Court Opinion

ID: 3076699
Source: CourtListenerOpinion
Date Created: 2015-10-16 01:21:36.594484+00
Date Added: 2024-06-11T12:32:09.574483
License: Public Domain

Opinion filed January 24, 2014

                                       In The

        Eleventh Court of Appeals
                                    __________
                                 No. 11-12-00008-CV
                                     __________

              SEVEN N. HOLDINGS, L.P. AND 7N OIL &
                  GAS BONANZA, L.P., Appellants

                                        V.
                     MATHIS & SONS, INC., Appellee

                     On Appeal from the 39th District Court
                            Haskell County, Texas
                         Trial Court Cause No. 11,670

                      MEMORANDUM OPINION
      Seven N. Holdings, L.P. (Seven Holdings) and 7N Oil & Gas Bonanza, L.P.
(7N Oil & Gas) appeal the trial court’s judgment that maintained a lien against
Seven Holdings and awarded attorney’s fees and costs to Mathis & Sons, Inc.
(Mathis & Sons). We affirm.
                                      I. Evidence at Trial
      The “Wirz Lease” refers to an oil, gas, and mineral lease originally entered
into between Seven Holdings, as lessee, and Richard and Kay Wirz, as lessors.
The lease was recorded in the official public records of Baylor County. Seven
Holdings assigned its interest in the lease to 7N Oil & Gas on August 27, 2008,
and this assignment was properly recorded in the official records of Baylor
County. 1
      Records filed with the Texas Railroad Commission show that 7N Oil & Gas
is the operator of the Wirz Lease, but the records incorrectly show Seven
Holdings’ address rather than the correct address of 7N Oil & Gas. 7N Oil & Gas
is in Houston, and Seven Holdings operates in Aubrey. The general partner for
both Seven Holdings and 7N Oil & Gas is Jabela Holdings, L.L.C. (Jabela).
Laurie D. Nickell is Jabela’s general partner, and she is also the registered agent
for Seven Holdings. Jerry D. Nickell, Laurie Nickell’s husband, serves as the
registered agent for 7N Oil & Gas.
      Jerry Nickell hired contract pumper Donnie Harrington to perform work on
the Wirz Lease. At Harrington’s request, Mathis & Sons provided oilfield and
fluid disposal services on the Wirz Lease from October 28, 2008, to March 6,
2009. Mathis & Sons also rented and delivered a frac tank to the Wirz Lease.
Harrington told Terry Mathis, the president of Mathis & Sons, to send the invoices
for the provided services to 7N Oil & Gas.
      Subsequently, Mathis & Sons sent twenty-two invoices for services
performed on the Wirz Lease to Seven Holdings’ address in Aubrey. Unsure of the
proper party to bill, Mathis & Sons addressed these invoices using a variety of
      1
       After the assignment, Seven Holdings retained an overriding royalty interest in the Wirz lease.

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names, including “7N Holdings, L.P.,” “7N Oil and Gas,” and “7N Holding
Company.” 7N Oil & Gas initially paid two of the invoices, but the other twenty
invoices went unpaid.
      Mathis finally checked the Baylor County records in an effort to find out
who was the proper party upon which to make demand for the unpaid balance.
Mathis discovered the original Wirz Lease but failed to find the subsequent
assignment to 7N Oil & Gas. Based on the information contained in the original
Wirz Lease agreement, Mathis & Sons made demand on Seven Holdings for the
balance of the unpaid invoices.
      Mathis contacted Jerry Nickell several times about the unpaid invoices, but
Jerry refused to pay them and also failed to give an explanation for not paying
them. Mathis & Sons then filed a lien on the Wirz Lease under Chapter 56 of the
Texas Property Code. 2 Mathis also removed the rented frac tank from the Wirz
lease. In order to remove the tank, Mathis emptied the contents of the tank into the
casing of the Wirz lease well.
      Mathis & Sons then brought a Chapter 53 3 foreclosure and enforcement suit
against Seven Holdings. After Seven Holdings responded with a verified denial
that indicated that 7N Oil & Gas was the proper party to the litigation, Mathis &
Sons amended its claim to include 7N Oil & Gas as an additional defendant.
Almost two years after Mathis & Sons first demanded payment, 7N Oil & Gas sent
Mathis & Sons a cashier’s check for the balance of the unpaid invoices. Because
the check did not include additional compensation for interest and attorney’s fees,
Mathis & Sons refused to accept it.
      Mathis testified that his decision to pump the contents of the frac tank back
down the Wirz Lease well, to retrieve the rented frac tank, represented standard
      2
       TEX. PROP. CODE ANN. ch. 56 (West 2007).
      3
       TEX. PROP. CODE ANN. ch. 53 (West 2007 & Supp. 2013).

