Mineral Rights Dispute Holds Up Royalty Payments

Oil and Gas Leasing Help
#1

When we bought our house in a new subdivision we were told the mineral rights would not transfer. About one year later we were contacted by a landman and informed that due to a "deed failure" we actually owned our rights. He told us that the first three homes built all retained mineral rights. We were surprised and thankful. We got 1380.00 for a signing bonus and 25% for our 1/4 acre lot.

The gas compnay is Williams out of Oklahoma. Over a year went by (wells were drilled and pipelines were put in over the course of this year) and no royalty checks had arrived so I contacted Williams. They told me that the developer had filed a dispute saying he owned the rights.

After about three more months Williams advised us that they had two law firms look at the title work and they believe it could be argued either way. Their suggestion was for us to approach the developer and try to make a deal. Because this developer is already in several ventures with Wiliams I don't trust them for their solution. I saw the title work and it is pretty apparent to me the developer went back in and tried to change the title work to give himself the mineral rights.

Compnay A sold the rights to Company B including Mineral Rights in 2004

Company B now holds the rights

Company A in 2006 comes back in and transfers the mineral rights to the developer personally.

Company B sells the land to Company C

We bought our lot from Compnay C

Now here is twist, the same guy owns all these companies, but, once Company A sells to Company B, Company A can't come back in 2 years later and re-assign rights. They don't own them anymore, Company B owns them. He should have re-assigned them as Company B and I can't figure out why he didn't do that.

A lawyer we talked to states our case is strong but wants 5000 retainer to represent us if we have to go to court. I really don't know if I can swing that kinda money.

If Williams assigns this to a court to hold the royalties have I lost any chance of recovering the royalties? The developer is a very wealthy mover and shaker around here so I don't really see him letting this all go with out a protracted fight. Lawyers fees to him are nothing.

Any thoughts out there on this situation?

Thanks,

Buster

#2

I have a similar thing going on here in TX over a couple of leases for which I am the operator.

Firstly, Williams wont assign it to a court, it isnt their problem, it is your problem and the developers problem. Williams will just sit there drawing interest on the royalties until the civil courts sort it out.

Contact the developer, see if he will deal. If not, then you have to go to the courts, unless you can convince him (or the bills of sale) have an arbitration clause. In either case, if you can’t afford an attorney, and since this is a civil matter, you may have to represent yourself, which you are entitled to do.

One more point, the fact that the same guy owns all the companies doesnt mean anything. I own several companies, but they are companies and therefore their own legal entity. I merely work for them. Unless you can prove a few very specific things, piercing the corporate veil isnt worth your time or money.

#3

Just to clarify Ryan’s point, I think Williams will “assign” it to a court. If they are holding funds that they are supposed to pay someone, but they don’t know who to give to, they will file an interpeader action in court. Then, the two parties who may be entitled to the money fight it out in civil court. Williams will give the royalty money to the court. Williams will not get to keep any interest on it. Whoever wins will get the pre-judgment interest.

Ryan C. Meinzer said:

I have a similar thing going on here in TX over a couple of leases for which I am the operator.

Firstly, Williams wont assign it to a court, it isnt their problem, it is your problem and the developers problem. Williams will just sit there drawing interest on the royalties until the civil courts sort it out.

Contact the developer, see if he will deal. If not, then you have to go to the courts, unless you can convince him (or the bills of sale) have an arbitration clause. In either case, if you can’t afford an attorney, and since this is a civil matter, you may have to represent yourself, which you are entitled to do.

One more point, the fact that the same guy owns all the companies doesnt mean anything. I own several companies, but they are companies and therefore their own legal entity. I merely work for them. Unless you can prove a few very specific things, piercing the corporate veil isnt worth your time or money.
#4

Hi Ryan, I appreciate your reply. I think you help make my point about the companies being their own entity, Company A can’t reassign the mineral rights because Company B now owns them and him being a principal in these companies makes no difference. Williams told us last year they were going to file an “interpleader” with the court if we didn’t resolve the issue amongst ourselves. They haven’t done that yet. I guess we are going to end up in court in some shape, form or fashion. The landman that contacted us was going to talk to at least three other homeowners about their mineral rights and then he abruptly changed and told them they didn’t have their mineral rights. That was kinda strange. We had wondered if there was some influence from Williams for him to stop talking to the other homeowners. Thanks, Buster

Ryan C. Meinzer said:

I have a similar thing going on here in TX over a couple of leases for which I am the operator.

