Court Opinion

ID: 3117223
Source: CourtListenerOpinion
Date Created: 2015-10-16 07:49:43.839995+00
Date Added: 2024-06-11T10:19:53.782324
License: Public Domain

Opinion issued June 20, 2013

                                     In The

                              Court of Appeals
                                     For The

                          First District of Texas
                           ————————————
                              NO. 01-12-00698-CV
                           ———————————
        TORCH ENERGY ADVISORS INCORPORATED, Appellant
                                        V.
     PLAINS EXPLORATION & PRODUCTION COMPANY, Appellee

                   On Appeal from the 269th District Court
                            Harris County, Texas
                      Trial Court Case No. 2010-50535

                                  OPINION

      Appellee, Plains Exploration & Productions Company, recovered over $83

million in a lawsuit against the federal government concerning offshore oil and gas

leases. Appellant, Torch Energy Advisors Incorporated, claimed an interest in a
portion of Plains Exploration’s recovery and brought the underlying suit. The trial

court rendered summary judgment in favor of Plains Exploration on Torch

Energy’s claims. In two issues, Torch Energy argues the trial court erred by

granting summary judgment (1) on its breach of contract claim because Torch

Energy, in its conveyance of the oil and gas leases to Plains Exploration, retained

the rights to a portion of what Plains Exploration recovered in the suit against the

federal government and, alternatively, (2) Torch Energy had a right to recover the

money under a theory of money had and received.

      We affirm, in part, and we reverse and remand, in part.

                                   Background

      From 1968 to 1984, the federal government, through the Mineral

Management Service (“MMS”) of the Department of the Interior, granted to a

number of private entities certain oil, gas, and mineral leases on the outer

continental shelf off the coast of California. These leases were governed by a body

of federal statutes and regulations. The statutory law included the Submerged

Lands Act, the Offshore Continental Shelf Lands Act, and the Coastal Zone

Management Act (the “CZMA”).

      During this period, Ogle Petroleum obtained 23 of these leases. It paid the

federal government bonuses as one of the requirements to obtain the leases. The

leases, like all others issued during this period, were for a period of five years.

                                         2
Under certain circumstances, however, the leases could be suspended, delaying

their expiration.

      In 1990, the federal government amended the CZMA. The amendment

broadened circumstances when the federal government would have to perform

“consistency determinations” to ensure that activity on the outer continental shelf

was consistent with the corresponding state’s coastal management program.

Despite the changes, MMS and the lessees interpreted the statute to not include

lease suspensions as an activity that required a consistency determination.

      California took the position that the 1990 CZMA amendment required

consistency determinations for lease suspensions. It did not seek a legal ruling on

this dispute, however, until 1999. Between the 1990 CZMA amendment and

California’s later legal challenge, a number of conveyances relevant to this suit

took place.

      First, on July 8, 1994, Ogle Petroleum conveyed in full its interest in its

leases to Torch Energy. Second, on December 1, 1994, Torch Energy conveyed to

what is now Plains Exploration a 50% interest in the Ogle Petroleum leases. Third,

on April 4, 1996, Torch Energy conveyed to what is now Plains Exploration the

remaining 50% interest in the Ogle Petroleum leases. The contract effecting this

last conveyance, however, excluded from the conveyance certain rights and claims.

What exactly was excluded is a matter of dispute between the parties in this suit.

                                         3
      In 1999, California filed its suit, challenging MMS’s grant of certain lease

suspensions. The district court ultimately agreed with California, ruling that MMS

had to make a consistency determination before granting a requested suspension.

California v. Norton, 150 F. Supp. 2d 1046, 1053 (N.D. Cal. 2001) (“Norton I”).

The Ninth Circuit later affirmed this ruling. California v. Norton, 311 F.3d 1162,

1178 (9th Cir. 2002) (“Norton II”).

      The rulings in Norton I and Norton II spawned litigation between certain

lessees, including Plains Exploration, and the federal government. The lessees

filed suit on January 9, 2002, claiming that changing the statutory framework to

allow states some control over lease suspensions constituted a breach of the leases,

entitling them to restitution for the bonuses that the lessees had paid to the federal

government when the leases were issued. The court of federal claims agreed. It

ruled that the 1990 CZMA amendments violated the leases. Amber Res. Co. v.

