*Pursuant to 5

TH CIR. R. 47.5, the Court has determined that this opinion should not be

published and is not precedent except under the limited circumstances set forth in 5

TH CIR.

R. 47.5.4.

UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 98-20382

Summary Calendar

WILLIAM N. ARMSTRONG; ROBERT E. ARMSTRONG,

Plaintiffs-Appellants,

versus

CHESAPEAKE OPERATING, INC.,

Defendant-Appellee.

Appeal from the United States District Court

for the Southern District of Texas

(H-97-CV-1202)

January 7, 1999

Before POLITZ, Chief Judge, DAVIS and JONES, Circuit Judges.

POLITZ, Chief Judge:*

William and Robert Armstrong appeal an adverse summary judgment in

favor of Chesapeake Operating, Inc. For the reasons assigned, we affirm.

BACKGROUND

The dispute between the parties centers around the ownership of mineral

interests in a tract of land in Grimes County, Texas. In the early 1970s, the

Armstrongs inherited a mineral interest in the tract from their mother, Mildred
 

1The Texas Mineral Receivership Statute, Tex. Civ. Prac. & Rem. Code Ann. § 64.091(b)

(Vernon 1997), permits a state district court to appoint a receiver for the mineral interest or

leasehold interest under a mineral lease owned by a nonresident or absent defendant. 

 

2Mildred Norwood Armstrong was included in this group.

2

Norwood Armstrong. In 1993 Chesapeake Operating, Inc. acquired oil, gas and

mineral leases covering an undivided interest in the tract. In its efforts to confirm

the lessors’ ownership of the mineral interests, Chesapeake discovered that in 1893

that the tract had been conveyed to the Mineral Springs Mining and Development

Company, a Texas corporation whose charter expired in 1943. In light of this

information, Chesapeake was unable to confirm the ownership interest of its

lessors, precipitating its filing of a receivership action in Grimes County.1 In that

receivership, Chesapeake named the originalshareholders of Mineral Springs,2the

granteesin other recorded conveyances by which shareholders had conveyed their

interests in the tract, and the heirs of the same. The district court, finding that

plaintiffs had made a diligent but unsuccessful effort to locate defendants,

appointed a receiver who subsequently executed an oil, gas and mineral lease on

the tract in favor of Chesapeake.

Concerned that the receivership did not cover all potential owners of the

tract, Chesapeake filed a second action in Grimes County, seeking appointment of

a receiver for all unknown owners and shareholders of Mineral Springs. A receiver

was appointed and a second lease in favor of Chesapeake was executed. Pursuant

to the authority of the receivership orders and the leases, Chesapeake drilled a well

in Mineral Springs and deposited the royalties received into an escrow account
 

3Gardes Directional Drilling v. U.S. Turnkey Exploration Co., 98 F.3d 860 (5th Cir.

1996).

3

awaiting determination of the successors to Mineral Springs.

In April 1996 the Armstrongs moved for a new trial in the consolidated

receivership action. Contending that they did not receive notice of the receivership

action due to Chesapeake’slack of diligence, they sought to set aside any previous

order against them, the leases, and other business transacted by the receivers. The

court found Chesapeake had exercised reasonable diligence and had satisfied the

statutory requirementsfor an oil and gaslease from a receiver. It further found that

the Armstrongs had no standing to bring theirmotion. The Armstrongs’ subsequent

appeal was dismissed for failure to perfect an appeal within the time prescribed by

law.

The Armstrongsthen filed the instant action in state court in Grimes County,

alleging that they were co-tenants with Chesapeake in the tract’s oil and gas estate

and, assuch,sought an accounting from Chesapeake for all revenuesreceived from

the tract. The action was removed to federal court and the court granted

Chesapeake’s motion for summary judgment, holding that the Armstrongs were

collaterally estopped from bringing the suit. This appeal timely followed.

ANALYSIS

We review de novo the district court’s grant of summary judgment.

3

Summary judgment is appropriate if the pleadings, depositions, and other evidence,

together with the affidavits, show that there is no genuine issue as to any material
 

4Fed.R.Civ.P. 56(c).

 

5Helton v. Kimbell, 621 S.W.2d 675 (Tex. Civ. App. – Fort Worth 1981, no writ);

Johnson v. Barnwell Prod. Co., 391 S.W.2d 776 (Tex. Civ. App. – Texarkana 1965, writ

ref’d n.r.e.).

 

6The Texas Mineral Receivership Statute, Tex. Civ. Prac. &Rem. Code Ann. § 64.091

(Vernon 1997).

4

fact and that the moving party is entitled to a judgment as a matter of law.4 

The Armstrongs contend on appeal that the district court erred in holding that

their interest was covered by one or both receivership leases which thus collaterally

estopped them from bringing suit challenging the receiverships. Our review of the

record and the applicable law, however, persuadesthat the district court was correct.

Under Texas law, an order appointing a receiver may not be collaterally attacked.5

The Armstrongs, as heirs of Mildred Norwood Armstrong, were included in the first

receivership. All of the defendants in the first receivership are unknown owners and

shareholders of Mineral Springs and thus included in the second receivership. The

Grimes County court found that Chesapeake had exercised the requisite diligence

in seeking to identify the owners of the mineral interest under the relevant Texas

statute,6and the Armstrongs’ challenge to this finding failed. We must therefore

conclude that the district court correctly found that the Armstrongs’ action

represents an impermissible collateral attack.

The Armstrongs also contend that they cannot be bound by the receivership

proceedings because the Grimes County court held that they had no standing to

bring suit in the receivership action. We do not agree. As the district court noted,

the Grimes County court did not give reasons for its holding. Our review of the
 

7Scalfani v. Scalfani, 870 S.W.2d 608 (Tex. App. – Houston [1st Dist.] 1993, writ denied)

(holding that there is a twenty-day time period for motions to vacate receivership orders).

The Armstrongs failed to file the requisite motions to vacate within the time period

prescribed for each receivership order.

5

record and controlling precedents persuadesthat this determination most likely was

based on the Armstrongs’ failure to file a timely motion to vacate the first and

second receivership orders.7 Further, in attempting to appeal the order overruling

their motion for a new trial, the Armstrongs necessarily maintained that they had

standing to bring suit. They cannot now contend that they lack standing in the

present action.

The judgment appealed is AFFIRMED.