United States Court of Appeals

for the Fifth Circuit

____________

No. 23-20023

____________

Elmen Holdings, L.L.C., 

Plaintiff—Appellee,

versus

Martin Marietta Materials, Incorporated, 

Successor by Merger to Texas Industries, Incorporated, 

Defendant—Appellant.

______________________________

Appeal from the United States District Court

for the Southern District of Texas

USDC No. 4:19-CV-3293

______________________________

Before Higginbotham, Smith, and Elrod, Circuit Judges.

Jerry E. Smith, Circuit Judge:

This appeal concerns a sand and gravel mining lease executed in 1970. 

The original leaseholder transferred its interest to Martin Marietta Materials, 

Inc. (“Martin Marietta”), in 2014, and Elmen Holdings, L.L.C. (“Elmen”),

acquired title to the underlying land in 2018. Elmen contends that Martin 

Marietta did not make required royalty payments to it or prior lessors; Elmen

sought a declaration that the lease had terminated. Both parties moved for 

summary judgment, and a magistrate judge recommended that the district 

court grant Elmen’s motion and deny Martin Marietta’s. The district court 

United States Court of Appeals

Fifth Circuit

FILED

November 15, 2023

Lyle W. Cayce

Clerk

Case: 23-20023 Document: 00516968730 Page: 1 Date Filed: 11/15/2023
No. 23-20023

2

adopted that recommendation. 

Though we disagree with the magistrate judge’s and district court’s 

reasoning, they reached the correct result, and we AFFIRM the summary 

judgment for Elmen and AFFIRM the denial of summary judgment for 

Martin Marietta.

I.

In 1970, Wilma and Minton Minarcik leased a portion of their land to 

Texas Industries, Inc., to mine sand and gravel (“the Gravel Lease”). The 

Gravel Lease was to extend “for as long as merchantable materials are mined 

or produced from the leased premises, or for as long as Lessee shall pay the 

advance minimum royalty as hereinbelow specified.”1 Paragraph six of the 

lease specified the advanced minimum royalty payments that would be due:

Commencing on April 16, 1972, and on or before said day and 

month of each successive year hereunder, Lessee shall pay or 

tender to Lessor, annual advance royalties as follows: 

(a) $2,500 per year for the years 1972 and 1973; then, 

(b) $4,000 per year for each year thereafter up to and including 

the year during which mining or production operations are 

commenced on any portion of the land; then, 

(c) $3,000 per year for each year following the year in which 

mining or production operations are begun on any portion of 

said land, until this agreement is terminated.

No mining operations ever took place on the Minarcik land, meaning that—

after 1973—the lease could be maintained only by the payment of $4,000 on 

or before April 16 each year.

_____________________

1 Paragraph two of the lease reads in full, “Subject to the other provisions herein 

contained the term of this lease shall be for as long as merchantable materials are mined or 

produced from the leased premises, or for as long as Lessee shall pay the advance minimum 

royalty as hereinbelow specified.” 

Case: 23-20023 Document: 00516968730 Page: 2 Date Filed: 11/15/2023
No. 23-20023

3

Paragraph six of the Gravel Lease included a notice-and-cure 

provision:

Notwithstanding anything contained in this lease to the contrary, should Lessee fail to pay or tender any amount of advance royalties when due, then lessor shall notify Lessee in 

writing of such failure and this lease shall not terminate unless 

and until Lessee shall have failed to pay or tender the amount 

of advance royalties due within ten (10) days following Lessee’s receipt of such notice from Lessor.

That paragraph also made clear that “[n]otwithstanding the death of 

the lessor, or any of them, the payment of royalties when due hereunder 

within the time and in the manner provided herein shall be binding upon the 

heirs, executors, successors, assigns and legal representatives of Lessor.” 

Paragraph sixteen of the Gravel Lease required that all notices of missed payments be in writing and that all payments and notices “shall be deemed to 

have been properly given and made at the time when delivered in person or 

at the time when posted by certified or registered mail.” 

Martin Marietta acquired Texas Industries’s leasehold interest in 2014. 

