### TEXA S C OU R T OF A PPEAL S, THIR D DIST R ICT , AT AU STIN

444 444 444 444 444 444 444 444 444 ON MOTION F OR REHEARING

444 444 444 444 444 444 444 444 444 NO. 03-0 5 -00 275 -CV

Ja c kie Do ss S m it h , A ppe lla nt

v. Virginia Lagerstam , Em il Lagerstam , Kat hryn Lagerstam Wilbeck, Vivian L agerst am Savage, and An nik a Lagerstam Kaye , Appellees

F ROM THE DISTRICT CO URT OF TRAVIS COUNTY , 345TH JUDICIAL DISTRICT NO. GN40275 3 , HO NORAB LE MARGARET A. COO P ER , JUDGE PRESIDI NG

M E M O R

A N D U M O P I N I O N Appellant Jackie Do s s Smit h has filed a motion for rehe aring . We withdraw our opinion, dissenting opinion, and judgme nt issued on J une 1, 2007, and the following opinions and j u d gm en tar e s u

b s t i tu t ed

. W e o v erru l e S m i t h ’s m o t i o nfo r r eh ea ri n g. J ac k i e Do s s Smit h soug ht to rescind thre e dee ds under whic h she conve y ed her roy alty interest to her

cousins, Kathry

n L ag erstam Wilbeck, Vivian L ag erstam Sava g e, and A nnika L ag erstam Ka

y e (the “L ag erstam da

ug hters”) . Smit h reque sted that the cour t invalidate the dee ds on the g rounds of mutual and unilate ral mistake be cause , at the time of the transa ction, the par ties

wer e mistaken re g ardingthe interest that was convey ed. I n response , the L ag erstam da ug hters andDue to the sha red sur name of the appe llees, we will ref

er to them by their first names where 1 nece ssary to avoid confusion. T h e J an u ar

y an d F e b r u ar y 2 0 0 4 r o ya l t y c h e c k s w e r e $ 3 2 9

. 9 0 an d $ 3 5 3

. 8 5 , r e s p e c t i v e l y. 2 2 th e ir p ar e n ts , V ir g in ia

a n d E mi l L a g e r s ta

m ( c o ll e c ti v e ly

th e “ L a g e r s ta

ms”), filed a motion for 1 summary judgme nt, asserting that the eleme nts of both ty pes of mistake w ere not met. The district

c ourt grante d th e L a g e rs tams’ mot ion fo r s umm ary

jud g me nt, and

Smit h n owa pp e a ls. We w ill

a ff ir m th e jud g me nt o f t

he dis tr ic t c ourt
.

BACK GR OUND Smit h and her aunt, Virg ina L ag erstam, inherited identica l mineral intere sts to land in Robertson County , Texas. I n 1984, Smit h and Vi rg inia lease d their minera l interests to XTO Energ y by separ ate oil and g as lea ses. XTO Ene rg y subsequently

cre ated a

pooled unit, which included Smith’s and Virg inia’s intere sts. Sm ith and Virg inia wer e each en titled to a .0 00 99 01 ro y a lty

int e re st o n th e pr od

uc tio n o f o il f

ro m any we lls on the po ole d unit

. Smit h and Virg inia beg an to rec eive r oy alty pay ments in 1985 when the fir st well was completed. F or seve ral y ear s the roy alty pay ments amounted to less than $100 per y ear , but in 2002,

a se c on d w e ll w a s c omp le te d a nd pa y me nts ro se to $ 25 0- $3 00 pe r m on th. I n 2 00 3, pa y me nts a g a in rose whe n a third we ll was completed. B y the start of 2004, Smith and Virginia were rec eiving over $3 00 pe r m on th i n r oy a lty pa y me nts
. 2 On F e br ua ry 9, 20 04 , Sm ith re c e ive d an un so lic ite d off e r fr om San

Sa ba Roy a lty to purcha se her

entire inter est for $6,658.99. She had rece ived other of fer s befor e, but this offer

was considera bly highe r than a

ny of the pre vious offer s. Due to the lar g e amount off ere d and the f

act that Smit h had re cently

lear ned her son owed ove r $6,000 in bac k taxes, she considere d acc epting t heI t is worth noting that after the sale ha d completed a nd befor e re ceivingthe sec ond offe r 3 from San Saba, a

nother c ompany

offe red to purc hase V irg inia’s minera l interest for $1,087.50.

3 of fe r. Con se qu e ntl y , Smith ph on e d Vir g ini a , who Smit h ass ume d ha d re c e ive d th e same of fe r, in order to discuss her options. Virg inia stated t hat s he would purcha se S mith’s roy alty interest for the same pric e and e x plained that she wanted to give the intere st to her three daug hters. De siring to ke ep the intere st in the family

and to help her

son, Smi th ag ree d to Virg inia’s offe r. On Mar ch 9, 2004, Smit h executed thre e dee ds, convey ing he r entire interest to the L ag erstam da ug hters for

$6,660. I n J anuar y and F ebrua

ry 2004, just prior to the sale, two additi o n al wells wer e ins ta lle d o n th e po ole d unit . H ow e ve r, du e to t he la gbe tw e e n oil pr od

uc tio n a nd ro y a lty pa y me nts , neither pa rty had re ceive d roy alty

pay ments from these two w ells at t he ti me of the sale. For sever al months after the sale, S m i t h continued to re ceive roy alty pay ments for the oil produc tion that

occur red pr ior to the sale. These post-sale pay ments ref lected the production fr om the additional two wells and wer e for the amounts of $510.10 in Ma rch, $1,025.90 in A

pril, and $974.85 in May . After

rec eiving these pay

ments, Smit h claims she attempted to ve rify their ac cura cy

but was unsucc essful i nc o n t a c t i n g X T O E n e r g y.

