Court Opinion

ID: 3085169
Source: CourtListenerOpinion
Date Created: 2015-10-16 02:36:57.618954+00
Date Added: 2024-06-11T09:51:45.327097
License: Public Domain

NUMBER 13-12-00504-CV

                                 COURT OF APPEALS

                     THIRTEENTH DISTRICT OF TEXAS

                        CORPUS CHRISTI – EDINBURG

JOHN JAMES HARKINS, ET AL.,                                                             Appellants,

                                                   v.

NORTH SHORE ENERGY, L.L.C.,                                                                Appellee.

                       On appeal from the 267th District Court
                             of Goliad County, Texas.

              MEMORANDUM OPINION ON REHEARING
                  Before Justices Rodriguez, Garza and Perkes
                    Memorandum Opinion by Justice Garza
        We issued our original memorandum opinion in this case on December 12, 2013.

Appellants, John James Harkins et al.1 (“Harkins”) and Dynamic Production, Inc.

        1 Harkins co-owns the executive rights to the minerals under the land at issue. Dolores Marie

Harkins, Janey Frances Harkins Hiller, Allen Anthony Harkins, Patricia Ailene Harkins, Wilson William
Harkins IV, and Heath Alan Harkins are co-owners of the mineral rights, were named as parties in the trial
court, and are named as appellants here. We will refer to these appellants collectively as “Harkins.”
(“Dynamic”), filed motions for rehearing and for en banc reconsideration. See TEX. R.

APP. P. 49.1, 49.7. Appellee North Shore Energy (“North Shore”) filed a response to the

motions pursuant to our request, and appellants filed a reply to that response. We grant

the motion for rehearing in part and deny it in part, dismiss the motion for en banc

reconsideration as moot, withdraw our previous memorandum opinion and judgment, and

substitute the following memorandum opinion and accompanying judgment in their place.

        This sprawling oil and gas dispute involves a well drilled by North Shore on certain

Goliad County land owned by Harkins. Harkins argues by three issues that the trial court

erred by concluding that the well did not trespass on his property and by granting

summary judgment to North Shore on that basis. Dynamic asserts by thirteen issues2

that the trial court erred by rendering partial summary judgment in favor of North Shore

and by rendering judgment against Dynamic after trial on the issue of tortious interference

with contract. We reverse and remand.

                                           I. BACKGROUND

A.      The Option Agreement

        On June 3, 2009, Harkins and North Shore entered into an agreement (the “Option

Agreement”) giving North Shore the exclusive right to acquire one or more oil and gas

leases on a portion of Harkins’ property. In exchange for the option, North Shore paid

$140,000, representing $50 per acre, as consideration. The Option Agreement provided,

in relevant part:

         2 The “Issues Presented” section of Dynamic’s brief contains thirteen numbered items, eleven of

which individually exceed 100 words in length. See TEX. R. APP. P. 38.1(f) (requiring that the “Issues
Presented” section “state concisely all issues or points presented for review”). The “Argument” section of
the brief contains nine sections and nine subsections which do not correspond to the issues listed in the
“Issues Presented” section. Because briefing rules are to be construed liberally, see TEX. R. APP. P. 38.9,
we accept the brief and endeavor to address all issues fairly raised.

                                                    2
       [Harkins] hereby grants to [North Shore] the exclusive right on and under
       the following described lands, situated in Goliad County, Texas, to-wit:

              All that certain property more fully described on EXHIBIT “A”
              attached hereto and made a part hereof for all purposes.

       (hereinafter called “Said Land”), the exclusive option to acquire oil and gas
       leases on all or a portion of Said Land under the terms and provisions of
       that certain Oil and Gas Lease form set forth on Exhibit “B” attached hereto
       and made a part hereof for all intents and purposes, subject to the following
       terms and conditions:

       1.     For a period of twenty-four (24) months from the date hereof
              (hereinafter called the “Option Term”), [North Shore] shall have the
              exclusive option on Said Land.

       2.     At any time and from time to time during the Option Term, [North
              Shore] has the right to exercise its exclusive option to acquire an Oil
              and Gas Lease covering all or a portion (as hereinafter provided) of
              Said Land pursuant to the terms and provisions set forth on the Oil
              and Gas Lease form attached as Exhibit “B”, (hereinafter called the
              “Oil and Gas Lease”) by tendering a check payable to [Harkins] in an
              amount equal to Two Hundred Dollars ($200.00) per net mineral acre
              for each net acre owned by [Harkins] selected by [North Shore] out
              of Said Land, on which such option and/or options are exercised by
              [North Shore]. . . .

              ....

       7.     At such time as [North Shore] elects to exercise its option to acquire
              an Oil and Gas lease on Said Land pursuant to this Agreement, then
              such option as to such selected acreage shall expire and said Oil and
              Gas Lease shall become effective. . . .

              ....

       14.    This Option to Purchase Oil and Gas Lease is expressly made
              subject to the Oil, Gas, and Mineral Lease covering part of Said
              Land, and [North Shore] will be responsible for obtaining any consent
              from the Lessee that may be required. [North Shore]’s right to
              exercise its option to take an Oil and Gas Lease is also subject to the
              existing Lease on part of Said Land.