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practice in the industry. Mathis stated that his actions should have damaged no oil
and should not have prevented later retrieval of the oil. Royce Dean Walker, an
expert witness for Mathis, also testified that Mathis’s decision to pump the fluid
back down the well should not have affected the value of any oil in the well and
should not have prevented its recovery.
         In his testimony, Harrington described the fluid in the rented frac tank as
“slop” and compared it to “gun grease.” Jerry Nickell disputed Harrington’s as-
sessment of the oil and testified that the tank contained 242 barrels of good quality
oil, valued at $72 a barrel. Jerry referred to Mathis’s decision to pump the oil back
down the well as “unheard of,” and he also testified that, as a result of Mathis’s
actions, he was unable to recover the oil that Mathis had pumped back down the
well.     Jerry claimed the lost oil “had a market value of” $17,000, which
represented his damages.
         The trial court maintained the Chapter 56 lien against Seven Holdings and
ordered Seven Holdings and 7N Oil & Gas to pay Mathis & Sons $16,000 for
attorney’s fees and costs. In its findings of fact, the trial court stated that Mathis’s
decision to remove the rented frac tank and discharge its contents into the Wirz
Lease well did not result in damages because the contents were of no or nominal
value.
                                 II. Issues Presented
         Seven Holdings and 7N Oil & Gas present the following issues (as
paraphrased by this court):
         (1)   Did the trial court err when it held Seven Holdings and 7N Oil & Gas
               jointly and severally liable for Mathis & Sons’ attorney’s fees and
               costs?

         (2)   Did the trial court err when it awarded attorney’s fees and costs to
               Mathis & Sons?

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      (3)    Did the trial court err when it maintained a Chapter 56 lien against
             Seven Holdings?

      (4)    Did the trial court err when it found that Mathis & Sons’ decision to
             pump the contents of the rented frac tank back down the well did not
             result in damages because the contents were of no or nominal value?

      (5)    Did the trial court err when it refused to make additional findings of
             fact and conclusions of law as requested by Seven Holdings and 7N
             Oil & Gas?

                              III. Standard of Review
      On appeal, a trial court’s findings of fact have the same force and effect as a
jury’s verdict. Anderson v. City of Seven Points, 806 S.W.2d 791, 794 (Tex.
1991). As the factfinder, the trial court is the sole judge of the credibility of the
witnesses and the weight to be given their testimony. Nat’l Freight, Inc. v. Snyder,
191 S.W.3d 416, 425 (Tex. App.—Eastland 2006, no pet.). A trial court’s findings
of fact are reviewable for legal and factual sufficiency. Anderson, 806 S.W.2d at
794. Sufficiency challenges to a trial court’s findings of fact are reviewed under
the same standards used to review a jury’s findings. Catalina v. Blasdel, 881
S.W.2d 295, 297 (Tex. 1994).
      To analyze a legal sufficiency challenge, we must determine whether the
evidence would enable reasonable and fair-minded people to reach the verdict
under review. City of Keller v. Wilson, 168 S.W.3d 802, 827 (Tex. 2005). We
review the evidence in the light most favorable to the challenged finding. Id. at
821–22. We give credit to favorable evidence if a reasonable factfinder could do
so, and we disregard contrary evidence unless a reasonable factfinder could not do
so. Id. at 827.
      We may sustain a legal sufficiency challenge only when (1) the record
discloses a complete absence of a vital fact; (2) the court is barred by rules of law

