Oil and Gas Lawyer Blog
The Texas Supreme Court issued its opinion in ConocoPhillips Co. v. Ramirez, No. 17-0822, a family dispute over ownership of minerals in 10,058 acres in Zapata County, and ConocoPhillips’ claim to an oil and gas lease covering those minerals.
In 1995, ConocoPhillips bought oil and gas leases from EOG covering 1,058 acres, the Las Piedras Ranch, in Zapata County. At the time there was one producing well on the leases. The minerals belonged to the Ramirez family. One member of that family was Leonor, who died in 1990, owning all of the surface estate and a 1/4 mineral interest in the Ranch. Her will devised to her son Leon Oscar Sr. “all of my right, title and interest in and to Ranch Las Piedras … during term of his natural life,” and on his death “to his children then living in equal shares.” Leon Oscar Sr. signed an oil and gas lease on the Ranch, which was acquired by ConocoPhillips.
Leon Oscar Sr. died in 2006, survived by three children – Leon, Jr., Minerva and Rosalinda. In 2010 they sued ConocoPhillips and EOG for an accounting and to establish their title to 1/4 mineral interest in the Ranch. They alleged that the oil and gas lease signed by Leon Oscar Sr. was not binding on them as remaindermen following Leon Oscar’s life estate, and that EOG and ConocoPhillips owed them an accounting and payment for 1/4 of the net profits from oil and gas production from the Ranch, from the date of first production. They also sued for prejudgment interest and attorneys’ fees. The plaintiffs settled with EOG, and in 2015 the trial court signed a final judgment against ConocoPhillips awarding plaintiffs title to the minerals and $11.1 million for their share of net profits on production from the Ranch, plus $950,000 in prejudgment interest and $1,125,000 in attorneys’ fees. In 2017, the San Antonio Court of Appeals affirmed. 534 S.W.3d 490.
The case had many interesting issues, which I discussed in a previous post. But the only issue addressed by the Supreme Court was the defendants’ argument that Leonor’s devise of all of her “right, title and interest” in “Ranch Las Piedras” did not devise her 1/4 interest in the mineral estate, which instead passed to the beneficiaries of her residuary estate. The Court, based on the prior history of the family’s use of the term “Ranch Las Piedras” in partition deeds as including only the surface estate, held that Leonor’s will devised only the surface estate of the Ranch to Leon Oscar Sr. for life with remainder to his children. That conclusion made all other issues in the case moot.
The title history to Ramirez family lands is typical; as the lands pass down to second and third generations, the surface estate of the lands is partitioned among family members but the mineral estate remains undivided. In prior partitions of the Ramirez lands, the deeds expressly excluded minerals from the partition. So prior to Leonor’s death all family members owned the same interests in the original 7,016 acres of the Ramirez lands, and Leonor owned the surface estate of the 1,058-acre Las Piedras Ranch tract. In an extension of the oil and gas lease covering Las Piedras Ranch in 1990, after Leonor’s death, the extension bonus was paid based on the assumption that the mineral ownership in Las Piedras was the same as the rest of the Ramirez lands.
Based on the prior partition deeds that “clearly designate the 1,058-acre tract of land known as Las Piedras Ranch and Las Piedras Pasture as a surface estate only,” the Court concluded that Leonor intended in her will to devise to Leon Oscar a life estate only in the surface estate of the Las Piedras Ranch. The Court evidently also considered the history of oil and gas leasing after Leonor’s death to be relevant to construction of the will: “Had there been any doubt about the meaning of his mother’s will, it surely was in Leon Oscar Sr.’s interest to raise it rather than share the mineral interest with his siblings and join with them and his aunt in leasing the property.”
The result in this case may inject uncertainty in efforts by title attorneys to opine on the intent of the testator in wills that make a specific bequest of a tract referred to by name. Previously title examiners could rely on the general rule that a devise of “Blackacre” carried with it the testator’s entire interest in Blackacre, surface and minerals, and that, if the testator intended to devise only her surface interest in the land she would have said so. It can be argued that the prior family partition deeds relied on by the Court for the meaning of “Las Piedras Ranch”, all of which expressly reserved the minerals to the partitioning parties, would favor the argument that, by not mentioning minerals, Leonor’s will did not intend to devise only the surface estate of the Ranch to Leon Oscar. And it is difficult to see how the family’s understanding of the intent of Leonor’s will after her death would shed any light on her intent.
It also appears that the Court may be deciding an issue of disputed fact – Leonor’s testamentary intent – which is not within the Court’s jurisdiction, rather than remanding to the trial court for a decision on that issue.
In any event, a devise of “all of my right, title and interest” in a designated tract of land hereafter may or may not include a mineral estate in the devised land.