Saturday, March 3, 2012
All Parties to a Mineral Lease Must Generally Be Parties to Litigation about the Lease
Texas Ninth Court of Appeals Justice Hollis Horton , writing for a panel including David Gaultney and Charles Kreger, reverses and remands a decision of state district court 1-A in which a mineral lease was declared terminated on the ground that the trial court had not forced the plaintiffs to join all the other lessors before summarily declaring that the lease had terminated. The style of the case is Kodiak Resources v. Smith. Some mineral interest lessors asked the trial court to find that the lease did not continue because it was not producing and because "operations" as defined by the lease were not ongoing. The Ninth Court, which sits in Beaumont, distinguished this case from Sabre Oil and Gas Corp. v. Gibson, 72 S.W.3d 812 (Tex. App.--Eastland 2002, pet. denied). The Gibsons sued Sabre complaining that Sabre forced the Gibsons into a pool in bad faith. The Eastland Court of Appeals held that though holding for Gibsons would have an effect on the other members of the pool who were not parties to the suit, the other parties were not necessary to determine whether Sabre's acted wrongfully as to the Gibsons. In Kodiak Resources, the nonparty lessors might have evidence of production or "operations" as to the single lease each of them entered into and as to which each of them was bound by.