Court Opinion

ID: 6113827
Source: CourtListenerOpinion
Date Created: 2022-01-29 07:14:29.520841+00
Date Added: 2024-06-11T08:13:17.216227
License: Public Domain

Opinion filed January 27, 2022

                                       In The

        Eleventh Court of Appeals
                                    __________

                                 No. 11-20-00046-CV
                                     __________

                    RUDOLFO B. HUGHES, Appellant
                                         V.
  CJM RESOURCES, LP AND CJM OIL & GAS, INC., Appellees

                     On Appeal from the 238th District Court
                            Midland County, Texas
                        Trial Court Cause No. CV55852

                                    OPINION
      This is an appeal from an order granting a plea to the jurisdiction. It involves
a dispute over who owns the causes of action for fraud and negligent
misrepresentation that arise from the leasing of mineral interests for oil and gas
operations. The trial court determined that the plaintiff no longer owned the causes
of action after he conveyed his mineral and royalty interests to a third party. The
plaintiff challenges this determination in a single issue. We affirm.
                             Background Facts
      On September 19, 2017, Rudolfo B. Hughes and Appellee CJM Resources,
LP entered into a paid-up oil and gas lease. This lease covered Hughes’s 12.50 net
mineral acres in the following properties: “N/2 and SW/4 of Section 31, Block 34,
Township 3 North, of Martin County, Texas.” CJM offered Hughes $2,500 per net
mineral acre for a total bonus of $31,250.
      Hughes filed the underlying lawsuit against CJM Recourses, LP and CJM
Oil & Gas, Inc. (collectively CJM) in August 2019. Hughes asserted that CJM made
representations to him during the lease negotiations to the effect that CJM was
paying him “top dollar bonus money” that was the same amount being paid to his
siblings and that he would be receiving royalty payments within three months.
Hughes asserted that these representations were false, and he asserted claims against
CJM for fraud and negligent misrepresentation.
      CJM filed a plea to the jurisdiction asserting that Hughes did not have standing
because he had conveyed his claims to Decatur Mineral Partners, Ltd. In the plea to
the jurisdiction, CJM asserted that in September 2018, Hughes had filed a “virtually
identical” lawsuit against CJM that the trial court dismissed for lack of standing.
      In the prior lawsuit, the trial court determined that Hughes lacked standing
because Hughes had conveyed any cause of action he had regarding the lease to
Decatur Mineral Partners, Ltd. Hughes’s assignment to Decatur provided that
Hughes conveyed all his “claims and interests in and to the following described
well(s), land(s) and/or unit(s)” to Decatur. Hughes signed the assignment to Decatur
on February 15, 2018.

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      In this proceeding, there is no dispute that Hughes conveyed the claims to
Decatur in 2018. Hughes now asserts that Decatur reconveyed the claims back to
him in a 2019 assignment that was made effective January 1, 2018. The resolution
of this appeal hinges on whether Decatur continued to possess the claims when it
reconveyed them back to Hughes.          In this regard, there was an intervening
conveyance—on November 21, 2018, Decatur executed a mineral deed in favor of
Universal Royalty & Mineral Fund I, LP. This deed purported to convey to
Universal all of Decatur’s interest that it received from Hughes. Hughes asserts that
Decatur did not convey the causes of action associated with the property to
Universal. Rather, Hughes contends that Decatur’s deed to Universal excepted or
reserved the causes of action that Hughes now asserts. The trial court granted CJM’s
plea to the jurisdiction based upon its determination that Decatur’s deed to Universal
conveyed everything that Decatur received from Hughes in the original conveyance,
including any causes of action.
                                       Analysis
      In his sole issue, Hughes asserts that the trial court erred in deciding that it
lacked subject-matter jurisdiction over his claims. Specifically, Hughes asks that we
find that Decatur retained all of the causes of action irrespective of the mineral deed
to Universal. A plea to the jurisdiction is a dilatory plea that seeks dismissal of a
cause of action without regard to whether the claim has merit. Bland Indep. Sch.
Dist. v. Blue, 34 S.W.3d 547, 554 (Tex. 2000). An assertion that the trial court lacks
subject-matter jurisdiction over a claim is properly asserted in a plea to the
jurisdiction. Tex. Dep’t of Parks & Wildlife v. Miranda, 133 S.W.3d 217, 226 (Tex.
2004). Because the existence of subject-matter jurisdiction is a question of law, we
review de novo the trial court’s ruling on a plea to the jurisdiction. In re Lubbock,
624 S.W.3d 506, 512 (Tex. 2021) (orig. proceeding). “A plea to the jurisdiction