United States, 68 Fed. Cl. 535, 548 (2005) (“Amber I”). Under Amber I, Plains

Exploration was awarded over $83 million in restitution for the bonuses paid by

Ogle Petroleum. The Federal Circuit agreed with most of the district court’s

analysis, except that it held the breach did not occur until the district court’s ruling

                                           4
in Norton I. Amber Res. Co. v. United States, 538 F.3d 1358, 1369–70 (Fed. Cir.

2008) (“Amber III”). 1

      Before August 13, 2010, Torch Energy informed Plains Exploration that it

believed it was entitled to approximately half of Plains Exploration’s recovery

from the Amber lawsuit under the terms of the 1996 contract. Plains Exploration

rejected Torch Energy’s position. Torch Energy filed suit on August 13, 2010,

asserting a number of causes of action, including breach of contract and money had

and received. Plains Exploration answered, asserting a number of affirmative

defenses.

      Ultimately, the parties filed cross-motions for summary judgment. Plains

Exploration argued that the existence of the 1996 contract prevented Torch Energy

from recovering under any action other than breach of contract, that the breach of

contract claim failed as a matter of law, and that the breach of contract claim was

barred by limitations.    Torch Energy argued that it was entitled to summary

judgment on liability for its breach of contract claim, that it was entitled to

summary judgment on liability for its other claims, that it was entitled to

1
      The district court in the Amber cases issued a second opinion, which the Federal
      Circuit referred to as “Amber II.” See Amber Res. Co. v. United States, 538 F.3d
1358, 1369–70 (Fed. Cir. 2008) (citing Amber Res. Co. v. United States, 73 Fed.
      Cl. 738 (2006)). The second district court opinion is not relevant to our analysis.
      Nevertheless, we refer to the Federal Circuit’s opinion as “Amber III” for
      consistency across opinions.
                                           5
$43,959,041 in damages as a matter of law, and that there was no evidence to

support Plains Exploration’s affirmative defenses.

      The trial court granted Torch Energy’s motion for summary judgment on

Plains Exploration’s affirmative defenses of statute of limitations, laches, and

unclean hands. It denied the remainder of the motion. It further concluded that the

economic-loss rule barred Torch Energy non-breach-of-contract claims. Finally, it

ruled that “the [1996] Contract did not provide that Torch [Energy] retained any

rights to recover any restitution awards for the breaches of the leases committed by

the federal government described in Amber Resources.”

                               Standard of Review

      The summary-judgment movant must conclusively establish its right to

judgment as a matter of law. See MMP, Ltd. v. Jones, 710 S.W.2d 59, 60 (Tex.

1986). Because summary judgment is a question of law, we review a trial court’s

summary judgment decision de novo. Mann Frankfort Stein & Lipp Advisors, Inc.

v. Fielding, 289 S.W.3d 844, 848 (Tex. 2009).

      To prevail on a “traditional” summary-judgment motion asserted under Rule

166a(c), a movant must prove that there is no genuine issue regarding any material

fact and that it is entitled to judgment as a matter of law. See TEX. R. CIV. P.

166a(c); Little v. Tex. Dep’t of Criminal Justice, 148 S.W.3d 374, 381 (Tex.

2004). A matter is conclusively established if reasonable people could not differ as

                                         6
to the conclusion to be drawn from the evidence. See City of Keller v. Wilson, 168
S.W.3d 802, 816 (Tex. 2005).

      When a party moves for summary judgment on a claim for which it bears the

burden of proof, it must show that it is entitled to prevail on each element of its

cause of action. See Parker v. Dodge, 98 S.W.3d 297, 299 (Tex. App.—Houston

[1st Dist.] 2003, no pet.). The party meets this burden if it produces evidence that

would be sufficient to support an instructed verdict at trial. Id. In contrast, a party

moving for traditional summary judgment on a claim for which it does not bear the

burden of proof must either (1) disprove at least one element of the plaintiff’s

cause of action or (2) plead and conclusively establish each essential element of an

affirmative defense to rebut the plaintiff’s cause. See Am. Tobacco Co., Inc. v.

Grinnell, 951 S.W.2d 420, 425 (Tex. 1997).

      To determine if there is a fact issue, we review the evidence in the light most

favorable to the nonmovant, crediting favorable evidence if reasonable jurors could

do so, and disregarding contrary evidence unless reasonable jurors could not. See

Fielding, 289 S.W.3d at 848 (citing City of Keller, 168 S.W.3d at 827). We

indulge every reasonable inference and resolve any doubts in the nonmovant’s

favor. Sw. Elec. Power Co. v. Grant, 73 S.W.3d 211, 215 (Tex. 2002).

