              IN THE UNITED STATES COURT OF APPEALS
                      FOR THE FIFTH CIRCUIT



                            No. 95-40204



                   MITCHELL ENERGY CORPORATION,

                                                Plaintiff-Appellee,

                  MAURICE SHERMAN BLISS, ET AL.,

                                                Intervenor Plaintiff-
                                                Appellee,

                               versus


                    SAMSON RESOURCES COMPANY,

                                                Defendant-Appellant.



          Appeal from the United States District Court
                for the Eastern District of Texas
                           (9:93-CV-83)


                          January 11, 1996


Before WIENER, EMILIO M. GARZA, and BENAVIDES, Circuit Judges.

WIENER, Circuit Judge:*

     In the action underlying this appeal, a jury found Defendant-

Appellant Samson Resources Company (Samson), the lessee/operator of

a gas well (the Well), liable for conversion and fraud for its

failure to disclose and pay amounts owed to the Appellees as a


     *
      Pursuant to Local Rule 47.5, the court has determined that
this opinion should not be published and is not precedent except
under the limited circumstances set forth in Local Rule 47.5.4.
result    of    gas     production     from       the   Well.         Plaintiff-Appellee

Mitchell       Energy       Corporation   (Mitchell)         is       Samson's   unleased

cotenant1      in     the    mineral    interests        involved       in   this   case;

Intervenors-Appellees Maurice Bliss, et al. (Intervenors), lessors

of oil and gas leases now owned by Samson, were treated as unleased

cotenants based on the jury's finding that Samson had repudiated

these leases.         The total actual and punitive damages awarded were

approximately $3 million and $50 million, respectively. Concluding

that Texas law does not support a tort action for conversion or

fraud under the instant circumstances, we REVERSE the judgment of

the district court in part, MODIFY that judgment in part, and as

modified RENDER the judgment in favor of Mitchell and Intervenors.

                                              I

                                FACTS AND PROCEEDINGS

     Samson is lessee and operator of the Well by virtue of several

oil and gas leases covering lands within the Samson Trammel Trust

Gas Unit #1 (the Unit).           The Unit covers 704 acres of the William

Johns Survey A-39 in Polk County, Texas.

     Beginning in 1980, Samson acquired oil and gas leases from

Exxon,    Republic       National      Bank,      Trustee,      and    the   Intervenors,

covering most of the mineral interests that would eventually




      1
         As explained more fully below, Samson and Mitchell are
cotenants in the mineral interests constituting the Samson Trammel
Trust Gas Unit #1. The term "unleased cotenant" has been used by
the parties and is used in this opinion to denote the fact that
Mitchell did not execute an oil and gas lease with Samson, the
lessee/operator who drilled the Well.

                                              2
constitute the Unit.2    Samson drilled the Well and began producing

it in 1981.    As permitted by the pooling clauses in the leases,

Samson established the Unit by filing a Unit Designation in the

public records of Polk County on February 27, 1984.

     It turned out, however, that Samson had failed to obtain oil

and gas leases covering approximately five percent of the mineral

interests   comprising   the   Unit.   Beginning    in   1989,   Mitchell

obtained leases covering these unleased mineral interests while

acquiring other leases in the course of doing title work in and

around the Unit area for the purposes of its own drilling.        That is

how Mitchell came to own an unleased mineral interest in the Unit.

     As stipulated at trial, ownership of the Unit is as follows3:

            Mitchell Energy Corporation             4.93323%
            Intervenors                             5.55961%
            Republic National Bank, Trustee        82.94986%
            Exxon                                   5.20014%


     From 1981 to 1994, the Unit produced gross revenue of over $15

million.4   Although Exxon and Republic National Bank, Trustee were

paid royalties pursuant to their leases, the Intervenors were not

paid royalties, and Mitchell was not paid its share of profits

(gross production less expenses) as an unleased cotenant.          Samson


     2
        In many cases, the Intervenors are heirs of the original
lessors. In addition, two of the Intervenors' leases were obtained
in 1973 by Highland Resources, Inc and later assigned to Samson.
Samson obtained ratification of these leases in 1980.
     3
        These ownership percentages total to only 98.64284%.          The
owners of the remaining 1.35716% remain unknown.
     4
        The Railroad Commission records reflecting the volume of
gas produced from this well are available to the public.

                                   3
neither notified Mitchell or Intervenors of the well production nor

sent division orders to Intervenors for execution.

