National Association of Division Order Analysts July / August / September 2022
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Volume MMXXII • No 3
www.NADOA.org
Contents Feature
Articles
Legal Watch Highline Exploration Inc v QEP Energy.................................10 Legal Updates Blasi v Bruin E&P Partners....................................................11 Broadway Nat’l Bank v Yates Energy......................................12 Pauler v M & L Minerals........................................................28 Chambers v San Augustine Cty & San Augustine Cty Appraisal Dist v Chambers..............................31 Nettye Engler Energy v BlueStone Natural Resources..............33 Fitzgerald v Apache Corp and Carl v Hilcorp.........................34 Unclaimed Property Updates for the Oil & Gas Industry........................................35 North Carolina........................................................................37 Wisconsin VDA.......................................................................37 National Niche...........................................................................38 Institute Update.........................................................................39
NADOA 2022 Officers President Michele Lawton 1st Vice President Norma Dooley 2nd Vice Presiden t Vicki Danielson, CDOA Treasurer Valerie Wible, CDOA Corresponding Secretary Jason Alexander Recording Secretary Kimberly Bowman
The NADOA News Magazine is a quarterly publication of the National Association of Division
In This
Order Analysts P O Box 1656 Palm Harbor, FL 34682
Issue
President’s Corner..............................................................1 Nominations for 2023 Board..............................................2 Cob Webs............................................................................3 Decimal Points...................................................................4 Certification....................................................................... 5 New Members.....................................................................5 In Memory..........................................................................6 Counterpart Connection.....................................................7 NADOA Board & Committee Chairs................................49 Calendar of Events...........................................................50
Subscription: By membership to NADOA, at $75.00 per year.
News Magazine Editor Rona L. Erickson, CDOA Kaiser-Francis Oil Company Ronae@KFOC.net 918.491.4319
Graphic Design, Paul Beach
On the Cover: Floating On the River, Courtesy of the City of San Antonio
All rights reserved. No part of this publication may be reproduced/copied without written permission. Editorial disclaimer: The contents of this newsletter are intended for member use only and any other use without permission from the NADOA Board of Directors is strictly prohibited. Articles published herein represent the view of the authors; publication neither implies approval of the opinions expressed nor accuracy of the facts stated and NADOA accepts no liability for misprints.
President’s
Corner
Michele Lawton, CDOA 2022 NADOA President
Hi everyone! I am getting so excited to see everyone in person at Institute this year. The weather in San Antonio should be amazing in October.
The Institute Committees have been hard at work to bring you exciting networking opportunities and great learning opportunities this year. Come meet all those people you only talk to through e-mail. It is such a huge difference meeting people face-to-face. Networking is a big part of being successful in this industry. Make sure to take the time to meet new people and expand your contacts. We have seen plenty of ups and downs in the industry in recent years. It feels like we are headed in an upward position again and it so great to see job openings popping up. Being a member of NADOA can give you the extra edge you need to secure those new openings. Through our cost-free webinars, the industry updates in the quarterly newsmagazine, and the CDOA certification program, you will always have the tools to sharpen your skills and further develop your career. Let us know what topics you have an interest in seeing for future webinars and classes. We love to hear from our members. NADOA is all about leading its membership into the future of the industry.
October in historic San Antonio is going to beautiful. Come early and stay late to enjoy everything the city has to offer. I cannot wait to see everyone this year!
See you soon!
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Opportunity Knocks - 2023 Board
Calling all NADOA Members! Would you be interested in participating on the 2023 Board of Directors for NADOA? We are looking for members who may be interested in running for a position. Nominations are open for: 2nd VP – in charge of selecting site for Institute in 2 years’ time Corresponding Secretary – in charge of membership registration Recording Secretary – takes minutes at the board meetings Treasurer - responsible for reconciling AFEs and mailing checks as required
If you are interested in running for any position, please contact Lewis Box lewis.box@gmail.com or give him a call at 325-234-5741 by September 15, 2022, if you have any questions.
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Trusted Legal Counsel to Energy Companies
Oil & Gas | Utilities | Mining | Renewables
For more information visit steptoe-johnson.com
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Cob Webs
section on the homepage. Please send suggestions for NADOA webinar topics/speakers to Webinar Chair, Yoli Bazan, CDOA, ybazan@hilcorp.com Details for upcoming NADOA Webinars can be found at: https://nadoa.org/news-events/ Steptoe & Johnson PLLC – Visit: https://www.steptoe-johnson.com and click on News for details. The Steptoe webcasts are recorded. To access previously recorded webcasts, go to www. Steptoe-Johnson.com and enter Webcasts in the search feature. Oliva Gibbs LLP – Energy Education Series: Visit www.oglawyers.com/ events for further information. If you are aware of other educational webinars, please advise NADOA News Magazine editor, Rona Erickson, CDOA ( ronae@ kfoc.net ), Associate editor, Susan Bradley, CDOA ( sbradley@ faulenergy.com ) or 2022 NADOA Education Chairs, Norma Dooley, ndooley@wagneroil.com or Kimberly Bowman, kbowman@finleyresources.com .
