Opinion filed August 20, 2020

In The

Eleventh Court of Appeals 

__________

No. 11-17-00265-CV

__________

JATEX OIL AND GAS EXPLORATION L.P., JOHN A. TRUITT, 

INC., AND JOHN A. TRUITT, Appellants

V.

NADEL AND GUSSMAN PERMIAN, L.L.C. AND SCOTT 

GERMANN, Appellees

On Appeal from the 385th District Court 

Midland County, Texas

Trial Court Cause No. CV51210

O P I N I O N

This appeal arises from a dispute between a working interest owner and the 

operator of an oil and gas development known as the Clyde Prospect, which is in 

Glasscock County. Appellant Jatex Oil and Gas Exploration L.P. is the aggrieved 

working interest owner. Jatex, joined by its general partner, John A. Truitt, Inc.

(Truitt, Inc.), and the principal of both entities, John A. Truitt (Truitt), filed suit 
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against Appellees, Nadel and Gussman Permian, L.L.C. (NGP) and NGP’s general 

manager, Scott Germann. Appellants asserted causes of action for breach of 

contract, failure to act as a reasonably prudent operator, and tortious interference 

with a contract. The trial court granted summary judgment in favor of Appellees on 

all of Appellants’ claims. Appellants bring two issues on appeal. We affirm.

Background Facts

Truitt is a petroleum geologist. He alleged that, in 2008, he acquired three 

leases covering approximately 8,000 acres in Glasscock County known as the Clyde 

Prospect. He further alleged that he sold the prospect to NGP, retaining a 6.25% 

working interest in favor of Jatex. In 2010, Jatex and the other working interest 

owners executed a joint operating agreement that named NGP as the operator of the 

prospect area. Appellants premise their causes of action for breach of contract and 

failure to act as a reasonably prudent operator on NGP’s alleged breach of the joint 

operating agreement.

On October 27, 2011, Jatex executed a promissory note to Security Bank for 

a “reducing revolving line of credit” in the maximum amount of $3,000,000. Jatex 

pledged as collateral to the bank its mineral interests in the Clyde Prospect as well 

as other mineral interests owned by Appellants. The 2011 note required monthly 

payments due on the 28th of each month with a final maturity date of October 28, 

2015. Truitt, Inc. and Truitt were guarantors of the note.

Appellants were in default on the 2011 note for several months. Security 

Bank’s attorney sent the first default notice on August 26, 2013. In the initial notice, 

Security Bank demanded a payment of $497,470.70 by September 26, 2013. 

Security Bank sent subsequent default notices on the 2011 note as follows:

Proposed

Date of Default Notice Payoff Balance Foreclosure Date

October 23, 2013 $2,333,411.91 (none)
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December 13, 2013 $2,335,346.31 January 7, 2014 

February 10, 2014 $2,356,440.86 March 4, 2014

March 11, 2014 $2,074,120.24 April 1, 2014

May 12, 2014 $2,012,889.04 June 3, 2014

Appellants executed a new note on May 27, 2014, in the amount of 

$1,996,826.94. Appellants attached a copy of it to their petition. It was a “term 

promissory note” that provided for five monthly installments of “one hundred 

percent (100%) of [Appellants’] Oil and Gas Proceeds [as defined in the note]” 

beginning on June 27, 2014, and continuing until November 27, 2014, when the 

remaining unpaid balance “on this Note shall be due and payable.”

Security Bank sent its final (seventh) notice of default on December 10, 2014. 

The bank asserted in this notice that the 2014 note “became fully due on 

November 27, 2014,” and that Jatex owed the bank $1,928,617.63 under the note. 

The final notice listed a proposed foreclosure date of January 6, 2015. Security Bank 

foreclosed upon Appellants’ mineral interests on January 6, 2015, by purchasing the 

pledged mineral interests for $1,500,000.

The principal event giving rise to Appellants’ claims was NGP’s proposal in 

May 2014 to deepen the Vaqueros 47 No. 1 Well. Appellants asserted that, under 

the joint operating agreement, a written consent election was required to include a 

nonoperator in a proposed drilling operation. Appellants contend that NGP 

improperly included Jatex in the project and erroneously assessed charges to Jatex’s 

account because Jatex did not make a written election to participate in the project. 

Appellants asserted that this action of improperly billing Jatex’s account constituted 

a breach of the terms of the joint operating agreement. Appellants contend that 

NGP’s improper billing caused Security Bank to foreclose on the mineral interests 

owned by Appellants that had been pledged as collateral by Appellants. Appellants 
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also asserted that the alleged improper billing by NGP constituted tortious 

interference with contracts that Appellants had with the bank.

Appellees filed a combined no-evidence and traditional motion for summary 

judgment. Appellants filed a response to the summary judgment motion that 

included an unsworn declaration executed by Truitt. See TEX. CIV. PRAC. & REM.

CODE ANN. § 132.001 (West 2019). Truitt’s declaration included an exhibit wherein 

he expressed an estimate of the fair market value of the mineral interests foreclosed 

upon by the bank. Appellees filed a motion to exclude Truitt’s economic evaluation 

of the fair market value. The trial court granted the motion to exclude Truitt’s 

economic evaluation. This evidentiary ruling is the basis of Appellants’ first issue. 

The trial court also granted Appellees’ motion for summary judgment. In their 

second issue, Appellants challenge the summary judgment.

Analysis

We review the trial court’s grant of summary judgment de novo. Lujan v. 

Navistar, Inc., 555 S.W.3d 79, 84 (Tex. 2018) (citing Provident Life & Accident Ins. 

Co. v. Knott, 128 S.W.3d 211, 215 (Tex. 2003)). However, a trial court’s decision 

to exclude or admit summary judgment evidence is reviewed for an abuse of 

discretion. Id. (citing Starwood Mgmt., LLC v. Swaim, 530 S.W.3d 673, 678 (Tex. 

2017)). Accordingly, Appellants’ first issue requires us to determine if the trial court 

abused its discretion when it struck Truitt’s valuation testimony. See id.; Sw. Energy 

Prod. Co. v. Berry-Helfand, 491 S.W.3d 699, 727 (Tex. 2016) (A trial court’s 

evidentiary rulings are reviewed for abuse of discretion.). An abuse of discretion 

exists only when the trial court’s decision is made without reference to any guiding 

rules and principles. U-Haul Int’l, Inc. v. Waldrip, 380 S.W.3d 118, 132 (Tex. 