      When, as here, the parties file cross-motions for summary judgment on

overlapping issues, and the trial court grants one motion and denies the other, we

                                          7
review the summary judgment evidence supporting both motions and “render the

judgment that the trial court should have rendered.” FM Props. Operating Co. v.

City of Austin, 22 S.W.3d 868, 872 (Tex. 2000).

                                Breach of Contract

      The elements for a breach of contract claim are: (1) the existence of a valid

contract; (2) performance or tendered performance by the plaintiff; (3) breach of

the contract by the defendant; and (4) damages sustained by the plaintiff as a result

of the breach. Wright v. Christian & Smith, 950 S.W.2d 411, 412 (Tex. App.—

Houston [1st Dist.] 1997, no writ). The only element of Torch Energy’s breach of

contract claim that is in dispute is the third element, breach of the contract by the

defendant. The trial court granted summary judgment, ruling that Torch Energy

did not retain any right to the money that Plains Exploration recovered from the

federal government, that is, that the 1996 contract conveyed to Plains Exploration

the remaining interest in the right to recover the bonuses from the federal

government. The trial court further ruled that, accordingly, Plains Exploration did

not breach the 1996 contract by failing to share any of its recovery from the federal

government with Torch Energy.

      The central dispute between the parties is whether the 1996 contract

conveyed the remaining interest in the right to recover the bonuses from the federal

government. Plains Exploration argues that the interest was conveyed to it in the

                                         8
contract. Torch Energy argues that the interest was excluded from the conveyance

to Plains Exploration.

      If Plains Exploration’s interpretation of the contract—that the 1996 contract

conveyed the remaining interest in the right to recover the bonuses from the federal

government —is correct, then Plains Exploration has not breached the contract.

Under this interpretation, there can be no breach because Plains Exploration had

legal right to the full recovery.

      It is equally true, however, that if Torch Energy’s interpretation of the

contract—that the remaining interest in the right to recover the bonuses from the

federal government was excluded from the 1996 conveyance—is correct, then

Plains Exploration still has not breached the contract. Under this interpretation, the

remaining interest was excluded from the contract, meaning it was never made a

part of the contract. It follows, then, that there was nothing in the contract for

Plains Exploration to breach when it claimed full interest in the right to recover the

bonuses, even if that claim was wrong. Claiming ownership of money that was not

part of a contract may be actionable, but not as a breach of contract cause of action.

      The Supreme Court of Texas has held that the acts of parties to a contract

“may breach duties in tort or contract alone or simultaneously in both. The nature

of the injury most often determines which duty or duties are breached. When the

injury is only the economic loss to the subject of a contract itself, the action sounds

                                          9
in contract alone.” Jim Walter Homes, Inc. v. Reed, 711 S.W.2d 617, 618 (Tex.

1986). This is known generally as the economic loss rule. See Sharyland Water

Supply Corp. v. City of Alton, 354 S.W.3d 407, 415 (Tex. 2011). The obverse to

this rule is that, when the injury is only an economic loss distinct from the subject

of the contract, the action cannot sound in contract. Cf. Mays v. Pierce, 203
S.W.3d 564, 575 (Tex. App.—Houston [14th Dist.] 2006, pet. denied) (holding

“breach occurs when a party fails or refuses to do something he has promised to

do”).

        Assuming without deciding that the 1996 contract excluded from the

conveyance the remaining interest in the right to recover the bonuses, then it did

just that: excluded the conveyance of the right to recover the bonuses from the

contract. Because a claim for the remaining interest in the bonuses would not

constitute a breach of the contract, Torch Energy has failed to establish on appeal

that the trial court erred by granting summary judgment on its breach of contract

claim. See Arias v. Brookstone, L.P., 265 S.W.3d 459, 467 (Tex. App.—Houston

[1st Dist.] 2007, pet. denied) (holding “[i]t is an appellant’s burden to demonstrate

reversible error”). Accordingly, we overrule appellant’s first issue.

                              Money Had and Received

        In its second issue, Torch Energy argues that the trial court erred by granting

summary judgment against it on its money had and received claim. Money had

                                           10
and received is an equitable remedy that concerns whether the defendant holds

money that belongs to the plaintiff. Staats v. Miller, 243 S.W.2d 686, 687–88

(Tex. 1951).    The trial court ruled that the economic loss rule barred Torch

Energy’s recovery under this and other equitable claims. As we have indicated

above, this was erroneous.

