Dissenting Opinion issued Dec ember 22 , 2016

In The 

## Court of Appeals For The 

## First District of Texas

———————————— NO. 01
- 15
- 00044
- CV

——————————— TANYA L. M C CABE TRUST, M C CABE FAMILY TRUST, AND THE

ROCHFORD LIVING TRUS T , Appellant s

V. RANGER ENERGY LLC , Appellee

On Appeal from the 356th District Court Hardin County, Texas Trial Court Case No. 54138

DISSENTING OPINION This is an important suit that affects the development of Texas law governing the enforceability of correction deeds against oil and gas overriding royalty interest2

owners . I strongly disagree with the majority’s holding that a correction deed of

trust wa s invalid and that the royalty owners’ in terests in the property survive
foreclosure

. Accordingly, I respectfully dissent. This is a suit brought by a ppellee , Ranger Energy LLC (“Ranger”) , against

a ppellants, Tanya L. McCabe Trust, McCabe Family Trust, and Rochford Living
Tru st (collectively, “ the Trusts”) , to quiet title to overriding royalty interests in two oil

- and

- gas leases, the “ McShane Fee and Brice Leases , ” located in Hardin County,
Texas , that Ranger acquired at a foreclosure auction. The quest ion before the trial court on cross motions for summary judgment was whether a corrected mortgage and deed of trust complied with provisions in the Texas Property Code relating to correction instruments. See T EX
. P ROP
. C ODE A NN
. §§ 5.027

– .031 (West 2014). The Trusts contend that the correction instruments at issue in this case failed to comply with the statutory requirements for making a material correction to an instrument and are therefore invalid as a matter of law. The majority agrees with the Trusts , stating, “The correction instruments were ineffective because they pu rported to make material changes , yet they were not correctly executed as specified by the Texas Property Code.” Slip Op. at 3 . I strongly disagree. The leases at issue here

— the McShane Fee and Brice Leases

— were part of a package of eight oil and gas leases referred to as the “Saratoga Leases,” sold by Tomco Energy, PLC (“Tomco”) to Mark III Energy Holdings, LLC (“Mark III”) in3

August 2008. B ut these two particular leases were inadvertently omitted from the legal description of the Saratoga Leases set out in Exh i bit A to the 2008 O riginal
A ssignment, M ortgage, and Deed of T rust. The Trusts purchased their overriding royalty interests in the Saratoga Le ases in 2011 and 2012. In 2011, Exhibit A was corrected with respect to the original assignment and the assignments of overriding royalty interests to each of the Trusts, and the corrected instruments were filed in the pu blic records of Hardin County. Al l but the first overriding royalty interest purchased by the Trusts had the correct Exhibit A attached, and the one purchased with an incorrect Exhibit A was corrected effective one month later. In other words, the Trusts knew from the time they purchased their overriding royalty interests in the Saratoga Leases in 2011 and 2012 that they had purchased property interests in all eight of the Saratoga Leases. Subsequently, in December 2012, the Original Mortgage and D eed of T rust were renewed with the origin al incorrect Exhibit A attached that omitted the McShane Fee and Brice Leases from the legal description of the Saratoga Leases.
The mistake was promptly discovered, however, and , in January 2013, correction instruments were filed in the Hardin County pub lic records

. These instruments amended the Renewal M ortgage and D eed of T rust to reflect that the McShane Fee and Brice Leases were part of the Saratoga Leases , as shown in the 2011 C orrected4

Original A ssignment and the assignments to the Trusts already o n file in the Hardin County public records

. Under these circumstances, I cannot agree with the majority that the 2013 correction of Exhibit A to the renewal mortgage and deed of trust was a material change made at that time to the original conveyance instruments . I would hold,
instead , that it was a valid nonmaterial change made to correct the legal description of the Saratoga Leases in Exhibit A to the Renewal Mortgage and Deed of Trust so that they conformed to the previo usly Corrected Original A ssignment on file in the Hardin County public records since 2011