Firstly, Williams wont assign it to a court, it isnt their problem, it is your problem and the developers problem. Williams will just sit there drawing interest on the royalties until the civil courts sort it out.

Contact the developer, see if he will deal. If not, then you have to go to the courts, unless you can convince him (or the bills of sale) have an arbitration clause. In either case, if you can’t afford an attorney, and since this is a civil matter, you may have to represent yourself, which you are entitled to do.

One more point, the fact that the same guy owns all the companies doesnt mean anything. I own several companies, but they are companies and therefore their own legal entity. I merely work for them. Unless you can prove a few very specific things, piercing the corporate veil isnt worth your time or money.
#5

Ryan, I think you are probably correct in your your logic that you own the rights. One thing I forgot to mention earlier, is that Williams will get to deduct its own attorneys and court costs for filing the interpleader action, which are withheld from the disputed funds. In theory that should only be a couple thousand, but it adds insult to injury. Have you thought about joining up with the other 2 landowners in a quiet title action? Once Williams gets clarification of who owns the rights, I would imagine a contract would be forthcoming to those other parties, if one hasn’t already. Obviously attorneys fees and court costs split 3 ways is better than one.

Buster Foster said:

Hi Ryan,
I appreciate your reply.
I think you help make my point about the companies being their own entity, Company A can’t reassign the mineral rights because Company B now owns them and him being a principal in these companies makes no difference.
Williams told us last year they were going to file an “interpleader” with the court if we didn’t resolve the issue amongst ourselves. They haven’t done that yet.
I guess we are going to end up in court in some shape, form or fashion.
The landman that contacted us was going to talk to at least three other homeowners about their mineral rights and then he abruptly changed and told them they didn’t have their mineral rights. That was kinda strange. We had wondered if there was some influence from Williams for him to stop talking to the other homeowners.
Thanks,
Buster


Ryan C. Meinzer said:
I have a similar thing going on here in TX over a couple of leases for which I am the operator.

Firstly, Williams wont assign it to a court, it isnt their problem, it is your problem and the developers problem. Williams will just sit there drawing interest on the royalties until the civil courts sort it out.

Contact the developer, see if he will deal. If not, then you have to go to the courts, unless you can convince him (or the bills of sale) have an arbitration clause. In either case, if you can’t afford an attorney, and since this is a civil matter, you may have to represent yourself, which you are entitled to do.

One more point, the fact that the same guy owns all the companies doesnt mean anything. I own several companies, but they are companies and therefore their own legal entity. I merely work for them. Unless you can prove a few very specific things, piercing the corporate veil isnt worth your time or money.
#6

Hi Lisa, The three of us went to see a lawyer a few months ago and he advised that we have a strong position, but, he needed a 5000 dollar retainer. I really didn’t think that was too bad divided by three, but, he also advised that the developer would probably battle us in court and it could end up costing quite a bit more. He had just won a similar case and the costs approached 40,000 dollars. That suit was with 28 homeowners splitting the costs. Our royalties are not going to be very substantial and I don’t know how many years it would take to recoup the investment. I have a son starting his freshman year at Baylor which is about like us having another mortgage payment, so I am reluctant to agree to the possible lawsuit expense. Is a quiet title action different than us going to court to let a judge rule on the title? I really appreciate your responses. Thanks, Buster

Lisa said:

Ryan, I think you are probably correct in your your logic that you own the rights. One thing I forgot to mention earlier, is that Williams will get to deduct its own attorneys and court costs for filing the interpleader action, which are withheld from the disputed funds. In theory that should only be a couple thousand, but it adds insult to injury. Have you thought about joining up with the other 2 landowners in a quiet title action? Once Williams gets clarification of who owns the rights, I would imagine a contract would be forthcoming to those other parties, if one hasn’t already. Obviously attorneys fees and court costs split 3 ways is better than one.