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‘may challenge the pleadings, the existence of jurisdictional facts, or both.’” Tex.
Dep’t of Criminal Justice v. Rangel, 595 S.W.3d 198, 205 (Tex. 2020) (quoting
Alamo Heights Indep. Sch. Dist. v. Clark, 544 S.W.3d 755, 770 (Tex. 2018)).
        The resolution of this appeal requires us to interpret the mineral deed from
Decatur to Universal to determine if Decatur retained the causes of action after the
conveyance—because Decatur purportedly conveyed the claims back to Hughes
after the conveyance to Universal. In this regard, Hughes is not relying on the
retroactive effective date of the assignment of claims from Decatur back to him. See
In re Estate of Abraham, 583 S.W.3d 374, 379 (Tex. App.—El Paso 2019, pet.
denied)1 (“[T]raditionally, a ‘deed takes effect only from the date of its delivery[.]’”
(quoting Tuttle v. Turner, Wilson & Co., 28 Tex. 759, 773 (1866))). To the contrary,
Hughes asserts that Decatur never conveyed to Universal the causes of action that
he now asserts. Thus, Hughes contends that Decatur continued to possess the causes
of action when it attempted to reconvey them back to Hughes.
        Our task when construing an unambiguous deed is to “ascertain the intent of
the parties from the language in the deed” as expressed within the “four corners” of
the instrument. Luckel v. White, 819 S.W.2d 459, 461 (Tex. 1991). The four-corners
rule requires the court to ascertain the intent of the parties solely from all of the
language in the deed. Wenske v. Ealy, 521 S.W.3d 791, 794 (Tex. 2017) (citing
Luckel, 819 S.W.2d at 461). The intent that governs is not the intent that the parties
meant but failed to express but, rather, the intent that is expressed. Luckel, 819
S.W.2d at 462. Additionally, we must strive to “harmonize all parts of the deed”
and construe it “to give effect to all of its provisions.” Id. When different parts of a

        1
         In Estate of Abraham, the El Paso Court of Appeals addressed a deed with a retroactive effective
date. 583 S.W.3d at 379. The court noted that permitting a conveyance to take effect in accordance with a
retroactive effective date “would only invite mischief in the world of secured transactions and creditors
rights.” Id.

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deed appear to be contradictory or inconsistent, we must attempt to construe the
instrument so that no provision is rendered meaningless. Id.
      An appellate court may only construe a deed as a matter of law if it is
unambiguous. ConocoPhillips Co. v. Koopmann, 547 S.W.3d 858, 874 (Tex. 2018)
(citing J. Hiram Moore, Ltd. v. Greer, 172 S.W.3d 609, 613 (Tex. 2005)). If a deed
is worded in such a way that it can be given a certain or definite legal meaning, then
the deed is not ambiguous. Endeavor Energy Res., L.P. v. Discovery Operating,
Inc., 554 S.W.3d 586, 601 (Tex. 2018). Neither party contends the that deed to
Universal is ambiguous, nor do we find it to be ambiguous.
      Generally, deeds are construed to confer upon the grantee the greatest estate
that the terms of the instrument will allow. Lott v. Lott, 370 S.W.2d 463, 465 (Tex.
1963); Rahlek, Ltd. v. Wells, 587 S.W.3d 57, 64 (Tex. App.—Eastland 2019, pet.
denied). In other words, a deed will pass whatever interest the grantor has in the
land, unless it contains language showing a clear intention to grant a lesser estate.
Rahlek, Ltd., 587 S.W.3d at 64; see Sharp v. Fowler, 252 S.W.2d 153, 154 (Tex.
1952). Thus, unless the deed contains reservations or exceptions that reduce the
estate conveyed, a warranty deed will pass all of the estate owned by the grantor at
the time of the conveyance. Cockrell v. Tex. Gulf Sulphur Co., 157 Tex. 10, 299
S.W.2d 672, 675 (1956); Rahlek, Ltd., 587 S.W.3d at 65.
      Hughes first contends that Decatur did not convey to Universal the causes of
action Decatur obtained from Hughes. Generally, causes of action are freely
alienable. See State Farm Fire & Cas. Co. v. Gandy, 925 S.W.2d 696, 705–07
(Tex.1996) (absent specific circumstances, causes of action in Texas are freely
assignable). And as previously noted, there is no dispute that Hughes conveyed his
causes of action to Decatur as a result of his conveyance to Decatur.