. I would conclude that Ranger’s predecessor in title complied with the statutory provisions for making nonmaterial changes to correction instruments. Property Code section 5.030 provides that a correction instrument is subject only to the property interests of a creditor or bona fide purchaser without notice of an error in the original instrument. Under the circumstances of this case, I would conclude that the Trusts could not and did not establish that they were bona fide purchasers of the overriding royalty interests in the McShane Fee and Brice Leases withou t notice at the time they acquired their interests in 2011 that their overriding royalty inter ests extended to all eight of the Saratoga Leases burdened with the Original Mortgage and Deed of Trust . As a result, I would hold that the trial court correctly determined that the foreclosure sale of the Saratoga Leases to Ranger5

extinguished the Trusts ’ interests in the McShane Fee and Brice Leases together with their interests in the remaining six Saratoga Leases . I would affirm the judgment of
the trial court granting summary judgment in favor of Ranger

. Facts In August 2008, Tomco sold eight oil

- and

- gas leases, “the Saratoga Leases ,” in Hardin County, Texas , to Mark III. The Saratoga Leases were described in Exhibit A to the assignment and bill of sale ( “the 2008 Tomco Original Assignment ”). However, two of the eight Saratoga L eas es

— the McShane Fee and Brice Leases

— were inadvertently omitted from Exhibit A

. The 2008 Tomco Original Assignment was recorded in the o fficial p ublic r ecords of Hardin County. On October 21, 2008, in prepar ation for closing the $4 million Security Agreement between Mark III and Peoples Bank, attorney Keith C. Thompson issued an opinion letter (the “ 2008 Opinion Letter ” ). It stated , inter alia, that Thompson had “[p]repared and obtained signa t ures for the Assign ment of the Saratoga Lease
f rom Tomco Energy, PLC to Mark III Energy Holdings, LLC,” along with other leases, and that he had recorded all of the described documents in the appropriate counties. Thompson gave his opinion that the transactions were completed using regularly accepted standards in the Texas oil and gas industry and that they were “such that People’s Bank, Kansas has a valid and legally enforceable security
inte rest in the [ Saratoga Lease s ] .”6

O n November 3, 2008, Mark III obtained a $4 million mortgage from Peoples
Ban k ( the “ O riginal M ortgage ”) and executed a deed of trust securing the mortgage (the “Original Deed of Trust”)

. 1 The O riginal M ortgage and Deed of Trust granted

to Peoples Bank a lien against Mark III’s undivided wor king interests in the Saratoga
L eases. The Original Mortgage and Original Deed of Trust were recorded in the

o fficial p ublic r ecords of Hardin County on November 10, 2008. But , like the 2008 Tomco Original A ssignment, the Original Deed of Trust identified the subject leases in an Exhibit A that included only six of the eight Saratoga L eases , again inadvertently omitting the McShane Fee and Brice Leases

. Neither Mark III nor Peoples Bank discovered the error at this time.
O n May 3, 2011, Mark III executed an assignment , effective July 1, 201 1, of a 10% undivided overriding royalty interest in “the oil, gas and mineral leases in
Hardin Coun ty, Texas described on Exhibit ‘ A ’ ” to the Tanya L. McCabe Trust ( “ Tanya L. McCabe Assignment No. 1 ” )

. Exhibit A to th is a ssignment omitted the McShane Fee and Brice Leases , as had the 2008 Tomco Original Assignment and the Original Mortgage and Deed of Trust

. The Tanya L. McCabe A ssignment No.
1 was filed on May 26, 2011 , in the o fficial p ublic r ecords of Hardin County.

1 The transactions between Peoples Bank and Mark III also involved other oil

and

- ga s leases in Hardin and Liberty C ounties that are not at issue in this appeal

.7

On July 25, 2011, Mark III execute d an assignment of a 5 % undivided overriding royalty interest in “the oil, gas and mineral leases in Hardin Coun ty, Texas described on Exhibit ‘ A ’ ” to the Tanya L. McCabe Trust ( the “ Tanya L. McCabe Assignment No. 2 ” ). The assignment had an effective date of August 1 , 2011. The correct Exhibit A , including the McShane Fee and Brice Leases, was
attached to the Tanya L. McCabe Assignment No. 2. At some point, Mark III discovered the omission of the McShane Fee and
Br ice Leases. Although the Tanya L. McCabe Assignment No. 2 had the correct Exhibit A , Mark III nevertheless executed a “Corrected Tanya L. McCabe Assignment No

