                                    IN THE
                            TENTH COURT OF APPEALS

                                    No. 10-08-00283-CV

CLARENCE CAMPBELL, CHARLES CORLEY,
AND SUSAN AGUILAR,
                                                                 Appellants
    v.

NORTHWESTERN RESOURCES COMPANY AND
TEXAS WESTMORELAND COAL COMPANY,
                                                                 Appellees



                              From the 87th District Court
                                  Leon County, Texas
                                Trial Court No. 0-05-511


                             MEMORANDUM OPINION

         Clarence Campbell, Charles Corley, and Susan Aguilar (“the Campbells”) sued

Northwestern Resources Company and Texas Westmoreland Coal Company1

(“Northwestern”) for breach of contract and fraudulent inducement. In two issues, the

Campbells challenge the trial court‟s granting of Northwestern‟s traditional and no-




1        Westmoreland purchased Northwestern.
evidence motions for summary judgment. We affirm in part and reverse and remand in

part.

                              FACTUAL BACKGROUND

        Northwestern‟s predecessor obtained a coal lease on property later inherited by

the Campbells. Virginia Robertson of Northwestern approached the Campbells about

an amended lease. In her deposition, Robertson testified that the Campbells were “only

[] willing to sign a 10-year extension with a 10-year option that required an additional

bonus payment,” specifically, a $200 per acre bonus. She accepted this request, but no

agreement was signed. The Campbells‟ attorney became involved for a period of time,

during which he suggested a guaranteed royalty. Northwestern agreed to make a

$400,000 guaranteed production royalty payment. Thus, Robertson told the Campbells

that Northwestern would not pay the bonus unless no mining had begun.

        The Campbells believed that the bonus would be paid if mining was being

conducted.   In an affidavit, Campbell stated that he wanted to place cattle on the

property. He negotiated with Robertson such that Northwestern would be off the

property by 2004 or would pay a $200 per acre bonus, “regardless of the reason they

were on the land.” Campbell stated that the parties knew he would not sign the lease

without the bonus. Before he signed the lease, Robertson read a provision that led

Campbell to believe that a bonus would be paid if Northwestern had not vacated the

land by 2004. In his deposition, Campbell testified that Robertson told him that the

bonus was in the lease because he had asked for it.




Campbell v. Nw. Res. Co.                                                          Page 2
        Specifically, the Campbells believed that Paragraph 6 of the lease, entitled

“DELAY RENTAL,” provided for the bonus: “Upon execution of this amendment, see

Addendum, Paragraph 4, Lessee shall pay Lessor, as a bonus payment, the sum of Two-

Hundred Dollars ($200.00) per acre for each and every acre of the Premises herein

described.” Paragraph 4 of the addendum provides: “[U]pon exercise of its option to

extend the Primary Term, if so exercised. The option to extend the Primary Term will

obligate Lessee to pay the said bonus unless the premises is [sic] released as provided in

paragraph 16.” Jerome Kirchmeier of Northwestern interpreted the lease to mean that

the bonus would be paid if no mining had been conducted.                           He believed that

“everything [the Campbells] wanted is in the lease.” The parties do not dispute that

mining operations continued after the primary term ended in 2004.

                           TRADITIONAL SUMMARY JUDGMENT

        In issue one, the Campbells argue that the trial court erroneously granted

summary judgment on Northwestern‟s affirmative defense of statute of frauds because

Northwestern verbally agreed to provide a bonus and said agreement falls under the

partial performance exception to the statute of frauds.2 See TEX. BUS. & COM. CODE ANN.

§ 26.01(a), (b)(5)-(7) (Vernon 2009) (statute of frauds).



2
          In the trial court, the Campbells also argued that Northwestern breached paragraph 6 of the
lease. Northwestern‟s no-evidence motion challenged this claim. When granting Northwestern‟s
motions, the trial court “found” that: (1) the lease is unambiguous; (2) the lease did not require
performance or partial performance by the Campbells; (3) there was no evidence that the Campbells were
fraudulently induced to enter the lease; and (4) the lease falls within section 26.01 of the Business and
Commerce Code. But see Linwood v. NCNB Tex., 885 S.W.2d 102, 103 (Tex. 1994) (“findings of fact and
conclusions of law have no place in a summary judgment proceeding.”). The Campbells do not challenge
whether Northwestern breached paragraph 6 of the lease or whether summary judgment was proper as
to this claim.


Campbell v. Nw. Res. Co.                                                                          Page 3
       We review a trial court‟s summary judgment de novo. Provident Life & Accident

Ins. Co. v. Knott, 128 S.W.3d 211, 215 (Tex. 2003). In reviewing a summary judgment, we

must consider whether reasonable and fair-minded jurors could differ in their

conclusions in light of all of the evidence presented. See Goodyear Tire & Rubber Co. v.