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      Decatur’s deed to Universal provided in relevant portion as follows:
      [Decatur] does hereby grant, bargain, sell, convey, and transfer to
      [Universal] all of [Decatur’s] interest in the Section 31, Block 34,
      Township 3 North, T&P RR Co. Survey, Abstract 28, Martin County,
      Texas (hereinafter the “Subject Lands”), being 100% of the oil, gas and
      other minerals conveyed to [Decatur] by the certain Sale, Conveyance
      and Assignment of Mineral and Royalty Interests dated February 15,
      2018, recorded on February 20, 2018, in Volume 599, Page 730 of the
      Official Public Records of Martin County, Texas[.]
Thus, the deed states that it is conveying all of Decatur’s interest in the property to
Universal. Additionally, the conveyance identifies that the interest that Decatur is
conveying to Universal is the interest that Decatur received from Hughes.
Accordingly, we conclude that the parties’ objective intent in the conveyance from
Decatur to Universal was for Decatur to convey all interests it obtained from Hughes
and that these interests included the causes of action that Hughes conveyed to
Decatur.
      Hughes cites to the language in the deed from Hughes to Decatur in
comparison with the language in the deed from Decatur to Universal as evidence
that Decatur and Universal did not intend to convey any causes of action from
Decatur to Universal. 2 Hughes’s reliance on the language of the deed from him to
Decatur is misplaced.

      2
       In relevant portion, the deed from Hughes to Decatur conveyed the following:
               All (100%) of the oil, gas and other minerals, in and on and under, and that may
      be produced, saved, sold and/or marketed from ANY AND ALL LANDS DESCRIBED
      ON THE ATTACHED EXHIBIT “A” IN MARTIN COUNTY, TEXAS and including the
      following described well(s), land(s) and/or unit(s), effective as of the date hereof, which
      lands are hereinafter referred to collectively as the “Lands” including all mineral interest,
      royalty interests, overriding royalty interest, production payment interests, oil, gas and
      mineral leasehold estate interests, and all of Grantor’s rights, titles[,] claims and interests
      in and to the following described well(s), land(s) and/or unit(s) . . . .

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      In general, absent ambiguity, fraud, accident, or mistake, courts will not
consider extrinsic evidence in construing the intentions of the parties to the deed.
CenterPoint Energy Houston Elec., L.L.P. v. Old TJC Co., 177 S.W.3d 425, 430
(Tex. App.—Houston [1st Dist.] 2005, pet. denied) (citing Ulbricht v. Friedsam, 325
S.W.2d 669, 673 (Tex. 1959); Richardson v. Hart, 185 S.W.2d 563, 564 (Tex.
1945)). Here, there is no contention of ambiguity, fraud, accident, or mistake
regarding the deed from Decatur to Universal. Thus, because the deed from Decatur
to Universal is unambiguous, our analysis is limited to the four corners of the deed
from Decatur to Universal. See Luckel, 819 S.W.2d at 461. Therefore, we decline
Hughes’s invitation to compare the language of the two deeds.
      Hughes next contends that, even if the deed from Decatur to Universal
conveyed the causes of action to Universal in one portion of the deed, another portion
of the deed contained specific language exempting the causes of action from the
assignment. Hughes asserts that the following language in the third paragraph of the
deed excepts the causes of action from the conveyance:
             This conveyance is made subject to any right now existing in
      favor of any Lessee or its assigns under any valid and subsisting oil and
      gas lease covering the Subject Lands now appearing of record in Martin
      County, Texas. It is understood that the Grantee shall have, receive,
      and enjoy the Grantor’s proportionate right, title, and interest in or to
      bonus, rents, and royalties and other benefits which may accrue after
      the date of this Mineral Deed, as if Grantee had been, at the date of
      making any current, valid, and subsisting lease, the owner of the
      mineral interests herein conveyed.
(Emphasis added). Specifically, Hughes asserts that “[b]y temporally limiting the
interest being conveyed to ‘after the date of the mineral deed,’ Decatur is excepting
from the conveyance any interest it has obtained prior to the date of the Mineral
Deed, which is made effective January 1, 2018.” Thus, Hughes contends that the

