Court Opinion

ID: 3114985
Source: CourtListenerOpinion
Date Created: 2015-10-16 07:30:27.345631+00
Date Added: 2024-06-11T11:52:45.114385
License: Public Domain

COURT OF APPEALS
                         SECOND DISTRICT OF TEXAS
                              FORT WORTH

                             NO. 02-10-00370-CV

ASTON MEADOWS, LTD.,                                             APPELLANTS
MONTCLAIRE CUSTOM HOMES,
L.P., PETER PAULSEN, STEVE
PAULSEN, MIKE WELLS,
KATHRYN LEBLANC, DONALD
LEBLANC, NATALIE J. WARNICK,
JAMES S. WARNICK, AND KATHY
IVEY

                                       V.

DEVON ENERGY PRODUCTION                                            APPELLEES
COMPANY, L.P. AND DEVON
ENERGY CORPORATION

                                    ----------

        FROM THE 141ST DISTRICT COURT OF TARRANT COUNTY

                                    ----------

                                  OPINION
                                    ----------

      Aston Meadows, Ltd., Montclaire Custom Homes, L.P., Peter Paulsen,

Steve Paulsen, Mike Wells, Kathryn LeBlanc, Donald LeBlanc, Natalie J.

Warnick, James S. Warnick, and Kathy Ivey (collectively, appellants) appeal from

a summary judgment in favor of appellees Devon Energy Production Company,
L.P. and Devon Energy Corporation. Appellants bring seven issues challenging

the propriety of the summary judgment for appellees and the trial court‟s denial of

Aston Meadows‟s and Ivey‟s cross-motions for summary judgment. Appellants

also bring two issues challenging the trial court‟s evidentiary rulings as to Ivey‟s

summary judgment evidence.          Appellees bring a conditional cross-issue

challenging the trial court‟s refusal to award them attorney‟s fees. We affirm.

                                   Background

      Aston Meadows purchased 182.024 acres (the Property) in northern

Tarrant County in March 2001 to be used as a residential development; it

subdivided the property and recorded a plat.1 Aston Meadows also obtained a

title policy in connection with the purchase. Unbeknownst to all of the appellants,

the entire Property, which had been part of a larger tract located in both Tarrant

and Wise Counties, was subject to a 1977 oil, gas, and mineral lease (the Lease)

that encumbered several hundred acres of the larger tract in both Tarrant and

Wise Counties. The Lease was recorded in Wise County only in 1977. The

Lease was not shown as an encumbrance on Aston Meadows‟s title policy, and it

was not recorded in Tarrant County until April 2002, after Aston Meadows

purchased the Property.

      1
       Both Peter and Steve Paulsen and Wells have interests in Aston
Meadows. Montclaire, the LeBlancs, the Warnicks, and Ivey all purchased lots in
the subdivision from Aston Meadows.

                                         2
      Devon Energy Production Company, L.P. is the successor to the original

lessee under the Lease. When Aston Meadows purchased the Property, there

were no signs of any oil or gas production. However, in June 2007, appellants

sued Devon and its parent company, Devon Energy Corporation, alleging that

appellees had impermissibly drilled horizontally under the Property. Appellants

sought a declaration that the Lease was invalid because it was not recorded in

Tarrant County when Aston Meadows purchased the Property and, therefore,

appellants were bona fide purchasers for value. They also sought damages for

conversion and trespass, as well as injunctive relief. In the alternative, they

brought a claim for breach of contract under the Lease, claiming as damages

royalties under the Lease that they had not yet been paid.2

      Appellees filed a motion for summary judgment contending that appellants

had constructive notice of the Lease because it was properly recorded in Wise

County under section 11.001(a) of the property code. Aston Meadows and Ivey

filed cross-motions for summary judgment contending, among other things, that

they are bona fide purchasers for value because section 11.001(a) does not

control here; thus, they did not have constructive notice of the Lease. They also

claimed in the alternative that they did not have inquiry notice of the Lease. In

several orders, the trial court granted appellees‟ motion for summary judgment,

      2
       During this suit, the parties entered into a settlement agreement regarding
the payment of past due royalties.

                                        3
denied Aston Meadows‟s and Ivey‟s, and rendered a final judgment dismissing all

of appellants‟ claims against appellees.

