Source: https://openjurist.org/227/f3d/247
Timestamp: 2019-04-21 20:22:22+00:00

Document:
MESA OPERATING LIMITED PARTNERSHIP, Third Party Defendant-Appellee-Cross-Appellant.
As a foundation for its argument that payments made pursuant to the specific provisions of the 1988 Agreements fully satisfy and comply with the provisions of the 1955 Lease as amended, CIG attempts to distinguish the "Agreement" referred to in Paragraph 7 (the 1988 Amendment) from the "Lease" referred to in that paragraph (the 1955 Lease). From that starting point, CIG contends that the portions of the 1955 Lease that were not expressly restated in the 1988 Agreements ---- specifically, the FNC as incorporated by reference into the 1955 Lease by the 1967 Settlement ---- are of no force or effect after 1988. This creative but unsupported interpretation is fatally flawed for several reasons. First, we need not go beyond the plain wording of the provisions of the 1988 Amendment which proclaim that "[e]xcept as stated in this [Amendment] Agreement, the  Lease is not otherwise amended." This declaration states the diametric opposite of CIG's proffered interpretation which would posit that any provision of the 1955 Lease that is not reiterated in this 1988 Amendment is no longer in force or effect. That might well be a fair provision in a document purporting to be a total restatement or republication of an earlier agreement but not in an errata-type amendment like the 1988 Amendment. Absent an express statement to that effect, no accepted canons of contractual interpretation would support such a reading.25 To accept CIG's reading of the 1988 Amendment as broadly repealing all provisions of the 1955 Lease other than those expressly reiterated in the 1988 Amendment also runs contrary to the express declaration of the latter.
More to the point, when the 1988 Amendment is construed as a whole, it becomes clear that Paragraph 7's "in lieu of" provision does not render the FNC nugatory or, in CIG's terms, "fulfilled." Specifically, CIG argues that, because Paragraph 7 specifies that "all royalty payments made pursuant to this  Agreement are in lieu of any other rate...," all royalty payment obligations of Section A(2) of the 1967 Settlement are satisfied by payments to the Mastersons pursuant to Paragraph 3 of the 1988 Amendment. The flaw in this logic lies in the language of paragraph 3 of the 1988 Amendment that states unambiguously that "[t]he provisions of paragraphs A(2)(a) and (b)" of the 1967 Settlement are the ones replaced by paragraph 3. As paragraph 2 of the 1988 Amendment makes pellucid, paragraph 3 replaces only the two denominated sub-paragraphs of Paragraph A(2) of the 1967 Settlement, i.e., A(2)(a) and A(2)(b); clearly nothing in the 1988 Agreements repeals or otherwise affects or supplants subparagraph A(2)(c) of the 1967 Settlement, which, as we know, is the FNC.
When we hark back to the declaration in the 1988 Amendment to the effect that "[e]xcept as stated in [the 1988] Amendment, the  Lease is not otherwise amended," no doubt can remain that payments made "pursuant to" the 1988 Agreements must comply with the provisions of the FNC. Inasmuch as (1) the 1988 Amendment declares the continued efficacy of all provisions of, inter alia, the 1967 Settlement that are not expressly repealed, substituted, or modified by provisions of the 1988 Agreements, and (2) subparagraph A(2)(c), the FNC provision, is not expressly supplanted, payments made in conformity to those contracts must conform to the FNC as well.
See HECI Exploration Co. v. Neel, 982 S.W.2d 881, 884 (Tex. 1998) ("Texas law has never recognized a fiduciary relationship between a lessee and royalty owners."); Mitchell Energy Corp. v. Sampson Resources Co., 80 F.3d 976, 985 (5th Cir. 1996)(applying Texas law); Hurd Enters., Ltd. v. Bruni, 828 S.W.2d 101, 112 (Tex. App.-San Antonio 1992, writ denied); Cambridge Oil Co. v. Huggins, 765 S.W.2d 540, 544-45 (Tex. App.-Corpus Christi 1989, writ denied).
Sanus/New York Life Health Plan v. Dube-Seybold-Sutherland Management, Inc., 837 S.W.2d 191, 199 (Tex. App.-Houston [1st Dist.] 1992) (holding HMO had fiduciary obligations in its treatment of member physician partnership which was "totally dependent on [certain patient] information and relied exclusively on [HMO] to provide it"); LeCuno Oil Co. v. Smith, 306 S.W 2d 190, 192 (Tex. Civ. App.-Texarkana 1957, writ ref'd n.r.e.) (concerning a relationship "distinguishable from that found in most cases of this kind," in that lessee was both gas producer and pipeline operator, enabling it to "contract with itself respecting prices of gas at the wellhead.").

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