NO. 12-15-00083-CV
IN THE COURT OF APPEALS
TWELFTH COURT OF APPEALS DISTRICT
TYLER, TEXAS
CARRIZO OIL & GAS, INC., § APPEAL FROM THE 7TH
APPELLANT
V.
§ JUDICIAL DISTRICT COURT
BARROW-SHAVER RESOURCES
COMPANY,
APPELLEE § SMITH COUNTY, TEXAS
OPINION
Barrow-Shaver Resources Company (BSR) sued Carrizo Oil & Gas, Inc. (COG) for
breach of a consent-to-assignment provision in a farmout agreement. Following a jury trial,
judgment was rendered against COG for $27,690,466.86 plus prejudgment interest and
attorney’s fees. In thirteen issues, COG contends the trial court erred. We reverse the trial
court’s judgment and render judgment that BSR take nothing.
BACKGROUND
BSR, founded in 1989, operates more than one hundred oil and gas wells. Its business
model is to find oil and gas prospects, drill them, and then sell the project when it becomes too
big.
COG, founded in 1993, is a publicly traded oil and gas production company valued at 2.4
billion dollars and traded on the NASDAQ. It has approximately 250 employees in operations
throughout the United States.
COG owned the Parkey Lease, which was set to expire April 24, 2011. It had drilled
three dry holes on the lease, but had no plans for any further drilling operations to extend the
lease. In February 2011, COG made contact with BSR at a trade show, suggesting that BSR take
a farmout in order to drill on the lease. Negotiations ensued between Stewart Laufer, COG’s
southern United States land manager, and Hal Bertram, BSR’s vice-president of land and
marketing. Both men were highly experienced in the oil and gas field. Laufer had twenty-five
years of experience while Bertram had thirty-three years of experience.
After initial discussions, Bertram sent a draft of their agreement to Laufer, one and a half
pages in length, that contained no consent-to-assignment provision. Laufer countered with a
three page draft agreement which included the following consent-to-assignment provision:
The rights provided to BSR under this Letter Agreement may not be assigned, subleased
or otherwise transferred in whole or in part, without the express written consent of Carrizo which
consent shall not be unreasonably withheld.
Bertram followed with a third draft containing the exact same consent-to-assignment
provision as in Laufer’s counter-proposal. Laufer responded to Bertram with a fourth draft in
which the “shall not be unreasonably withheld” language in the consent-to-assignment provision
was deleted. Scott Shaver, BSR’s managing partner, joined Bertram in vehemently objecting to
Laufer for this change in the consent-to-assignment provision.
Laufer told Bertram that COG’s legal department in Houston insisted that the
reasonableness language be deleted from the consent-to-assignment provision of the farmout
agreement. However, Bertram testified at the jury trial that on three separate occasions before
the agreement was signed, both over the telephone and face to face, Laufer assured him that
COG would give BSR consent to assign the farmout. BSR signed the farmout agreement on
March 30, 2012 with the following consent-to-assignment provision:
The rights provided to BSR under this Letter Agreement may not be assigned, subleased
or otherwise transferred in whole or in part, without the express written consent of Carrizo.
BSR immediately drilled on the lease before April 24, 2011, and thus allowed COG to
keep the lease alive. Over the next year, BSR spent $22,000,000.00 drilling wells on the lease,
but with no tangible results. Chip Johnson, president and chief executive officer of COG,
testified during the jury trial that his company was pleased with BSR’s performance under the
farmout.
Raptor Petroleum II, LLC, approached BSR about an assignment and, after negotiations,
Raptor agreed to pay BSR $27,690,466.86 for an assignment of its farmout with COG. On May
2
7, 2012, BSR contacted COG for its consent to the assignment of the farmout to Raptor. COG
eventually demanded BSR pay $5,000,000.00 for the lease before it would give its consent for
the assignment from BSR to Raptor. BSR declined to pay COG $5,000,000.00. Without COG’s
consent to the assignment of the farmout, Raptor withdrew its offer to BSR.