                                     Analysis

      In their first seven issues, appellants challenge the trial court‟s rulings on

the competing summary judgment motions; their issues all relate to the trial

court‟s resolution of the question of law regarding whether appellants had notice

of the Lease.

Applicable Law

      Notice sufficient to defeat bona fide purchaser status may be actual or

constructive. Noble Mortg. & Invs., LLC v. D & M Invs., LLC, 340 S.W.3d 65, 76

(Tex. App.––Houston [1st Dist.] 2011, no pet.). Actual notice rests on personal

information or knowledge. Madison v. Gordon, 39 S.W.3d 604, 606 (Tex. 2001);

Noble Mortg., 340 S.W.3d at 76. Constructive notice is notice the law imputes to

a person not having personal information or knowledge. Madison, 39 S.W.3d at

606; Noble Mortg., 340 S.W.3d at 76. Constructive notice creates an irrebuttable

presumption of actual notice in some circumstances. See HECI Exploration Co.

v. Neel, 982 S.W.2d 881, 887 (Tex. 1998); Noble Mortg., 340 S.W.3d at 76.

      The Texas Property Code provides that an “instrument that is properly

recorded in the proper county is . . . notice to all persons of the existence of the

instrument.” Tex. Prop. Code Ann. § 13.002 (West 2004). Recorded instruments

in a grantee‟s chain of title generally establish an irrebuttable presumption of

notice. Ford v. Exxon Mobil Chem. Co., 235 S.W.3d 615, 617 (Tex. 2007); Noble

                                           4
Mortg., 340 S.W.3d at 76; see also HECI Exploration Co., 982 S.W.2d at 887

(“The need for stability and certainty regarding titles to real property has led

courts to hold that real property records can constitute constructive notice.”);

Westland Oil Dev. Corp. v. Gulf Oil Corp., 637 S.W.2d 903, 908 (Tex. 1982) (“It is

well settled that „a purchaser is bound by every recital, reference and reservation

contained in or fairly disclosed by any instrument which forms an essential link in

the chain of title under which he claims.‟”). A person may also be charged with

constructive notice for a deed outside his chain of title if facts appearing in the

chain of title through which he claims would place a reasonably prudent person

on inquiry as to the rights of other parties in the property conveyed.       Noble

Mortg., 340 S.W.3d at 76; Nguyen v. Chapa, 305 S.W.3d 316, 324–25 (Tex.

App.––Houston [14th Dist.] 2009, pet. denied).

      Property code section 11.001(a) provides that “[t]o be effectively recorded,

an instrument relating to real property must be eligible for recording and must be

recorded in the county in which a part of the property is located.” Tex. Prop.

Code Ann. § 11.001(a) (West Supp. 2011). Section 11.001 was enacted in 1983

as a nonsubstantive recodification of the property-related revised civil statutes.

See Act of May 26, 1983, 68th Leg., R.S., ch. 576, § 1, sec. 1.001(a), 1983 Tex.

Gen. Laws 3475, 3478. The substance of the predecessor to section 11.001 was

initially enacted in 1887,3 has not significantly changed since then, and has been

      3
      Act approved April 1, 1887, 20th Leg., R.S., ch. 102, § 1, 1887 Tex. Gen.
Laws 892, 892.

                                        5
consistently construed by appellate courts to provide that if a single tract of land

spans multiple counties, recording in either of the counties in which part of the

tract is located is sufficient to provide constructive notice. See, e.g., Brown v.