Mayes, 236 S.W.3d 754, 755 (Tex. 2007) (per curiam) (citing Wal-Mart Stores, Inc. v. Spates,

186 S.W.3d 566, 568 (Tex. 2006) (per curiam); City of Keller v. Wilson, 168 S.W.3d 802, 822-

24 (Tex. 2005)). We must consider all the evidence in the light most favorable to the

nonmovant, indulging every reasonable inference in favor of the nonmovant and

resolving any doubts against the movant. See Goodyear Tire, 236 S.W.3d at 756 (citing

Sudan v. Sudan, 199 S.W.3d 291, 292 (Tex. 2006) (per curiam); Spates, 186 S.W.3d at 568).

       “[C]ontracts that have been partly performed, but do not meet the requirements

of the statute of frauds, may be enforced in equity if denial of enforcement would

amount to a virtual fraud.” Exxon Corp. v. Breezevale, Ltd., 82 S.W.3d 429, 439 (Tex.

App.—Dallas 2002, pet. denied). To establish partial performance, a party must show:

(1) payment of consideration; (2) possession of the property by the buyer; and (3)

permanent and valuable improvements by the buyer with the consent of the seller or

other facts demonstrating that the buyer would be defrauded if the agreement were not

enforced. Lovett v. Lovett, 283 S.W.3d 391, 393-94 (Tex. App.—Waco 2008, pet. denied).

“[A] vendor may be entitled to enforce an oral contract if he shows performance of the

contract by delivery of possession to the purchaser and a detrimental change of position

for which the vendor has no adequate remedy.” Carmack v. Beltway Dev. Co., 701 S.W.2d

37, 40 (Tex. App.—Dallas 1985, no writ).


Campbell v. Nw. Res. Co.                                                              Page 4
       The partial performance must be “unequivocally referable to the
       agreement and corroborative of the fact that a contract actually was
       made.” The acts of performance relied upon to take a parol contract out of
       the statute of frauds must be such as could have been done with no other
       design than to fulfill the particular agreement sought to be enforced;
       otherwise, they do not tend to prove the existence of the parol agreement
       relied upon by the plaintiff.

Breezevale, 82 S.W.3d at 439-40.

       Citing Lincoln v. Kirk, 243 S.W. 671 (Tex. Civ. App.—Fort Worth 1922, writ dism‟d

w.o.j), the Campbells argue that they: (1) performed by providing the property to

Northwestern; and (2) relied on Northwestern‟s promises to their detriment, being

unable to place cattle on the property and receiving no bonus payment to offset this

damage.

       In Lincoln, Kirk and Pruett agreed to drill two wells in exchange for one-fifth of

Lincoln‟s interest in an oil and gas lease. See Lincoln, 243 S.W. at 672. They sued when

Lincoln failed to convey the one-fifth interest, after they had drilled the wells from

which Lincoln had begun receiving payments. Id. The Court held:

       For, while the contract was oral, and an oral contract to convey an interest
       in a mineral lease is a contract to convey real estate, and therefore in
       violation of the statute of frauds, yet it is well settled that a parol contract
       for the purchase of real estate is taken out of the statute of frauds where it
       is shown that possession under the contract was delivered and valuable
       and permanent improvements are made pursuant thereto.

Id. at 673-74. Unlike Lincoln, this case does not involve partial performance of a verbal

agreement.

       In Cox v. First River Place Reserve, No. 03-01-00601-CV, 2002 Tex. App. LEXIS 7761

(Tex. App.—Austin Oct. 31, 2002 pet. denied) (not designated for publication), Reserve



Campbell v. Nw. Res. Co.                                                                  Page 5
agreed, in a letter of intent, to pay a total commission of six percent to Cox and Duncan.

See Cox, 2002 Tex. App. LEXIS 7761 at *3. The written contract, however, provided a

four percent commission. Id. at *4. Cox sued, alleging breach of the agreement by

failure to pay his half, three percent, of the six percent commission. Id. at *5. The trial

court granted summary judgment in favor of Reserve. Id. at *6-7. On appeal, Cox

argued, in part, that “payment of the two-percent commission, combined with other

evidence, is a partial performance of the obligation to pay three percent that renders the

promise to pay three percent enforceable.” Id. at *14. The Austin Court disagreed:

       The summary judgment evidence is clear, however, that Reserve paid the
       two-percent commission to satisfy its express obligation under the August
       1994 sale contract. This payment was not partial performance of an oral
       contract but full performance of a written agreement. Whether that written
       agreement was fraudulently induced is a separate issue. But there is no
       dispute as to the purpose of Reserve‟s payment of the two-percent
       commission.

