Background and Parties

This interlocutory appeal arises from a royalty dispute in Martin County involving the interpretation of a deed reservation. The Boren Descendants and other royalty owners sued Fasken Oil and Ranch, Ltd. and its affiliated entities (collectively "Fasken"), who are successors-in-interest to the original grantees of property conveyed by the royalty owners' predecessors-in-interest. The central dispute concerns whether a deed provision reserving "an undivided one-fourth (1/4th) of the usual one-eighth (1/8th) royalty in and to all oil, gas, and other minerals" created a floating royalty interest that adjusts with lease terms or a fixed 1/32 royalty interest. The trial court granted the royalty owners' motion for partial summary judgment, determining the deed reserved a floating 1/4 royalty, and granted their motions for traditional and no-evidence summary judgment, effectively precluding Fasken from asserting affirmative defenses.

The Double-Fraction Doctrine

The Court of Appeals affirmed the trial court's construction of the deed as reserving a floating royalty interest, applying well-established Texas law governing double-fraction provisions. The court explained that when confronted with a deed containing a double-fraction in which the second stated fraction is 1/8, a court begins its analysis with a presumption that the use of such a double fraction was purposeful and that 1/8 reflects the entire mineral estate. The court held that the use of the term 1/8 in the context of a double-fraction provision in a deed conveying oil and gas rights is regarded as a term of art unless the text or structure of the instrument rebuts that presumption. Finding the deed unambiguous and containing no additional fractions aside from the 1/8 fraction, the court concluded Fasken failed to rebut the presumption that the reservation created a floating 1/4 royalty interest.

Rejection of Estoppel Defenses

The court systematically rejected each of Fasken's estoppel-based affirmative defenses. On quasi-estoppel and contractual estoppel, the court held that there was no indication the successors were parties to any of the documents, or that they were even aware of the existence of such documents at the time they were created, and any incorrect descriptions or acknowledgements of the owner's interest in the documents did not render the owner's claims unconscionable. The court also rejected division order estoppel, noting that there was no indication that division order estoppel was necessary to protect the successors from unconscionable actions, and the successors were not parties to the orders. Similarly, the court found that judicial estoppel did not apply to bar the owner's claims.

Waiver and Ratification

The court held that the owner did not waive its claims by requesting and accepting payments of 1/32 royalty interest, and that the owner's claims were not barred on the basis that it evinced an intention to ratify the otherwise wrongful payment of 1/32 royalty interest. However, the court reversed the trial court's determination that the owner could bring a claim for breach of contract, finding that the owner could not maintain such a claim under the circumstances presented.

Disposition

The Court of Appeals affirmed in part, reversed and rendered in part, and remanded the case for further proceedings consistent with its opinion.