenc e supports Br adshaw ’s alleg ation that the mineral lease

was the product of self-de aling on Steadfa st’s part, Steadfa st was not entitled to summary judgme nt.
We theref ore a ffirm that portion of the court of a ppeals’ judg ment. D. Conspiracy and Aid ing an d Abetting Rang e and Steadfa st are not aff iliated with one another ex ce p t as ad verse parties in an
arm’s- leng th transac tion. Fur thermore , there is no claim that Rang e owes an independe nt fiduciar y 1 1

I n h e r a p p e l l a t e b r i e f

, B r a d s h a w a c k n o w l e d g e s t h a t R a n g e “ w a s n o t a r e l a t e d p a r t y
. ” B y d e f i n i t i o n , a n 11

a r m ’ s - l e n g t h t r a n s a c t i o n r e f e r s t o “ [ a ] t r a n s a c t i o n b e t w e e n t w o u n r e l a t e d a n d u n a f f i l i a t e d p a r t i e s ” a n d m a y a l s o i n c l u d e a t r a n s a c t i o n b e t w e e n c l o s e l y r e l a t e d p a r t i e s “ c o n d u c t e d a s i f t h e p a r t i e s w e r e s t r a n g e r s , s o t h a t n o c o n f l i c t o f i n t e r e s t
a r i s e s
. ” B L A C K ’ S L A W D IC T IO N A R Y 1 7 2 6 ( 1 0 t h e d

. 2 0 1 4 )

. 21duty to Br adshaw

. I ndeed, Texas law has never rec og nized a fiduciar y rela tionship betwee n a lessee
and roy alty owner s. HECI , 982 S.W .2d at 888. This is not surprising g iven that the lessee’ s interests

are inhere ntly adver se to both the executive and a non-e x ec utive interest holders. Br adshaw 1 2
nonetheless cont ends that Steadfa st’s alleg ed brea ch of duty can be imputed to Rang e under civil-conspira cy

and aiding -and- abetting theories.

We conclude that Br adshaw ’s deriva tive-liability claim ag ainst Rang e is untenable as a matter
of law. Whether a jury ulti m at el y d et er m i nes Steadfa st brea ched a duty to Br adshaw , we fail to
discern any evidenc e raising a fac t issue t h at R an g e was complicit in the alleg ed underly ing tort. Rather, the uncontrove rted evidenc e ref lects that Rang e mere ly secur ed a mineral-le ase ag ree ment

on mutually acc eptable terms. I n fac t, Rang e’s interests in neg otiating the mineral lease wer e adver se

to both Steadfa st and Br adshaw in that R an ge s oug ht to extract the best deal it could on the most
favor able terms. Evidence that Rang e knew the estate wa s b u rdened with Br adshaw ’s

non-par ticipating roy alty interest, may have known about tensions betwee n Br adshaw ’s and
Steadfa st’s interest s , an d agreed to a one-e ighth roy alty and an eig ht-fig ure bonus pay ment to
Steadfa st are simply insufficient to impute Steadfa st’s liability , if any , to Rang e. The evidenc e shows nothing more than a ty

pical business transac tion in which the parties rea ched a meeting of the minds

as to terms mutually acc eptable to both sides. Were we to validate Br adshaw ’s theory of liability on

F e d e r a l c o u r t s h a v e s h o w n a s i m i l a r u n w i l l i n g n e s s t o e x t e n d f i d u c i a r y d u t i e s t o a d v e r s e p a r t i e s i n a r m ’ s - l e n g t h 12 t r a n s a c t i o n s
. S e e , e

. g

. , W e i n b e r g e r v

. K e n d r i c k , 6 9 8 F

. 2 d 6 1 , 7 9 ( 2 d C i r
. 1 9 8 2 ) ( n o t i n g e x i s t e n c e o f “ s e r i o u s o b s t a c l e s ” t o e x t e n d i n g f

i d u c i a r y p r i n c i p l e s t o a r m ’ s - l e n g t h t r a n s a c t i o n s )

. A l t h o u g h t h e S e c o n d C i r c u i t w a s w r i t i n g i n t h e c o n t e x t
o f t h e r e l a t i o n s h i p b e t w e e n b a n k s a n d l a r g e c o r p o r a t e b o r r o w e r s , t h e c o u r t r e j e c t e d i m p o s i n g d u t i e s i n t h o s e c o m m e r c i a l t r a n s a c t i o n s b e c a u s e “ i t w o u l d b e a n o m a l o u s t o r e q u i r e a l e n d e r t o a c t a s a f i d u c i a r y f

o r i n t e r e s t s o n t h e o p p o s i t e s i d e o f t h e n e g o t i a t i n g t a b l e
. ” I d

. T h e s a m e c o n c e r n s a r e i m p l i c a t e d i n t h e m i n e r a l

- l e a s i n g c o n t e x t

.