      “[T]he economic loss rule only [has been applied] in cases involving

defective products or failure to perform a contract.” Sharyland, 354 S.W.3d at

418. There is no obligation, duty, or other kind of right in the contract that would

form the basis of Torch Energy’s breach of contract claim. “When the injury is

only the economic loss to the subject of a contract itself, the action sounds in

contract alone.” Jim Walter Homes, 711 S.W.2d at 618. The alleged injury here is

Plains Exploration’s recovery of bonuses from the federal government that Torch

Energy asserts it retained the right to recover. If this theory is correct, the right to

recover the bonuses was a matter that was specifically excluded from the contract.

If this theory is incorrect, there is no injury.      In either scenario, there is no

economic loss to the subject of a contract because even if Torch Energy has a right

to recover part of the bonus, that right is not part of the contract. Accordingly, we

hold the trial court erred by ruling that the economic loss rule precluded Torch

Energy’s recovery under its money had and received claim.

      We sustain Torch Energy’s second issue.

                                          11
                             Contract Interpretation

      Here, the parties fully presented the matter of how to interpret the contract as

it relates to the right to recover the bonuses from the federal government. The trial

court even ruled on this issue, ruling in favor of Plains Exploration. This matter

was presented under the breach of contract action, which we have held that Torch

Energy cannot recover under regardless of how the contract is interpreted. The

matter is still relevant, however. Its resolution will control whether Torch Energy

can recover under an equitable claim.

      As it stands, then, the matter is still relevant, the parties still have the same

position, and nothing in our analysis so far would suggest a different ruling for the

trial court. If we were to remand this case based on Torch Energy’s claim of

money had and received without analyzing the contract interpretation matter, the

most obvious result is that the matter would again be presented in a summary

judgment motion, though applied this time to Torch Energy’s equitable claim. The

trial court would in all likelihood make the same ruling that the claims to bonuses

were conveyed to Plains Exploration, and the issue would come to us in another

appeal in much the same form.

      We are obligated to analyze every issue that is properly raised and that is

necessary to final disposition. See TEX. R. APP. P. 47.1; Cincinnati Life Ins. Co. v.

Cates, 927 S.W.2d 623, 626 (Tex. 1996). In the interest of judicial economy, we

                                         12
may, in addition, consider summary judgment grounds preserved for review that

the trial court did not rule on. Cincinnati Life, 927 S.W.2d at 626. Here, we have

a matter that was both preserved for review and ruled on by the trial court. We

hold that, in the interest of judicial economy, we can consider the matter of

contract interpretation. We choose to do so.

      “In construing a contract, a court must ascertain the true intentions of the

parties as expressed in the writing itself.”   Italian Cowboy Partners, Ltd. v.

Prudential Ins. Co. of Am., 341 S.W.3d 323, 333 (Tex. 2011) (citing J.M.

Davidson, Inc. v. Webster, 128 S.W.3d 223, 229 (Tex. 2003)). We begin this

analysis with the contract’s express language. Id. (citing Progressive Cnty. Mut.

Ins. Co. v. Kelley, 284 S.W.3d 805, 807 (Tex. 2009)). We review the contract as a

whole, giving effect to all the provisions of the contract so that none will be

rendered meaningless. J.M. Davidson, 128 S.W.3d at 229. “We give contract

terms their plain and ordinary meaning unless the instrument indicates the parties

intended a different meaning.” Dynegy Midstream Servs., Ltd. P’ship v. Apache

Corp., 294 S.W.3d 164, 168 (Tex. 2009).

      If, after the rules of construction are applied, the contract can be given a

definite or certain legal meaning, it is unambiguous and we construe it as a matter

of law. Frost Nat’l Bank v. L & F Distribs., Ltd., 165 S.W.3d 310, 312 (Tex.

2005); Samson Lone Star, Ltd. P’ship v. Hooks, 389 S.W.3d 409, 437 (Tex.

                                        13
App.—Houston [1st Dist.] 2012, pet. filed). In contrast, if a contract’s meaning is

uncertain or is reasonably susceptible to more than one interpretation, then it is

ambiguous and its meaning must be resolved by the finder of fact. Lenape Res.

Corp. v. Tennessee Gas Pipeline Co., 925 S.W.2d 565, 574 (Tex. 1996). An

ambiguity in a contract may be patent or latent. Nat’l Union Fire Ins. Co. of

Pittsburgh, PA v. CBI Indus., Inc., 907 S.W.2d 517, 520 (Tex. 1995). A patent

ambiguity is apparent on the face of the contract, while latent ambiguity only

becomes apparent when a facially unambiguous contract is applied under particular

circumstances. Id.