I n J une 2004, Smith rece ived a transfe r orde r fr om XTO Ener g y , indicating that she had succ essfully transfe rre d her entire interest, including her interest in pr oduction from the two new wells, to the L ag erstam da ug hters. On that same day , Smit h rec eived another purcha se off

er f rom San Sa ba , th is o ne fo r $ 62 ,6 51 .3 8. Af te r re c e ivi ngthi s o ff

e r, sh e c on ta c te d V ir g ini a and ult imate ly wrote a letter to the L ag erstam daug hters, reque sting that they sell her roy alty interest back to he r for the orig inal purcha se price of $6,600 plus interest. The L ag erstam da ug hters re fused. 34 Smit h t h en filed suit t o resc ind the three deeds on the g rounds that the dee ds were

en t ered into under a mutual or a unilater al mistake. Specific ally , she aske d that the transf er be

resc inded bec ause, at the time of the conve y ance , she was unawa re that additional ga s wells had bee n place d on the prope rty . As a re sult, she insist s that she was mistaken a bout th e i n t erest she was convey ing. I n response , the L ag erstams filed a motion for summary judgme nt, c ontending that the de e ds sh ou ld b e up he ld b e c a us e the re wa s n o mi sta

ke , mutua l or

oth e rw ise , r e g ard ingthe int e re st that w a s so ld. Th e dis tr ic t c ourt g ra nte d th e mot ion , an d Smitha pp e a ls the dis tr ic t c ourt ’s jud g me nt.

DI SCU SSIO N Summ ary Judgm ent Mot ion

On appe al, Smith contends that the district court er re d wh en it g rante d the L ag erstams’ motion bec ause f act issues we re pr esent re g ardingwhether th e deeds should be

resc inded on the basis of a mutual or uni latera l mistake. Be fore addre ssing the merits of t his case,

we ne ed to addr ess the dissent’s conc erns r eg arding t h e L agerstams’ summary judgme nt motion. Essentially , the dissent attacks the adequa cy of the L ag erstams’ motion on the basis of its length a nd its lack of citation to ca se law.

Although the L ag erstams’ motion asser ted that the L ag erstams wer e entitled to re lief

un de r b oth

tr a dit ion a l and

no e vid e nc e su mma

ry jud g me nt s tand ard s, the mot ion is m or e pr op e rl y

rea d as a traditional motion for summary judgme nt beca

use it did not specify

which ele ments of Smit h’s claims there was no evidenc e for and beca use it r efe rre d to evidence attache d to the motion

as proof that the L ag erstams wer e entitled to r elief as a matter of law. See Te x. R. C iv. P. 1 66 a (i ) (in no evid en ce m o t i on, movant “must state eleme nts as to which there is no evidence .”).5

Acc ording ly , we will limit our discussion t o the re quirements of tra ditional summ ary -judg ment motions and need not addr ess the dissent’s assertions that the motion fails as a no-e vidence summary judgme nt motion.

We first note that Smit h did not contest the adequa cy of the motion to the trial court and raises no issue reg ardingthe suffic iency of the motion on appea l. See McConnell v. Southside In de p. Sc h. Di

st. , 8 58 S.W. 2d

33 7, 34 2- 43 (T e x. 19 93 ) ( ho ldi ngthat i n ord e r f or no n- mov a nt t o complain on appe al that g rounds raised in motion for summary judgme nt were unclea r, non-movant

mus t f ile e xce pti on

to m oti on ); Lochabay v. Southwestern Be ll Media, Inc. , 828 S.W .2d 167, 170 n.2 (T e x. Ap p. —A us tin

19 92 , n o wr it) (s a me ). As su min g wi tho ut de c idi ng that it is pr op e r i n th is c a se to reviewthe suffic iency of the mot i o n wh en n ei t h er party has aske d us to, we believe that the motion satisfies the require ments of a tra ditional summ ary judgme nt motion. Th e mot ion

is a dmi tte dly

brief; ho weve r, to b e e ff e c tiv e , th e mot ion

ne e d o nly

lis t t h e g r o u n d s u

p o n w h i c h r e l i e f i s r e qu e s t e d , an d t h e s p e c i f i e d g r o u n d s m ay b e s t a t e d “ c o n c i s e l y, without detail and ar g ument.” Lochabay , 828 S.W .2d at 170 n.2 (af firming summary

j u d gm ent motion on deceptive tra de pra ctice g rounds when motion simply stated that non-moving party ’s counter claim “citing [ the m ovant’s] use of dece ptive trade prac tices i s wholly unsupported by

leg al authority .”). The motion st ated that Smith is not entitle d t o re lief on the g rounds of unilater al or mutual mist ake. F urther, the L ag erstams attached se vera l documents to their motion for summary judgme nt, in cl u ding V irg inia’s af fidavit, an off

er le tter fr om San Saba, and the de eds conve y ing Smit h’s intere st to the L ag erstam da ug hters. In their motion, the L ag erstams ref err ed to the attache d evidenc e and stated that the evidenc e “c onclusively establishes” that the L ag erstams “ never intended fo r t he ir purc ha se to b e any

thi ngoth e r t

ha n f or the e nti re int e re st ow ne d by ” Smit h a nd that Smi th6

“ ne ve r s a id or did any

thi ng to ind ic a te that the sa le wa s su pp os e d to be a tr ans fe r on ly of an in te re st that involved a ce rtain number of exis ting we lls.” I n light of the prec eding , the motion fa lls fa r short of the ty

pe of motions that have been h el d i neff

ective be cause they

prese nted no g rounds for c onsideration. Se e, e .g ., Mc Con ne ll , 858 S.W .2d at 338, 341 (holding that summary j u dg ment that only stated there wer e “no g enuine is s u e s a s to an y

