pjc-oil-and-gas-2022-lib

T EXAS P ATTERN J URY C HARGES

Oil • Gas

TEXAS PATTERN JURY CHARGES

Oil • Gas

Prepared by the COMMITTEE on PATTERN JURY CHARGES of the STATE BAR OF TEXAS

Austin 2022

The State Bar of Texas, through its Texas Bar Books Department, publishes practice books pre pared and edited by knowledgeable authors to give practicing lawyers as much assistance as possible. The competence of the authors ensures outstanding professional products, but, of course, neither the State Bar of Texas, the editors, nor the authors make either express or implied warranties in regard to their use. Each lawyer must depend on his or her own knowl edge of the law and expertise in the use or modification of these materials. IRS CIRCULAR 230 NOTICE: To ensure compliance with requirements imposed by the IRS, we inform you that (1) this written material was not intended or written by the author(s) to be used for the purpose of avoiding federal penalties that may be imposed on a taxpayer; (2) this written material cannot be used by a taxpayer for the purpose of avoiding penalties that may be imposed on the taxpayer; (3) this written material cannot be used in promoting, marketing, or recommending to another party any tax-related transaction or matter; and (4) a taxpayer should seek advice based on the taxpayer’s particular circumstances from an independent tax advisor. The use of the masculine gender throughout this publication is purely for literary convenience and should, of course, be understood to include the feminine gender as well. ISBN (print): 978-1-956363-25-8 ISBN (digital download): 978-1-956363-26-5 ISBN (book set): 978-1-956363-29-6 © 2016, 2018, 2020, 2022 State Bar of Texas Austin, Texas 78711 All rights reserved. Permission is hereby granted for the copying of pages or portions of pages of this publication by a photocopy or other similar process or by manual transcription, by or under the direction of licensed attorneys for use in the practice of law. No other use is permitted that will infringe the copyright without the express written consent of the State Bar of Texas. Printed in the United States of America

To the memory of Michael Ambrose, 1956–2022, senior editor of Texas Bar Books and project editor for the

Texas Pattern Jury Charges for most of his twenty-seven years with the bar. He was meticulous and knowledgeable and contributed significantly to the high quality of this series.

To the memory of Susan R. Richardson, 1947–2022, a legendary leader whose contributions to the Texas Pattern Jury Charges and to the profession will be with us forever.

COMMITTEE ON PATTERN JURY CHARGES Oil • Gas 2020–2023

R ICARDO E. M ORALES , Chair L ISA V AUGHN , Chair/Vice-Chair L AURA H. B URNEY , Vice-Chair M ICHAEL D. J ONES , Vice-Chair

H ON . P ATRICIA O’C ONNELL A LVAREZ

C HIGO N WAOGWUGWU K AREN S. P RECELLA B ENJAMIN R OBERTSON T IMOTHY S HELBY G EORGE S HIRES P AUL F. S IMPSON S COTT P. S TOLLEY J AMES M. T RUSS P AT L ONG -W EAVER K ATY P IER W EHMEYER H ON . R USSELL W ILSON

D ANIEL H. C HAREST A LLEN D. C UMMINGS C HARLES W. G ORDON , IV J. C LIFFORD G UNTER , III C HRISTOPHER M. H OGAN I SAIAH R OBY J ACKSON E ZRA A. J OHNSON H ERIBERTO M ONTALVO H ON . M ONICA N OTZON K YLA G UNTER C RAIG A. H AYNES

S USAN R AFFERTY R ICHARDSON

COMMITTEE ON PATTERN JURY CHARGES—OVERSIGHT 2020–2023 H ON . D ANIEL E. H INDE , Chair

H ON . A NA E. E STEVEZ , Vice-Chair H ON . E MILY M ISKEL , Vice-Chair H ON . J OHN P. D EVINE , Supreme Court Liaison

B ROCK C. A KERS S COTT A RMSTRONG H ON . J ANE B LAND

J EFFREY S. L EVINGER B RIAN M ILLER J OYCE W. M OORE H ON . L ANA M YERS L A D AWN H. N ANDRASY

K IRSTEN M. C ASTAÑEDA J. C HRISTOPHER D EAN

M ICHAEL E ADY

D ANIEL P OZZA

S TEWART W. G AGNON J OHN B LAISE G SANGER M ARY T AYLOR H ENDERSON

H ON . R OBERT K. S CHAFFER

M ICHAEL L. S LACK

H ON . C ATHERINE S TONE H ON . T IMOTHY S ULAK H ON . A NDREW A. W RIGHT

J AY J ACKSON D AVID C. K ENT

STATE BAR OF TEXAS 2022–2023 L AURA G IBSON , President C HAD B ARUCH , Chair of the Board

D WIGHT M C D ONALD , Chair, Board Professional Development Subcommittee S COTT R OTHENBERG , Chair, Committee on Continuing Legal Education T REY A PFFEL , Executive Director

S HARON S ANDLE , Director E LMA E. G ARCIA , Assistant Director and Project Publications Attorney

N ICHOLAS B. G ODDARD , Publications Attorney S USANNAH R. M ILLS , Publications Attorney J AMES W. N ORMAN , Publications Attorney D EREK S MITH , Publications Attorney

R OGER S IEBERT , Senior Editor C OURTNEY C AVALIERE , Editor L EXI C LIDIENST , Editor E LIZABETH F LOREANI , Editor J ILL H OEFLING , Business Manager

E DWARD M ORGAN , Operations Manager T RAVIS R IDDLE , Production Supervisor J ENNIFER T OWNSEND , Production and Editorial Assistant

