Affirmed and Memorandum Opinion filed November 21, 2019.




                                     In The

                    Fourteenth Court of Appeals

                             NO. 14-18-00708-CV

 MESA SOUTHERN CWS ACQUISITION, LP D/B/A MESA SOUTHERN
               WELL SERVICING, Appellant
                                       V.

       DEEP ENERGY EXPLORATION PARTNERS, LLC, Appellee

                   On Appeal from the 151st District Court
                           Harris County, Texas
                     Trial Court Cause No. 2018-10732

                 MEMORANDUM OPINION

      In this dispute involving mineral liens, appellant Mesa Southern CWS
Acquisition, LP appeals an adverse summary judgment on its claims against
appellee Deep Energy Exploration Partners, LLC. Pursuant to a contract, Mesa
provided labor and materials to an oil and gas operator, Deep Operating, LLC.
Claiming that it did not receive payment for the full value of its services, Mesa
filed three mineral liens in Milam County encumbering certain real, mineral, and
personal property. After Deep Operating filed for bankruptcy protection, Mesa
filed this suit against Deep Operating’s parent company, appellee Deep Energy.
Deep Energy moved for summary judgment on Mesa’s claims, arguing that Mesa
contractually waived its right to assert liens against Deep Operating’s wells and
waived its right to seek payment on the contract from any entity other than Deep
Operating. The trial court granted Deep Energy’s motion and dismissed Mesa’s
claims. Because we agree that the contract between Mesa and Deep Operating
forecloses all of Mesa’s claims against Deep Energy, we affirm the trial court’s
judgment.

                                   Background

       Mesa provides services and supplies to oil and gas operators, such as Deep
Operating. In October 2016, Mesa and Deep Operating signed a Master Service
Agreement (“MSA”) that established the terms and conditions of any work
performed by Mesa for Deep Operating.             The MSA identified Mesa as
“CONTRACTOR,” Deep Operating as “COMPANY,” and “the services . . . to be
performed and/or the materials . . . to be supplied” as the “Work.” As relevant
here, the MSA included a provision relating to “Payment of Claims,” which stated
in its entirety:

       CONTRACTOR shall promptly pay all bills, other indebtedness for
       labor and for materials furnished or purchased by it involved in or
       arising out of this Agreement, and shall exhibit receipted payrolls for
       all labor employed, and receipted statements or invoices for all
       material used. To the maximum extent permitted by applicable law,
       CONTRACTOR agrees that, in consideration for entering into this
       Agreement, CONTRACTOR irrevocably waives any and all rights to
       lien, sequester, attach, seize or assert a privilege over the Work
       performed by CONTRACTOR, the real property upon which the
       Work is located and any hydrocarbon product associated with the
       Work. CONTRACTOR acknowledges that in entering into this
       Agreement, CONTRACTOR is relying on the creditworthiness of
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      COMPANY and shall look solely and exclusively to COMPANY for
      payment and shall not rely on any statutory, common law or other
      right to seize, attach, sequester, assert a privilege, lien or otherwise
      encumber the real property of COMPANY or upon which the Work is
      located or any hydrocarbon associated therewith. Accordingly,
      CONTRACTOR agrees to keep and maintain the Work free from any
      liens or privileges asserted by CONTRACTOR or any of its
      subcontractors both during and after completion of the Work under
      this Agreement.
      Mesa performed work for Deep Operating on three wells and mineral
leaseholds, identified as Key #2 Well, Owens Grindle #1 Well, and Von Goten #2
Well, all located in Milam County. Mesa invoiced Deep Operating for work it
performed in the latter part of 2016 and early 2017, but, according to Mesa, Deep
Operating did not pay Mesa the full amount owed.

      Deep Operating filed for bankruptcy protection under United States
Bankruptcy Code Chapter 11 on June 8, 2017. In the bankruptcy proceeding, Deep
Operating asserted that it was a “wholly owned subsidiary of Deep Energy
Exploration Partners, LLC.”