mate r ia l f

a c ts ” w a s in s u f

f ic ie nt); Bean v . Rey nolds Realty Group, Inc

. , 19 2 S. W.3 d 8 56 , 8 59 (T e x. Ap p. —T e xar ka na 20 06 , no pe t.) (h old ing that mo tio n th a t st a te d o nly that “ther e is no evidenc e to support th e p l aintiff’s c auses of actions and a lleg ations” wa s ineffe ctive); Great-Ness Prof’l Serv s., Inc. v . First Nat ’l Bank, 704 S.W .2 d 9 1 6 , 9 17 (Tex. App.—Houston [14t h Dist.] 1986, no writ) (holding that motion was inef fec tive in brea ch-of

le a se c a se be c a

us e mot ion ma de no me nti on of br e a c h- of -l e a se c la im and , in ste a d, state d a s it s o nly g round that “[t] his is a suit on a sworn ac count.”)

.

For all the re asons pre viously g i v en, we conclude that the L ag erstams’ motion for summary judgme nt was effe ctive. W e now turn to the standa rd with which a

ppellate c ourts revie w district court dete rminations reg arding summary judgme nt motions. A summary judgme nt ma y be upheld only

if no g enuine issue of

materia l fac t exi sts. Tex . R. Civ. P . 166a(c ). To esta blish that no g enuine issue of

materia l fac t e x ists, a defe ndant moving for summary judgme nt must di sprove at least one e lement of the pla intiff’s ca use o f ac tion. Randall’s Food Mkts., Inc . v. Johnson , 89 1 S.W. 2d 64 0, 64 4 (T ex . 1 99 5); Arbelaez v . Just Brake s Corp. , 149 S.W .3d 717, 719 (T e x. A p p . —

A u s ti n 2 0 0 4 , n o p e t. )

. I n r e v ie w in g th e s u mm ar y ju d g me n t e v id e n c e , a ll evidenc e favor able to the nonmovant must be take n as true. Johnson , 891 S.W .2d at 644.This estimate is based on S an Saba’ s offe r to purcha se the intere st for $62,651.38, made 4 afte r the sale , and on testimony that the intere st was worth $28,000 at the time of sale.

7 M ut ual M ist ake

I n her f irst issue on appea l, Smi th claims that there w as a fa ct issue as to whe ther there exis ted a mutual mistake wa rra nting r escission of the de eds. Smith argu es t hat the par ties enter ed the sa les contra ct under the mistaken belief

that she wa s selling, a

nd the L ag erstams we re buy ing, only

three producin g wells . This mist ake a bout the number of pr oducing wells, she contends, mate rially

aff ecte d the sales tra

nsaction and cause d her to se ll he r interest for be tween 11% to 25% of its true value

. 4

Under Texas law, when parties to an a g ree ment have c ontrac ted under a mutual mi s c o n c e p ti o n o f mate r ia l f a c t, th e a g r e e me n t is v o id a b le u n d e r th e d o c tr in e o f mutu al mistake. W ill iam s v . G las h , 7 89 S.W. 2d 26 1, 26 4 ( Te x. 19 90 ). Ho we ve r, the do c tr ine of mut ua l mistake is

a pp lie d o nly

in r are c ir c ums tanc e s in or de r t o a llo w p art ie s to “ re ly on the fi na lity ” of

the ir ag ree ments and to preven t t h e ro u t i n e use of the doctrine to avoid the ef fec ts of an “unha

ppy barg ain.” Id. a t 26 5; see W all e rst e in v . S

pir t , 8 S.W .3d 774, 781 (Tex. App.—Austin 1999, no pet.). A mutual mistake must be proven by “cle ar, e x act, a

nd satisfac tory

evidenc e.” Es tes v. R epu blic Nat’l Bank , 4 6 2 S

. W

. 2 d 2 7 3 , 2 7 5 (T ex . 1 9 7 0 ) ( ci t i n g Su n Oi l Co. v . B e nn e tt , 84 S.W .2d 447, 452 (Tex. 1935)). To be entitled to rescind an ag ree ment due to a mutual mistake , a par ty must show that there ex i sts (1) a mistake of fac t, (2) held mutually

by the par ties, (3) whic h materia lly aff ects the ag ree d upon exchang e. W all e rst e in , 8 S.W. 3d

a t 78 1; De M

onet v. PER

A , 877 S.W .2d 352, 357 (Tex. App.—Dallas 1994, no wr it). “[T] he mistake must relate to the subject matter of t he contr act and not to a matter

that is merely

collater al or incide n t al t o t h e contract.” Petrey v. John F

.8

Buck ner &Sons , 2 80 S.W. 2d

64 1, 64 3 ( Te x. Civ . App .— Wac o 195 5, wr it r e f’ d n .r .e .) ; se e als o De M onet , 877 S.W .2d at 359 (re lief only appropr iate whe re mistake upse ts basis of contra ct); Chambers v. Huggins , 7 09 S.W. 2d 21 9, 22 4 ( Te x. Ap p. —H ou sto n [14 th Di st. ] 198 6, no wr it) (re quiring party

show that mistake was mutual a nd that it was materia l inducement to transa ction). When determining whether there was a

mutual m i s t ake, c ourts must consider the lang uag e of the ag ree ment. See, e .g. , Sun Oil Co. , 8 4 S. W.2 d at 44 9 ( re fu sin g to i nv a lid a te le a se

on g ro un d it mis take nly inc lud e d pa rt ic ula r t ra c t of land , w he re int e nt t o in c lud e land in c on tr ov e rs y

