Court Opinion

ID: 9775112
Source: CourtListenerOpinion
Date Created: 2023-08-29 18:44:07.519774+00
Date Added: 2024-06-11T07:32:20.570427
License: Public Domain

GONZALEZ, Justice,
joined by ABBOTT, Justice, dissenting.
As in another case decided today, Heritage Resources, Inc. v. NationsBank, 939 S.W.2d 118 (Tex.1996), the Court confronts and decides the issue of whether “market value at the well” in an oil and gas lease includes or excludes post-production costs. For the first time in Texas jurisprudence, the Court concludes that post-production costs are included within the definition of that phrase. Yet, the Court fails to analyze the phrase in the context of each contract to determine whether the parties relied on another meaning. As I noted in my dissent to Heritage Resources, this approach overturns well-settled principles of contract interpretation. Heritage Resources, 939 S.W.2d at 132 (Gonzalez, J., dissenting) (citing Forbau v. Aetna Life Ins. Co., 876 S.W.2d 132,133 (Tex.1994)).
The oil and gas leases at issue in this case state that royalty is to be calculated based on “the market value at the well of all gas produced, and saved from [the] leased premises.” In their pleadings, both the Judices and Mewbourne Oil Company contended that the leases could be unambiguously construed in their favor. Both asserted in the alternative that, if theirs was not the only reasonable interpretation, then the leases are ambiguous. The Judices argued that “it was the intent of the parties that royalty should be based on gross proceeds,” and Mewb-ourne argued that “[i]t was the intent of the parties that compression charges be deductible from the gas royalties.” The trial court found the royalty provisions ambiguous and submitted the following question to the jury:
Do you find that the contracting parties to [the] Lease[s] ..., being the Judice family and Mewbourne Oil Co., intended that the royalties were to be based upon the price received by the working interest owners from the purchasing pipeline, without deduction for compression charges?
The jury answered ‘Yes.” Thus, after hearing all of the evidence in this case, the jury decided that the parties did not intend for the Judices to share in compression costs. The court of appeals agreed that this ques*138tion was one for the jury and affirmed the trial court’s judgment. 890 S.W.2d 180, 184.
As in Heritage Resources, the Court’s reading of its own definition of “market value at the well” into these leases yields a different conclusion. In my opinion, the Court errs by failing to consider the parties’ intent. See Forbau, 876 S.W.2d at 133. Furthermore, I reiterate my view that the rule announced in Heritage Resources should apply only prospectively, as lessors such as the Judices could not have expected this result. See Heritage Resources, 939 S.W.2d at 132-33 (Gonzalez, J., dissenting).
For the foregoing reasons, I dissent.