NO. 07-06 -020 9-CV IN THE CO UR T OF APPEA LS FO R THE S EVEN TH D ISTRI CT O F TEXAS

AT AM AR ILLO PAN EL D JAN UA RY

28, 2008

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___ SOUT H PLAINS L AMESARAILROAD, LT D. AND LA R RYD AL E W IS EN ER , AP PE LL AN TS

V. T HE KIT T EN FAMILY LIVING T RUST AND JER RY KITTEN , AP PELLEE S

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______ FRO M T HE 99 DIS T RI CT COU RT , L UB BO CKCOU NT Y; TH NO . 200 5- 529,345 ; H ON ORABLE W ILLIA M C . SO W DE R, JU DG E

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____ Before QUINN, C.J., and CAMPBELL and PIRT LE, JJ.
ME MO RA ND UM OPI NI ON By four i ssues, App ellant s, Sou th Plains Lam esa Railroad , Ltd

. (SPLR) and Larry Dal e W is ener

( W is ener ), appeal the jud g ment of t he tr ial co urt ent ered i n fav or of Appel lee s, The Kitten Famil y Liv ing T ru st ( the Tr ust ) and J er ry Ki tten (K it ten) , c ontendi ngA lt h o u gh t h e p a rt ie s a gr e e t h a t t h e two a gr e e m e n t s p e rt a in t o t h e sa m e p ro p e rt y, 1 the l eg al d es c r i pt i on o f t he p rop er ty , as c on ta i ne d on t he fac e of e ac h ag r ee me nt , is subs tanti all y

di ff erent. The l e a se a g re ement de sc ri bes the p ro per ty as “ the l and (h erein after cal led “Premis es) , sit uated near Slaton, Lubbock Co unty , Texa s a s d esc ri bed or shown on the map hereto a ttach ed, d ate d Februa ry 5 , 199 8, ma rked Exhibit “A.” The re is attac hed to the lea se ag re ement a map or pl at de si g nated Ex hib it“ A.” The ea sement ag re ement de sc ri bes the p ro per ty as “ [a] tractof lan d s it uated w it hin the SE/4 of Secti on 23, B loc k 2 4, HE&W T Rai lw ay C o. S ur v ey , Lub bock

C ounty , Tex as, ” and t hen des cr ibe s the e asementas extendi ng “ from the Eastse cti on li ne of Sec ti on 23, Bl ock

24, ide nti fied by a cal ic he roadw ay , thence South w ard paral lel to the ex is ti ng rai lroad trac ks into S ect ion 6, B loc k 0 , D & W Sur

v ey to a poi nt 10 0 feet Sou th of the S outh sec ti on l ine of Sect ion 23, Bl ock 24, HE &W T Rai lw ay

C o. Sur v ey ,” w it hout attac hin g the map or pla t ide nti fied in the lea se ag re ement. 2 that the tr ial courterred in (1) granti ng summary judg ment i n fav or

of the Tr ustand Ki tten (2 and 3) deny ing su mmary j udg ment i n fav o r o f

SPLR a nd W is ener , and ( 4) aw ardin g attor ney ’s f ees to the T ru st and Kit ten. W e af firm in par

t and rev erse and remand i n par t. Back g ro und SPL R ow ns a railroad right-of-w ay in Lub bock Cou nty, g ene rally running sout hwest from Sl aton, Tex as. O n F ebr uar y 6, 1998, SPLRente re d i nto a co ntract , ent it led Lea se (h erein after the l ease ag re ement) , w it h the T ru st, for the pur pose of all ow ing the Trus t t o produce w ater

from t he ra il ro ad ri g ht- of-w ay . The l ease ag re ement prov ide d for the d ri ll ing of “a w ater

w ell ” on the proper

ty

. El ev en day s lat er , on Febr uar y 17, 1998, SPLRand the Trus t ent er ed i nto a se cond cont ra ct, enti tl ed W ater Well and Pi

pel ine Eas em ent (h erein after the e asementag re ement) , p e rt a in in g to the s ame proper ty