BSR filed suit against COG for breach of contract, fraud, and tortious interference with a
contract. During the jury trial, BSR contended any consent-to-assignment provision in the
farmout was silent as to the type of consent COG was required to give. COG asserted that the
negotiations and previous drafts informed the trial court that the reasonableness clause for the
type of consent it would give had been removed and therefore it could withhold consent for any
reason or for no reason. COG further contended that the farmout agreement was unambiguous
and that the trial court could construe it as a matter of law without resort to a jury acting as a fact
finder on what the consent-to-assignment provision meant.
The trial court sided with BSR and, based on the parol evidence rule, did not allow
evidence of the parties’ negotiations or the four drafts of the farmout agreement to be admitted.
The trial court allowed BSR’s expert, Professor Bruce Kramer, to testify that the custom in the
industry was that consent could not be withheld absent a reasonable concern about the potential
assignee’s capabilities. COG filed a motion for a directed verdict, following the close of
testimony in the trial, asserting that the farmout established as a matter of law that COG could
withhold its consent for BSR to assign the farmout agreement to Raptor for any reason, or for no
reason. The trial court denied COG’s motion and submitted issues to the jury on breach of
contract, fraud, and tortious interference with contract. The jury found COG liable on each of
those theories. The trial court rendered a judgment based on the jury verdict against COG on
BSR’s breach of contract claim, awarding BSR $27,690,466.86 plus prejudgment interest and
attorney’s fees. COG timely appealed.
BREACH OF CONTRACT
In its first issue, COG contends the trial court erred in failing to construe, as a matter of
law, the consent-to-assignment provision to mean that it had an unqualified right to refuse
consent for BSR to assign the farmout to Raptor. The trial court erred, the argument continues,
by submitting the contract claim to the jury, and there is no evidence supporting the jury’s
finding of breach. In its third issue, COG argues that the trial court erred when it excluded
3
evidence of the parties’ negotiations showing the deletion of the phrase “which consent shall not
unreasonably be withheld.” It asserts that the parol evidence rule permits evidence of the facts
and circumstances regarding a contract’s negotiation to demonstrate the parties’ intent, and the
excluded evidence demonstrates an intent not to impose any conditions on COG’s right to
withhold written consent.
Standard of Review
When a party is attacking the legal sufficiency of the evidence supporting a finding on an
issue for which it did not have the burden of proof, it must show that no evidence supports the
finding. Exxon Corp. v. Emerald Oil & Gas Co., 348 S.W.3d 194, 215 (Tex. 2011). We may
sustain a no evidence challenge only when 1) the record discloses a complete absence of
evidence of a vital fact; 2) the court is barred by rules of law or of evidence from giving weight
to the only evidence offered to prove a vital fact; 3) the evidence offered to prove a vital fact is
no more than a mere scintilla; or 4) the evidence establishes conclusively the opposite of a vital
fact. Uniroyal Goodrich Tire Co. v. Martinez, 977 S.W.2d 328, 334 (Tex. 1998). Evidence is
legally sufficient if it would enable reasonable and fair-minded people to reach the verdict under
review. Exxon Corp., 348 S.W.3d at 215. We credit favorable evidence if reasonable jurors
could, and disregard contrary evidence unless reasonable jurors could not. Id.
We review the trial court’s rulings on admissibility of evidence under an abuse of
discretion standard. Brookshire Bros., Ltd. v. Aldridge, 438 S.W.3d 9, 27 (Tex. 2014). We
review de novo parol evidence rulings. Dyer v. Cotton, 333 S.W.3d 703, 718 (Tex. App.—
Houston [1st Dist.] 2010, no pet.). The construction of an unambiguous contract is a question of
law for the court, which we may consider under a de novo standard of review. Tawes v. Barnes,
340 S.W.3d 419, 425 (Tex. 2011).
Applicable Law
A trial court errs when it does not construe an unambiguous provision as a matter of law,
and instead, submits the issue to a fact finder. Grohman v. Kahlig, 318 S.W.3d 882, 887 (Tex.
2010) (per curiam); Transcon. Gas Pipeline Corp. v. Texaco, Inc., 35 S.W.3d 658, 665 (Tex.