      Shortly after Deep Operating filed its bankruptcy petition, Mesa filed a lien
against the Key #2 Well for $104,944.99, a lien against the Owens Grindle #1 Well
for $69,838, and a lien against the Von Goten #2 Well for $17,540. In supporting
affidavits, Mesa swore that it performed labor and furnished materials as a
contractor under a contract with Deep Operating and/or Deep Energy, who Mesa
identified as the operator or operators and/or mineral property owner or owners of
the land, oil, gas, or other mineral leasehold subject to the liens.

      Mesa also filed this suit against Deep Energy, asserting claims for:
(1) breach of duty under chapter 162 of the Texas Property Code; (2) recovery of



                                            3
“trapped funds” under chapter 56 of the Texas Property Code; and (3) declaratory
relief and request for an order of sale for foreclosure of the three lien claims.

      Deep Energy denied Mesa’s allegations and asserted counterclaims for
breach of contract and fraudulent lien. On the same day it filed its answer, Deep
Energy moved for traditional summary judgment on all of Mesa’s claims. Deep
Energy argued that all of Mesa’s claims were barred by the MSA, in which Mesa
contractually waived its rights to: (1) seek payment from any entity other than
Deep Operating; and (2) file the liens at issue.

      The trial court granted Deep Energy’s motion without specifying the
grounds for its ruling and dismissed Mesa’s claims with prejudice. The court also
ordered that Mesa file a release of any lien filed against Deep Energy in Milam
County relating to the work Mesa performed for Deep Operating. After Deep
Energy nonsuited its counterclaims, the summary judgment became final.

      Mesa timely appealed.

                                 Standard of Review

      We review a trial court’s order granting a traditional summary judgment de
novo. Mid-Century Ins. Co. v. Ademaj, 243 S.W.3d 618, 621 (Tex. 2007). In
reviewing a grant of summary judgment, we consider all the evidence in the light
most favorable to the nonmovant. Ron v. AirTran Airways, Inc., 397 S.W.3d 785,
788 (Tex. App.—Houston [14th Dist.] 2013, no pet.).                When reviewing a
traditional summary judgment, we must determine whether the movant met its
burden to establish that (1) no genuine issue of material fact exists and (2) the
movant is entitled to judgment as a matter of law. Tex. R. Civ. P. 166a(c);
Provident Life & Accident Ins. Co. v. Knott, 128 S.W.3d 211, 215-16 (Tex. 2003)
(citing Haase v. Glazner, 62 S.W.3d 795, 797 (Tex. 2001)). To be entitled to


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summary judgment, a defendant must conclusively negate at least one essential
element of each of the plaintiff’s causes of action or conclusively establish each
element of an affirmative defense. Sci. Spectrum, Inc. v. Martinez, 941 S.W.2d
910, 911 (Tex. 1997); Chrismon v. Brown, 246 S.W.3d 102, 105-06 (Tex. App.—
Houston [14th Dist.] 2007, no pet.). When, as here, the trial court grants a motion
for summary judgment without specifying the grounds, we will affirm the trial
court’s judgment if any of the independent grounds supporting the motion are
meritorious. See FM Props. Operating Co. v. City of Austin, 22 S.W.3d 868, 872-
73 (Tex. 2000).

                                          Analysis

       Mesa contends that the summary judgment is error because Deep Energy did
not conclusively negate at least one element of each of Mesa’s claims and did not
conclusively establish each element of an affirmative defense. For the most part,
Mesa commits its appellate briefing to the former proposition: that Deep Energy
failed to conclusively negate in its summary judgment motion at least one element
of each of Mesa’s claims.           This is true, but Mesa constructs “straw man”
arguments by attacking positions that Deep Energy did not assert as grounds for
summary judgment. In its summary-judgment motion, Deep Energy did not seek
to disprove an element or elements of Mesa’s claims. Rather, Deep Energy sought
summary judgment on all of Mesa’s claims based on the affirmative defense of
waiver.1

       A party may assert waiver as an affirmative defense against another who
intentionally relinquishes a known right or engages in intentional conduct

       1
         Deep Energy did not plead the affirmative defense of waiver in its answer, see Tex. R.
Civ. P. 94, but because Mesa did not object to Deep Energy’s reliance on waiver in its summary-
judgment motion, the issue was determined by consent and we may consider it. See Roark v.
Stallworth Oil & Gas, Inc., 813 S.W.2d 492, 495 (Tex. 1991).

