                                                                                                  ACCEPTED
                                                                                              12-15-00105-CV
                                                                                 TWELFTH COURT OF APPEALS
                                                                                               TYLER, TEXAS
                                                                                       12/21/2015 11:41:12 AM
                                                                                                    Pam Estes
                                                                                                       CLERK


                                                               Oral Argument Requested

                                                                              FILED IN
                                                                      12th COURT OF APPEALS
                        No. 12-15-00105-CV                                  TYLER, TEXAS
                                                                      12/21/2015 11:41:12 AM
                                                                             PAM ESTES
                                                                               Clerk
                      In the Twelfth Court of Appeals
                              Tyler, Texas


             CONSOLIDATED PROPERTY INTERESTS, LLC
                                                            Appellant

                                          v.

                   JERRY PAYNE AND PENNY PAYNE
                                                            Appellees


                    Appealed from the 273rd Judicial District Court
                                Sabine County, Texas


                       APPELLANT’S REPLY BRIEF


Brent L. Watkins                               Greg Smith
Texas Bar No.24033312                          Texas Bar No. 18600600
SKELTON SLUSHER                                Nolan Smith
1616 S. Chestnut                               Texas Bar No. 24075632
Lufkin, Texas75902                             RAMEY & FLOCK, P.C.
Telephone: 903-632-2300                        100 E. Ferguson, Suite 500
Facsimile: 903-632-6545                        Tyler, Texas 75702
bwatkins@skeltonslusher.com                    Telephone: 903-597-3301
                                               Facsimile: 903-597-2413
                                               gsmith@rameyflock.com
                                               nolans@rameyflock.com
                        ATTORNEYS FOR APPELLANT
                                                  CONTENTS

Authorities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . iii

The Reply Argument . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

I.        Consolidated, not Penny, correctly interprets the 1931 deed . . . . . . . 2

II.       Although Penny concedes that she cannot rebut the community
          property presumption, she nonetheless speculates about parties’
          irrelevant subjective intentions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

III.      This Court should reverse and remand the attorney’s fee issue . . . . . 6

Conclusion and Prayer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

Certificate of Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

Certificate of Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10




                                                          ii
                                       AUTHORITIES

CASES:

Kachina Pipeline Co., Inc. v. Lillis, 471 S.W.3d 445 (Tex. 2015) . . . . . . . . . . . . . 6

Pearson v. Fillingim, 332 S.W.3d 361 (Tex. 2011) . . . . . . . . . . . . . . . . . . . . . . . . 5

Richardson v. Hart, 185 S.W.3d 563 (Tex. 1945) . . . . . . . . . . . . . . . . . . . . . . . . 4

Williams v. Hardie, 22 S.W. 399 (Tex. 1893) . . . . . . . . . . . . . . . . . . . . . . . . . . . 2


RULES, STATUTES AND OTHER AUTHORITIES:

William B. Burford, 6 West’s Texas Forms,
      Minerals, Oil and Gas § 1:2 (4th ed.) . . . . . . . . . . . . . . . . . . . . . . . . . 2, 3




                                                iii
TO THE HONORABLE COURT OF APPEALS:

       Penny has all but given up. After years of litigation ginning up legal fees,

Penny finally concedes that her primary argument – a claim that the subject

property had been J. O. Payne’s separate property – never had any support. See

Appellee’s Br. at 9. Consolidated thus is entitled to the declaratory judgment it

seeks, stating that the property was bought in 1907 as community property and,

thus, half of that property was inherited by Frances Payne and her brother,

James Jr., upon their mother Pearl’s intestate death in 1909.

       Penny may not explicitly concede her alternative argument, about the

1931 mineral deed into Frances Payne and her brother. But Penny certainly

offers the Court no reason to accept it. She does not cite any case law that would

even faintly support her position. And she utterly ignores Consolidated’s

contrary deed interpretation and on-point authorities. Penny instead presents a

hornbook law discussion on recitals, originating in century-old cases and copied

verbatim from her summary-judgment response. Cf. CR 89-90 with Appellee’s

Br. at 14-16. But the 1931 deed contains no such recital. Penny’s so-called

“recital” actually is an operative clause (i.e., a standard lease-termination clause).

Thus, as a matter of law, Penny’s sole remaining theory is utterly no basis for

denying Consolidated’s mineral-interest ownership.

       The decision below must be reversed.


                                          1
                             The Reply Argument

I.    Consolidated, not Penny, correctly interprets the 1931 deed.

      As we have argued (and Penny ignores), Penny’s interpretation of the

1931 mineral deed is in direct conflict with any proper deed construction.