       Exhibit “A” to the Option Agreement described two tracts of land, “Tract 1” and

“Tract 2.” Pertinent to this case, “Tract 2” was described as follows:

                                             3
      Being 1,210.8224 acres of land, more or less, out of the 1673.69 acres out
      of the Caleb Bennett Survey, A-5, Goliad County, Texas and being the
      same land described in that certain Memorandum of Oil and Gas Lease
      dated March 14, 1996 from The Estate of Janie Frances Harkins,
      Deceased, to Export Petroleum Corporation and being recorded in Volume
      50 at Page 454 of the Official Public Records of Goliad County, Texas to
      which deed reference is here made for a more complete description of said
      land.

The March 14, 1996 Memorandum of Oil and Gas Lease referenced above (the “Export

Lease”) described the land to which it applied as follows:

      Being 1273.54 acres situated in Goliad County, Texas, and being all of the
      1673.69 acre tract described on EXHIBIT “A” attached hereto, SAVE AND
      EXCEPT a 400.15 acre tract described in a Memorandum of Oil and Gas
      Lease between the Estate of Janie Frances Harkins, deceased, and
      Hamm[a]n Oil & Refining, dated March 13, 1995, recorded in Volume ___,
      Page ___[3], of the Public Records of Goliad County, Texas.

The March 13, 1995 Memorandum of Oil and Gas Lease (the “Hamman Lease”), in turn,

contained a metes and bounds description of the 400.15-acre tract referenced in the

Export Lease. Exhibit “A” to the Export Lease states:

      Field notes of a 1673.69 acre tract, being a part of a tract of land conveyed
      from Cyrus B. Lucas, et al., to John J. O’Brien by Deed dated February 7,
      1931, and recorded in Volume 66, Page 325 of the Deed Records of Goliad
      County, Texas;

      Said 1673.69 acre tract is comprised of a portion of the Solon Bartlett
      Survey, Abstract 4 and the Caleb Bennett Survey, Abstract 5, is situated in
      Goliad County, Texas, approximately 4 miles north of the town of Blanconia
      and is described by metes and bounds as follows:

      Beginning at a point in the center of Sarco Creek . . .

      [most of lengthy description omitted]

                 ....

      Thence S 82° 09ˈ W a distance of 8663.39 feet to the place of beginning,
      containing 1673.69 acres, more or less. Save and Except a 400.15 tract

      3   As in original.

                                              4
        described in Participation Agreement dated November 8, 1995, between
        Hamman Oil and Refining Company and Alia Mesa Resources, Inc., et al.,
        recorded in the Deed Records of Goliad County, Texas.[4]

B.      North Shore’s Attempt to Secure Leases

        In September 2009, North Shore paid Harkins nearly $33,000 with the objective of

securing a lease on a 169.9-acre area enclosed entirely within “Tract 2” as defined in

Exhibit “A” to the Option Agreement.5 A formal lease agreement was never executed.6

Nevertheless, North Shore proceeded to drill a well on the 169.9-acre tract that it

identified. In December 2009, North Shore and Harkins executed an easement so that

the well could be connected to a gas purchaser’s pipeline. According to an affidavit by

Catherine Schaper, one of North Shore’s co-owners, North Shore paid Harkins and other

surface rights owners over $17,000 for the easement, and the easement instrument

contained a detailed survey plat showing the location of the well in relation to local

boundaries and landmarks.              Schaper further averred that North Shore spent over

$700,000 to drill and complete the well. The well commenced production in January 2010.

        Harkins knew that North Shore had built a well and initially assumed that it was

situated on land covered by the Option Agreement. However, in March 2010, Harkins,

relying on the advice of landman Bill Bishop, came to believe that the well had in fact

been drilled on land that was excluded from the Option Agreement. In particular, Harkins

believed that the well was actually situated on the 400.15-acre tract which was described

in the Hamman Lease and referenced in the Export Lease. According to Harkins, this

        4   This “Participation Agreement” does not appear in the record.

         5 North Shore also paid Harkins in an attempt to obtain a lease on a 570.941-acre area enclosed

entirely within “Tract 1” as defined in Exhibit “A” to the Option Agreement.
        6
        North Shore viewed the execution of a lease instrument as a formality because the Option
Agreement provides that North Shore may exercise its option merely by making payment.

                                                      5
400.15-acre tract was specifically excluded from the description of land in the Option

Agreement.      Harkins therefore believed that the well constituted a trespass on his

property. Harkins’ attorneys informed North Shore of the problem and offered North

Shore the opportunity to negotiate a valid lease of the land upon which the well was

already situated. Those negotiations failed.

