pjc-oil-and-gas-2024-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 2024

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): 978-1-956363-57-9 ISBN (digital download): 978-1-956363-58-6 ISBN (book set): 978-1-956363-59-3 © 2016, 2018, 2020, 2022, 2024 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

COMMITTEE ON PATTERN JURY CHARGES Oil • Gas 2024–2025 P AUL F. S IMPSON , Chair S COTT P. S TOLLEY , Vice-Chair

J ONATHAN D. B AUGHMAN R ICHARD B OOTH D ANIEL C HAREST C ELIA F LOWERS J. C LIFF G UNTER K YLA G UNTER C RAIG A. H AYNES B ALDEMAR G ARCIA J R . C HRISTOPHER M. H OGAN R ONALD O. H OLMAN M ICHAEL D. J ONES

F RANCES M ARSHALL T IFFANY M EANS H ERIBERTO M ONTALVO

H ON . M ONICA Z APATA N OTZON

J AIME S. R ANGEL

H ON . B ENJAMIN R OBERTSON T IMOTHY C. S HELBY J AMES M. (M ARTY ) T RUSS

L ISA V AUGHN

P AT L ONG W EAVER K ATY W EHMEYER D AVID W HITTLESEY

W ILLIAM K ROGER

COMMITTEE ON PATTERN JURY CHARGES—OVERSIGHT 2024–2025 H ON . D ANIEL E. H INDE , Chair H ON . R OBERT S CHAFFER , Vice-Chair H ON . J OHN P. D EVINE , Supreme Court Liaison B ROCK C. A KERS H ON . D ENNISE G ARCIA M ALERIE T. A NDERSON T RACI A. G IBSON S COTT A RMSTRONG H ON . M ELISSA G OODWIN H ON . S COTT B RISTER M ARY T AYLOR H ENDERSON K IRSTEN M. C ASTAÑEDA J AY J ACKSON H ON . M URRY B. C OHEN D AVID C. K ENT J. C HRISTOPHER D EAN J EFFREY S. L EVINGER M ICHAEL E ADY L A D AWN H. N ANDRASY H ON . A NA E. E STEVEZ K AREN S. P RECELLA M ARCUS E STHER M ICHAEL L. S LACK A PRIL F ARRIS H ON . B ONNIE S UDDERTH T ITIANA D. F RAUSTO H ON . T IMOTHY S ULAK S TEWART G AGNON J IMMY V AUGHT H ON . A NDREW A. W RIGHT

STATE BAR OF TEXAS 2024–2025 S TEVE B ENESH , President P AUL K. S TAFFORD , Chair of the Board

A ARON Z. T OBIN , Chair, Board Professional Development Subcommittee S ARAH C LOWER K EATHLEY , Chair, Committee on Continuing Legal Education T REY A PFFEL , Executive Director

S HARON S ANDLE , Director E LMA E. G ARCIA , Assistant Director

R OBERT C. C ABLE , Project Publications Attorney E LIZABETH F LOREANI , Publications Attorney N ICHOLAS B. G ODDARD , Publications Attorney D EREK S MITH , Publications Attorney

R OGER S IEBERT , Senior Editor C OURTNEY C AVALIERE , Editor L EXI C LIDIENST , Editor C ASEY E LLIS , 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 , Meeting 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 2013–2024 Chair R ICARDO E. M ORALES , 2013–2023 L ISA V AUGHN , 2020–2023 C RAIG A. H AYNES , 2023–2024 Vice-Chairs E LIZABETH N. M ILLER , 2013–2014

L AURA H. B URNEY , 2014–2023 M ICHAEL D. J ONES , 2020–2023 P AUL F. S IMPSON , 2023–2024 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 M ICHAEL E. M C E LROY C HIGO N WAOGWUGWU K AREN S. P RECELLA E ZRA A. J OHNSON

S USAN R AFFERTY R ICHARDSON H ON . B ENJAMIN R OBERTSON

M ARK C. R ODRIGUEZ

G EORGE S HIRES

S COTT P ATRICK S TOLLEY J AMES M. (M ARTY ) T RUSS

D ICK W ATT

P AT L ONG W EAVER

H ON . R USSELL W ILSON

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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

xix

C HANGES IN THE 2024 E DITION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

xxi

I NTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xxiii

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 PJC 300.15 Instruction for Deposition Testimony . . . . . . . . . . . . . . . . . . . . . 35 PJC 300.16 Instructions for Multilingual Jurors. . . . . . . . . . . . . . . . . . . . . . . 36

ix

C ONTENTS

C HAPTER 301 A DVERSE P OSSESSION PJC 301.1

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

41

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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

43

PJC 301.3

49

PJC 301.4

54

PJC 301.5

59

PJC 301.6

64

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. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

71

PJC 302.2

72

PJC 302.3

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

74

PJC 302.4

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

76

[PJC 302.5–302.7 are reserved for expansion.]