H OLLY R EDDEHASE , Meetings Coordinator L ARA T ALKINGTON , Marketing Coordinator K EVIN H ENDERSON II, Website Manager J ENNIFER K ARLSSON , Web Content Specialist J ENNIFER P EREZ , Web Content Specialist O TTO N ICLI , Web Content Strategist L ENILA C ARRENO , Accounting Specialist

COMMITTEE ON PATTERN JURY CHARGES Oil • Gas 2013–2020 Chair R ICARDO E. M ORALES , 2013–2020 Vice-Chairs E LIZABETH N. M ILLER , 2013–2014 L AURA H. B URNEY , 2014–2020 Members

H ON . P ATRICIA O’C ONNELL A LVAREZ

C. E. R HODES , J R .

R ICHARD F. B ROWN A LLEN D. C UMMINGS C HARLES W. G ORDON , IV I SAIAH R OBY J ACKSON E ZRA A. J OHNSON M ICHAEL D. J ONES M ICHAEL E. M C E LROY K AREN S. P RECELLA C RAIG A. H AYNES

S USAN R AFFERTY R ICHARDSON

B ENJAMIN R OBERTSON M ARK C. R ODRIGUEZ

P AUL F. S IMPSON S COTT P. S TOLLEY J AMES M. T RUSS

L ISA V AUGHN

D ICK W ATT

P AT L ONG -W EAVER

COMMITTEE ON PATTERN JURY CHARGES Civil

1990–1991

J. H ADLEY E DGAR , Chair H ON . W ILLIAM L. H UGHES , J R ., Vice-Chair

B LAKE B AILEY R. D OAK B ISHOP

D OUGLASS D. H EARNE K AREN M. K ACIR S TEPHEN R. L EWIS W AYNE H. P RESCOTT T HOMAS T. R OGERS

G EORGE E. C HANDLER S TEPHEN C. D ILLARD R OBERT L. G IBBINS , J R .

CONTENTS

P REFACE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

xxi

C HANGES IN THE 2022 E DITION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xxiii

I NTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

xxv

C HAPTER 300 A DMONITORY I NSTRUCTIONS PJC 300.1

Instructions to Jury Panel before Voir Dire Examination. . . . . . 3

PJC 300.2

Instructions to Jury after Jury Selection . . . . . . . . . . . . . . . . . . . 5

PJC 300.3

Charge of the Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

PJC 300.4

Additional Instruction for Bifurcated Trial . . . . . . . . . . . . . . . . . 20

PJC 300.5

Instructions to Jury after Verdict . . . . . . . . . . . . . . . . . . . . . . . . 23

PJC 300.6

Instruction to Jury If Permitted to Separate. . . . . . . . . . . . . . . . 24

PJC 300.7

Instruction If Jury Disagrees about Testimony . . . . . . . . . . . . . 25

PJC 300.8

Circumstantial Evidence (Optional) . . . . . . . . . . . . . . . . . . . . . . 26

PJC 300.9 Instructions to Deadlocked Jury . . . . . . . . . . . . . . . . . . . . . . . . . 27 PJC 300.10 Privilege—Generally No Inference. . . . . . . . . . . . . . . . . . . . . . . 28 PJC 300.11 Fifth Amendment Privilege—Adverse Inference May Be Considered. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 PJC 300.12 Parallel Theories on Damages. . . . . . . . . . . . . . . . . . . . . . . . . . . 30 PJC 300.13 Proximate Cause . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 PJC 300.14 Instruction on Spoliation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33

C HAPTER 301 A DVERSE P OSSESSION PJC 301.1

Adverse Possession (Comment) . . . . . . . . . . . . . . . . . . . . . . . . . 37

xiii

C ONTENTS

PJC 301.2

Question and Instructions on Adverse Possession— Three-Year Limitations Period. . . . . . . . . . . . . . . . . . . . . . . . . . Question and Instructions on Adverse Possession— Five-Year Limitations Period. . . . . . . . . . . . . . . . . . . . . . . . . . . Question and Instructions on Adverse Possession— Ten-Year Limitations Period . . . . . . . . . . . . . . . . . . . . . . . . . . . Question and Instructions on Adverse Possession— Twenty-Five-Year Limitations Period . . . . . . . . . . . . . . . . . . . . Question and Instructions on Adverse Possession with Recorded Instrument—Twenty-Five-Year Limitations Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

39

PJC 301.3

45

PJC 301.4

50

PJC 301.5

55

PJC 301.6

60

C HAPTER 302 I MPROPER U SE OF R EAL P ROPERTY PJC 302.1

Injury to Real Property from Oil and Gas Operations (Comment) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Question and Instruction on Unreasonable Use of Surface Estate. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

67

PJC 302.2

68

PJC 302.3

Question and Instruction on Accommodation Doctrine . . . . . .

70

PJC 302.4

Question and Instruction on Trespass . . . . . . . . . . . . . . . . . . . .

72

[PJC 302.5–302.7 are reserved for expansion.]

PJC 302.8

Question and Instruction on Statutory Waste. . . . . . . . . . . . . . .

74

PJC 302.9

Question and Instruction on Reasonably Prudent Operator Defense to Statutory Waste Claim . . . . . . . . . . . . . . . . . . . . . . .

78

[PJC 302.10 and 302.11 are reserved for expansion.] PJC 302.12 Private Nuisance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79

C HAPTER 303 L ESSOR -L ESSEE I SSUES PJC 303.1

Claims for Breach of Lease Provisions (Comment) . . . . . . . . .

87

PJC 303.2

Question on Breach of Express Pooling Provision . . . . . . . . . .