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inconsistent with claiming that right. Trelltex, Inc. v. Intecx, L.L.C., 494 S.W.3d
781, 790 (Tex. App.—Houston [14th Dist.] 2016, no pet.); Tex. R. Civ. P. 94. To
establish entitlement to summary judgment based on a waiver defense, the movant
must show: (1) an existing right, benefit, or advantage held by a party; (2) the
party’s actual knowledge of its existence; and (3) the party’s actual intent to
relinquish the right, or intentional conduct inconsistent with the right. Ulico Cas.
Co. v. Allied Pilots Ass’n, 262 S.W.3d 773, 778 (Tex. 2008). Intent to waive must
be clear, decisive, and unequivocal. Shannon v. Mem’l Drive Presbyterian Church
U.S., 476 S.W.3d 612, 627 (Tex. App.—Houston [14th Dist.] 2015, pet. denied);
Thompson v. Kerr, No. 14-08-00978-CV, 2010 WL 2361636, at *4 (Tex. App.—
Houston [14th Dist.] June 15, 2010, no pet.) (mem. op.). A court should conclude
a waiver occurred only when a party unequivocally manifested the intent not to
assert its rights. Shannon, 476 S.W.3d at 627. Waiver of a contractual right may
be express or implied from conduct. G.T. Leach Builders, Inc. v. Sapphire V.P.,
LP, 458 S.W.3d 502, 511 (Tex. 2015); Pounds v. Liberty Lloyds of Tex. Ins. Co.,
528 S.W.3d 222, 226 (Tex. App.—Houston [14th Dist.] 2017, no pet.). If Deep
Energy failed to conclusively establish its waiver defense as to each claim, we
must reverse the summary judgment. See Wilson v. Fleming, 566 S.W.3d 410, 423
(Tex. App.—Houston [14th Dist.] 2018, pet. filed).

      We examine whether the record shows conclusively that Mesa waived each
of its claims. Mesa asserted three claims against Deep Energy, seeking to recover
Mesa’s actual damages in the amount of $192,322.99. In its first claim, Mesa
alleged that Deep Energy violated Property Code chapter 162, known as the Trust
Fund Act.    Under the Act, construction payments made to a contractor or
subcontractor under a construction contract for the improvement of real property
are considered funds held in trust.          See Tex. Prop. Code § 162.001(a).


                                         6
Subcontractors or suppliers who furnish labor or material for the construction
project are considered beneficiaries of any trust funds paid or received in
connection with the improvement. Id. § 162.003. A trustee misapplies trust funds
if it “intentionally or knowingly or with intent to defraud, directly or indirectly
retains, uses, disburses, or otherwise diverts trust funds without first fully paying
all current or past due obligations incurred by the trustee to the beneficiaries of the
trust funds.” Id. § 162.031(a). A party who misapplies trust funds under the Trust
Fund Act is subject to civil liability to trust-fund beneficiaries whom the Act was
designed to protect. See Dealers Elec. Supply Co. v. Scroggins Constr. Co., 292
S.W.3d 650, 657 (Tex. 2009); C&G Inc. v. Jones, 165 S.W.3d 450, 453 (Tex.
App.—Dallas 2005, pet. denied).

