Court Opinion

ID: 9961962
Source: CourtListenerOpinion
Date Created: 2024-04-22 08:10:59.170659+00
Date Added: 2024-06-11T08:19:30.582680
License: Public Domain

In the
                   Court of Appeals
           Second Appellate District of Texas
                    at Fort Worth
                  ___________________________
                       No. 02-23-00269-CV
                  ___________________________

ROBERT SCOTT BAUER AND BRAXTON MINERALS II, LLC, Appellants

                                  V.

            BRAXTON MINERALS III, LLC, Appellee

               On Appeal from the 141st District Court
                       Tarrant County, Texas
                   Trial Court No. 141-313791-19

            Before Sudderth, C.J.; Birdwell and Wallach, JJ.
                     Opinion by Justice Wallach
                                      OPINION

      Braxton Minerals III, LLC (BM3) sued Braxton Minerals II, LLC (BM2) and

Robert Scott Bauer (Bauer) (collectively Appellants) in district court in Tarrant

County. BM3 alleged that Appellants failed to comply with their representations and

contractual obligations to transfer oil, gas, and mineral interests (collectively mineral

interests) to BM3 in West Virginia, resulting in BM3 not owning the mineral interests

to such properties and not receiving royalty payments for production from the

properties. BM3 asked the court (1) to order that the disputed mineral deeds be

reformed to show BM3’s ownership, (2) to order specific performance for Appellants

to transfer and assign the disputed mineral interests and royalties to BM3, and (3) to

issue declaratory relief that BM3 is the rightful owner of the disputed mineral interests

and award past and future royalty payments from the properties to BM3.

BM3 asserted causes of action for fraud and fraudulent inducement, unjust

enrichment, imposition of a constructive trust, and money had and received, and

temporary and permanent injunctive relief regarding reformation of the disputed

mineral deeds and recovery of past and future royalty payments. BM3 also sought

recovery of attorney’s fees.

      Appellants counterclaimed against BM3 alleging that BM3, acting in concert

with one of Appellants’ managers, defrauded them in the transactions involved in

BM3’s claims and sought damages for (1) fraud and wrongful taking of the mineral

interests in West Virginia and royalty payments therefrom, (2) unjust enrichment,

                                           2
(3) money had and received, and (4) attorney’s fees. Appellants did not seek to have

any property interests transferred or deeds reformed. The trial court granted summary

judgment for BM3 on its claims for affirmative relief, denied Appellants’ summary

judgment motion on their counterclaim, and after conducting a bench trial on

attorney’s fees, awarded final judgment in favor of BM3, incorporating its earlier

summary judgment rulings.1

       Appellants appeal from the trial court’s final judgment, raising ten issues with

subparts. Appellants’ first issue challenges the trial court’s subject matter jurisdiction.

Because we sustain Appellants’ first issue, we will reverse the judgment of the trial

court in favor of BM3 on its claims for affirmative relief against Appellants and

dismiss BM3’s case for want of jurisdiction. Appellants’ issues 2 through 92

      1
        The trial court included in its final judgment an award against Appellants,
jointly and severally, for $15,000 in attorney’s fees and $15,000 in sanctions which had
purportedly been assessed by the regional presiding judge for frivolous attempts to
recuse the presiding trial judge, payable on entry of final judgment. The regional
presiding judge’s “Order Denying Defendants/Counter Plaintiff’s Motion to Recuse
and Granting Braxton Minerals’ III, LLC’s Request for Sanctions” found that the
reasonable attorney’s fees incurred by BM3 in responding to the third motion to
recuse was $15,000 but the decretal language awarded “sanctions” to BM3 against
Appellants, jointly and severally, in the amount of $15,000 without any direct
reference to attorney’s fees. Because we hold that the trial court had no subject matter
jurisdiction of the claims of either party, the award of attorney’s fees as sanctions
should be dismissed for want of jurisdiction. See In re C.R.C., No. 05-20-00125-CV,
2022 WL 16549070, at *2 (Tex. App.—Dallas Oct. 31, 2022, no pet.) (mem. op.)
(holding that award of attorney’s fees as sanctions in a judgment that was void due to
lack of subject matter jurisdiction must be dismissed for want of jurisdiction).
      2
       Appellants’ numbering and wording of their issues in the Issues Presented
section of their brief differs somewhat from the numbering and wording of their

                                            3
challenging the trial court’s judgment regarding BM3’s claims for affirmative relief are

mooted by our holding on issue one, and we need not address them. See Tex. R. App.

