Court Opinion

ID: 4457769
Source: CourtListenerOpinion
Date Created: 2019-11-21 15:15:48.020275+00
Date Added: 2024-06-11T15:03:39.420218
License: Public Domain

NUMBER 13-18-00039-CV

                            COURT OF APPEALS

                   THIRTEENTH DISTRICT OF TEXAS

                     CORPUS CHRISTI - EDINBURG

METROPOLITAN WATER
COMPANY, LP,                                                               Appellant,

                                        v.

NATHAN AUSLEY,                                                             Appellee.

                    On appeal from the 21st District Court
                         of Burleson County, Texas.

                        MEMORANDUM OPINION
  Before Chief Justice Contreras and Justices Hinojosa and Tijerina
                 Memorandum Opinion by Justice Tijerina

      Appellee Nathan Charles Ausley sued appellant Metropolitan Water Company,

L.P. (Met Water) for breach of contract.       Ausley and Met Water have differing

interpretations of the relevant contract, and each moved for summary judgment. The trial

court granted Ausley’s motion for summary judgment and denied Met Water’s. By its sole
issue, Met Water contends that summary judgment for Ausley was improper because Met

Water timely made payment pursuant to the contract. We affirm. 1

                                         I.      BACKGROUND

        On January 26, 2005, Ausley entered into two groundwater leases with Met Water

(collectively, the contract). The contract provided that Met Water would pay Ausley

certain royalty payments once production began and described a process by which any

deficiencies in royalty payments would be addressed.

        On July 6, 2016, Ausley mailed Met Water notice asking Met Water to correct

royalty payment deficiencies. Met Water received this notice on July 8. Met Water issued

a check for the proper amount and deposited it in the mail on September 6. Ausley

received this payment on September 8 and claims it was two days late pursuant to a sixty-

day deadline imposed by the contract.

        Thereafter, Ausley sued Met Water asserting the late payment constituted a

breach of contract. Both parties moved for traditional summary judgment, and the trial

court granted Ausley’s motion and denied Met Water’s motion. In their motions for

summary judgment, both parties agreed that payment was due by September 6, 2016.

While Met Water argued that it made payment on September 6 when it deposited payment

in the mail, Ausley argued that Met Water paid on September 8—the date Ausley received

payment. The trial court determined that Met Water’s payment was untimely and awarded

Ausley attorney’s fees and costs. It subsequently denied Met Water’s motion for new

trial. This appeal followed.

                                   II.        STANDARD OF REVIEW

        1This case is before this Court on transfer from the Tenth Court of Appeals in Waco pursuant to a
docket-equalization order issued by the Supreme Court of Texas. See TEX. GOV’T CODE ANN. § 73.001.

                                                   2
        We review the trial court’s summary judgment de novo. See Provident Life &

Accident Ins. Co. v. Knott, 128 S.W.3d 211, 215 (Tex. 2003). Summary judgment is

proper when the movant conclusively establishes the elements of the claim. Id.; Sci.

Spectrum, Inc. v. Martinez, 941 S.W.2d 910, 911 (Tex. 1997). Here, the claim is breach

of contract, which requires proof of four elements: “(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.” Eaves

v. Unifund CCR Partners, 301 S.W.3d 402, 407 (Tex. App.—El Paso 2009, no pet.); Doss

v. Homecoming Fin. Network, Inc., 210 S.W.3d 706, 713 (Tex. App.—Corpus Christi–

Edinburg 2006, pet. denied). 2

        When reviewing a summary judgment, we take as true all evidence favorable to

the nonmovant, and we indulge every reasonable inference and resolve any doubts in the

nonmovant’s favor. City of Keller v. Wilson, 168 S.W.3d 802, 822 (Tex. 2005). The party

moving for traditional summary judgment has the burden to show that no genuine issue

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

166a(c); Nixon v. Mr. Prop. Mgmt. Co., 690 S.W.2d 546, 548 (Tex. 1985). When, as here,

both parties move for summary judgment on the same issue and the trial court grants one

motion and denies the other, we consider the summary judgment evidence presented by

both sides, determine all questions presented, and if we determine that the trial court

erred, render the judgment the trial court should have rendered.                    See FM Props.

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

                                       III.    THE CONTRACT

        2The issue on appeal is whether Met Water breached the contract; therefore, we will only address
this element.