Among other things, it (a) renders the deed’s granting clause surplusage, (b) fails

to harmonize the deed overall, (c) ignores the cannons of deed construction,

including the cannon that a deed should always be interpreted, if possible, so

that it passes an interest, and (d) gives a cold shoulder to indisputable proof

respecting how deeds were drafted and interpreted as of 1931. See Appellant’s

Br. at 31-34. Penny contends that the 1931 deed’s grantees (Frances Payne and

her brother), through a supposed recital, effectively quitclaimed their inherited

half mineral interest so that they could be conveyed the other, identical half

mineral interest in the same instrument. Not only does that seem like an odd

thing to do, but is not a viable position here because – as a matter of law – the

1931 mineral deed contains no such recital.

      As Penny’s own, ancient authorities admit, recitals by definition are

statements of existing factual context. See, e.g., Williams v. Hardie, 22 S.W. 399,

401 (Tex. 1893); see also William B. Burford, 6 West’s Texas Forms, Minerals, Oil

and Gas §1:2 (4th ed.) (“Such facts may include . . .”). To be effective, they must



                                        2
not only be clear and “certain in . . . terms,” Hardie, 22 S.W. at 401, but their

nature as recitals should be denoted by some objective means within the

instrument’s four corners. E.g., Burford, §1:2 (“Where unusual circumstances

exist, it is wise to recite them following the caption of the instrument and prior

to the beginning of the instrument itself.”). Back in 1931 (and largely still today),

this was accomplished by both words and positioning within the document:

      (1) Being statements about factual context, recitals invariably show up at

or near the beginning of the document, where they lay down context for the operative

terms to follow. Id. To withhold recitals until later – as Penny argues about the

1931 deed – would frustrate this primary purpose. It would be like an appellate

brief writer sandbagging a brief’s “Background” discussion until the document’s

conclusion. Not even the most foolish brief writer would do that. Nor would

any reasonable draftsman of deeds place prefatory recitals after the operative

provisions they were meant to set up.

      (2) Any intent to state a recital generally is denoted by one or more clear

hallmarks or verbal clues – such as a heading called “Recitals” or a standard

introductory term (e.g., the capitalized word “WHEREAS”). See Burford, §1:2

(discussing both “the ‘Whereas’ form” and “the ‘Recital’ form”).




                                         3
       (3) Any true recital would generally have the singular function of setting

out a commonly held understanding of existing fact. It would not act as both a

statement of fact and an operative grant of rights.

       The lengthy clause that Penny calls a recital doesn’t conform to any of

these basic rules. For instance, Penny’s so-called recital – the deed’s “lease-

termination” clause – is no mere factual statement, but clearly provides how the

parties objectively intended to divide the existing and future lease rights associated

with the mineral interests being conveyed. To this end, the clause (1) stated a present

agreement (not a recitation of fact) that the deed was “subject to the terms of” the

existing lease, (2) spelled out the fraction of royalty and rentals under that lease

that are being conveyed, and (3) further spelled out the interest being conveyed

in respect of future leases. As we have explained (and Penny ignores), this clause

is verbatim in the form of a standard lease-termination clause. See, e.g., Richardson

v. Hart, 185 S.W.3d 563, 563-65 (Tex. 1945). The clause also occupies the exact

position within the deed where a lease-termination clause is normally located

(and where a recital would never be found) – following the unambiguous grant of

a half mineral interest. Id. at 563, 565. This ordering of the deed’s terms

objectively shows that the parties intended the deed to transfer the specified half

interest from Gertrude to Frances and her brother independent of what

inherited interest Frances and her brother did or didn’t own going into the deal.


                                          4
What is more, the provision never once uses the term “recital” or “whereas,” or

any other word that might denote a mere stipulation of pre-existing fact. In

short, Penny’s “recital” argument is frivolous.

II.     Although Penny concedes that she cannot rebut the community
        property presumption, she nonetheless speculates about parties’
        irrelevant subjective intentions.
        Even though she concedes that the subject property was not J. O. Payne’s

separate property, Appellee’s Br. at 9, Penny conjectures, improperly, about what