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or evidence from giving weight to the only evidence offered to prove a vital fact;
(3) the only evidence offered to prove a vital fact is only a mere scintilla; or (4) the
evidence conclusively establishes the opposite of a vital fact. Id. at 810 (citing
Robert W. Calvert, “No Evidence” and “Insufficient Evidence” Points of Error,
38 TEX. L. REV. 361, 362–63 (1960)).
      To analyze a factual sufficiency challenge, we must consider and weigh all
the evidence and may set aside a verdict only if the evidence is so weak or the
finding is so against the great weight and preponderance of the evidence that it is
clearly wrong and unjust. Dow Chem. Co. v. Francis, 46 S.W.3d 237, 242 (Tex.
2001). We review a trial court’s conclusions of law, including those mislabeled as
findings of fact, de novo. BMC Software Belg., N.V. v. Marchand, 83 S.W.3d 789,
794 (Tex. 2002).
                                       IV. Analysis
      A. Joint and Several Liability
      Seven Holdings and 7N Oil & Gas argue that Seven Holdings cannot be held
liable for the debts of 7N Oil & Gas because there was no evidence to suggest that
the two distinct partnerships acted or operated as one. Mathis & Sons contends
that the evidence at trial of the long history of muddled transactions between Seven
Holdings and 7N Oil & Gas sufficiently supported their joint and several liability.
      Apparent authority is based upon the doctrine of estoppel and is created
when the principal’s conduct would lead a reasonably prudent person to believe
that the agent has the authority he purports to exercise. Biggs v. U.S. Fire Ins. Co.,
611 S.W.2d 624, 629 (Tex. 1981). An agent who acts within the scope of his
apparent authority binds the principal as if the principal itself had taken the action.
Id. Apparent authority is established when a principal knowingly permits an agent
to hold himself out as having authority or when a principal acts with a lack of such

                                           6
ordinary care as to clothe an agent with the indicia of authority. Ames v. Great S.
Bank, 672 S.W.2d 447, 450 (Tex. 1984).
      A party who seeks to recover under an apparent authority theory must show
justifiable reliance on the principal’s words or conduct that resulted in harm to the
party. Baptist Mem’l Hosp. Sys. v. Sampson, 969 S.W.2d 945, 948 & n.2 (Tex.
1998). The party must also show that the principal had full knowledge of all
essential facts at the time of the conduct alleged to be the basis of the apparent
authority. Gaines v. Kelly, 235 S.W.3d 179, 182 (Tex. 2007). To determine if
apparent authority existed, we examine the conduct of the principal and the
reasonableness of the third party’s assumptions in relation to the assumed
authority. Id. at 183.
      In this case, the trial court did not err when it held the two partnerships
jointly and severally liable because there was sufficient evidence at trial to support
that determination. Mathis testified that Jerry Nickell did not explain his refusal to
pay before trial and did not claim that Mathis & Sons had billed the wrong
partnership until after Mathis & Sons filed suit. Although 7N Oil & Gas now
claims that it failed to pay because Mathis & Sons billed the wrong partnership, 7N
Oil & Gas initially paid two of the invoices without any objection, explanation, or
request that Mathis & Sons change the billing.
      Harrington and Mathis testified that they could not identify which
partnership they were employed by because Jerry Nickell operated the Wirz Lease
either personally or as an agent of both partnerships. Harrington and Mathis’s
testimony was supported by documents submitted into evidence that showed that
Jerry used the two partnership names and addresses interchangeably in Railroad
Commission filings. These disputed facts were resolved by the trier of fact, and
we defer to its factual resolution. The first issue on appeal is overruled.