     Mitchell made its first demand for an accounting on February

5, 1991.        After Samson refused this demand, Mitchell filed an

action in Texas state court for an accounting, as well as damages

for conversion and "fraudulent taking."            This action was later

removed    to    federal   district   court   by   Samson   on   grounds   of

diversity.      Upon learning of the Well from Mitchell, Intervenors

joined the suit and asserted that Samson had breached their leases

and committed fraud and conversion.           Prior to their joining the

suit, Intervenors had made no demand on Samson.

     The two sides paint diametrically opposed pictures of Samson's

motives and conduct. Samson presented evidence at trial, including

several title opinions, indicating that the reason Mitchell and

Intervenors had not been paid was because the ownership of those

mineral estates was not clear and royalties attributable to the

questionable estates were being held "in suspense" until Samson was

certain of the true ownerships. Mitchell and Intervenors countered

with expert testimony that there was no title dispute in 1980, the

year in which Samson began work on the Well, and that Samson had

sufficient information to determine the correct ownership of these

minerals.

     The money due the allegedly unknown owners was not segregated

or placed in an escrow account by Samson.            Instead, Samson used

these funds in its own business, a practice which Samson insists is

common in the industry.       Some of these funds were distributed by


                                      4
Samson to other working interest owners of the well who were

affiliates of Samson.         Neither did Samson make accounting entries

on its books to reflect the suspension of these funds.               Samson

describes this bookkeeping omission as a failure of communication

among its employees; the Appellees describe it as intentional

obfuscation.

      The jury found against Samson on both the conversion and fraud

claims and assessed actual damages of $1,354,752.11 for Mitchell

and $1,664,222.80 for the Intervenors.            The jury also found that

Samson had repudiated the Intervenors' leases.             Accordingly, the

actual damages for the Intervenors were calculated as if they were

unleased cotenants rather than lessors under the lease agreements.

Punitive damages in the amounts of $10 million and $40 million were

awarded    to    Mitchell     and   the   Intervenors,   respectively.   In

addition, the judgment of the district court enjoins Samson to pay

Mitchell and Intervenors 100 percent of their mineral percentages

in the future, without deduction for expenses, and awards Mitchell

attorneys' fees of $65,718.75 pursuant to the Eastern District

Civil Justice and Delay Reduction Plan.

      Samson filed a Motion for Judgment as a Matter of Law and a

Motion for a New Trial, both of which were denied.               Samson now

appeals.

                                          II

                                     ANALYSIS

A.   STANDARD   OF   REVIEW

      A jury's findings of fact will not be overturned unless the


                                          5
facts and inferences point so strongly and overwhelmingly in favor

of one party that the court believes that reasonable jurors could

not arrive at a contrary verdict.5              We review a district court's

application of state law de novo.6             Most of the relevant facts in

this case are uncontested, and this opinion focuses primarily on

the district court's determination and application of Texas law.

B.   THE LEGAL RELATIONSHIPS BETWEEN   THE   PARTIES

      Mitchell's predecessors had not leased their mineral interests

in the Unit to Samson or anyone else.                    Thus, as the owner of

undivided mineral interests in the Unit, Mitchell is Samson's

unleased cotenant and was properly treated as such by the district

court.

      The Intervenors, on the other hand, had leased their mineral

interests in the Unit to Samson.              The jury found, however, that

Samson had repudiated these leases.7                   Thus, the district court

treated the Intervenors as unleased cotenants, rather than as

lessors under the lease agreements, which Samson contends was

error.    We agree.

      In Texas, an oil and gas lease conveys an estate in real

property to the lessee, namely, a fee simple determinable in the

     5
       Vero Group v. ISS-International Serv. Sys., 971 F.2d 1178,
1181 (5th Cir. 1992).
      6
       Salve Regina College v. Russell, 499 U.S. 225, 231, 111 S.
Ct. 1217, 1221, 113 L.Ed.2d 190 (1991).
      7
        Interrogatory No. 3 defined "repudiation" to mean "when a
party indicates by its words or actions that it is not going to
perform its obligations under an agreement or lease and shows a
fixed intention to abandon, renounce and refuse to perform the
agreement or lease without just excuse."