C.      Dynamic’s Involvement

        Meanwhile, Dynamic had expressed its interest in conducting seismic exploration

activities on much of Harkins’ land, including on the tract purportedly leased by North

Shore. Initially, Dynamic approached North Shore about obtaining permission to conduct

those activities; however, after negotiations with North Shore failed in February 2010,

Dynamic took the position that the right to approve seismic exploration actually belonged

to Harkins. Dynamic then proceeded to negotiate directly with Harkins about acquiring

seismic exploration rights. On March 19, 2010, Dynamic sent to Harkins a “Letter of Intent

to Acquire Oil and Gas Lease” (the “Letter of Intent”) on the 400.15-acre tract identified in

Exhibit “A” to the Hamman Lease.7 Subsequently, in April of 2010, Dynamic and Harkins

executed an agreement (the “Seismic Permit”) granting Dynamic the right to conduct

seismic exploration on various tracts of land, including:

        1673.69 acres of land, more or less, situated in the Caleb Bennett Survey,
        A-5, Goliad County, Texas, being more fully described by metes and
        bounds in Exhibit “A” to that certain Memorandum of Oil and Gas Lease
        dated March 14, 1996 from the Estate of Janie Frances Harkins to Export
        Petroleum Corporation, recorded in Volume 50, Page 454, Official Public
        Records, Goliad County, Texas.

         7 The Letter of Intent stated that Dynamic proposed to pay Harkins $400 per net mineral acre for

an oil and gas lease “covering 160 acres of land in the form of a square around the wellbore of the [North
Shore] Well” and $250 per net mineral acre for a lease “covering 240.15 acres, being the balance of the
400.15 acres subject to this letter of intent.”

                                                    6
        On June 17, 2010, Harkins and Dynamic entered into an oil and gas lease

agreement (the “Dynamic Lease”) based upon the Letter of Intent sent by Dynamic in

March. The Dynamic Lease was largely based on the form lease agreement attached as

Exhibit “B” to North Shore’s Option Agreement.                    However, it contained additional

provisions stating that: (1) Harkins would assign all of his causes of action against North

Shore to Dynamic, (2) Dynamic would indemnify Harkins for any liability incurred by

Harkins (including “attorney’s fees, expert’s fees and court costs”) “arising out of or by

virtue of [the Option Agreement], the assignment of claims herein made or the granting

of [the Dynamic Lease]”; and (3) Harkins would agree to participate in any litigation

between Dynamic and North Shore.

D.      Litigation Begins

        North Shore then filed the instant lawsuit against both Dynamic and Harkins. In its

original petition filed in August 2010, North Shore contended that “[t]he Option Agreement

as written does not reflect the true agreement of the parties” due to a “scrivener’s error.”

North Shore asserted that the parties intended for the Option Agreement to cover the land

upon which the well was drilled, and it requested that the agreement be reformed to

explicitly include that land. North Shore’s petition also included a suit to quiet title with

regard to the land surrounding the well.

        In subsequent amended petitions, North Shore contended that the Option

Agreement included the disputed 400.15-acre tract and was not drafted erroneously.8

North Shore further claimed that Harkins repudiated the Option Agreement and that

        8 North Shore’s amended petitions retained the reformation claim, but asked for reformation only in
the alternative to the trespass claim and only “if any material defects in the Option Agreement appear.” The
amended petitions also retained the pleadings to quiet title.

                                                     7
Dynamic tortiously interfered with the Option Agreement and committed “conscious and

malicious geophysical trespass” by conducting seismic exploration on the allegedly

leased land. North Shore further made an alternative claim for “recovery under assumpsit

in lieu of geophysical trespass for the reasonable value of the use and occupation of the

land and appropriation of trade secrets . . . .” In its amended petitions, North Shore

requested actual and exemplary damages from Dynamic as well as an order compelling

Harkins to specifically perform the Option Agreement by executing oil and gas leases on

the tracts identified by North Shore in September 2009. Harkins and Dynamic asserted

counterclaims of trespass, tortious interference with contract, and conversion, and sought

damages, declaratory relief, attorney’s fees, an accounting, and the appointment of a

receiver to take over operation of the subject well.

E.     Summary Judgment Motions

       The parties each moved for summary judgment. In its summary judgment motion,

North Shore contended that the Option Agreement unambiguously included the 400.15-

acre Hamman Lease tract and that, because North Shore complied with the agreement’s

provisions regarding invocation of the option, Harkins should be compelled to specifically

perform his obligations under the agreement. North Shore noted that, until Dynamic

became involved in the case, no party believed that the 400.15-acre Hamman Lease tract

was excluded. As evidence, North Shore presented a map produced by Dynamic in

discovery which purported to identify the land optioned to North Shore under the Option

Agreement; the map demarcates the boundaries of the 400.15-acre Hamman Lease tract

but does not appear to indicate that the tract was excluded from the land made available

                                             8
for lease in the Option Agreement.9 North Shore argued that the Hamman Lease had

expired before the parties executed the Option Agreement and that “[t]he parties did not

intend to pointlessly exclude a large square of useful acreage in the middle of an optioned

tract . . . .” North Shore further argued that the Option Agreement gave it the “exclusive

right to explore for oil and gas” on the optioned area. In support of the motion, North

Shore attached affidavits by its principals Schaper and W. Troy West, as well as its

attorney J. Robert Goldsmith, averring to the facts set forth in North Shore’s petition and

summary judgment motion.