      Before we analyze the contested provisions in the 1996 contract, it is useful

to establish certain matters that are not in dispute. Ogle Petroleum obtained the

relevant leases from the federal government between 1968 and 1982.              Ogle

Petroleum paid the government bonuses as one of the requirements to obtain the

leases. In July 1994, Ogle Petroleum fully conveyed all of its interest in the leases

to Torch Energy. Later that year, Torch Energy conveyed 50% of its interest in the

leases to Plains Exploration. It is undisputed, then, that Plains Exploration was

entitled to the bonuses paid to the federal government for Plains Exploration’s

portion of the Ogle Petroleum leases that it obtained in 1994. Whether Plains

Exploration was entitled to the remainder of the bonuses paid under the Ogle

Petroleum leases is determined by the language of the 1996 contract.

                                         14
      The 1996 contract was signed on or about April 4, 1996. It contained an

earlier effective date, however. It was effective as of October 1, 1995. The

contract defines two categories of assets.          The first category, called “the

Properties,” identifies all items that are conveyed from Torch Energy to what is

now Plains Exploration.      The second category, called “the Excluded Assets,”

identifies all items that are excluded from the conveyance from Torch Energy to

Plains Exploration, even if otherwise encompassed by the first category.

Accordingly, in order for something to be conveyed to Plains Exploration, it (1)

had to be included in the Properties and (2) could not be listed in the Excluded

Assets.

      With this context in mind, we consider the disputed portions of the 1996

contract. First we consider portions in the Properties category. Plains Exploration

argues that the Properties category “presumptively conveyed the right to sue for

enforcement of the leases.” We do not construe this provision as broadly as Plains

Exploration.

      One of the items conveyed in the Properties category is labeled “Oil and Gas

Properties.” It is defined, in pertinent part, as “[a]ll leasehold interests or operating

rights in the oil and gas leases . . . .” Plains Exploration argues that this language

conveyed the remainder of the Ogle Petroleum leases to it. We disagree.

                                           15
      There is a distinction to be drawn between a conveyance of an interest in a

lease and the conveyance of the lease itself. In Childress v. Siler, Childress had

executed an assignment of an existing lease to Siler. 272 S.W.2d 417, 419 (Tex.

Civ. App.—Waco 1954, writ ref’d n.r.e.). After the lease was cancelled, Siler sued

Childress.     Id.   On appeal, Childress argued the assignment functioned as a

quitclaim on the “right, title and interest” in the lease. Id. at 420. The court

disagreed, explaining that the language in the assignment “evidences the intention

on the part of Childress to convey the lease itself and not merely the grantor’s title

and interest therein.” Id.

      The opposite is true here, as it relates to the Oil and Gas Properties item. As

Torch Energy points out, the Oil and Gas Properties item, conveys the “leasehold

interests or operating rights in the oil and gas leases,” not the leases themselves.

(Emphasis added.) Accordingly, this item did not fully convey the leases to Plains

Exploration.

      Further down in the Properties category is an item labeled “Contracts.” This

item conveys, in pertinent part, “[a]ll contracts and arrangements that directly

relate to the Properties and the operation, pooling, unitization, [etc.] of Substances

therefrom and any and all amendments, ratifications or extensions of the foregoing,

to the extent that any of the foregoing relate to periods on or after the Effective

Date . . . .” Plains Exploration, in its argument that the Oil and Gas Properties item

                                         16
conveyed the leases, argues the leases were not conveyed in the Contracts item

because the Contracts item only concerns “agreements with third parties to assist

with development of the leases, not the leases themselves.”          We again must

disagree.

      The Contracts item conveys all contracts that directly relate to (1) the

Properties and (2) the operation, pooling, unitization, etc. of the substances

extracted from the Properties. The Properties category includes the leasehold

interest and operating rights in the leases. It follows that the leases are necessarily

contracts that directly relate to the Properties category. This item, then, conveys

the remainder of the Ogle Petroleum leases “to the extent that [the remainder of the

Ogle Petroleum leases] relate to periods on or after” October 1, 1995.

      This leaves us to determine whether the Contracts item conveyed the right to

recover from the federal government the bonuses paid at the start of the leases. We

hold that this item is ambiguous on this matter.

