With today’s orders list, the Texas Supreme Court issued opinions deciding four cases. It also issued corrected opinions on rehearing in one case originally decided last summer. And it reassigned one of the cases set for argument in early March to a (new) argument date in late March.

The case with new opinions on rehearing is CHESAPEAKE EXPLORATION, L.L.C. AND CHESAPEAKE OPERATING, INC. v. MARTHA ROWAN HYDER, INDIVIDUALLY, AND AS INDEPENDENT EXECUTRIX AND TRUSTEE UNDER THE WILL OF ELTON M. HYDER..., No. 14-0302 .

The case now set for oral argument on March 29th is CROSSTEX NORTH TEXAS PIPELINE, L.P., N/K/A ENLINK NORTH TEXAS PIPELINE, LP v. ANDREW GARDINER AND SHANNON GARDINER, No. 15-0049 .

Opinions

A school cannot moot a student's lawsuit merely by announcing a policy change

A group of middle school cheerleaders sued when their school prohibited them from displaying banners containing religious messages. The school district filed a plea to the jurisdiction and, eventually, an interlocutory appeal.

After the suit was filed, the school district adopted a new policy stating, in somewhat elliptical terms, that it was “not required to prohibit messages on school banners . . . that display fleeting expressions of community sentiment solely because the source or origin of such message is religious,” but “retains the right to restrict the content of school banners.” Although that policy does not provide a definitive answer on whether future banners will be permitted, it purports to change the rules under which district officials might consider a request. The school district argued on appeal that this policy change mooted the case, depriving the courts of subject-matter jurisdiction, and the court of appeals agreed.

The Texas Supreme Court reversed, stating that it was unpersuaded that the controversy had been resolved. The opinion notes that, in suits brought to challenge public policy, a defendant cannot moot the challenge merely by stating that it has changed its mind: "If it did, defendants could control the jurisdiction of courts with protestations of repentance and reform, while remaining free to return to their old ways. This would obviously defeat the public interest in having the legality of the challenged conduct settled."

In framing the test to be applied, the Court focused on the risk that the conduct would recur. It quoted language from past decisions saying that the defendant arguing for mootness bears "a 'heavy' burden" to show that "subsequent events make 'absolutely clear that [the conduct] could not reasonably be expected to recur."

The Court held that this situation fell short of mootness. It noted, in part, the district's continued position that, while "it does not have any current 'intent' or 'plan' to reinstate that prohibition," it was reserving the right to do so. Because the case was not moot, the Texas Supreme Court reversed and remanded the case to the court of appeals so that it could consider the other issues raised by the district in its plea.

The Railroad Commission can defeat a claim for breach of contract or negligence by showing its officials acted with subjective good faith

RAILROAD COMMISSION OF TEXAS v. GULF ENERGY EXPLORATION CORPORATION, No. 14-0534

jury charges oil and gas regulatory sovereign immunity

This case involves a well that was plugged in error by the Railroad Commission. The Commission was in discussion about the need to plug a number of wells, which included the one at issue here. A meeting was held, where it is alleged a preliminary oral agreement was reached to delay plugging these wells to give the operator more time to try to reestablish production.

Subsequently, an official from the Railroad Commission misread a map and plugged this well. When a dispute arose, the Legislature passed a resolution authorizing these plaintiffs to bring a lawsuit against the Railroad Commission despite the state's sovereign immunity. The case proceeded to trial, and the trial court refused to submit a question to the jury about whether the officials had acted with "good faith." The trial court found the Railroad Commission to be liable.

The Texas Supreme Court holds that the trial court should have submitted a question to the jury about "good faith," which the statute makes a substantive defense to liability. The Court rejected the argument that this had been procedurally waived. (The Court's discussion of how error can be preserved through proposed questions is worth more careful study.) And it rejected the argument that the Legislature's jurisdictional permission to bring this suit was also a waiver of this substantive defense.

The Court did not find, however, that the evidence was so conclusive about "good faith" to permit it to render judgment in favor of the Commission. Instead, the Court remanded this for a new trial, with the clarification that the kind of "good faith" contemplated by the statute is merely subjective good faith of the officials involved, not the higher burden of showing objective good faith.