Educational webinars can be approved for 1 (one) CDOA certification point. NADOA webinars, Steptoe & Johnson PLLC webcasts and Oliva
Gibbs LLP webinars are pre-approved. Please check the certification page to determine if other webinars are pre-approved or need to be submitted for approval to the NADOA Certification Committee. Contact Sherry Werth for approvals ( srw6886@gmail. com ). Certification points should only be applied for after completing the event. If you are unable to attend an event due to unforeseen circumstances, it is an ethics violation to apply for the credit NADOA – Webinar information and registration links will be posted on the website ( www.nadoa.org ). ). Webinars are free for NADOA members and $15.00 for non- members. Links to recorded webinars are available to NADOA members by using the Webinar link in the Members Only
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NADOA
Decimal Points
Remember to keep your NADOA directory information updated. Due to all the changes taking place in our industry and the world, it is more important than ever to maintain professional contacts and receive the educational benefits of membership in NADOA. NADOA online Job Bank has new postings. Visit http://www.nadoa.wildapricot.org/page- 662233
If you have a suggestion for someone to act as a Regional Reporter to help NADOA keep abreast of current legislation and legal issues for your region, please submit the name or the name of the firm. Regional Reporters ABADOA Steptoe & Johnson PLLC Ryan.daniels@steptoe-johnson.com CAPDOA OPEN DADOA OPEN DALWORTH Lewis Box, CDOA lewis.box@gmail.com HADOA Emily Sheffield esheffield@oglawyers.com PBADOA Rosanne Kidder Rosanne.kidder@pxd.com SADOA Joe Anderson Janderson96@cox.net Arkansas Jackie Clotfelter, CDOA jclotfelter@hannaoilandgas.com Kansas Amy Flaming Amy.flaming@chsinc.com North Dakota Kimberly A. Backman kbackman@crowleyfleck.com New Mexico Zachary P. Oliva zoliva@oglawyers.com Louisiana Margaret Patton mpatton@pattonfirm.com
Is your company’s server blocking NADOA emails? Do you have issues logging into the NADOA website? Download the Wild
Apricot for Members WILD APRICOT App to see your NADOA membership details, get quick access to the NADOA Membership Directory or register for NADOA events.
2022 NADOA Article Deadlines
November 11.......................Fourth Quarter
2022 News Magazine Team
Kim Bowman Associate Editor, Photography
Rona Erickson CDOA, Editor
Susan Bradley CDOA Associate Editor
Michelle Davila Associate Editor
Cheryl Hampton Associate Editor
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CANDIDATES FOR CERTIFICATION Publication of the following “Certified Division Order Analyst” applicant(s) fulfills the requirement as stated in the Voluntary Certification Policy, III C.2 which states: “…applicant’s name will be published in the NADOA Newsletter or other official publication of NADOA.” This allows the NADOA membership an opportunity to present objections to the certification of the applicant. Any objection to the certification of the applicant must be in writing and signed by a NADOA member or non-member who qualifies his knowledge and objection of the applicant. All such letters will be considered confidential and must be received by the NADOA Certification Committee at the following address within thirty (30) days following the last day of the month in which the Newsletter or other official publication of NADOA was published: NADOA Certification Committee P O Box 1656 Palm Harbor, FL 34682 If the objection warrants denial of the certification or temporary withholding of certification, the applicant will be notified by Certified Mail. CANDIDATES FOR RECERTIFICATION
Betty Davidson – Houston, TX Luanne Johnson – Houston, TX
Anna M McMinn – Dallas, TX Kristy Peters – Houston, TX
CDOAs with July renewal dates be sure to submit your 2021 employment credits using the Certification Self-Service portal on the NADOA website. This is a pre-approved drop down item. TIME TO RECERTIFY? If you are a CDOA whose certification expires July 1, 2022, you should have received your Re- Certification Application electronically by the end of June. If you do not receive your application, please contact Darryn McGee, CDOA at darryn.mcgee@coterra.com.
NADOA Welcomes The Following New Members: Callon Petroleum Nicole De Mesa Enlink Midstream Mac Anthony McMorris
Oxy
Marathon Oil Company Mia Jackson Teodelyn Martinez
Jillian Castellon Alexa Ignasiak LaTanya Thompson
Caleigh Miller Morgan Raley
EOG Resources Inc Scott Ellis Katie Manton John Stelzer Kimberly Stetler Kathryn Ward
Maria G Andrews Maria Andrews
Rife Resources Ltd Catherine Miller
CIMA ENERGY LP Daniel Ballard
Matador
Southwestern Energy Megan Tripp Tiffany Vogel
Debra Davis
Country Roads Minerals LLC Kayla Higgins Ashley Lucas
Occidental Oil & Gas Corporation Blake Frosch Occidental Petroleum Corporation Amy Potter Samantha Wiselogel
Frio Energy
Teresa Ward
TGNR
Cypress Natural Resources Mindy Minor
Cynthia Maya
Lambert Land Company Alyssa Barnes
The GHK Company
Elk Range Royalties LP Shawna Weaver
Carolyn Bechtold Heck
Lime Rock Resources Andrew Engel
Enerplus Resources Haley Zepeski
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In Memory
Richard (Rick) Alan Haynie, CPL
Richard passed away on June 24, 2022, in Houston, Texas, at the age of 71. He graduated from the University of Texas with a bachelor’s degree in Petroleum Land Management. Richard worked in various positions in the oil and gas industry and was at El Paso Production Company for many years. Upon retirement, he took pleasure in spending time outdoors, appreciating nature and feeding birds, as well as spending quality time with friends and loved ones. He also appreciated good food and never passed up the opportunity to explore different restaurants. Richard is survived by his fiancé, Mary Peters LeMond, and many friends and family.