88

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Contents

PJC 303.3

Question and Instruction on Good-Faith Pooling. . . . . . . . . . . . 89

PJC 303.4

Question on Breach of Express Royalty Provision. . . . . . . . . . . 91

PJC 303.5

Question on Untimely Payment of Proceeds of Production under Natural Resources Code . . . . . . . . . . . . . . . . . . . . . . . . . . 93

PJC 303.6

Question on Location of Sale . . . . . . . . . . . . . . . . . . . . . . . . . . . 95

PJC 303.7

Question and Instruction on Implied Duty to Reasonably Market Production (Proceeds/Amount Realized Royalty Provision). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96 Question and Instructions on Breach of Express Market Value Royalty Provision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97

PJC 303.8

PJC 303.9 Question and Instruction on Unreasonable Deduction of Postproduction Costs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99 PJC 303.10 Implied Covenants (Comment). . . . . . . . . . . . . . . . . . . . . . . . . . 100 PJC 303.11 Question and Instructions on Breach of Implied Covenant to Protect against Drainage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101 PJC 303.12 Question and Instruction on Breach of Implied Covenant to Develop . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103 PJC 303.13 Lease Termination (Comment) . . . . . . . . . . . . . . . . . . . . . . . . . . 105 PJC 303.14 Question on Failure to Tender Delay Rental Payment . . . . . . . . 107 PJC 303.15 Question and Instruction on Failure to Commence Operations before End of Primary Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108 PJC 303.16 Question and Instruction on Failure to Commence Operations after Cessation of Production . . . . . . . . . . . . . . . . . . . . . . . . . . . 109 PJC 303.17 Question and Instruction on Failure to Prosecute Operations without Cessation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111 PJC 303.18 Question and Instruction on Failure to Commence Operations after Completion of Dry Hole . . . . . . . . . . . . . . . . . . . . . . . . . . . 112 PJC 303.19 Question on Cessation of Production . . . . . . . . . . . . . . . . . . . . . 113

xv

C ONTENTS

PJC 303.20 Question and Instructions on Cessation of Production in Paying Quantities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114 PJC 303.21 Question on Date of Cessation of Production . . . . . . . . . . . . . . 117 PJC 303.22 Question and Instruction on Temporary Cessation of Production. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 118 PJC 303.23 Question on Failure to Tender Shut-In. . . . . . . . . . . . . . . . . . . . 120 PJC 303.24 Question and Instruction on Determining Whether Well Qualifies as Shut-In Well . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 121 PJC 303.25 Question on Force Majeure . . . . . . . . . . . . . . . . . . . . . . . . . . . . 123

C HAPTER 304 E XECUTIVE R IGHTS PJC 304.1

Breach of Executive Rights Duty (Comment). . . . . . . . . . . . . . 127

PJC 304.2

Question and Instruction on Breach of Executive Rights Duty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 129

C HAPTER 305 O IL AND G AS I NDUSTRY A GREEMENTS PJC 305.1

Oil and Gas Industry Contracts (Comment) . . . . . . . . . . . . . . . 139

PJC 305.2

Basic Question—Existence . . . . . . . . . . . . . . . . . . . . . . . . . . . . 141

PJC 305.3

Basic Question—Compliance (Non-JOA) . . . . . . . . . . . . . . . . 144

PJC 305.4

Question and Instruction on Declaration of Meaning of Ambiguous Provisions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 149 Question and Instruction on Reformation as an Affirmative Cause of Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 150

PJC 305.5

[PJC 305.6 and 305.7 are reserved for expansion.]

PJC 305.8

Question on Main Purpose Doctrine . . . . . . . . . . . . . . . . . . . . . 152

PJC 305.9 Instruction on Formation of Agreement. . . . . . . . . . . . . . . . . . . 154 PJC 305.10 Instruction on Offer and Acceptance . . . . . . . . . . . . . . . . . . . . . 157 PJC 305.11 Instruction on Withdrawal or Revocation of Offer . . . . . . . . . . 158

xvi

Contents

PJC 305.12 Instruction on Ambiguous Provisions . . . . . . . . . . . . . . . . . . . . . 159 PJC 305.13 Instruction on Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 161 PJC 305.14 Instruction on Time of Compliance. . . . . . . . . . . . . . . . . . . . . . . 162 PJC 305.15 Instruction on Authority. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 163 PJC 305.16 Instruction on Ratification. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 165 PJC 305.17 Instruction on Materiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 166 [PJC 305.18 and 305.19 are reserved for expansion.] PJC 305.20 Trade Custom (Comment). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 167 PJC 305.21 Conditions Precedent (Comment). . . . . . . . . . . . . . . . . . . . . . . . 169 PJC 305.22 Third-Party Beneficiaries (Comment). . . . . . . . . . . . . . . . . . . . . 170 PJC 305.23 Question on Promissory Estoppel. . . . . . . . . . . . . . . . . . . . . . . . 172 PJC 305.24 Question and Instruction on Quantum Meruit . . . . . . . . . . . . . . 173 PJC 305.25 Money Had and Received (Comment) . . . . . . . . . . . . . . . . . . . . 175 PJC 305.26 Unjust Enrichment (Comment). . . . . . . . . . . . . . . . . . . . . . . . . . 179 PJC 305.27 Basic Question and Instructions on Breach of Joint Operating Agreement—Compliance. . . . . . . . . . . . . . . . . . . . . . 180 PJC 305.28 Questions and Instructions on Breach by Operator under Joint Operating Agreement Exculpatory Provision . . . . . . . . . . 181

[Chapters 306–311 are reserved for expansion.]