App.—Houston [1st Dist.] 2000, pet. denied). The error is harmless if the jury answers the
question as the trial court should have answered it. Grohman, 318 S.W.3d at 887. However,
extraneous prejudice exists when the answer given by the jury is incorrect as a matter of law.
Hicks v. Pilgrim Poultry, G.P., 299 S.W.3d 249, 258 (Tex. App.−Texarkana 2009, no pet.).
4
Whether the jury answered the question as the trial court would have been required to answer it
effectively requires a review of the jury’s answer under a no evidence standard. Id. at 259.
Texas’s strong public policy favoring freedom of contract is firmly embedded in our
jurisdiction. Philadelphia Indem. Ins. Co. v. White, 490 S.W.3d 468, 471 (Tex. 2016). Absent
compelling reasons, courts must respect and enforce the terms of a contract the parties have
freely and voluntarily entered. Id. As a rule, parties have the right to contract as they see fit as
long as their agreement does not violate the law or public policy. Coyote Lake Ranch, LLC v.
City of Lubbock, 498 S.W.3d 53, 59 (Tex. 2016). This rule applies in the oil and gas context.
See id. We are not permitted to rewrite an agreement to mean something it did not. Thedford
Crossing L.P. v. Tyler Rose Nursery, Inc., 306 S.W.3d 860, 867 (Tex. App.—Tyler 2010, pet.
denied). We cannot change the contract simply because we or one of the parties comes to dislike
its provisions or thinks something else is needed in it. Id. Parties to a contract are masters of
their own choices and are entitled to select what terms and provisions to include in or omit from
a contract. Id.
Contract language should be interpreted by a court as a matter of law if it can be given a
certain or definite meaning. Grohman, 318 S.W.3d at 887. If the contract is ambiguous, the
party’s intent is a question of fact for the jury. Id. Whether a party has breached a contract is a
question of law for the court, not a question of fact for the jury, when the facts of the parties’
conduct are undisputed or conclusively established. Id. A written contract must be construed to
give effect to the parties’ intent expressed in the text as understood in light of the facts and
circumstances surrounding the contract’s execution, subject to the limitations of the parol
evidence rule. Americo Life, Inc. v. Myer, 440 S.W.3d 18, 22 (Tex. 2014).
The parol evidence rule is a rule of substantive law which provides that, in the absence of
fraud, accident, or mistake, extrinsic evidence is not admissible to vary, add to, or contradict the
terms of a written contract that is facially complete and unambiguous. Gail v. Berry, 343
S.W.3d 520, 523 (Tex. App.−Eastland 2011, pet. denied). However, “[t]he [parol evidence] rule
does not prohibit consideration of surrounding circumstances that inform, rather than vary from
or contradict, the contract text.” Houston Expl. Co. v. Wellington Underwriting Agencies, Ltd.,
352 S.W.3d 462, 469 (Tex. 2011). We may consider the facts and circumstances surrounding a
contract, including the commercial or other setting in which the contract was negotiated and
5
other objectively determinable factors that give context to the parties’ transaction. Kachina
Pipeline Co., v. Lillis, 471 S.W.3d 445, 450 (Tex. 2015).
Negotiations of the parties may have some relevance in ascertaining the dominant
purpose and intent of the parties embodied in the contract interpreted as a whole. Houston Expl.
Co., 352 S.W.3d at 469-70 (citing RESTATEMENT (SECOND) OF CONTRACTS § 214(c) (AM. LAW
INST. 1979)). Evidence of circumstances can be used to inform the contract text and render it
capable of only one meaning. Kachina, 471 S.W.3d at 450.
Analysis
BSR contends that, because there was no stated qualifier regarding the consent-to-
assignment provision, the agreement was silent as to the type of consent COG would give. In
furtherance of that theory, BSR introduced evidence, in contradiction of industry custom and
usage requiring consent to be reasonably granted, that COG unreasonably withheld consent for
Raptor to assume the farmout agreement from BSR. See Energen Res. MAQ, Inc., v. Dalbosco,
23 S.W.3d 551, 557 (Tex. App.−Houston [1st Dist.] 2000, pet. denied) (holding that evidence of
custom and usage is admissible to add to a contract that is silent on a particular matter).