      The recovery that Plains Exploration obtained was for bonuses paid between

1968 and 1982. In this sense, the recovery relates to a period before October 1,

1995. The breach of the leases, however, did not occur until after June 20, 2001.

See Amber III, 538 F.3d at 1370 (holding breach did not occur until after trial

court’s decision in Norton I); Norton I, 150 F. Supp. 2d 1046 (issued June 20,

2001). In this sense, the recovery relates to a period after October 1, 1995. The

                                          17
basis of the breach was the amendment of the CZMA in 1990, which obviously

relates to a period before October 1, 1995. See Amber III, 538 F.3d at 1370

(holding that basis of breach was Norton trial court’s injunction requiring federal

government to apply provisions from 1990 CZMA amendments).

      It can only be said, then, that the recovery of bonuses from the federal

government relates to periods both before and after October 1, 1995. The 1996

contract does not explain whether matters relating to periods both before and after

October 1, 1995 are conveyed to Plains Exploration or retained by Torch Energy.

      Torch Energy argues in its post-submission letter-brief that “the choice of

terms like ‘arising from,’ ‘arising under or with respect to,’ and ‘attributable to,’

puts the emphasis on the front end of the process, not the back end.” It provides no

support for this assertion, however, and we find no reason to so conclude. A plain

reading of the contract does not compel any specific result. Accordingly, the

contract is patently ambiguous about whether the right to recover bonuses from the

federal government was included as a right conveyed to Plains Exploration. See

Nat’l Union Fire Co., 907 S.W.2d at 520 (defining patent ambiguity as ambiguity

apparent on face of contract). We hold the trial court could not have ruled as a

matter of law, then, that “the [1996] Contract did not provide that Torch [Energy]

retained any rights to recover any restitution awards for the breaches of the leases

committed by the federal government described in Amber Resources.”

                                         18
      Cross-motions were filed. Accordingly, we next consider whether the trial

court should have granted Torch Energy’s motion for summary judgment on its

breach of contract claim. Such a ruling would only have been possible if, as a

matter of law, the 1996 contract excluded the right to recover the bonuses from the

conveyance to Plains Exploration. See Parker, 98 S.W.3d at 299 (holding when

plaintiff moves for summary judgment on its cause of action, it must show that it is

entitled to prevail on each element of its cause of action). As we stated above, in

order for an item to be conveyed to Plains Exploration, the item (1) had to be

included in the Properties and (2) could not be listed in the Excluded Assets.

Accordingly, even if the Contracts item encompassed the right to recover the

bonuses, it was not conveyed if it was otherwise excluded under the Excluded

Assets.

      The 1996 contract defines “Excluded Assets” to encompass a number of

items. Torch Energy argues two of the items are relevant to this suit. In pertinent

part, the Excluded Assets include

      . . . (b) all claims and causes of action of [Torch Energy] (i) arising
      from acts, omissions or events, or damage to or destruction of
      property, occurring prior to the Effective Date, [or] (ii) arising under
      or with respect to any of the Contracts that are attributable to periods
      of time prior to the Effective Date (including claims for adjustments
      or refunds) . . . [and] (g) all proceeds, income or revenues (and any
      security or other deposits made) attributable to (i) the properties for
      any period prior to the Effective Date . . . .

                                        19
One of the central disputes between the parties is the meaning of the word “claims”

in the definition of Excluded Assets. Specifically, the parties dispute whether

“claims” only encompasses “asserting an existing right” or whether “claims” also

encompasses contingent rights.

      “We give contract terms their plain and ordinary meaning unless the

instrument indicates the parties intended a different meaning.” Dynegy Midstream,
294 S.W.3d at 168. As used in this contract, “claim” is a legal term of art. Black’s

Law Dictionary lists four general definitions of the word. See BLACK’S LAW

DICTIONARY 281–82 (9th ed. 2009). The first is “[t]he aggregate of operative facts

giving rise to a right enforceable by a court.” Id. at 281. The definition that most

closely matches Plains Exploration’s definition is “[t]he assertion of an existing

right; any right to payment or to an equitable remedy, even if contingent or

provisional.” Id. at 281–82 (emphasis added). Additionally, within the list of the

defined subtypes of claims is “contingent claim,” which is defined as “[a] claim

that has not yet accrued and is dependent on some future event that may never

happen.” Id. at 282.