“ c le arl y and un mis taka

bly a pp e ar[e d] f

ro m th e langua g e of

the le a se ” ); see also Estes , 462 S.W .2d at 275 (p re s ume written a g ree ment embodies par ties’ intentions). Howeve r, the

e xiste nc e of

a mut ua l mi sta ke c ann ot a lw ay s be de te rm ine d e xclu siv e ly by the langua g e in a c on tr a c t. W illiams , 7 8 9 S.W .2d at 264. I n such ca ses, other obje ctive cir cumstance s surrounding the execution of the docume nt may also be c onsidered. Id. (“ the q ue sti on of mut ua l mi sta ke is deter mined not by

self-se rving subjective stateme nts of the par ties’ intent . . . bu t ra t h er s o l ely by objective c ircumstance s”). The s e i n cl u d e the knowledg e of the parties a nd the substance of the neg otiations at the time of the contra ct execution. De M onet , 8 77 S.W. 2d

a t 358; see W

illiams , 789 S.W .2d at 264. Ess entially , the party seekingref

ormation due to mistake must show what the true ag ree ment betwee n the parties was and must prove that the wr itten ag ree ment does not comport with the tru e agr ee m en t beca use of a mutually

held mistake. Estes , 462 S.W .2d at 275; Be y e rs v . R ob e rts , 199 S.W .3d 354, 362 (Tex. App.—Houston [1s t Dist.] 2006, pet. denied)

.

Ev e n w h e n t h e e v i d e n c e i s v i e w e d i n t h e l i g h t m o s t f a v o r a b l e t o S m i t h , i t f

a ils to

cre ate a fact issue reg ardingwhether there exis ted a mutual mistake mate rially aff ectingthe

a g re e me nt. Th e re le va

nt l angua g e of

the de e ds re a ds a s f

oll ow s:9

al l o f [ t h e] Gr an t o r’ s i n t er es ti n an d t o al l o i l , gas , m i n er al s an d ro y al t i es , i n cl u d i n g, bu t no t l imite d to , a

0. 00 09 90 1 r oy a lty , mi ne ra l in te re st, ro y a lty int e re st, le a se ho ld interest, re version ary

i n t er es t s , af

t er ac qu i re d p ro p er t y i n t er es t s , ri gh t s o f subs tituti on, rig hts of entry

and re -entry , interests in claims or c auses of ac t i on, rig hts of subrog ation, reg ardle ss of whethe r any of such r ights, titles and int ere sts are vested now or will be ve sted in the future

. . . . The languag e in the dee ds is broad. R at h er t h an s p ecif ically delineate or limit t he intere st to be convey ed, the de eds outline a c o m p re h en s i v e, non-ex haustive list of what is to be included in the conveyance . I t list s Smi th’s specific minera l i n t ere st in the property but also convey s any

other interest Smith might have i n the property

. There is no indication in the l ang uag e of the deeds that the par ties intended to convey any thing other than S mith’s entire interest, whateve r that mig ht have been, inc luding he r stake in the production fr om whateve r we lls were on the proper ty at the time of the c on ve y anc e . T he de e ds do no t li mit the int e re st t o b e c on ve y e d to any numbe r o f w e lls a nd , in fac t, make no mention of wells. Cf. Sun Oil Co. , 84 S.W. 2d a t 45 2 (l angua g e of de e d w ri tte n b ro a dly fo r p ur po se of e ns ur ing e nti re int e re st c on ve y e d a nd pr e ve nti ngg ra

nto r f ro m r e ta ini ngany

int e re st in property

due to lack of

prec ision in describing proper ty or lac k of knowle d ge o f t o t al ity of interest by

parties)

. Second, althoug h documents at the time of the sale indicate that only three wells wer e producing , the evidenc e conc erningthe var i o u s discussions and neg otiations between Smith and Virg inia demonstrate that the parties unde rstood themselves to be buy ing a nd selling Smith’s entire mineral intere st. I n Smit h’s deposition, she admitted that she unde rstood the San Saba of fer to be fo r h e r e nti re int e re st a

nd fu rt he r a dmi tte d th a t sh e int e nd e d to se ll the L a g e rs tams t he e xac t in te re st she would have sold to S an Saba. San Saba ’s offe r letter ma de no mention of a ny well s; on the10

c on tr ary , th e of

fe r l e tte r s ta te d th a t th e of fe r w a s f or “ any and a ll o f the ro y a lty int e re st that” Smith

ow ne d at the tim e of the of fe r. I n a dd iti on

to t he le tte r, San Sa

ba a tta c he d a

do c ume nt t

hat w ou ld have a llo we d Sm ithto t

ra ns fe r h e r o wn e rs hip to S an Sa ba . L ike the of

fe r l e tte r, thi s d oc ume nt d id not list any

wells. Moreove r, conta ined within the document was the following phrase written in a f on t t hat was si gnif

ica nt ly lar ger th an fo nt s u sedfor th e ot her p art s o f t he d ocu men t: “BY EX ECU TI

NG AN D DE L I VE RI

NG TH I S I

NST RU ME NT YO U A RE S EL L I NG YO UR

EN TI RE MI NERAL AND ROYA L TY I

NTEREST I

N THE PROPERTY DESCR I BED AB OVE.” Although in he r af

fidavit Smit h say s she believe d her inter est included the pr oduction fr om o nly thr e e we lls , no thi ng in the re c or d s ug g e sts that Smi th atte mpt e d to c on ve y on ly thr e e we lls or to limit the conve y ance in any way . Moreove r, nothing in t h e re cord sugg ests that the par ties

ne g oti a te d r e g ard ingthe numbe r o f w e lls on the pr op e rt y . On the c on tr ary , in

he r d e po sit ion

Smith admitted that she did not communicate a desire to c onvey only her inter est in three w ells. Furthe r, Vi rg ini a ’s a ff

ida vit state s th a t ne ith e r pa

rt y me nti on e d th e numbe r o f w e lls pr ior to t he sa le , a nd thi s testimony was not controve rted. I n support of her argument that the mistake was materia l, Smith relies on a c omment

and an illu str a tio n ac c omp anying se c tio n 152 of the re state me nt of c on tr a c ts. Se c tio n 152 pr ov ide s, in r e le va nt p art , a s f

oll ow s: (1 ) Wh e re a mi st ake of

bo th p art ie s at th e tim e a c on tr a c t w a s ma de a s to a ba sic assumption on which the contr act wa s made ha s a mater ial eff ect on the a g ree d e xch ang e of perf

or manc e s, the c on tr a c t is vo ida ble by the a dv e rs e ly

a ff e c te d p art y unless he bea

rs the risk of the mistake . . . . Restatement (Sec ond) of Contrac t s § 152 (1981). The first illustration to t his section provides as fo llo ws :11