                                         6
mineral estate.8        Samson thus retains title to the minerals under

its    leases    for    as    long   as    production        in     paying       quantities

continues.       Absent      a   specific       lease   clause       to    the    contrary,

nonpayment of royalty does not terminate an oil and gas lease; the

lessee's sole remedy lies in an action for damages based on breach

of covenant.9

       The leases in the instant case contain no clause providing for

termination      upon   the      failure    to    pay   royalty.           Moreover,    all

conditions necessary for Samson to retain the fee (i.e., production

in    paying    quantities)       have    been    satisfied.             Therefore,    even

assuming that Samson's failure to pay royalties to the Intervenors

was intentional, as a matter of law this conduct could not result

in Samson's mineral estate terminating and reverting back to the

Intervenors.

       Intervenors, insisting that Texas law permits an oil and gas

lease to be repudiated in these circumstances, erroneously rely on

cases discussing the doctrine of repudiation.10                            That doctrine

provides that a lessor may be estopped from asserting that a lease

has terminated as a result of the lessee's nonperformance when the

lessor has directly contributed to that nonperformance.11                             Thus,

       8
            Jupiter Oil Co. v. Snow, 819 S.W.2d 466, 468 (Tex. 1991).
       9
         Moriss v. First Nat'l Bank, 249 S.W.2d 269, 279 (Tex. Civ.
App.SQSan Antonio 1952, writ ref'd n.r.e.); 1 E. Smith & J. Weaver,
TEXAS LAW OF OIL AND GAS § 4.6D at 195-0 (1994).
      10
       E.g., Cheyenne Resources, Inc. v. Criswell, 714 S.W.2d 103,
105 (Tex. App.SQEastland 1986, no writ).
       11
            1 E. Smith & J. Weaver, TEXAS LAW           OF   OIL   AND   GAS § 4.5F at 191
(1994).

                                            7
this doctrine relieves a lessee from any obligation to conduct

operations which are necessary to maintain the lease while a

judicial resolution of the controversy between the lessee and

lessor over the validity of the lease is pending.12         The doctrine

of repudiation, however, provides no support for Intervenors'

position that Samson, the lessee, has repudiated these leases.

Furthermore, the other cases relied on by Intervenors involve the

rescission of ordinary bilateral contractsSQas opposed to oil and

gas leases, which convey estates in realtySQand are therefore

inapposite.        Thus, we conclude as a matter of law that Samson's oil

and gas leasesSQmineral estatesSQhave not terminated by repudiation

or otherwise, so that Intervenors must be treated as lessors under

oil and gas leases, not as unleased cotenants.

C.   CONVERSION

      Under Texas law, a party commits conversion if it exercises

wrongful dominion and control over personal property belonging to

another.13        The right to payment for minerals already severed from

the ground is considered personal property, not realty.14       Mitchell

and Intervenors thus argue that the jury properly found Samson

liable for the tort of conversion for failing to pay them the

amounts they were owed.         We disagree, concluding that Texas law


     12
       Exploracion de la Estrella Soloataria Inc. v. Birdwell, 858
S.W.2d 549, 554 (Tex. App.SQEastland 1993, no writ).
      13
               Waisath v. Lack's Stores, Inc., 474 S.W.2d 444, 446 (Tex.
1971).
          14
         Phillips Petroleum Co. v. Adams, 513 F.2d 355, 363 (5th
Cir.), cert. denied, 423 U.S. 930 (1975).

                                      8
does not support a tort action for conversion of the proceeds of

mineral production under these circumstances.

     As for Mitchell, it and Samson are cotenants in the mineral

interests within the Unit.         A unique legal relationship exists

between cotenants.     Unlike one who is not a party to the cotenancy,

any cotenant has the right to extract minerals from the common

property without consent or participation of the other cotenants.15

This right is subject only to a duty to account for the other

cotenants' proportionate part of the value of the oil and gas

produced,    less   their    proportionate    part   of   the   drilling   and

operating expenses.16       Thus, the parties do agree that Samson did

not convert gas by producing it and selling it.17               Instead, the

issue is whether a tort action lies against Samson for converting

the proceeds of the gas sales when it failed to pay Mitchell.               We

conclude that no conversion action lies.

     Mitchell has not cited, and we have not found, a Texas case

that has held one cotenant liable for the tort of conversion for

failing to pay another cotenant the profits to which that other

cotenant    is   entitled.       The   law,   of     course,    provides   the


     15
           Byrom v. Pendley, 717 S.W.2d 602, 605 (Tex. 1986).
     16
           Id.
     17
        Samson argues that Mitchell's concession on this point is
fatal   because  Interrogatory   No.  1   asked  whether   Samson
"intentionally converted property or revenues."      Samson thus
essentially contends that this interrogatory was based on two
theories, the first of which (i.e., conversion of real property)
was not legally sound. We find this argument unpersuasive in that
we do not interpret this interrogatory to be based upon two legal
theories.