JoBeth Hines-Lorraine, CDOA
The Houston Land and Division Order community recently lost a wonderful person: JoBeth passed away on July 3, 2022, in Houston, Texas. JoBeth began her land career in Houston in 1979 as a secretary/lease analyst for Kirby Exploration Company. Over the span of her career she worked for Cabot Oil & Gas, Citation Oil & Gas, Dune Energy, Inc. and others. At the time of her death, she was working as a Division Order Analyst for Black Stone Minerals, LP. JoBeth was very active in the division order community. She was a certified division order analyst. She served on the HADOA board, volunteering for many HADOA committees and events. JoBeth also served on the NADOA Institute committee. JoBeth will be missed by all who had the pleasure of working with her over her many years in the Industry.
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Counterpart
Connection
Sandi Rupprecht Local Association Coordinator
APPALACHIAN BASIN ASSOCIATION OF DIVISION ORDER ANALYSTS (ABADOA) Association Based in the Pittsburgh, Pennsylvania Area Serving NY, OH, PA, WV (Inactive)
Lola Strickland, Local Association Reporter
CAPITAL ASSOCIATION OF PROFESSIONAL DIVISION ORDER ANALYSTS (CAPDOA) Association based in the Oklahoma City, OK Area
…………………………………
ARKLATEX ASSOCIATION OF DIVISION ORDER ANALYSTS (ALTDOA) Association based in the Shreveport, LA Area (Inactive) …………………………………
Hello from Oklahoma City and CAPDOA! It’s been a hot one but we are pressing on! We had a wonderful
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Summer Seminar in June with amazing speakers! Meredith Wegener spoke regarding Issues with Petroleum & Plastic; Roberto Seda’s presentation was over The Fractionalization Dilemma; Darren Gagliardi’s presentation was on Owner Relations-We Got a Case for That; Jennifer Krieg spoke on Federal & Indian Transactions & Title Issues; Wade Brawley presented on Land’s Role in Data Management and Melissa Gardner gave a presentation on Affidavits of Heirship. All of the speakers did an exceptional job, and I received a lot of positive feedback on what a great Seminar it was. We were able to give away a 2022 NADOA Institute Registration at the Seminar as one of the door prizes as well. CAPDOA’s August Business meeting on 8/16 featured speakers Jacob Charney and Rami Jabara, presenting on Senate Bill 168 PRSA. For more information regarding CAPDOA, please visit our website at www.capdoa.org. ………………………………… Submitted by Eli Murray, President DALWORTH ASSOCIATION OF DIVISION ORDER ANALYSTS (DALWORTH) Association serving the Dallas/Fort Worth, TX Area
We have an educational luncheon coming up in September and intend to cover the CDOA Chapter concerning Lease Provisions. As mentioned last quarter, DALWORTH has been joining forces with the local NALTA affiliate for several years and has offered similar pricing to DFW-ALTA members as for DALWORTH members. This helps ease the pain of our drop in membership, and still allows us to provide excellent opportunities for learning and networking. For information regarding DALWORTH, please visit our website at www.dalworth.org. …………………………………
Kaitlin LaFlamme, Local Association Reporter
DENVER ASSOCIATION OF DIVISION ORDER ANALYSTS (DADOA) Association based in the Denver, CO Area
DADOA is thrilled to welcome our members back to in-person luncheons starting September 14. Our speaker will be Taylor Hindes, who will present on “Title Opinions 101”, a discussion of the sections in the title opinion and what to expect to see in each section. Bring your questions and examples for the Q&A at the end of the presentation. One CDOA credit and one CPLTA credit pending approval. The luncheon will be at the Crowheart Energy LLC’s building conference room. DADOA met with 3 representatives from the Denver Association of Lease and Title Analysts, (DALTA) to discuss the possibility of combining our events for the remainder of the year. Due to the loss of several companies through mergers and acquisitions, and thus DO analysts to Houston, Midland and Oklahoma, as well as other industries in Denver, we see the need to work together to survive in our new reality. More on this as the talks and plans progress. DADOA will co-host a combined fall seminar with DALTA on October 13, 2022. Carol Ann Hartnagle of Total Document Solutions has graciously sponsored the entire seminar. Thank you, Carol Ann for your generosity. The seminar will be at Crowheart Energy LLC’s building conference room.