At that point, the ownership of the land had splintered, but Wilma Minarcik 

was still alive and owned a portion.2 Wilma died in early 2017, and her remaining portion passed to her heirs: Sam and Gary O’Callaghan. Martin 

Marietta attempted to pay royalties to Wilma Minarcik on April 12, 2017, unaware that she had died. On May 15, 2017, Gary O’Callaghan sent an email 

to Martin Marietta requesting that it “send the 2017 royalty payment.” Martin Marietta never sent this payment because neither Gary nor Sam ever gave 

it a copy of their W-9 tax forms. 

_____________________

2 Martin Marietta had been paying the royalties in a pro-rata share to the different 

owners of the Minarcik land. 

Case: 23-20023 Document: 00516968730 Page: 3 Date Filed: 11/15/2023
No. 23-20023

4

Elmen acquired the land from the O’Callaghans on August 10, 2018. 

Elmen then sued Martin Marietta in Texas state court seeking a declaration 

that the failure to pay had terminated the Gravel Lease. Martin Marietta removed the case to the Southern District of Texas, where the parties proceeded through discovery and cross-moved for summary judgment. Neither 

party disputed that paragraph six’s notice-and-cure provision applied to any 

missed or late royalty payments under the Gravel Lease. Elmen averred that 

the undisputed facts showed that the Gravel Lease had terminated because 

Martin Marietta had missed royalty payments, had been adequately notified, 

and had failed to cure. Martin Marietta contended that the Gravel Lease was 

still in force because it had made all needed royalty payments or had cured 

any late ones, and, alternatively, that it had never received the notice required 

by paragraphs six and sixteen of the lease. 

The magistrate judge recommended that the district court grant 

Elmen’s motion for summary judgment and deny Martin Marietta’s. But the 

recommendation did not address the parties’ contentions regarding whether

Martin Marietta had satisfied the notice-and-cure provision. Rather—

despite the parties’ agreement that the notice-and-cure provision applied—

the magistrate judge determined that, given the absence of mining on the 

Minarcik land, the Gravel Lease terminated automatically upon a late royalty 

payment. Because Martin Marietta had been late with several royalty payments, the magistrate judge recommended that the district court enter summary judgment for Elmen. The district court adopted that recommendation 

in a one-page order.3

_____________________

3 Because the district court adopted the magistrate judge’s report in full, all references to the magistrate judge’s analysis are synonymous with references to the district 

court’s final order and judgment.

Case: 23-20023 Document: 00516968730 Page: 4 Date Filed: 11/15/2023
No. 23-20023

5

II.

Martin Marietta first contends that the magistrate judge violated the 

principle of party presentation by ignoring the parties’ agreement that paragraph six’s notice-and-cure provision applied to Martin Marietta’s alleged 

missed royalty payments. We disagree. 

“In our adversarial system of adjudication, we follow the principle of 

party presentation.” See United States v. Sineneng-Smith, 140 S. Ct. 1575, 

1579 (2020). That means “we rely on the parties to frame the issues for decision and assign to courts the role of neutral arbiter of matters the parties present.” Greenlaw v. United States, 554 U.S. 237, 243 (2008). Therefore, we 

“normally decide only questions presented by the parties.” Sineneng-Smith, 

140 S. Ct. at 1579 (internal quotation marks omitted). We review a district

court’s decision to ensure that it has not “departed so drastically from the 

principle of party presentation as to constitute an abuse of discretion.” Id.

at 1578.

Martin Marietta’s contention centers on the fact that the parties 

agreed the Gravel Lease would terminate for failure to pay royalties only 

upon Elmen’s provision of notice and Martin Marietta’s failure to cure. The 

only issues the parties presented to the district court were (1) whether Martin

Marietta in fact had missed its royalty payments, (2) whether Elmen had provided sufficient notice of any non-payment, and, if so, (3) whether Martin 

Marietta had cured any non-payment. The magistrate judge nonetheless disposed of the case by determining that the lease had terminated automatically 

upon Martin Marietta’s nonpayment. In Martin Marietta’s view, the magistrate judge ignored how the parties had “frame[d] the issues” and instead 

decided the summary judgment motions on an issue “framed by the [court].”