A contra cts to sell and B to buy a tra ct of land, t h e v alue of which has de pended ma inl y on the tim be r o n it

. B oth

A a nd B be lie ve that th e tim

be r i s st ill the re , b ut i n fac t it has been de stroy ed by fire. T he contr act is voidable by B.

Id. § 1 52 , il lus . 1 . Smitha sse rt s th a t th is c a se inv olv e s th e re ve rs e of the sit uatio n d e sc ri be d in

thi s example

. Sp e c if

ic a ll y , s h e c o n te n d s th a t, b e c a u s e th e a d d it io no f

th e w e ll s in c r e a s e d

th e v a lu e of the prope rty , she should be allowe d to rescind he r conve y ance s.

Our c ase is not analogous to this example. The example addre sses what ha ppens when ther e is a m i s t ak e ab o ut the very essenc e of w hat is sold—a bare trac t of land ver sus tim be rl and . T he re is no suc h ba sic mis take in our c a se : bo th part ie s bel ie ve d the y we re de a lin g wi th a minera l interest, and both par ties knew that the land was a ctively producingminerals. More over, a mistake in the number of we lls convey ed do es not rende r the e ssence of the e x chang e—the conveyance of an active miner al intere st—inherently differ ent from the intende d conveyance . The Restatement example would be more applicable if the mistake in the illus t ra t ion was about the number of tr ees on the lot rather tha n the ex istence of any tree s at all. Finally , the ex ample cited by Smit h d o e s n o t a d dr e s s th e s it u a ti o nh e r e w h e r e th e s e ll e r w an ts to u n d o a

tr ansac tion due to a mistake.

Com me nt b to s e c tio n 1 52 re a ds , in re le va nt p art , a s f

oll ow s: The pa rties may have ha d such a “ basic a ssumption,” even thoug h t h ey wer e not conscious of a lternatives. . . . Where , for e x ample, a pa rty purcha ses an annuity

on the life of a

nother pe rson, it can be said that it was a basic a ssumption t hat the other person wa s alive at the time, e ven thoug h t h e par ties never consciously

addre ssed themselves to the possibility that he wa s dead.12

Restatement (Sec ond) of Contrac ts § 152, cmt

. b

. Howeve r, as with the pr evious example, the situation described in the c omment is not congr uent to the circ umstances pr esent in this appea l. The basic assumpti on underlying the ag ree ment in this case is that there was g as pre sent on the pooled unit, not the precise value of the interest or the a mount pumped from the pooled unit. This comment would have mor e applica bility to a situation in which two parties believed that ga s was pre sent on the prope rty

when the sa le was f

inalized but later discover ed that the unit was dr y . I n further support of her

argument, Smit h ref

ers to two ca ses in which a c ourt

c on c lud e d th e re wa s a

fa c t is su e re g ard ingthe e xiste nc e of a mut ua l mi sta ke : De M

onet v. PER

A and W ill iam s v . G las h . I n De M

onet , t h e p ar t i es en t er edi n t o an agr ee m en t t o s el l an o ff i ce b u i l d i n g. 877 S.W .2d at 354. Prior to the sale, the se llers discover ed that the building contained a sbestos and hired a company to remove it. Id. at 355. The pa rties extensively

neg otiated re g ardingthe re moval of the a sbestos prior to the sale being finalized, and the seller s made seve ral re prese ntations that the asbestos would be r emoved pr ior to the sale. How ever , the purc haser discovere d asbestos in the building af

ter the sa le was f

inalized. Due t o t h e v arious actions perfor med by the par ties and the signific ant neg otiations concer ning the asbestos, the c ourt conc luded there was a fa ct issue re g arding whether the sellers a ssumed the risk of ther e beinga mistake reg arding the asbestos or whether the mistake was so “ fundame ntal to the p ar t i es’ ag ree ment” that it “mater ially altere d the ag ree ment.” Id. at 359.

DeMo ne t is distinguishable from this case . I n De M onet , the sellers w ere require d to e ng a g e in c e rt a in a c tio ns and wa rr ant t hat the y ha d c omp le te d tho se ta sk s b e fo re the buy e rs wo uld ag ree to purch ase the building, and the mistake both parties ha d was the be lief that the a ction had be e n c omp le te d. I n th e pr e se nt c a se , th e pa rt ie s d id n ot n e g oti a te re g ard ingthe nu mb er of we lls13

pr e se nt o n th e pr op e rt

y , a nd ne ith e r p art

y ma de any

re pr e se ntatio ns re g ard ingthe we lls

. Fur thermore , there was no a ction either pa rty neede d to complete bef

ore the L ag erstams would ag ree to purcha se S mi th ’ s mi n e r a l i n te r e s t, an d a c c o r d in g ly , th e r e is n o mi s ta k e r e g ar d in g an y

a c ti on eng ag ed in by

Smit h: she ag ree d to se ll all of her miner al intere st to the L ag erstams for an ag ree d price , and subseque ntly

convey ed the pr operty

to the L ag erstam da

ug hters. I n W ill iam s v . G las h , Wil liams was involved in a car acc ident but did not feel injured immedi a te ly a f

te r th e a c c id e n t an d s tate d o n h e r c la im f o r m th a t n o o n e h a d b e e n in ju r e d in the

acc ident. 789 S.W .2d at 263. The othe r driver’ s insurance company ag ree d to pa y to fix Wil liams’s

car . Id. During the var ious neg otiations W illiams had with the insurance company , neither she nor any of t he company ’s employ ees mentioned a per sonal-injury claim. Id. Fur

ther, the code stamped on the che ck the insurance company g ave Wil liams to repa ir her c ar sig nified that the c ase did not involve a per sonal injury

