Texas Supreme Court Rules for Mineral Owner in Hooks v. Samson

In a decision issued January 30, 2015, the Texas Supreme Court reversed the court of appeals decision that had barred the mineral owner’s fraud claims, holding that the claims were not timely filed.

Hooks has a lease of its minerals with Samson. At issue in this case was a provision of the lease requiring Samson to compensate Hooks if the bottom hole of a directional well was located within a certain distance of the lease boundary. Samson drilled a well within that distance and should have compensated Hooks under the lease. Instead, Samson provided Hooks with a plat that incorrectly placed the bottom hole location outside of the protected area and filed this plat with the Texas Railroad Commission. Hooks relied upon this incorrect plat, agreed to a pooling amendment, and took no action within the four-year limitations period. Later, Hooks discovered that the plat was false and that the well was located within the protected area and filed suit. Samson argued that Hooks was on notice of the actual location of the well because Samson had subsequently filed records with the TRRC showing the correct location of the well and that Hooks was on notice by this filing, but failed to timely file suit. The Houston court of appeals agreed, reversing the trial court judgment in Hooks’ favor.

The Texas Supreme Court reversed holding that Hooks was entitled to rely upon the first plat filed with the TRRC by Samson that showed the well was located outside the protected area and was not obligated to review the records after that. The Court held that to require, as a matter of law, that the landowner double-check the more recent filings against earlier filings is a higher burden than reasonable diligence requires.