BP Am. Prod. Co. v. Laddex, Ltd., 2015 Tex. App. LEXIS 1521 (Tex. Civ. App. B Amarillo, 2015)

Lessor executed the Arlington Lease in 1971. BP=s well on the property produced steadily until August of 2005, when, for unexplained reasons, production slowed significantly. In November of 2006, the well resumed production at its prior level. In 2007, Laddex and the landowners entered into a Atop lease@ and Laddex filed suit to have the Arlington Lease declared terminated.

There were two primary issues that the court resolved. The first was BP=s claim that the Laddex lease violated the Rule against Perpetuities. The court held that the lessor=s possibility of reverter is a vested interest not subject to the Rule. Since the terms of the conveyance provided that it Ais intended to and does include and vest in Laddex any and all remainder and reversionary interest,@ the conveyance was of a present interest in the lessor=s possibility of reverter and not subject to the Rule. The court discussed two earlier cases that did not contain similar language in which it was held that the language in the leases in those cases provided for Aspringing interests@ that would vest only upon termination of the underlying leases, which violated the Rule.

The second issue was the jury charge. The trial court singled out a 15 month period and asked if the well produced in paying quantities during this period. The appeals court held that the lease had already returned to profitability before the Laddex lease was signed and that the requirement to only look at this 15 month period was error. The jury decision for Laddex was reversed and the case remanded for a new trial.