      These definitions do not categorically exclude contingent rights from the

meaning of claim. Some of the definitions specifically encompass contingent

rights. Plains Exploration relies on two cases in arguing that “claim” cannot

include contingent rights. See Johnson & Higgins of Tex., Inc. v. Kenneco Energy,

                                        20
Inc., 962 S.W.2d 507 (Tex. 1998); Vacek Group, Inc. v. Clark, 95 S.W.3d 439

(Tex. App.—Houston [1st Dist.] 2002, no pet.). These cases are distinguishable,

however.

      Johnson concerned how to calculate prejudgment interest. 962 S.W.2d at

528. In this context, the Texas Supreme Court defined “claim” as “‘a demand for

compensation or an assertion of a right to be paid.’” Id. at 531 (quoting Robinson

v. Brice, 894 S.W.2d 525, 528 (Tex. App.—Austin 1995, writ denied)). Such a

definition makes clear sense in this context. As Johnson explains, “Prejudgment

interest is ‘compensation . . . for lost use of the money due as damages during the

lapse of time between the accrual of the claim and the date of judgment.’” Id. at

528 (quoting Cavnar v. Quality Control Parking, Inc., 696 S.W.3d 549, 552 (Tex.

1985)) (emphasis added). A claim accrues “when the wrongful act effects an

injury.” Moreno v. Sterling Drug, Inc., 787 S.W.2d 348, 351 (Tex. 1990). In other

words, a claim does not accrue when the right to recover is contingent on future

events—such as when the injury has not occurred. Accordingly, in the context of

prejudgment interest, “claim” does not include contingent rights. This does not

mean, however, that “claim” can never encompass contingent rights.

      Similarly, Vacek concerned a specific rule for tolling on legal malpractice

claims. 95 S.W.3d at 442–43. We explained,

      In Hughes, the Texas Supreme Court observed that “when an attorney
      commits malpractice while providing legal services in the prosecution
                                        21
      or defense of a claim which results in litigation, the legal injury and
      discovery rules can force the client into adopting inherently
      inconsistent litigation postures in the underlying case and in the
      malpractice case.”

Id. (quoting Hughes v. Mahaney & Higgins, 821 S.W.2d 154, 156 (Tex. 1991)).

Accordingly, the Texas Supreme Court established a rule for tolling, “stating that

the statute of limitations for a malpractice claim against an attorney, committed in

the prosecution or defense of a claim that results in litigation, is tolled until all

appeals on the underlying claim are exhausted.” Id. at 443 (citing Hughes, 821
S.W.2d at 157).

      The question in Vacek concerned whether this tolling rule also applied to

transactional malpractice. Id. at 445. We held that, based on the definition of the

words used by the Texas Supreme Court, the tolling rule did not apply to

transactional malpractice. Id. In Vacek, we defined claim “as ‘the assertion of an

existing right; any right to payment or to an equitable remedy.’” Id. (quoting

BLACK’S LAW DICTIONARY 240 (7th ed. 1999)).

      Again, in context, this definition makes clear sense. We also observed in

Vacek that the use of the words “prosecution” and “defense” in the tolling rule

indicated that the Texas Supreme Court was contemplating active litigation for the

tolling rule. Id. at 446. Accordingly, claim would not include contingent rights

when the litigation is already underway.

                                           22
      Contrary to Plains Exploration’s argument, we are compelled to conclude

that “claim” can encompass contingent rights. Countless Texas cases analyze

whether a claim is ripe. See, e.g., Robinson v. Parker, 353 S.W.3d 753, 755 (Tex.

2011); Waco Indep. Sch. Dist. v. Gibson, 22 S.W.3d 849, 851–52 (Tex. 2000);

Patterson v. Planned Parenthood of Hous. & Se. Tex., Inc., 971 S.W.2d 439, 442

(Tex. 1998). “In considering whether a claim is ripe, we consider whether, at the

time a lawsuit is filed, the facts are sufficiently developed so that an injury has

occurred or is likely to occur, rather than being contingent or remote.” Harris

Cnty. Mun. Util. Dist. No. 156 v. United Somerset Corp., 274 S.W.3d 133, 139

(Tex. App.—Houston [1st Dist.] 2008, no pet.) (internal quotes omitted; emphasis

added). Under Plains Exploration’s interpretation of the word claim, the phrase

“unripe claim” would be an oxymoron and “ripe claim” would be redundant. The

implicit and obvious conclusion from this mass of cases, however, is that the word

claim, in its ordinary usage, includes contingent claims and that a ripe claim is a

subcategory within that broader term. This is in line with the definitions in Black’s

Law Dictionary.