C HAPTER 312 D EFENSES PJC 312.1

Defenses—Basic Question . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 185

PJC 312.2

Defenses—Instruction on Plaintiff’s Material Breach When Only One Party Claims a Material Breach. . . . . . . . . . . . 186

PJC 312.3

Defenses—Instruction on Anticipatory Repudiation . . . . . . . . . 188

PJC 312.4

Defenses—Instruction on Waiver . . . . . . . . . . . . . . . . . . . . . . . . 189

xvii

C ONTENTS

PJC 312.5

Defenses—Instruction on Release. . . . . . . . . . . . . . . . . . . . . . . 190

PJC 312.6

Defenses—Instruction on Equitable Estoppel. . . . . . . . . . . . . . 191

PJC 312.7

Defenses—Instruction on Duress . . . . . . . . . . . . . . . . . . . . . . . 192

PJC 312.8

Defenses—Instruction on Undue Influence. . . . . . . . . . . . . . . . 194

PJC 312.9

Defenses—Instruction on Mutual Mistake of Fact . . . . . . . . . . 195

PJC 312.10 Defenses—Instruction on Mutual Mistake—Scrivener’s Error . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 196 PJC 312.11 Defenses—Instruction on Novation. . . . . . . . . . . . . . . . . . . . . . 197 PJC 312.12 Defenses—Instruction on Modification. . . . . . . . . . . . . . . . . . . 198 PJC 312.13 Defenses—Instruction on Accord and Satisfaction. . . . . . . . . . 199 PJC 312.14 Defenses—Instruction on Mental Capacity. . . . . . . . . . . . . . . . 200 PJC 312.15 Defenses—Instruction on Fraudulent Inducement . . . . . . . . . . 201 PJC 312.16 Definitions of Misrepresentation—Intentional Misrepresentation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 203 PJC 312.17 Defenses—Statute of Frauds (Comment) . . . . . . . . . . . . . . . . . 208 PJC 312.18 Question on Statute of Limitations—Discovery Rule. . . . . . . . 211 PJC 312.19 Question and Instruction on Repudiation of Title . . . . . . . . . . . 212 PJC 312.20 Question and Instruction on Statutory Defense to Withholding of Payments and Prejudgment Interest. . . . . . . . . 213 PJC 312.21 Question and Instruction on Bona Fide Purchaser Defense . . . 214

C HAPTER 313 D AMAGES PJC 313.1

Predicate—Instruction Conditioning Damages Questions on Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 219 Instruction on Whether Compensatory Damages Are Subject to Income Taxes (Actions Filed on or after September 1, 2003). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 220

PJC 313.2

xviii

Contents

[PJC 313.3 and 313.4 are reserved for expansion.]

PJC 313.5

Monetary Damages Recoverable for Claims Involving Real Property Interests (Comment). . . . . . . . . . . . . . . . . . . . . . . 221 Question on Permanent vs. Temporary Injury to Real Property Interests (Frequency and Duration) . . . . . . . . . . . . . . . 224 Question and Instruction on Cost to Repair, Fix, or Restore Temporary Injury . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 227

PJC 313.6

PJC 313.7

PJC 313.8

Question and Instruction on Diminution in Market Value . . . . . 231

PJC 313.9 Question and Instruction on Damages Affecting Value of Minerals. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .234 PJC 313.10 Question and Instruction on Affirmative Good-Faith Defense to Trespass . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 236 PJC 313.11 Question on Reduction of Damages Resulting from Good-Faith Trespass . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 237 PJC 313.12 Question and Instruction on Damages for Breach of Express Pooling Provisions and Implied Duty to Pool in Good Faith . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 239 PJC 313.13 Question and Instruction on Damages for Breach of Express Royalty Provision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 241 PJC 313.14 Question and Instruction on Damages for Breach of Implied Duty to Reasonably Market Production . . . . . . . . . . . . 243 PJC 313.15 Question and Instruction on Damages for Breach of Express Market Value Royalty Provision . . . . . . . . . . . . . . . . . 244 PJC 313.16 Question and Instruction on Damages for Unreasonable Deductions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 246 PJC 313.17 Question and Instruction on Drainage Damages of a Lessee or Royalty Owner . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 247 PJC 313.18 Question and Instruction on Damages for Breach of Implied Covenant to Develop . . . . . . . . . . . . . . . . . . . . . . . . . . . 249 PJC 313.19 Question and Instruction on Actual Damages for Breach of Executive Rights Duty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 251

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PJC 313.20 Question on Contract Damages . . . . . . . . . . . . . . . . . . . . . . . . 254 PJC 313.21 Sample Instructions on Direct and Incidental Damages— Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 257 PJC 313.22 Instructions on Consequential Damages—Contracts . . . . . . . . 261 PJC 313.23 Question on Promissory Estoppel—Reliance Damages . . . . . 262 PJC 313.24 Question on Quantum Meruit Recovery . . . . . . . . . . . . . . . . . . 264 PJC 313.25 Defensive Instruction on Mitigation—Contract Damages . . . . 265 [PJC 313.23–313.32 are reserved for expansion.] PJC 313.33 Question on Attorney’s Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . 267

C HAPTER 314 P RESERVATION OF C HARGE E RROR PJC 314.1

Preservation of Charge Error (Comment) . . . . . . . . . . . . . . . . . 273

PJC 314.2

Broad-Form Issues and the Casteel Doctrine (Comment) . . . . 277

A PPENDIX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 279

S TATUTES AND R ULES C ITED . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 325