. I n addi ti on to 1 grant ing the T rust a rig ht of f irst ref usal to purch ase the property in the ev entSPLR sho uld abandon the ra il li ne, the easement ag re ement cont ain ed lan g uag e that g av e the Trus t an3

easementfor t he pur pose of drilli ng “ w ater w ell s” on t he proper

ty

. After the Tr ustdr il led mo re than one w ell on the prop e rt y, a disput e arose between SP LR and the T rust conce rn in g t h e interpret ation and interrelatio n of these tw o con tracts, resu lting i n this li ti g ati on. The Trus t and Ki tten broug ht s uitand soug ht a Temporar y R est ra ini ng Order

to proh ibit SPL R and W isene r f rom interfering w ith the ir prod uction of w ate r f rom th e land in question . Af

ter the entry of

a T em pora ry

I njun ction, both parties f iled mo tions for sum ma ry jud g ment. On Apr il 20, 2006, the t ri al cour t ent ered a jud g men t gra n ti n g t he moti on for sum ma ry

judgmen t f iled b y t he T rust and Kitten , and den y ing the mo tion for sum ma ry jud g ment f il ed bySPLR and W is ener . The jud g ment furt her enj oin ed SP LR and W is ener from i nter

feri ng w it h the Trus t and Ki tten’ s use of i rr ig ati on w ell s and a w ater l ine l ocat ed on th e proper

ty and aw arded t he Tr ustrec o v er y of attor ney ’s fees. SPLR and W is ener perfecte d this ap pea l. Iss ues Present ed SPLRand W isener c ontend that the l ease ag re ement an d the eas ement ag re ement, w hen const ru ed tog ether , are ambig uous, that summary judg ment in fav or

of the Tr ustand Ki tten shoul d be setaside ( inc lud ing the aw ard of atto rn ey ’s fees) , and that a tr ial sh oul d det er mine the i ntentof the p arti es. Al ter nati v ely , SP LR and W is ener co ntend the l ease ag re ement s ets forth the ex is ti ng agreement b etw een t he par ti es per tai nin g t o the e xtract ion of w ater , and thatthe ag re ement ha s b een breache d. Theyfurth er co ntend4

the e asemen t a greement p ertai ns to t he Tr ust ’s r ig ht of i ng re ss and eg re ss , and r ig ht of f irst r efu s al , an d th att he e as em en t ha s l ap s ed b ec au s e th e or i g i na l l ea s e w as p rop erly ter minat ed. The Trus t and Ki tten cont end the doct ri ne of merg er operates to a llo w the easement ag re ement to supersede the lea se ag re ement. The Trus t and Kitt e n f u rt her cont end t h a t becau se the l ease ag re ement ha s b een s uperseded by the easement ag re ement, the t ri al cour t c or re ctl y

co nst ru ed t h e e a s e me nt ag re ement as an u nambig uous docu me nt suppo rting the trial court’s g rantin g of sum ma ry judgme nt i n favor of th e T rust and Ki tten. Standa rd of Rev iew In rev iew ing a s ummary jud g ment, thi s Cou rt must appl y w ell -e sta bli shed sta ndards w hich are: (1) th e mo v antfor su mm aryju dgme nt has the b urde n of sh owi ng th at th ere is no g enui ne iss ue of

m ater ial f actand that itis enti tl ed to judg ment as a matter of law ; ( 2) in deci din g w hether

there is a dis puted mater ial f actiss ue prec lud ing summary j udg ment, evidence favorable to th e n o n -m ovant w ill be ta ken a s true; an d (3) ev eryreason able inferen ce mu st be ind ulged in favor of th e no n-mo v antand any doubt s resolv ed in its favor. Am . T obacc o C o. v

. G ri nnel l, 951 S .W .2d 4 20, 4 25 (T ex. 1997 ); Ni xon v. Mr

. Pr op. M gm t. Co., 690 S.W .2d 546 , 548 -49 (Te x . 198 5). For a p ar

ty t o prev ai l o n a mo ti on for s um ma r

y j ud g me nt , he mu s t c on c l us i v ely est abl is h the abs ence of anyge n uin e q uest ion of mater ial fact a nd th at he i s e nti tl ed to jud g ment as a mat ter of l aw . Tex

. R. Ci v . P. 166a( c)

. Onc e the mov ant h as est abl is hed5

a r ig ht t o s ummary jud g ment, the non- mov ant has the burden to re spond to the mot ion for sum ma ry

judgmen t and presen t to the trial court any issues th at w ould preclude summ ary jud g ment. City of Hou sto n v. Clear Cre ek Basi

n Aut h. , 589 S .W .2d 6 71, 6 78 (T ex. 1979 ); B a r b o u t i v . He a r s t C or p. , 9 27 S. W .2d 37, 64 (Tex.App .–Hou ston [1st Dist.] 19 96, w rit den ied)

