Court Opinion

ID: 9654935
Source: CourtListenerOpinion
Date Created: 2023-08-23 18:54:53.667528+00
Date Added: 2024-06-11T18:13:14.790687
License: Public Domain

MARGARET GARNER MIRABAL, Justice,
dissenting.
We are faced with construing an unambiguous contract.
When a contract is not ambiguous on its face, extrinsic evidence may not be properly used to create an ambiguity. Balandran v. Safeco Ins. Co. of Am., 972 S.W.2d 738, 745 (Tex.1998). When a contract is unambiguous, the words used are to be given their ordinary meaning. Admiral Ins. Co. v. Trident NGL, Inc., 988 S.W.2d 451, 453-54 (Tex.App. — Houston [1st Dist.] 1999, pet. denied). Further, when a contract is unambiguous, the rule of construing a contract against its drafter does not apply. GTE Mobilnet ofS. Tex. Ltd. Partnership v. Telecell Cellular, Inc., 955 S.W.2d 286, 290 (Tex.App. — Houston [1st Dist.] 1997, writ denied). A trial court errs when it does not construe an unambiguous provision as a matter of law, and instead, submits the issue to a fact finder. Id.
In my opinion, the trial court erred in not construing the unambiguous contract as a matter of law. Further, the jury’s finding in response to question one is contrary to the clear and unambiguous meaning of the contract. Accordingly, I dissent.
Analysis
The Oak Hill contract required Transco to “take or pay for” 80% of Texaco’s produced and deliverable gas at a price of $8.80 per MMBtu for 15 years.
The later Omnibus Settlement Agreement required Transco to “take or pay for” 70% of Texaco’s produced and deliverable gas at an average price of $1.80 per MMBtu (the price being subject to renegotiation yearly). The Omnibus further provided:
Transco agrees to reimburse Texaco for all “excess royalty payments” which Texaco is required to pay to any royalty owner ... which are claimed based upon the price that Texaco would have received under the provisions of the [Oak Hill contract] prior to being modified by the terms [of this Omnibus Settlement Agreement].
(Emphasis added.)
What was the “price that Texaco would have received under the provisions of the Oak Hill contract?” Clearly, under the Oak Hill contract, Texaco would have received $8.80 per MMBtu for 80% of Texaco’s produced and deliverable gas. Clearly, under the Oak Hill contract, if Texaco did not produce gas, Transco would not be obligated to take or pay for it; if Texaco did produce gas in deliverable amounts, Transco was obligated to take or pay for 80% of it at a specified price.
Notwithstanding the clear terms of the contracts, the majority opinion effectively holds that the “price that Texaco would *677have received under the provisions of the Oak Hill contract” encompassed a price for not only gas that was produced, but also for gas that “should have been produced” by Texaco, but was not. Such a construction is contrary to the ordinary meaning of the words used in the Oak Hill contract.
Transco argues that the trial court erred by failing to rule that the excess royalty payment provision is unambiguous and that, as a matter of law, it does not cover claims for unproduced gas. I agree with Transco. We should sustain Transco’s issues one and two, and reverse the judgment.