        North Shore also attached as summary judgment evidence certified copies of

Texas Railroad Commission records indicating that a well which had been drilled by

Hamman Oil & Refining Company pursuant to the Hamman Lease was plugged on March

22, 2006.

        The motion for summary judgment filed by Harkins and Dynamic asserted both

traditional and no-evidence grounds. First, the defendants’ motion alleged that North

Shore had produced no evidence that Harkins repudiated the Option Agreement.

Second, Harkins and Dynamic argued that North Shore had produced no evidence that it

had exclusive exploration rights regarding the land at issue and, therefore, North Shore’s

trespass, conversion, and conspiracy claims must fail. Third, the defendants asserted

that North Shore had not established an assumpsit cause of action. Fourth, Harkins and

Dynamic argued that North Shore was not entitled to reformation of the Option Agreement

        9 The map produced by Dynamic in discovery depicts the irregularly-shaped “Tract 2” identified in
the Option Agreement as shaded. The 400.15-acre Hamman Lease tract, which is roughly square-shaped
and lies entirely within “Tract 2,” is demarcated by a dashed line on the map, but the interior of the 400.15-
acre tract is shaded in the same manner as the remainder of “Tract 2.”

       Dynamic also produced another map in discovery that was apparently produced some time later
and explicitly excluded the 400.15-acre area from “Tract 2.”

                                                      9
because there was no unilateral or mutual mistake as to its terms; instead, Harkins and

Dynamic alleged that the Option Agreement unequivocally excludes the 400.15-acre

Hamman Lease tract from its property description. Finally, the defendants’ summary

judgment motion stated that North Shore produced no evidence establishing its

entitlement to exemplary damages or attorney’s fees.

       Harkins and Dynamic also filed an objection to North Shore’s summary judgment

evidence, contending that various parts of the three affidavits were unreliable and

inadmissible.

       On September 9, 2011, the trial court: (1) denied the motion for summary judgment

filed by Harkins and Dynamic in its entirety; (2) overruled Harkins’s and Dynamic’s

objections to North Shore’s affidavits; and (3) granted partial summary judgment to North

Shore in a series of four separate orders. The four orders granting relief to North Shore

stated respectively and in relevant part as follows:

       The Court finds as a matter of law that under the provisions of the [Option
       Agreement] . . . [Dynamic], which is not a party to the Option Agreement,
       does not have the right to conduct exploratory operations on either Tract 1
       or Tract 2 as described in the Option Agreement during the term of the
       Option Agreement.

                ....

       It is hereby ORDERED that the Oil and Gas lease from [Harkins], as
       Lessors, to [Dynamic], as Lessee, covering 400.15 acres in the Caleb
       Bennett Survey, dated June 17, 2010 . . . is removed as a cloud on the
       rights, titles, and interests held by [North Shore] under [the Option
       Agreement], and the Oil and Gas Leases covering 169.9 acres which have
       this day been ordered by this Court to be executed and delivered.

                ....

       It is therefore ORDERED that within 15 days of the date of this Order,
       [Harkins] shall execute and return the respective Oil and Gas Lease
       counterparts to [North Shore] as lessee, covering 570.941 acres out of Tract

                                            10
        1 as described in the [Option Agreement] that are currently in the
        possession of [Harkins].

                ....

        It is therefore ORDERED that [Harkins] shall execute and return the form
        Oil & Gas Lease to [North Shore] as lessee which is attached as Exhibit B
        to the [Option Agreement], covering 169.9 acres out of the Caleb Bennett
        Survey A-5, Goliad County, Texas, within 15 days from the date the leases
        are delivered to Defendants’ counsel.

F.      Trial and Judgment

        The cause proceeded to trial in July of 2012 on North Shore’s tortious interference

and assumpsit claims.10 After trial, the jury found that Dynamic intentionally interfered

with the Option Agreement and caused North Shore to suffer $574,000 in actual

damages. The jury also found by clear and convincing evidence that North Shore’s

damages resulted from malice on the part of Dynamic, and it assessed $1.7 million in

exemplary damages. Finally, with respect to North Shore’s assumpsit claim, the jury

concluded that North Shore was entitled to $88,800 representing the “reasonable market

value of the seismic testing at the time and place it occurred” and $46,250 representing

the “reasonable market value of the processed seismic data.” The trial court denied the

defendants’ motions for new trial and to modify the judgment and rendered judgment on

May 18, 2012: (1) ordering Dynamic to pay North Shore actual damages of $709,050

and exemplary damages of $1,148,000,11 plus postjudgment interest on those amounts;

        10
         The trial court denied a motion filed by Harkins and Dynamic to sever the claims that had been
determined by the summary judgment orders.
        11  “Exemplary damages awarded against a defendant may not exceed an amount equal to the
greater of: (1)(A) two times the amount of economic damages; plus (B) an amount equal to any
noneconomic damages found by the jury, not to exceed $750,000; or (2) $200,000.” TEX. CIV. PRAC. &
REM. CODE ANN. § 41.008(b) (West, Westlaw through 2013 3d C.S.). North Shore sought punitive damages
only on its tortious interference claim, for which the jury awarded $574,000. The $1,148,000 in exemplary
damages represents two times the tortious interference damages award.