C ASES C ITED . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 329

S UBJECT I NDEX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 341

H OW TO D OWNLOAD T HIS B OOK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 351

xx

PREFACE

This 2022 edition of Texas Pattern Jury Charges—Oil & Gas can be a tremendous asset to you and the clients you work so diligently to represent. As with the volumes before it, it is the culmination of many thousands of hours of case study and drafting work from a stellar group of lawyers who so graciously volunteer their time to assist the bar with jury charges. Our pleasure in delivering this incredible work product is darkened, however, by the loss this year of one of the founders of this project, Susan Richardson. She was a remarkable lawyer, known throughout the state for her depth of knowledge of oil and gas trial work. In the late 1990s, Susan, along with several other oil and gas legends, originated the idea of drafting pattern jury charges to serve the oil and gas bar. At that time, oil and gas litigators had to rely on their own research to write a jury charge; it nearly always had to be crafted from scratch and took days to assemble. Susan served as the first chair of a committee set on drafting pattern charges; she and a team of legends on the governing counsel of the Oil, Gas and Energy Resources Law (OGERL) Section of the State Bar prepared the first published oil and gas pattern jury charges. The committee then undertook ongoing revisions and improvements over the years. The oil and gas luminaries who contributed their intellect and time to this on going project have included (but are no means limited to) Elizabeth “Becky” Miller, Dick Watt, Jesse Pierce, Arnold “Arne” Johnson, Pat Lochridge, Allen Cummings, Jeff Hart, Rick Strange, Charles B. Harris, Judge Bob Parks, Ernie Bruche, Bob Grable, Kevin Beiter, Richard Brown, Mike McElroy, Charles Gordon, Laura Burney, and our most recent chair, Ricardo Morales. Although this project began as the brainchild of the governing counsel of OGERL, in 2013, the State Bar of Texas moved toward its own stand-alone oil and gas pattern jury charges project. Many of the members that had worked for years on OGERL’s commit tee were brought on, along with new members to help with the State Bar project. We are now on the State Bar’s fourth iteration, which continues to build on prior volumes, add ing new questions, refining old ones, and adding helpful commentary to guide both experienced and new oil and gas litigators. And like all the chairs who have come before me, I am awed by the hours spent by so many preeminent oil and gas trial lawyers and thankful to all of those who volunteered their time over the years for the benefit of other practitioners. I have big shoes to fill, but I am honored to be following in Susan’s foot steps on this journey. On behalf of the entire Committee, I want to give special recognition to Elma Garcia, our project legal editor, for her patience and grace in keeping our colorful group on course. —Lisa Vaughn, Chair

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CHANGES IN THE 2022 EDITION The 2022 edition of Texas Pattern Jury Charges—Oil & Gas includes the following changes from the 2020 edition: 1. Admonitory Instructions—Updated commentary on proximate cause to include new case law discussing aggregate level causation (300.13) 2. Improper Use of Real Property— a. Question and instruction on affirmative good-faith defense to trespass moved to damages chapter (formerly 302.5, now 313.10) b. New questions and instructions added on intentional, negligent, and strict liability private nuisance (302.12A–302.12C) 3. Oil and Gas Industry Agreements— a. Updated chapter in its entirety, including both a reorganization of the material and substantive updates. Charges have been renumbered throughout. A Committee Note at the beginning of the chapter explains the reorganization and includes disposition and derivation tables to clarify the renumbering. b. New material includes a stand-alone question on multiple competing claims of breach (305.3B) and an instruction on materiality (305.17). c. Consolidated commentary on ambiguity under the instruction on ambiguous provisions (305.12). Expanded discussion on formation of agreement and parol evidence (305.9) and updated discussion on trade custom with new proposed instruction (305.20). 4. Defenses— a. Added new instruction on release (312.5) b. Added new instruction on fraudulent inducement (312.15) c. Added new discussion on partial performance as an exception to the stat ute of frauds (312.17) d. Charges have been renumbered throughout 5. Damages— a. Updated title and revised discussion in Comment PJC on monetary damages recoverable for claims involving real property interests (313.5)

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C HANGES IN THE 2022 E DITION

b. Revised title and updated questions and instructions on permanent vs. temporary injury and expanded discussion on classification of injury (313.6) c. Revised question and instruction on temporary injury and updated commentary (313.7) d. Revised questions and instruction and updated commentary on perma nent injury (313.8) e. Revised question and instruction on damages affecting value of miner als and updated commentary (313.9) f. Added question and instruction on affirmative good-faith defense to trespass (formerly 302.5, now 313.10) g. Revised title and question on drainage damages (313.17) h. Updated commentary on the economic feasibility exception (313.5, 313.7, 313.8) i. Charges have been renumbered throughout

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INTRODUCTION 1. P URPOSE OF P UBLICATION

The purpose of this volume, like those of the others in this series, is to assist the bench and bar in preparing the court’s charge in jury cases. It provides definitions, instructions, and questions needed to submit jury charges in the following cases: • adverse possession • improper use of real property • issues between the lessor and lessee • executive rights; and • contracts between working interest owners. It also contains questions and comments pertaining to defenses to the above actions and sections on damages and preservation of charge error. The pattern charges are suggestions and guides to be used by a trial court if they are applicable and proper in a specific case. The Committee hopes that this volume will prove as worthy as have the earlier Texas Pattern Jury Charges volumes. 2. S COPE OF P ATTERN C HARGES The infinite combinations of possible facts in oil and gas cases make it impracticable for the Committee to offer questions suitable for every occasion. The Committee has tried to prepare charges to serve as guides for the usual litigation encountered in these types of cases. However, a charge should conform to the pleadings and evidence of a case, and occasions will arise for the use of questions and instructions not specifically addressed here. 3. U SE OF A CCEPTED P RECEDENTS Like its predecessors, this Committee has avoided recommending changes in the law and has based this material on what it perceives the present law to be. It has attempted to foresee theories and objections that might be made in a variety of circumstances but not to express favor or disfavor for particular positions. In unsettled areas, the Committee generally has not taken a position on the exact form of a charge. However, it has pro vided guidelines in some areas in which there is no definitive authority. Of course, trial judges and attorneys should recognize that these recommendations may be affected by future appellate decisions and statutory changes. 4. P RINCIPLES OF S TYLE a. Preference for broad-form questions. Tex. R. Civ. P. 277 provides that “the court shall, whenever feasible, submit the cause upon broad-form questions.” Accord ingly, the basic questions are designed to be accompanied by one or more instructions.