P. 47.1.

       Appellants’ issue ten challenges the trial court’s denial of their summary

judgment on their counterclaim for damages. We overrule this issue as well because

the trial court had no jurisdiction over the counterclaim. Therefore, we will dismiss

Appellants’ counterclaim for want of jurisdiction.

I.     Standards of Review and Legal Principles

       When a party challenges the subject matter jurisdiction of the trial court on

appeal but fails to adequately brief it, we have a duty to determine whether the trial

court had subject matter jurisdiction. Jarvis v. Field, 327 S.W.3d 918, 924 (Tex. App.—

Corpus Christi–Edinburg 2010, no pet.). 3 In reviewing a challenge to the court’s

subject matter jurisdiction, we may review the pleadings and any other evidence

relevant to the subject matter jurisdiction issue. Bland Indep. Sch. Dist. v. Blue,

34 S.W.3d 547, 554 (Tex. 2000); Devon Energy Prod. Co., v. KCS Res., LLC, 450 S.W.3d

203, 210 (Tex. App.—Houston [14th Dist.] 2014, pet. denied). Whether a trial court

issues as set out in the Arguments section of their brief. We will use the numbering as
set out in the Arguments section.
       3
         As in Jarvis, Appellants here made a conclusory statement in their brief that the
trial court had no jurisdiction in this case because it involved determination of
ownership of mineral interests in a foreign jurisdiction and cited several cases to
support the general proposition. Appellants provided no analysis of their argument.
See Jarvis, 327 S.W.3d at 924.

                                            4
has subject matter jurisdiction is a question of law, which we review de novo. Tex.

Dep’t of Parks & Wildlife v. Miranda, 133 S.W.3d 217, 226 (Tex. 2004); Danish

Leasegroup, Inc. v. York Oil & Gas Mgmt, Inc., 362 S.W.3d 220, 223 (Tex. App.—Dallas

2012, no pet.).

II.   Analysis

      We start with the basic principle that Texas courts have no jurisdiction to

adjudicate title to real property in other jurisdictions. Fox v. Fox, No. 14-18-00672-CV,

2020 WL 1265366, at *3 (Tex. App.—Houston [14th Dist.] March 17, 2020, no pet.);

Trutec Oil & Gas, Inc. v. W. Atlas Int’l, Inc., 194 S.W.3d 589, 583 (Tex. App.—Houston

[14th Dist.] 2006, no pet.); Carmichael v. Delta Drilling Co., 243 S.W.2d 458, 460 (Tex.

App.—Texarkana 1951, writ ref’d); Holt v. Guerguin, 163 S.W. 10, 12 (Tex. 1914). This

rule applies to interests in oil and gas leases and mineral interests in other

jurisdictions. Devon Energy, 450 S.W.3d at 216; Trutec, 194 S.W.3d at 583; Kelly Oil Co. v.

Svetlik, 975 S.W.2d 762, 764 (Tex. App.—Corpus Christi 1998, pet denied); Carmichael,

243 S.W.2d at 460. However, if a Texas court has jurisdiction over the parties, it may

enforce a party’s personal or contractual obligation that indirectly involves property in

another state, such as when a Texas court compels a party over whom it has

jurisdiction to execute a conveyance of a real property interest located in another

state. To determine the extent to which title and possession are involved, and thereby

implicate jurisdiction, we look to the nature of the suit, the injury complained of, and

the relief sought, together with any relevant evidence. Fox, 2020 WL 1265366, at *3;

                                            5
Devon Energy, 450 S.W.3d at 216; Trutec, 194 S.W.3d at 583–88. Regardless of how a

party frames its pleadings, we look to the basis upon which it seeks to recover

judgment. If the gist or gravamen of a claim involves adjudication of title to foreign

real property interests, the Texas court lacks subject matter jurisdiction. Fox,

2020 WL 1265366, at *3; Merit Mgmt. Partners I, L.P. v. Noelke, 266 S.W.3d 637, 646–

47 (Tex. App.—Austin 2008, no pet.). If ownership of foreign jurisdiction real

property interests is more than incidental or collateral to the claims and measure of

recovery, then the court lacks jurisdiction. Noelke, 266 S.W.3d at 646–47.

      Applying these standards, how do the pleadings of the parties in this case speak

to the jurisdictional issue? From the discussion of the pleadings set forth above, we

hold that the pleadings demonstrate that the trial court did not have subject matter

jurisdiction of the claims raised by BM3 and that its claims for affirmative relief

should be dismissed for want of subject matter jurisdiction. Likewise, we hold that the

trial court did not have jurisdiction of the Appellants’ counterclaim.

