Lessee Could Not Force Joinder of Neighboring Landowners in Texas Royalty Suit
On February 3, 2017, the Texas Supreme Court issued an opinion in Richard D. Crawford v. XTO Energy, Inc. finding that a lessee could not require a lessor to join neighboring landowners because the adjacent landowners did not “claim an interest relating to the subject of the action.”
XTO Energy, Inc. (“XTO”) was paying adjacent landowners royalty interests based on a title opinion advising that the common-law strip-and-gore-doctrine applied. However, Richard Crawford, a lessor, believed he was entitled to the royalties and sued XTO. The trial court dismissed the case when Crawford did not join the adjacent landowners. A divided court of appeals affirmed, concluding that the adjacent landowners had a pecuniary interest in the outcome of the suit.
The Texas Supreme Court found that the adjacent landowners were not necessary parties. Although the adjacent landowners may have had a claim to the minerals pursuant to the strip-and-gore doctrine, the record was devoid of evidence showing that any of the landowners had ever demanded or asserted ownership of a royalty interest.
In sum, joinder is only required where the parties to be joined “claim an interest relating to the subject of the action.” This case is unusual in that most royalty dispute cases involve an absent party with an express claim of interest. While this case is unique, it should serve as a reminder that a lessee may only force a lessor to join an absent party if they are claiming an interest. Alternatively, in order to avoid multiple suits over the same royalty payouts, a lessee must join parties pursuant to the Texas Rules of Civil Procedure.