Id. at *14-15 (emphasis added).

       Under the written lease, Northwestern received possession of the property from

the Campbells and commenced mining operations. Performance was taken to fulfill the

written lease agreement, not an alleged verbal agreement to make a bonus payment.

See Cox, 2002 Tex. App. LEXIS 7761, at *14-15; see also Breezevale, 82 S.W.3d at 439-40.

Accordingly, the performance in this case is not “unequivocally referable” to the verbal

agreement. Breezevale, 82 S.W.3d at 439-40. The Campbells have not produced evidence

raising a fact issue as to partial performance. See Lovett, 283 S.W.3d at 393-94. The trial

court properly granted Northwestern‟s motion for partial summary judgment on the

Campbell‟s breach of contract claim. We overrule issue one.


Campbell v. Nw. Res. Co.                                                             Page 6
                           NO-EVIDENCE SUMMARY JUDGMENT

        In issue two, the Campbells contend that the trial court erroneously granted

summary judgment on their fraudulent inducement claim.

        We review a no-evidence summary judgment under the same standard of review

as a directed verdict. See Mack Trucks, Inc. v. Tamez, 206 S.W.3d 572, 581 (Tex. 2006).

“We review the evidence presented by the motion and response in the light most

favorable to the party against whom the summary judgment was rendered, crediting

evidence favorable to that party if reasonable jurors could, and disregarding contrary

evidence unless reasonable jurors could not.” Id. at 582. A no-evidence summary

judgment will be defeated if the non-movant produces some evidence “raising an issue

of material fact” on the elements challenged by the movant. Id.

        Fraudulent inducement is established by: (1) a material misrepresentation; (2)

which was false; (3) which was known to be false when made or was made recklessly as

a positive assertion without knowledge of its truth; (4) which was intended to be acted

upon; (5) which was relied upon; and (6) which caused injury. Fletcher v. Edwards, 26

S.W.3d 66, 77 (Tex. App.—Waco 2000, pet. denied).                       In its no-evidence motion,

Northwestern challenged elements two, three, and six.3

        Viewing the evidence in the light most favorable to the Campbells, they

presented evidence that Northwestern agreed to pay the requested bonus. Robertson

3       On appeal, Northwestern challenges the reliance element of the Campbells‟ fraudulent
inducement claim. However, this challenge was not raised in the trial court. See Nat'l Cafe Servs., Ltd. v.
Podaras, 148 S.W.3d 194, 196 n. 1 (Tex. App.—Waco 2004, pet. denied) (on appeal from summary
judgment, “[w]e consider only those grounds „the movant actually presented to the trial court‟ in the
motion”) (quoting Fletcher v. Edwards, 26 S.W.3d 66, 74 (Tex. App.—Waco 2000, pet. denied) (quoting
Cincinnati Life Ins. Co. v. Cates, 927 S.W.2d 623, 625 (Tex. 1996))).


Campbell v. Nw. Res. Co.                                                                            Page 7
knew that the Campbells were unwilling to sign the lease without this bonus. Although

she testified that the bonus was replaced by a guaranteed payment, she also testified

that a bonus would be paid if Northwestern was not mining the property at the end of

the primary term. The Campbells, however, understood that the bonus was to be paid

if Northwestern was mining the property at the end of the primary term. In fact,

Campbell stated that he wanted to place cattle on the property; thus, he did not want to

sign the amended lease. He requested the bonus and Robertson assured him, before he

signed the lease, that the lease provided for the bonus and led him to believe that

paragraph 6 of the lease contained the bonus that he had requested. We conclude that

the Campbells presented some evidence raising an issue of material fact on the elements

challenged by Northwestern. See Tamez, 206 S.W.3d at 582. We sustain issue two.

         We affirm the trial court‟s judgment as to the Campbell‟s breach of contract

claim.     We reverse the trial court‟s judgment as to the Campbell‟s fraudulent

inducement claim and remand this cause to the trial court for further proceedings

consistent with this opinion.




                                                      FELIPE REYNA
                                                      Justice
Before Chief Justice Gray,
       Justice Reyna, and
       Justice Davis
       (Chief Justice Gray concurring with note)*
Affirmed in part; reversed and remanded in part
Opinion delivered and filed November 4, 2009
[CV06]



Campbell v. Nw. Res. Co.                                                          Page 8
*      (Chief Justice Gray concurs in the judgment. A separate opinion will not issue.
He notes, however, that by joining the judgment no inference can or should be made
about the propriety of the claim of fraudulent inducement. We can answer only those
limited issues presented to us. This is particularly true with regard to a no-evidence
summary judgment.)




Campbell v. Nw. Res. Co.                                                        Page 9