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causes of action that he conveyed to Decatur were excepted from the conveyance
from Decatur to Universal because they arose prior to January 1, 2018.
      Both reservations and exceptions in deeds must be clear and specific. Rahlek,
Ltd., 587 S.W.3d at 65. We will not find “reservations by implication.” Perryman v.
Spartan Tex. Six Capital Partners, Ltd., 546 S.W.3d 110, 119 (Tex. 2018) (quoting
Sharp, 252 S.W.2d at 154, 252 S.W.2d at 154); Rahlek, Ltd., 587 S.W.3d at 65.
Similarly, exceptions, which generally are strictly construed against the grantor,
must identify, with reasonable certainty, the property to be excepted from the larger
conveyance. Rahlek, Ltd., 587 S.W.3d at 65; Combest v. Mustang Minerals, LLC,
502 S.W.3d 173, 179–80 (Tex. App.—San Antonio 2016, pet. denied).
      There are three potential purposes for a “subject-to” clause in an oil and gas
conveyance:
      (1) it protects the grantor against breach of warranty arising from the
      outstanding oil and gas lease; (2) it spells out the precise interests the
      grantee is to receive and thus is supposed to make the deed clearer; (3) it
      makes certain that rentals and royalty under the existing lease pass to
      the grantee . . . .
2 PATRICK H. MARTIN & BRUCE M. KRAMER, WILLIAMS & MEYERS, OIL & GAS LAW
§ 340 (2019) (footnotes omitted). The principal purpose is to protect grantors
against claims for breaches of warranty. Wenske, 521 S.W.3d at 796. In their
ordinary sense, the words “subject-to” mean “subordinate to, subservient to, or
limited by.” Id. However, a subject-to clause may also be used as an exception to
the conveyance. See Averyt v. Grande, 717 S.W.2d 891, 894 (Tex. 1986) (holding
“that a ‘subject[-]to’ clause that excepts a fractional mineral interest conveyed does
not form part of the description of the land.”). A subject-to clause that purports to
except property from the conveyance must still identify the property it is excepting
with reasonably certainty. See Combest, 502 S.W.3d at 179–80.

                                          8
      We conclude that the subject-to clause in the deed from Decatur to Universal
is not an exception. Hughes contends that the second sentence of the above quoted
paragraph shows that the parties intended for Universal to except the causes of action
from the conveyance. However, the language used in the sentence does not make it
reasonably certain that Decatur intended to except the causes of action that it had
obtained from Hughes from the conveyance to Universal. The language used makes
no mention of the causes of action, nor does it indicate that the conveyance was made
subject-to the causes of action being retained by Decatur. While no “magic words”
are necessary to formulate an exception in a deed, there still must be enough to
provide reasonable certainty that something is being withheld from the assignment.
Wenske, 521 S.W.3d at 794.
      Additionally, the first paragraph of the deed to Universal would lose its
meaning if we were to adopt Hughes’s reading of the second sentence of the third
paragraph. See U.S. Shale Energy II, LLC v. Laborde Props., L.P., 551 S.W.3d 148,
151 (Tex. 2018) (noting that each provision of a deed must have meaning). The first
paragraph purports to convey “all of [Decatur’s] interest” received in the original
deed from Hughes to Decatur. Under Hughes’s reading, “all” would not mean all
the interest Decatur received in the original deed from Hughes.
      Contrary to Hughes’s reading of the third paragraph of the deed, we construe
the paragraph to merely clarify what rights both Universal and Decatur would have
under an oil gas lease associated with the property. Decatur retained its interest in
rents, royalties, and bonuses received before 2018, and Universal received those
rights from 2018 and beyond.
      A case that we find instructive to the outcome of this case is Pauler as Trustee
of Janysek Survivor’s Trust v. M & L Minerals, LP, No. 04-20-00302-CV, 2021 WL
2814906 (Tex. App—San Antonio July 7, 2021, pet. filed). In this case, the