22such unre marka ble evidenc e, it would be difficult to conce ive of a context in which a lessee w ould

n o t owe a deriva tive fiduciar y duty to the other side of the barg aining table. An ar m ’s -l en gt h

neg otiation would be essentially nonexis tent, beca use both sides of t he table would be require d to
balanc e their interests ag ainst the non-executive’s interests. This is not only contra ry to the limit ed scope of the duty we ha ve re cog nized in thi s context, i t is nonsensical.
There is also no evidenc e of an imbalance in the mineral-le ase terms that substantially favor ed Rang e, but even if there wer e, that is not evidenc e that it acte d improperly

. I ndeed, in a broad sense,
almost any barg ained- for commerc ial exchang e might be construed as benef it t i n g o n e party at the

expense of another

. See W al-Mart Stores, In c. v. S t urges , 52 S.W .3d 711, 715-16 (Tex. 2001) (“Whene ver two competitors vie for the same business advanta g e
. . . one’s succe ss over the other can almost alway s be said to har m the other.” ). Finally , while our deter

mination here is g uided by law and extan t prec edent, we are not
unmindful of the considera ble burdens that a contra

ry holding would impose on the ener g y industry
in Texas. The Tex as Oi l & Ga s Association arg ues in an amicus brief that a lessee should not be

ta s k e d

— d ir e c tl y o r d e r iv a

tive ly —with policing the executive’s duty to n o n - e xe c u ti v e in te r e s t h o ld e r s
. Nor should a lessee be expected to g ive weig ht to a non-par tic i p at i n g ro y alty interest holder’s
economic inte re s t s ; as we have held, that is the executive’s responsibility

. We ag ree with the
Association that “in neg otiating with the executive, a lessee should not fea r liability for doing nothing more than g etting a

g ood deal c losed.” Rang e conclusively established that it did not owe a duty to Br adshaw in connec tion with its
arms-len gt h t ransaction with Steadfa st, and Br adshaw failed to produce controve rting evidenc e.
23Given the dear th of evidenc e to raise a materia l fac t iss u e, t h er e is no justification for extending
Steadfa st’s fiduciar

y duty to R an ge via theories of deriva tive liability

. Acc ording ly , Br adshaw ’s claims ag ainst Rang e fa il as a matter of law.
E. Constructive Trust and Fr audu lent Transf er
Under the terms of the 196 0 deeds, Br adshaw prese ntly holds a one-sixteenth

non-par ticipating roy alty interest bec au s e t h e deeds rese rve one-ha lf of the roy alty provided in the
mineral lease , which is one-eig hth. Br adshaw contends, howeve r, that she has been shorted an 1 3
additional one-s ixt e e n th roy alty interest beca use Steadfa st should have procur ed a one-f ourth roy alty

. Apply ing the rese rved fra ction of a roy alty (one- h al f) t o the roy alty Br adshaw contends Steadfa st
should ha ve procur ed (one- fourth), she contends that she is actua lly entitled to a one-e ighth roy alty
and has there fore been dispossessed of the additional one-sixteenth roy alty

. Br adshaw maintains that,

to r ectify the alleg ed loss, she is entitled to proce eds from the entire roy alty provided in the mineral
lease , notwithstanding the rese rvation in the 1960 deeds of only half of such ro y alty

. I n eff ect,
Br adshaw lay s claim to the unrese rved roy alty interest Br adshaw ’s pare nts convey ed with the mineral estate, which Steadfa st (1) acquire d as owner of the m inera l es t at e, (2 ) reserved as a one-six teenth

roy alty when the mineral rig hts wer e convey ed to Rang e by mineral lease , and (3 ) subsequently
transfe rre d to the Roy alty Owner s. 1 4