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I NTRODUCTION

See Tex. R. Civ. P. 277–78. For further discussion, see PJC 314.2 regarding broad-form issues and the Casteel doctrine. b. Simplicity. The Committee has sought to be as brief as possible and to use lan guage that is simple and easy to understand. c. Definitions and instructions. The supreme court has disapproved the practice of embellishing standard definitions and instructions, Lemos v. Montez , 680 S.W.2d 798 (Tex. 1984), or of adding unnecessary instructions, First International Bank v. Roper Corp. , 686 S.W.2d 602 (Tex. 1985). The Committee has endeavored to adhere to stan dard definitions and instructions stated in general terms rather than terms of the particu lar parties and facts of the case. If an instruction in general terms would be unduly complicated and confusing, however, reference to specific parties and facts is suggested. d. Placement of definitions and instructions in the charges. Definitions and instructions that apply to a number of questions should be given immediately after the general instructions required by Tex. R. Civ. P. 226a. See Woods v. Crane Carrier Co. , 693 S.W.2d 377 (Tex. 1985). However, if a definition or instruction applies to only one question or cluster of questions (e.g., damages questions), it should be placed with that question or cluster. Specific guidance for placement of definitions and instructions can be found in the individual PJCs and comments. e. Burden of proof. As authorized by Tex. R. Civ. P. 277, it is recommended that the burden of proof be placed by instruction rather than by inclusion in each question. When the burden is placed by instruction, it is not necessary that each question begin: “Do you find from a preponderance of the evidence that ...” The admonitory instruc tions contain the following instruction, applicable to all questions: Answer “yes” or “no” to all questions unless you are told otherwise. A “yes” answer must be based on a preponderance of the evidence [unless you are told otherwise]. Whenever a question requires an answer other than “yes” or “no,” your answer must be based on a pre ponderance of the evidence [unless you are told otherwise]. The term “preponderance of the evidence” means the greater weight of credible evidence presented in this case. If you do not find that a preponderance of the evidence supports a “yes” answer, then answer “no.” A preponderance of the evidence is not measured by the number of witnesses or by the number of documents admitted in evidence. For a fact to be proved by a preponderance of the evidence, you must find that the fact is more likely true than not true. f. Hypothetical examples. The names of hypothetical parties and facts have been italicized to indicate that the names and facts of the particular case should be substituted. In general, the name Paul Payne has been used for the plaintiff and Don Davis for the defendant. Larry Lessee refers to the lessee, and Suzie Surface Owner refers to the sur-

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Introduction

face owner. Additionally, in PJC 312.20, Polly Payor indicates the payor, and Perry Payee is used to indicate the payee. 5. C OMMENTS AND C ITATIONS OF A UTHORITY The comments to each PJC provide a ready reference to the law that serves as a foun dation for the charge. The primary authority cited is Texas case law. In some instances, secondary authority—for example, Smith & Weaver, 1 Texas Law of Oil and Gas —is also cited. The Committee wishes to emphasize that secondary authority is cited solely as additional guidance to the reader and not as legal authority for the proposition stated. Some comments also include variations of the recommended forms and additional ques tions or instructions for special circumstances. 6. U SING THE P ATTERN C HARGES Matters on which the evidence is undisputed should not be submitted by either instruction or question. Conversely, questions, instructions, and definitions not included in this book may sometimes become necessary. Finally, preparation of a proper charge requires careful legal analysis and sound judgment. 7. I NSTALLING THE D IGITAL D OWNLOAD The downloadable version of Texas Pattern Jury Charges—Oil & Gas (2022 edition) contains the entire text of the printed book. To install the digital download— 1. go to https://manage.texasbarpractice.com ; 2. if prompted to log in, do so; and 3. in the “Downloadables” column, click the download button for this book’s title. Use of the digital download is subject to the terms of the license and limited war ranty included in the documentation at the end of this book and on the digital download web pages. By accessing the digital download, you waive all refund privi leges for this publication. 8. F UTURE R EVISIONS The contents of questions, instructions, and definitions in the court’s charge depend on the underlying substantive law relevant to the case. This volume as updated reflects all amendments to Texas statutes enacted through 2021. The Committee expects to pub lish updates as needed to reflect changes and new developments in the law.

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C HAPTER 300 A DMONITORY I NSTRUCTIONS PJC 300.1 Instructions to Jury Panel before Voir Dire Examination. . . . . . . 3 PJC 300.2 Instructions to Jury after Jury Selection . . . . . . . . . . . . . . . . . . . . 5 PJC 300.3 Charge of the Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 PJC 300.3A Charge of the Court—Twelve-Member Jury. . . . . . . . . . . . . . 9 PJC 300.3B Charge of the Court—Six-Member Jury . . . . . . . . . . . . . . . . . 13 PJC 300.4 Additional Instruction for Bifurcated Trial . . . . . . . . . . . . . . . . . . 20 PJC 300.5 Instructions to Jury after Verdict . . . . . . . . . . . . . . . . . . . . . . . . . 23 PJC 300.6 Instruction to Jury If Permitted to Separate. . . . . . . . . . . . . . . . . 24 PJC 300.7 Instruction If Jury Disagrees about Testimony . . . . . . . . . . . . . . 25 PJC 300.8 Circumstantial Evidence (Optional) . . . . . . . . . . . . . . . . . . . . . . . 26 PJC 300.9 Instructions to Deadlocked Jury . . . . . . . . . . . . . . . . . . . . . . . . . . 27 PJC 300.10 Privilege—Generally No Inference. . . . . . . . . . . . . . . . . . . . . . . . 28 PJC 300.11 Fifth Amendment Privilege—Adverse Inference May Be Considered. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 PJC 300.12 Parallel Theories on Damages. . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 PJC 300.13 Proximate Cause . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 PJC 300.14 Instruction on Spoliation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33

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A DMONITORY I NSTRUCTIONS

PJC 300.1

PJC 300.1

Instructions to Jury Panel before Voir Dire Examination

[Brackets indicate optional, alternative, or instructive text.]