PJC 302.8

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

78

PJC 302.9

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

82

[PJC 302.10 and 302.11 are reserved for expansion.] PJC 302.12 Private Nuisance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83

x

Contents

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

Claims for Breach of Lease Provisions (Comment). . . . . . . . . . 91

PJC 303.2

Question on Breach of Express Pooling Provision. . . . . . . . . . . 92

PJC 303.3

Question and Instruction on Good-Faith Pooling. . . . . . . . . . . . 93

PJC 303.4

Question on Breach of Express Royalty Provision. . . . . . . . . . . 95

PJC 303.5

Question on Untimely Payment of Proceeds of Production under Natural Resources Code . . . . . . . . . . . . . . . . . . . . . . . . . . 97

PJC 303.6

Question on Location of Sale . . . . . . . . . . . . . . . . . . . . . . . . . . . 99

PJC 303.7

Question and Instruction on Implied Duty to Reasonably Market Production (Proceeds/Amount Realized Royalty Provision). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100 Question and Instructions on Breach of Express Market Value Royalty Provision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101

PJC 303.8

PJC 303.9 Question and Instruction on Unreasonable Deduction of Postproduction Costs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103 PJC 303.10 Implied Covenants (Comment). . . . . . . . . . . . . . . . . . . . . . . . . . 104 PJC 303.11 Question and Instructions on Breach of Implied Covenant to Protect against Drainage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105 PJC 303.12 Question and Instruction on Breach of Implied Covenant to Develop . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107 PJC 303.13 Lease Termination (Comment) . . . . . . . . . . . . . . . . . . . . . . . . . . 109 PJC 303.14 Question on Failure to Tender Delay Rental Payment . . . . . . . . 111 PJC 303.15 Question and Instruction on Failure to Commence Operations before End of Primary Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112 PJC 303.16 Question and Instruction on Failure to Commence Operations after Cessation of Production . . . . . . . . . . . . . . . . . . . . . . . . . . . 113 PJC 303.17 Question and Instruction on Failure to Prosecute Operations without Cessation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115

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C ONTENTS

PJC 303.18 Question and Instruction on Failure to Commence Operations after Completion of Dry Hole . . . . . . . . . . . . . . . . . . . . . . . . . . 116 PJC 303.19 Question on Cessation of Production. . . . . . . . . . . . . . . . . . . . . 117 PJC 303.20 Question and Instructions on Cessation of Production in Paying Quantities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 118 PJC 303.21 Question on Date of Cessation of Production . . . . . . . . . . . . . . 121 PJC 303.22 Question and Instruction on Temporary Cessation of Production. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 122 PJC 303.23 Question on Failure to Tender Shut-In. . . . . . . . . . . . . . . . . . . . 124 PJC 303.24 Question and Instruction on Determining Whether Well Qualifies as Shut-In Well . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 125 PJC 303.25 Question on Force Majeure . . . . . . . . . . . . . . . . . . . . . . . . . . . . 127

C HAPTER 304 E XECUTIVE R IGHTS PJC 304.1

Breach of Executive Rights Duty (Comment). . . . . . . . . . . . . . 131

PJC 304.2

Question and Instruction on Breach of Executive Rights Duty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 133

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

Oil and Gas Industry Contracts (Comment) . . . . . . . . . . . . . . . 137

PJC 305.2

Basic Question—Existence . . . . . . . . . . . . . . . . . . . . . . . . . . . . 139

PJC 305.3

Basic Question—Compliance (Non-JOA) . . . . . . . . . . . . . . . . 142

PJC 305.4

Question and Instruction on Declaration of Meaning of Ambiguous Provisions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 147 Question and Instruction on Reformation as an Affirmative Cause of Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 148

PJC 305.5

[PJC 305.6 and 305.7 are reserved for expansion.]

