Court Opinion

ID: 3071040
Source: CourtListenerOpinion
Date Created: 2015-10-16 00:32:03.432185+00
Date Added: 2024-06-11T11:50:03.652388
License: Public Domain

In The

                                Court of Appeals
                    Ninth District of Texas at Beaumont
                              ___________________

                               NO. 09-12-00303-CV
                              ___________________

 MICHAEL I. LEAVITT, SUCCESSOR TESTAMENTARY TRUSTEE OF
    THE BERT EARL GASSAWAY TESTAMENTARY TRUST AND
    SUCCESSOR INDEPENDENT ADMINISTRATOR WITH WILL
  ANNEXED OF THE ESTATE OF MARIE ANDERSON GASSAWAY,
                         Appellant

                                         V.

  BRUCE HOLBROOK, VIRGIL HOLBROOK, JUANITA HOLBROOK
   RIZZO, INDIVIDUALLY AND AS TRUSTEE OF THE 1992 RIZZO
FAMILY TRUST, EVELYN WALDROP, AND JUNE WALDROP, Appellees

__________________________________________________________________

                 On Appeal from the 75th District Court
                        Liberty County, Texas
                      Trial Cause No. CV67744
__________________________________________________________________

                          MEMORANDUM OPINION

      In this appeal, we resolve whether a statutory probate court has exclusive

jurisdiction over a suit, filed in 2004, seeking to clear a cloud on title. The suit,

filed by the owners of the executive mineral rights against the trustee of a

testamentary trust, sought to remove a cloud on the ownership of minerals on land

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in Liberty County. The trustee created the cloud on the right of the executive

mineral owners to receive royalties from production attributed to a pooled unit by

claiming that it was entitled to a share in the royalties attributable to production

based on its ownership of a nonparticipating royalty interest (NPRI) 1 in certain

acreage burdened by the NPRI located within the pool. The 75th District Court of

Liberty County exercised jurisdiction over the dispute and rendered judgment,

clearing the cloud. Based on provisions in the Texas Probate Code that applied in

2004 when the executive mineral owners filed suit, we conclude the trial court did

not have jurisdiction over the claims asserted by the Holbrooks against the trustee.

With respect to the trial court’s judgment against the trustee, we vacate the

judgment and dismiss the claims of the executive mineral owners against the

trustee without prejudice. With respect to the parties who did not appeal, the trial

      1
          The Texas Supreme Court has described a nonparticipating royalty interest
as:

      an interest in the gross production of oil, gas, and other minerals
      carved out of the mineral fee estate as a free royalty, which does not
      carry with it the right to participate in the execution of, the bonus
      payable for, or the delay rentals to accrue under, oil, gas, and mineral
      leases executed by the owner of the mineral fee estate.

In re Bass, 113 S.W.3d 735, 745 n.2 (Tex. 2003) (quoting Lee Jones, Non-
participating Royalty, 26 Tex. L. Rev. 569, 569 (1948)); see also Pickens v. Hope,
764 S.W.2d 256, 264 (Tex. App.—San Antonio 1988, writ denied) (explaining that
an NPRI owner has “no right to lease the land to another for mineral development
or to produce the minerals himself[,]” rather the interest “merely entitles him to a
share of production under the lease free of exploration and production expenses”).
                                          2
court’s judgment is affirmed, without regard to the merits of the trial court’s

resolution of the issues.

                                    Background

      This appeal concerns the trial court’s decision to grant the motion for

summary judgment filed by the Holbrooks, 2 the owners of the executive mineral

rights to the acreage at issue, clearing a cloud the trustee 3 of the Bert Earl

Gassaway Testamentary Trust placed on the minerals by asserting a claim to share

in the royalties from production in a pooled unit. The Trust’s claim is based on the

Trust’s ownership of an NPRI in certain acreage that is located within the pool.