. 2” on No v emb e r 1, 2011, to be effective August 1, 2011. The
Ex h ibit A attached to this document again included the McShane Fee and Bric e Leases. Mark III also corrected the first assignment to the Tanya L. McCabe Trust by executing a “Corrected Assignment of Overriding Royalty Interest” that “supersede[d] the Assignment of Overriding Royalty Interests recorded in
Instrument No. 2011

- 2034 2” in the Hardin County Public Records (the “ Corrected Tanya L. McCabe Assignment No. 1” ) on November 30, 2011, to be effective August 1, 2011. The Corrected Tanya L. McCabe Assignment No. 1 attached the corrected Exhibit A that included the McShane Fee a nd Brice Leases. Both of these corrected assignments were filed in the Hardin County Public Records on December 22, 2011.8

On November 1, 2011, Mark III executed an assignment of a 15% undivided overriding royalty interest in “the oil, gas and mineral leas es in Hardin Coun ty, Texas described on Exhibit ‘ A ’ ” to the Tanya L. McCabe Trust ( the “ Tanya L. McCabe Assignment No. 3 ” ). The Exhibit A attached to this document included the McShane Fee and Brice Leases. The Tanya L. McCabe Assignment No. 3 was also filed in the Hardin County Public Records on December 2 2 , 2011.
O n or about December 13, 2011, Tomco executed and filed a Corrected Assignment and Bill of S ale (the “2011 Corrected Tomco Original Assignment”)
which a dded the two o mitted McShane Fee and Bri ce Leases to the August 2008 Tomco Original A ssignment , clarifying that the August 2008 transaction transferred all eight Saratoga Leases from Tomco to Mark III

. Mark III and Peoples Bank did not execute a corrected mortgage or deed of trust at this time. The parties do not dispute the validity of the 2011 Corrected Tomco Original Assignment conveying the Saratoga Leases to Mark III . Nor do they dispute the validity of the 2011 Corrected Tanya L. McCabe Trust Assignments, all of which

were filed by Mark III in the Hardin C ounty Public R ecords by December 2011. On April 1, 2012, Mark III executed an assignment of a 2.5% undivided overriding royalty interest in “ the oil, gas and mineral leases in Hardin Coun ty, Texas described on Exhibit ‘A’” to the McCabe Family Trust ( the “ McCabe Family Trust Assignment ” ). The Exhibit A attached to this document again included the9

McShane Fee and Brice Leases. The McCabe Family Trust Assignment was filed in the Hardin County Public Records on May 18, 2012. Likewise on A pril 1, 2012, Mark III executed an assignment of a 2.5% undivided overriding royalty interest in “the oil, gas and mineral leases in Hardin County, Texas described on Exhibit ‘A’” to the Rochford Living Trust ( the

“ Rochford Living Trust Assignment ” ). The Exhibit A attached to this document included the McShane Fee and Brice Leases. The Rochford Living Trust Assignment was also filed in the Hardin County Public Records on May 18, 2012. Mark III fell behind in its mortgage payments, and , in 2012, Peoples Bank filed a lawsuit to collect the debt . At that time, however, Steward Energy Fund LLC also claimed a lien on some of the leases that secur ed the loans to Mark III from Peoples Bank. O n December 6 , 20 12, Peoples Bank, Mark III, and other parties , including Steward, entered into a s ettlement agreement (the “ 2012 Settlement Agreement ” ). That agreement provided that Steward would release its lien and, in lieu of foreclosure, Mark III would deed its interest in the Saratoga Leases to Peoples
Bank and pay it $750,000

. The exhibit identifying the Saratoga Leases o mitted the McShane Fee and Brice Leases. In connection with the 2012 S ettlement Agreement , Peoples Bank and Mark III executed a new mortgage on December 6 , 2012 (the “ Hardin Renewal Mortgage”), which extended the bank’s sec urity interest in the Saratoga L eases .10

Despite having the correct description of the eight leases comprising the Saratoga Leases on file with the Hardin County Public Records in the 2011 Corrected Tomco Original As signment and each of the five assignments of overriding royalty interests to the Trusts, the Hardin Renewal Mortgage, like the uncorrected Original Mortgage , identified the leases in an attachment , Exhibit A, that omitted the McShane Fee and
Brice Leases