      A.     BM3’s claims

      We find the following cases to be instructive, starting with Danish Leasegroup,

which involved oil and gas leases in Kentucky. 362 S.W.3d at 222. Danish Leasegroup

was offered working interests in oil and gas leases in Kentucky, which it accepted in

return for a $750,000 payment to OAG/York, who was to use the funds to purchase

working interests for Danish Leasegroup’s benefit. OAG/York accepted the payment

and sent statements to Danish Leasegroup showing its working interests in the leases.

                                            6
Danish Leasegroup then received a percentage of income from the working interests

and distributed those funds to its investors. Thereafter, Danish Leasegroup sought

assurances from OAG/York regarding its title to the Kentucky working interests, and

OAG/York denied having transferred title to the interests and denied any agreement

to do so. Danish Leasegroup sued OAG/York for failing to transfer title to the

working interests and for damages flowing therefrom. Id. The causes of action

asserted by Danish Leasegroup were for

      •     violation of state and federal securities acts (fraudulently
            inducing the payment of the $750,000 for the working
            interests),

     •      statutory and common law fraud for the same conduct and
            failing to transfer title to the working interests,

     •      negligent misrepresentation in providing guidance on whether
            to purchase the working interests,

      •     breach of contract for failing to transfer the working interests
            as agreed,

     •      unjust enrichment as a result of failing to transfer the title to
            the working interests,

     •      breach of fiduciary duty for failing to transfer title to the
            working interests,

      •     civil conspiracy to defraud Danish Leasegroup of its title to the
            working interests,

      •     injunctive relief to preserve the working interests at issue,

      •     an accounting, and

                                           7
       •      constructive trust and receivership to protect the un-transferred
              working interests.

Id. at 224–25.

       In holding that these allegations required an impermissible determination of

title to foreign real property interests, our sister court stated:

       Throughout appellant’s pleadings, it repeatedly ties its causes of action to
       “the working interests it never received” and the failure by OAG and
       York to “transfer title to the working interests.” At its core, appellant’s
       complaint is that it had working interests in oil and gas leases in
       Kentucky and title to the working interests has not been
       transferred. Thus, in order to determine whether the causes of
       action have merit, the trial court would first be required to
       adjudicate title to the oil and gas interests in Kentucky, which
       appellant claims to own but OAG denies. This the court cannot
       do. See Trutec, 194 S.W.3d at 586[ &] n.6 (noting Trutec’s claims for
       breach of contract, specific performance, conversion, breach of fiduciary
       duty, constructive trust, and accounting were all based on whether it had
       an oil and gas interest); see also Kelly, 975 S.W.2d at 763 (holding claims
       for breach of contract and conversion involving royalty interests were
       claims that could only be decided by determining whether plaintiff
       owned an interest in oil and gas leases outside of Texas; therefore, court
       lacked subject matter jurisdiction).

Id. at 225–26 (emphasis added).

       The allegations made and remedies sought in this case are very similar to those

in Danish Leasegroup. BM3 alleged that Appellants had represented, and entered into an

agreement, that BM2 would transfer title to mineral interests it owned in West

Virginia, which interests were subject to producing oil and gas leases owned by

Antero Resources. BM3 further alleged that BM2 had failed and refused to notify

Antero, the producer, that BM3 was the new owner of those mineral interests

                                              8
resulting in Antero initially improperly paying royalties to BM2 and subsequently in

Antero paying royalties into a suspense fund pending resolution of the ownership

question. Asserting various legal theories like the ones asserted in Danish Leasegroup,

BM3 sought to have the deeds corrected to show its ownership of the mineral

interests, to have specific performance of its contractual rights of ownership of the

mineral interests, to recover the royalty payments improperly paid to BM2, and for

injunctive relief to prevent improper payments being retained by BM2 in the future.

       BM3 also alleged that it had arranged funding for additional mineral deeds

through the mechanisms established in its contract with Appellants, that the interests

made the subject of those deeds had been acquired by Appellants but that the mineral

deeds prepared by Appellants reflected BM2, not BM3, as the owner, and that the

court should order the correction of those deeds to reflect its ownership and issue

injunctive relief to protect BM3’s rights to future royalty payments based on the

similar legal theories of recovery and relief.