      Just because the word claim can include contingent claims, however, does

not mean that it does in the 1996 contract. Just as the context of the word claim in

Johnson and Vacek excluded contingent claims from its definition, the context of

                                         23
the word claim as used in the 1996 contract could exclude contingent claims from

its definition. We consider, then, the context in which the word claim is used. 2

      Item (b) of the Excluded Assets category excludes two sets of claims and

causes of action. First, it excludes “all claims and causes of action of [Torch

Energy] (i) arising from acts, omissions or events, or damage to or destruction of

property, occurring prior to” October 1, 1995. This exclusion suffers from the

same problem as the definition of Contracts in the Properties category. There are

acts, omissions, and events that occurred before October 1, 1995. There is also at

least one act or event that occurred after October 1, 1995. The contract is silent

about whether this means the claim relating to these acts, omissions, and events

were excluded from or included in the conveyance. Accordingly, it is patently

ambiguous.

      Second, item (b) excludes “all claims and causes of action of [Torch Energy]

. . . (ii) arising under or with respect to any of the Contracts that are attributable to

periods of time prior to [October 1, 1995] (including claims for adjustments or

2
      Plains Exploration points to other sections of the 1996 contract that it argues use
      “claim” only in the context of existing rights. Assuming without deciding that this
      is correct, Plains Exploration does not explain why the context for the use of the
      word in these other sections should prevail over the context for the word in the
      section actually in dispute. Moreover, one of the other sections that Plains
      Exploration relies on is a covenant by Torch Energy not to “waive, compromise or
      settle any right or claim that would materially and adversely affect the ownership,
      operation or value of any of the Properties after the Effective Date.” We see no
      justification in interpreting this section to prevent Torch Energy from settling a
      ripe claim while allowing Torch Energy to settle contingent claims.
                                           24
refunds).” The same problem exists for this exclusion. The claim is attributable to

periods of time both before and after October 1, 1995. This exclusion, then, is also

patently ambiguous. For the same reason, we are prevented from determining

whether item (b) included or excluded contingent claims.

      Finally, item (g) under Excluded Assets excludes “all proceeds, income or

revenues (and any security or other deposits made) attributable to (i) the properties

for any period prior to” October 1, 1995. Torch Energy argues that the recovery of

the bonuses from the federal government constitutes proceeds, income, and

revenue. Assuming that this is correct, item (g) still suffers from the same problem

as item (b). In one sense, the recovery of the bonuses—whether constituting

proceeds, income or revenue—is attributable to a period before October 1, 1995,

because that is when the bonuses were paid to the government. In another sense,

the recovery of the bonuses is attributable to a period after October 1, 1995,

because that is when the breach occurred. While it is true that without payment of

the bonuses, there could be no recovery, it is equally true that without the breach

there also could have been no recovery. 3 This provision, then, is also patently

ambiguous.

3
      Plains Exploration argues that the events before October 1, 1995 are too tenuous
      and remote to constitute “arising from,” “arising under,” or “relating to” as used in
      items (b) and (g). See Utica Nat’l Ins. Co. of Tex. v. Am. Indem. Co., 141 S.W.3d
198, 203 (Tex. 2004) (holding “‘arise out of’ means that there is simply a ‘causal
      connection or relation,’ . . . which is interpreted to mean that there is but for
                                           25
      In summary, the contract is ambiguous as to whether the right to recover the

bonuses was designated to be conveyed under the Properties category.             Even

assuming that it was designated to be conveyed under the Properties category, the

contract is still ambiguous as to whether the right to recover the bonuses was

excluded under the Excluded Assets category.             While “claim” can mean

“contingent claim,” the context of the remaining language creates an ambiguity

about whether contingent claims relating to and arising from both before and after

the effective date were excluded.      Similarly, the contract is ambiguous about

whether proceeds attributable to both before and after the effective date were

excluded.

      causation, though not necessarily direct or proximate causation”). We do not
      consider the payment of the very bonuses that Plains Exploration recovered or the
      enactment of the 1990 CZMA amendment that formed the basis of the federal
      government’s subsequent breach to be too tenuous and remote.
                                         26
                                    Conclusion

      We affirm the judgment of the trial court as it relates to Torch Energy’s

breach of contract claim. We reverse the judgment of the trial court as it relates to

Torch Energy’s money had and received claim, and remand for further

proceedings.

                                              Laura Carter Higley
                                              Justice

Panel consists of Chief Justice Radack and Justices Higley and Brown.

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