. Id. Howeve r, the c h ec k d i d co n t ai n a re lease clause stating that the amount offe red constituted a full settlement prec luding future claims for property or per sonal-injury damag es. Id. After

depositin g t he che ck, Willi ams discover ed that she ha d been injure d in the

acc ident. Id. Given the lack o f k n o wl edg e of a n injury at the time the re lease was sig ned, the absenc e of a

ny neg otiation concer

ning pe rsonal injuries, the amount of money offe red, a nd the code on the che ck, the supre me cour t concluded that there w as a f act issue a s to whether

the par ties intended the r elea se to cove r per sonal injuries. Id. at 264.

Smit h’s re liance on this ca se is misplaced. In W illiams , there was e vidence that

c re a te d a fa c t is su e a s to wh e the r t he pa rt ie s in te nd e d th e re le a se to c over the unkn ow n, pe rs on a linjury claims. This case does not involve a deter mination of

whether an ag ree ment enter ed into by the par ties fore closes the possibili ty of asse rting unknown future claims. Reg ardle ss of the number14

of we lls on

the pr op e rt

y , th e dis pu te in th is cas e inv olv e s o nly on e kn ow n c la im t o one minera l interest.

The languag e of the deed and the objective c ircumstance s surrounding the execution of the de e ds a ll i nd ic a te tha

t th e su bje c t matte r of the c on ve y anc e wa s Smi th’ s e nti re min e ra l in te re st, not the nu mb e r o f w e ll s p r e s e n t o n th e p o o le d u n it

. A c c o r d in g ly , an y mi s ta k e c o n c e r n in g the number of w ells did not materially aff ect the e x chang e. Mo re ov e r, e ve n if a mista ke a bo ut t he numbe r o f w e lls we re ma te ri a l, r e lie f w ou ld still be bar

red by the principle that a par

ty to an ag ree men t may

not seek re lief on the g round of mistake if the risk of t he mi stake is allocated to that party

. Se e Che rry v . M c Cal l , 138 S.W .3d 35, 40 (T e x. Ap p. —Sa

n A nto nio 20 04 , pe t. de nie d)

. A pa rt y be ars the ri sk

of a mis take wh e n “ the ri sk is allocated to him by ag ree ment of t he parties.” Restatement (Second) of Contracts § 154(a) (1981). Th e ri sk of a mis take wa s a llo c a te d to Smit h by th e te rm s o f t he de e ds sh e sig ne d. Th e te rm s sp e c if ie d th a t Smi th a g re e d to se ll “ all oil, ga s, minerals, and r oy alties, inc lud ing bu t no t li mi te d to , a .0009901 roy alty , minera l interest, roy alty interests, . . . regardless of whether any of such

. . . int e re sts ar e v este d now or will b e v este d in thefutur e .” (E mph a sis a dd e d)

. Ad dit ion a lly , r e lie f i s also barr ed by

the principle that a mistake must ordinarily not be due to neg lige nce on the part of the petitioner. S

e e C o m m e r c i a l S

t a n d a rd I n s . C o . v . W

hit e , 423 S.W .2d 427, 433 (T e x. Civ . App .—

Am ari llo 19 67 , w ri t r e f’ d n .r .e .) ; see also Re st ate ment (S e c on d) of

Con tr a c ts § 154(b) ( 1981) (pa

rty assumes risk of mistake if he “is awa re, at the time the contra ct is made, that h e h a s o n l y l i m i t e d k

n o w l e d g e w i t h r e s p e c t t o t h e f a c t s t o w h i c h t h e m i s t a k e r e l a t e s b u t tr e a ts h is limit ed knowledg e as sufficie nt.”). As discussed more thoroug hly in the next sec tion, des p i t e t heOu r conclusion t hat the dee ds are not subject to resc ission is bolstered by Smit h’s 5 admission on appea l that she would be unable to resc ind the agr eeme nts if the wells had be en adde d afte r the sale was c ompleted. When making this statement, Smi th nece ssarily admitted that she wa s not under the mistaken be lief that the va lue of the proper ty could not be incr ease d by the addition of future wells. 15 fa c t th a t he r ro y a lty

pa y me nts ha d in c re a se d s ig nif ic antl y in r e c e nt y e ars , Sm ithfa ile d to a sc e rt a in

or inv e sti g a te the va lue of

he r i nte re st p ri or

to s e lli ngit t o th e L a g e rs tams. 5 For all the re asons pre viously g iven, we c onclude that the c onvey ance was not subject to rescission under

the doctrine of mutual mistake and ove rrule Smith’s first issue on appe al. I n a dd iti on to a tta c kin g the mot ion ’s a de qu a c y , th e dis se nt a lso imp ro pe rl y lim its its dis c us sio n to on e e le me nt o f m utu a l mistake