       Using the legal standards set out in Danish Leasegroup, it is clear that not only the

gist, but the core, of BM3’s allegations revolve around its claims of ownership of the

mineral interests in question, not only as to the correction of the deeds and requests

for specific performance of the contract, but also for recovery of improperly paid

royalties in the past and protection for royalty payments in the future as well as the

other causes of action. See also Trutec, 194 S.W.3d at 583-86, 588–90 (holding suit by

consultant to Nigerian oil venture seeking undivided interest in Nigerian oil lease to

                                             9
be suit seeking interest in foreign real property outside the Texas court’s jurisdiction

despite argument that suit was for breach of contract, tortious interference and unfair

business practices, conversion, breach of fiduciary duties, and conspiracy).

       We also find Devon Energy to be instructive. 450 S.W.3d at 203. That case

involved oil and gas leases, wells, and mineral interests in Louisiana and Mississippi as

well as Texas. The purchase and sale agreement (PSA) conveyed all of Devon’s right,

title, and interest in certain properties, mineral interests, royalty and overriding royalty

interests, and wells to KCS. At the closing, Devon executed various deeds including

one for the sale of the DeSoto Parrish assets (DeSoto deed) in Louisiana.

Subsequently, the parties developed a disagreement on what particular properties were

conveyed in the deeds.

       Litigation was filed in both Louisiana and Texas courts. Id. at 208. While the

Louisiana case was stayed, in Texas, Devon sought declaratory relief pursuant to a

forum selection clause in the PSA seeking a declaration of the parties’ rights under the

DeSoto deed and the PSA. Id. KCS challenged the trial court’s jurisdiction arguing

that the court lacked jurisdiction to declare title to the Louisiana interests. Id. at 208–

09. The trial court conditionally granted the challenge but allowed Devon the

opportunity to amend its pleadings. Id. at 208.

       Devon amended its pleadings, seeking a declaration of the parties’ intent

regarding the conveyance of the disputed properties in the PSA alone. Id. at 209. KCS

                                            10
challenged the jurisdiction again, arguing that only the deed was relevant under the

merger doctrine. The trial court denied this challenge. Id. at 209.

      Eventually, KCS filed a motion for summary judgment challenging the court’s

jurisdiction. KCS argued that a declaration of the parties’ intent to convey under the

PSA would be an impermissible advisory opinion because the PSA merged into the

DeSoto deed, so the parties’ intent under the PSA was superseded and mooted by the

DeSoto deed, and the DeSoto deed established what was actually conveyed, and

determining title to real property in foreign jurisdictions is beyond the jurisdiction of

Texas courts. Id. Devon responded, in part, that Texas courts do have jurisdiction to

interpret contracts involving land in foreign jurisdictions as long as the case does not

involve a “naked question of title,” which was not present in that case. Id.

      After a lengthy discussion of the merger doctrine, our sister appellate court

held that the parties’ intent under the PSA was moot because the PSA was merged

into the Desoto deed. Id. at 212–13. The court then addressed the jurisdictional issue.

In holding that the pleadings established lack of jurisdiction, the court stated:

      It is evident, however, that the relief Devon ultimately seeks is the
      resolution of the disagreement between it and KCS as to which of them
      owns the Disputed Properties in Louisiana. Notably, Devon first filed
      suit in Louisiana, claiming that it owned the mineral interests KCS had
      mortgaged. And when Devon originally filed this lawsuit in Texas, it
      requested declarations regarding ownership of the Disputed Properties
      under both the DeSoto Deed and the PSA. Only after the trial court
      granted KCS’s plea to the jurisdiction did Devon amend its pleadings to
      argue that the dispute could be resolved by interpreting the PSA alone.
      Moreover, although Devon relies on cases like McElreath [v. McElreath,
      345 S.W.2d 722 (Tex. 1961)] for the proposition that a Texas court has

                                            11
       subject matter jurisdiction to order a conveyance of out-of-state
       property, neither party has requested such relief. Instead, Devon
       requests a declaration of the Louisiana mineral interests it intended to
       convey.

       ....

              In contrast, the pleadings, factual allegations, and relief
       sought in this case demonstrate that the gravamen of Devon’s
       action is the determination of the parties’ existing property
       interests located in another state. Despite being couched as a
       request for declaratory relief under the UDJA, the relief Devon
       seeks is in essence a determination of title to land in Louisiana-a
       matter over which the trial court lacks jurisdiction. See Trutec . . . ,
       194 S.W.3d at 588; Miller [v. Miller], 715 S.W.2d [786,] 789 [(Tex. App.—
       Austin 1986, writ ref’d n.r.e.)]; see also Renwar Oil Corp. v. Lancaster,
       154 Tex. 311, 276 S.W.2d 774, 776 (1955) (in context of venue dispute,
       suit was in essence one for recovery of interest in land despite being cast
       as one for declaratory judgment).