      In its second and third claims, Mesa alleged that it was entitled to recover
the amounts allegedly owed by virtue of its three mineral liens. Chapter 56 of the
Property Code creates lien rights for a contractor who performs labor or furnishes
materials to a mineral property owner related to the drilling or operating of an oil
or gas well or an oil or gas pipeline. The statute is a “statutory fund-trapping
provision” that allows subcontractors to trap funds payable to a general contractor
if the owner receives notice from the subcontractors that they are not being paid.
Page v. Marton Roofing, Inc., 102 S.W.3d 733, 734 (Tex. 2003). Accordingly,
Mesa sought recovery of its trapped funds under chapter 56 or, alternatively, Mesa
sought a declaration that its mineral liens were valid and properly perfected and an
award of foreclosure on those liens.

      Deep Energy moved for summary judgment on the ground that Mesa, by
signing the MSA, waived its statutory and common law rights to assert claims
against anyone other than Deep Operating for the work Deep Operating performed
under the MSA. Deep Energy’s argument requires us to construe the MSA’s key

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provisions. We apply well-established contract interpretation principles. When
construing a contract, we give contract terms their plain, ordinary, and generally
accepted meanings unless the contract itself shows them to be used in a technical
or different sense. Valence Operating Co. v. Dorsett, 164 S.W.3d 656, 662 (Tex.
2005). We construe contracts from a utilitarian standpoint, bearing in mind the
particular business activity sought to be served, and we avoid, when possible and
proper, a construction that is unreasonable, inequitable, or oppressive. Frost Nat’l
Bank v. L&F Distrib., Ltd., 165 S.W.3d 310, 312 (Tex. 2005). We examine and
consider the entire writing to harmonize and give effect to all provisions of the
contract so that none will be rendered meaningless.        J.M. Davidson, Inc. v.
Webster, 128 S.W.3d 223, 229 (Tex. 2003).

      In support of its summary-judgment argument, Deep Energy relied on the
MSA’s Payment of Claims clause, in which Mesa “acknowledges that in entering
into this Agreement, [Mesa] is relying on the creditworthiness of [Deep Operating]
and shall look solely and exclusively to [Deep Operating] for payment.” (Emphasis
added). Based on this clause, Deep Energy argued that the MSA conclusively
precludes Mesa’s claims, which ultimately seek a money judgment for
$192,322.99 or foreclosure of liens in an amount to satisfy the alleged debt. We
agree that all of Mesa’s claims against Deep Energy are waived under the MSA.

      The Dallas Court of Appeals has addressed this issue in analogous
circumstances—i.e., when a party to a contract agrees to seek payment or damages
only from one source to the exclusion of all others. See ADT Sec. Servs., Inc. v.
Van Peterson Fine Jewelers, 390 S.W.3d 603, 606-07 (Tex. App.—Dallas 2012,
no pet.).   In ADT, the contract’s limitation-of-liability clause provided that a
customer would “look exclusively to customer’s insurer to recover for injuries or
damage.” Id. The court held that the clause barred the customer from recovering

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damages from an entity other than the insurer. See id. (“Because Van Peterson
contractually agreed to seek recovery from its insurer, and only its insurer, in the
event of a loss due to breach of contract or negligence, and because Van Peterson
now seeks to recover those damages from ADT, the trial court erred by denying
ADT’s traditional motion for summary judgment on Van Peterson’s claims.”).

      Similarly, in Wells Fargo Bank, N.A. v. Murphy, the Supreme Court of
Texas was tasked with deciding whether the status of a loan agreement was
recourse (in which case the debtor would be exposed to personal liability under the
note) or nonrecourse (in which case the note would be payable only from a
particular fund or source and the debtor would not be exposed to personal
liability). See 458 S.W.3d 912, 917 (Tex. 2015). The loan agreement, between
homeowners and a bank, provided that the bank, as the note holder, “can enforce
its rights under this Note solely against the property and not personally against any
owner of such property.” Id. Based on that language, the court held that the bank
“could seek payment of the home-equity loan only from the collateral.” Id.; see
also Fein v. R.P.H., Inc., 68 S.W.3d 260, 265-67 (Tex. App.—Houston [14th Dist.]
2002, pet. denied) (note unambiguously provided that creditor’s “sole remedy” was
enforcement of its security interest in the collateral in the event of debtor’s default
to the exclusion of the debtor’s personal liability).