                                       9
nonconsenting cotenant a remedySQthe right to an accounting.18

Moreover,     a     Texas    statute      also    allows,        at   least     in   some

circumstances, the recovery of interest and attorneys' fees when

recovering these amounts due.19 This right to an accounting for the

profits of production, however, is not a tort remedy for which

punitive damages are available.

      Similarly, the authorities relied on by Mitchell fail to

support     the    contention      that    conversion       is    a    proper    remedy.

Although it is certainly true that the Texas courts have found that

the proceeds from the sale of oil and gas can be the subject of

conversion, each case in which the courts of Texas have so held

involved a trespasser or other person with no legal right in and to

the minerals.20         As discussed above, however, a cotenant has the

legal right to extract and sell minerals from the common property.

Thus, this line of cases lacks relevance to the issue before us.

Similarly,        the    Gardner   Machinery       case,     which      involved      the

conversion of sale proceeds by an agent selling particular items of

machinery owned by its principal, is also inapposite.21

      Texas law does recognize that one cotenant may have an action

for   conversion         against   another       cotenant    in       certain    limited

circumstances.          Thus, "a suit for conversion may be maintained by

      18
            E.g., Cox v. Davison, 397 S.W.2d 200 (Tex. 1965).
      19
            See Tex. Nat. Res. Code Ann. §§ 91.401-91.406.
       20
         E.g., W.B. Johnson Drilling Co. v. Lacy, 336 S.W.2d 230
(Tex.Civ.App.SQEastland 1960, no writ).
      21
        Gardner Machinery Corp. v. U.C. Leasing, Inc., 561 S.W.2d
897 (Tex.Civ.App.SQBeaumont 1978, writ dism'd).

                                           10
one    tenant   in   common   against     another      tenant    in   common     who

appropriates the entire property owned in common between them."22

We note that in Grabes the property owned in common was machinery;

profits from real property were not involved.                 The rule announced

in that case is inapplicable to the situation at hand.                   The most

that can be said for the instant case is that only proceeds of

production have been "appropriated," not the entire mineral estate

owned by the cotenants.           Therefore, the unique situation under

which one cotenant may have an action for conversion against

another cotenant is not present.

       Mitchell, Intervenors, and Samson all argue that the line of

cases involving money as the subject of conversion supports their

respective positions on this issue. Texas jurisprudence holds that

money can be the subject of conversion, but only when it is in the

form of specific chattel, such as old coins, or when "the money

delivered is to another party for safekeeping, the keeper claims no

title, and the money is required and intended to be segregated,

either substantially in the form in which it was received or as an

intact fund."23      An obligation to pay money generally, however, is

treated differently under Texas law.          "Where money is involved, it

is    subject   to   conversion    only    when   it    can     be   described    or

identified as a specific chattel, but not where an indebtedness may

        22
          Grabes v. Fawcett, 307 S.W.2d 311, 315 (Tex.Civ.App.SQ
Texarkana 1957, no writ) (citing Friemel v. Crouch, 189 S.W.2d 764
(Tex. Civ. App.SQAmarillo 1945, writ ref'd w.o.m.)) (emphasis
added).
        23
          Dixon v. State, 808 S.W.2d 721, 723 (Tex. App.SQAustin
1991, writ dism'd w.o.j.).

                                      11
be discharged by the payment of money generally."24

     We first note that none of these "money conversion" cases

involves the right of a cotenant with respect to profits from the

common property.    Thus, these cases are not truly on point.

Although Mitchell does have a right to a percentage of the profits

of production, this does not give Mitchell a right to a specific

and identifiable portion of the proceeds received that could be

considered specific chattel.   Rather, Mitchell's right is to an

amount equal to its proportionate share of the value of gas

produced, which is not necessarily the same as the amount of the

sale proceeds less reasonable drilling and operating expenses.

Therefore, regardless of the extent to which this line of cases may

be relevant, we are satisfied that the obligation owed to Mitchell

under the law of cotenancy is more analogous to an obligation to

pay money generally than to return or deliver money as specific

chattel. Moreover, this conclusion comports with the fact that the

law of cotenancy provides no remedy for conversion under these

circumstances.