Id. at 217–18 (emphasis added).

       In our case, BM3 sought declaratory relief regarding the ownership of the West

Virginia mineral interests and royalties. The gravamen of BM3’s lawsuit is to obtain

title to real property interests in a foreign jurisdiction and recover damages flowing

from interference with those interests. Thus, under the rationale of Devon Energy, the

trial court in this case did not have jurisdiction to hear the case as a declaratory

judgment action. 4 See id.; see also In re Applied Chem. Magnesias Corp., 206 S.W.3d 114,

       4
        The Declaratory Judgment Act does not create or enlarge a trial court’s subject
matter jurisdiction. It is only a procedural device for deciding cases already within the
trial court’s jurisdiction. Tex. Ass’n of Bus. v. Tex. Air Control Bd., 852 S.W.2d 440, 443–
44 (Tex. 1993); Devon Energy, 450 S.W.3d at 210; see Tex. Civ. Prac. & Rem. Code Ann.
§ 37.004(a).

                                            12
116 (Tex. 2006) (holding declaratory judgment action seeking declaration of rights to

extract minerals from property pursuant to a letter agreement to be a suit seeking

recovery of an interest in real property and therefore subject to the mandatory venue

provision in Tex. Civ. Prac. & Rem. Code Ann. § 15.011 based on the “essence” of

the dispute).

       BM3 contends that we should hold that this is a case of the trial court being

asked to make declarations and order relief regarding the parties’ obligations to one

another. It relies on two cases cited in Trutec in support of this theory. First, they cite

to Miller v. Miller. See 715 S.W.2d at 786. We find this case to be harmful, not helpful

to BM3’s position. Miller involved a family dispute over title to mineral interests in

Oklahoma with the dispute being litigated in district court in Travis County, Texas.

715 S.W.2d at 786–87. After a complicated procedural process, the trial court ordered

one set of parties (Anne) to execute a quitclaim deed transferring their interests in the

disputed property to the opposing party (Laurence). Id.

       On appeal, Anne contended that the judgment was void because the trial court

lacked jurisdiction to order the transfer of title to real property outside Texas. Id.

Laurence contended that a Texas court may properly determine the rights of parties

before it to real property located in another state and effectuate those rights through

the issuance of decrees acting directly on the parties. Id. at 787–88. Although the

appellate court acknowledged that there are circumstances where courts can

determine personal rights between parties and issue orders affecting real property

                                            13
outside Texas, in Miller the parties were directly asking the court to adjudicate title to

Oklahoma real property and order the transfer of title. Id. at 789. Thus, the Austin

Court of Appeals reversed the trial court’s order and dismissed the case for want of

jurisdiction. Id. at 786.

       BM3 also cites Hartman v. Sirgo Operating, Inc., 863 S.W.2d 764 (Tex. App.—El

Paso 1993, writ denied). The court succinctly summarized the facts of that case as:

       Sirgo Brothers, Inc. and Sirgo Operating, Inc. (Sirgo) began negotiating
       with Doyle Hartman in 1990 for the purchase of his interest in the
       Myers Langlie–Mattix Unit, an oil producing waterflood project in Lea
       County, New Mexico. Hartman’s interest in the Unit was the community
       property of him and his wife, Margaret. Negotiations were conducted for
       Hartman by his landman, Bryan Jones. Jones and Sirgo signed a letter
       agreement in November 1990 which required Sirgo to obtain certain
       interest owned by Atlantic Richfield (ARCO) which was to be
       exchanged for the interest owned by Hartman. Sirgo and ARCO entered
       into an agreement in April 1991 for the exchange of properties. That
       agreement was mutually rescinded by the parties on May 14, 1991. Sirgo
       then filed this suit for a declaratory judgment to determine the rights of
       the parties under the November 1990 letter agreement. Hartman then
       filed suit in New Mexico seeking specific performance of the various
       contracts. That suit was dismissed following the entry of the judgment in
       this case.

Id. at 766.

       The trial court declared the contract void under New Mexico’s joinder statute

because the wife had not signed the contract. Id. Attorney’s fees were awarded to the

Appellees. Id. On appeal, Hartman contended that the trial court lacked jurisdiction

because the case involved a determination of title to New Mexico real property. Id.