Id. at 1578–79. 

That contention has some merit, but unlike the Ninth Circuit in 

Case: 23-20023 Document: 00516968730 Page: 5 Date Filed: 11/15/2023
No. 23-20023

6

Sineneng-Smith, the magistrate judge did not “depart[] so drastically” from 

the issues and arguments presented “as to constitute an abuse of discretion.” 

See id. at 1578. Elmen alleged that the Gravel Lease had terminated because 

of Martin Marietta’s failure to make timely royalty payments. One of Martin 

Marietta’s main responses was that, even if it had missed payments, Elmen 

did not give it notice and an opportunity to cure as required by paragraph six 

of the Gravel Lease. The magistrate judge resolved that dispute by construing the Gravel Lease to determine that paragraph six’s notice-and-cure provision applies only to royalties paid under paragraph 6(c) but not to royalties 

paid under 6(b) and 6(a). That construction meant Martin Marietta, which

was paying royalties under 6(b), had no right to notice or cure: The lease 

terminated automatically after a late royalty payment under paragraph two. 

Thus, the magistrate judge recommended granting Elmen’s motion 

for summary judgment because Martin Marietta had been late on several 

royalty payments. The magistrate judge did not “radical[ly] transform[]” 

this case to such an extent as to constitute an abuse of discretion; she merely 

took a different route than Martin Marietta and Elmen had suggested to 

“decide . . . questions presented by the parties.” Id. at 1579, 1582. Therefore, the magistrate judge did not violate the party presentation principle by 

interpreting the Gravel Lease to terminate automatically upon a missed 

royalty payment, even if that interpretation was contrary to the parties’ 

reading of their contract.

III.

Martin Marietta next contends that the magistrate judge erred in construing the Gravel Lease to terminate automatically upon a missed royalty 

payment. We agree. The magistrate judge’s interpretation of the Gravel 

Lease contravenes the lease’s plain language by subordinating paragraph 

six’s notice-and-cure provision to paragraph two’s termination provision. 

Case: 23-20023 Document: 00516968730 Page: 6 Date Filed: 11/15/2023
No. 23-20023

7

“On appeal, a district court’s interpretation of a contract is a matter 

of law reviewable de novo.” Am. Totalisator Co. v. Fair Grounds Corp., 3 F.3d 

810, 813 (5th Cir. 1993). We review “the record independently and under 

the same standard that guided the district court.” Id. “In a diversity case 

involving the interpretation of a contract, we apply the substantive law of 

[Texas] . . . according to the general principles of contract interpretation 

articulated by the Texas Supreme Court.” McLane Foodshare, Inc. v. Table 

Rock Rests., L.L.C., 736 F.3d 375, 377 (5th Cir. 2013). 

In Texas, “[a] mineral lease is the conveyance of a determinable fee 

interest in land” and “does not in all respects create the relationship of landlord and tenant.” Parker v. Standard Oil Co., 250 S.W.2d 671, 680 (Tex. Civ. 

App.—Galveston 1952, writ ref’d n.r.e.). That fee interest may be subject to 

three types of qualifications: (1) a special limitation, (2) a condition subsequent, or (3) a covenant.4

“A special limitation . . . provides that the lease will automatically terminate upon the happening of a stipulated event.” Endeavor Energy Res., L.P. 

v. Discovery Operating, Inc., 554 S.W.3d 586, 606 (Tex. 2018). Texas courts 

have consistently held that provisions stating that the lease’s duration shall 

be “for as long as” certain conditions are met creates a special limitation on 

the leasehold interest.5 But a lease will not create a special limitation “unless 

_____________________

4 A.W. Walker, Jr., The Nature of the Property Interests Created by an Oil and Gas 

Lease in Texas, 8 Tex. L. Rev. 483, 483–84 (1930). Texas courts typically apply the same 

principles of law to a mining lease as they do to an oil-and-gas lease, so any oil-and-gas 

precedents are applicable. See, e.g., Cole Petro. Co. v. U.S. Gas & Oil Co., 41 S.W.2d 414, 

417 (Tex. 1931); Roach v. Chevron U.S.A., Inc., 574 S.W.2d 200, 203 (Tex. Civ. App.—San 

Antonio 1978, no writ). 