MEMBERS OF THE JURY PANEL: Thank you for being here. We are here to select a jury. Twelve [six] of you will be chosen for the jury. Even if you are not chosen for the jury, you are per forming a valuable service that is your right and duty as a citizen of a free country. Before we begin: Turn off all phones and other electronic devices. While you are in the courtroom, do not communicate with anyone through any electronic device. [For example, do not communicate by phone, text message, email mes sage, chat room, blog, or social networking websites such as Facebook, Twitter, or Myspace.] [I will give you a number where others may contact you in case of an emergency.] Do not record or photograph any part of these court proceed ings, because it is prohibited by law. If you are chosen for the jury, your role as jurors will be to decide the dis puted facts in this case. My role will be to ensure that this case is tried in accor dance with the rules of law. Here is some background about this case. This is a civil case. It is a lawsuit that is not a criminal case. The parties are as follows: The plaintiff is _________, and the defendant is _________. Representing the plaintiff is _________, and representing the defendant is _________. They will ask you some questions during jury selection. But before their questions begin, I must give you some instructions for jury selection. Every juror must obey these instructions. You may be called into court to testify about any violations of these instructions. If you do not follow these instructions, you will be guilty of juror misconduct, and I might have to order a new trial and start this process over again. This would waste your time and the parties’ money, and would require the taxpayers of this county to pay for another trial. These are the instructions. 1. To avoid looking like you are friendly with one side of the case, do not mingle or talk with the lawyers, witnesses, parties, or anyone else involved in the case. You may exchange casual greetings like “hello” and “good morning.” Other than that, do not talk with them at all. They have to

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PJC 300.1

A DMONITORY I NSTRUCTIONS

follow these instructions too, so you should not be offended when they fol low the instructions. 2. Do not accept any favors from the lawyers, witnesses, parties, or anyone else involved in the case, and do not do any favors for them. This includes favors such as giving rides and food. 3. Do not discuss this case with anyone, even your spouse or a friend, either in person or by any other means [including by phone, text message, email message, chat room, blog, or social networking websites such as Face book, Twitter, or Myspace]. Do not allow anyone to discuss the case with you or in your hearing. If anyone tries to discuss the case with you or in your hearing, tell me immediately. We do not want you to be influenced by some thing other than the evidence admitted in court. 4. The parties, through their attorneys, have the right to ask you ques tions about your background, experiences, and attitudes. They are not trying to meddle in your affairs. They are just being thorough and trying to choose fair jurors who do not have any bias or prejudice in this particular case. 5. Remember that you took an oath that you will tell the truth, so be truthful when the lawyers ask you questions, and always give complete answers. If you do not answer a question that applies to you, that violates your oath. Sometimes a lawyer will ask a question of the whole panel instead of just one person. If the question applies to you, raise your hand and keep it raised until you are called on. Do you understand these instructions? If you do not, please tell me now. The lawyers will now begin to ask their questions. COMMENT When to use. The foregoing oral instructions are prescribed in Tex. R. Civ. P. 226a. The instructions, “with such modifications as the circumstances of the particular case may require,” are to be given to the jury panel “after they have been sworn in as provided in Rule 226 and before the voir dire examination.” Rewording regarding investigation by jurors. In an appropriate case, the sen tence “Do not post information about the case on the Internet before these court pro ceedings end and you are released from jury duty” may be added in the second paragraph of this instruction, and the instructions admonishing against independent investigation by the jurors contained in item 6 of PJC 300.2 may be included in the instruction.

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A DMONITORY I NSTRUCTIONS

PJC 300.2

PJC 300.2

Instructions to Jury after Jury Selection

[Brackets indicate optional or instructive text.] [Oral Instructions]

MEMBERS OF THE JURY: You have been chosen to serve on this jury. Because of the oath you have taken and your selection for the jury, you become officials of this court and active participants in our justice system. [Hand out the written instructions.] You have each received a set of written instructions. I am going to read them with you now. Some of them you have heard before and some are new. 1. Turn off all phones and other electronic devices. While you are in the courtroom and while you are deliberating, do not communicate with any one through any electronic device. [For example, do not communicate by phone, text message, email message, chat room, blog, or social networking websites such as Facebook, Twitter, or Myspace.] [I will give you a number where others may contact you in case of an emergency.] Do not post infor mation about the case on the Internet before these court proceedings end and you are released from jury duty. Do not record or photograph any part of these court proceedings, because it is prohibited by law. 2. To avoid looking like you are friendly with one side of the case, do not mingle or talk with the lawyers, witnesses, parties, or anyone else involved in the case. You may exchange casual greetings like “hello” and “good morning.” Other than that, do not talk with them at all. They have to follow these instructions too, so you should not be offended when they fol low the instructions. 3. Do not accept any favors from the lawyers, witnesses, parties, or anyone else involved in the case, and do not do any favors for them. This includes favors such as giving rides and food. 4. Do not discuss this case with anyone, even your spouse or a friend, either in person or by any other means [including by phone, text message, email message, chat room, blog, or social networking websites such as Face book, Twitter, or Myspace]. Do not allow anyone to discuss the case with you or in your hearing. If anyone tries to discuss the case with you or in your