Lazarus, 25 S.W. 71, 73 (Tex. Civ. App. 1893)4 (“Article 4333, Rev. St., provides

that „all deeds, conveyances, mortgages, deeds of trust, or other written

contracts relating to real estate, which are authorized to be recorded, shall be

recorded in the county where such real estate, or a part thereof, is situated.‟”).5

      In Brown v. Lazarus, the Court of Civil Appeals held,

      4
        According to Texas Jurisprudence, when “a deed or other instrument
affects the title to land in one tract that is partly in one county and partly in
another, recordation in either county is notice as to all the land.” 64 Tex. Jur. 3d
Records and Recording Laws § 42 (2003); see Steven C. Haley, The Recording
Statute in Texas (and the Innocent Purchaser Doctrine), State Bar of Tex. Prof.
Dev. Program, Advanced Real Estate Law Course (2007) (“If one property is
located in two different counties, recordation in one of those two counties is
sufficient, even if only an insignificant part of the land lies in the county of
recordation.”            (footnotes        omitted)),           available         at
http://www.moormantate.com/stevenPub%20PDF/The%20Recording%20Statute
%20(00037193).PDF. Both of these sources cite cases dating to the 1880s in
support of this proposition. See, e.g., Hancock v. Tram Lumber Co., 65 Tex.
225, 232 (1885); Tom v. Kenedy Nat’l Farm Loan Ass’n, 123 S.W.2d 416, 419
(Tex. Civ. App.––El Paso 1938, no writ); Haines v. West, 102 S.W. 436, 439
(Tex. Civ. App.), aff’d, 105 S.W. 1118 (1907).
      5
        Appellants contend that because the statute says that a deed should be
recorded in “the county in which a part of the property is located” rather than “a
county” or “any county,” the statute should be construed to particularize the word
“county” so that an instrument must be recorded in each county in which a part of
the property is located. However, their argument is self-defeating; if “the”
particularizes the word “county,” then recording in only one county rather than
multiple counties is what is contemplated by the statute. See Steger & Bizzell,
Inc. v. Vandewater Constr., Inc., 811 S.W.2d 687, 693 (Tex. App.––Austin 1991,
writ denied) (“Next, the term „the‟ preceding the term „transaction‟ indicates that
the statute is referring to the solicitation of one particular transaction.”).

                                          6
            From so much of the judgment as denied appellees Lazarus
     and the Western Mortgage & Investment Company, Limited, a
     recovery against the other appellees of that part of the tract of 3,111
     acres which is situated in Wichita [C]ounty, they have prosecuted a
     cross appeal. They claim as purchasers under a deed of trust which
     was duly recorded in Archer [C]ounty, where about one-half of said
     tract of land is situated. The other appellees claim as purchasers at
     execution sale made in Wichita [C]ounty by virtue of a levy
     subsequent to the registration of the deed of trust in Archer [C]ounty,
     of which deed of trust the plaintiff in execution had no actual notice
     at the date of the levy. The entire tract of land was described in the
     patent, and in the subsequent conveyances, including the deed of
     trust, as situated in Archer [C]ounty, but with the field notes therein
     set out.       Article 4333, Rev. St., provides that „all deeds,
     conveyances, mortgages, deeds of trust, or other written contracts
     relating to real estate, which are authorized to be recorded, shall be
     recorded in the county where such real estate, or a part thereof, is
     situated.‟ The succeeding article provides that „every conveyance,
     covenant, agreement, deed of trust, or mortgage in this chapter
     mentioned, which shall be acknowledged, proved or certified
     according to law, and delivered to the clerk of the proper court to be
     recorded, shall take effect and be valid as to all subsequent
     purchasers for a valuable consideration, without notice, and as to all
     creditors, from the time when such instrument shall be so
     acknowledged, proved, or certified and delivered to such clerk to be
     recorded, and from that time only.‟ The language of these articles
     indicates very clearly, we think, that when the holder of the deed of
     trust had it recorded in Archer [C]ounty, where all the land purported
     to be situated, and where „a part‟ (one-half) of the entire tract was
     situated, the statute was fully complied with, and the lien thereby
     secured must be protected against „all creditors,‟ as therein
     provided. The tract being a unit, record in either county would be
     sufficient constructive notice. The language employed by the
     present chief justice of our supreme court in Hancock v. Lumber Co.,
     65 Tex. 232, in construing this statute, while not necessary to a
     decision of that case, seems to us to state the rule correctly. It
     follows, therefore, that as to so much of this tract as lies in Wichita
     [C]ounty[,] the judgment must be reversed, and here rendered in
     accordance with this conclusion, for the entire tract, in favor of said
     appellees, who recovered only that part which is situated in Archer
     [C]ounty.
25 S.W. at 73 (emphasis added).