. W h e n b oth parties m ove fo r summ aryjudgmen t, the rev iew ing court shou ld re nder the jud g ment t he tr ial co urt s houl d hav e rendered. Dow Chem ic al Co. v. Br igh t , 89 S.W .3d 6 02, 6 05 ( Tex . 200 2)

. Doctr ine of Me rg er W it h respec t t o the l aw of cont ra cts , merg er

refers to t he exti ng uis hm e n t o f one cont ra ct by

i ts absor pti on i nto a noth e r co n tr actand is l arg ely a mat ter of int enti on of the par ti es. Com m er

ci al Bank of Ma son v. Satter

white , 413 S.W .2d 9 05, 9 09 ( Tex . 196 7) ; Hill
v. Spenc er

& S on, Inc. , 973 S.W .2d 772 , 775 (Tex.App .–T exarkana 19 98, no pet.). As a g eneral pr inc ipl e, w hen tw o c ontract s a re ente re d i nto b y the same p arti es, co v er ing the same s ubj ectmatte r, but cont ain ing terms w hic h are s o i ncons is tent that the t er ms of the tw o c ontract s c annot subs is t t og ether , th e l eg al eff ectof the s ubseq uent cont ra ct is to re sc ind the ear lie r cont ra ct. W il lek e v . Ba ylor , 144. Tex . 157 , 189 S.W .2d 4 77, 4 79 (1 945)

. The subs eq uent cont ra ct the n becomes a su bst it ute for the ear li er

co ntractand is the onl y

ag re ement be tw een t he par ti es upon t hat s ubj ect

. A pr ior ag re ement i s n ot, ho w ev er , s up ers ed ed o r i nv al i da te d by

a s ub s eq ue nta g r ee me ntrelatin g t o th e s am e subj ectmatte r if the firs t agre e m ent i s o ne th at mi g ht na turall y be made as a s eparate ag re ement or w here the first ag re ement i s n ot full y i nteg ra ted i nto t he s econd ag re ement6

and merely

modi fies the first ag re ement i n s ome respect. Huba cek v. Enn is State Bank, 159 Tex . 166 , 317 S.W .2d 3 0, 32 ( 1958) ; Boy Scou ts of A m er ic a v . R espon si ve Ter

m ina l Sys tem s, Inc,, 790 S.W .2d 738, 745 ( Tex .App. –Da ll as 1990, w ri t den ied ). W hether one co n t ra c t e x ecut ed in a se ries of contract s is i nte nde d by the parties to beco me the sole ag re ement of t he par

ti es present s a q uest ion of fact unde r the d oct ri ne of merg er . Sar te
v. Dom m er

t, 184 S.W .3d 893 , 899 (Tex.App .–B eau mo nt 20 06, no pe t.). Me rg er i s l arg ely

a mat ter of i n te nti on of the par

ti es. Sm it

h v . Sm it h, 794 S.W .2d 823, 827- 28 ( Tex .App.–Da ll as 1990, no w ri t)

. Me rg er i s i nappl ic abl e w hen t he par ti es manifestan int ent to hav e anyof the o ri g ina l cont ra ct’ s p ro v is ion s s ur v iv e. An ag re ement tha t me rg e s a n o rig inal con tract into a new cont ract is an agreem entthatis accepte d in sat is facti on of the or ig ina l cont ra ct and t hereby co mplet ely

di sc harg es it

. Ambig uity Dec idi ng w hether

a c ontracti s am b igu o u s is a q uest ion of law for t he c our

t t o deter mine. J. M. Dav

ids on, Inc

. v. W

ebster , 128 S .W .3d 223 , 229 (Tex. 2003 ). M ultiple c on trac ts p er

ta i ni ng t o th e s am e tran s ac ti on , ex ec ut ed by th e s am e pa rti es , at th e s am e t i me o r c o n t e mp o r a n e o u s l y