2012). “An appellate court must uphold the trial court’s evidentiary ruling if there 

is any legitimate basis for the ruling.” Owens-Corning Fiberglas Corp. v. Malone, 

972 S.W.2d 35, 43 (Tex. 1998).
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Motion to Strike Truitt’s Valuation of Mineral Interests

In their initial designation of experts, Appellants designated Truitt as an 

expert. The designation provided that Truitt “may testify as to the value of the 

[working interests] and [overriding royalty interests] held under the Deed of Trust 

which was lost to Security Bank.” Appellants subsequently filed an amended 

designation of experts that omitted Truitt as an expert. Appellants filed this amended 

designation approximately one year prior to Truitt’s deposition.

One month after Truitt’s deposition, Appellants filed their response to 

Appellees’ motion for summary judgment. Appellants’ response included Truitt’s 

declaration wherein he gave an estimate of the fair market value of the mineral 

interests that were foreclosed upon by the bank. Truitt stated his evaluation as 

follows:

I am a degreed Petroleum geologist with numerous petroleum 

engineering courses and classes. Began my oil and gas career with 

Marathon Oil Company in 1983. Formed JATEX Oil & Gas 

Exploration, LP in 1983. I have over thirty-four years generating, 

evaluating and selling prospects and projects in the Permian Basin. My 

experience in the areas under the bank agreements is extensive. Most 

of the properties lost were discoveries made productive by my local 

expertise.

Fair Market value is the price a willing buyer will pay and a 

willing seller will accept for a property, when the property is exposed 

to the market for a reasonable period of time, and neither party has any 

compulsion to buy or sell, and both being knowledgeable of the 

pertinent facts. The property was purchased by the bank from the bank 

within days of foreclosure to eliminate exposure to a competitive 

market. The collusion price was well below the banks own PDP value 

for the properties. 

The value generated in Mr. Patterson’s1report is by his own 

admission . . . incomplete, addressed just a few of the wells for PDP 

1Dee Patterson was a retained expert designated by Appellees.
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value only and is therefore unreliable at best. Mr. Lee2attempted to 

include most of the properties and wells. In my opinion Mr. Lee’s 

report was generated for a third party and represent[s] a more accurate 

presentation between the two. Both reports fall short of a full economic 

evaluation of the properties. The Society of Petroleum Evaluation 

Engineers (SPEE) in their publication Elements of a Reserve and 

Resource [R]eport state that a proper report should include values for 

PDP, PDNP, PDBP, PUD and Probable. Neither report included any 

value for behind pipe potential (PDNP), proven undeveloped locations 

(PUD) or probable locations.

Cawley, Gillespie & Associates, Inc. is an engineering 

evaluation firm well respected in the oil and gas industry. The NYMEX 

STRIP price that they were using December 1, 2014 represents a fair 

assumption and was nearest the time of foreclosure. The numbers are 

similar to those used by Mr. Lee to establish his PDP value and below 

Nadel’s September 2014 actual sales dollars. The properties under the 

bank agreement represented over 18,000 gross acres with stacked pay 

zones for both oil and gas. They would be classified as PUD and 

probable locations. Prices for acreage in the Permian for similar 

acreage with sta[c]ked pays have averaged $15,000-$20,00 [sic] per 

acre. A conservative $ 5,000 per net acre was used in this report. The 

acreage also included a large PDNP component. The attached 

stratigraphic chart shows the stack by potential in the Glasscock 

property allow. The current production is Lower Wolfcamp and 

deeper. The zones above the Lower Wolfcamp in this example are 

considered PDNP in most wellbores. Based on my thirty plus years 

evaluating, generating and selling properties in these areas I believe the 

true value of the properties is closer to $12,000,000.

PV(9%)

PDP 2,975

PUD & Prob. 6,986

PDNP 2,356

$12,317 Grand Total

2Robert Lee performed appraisals for the bank. Appellants and Appellees designated Lee as a nonretained expert.
7

Truitt’s valuation was followed by two charts. The first chart listed estimates for 

future sales prices for oil and gas. The second chart listed various oil and gas 

formations that appear to be associated with the Clyde Prospect. Truitt classified the 

formations less than 7,500 feet in depth as “PDNP Behind Pipe” and the deeper 

formations as “PDP Producing in existing Wells.”

Appellees filed a motion to exclude Truitt’s economic evaluation of the fair 

market value of the interests that the bank foreclosed upon. Appellees asserted the 

following three grounds for excluding Truitt’s valuation: (1) Truitt was not qualified 

to offer expert opinions on valuation; (2) his opinions on valuation were not reliable; 

and (3) his opinions were not timely disclosed. With respect to the third ground,

Appellees asserted that Truitt gave his valuation one year after Appellants’ deadline 

for designating experts. Appellees also asserted that, in his deposition taken one 

month earlier, Truitt was asked: “[D]o you have an evaluation or an analysis of the 

value of your interest as of January 6[,] 2015,

3

that you prepared?” Truitt replied,

“No.”

In the trial court, Appellants responded to Appellees’ objections to Truitt’s 

valuation by asserting that his opinions on value were admissible under the Property 

Owner Rule. See Nat. Gas Pipeline Co. of Am. v. Justiss, 397 S.W.3d 150, 155–59

(Tex. 2012); Reid Rd. Mun. Util. Dist. No. 2 v. Speedy Stop Food Stores, Ltd., 337 

S.W.3d 846, 852–53 (Tex. 2011); Tuttle v. Builes, 572 S.W.3d 344, 356–57 (Tex. 

App.—Eastland 2019, no pet.). On appeal, Appellants contend that the trial court 

abused its discretion by striking Truitt’s valuation because it was proper under the 

Property Owner Rule.

Under the Property Owner Rule, a property owner is generally qualified to 

testify to the value of his property even if he is not an expert and would not be 

3As noted previously, January 6, 2015, was the date of foreclosure.
8

qualified to testify to the value of other property. Reid Rd. Mun. Util. Dist. No. 2, 

337 S.W.3d at 852–53 (citing Porras v. Craig, 675 S.W.2d 503, 504 (Tex. 1984)).

The rule is based on the presumption that an owner will be familiar with his own 

property and know its value. Id. at 853. Organizations are the same as natural 

persons for purposes of the Property Owner Rule. Id. The entity can prove the value 

of its property through certain officers or employees whose management positions 

warrant applying a presumption that they are familiar with the entity’s property and 

its value. Id. at 854.