PJC 305.8

Question on Main Purpose Doctrine . . . . . . . . . . . . . . . . . . . . . 150

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PJC 305.9 Instruction on Formation of Agreement . . . . . . . . . . . . . . . . . . . 152 PJC 305.10 Instruction on Offer and Acceptance. . . . . . . . . . . . . . . . . . . . . . 155 PJC 305.11 Instruction on Withdrawal or Revocation of Offer. . . . . . . . . . . 156 PJC 305.12 Instruction on Ambiguous Provisions . . . . . . . . . . . . . . . . . . . . . 157 PJC 305.13 Instruction on Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 159 PJC 305.14 Instruction on Time of Compliance. . . . . . . . . . . . . . . . . . . . . . . 160 PJC 305.15 Instruction on Authority. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 161 PJC 305.16 Instruction on Ratification. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 163 PJC 305.17 Instruction on Materiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 164 [PJC 305.18 and 305.19 are reserved for expansion.] PJC 305.20 Trade Custom (Comment). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 165 PJC 305.21 Conditions Precedent (Comment). . . . . . . . . . . . . . . . . . . . . . . . 167 PJC 305.22 Third-Party Beneficiaries (Comment). . . . . . . . . . . . . . . . . . . . . 168 PJC 305.23 Question on Promissory Estoppel. . . . . . . . . . . . . . . . . . . . . . . . 170 PJC 305.24 Question and Instruction on Quantum Meruit . . . . . . . . . . . . . . 171 PJC 305.25 Money Had and Received (Comment) . . . . . . . . . . . . . . . . . . . . 173 PJC 305.26 Unjust Enrichment (Comment). . . . . . . . . . . . . . . . . . . . . . . . . . 177 PJC 305.27 Basic Question and Instructions on Breach of Joint Operating Agreement—Compliance. . . . . . . . . . . . . . . . . . . . . . 178 PJC 305.28 Questions and Instructions on Breach by Operator under Joint Operating Agreement Exculpatory Provision . . . . . . . . . . 179

[Chapters 306–311 are reserved for expansion.]

C HAPTER 312 D EFENSES PJC 312.1

Defenses—Basic Question . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 183

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PJC 312.2

Defenses—Instruction on Plaintiff’s Material Breach When Only One Party Claims a Material Breach . . . . . . . . . . . 184

PJC 312.3

Defenses—Instruction on Anticipatory Repudiation. . . . . . . . . 186

PJC 312.4

Defenses—Instruction on Waiver . . . . . . . . . . . . . . . . . . . . . . . 187

PJC 312.5

Defenses—Instruction on Release. . . . . . . . . . . . . . . . . . . . . . . 188

PJC 312.6

Defenses—Instruction on Equitable Estoppel. . . . . . . . . . . . . . 189

PJC 312.7

Defenses—Instruction on Duress . . . . . . . . . . . . . . . . . . . . . . . 191

PJC 312.8

Defenses—Instruction on Undue Influence. . . . . . . . . . . . . . . . 193

PJC 312.9

Defenses—Instruction on Mutual Mistake of Fact . . . . . . . . . . 194

PJC 312.10 Defenses—Instruction on Mutual Mistake—Scrivener’s Error . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 195 PJC 312.11 Defenses—Instruction on Novation. . . . . . . . . . . . . . . . . . . . . . 196 PJC 312.12 Defenses—Instruction on Modification. . . . . . . . . . . . . . . . . . . 197 PJC 312.13 Defenses—Instruction on Accord and Satisfaction. . . . . . . . . . 198 PJC 312.14 Defenses—Instruction on Mental Capacity. . . . . . . . . . . . . . . . 199 PJC 312.15 Defenses—Instruction on Fraudulent Inducement . . . . . . . . . . 200 PJC 312.16 Definitions of Misrepresentation—Intentional Misrepresentation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 202 PJC 312.17 Defenses—Statute of Frauds (Comment) . . . . . . . . . . . . . . . . . 207 PJC 312.18 Question on Statute of Limitations—Discovery Rule. . . . . . . . 210 PJC 312.19 Question and Instruction on Repudiation of Title . . . . . . . . . . . 211 PJC 312.20 Question and Instruction on Statutory Defense to Withholding of Payments and Prejudgment Interest. . . . . . . . . 212 PJC 312.21 Question and Instruction on Bona Fide Purchaser Defense . . . 213