Buster Foster said:
Hi Ryan,
I appreciate your reply.
I think you help make my point about the companies being their own entity, Company A can’t reassign the mineral rights because Company B now owns them and him being a principal in these companies makes no difference.
Williams told us last year they were going to file an “interpleader” with the court if we didn’t resolve the issue amongst ourselves. They haven’t done that yet.
I guess we are going to end up in court in some shape, form or fashion.
The landman that contacted us was going to talk to at least three other homeowners about their mineral rights and then he abruptly changed and told them they didn’t have their mineral rights. That was kinda strange. We had wondered if there was some influence from Williams for him to stop talking to the other homeowners.
Thanks,
Buster


Ryan C. Meinzer said:
I have a similar thing going on here in TX over a couple of leases for which I am the operator.

Firstly, Williams wont assign it to a court, it isnt their problem, it is your problem and the developers problem. Williams will just sit there drawing interest on the royalties until the civil courts sort it out.

Contact the developer, see if he will deal. If not, then you have to go to the courts, unless you can convince him (or the bills of sale) have an arbitration clause. In either case, if you can’t afford an attorney, and since this is a civil matter, you may have to represent yourself, which you are entitled to do.

One more point, the fact that the same guy owns all the companies doesnt mean anything. I own several companies, but they are companies and therefore their own legal entity. I merely work for them. Unless you can prove a few very specific things, piercing the corporate veil isnt worth your time or money.
#7

The sad thing about the legal system, is that you almost need to have money to throw away to get what is legally yours. I wouldn’t think this case would cost much, but still, I like Ryan’s idea of seeing if the builder will arbitrate or maybe mediate. Have you tried to negotiate on your own even? If you could negotiate half the rights without incurring attorneys fees, that wouldn’t be bad. The quiet title action is what would end up happening anyway if Williams interpleads it.

Buster Foster said:

Hi Lisa,
The three of us went to see a lawyer a few months ago and he advised that we have a strong position, but, he needed a 5000 dollar retainer. I really didn’t think that was too bad divided by three, but, he also advised that the developer would probably battle us in court and it could end up costing quite a bit more. He had just won a similar case and the costs approached 40,000 dollars. That suit was with 28 homeowners splitting the costs. Our royalties are not going to be very substantial and I don’t know how many years it would take to recoup the investment. I have a son starting his freshman year at Baylor which is about like us having another mortgage payment, so I am reluctant to agree to the possible lawsuit expense.
Is a quiet title action different than us going to court to let a judge rule on the title?
I really appreciate your responses.
Thanks,
Buster

Lisa said:
Ryan, I think you are probably correct in your your logic that you own the rights. One thing I forgot to mention earlier, is that Williams will get to deduct its own attorneys and court costs for filing the interpleader action, which are withheld from the disputed funds. In theory that should only be a couple thousand, but it adds insult to injury. Have you thought about joining up with the other 2 landowners in a quiet title action? Once Williams gets clarification of who owns the rights, I would imagine a contract would be forthcoming to those other parties, if one hasn’t already. Obviously attorneys fees and court costs split 3 ways is better than one.

Buster Foster said:
Hi Ryan,
I appreciate your reply.
I think you help make my point about the companies being their own entity, Company A can’t reassign the mineral rights because Company B now owns them and him being a principal in these companies makes no difference.
Williams told us last year they were going to file an “interpleader” with the court if we didn’t resolve the issue amongst ourselves. They haven’t done that yet.
I guess we are going to end up in court in some shape, form or fashion.
The landman that contacted us was going to talk to at least three other homeowners about their mineral rights and then he abruptly changed and told them they didn’t have their mineral rights. That was kinda strange. We had wondered if there was some influence from Williams for him to stop talking to the other homeowners.
Thanks,
Buster


Ryan C. Meinzer said:
I have a similar thing going on here in TX over a couple of leases for which I am the operator.

Firstly, Williams wont assign it to a court, it isnt their problem, it is your problem and the developers problem. Williams will just sit there drawing interest on the royalties until the civil courts sort it out.

Contact the developer, see if he will deal. If not, then you have to go to the courts, unless you can convince him (or the bills of sale) have an arbitration clause. In either case, if you can’t afford an attorney, and since this is a civil matter, you may have to represent yourself, which you are entitled to do.