“The Property Owner Rule falls under Texas Rule of Evidence 701, which 

allows a lay witness to provide opinion testimony[.]” Justiss, 397 S.W.3d at 157. It 

provides an exception to the requirement that a witness must establish his 

qualifications to express an opinion on land values. Id. Under the rule, a property 

owner’s testimony fulfills the same role that expert testimony does. Id. With the 

exception of establishing his qualifications to testify as to property value, the 

property owner’s valuation testimony must still meet “the same requirements as any 

other opinion evidence.” Id. at 155 (quoting Porras, 675 S.W.2d at 504). “Because 

property owner testimony is the functional equivalent of expert testimony, it must 

be judged by the same standards.” Id. at 159. Thus, conclusory testimony from a 

property owner about the value of his property without an explanation will not 

support a judgment. Justiss, 397 S.W.3d at 158–59, 161; Tuttle, 572 S.W.3d at 358. 

An expert’s opinion is conclusory when it is without a reliable predicate. See Mack 

Trucks, Inc. v. Tamez, 206 S.W.3d 572, 578 (Tex. 2006); Burrow v. Arce, 997 

S.W.2d 229, 236 (Tex. 1999).

In Arkoma Basin Exploration Co. v. FMF Associates 1990-A, Ltd., the Texas 

Supreme Court noted that “the value of mineral reserves is not a matter of common 

knowledge.” 249 S.W.3d 380, 388 (Tex. 2008) (citing TEX. R. EVID. 702; Kerr–

McGee Corp. v. Helton, 133 S.W.3d 245, 254 (Tex. 2004); Gulf States Utils. Co. v. 
9

Low, 79 S.W.3d 561, 567 (Tex. 2002)). Accordingly, a party seeking a recovery 

based upon the value of mineral reserves must prove those damages by expert 

testimony. See Cty. Mgmt., Inc. v. Butler, 650 S.W.2d 888, 890 (Tex. App.—Austin 

1983, writ dism’d by agr.), abrogated on other grounds by Coastal Oil & Gas 

Corp. v. Garza Energy Tr., 268 S.W.3d 1 (Tex. 2008). As noted in Butler, an 

estimate of mineral reserves is a highly technical endeavor that requires an 

examination of such matters as drilling logs, production costs, and geological trends. 

Id.

We held in Wortham Bros., Inc. v. Haffner that the presumption afforded by 

the Property Owner Rule that a property owner is qualified to testify about the value 

of his property does not extend to matters that are of a technical or specialized nature. 

347 S.W.3d 356, 361 (Tex. App.—Eastland 2011, no pet.). That principle applies 

in this case—an owner of a mineral interest is not qualified under the Property 

Owner Rule to give lay opinion evidence under Rule 701 on the value of mineral 

reserves because of the technical, specialized nature of that valuation. Thus, a 

valuation of mineral reserves constitutes expert opinion evidence under Rule 702 

because it “is based on special knowledge, skill, experience, training, or education 

in a particular subject.” See Reid Rd. Mun. Util. Dist. No. 2, 337 S.W.3d at 850.

A review of Truitt’s declaration pertaining to his valuation of the mineral 

interests that the bank foreclosed upon reveals the technical nature of his opinion on 

valuation. He begins the report by giving his education and experience and noting 

his “local expertise,” which indicates that he was giving expert opinion evidence 

under Rule 702. See id. at 852. He also criticized the valuations performed by 

Appellees’ expert and the bank’s expert. With respect to his valuation of the mineral 

interests, Truitt cites a publication from the Society of Petroleum Evaluation 

Engineers for a variety of technical acronyms that must be included in a valuation 
10

of mineral reserves. He calculated his valuation by assigning values to the matters 

related to these acronyms to compute a valuation in excess of $12 million.

Because Truitt’s valuation of the mineral interests was of a technical nature 

and constituted expert opinion testimony under Rule 702, it should have been 

disclosed in discovery. Id. at 851–52 (noting that “there is no good reason” to allow 

surprise expert testimony). The circumstances of this case are particularly 

compelling to support a finding of discovery circumvention when one considers that 

Appellants previously designated Truitt as an expert on valuation and then 

“undesignated” him. See id. On top of that, Truitt testified in his deposition, taken 

only one month earlier, that he had not performed a valuation of the mineral interests.

Additionally, even if one assumes that Truitt’s valuation testimony was 

admissible as Rule 701 lay opinion testimony under the Property Owner Rule and 

did not have to be disclosed in discovery, it still had to meet the requirements for 

expert opinion testimony. Justiss, 397 S.W.3d at 155–59. “Bare conclusions” 

without explanation will not support an opinion on the value of property. Id. at 156 

(citing Coastal Transp. Co. v. Crown Cent. Petroleum Corp., 136 S.W.3d 227, 231–

32 (Tex. 2004)). A property owner “must provide the factual basis on which his 

opinion rests.” Id. at 159. Furthermore, an expert must provide a sufficient 

description of the analysis that he used so that the court can determine if his 

conclusions are reliable. Helton, 133 S.W.3d at 257–58. As noted in Helton, an 

expert’s opinion is not reliable if there is “too great an analytical gap between the 

data and the opinion.” Id. at 258 (quoting Gammill v. Jack Williams Chevrolet, Inc., 

972 S.W.2d 713, 727 (Tex. 1998)).

As was the case in Helton, there is too great of an analytical gap in Truitt’s 

valuation in order for a court to determine if it is reliable. While there is a reference 

to the calculation that he performed, Truitt provided scant data supporting those 

calculations. Other than the two charts that we previously referenced, Truitt did not 
11

provide any other data in support of his valuation. His opinion on valuation is set 

out on two pages of the clerk’s record, which we have essentially quoted verbatim

(other than the two charts that are on those two pages). Truitt’s valuation is devoid 

of supporting data. Thus, even if the data and factors used by Truitt are of the type 

generally relied upon by petroleum engineers to estimate production or mineral 

reserves, there is too great of an analytical gap in his valuation for his conclusions 

to be assessed for their reliability. See id. Accordingly, we conclude that Truitt’s 

valuation was conclusory because it lacked sufficient explanation and supporting 

data.

In summary, the trial court had multiple bases for striking Truitt’s valuation 

of the mineral interests. Accordingly, the trial court did not abuse its discretion by 

granting Appellees’ motion to strike Truitt’s valuation from the summary judgment 

evidence. We overrule Appellants’ first issue.

Summary Judgment

In their second issue, Appellants assert that the trial court erred in granting 

summary judgment in favor of Appellees. Appellees filed a combined traditional 

and no-evidence motion for summary judgment. The trial court granted the motion 

on unspecified grounds. When the trial court’s order fails to specify the grounds for 

its summary judgment, we will affirm if any of the theories are meritorious. Knott, 

128 S.W.3d at 216. If a party moves for summary judgment on both traditional and 

no-evidence grounds, we first consider the no-evidence motion. Lightning Oil Co. v. 

Anadarko E&P Onshore, LLC, 520 S.W.3d 39, 45 (Tex. 2017).