. Also as part of the 2012 Settlement Agreement , the same parties executed a

“ Renewal Deed of Trust.” In the Renewal Deed of Trust, Mark III represented that it w as renewing and extending the $4 million note it had executed on August 12,
2008 , in favor of Peoples Bank. Like the Hardin Renewal Mortgage, the addendum

to t he Renewal Deed of Trust that identified the leases subject to the mortgage to Peoples Bank , Exhibit A, omitted the McShane Fee and Brice Leases

. The Renewal
Deed of Trust was recorded in the o fficial p ublic r ecords of Hardin County on December 7 , 2012

. About a month after Mark III and Peoples Bank exec uted the Hardin Renewal Mortgage and the Renewal D eed of Trust , Peoples Bank discovered the mistake: the McShane Fee and Brice Leases had been omitted from Exhibit A to both the Hardin Renewal Mortgage and the Renewal D eed of Trust executed in connection with the 2012 Settlement A greement. On January 1 4 , 2013, Peoples Bank filed a “Corrected Deed of Trust” in the p ublic r ecords of Hardin County . This document contained a11

revised first page and the original remaining pages of the Renewal Deed of Trust , including the or i ginal signature page signed by Mark III and Peoples Bank that had previously been filed as the signature page of the Renewal Deed of Trust in the

o fficial p ublic r ecords of Hardin County o n December 7 , 2012

. This document also contained a correct Exhibit A that listed all eight Saratoga L eases, including the McShane Fee and Brice Leases

. The revised first page of the Corrected Deed of
Trust listed the same parties as the Renewal Deed of Trust: Mark III and Peoples Bank

. It added a paragraph to the bottom of the first page explaining that the document had been refiled to correct the original E xhibit A that listed the properties
used as collateral. Peoples Bank notified Mark III of the filing of the Corrected Deed of Trust on January 15, 2013. On January 23, 2013, a fter recording the Corrected Deed of Trust, Peoples
Bank filed a “ Corrected M ortgage ” in the o fficial p ublic r ecords of Hardin County. The Corrected Mortgage was corre cted in the same manner as the Corrected Deed of T rust. As with the Corrected Deed of Trust, the Corrected M ortgage included a revised first page that identified Mark III as t he mortgagor and Peoples Bank as the

mort g agee , plus the original remaining pages of the Original Mortgage, including

t he original signature page executed by Mark III and Peoples Bank for th e Original Mortgage , and a corrected Exhib it A that listed all eight of the Saratoga Leases, including the McShane Fee and Brice Leases. As with the Corrected Deed of Trust,12

t he revised first page of the Corrected M ortgage stated that the Original Mortgage was being refiled to correct the E xhibit A that l isted the property used as collateral,
and the corrected E xh ibit A showed all eight Saratoga L eases. On January 23, 2013, Peoples Bank notified Mark III of the filing of the Corrected M ortgage. Two months later, on March 4, 2013, Peoples Bank and Mark III entered into a second written settlement agreement (the “Second Settlement Agreement”) , which provided that Peoples Bank had the right to foreclose on the lien created by the Corrected M ortgage and renewed by the Correcte d Deed of Trust against all eig h t of the Saratoga Leases, including the McShane Fee and Brice Leases. In return, Peoples Bank agreed to pay a third

- party lienholder $150,000 to obtain release of
the third

- party’s lien against the McShane Fee and Brice Leases

. O n March 5, 2013, Peoples Bank foreclosed on the lien created by the Corrected M ortgage, and it sold the Saratoga L eases to Ranger.
I n May 2013, Ranger filed this declaratory judgment action and suit to quiet title against the Trusts . Ranger asserted that because it had obtained the leases by foreclosure sale, the Trusts’ overriding royalty interests had been extinguished. The Trusts disagreed

. They argued that the C orrected Mortgage and the Corrected Deed of T rust were invalid, and therefore the foreclosure affected only the si x leases listed
in the original, uncorrected Hardin Renewal Mortgage, excluding the McShane Fee13

and Brice Leases

. The Trusts argued that they retained their overriding royalty interests in the McShane Fee and Brice Leases free and clear of any mortgage.
O n May 8, 2014, Ranger and the Trust s executed a Rule 11 and Stipulation of Facts Agreement (“the Rule 11 Agreement”)