With regard to the contract claim, the jury charge asked merely whether the Commission had breached an agreement—without specifying the timing of when that agreement was formed. Here, that fact was crucial. The plaintiffs argued that the Commission's actions taken just before the final agreement was signed constituted a breach of the agreement, the basic terms of which had already been agreed weeks before that formality. The jury charge, echoing Texas's very broad pattern jury charge, did not distinguish between the two contracts. The Texas Supreme Court holds that the distinction mattered and that the Commission's objections made below were specific enough to preserve this error. The Court also holds that the "good faith" defense mentioned in the statute is, because of the way the law was drafted, equally applicable to this breach of contract claim. So in the second trial, the Commission will be able to argue that it should not be liable for contract damages where its officials acted in subjective good faith.

The "necessity" in an easement by necessity is evaluated at time the two properties were severed

The land originally conveyed in a state land grant was eventually severed into two parcels in 1866. Today, one of those parcels (the Staley tract) is landlocked in the sense that it has no connections to nearby roads and so cannot be accessed without the permission of other neighboring owners. The current owners sued, arguing that the doctrine of easement by necessity should compel finding an easement across the other half of the original land grant (the Stiles tract) to connect to a state road running through the area. The trial court ruled against them.

The court of appeals affirmed, holding that this record did not support an easement by necessity. The Texas Supreme Court agreed, affirming the judgment below.

The key to the Court's decision is timing. As the Court explained:

Maps introduced into evidence showed roads in the vicinity of CR 134 may have existed as early as the 1930s, but there was no evidence of a public roadway through the Stiles Tract or along its northern boundary before that time.

The Court explained that a landowner claiming an easement by necessity must show the presence of a public roadway at the time of the original severance of the two parcels. Here, that severance was in 1866. And there was no evidence that—in 1866—any easement could have been drawn to connect to a public road.

Interpreting fractions in older documents conveying a royalty interest in minerals

In 1947, Ethel Hysaw executed a will that would divide her properties among three children. Although the surface parcels were divided in different proportions, with one getting the homestead and another getting a larger contiguous piece, the mineral royalty to be devised was the same for each: "an undivided one-third (1/3) of an undivided one-eighth (1/8) of all oil, gas or other minerals in or under or that may be produced from any of said lands." She passed away in 1949.

In 2008, a mineral lease was negotiated that offered an even larger royalty to the mineral estate, 1/5 (0.2) instead of 1/8 (0.125). This case is about who owns this additional 3/40 (0.075) interest. Should it be divided in proportion to the surface estate, because the will was specific about using the figure 1/8? Or should the will be interpreted to give an equal share to each of the original heirs, floating with the current market royalty?

The complexity comes from history. Before the 1970s, it was extraordinarily common that landowners would receive a 1/8 royalty, with some courts even taking judicial notice of that being the rate. Thus, a "double fraction" conveyance—in which a document assigns percentages or fractions of a "1/8" interest—have sometimes been interpreted to mean that the drafter intended the recipient to receive that percentage of the full royalty (assumed at that time to be 1/8), creating a royalty that floats with market conditions. In other contexts, courts have read these documents to suggest that two fractions should be multiplied to create a single, fixed royalty that does not change, regardless of later market conditions.

The Court's opinion contains an extensive discussion of how courts have grappled with this problem, as well as the rules of construction that should be applied. The Court cautioned against a mechanical approach, emphasizing that the larger context of the document can shed more light on the drafter's intent.

Here, the Court ultimately concluded that the intent was to give each heir a 1/3 interest that floated with the prevailing royalty. The Court placed special emphasis on a different section of the document, which conditionally gave each heir an equal 1/3 interest in the proceeds of any assignments of the royalty interest that Ethel might make during her lifetime. Although this clause about what might happen during her lifetime was not triggered (because the royalty interests stayed in the estate), the Court noted that this was still probative of Ethel's intent for how to divide royalties after her death.

Given that context, the Court holds that each of the original heirs was devised an equal, floating 1/3 interest in whatever royalty is later negotiated, not merely a fixed 1/24 royalty.