After an adequate time for discovery, a party may move for summary 

judgment on the ground that there is no evidence of one or more essential elements 

of a claim or defense on which an adverse party would have the burden of proof at 

trial. TEX. R. CIV. P. 166a(i). We review a no-evidence motion for summary

judgment under the same legal sufficiency standard as a directed verdict.
12

Merriman v. XTO Energy, Inc., 407 S.W.3d 244, 248 (Tex. 2013). Under this 

standard, the nonmovant has the burden to produce more than a scintilla of evidence 

to support each challenged element of its claims. Id. Evidence is no more than a 

scintilla if it is “so weak as to do no more than create a mere surmise or suspicion” 

of a fact. King Ranch, Inc. v. Chapman, 118 S.W.3d 742, 751 (Tex. 2003) (quoting 

Kindred v. Con/Chem, Inc., 650 S.W.2d 61, 63 (Tex. 1983)).

A party moving for traditional summary judgment bears the burden of proving 

that there is no genuine issue of material fact and that it is entitled to judgment as a 

matter of law. TEX. R. CIV. P. 166a(c); Nassar v. Liberty Mut. Fire Ins. Co., 508 

S.W.3d 254, 257 (Tex. 2017). To be entitled to a traditional summary judgment, a 

defendant must conclusively negate at least one essential element of the cause of 

action being asserted or conclusively establish each element of an affirmative 

defense. Sci. Spectrum, Inc. v. Martinez, 941 S.W.2d 910, 911 (Tex. 1997). 

Evidence is conclusive only if reasonable people could not differ in their 

conclusions. City of Keller v. Wilson, 168 S.W.3d 802, 816 (Tex. 2005). If the 

movant initially establishes a right to summary judgment on the issues expressly 

presented in the motion, then the burden shifts to the nonmovant to present to the 

trial court any issues or evidence that would preclude summary judgment. See City 

of Houston v. Clear Creek Basin Auth., 589 S.W.2d 671, 678–79 (Tex. 1979). In 

reviewing both traditional and no-evidence summary judgments, we consider the 

evidence in the light most favorable to the nonmovant, indulging every reasonable 

inference in favor of the nonmovant, and resolving any doubts against the movant. 

Merriman, 407 S.W.3d at 248; City of Keller, 168 S.W.3d at 824.

Breach of Contract/Failure to Act as a Reasonably Prudent Operator

Appellants’ claim for breach of contract is premised on the joint operating 

agreement. Appellees assert that Appellants’ claim against NGP for failing to act as 

a reasonably prudent operator is essentially a claim for a breach of the joint operating 
13

agreement. Appellees cite Cone v. Fagadau Energy Corp. in support of this 

proposition. 68 S.W.3d 147, 160–61 (Tex. App.—Eastland 2001, pet. denied). We 

held in Cone that a claim based on the failure to perform under the terms of an 

operating agreement is a claim sounding in contract rather than tort. Id.; see also 

Abraxas Petroleum Corp. v. Hornburg, 20 S.W.3d 741, 752–53 (Tex. App.—

El Paso 2000, no pet.). We agree with Appellees that Appellants’ claim that NGP 

failed to act as a reasonably prudent operator is a claim for a breach of the terms of 

the joint operating agreement. We further note that Appellants have not asserted 

otherwise. In this regard, Appellants’ brief does not contain any contentions in 

support of their claim that NGP failed to act as a reasonably prudent operator.

Standing

Appellees asserted that there was no evidence that either Truitt, Inc. or Truitt 

are parties to the joint operating agreement. Appellees also asserted a traditional 

summary judgment ground that Truitt, Inc. and Truitt cannot maintain a breach of 

contract action because they are not parties to the joint operating agreement.

A party must have both standing to sue and capacity to sue. Austin Nursing 

Ctr., Inc. v. Lovato, 171 S.W.3d 845, 848 (Tex. 2005). Appellees couched their 

argument concerning Truitt, Inc. and Truitt as an issue of standing. However, 

Appellees’ lack-of-privity contention is actually a challenge to capacity, not 

standing. See John C. Flood of DC, Inc. v. SuperMedia, L.L.C., 408 S.W.3d 645, 

651 (Tex. App.—Dallas 2013, pet. denied). Thus, whether a party is entitled to sue 

on a contract is not truly a standing issue concerning the jurisdiction of the court but,

rather, is a decision on the merits. Transcon. Realty Inv’rs, Inc. v. Wicks, 442 S.W.3d 

676, 679 (Tex. App.—Dallas 2014, pet. denied). Irrespective of this distinction, 

Appellants have not asserted that Truitt, Inc. and Truitt are parties entitled to enforce 

the joint operating agreement through a breach of contract action. Accordingly, the 
14

trial court did not err by implicitly determining that Truitt, Inc. and Truitt could not 

sue for breach of the joint operating agreement.

Appellees also assert that Jatex lacks standing to assert a cause of action for 

breach of the joint operating agreement. As we noted in Bans Properties, L.L.C. v. 

Housing Authority of Odessa, a party to a contract generally has standing to maintain 

a suit on the contract. 327 S.W.3d 310, 314 (Tex. App.—Eastland 2010, no pet.)

(citing Interstate Contracting Corp. v. City of Dallas, 135 S.W.3d 605, 618 (Tex.

2004)). Accordingly, we disagree with Appellees’ contention that Jatex lacks 

standing to pursue a claim for breach of the joint operation agreement.

Damages for Breach of Contract

Jatex seeks three forms of damages under its claim for breach of contract. 

These damages are as follows: (1) net revenues withheld from Jatex’s account for 

its proportionate share of the deepening costs for the Vaqueros 47 No. 1 Well; 

(2) revenues for a 1% interest that was the subject of an agreement between Jatex 

and the Robert & Maxine Hannifin Trust; and (3) damages that Appellants 

characterize as “foreclosure damages.”

Deepening Costs for the Vaqueros 47 No. 1 Well

Appellants asserted in their summary judgment response that the “Crux of the 

Case” is the following question: “[D]id NGP wrongfully debit drilling expenses 

from Plaintiff Jatex’s account for operations [at the Vaqueros 47 No. 1 Well] . . . ?” 

Thus, Jatex seeks to recover its proportionate share of the deepening costs for the 

Vaqueros 47 No. 1 Well that was charged against its account by NGP.4 Appellants 

4There is a dispute between the parties over the amount of Jatex’s proportionate share of the 

deepening costs for the Vaqueros 47 No. 1 Well that were billed to Jatex’s account by NGP. Appellees 

assert that the amount was $112,076.76, while Appellants assert that the amount was $118,700. Because 

of our disposition of this appeal, we do not need to resolve this dispute.
15

also assert that the withholding of these deepening costs caused Security Bank to 

foreclose upon Appellants’ mineral interests.