2022 DALWORTH Officers and Directors
President – Eli Murray 1st Vice President – Connie Wilcoxson 2nd Vice President – Liz Karlen Recording Secretary – Lindsay Grose Director (Compliance) – Megan McKee Director (House) – Christy Ewert Director (Hospitality) – Somchay Fairbanks Director (Hospitality) – Isabel Zhang Director (Historian) – Brenda Pirozzolo Director (Scholarship) – Lewis Box
Board Advisor – Kim Bowman NADOA Liaison – Megan McKee
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Lister at HLister@rife.com. Joining the Board of Directors for a local chapter is a great start in understanding the work and effort needed to host these awesome events but also a way to reach personal and professional goals through growth. For additional information regarding HADOA please view our website: www.HADOA.org. ………………………………… MID-AMERICA ASSOCIATION OF DIVISION ORDER ANALYSTS (MAADOA) Association based in the Wichita, KS Area (Inactive)
For more information regarding DADOA, please visit our website at www.dadoa.org. ………………………………… Submitted by Heather Lister HOUSTON ASSOCIATION OF DIVISION ORDER
ANALYSTS (HADOA) Association based in the Houston, TX Area
Howdy from Houston! The members of the HADOA 2022 Board of Directors are happy to report that we have had great attendance this year. Prior to this article, our June full day seminar hosted 37 attendees who were educated on a wide variety of topics including Texas Unclaimed Property, Curative Practices, and Definitions of Legal Entities. May was our first in-person only event this year and we had a wonderful 30 people in attendance who heard from Ms. Shellie Williams at Enverus on Do’s and Don’ts of Customer Service. In March, HADOA hosted Paul Strickland with Hargrove Smelley & Strickland who discussed various Louisiana title matters to 16 in-person attendees and 28 virtual attendees. Although this article will be printed after our August speaking event, there are currently over 20 attendees signed up to attend a presentation on the Anatomy of the Oil and Gas Lease by Mr. Ryan Kirby with Kirby, Mathews, & Walrath. As we move into last quarter, we want to remind everyone that our last educational luncheon of the year will be September 29 and although we are not yet ready to share details on the speaker and topic, we are excited to close out the year with this presentation. Our annual Holiday Charity Luncheon is currently scheduled for December 9, and we cannot wait to see who our President, Armando Lopez, chooses as our Charity of the Year recipient. Make sure to follow us on social media (LinkedIn, Instagram, Facebook) for all the latest and greatest that the Board of Directors is hosting! As always, if you have any suggestions for topics, speakers, or co-sponsored events, email us at admin@hadoa.org. Board of Director nominations for the 2023 year will be quickly approaching, so if you know someone who would be a great leader in our industry or if you are interested in joining, please email Past President, Heather
………………………………… Jennifer Oden, CDOA, Local Association Reporter PERMIAN BASIN ASSOCIATION OF DIVISION ORDER ANALYSTS (PBADOA) Association based in the Midland, TX Area
Hello there! Hope everyone has enjoyed their summer, west Texas is definitely ready for some cooler temps! PBADOA has currently been on break for the last few months, but we are excited to meet again in September. We will continue to meet with PALTA for the rest of the year. We are also thrilled that our old venue, the Bush Convention Center, will be up and running for our fall luncheons. PBADOA is pleased to announce we were able to award two scholarships to the NADOA Institute in San Antonio. We are looking forward to hearing about our candidates’ experiences there. See ya’ll in October! For more information regarding PBADOA, please visit our website at www.pbadoa.org. …………………………………
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Dixie Folzenlogen, Local Association Reporter SOONER ASSOCIATION OF DIVISION ORDER ANALYSTS (SADOA) Association based in the Tulsa, OK Area
Barbara M. Moschovidis, Shareholder with GableGotwals, and Sandy Moriarty, Division Order Analyst with Coterra Energy Inc. were the keynote speakers at SADOA’s luncheon meeting on June 8 at the Tulsa Country Club. Their topic was “TO INTERPLEAD OR NOT TO INTERPLEAD? That is the question: Taking Arms against Outrageous Statutory Interest.” SADOA hosted a luncheon meeting on August 10 from 11:30 a.m. to 1:00 p.m. at the Tulsa Country Club. The speaker was Drew Hopkins, Land Information Services/ PakEnergy. The topic was “Finding Success Through Business Ethics.” SADOA 2022 CALENDAR October 19, 2022................................FALL SEMINAR December 8, 2022....... HOLIDAY DINNER MEETING For more information regarding SADOA, please visit our website at www.oksadoa.org. …………………………………
President:............................................Jamie Donohue 1st Vice President:.........................Dixie Folzenlogen 2nd Vice President:.............................Crystal Chapin Secretary:.............................Debbie Wortham, CDOA Treasurer:..................................................Joe Votruba Director:..................................................Holly Brandt Director:..............................................Rachel Dawson Advisor:.........................................Cyndi Bryant-Price Advisor:.....................................Carrie Hughes, CDOA NADOA Liaison:.........................Sonya Turner, CDOA
Legal
Watch
Highline Exploration, Inc. v. QEP Energy Co.
North Dakota
In August, the United States Court of Appeals for the Eighth Circuit affirmed a district court’s ruling that overriding royalty owners generally must bear their share of post-production costs under North Dakota law. Available through this link, the Eighth Circuit’s Opinion is reported at Highline Exploration, Inc. v. QEP Energy Co., --- F.3d ---, 2022 U.S. App. LEXIS 21402 (8th Cir. Aug. 3, 2022). In affirming summary judgment in favor of QEP, the Eighth Circuit held overriding royalty interests that are “free and clear” of development and
operation costs do not exempt the interests from costs incurred to gather, process, or transport oil and natural gas. Reviewed in combination with the North Dakota Supreme Court’s decision in Blasi v. Bruin E&P Partners, LLC, 2021 ND 86, 959 N.W.2d 872, and other cases, the Eighth Circuit opinion offers clarity to producers in North Dakota when calculating payments to royalty and overriding royalty owners.
There is ongoing litigation in this case.
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Legal
Updates Articles are not intended to be and should not be relied upon as legal advice or to establish any kind of an attorney-client relationship with the author.
