Court Opinion

ID: 4445627
Source: CourtListenerOpinion
Date Created: 2019-10-10 09:11:09.165785+00
Date Added: 2024-06-11T14:25:20.950555
License: Public Domain

Fourth Court of Appeals
                                      San Antonio, Texas
                                 MEMORANDUM OPINION

                                         No. 04-19-00088-CV

                               ELG OIL, LLC and ELG Utility, LLC,
                                          Appellants

                                                    v.

                                   STRANCO SERVICES, LLC,
                                          Appellee

                    From the 218th Judicial District Court, Karnes County, Texas
                               Trial Court No. 16-03-00056-CVK-A
                          Honorable Walden E. Shelton, Judge Presiding 1

Opinion by:      Sandee Bryan Marion, Chief Justice

Sitting:         Sandee Bryan Marion, Chief Justice
                 Rebeca C. Martinez, Justice
                 Luz Elena D. Chapa, Justice

Delivered and Filed: October 9, 2019

REVERSED AND REMANDED

           ELG Oil, LLC and ELG Utility, LLC appeal a summary judgment granted in favor of

Stranco Services, LLC allowing Stranco to foreclose on a mineral subcontractor’s lien. ELG

asserts the trial court erred in granting the summary judgment because Stranco failed to

conclusively establish it: (1) furnished or hauled material, machinery or supplies used in mineral

activities under contract with a mineral contractor, or (2) performed labor used in mineral activities

1
 The Honorable Stella H. Saxon granted the partial summary judgment in favor of the appellee. The Honorable
Walden E. Shelton signed the final judgment.
                                                                                               04-19-00088-CV

under contract with a mineral contractor. We reverse the trial court’s judgment and remand the

cause to the trial court for further proceedings.

                                               BACKGROUND

        ELG entered into a contract with Turn-Key Specialists, Inc. to add natural gas bullet

storage tanks to the KDB Central Treatment Facility (the “Facility”), 2 and Turn-Key entered into

a subcontractor agreement with Stranco. 3 On March 3, 2016, Stranco filed the underlying lawsuit

against Turn-Key and ELG alleging various claims, including a claim to foreclose on a mineral

lien Stranco alleged it had against ELG’s property. After Turn-Key filed bankruptcy, Stranco’s

claims against ELG were severed into a separate cause. Stranco then moved for a partial summary

judgment on its claim to foreclose on its alleged mineral lien.

        On November 16, 2018, the trial court granted Stranco’s motion. 4 On January 17, 2019,

the trial court signed an agreed order severing Stranco’s other pending claim into a separate cause. 5

On February 12, 2019, the trial court signed a final judgment incorporating the partial summary

judgment and awarding Stranco attorney’s fees.

                                          STANDARD OF REVIEW

        “A trial court’s decision to grant summary judgment is subject to de novo review.”

Schlumberger Tech. Corp. v. Pasko, 544 S.W.3d 830, 833 (Tex. 2018). “Courts review the record

in the light most favorable to the nonmovant, indulging every reasonable inference and resolving

any doubts against the motion.” Id. (internal quotation omitted). In order to be entitled to a

2
  We note this contract was not included in the summary judgment evidence.
3
  We note this contract also was not included in the summary judgment evidence.
4
  Although ELG also filed a motion for summary judgment on Stranco’s claim to foreclose on the mineral lien, the
trial court did not rule on ELG’s motion.
5
  The trial court previously granted a no evidence motion for summary judgment in favor of ELG on a portion of
Stranco’s trust fund claim, and Stranco non-suited the other portion of that claim.

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                                                                                      04-19-00088-CV

summary judgment, the movant must establish “there is no genuine issue as to any material fact

and the moving party is entitled to judgment as a matter of law.” TEX. R. CIV. P. 166a

                                            DISCUSSION

       Section 56.002 of the Texas Property Code provides, “A mineral contractor or

subcontractor has a lien to secure payment for labor or services related to the mineral activities.”

TEX. PROP. CODE ANN. § 56.002. A “mineral subcontractor” is defined, in pertinent part, as a

person who:

       (A) furnishes or hauls material, machinery, or supplies used in mineral activities
       under contract with a mineral contractor or with a subcontractor; or

       (B) performs labor used in mineral activities under contract with a mineral
       contractor.