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       By its sole issue, Met Water contends the trial court erred by granting Ausley’s

motion for summary judgment on Ausley’s breach of contract claim. Met Water argues

that it paid on September 6, 2016 when it deposited payment in the mail—not when

Ausley received the payment—“because payment by mail was permitted by [the contract]

and because it was customary for the parties to exchange payments by mail.” Ausley

argues Met Water did not pay on time because Ausley received payment on September

8.

       “Ordinarily, simply mailing a premium check before the last day for payment is not

sufficient to constitute timely payment,” but when “remittance by mail is customary or

authorized,” performance is completed when “remittance, properly addressed, is

deposited in the mail.” Am. Cas. Co. of Reading, Pa. v. Conn, 741 S.W.2d 536, 538 (Tex.

App.—Austin 1987, no writ). “[A]n oil and gas lease may expressly provide for the

payment of delay rentals by the mailing of a check, draft or other form of remittance to the

lessors.” See Corley v. Olympic Petroleum Corp., 403 S.W.2d 537 (Tex. App.—

Texarkana 1966, writ ref’d).

       The provision at issue, in relevant part, provides: “If [Met Water] fails to make the

minimum payment within the sixty (60) days as specified hereinabove, then this lease

shall lapse and terminate and no longer be in force and effect.” Both parties agree the

deadline for payment was September 6, 2016, and Met Water has not identified any case

law interpreting identical language. Thus, to support its argument, Met Water relies on

the following shut-in royalty provision, unrelated to royalty payment deficiencies, in the

contract: “On or before the expiration of the six (6) consecutive month period, [Met Water]

may pay or tender by check . . . a shut-in royalty amount . . . .” According to Met Water,

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because the contract “contemplates payment of shut-in royalties by check,” the deposit

of royalty deficiency payments by mail was therefore authorized by the contract and its

deposit of the check into the mail on September 6 was timely. We disagree.

      Here, the contract does not specify the manner in which the royalty deficiency

payments should be paid or received. For comparison, in TSB Exco, Inc. v. E.N. Smith,

III Energy Corp., the contract expressly provided that payment

      may be made by check or draft of Lessee delivered or mailed to the
      authorized depository bank or to Lessor (at the address last known to
      Lessee) on or before such date for payment, and the payment or tender will
      be deemed made when the check or draft is so delivered or mailed.

818 S.W.2d 417, 419 (Tex. App.—Texarkana 1991, no writ). In this case, although the

contract expressly authorizes payment of shut-in royalties by check, it does not expressly

authorize shut-in royalty payments, or any other royalty payments, to be deposited by

mail as Met Water suggests.        Absent language specifically authorizing depositing

payments by mail, we hold that the contract did not expressly provide for royalty

deficiencies to be timely if deposited by mail on or before the due date. See Buffalo

Pipeline Co. v. Bell, 694 S.W.2d 592, 596–97 (Tex. App.—Corpus Christi–Edinburg 1985,

writ ref’d n.r.e.) (op. on reh’g)(explaining that where the subject lease had no provision

for payment by mail and there was no established custom or course of dealing between

the parties, the lessee’s deposit of payment in the mail was not timely); see also Kingsley

Props., LP v. San Jacinto Title Servs. of Corpus Christi, LLC, 501 S.W.3d 344, 349 (Tex.

App.—Corpus Christi–Edinburg 2016, no pet.) (holding that parties to a contract are

masters of their own choices).

      Next, Met Water asserts that payment by mail was customary between the parties

although “the appellate record may not directly reflect it.”     For summary judgment

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purposes, it was Met Water’s burden to establish, as a matter of law, that remittance of

royalty payments by mail was customary between it and Ausley, and that, indeed, it timely

mailed the payment pursuant to its custom. See Conn, 741 S.W.2d at 538; Pentico v.

Mad-Wayler, Inc., 964 S.W.2d 708, 718 (Tex. App.—Corpus Christi–Edinburg 1998, pet.

denied) (providing that where a note on its face does not authorize payments by mail, a

pattern of dealing may establish such authorization). After reviewing the record, we find

no evidence demonstrating remittance by mail was a customary form of payment between

the parties.

       Because the contract does not expressly provide for the mailing of royalty

payments and we find no evidence in the record demonstrating that this form of dealing

was customary between the parties, Ausley conclusively established that Met Water

breached the contract by failing to timely make royalty payments. Accordingly, the trial

court properly granted summary judgment in favor of Ausley on that basis. See Knott,
128 S.W.3d at 215. We overrule Met Water’s sole issue.

                                   IV.     CONCLUSION

       We affirm the judgment of the trial court.

                                                    JAIME TIJERINA,
                                                    Justice

Delivered and filed the
21st day of November, 2019.

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