I n t h e d e e d s , t h e g r a n t o r r e s e r v e d “ a n u n d i v i d e d o n e - h a l f ( 1 / 2 ) R o y a l t y ” o f “ n o t l e s s t h a n a n u n d i v i d e d o n e 13

s i x t e e n t y [ s i c ] ( 1 / 1 6 ) ” a n d a u t h o r i z e d t h e g r a n t e e , h i s h e i r s a n d a s s i g n s “ t o l e a s e s a i d l a n d f o r o i l , g a s a n d o t h e r m i n e r a l s p r o v i d e d , h o w e v e r , t h a t a l l s u c h l e a s e s s h a l l p r o v i d e f o r R o y a l t y o f n o t l e s s t h a n o n e - e i g h t [ s i c ] ( 1 / 8 )

. ”

B r a d s h a w i n i t i a l l y c l a i m e d a n i n t e r e s t i n t h e p o r t i o n o f S t e a d f a s t ’ s r o y a l t y i n t e r e s t t h a t w a s t r a n s f e r r e d t o 14 B e n n i s a n d K o r b , b u t h a s s i n c e a b a n d o n e d t h a t c l a i m
. A c c o r d i n g l y , s h e n o w s e e k s s o m e t h i n g l e s s t h a n a n a d d i t i o n a l
o n e - s i x t e e n t h i n t e r e s t , b u t t h e p r e c i s e f i g u r e s a r e n o t g e r m a n e t o o u r a n a l y s i s
.

24Br adshawseeks a constructive tr

ust on Range ’s roy alty

pay ments to the Roy alty Owner s so
that she may be place d in essentially the same position she would have occupie d but f or Steadfa st’s alleg ed brea ch. Br adshaw also claims, in the alterna tive, that the roy alty -intere st transfe rs should be

set aside as fra

udulent transfe rs. See T E X

. B U S

. & C O M

. C O D E §§ 24.001–.013 (Tex as Uniform

Fr audulent Tra

nsfer Act or TU FTA ). We addre ss these cla ims in t urn. 1 5

A constructive tr ust is an equitable, court-c rea ted reme dy desig ned to preve nt unjust
enric hment. Meadows v. Bierschwale , 516 S.W .2d 125, 131 (Tex. 1974) (“Constructive trusts, being

reme dial in char acte r, have the very broad function of redr essing wrong or unjust enric hment in keeping with basic principles of equity and justice.”). They have historically been applied to reme dy

or ameliora te harm arising from a wide varie ty of misfeasa nce. P O M E R O Y ’ S E Q U I T Y J U R I S P R U D E N C E , 5th E d., Vol. 4, p. 97, § 1045, quoted in P ope v. Garrett , 211 S.W .2d 559, 560 (Tex. 1948) (“I t ha s
been said that ‘The specific instances in which equity impr esses a constructive trust are
numberless—a s numberless as the modes by which proper ty may be obtained throug h bad faith and
unconscie ntious a cts.’”)

. But the rea ch of a construc tive trust is not unl imited. Three e lements are

g ener ally require d for a constructive trust to be imposed u n d er Texas law. The party reque sting a
constructive trust must establish the following : (1) brea ch of a specia l trust or fiduciar y rela tionship

or actua l or constructive fra ud; (2) unjust enric hment of the wrong doer; and (3) an identifiable res that

T h e c o u r t o f a p p e a l s r e v e r s e d s u m m a r y j u d g m e n t o n B r a d s h a w ’ s c o n s t r u c t i v e - t r u s t a n d f r a u d u l e n t

- t r a n s f

e r 15

c l a i m s a s f

o l l o w s : “ A s w e h a v e c o n c l u d e d t h a t S t e a d f a s t o w e d a f

i d u c i a r y d u t y t o B r a d s h a w a n d t h a t t h e r e i s a g e n u i n e i s s u e o f m a t e r i a l f

a c t w i t h r e g a r d t o w h e t h e r S t e a d f a s t b r e a c h e d t h a t d u t y b y e n g a g i n g i n s e l f

- d e a l i n g a n d c o n s p i r i n g w i t h
o t h e r s t o B r a d s h a w ’ s d e t r i m e n t