. The parties stipulated that the 2008 Tomco Original Assignment inadvertently omitted the McShane Fee and Brice Leases from the Saratoga Leases that Tomco conveyed to Mark III. The parties also stipulated that the McShane Fee and Brice Leases were inadve rtently omitted from the Original Mortgage and the Renewal Deed of Trust as well. The Rule 11 Agreement also contained stipulations relating to the filing of the Corrected Mortgage and Corrected Deed of Trust by Peoples Bank. The parties stipulated that the Corrected Mortgage and Corrected Deed of Trust included the inadvertently omitted McShane Fee and Brice Leases and that Peoples Bank prepared the correction instruments by revising the first page of the instruments to acknowledge the correction being m ade, using the remaining pages from the original instruments, and revising Exhibit A describing the Saratoga Leases. Attorneys for both Ranger and the Trusts signed the Rule 11 Agreement on May 8, 2014 , and t he parties filed the Rule 11 Agreement with the trial court on May 12 , 2014. Both parties subsequently moved for summary judgment. As summary judgment evidence , Ranger filed the a ffidavit of Mark Watts, an officer of b oth Ranger and Peoples Bank, explaining the history of all relevant transactions. The14

affidavit attached the 2008 O pinion L etter, which st at ed that the entire “Saratoga Lease” was subject to the Securit y Agreement between Mark III and Peoples Bank. The affidavit also stated that in December 2011 , Mark III “had corrected the mistake

co ncerning the McShane Fee and Brice Leases with regard to every transaction except as to the Hardi n mort g ages it had executed in 2008 in favor of People s . ” Ranger’s summary judgment evidence also included the deposition of Stanley McCabe, the trustee of the McCabe Family Trust. McCabe testified that he did not perform any due diligence prior to purchasing the overriding royalty interests in the Saratoga Leases. He did not check the property records, and Mark III did not inform him that Peoples Bank had a lien on the Saratoga Leases. Ranger also attached the deposition of Lloyd Rochford, a trustee of the Rochford Living Trust, and Rochford also testified that he did not perform a title examination or inquire about whether there were any outstanding liens on the Saratoga Leases before purchasing an overridin g royalty interest. On October 26, 2014, t he trial court denied the Trusts’ motion for summary judgment, granted summary judgment in favor of Ranger, and issued a final declaratory judgment that the Tru sts’ overriding royalty interests were void and extinguished. The Trusts appealed. The majority rev erses, enters judgment in favor
of the Trusts , and remands the case. I would affirm.15 Validity of Correction Instruments A. Applicable Statutes The Texas Property Code provides for the correction of recorded instruments that transfer real property or an interest in real property. See T EX
. P ROP
. C ODE A NN
. § 5.027(a) ( West 2014)

. S ection 5.027(a) provides, in relevant part: A correction instrument that compl ies with Section 5.028 or 5.029 may correct an ambiguity or error in a recorded original instrument of conveyance to transfer real property or an interest in real property, including an ambiguity or error that relates to the description of or extent of the interest conveyed. Id

. The Property Code permits parties to make both nonmaterial and material changes to instruments of conveyance. Section 5.028 governs nonmaterial corrections to instruments of conveyance and provides: (a ) A person who has personal knowledge of facts relevant to the correction of a recorded original instrument of conveyance may prepare or execute a correction instrument to make a nonmaterial change that results from a clerical error

. . . .