COG argues that consideration of the circumstances surrounding the execution of the
farmout agreement indicate that the agreement was not silent regarding the type of consent
required. See Houston Expl. Co., 352 S.W.3d at 469. COG contends that prior drafts of the
farmout agreement clearly establish that the absence of a restriction on COG’s ability to withhold
consent was intentional.1 An earlier draft provided that consent cannot be unreasonably
withheld. In a later draft, COG deleted this language. COG argues that evidence of this deletion
demonstrates an intent not to impose any conditions on COG’s right to withhold consent. It
contends that the four drafts leading to the executed farmout agreement render the consent to
assign provision capable of only one meaning, that it could withhold its consent for any reason or
no reason. See Kachina, 471 S.W.3d at 450.
We agree with COG. Negotiations of a contract can matter in determining whether it is
silent on a material term. See Houston Expl. Co., 352 S.W.3d at 469-70. Here, the previous
drafts and negotiations between the parties inform us that the consent-to-assignment provision
was not silent as to the type of consent. The farmout agreement unambiguously stated that BSR
1
Although the trial court excluded evidence of the negotiations, including the four drafts exchanged
between the parties, COG properly made a bill of exception bringing this to the trial court’s attention for the purpose
of construing the farmout agreement’s consent-to-assignment provision.
6
could not assign its rights under the agreement “without the express written consent of [COG].”
The qualifying language, “which consent shall not be unreasonably withheld,” was purposely
deleted from an earlier draft. COG’s evidence of the negotiations and preliminary drafts of the
agreement was not barred from admissibility by the parol evidence rule. Id. at 469. Therefore,
the trial court abused its discretion by refusing to admit that evidence. See Aldridge, 438 S.W.3d
at 27.
BSR responds that the provision had to explicitly state that COG had the sole discretion
to deny consent and that because it did not, an obligation of good faith and fair dealing was
imposed on COG to be reasonable when asked for its consent to assign the farmout agreement.
See Alex Ritchie, How Contract Boilerplate Can Bite, 50 ROCKY MTN. MIN. L. FOUND. J. 243,
248 (2013). While some jurisdictions impose an obligation of good faith and fair dealing in
contract disputes, Texas does not. See English v. Fischer, 660 S.W.2d 521, 522 (Tex. 1983).
Rather, under Texas law, a consent-to-assignment provision that fails to set a standard by which
to measure consent, such as reasonableness or good cause, allows a lessor to withhold consent
arbitrarily. Benjamin Robertson, Katy Pier Moore, & Corey F. Wehmeyer, Consent to
Assignment Provisions in Texas Oil and Gas Leases: Drafting Solutions to Negotiation Impasse,
48 TEX. TECH L.R. 335, 339 (2016); see also Louis J. Davis, Preferential Rights to Purchase and
Consents to Assign, STATE BAR OF TEX. PROF. DEV. PROGRAM, 31st ANNUAL ADV. OIL, GAS &
ENERGY RES. LAW COURSE Chapter 12, at 14-15 (2013).
The dissent takes the position that the contract was silent as to when consent could be
withheld for any proposed assignment of the farmout agreement. A contract is silent when it
fails to address a particular issue. E.P. Towne Ctr. Partners v. Chopsticks, Inc., 242 S.W/.3d
117, 122 (Tex. App.—El Paso 2007, no pet.). The parties had two options when negotiating the
consent-to-assignment provision. One was to provide that consent would “not be unreasonably
withheld” or the other choice of allowing consent to be arbitrarily withheld. The parties
explicitly negotiated out the “not be unreasonably withheld” option. That left only one consent-
to-assignment provision for the trial court to construe. That being consent could be arbitrarily
withheld.
We hold that the consent-to-assignment provision of the farmout agreement was not
silent when we are informed by its surrounding circumstances. The agreement gave COG an
unqualified right to refuse BSR’s proposed assignment. The trial court erred when it failed to
7
construe this unambiguous provision as a matter of law but rather submitted it to the jury. See
Transcon. Gas Pipeline Corp., 35 S.W.3d at 665. In light of the consent provision in the
farmout agreement and the evidence of the circumstances surrounding its execution, there is a
complete absence of evidence supporting the jury’s finding that COG breached the agreement.
