Cactus Canyon Quarries of Texas, Inc./Joe R. Williams, Louise Williams, and Texas Architectural Aggregates, Inc. v. Joe R. Williams, Louise Williams & Texas Architectural Aggregates, Inc./Cactus Canyon Quarries of Texas, Inc.

Citation: Not availableDocket: 03-95-00029-CV

Court: Court of Appeals of Texas; July 17, 1996; Texas; State Appellate Court

Original Court Document: View Document

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The appeal involves a dispute over granite/mineral rights between Cactus Canyon Quarries of Texas, Inc. and the Williamses, following a bifurcated trial. The first trial (Cactus Canyon I) established Cactus Canyon's superior title to the granite but required further proceedings. The second trial (Cactus Canyon II) addressed damages from the Williamses' trespass and conversion of the granite. A jury found the Williamses acted in good faith and allowed them to offset their mining costs against the damages, leading Cactus Canyon to appeal this offset decision. The Williamses also appealed the granite valuation used in the trial.

Both parties operate competing quarries in Burnet County and the dispute centers on a 66.93-acre tract, originally conveyed in 1939. The controversy arose from granite rights reserved by O'Donnell in a 1943 deed to Parks, with the northern 17.56 acres' rights undisputed in favor of Cactus Canyon. The southern section, identified as the "gap," is contested, with the Williamses arguing they hold granite rights in this area based on the interpretation of O'Donnell's deed. Cactus Canyon's claims stem from leases made in 1984, which the Williamses dispute, asserting that O'Donnell did not reserve granite rights in the gap, thus transferring them to Parks and subsequently to the Williamses. Cactus Canyon contends that O'Donnell reserved all granite rights in the disputed area. The trial court's judgment was affirmed.

Sally Williams initiated a quiet title action in 1976 to establish granite rights over an 80-acre tract of land, which included a disputed area. The trial court dismissed her case with prejudice, leading to a subsequent appeal, Cactus Canyon I, where the court upheld the dismissal, confirming that there was no gap in title and that the properties in question abutted. The court ruled that Sally Williams was barred by res judicata from claiming granite rights against Jack Carson, who held superior title through the common source doctrine. Following this ruling, the trial court assessed trespass damages incurred by Cactus Canyon due to the Williamses' granite mining, concluding that the Williamses trespassed in good faith, allowing them to offset production costs against the damages. Cactus Canyon appealed, contesting the rights to these offsets, while the Williamses appealed the valuation of the mined granite. 

The appeal raised fourteen points of error categorized into six main issues: (1) improper jury submission regarding willful trespass, (2) errors in submitting production cost questions, (3) omission of jury questions about willful trespass, (4) wrongful admission of title-related testimony, (5) insufficient evidence supporting the jury's findings on production costs, and (6) error in denying the Motion for New Trial. In response, the appellees argued that many issues were not preserved for appeal. The trial court's decision to grant a credit for mining costs was contingent on the Williamses' good faith trespass, consistent with established Texas case law. The appeal focused on the question of whether the Williamses acted in bad faith or failed to prove their good faith defense.

Appellant contends that the trial court erred in submitting question number six to the jury, related to the Williamses' affirmative defense of acting in good faith. Appellees argue that appellant failed to preserve the complaint for appellate review as no objection to question six was made at trial, citing Tex. R. App. P. 52(a) which requires timely, proper, and distinct objections to preserve an issue for appeal. Additionally, the record shows that appellant only referenced question six in relation to objection against question five and did not specifically object to its submission. Appellant's claim that it preserved error by requesting a different issue is rejected, as the appellate complaint must align with trial objections. The court also notes that appellant's argument regarding the submission of question six is inconsistent, as it initially sought jury consideration but later argued against the issue being presented at all. Furthermore, in point of error seven, appellant argues that the trial court erred by not providing an instruction to test appellees’ burden regarding willful trespass. However, this complaint was also not raised at trial, and appellant failed to cite relevant authority, resulting in waiver of the error. The court categorizes this point of error as multifarious due to its multiple grounds, allowing the court to disregard it. Consequently, points of error one, four, five, eight, and seven are overruled.

Appellant asserts that the trial court improperly admitted testimony and argument related to a title dispute from a previous case, Cactus Canyon I, claiming this evidence was relevant to whether appellees trespassed in good faith. Despite multiple witnesses discussing issues from Cactus Canyon I, appellant did not object during the testimony or to the jury's argument referencing this evidence. To preserve an error for appeal regarding evidence admission, a contemporaneous objection must be made, as per Texas procedural rules. Since appellant failed to do so, points of error two and three are overruled.