One more point, the fact that the same guy owns all the companies doesnt mean anything. I own several companies, but they are companies and therefore their own legal entity. I merely work for them. Unless you can prove a few very specific things, piercing the corporate veil isnt worth your time or money.
#8

I know this discussion is almost a year old and the only development has been that we have seen a lawyer and are contemplating filing for a quiet title action.

Today I recieved a Division Order form in the mail from Williams for me to sign and return??? Does this change anything for us?? Is this a recognition of our ownership or just a standard request?



Lisa said:

The sad thing about the legal system, is that you almost need to have money to throw away to get what is legally yours. I wouldn't think this case would cost much, but still, I like Ryan's idea of seeing if the builder will arbitrate or maybe mediate. Have you tried to negotiate on your own even? If you could negotiate half the rights without incurring attorneys fees, that wouldn't be bad. The quiet title action is what would end up happening anyway if Williams interpleads it.

Buster Foster said:
Hi Lisa,
The three of us went to see a lawyer a few months ago and he advised that we have a strong position, but, he needed a 5000 dollar retainer. I really didn't think that was too bad divided by three, but, he also advised that the developer would probably battle us in court and it could end up costing quite a bit more. He had just won a similar case and the costs approached 40,000 dollars. That suit was with 28 homeowners splitting the costs. Our royalties are not going to be very substantial and I don't know how many years it would take to recoup the investment. I have a son starting his freshman year at Baylor which is about like us having another mortgage payment, so I am reluctant to agree to the possible lawsuit expense.
Is a quiet title action different than us going to court to let a judge rule on the title?
I really appreciate your responses.
Thanks,
Buster

Lisa said:
Ryan, I think you are probably correct in your your logic that you own the rights. One thing I forgot to mention earlier, is that Williams will get to deduct its own attorneys and court costs for filing the interpleader action, which are withheld from the disputed funds. In theory that should only be a couple thousand, but it adds insult to injury. Have you thought about joining up with the other 2 landowners in a quiet title action? Once Williams gets clarification of who owns the rights, I would imagine a contract would be forthcoming to those other parties, if one hasn't already. Obviously attorneys fees and court costs split 3 ways is better than one.

Buster Foster said:
Hi Ryan,
I appreciate your reply.
I think you help make my point about the companies being their own entity, Company A can't reassign the mineral rights because Company B now owns them and him being a principal in these companies makes no difference.
Williams told us last year they were going to file an "interpleader" with the court if we didn't resolve the issue amongst ourselves. They haven't done that yet.
I guess we are going to end up in court in some shape, form or fashion.
The landman that contacted us was going to talk to at least three other homeowners about their mineral rights and then he abruptly changed and told them they didn't have their mineral rights. That was kinda strange. We had wondered if there was some influence from Williams for him to stop talking to the other homeowners.
Thanks,
Buster


Ryan C. Meinzer said:
I have a similar thing going on here in TX over a couple of leases for which I am the operator.

Firstly, Williams wont assign it to a court, it isnt their problem, it is your problem and the developers problem. Williams will just sit there drawing interest on the royalties until the civil courts sort it out.

Contact the developer, see if he will deal. If not, then you have to go to the courts, unless you can convince him (or the bills of sale) have an arbitration clause. In either case, if you can't afford an attorney, and since this is a civil matter, you may have to represent yourself, which you are entitled to do.

One more point, the fact that the same guy owns all the companies doesnt mean anything. I own several companies, but they are companies and therefore their own legal entity. I merely work for them. Unless you can prove a few very specific things, piercing the corporate veil isnt worth your time or money.
#9

The only division order I have handy is from Conoco, and says that in a case where I didn’t own the mineral rights, I agree to reimburse them. It says nowhere that I would be bound to defend title. In your case I would look for that, because you may just want to give the money back and walk away, at some point if it’s going to become a costly legal battle. If the wording is something you can agree with, and the decimal interest is correct, I’d sign it and bank the money against a rainy day, if they pay you. I think it likely that the division order will not obligate you any more than signing the lease already has. Good luck!

#10