5 See, e.g., Clark v. Perez, 679 S.W.2d 710, 712 (Tex. App.—San Antonio 1984, no 

writ) (holding that a lease term stating that the lease “shall be for . . . as long thereafter as 

oil, gas or other minerals [are] produced” created a special limitation); Discovery Operating, 

554 S.W.3d at 597 (stating that a lease term “as long as oil or gas is produced” will terminCase: 23-20023 Document: 00516968730 Page: 7 Date Filed: 11/15/2023
No. 23-20023

8

[its] language is so clear, precise, and unequivocal that [the court] can 

reasonably give it no other meaning.” Endeavor Energy Res., L.P. v. Energen 

Res. Corp., 615 S.W.3d 144, 148–49 (Tex. 2020) (internal quotation marks

omitted). 

“A condition subsequent designates an event which, when it happens, 

gives the grantor the right to terminate the estate by reentry.” Field v. Shaw, 

535 S.W.2d 3, 5 (Tex. Civ. App.—Amarillo 1976, no writ); see also W.T. 

Waggoner Est. v. Sigler Oil Co., 19 S.W.2d 27, 30 (Tex. 1929). A condition 

subsequent is typically created by language “allowing the lessor the option of 

terminating the lease in the event of the lessee’s failure to pay royalty,” as 

distinguished from language that “terminates the lease, without the necessity 

of re-entry.” XTO Energy, Inc. v. Pennebaker, No. 07-10-00396, 2011 Tex. 

App. LEXIS 10194, at *6–7 (Tex. App.—Amarillo Dec. 29, 2011, no pet.); 

Waggoner, 19 S.W.2d at 30. 

Finally, a covenant is a provision in a lease the breach of which “does 

not automatically terminate the estate, but instead subjects the breaching 

party to liability for monetary damages.” See Rogers v. Ricane Enters., Inc., 

772 S.W.2d 76, 79 (Tex. 1989). A covenant is created when the lease imposes 

an obligation on the parties, but the breach of that obligation gives rise only 

to an action for damages. Cf. Waggoner, 19 S.W.2d at 29.

Paragraph two of the Gravel Lease, viewed in isolation, creates a special limitation on Martin Marietta’s leasehold interest. It states that the 

Gravel Lease was to extend “for as long as merchantable materials are mined 

or produced from the leased premises, or for as long as Lessee shall pay the 

advance minimum royalty as hereinbelow specified.” The “for as long as” 

_____________________

ate automatically if production permanently ceases). Texas courts will sometimes refer to 

such provisions as “habendum clauses.” See id.

Case: 23-20023 Document: 00516968730 Page: 8 Date Filed: 11/15/2023
No. 23-20023

9

language so clearly creates a special limitation on the Gravel Lease under 

Texas law that we “can reasonably give it no other meaning.” See Energen, 

615 S.W.3d at 148 (cleaned up). Thus, paragraph two causes Martin Marietta’s leasehold estate to terminate automatically unless Martin Marietta is 

mining or producing merchantable materials or paying the required royalties. 

Because no mining operations ever took place on the Minarcik land, paragraph two—read independently of any other provision—causesthe leasehold 

estate to terminate upon a missed royalty payment automatically. 

 But we cannot view paragraph two in a vacuum: It must be construed 

in light of the notice-and-cure provision of paragraph six.