      Here, the terms of the MSA are unambiguous—Mesa agreed that it “shall
look solely and exclusively to [Deep Operating] for payment” for Mesa’s work.
As in ADT, because Mesa contractually agreed to seek payment from Deep
Operating—and only Deep Operating—Mesa cannot now recover from Deep
Energy amounts allegedly owed but unpaid for its work on Deep Operating’s
wells. See ADT, 390 S.W.3d at 607; see also Wells Fargo, 458 S.W.3d at 917;
Fein, 68 S.W.3d at 265-67. In contractually limiting its recourse for payment

                                           9
solely to Deep Operating, Mesa cannot obtain satisfaction of the alleged debt from
Deep Energy either by direct money judgment or through foreclosure and sale
based on purported lien rights.

         Our interpretation of the phrase “shall look solely and exclusively to [Deep
Operating] for payment” is bolstered by the additional specific reference in the
MSA to Deep Operating’s “creditworthiness.” “Creditworthy” means “financially
sound enough that a lender will extend credit in the belief that default is unlikely;
fiscally healthy.” Black’s Law Dictionary, “Creditworthy” (11th ed. 2019). By
agreeing to rely on Deep Operating’s creditworthiness, Mesa relied on Deep
Operating’s ability to pay and understood that it could seek payment only from
Deep Operating. Mesa bore the risk of potential loss, or the burden of pursuing its
claim as a creditor in bankruptcy proceedings, if ultimately Deep Operating
defaulted. In all events, Mesa contractually agreed to look only to Deep Operating
for satisfaction of the amounts owed for work performed on Deep Operating’s
wells.

         We conclude that Deep Energy established its waiver defense as a matter of
law.      The MSA is an unequivocal manifestation that Mesa intentionally
relinquished its right to seek payment for its services from any entity other than
Deep Operating. See Trelltex, 494 S.W.3d at 790; Shannon, 476 S.W.3d at 627.
This conclusion necessarily precludes recovery on all of Mesa’s claims, which
seek satisfaction of the alleged debt from Deep Energy. Both chapter 162 and
chapter 56 are statutory sources by which a contractor or subcontractor can seek to
recover payments allegedly owed. See Tex. Prop. Code § 162.001(a) (“payments”
made to a contractor or subcontractor under a construction contract for the
improvement of real property are considered trust funds covered by the Act); id.
§ 56.002 (“A mineral contractor or subcontractor has a lien to secure payment for

                                          10
labor or services related to the mineral activities.”) (emphasis added). Further, and
without deciding whether Mesa’s liens are valid, Mesa may not foreclose on the
liens or otherwise enforce the liens against Deep Energy.2

       We hold that Deep Energy conclusively established its waiver defense that
the MSA prohibits Mesa from seeking satisfaction of the alleged debt from Deep
Energy as a matter of law. Because the trial court did not err in granting summary
judgment on this ground, we overrule Mesa’s sole appellate issue.

                                          Conclusion

       Mesa may not recover from Deep Energy any unpaid amounts allegedly
incurred during Mesa’s work on Deep Operating’s wells. We affirm the trial
court’s judgment in all respects.




                                              /s        Kevin Jewell
                                                        Justice


Panel consists of Justices Jewell, Bourliot, and Zimmerer.




       2
         The parties dispute the validity of Mesa’s liens. Deep Energy argues that Mesa
contractually waived its right to assert a mineral lien under chapter 56 against Deep Operating’s
wells; Mesa argues that its agreement to waive the right to assert a mineral lien is void as against
public policy. We need not decide and express no opinion whether Mesa’s liens are valid
because Mesa is not entitled to recover on the liens against Deep Energy. Thus, the portion of
the judgment compelling Mesa to release the liens against Deep Energy is proper.

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