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Contents

C HAPTER 313 D AMAGES PJC 313.1

Predicate—Instruction Conditioning Damages Questions on Liability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 217 Instruction on Whether Compensatory Damages Are Subject to Income Taxes (Actions Filed on or after September 1, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 218 [PJC 313.3 is reserved for expansion.] Monetary Damages Recoverable for Claims Involving Real Property Interests (Comment). . . . . . . . . . . . . . . . . . . . . . . 219 Additional Categories of Monetary Damages That May Be Recoverable (Comment) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 222 Questions on Permanent vs. Temporary Injury to Real Property Interests (Frequency and Duration) . . . . . . . . . . . . . . . 223 Question and Instruction on Cost to Repair, Fix, or Restore Temporary Injury . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 226

PJC 313.2

PJC 313.4

PJC 313.5

PJC 313.6

PJC 313.7

PJC 313.8

Question and Instruction on Diminution in Market Value . . . . . 230

PJC 313.9 Question and Instruction on Damages Affecting Value of Minerals. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 233 PJC 313.10 Question and Instruction on Affirmative Good-Faith Defense to Trespass . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 235 PJC 313.11 Defensive Question on Reduction of Damages Resulting from Good-Faith Trespass . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 236 PJC 313.12 Question and Instruction on Damages for Breach of Express Pooling Provisions and Implied Duty to Pool in Good Faith . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 238 PJC 313.13 Question and Instruction on Damages for Breach of Express Royalty Provision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 240 PJC 313.14 Question and Instruction on Damages for Breach of Implied Duty to Reasonably Market Production . . . . . . . . . . . . 242 PJC 313.15 Question and Instruction on Damages for Breach of Express Market Value Royalty Provision . . . . . . . . . . . . . . . . . 243

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PJC 313.16 Question and Instruction on Damages for Unreasonable

Deductions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 245

PJC 313.17 Question and Instruction on Drainage Damages of a

Lessee or Royalty Owner. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 246

PJC 313.18 Question and Instruction on Damages for Breach of

Implied Covenant to Develop . . . . . . . . . . . . . . . . . . . . . . . . . . 248

PJC 313.19 Question and Instruction on Actual Damages for Breach of Executive Rights Duty. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 250 PJC 313.20 Question on Contract Damages . . . . . . . . . . . . . . . . . . . . . . . . 253 PJC 313.21 Sample Instructions on Direct and Incidental Damages— Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 256 PJC 313.22 Instructions on Consequential Damages—Contracts . . . . . . . . 260 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 313.26 Confusion of Goods (Comment) . . . . . . . . . . . . . . . . . . . . . . . . 267 PJC 313.27 Predicate Findings for Equitable or Legal Relief (Comment) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 269 PJC 313.28 Predicate Question for Award of Specific Performance . . . . . . 271 [PJC 313.29–313.32 are reserved for expansion.] PJC 313.33 Question on Attorney’s Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . 273

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

Preservation of Charge Error (Comment) . . . . . . . . . . . . . . . . . 279

PJC 314.2

Broad-Form Issues and the Casteel Doctrine (Comment) . . . . 283

A PPENDIX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 285

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

331

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

335

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

347

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

357

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PREFACE

Welcome to the 2024 edition of Texas Pattern Jury Charges—Oil & Gas . This is the fifth volume since the Oil & Gas Pattern Jury Charges Committee was formed and pro mulgated the initial 2016 volume. That effort followed extensive groundwork starting in 2000 by the State Bar of Texas’s Oil, Gas & Energy Resources Law Section (OGERL) to

aid practitioners in crafting jury charges for oil and gas trials. Why have a separate oil and gas Pattern Jury Charge volume?