Id. § 56.001(4)(A),(B). A “mineral contractor” is defined as “a person who performs labor or

furnishes or hauls material, machinery, or supplies used in mineral activities under an express or

implied contract with a mineral property owner or with a trustee, agent, or receiver of a mineral

property owner.” Id. § 56.001(2). “Mineral activities” are defined, in pertinent part, as “digging,

drilling, torpedoing, operating, completing, maintaining, or repairing . . . an oil or gas pipeline.”

Id. § 56.001(1); see also Adams v. Starside Custom Builders, LLC, 547 S.W.3d 890, 894 (Tex.

2018) (noting courts must adhere to statutory definitions).

       In its motion for summary judgment, Stranco asserted it was entitled to a judgment

allowing it to foreclose on its mineral lien against ELG’s property as a matter of law because it

“furnished ‘material, machinery, or supplies used in mineral activities’ and performed ‘labor used

in mineral activities’ under a contract (the Agreement) with a mineral contractor (TURN-KEY) in

September 2015 and October 2015 thereby qualifying STRANCO as a ‘mineral subcontractor’

entitled to claim the lien in Section 56.002 of the Texas Property Code to secure payment for

STRANCO’s labor and services related to such mineral activities.” In its brief, Stranco asserts

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that it was only required to prove that its labor and services “related to” or were “used in” mineral

activities. Applying the statutory definition of mineral subcontractor, however, we hold Stranco

was required to conclusively establish the labor and services it provided were “used in” mineral

activities. See Adams, 547 S.W.3d at 894. Accordingly, we examine the summary judgment

evidence to determine whether Stranco conclusively established the material, machinery, and

supplies it furnished and the labor it provided were used in “digging, drilling, torpedoing,

operating, completing, maintaining, or repairing . . . an oil or gas pipeline.” Id. § 56.001(1).

        Stranco primarily relies on the affidavit of its owner stating Stranco contracted with Turn-

Key and performed mineral activities on ELG’s property “including, but not limited to, hydrostatic

pressure testing, torqueing, dewatering, and drying of pressure tested pipe in connection with

constructing, repairing, or maintaining oil or gas pipelines and the pipeline terminal station.” The

affidavit further stated Stranco “furnished materials, machinery, and supplies used in connection

with constructing, repairing, and maintaining oil or gas pipelines and the pipeline terminal station.”

        The summary judgment evidence also included two affidavits from an ELG project

manager and an affidavit from an ELG project engineer. One of the project manager’s affidavits

and the project engineer’s affidavit described the work or project as “the engineering, procurement

and construction of a new natural gas line bullet tank addition.” The project manager’s second

affidavit stated the Facility was fully functional before the contract was entered into with Turn-

Key, and the scope of the work performed under the contract with Turn-Key was “to add bullet

storage tanks to the Facility.” That affidavit further stated the Facility “is not a gathering facility;”

therefore, it “does not have any oil or gas pipelines that ‘combine’ inside the Facility.” The project

manager’s second affidavit explained the Facility has three import pipelines that “terminate on the

outlet valves of the pig receivers before the Facility piping begins” and are “segregated from the

Facility piping by valves.” The affidavit also explained three export pipelines are also “segregated

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                                                                                    04-19-00088-CV

from the Facility and begin with meters and then pig launchers,” and ELG did not own the export

pipelines. The affidavit further explained the work performed by Stranco “was solely limited to

the addition of bullet storage tanks within the Facility.”

       “Affidavits supporting and opposing a motion for summary judgment must set forth facts,

not merely conclusions.” Gonzales v. Shing Wai Brass & Metal Wares Factory, Ltd., 190 S.W.3d
742, 746 (Tex. App.—San Antonio 2005, no pet.). “A conclusory statement is one that does not

provide the underlying facts to support the conclusion.” Id. “Thus, an affidavit that is merely a

sworn statement of the allegations in a pleading or that simply paraphrases statutory language is

conclusory and lacks probative force.” Lenoir v. Marino, 469 S.W.3d 669, 686 (Tex. App.—

Houston [1st Dist.] 2015), aff’d, 526 S.W.3d 403 (Tex. 2017).