Appellees assert that Jatex lacks standing to seek the recovery of Jatex’s

proportionate share of the deepening costs for the Vaqueros 47 No. 1 Well. 

Appellees base this contention on Jatex’s assignment of its net oil and gas revenues 

from the Clyde Prospect to Security Bank.

The deed of trust and security agreement that Appellants executed with the 

bank in 2010 contained an “Assignment of Production” that assigned all proceeds 

from hydrocarbons produced from the mortgaged properties. Security Bank’s 

attorney subsequently notified NGP of its lien on Appellants’ interests in the Clyde 

Prospect in a letter dated November 21, 2013. This letter also notified NGP of the 

assignment of the proceeds contained in the deed of trust. In the letter, Security 

Bank requested that NGP begin paying all net revenues attributable to Appellants’

interests directly to the bank.

Appellants’ assignment of their net revenues from the Clyde Prospect was in 

the nature of a “collateral assignment” because the assignment constituted a pledge 

of property to secure repayment of the loan. See Marhaba Partners Ltd. P’ship v. 

Kindron Holdings, LLC, 457 S.W.3d 208, 219 (Tex. App.—Houston [14th Dist.] 

2015, pet. denied). Under contract law, a party that assigns its interest under a 

contract has standing to sue for its damages that it incurred based on the rights that 

it had prior to the assignment unless its rights were terminated or otherwise released. 

Republic Petroleum LLC v. Dynamic Offshore Res. NS LLC, 474 S.W.3d 424, 430 

(Tex. App.—Houston [1st Dist.] 2015, pet. denied). Appellants’ assignment of their 

net revenues from the Clyde Prospect did not terminate or release Appellants’ rights 

under the joint operating agreement. Accordingly, we disagree with Appellees’ 

contention that Jatex lacks standing to sue for a breach of the joint operating 
16

agreement by virtue of the assignment of its net revenues as collateral to the bank. 

See id. at 431.

Appellees also assert that Appellants do not have a claim for the withheld 

revenues because Jatex assigned the net revenues to Security Bank and NGP later 

paid the withheld revenues to the bank. We agree. “Generally, ‘after a debtor 

receives notice of a valid assignment, payment made by the debtor to the assignor or 

to any person other than the assignee is made at the debtor’s peril and does not 

discharge the debtor from liability to the assignee.’” Holloway-Houston, Inc. v. Gulf 

Coast Bank & Tr. Co., 224 S.W.3d 353, 361 (Tex. App.—Houston [1st Dist.] 2006, 

no pet.) (quoting Buffalo Pipeline Co. v. Bell, 694 S.W.2d 592, 596 (Tex. App.—

Corpus Christi 1985, writ ref’d n.r.e.)). When notice of assignment has been given, 

“the account debtor may discharge its obligation by paying the assignee and may not 

discharge the obligation by paying the assignor.” TEX. BUS. & COM. CODE ANN. 

§ 9.406(a) (West Supp. 2019). As explained by the official comment to 

Section 9.406: “The revision makes clear that once the account debtor receives the 

notification, the account debtor cannot discharge its obligation by paying the 

assignor. It also makes explicit that payment to the assignor before notification, or 

payment to the assignee after notification, discharges the obligation.” Id. cmt. 2

(West 2011). Thus, when NGP (the account debtor) was notified of the assignment 

of Jatex’s net revenue to Security Bank, the net revenue was owed to the bank. 

Furthermore, NGP’s later payment of the net revenue to Security Bank discharged 

NGP’s obligation to pay the withheld net revenue. See 6A C.J.S. Assignments § 107

(“Payment of a debt to an assignee entitled to payment constitutes a valid discharge 

of the indebtedness.”). Accordingly, Appellees were entitled to summary judgment 

on Appellant’s claims for the withheld revenues attributable to the deepening costs 

of the Vaqueros 47 No. 1 Well.
17

Hannifin Trust—One-Percent Interest

Jatex also asserted a breach of contract claim for accrued revenues attributable 

to a 1% interest that was the subject of a recorded Letter Agreement that Jatex

executed with the Robert & Maxine Hannifin Trust on January 20, 2013. Under the 

terms of the Letter Agreement, the Trust agreed to pay $933,133.78 to Jatex “in 

exchange for” a 1% working interest in the subject leases, including the leases in the 

Clyde Prospect. The Letter Agreement further provided that the 1% interest was 

“being purchased” by the Trust. Security Bank subsequently executed a partial 

release of lien for this 1% working interest on February 5, 2013. NGP paid revenues 

attributable to the 1% interest to the Trust after the execution of the Letter 

Agreement.

Appellees assert that the Letter Agreement constituted a conveyance of the 

1% interest to the Trust to the effect that Jatex no longer owned the 1% interest. 

Conversely, Appellants assert that the Letter Agreement only created a lien in favor 

of the Trust on the 1% interest. Appellants contend that the Letter Agreement did 

not constitute a conveyance because it did not provide that it was “an assignment.”

Based on the terms of the Letter Agreement, we conclude that it was a 

conveyance of the 1% interest irrespective of the fact that it did not say that it was 

an assignment. The Letter Agreement states that the Trust was purchasing the 1% 

interest. The Letter Agreement was recorded in the public deed records, and the 

signatures of the parties signing on behalf of the Trust and Jatex were acknowledged 

before a notary. The Letter Agreement constituted a conveyance of the 1% interest 

because the grantor and grantee can be ascertained from the instrument, there are 

operative words or words of grant showing a present intention by the grantor to 

convey title to a real property interest (which is sufficiently described) to the grantee, 

and it is signed and acknowledged by the grantor. See Green v. Canon, 33 S.W.3d 

855, 858 (Tex. App.—Houston [14th Dist.] 2000, pet. denied).
18

The Letter Agreement contains language concerning a lien, but that language 

pertains to Jatex granting a lien to the Trust on all interests owned by Jatex, including 

the 5.25% working interest retained by Jatex, as well as Jatex’s proportionate share 

of production from the Clyde Prospect. In this regard, the Letter Agreement 

provided that the parties executed it in contemplation of Jatex quickly selling its 

5.25% interest along with the 1% interest conveyed to the Trust and that the Trust 

would receive a minimum of $1,119,760.05 for “a guaranteed minimum of 20% 

return on investment.” Accordingly, Appellees were entitled to summary judgment 

on Appellants’ claims for the 1% interest conveyed to the Robert & Maxine Hannifin 

Trust.