. . . . (a

- 1) A person who has personal k nowledge of facts relevant to the correction of a recorded original instrument of conveyance may prepare or execute a correction instrument to make a nonmaterial change that results from an inadvertent error , including the addition, correction, or clarific ation of: (1) a legal description prepared in connection with the preparation of the original instrument but inadvertently omitted from the original instrument ;

. . . .16

(b) A person who executes a correction instrument under this section may execute a correction instrument that provides an acknowledgement or authentication that is required and was not included in the recorded original instrument of conveyance. (c) A person w ho executes a correction instrument under this section shall disclose in the instrument the basis for the person’s personal knowledge of the facts relevant to the correction of the recorded original instrument of conveyance. (d) A person who executes a co rrection instrument under this section shall: (1 ) record the instrument and evidence of notice as provided by Subdivision (2), if applicable, in each county in which the original instrument of conveyance being corrected is recorded; and (2) if the correc tion instrument is not signed by each party to the recorded original instrument, send a copy of the correction instrument and notice by first class mail, e

- mail, or other reasonable means to each party to the original instrument of conveyance and, if appli cable, a party’s heirs, successors, or assigns. Id. § 5.028 (West 2014) (emphasis added)

. Section 5.029 , governing material changes to instruments of conveyance,
p rovides, in relevant part: (a ) In addition to nonmaterial corrections, including the corrections described by Section 5.028, the parties to the original transaction or the parties’ heirs, successors, or assigns, as applicable may execute a correction instrument to make a material correc tion to the recorded original instrument of conveyance, including a correction to: (1 ) add:17 (A ) a buyer’s disclaimer of an interest in the real property that is the subject of the original instrument of conveyance; (B) a mortgagee’s consent or subordina tion to a recorded document executed by the mortgagee or an heir, successor, or assign of the mortgagee; or (C) land to a conveyance that correctly conveys other land[.]

. . . . (b) A correction instrument under this section must be: (1 ) executed by each party to the recorded original instrument of conveyance the correction instrument is executed to correct or, if applicable, a party’s heirs, successors, or assigns; and (2) recorded in each county in which the original instrument of conveyance that i s being corrected is recorded. Id. § 5.029 (West 2014) (emphasis added)

. Finally, s ection 5.030 , which governs the effect of a correction instrument against a challenge by another party claiming an interest in the property , provides : (a ) A correction instrument that complies with Section 5.028 or 5.029 is: (1 ) effective as of the effective date of the recorded original instrument of conveyance; (2) prima facie evidence of the facts stated in the correction instrument; (3) presumed to be true; (4) subject to rebuttal; and18 (5) notice to a subsequent buyer of the facts stated in the correction instrument. (b) A correction instrument replaces and is a substitute for the original instrument . Except as provided by Subsection (c), a bona fide purchaser of property that is subject to a correction instrument may rely on the instrument against any person making an adverse or inconsistent claim. (c) A correction instrument is subject to the property interest of a creditor or a subsequent purchaser for valu able consideration without notice acquired on or after the date the original instrument was acknowledged, sworn to, or proved and filed for record as required by law and before the correction instrument has been acknowledged, sworn to, or proved and filed for record as required by law. Id. § 5.030 (West 2014) (emphasis added).
B. Whether the Corrected Mortgage and Deed of Trust Complied with Statutory Requirements The Trusts contend that the corrected instr uments of conveyance did not comply with the Texas correction statute s ; therefore, they “could not serve to correct the original instruments of conveyance which omitted all mention of two oil and gas leases, and thereby prevented [Ranger] from extinguishing by foreclosure [the Trusts’] righ t in such omitted leases.” The Trusts acknowledge that “ due to an inadvertent error, two of the Saratoga Leases intended to be included in the Tomco Original Assignment were inadvertently omitted from Exhibit A thereto, which listed only six of the eight Saratoga leases intended to be subject to the Tomco Assignment ,” specifically the McShane Fee Lease and the B rice Lease on which they base their claims. In the trial court and on appeal, Ranger responds that “[t]he19

corrected instruments are valid under se ctions 5.027 through 5.031 of the Texas Property Cod e (the “Correction Statutes”).” And it further argues that the Trusts “are not bona fide purchasers f or the purposes of Section 5. 0 30(c ) of the Correction Statutes.”
1. Inadvertent error in a legal description under s ection 5.028 In my view, section 5.028(a

- 1) , governing nonmaterial changes to conveyance instruments , which is relied upon by Ranger, governs this case. T he majority instead incorrectly determines that secti on 5.029, governing material changes to conveyance instruments , appl ies

. The difference is decisive.
S ection 5.028(a

- 1) provides that “[a] person who has personal knowledge of facts relevant to the correction of a recorded original instrument of conveyanc e may prepare or execute a correction instrument to make a nonmaterial change that results from an inadvertent error, including . . . a legal description prepared in connection with the preparation of the original instrument but inadvertently omitted from the original instrument