     Mitchell further argues that Texas Property Code section

75.102 supports a conversion action against a cotenant.       That

section provides that "[a] holder of abandoned property shall

preserve that property and may not by any procedure, including a

           24
                  Crenshaw v. Swenson, 611 S.W.2d 886, 891
(Tex.Civ.App.SQAustin 1980, writ ref'd n.r.e.). See Gronberg v.
York, 568 S.W.2d 139, 144 (Tex.Civ.App.SQTyler 1978, writ ref'd
n.r.e.) (holding that an employee could not recover against his
employer on the theory of conversion when he did not seek return of
specific money but was only seeking repayment of money generally
which he alleged was wrongfully withheld from his commissions).

                                12
deduction for service, maintenance, or other charge, transfer,

convert, or reduce the property to the profits or assets of the

holder."25    This unclaimed property statute has no application to

the rights and remedies of cotenants.     Neither does the mere use of

the word "convert" in an illustrative list somehow create a cause

of action in tort where none exists independently. Therefore, this

argument by Mitchell fails.

     At oral argument, Mitchell conceded that normally the only

remedy available in this type of situation is an action for an

accounting. Mitchell insists, however, that this case is different

because Samson neither made a bookkeeping entry to reflect that

these funds were held in suspense nor placed them in escrow.        We

are not convinced that the omission of these actsSQwhich are not

expressly required by lawSQcan somehow transform a right to an

accounting into the tort of conversion.      Accordingly, we conclude

that Mitchell has no action in conversion against its cotenant,

Samson, to recover its share of profits in the mineral estate.

     We reach the same conclusion as to Intervenors.      As discussed

above, they are properly treated as Samson's lessors under the oil

and gas leases, not as Samson's cotenants.     Their causes of action

sound only in contract, and not in tort.26      Thus, Intervenors too

have no claim for conversion.




    25
          TEX. PROP. CODE ANN. § 75.102 (Vernon 1995) (emphasis added).
     26
        See Harrison v. Bass Enter. Prod. Co., 888 S.W.2d 532, 536
(Tex. App.SQCorpus Christi 1994, no writ).

                                   13
D.   FRAUD

      The jury also found that Samson had committed fraud.    This

finding was based on Samson's failure to disclose material facts

(i.e., that money was owed to Mitchell and Intervenors as a result

of gas production from the Well), which it purportedly had a duty

to disclose pursuant to an asserted fiduciary relationship. Samson

contends that such a position is not supported under Texas lawSQand

we agree.

      Absent a fiduciary or confidential relationship, the failure

to disclose information is not actionable as fraud.27   Under Texas

law neither a cotenancy nor a lessor/lessee relationship imports a

fiduciary relationship.28 Although a confidential relationship can

arise not only from technical fiduciary relationships but from

partnerships, joint ventures, and some informal relationships,29

there is no evidence in this case to suggest the existence of some

other relationship between Samson on the one hand and either

Mitchell or Intervenors on the other that could support such a

finding by the jury.

     27
        Tempco Tamers, Inc. v. Grow-Houston Four, Ltd., 715 S.W.2d
658, 669 (Tex. App.SQDallas 1986, writ ref'd n.r.e.).
     28
       Matter of Fender, 12 F.3d 480, 486 (5th Cir. 1994) (holding
that under Texas law cotenancy law "there is no fiduciary or agency
relationship (which might create such a duty) between the cotenants
unless they create it by agreement."); see Hurd Enter. v. Bruni,
828 S.W.2d 101, 111-12 (Tex. App.SQSan Antonio 1992, writ denied);
Cambridge Oil Co. v. Huggins, 765 S.W.2d 540, 544 (Tex. App.SQ
Corpus Christi 1989, no writ) (holding that no confidential or
fiduciary relationship existed between oil and gas lessee and
lessor).
          29
         See Monnig's Dep't Store, Inc. v. Azasd Oriental Rugs,
Inc., 929 F.2d 197 (5th Cir. 1991).

                                14
     Mitchell      contends    that       Samson   had    a    fiduciary    duty   of

disclosure as a matter of law, arguing that the duty to account, by

its very nature, includes the duty to disclose.                     No authority is

cited for this contention, and we have found none through our own

research.     Mitchell's argument does not withstand scrutiny:                     It

emerges as simply an attempt to bootstrap a cotenant's right to an

accounting into the tort of fraud based on failure to render an

accounting.

     Mitchell further contends that Samson was a trustee of that

portion of the proceeds of production from the Well to which

Mitchell was entitled.        Mitchell relies on a single phrase from a

single Texas case in which it is stated that "rents and profits

received    by    one   cotenant     are    held   by    him   in   trust   for    his

cotenants."30 That case then goes on to state that for the cotenant

to acquire title to these funds as a result of the running of the

statute of limitations, the cotenant must have repudiated the

trust.