– o n e o f t h e b a s e s f o r B r a d s h a w ’ s c o n s t r u c t i v e t r u s t a n d U F T A c l a i m s a g a i n s t t h e R o y a l t y H o l d e r s

– w e c a n n o t s a y t h a t t h e y w e r e e n t i t l e d t o s u m m a r y j u d g m e n t a s a m a t t e r o f l a w
. T h e r e f o r e w e s u s t a i n B r a d s h a w ’ s t h i r d i s s u e i n p a r t , a n d w e s u s t a i n h e r f o u r t h i s s u e
. O n r e m a n d , i f t h e f a c t f i n d e r c o n c l u d e s t h a t n o b r e a c h
o c c u r r e d , t h e n t h e s e c o n s t r u c t i v e t r u s t a n d U F T A i s s u e s w i l l b e m o o t

. ” 3 9 5 S

. W

. 3 d 3 4 8 , 3 7 6

. 25can be trac ed back to the orig inal proper ty

. Matter of

Haber Oil Co., Inc. , 12 F.3d 426, 437 (5th Cir. 1994) (a pply ing T exas law); see also Me adows, 516 S.W .2d at 128-31.

I n wei gh i n g t h e imposit ion of a constructive trust, a court will identify whether a wrong ful taking has occur

red. See, e.g. , W

heele r v. Blacklands Prod. Credit Ass’n , 627 S.W .2d 846, 851 (Tex. App.—For

t Worth 1982, no writ) (“The very nature of a constructive trust presuppose s a wr ong ful taking by B of proper

ty owned equitably or l eg ally by A, or to which A has some cla im of rig ht.”); Thompson v. Maye

s , 707 S.W .2d 951, 954 (Tex. App.—Eastland 1986, writ ref ’d n.r.e.) (noting a suit

to impose a constructive trust “is an action in equity to preve nt unjust enric hment of a person who has wrongf u l l y ac quired proper

ty ”). A resultant constructive trust may be place d on the proper ty

wrong fully taken or the proce eds or reve nues g ener ated from the proper ty

. W heele r , 627 S.W .2d at
8 5 1

. “I n order to fasten a constructive trust on proper ty owned by the defe ndant, some particul ar
proper ty must be identified as to which plaintiff has an equity .” Id. “De finitive, desig nated proper ty ,
wrong fully withheld from another , is the very hear t and soul of the constructive trust theory .” Id. The theory underly ing t h e co n s t ructive- trust reme dy is the equitable notion that the “ac quisiti on or

rete ntion of the proper

ty is wrong ful and that [t he possessor of the proper ty ] would be unjustly
enric hed if [t he possessor] wer e permitted to re t ai n t he property .” Bake r Botts, L.L.P. v. C ailloux , 224 S.W .3d 723, 736 (Tex. App.—San Antonio 2007, pet. denied)

. B r a d s h a w ’ s c o n s tr u c ti v e - tr u s t c la im f a il s b e c a u s e the undisputed summary -judg me n t e v id e n c e
aff irmatively neg ates at least one element req uired for the imposit ion of a constructive trust. Although Br adshaw asser ts otherwise, the Roy alty Owner s’ interests orig inate in the one-ha lf roy alty
interest transfe rre d to the mineral-inter est owner by the Driskills as part of the bundle of proper ty

26rig hts convey ed by th e 1 9 6 0 d ee d s
. The later execution of the mineral lease with Rang e, even if

wrong ful, did not convert the unr eser ved one- half intere st into Bradsha w’s prope rty

. A constructive trust is not mere ly a vehicle for collecting assets as a fo rm of damag es.
“Unless the trac ing require ment is observe d with rea sonable strictness, any suit o n a debt or obliga tion
could be used to impress a constructive trust on the assets of the defe ndant. ” P eirce v. Sheldon
Petroleu m C o ., 589 S.W .2d 849, 853 (Tex. Civ. App.—Amar illo 1979, no writ). Fur thermore , a
constructive trust may not be imposed simply beca use doing so will, from an acc ounting perspe ctive,
make Br adshaw whole or close to whole. By seeking a constructive trust on the proce eds otherwise

pay able to the Roy alty Owner s, Br adshaw is, in essenc e, seeking a whole share of the roy alty , which

contra venes the express terms of the 1960 deeds. The Roy alty Owner s’ proper ty cannot be taken to

reme dy an alleg ed wrong simply beca use it would harmonize Br adshaw ’s ledg er. Br adshaw ’s 1 6
constructive- trust claim falls short beca use the undisputed evidenc e i n t h e rec ord conclusively
establishes that she has no interest in the roy alty interest sold by her pare nts and held by Steadfa st as part of the bundl e of property rig hts it obtained as mineral owner. The roy alty pay ments on which

