applicable, the Court determined that there was no “bona fide” title dispute regarding the lessors’ mineral interest because the lessee was willing to recognize equitable title as opposed to legal title. 4 The Court’s decision for the Bordages affirmed the trial court’s grant of partial summary judgement; however, we note that a petition for review has been filed with the Texas Supreme Court. In 1999, Samson Lone Star, L.P. (“Samson”) executed an oil and gas lease with landowners Joe A. Bordages, Katherine Bordages Brownlee, Stephanie Bordages Knobel, Joseph A. Bordages III, Joanna M. Pastore, Scott Alan Bordages, and Allison Bordages Koskella, (the “Bordages”) covering 95 acres in Hardin County,Texas. 5 A title opinion later commissioned by Samson in 2001 uncovered (among other issues) the absence of a recorded deed in Hardin County,Texas, vesting J.A. Bordages with the undivided 1/3 interest he purportedly received from Charles G. Hooks, et al . 6 In an attempt to cure the gap in title, Samson sent a letter requesting the missing deed to the Bordages on May 14, 2002. In June of that same year, Samson spoke with Richard Pastore, husband of lessor Joanna Pastore, who informed Samson that a deed conveying the 1/3 interest had never been executed. 7 According to Mr. Pastore, the parties had instead executed a “Certificate of Interest.” 8 After discussing this issue with the attorney who drafted the title opinion, Samson was advised that the ‘“Certificate of Interest vests J.A. Bordages with beneficial or equitable title to the 1/3 interest, but not legal title.”’ 9 Further, the attorney suggested that Samson ‘“may want to secure an affidavit from Chas. G. Hooks & Sons with the aforesaid Certificate of Interest attached and file it of record in Hardin Co.”’ 10 Lastly, the attorney clarified that “this won’t cure the defect [but] will help explain the circumstances and put [third] parties on notice of the claim of the heirs of J.A. Bordages to this 1/3 interest.”’ 11 Unsatisfied, Samson re-sent its previous letter to the Bordages on September 18, 2002. 12 Meanwhile, the Bordages’ lease had been included in two gas units, the Joyce DuJay No. 1 and the Joyce DuJay “A” No. 1, and production had been obtained from the units. 13 Despite the fact that
Samson had the Certificate of Interest in its possession, and that no other parties contested the Bordages’ ownership or claimed an interest in the property, Samson refused to pay the Bordages royalties on production from the Joyce DuJay Units, withholding payments until December of 2007. Samson only began payments after it had received an affidavit from the Hooks family confirming the original 1/3 transfer, and incorporating a copy of the same Certificate of Interest that Samson already had in its possession. 14 In addition to the withheld royalties, Samson also did not pay any interest or late charges on the accrued royalties. 15 The Bordages sued Samson for breach of contract for failure to pay royalties and failure to pay late charges, among other claims. The trial court granted the Bordages’ motion for partial summary judgement awarding them a total of $12,955,919.00 in damages, $8,312,203.00 of which was for accrued and unpaid royalties. 16 On Appeal, Samson argued that royalties on production were not “due” because the Bordages did not provide Samson with ‘“reasonable assurances that they were the proper parties to receive the royalties until October 2007”’ when Samson received the affidavit and attached Certificate of Interest. 17 Samson argued that until that point,“it did not know who to pay, so the royalties were not due,” and consequently, that its December 2007 payments were “timely” and not subject to late charges, 18 essentially arguing the “safe harbor” provisions offered by the Texas Suspense Statute. The Court ultimately rejected Samson’s arguments. To determine when payments are “due” under the lease, the Court looked to the plain language included in the lease, stating that “[h]ere, the lease provision at issue describes when the payment is required, and directly links the first royalty payment to the filing of a completion report or a test well report with the Railroad Commission rather than who is to be paid.” 19 Payments were “triggered” when Samson filed its completion reports with the Railroad Commission on February 7, 2002, for the Joyce DuJay No. 1, and on October 24, 2002, for the Joyce DuJay A-1. 20 “The lease expressly provides that the royalties for the first
_________ 4 Id. at 20. 5 Id. at 2.
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17 Id. at 16. 18 Id. 19 Id. at 18. 20 Id. at 17-18. _________
9 Id. at 3-4. 10 Id. at 4.
13 Id. at 2. 14 Id. at 4-5. 15 Id. 16 Id. at 8.
6 Id. at 2-3. 7 Id. at 3-4. 8 Id. at 3.
11 Id. 12 Id.
G rowth T hrough E ducat i on - O c tober / N ov ember / D e c ember 2022 15
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