                                           7
      B. Attorney’s Fees
      Seven Holdings and 7N Oil & Gas also contend that, because Mathis & Sons
did not prevail in its suit and never requested payment from 7N Oil & Gas, the trial
court improperly awarded Mathis & Sons attorney’s fees and costs. Mathis &
Sons claims that it made proper presentment to both partnerships and was entitled
to collect attorney’s fees as the prevailing party.
      A party who sues to foreclose a lien against mineral property may properly
be awarded attorney’s fees under the Texas Property Code. Section 56.041 of the
Texas Property Code allows the holder of a mineral lien to enforce it as a
Chapter 53 mechanic’s lien. Section 53.156 of the Texas Property Code provides
that a plaintiff who sues to foreclose a lien may recover an award for costs and
attorney’s fees, so long as the award is equitable and just.
      Additionally, Section 38.001(1) and (2) of the Texas Civil Practice and
Remedies Code provides for the recovery of reasonable attorney’s fees associated
with a successful claim for services rendered or labor performed.           TEX. CIV.
PRAC. & REM. CODE ANN. § 38.001(1), (2) (West 2008). To recover attorney’s
fees under this chapter, the claimant must (1) prevail on a cause of action for which
attorney’s fees are recoverable and (2) recover damages. Green Int’l v. Solis, 951
S.W.2d 384, 390 (Tex. 1997). The Texas Supreme Court has established that a
party satisfies this test when the court awards the party “something, either
monetary or equitable.” Intercont’l Grp. P’ship v. KB Home Lone Star L.P., 295
S.W.3d 650, 655 (Tex. 2009).
      To recover attorney’s fees under Chapter 38, the claimant must also present
the claim to the opposing party or its authorized agent. CIV. PRAC. § 38.002(2). A
party must present its claim at least thirty days before trial in order to provide the
defendant with an opportunity to pay the claim without incurring attorney’s fees.
Jones v. Kelley, 614 S.W.2d 95, 100 (Tex. 1981).               The statute requires no
                                           8
particular form of presentment; presentment may be accomplished either orally or
in writing. Id.
      An award for attorney’s fees rests in the sound discretion of the trial court
and will not be reversed absent a clear showing of abuse of discretion. Oake v.
Collin Cnty., 692 S.W.2d 454, 455 (Tex. 1985).         We find no such abuse of
discretion in the attorney’s fees award in this case. Because Mathis & Sons sued to
foreclose a mineral lien, the trial court could clearly award attorney’s fees under
Sections 53.156 and 56.041 of the Texas Property Code.
      Alternatively, Mathis & Sons was entitled to recover attorney’s fees under
Section 38.001(1) and (2) of the Texas Civil Practice and Remedies Code.
Mathis & Sons received equitable relief from the trial court through the court’s
judgment that ordered the lien against Seven Holdings to remain in place. This
equitable relief established Mathis & Sons as a prevailing party and authorized the
award of attorney’s fees.     Mathis & Sons made proper presentment on both
partnerships through numerous collection attempts aimed at Jerry Nickell, Seven
Holdings, and 7N Oil & Gas.
      7N Oil & Gas’s attempt to tender payment after Mathis & Sons sued did not
affect the trial court’s ability to award attorney’s fees. The payment was refused
by Mathis & Sons because it did not contain an additional amount for interest and
attorney’s fees.   The trial court did not err when it awarded Mathis & Sons
attorney’s fees. The second issue on appeal is overruled.
      C. Chapter 56 Lien
      Seven Holdings and 7N Oil & Gas further claim that, because the judgment
does not conform to the original pleadings, the trial court erred when it maintained
the Chapter 56 lien on the Wirz Lease. The partnerships also argue the lien was
improper due to Mathis & Sons’ failure to comply with Section 56.022 of the
Texas Property Code. Mathis & Sons contends that the standard for a mineral lien
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affidavit is substantial compliance, rather than strict compliance, and it argues that
it substantially complied with the statute.
        Rule 301 of the Texas Rules of Civil Procedure mandates that a trial court’s
judgment conform to the pleadings of the case. TEX. R. CIV. P. 301. A party
cannot recover through a right not asserted. Starr v. Ferguson, 166 S.W.2d 130,
132 (Tex. 1942). Facts not alleged, though proved, cannot support judicial action.
Id.
        Texas applies a “substantial compliance” rule to mineral lien affidavits.
Texcalco, Inc. v. McMillan, 524 S.W.2d 405, 407 (Tex. Civ. App.—Eastland 1975,
no writ). Section 56.022(a) of the Texas Property Code provides that an affidavit
for a lien against mineral property must include the name of the mineral property
owner only if known. A “mineral contractor”4 is not required to give notice to the
mineral property owner to secure a Chapter 56 lien.                            PROP. §§ 56.021(a),
56.022(a). “Had the legislature intended for all mineral property owners of record
to be notified by a ‘mineral contractor’ in order to secure the lien, then it would
have so provided. Chapter 56 should be liberally construed for the protection of
laborers and materialmen.” Bandera Drilling Co. v. Lavino, 824 S.W.2d 782, 785
(Tex. Civ. App.—Eastland 1992, no writ).
        In its original petition, Mathis & Sons sought foreclosure of its Chapter 56
lien against Seven Holdings and pleaded facts to support its claim. Mathis testified
extensively about the events that led up to Mathis & Sons’ decision to file the
Chapter 56 lien. Given these facts, the trial court had authority to maintain the lien
against Seven Holdings.