See Exxon Corp., 348 S.W.3d at 215. The contract was not ambiguous and therefore no breach
of contract issue should have been submitted to the jury. See Grohman, 318 S.W.3d at 887.
Accordingly, BSR cannot prevail on its breach of contract claim. COG’s issues one and three
are sustained.
FRAUD
In its eighth issue, COG contends that its farmout negotiator’s purported oral promise to
his BSR counterpart that consent would not be unreasonably withheld does not constitute fraud
because it is contradicted by the express terms of the agreement. BSR responds that the consent-
to-assignment provision was silent on the type of consent, and therefore, there could be no
contradiction between the express terms of the farmout agreement and COG’s oral
representation. As we decided in issues one and three above, the contract was not silent on the
type of consent COG had the choice to give.
A plaintiff, such as BSR, seeking to prevail on a fraud claim must prove that (1) the
defendant made a material misrepresentation; (2) the defendant knew the representation was
false or made the representation recklessly without any knowledge of its truth; (3) the defendant
made the representation with the intent that the other party would act on that representation or
intended to induce the party’s reliance on the representation; and (4) the plaintiff suffered an
injury by actively and justifiably relying on that representation. Exxon Corp., 348 S.W.3d at
217.
Here, BSR’s Bertram and COG’s Laufer, with thirty-three and twenty-five years of
experience in the oil and gas industry respectively, negotiated the farmout agreement. When the
reasonableness clause was deleted from the consent-to-assignment provision, Bertram brought
BSR’s managing partner, Scott Shaver, into the negotiations in an attempt to persuade COG to
change its mind and reinsert the reasonableness clause. This attempt failed. Shaver went
forward in signing the farmout agreement, without any reasonableness clause included.
8
No matter how much confidence Shaver and Bertram had in Laufer’s oral promise that
COG’s consent would not be unreasonably withheld, their reliance is of no consequence in light
of the unambiguous term in the written contract that directly contradicts the oral representation.
See DRC Parts & Accessories, L.L.C. v. VM Motori, S.P.A., 112 S.W.3d 854, 858 (Tex.
App.−Houston [14th Dist.] 2003, pet. denied) (op. on reh’g) (en banc). A written contract
vitiates any reliance on oral promises. See Fisher Controls Int’l, Inc. v. Gibbons, 911 S.W.2d
135, 142 (Tex. App.−Houston [1st Dist.] 1995, writ denied). BSR’s attempt to return to the
reasonable consent term that it bargained away, albeit reluctantly, must fail. There is no
evidence to support the justifiable reliance element of BSR’s fraud claim. Therefore, the trial
court erred in rendering judgment for BSR on its fraud cause of action. We sustain COG’s
eighth issue.
TORTIOUS INTERFERENCE WITH CONTRACT
In its ninth issue, COG contends that its contractual absolute right to withhold consent
justified its actions, constituting a defense to the tortious interference with contract claim as a
matter of law. In its brief, BSR conceded that if we construed the consent-to-assignment
provision as allowing COG to withhold its consent for any reason, or no reason, COG would
prevail on this issue. We agree.
Justification is an affirmative defense to the tortious interference claim as a matter of law.
Prudential Ins. Co. v. Fin. Review Servs., Inc., 29 S.W.3d 74, 80 (Tex. 2000). As we explained
above, COG had the unqualified right to withhold consent and, therefore, cannot be liable for
tortious interference with BSR’s contract with Raptor. We sustain COG’s ninth issue.
CONCLUSION
COG was entitled to judgment as a matter of law on BSR’s breach of contract, fraud, and
tortious interference with contract causes of action.2 We reverse the trial court’s judgment and
render a take nothing judgment.3
2
Because COG’s first, third, eighth, and ninth issues are dispositive, we need not address its remaining
nine issues. See TEX. R. APP. P. 47.1.
