Court Opinion

ID: 3085608
Source: CourtListenerOpinion
Date Created: 2015-10-16 02:42:47.018906+00
Date Added: 2024-06-11T12:26:53.534708
License: Public Domain

Opinion filed March 15, 2012

                                          In The

   Eleventh Court of Appeals
                                        __________

                                  No. 11-09-00348-CV
                                      __________

                    RAVEN RESOURCES, LLC, Appellant
                                  V.
                 LEGACY RESERVES OPERATING, LP, Appellee

                          On Appeal from the 385th District Court
                                 Midland County, Texas
                             Trial Court Cause No. CV 46609

                                       OPINION
       On original submission, we issued our opinion in which we reversed the judgment of the
trial court and rendered in part and remanded in part.      Legacy Reserves Operating, LP
subsequently filed a motion for rehearing. We granted Legacy’s motion for rehearing, withdrew
our former opinion and judgment, and issued a subsequent opinion and judgment in which we
affirmed the trial court’s judgment.   However, we apparently did not request that Raven
Resources, LLC respond to Legacy’s motion for rehearing. Therefore, we withdrew our second
opinion and judgment and asked Raven to respond to Legacy’s motion for rehearing. Raven has
now responded to the motion, and Legacy has replied to Raven’s response. We grant Legacy’s
motion for rehearing, withdraw our original opinion and judgment, and substitute the following
opinion and judgment therefor. We affirm the trial court’s take-nothing judgment it entered
against Raven.
       Among other related business pursuits, Raven buys and sells various oil and gas wells
and leases.
       Raven was interested in selling, and Legacy was interested in buying, certain oil and gas
related properties. At the time that the transaction giving rise to this lawsuit began between
Raven and Legacy, Michael L. Lee was employed by Raven; he assisted in the evaluation of
properties that Raven was interested in purchasing or selling. Lee was Raven’s primary contact
in the negotiations with Legacy for the purchase and sale of the property that is involved in this
lawsuit.
       After extended negotiations between Lee and Legacy, Legacy forwarded a draft of a
purchase and sale agreement to Raven. The draft was not signed by Legacy, was dated June 22,
2007, and contained the word “DRAFT.” The draft agreement did not contain any detail
describing the properties to be conveyed. The purchase price to be paid by Legacy, as stated in
the draft agreement, was $26,626,000. David Stewart, on behalf of Raven, as its sole managing
member, signed the draft agreement and returned it to Legacy. After having performed its due
diligence and after continued negotiations with Lee, Legacy determined that there were certain
adjustments that needed to be made in the detail and extent of the property interests and other
matters, including price, before it would complete the transaction.
       In a subsequent draft of the purchase and sale agreement dated July 11, 2007, Legacy
made those changes and reduced the purchase price accordingly to $20,300,000. The July 11
agreement also provided that Legacy would pay 5% of the $20,300,000 purchase price as earnest
money. Legacy sent the July 11 agreement to Lee. However, Lee did not tell Stewart about the
changes and the subsequent agreement but, instead, forged Stewart’s name to the agreement and
returned it to Legacy. The summary judgment evidence shows that Lee had no authority to sign
documents on behalf of Raven or to bind Raven to any agreement; that authority was held only
by David Stewart, Raven’s sole managing member. Raven does not claim that Legacy knew
about the forgery. On July 13, 2007, Legacy paid the 5% earnest money payment to Raven in
accordance with the July 11 agreement.
       On July 31, 2007, Stewart signed a “Certificate” wherein he certified that he was Raven’s
managing member “well prior to the July 11, 2007 execution of [the] Purchase and Sale
Agreement.” Stewart also certified that he served as Raven’s managing member “through the
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date of the sale contemplated thereby.” Additionally, among other things, he certified that he
had been duly authorized and directed “to execute the above-described Agreement and to close
the sale contemplated thereby.”
       The parties closed the transaction by mail. By thirty-five “assignments and bills of sale”
dated August 3, 2007, Raven purported to transfer to Legacy the various interests and properties
set out in the July 11 agreement. The assignments specifically incorporated the terms of the
July 11 agreement. Also on August 3, 2007, Legacy transferred $18,925,000.03, the balance due
under the specific terms of the July 11 agreement, into Raven’s bank account. Raven used the
money to pay debts and partners. Some three weeks after Raven executed the assignments, and
after it had paid debts and partners, Raven discovered that the amount deposited into its bank
account by Legacy was $6,326,000 less than the $26,626,000 purchase price set out in the
June 22 draft.
       Raven subsequently filed this lawsuit against Legacy. Legacy filed counterclaims against
Raven. With the exception of breach-of-contract counterclaims asserted by Legacy against
Raven for damages, indemnification, and specific performance (which were severed by the trial
court), all of the other claims were covered in motions for summary judgment filed by Raven and
by Legacy.
       In Raven’s motion for partial summary judgment, it sought a declaration that the July 11
agreement was void due to forgery.       It also sought a judgment rescinding the thirty-five
assignments based upon mutual mistake as to the sales price. Raven did not seek a summary
judgment on its claim for unjust enrichment.
       Legacy also filed a motion for partial summary judgment in which it asked the trial court
to enter summary judgment that Raven take nothing by any of its claims. Legacy also asked the
trial court to declare the July 11 agreement to be valid and enforceable because Raven had
ratified and adopted it, because Raven was estopped to deny that it had ratified the July 11
agreement, and because Raven had waived the right to rescind the assignments.             In the
alternative, Legacy sought a declaration that, because the terms of the July 11 agreement were
incorporated into each of the assignments, the assignments were valid and enforceable
agreements.