When I began working in the oil industry in the 1970s, skeptics called it a dying busi ness in light of pessimistic projections that domestic and worldwide petroleum supplies would soon be depleted. But, as Yogi Berra said, “It’s tough to make predictions, espe cially about the future.” Those forecasts of doom did not happen. The oil and gas indus try remains vital to our world, and especially to Texas. Recent years have even seen a flip to predictions of “peak demand” for oil and gas. The Committee thus seeks to assist courts and practitioners in properly applying the law to oil and gas disputes in Texas, which often set the trend for other jurisdictions in the oil and gas arena. The Committee obviously does not make law. Rather, we aim to provide questions for juries to answer that accurately reflect Texas law. That task requires keeping up with developments in the law and, if possible, providing guidance to authorities where there are unresolved issues. We also work with other Committees in areas of overlap, which are all subject to approval by the Oversight Committee before final publication. To those ends, this volume includes a new comment on confusion of goods; updates to the instructions and questions on improper use and cessation of production in paying quanti ties; updates to authorities cited for various issues; collaboration with the Business, Con sumer, Insurance and Employment Committee on updates to the trade customs comment and new instructions addressing predicate findings for specific performance and equita ble relief generally; and new admonitory instructions on deposition testimony and multi lingual jurors. We have enjoyed working with those groups toward common goals. This volume would not exist without the experience, expertise, and countless hours volunteered by the Committee members. Their willingness to share knowledge and engage in professional and collegial debate has been key to assembling this volume for our fellow lawyers. Many thanks to all of them for their devotion and hard work. Also, special thanks to my predecessor Craig Haynes, who ably chaired the Oil & Gas Pattern Jury Charges Committee in 2023 and 2024, after publication of the prior volume Finally, on behalf of our entire Committee, thanks to the State Bar staff who make the Committee’s work possible: Elma Garcia, our former legal editor who steered the ship from this Committee’s inception, and her successor Cole Cable. They both skillfully herded the cats and kept the trains running on time, for which we are most grateful. —Paul F. Simpson, Chair

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CHANGES IN THE 2024 EDITION The 2024 edition of Texas Pattern Jury Charges—Oil & Gas includes the following changes from the 2022 edition: 1. Admonitory Instructions— a. Added instruction on deposition testimony (300.15) b. Added instruction on multilingual jurors (300.16) 2. Lessor-Lessee Issues—Added analysis for disputes over multi-well leases in the context of cessation of production in paying quantities (303.20) 3. Industry Agreements— a. Deleted Committee Note and Disposition Tables b. Updated Comment on trade custom to include revised instruction and to clarify discussion (305.20) c. Expanded discussion on willful misconduct under operator breach in joint operating agreement exculpatory provisions (305.28) 4. Damages— a. Added additional category of monetary damages that may be recoverable in claims involving real property interests (313.5) b. Revised the source discussion around measuring damages for breach of implied covenant to develop (313.18) c. Revised discussion on benefit of the bargain and remedial damages to reflect updated case law (313.21) d. Revised discussion of foreseeability under consequential damages to reflect updated case law (313.22) e. Added Comment on confusion of goods (313.26) f. Added Comment on predicate findings for equitable or legal relief (313.27) g. Added Comment on predicate question for award of specific performance (313.28) 5. Preservation of Charge Error—Added Caveat noting that the current discussion does not reflect Horton v. Kansas City Southern Railway Co. , 692 S.W.3d 112 (Tex. 2024) (314.2)

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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 (2024 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 June of 2024. The Committee expects to publish updates as needed to reflect changes and new developments in the law. 9. C AVEAT R EGARDING B ROAD -F ORM S UBMISSION On June 28, 2024, the Texas Supreme Court decided Horton v. Kansas City Southern Railway Co. , 692 S.W.3d 112 (Tex. 2024), addressing issues surrounding broad-form jury charge submission and the Casteel doctrine as discussed in Casteel v. Crown Life Insurance Co. , 22 S.W.3d 378 (Tex. 2000). As of the date of publication, the Committee

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I NTRODUCTION

has not had sufficient time to update this volume to incorporate the court’s holdings or reasoning in Horton . Thus, the Committee encourages practitioners to review Horton and subsequent applications of that decision when drafting and submitting their charges.

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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

PJC 300.15 Instruction for Deposition Testimony . . . . . . . . . . . . . . . . . . . . . . 35

PJC 300.16 Instructions for Multilingual Jurors. . . . . . . . . . . . . . . . . . . . . . . . 36

PJC 300.16A Contemporaneous Instruction on Witness Testimony for

Multilingual Jurors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36

1

PJC 300.16B Contemporaneous Instruction on Audio Recordings for Multilingual Jurors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 PJC 300.16C Instruction for the Final Charge for Multilingual Jurors. . . . . 36

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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

3

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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