     Mitchell's reliance on this isolated phrase is misplaced.

True, the "in trust" language of the case makes clear that the one

cotenant does not own the proceeds allocable to the other cotenant,

and describes the implications for the statute of limitations.

Nevertheless, this isolated and imprecise use of the word "trust"

does not justify the stretch that would be required to approbate

Mitchell's       assertion    that    a    cotenant's     failure      to   disclose


     30
        Eddings v. Black, 602 S.W.2d 353, 358 (Tex. Civ. App.SQEl
Paso 1980, writ ref'd n.r.e.) (emphasis added).

                                           15
information regarding an accounting results in a breach of a

fiduciary duty which in turn can serve as the basis for the tort

remedy of fraud. Other Texas cases that involve an accounting owed

by a cotenant do not mention a fiduciary duty.

      We conclude that Samson had no confidential or fiduciary duty

vis-à-vis Mitchell or Intervenors.         It follows that no actionable

fraud could arise from Samson's failure to disclose information

about production from the Well or to pay them their respective

shares of the proceeds thereof.

E.   MODIFICATION   OF   JUDGMENT

      Samson concedes that, as a cotenant, Mitchell is entitled to

an accounting for its share of the net proceeds of production, and

that Intervenors are entitled to royalty payments in accordance

with their lease agreements. Moreover, the parties have stipulated

to minimum payments due based on evidence presented to the district

court.     As the record evidence available to us is sufficient to

permit a determination of the payments to which Mitchell and

Intervenors are entitled on the basis of our holding, we need not

remand this case to the district court for the calculation of

various amounts due and entry of judgment therefor.

      1.   Actual Damages for Mitchell

      In calculating the actual damages for Mitchell, the district

court awarded an amount equal to Mitchell's ownership percentage of

the gross revenues produced by the Well.        The court did not deduct

Mitchell's share of expenses and taxes from the gross amount of the

actual damages.          This was error.   Under Texas law, a producing


                                      16
cotenant must account to nonproducing cotenants "on the basis of

the value of any minerals taken, less the necessary and reasonable

costs of production and marketing."31        Thus, Mitchell's actual

damages must take into consideration Mitchell's share of the

operating expenses.

     Citing Mayfield v. de Benavides,32 Mitchell argues that Samson

is a willful and deliberate converter who should not be able to

recover costs of production.    Mayfield, however, holds that a bad

faith trespasser's measure of damages does not include the recovery

of drilling and operating costs.33     In addition to the fact that no

finding was made that Samson was a bad faith trespasser, Samson's

valid leases with Exxon and Republic National Bank, Trustee, would

preclude such a finding as a matter of law.        Thus, the district

court's damage calculation for Mitchell is wrong and must be

reduced by Mitchell's share of drilling and operating costs, taxes,

and the like.

     Based on the evidence in the record (and before taking into

account prejudgment interest), the amount of actual damages payable

to Mitchell, calculated through September 30, 1994, is $424,999.82.

     2.    Actual Damages for the Intervenors

     The district court awarded actual damages to the Intervenors

as though they were unleased cotenants, rather than royalty owners,


     31
           Byrom, 717 S.W.2d at 605 (emphasis added).
      32
           693 S.W.2d 500 (Tex. App.SQSan Antonio 1985, writ ref'd
n.r.e.).
     33
           Mayfield, 693 S.W.2d at 506.

                                  17
based on the jury's finding that Samson repudiated the Intervenors'

leases.    As with Mitchell, this calculation was not reduced by the

Intervenors' share of expenses.

      That is immaterial as to Intervenors, though, because as a

matter of law the nonpayment of royalty cannot support a finding

that Samson repudiated their leases. Accordingly, the Intervenors'

damages must equate with their royalty interests under their

leases, not with the share of gross proceeds attributable to their

fee ownerships, regardless whether or not the latter is reduced by

costs and expenses of production.

      In light of the evidence in the record (and before taking into

account prejudgment interest), the amount of royalty payments due

and   owing   to    Intervenors,   through   September    30,   1994,   is

$109,035.17.34

      3.   Prejudgment Interest

      The district court's judgment calculation included a Treasury

bill (T-bill) rate of interest applied to the actual damages.           On

top of that, prejudgment interest at a rate of 10 percent per annum

was added to the damages, which already included interest, clearly

      34
        These actual damages are allocated among the Intervenors
as follows:

            Bliss Interest                   $ 3,336.60
            Mayo Interest                      5,735.31
            Hair Interest                      7,647.04
            McCracken Interest                33,367.01
            Gullick Interest                   7,647.04
            Nance Interest                    25,025.43
            Rowlan Interest                   25,025.43
            Cannon Interest                    1,251.31

                   Total                          $109,035.17

                                    18
constituting a double interest award.