North Dakota
North Dakota Supreme Court Issues Opinion on Oil Post-Production Costs By: Kimberly A. Backman
On May 20, 2021, the North Dakota Supreme Court issued its opinion in Blasi v. Bruin E&P Partners , LLC, 2021 ND 86, 959 N.W.2d 872, answering a certified question from the United States District Court for the District of North Dakota. The Court held that oil royalties are properly valued at the well when the royalty clause provides that the lessee is to deliver “to the credit of the Lessor, free of cost, in the pipeline to which Lessee may connect wells on said land, the equal [fractional] part of all oil produced and saved from the leased premises.” At this time, approximately fifteen putative class actions from oil and gas lessors were pending before the United States District Court for the District of North Dakota. The plaintiffs in those class actions generally alleged that oil and gas operators had improperly taken deductions from the oil royalties accruing under the oil and gas leases at issue by valuing production at the well. The plaintiffs argued the valuation location is independent of the well’s location and “the pipeline” means a downstream pipe used to transport oil to a refinery. The United States District Court for the District of North Dakota certified a question of law to the North Dakota Supreme Court concerning whether the oil royalty should be calculated at the well. The North Dakota Supreme Court began its analysis by exercising its discretion to answer the certified question, noting that the lease language has been common in North Dakota for over sixty years and presented a significant
issue of law. Addressing the merits, the Court held that the oil royalty clause unambiguously established the valuation point at the well. It reasoned that “the words describing the contemplated location—i.e., the place where the lessee ‘may connect’ a pipeline . . . is at the ‘wells on said land.’” The Court rejected the plaintiffs’ claim that the valuation point should be at some point further downstream because the oil royalty clause unambiguously referred to the leased premises and the plaintiffs’ interpretation would interject considerable uncertainty in the valuation location. The Court also noted that its conclusion is consistent with case law from other jurisdictions. The Court concluded, “We hold, as a matter of law, that the oil royalty provision in this case unambiguously sets a valuation point at the well.” Note: Numerous defendants in the class action lawsuits were represented by Crowley Fleck PLLP. This article was first published by Crowley Fleck PLLP on May 20, 2021. About the Author: Kimberly Backman is a Partner in the Oil and Gas Practice Group of Crowley Fleck PLLP in the Bismarck office. Her practice encompasses various areas of natural resources law and estate administration with an emphasis on title examination. Ms. Backman handles projects containing complex oil and gas title issues and also assists clients with general oil and gas matters.
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So You Write Title Opinions? Have You Read, Understood and Incorporated Into Your Title Opinions the Case of:
Texas
Broadway National Bank, Bank of the Mary Frances Evers Trust, Et Al. v. Yates Energy Corporation ET AL., 631 S.W.3d 16 (Tex.2021) By Terry E. Hogwood, Attorney
to reconcile the rules of statutory interpretation of the Correction Deed Statutes found in the Court’s opinion with present run sheet/title examination procedures in an attempt to formulate a new set of title examination procedures that will allow a landman/attorney to be able to locate a correction deed filed out of time. The Court had the advantage in Broadway of knowing all of the title facts. A title examiner attempting to build an accurate run sheet which fully locates all correction deeds pertaining to the lands at issue will not know any such title facts. These title facts will have to be located in the pertinent county deed records and made a part of a completed run sheet. The question being explored in this article is how and at what cost will the new title examination procedures regarding correction deeds lead to increased title examination costs for client companies. Title Opinions - Title opinions are based on run sheets (defined as (i) a compilation of all instruments filed in the pertinent county deed records; (ii) commencing with the sovereignty of the soil down to the close of the examination period; (iii) put in file date order [as distinguished from date of instrument order] and (iv) which is represented by its compiler to be a complete listing of all title related documents for a specific tract of land). The run sheet is examined by a by a competent title attorney and, after such examination, should yield the present status/ownership of the fee simple title to at least the mineral estate of the lands at issue. The ownership status of the lands under examination is premised on all instruments filed of record in the county deed records through the closing date of the run sheet as well as all title related problems raised by such examination.
“ Using similar reasoning, courts have applied the discovery rule to a property owner’s fraudulent- lien claims despite the lien’s filing in the property records. E.g., Vanderbilt Mortg. & Fin., Inc. v. Flores, 692 F.3d 358, 369-70 (5th Cir. 2012) (applying Texas law). Such an injury is nevertheless inherently undiscoverable where the property owner has “no reason ... to believe that any adverse claim has been made on his property, and no reason to be checking regularly to see whether such a filing has been made.” Id. at 368. This is consistent with the well-settled principle that one who “already owns the land ... is not required to search the records every morning in order to ascertain if something has happened that affects his interests or deprives him of his title.” Cox v. Clay, 237 S.W.2d 798, 804 (Tex.Civ.App.— Amarillo 1950, writ ref’d n.r.e.); cf. Leonard v. Benford Lumber Co., 110 Tex. 83, 216 S.W. 382, 384 (1919) (noting that “registration of an instrument carries notice of its contents only to those bound to search for it, among whom are subsequent purchasers” (emphasis added) . Archer v. Tregellas, 566 S.W.3d 281, 291 (Tex. 2018). Interesting quote, is it not? It is unless you have read the Broadway National Bank Case (“ Broadway ”). The following is an analysis of the factual underpinnings of the case, examples of some of the title examination procedures which could be impacted, how abstracts of title are prepared, examined and how title opinions may have to be written post Broadway . As poorly written/reasoned as this case is, this is only the first of what the author expects will be several articles on the impact of this case on title examination in Texas.
