Opinion ID: 5161
Heading Depth: 2
Heading Rank: 3

Heading: natural resources code

Text: Hondo alleges that Texas Crude's withholding of Hondo's payments violated Tex.Nat.Res.Code § 91.401 et seq.3 The district court, however, expressly held that Texas Crude 3 These sections were amended in 1991, but the parties are subject to the pre-amendment sections. did not violate the Texas Natural Resources Code. Section 91.403(a) requires interest to be paid for late payments, but 91.403(b)(2) provides that interest does not have to be paid if there is a reasonable doubt that the payee does not have clear title to the interest in the proceeds of payments. Essentially, Hondo asks us to hold that Texas Crude violated the Natural Resources Code so that Hondo can collect prejudgment interest. The district court held that Texas Crude did not violate the Texas Natural Resources Code, but the court did not elaborate on its holding. We assume the court concluded that Texas Crude had a reasonable doubt whether Hondo was entitled to the proceeds. We agree with the conclusion. ARCO was withholding its payments from Texas Crude, and Texas Crude had an operator's lien on the proceeds. That we ultimately award damages to Hondo is inconsequential because Texas Crude acted reasonably at the time in questioning Hondo's right to the proceeds. [W]e have interpreted Texas law as allowing a prevailing party in either a contract or tort suit to recover prejudgment interest as a matter of equity in all but the most exceptional circumstances. Campbell, Athey & Zukowski v. Thomasson, 863 F.2d 398, 402 (5th Cir.1989) (emphasis in original). The present case illustrates one of the exceptional circumstances in which we do not require payment of prejudgment interest. The general must yield to the specific. It would be contradictory to rule t hat Texas Crude did not violate a statute allowing it to withhold payments without paying interest, and then require Texas Crude to pay prejudgment interest. We affirm the district court's ruling that Texas Crude did not violate the Texas Natural Resources Code and that Texas Crude need not pay prejudgment interest.