Throughout the proceedings, the trustee of the Trust has consistently asserted that

the district court in Liberty County did not have jurisdiction to adjudicate the

Holbrooks’ claims against the Trust. According to the trustee, the Probate Court

Number 2 in Harris County has exclusive jurisdiction over the claims the

Holbrooks asserted against the Trust’s trustee and its successor trustee.

      The Holbrooks who executed a mineral lease that included the acreage in
      2

which the Trust owned an interest are Bruce Holbrook, Virgil Holbrook, Juanita
Holbrook Rizzo (Individually and as Trustee of the 1992 Rizzo Family Trust),
Evelyn Waldrop, and June Waldrop.
      3
       Michael I. Leavitt is the Successor Testamentary Trustee of the Bert Earl
Gassaway Testamentary Trust. Michael was appointed to this position following
the death of his mother, Bernice Davis Leavitt, the initial Testamentary Trustee of
the Trust. Bernice’s demands that the Trust be paid based on the NPRI created the
cloud.

                                          3
        The Trust traces its interest in the NPRI at issue to provisions in Marie

Anderson Gassaway’s will. Prior to Marie’s death, she and her brother, Allie

Anderson, deeded acreage to A. Chester Holbrook, the Holbrooks’ predecessor in

interest. In the deed, Gassaway and Anderson reserved a 1/16 NPRI in the acreage

conveyed by the deed. Marie’s will, probated in the Probate Court Number 2 in

Harris County in 1980, created a testamentary trust benefitting her son, Bert Earl

Gassaway. Marie’s will directed her interest in the NPRI to the Trust. On Bert’s

death in 2002, the Trust’s interest in the NPRI passed under the provisions in the

will to “Sadie Boatner” (identified by the pleadings in the trial court as Celia

Boatner, a/k/a Sadie Boatner). On November 17, 2003, Celia ratified the pooling of

her interest in the NPRI, which is traced to the Anderson-Gassaway deed. After

Celia died in 2007, Patricia Boatner appeared in the proceedings as Celia’s

successor, and as trustee of the “Celia ‘Sadie’ Boatner Family Living Trust.”

        The Holbrooks filed suit in district court in Liberty County on June 3, 2004.

They sued the Trust, Boatner, and others. Subsequently, Boatner and the others

who are not parties to the appeal settled the claims the Holbrooks asserted against

them.

        While the case was pending in Liberty County, the trustee of the Trust filed

a motion in the Probate Court, requesting that the Probate Court transfer the

Holbrooks’ suit to Harris County. The Probate Court declined that request.
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Additionally, in the Probate Court, the trustee sued the Holbrooks and others,

claiming that based on its NPRI, the Holbrooks owed the Trust past royalties they

had received from the production attributable to the pooled unit that included the

acreage burdened by its NPRI. At the Holbrooks’ request, the Probate Court abated

(but did not transfer or dismiss) the trustee’s claims against the Holbrooks and

others.

      In 2012, based on the Holbrooks’ motion for summary judgment, the

presiding judge of the District Court in Liberty County rendered a final judgment

resolving the claims of all of the parties in the suit. The trial court’s judgment

declares that the Holbrooks’ royalty interest was burdened or reduced by the NPRI

interest held by Boatner only from and after November 17, 2003 (the date Celia

ratified the unit). The judgment rejects the Trust’s claim that it was entitled to

royalties from the production attributed to the pooled unit, and the judgment

removes the cloud the Trust placed on the executive mineral owner’s interest in the

royalties at issue. Only the trustee, on behalf of the Trust, appealed from the final

judgment.

      In issue one, the trustee argues that the trial court could not exercise

jurisdiction over the trustee to decide that the Trust’s NPRI asset automatically

vested in Celia Boatner on Bert Gassaway’s death. In issue two, the trustee

contends that the Trust “was entitled to the equitable remedy of unjust enrichment
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against [the Holbrooks.]” In issue three, the trustee argues the trial court erred

when it agreed with the Holbrooks’ that the owners of an NPRI had to ratify the

agreement to pool its acreage before becoming entitled to any of the royalties

attributable to the production from the pool. In issue four, the trustee contends that

material fact issues regarding the trustee’s knowledge that an agreement to pool the

minerals existed, and that these fact issues required a trial that could not be

resolved by summary judgment proceedings. In issue five, the trustee argues that

the Trust did not create a cloud on title because its claim that it was owed royalties

was not wrongful.