It must be remembered throughout the reading of this article that the following analysis is an attempt
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the Broadway National Bank (“Bank ”), as trustee, coupled with subsequent attempts (via correction deeds) to correct the first incorrect conveyance. Specifically, the trust agreement/amendment provided that one of the beneficiaries (John Evers – “John”) was only to receive a life estate in twenty- five percent (25%) of the mineral estate in and under the lands at issue in the case. The Bank incorrectly conveyed to John a full twenty-five percent (25%) fee simple mineral interest in the lands at issue. Quoting the Court: “In this case, the court of appeals considered whether the original parties could validly agree to correct a mistake in the original instrument of conveyance, after a third party acquired an interest...” ( Broadway National Bank et al. v. Yates Energy Corporation et al. , 631 S.W.3d 16, 18 (Tex. 2021) (emphasis added)). The court of appeals ruled that, to have a valid correction deed, once a sale or transfer of the property was made, such sale triggered the “if applicable” clause found in Tex. Prop. Code § 5.029(b)(1) and thus required the joinder of all of the current owner(s), including any intervening third party grantees. The Texas Supreme Court did not agree ! It interpreted the “if applicable” clause to require a third party grantee (present owner) to join in the correction deed if and only if the original parties to the incorrect deed were “unavailable” (Deceased, unlocatable or refused to sign? Unknown and un-defined in the Correction Deed Statutes or this case). That is, even if there was a new owner of all/part of the lands at issue or an interest therein, pursuant to a conveyance to that third party made prior to the attempted correction of a prior “incorrect” deed, only the original party(ies) to the incorrect deed (who may own no interest in the lands at issue at the time of the issuance of the correction deed) were required to execute a correction deed under Tex. Prop. Code § 5.029(b) (1) to achieve the result of a valid correction of a material mistake.
This article will look at some of the specific problems raised by Broadway as it pertains to: (i) the examination methodology for the run sheets for use by the examining attorney; (ii) how those documents are to be interpreted (by both the landman and examining attorney) in light of this case and (iii) how the costs of preparation of the title run sheet will certainly skyrocket in light of this case (perhaps increasing up to 300% or more). Retroactive Application - Preliminarily, how does Broadway apply to the matters raised below? Specifically, does the case have only a prospective application or is it to be applied retroactively as though the rules of law announced in the case had always been the law? This point is absolutely crucial in understanding this case on a go forward basis! The general rule in Texas is that any decision of the Texas Supreme Court was to be applied retroactively as though it had always been the law. ( Sanchez v. Schindler , 651 S.W.2d 249, (Tex. - 1983); Carrollton-Farmers Branch Independent School Dist. v. Edgewood Independent School Dist., 826 S.W.2d 489 (Tex. - 1992)). However, exceptions are recognized when considerations of fairness and policy preclude full retroactivity. Resolution of the retroactivity issue turns primarily on the extent of public reliance on the former rule and the ability to foresee a coming change in the law ( City of Farmers Branch v. Matushita Electric Corp. , 537 S.W.2d 452, 454 (Tex. - 1976)). Key to this article is the author’s opinion that this case will be applied retroactively. As significant as this case is, the Court should have stated whether or not it would have prospective application only. It did not! Are additional Texas titles in danger of being overturned based on as yet undiscovered correction deeds which would NOT have been found using pre- Broadway title examination procedures? In the author’s opinion, yes.
Summary of the Case
Broadway arose out of an unrecorded trust agreement/amendment and a subsequent incorrect conveyance to certain beneficiaries of the trust by
Facts of the Case
1. Pursuant to an unrecorded trust
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2012 . Seventy percent (70%) of Yates Energy’s interest was subsequently assigned to EOG Resources et al. by Yates Energy. 6. The Bank and all beneficiaries under the trust, including John, thereafter executed a duly recorded instrument dated November 4, 2013 whereby all grantees, and specifically John, acknowledged that John only acquired a life estate under the deed described in 3. above (“2013 Correction Deed”). This correction deed , issued some eight (8) years after the 2005 Deed, was found by the Court to be a valid correction deed.
agreement/amendment, Mary Frances Evers created the Mary Frances Evers (Intervivos) Trust, naming Broadway National Bank as Trustee. Apparently, the actual trust agreement was not recorded. Was there a deed of conveyance into the trust? Unknown. If there was a deed of conveyance into the trust, was that conveyance recorded? Unknown. Mary Frances Evers apparently amended the unrecorded trust agreement to provide that John was only to receive a life estate in 25% of the mineral estate in, on and under the lands at issue and other lands. 2. Mary Frances Evers died in 2003 (not stated in the Court’s opinion but independently verified), thus apparently making the terms of her trust irrevocable. 3. The Bank, as trustee, thereafter via distribution deed conveyed to John (and others) who, per the Mary Francis Evers trust, was only to receive a life estate in the oil, gas and other minerals in the lands at issue, an undivided 25% fee simple interest therein by deed dated February 1, 2005 (which deed was properly recorded). This distribution was apparently not in accordance with the express terms of the 2003 trust agreement/amendment. 4. The Bank thereafter attempted to “correct” its perceived mistake by issuing the first correction deed dated June 26, 2006 (which deed was properly recorded) to the same persons listed in the deed in 3. but only conveying to John a life estate in the oil, gas and other minerals in the subject lands. This correction deed was only signed by the Bank. 5. John thereafter conveyed a royalty interest to Yates Energy by duly recorded deed effective February 1, 2012 as well as an overriding royalty interest by separate assignment also effective February 1,
7. John died a few months thereafter.
Yates Energy thereafter disputed whether its grantor, John, owned a life estate or fee simple estate in and to an undivided 25% of the minerals in, on and under the subject lands. Thus, the case was joined with the Bank seeking declaratory relief in the probate court that the correction deed signed ONLY by it and the original parties to the 2005 deed of distribution was a valid correction deed. The remaindermen under John’s life estate interest joined the litigation seeking to have their interest validated and confirm that John only received a life estate in the minerals in and to the subject lands as well as confirming that the 2013 Correction Deed was valid. Question: What title attorney/real estate attorney would fail to join Yates Energy/EOG Resources et al. in the 2013 Correction Deed? It may be that either the Bank had contacted them about signing the 2013 Correction Deed and they refused or the Bank was convinced they would never sign (who would deliberately decrease their royalty interest for no consideration?). And after the decision in this case? Persons/entities owning no interest in the lands at issue can, years later, potentially denude properly vested parties of their interest simply by signing a correction deed.