. ” Id. § 5.028(a

- 1). For a nonmaterial change, t he person who
executes the correction instrument must disclose in the instrument the basis for the person’s knowledge of the facts relevant to the correction. Id

. § 5.028(c ). Unlike a correction instrument that makes a material correction to an instrument of conveyance, a correction instrument that makes a nonmaterial change need not be executed by each party to the recorded original instrument of20

conveyance. C ompare id

. § 5.029 (b) ( governing material corrections to instruments of conveyance) , with id. § 5.028(d) (governing nonmaterial changes). Specifically, section 5.02 8 provides that “ if the correction instrument is not signed by each party to the recorded original instrument ,” the parties making the correction must “ send a copy of the correction instrument and notice by first class mail, e

- mail, or other reasonable means to each party to the original instrument of conveyance and, if applicable, a party’s heirs, successors, or a ssigns.” Id

. § 5.028(d) (2)

. It must record the instrument and evidence of reasonable notice given as provided in the statute to each party to the original instrument and, if applicable, a party’s assigns. Id

. The majority notes that the Corrected Mortgage and Deed of Trust added the McShane Fee and Brice Leases to Exhibit A, which described the Saratoga Leases, and it states that “the revisions purported to add property interests in two leases that previously w ere not listed.” Slip Op. at 24

. The majority concludes that the correction instruments “ added two leases to a conveyance that correctly conveyed interest s in other specifically identified leases ,” which constitutes a material correction pursuant to sect ion 5.029. Slip Op. at 26

. But to say that the two leases

were not listed in the legal description of the land conveyed is not to say that they

were not conveyed , and the evidence is undisputed that all eight Saratoga Leases

were , in fact, conveyed by To mco to Mark III in 2008. I disagree , therefore, that the revisions in the Corrected Mortgage and Deed of Trust “add[ed]

. . . land to a21

conveyance that correctly convey[ed] other land.” See T EX
. P ROP
. C ODE A NN
. § 5.029(a)(1)(C). Instead, I agree with Ra nger that the revisions in the correction instruments added the McShane Fee and Brice Leases to the legal description of the Saratoga Leases, the property interest conveyed by Tomco to Mark III in 2008 and mortgaged by Mark III to Peoples Bank in 2008. Th e “addition, correction, or
clarification of

. . . a legal description prepared in connection with the preparation of the original instrument but inadvertently omitted from the original instrument” is a nonmaterial correction pursuant to section 5.028(a

- 1)

. See id. § 5.028(a

- 1)

. T he evidence in this case shows that a ll of the requirements of section 5.028
were met. T he Correct ed Deed of Trust stated, “This document was originally filed under County Clerk Instrument No. 2

- 12

- 33676, Official Public Records of Hardin County, Texas and is being refiled to correct the Exhibit A attached at the time of the original filing

. ” That same Exhibit A had already been corrected with respect to both the 2008 Tomco Original Assignment of the Saratoga Leases to Mark III and the assignments of undivided overriding royalty interests in the Saratoga Leases to the Trusts and filed in the Hardin County public recor ds in 2011. Moreover, both parties stipulated in their Rule 11 Agreement filed in this litigation, “Due to an inadvertent error, two of the Saratoga Leases were omitted from the Exhibit A attached to the Original Tomco Assignment.” That same Rule 11 Agree ment state d that Tomco executed the 2011 Corrected Tomco Original Assignment , recorded22

under number 2011

- 25176 of the o fficial p ublic r ecords of Hardin County , that “corrected the Original Tomco Assignment by adding the two Omitted Saratoga Leases as part of the property being conveyed by this instrument.” The parties also agreed in the Rule 11 Agreement that Peoples Bank sent notice of the Corrected Mortgage and Deed of Trust to Mark III shortly after it filed the corrected
instruments. I would hold that all of the requirement s of section 5.028 for making a nonmaterial correction to a legal description in a conveyance instrument were satisfied with respect to the Correct ed Mortgage and the Correc t ed Deed of Trust. Therefore, I would hold that the Correct ed Mortgage and Correct ed Deed of Trust are valid.
2. Bona fide purchasers without notice under s ection 5.030 I would also hold that, at the time the Corrected Mortgage and Corrected Deed of Trust w ere filed, the Trusts we re not bona fide purchasers for value of their overriding royalty interests in the McShane Fee and Brice Leases

