On January 24, 2013 the Fort Worth Court of Appeals found in favor of XTO Energy and against a Fort Worth husband and wife homeowner on an oil and gas lease bonus issue in Case No. 02-00007-CV, Wade v. XTO Energy, Inc. The husband and wife from the Fort Worth Overton Woods neighborhood negotiated a $25,000 per acre oil and gas lease bonus and a 25% royalty. XTO paid the couple a $12,430 bonus check in September 2008 and the couple signed a lease. About this time, the economy was declining rapidly and XTO stopped obtaining oil and gas leases. XTO stopped payment on the couple’s bonus check.
The couple sued in Tarrant County Court at Law No. 3 and a jury found in their favor and ordered XTO to pay the bonus plus the couple’s attorney’s fees. The attorney’s fees were $50,000, four times the lease. XTO appealed and argued the legal description of the couple’s property was missing from the signed lease even though the legal description was in previous offer letters sent to the couple by XTO, was contained in unsigned leases sent to the couple by XTO, and was on the bonus check sent to the couple by XTO. XTO argued that failing to have the property description on the actual signed lease violated the statute of frauds. The statute of frauds is a legal doctrine which requires all contracts involving real estate to be in writing and the contract itself must contain “the means or data by which the real estate at issue may be identified.” The Fort Worth Court of Appeals agreed with XTO’s argument, reversed the jury verdict and found the couple was entitled to nothing. The Court said that the offer letters, previous leases and check stubs could not be considered.
The Court’s decision appears to be legally sound but is a harsh result for the couple and their lawyers. XTO knew the couple’s legal description, agreed to pay the couple a bonus, paid the bonus and knew the property they were paying the bonus for. Ultimately, XTO made a deal and then found a technicality after the deal to get their money back.