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         The trial court denied the motion filed by Raven, but it granted the motion filed by
Legacy and entered a take-nothing judgment against Raven on the claims that Raven had made.
The trial court did not state the reasons for its ruling. The trial court severed Legacy’s remaining
counterclaims, thus creating a final appealable judgment.
         On appeal, Raven claims in one issue that the trial court erred when it granted Legacy’s
motion for partial summary judgment. In sub-issues, Raven claims that the trial court erred
because the July 11 agreement was forged and therefore void as a matter of law, because Raven
did not adopt or ratify the July 11 agreement, because incorporation of the July 11 agreement
into the assignments did not render it valid, because Raven was not estopped from denying that it
ratified the July 11 agreement or that it was incorporated into the assignments, and because
Raven was entitled to relief on its claim for unjust enrichment.
         In response, Legacy takes the position that the terms of the July 11 agreement were
properly incorporated into each of the assignments and that, therefore, the assignments are valid
and enforceable.     Legacy also maintains that, by its actions, Raven ratified the July 11
agreement. Legacy reasons, therefore, that, for either of those reasons, the trial court was correct
when it granted Legacy’s motion for partial summary judgment and when it denied Raven’s
motion for partial summary judgment.
         Both of the motions for partial summary judgment were traditional ones.           TEX. R.
CIV. P. 166a(c). We review the trial court’s summary judgment de novo. Valence Operating
Co. v. Dorsett, 164 S.W.3d 656, 661 (Tex. 2005); Provident Life & Accident Ins. Co. v. Knott,
128 S.W.3d 211, 215 (Tex. 2003). A trial court must grant a traditional motion for summary
judgment if the moving party establishes that no genuine issue of material fact exists and that the
movant is entitled to judgment as a matter of law. Rule 166a(c); Lear Siegler, Inc. v. Perez, 819
S.W.2d 470, 471 (Tex. 1991). In order for a defendant to be entitled to summary judgment
against the plaintiff’s claims, it must either disprove an element of each of the plaintiff’s causes
of action or establish an affirmative defense as a matter of law. Am. Tobacco Co. v. Grinnell,
951 S.W.2d 420, 425 (Tex. 1997); Sci. Spectrum, Inc. v. Martinez, 941 S.W.2d 910, 911 (Tex.
1997).
         Once the movant establishes a right to summary judgment, the nonmovant must come
forward with evidence or law that precludes summary judgment. City of Houston v. Clear Creek
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Basin Auth., 589 S.W.2d 671, 678–79 (Tex. 1979). When reviewing a traditional summary
judgment, the appellate court considers all the evidence and takes as true evidence favorable to
the nonmovant. Am. Tobacco Co., 951 S.W.2d at 425; Nixon v. Mr. Prop. Mgmt. Co., 690
S.W.2d 546, 548–49 (Tex. 1985). The appellate court “must consider whether reasonable and
fair-minded jurors could differ in their conclusions in light of all of the evidence presented” and
may not ignore “undisputed evidence in the record that cannot be disregarded.” Goodyear
Tire & Rubber Co. v. Mayes, 236 S.W.3d 754, 755, 757 (Tex. 2007).
       When both parties move for summary judgment on the same issues and the trial court
grants one motion and denies the other, we consider the summary judgment evidence presented
by both sides and determine all questions presented. If we determine that the trial court erred,
we must render the judgment that the trial court should have rendered. Valence Operating, 164
S.W.3d at 661. When a trial court does not specify the grounds it relied upon to grant the
summary judgment, we must affirm the summary judgment if any of the grounds stated in the
motion for summary judgment are meritorious. FM Props. Operating Co. v. City of Austin, 22
S.W.3d 868, 873 (Tex. 2000).
       Raven is correct in its argument that the summary judgment evidence shows that the
July 11 agreement was forged and therefore invalid. Because it was forged, the agreement was
void. Garcia v. Garza, 311 S.W.3d 28, 44 (Tex. App.—San Antonio 2010, pet. denied); Bellaire
Kirkpatrick Joint Venture v. Loots, 826 S.W.2d 205, 210 (Tex. App.—Fort Worth 1992, writ
denied).
       While it is true that a reference to a void agreement references nothing, we have come to
the conclusion that we need not decide the effect of that principle in this case and that the
principle is not the end of the inquiry here. Commonwealth Land Title Ins. Co. v. Nelson, 889
S.W.2d 312, 318 (Tex. App.—Houston [14th Dist.] 1994, writ denied). Here, the parties did
more than merely reference the void July 11 agreement in the assignments—they specifically
incorporated the terms of that agreement into the assignments. Therefore, the parties made the
actual terms of the July 11 agreement a part of the content of the assignments the same as any
other term appearing in the assignments, regardless of whether the July 11 agreement was void.
The assignments became the operative and controlling documents, and they contained those