                                       7
      Appellants contend that Brown is distinguishable because (1) the

predecessor statute which it references involved “specific creditor language,”

which current section 11.001(a) does not contain, (2) it dealt with the recording of

a deed of trust rather than an oil and gas lease, (3) the deeds at issue in Brown

described the land as being located only in the county in which the deed of trust

was recorded even though the metes and bounds description indicated the land

was actually located in two counties, and (4) the purchaser in Brown obtained

property known to be located in two counties.

      The “specific creditor” language in the prior statute does not distinguish the

statute at issue in Brown from the language in section 11.001(a); Brown‟s

construction of the applicable part of the prior statute does not turn on the

“specific creditor” language. Instead, that language reiterates as against whom

and when a properly recorded deed gives constructive notice. Id. Additionally,

that Brown involved a deed of trust rather than an oil and gas lease is of no

import:   both section 11.001(a) and its predecessor apply to instruments or

contracts related to real estate; an oil and gas lease, like a deed of trust, is

clearly an instrument related to real property. See Tittizer v. Union Gas Corp.,

171 S.W.3d 857, 860 (Tex. 2005) (“An oil and gas lease is a contract, and its

terms are interpreted as such.”).

      Although the deed of trust at issue in Brown did describe the land as being

located in Archer County (even though part of it was also located in Wichita

County according to the metes and bounds description), the court‟s opinion did

                                         8
not turn on that description but rather on compliance with the statute, by virtue of

the fact that part of the land was actually located in Archer County. See Brown,
25 S.W. at 73. Additionally, the deed to Aston Meadows, although describing

property as being located in Tarrant County, also describes it as “a portion of that

certain tract of land described in deed to the The Jack W. Wilson Family Trust,

recorded in Volume 11964, page 683, Deed Records, Tarrant County, Texas.”

The deed to the Jack W. Wilson Family Trust describes the property being

conveyed as located in “Tarrant County and Wise County.” See Tex. Prop. Code

Ann. § 11.007 (West 2004) (“A reference in an instrument to the volume and

page number, film code number, or county clerk file number of the „real property

records‟ (or other words of similar import) for a particular county is equivalent to a

reference to the deed records, deed of trust records, or other specific records, for

the purpose of providing effective notice to all persons of the existence of the

referenced instrument.”).6

      Finally, it is unclear whether the parties who recovered the Wichita County

part of the tract in Brown were claiming title to the entire tract, including the part

in Archer County, or only the part in Wichita County. The appellate court does

      6
       Although the references in the deed to Aston Meadows relate more
properly to the issue of inquiry notice, we discuss them here to show that the
court‟s decision, and interpretation of the statute, in Brown was based on the
property‟s actual location rather than its description in the deed. See Westland
Oil Dev. Corp. v. Gulf Oil Corp., 637 S.W.2d 903, 908 (Tex. 1982); Boswell v.
Farm & Home Sav. Ass’n, 894 S.W.2d 761, 766 (Tex. App.––Fort Worth 1994,
writ denied).

                                          9
not say if those parties had claimed the entire tract at trial although we note that

the trial court had already awarded the Archer County part to Lazarus, so the

only part of the tract at issue on appeal was the part in Wichita County. Brown,
25 S.W. at 73. Thus, Brown is not distinguishable on that basis.

      We conclude and hold that the correct statutory construction of section

11.001(a) is that when an instrument relates to a contiguous tract of land located

in more than one county, the recording of that instrument in only one of the

counties is sufficient to comply with the requirements of section 11.001(a).

Effect of Subdivision of Larger Tract on Recording Requirements

      Appellants contend that this construction of section 11.001 improperly

places the burden on a purchaser of property that has been subdivided from a

larger, multi-county tract into a single county tract to search the property records

of multiple counties for prior recorded instruments. Appellants contend that even

if the Lease was properly recorded initially, it is not effective as to appellants

because the character of the Property changed once it was “no longer being

treated as a single tract or unit.”