       The statement in the affidavit of Stranco’s owner is conclusory because it does not provide

any facts showing how the materials, machinery, and supplies Stranco furnished or the labor it

performed on the bullet storage tanks was connected to the oil and gas pipelines such that the work

was used in mineral activities. In its brief, Stranco argues its labor and services were used in

mineral activities “because [the] natural gas storage tanks are likewise used in operating,

completing, or maintaining the natural gas pipelines that the KDB Facility has.” Stranco did not,

however, produce any summary judgment evidence explaining how the bullet storage tanks were

used in the operation, completion, or maintenance of the oil and gas pipelines. And, under our

standard of review, we must resolve all doubts in favor of ELG especially in light of the affidavit

of ELG’s project manager which stated the oil and gas pipelines are segregated from the Facility.

See Schlumberger Tech. Corp., 544 S.W.3d at 833. While we agree with Stranco’s argument that

its work did not have to be performed “on” the oil and gas pipelines themselves to establish its

work was “used in” mineral activities, without summary judgment evidence establishing the link

between the Facility’s bullet storage tanks and the operation, completion, or maintenance of the

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                                                                                                         04-19-00088-CV

oil and gas pipelines, Stranco has failed to conclusively establish that the materials, machinery,

and supplies it furnished or the labor it performed were “used in” mineral activities. 6 Although

we acknowledge we liberally construe the mineral lien statute to protect laborers and materialmen,

a “[l]iberal interpretation of a statute does not permit doing violence to the language of the statute.”

Wesco Distrib., Inc. v. Westport Group, Inc., 150 S.W.3d 553, 557 (Tex. App.—Austin 2004, no

pet.) And, the Texas Supreme Court has repeatedly instructed that we must adhere to the

definitions provided by the statute. See Adams, 547 S.W.3d at 894. Because Stranco failed to

meet its burden to conclusively establish its labor, materials, machinery, and supplies were “used

in” mineral activities, the trial court erred in granting the summary judgment. 7

                                                     CONCLUSION

         The trial court’s judgment is reversed, and the cause is remanded to the trial court for

further proceedings.

                                                             Sandee Bryan Marion, Chief Justice

6
  We note the three cases Stranco cited in its brief are readily distinguishable from the instant case. For example,
McCarty v. Halliburton Co., was an appeal after a bench trial in which the trial court found frac tanks were used in
drilling, completing and operating oil wells; therefore, the standard of review was different. 725 S.W.2d 817, 818-20
(Tex. App.—Eastland 1987, writ ref’d n.r.e.) (noting trial court’s findings of fact had same force and effect as a jury’s
verdict and would not be “disturbed on appeal unless they are so against the overwhelming weight of the evidence as
to be clearly and manifestly wrong”). The other two cases are federal cases which are not binding precedent. See Lee
M. Bass, Inc. v. Shell W. E & P, Inc., 957 S.W.2d 159, 162 n.4 (Tex. App.—San Antonio 1997, no pet.). In one of
those cases, although the federal court held “as a matter of law “ that “plumbing work on the living quarters of an
offshore platform can be sufficiently related to the mineral activities to qualify for a mineral property lien,” the federal
district court denied the defendants’ motion for summary judgment because “a genuine issue of material fact exist[ed]”
as to “whether the Plaintiff’s work [was] related to the mineral activities.” Sun Coast Plumbing Co. v. Shell Offshore,
Inc., No. B-09-204, 2010 WL 1404371, at *4 (S.D. Tex. Apr. 7, 2010) (emphasis added). In the other case, the
evidence established the company claiming the mineral lien was “a caterer to the offshore industry, supplying materials
and labor to feed the offshore crews.” World Hospitality, Ltd. v. Shell Offshore, Inc., 699 F. Supp. 111, 112 (S.D.
Tex. 1988). Accordingly, the evidence established the link between the company’s services and the oil well, and the
district court concluded “While a caterer may not have the traditional oil business mystique of a well logger or
mudman, it had men on the job site performing an essential function.” Id. at 113.
7
  Because we reverse the trial court’s judgment on this basis, we need not address whether Stranco met its summary
judgment burden to conclusively establish it was “under contract with a mineral contractor” as that phrase is used in
the statutory definition of “mineral subcontractor.” See TEX. PROP. CODE ANN. § 56.001(4)(A), (B).

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