        4
         Section 56.001(2) of the Texas Property Code defines a “mineral contractor” as a person who
performs labor or furnishes or hauls material, machinery, or supplies used in mineral activities under an
express or implied contract with a mineral property owner or with a trustee, agent, or receiver of a mineral
property owner.

                                                    10
      Mathis & Sons substantially complied with Section 56.022(a) of the Texas
Property Code. Mathis & Sons filed a lien against Seven Holdings because it
believed the partnership to be the owner of the mineral property. Although the
partnership with an ownership interest in the property is 7N Oil & Gas, under
Section 56.022(a) of the Texas Property Code and the applicable substantial
compliance standard, Mathis & Sons’ error did not affect the status of the mineral
property lien. See PROP. § 56.022(a); Texcalco, 524 S.W.2d at 407.
      The trial court did not err when it maintained the lien against Seven
Holdings. The judgment properly conformed to the original petition, and the lien
affidavit substantially complied with the statute. 7N Oil & Gas’s attempt to tender
payment on February 7, 2011, did not affect the lien because Mathis & Sons
rightfully refused the tender. See Jenkins v. Henry C. Beck Co., 449 S.W.2d 454,
455 (Tex. 1969) (parties must mutually agree that a payment will amount to full
satisfaction of the existing claim, and a court is not required to release a lien where
the evidence showed unpaid indebtedness). The third issue on appeal is overruled.
      D. Market Value
      Seven Holdings and 7N Oil & Gas additionally argue that the trial court
erred when it concluded that the contents of the rented frac tank had no or nominal
value. The partnerships claim that Jerry Nickell, the only expert witness allowed
to testify on oil quality and market value, established the market value of the oil
taken from the tank at $72 dollars per barrel and that no expert testimony
supported the trial court’s finding the oil had no or nominal value. Mathis & Sons
contends that the lay witness testimony of Mathis and of Harrington was
admissible as to the physical characteristics of the contents of the tank and that the
testimony was properly considered by the trial court when it determined the value
of the contents of the tank.