      According to appellants, a purchaser should be required to search property

records only in the county in which the purchased property is located. However,

such a rule would place the burden on a recorder of a prior instrument conveying

an interest in real property (such as a deed of trust or oil and gas lease) to

continually check property records for evidence of subsequent subdivision by the

owner and of recordings by subsequent purchasers.            This would turn our

                                        10
recording system, which provides for a system of constructive notice to

subsequent purchasers of prior recorded documents, on its head.

      As pointed out by appellees, a prospective purchaser can protect its rights

by “examining the chain of title to the property to be acquired and searching the

real property records of all counties referenced in the chain of title.” [Emphasis

added.] Such a burden does not seem to be as onerous in a case, such as this

one, in which title insurance was obtained; the title company‟s abstract plant

maintains records based on past chains of title rather than being searchable for

prospective purchasers.    See Tex. Ins. Code Ann. § 2501.004 (West Supp.

2011); Noble Mortg., 340 S.W.3d at 79–80; Sanchez v. Telles, 960 S.W.2d 762,

767 (Tex. App.––El Paso 1997, pet. denied) (“The intention of the recording acts

is to compel every person receiving conveyances of real property to place such

an instrument of record, not only that he may thereby protect his own rights, but

also those of all others who may afterwards seek to acquire an interest in the

same property.” (emphasis added)). Moreover, by enacting section 11.001(a), it

is the legislature that has chosen to place the burden on subsequent purchasers

of subdivided property to check all applicable property records rather than on

prior recorders of instruments to continually check for subsequent recorded

documents.

      Appellants contend that this interpretation of section 11.001(a) conflicts

with sections 11.001(b) and 12.005 of the property code.       Section 11.001(b)

provides that if an instrument is recorded in a proper county, and a new county is

                                       11
later formed “containing property conveyed or encumbered by the instrument,”

the creation of the new county “does not affect the recording‟s validity or effect as

notice.” Tex. Prop. Code Ann. § 11.001(b) (West Supp. 2011). The county court

of the new county must, at its own expense, “obtain a certified transcript of the

record of all instruments conveying or encumbering property in the new county[,]

. . . deposit the transcript for public inspection in the recorder‟s office of the new

county[,] and . . . make an index of the transcript.” Id. However, this part of the

statute does not make the validity of the instrument dependent on the new

county‟s recording of the instrument in that county‟s records; instead, it very

clearly states that the formation of the new county does not affect the validity of

the prior recorded instrument as to notice. Thus, our interpretation of section

11.001(a) does not conflict with section 11.001(b).

      Moreover, our interpretation of the statute does not conflict with section

12.005 either, which provides that “[a] court order partitioning or allowing

recovery of title to land must be recorded with the county clerk of the county in

which the land is located in order to be admitted as evidence to support a right

claimed under the order.”      Id. § 12.005(a) (West 2004).        This provision is

intended to provide for a court order, which is not normally required to be

recorded in a county‟s real property records, to serve as constructive notice; it is

inapposite to the proper construction of section 11.001(a).

                                         12
Where is Property Located?

      Appellants contend that even if this court interprets section 11.001(a) as

giving constructive notice if the instrument is recorded in only one county,

appellees did not conclusively establish recording in the proper county because

the premises originally leased to appellees‟ predecessor consisted of three

separate and distinct tracts, rather than just the two purportedly described in the

Lease, and that the third tract was located completely in Tarrant County and

therefore is not part of a larger tract spanning multiple counties.

      A visual depiction of the two tracts described in the Lease is attached to

this opinion as an addendum. The first tract is located in both Wise and Tarrant

Counties and is shown in yellow. The second tract is described by metes and

bounds and consists of two almost squares meeting at a point in the middle

(similar to a figure eight with squared figures instead of loops); it is shown in

green. The western part of the second tract is located in both Wise and Tarrant

Counties, but the eastern part is located solely within Tarrant County. Most of

the Property is comprised of the eastern part of Tract II. According to appellants,

because the eastern part of Tract II is located solely within Tarrant County,

section 11.001(a) does not apply, and the law requires the Lease to be recorded

in both counties because the eastern part is a separate and distinct tract of land.