                                                  11
(2) awarding North Shore trial attorney’s fees of $405,33812 “in connection with its suit on

a written contract against [Harkins],” plus postjudgment interest, payable by Harkins; and

(3) incorporating the previously-rendered summary judgment orders. The trial court

rendered findings of fact and conclusions of law chiefly related to North Shore’s recovery

of attorney’s fees. This appeal followed.

                                            II. DISCUSSION

A.      Summary Judgment

        Harkins’s first two issues and Dynamic’s first, second, and seventh issues argue

that the trial court erred in its September 9, 2011 summary judgment rulings.

        1.      Standard of Review

        A motion for summary judgment may be brought on no-evidence or traditional

grounds. See TEX. R. CIV. P. 166a(c), (i). A motion for no-evidence summary judgment

is equivalent to a motion for pretrial directed verdict, and we apply the same legal

sufficiency standard on review. Mack Trucks, Inc. v. Tamez, 206 S.W.3d 572, 582 (Tex.

2006); Ortega v. City Nat’l Bank, 97 S.W.3d 765, 772 (Tex. App.—Corpus Christi 2003,

no pet.) (op. on reh’g). Such a motion should be granted if there is no evidence of at least

one essential element of the claimant’s cause of action. Hamilton v. Wilson, 249 S.W.3d
425, 426 (Tex. 2008) (per curiam). The burden of producing evidence is entirely on the

non-movant; the movant has no burden to attach any evidence to the motion, and if the

non-movant produces evidence raising a genuine issue of material fact, summary

judgment is improper. TEX. R. CIV. P. 166a(i). All that is required of the non-movant is to

        12The final judgment also awarded conditional appellate attorney’s fees of $73,750 in the event an
unsuccessful appeal is made to this Court, and $33,750 in the event an unsuccessful appeal is filed with
the Texas Supreme Court.

                                                   12
produce a scintilla of probative evidence to raise a genuine issue of material fact on the

challenged element. Forbes, Inc. v. Granada Biosciences, Inc., 124 S.W.3d 167, 172

(Tex. 2003); Ortega, 97 S.W.3d at 772. “Less than a scintilla of evidence exists when the

evidence is ‘so weak as to do no more than create a mere surmise or suspicion of a fact.’”

Ortega, 97 S.W.3d at 772 (quoting Kindred v. Con/Chem, Inc., 650 S.W.2d 61, 63 (Tex.

1983)); see Forbes, 124 S.W.3d at 172. Conversely, more than a scintilla of evidence

exists when reasonable and fair-minded individuals could differ in their conclusions.

Forbes, 124 S.W.3d at 172; Ortega, 97 S.W.3d at 772 (citing Transp. Ins. Co. v. Moriel,

879 S.W.2d 10, 25 (Tex. 1994)). In determining whether the non-movant has produced

more than a scintilla of evidence, we review the evidence in the light most favorable to

the non-movant, crediting such evidence if reasonable jurors could and disregarding

contrary evidence unless reasonable jurors could not. Tamez, 206 S.W.3d at 582; City

of Keller v. Wilson, 168 S.W.3d 802, 825, 827 (Tex. 2005).

      We review the trial court’s granting of a traditional motion for summary judgment

de novo. Provident Life & Accident Ins. Co. v. Knott, 128 S.W.3d 211, 215 (Tex. 2003);

Branton v. Wood, 100 S.W.3d 645, 646 (Tex. App.—Corpus Christi 2003, no pet.). A

motion for traditional summary judgment must show that no genuine issue of material fact

exists and that the movant is entitled to judgment as a matter of law. TEX. R. CIV. P.

166a(c); Sw. Elec. Power Co. v. Grant, 73 S.W.3d 211, 215 (Tex. 2002). The movant

bears the burden of proof, and all doubts about the existence of a genuine issue of

material fact are resolved against the movant. See Sw. Elec. Power Co., 73 S.W.3d at

215. We take as true all evidence favorable to the non-movant, and we indulge every

                                           13
reasonable inference and resolve any doubts in the non-movant’s favor.            Valence

Operating Co. v. Dorsett, 164 S.W.3d 656, 661 (Tex. 2005).

      When both parties move for summary judgment and the trial court grants one

motion and denies the other, we review both parties’ summary judgment evidence and

determine all questions presented. See FM Props. Operating Co. v. City of Austin, 22
S.W.3d 868, 872 (Tex. 2000); Warrantech Corp. v. Steadfast Ins. Co., 210 S.W.3d 760,

765 (Tex. App.—Fort Worth 2006, no pet.). Our task is to render the judgment that the

trial court should have rendered. See FM Props., 22 S.W.3d at 872; Warrantech, 210
S.W.3d at 765. We will affirm a summary judgment if any of the theories presented to the

trial court and preserved for appellate review are meritorious. Joe v. Two Thirty Nine

Joint Venture, 145 S.W.3d 150, 157 (Tex. 2004).