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PJC 300.2

A DMONITORY I NSTRUCTIONS

hearing, tell me immediately. We do not want you to be influenced by some thing other than the evidence admitted in court. 5. Do not discuss this case with anyone during the trial, not even with the other jurors, until the end of the trial. You should not discuss the case with your fellow jurors until the end of the trial so that you do not form opin ions about the case before you have heard everything. After you have heard all the evidence, received all of my instructions, and heard all of the lawyers’ arguments, you will then go to the jury room to discuss the case with the other jurors and reach a verdict. 6. Do not investigate this case on your own. For example, do not: a. try to get information about the case, lawyers, witnesses, or issues from outside this courtroom; b. go to places mentioned in the case to inspect the places; c. inspect items mentioned in this case unless they are presented as evidence in court; d. look anything up in a law book, dictionary, or public record to try to learn more about the case; e. look anything up on the Internet to try to learn more about the case; or f. let anyone else do any of these things for you. This rule is very important because we want a trial based only on evi dence admitted in open court. Your conclusions about this case must be based only on what you see and hear in this courtroom because the law does not permit you to base your conclusions on information that has not been presented to you in open court. All the information must be presented in open court so the parties and their lawyers can test it and object to it. Infor mation from other sources, like the Internet, will not go through this import ant process in the courtroom. In addition, information from other sources could be completely unreliable. As a result, if you investigate this case on your own, you could compromise the fairness to all parties in this case and jeopardize the results of this trial. 7. Do not tell other jurors about your own experiences or other peo ple’s experiences. For example, you may have special knowledge of some thing in the case, such as business, technical, or professional information. You may even have expert knowledge or opinions, or you may know what

6

A DMONITORY I NSTRUCTIONS

PJC 300.2

happened in this case or another similar case. Do not tell the other jurors about it. Telling other jurors about it is wrong because it means the jury will be considering things that were not admitted in court. 8. Do not consider attorneys’ fees unless I tell you to. Do not guess about attorneys’ fees. 9. Do not consider or guess whether any party is covered by insurance unless I tell you to. 10. During the trial, if taking notes will help focus your attention on the evidence, you may take notes using the materials the court has provided. Do not use any personal electronic devices to take notes. If taking notes will dis tract your attention from the evidence, you should not take notes. Your notes are for your own personal use. They are not evidence. Do not show or read your notes to anyone, including other jurors. You must leave your notes in the jury room or with the bailiff. The bailiff is instructed not to read your notes and to give your notes to me promptly after collecting them from you. I will make sure your notes are kept in a safe, secure location and not disclosed to anyone. [You may take your notes back into the jury room and consult them during deliberations. But keep in mind that your notes are not evidence. When you deliberate, each of you should rely on your independent recollec tion of the evidence and not be influenced by the fact that another juror has or has not taken notes. After you complete your deliberations, the bailiff will collect your notes.] When you are released from jury duty, the bailiff will promptly destroy your notes so that nobody can read what you wrote. 11. I will decide matters of law in this case. It is your duty to listen to and consider the evidence and to determine fact issues that I may submit to you at the end of the trial. After you have heard all the evidence, I will give you instructions to follow as you make your decision. The instructions also will have questions for you to answer. You will not be asked and you should not consider which side will win. Instead, you will need to answer the spe cific questions I give you. Every juror must obey my instructions. If you do not follow these instruc tions, you will be guilty of juror misconduct, and I may have to order a new trial and start this process over again. This would waste your time and the par-

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PJC 300.2

A DMONITORY I NSTRUCTIONS

ties’ money, and would require the taxpayers of this county to pay for another trial. Do you understand these instructions? If you do not, please tell me now. Please keep these instructions and review them as we go through this case. If anyone does not follow these instructions, tell me. COMMENT When to use. The foregoing instructions are prescribed in Tex. R. Civ. P. 226a. The instructions, “with such modifications as the circumstances of the particular case may require,” are to be given to the jury “immediately after the jurors are selected for the case.” If no tort claim is involved. Item 9 should be deleted from the foregoing instruc tions unless a tort claim is involved in the case.

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A DMONITORY I NSTRUCTIONS

PJC 300.3

PJC 300.3

Charge of the Court

PJC 300.3A Charge of the Court—Twelve-Member Jury

[Brackets indicate optional or instructive text.]

MEMBERS OF THE JURY: After the closing arguments, you will go to the jury room to decide the case, answer the questions that are attached, and reach a verdict. You may discuss the case with other jurors only when you are all together in the jury room. Remember my previous instructions: Do not discuss the case with anyone else, either in person or by any other means. Do not do any independent inves tigation about the case or conduct any research. Do not look up any words in dictionaries or on the Internet. Do not post information about the case on the Internet. Do not share any special knowledge or experiences with the other jurors. Do not use your phone or any other electronic device during your delib erations for any reason. [I will give you a number where others may contact you in case of an emergency.] [Any notes you have taken are for your own personal use. You may take your notes back into the jury room and consult them during deliberations, but do not show or read your notes to your fellow jurors during your deliberations. Your notes are not evidence. Each of you should rely on your independent rec ollection of the evidence and not be influenced by the fact that another juror has or has not taken notes.] [You must leave your notes with the bailiff when you are not deliberating. The bailiff will give your notes to me promptly after collecting them from you. I will make sure your notes are kept in a safe, secure location and not disclosed to anyone. After you complete your deliberations, the bailiff will collect your notes. When you are released from jury duty, the bailiff will promptly destroy your notes so that nobody can read what you wrote.] Here are the instructions for answering the questions. 1. Do not let bias, prejudice, or sympathy play any part in your deci sion. 2. Base your answers only on the evidence admitted in court and on the law that is in these instructions and questions. Do not consider or discuss any evidence that was not admitted in the courtroom.

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