Br adshaw seeks a constructive trust emana te from that interest, which Steadfa st reta ined when it

convey ed the mineral rights t o Rang e, and not fro m the one-half of roy alty interest reserve d by the
Driskills in t he 1960 dee ds.
As an alt er n at ive claim for relief , Br adshaw asser

ted in her live petition that the

B e n n i s m a d e t h i s p o i n t b e f o r e t h e t r i a l c o u r t d u r i n g t h e s u m m a r y - j u d g m e n t h e a r i n g : “ A s a m a t t e r o f 16

c o n v e n i e n c e , [ B r a d s h a w ] w a n t s a n a d d i t i o n a l o n e - s i x t e e n t h , a n d s h e w o u l d l i k e t h a t o n e - s i x t e e n t h o u t o f w h a t S t e a d f a s t h a d l e f t o v e r , w h i c h w o u l d n e c e s s a r i l y i n c l u d e M r
. B e n n i s ’ [ s ] i n t e r e s t , b u t t h a t i s , a g a i n , j u s t a m e r e m a t h i s s u e w h e r e s h e w o u l d b e b a s i c a l l y u s i n g a c o n s t r u c t i v e t r u s t l i k e a

— l i k e a w r i t o f a t t a c h m e n t t o s a t i s f

y a j u d g m e n t c l a i m s h e h a s
. ” 27roy alty -intere st transfe rs should be set aside as fra udulent beca

use (1) Steadfa st rec eived less than a

rea sonably equivalent value in exchang e for the transfe rs and (2) Steadfa st was either insolvent at the
time such transfe rs wer e made or beca me insolvent as a result of the transfe rs. See T E X

. B U S

. & C O M

. C O D E §§ 24.005(a) (2), .006. Under T UF T A, a “debtor ,” define d as a “per son who is liable on a claim,” is prohibited from transfe rring its assets for less than rea sonably eq u i v alent value if it is
insolvent or would become insolvent by virtue of the t ransf

er. Id. §§ 24.002(6), .003, .005(a) (2), 1 7

.006. Under the Act, a debtor is insolvent “if the sum of the debtor’s debts is g rea ter than all of the
debtor’s assets at a fair valuation.” Id

. § 24.003(a)

. I f the debtor “is g ener ally not pay ing the debtor’s
debts as they become due,” insolvency is presumed. Id. § 24.003(b); see also id. § 2 4

. 0 0 5(a) (2) (making transfe r fra

udulent as to prese nt or future cre ditor when debtor lacke d s u ff i ci en t assets or
would rea sonably

be unable to pay

debts as they

beca me due a t the time of the transf er)

. The Act is desig ned to protec t cre ditors from being defr auded or left without rec ourse due to
the actions of unscrupulous debtors. “The purpose of TUF TA is to preve nt debtors from defr auding 1 8

cre ditors by placing assets bey ond their rea ch.” Corpus v. Arriaga , 294 S.W .3d 629, 634 (Tex. App.—Houston [1st Dist.] 2009, no pet.). Other than surmise and specula tion, there is no evidenc e

t h at S teadf

ast was insolvent at the time it assig ned its one-ha lf of roy alty interest to the Roy al t y
Owner s or otherwise lacke d sufficie nt assets. See T E X

. B U S

. & C O M

. C O D E § 24.002(6), .003,

I n s o l v e n c y i s n o t r e q u i r e d t o s u s t a i n a c l a i m u n d e r s e c t i o n 2 4

. 0 0 5 ( a ) ( 1 ) o f T U F T A , w h i c h p r o h i b i t s a t r a n s f e r 17

m a d e “ w i t h a c t u a l i n t e n t t o h i n d e r , d e l a y , o r d e f r a u d a n y c r e d i t o r o f t h e d e b t o r ” ; h o w e v e r , B r a d s h a w d i d n o t a l l e g e a f r a u d u l e n t