                                           14
While the El Paso appellate court acknowledged that principle, it distinguished it as

follows:

      In this case, Sirgo sought a determination of the parties’ rights and legal
      obligations under the letter agreement executed in November 1990. That
      agreement provided for the exchange of Hartman’s interest in the
      waterflood unit for certain property to be acquired by Sirgo from
      ARCO. The exchange was conditioned upon Sirgo’s acquisition of
      certain interest from ARCO. The trial court was not required to
      determine ownership of land in New Mexico nor was any relief
      sought requiring the transfer of title to land in New Mexico. The
      declaratory judgment suit was only seeking to determine obligations
      under a contract, which contract did involve an obligation to exchange
      land in New Mexico. Unlike the suit in Carmichael v. Delta Drilling
      Co. , this suit was not filed seeking specific performance of the
      parties’ agreement. And unlike Miller v. Miller, this suit did not
      seek to determine ownership of mineral rights located in another
      state. The trial court had jurisdiction to determine if certain conditions
      precedent had been met and if the contract was valid and if the parties’
      obligations were valid and enforceable.

Id. at 766–67 (emphases added).

      Unlike in Hartman, BM3 did ask for specific performance of the parties’ alleged

agreement and did ask the court to change the ownership of the foreign mineral

interests. Thus, Hartman is simply not applicable.5

      5
        BM3 argues in its brief that title to the West Virginia interests was never
questioned in the trial court or on appeal. We find this position untenable. BM3’s
contentions in its pleadings were that BM2 wrongfully refused to title the mineral
deeds properly to reflect BM3’s ownership of the mineral interests in question and
that BM2 was wrongfully exercising control of BM3’s rights to royalties from the
properties. BM3 asked the trial court to order reformation of the deeds, specific
performance of the contract, damages for wrongful control of the royalties, and
injunctive protection from such in the future. Based on the authorities cited above,
these allegations constituted a dispute about title to ownership of real property
interests in a foreign jurisdiction.

                                           15
      We hold that the trial court had no subject matter jurisdiction of BM3’s claims

for affirmative relief. We sustain Appellants’ first issue, and we therefore need not

reach Appellants’ second through ninth issues. See Tex. R. App. P. 47.1.

      B.     Appellant’s counterclaim

      We now turn to Appellants’ tenth issue, which challenges the trial court’s

summary judgment on their counterclaim. Appellants argue that BM3’s summary

judgment motion failed to negate Appellants’ counterclaim. Appellants’ counterclaim

alleged that BM3, acting in concert with Appellants’ own manager, defrauded them in

the sales and exchanges of the mineral interests in question, resulting in damages

being incurred. The wrongful conduct centered around transferring mineral deeds to

properties without Appellants’ consent or knowledge, or without any or adequate

consideration. The resulting damages were Appellants’ loss of valuable mineral

interests and the past and future income from those interests. Appellants sought

damages for unjust enrichment, an accounting, imposition of a constructive trust on

the ill-gotten assets, and for recovery of attorney’s fees. Appellants did not expressly

seek to have title to the mineral interests determined or modified and did not seek

specific performance regarding title to those interests.

      There is no briefing from the parties directly addressing the question of

whether the trial court had jurisdiction of Appellants’ counterclaim. Our research,

which queried the topic in jurisdictional terms relating to actions for damages for

fraud in a foreign real estate transaction, was not productive. However, there is an

                                           16
instructive body of case law relative to the Texas mandatory venue statute dealing

with suits seeking a recovery of interests in real property.

       As noted previously, when determining whether a pleading seeks an

impermissible determination of ownership in interest in foreign real property,

including mineral interests, we look to the gist, or gravamen, of the pleadings, not just

the labels that the parties place on their theories of recovery. If the gist, or gravamen,

of the allegations involves determining ownership of interests in foreign real property,

then a Texas court has no jurisdiction. Fox, 2020 WL 1265366, at *3; Devon Energy,

450 S.W.3d at 216, 218–19; Trutec, 194 S.W.3d at 585–86.

       In our state’s venue jurisprudence, there is a similar body of law that has

developed around the mandatory venue provisions governing suits for recovery of

real property interests. Section 15.011 of the Texas Civil Practice and Remedies Code

provides that “[a]ctions for recovery of . . . an estate or interest in property, . . . [or]

for recovery of damages to real property . . . shall be brought in the county in which

all or a part of the property is located.” Tex. Civ. Prac. & Rem. Code Ann. § 15.011.