     State        law   governs   the   award    of   prejudgment   interest   in

diversity cases.35         Under Tex. Rev. Civ. Stat. Ann. art. 5069-1.05,

the proper rate of prejudgment interest is 10 percent per annum,

not a T-bill rate of interest.           Moreover, the district court erred

in awarding a double recovery for the time value of money.36                   As

Mitchell and Intervenors all but concede, the damage award should

include only one recovery for the time value of money, and that one

recovery should be calculated using the statutory 10 percent per

annum rate for prejudgment interest.37                 Therefore, taking into

account the correct rate of prejudgment interest through February

2, 1995, the day before the district court's judgment was signed,

the judgment for actual damages through September 30, 1994 is

modified as follows:

                Appellee                                       Actual Damages

                Mitchell                                       $ 766,719.00

                Bliss Interest                  $ 6,308.94
                Mayo Interest                    10,844.50
                Hair Interest                    14,459.25
                McCracken Interest               63,091.35
                Gullick Interest                 14,459.25
                Nance Interest                   47,318.84
                Rowlan Interest                  47,318.84
                Cannon Interest                   2,366.01



     35
               Harris v. Mickel, 15 F.3d 428, 429 (5th Cir. 1994).
     36
        Texas Farmers Ins. Co. v. Soriano, 844 S.W.2d 808, 830-31
(Tex. App.SQSan Antonio 1992), rev'd on other grounds, 881 S.W.2d
312 (Tex. 1994).
          37
          The damages awarded by the district court reflect an
interest rate of less than 10 percent.

                                         19
            Total For Intervenors                                    206,167.00

            Total Actual Damages                                  $ 972,886.00


     Post-judgment interest on money judgments recovered in federal

district court is governed by 28 U.S.C. § 1961, even in diversity

cases.38    As the district court's judgment provided, this entire

judgment, which Mitchell and the Intervenors shall have and recover

against Samson in the amount of $977,886, plus costs of court,

shall earn interest at the rate of 7.03%, compounded annually,

beginning    on    February   3,   1995,      the   day   the    district   court's

judgment was signed, in accordance with 28 U.S.C. § 1961.39

     4.    Punitive Damages

     Texas law requires the existence of an independent tort to

support    an   award   of    punitive     damages.40       In    this   case,   the

independent torts of conversion and fraud are not supported by

Texas law.        The remedies to which Mitchell and Intervenors are

entitled, flowing as they do from actions for an accounting and for

breach of contractSQand not from tortSQdo not supply a basis for

punitive damages.41      Therefore, the judgment with respect to the

award of punitive damages is reversed and vacated.


     38
        Nissho-Iwai Co. v. Occidental Crude Sales, 848 F.2d 613,
622 (5th Cir. 1988).
    39
       See Fuchs v. Lifetime Doors, Inc., 939 F.2d 1275, 1280 (5th
Cir. 1991) (awarding post-judgment interest on the entire amount of
the judgment, including prejudgment interest).
      40
         See Jim Walter Homes, Inc. v. Reed, 711 S.W.2d 617, 618
(Tex. 1986).
     41
           See id.

                                         20
     5.    Additional Relief

     Under the heading "Additional Relief Granted," the district

court "Orders that Samson Resources Company pay to Mitchell Energy

Corporation 100% of its mineral interests and Intervenors 100% of

their mineral interests based on future production after September,

1994 for such time as the well in question produces in paying

quantities, without allowance for deduction of expenses."

     The amounts ordered to be paid in this "additional relief"

portion of the district court's judgment are incorrect.   Instead,

as we have noted, Mitchell's future right is to receive timely its

proportionate part of the proceeds of production less reasonable

operating expenses; and Intervenors' future right is to receive

royalty payments timely, pursuant to the terms of their respective

lease agreements.    In light of our reversal of the judgment that

was premised on the theories of conversion and fraud and the fact

that the parties have an adequate remedy at law, we see no need to

remand this "additional relief" aspect of the district court's

judgment for disposition by that court. Accordingly, the judgment

with respect to the "additional relief" is reversed and vacated.