Question: Did John receive any remuneration for his execution of the 2013 Correction Deed? Unknown.
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Validity of 2013 Correction Deed
three paragraphs (Par. I, II and III) found in Exhibit “A” attached to this article. The Court initiates its legal reasoning in Par. I by initially stating that the express language found in §5.029 of the Correction Deed statutes allows the Court to hold it was unclear exactly what the Texas Legislature intended. That is, did it intend for the original parties (if “available” – an undefined term i.e. not physically present or not locatable or refused to sign - Unknown) to sign a correction deed correcting a material mistake OR did it intend for an alternate (heir, successor or assign) to sign once it acquired an interest in the original conveyance. The court of appeals chose the latter interpretation thus simplifying who has to sign a correction deed – any party owning an interest in the lands at issue. Rather than keeping its analysis simple, the Court forgot that its ultimate policy consideration was to protect the integrity of the Texas real property filing system (deed records) and thus the validity of already established titles to lands and interests therein. In this the Court failed. Instead, it affirmed initially that an original party (John), no longer owning any interest in the royalty estate in the lands at issue, could by his execution of a correction deed eight (8) years after the original deed into him, reduce his grantee’s interest (Yates Energy/EOG Resources et al.) from a 25% fee royalty interest in the lands at issue to a life estate in a 25% fee royalty interest in the lands at issue. Such reduction in interest could legally be made WITHOUT the present owners of the interest (Yates Energy/EOG Resources et al.) agreeing to such reduction of interest. As decided by the Court, Yates Energy/EOG Resources et al. may be BFPs for value but they will have to prove that they qualify as such on remand. The Court’s interpretation and the required remand (additional litigation) thus defeats the very stated purpose of the Correction Deed Statutes – less litigation. Par. II and III attempt to draw a difference between where a transfer of title or the absence of the original party has taken place. If the “if applicable” clause is triggered and only the heirs (an individual is deceased) or a successor (assumedly a merger of two companies by stock transfer leaving only the successor company) can be located, the Court holds
The first issue before the Court was whether the 2013 Correction Deed was a valid correction deed and thus complied with Tex. Prop. Code § 5.029(b) (1), which provides in part the following: “(b) A correction instrument under this section must be: (1) executed by each party to the recorded original instrument of conveyance the correction instrument is executed to correct or, if applicable , a party’s heirs, successors, or assigns;”…(emphasis added). It is important to keep in mind that neither Yates Energy nor EOG Resources (or its subsequent grantees) executed the 2013 Correction Deed . More importantly, as a result of the 2013 Correction Deed being executed only by the original parties (John owning no royalty interest in the lands at issue at the time of his execution) and this decision, Yates Energy/EOG Resources et al.’s royalty interest in the lands at issue terminated on the date of John’s death. Equally as important, effective the date of this opinion it was then known that the 25% remainder mineral interest in the lands at issue was unleased . John did not have any authority to lease same beyond his lifetime (unless the lessees thereunder had obtained leases/top leases from said remaindermen. The opinion does not address this issue). The argument comes down to this: (i) could ONLY the Bank and original grantees (under the February 1, 2005 distribution deed) execute a correction deed limiting John’s interest to a life estate in and to twenty-five percent (25%) of the minerals in the subject lands where an intervening third party had a valid conveyance of John’s royalty interest OR (ii) were the subsequent owners of royalty interests (Yates Energy/EOG Resources et al.) also required to join the 2013 Correction Deed in order for the court to find it to be a valid correction deed effectively reducing John’s conveyed fee simple interest in 25% of the mineral estate to a life estate only?
The crux of the decision appears to occur in the
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within four years of their mistake. See, e.g., Garcia v. Reverse Mortg. Sols., Inc. , No 04-18-00736-CV, 2019 WL 2996971, at *3 (Tex. App.—San Antonio 2019, no pet.) (holding that Tex. Civ. Prac. & Rem. Code § 16.051 “does not apply to a party filing a corrected instrument in the county’s public records” pursuant to Tex. Prop. Code § 5.029 ). Neither section 5.027, which pertains to correction instruments generally, nor sections 5.029 and 5.030, which pertain to material-correction instruments and their effect, mention any such time constraint. See Silguero v. CSL Plasma, Inc. , 579 S.W.3d 53, 59 (Tex. 2019) (noting the presumption that legislative omissions are purposeful). The Property Code does not require that parties correcting an instrument pursuant to 5.029 do so within four years of the mistake.” Broadway National Bank et al. v. Yates Energy Corporation et al. , 631 S.W.3d 16, 28 (Tex. 2021) (emphasis added).
that that the statute is clear and it is no problem to locate the proper party to execute a correction deed ie the heir/successor depending on the facts. The Court clearly stated that the only interpretative problem with the statute is where there is an assignment of all or part of an interest in a tract of land (which assignment contains a material error) and both the original party and assign remain locatable and available. That is, can the original party, without the joinder of the assign, execute a valid correction deed correcting a material mistake in an earlier deed? According to the Court, YES, subject to the potential rights of a BFP for value. RESULT: An original party (remembering that John had been conveyed an undivided 25% mineral interest in the lands at issue eight (8) years prior to the 2013 Correction Deed), not owning ANY interest in the royalty estate in the lands at issue, can join with the other original party to the assignment (in commonly understood legal terminology – grantor and grantee) and execute a valid correction deed more than four (4) years after the execution of the incorrect initial assignment and overturn a long established legal title without having any statute of limitations on what amounts to a non-judicial reformation of the original assignment.