The Supreme Court analyzed the proper test for determining whether a case fits

within this venue provision in Applied Chemical Magnesias. 206 S.W.3d at 116. Like the

rule on determining whether a case involves the impermissible effort to determine

ownership interests in foreign land, the court held that the nature of the dispute, not

the terms used to describe the action, focuses the venue determination. Id. at 119.

                                            17
       Our sister court’s opinion in In re Kerr is particularly instructive. 293 S.W.3d

353, 359 (Tex. App—Beaumont 2009, orig. proceeding) (per curiam). There, relator

James Thorp served as president of Etoco, L.P. Id. at 355. Real party in interest Etoco

was involved in discovering and producing oil, natural gas, and petroleum deposits

across Texas. Id. Etoco sued Thorp and relators Thorp Petroleum Corporation, Cobra

Operating Company, J. Robinson Kerr, and Hal Energy Company, alleging that while

Thorp was employed with Etoco, he had conspired with the other defendants in

fraudulently locating oil, natural gas, petroleum deposits, and reserves for his benefit.

Id. Etoco contended that Thorp had made profits from these wrongfully acquired real

property interests and that they rightfully belonged to Etoco. Id. Etoco originally

alleged that the defendants fraudulently acquired the interest and sought monetary

damages for lost income, interest in the leases and other assets to which it was

entitled, and recovery of all assets in the form of mineral leases, operating interests,

and leasehold interests. Id. at 358.

       The defendants moved to transfer venue to Harris County, the county where

the real property was located, under Section 15.011 as a suit seeking recovery of

interests in real property. Id. at 355 (citing Tex. Civ. Prac. & Rem. Code Ann.

§ 15.011). After the venue motion was filed, Etoco amended its pleadings to expressly

disclaim that it was seeking any recovery of interests in real property and to assert that

it was only seeking damages for lost profits or net operating revenue incurred in the

past as a result of the defendants’ breaches of fiduciary duty, fraud, and conspiracy. Id.

                                           18
at 356. The trial court denied the venue motion, and the defendants sought

mandamus relief from the court of appeals. Id. at 355–56.

      The court of appeals conditionally granted mandamus relief. Id. at 355. The

court first noted the well accepted rule that the venue determination was to be based

on the facts existing at the time the cause of action accrued. Id. at 358–59. Thus, the

fact that the plaintiff amended its cause of action to delete express claims for recovery

of interests in real property was of no import. Id.

      Second, the court noted that mandatory venue provisions may not be evaded

by artful pleading; rather, “[t]he nature of the dispute, not the terms used to describe

the action, focuses the venue determination.” Id. at 359 (citing Applied Chem. Magnesias,

206 S.W.3d at 119). The court went on to hold that “[w]hen the underlying issue that

a plaintiff must prove to show its entitlement to damages involves proof of the

ownership rights to mineral interests, [S]ection 15.011 applies.” Id. at 358. After

observing that Etoco’s live pleading sought disgorgement of past profits and recovery

of past damages based on production that Etoco asserted was its property and

recovery of lost profits or lost net operating revenue in the past from the minerals

Etoco claimed to own, the court held that Etoco’s suit was contesting the defendants’

rights to develop those minerals in Harris County and that Etoco’s claim depended on

the rightful ownership of the real property interests. Id. at 359–60. Because the dispute

was essentially over the rightful ownership of real property interests in Harris County,

Section 15.011 applied. Id.

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       Kerr is very similar to our case. Appellants contend that they were the rightful

owners of mineral interests in West Virginia and that one of their managers, acting in

concert with competitors, defrauded them of the ownership and production of

minerals, royalties, and profits from those properties. Appellants sued their

competitor seeking an accounting, recovery of money damages, and a constructive

trust for the loss of those benefits which would have accrued to them had their own

manager and its conspirators not defrauded them. Like in Kerr, in order to recover the

damages claimed, Appellants would have needed to prove their rightful ownership of

the mineral interests. Under Kerr, those circumstances would justify the application of

Section 15.011 for mandatory venue as a suit for the recovery of interests in real

property if the property had been located in Texas. Since the test for determining

whether a suit is one for recovery of interests in real property is similar for jurisdiction

and venue purposes, we find the rationale from Kerr to be persuasive. We hold that

the gravamen of Appellants’ counterclaim is determining ownership of interests in real

property in a foreign jurisdiction.