                                          11
      The trial court has sound discretion in ruling on evidentiary matters. Bay
Area Healthcare Grp., Ltd. v. McShane, 239 S.W.3d 231, 234 (Tex. 2007). A trial
court abuses this discretion when it acts without regard for guiding rules or
principles. Owens-Corning Fiberglas Corp. v. Malone, 972 S.W.2d 35, 43 (Tex.
1998). Even when a trial court abuses its discretion, reversal is only appropriate if
the error was harmful and probably resulted in an improper judgment. See Nissan
Motor Co. v. Armstrong, 145 S.W.3d 131, 144 (Tex. 2004); TEX. R. APP. P. 44.1.
      Market value is defined as the price property would bring when offered for
sale by someone who desires, but is not obligated, to sell and is bought by someone
who is not required to buy. Exxon Corp. v. Middleton, 613 S.W.2d 240, 246 (Tex.
1981). The complexity of the oil and gas industry has made it difficult to establish
a precise formula to determine the market value of oil and gas. Id. It is proper, but
unnecessary, for the trial court to consider an expert’s testimony on market value.
Id. at 247. Objections to the basis of such testimony go to its weight, not its
admissibility. Id. at 249.
      Jerry Nickell was the only witness designated as an expert on oil quality and
market value. Jerry testified he performed a color cut gauge of the tank that
showed that the tank contained 200 barrels of oil, and he claimed that Mathis later
informed him that the tank gauged 242 barrels of oil.            Jerry stated that he
determined that the market value of the oil in the tank was $72 a barrel based on
the results of the specific gravity and sulfur tests he performed.
      Harrington compared the oil in the tank to “gun grease” and referred to it as
“slop.” Mathis stated that any oil in the tank was mixed with a much larger
amount of saltwater and paraffin. Although Harrington and Mathis testified as lay
witnesses, their testimony was admissible to establish the physical characteristics
of the contents of the frac tank. See TEX. R. EVID. 701.

                                          12
      The trial court was within its discretion when it found that the contents of
the frac tank were of no or nominal value. Though Jerry may have been the only
expert designated to speak to the market value of oil, as an interested witness, his
testimony only raised a fact issue for the trial court. Cochran v. Wool Growers
Cent. Storage Co., 166 S.W.2d 904, 908 (Tex. 1942).           The trial court could
disbelieve Jerry’s testimony and base its finding on other evidence at trial. The
fourth issue on appeal is overruled.
      E. Additional Findings of Fact and Conclusions of Law
      Seven Holdings and 7N Oil & Gas contend that the trial court erred when it
refused to make the additional findings of fact and conclusions of law that they
requested. Although the partnerships make this contention within another issue on
appeal, we address it separately based on its applicability to several of the issues
presented on appeal.
      Upon a party’s timely request for additional findings of fact and conclusions
of law, the trial court shall file any additional or amended findings of fact and
conclusions of law that are appropriate. TEX. R. CIV. P. 298. Additional findings
of fact and conclusions of law are not required if the original findings of fact and
conclusions of law adequately relate the facts and law necessary to present the
party’s appeal. Finch v. Finch, 825 S.W.2d 218, 221 (Tex. App.—Houston [1st
Dist.] 1992, no writ). A trial court’s failure to make additional findings of fact and
conclusions of law will not be reversed unless the record affirmatively shows that
the complaining party has suffered an injury. Cherne Indus., Inc. v. Magallanes,
763 S.W.2d 768, 772 (Tex. 1989). If the refusal to file additional findings of fact
and conclusions of law does not prevent a party from adequately presenting an
argument on appeal, there is no reversible error.        ASAI v. Vanco Insulation
Abatement, Inc., 932 S.W.2d 118, 122 (Tex. App.—El Paso 1996, no writ).

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      In this case, the trial court could have rightfully refused to supplement the
original findings of fact and conclusions of law with those requested by Seven
Holdings and 7N Oil & Gas. Seven Holdings and 7N Oil & Gas suffered no injury
as a result of the refusal. The trial court’s refusal to file additional findings of fact
and conclusions of law did not prevent Seven Holdings and 7N Oil & Gas from
presenting their arguments on appeal. The trial court did not err when it refused to
make additional findings of fact and conclusions of law. The fifth issue on appeal
is overruled.

                               V. This Court’s Ruling

      We affirm the judgment of the trial court.

                                                      MIKE WILLSON
                                                      JUSTICE

January 24, 2014
Panel consists of: Wright, C.J.,
Willson, J., and Bailey, J.

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