                                     Jurisdiction

      Initially, the trustee argues the trial court lacked subject matter jurisdiction

over matters pertaining to the Trust’s NPRI. According to the trustee, the statutory

probate court in Harris County, the county where Marie’s will was probated,

possesses continuing exclusive jurisdiction with respect to all of the matters that

concern the claims against the Trust and its trustee.

      Whether a trial court has subject matter jurisdiction is a question of law we

review de novo. Tex. Natural Res. Conservation Comm’n v. IT-Davy, 74 S.W.3d
849, 855 (Tex. 2002). Lack of subject matter jurisdiction is fundamental error that

may be recognized by the appellate court, sua sponte, or raised by a party at any

time. Saudi v. Brieven, 176 S.W.3d 108, 113 (Tex. App.—Houston [1st Dist.]
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2004, pet. denied). A judgment is void if the trial court rendering the judgment

lacks subject matter jurisdiction. See Cook v. Cameron, 733 S.W.2d 137, 140 (Tex.

1987).

          When the Holbrooks filed their original petition in 2004 against the Trust,

the Texas Property Code provided that a district court’s jurisdiction over

proceedings concerning trusts is exclusive “except for jurisdiction conferred by

law on a statutory probate court[.]” Act of May 26, 1997, 75th Leg., R.S., ch. 1375,

§ 5, sec. 115.001(d), 1997 Tex. Gen. Laws 5162, 5163. Probate Court Number 2 of

Harris County is a statutory probate court. Tex. Gov’t Code Ann. § 25.1031(c)(2)

(West 2004).

      Based on the date the Holbrooks filed suit, Sections 5 and 5A(b) of the

Texas Probate Code govern the jurisdiction of statutory probate court proceedings.

See Act of May 28, 2003, 78th Leg., R.S., ch. 1060, §§ 1-4, 2003 Tex. Gen. Laws

3052, 3052-3054.4 We note that even though Gassaway’s will was probated in

      4
        When the matters discussed in the opinion were before the trial and probate
courts, the Texas Probate Code applied. Effective January 1, 2014, the Probate
Code was repealed; it was substantially replaced by the new Texas Estates Code.
See Act of May 26, 2009, 81st Leg., R.S., ch. 680, 2009 Tex. Gen. Laws 1512,
1512-1732 (§§ 10-12 reflect the effective date of the Texas Estates Code and the
repeal of the Texas Probate Code), amended by Act of May 19, 2011, 82nd Leg.,
R.S., ch. 823, 2011 Tex. Sess. Law Serv. 1901, 1901-2095 (West); Act of May 9,
2013, 83rd Leg., R.S., ch. 161, art. 6, 2013 Tex. Sess. Law Serv. 623, 633-657
(West). With respect to the sections of the Probate Code pertaining to jurisdiction
of statutory probate courts, and based on the savings provisions in the Estates Code
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1980, the sections of the Probate Code giving a statutory probate court exclusive

jurisdiction over claims against the trustee of a testamentary trust are the operable

provisions that govern this appeal. See id. at § 17, 2003 Tex. Gen. Laws at 3057

(explaining that sections 5 and 5A(b) apply to actions commenced on or after the

effective date, September 1, 2003, without regard to whether the probate

proceeding is already pending).

      When the Holbrooks sued the trustee for clouding title to the minerals at

issue, section 5A(b) directed that, with the exception of matters provided in section

5, “any cause of action[,]” including those involving testamentary trusts, “shall be

brought in a statutory probate court.” Act of May 28, 2003, 78th Leg., R.S., ch.

