Thirteenth Court Grants Mandamus on Venue Selection Clause in Eagle Ford Assignment Dispute
The Thirteenth Court of Appeals conditionally granted mandamus relief to INEOS, CNOOC, Jamestown, and Chesapeake entities, holding that a venue selection clause designating Nueces County was unenforceable because the assignment of fourteen oil and gas leases covering 633.22 acres in La Salle County did not constitute a "major transaction" under Texas Civil Practice and Remedies Code § 15.020. The dispute arose from Texas Lone Star Petroleum's claim that reversionary rights were triggered when wells drilled by assignees failed to satisfy production levels required in a Partial Assignment with an $850-per-acre purchase price totaling $538,237.
Background and Transaction Structure
This mandamus proceeding arises from a dispute over the assignment of fourteen oil and gas leases covering 633.22 acres in La Salle County. Texas Lone Star Petroleum Corporation (Lone Star) and Empresa Energy, LLC structured the transaction through two instruments: a Purchase and Sale Agreement (PSA) providing for payment of $850 per acre for a total purchase price of $538,237, and a Partial Assignment of Oil, Gas, and Mineral Leases with Reservation of Overriding Royalty Interest and Reversionary Rights. The Assignment granted Lone Star contingent reversionary rights if Empresa failed to drill wells according to certain specifications on lease acreage or if production levels fell below contractual thresholds. Empresa subsequently assigned seven of the fourteen leases to Chesapeake Exploration, which conveyed some interests to CNOOC; Chesapeake Exploration later assigned its interests to INEOS. Jamestown Resources also held interests in the leases.
The Venue Dispute
When Lone Star filed suit in Nueces County, it invoked a venue selection clause in the Assignment providing that "[v]enue for any cause of action pertaining to this Assignment or the interests assigned or reserved by this Assignment shall lie exclusively in Corpus Christi, Nueces County, Texas." Relators moved to transfer venue to La Salle County, arguing the venue selection clause was unenforceable because the transaction did not constitute a "major transaction" under Texas Civil Practice and Remedies Code § 15.020, and that venue was mandatory in La Salle County under § 15.011 where the real property at issue is located. The trial court refused to transfer venue.
The Court's Ruling
The Thirteenth Court of Appeals conditionally granted the petition for writ of mandamus. The court noted that
relators assert that the venue selection clause in the parties' agreement providing for suit in Nueces County is unenforceable because the agreement does not evidence a "major transaction" and that venue in La Salle County is mandatory because that is where the real property at issue in the lawsuit is located.By conditionally granting mandamus relief, the court found that the trial court abused its discretion in refusing to transfer venue from Nueces County to La Salle County, effectively determining that the venue selection clause was unenforceable under the major transaction exception of § 15.020 and that mandatory venue provisions of § 15.011 required the case to proceed in La Salle County where the land is located.