Background and Parties

Evans Resources, L.P. and related landowner entities brought a fifth amended complaint against Diamondback E&P, LLC and Diamondback O&G, LLC, asserting claims for fraud, breach of contract, bad faith pooling, accounting of profits, and declaratory judgment. The dispute centered on the assignment of interests in oil and gas agreements, with landowners alleging that Diamondback made oral representations that it would timely drill horizontal wells on certain pads if landowners agreed to the assignment. The underlying lease was a paid-up lease with a three-year primary term.

The Fraud Claim and Justifiable Reliance

The central issue on the fraud claim was whether landowners' alleged reliance on Diamondback's oral drilling commitments was justifiable given the express terms of the lease. The trial court granted partial summary judgment for Diamondback during trial on the remaining claims, and the appellate court affirmed. The court found that the lease terms were fundamentally inconsistent with the alleged oral representations. According to the court's holdings, the terms of the lease were inconsistent with Diamondback's alleged oral representations that it would drill horizontal wells, making any reliance by landowners on those representations unjustifiable as a matter of law. The lease was characterized as granting only discretionary rights to develop minerals beyond initial obligations.

Expert Testimony Exclusions on Surface Agreement Damages

The court addressed multiple evidentiary rulings excluding expert testimony on damages for breach of the surface agreement. The trial court granted Diamondback's motion to exclude expert testimony regarding damages for breach of surface agreement. Landowners' experts calculated diminution in land value at $6,670,000 based on differences between setback distances. The appellate court held that opinions of landowners' experts regarding the city's approval of variances were unreliable and inadmissible on Diamondback's no-evidence motion for summary judgment as to landowners' claim for breach of surface agreement. The court found these expert opinions were based on assumed facts that were contradicted by the record.

Surface Agreement and Rule Against Perpetuities

Landowners also challenged the surface agreement on grounds that it violated the rule against perpetuities, claiming Diamondback had asserted a perpetual option to use certain horizontal well pads. The appellate court rejected this argument, holding that the surface agreement did not violate the rule against perpetuities.

Jury Findings and Sufficiency of Evidence

Following trial on remaining claims, the jury found that Diamondback did not fail to pay royalties and that although Diamondback failed to account to landowners as mineral cotenants, landowners suffered $0 in damages. The appellate court reviewed these findings for legal and factual sufficiency. The court held that evidence was legally and factually sufficient to support the jury's determination that Diamondback did not fail to pay royalties. Additionally, the court found that evidence was legally and factually sufficient to support the jury's finding that Diamondback failed to account to landowners as mineral cotenant, but that $0 would reasonably compensate landowners for that failure.

Disposition

The Court of Appeals affirmed the trial court's judgment in all respects, upholding the summary judgments, evidentiary rulings, and jury findings. The court also noted that landowners had abandoned their claim for breach of lease based on Diamondback's alleged failure to obtain consent to pool.