Recovery for “Foreclosure Damages”

The bulk of the damages sought by Appellants is the value of the mineral 

interests that Security Bank foreclosed upon. As noted previously, Security Bank 

purchased the mineral interests at the foreclosure sale for $1,500,000.5 As reflected 

in Truitt’s valuation, Appellants asserted that the mineral interests were worth much 

more than $1,500,000.

Appellees asserted that Appellants had no evidence of damages on any of their 

claims. Appellants relied exclusively on Truitt’s valuation for the calculation of 

their foreclosure damages. In our disposition of Appellants’ first issue, however, we 

have determined that the trial court did not err by striking Truitt’s valuation.

Appellants assert that there is additional summary judgment evidence that 

supports a valuation in excess of $1,500,000 for the foreclosed mineral interests. 

Specifically, they cite documents attached to Appellees’ motion for summary 

judgment: (1) a letter from Jatex to Security Bank dated May 22, 2014, and (2) a 

“loan history” bank statement from Security Bank. Appellants cite Timpte 

5At the time of foreclosure, the amount of Appellants’ indebtedness to Security Bank was 

$1,928,617.63.
19

Industries, Inc. v. Gish, 286 S.W.3d 306, 310 (Tex. 2009), and Binur v. Jacobo, 135 

S.W.3d 646, 651 (Tex. 2004), for the proposition that documents attached to a noevidence motion for summary judgment can be considered to create a fact issue that 

defeats the motion.

Appellees attached the loan history as evidence to their combined motion for 

summary judgment. However, Appellants did not direct the trial court to the loan 

history in their response to the motion as a matter to defeat the no-evidence motion 

for summary judgment. We held in Smith v. Directru Assets Management, L.L.C.

that an appellant may not point to such evidence, for the first time on appeal, to raise 

a genuine issue of material fact to defeat a no-evidence motion for summary 

judgment. No. 11-17-00249-CV, 2019 WL 4135469, at *2 (Tex. App.—Eastland 

Aug. 30, 2019, no pet.) (mem. op.) (citing B.C. v. Steak N Shake Operations, Inc., 

532 S.W.3d 547, 551 (Tex. App.—Dallas 2017), reversed on other grounds, 598 

S.W.3d 256 (Tex. 2020)). “Although the nonmovant may not be required to 

resubmit the evidence already proffered by the movant at trial, the nonmovant must, 

at a minimum, file a timely response identifying the portions of the movant’s 

evidence that the nonmovant is relying on to show that fact issues exist.” Id.

The comment to Rule 166a(i) specifies that the nonmovant has the burden to 

“point out” the evidence that defeats each challenged element of a no-evidence 

motion for summary judgment. TEX. R. CIV. P. 166a(i) cmt.; see MaximusAlliance 

Partners, LLC v. Faber, No. 05-13-01688-CV, 2015 WL 707033, at *5 (Tex. App.—

Dallas Feb. 17, 2015, no pet.) (mem. op.) (citing Johnson v. Brewer & Pritchard, 

P.C., 73 S.W.3d 193, 206–08 (Tex. 2002)). As explained by the Dallas Court of 

Appeals:

The issue is whether the trial court must search through all of the nonmovant’s evidence to determine if a fact issue exists without any 

guidance concerning what evidence creates an issue on a particular 

element. Under the Rules of Civil Procedure, the party seeking to avoid 
20

the effects of a well-pleaded no-evidence motion for summary

judgment bears the burden to file a written response that raises issues 

preventing summary judgment, and that points to evidence supporting 

those issues. Where the nonmovant fails to meet that burden, the trial 

court is not required to supply the deficiency, but instead must grant the 

motion.

Chambers v. Allstate Ins. Co., No. 05-15-01076-CV, 2016 WL 3208710, at *12 

(Tex. App.—Dallas June 9, 2016, pet. denied) (mem. op.) (quoting Burns v. Canales, 

No. 14-04-00786-CV, 2006 WL 461518, at *6 (Tex. App.—Houston [14th Dist.] 

Feb. 28, 2006, pet. denied) (mem. op.)). As noted by the Fourteenth Court of 

Appeals, the trial court is not required to search the record for evidence raising a 

material fact issue without more specific guidance from the nonmovant. Moon Sun 

Kang v. Derrick, Nos. 14-13-00086-CV, 14-13-00088-CV, 2014 WL 2048424, at 

*7 (Tex. App.—Houston [14th Dist.] May 15, 2014, pet. denied) (mem. op.). “In 

the absence of any guidance from [the nonmovant] as to where the evidence can be 

found, neither we nor the trial court is required to sift through a voluminous record 

in search of evidence to support [the nonmovant’s] argument [that] a fact issue exists 

on any challenged element.” White v. Calvache, No. 05-17-00127-CV, 2018 WL 

525684, at *4 (Tex. App.—Dallas Jan. 24, 2018, no pet.) (mem. op.).

Because Appellants did not cite the loan history in their response as evidence 

of their damages, they cannot rely on the loan history to defeat the no-evidence 

motion. With respect to the May 22, 2014 letter from Jatex to Security Bank, 

Appellants cited the letter in their response to the motion for summary judgment. As 

discussed below, Appellants cited the letter in support of their cause of action for 

tortious interference with a contract. However, Appellants did not cite the letter as 

evidence of their “measurement of damages.” To the contrary, Appellants relied 

exclusively in their response on Truitt’s valuation of the mineral interests to support 
21

their measurement of damages for the value of the mineral interests that Security 

Bank foreclosed upon.

Moreover, we disagree that the loan history or the May 22, 2014 letter 

constituted evidence of the fair market value of the mineral interests that Security 

Bank foreclosed upon. The loan history shows some of the payments that Jatex 

made on its loan with Security Bank. However, the loan history does not show the 

source of the funds that Jatex used to make those payments, and it contains no 

information about the value of any mineral interests.

The May 22, 2014 letter was a proposal by Truitt on behalf of Jatex for 

Security Bank to apply 100% of the revenue from the secured mineral interests to 

the loan. Truitt’s letter contained his estimate of the amount of revenue that would 

be generated and his projection that the loan would be paid off in three years at 

“current6cash flow levels.” However, Truitt’s letter did not contain a valuation of 

the secured mineral interests other than to say that he had not been able to sell the 

properties “for enough to get us whole,” despite his efforts to do so.

Neither the loan history nor Truitt’s letter applied a capitalization rate to 

determine the present value of the secured interests. The application of a 

capitalization rate is an element of the income approach for determining fair market 

value. City of Harlingen v. Estate of Sharboneau, 48 S.W.3d 177, 183 (Tex. 2001). 