. I n the ir mot ion fo r sum mary jud g me nt, a ft e r g e ne ra lly stating that Smi th may

not e mploy the doctrine of mutual mistake and noting that a cla im of mutual mistake involves proving sever al elements, the L ag erstams stated that “[t] he most basic ele ment of this cause of action is that the mistake was MUTUAL .” I n light of this stateme nt, the dissent rea sons that this Court m ay

only addre ss whether

Smit h and the L ag erstams we re mutually mistaken about the number of

wells. I n essenc e, the dissent ar g ues that by specific ally listi ngthe word “ mutual,” the L ag erstams have only prese nted one e lement for c onsideration. We see no rea son to c onclude that afte r g ener ally stating that Smit h may not r ely on mutua l m i s t ak e, the L ag erstams e ffe ctively conce ded or w aived the materiality require ment by indi v id u a ll y li s ti n g th e mutu a li ty r e qu ir e me n t. M o r e o v e r , w e r e w e to li mi t o u r c o n c lu s io n in the

s a m e m an n e r

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

t h e w e l l

- s e t t l e d

p r i n c i p l e s o f

s u m m a ryjud g me nt j ur isp ru de nc e . Wh e n, a s he re , a dis tr ic t c ourt do e s no t sp e c if y the g ro un ds up on

wh ic h it g rante d su mm ar

y ju d g me n t, th is Co u rt m

u s t a f f ir m t h e s u mm ar

y ju d g me n t i f

an y o f th e g r o unds16

pr e se nte d to the dis tr ic t c ourt are me ri tor iou s. J

oe v. Two T

hir ty Nin e J oin t V e ntu re , 145 S.W .3d 150, 157 (Tex. 2004). The L ag erstams c laimed that Smith i s not entitled to recove ry under the doctrine of

mutual mist ake, a

nd it is t here fore appropr iate for this Court t o consi d er whether the diffe renc e in the number of we lls was materia l to the transac tion. F ur the rm or e , a s me nti on e d p re vio us ly , a lth ou g h the L a g e rs tams d id n ot s pe c if ic a lly

us e the wo rd

ma te ri a l in

the ir mot ion , the y did state that th e y “ ne ve r i nte nd e d f

or the ir purc ha se to be any thi ngoth e r t

ha n f or the e nti re int e re st o wn e d b y ” Smith a nd that Smi th “nev er sai d or d id any thing to in d ic a te th a t th e s a le w a s s u p p o s e d to b e a tr an s f

e r o n ly o f an in te r e s t th a t inv o lv ed a

cer tain number of e x isting we lls.” By making these stateme nts, the L ag erstams e ffe ctively argued that the exact number of

wells was not mater ial to the transac tion at issue in this case . Uni lat e r al M ist ake

I n her second issue on appea l, Smit h claims that there was a fac t issue as to whether there exis ted a unilatera l mistake nece ssitating rescission of t he deeds. I n order to obtain relief due to a unilatera l mist ake, the following require ments need to be satisfied: (1) the mistake must be “of

so g re a t a c on se qu e nc e that to e nf or c e the c on tr a c t a s ma de wo uld be un c on sc ion a ble ” ; (2 ) i t mu st

“ re la te to a

ma te ri a l f

e a tur e of the c on tr a c t” ; ( 3) it “ mus t ha ve be e n ma de re g ard le ss o f t he e xer c ise of ordinar

y c ar e ” ; a n d ( 4 ) “ th e p arti e s c anb e p la c e d in s tatu s qu o in

th e e qu it

y s e n s e .” Tay lor v . A rli ng ton In de

p. Sc h. Di

st. , 3 35 S.W. 2d

37 1, 37 3 ( Te x. 19 60 ); see Zapatero v. Canales , 730 S.W .2d 111, 114 (Tex. A pp.—San Antonio 1987, writ ref ’d n.r.e.)

. The party seekingrelief has the burde n of establishing all these e lements. Zap ate ro , 7 30 S.W. 2d a t 11 4. Re qu ir ingthat th e se elements be met preve nts a mere ly dissatisfied party

from see king to se t aside an ag ree ment by17

claiming that he did not understand the ag ree ment he wa s signing

. Cf. W heele r v. Ho l l oway , 276 S.W . 653, 654 (Tex. 1925).

Smit h arg ues that all four

elements a

re satisfied in this case. Specif ically , she ar g ues that her mistake reg arding the number of wells was materia l to the contra ct and led t o t he unconsciona

ble re sult in which she lost thousands of dollar s. Furthe r, she a rg ues that she is willing to r eturn the $6,600 the L ag erstams paid for the inter est and that, ther efor e, re scission of the contra ct would place the parties in the position they wer e in pr ior to the sale. Moreove r, she c laims that her actions we re not the r esult of a f ailure to ex erc ise ordinary car e that would prohibit rescinding the

c on tr a c t. S he argue s sh e ha s li ttle kn owl edge r e g ard ingmin e ra l in te re sts , b e lie ve d $ 6, 60 0 w a s a

rea sonable pric e for

the amount of royalty

pay ments she receive d, and relied on the L ag erstams for advice on whether

to sell her intere st. Finally , she contends that her a ctions were rea sonable unde r the se c ir c ums tanc e s.