See Hancock, 65 Tex. at 232 (“We do not think, however, that the registration of

a deed, or other instrument which affects the title to several separate or distinct

tracts of land situated in different counties, in a county in which some of the tracts

                                         13
may be situated, would be such registration as would operate as notice of the

deed or other instrument, in so far as the same might embrace lands not situated

in the county in which registration is made.”).

         Here, a careful reading of the entirety of the Lease 7 shows that the

grantors were not intending to convey separate lease rights in distinct tracts of

land, but rather the same interest in an entire tract that was described in two

parts.       The Lease begins by stating that the lessor “grants, leases and lets

exclusively . . . the following described land,” after which is a description of the

two tracts. After the descriptions of the two tracts, which are titled “Tract I” and

“Tract II” and comprise two paragraphs, is the following: “LESS AND EXCEPT

from the above two tracts . . . 526.52 acres of land located in the M. Ashton

Survey, Abstract 1 and Chas. Fleishner Survey, Abstract 310 . . . .” [Emphasis

added.] Following the property descriptions is this statement: “This lease also

covers and includes all land owned or claimed by Lessor adjacent or contiguous

to the land particularly described above, whether the same be in said survey or

surveys or in adjacent surveys, although not included within the boundaries of

the land particularly described above.” Thus, we conclude and hold that the

Lease did not intend to apply to two or three separate tracts in different counties,

         7
       We review an unambiguous lease de novo as a question of law; our
primary duty is to ascertain the parties‟ intent as expressed within the lease‟s four
corners, harmonizing all of its parts. Anadarko Petroleum Corp. v. Thompson, 94
S.W.3d 550, 554 (Tex. 2002).

                                          14
but rather to one contiguous tract described in two parts. Therefore, section

11.001(a) applies.

Conclusion

      Based on the foregoing, we conclude and hold that the trial court did not

err by granting summary judgment for appellees. Because Aston Meadows‟s

and Ivey‟s motions for summary judgment were based on the interpretation of the

statute that we reject here, we also conclude and hold that the trial court did not

err by denying those motions for summary judgment. We overrule appellant‟s

first through seventh issues.8

                                 Evidentiary Issues

      In their eighth and ninth issues, appellants contend that the trial court

abused its discretion by (1) excluding an affidavit with attached exhibits from

Gregory S. Iffland in response to Ivey‟s motion for summary judgment on the

ground that Iffland had not been disclosed as a witness and (2) excluding parts of

Ivey‟s affidavit.   However, even if the trial court did abuse its discretion by

excluding that evidence, the exclusion did not cause the rendition of an improper

verdict because that evidence would not change the trial court‟s answer to the

      8
      To the extent those issues raise inquiry notice, we do not address them.
See Tex. R. App. P. 47.1.

                                        15
question of law resolved in the summary judgment for appellees.9 See Tex. R.

App. P. 44.1(a)(1). Accordingly, we overrule appellants‟ eighth and ninth issues.

                                   Conclusion

      Having overruled appellants‟ nine issues, we affirm the trial court‟s

judgment. Because appellees‟ cross-issue is contingent on this court‟s granting

relief to appellants, we need not address it. See Tex. R. App. P. 47.1.

                                                  TERRIE LIVINGSTON
                                                  CHIEF JUSTICE

PANEL: LIVINGSTON, C.J.; DAUPHINOT, J.; and WILLIAM BRIGHAM (Senior
Justice, Retired, Sitting by Assignment).

DELIVERED: January 26, 2012

      9
       Although the trial court excluded the evidence as to Ivey‟s response to
appellees‟ motion for summary judgment, it did not do so as to Ivey‟s motion for
summary judgment, or the prior cross-motions for summary judgment filed
between Aston Meadows and appellees.

                                        16
Addendum