Accordingly, there was no summary judgment evidence raising a fact issue that the 

value of the mineral interests that Security Bank foreclosed upon exceeded the 

amount paid by the bank at the foreclosure sale.

6Appellees’ valuation expert noted that the price of oil had dropped from over $100 a barrel on 

June 1, 2014, to $47.22 on January 6, 2015. He opined: “This rapid decline in price caused liquidity 

problems throughout the industry. The loss of liquidity and the significant price decline reduced the value 

of oil and gas assets to a fraction of their prior value.”
22

Appellees have presented an additional basis for excluding Jatex’s damages 

as a result of the foreclosure. Appellees assert that the damages that Jatex seeks as 

a result of the foreclosure are consequential damages that were not foreseeable by 

NGP at the time that the parties executed the joint operating agreement. Appellees 

support this contention with the fact that Appellants did not obtain the loan from 

Security Bank until after the execution of the joint operating agreement. We agree 

with Appellees’ contention.

Consequential damages are those damages that result naturally, but not 

necessarily, from a party’s breach of contract. Basic Capital Mgmt., Inc. v. Dynex 

Commercial, Inc., 348 S.W.3d 894, 901 (Tex. 2011); Superior Broad. Prods. v. 

Doud Media Grp., L.L.C., 392 S.W.3d 198, 209 (Tex. App.—Eastland 2012, no 

pet.). Consequential damages are not recoverable unless the parties contemplated, 

at the time of contract formation, that such damages would be a probable result of 

the breach. Basic Capital, 348 S.W.3d at 901; Doud Media, 392 S.W.3d at 209. 

Thus, to be recoverable, consequential damages must be foreseeable and directly 

traceable to the breach and result from it. Basic Capital, 348 S.W.3d at 901; Stuart v. 

Bayless, 964 S.W.2d 920, 921 (Tex. 1998); Doud Media, 392 S.W.3d at 209.

In their response to the motion for summary judgment, Appellants relied on a 

statement in Truitt’s declaration that “[m]ost persons involved in this industry pledge 

their working interests as collateral for credit lines or loans in order to participate in 

additional oil and [gas] activity, and any operator is well aware of this.” Based upon 

this statement, Appellants asserted that “it is almost expected in the oil and gas 

business that holders of working interests pledge those interests as collateral for 

loans. Thus, NGP would naturally know that in the ‘ordinary course of events’ in 

the oil and gas business a failure to pay over to working interest holders what is 

owed could well imperil that collateral[.]” Appellants present a somewhat different 

argument on appeal. Rather than focusing on foreseeability at the time the joint 
23

operating agreement was executed, Appellants emphasize that, at the time that 

Appellees breached the joint operating agreement by debiting Jatex’s account for the 

deepening costs for the Vaqueros 47 No. 1 Well, Appellees should have reasonably 

foreseen that the act would have likely caused Security Bank to foreclose on the lien.

From a timing perspective, the foreseeability of consequential damages for a 

breach of contract is assessed at the time the contract is formed, not at the time that 

the contract is subsequently breached. Basic Capital, 348 S.W.3d at 901; Doud 

Media, 392 S.W.3d at 209. Accordingly, we disagree with Appellants’ contention 

that Appellees’ knowledge of Jatex’s loan with Security Bank at the time that 

revenues were withheld for the deepening costs for the Vaqueros 47 No. 1 Well is 

relevant to the foreseeability analysis. Instead, the relevant focus is on what 

Appellees contemplated—at the time the parties executed the joint operating 

agreement—that Jatex’s damages might be in the event of a breach in the future.

As noted previously, Appellants obtained the loan from Security Bank after 

the parties executed the joint operating agreement. While Appellees did not have to 

know the particular bank that Appellants might obtain a loan from, Appellees had to 

have reason to know at the time the joint operating agreement was executed that 

Jatex would be pledging its interest as collateral. Basic Capital, 348 S.W.3d at 903. 

There is no summary judgment evidence to this effect. We disagree with Appellants’ 

assertion that every oil and gas operator executing a joint operating agreement 

should have reason to know that every working interest owner will be pledging its 

interest as collateral. This contention is so far-reaching that it would eviscerate the 

foreseeability requirement set out in Basic Capital for the recovery of consequential 

damages for breach of a joint operating agreement. We further note that Jatex is not 

just seeking to recover the value of its mineral interests subject to the joint operating 

agreement—it is also seeking to recover for mineral interests that were not subject 

to the joint operating agreement as consequential damages for a breach of the joint 
24

operating agreement. However, there is no showing of Appellees’ knowledge of 

Jatex’s other mineral interests at the time the joint operating agreement was 

executed.

Accordingly, the trial court did not err in granting summary judgment in favor

of Appellees on Jatex’s breach of contract claim for the recovery of damages 

allegedly caused by the foreclosure.

Tortious Interference with a Contract

Appellees also asserted that there was no evidence supporting Appellants’ 

claim for tortious interference with a contract. Appellants assert that Appellees 

tortiously interfered with an oral forbearance agreement that Appellants had with 

Security Bank. To establish a claim for tortious interference with an existing 

contract, a plaintiff must show the following: (1) that a valid contract exists and is 

subject to interference, (2) that the defendant willfully and intentionally interfered 

with that contract, (3) that the interference was a proximate cause of the plaintiff’s 

injury, and (4) that the plaintiff incurred actual damage or loss. Cmty. Health Sys. 

Prof’l Servs. Corp. v. Hansen, 525 S.W.3d 671, 689 (Tex. 2017); Duncan v. Hindy, 

590 S.W.3d 713, 726 (Tex. App.—Eastland 2019, pet. denied).

Appellees asserted that Appellants did not have evidence of a contract subject 

to interference. This contention focuses on the oral forbearance agreement that 

Appellants alleged in their response to the motion for summary judgment. 

Appellants asserted in their response that “[t]he bank orally agreed to refrain from 

foreclosure so long as it could receive Jatex’s Clyde Prospect revenues directly from 

[Appellee] NGP.” Appellants supported this proposition by citing Jatex’s letter of 

May 22, 2014, to Security Bank. Appellants acknowledged that the letter set out a 

proposal to the bank by Jatex. They asserted that Security Bank “substantially 

accepted” the proposal, thereby creating a contractual addendum to the deed of trust. 

In his declaration, Truitt described the oral forbearance agreement as follows: “Jatex 
25

reached a mutual oral understanding with Garth Wright, its loan officer at [Security 

Bank], that with the payments promised by NGP and other resources at Jatex’s 

disposal, the bank would refrain from foreclosing on the collateral for the line of 

credit.”