1060, § 4, sec. 5A(b), 2003 Tex. Gen. Laws 3052, 3054. When the Holbrooks sued

the trustee in 2004, 5 suits against trustees of testamentary trusts were not excepted

that gave those provisions in the Probate Code continuing force, we cite to the
applicable Probate Code sections. See Tex. Est. Code Ann. §§ 32.006, 32.007
(West Pamph. 2013); Act of May 24, 2013, 83rd Leg., R.S., ch. 1136, § 62(d),
2013 Tex. Sess. Law Serv. 2740, 2757 (West); Act of June 1, 2009, 81st Leg.,
R.S., ch. 1351, § 14, 2009 Tex. Gen. Laws 4273, 4282.
      5
        In 2005, trustees of testamentary trusts were added as an exception to those
matters the Legislature required to be filed in statutory probate courts. Following
the effective date of the amendment, the Legislature gave district courts and the
statutory probate courts concurrent jurisdiction over trustees of testamentary trusts.
See Act of May 23, 2005, 79th Leg., R.S., ch. 551, § 1, sec. 5(e), 2005 Tex. Gen.
Laws 1476, 1477 (adding testamentary trusts and actions by and against a trustee
to the list of matters in section 5(e) over which district and statutory probate courts
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from the requirement that such suits be filed in a statutory probate court. Act of

May 28, 2003, 78th Leg., R.S., ch. 1060, § 2, sec. 5(e), 2003 Tex. Gen. Laws 3052,

3053.

        Marie’s will, which created the Trust, was admitted to probate in the Probate

Court Number 2, a statutory probate court. The estate’s administration remains

open. No one disputes that the Trust is a testamentary trust or that the Holbrooks

filed suit against the Trust’s trustee in 2004. While the Probate Code’s provision

that gave statutory probate courts exclusive jurisdiction over trustees existed for

only two years during the years that are relevant to the parties’ dispute, it is the

provision that applies based on the date the Holbrooks sued the trustee. Compare

Act of May 28, 2003, 78th Leg., R.S., ch. 1060, § 17, 2003 Tex. Gen. Laws at

3057, with Act of May 23, 2005, 79th Leg., R.S., ch. 551, § 9(a), 2005 Tex. Gen.

Laws at 1480. Therefore, we agree with the trustee that the statutory probate court

overseeing the Trust had exclusive jurisdiction over all of the claims the Holbrooks

made against the Trust’s trustee. See Act of May 28, 2003, 78th Leg., R.S., ch.

1060, § 4, sec. 5A(b), 2003 Tex. Gen. Laws 3052, 3054; id. at § 2, sec. 5(e), 2003

Tex. Gen. Laws at 3053. Because the trial court lacked jurisdiction over the trustee

share concurrent jurisdiction); id. at § 9(a), 2005 Tex. Gen. Laws at 1480
(instructing that the amendments to section 5 are applicable to only those matters
filed after the September 1, 2005 effective date); see also Gammill v. Fettner, 297
S.W.3d 792, 799 n.10 (Tex. App.—Houston [14th Dist.] 2009, no pet.).
                                          9
and actions concerning the Testamentary Trust, the trial court could not render a

valid and binding final judgment that addressed the Holbrooks’ claims against the

trustee for the actions the trustee took on behalf of the Trust. See Cook, 733
S.W.2d at 140.

      Because the trial court’s judgment against the trustee is void, we sustain the

Trust’s first issue. Given our resolution of issue one, we need not address the

Trust’s remaining appellate issues. Tex. R. App. P. 47.1. With respect to the trustee

and the interests of the Trust, we vacate the trial court’s final judgment, and we

dismiss the Holbrooks’ claims against the trustee without prejudice. Without

addressing the merits of the Holbrooks’ claims against the persons who are not

parties to the appeal, the trial court’s final judgment with respect to those other

parties is affirmed.

      REVERSED AND DISMISSED IN PART; AFFIRMED IN PART.

                                              ___________________________
                                                     HOLLIS HORTON
                                                          Justice

Submitted on August 30, 2013
Opinion Delivered July 10, 2014

Before McKeithen, C.J., Kreger and Horton, JJ.
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