It is interesting to note that the recent case cited as legal support in the Court’s opinion, Garcia v. Reverse Mortg. Sols., Inc. , did indeed hold: “Further, a statute of limitations precludes a party from bringing an action in court after a statutory amount of time has expired from when the cause of action accrued. See TEX. CIV. PRAC. & REM. CODE ANN. § 16.051. It does not apply to a party filing a corrected instrument in the county’s public records…” The foregoing quote is also a naked legal conclusion by an appeals court with no case precedent to back it up. In essence, by the Court’s adoption of this rule of law, does such adoption not make Broadway a case of first impression in Texas? Following that logic, did not the Court have the opportunity to decide the other way and hold that a correction deed was a de facto reformation and could only be held to be a valid correction deed if entered into within four (4) years from the date of the initial document containing the mutual mistake? It appears
A Comment About Reformation
Is a correction deed in essence a reformation of a previously incorrect deed containing a mutual mistake? If so, does such a reformation have to be made within four (4) years of the date of execution of the original instrument. The Court held:
“While we agree that the residual, four-year statute of limitations applies to reformation suits, we do not agree that the Bank’s action here was such a suit. Causes of action and self-help provisions are not interchangeable concepts. A distinction thus exists between (1) seeking the judicial remedy of deed reformation and (2) voluntarily seeking to correct a deed by agreement. Parties attempting the latter are not limited to doing so
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that the following analysis could provide a yes answer to the question.
since the remaindermen did not join in its execution or ratify same? Does the lessee now owe the remaindermen, as of the date of John’s death or from some other date, 25% of 8/8 of all production less the costs of drilling/production? Is interest owed on the payments to the remaindermen? 2. Are Yates Energy/EOG Resources et al. barred from recovering any consideration paid to John for the purchase of his royalty interest since (i) the estate they now own in the lands at issue is a life estate only and (ii) more than four (4) years have elapsed since their acquisition of John’s royalty interest? Are Yates Energy/EOG Resources et al. barred from recovering the bonus monies paid to John for an oil and gas lease on his 25% interest since, what was ultimately leased according to the decision, was John’s life estate in 25% of the mineral estate, thus causing an apparent overpayment of bonus for what the lessee thought was a full 25% mineral interest at the time the lands at issue were leased? 3.
Texas law is clear that a judicial reformation of a deed requires two elements: (1) an original agreement (Mary Evers Trust agreement/ amendment) and (2) a mutual mistake, made after the original agreement, in reducing the original agreement to writing (2005 Deed which conveyed to John a full 25% mineral interest instead of a life estate therein). Sun Oil Co. v. Bennett , 84 S.W.2d 447, (Tex. 1935); Cherokee Water Co. v. Forderhause , 741 S.W.2d 377, 379 (Tex. 1987). Obviously, the elements necessary for the reformation of the 2005 Deed are present. The only problem is that too much time has elapsed (eight years) to allow for a judicial decision on the reformation of such instrument. According to Broadway , however, not a problem anymore. It should be noted that the underlying purpose of reformation is to correct a mutual mistake made in preparing a written instrument so that the instrument truly reflects the original agreement of the parties. Was it a step too far for the Court, as a policy matter, to find that the result of the 2013 Correction Deed was to correct a mutual mistake made in preparing the 2005 Deed? In fact, the Court held just that. Unfortunately, it also held that such non-judicial correction had no four (4) year statute of limitations in which to correct such mutual mistake. Had the Court really examined what the effect of a judicial reformation is on a deed containing a mutual mistake it would have found that the 2013 Correction Deed had the same legal effect – correcting a mutual mistake. And as a further policy consideration, the Court could have found that the parties to an instrument containing a mutual mistake have only four (4) years from the date of the original instrument to correct same. Alas, it did not.
Effect of Broadway on Present Day Title Examination
At this point in the analysis of Broadway , it is important to look at the decision of the case and its effect on title examination. Not “title examination” as some abstract term but the literal process of how landmen (and sometimes brave attorneys) actually run a title chain online or in the courthouse. Specifically, as of February 1, 2005, the “record” showed that the Bank, having conveyed an undivided 25% mineral interest to John, no longer had any title to that 25% mineral interest left vested in it which could be further conveyed. More importantly, John was vested with an undivided 25% fee simple interest in the mineral estate in the subject lands via the 2005 deed. KEY – how does the person actually running the title bring that title forward after the February 1, 2005 conveyance by the Bank? Did the title examiner carry forward and look for additional conveyances out of the Bank from and after that date? What about post- Broadway?
Now the present parties are left with the following issues:
1. Since the remaindermen apparently did not join in John et al.’s oil and gas lease(s) covering the lands at issue, did the lessee’s oil and gas leases, as to John’s NOW life estate interest, terminate at his death? Was the oil and gas lease from John ever valid
It cannot be emphasized enough that the purpose
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