Appellees asserted at trial and on appeal that Appellants could not rely on an 

oral forbearance agreement because it violated the statute of frauds and was

precluded by the express terms of the loan agreement. See TEX. BUS. & COM. CODE 

ANN. § 26.02 (West 2015). In response, Appellants contend that Appellees cannot 

invoke either the statute of frauds or the terms of the loan agreement because 

Appellees lack standing to complain about the enforceability of the alleged oral 

forbearance agreement. We agree with Appellants’ proposition that Appellees’ 

status as third parties to the alleged oral forbearance agreement precludes Appellees 

from challenging voidable defects in it. See Juliette Fowler Homes, Inc. v. Welch 

Assocs., 793 S.W.2d 660, 664 (Tex. 1990), superseded on other grounds by statute 

as recognized in Coinmach Corp. v. Aspenwood Apartment, Corp., 417 S.W.3d 909 

(Tex. 2013) (“[M]ere unenforceability of a contract is not a defense to an action for 

tortious interference with its performance.”); Clements v. Withers, 437 S.W.2d 818, 

821 (Tex. 1969) (a contract held to be unenforceable under the statute of frauds may 

nevertheless serve as the basis for a tortious-interference claim); see also Morlock, 

L.L.C. v. Bank of N.Y., 448 S.W.3d 514, 517 (Tex. App.—Houston [1st Dist.] 2014, 

pet. denied) (a third party lacks standing to challenge a voidable defect in a contract).

In addition to asserting that Appellants had no evidence of a contract subject 

to interference, Appellees also asserted that Appellants had no evidence that 

Appellees willfully or intentionally interfered with any contract. “To prevail on a 

tortious interference claim, a plaintiff must present evidence that the defendant 

interfered with a specific contract.” Funes v. Villatoro, 352 S.W.3d 200, 213 (Tex. 

App.—Houston [14th Dist.] 2011, pet. denied) (citing Finlan v. Dallas Indep. Sch. 
26

Dist., 90 S.W.3d 395, 412 (Tex. App.—Eastland 2002, pet. denied)). Furthermore, 

the plaintiff “must present evidence that some obligatory provision of a contract has 

been breached.” Id.; see Duncan, 590 S.W.3d at 726. In other words, a plaintiff 

must produce some evidence that the defendant “knowingly induced one of the 

contracting parties to breach its obligations under a contract.” Funes, 352 S.W.3d 

at 213. Thus, Appellants were required to show that Appellees induced Security 

Bank to breach some provision of the alleged oral forbearance agreement. See El 

Paso Healthcare Sys., Ltd. v. Murphy, 518 S.W.3d 412, 421–22 (Tex. 2017) (citing 

Holloway v. Skinner, 898 S.W.2d 793, 794–95 (Tex. 1995)); Duncan, 590 S.W.3d 

at 726; Texaco, Inc. v. Pennzoil Co., 729 S.W.2d 768, 803 (Tex. App.—Houston [1st 

Dist.] 1987, writ ref’d n.r.e.) (“A necessary element of the plaintiff’s cause of action 

is a showing that the defendant took an active part in persuading a party to a contract 

to breach it.”).

As we noted above, Appellees cannot rely on either the statute of frauds or the 

provisions of the loan agreement that prohibit oral modifications to its terms. 

However, Appellants must still show the terms of the oral forbearance agreement 

and must also show that Appellees induced Security Bank to breach an obligatory 

provision of the alleged oral forbearance agreement. Appellants have only made a 

general statement that they had an oral forbearance agreement with Security Bank. 

Appellants have not provided any details about the specific terms of the oral 

forbearance agreement or how Security Bank may have breached the oral 

forbearance agreement by proceeding to foreclose on the property. In the absence 

of this evidence, a no-evidence summary judgment is proper. See All Am. Tel., 

Inc. v. USLD Commc’ns, Inc., 291 S.W.3d 518, 532–33 (Tex. App.—Fort Worth 

2009, pet. denied). Furthermore, Appellants have not alleged that Security Bank 

breached any provision of the oral forbearance agreement. To the extent that 

Appellees induced Security Bank “to do what it ha[d] a right to do is not actionable 
27

interference.” ACS Inv’rs, Inc. v. McLaughlin, 943 S.W.2d 426, 430 (Tex. 1997); 

Duncan, 590 S.W.3d at 727.

In Truitt’s May 22, 2014 letter, he presented a proposal to Security Bank to 

continue to hold all properties as collateral and “apply 100% of the runs to the 

outstanding balance on the note.” However, Appellants had already assigned the 

runs to Security Bank, having done so in the original loan documents. Furthermore, 

Security Bank had already invoked the assignment of the runs by requesting 

Appellees in November 2013 to start paying the runs directly to Security Bank. 

Additionally, Truitt stated in his declaration that the oral forbearance agreement was 

based on the runs from the subject property being paid directly to Security Bank plus 

“other resources at Jatex’s disposal.” Appellants did not elaborate on these other 

resources or on whether they were paid to the bank as required by the alleged oral 

forbearance agreement.

By and through its attorney, Security Bank sent its final Notice of Default and 

Demand for Payment in a letter dated December 10, 2014. The bank asserted in this 

notice that Appellants were in default of a “$1,996,826.94 Promissory Note” dated 

May 27, 2014.7 The bank asserted that this note “became fully due on November 27, 

2014,” and that Jatex owed the bank $1,928,617.63 under the note. Thus, the final 

notice of default indicates that the bank foreclosed upon the mineral interests 

pursuant to a note executed after the oral forbearance agreement was purportedly 

made. Accordingly, Appellants have not shown that Security Bank breached any 

contract that it had with Appellants. The trial court did not err by implicitly 

7We note that the $1,996,826.94 Promissory Note was executed five days after Truitt’s letter of 

May 22, 2014. A copy of it that was attached to Appellants’ petition indicates that it was a “term promissory 

note” that provided for five monthly installments of “one hundred percent (100%) of [Appellants’] Oil and 

Gas Proceeds as defined [in the note]” beginning on June 27, 2014, and continuing until November 27, 

2014, when the remaining unpaid balance “on this Note shall be due and payable.”
28

determining that Appellants did not present evidence raising a genuine issue of fact 

to support their claim of tortious interference with a contract.

We overrule Appellants’ second issue challenging the summary judgment.

This Court’s Ruling

We affirm the judgment of the trial court.

JOHN M. BAILEY

CHIEF JUSTICE

August 20, 2020

Panel consists of: Bailey, C.J.,

Stretcher, J., and Wright, S.C.J.8

Willson, J., not participating.

8

Jim R. Wright, Senior Chief Justice (Retired), Court of Appeals, 11th District of Texas at Eastland, 

sitting by assignment.