w i t h o n e a n o t h e r , ma y b e c o n s t r u e d a s i f t h e y w e r e p a rto f a si ng le uni fied inst ru ment, ev en if the contract s do not ex press ly refer t o eac h oth er . Fort W o rth I n d e p e ndent Scho ol Di st. v. Cit y o f F or t Worth, 22 S.W .3d 831 , 840 (Tex. 2000 ). To deter mine w hether

the mult ipl e cont ra cts , w hen c onst ru ed to g ether , are ambi g uous, a c o u rtm u s te xa m in e a n d co n s id e r t h e e n t ir e a gr e e m e n tin a n e f fo rtt o h a rm o n ize a n d gi ve7

eff ectto all the prov is ion s of t h e c ontractso thatnone of the prov is ion s w il l be rendered meanin g les s. J. M. D avi dson, Inc ., 128 S.W .3d at 229 . Upon a nalysis, a contract is unambi g uous if i t c an be g iv en a defini te an d c ertai n l eg al meanin g . Id. On t he ot her han d, if t he a g r ee me ntb etw ee n th e pa rti es i s s ub j ec t to tw o or

mo r e r ea s on able interp retat ions, a f

ter app ly ing pertinen t rules of construct io n, th e con tract is amb iguous, creati ng a facti ss ue c oncer nin g the int ent o f the par ti es. Id. Ana ly sis The ease ment ag re emen t did n ot c ontai n a merg er cl ause ex press ly

merg ing the lea se ag re ement i nto t he eas ement ag re ement. The eas e m e n t ag re ement i ncl uded specif ic prov isions pe rtaining to the Trust ’s right o f f irst ref usal to purcha se the prope rty in the ev entSPLR sho uld a b a n d on th e railw ay w hich w ere no t me ntion ed in th e lease agreem ent . A ri ght of

f irst ref usal is an agreem entthatmigh tn a t u ra lly be m ade as a separate a g re ement i n the co ntext of l eased proper ty

. Fur ther more, the l ease ag re ement is not f ully

integrated into the ease me nt agreem entand the ease me nt agreem entmere ly mo dif ies the lease agreem entin some respects. Becau se the ease me nt agreem entdid not e x pr ess ly

di sc harg e the ter ms of the l ease ag re ement ( e.g ., the Tr ustco nti nued t o pay re nt ac cordin g to the t er ms of the lea se ag re e m e n t) , and bec ause the e asement ag re ement di d notenc ompass the enti re ag re ement of the par ti es, w e find that the d oct ri ne of merg er is ina pposi te. Acc ordin g ly , w e find the lea se ag re ement w as not merg ed i nto t heCo n s t ru in g t h e le a s e a gr e e m e n tt o ge t h e r wi t h t h e e a s e m e n ta gr e e m e n t , yo u h a ve 2 an ac curate a nd c lea r desc ri pti on of the proper ty co nv ey ed. See fn 1. 8 easementag re ement. Bec ause the tw o ag re ements per tai ned t o the same proper ty and 2 to th e sam e subject ma tter (i.e., th e T rust’ s r ig h tt o e xtract w ate r from the pro perty in cont ro v ersy ), to the e xtent that the tw o contract s conta ine d incon si ste nt ter ms, w e f ind that the tw o ag re emen ts , w hen c onst ru ed to g ether , c re ated an ambi g uity . The ambig uity created a fact q uest ion as to the i ntentof the p arti es, and the e x is tenc e of a fact q uest ion pr ecl udes the g ra nti ng of a s ummary judg ment. Therefore , t he tr ial co urt c or re ctl y deni ed summar y j udg ment i n fav or

of SPLRand W is ener , buter re d i n g ra nti ng su mmary j udg ment in fav or of the Tr ustand Ki tten. Con cl usi on Is sues one and four

are s ust ain ed, a nd i ss ues tw o and three are ov erru le d. Acc ordin g ly , w e aff ir m thatporti on of the jud g ment of

the tr ial co urt as to the d eni al of the mo tion for sum ma ry

judgmen t of

Sou t h Plains L am esa Railroad , Ltd . and Larry Dale W is ener ; w e rev erse that por ti on of the jud g ment of

the tr ial co urt g ra nti ng the moti on for summar y j udg ment of the Ki tten Family L ivin g T ru st and J er ry Ki tten, and aw ardin g attor ney ’s fees, and remand th is ca use to t he tr ial co urt for further proceed ing s c onsi ste nt w it h thi s o pin ion

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Pat rick A. Pirtle Justice