6 Paragraph two 

says that it is “[s]ubject to the other provisions herein contained[,]” and the 

notice-and-cure provision says that it applies “[n]ot withstanding anything 

contained in this Lease to the contrary.” The best reading of the Gravel 

Lease is that paragraph six’s notice-and-cure provision modifies paragraph 

two’s creation of a special limitation such that, upon a missed royalty payment, the lease does not terminate until Martin Marietta has been notified 

and has failed to cure.7

The magistrate judge determined that paragraph six’s notice and cure 

provision applied to royalties paid under paragraph 6(c) but not to royalties 

paid under 6(b) and 6(a). That construction defies the language of the Gravel 

Lease. The notice-and-cure provision makes no distinction between the 

various categories of royalty payments and instead applies to “any amount of 

_____________________

6 Piranha Partners v. Neuhoff, 596 S.W.3d 740, 746–47 (Tex. 2020) (explaining how

the Texas Supreme Court has “cast off” rules of interpretation like “giving . . . [a] habendum clause [] absolute priority over other clauses.” (cleaned up)).

7 Cf. Pathfinder Oil & Gas Co. v. Great W. Drilling, Ltd., 574 S.W.3d 882, 889 (Tex. 

2019) (“[A] specific contract provision controls over a general one.”).

Case: 23-20023 Document: 00516968730 Page: 9 Date Filed: 11/15/2023
No. 23-20023

10

advanced royalties when due.”8

The magistrate judge makes two main contentions in support of her

interpretation.

9 First, she avers that if the parties had intended the Gravel 

Lease to continue absent mining and royalty payments, they could have included express language demonstrating their intent to keep the lease in force. 

But paragraph six contains express language demonstrating that intent. It 

states explicitly, “This lease shall not terminate unless and until Lessee shall 

have failed to pay or tender the amount of advanced royalties due within ten 

(10) days following Lessee’s receipt of such notice from Lessor.” That language demonstrates a clear intent to keep the lease in force “unless and 

until” Martin Marietta has been notified of a missed payment and has failed 

to cure. 

Second, the magistrate judge stated that “[t]o interpret the notice provision in Paragraph 6 to preclude automatic termination of the lease term 

would render Paragraph 2 meaningless.” No. 4:19cv3293, 2022 U.S. Dist. 

LEXIS 230446, at *33 (S.D. Tex. Nov. 22, 2022) (magistrate judge’s 

amended memorandum and recommendation). As described above, paragraph two creates a special limitation—not a covenant or a condition 

subsequent—on Martin Marietta’s leasehold interest, meaning that upon the 

happening of the stated conditions the lease will terminate automatically. See

_____________________

8 The magistrate judge’s view that the Gravel Lease can never terminate automatically when royalties are paid under 6(c) is not correct. Royalties under 6(c) are due only in 

the years following the commencement of mining operations. The lease cannot terminate 

when mining or production of materials is ongoing, regardless of what royalties are paid. 

That means, when mining operations are ongoing, paragraph 6(c) functions only as a covenant, not a special limitation. But if mining operations have started and then stopped, royalties under 6(c) will still be due, with 6(c) functioning as a special limitation, given that there 

is no mining or production continuing the lease in the absence of payment. 

9 Elmen does not engage with this issue on appeal and just urges us to affirm for all 

the reasons stated by the magistrate judge. 

Case: 23-20023 Document: 00516968730 Page: 10 Date Filed: 11/15/2023
No. 23-20023

11

Discovery Operating, 554 S.W.3d at 606.

Far from being meaningless, paragraph two ensures that—in the 

absence of both mining operations and relevant royalty payments—Martin 

Marietta’s leasehold interest terminates automatically ten days after receiving notice of non-payment from Elmen. If paragraph two did not exist, Elmen 

would have to either take affirmative steps to end the lease (if the remainder 

of the lease is read as creating condition subsequent) or settle for a damages 

suit (if read as a covenant) upon Martin Marietta’s failure to cure. 

In sum, the magistrate judge erred by holding that the Gravel Lease’s 

notice and cure provision applies only to royalty payments due under paragraph 6(c) and not to payments due under paragraph 6(a) or 6(b). On de novo

review, the plain language of the Gravel Lease shows that paragraph six’s 

notice and cure provision applies to all types of royalty payments. Therefore, 

the lease terminates only if Martin Marietta misses a royalty payment, 

receives notice of non-payment, and fails to cure the non-payment within ten 

days. 

IV.