       We find further support in In re Stephens, another mandamus proceeding to

compel     mandatory     venue     under    Section    15.011.    No.    05-20-00833-CV,

2021 WL 1904324, at *9 (Tex. App—Dallas May 12, 2021, orig. proceeding) (mem.

op.). The Stephens parties had obtained an “original” judgment against Frank and

obtained turnover orders for his mineral interests in Reagan County, resulting in

Frank assigning his mineral interests to a constable who sold them to the Stephens

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parties, who subsequently assigned them to another party. Id. at *1–2. Over the years,

subsequent litigation events resulted in a “reformed” judgment being entered against

Frank, which eventually caused Frank (and parties in privity with him) to contest the

validity of the original judgment and the assignment of the mineral interests. Id. at *1–

3.

      Frank filed suit in Dallas County. Id. at *3. He alleged that the litigation events

after the original judgment had rendered the turnover order and the resulting sale and

assignments null and void such that title never left Frank. Id. Further, Frank alleged

that all proceeds from the mineral interests of those properties paid to the Stephens

parties in the past belonged to Frank and should be credited against the reformed

judgment. Id. at *3–4. Frank requested an accounting, appointment of a receiver,

declaratory judgment that Frank had fully satisfied the reformed judgment, removal of

the cloud on the title from the Stephens’ judgment collection efforts, orders for the

return of wrongfully taken property, imposition of a constructive trust, declaratory

judgment that the assignments and liens were void, and actual and punitive damages

for tortious interference, conversion, and abuse of process. Id. at *4.

      The Stephens parties answered and moved to transfer venue to Reagan County

because the case was a suit to quiet title or recover real property in that county,

invoking Section 15.011. Id. (citing Tex. Civ. Prac. & Rem. Code Ann. § 15.011).

Frank responded by amending the petition to omit requests for relief expressly

seeking to quiet title to real property, injunctive relief for enforcement of judgment, or

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return of wrongfully taken property. Id. at *5. The trial court denied the motion to

transfer venue, and the Stephens parties sought mandamus relief from the court of

appeals. Id.

       On appeal, the court conditionally granted mandamus relief. Id. at *13. The

court held that

       The ultimate or dominant purpose of the suit is to establish Frank never
       lost title to the Mineral Interests in 1999—despite the 1999 Dallas
       Turnover Order, the Assignment, and the Sale—because Real Parties
       want a credit against the Judgments for all proceeds Relators have
       received from the Mineral Interests since 1999. Real Parties’
       entitlement to any of their above-requested relief will stand or fall
       based, in large part, on whether the Supreme Court’s Order
       rendered the 1999 Dallas Turnover Order, the Assignment, and/or
       the Sale null and void such that Frank remained the true owner of
       the Mineral Interests all along. Real Parties’ suit will have an effect
       on an interest in land because rightful ownership of the Mineral
       Interests, which are real property interests, must be decided as a
       prerequisite to their requested accounting, declaratory judgment,
       and damages for conversion.

Id. at *8 (footnote omitted) (emphasis added).

       The same is true in this case. For Appellants to succeed on their damage

counterclaim, they must prove their rightful ownership to the mineral rights. Thus,

Appellants’ suit is one that requires the trial court to determine ownership of real

property interests in a foreign jurisdiction, which is forboden. See also York v. Oleum

Operating Co., No. 06-16-00056-CV, 2017 WL 2622797, at *1 (Tex. App.—Texarkana

June 16, 2017, no pet.) (mem. op.) (reviewing contract dispute involving claims and

counterclaim over damages from an oil well project in Louisiana and holding that

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both parties’ claims required Texas court to adjudicate title to Louisiana mineral

rights, so Texas court had no subject matter jurisdiction). Because Appellants had to

prove their rightful ownership of the mineral interests to prevail on their damage

counterclaim, the trial court would be required to determine rightful ownership of the

West Virginia mineral rights, which it did not have jurisdiction to adjudicate. The trial

court was therefore without jurisdiction to render any judgment but dismissal for

want of jurisdiction. Accordingly, we overrule Appellants’ tenth issue, reverse the trial

court’s summary judgment on Appellant’s counterclaim, and render judgment

dismissing them for lack of jurisdiction.

   III.      Conclusion

      Having sustained Appellants’ first issue, which is dispositive of Appellants’

second through ninth issues, and having overruled Appellants’ tenth issue, we reverse

the judgment of the trial court and dismiss the case for want of jurisdiction.

                                                      /s/ Mike Wallach
                                                      Mike Wallach
                                                      Justice

Delivered: April 18, 2024

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