subsequent parties in the chain of mineral title may subjectively have assumed

about Frances’s and her brother’s 1909 inheritance.1 Why do this? It makes no

sense considering Penny’s concession that the inheritance included a

community-property half.2 In light of her concession, Penny’s discussion of


        1
          See, e.g., Appellee’s Brief at 10 (“it is clear to the writer that the January 12, 1916 deed
. . . resulted from [J. O. Payne’s] desire to make his wife an owner . . . while retaining
ownership of the other one-half”); (“the reason James, Jr. and Frances leased one-fourth
interest each is that they (and W. A. Bridges) thought that was all they owned”); Id. at 12
(“these 1938 leases . . . clearly show that they were only claiming one-fourth of the minerals
each”); Id. at 13 (“It is certainly logical that J. O. Payne . . . would not intend that the two
children . . . by his prior marriage . . . would end up with all of the minerals under almost 500
acres of land”).
        2
         Even Penny’s statement of facts makes no sense given her inevitable concession of
the property’s community-property character. The statement of facts begins curiously, with a
discussion about what private title examiners generally do when the chain of title includes a
conveyance for which the deed instrument doesn’t say whether the property was bought with
community or separate property. That testimony is irrelevant now, for two reasons. First, in a
lawsuit addressing the property’s characterization, the property will conclusively be deemed to
have been acquired as community property unless the advocate of a separate-property theory


                                                  5
how the legal predecessors of the parties treated the property over the past 100

plus years is irrelevant. Smith v. Buss, 144 S.W.2d 529, 532 (Tex. 1940)

(community-property character is fixed at the time of acquisition by the facts at

the time of acquisition).

III.   This Court should reverse and remand the attorney’s fee issue.

       As with the other issues on appeal, Penny has not offered any substantive

response to Consolidated’s position regarding attorney’s fees. In its brief,

Consolidated argued that should this Court reverse the trial court’s judgment, it

should render judgment that Consolidated is entitled to attorney’s fees and then

remand the issue of the amount of attorney’s fees per Kachina Pipeline Co., Inc. v.

Lillis, 471 S.W.3d 445, 455 (Tex. 2015) (upon reversal of declaratory judgment

action, court of appeals may reverse attorney’s fee award). In response, Penny

doesn’t cite the record or any case law, but rather merely states that only a trial

court may award attorney’s fees and decide the amount of those fees in a

declaratory judgment case. Consolidated stands by its position and its

interpretation of Kachina Pipeline.



traces the purchase-money funds to separate property. Pearson v. Fillingim, 332 S.W.3d 361, 363
(Tex. 2011). Penny concedes she has not done this and thus she concedes the property was
bought in 1907 as community property – regardless what a title examiner might or might not
infer in an out-of-court examination of the cold record documents.



                                              6
                           Conclusion and Prayer

      Penny now has conceded what had been her primary argument. She

basically ignores the central arguments of Consolidated’s brief. And what

argument she does make – attempting to characterize an operative lease-

termination clause as a mere recital – falls flat. As stated in Consolidated’s

previous prayer, the decision below should be reversed, Consolidated’s request

for a declaratory judgment should be granted (as should Consolidated’s request

for declaratory-judgment attorney’s fees), and Penny’s cross- and counter-claims

should be dismissed, with costs awarded to Consolidated.




                                       7
    Respectfully submitted,

       /s/ Greg Smith
    Greg Smith
    State Bar No. 18600600
    Nolan Smith
    Texas Bar No. 24075632
    RAMEY & FLOCK, P.C.
    100 East Ferguson, Suite 500
    Tyler, TX 75702
    Telephone: (903) 597-3301
    Facsimile: (903) 597-2413
    gsmith@rameyflock.com
    nolans@rameyflock.com

    Brent L. Watkins
    SKELTON SLUSHER
    1616 S. Chestnut
    Lufkin, TX 75902
    Telephone: (936) 632-2300
    Facsimile: (936) 632-6545
    bwatkins@skeltonslusher.com

    COUNSEL FOR APPELLANT




8
                            Certificate of Service

      This brief was served electronically and via email, in accordance with the

applicable Texas Rules of Civil Procedure, on this the 21st day of December,

2015, on the following:

      Via email katiecmorgan@yahoo.com
      John H. Seale
      Attorney at Law
      P. O. Box 480
      Jasper, TX 75951


                                                /s/ Greg Smith
                                                   Greg Smith




                                       9
                        Certificate of Compliance

1.   This brief complies with the type-volume limitation of TEX. R. APP. P. 9.4
     because it contains 1592 words, excluding the parts of the brief exempted
     by TEX. R. APP. P. 9.4(i)(2)(B).

2.   This brief complies with the typeface requirements of TEX. R. APP. P.
     9.4(e) because it has been prepared in the proportionally spaced typeface
     using Word in 14 point Garamond font.

     Dated: December 21, 2015.

                                          /s/ Greg Smith
                                          GREG SMITH




                                     10