We now turn to the issue the parties presented to the district court 

originally: whether the Gravel Lease had terminated because Martin Marietta 

had missed royalty payments, had been adequately notified, and had failed to 

cure. Because Martin Marietta did not make timely royalty payments in 2017,

received notice of this failure, and failed to cure its non-payment within the 

Gravel Lease’s 10-day grace period, the district court properly granted 

Elmen’s motion for summary judgment.

10

_____________________

10 We “can affirm the granting of summary judgment on any ground supported by 

the record, even where the district court granted summary judgment based upon erroneous 

reasoning.” Cherokee Pump & Equip., Inc. v. Aurora Pump, 38 F.3d 246, 249 (5th Cir. 1994)

Case: 23-20023 Document: 00516968730 Page: 11 Date Filed: 11/15/2023
No. 23-20023

12

“When parties file cross-motions for summary judgment, we review 

each party’s motion independently, viewing evidence and inferences in the 

light most favorable to the nonmoving party.” Green v. Life Ins. Co. N. Am., 

754 F.3d 324, 329 (5th Cir. 2014) (internal quotation marks omitted). Summary judgments are reviewed de novo. See id. A party is entitled to summary 

judgment if “there is no genuine dispute as to any material fact and the 

movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a). 

A dispute of fact is genuine if “the evidence is such that a reasonable juror 

could return a verdict for the nonmoving party.” Anderson v. Liberty Lobby, 

Inc., 477 U.S. 242, 248 (1986).

The interpretation of a contract is a question of law. Fair Grounds, 

3 F.3d at 813. Whether a contract provision requires strict or substantial 

compliance with its terms is governed by state law in diversity cases. Cf. 

Rogers v. Aetna Cas. & Sur. Co., 601 F.2d 840, 844 (5th Cir. 1979). But where

state substantive law requires substantial compliance, “whether a party has 

substantially complied with the terms of a contract presents a pure question 

of fact that the trier of fact alone may decide.” Turriull v. Life Ins. Co., 

753 F.2d 1322, 1326 (5th Cir. 1985). That is true even in diversity cases 

because “where federal rules would entitle litigants to a jury determination 

of a particular issue, the court will not yield to a state practice to the 

contrary.” Nunez v. Super. Oil Co., 572 F.2d 1119, 1125 (5th Cir. 1978).11

Whether a party has breached a contract is also governed by state law 

in diversity cases. See Ziegler v. Champion Mortg. Co., 913 F.2d 228, 229 (5th 

Cir. 1990). “Where the evidence is undisputed regarding a person’s conduct 

_____________________

(internal citation omitted). 

11 Texas law also treats whether a party has substantially complied with the terms 

of a contract as a question of fact. See James Constr. Grp., L.L.C. v. Westlake Chem. Corp., 

650 S.W.3d 392, 404–05 (Tex. 2022).

Case: 23-20023 Document: 00516968730 Page: 12 Date Filed: 11/15/2023
No. 23-20023

13

under a contract, the court alone must determine whether such conduct 

shows performance or a breach of a contractual obligation.” Trinity Indus., 

Inc. v. Ashland, Inc., 53 S.W.3d 852, 868 (Tex. App.—Austin 2001, pet. 

denied). 

1. Martin Marietta did not pay or tender royalties in 2017.

The Gravel Lease requires Martin Marietta to pay or tender annual 

royalties by April 16 of each year. In Texas, payment occurs when “money 

passes from the debtor to the creditor for the purpose of extinguishing the 

debt, and the creditor [receives] it for the same purpose.” Rowlett v. Superior 

Ins. Co., 325 S.W.2d 921, 923 (Tex. Civ. App.—Eastland 1959, writ ref’d 

n.r.e.). “A tender is an unconditional offer by the debtor to pay another . . . 

a sum not less in amount than that due on a specified debt or obligation.”