- t r a n s f

e r c l a i m o n t h a t b a s i s i n t h e t r i a l c o u r t

.
T h e A c t o p e r a t e s t o p r e v e n t o r m i t i g a t e f r a u d u l e n t t r a n s f

e r s t h a t p l a c e a d e b t o r ’ s p r o p e r t y o u t s i d e o f a 18

c r e d i t o r ’ s r e a c h

. F l o r e s v

. R o b i n s o n R o o f i n g & C o n s t r

. C o

. , I

n c
. , 1 6 1 S

. W

. 3 d 7 5 0 , 7 5 4 ( T e x
. A p p
. — F o r t W o r t h 2 0 0 5 , p e t

. d e n i e d ) ( d e s c r i b i n g a “ f r a u d u l e n t t r a n s f

e r ” a s “ a t r a n s f

e r b y a d e b t o r w i t h t h e i n t e n t t o h i n d e r , d e l a y , o r d e f r a u d h i s c r e d i t o r s b y p l a c i n g t h e d e b t o r ’ s p r o p e r t y b e y o n d t h e c r e d i t o r ’ s r e a c h ” )

. 28. 005(a) (2), .006. Nor is there evidenc e that it was rende red insolvent by the same. Ac co rd i n gl y ,

Br adshaw ’s fra

udulent-transf

er c laim fails as a ma tter of law

.

III. Conclusi on
Our decision today rea ffirms a principle that has exis ted in our jurisprudenc e for eig hty y ear s:
An executive owes a duty of utmost g ood faith and fair dealing to a non-executive and is prohibited
from eng ag ing in self-de aling in connec tion with the formation of a mineral-le ase ag ree ment.
Howeve r, the failure to obta in a marke t-rate roy alty does not, in and of itself, c onstitut e a brea ch of
that duty

. Texas la

w imposes no such obliga tion, a nd g iven the rela tive rig hts and interests that are implicated in neg otiating the te rms of a mineral lease, such a requirement would have the eff ect of depriving the executive of its exclusive rig ht to make and amend lease s.
I n l i k e manner , when a roy alty rese rvation imbues the executive with some discretion to

neg otiate the roy alty rate , as is the case here , the g oing rate for a roy alty interest should be considere d by the executive in exercising its discr etion. To hold tha t pr evailing roy alty rate s are immaterial as

a matter of law would deprive the non-executive of adequa te protec tion. We are not persua ded that
the minimum roy alty require ment in the 1960 deeds alters the analy sis; if the executive has discretion

to neg otiate the roy alty , the duty of utmost g ood faith and fair dealing applies beca use of the potential impact on the value of the non-executive’s interest. I n the proce dural posture of this case , we are not

ca l led upon to deter

mine whether a brea ch of duty occur red as alleg ed. We observe only that the

rec ord is not devoid of evidenc e from which a rea sonable fac t finder could conclude that it did. See Neely v . W

ilson , 418 S.W .3d 52, 76 (Tex. 2013).

Ho wever, even if Steadfa st wer e found to have brea ched a duty owed to Br adshaw , on th e
29rec ord befo re t h e Court its liability cannot be imputed to Rang e under civil-conspira cy and

aiding -and- abetting theories as a matter of law. Fu rt h ermore , the Roy alty Owner s are entitled to

summary judgme nt beca

use (1) they

have c onclusively

neg ated a t least one e lement of B radsha w’s
constructive- trust claim and (2) there is no evidenc e of insolvency , as Bradsha w has all eged in her
fra udulent-transf

er c laim.
Acc ording ly , we rever se t he court of appeals’ judgment as to the cl ai m s against Rang e and
the Roy alty Owner s and rende r judgme nt that Br adshaw take nothing on those claims. We aff irm the
court of appea ls’ judgme nt as t o the breac h -o f-duty claim aga inst Steadfa st and remand t o the t rial
court for further proce eding s consistent with this opi nion.

_ _ _ _ _ _ _ _________________________ _ _ _ _ _ Eva M. Guzman J ustice

OP INION DELIVERED : March 6, 2015

30