. The Trusts were

not without notice that these Leases were two of the eight Saratoga Leases to which their undivided ov erriding royalty interests applied and which were mortgaged by Mark III to Peoples Bank

. T herefore, th ese correction instruments replace d the

un corrected instruments as to the Trusts and bar red their claims in this litigation.23

Property Code section 5.030 , governing the enforceability of correction instruments against adverse claimants, provides: (b ) A correction instrument replaces and is a substitute for the original instrument. Except as provided by Subsection (c), a bona fide purchaser of propert y that is subject to a correction instrument may rely on the instrument against any person making an adverse or inconsistent claim. (c ) A correction instrument is subject to the property interest of a creditor or a subsequent purchaser for valuable consid eration without notice acquired on or after the date the original instrument was acknowledged, sworn to, or proved and file d for record as required by law and before the correction instrument has been acknowledged, sworn to, or proved and filed for record as required by law. Id. § 5.030(b)

– (c). Thus, u nder section 5.030, a correction instrument replace s the original instrument and is subject only to the property interests of creditors or bona fide purchasers for value without notice of the error in the or iginal instrument and who acquired their interest on or after the date the original instrument was executed and filed in the public records and before the correction instrument was executed

an d filed in the public records. Se e id. The Trusts assert that their property interests in the McShane Fee and Brice
Leases were not subject to the lien placed on the Saratoga Leases by Peoples Bank, so that their interests were not conveyed to Ranger at the March 5, 2013 foreclosure sale

. To prove this, the Tr usts had to show that they were bona fide purchasers of their undivided overriding royalty interests in the McShane Fee and Brice Leases24

“for valuable consideration without notice acquired on or after the date the original instrument was acknowledged, swor n to, or proved and filed for record as required by law and before the correction instrument ha[d] been acknowledged, sworn to or proved and file d for record as required by law

. ” Id. § 5.030(c). The Trusts thus had to prove that they had no notice that t heir undivided overriding royalty interests in the McShane Fee and Brice Leases were included in the undivided interests in all eight Saratoga Leases acquired by Mark III from Tomco in the 2008 Tomco Original Assignment and Bill of Sale and made subject to Peoples Bank’s 2008 Original Mortgage and Deed of Trust. See id. I would hold that the Trusts did not and cannot show that they were bona fide purchasers for value of their undivided overriding royalty interests in the McShane Fee and Brice Leases witho ut notice before the Correct ed Mortgage and Correct ed
Deed o f Trust were executed and filed that their undivided property intere sts in those two leases were a portion of their undivided property interests in all eight Saratoga
Lease s conveyed by the 2008 Tomco Original Assignment to Mark III

. Nor did the Trusts acquire their interests wit hout knowledge that the working interests in the Saratoga Lease s acquired by Mark III in 2008

— from which they purchased their interests in 2011 and 2012

— were all subject to the 2008 Original Mortgage and
Deed of Trust and the Hardin Renewal Mortgage and Renewal Deed of Trust before the Correct ed Mortgage and Correct ed Deed of Trust were executed and filed

.25

Therefore, the Correct ed Mortgage and the Correct ed Deed of Trust wer e both enforceable against the Trusts’ interests. See id. § 5.030(a)

– (c). Because the Trusts failed to show that the foreclosure sale under the Corrected Mortgage and Deed of Trust foreclosed upon and sold property they owned that was not subject to the Correct ed Mortgage and Correct ed Deed of Trust

— namely that portion of the undivided overriding royalty interests in the Saratoga Leases attributable to the McShane Fee and Brice Leases

— I would hold that their interests

were extinguished by the foreclos ure sale

. Conclusion I would affirm the trial court’s judgment denying the Trusts’ motion for summary judgment and granting summary judgment in favor of Ranger.

Evelyn V. Keyes Justice Panel consists of Justices Keyes, Massengale, and Lloyd. Justice Keyes , dissenting.