3 An appellate court should render judgment after sustaining a complaint as to the legal sufficiency of the
evidence. See TEX. R. APP. P. 43.3; Horrocks v. Tex. Dep’t of Transp., 852 S.W.2d 498, 499 (Tex. 1993) (per
curiam).
9
JAMES T. WORTHEN
Chief Justice
Opinion delivered January 31, 2017.
Panel consisted of Worthen, C.J. and Neeley, J.
Hoyle, J., concurring in part, dissenting in part.
Because I believe that the trial court erred in excluding evidence of the prior drafts and
negotiations involving COG and BSR, and because I believe that such error was harmful, I
concur with the majority’s decision to reverse the trial court’s judgment. Because I believe that a
fact issue remains regarding under what circumstances the contract permits COG to withhold
consent to a proposed assignment, I dissent from the majority’s decision to render judgment, and
I instead would remand the case to the trial court for a new trial.
At its crux, the parties dispute whether COG could withhold its consent to BSR’s
assignment of its interest so that COG could seek compensation from BSR for the consent. The
majority concludes that the negotiations between the parties inform us that COG had an
unqualified right to refuse BSR’s proposed assignment and thus could withhold consent
arbitrarily. Accordingly, the majority determined as a matter of law that COG did not breach the
contract. Based on the majority’s construction of the consent-to-assignment provision of the
farmout agreement between the parties, the majority likewise determined that BSR could not
recover under its claims of fraud and tortious interference with contract.
I disagree with the majority that the negotiations between the parties inform us that COG
could withhold consent arbitrarily. The majority opinion relates the negotiations between the
parties. To summarize those negotiations, (1) BSR offered a farmout agreement with no
necessity to obtain COG’s consent to an assignment, (2) COG countered with a consent-to-
assignment provision in which COG agreed that consent would not be unreasonably withheld,
(3) BSR countered, but made no changes to the consent-to-assignment provision, (4) COG
countered with a consent-to-assignment provision that did not include specific language that
consent would not be unreasonably withheld, (5) BSR objected to the change in the consent-to-
assignment provision, (6) COG expressed that it would not reinsert the language that consent
would not be unreasonably withheld, and (7) according to BSR, three times before BSR signed
the farmout agreement, COG assured BSR that COG would consent if BSR attempted to assign
the farmout. The parties then executed a farmout agreement with the following consent-to-
assignment provision:
The rights provided to BSR under this Letter Agreement may not be assigned, subleased or
otherwise transferred in whole or in part, without the express written consent of [COG].
Instead of informing us that COG had an unqualified right to refuse BSR’s proposed
assignment and thus could withhold consent arbitrarily, I believe that the negotiations clarify that
the contract requires COG’s consent to a BSR assignment but is silent as to the circumstances
when COG can properly withhold consent. I agree with the majority that the trial court erred
when it prohibited COG from presenting evidence of the negotiations and prior drafts of the
farmout agreement. See Energen Res. MAQ, Inc. v. Dalbosco, 23 S.W.3d 551, 557 (Tex.
App.−Houston [1st Dist.] 2000, pet. denied). However, I do not construe the contract as
foreclosing BSR’s breach of contract claim.
10
We cannot use industry custom and usage to add terms specifically addressed by a
written agreement of the parties. Kachina Pipeline Co. v. Lillis, 471 S.W.3d 445, 454 (Tex.
2015); but see Holmes v. Beatty, 290 S.W.3d 852, 858 (Tex. 2009). But, because I construe the
contract as silent as to the circumstances when COG can properly withhold consent,4 I believe
that the trial court did not err in submitting the contract claim to the jury. Further, the trial court
properly allowed BSR to present evidence of the industry custom and usage on this topic, an
issue not reached by the majority. See Energen Res. MAQ, Inc., 23 S.W.3d at 557. Before
terms are added to a contract based on custom and usage, the custom and usage must be so
general and universal in the industry that the parties are charged with knowledge of its existence
to such an extent to raise a presumption that they dealt with reference to it. Va. Power Energy
Mktg., Inc. v. Apache Corp., 297 S.W.3d 397, 406 (Tex. App.—Houston [14th Dist.] 2009, pet.
denied).