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San Antonio Court of Appeals construed a 1977 deed that purported to convey
the entire tract of land but had a subject-to clause and a specific reservation. Id. at
*1–2. The granting clause stated: “[Grantors convey] [a]ll that certain tract or parcel
of land.” Id. at *1. The subject-to clause of the deed read: “This conveyance is
subject, however, to all mineral conveyances, mineral reservations, oil, gas and other
mineral leases, royalty conveyances or reservations, easements, ordinances and
rights-of-way of record in the office of the County Clerk of Karnes County, Texas.”
Id. The exception clause of the deed stated:
      In addition to the above exceptions, there is reserved and excepted unto
      SUSAN JANYSEK, an undivided one-fourth (1/4) interest in and to all
      royalty paid on the production or mining of oil, gas and any and all
      other minerals, whether similar or dissimilar. The interest reserved
      unto the said SUSAN JANYSEK, shall be a non-participating royalty
      interest. . . . Such royalty interest is for the life of SUSAN JANYSEK,
      and after her death, such royalty interest shall revert to [Susan’s nine
      children, identified by name].
Id. Prior to the 1977 deed, in 1958 and 1959, two other deeds were executed that
conveyed two separate term royalties. Id. Those interests had expired, and the
parties to the case were disputing whether the 1977 deed conveyed the reversionary
interest or whether the subject-to clause excepted them from the assignment. Id.
The court held that the subject-to clause was not an exception because “[t]he 1977
[d]eed does not state with any certainty that the disputed royalties are reserved or
excepted from conveyance.” Id. at *5.
      Much like the deed in Janysek, the deed from Decatur to Universal did not
state with any particularity that it was excepting from the conveyance the causes of
action. The paragraph that Hughes contends is an exception makes no mention of
the causes of action, and it does not use language that would clearly indicate that the
grantor was withholding property from the conveyance. Additionally, Janysek is

                                          10
instructive because it also gives an example of a valid exception clause. Id. at *1.
The exception clause in Janysek specifically uses reservation/exception language
and clearly states what interest the grantor is withholding. See id. Here, the
paragraph Hughes claims is an exception is unlike the exception in Janysek. The
deed from Decatur to Universal only mentioned interests in bonuses, rents, and
royalties and made no mention of any causes of action.
      As stated previously, we conclude that the third paragraph of the Universal
deed is merely a subject-to clause. If we were to construe the paragraph as Hughes
has asked us to do, that would require us to impliedly find an exception, which is
unfavored under Texas law. See Perryman, 546 S.W.3d at 119.
      Alternatively, if we construed the subject-to clause to be an exception, the
language of the paragraph is not sufficiently certain to include the causes of action.
See Combest, 502 S.W.3d at 179–80. In order for the subject-to clause to except the
causes of action, we would have to construe the following clause as including them:
“It is understood that the Grantee shall have, receive, and enjoy the Grantor’s
proportionate right, title, and interest in or to bonus, rents, and royalties and other
benefits . . . .” Under the interpretive canon of ejusdem generis, when specific terms
are followed by a catchall term, the catchall term must be limited to the sorts of
things that are like the preceding, more specific terms. See Deepwell Energy Servs.,
LLC v. Aveda Transp. & Energy Servs., 574 S.W.3d 925, 928 (Tex. App.—Eastland
2019, pet. denied). Thus, if we were to treat the subject-to clause as an exception
and find that it actually excepts the causes of action, we would have to conclude that
causes of action are the same kind of things as bonuses, rents, and royalties. We
decline to do so.
      Because we conclude that the deed from Decatur to Universal conveyed the
causes of action to Universal, Decatur no longer possessed the causes of action when

                                          11
it attempted to reconvey them back to Hughes. Thus, Hughes lacks standing.
Accordingly, we overrule Hughes’s sole issue.
                                   This Court’s Ruling
      We affirm the trial court’s order granting CJM’s plea to the jurisdiction.

                                                JOHN M. BAILEY
                                                CHIEF JUSTICE

January 27, 2022
Panel consists of: Bailey, C.J.,
Trotter, J., and Williams, J.

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