     6.    Attorneys' Fees

     The district court's judgment also awards Mitchell attorneys'

fees in the amount of $65,718.75 pursuant to the Eastern District

of Texas Civil Justice and Delay Reduction Plan (Eastern District

Plan).42   The sole foundation for Mitchell's attorneys' fees claim

    42
       The relevant portion of the Eastern District of Texas Civil
Justice and Delay Reduction Plan reads as follows:


                                 21
is its letter of November 15, 1993.       Mitchell contends that this

letter constitutes an "offer of judgment" within the meaning of the

Eastern District Plan.    Samson counters that Mitchell's letter is

not sufficient, that it is merely a settlement proposal.       We agree

with Samson.

     The letter in question states Mitchell's belief that it is

"entitled to receive in settlement of the matter the sum of

$246,093.06 for past production plus $143,921.13 as pre-judgment

interest at the rate of 10%."       The next sentence in the letter

contains an offer to settle the case by having Mitchell sell its

working   interest   to   Samson   for   approximately   $91,000,   with

conditions on the royalty interest.       And the sentence after that

proposes, as an alternative to sale, that the parties enter into an


     Article Six.    Miscellaneous Matters

          (9) Offer of Judgment. At the Management Conference or
     anytime thereafter, a party may make a written offer of
     judgment. If the offer of judgment is not accepted and the
     final in the case is of more benefit to the party who made the
     offer by 10%, then the party who rejected the offer must pay
     the litigation costs incurred after the offer was rejected.
     In personal injury and civil rights cases involving contingent
     attorneys' fees, the award of litigation costs shall not
     exceed the amount of the final judgment. The Court may, in
     its discretion, reduce the award of litigation costs in order
     to prevent undue hardship to a party.

          "Litigation costs" means those     costs which are directly
     related to preparing the case for        trial and actual trial
     expenses, including but not limited     to reasonable attorneys'
     fees, deposition costs and fees for     expert witnesses.

          The party who makes an offer of judgment shall set forth
     the deadline by which the offer must be accepted.         The
     deadline must be reasonable. If the offer is not accepted in
     writing by the deadline, the offer is deemed rejected on that
     day.


                                   22
operating agreement.

      More significant than what Mitchell's letter says is what it

does not say:    It makes no reference to offering a "judgment"; it

appears to contemplate future negotiations; and it is also unclear

whether this settlement offer is conditioned on entering a sale or

an   operating   agreement.   Additionally,    although   the   Eastern

District Plan does not specify a format or require any "magic

words" for an offer of judgment, it does provide that the offer

must specify a deadline.      The closest thing to a deadline in

Mitchell's letter is the closing sentence which states, "I look

forward to hearing from you this week."       It would be too great a

stretch to call this imprecise languageSQwhich appears to be little

more than a courteous salutationSQa deadline, particularly given

the other shortcomings of Mitchell's letter.

      These observations lead us to conclude that Mitchell's letter

does not rise to the level of an "offer of judgment" within the

contemplation of the Eastern District Plan. Accordingly, the award

of attorneys' fees for Mitchell is vacated.

                                 III

                              CONCLUSION

      Samson failed to disclose or pay the amounts owed to Mitchell

and Intervenors as a result of gas production from the Well.         As

Samson's cotenant, Mitchell's remedy is an action for an accounting

of its proportionate share of the Well's profits, i.e., the value

of the gas produced less drilling and operating expenses.            As

Samson's lessors, Intervenors' remedy is a breach of contract claim


                                  23
against Samson for the royalty payments owed to them pursuant to

the terms of their respective lease agreements.   Under Texas law,

Samson retains the mineral estate conveyed to it by the oil and gas

leases entered into with the Intervenors. Neither Mitchell nor the

Intervenors can maintain an action in tort against Samson for

conversion or fraud under these circumstances, and absent an

independent tort, punitive damages do not lie.     As the evidence

before the court is sufficient to enable us to calculate the

damages for which Samson is liable based on our holdings, the

judgment of the district court is reversed and vacated in part,

modified in part, and, as modified, rendered, as follows:   Samson

to pay Mitchell $ 766,719, plus costs of court, plus post-judgment

interest from February 3, 1995, until paid in full, at the rate of

7.03% per annum; and Samson to pay Intervenors $ 206,167, plus

costs of court, plus post-judgment interest from February 3, 1995,

until paid in full, at the rate of 7.03% per annum.

REVERSED and VACATED in part; MODIFIED in part; and, as modified,

RENDERED.




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