Baucum v. Great Am. Ins. Co., 370 S.W.2d 863, 866 (Tex. 1963). Payment to 

a person having no authority to receive it does not discharge the debt. See

Bluntzer v. Dewees, 15 S.W. 29, 30 (Tex. 1891); 58 Tex. Juris. Payment

§ 29. Likewise, tender of payment must be to whom a debt or obligation is 

due. Arguelles v. Kaplan, 736 S.W.2d 782, 784 (Tex. App.—Corpus Christi

1987, writ ref’d n.r.e); 58 Tex. Juris. Payment § 6. 

If Martin Marietta misses a royalty payment, Elmen is required to

notify it in writing, and, upon such notification, Martin Marietta has ten days 

to cure. In Texas, “substantial compliance is the appropriate standard when 

evaluating whether a party complied with a contractual notice condition.” 

James, 650 S.W.3d at 405. A party substantially complies with a notice provision when it “communicate[s] sufficient information to enable [the other 

party] to reasonably conclude that the [provision] was in play and that the

. . . clock was ticking. See id. at 410. That means “[t]he doctrine of substantial compliance excuses a party’s deviations from a contractual requirement 

. . . if those deviations do not severely impair the purpose of the requirement.” S. Tex. Elec. Coop. v. Dresser-Rand Co., 575 F.3d 504, 508 (5th Cir. 

Case: 23-20023 Document: 00516968730 Page: 13 Date Filed: 11/15/2023
No. 23-20023

14

2009) (applying Texas law). A defect in the mode by which notice was sent 

will substantially comply with a notice provision if the content of the communication has put the party on notice. See Barbier v. Barry, 345 S.W.2d 557, 

562 (Tex. Civ. App.—Dallas 1961, no writ).

Martin Marietta sent a royalty check addressed to Wilma Minarcik on 

April 12, 2017. But Wilma had died in January 2017, and her land passed to 

her heirs: Sam and Gary O’Callaghan. Consequently, on April 12, 2017, 

Wilma was not the lessor of the Minarcik land—Sam and Gary O’Callaghan 

were. But Martin Marietta never sent a check to the O’Callaghans in 2017. 

So, Martin Marietta never made its required royalty payment—because the 

money never passed to the O’Callaghans—nor tendered one—because tender is not made in Texas when the funds are not given to the person holding 

the debt—in 2017. See Rowlett, 325 S.W.2d at 923; Dewees, 15 S.W. at 30. 

Martin Marietta contends that the April 12 tender discharged its 

royalty obligation because paragraph six of the lease provides that “[n]otwithstanding the death of Lessor, or any of them, the payment of royalties 

when due hereunder within the time and in the manner provided herein shall 

be binding upon the heirs . . . of lessor.” Martin Marietta misreads that portion of paragraph six. That part of the Gravel Lease says that a royalty payment sent “in the manner provided herein” will bind the lessor’s heirs. Paragraphs six and sixteen state that payments and tenders must be made to the 

lessor and the lessor only. 

A payment or tender—such as Martin Marietta’s April 12 check—

made to someone other than the lessor is not made “in the manner provided” 

by the Gravel Lease. The sentence in paragraph six that Martin Marietta 

relies on would apply only had Martin Marietta paid Wilma Minarcik before 

her death, and the O’Callaghans tried to claim an additional payment. Therefore, Martin Marietta did not pay or tender royalties to the lessor (Sam and 

Case: 23-20023 Document: 00516968730 Page: 14 Date Filed: 11/15/2023
No. 23-20023

15

Gary O’Callaghan) on or before April 16, 2017.12

2. Martin Marietta received adequate notice of non-payment and failed to cure 

within ten days. 

On May 15, 2017, Gary O’Callaghan emailed Martin Marietta asking 

it to “please send the 2017 royalty payment to [his] attention at the address 

listed below.” Yet Martin Marietta never sent either of the O’Callaghans a 

royalty payment in 2017. Rather, Martin Marietta contends that the email 

could not serve as notice of non-payment because, contrary to paragraph 

sixteen, it was sent as an email.13 It is true that paragraph sixteen requires 

notice be “delivered in person or . . . posted by certified or registered mail.” 