      2.     Applicable Law

      When a written contract is so worded that it can be given a certain or definite legal

meaning or interpretation, it is not ambiguous, and the court construes it as a matter of

law. Am. Mftrs. Mut. Ins. Co. v. Schaefer, 124 S.W.3d 154, 157 (Tex. 2003). On the

other hand, a contract is ambiguous when its meaning is uncertain and doubtful or is

reasonably susceptible to more than one interpretation.           Heritage Res., Inc. v.

NationsBank, 939 S.W.2d 118, 121 (Tex. 1996). This determination is made in light of

the circumstances present when the parties entered into the contract. Ganske v. Spence,

129 S.W.3d 701, 707 (Tex. App.—Waco 2004, no pet.) (citing Grimes v. Andrews, 997
S.W.2d 877, 881 (Tex. App.—Waco 1999, no pet.)). An ambiguity does not arise simply

because the parties advance conflicting interpretations of the contract. Columbia Gas

                                           14
Transmission Corp. v. New Ulm Gas, Ltd., 940 S.W.2d 587, 589 (Tex. 1996). For an

ambiguity to exist, both interpretations must be reasonable. Id.

        Extrinsic evidence of intent is admissible only if the contract is ambiguous on its

face. See Friendswood Dev. Co. v. McDade & Co., 926 S.W.2d 280, 283 (Tex. 1996);

CenterPoint Energy Houston Elec., L.L.P. v. Old TJC Co., 177 S.W.3d 425, 431 (Tex.

App.—Houston [1st Dist.] 2005, pet. denied) (“A court may consider the parties’

interpretations of the contract through extrinsic or parol evidence only after a contract is

first determined to be ambiguous.”). A mere disagreement about the proper interpretation

of a contract, however, does not make the contract ambiguous; the instrument is

ambiguous only if, after application of the rules of construction, the contract is reasonably

susceptible to more than one meaning. Brown v. Havard, 593 S.W.2d 939, 942 (Tex.

1980); Universal C.I.T. Credit Corp. v. Daniel, 150 Tex. 513, 243 S.W.2d 154, 157 (1951).

        3.       Interpretation of Property Description

        Harkins argues by his first issue that the trial court erred in granting partial

summary judgment to North Shore, and in denying summary judgment to Harkins.

Dynamic similarly argues by its first issue that the trial court erred in granting partial

summary judgment to North Shore, and it argues by its second issue that the trial court

erred by denying summary judgment to Dynamic. These issues each pose the question

of whether North Shore’s well was drilled on land covered by the Option Agreement.13

This is the central issue in this appeal and it turns on the interpretation of the description

of land in the Option Agreement and the references contained therein.

          13 The trial court concluded that the well was, in fact, drilled on optioned land. This finding supported

the trial court’s orders (1) removing the Dynamic Lease as a cloud on North Shore’s title, and (2) compelling
Harkins to deliver leases to North Shore per the Option Agreement.

                                                       15
       We find that the description of land in the Option Agreement is capable of more

than one reasonable interpretation. The description of “Tract 2,” where North Shore

drilled its well, is as follows: “Being 1,210.8224 acres of land, more or less, out of the

1673.69 acres out of the Caleb Bennett Survey, A-5, Goliad County, Texas and being the

same land described in [the Export Lease].” This description can have two different

reasonable meanings depending on what the phrase “and being the same land described

in [the Export Lease]” is understood to modify. One reasonable interpretation would be

that this phrase modifies “1,210.8224 acres of land, more or less.” That interpretation

would be reasonable because the reference to “1,210.8224 acres” and the reference to

“the same land described in [the Export Lease]” are both preceded by the word “[b]eing,”

indicating that “1,210.8224 acres” refers to the same land as that to which the Export

Lease applies. Moreover, the total amount of land to which the Export Lease applies is

1,273.54 acres,14 which may be considered “more or less” equivalent to “1,210.8824

acres.” See Slagle v. Clark, 237 S.W.2d 430, 433 (Tex. Civ. App.—Amarillo 1951, no

writ) (noting that the presence of the words “more or less” in a deed “indicates a sale in

gross, and not by acre” and constitutes “prima facie evidence that the parties intended to

risk a not unreasonable gain or loss in the estimated quantity”). This interpretation,

favored by Harkins and Dynamic, would mean that “Tract 2” is identical to the land to

which the Export Lease was applicable—i.e., it would exclude the land upon which North

Shore drilled its well.

       North Shore argues that this interpretation is unreasonable because, “when one

document refers to another for descriptive purposes, only the parts of the referenced

       14   1,673.69 acres minus the 400.15-acre Hamman Lease tract.

                                                  16
document that can be harmonized with the information in the main document are looked

to and the rest of the referenced document is to be ignored.” (Emphasis in original.) North

Shore cites American Savings & Loan Ass’n of Houston v. Musick, 531 S.W.2d 581, 585

(Tex. 1975), and Sharp v. Fowler, 252 S.W.2d 153, 154 (Tex. 1952), for that proposition,

and it argues that “[t]he only part of the Export [Lease] that can be harmonized with

information in the Option Agreement is the surveyor’s field notes on its Exhibit A

describing the boundaries of a 1673.69 acre tract—exactly the size referred to in the

Option Agreement in its description of Tract 2.” We note that the Musick and Sharp cases

do not explicitly support the tenet of law set forth by North Shore. In any event, we do

not find this argument persuasive.      As noted above, the Export Lease described a

1,273.54-acre tract consisting of 1,673.69 acres minus the 400.15-acre Hamman Lease

tract. This description can be harmonized with the Lease Agreement’s description of

“1,210.8224 acres of land, more or less, out of the 1673.69 acres . . . .” See Slagle, 237
S.W.2d at 433.