specific terms that had been incorporated into them. The assignments are valid and enforceable
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in and of themselves, and the incorporation of the terms of the forged July 11 agreement did not
void the assignments. Nelson, 889 S.W.2d at 318.
       We are not to be taken as holding that the July 11 forged agreement somehow received a
breath of new life when Stewart signed the thirty-five August 3, 2007 assignments. The July 11
agreement was and remains void because it was forged. Instead, the assignments constituted
new, independent, enforceable agreements with all of the terms and conditions contained within
them, including those specifically incorporated into them from the July 11 forged agreement.
Those assignments are enforceable by their own terms, and the July 11 agreement remains as
void as it was from its inception.
       If the trial court granted summary judgment on the basis that the thirty-five assignments
were valid and enforceable, then it did not err. Because we have held that the assignments are
valid and enforceable, we need not discuss whether Raven adopted or ratified the July 11
agreement.
       Raven argues that, even if the assignments are valid, it is entitled to rescind them because
of the existence of a mutual mistake as to price. A mutual mistake exists when both parties to
the transaction entertain a belief that a present material fact exists when that present material fact
does not in fact exist. Valero Energy Corp. v. Teco Pipeline Co., 2 S.W.3d 576, 588–89 (Tex.
App.—Houston [14th Dist.] 1999, no pet.). The burden to show the existence of a mutual
mistake is on the party claiming mutual mistake. Barker v. Roelke, 105 S.W.3d 75, 84 (Tex.
App.—Eastland 2003, pet. denied). The burden was on Raven to raise a fact issue showing that
it and Legacy were acting under the same misunderstanding of the same material fact.
Johnson v. Conner, 260 S.W.3d 575, 581 (Tex. App.—Tyler 2008, no pet.). The issue is not
determined from the subjective statements regarding the parties’ intent but, rather, by the
objective circumstances surrounding the execution of the agreement. Myrad Props., Inc. v.
LaSalle Bank Nat’l Ass’n, 300 S.W.3d 746, 751 (Tex. 2009). We must consider the language of
the agreement. See, e.g., Sun Oil Co. v. Bennett, 84 S.W.2d 447, 452 (Tex. 1935).
       Here, the assignments contained clear language incorporating the terms of the July 11
agreement. A party is presumed to know the contents of documents that it signs, including those
specifically incorporated by reference. In re Int’l Profit Assocs., Inc., 286 S.W.3d 921, 923 (Tex.
2009). “[P]arties to a contract have an obligation to protect themselves by reading what they
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sign and, absent a showing of fraud, cannot excuse themselves from the consequences of failing
to meet that obligation.” In re Lyon Fin. Servs., Inc., 257 S.W.3d 228, 233 (Tex. 2008). Under
the facts of this case, Raven was under that obligation when Stewart signed the assignments.
       Because the terms of the July 11 agreement had become, by specific incorporation, terms
of the new and valid assignments, Raven was presumed to know what those terms were. See
Int’l Profit, 286 S.W.3d at 923. Again, it is the objective and not the subjective that controls the
answer as to whether there was a mutual mistake. Moreover, Raven presented no summary
judgment evidence that would raise a fact issue that Legacy was operating under any mistake as
to the assignments, much less one that was shared mutually with Raven.
        We hold that, as a matter of law, the assignments constituted valid, enforceable
agreements and that they are binding upon Raven and Legacy. Because the summary judgment
evidence did not raise an issue regarding mutual mistake, the trial court did not err when it
denied Raven’s claim to rescission. As stated above, because we have held that the assignments
constitute valid, enforceable agreements, we need not address the issues on appeal relating to
ratification and adoption.
       Because Legacy asked the trial court to enter a take-nothing judgment on all of Raven’s
claims, we will address Raven’s claim for unjust enrichment. Unjust enrichment claims are
based in quasi-contract. Fortune Prod. Co. v. Conoco, Inc., 52 S.W.3d 671, 683 (Tex. 2000).
Generally, with certain exceptions not applicable here, there can be no recovery for unjust
enrichment when an express contract covers the subject matter of the dispute. Id. We have held
that there is an express agreement that governs the parties and the issues in this case. Therefore,
the trial court did not err when it granted Legacy’s motion for summary judgment in this regard.
       We overrule all of Raven’s issues on appeal.
       We affirm the judgment of the trial court.

                                                             JIM R. WRIGHT
March 15, 2012                                               CHIEF JUSTICE
Panel consists of: Wright, C.J.,
McCall, J., and Kalenak, J.

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