But Texas law is clear that notice substantially complies with the terms of a 

contract even when it is not delivered in the precise manner the contract 

contemplates. See Barbier, 345 S.W.2d at 562. 

In Barbier, a Texas appellate court held that a party had substantially 

complied with a notice provision when it sent a writing that adequately informed the counterparty even where the written notice was not sent by registered mail as required by the contract. See id. Here too, Gary O’Callaghan’s 

email was not sent in the manner prescribed by the Gravel Lease, but it was 

received and understood by Martin Marietta, and it unequivocally identified 

_____________________

12 Martin Marietta also contends that, because Elmen did not become the lessor 

until August 10, 2018, Elmen does not have standing to claim that the O’Callaghans did 

not receive a royalty payment. That contention lacks merit because, as discussed above, 

failure to cure a missed royalty payment after receiving adequate notice terminates the 

Gravel Lease automatically. Therefore, if Martin Marietta had failed to cure a missed royalty payment at any point, it no longer has any rights to the Minarcik land, and Elmen has 

standing to seek a declaratory judgment to that effect. 

13 Martin Marietta does not dispute that the email constituted a writing as required 

by the Gravel Lease. Cf. James, 650 S.W.3d at 409 (“[W]hen a contract requires written 

notice . . . substantial compliance with that requirement may not be achieved in the absence 

of a writing.”). 

Case: 23-20023 Document: 00516968730 Page: 15 Date Filed: 11/15/2023
No. 23-20023

16

the missing royalty payment. Therefore, as a matter of Texas law, Gary 

O’Callaghan’s email fulfilled the “purpose of the [notice] requirement” and 

substantially complied with paragraphs six and sixteen of the Gravel Lease. 

See Dresser-Rand, 575 F.3d at 508. Martin Marietta was on notice of its 

missed payment on May 15, 2017, and had ten days to tender or pay the 

O’Callaghans. It did not.

Martin Marietta contends that it cured this missed payment by offering to issue a check to Sam O’Callaghan once he sent it a W-9 tax form. But 

Texas law is clear that “tender is an unconditional offer,” and a payment 

occurs only when “money passes from the debtor to the creditor . . . and the 

creditor [receives] it.” See Baucum, 370 S.W.2d at 866 (emphasis added); 

Rowlett, 325 S.W.2d at 923 (emphasis added). Martin Marietta fell short of 

tendering payment because its offer was conditioned on Sam O’Callaghan’s

returning a W-9 form. And Martin Marietta did not pay Sam O’Callaghan 

because the money never passed to him. Contrary to Martin Marietta’s 

assertions, the W-9 form was not necessary to pay or tender the check to the 

O’Callaghans: The Gravel Lease made no mention of requiring a W-9 form, 

and the IRS outlines steps a payor can take in the absence of the form.14

In sum, the undisputed facts show that Martin Marietta failed to pay 

royalties in 2017, received adequate notice of this failure, and did not cure 

within ten days of that notice. Therefore, the Gravel Lease terminated ten

days after Martin Marietta received Gary O’Callaghan’s email, and summary 

judgment in favor of Elmen is warranted.15

_____________________

14 See 26 U.S.C. § 3406(a); I.R.S. Pub. 1281 (Rev. 3-2017), Backup Withholding for 

Missing and Incorrect Name/TIN(s), 2017 WL 4317150, at *1-3 (Jan. 1, 2017); Moore v. 

Hickenlooper, 723 F. App’x 582, 585–86 (10th Cir. 2018) (rejecting the argument that the 

absence of a W-9 form excused nonpayment of an award). 

15 Because Martin Marietta’s non-payment in 2017 terminated the Gravel Lease, 

Case: 23-20023 Document: 00516968730 Page: 16 Date Filed: 11/15/2023
No. 23-20023

17

******

The magistrate judge and district judge reached the right result. The 

summary judgment for Elmen and the denial of summary judgment for Martin Marietta are AFFIRMED.

_____________________

we need not address Elmen’s contention that Martin Marietta also missed royalty payments in other years. 

Case: 23-20023 Document: 00516968730 Page: 17 Date Filed: 11/15/2023