       A second reasonable interpretation of the Lease Agreement’s property description

would hold that “and being the same land described in [the Export Lease]” instead

modifies the phrase “the 1673.69 acres out of the Caleb Bennett Survey.” Under this

interpretation, the 1,673.69 acres referred to in the “Tract 2” description are the same

1,673.69 acres “described” in the Export Lease—but before the 400.15-acre Hamman

Lease tract is excluded. This interpretation is reasonable because the Export Lease

does, in fact, “describe” a tract of exactly 1,673.69 acres—even though it then explicitly

states that the lease does not apply to all of that tract (that is, the Hamman Lease tract is

part of the 1,673.69-acre tract described in the Export Lease but is not part of the property

                                             17
actually leased by that instrument). Under this interpretation, the Option Agreement’s

reference to “1,210.8824 acres” could be viewed as merely referring to North Shore’s

right to select a certain amount of land out of the 1,673.69 acres made available to it. 15

This interpretation, favored by North Shore, would mean that North Shore had the option

to lease any 1,210.8824 acres out of the entire 1,673.69-acre tract—including the

Hamman Lease tract, where it drilled its well.

        Harkins and Dynamic contend that this interpretation is unreasonable because it

would contravene the statute of frauds. See, e.g., Bailey v. Mullens, 313 S.W.2d 99, 102

(Tex. Civ. App.—San Antonio 1958, writ ref’d n.r.e.) (“A sound rule of construction

requires an interpretation under which the deed will be valid and operative in preference

to one which will nullify it.”). With respect to property descriptions, the statute of frauds

requires “a written memorandum which is complete within itself in every material detail,

and which contains all of the essential elements of the agreement, so that the contract

can be ascertained from the writings without resorting to oral testimony.” Cohen v.

McCutchin, 565 S.W.2d 230, 232 (Tex. 1978). Harkins and Dynamic claim that North

Shore’s interpretation of the Option Agreement fails this test because, though it purports

to allow North Shore to select a certain amount of acreage, it does not contain express

“selection language” explicitly granting North Shore the right to do so.                           However,

“selection agreements” have been upheld as enforceable despite the statute of frauds.

See, e.g., Stekoll Petroleum Co. v. Hamilton, 255 S.W.2d 187, 190 (Tex. 1952); Eland

         15 North Shore notes that paragraph 14 of the Option Agreement, quoted above, explicitly mentions

that there is an “Oil, Gas, and Mineral Lease covering part of Said Land”; and that, while the Hamman
Lease had expired at the time the Option Agreement was entered into, there were two other tracts within
“Tract 2” that had active oil and gas leases still in effect at that time. According to North Shore, this is why
the Option Agreement only gave it the right to select 1,210.8824 out of 1,673.69 total acres in “Tract 2.”

                                                      18
Energy, Inc. v. Rowden Oil & Gas, Inc., 914 S.W.2d 179, 182 (Tex. App.—San Antonio

1995, writ denied); Best Bldg. Co. v. Sikes, 394 S.W.2d 57, 62 (Tex. Civ. App.—Fort

Worth 1965, writ ref’d n.r.e.) (“It appears that existence in one party of an unqualified right

of determination or selection of an amount and location of premises (within an area

certainly ascertainable) meets the requirements of the Statute of Frauds where there is

no necessity of any further agreement or approval by the other party.”). Harkins and

Dynamic note that the cases in which “selection agreements” have been upheld largely

involve contracts expressly and explicitly giving the grantee the right to select acreage to

lease or purchase, and they cite several cases establishing that “a contract providing for

the sale or lease of an unidentified portion of a larger, identifiable tract is not sufficient

under the statute of frauds.” See Tex. Builders v. Keller, 928 S.W.2d 479, 482 (Tex.

1996); Morrow v. Shotwell, 477 S.W.2d 538, 539–40 (Tex. 1972); see also Lumbreras v.

Rocha, 13-10-00459-CV, 2012 WL 29215 (Tex. App.—Corpus Christi Jan. 5, 2012, no

pet.) (mem. op.).       However, Harkins and Dynamic do not cite case law specifically

indicating that a “selection agreement”—that is, an agreement granting a party the right

to select which part of a larger parcel of property it will lease or buy—cannot be found by

implication.16 In other words, when an agreement purports to grant a specific parcel of

land to convey, that agreement must explicitly identify the land to which it applies, see,

e.g., Tex. Builders, 928 S.W.2d at 482; but an agreement granting a party the right to

select certain acreage out of a larger parcel need not contain explicit “selection language.”