BSR presented evidence of custom and usage through its expert witness, Bruce Kramer.
Kramer possesses a wealth of experience in the oil and gas industry, albeit most of it tangentially
as an oil and gas law professor and author on oil and gas law topics. Kramer specifically
testified regarding the consent-to-assignment provision in the parties’ farmout agreement.
Kramer explained that the parties could “use terms of art that speak for themselves but do not
answer all of the questions that are raised by the use of such language in a particular oil and gas
agreement.” Kramer continued that most people in the industry would read these terms of art to
have a specific meaning.
Kramer contended that because the farmout agreement between the parties does not state
the circumstances under which COG could withhold consent, the custom and practice of the oil
and gas industry would add language to the clause that consent would be given unless COG had
a concern regarding the financial status, technical expertise, or general reputation of the proposed
assignee. Kramer based his opinion to add language to the consent-to-assignment provision on
his study of oil and gas law as well as his discussions with people in the industry. He claimed
that parties experienced in the oil and gas industry should know the language was implied
because it was a basic principle in the industry. Based on the language that he added to the
agreement because of custom and practice of the industry, Kramer concluded that COG breached
the contract by deciding to withhold consent when BSR would not pay COG for the consent.
BSR presented other testimony from those in the industry that a party is expected to
provide consent to an assignment unless the party has some concern regarding the assignee.
And, Chip Johnson, the president of COG, acknowledged that nothing in the farmout agreement
gives specific guidance as to the circumstances under which COG could withhold consent.
Based on the wording of the farmout agreement and the evidence presented at trial, I
would hold that BSR raised a fact issue regarding whether custom and usage limited the
circumstances under which COG could withhold consent to an assignment. Thus, I would not
render judgment on behalf of COG as to BSR’s breach of contract claim. Because I have not
interpreted the contract as the majority has, I likewise would not render judgment on behalf of
COG as to BSR’s fraud and tortious interference claims.
However, neither can I affirm the trial court’s judgment. The jury sided with BSR, but
the jury never saw the entire picture. The unadmitted evidence of negotiations and drafts of the
agreement was especially probative of whether BSR’s claimed additional language to the
consent-to-assignment provision should have been included based on custom and usage in the
4 Expert witnesses presented by both COG and BSR likewise construed the contract as silent as to the
circumstances under which COG could withhold consent.
11
industry. Because the evidence was crucial to the issue, the trial court’s exclusion of the
evidence was harmful error. TEX. R. APP. P. 44.1; see State v. Cent. Expressway Sign Assoc.,
302 S.W.3d 866, 874 (Tex. 2009) (held that erroneously excluded evidence directly related to the
central issue in the case generally is harmful). Accordingly, I would remand the case for a new
trial.
Therefore, I respectfully concur in part and dissent in part to the majority’s opinion.
BRIAN HOYLE
Justice
(PUBLISH)
12
COURT OF APPEALS
TWELFTH COURT OF APPEALS DISTRICT OF TEXAS
JUDGMENT
JANUARY 31, 2017
NO. 12-15-00083-CV
CARRIZO OIL & GAS, INC.,
Appellant
V.
BARROW-SHAVER RESOURCES COMPANY,
Appellee
Appeal from the 7th District Court
of Smith County, Texas (Tr.Ct.No. 12-2565-A)
THIS CAUSE came to be heard on the oral arguments, appellate record and
the briefs filed herein, and the same being considered, it is the opinion of this court that there was
error in the judgment of the court below, and that the same should be reversed and judgment
rendered.
It is therefore ORDERED, ADJUDGED and DECREED by this court that
the judgment of the trial court in favor of Appellee, BARROW-SHAVER RESOURCES
COMPANY, be, and the same is, hereby reversed and judgment rendered that the Appellee
take nothing.
It is FURTHER ORDERED that all costs in this cause expended both in this
court and the trial court below be, and the same are, adjudged against the Appellee, BARROW-
SHAVER RESOURCES COMPANY, for which let execution issue; and that this decision be
certified to the court below for observance.
James T. Worthen, Chief Justice.
Panel consisted of Worthen, C.J., Hoyle, J., and Neeley, J.