We disag ree with Smi th for sever al rea sons. I n g ener al, a party is not e ntitled to relief d u e t o i t s u n i l a t e r a l m i s t a k e i f t h e m i s t a k e w a s n o tkn o w no r i n d u c e d b y t h e o t h e r

p a rt y. J oh ns on v . S

ne ll , 504 S.W. 2d 39 7, 39 9 ( Te x. 19 73 ); Zap ate ro , 730 S.W .2d at 114. Smith m akes no claim that her

mistaken belief w as induce d by the L ag erstams or that the L ag erstams knew the true number of w ells on the proper ty and re alized Smi th did not. S e e Z a p ate ro , 7 3 0 S

. W

. 2 d at 114 (appel l ant not entitled to relief unde r doctrine of unilatera l mist ake be cause no evidenc e wa s prese nted showing that appellee knew of appellant’ s mistaken belief)

. Mo re ov e r, e ve n vie wi ng the e vid e nc e in the lig ht mos t fa vo ra ble to S mith, we mus t conclude that the evidenc e pre sented disprove s at least one of the re quired e lements of Smith’sI n light of our discussion of m ater iality in the previous section, we also conc lude that the 6 ma te ri a lity

re qu ir e me nt o f a

un ilate ra l mi sta

ke is n ot m e t. 18 cla im : th a t Sm it

h ’ s mi s ta k e w o u ld h a v e b e e n ma d e r e g ar d le s s o f th e e xe r c is e o f o r d in ary car e. 6 Even tho u gh the roy alty

pay ments Smi th rec eived in the months befor e the sa le stated that the pay ments were for production from three wells, the documents also specifie d that the pay ment was for g as produc tion that had occur red months ea

rlier. I n other words, the documents did not provide

an ac curate assessment of activity that was c urre ntly

happeningon the unit either in terms of the amount of g as that wa s pumped or the number of we lls that were a ctive. I n addition, the number of we l l s prese nt on the proper ty has incre ased ove r time. Fr om the time Smith be g an rec eiving roy alty pay ments to the time of the sale, three wells wer e adde d to the proper

ty . Of these three wel l s , t wo wer e adde d in the two y ear s prec eding the sale. Eve n assuming that Smit h never knew the number of wells on the prope rty , Smit h was a war e that amount of he r r oy a lty

pa y me nts ha d in c re a se d s ub sta nti a lly . In th e tw o y e ars pr ior to s a le , Sm ith ’s ro y a lty pay ments increa sed by more than three fold. Howe ver, Smith made no ef fort to asc erta in the number of we lls on he r p ro pe rt

y or de te rm ine the va lue of he r m ine ra l in te re st unti l a ft e r s he so ld h e r i nte re st to the L ag erstams. See W heele r , 27 6 S.W. a t 65 4 ( c ourt c on c lud e d th a t be c a

us e Ho llo wa

y fa ile d to eng ag e in any

eff ort to determine e nd point o f p ro p er t y h e acquir ed, he w as not entitled to relief under d o c tr in e o f u n il a te r a l mi s ta k e : “ T h e w h o le tr o u

b le in th is c a s e is th a t H o ll w ay tr aded a nd inv e sti g a te d a ft e rw ard . H e sh ou ld h a ve re ve rs e d th is p ro c e dure .” ); Zap ate ro , 730 S.W .2d at 114 (p art y c ann ot c la im unil a te ra l mi sta ke c on c e rn ingou tst and ingmin e ra l in te re st b e c a us e int e re st f

ull y de sc ri be d in

de e d r e c or ds ); se e als o An de rso n B ro s. Cor p. v . O ’M e ara , 306 F.2d 672, 677 ( 5th Cir.19

19 62 ) ( a pp e lle e no t e nti tle d to re lie f by un ilate ra l mis take be c a us e , p ri or to p ur c ha sin g e qu ipm e nt, he did not attempt to asce rtain whe ther e quipment was suited for hi s p u rp o s es ). A par ty cannot obtain relief

from an a g ree ment as a r esult of a unilater al mistake if the pa rty ’s “ig noranc e of the fac ts was the re sult of car elessness, indiffe renc e, or inatt ention.” Roland v. Mc Cullough , 561 S.W .2d 207, 213 (Tex. Civ. App.—S an Antonio 1978, writ re f’d n.r .e.).

For all the re asons pre viously g iven, we c onclude that the c onvey ance was not subject to refor mation or resc ission under the doctrine of unilatera l mist ake and overr ule Smith’s second issue on a

ppeal.

Re spo nse to th e Di sse nt

I n arguing that, on the merits, summary judgme nt was i m p ro p er in this case , the dis se nt i g no re s th e c le ar wa rn ing art ic ulate d by the su pr e me c ourt

that c ourt s sh ou ld o nly

sp ari ng ly

a llo w b arg a ins to b e un do ne du e to a mis take by

on e or mor e of th e pa rt ie s to an a g re e me nt. W illiams , 789 S.W .2d at 265. I t is not the job of the cour ts to ensure that a ll parties to a tra nsaction equally benef it from their bar g ain or that the sale price of an item a ccur ately ref lects the true value of that item

. F or a va

ri e ty of re a so ns , p e op le of

te n s e ll i te ms f

or a mou nts that are sig nif

ic antl y le ss than m ark e t va lue . A lth ou g h th e se lle r m ay los e the fu ll b e ne fi t of

the ba rg a in, it i s p os sib le that, in t he se lle r’ s e y e s, tha

t lo ss i s w e ll w or

th t he be ne fi t of

qu ic kly se lli ngan a sse t. I t is a lso po ssi ble that a seller

may cho o s e t o exert absolutely no eff ort to asce rtain the true value of the item befor e

se lli ngit t o a vo id the ha ssl e of ins pe c tin g or a pp ra isi ng the pr op e rt

y . Court s sh ou ld tr e a d c are fu lly b e f o r e e n t e r i n g i n t o t h e b u s i n e s s o f d e t e r m i n i n g w h e t h e r , i nh i n d s i g h t , t h e b e n e f i to b t a i n e d

b y a20

quick sale or

by being able to sell an item wi thout valuing a n asset is equivale nt to the differ ence betwee n the marke t value and the sale pric e.

CO NC LU SION Havingoverr

uled Smith’s two is sues on a p p ea l , we a ffirm the judg ment of the district court.

David Pury ear , J ustice Be fore Chief J ustice L aw, Justi ces Patter son and Pury ear ; Dissenting O pinion by J ustice Patterson Affir med on Motion for Rehea ring Filed: Jul y

19, 2007