In point of error six, appellant contends the trial court wrongly denied its motion for a new trial due to insufficient evidence supporting the jury's finding regarding willful trespass. The challenge appears to be factual rather than legal. Good faith is typically a factual question, but a legal exception exists when a party trespasses with knowledge of an opposing claim. However, this exception is irrelevant here because appellant did not preserve the issue for appeal. The court highlights the need to evaluate all evidence when reviewing a jury's factual findings and will only overturn a verdict if it is overwhelmingly against the evidence. 

Evidence presented included testimony from David Williams, indicating that Mrs. O'Donnell's attorney suggested she did not believe she owned any granite but was willing to accept payment, and acknowledgment from Jack Carson of Cactus Canyon that Texas Granite Corporation might have a claim if the property lines were as interpreted.

Jack Carson recognized that any granite rights Mrs. O'Donnell possessed were limited to granite situated between Texas Granite Corporation's rights and the Snead 17.56-acre tract. Cactus Canyon expressed uncertainty regarding Texas Granite Corporation’s rights in a disputed area known as "the gap," leading to a 1987 Stipulation of Interest, which acknowledged potential overlaps in rights. In Cactus Canyon I, the trial court determined that Cactus Canyon failed to prove title to any lands in controversy, except for granite rights under the 17.56-acre tract. Andy Carson opined that the trial court's assessment of title was honest and reasonable. Expert witness Sam McDaniel testified that a reasonable examination of deed records in July 1984 would indicate that Mrs. O'Donnell had no granite rights to convey, and that Texas Granite Corporation or its successors owned the granite under the 117-acre tract. McDaniel concluded similarly to the trial court, affirming that Cactus Canyon had no granite rights below the 17.56-acre tract. This evidence supports the belief that the O'Donnells had not retained granite rights in the 66.93-acre tract and that granite ownership belonged to either Texas Granite Company or Sally Williams, the surface owner. The appellant did not successfully demonstrate that the jury's finding of good faith trespass was against the overwhelming weight of the evidence. The court overruled point of error six. Regarding points of error nine and ten, the appellant claimed error in the submission of a jury question regarding the valuation of mining costs, arguing that appellees' pleadings were defective and that there was insufficient evidence for a good faith finding. However, the court noted that to raise such complaints on appeal, proper objections must be made at trial; the appellant's only objection was a lack of good faith evidence, which was inconsistent with the appellate complaint. Therefore, the court overruled point of error nine and found sufficient evidence to support a good faith finding, overruling point of error ten as well.

Appellant argues that the evidence regarding cost offsets is insufficient to support the jury's finding on the costs of granite mining. The legal standard for no-evidence claims requires considering only supportive evidence and disregarding contrary evidence. A finding is upheld if there is more than a scintilla of evidence, meaning reasonable minds could differ on the conclusions. Testimony indicated costs of $12-$15 per ton for quarried granite and $62-$63 per ton for processed granite, while the jury found appellees' costs to be $15 and $62.90 per ton, respectively. The court concluded that the jury's answer was supported by sufficient evidence and was not clearly wrong or manifestly unjust, thereby overruling the appellant’s points of error.

On the appellees' appeal regarding granite valuation, they challenge the trial court's method of calculating damages. They argue that the granite's value should have been assessed at the initial severance stage (rip rap) rather than after processing. Appellant contends that appellees did not preserve this error for appeal, but the court found that the issue was raised before the trial court. Citing the Texas Supreme Court case Bender v. Brooks, the appropriate valuation method for minerals in trespass actions is the value before disturbance, although this can be challenging to determine. Alternative valuation methods, such as royalty and net profit approaches, have been recognized for approximating this value.

Texas law dictates that in "good faith" trespass cases, damages are determined using a "net profits" approach, which calculates profit after deducting business expenses from gross receipts. This principle is grounded in the idea that an owner should retain the right to develop their minerals and profit from them, while preventing unjust enrichment of the trespasser. In the case reviewed, the jury's valuation of granite post-processing aligns with gross receipts, as granite is typically sold only after processing, unlike rip rap granite, which is not commonly sold and would unfairly limit the mineral owner's rights. The appellees' argument for valuing the granite at the time of severance, referencing Dahlstrom Corp. v. Martin, is unconvincing as Dahlstrom asserts that in situ value pertains to minerals as they exist undisturbed in the earth. Subsequent cases clarify that the net profits method based on gross receipts is the applicable standard. Therefore, the appellees cannot convert the granite and simultaneously restrict the mineral owner's ability to fully exploit their resources. The court affirms the trial court's judgment, overruling all points of error raised by the parties.