         16 The parties do not dispute that the Option Agreement explicitly gave North Shore the right to

select the portions of Tract 2 that it wished to lease. The issue we discuss here is whether it is reasonable
to interpret the Option Agreement as granting North Shore the right to select which 1,210.8224 acres (out
of the 1,673.69 total acres described in the Export Lease) comprised Tract 2; that is, whether North Shore
had the right to choose which land was optioned.

                                                    19
Instead, consistent with the general rule governing contracts, such an agreement may be

found by implication. See, e.g., Harrison v. Williams Dental Group, P.C., 140 S.W.3d
912, 916 (Tex. App.—Dallas 2004, no pet.) (“[A]n implied contract can arise from the acts

and conduct of the parties.”) (citing Haws & Garrett Gen. Contractors, Inc. v. Gorbett Bros.

Welding Co., 480 S.W.2d 607, 609 (Tex. 1972)). Moreover, it is a rule of construction of

deeds that they are to be most strongly construed against the grantor and in favor of the

grantee, and this rule applies to reservations and exceptions. See Commerce Trust Co.

v. Lyon, 284 S.W.2d 920, 921 (Tex. Civ. App.—Fort Worth 1955, no writ); see also

Gonyea v. Kerby, No. 10-12-00182-CV, 2013 WL 4040117, at *3 (Tex. App.—Waco Aug.

8, 2013, pet. denied) (mem. op.). We do not believe that North Shore’s interpretation of

the Option Agreement would render the agreement void under the statute of frauds, and

we disagree with appellants’ contention that North Shore’s interpretation is unreasonable

for that reason.

        Because the Option Agreement is capable of more than one reasonable

interpretation, it is ambiguous. See Milner, 361 S.W.3d at 619. “When a contract contains

an ambiguity, the granting of a motion for summary judgment is improper because the

interpretation of the instrument is a question of fact for the jury.” Reilly v. Rangers Mgmt.,

Inc., 727 S.W.2d 527, 529 (Tex. 1987); Barrand, Inc. v. Whataburger, Inc., 214 S.W.3d
122, 129 (Tex. App.—Corpus Christi 2006, pet. denied).17 We therefore conclude that

        17  We note that North Shore may have been entitled to judgment as a matter of law if: (1) it
established through extrinsic evidence that the parties intended, despite the ambiguous nature of the
property description, to include the 400.15-acre Hamman Lease tract as part of the area optioned to North
Shore; and (2) Harkins and Dynamic then failed to produce evidence raising an issue of material fact as to
that intention. See TEX. R. CIV. P. 166a(c). However, North Shore did not argue in its summary judgment
pleadings that the agreement was ambiguous or that extrinsic evidence as to the parties’ intent established
its entitlement to judgment on this issue. Accordingly, we may not affirm the summary judgment rulings on
this basis. See id.; Travis v. City of Mesquite, 830 S.W.2d 94, 100 (Tex. 1992) (“A summary judgment
cannot be affirmed on a ground not specifically presented in the motion for summary judgment.”).

                                                   20
the trial court erred by granting partial summary judgment in favor of North Shore and that

it did not err by denying Harkins’s and Dynamic’s motions for summary judgment.

Harkins’s first issue is sustained in part and overruled in part. Dynamic’s first issue is

sustained and its second issue is overruled.

B.      Other Issues

        The other issues raised by Harkins and Dynamic on appeal challenge aspects of

the trial court’s judgment based on trial proceedings which, in turn, were based at least in

part on the erroneous summary judgment rulings.18 Accordingly, we do not address these

issues. See TEX. R. APP. P. 47.1.

                                               III. CONCLUSION

        We reverse the trial court’s judgment and remand the cause for further

proceedings consistent with this memorandum opinion. See TEX. R. APP. P. 43.3.

                                                             DORI CONTRERAS GARZA,
                                                             Justice

Delivered and filed the
1st day of May, 2014.

        18  In particular, Harkins argues by his second issue that North Shore did not have an exclusive right
to conduct oil and gas exploration on the land at issue, and he argues by his third issue that the trial court
erred in rendering judgment ordering Harkins to pay North Shore’s attorney’s fees. Dynamic argues by its
third, fourth, and fifth issues that the trial evidence was insufficient to support North Shore’s tortious
interference with contract claim; by its sixth and eighth issues that the trial evidence was insufficient to
support lost profits damages; by its seventh issue that North Shore did not have an exclusive right to
conduct oil and gas exploration on the land at issue; by its ninth issue that the trial court erred by awarding
damages to North Shore representing both (1) the market value of seismic testing done by Dynamic and
(2) the market value of the processed seismic data; by its tenth issue that the trial evidence was insufficient
to support exemplary damages; by its eleventh issue that the trial court erred in omitting from the jury charge
questions and instructions related to its justification and failure-to-mitigate defenses; by its twelfth issue that
the trial court erred “in discussing, and in allowing North Shore to discuss, the summary judgment rulings
in witness examinations, jury arguments, and charge instructions”; and by its thirteenth issue that North
Shore’s expert testimony regarding seismic exploration damages was incompetent and inadmissible.

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