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Click here for the full text of this decision FACTS:In early 1997, Michael Quigley decided to sell his interest in oil and gas leases known as the Samano leases. Robert Bennett, a geologist, agreed to help Quigley by analyzing the leases and assisting with a sales presentation to Louis Dreyfus Natural Gas. Bennett did not expect to be paid; he agreed to do the presentation as a favor to a sick colleague who had been working with Quigley. While Bennett prepared for the presentation, Quigley asked him to do additional work as to the leases, including preparing more color graphs and maps. Bennett testified that when he told Quigley he did not have time to do the additional work because he had his own projects to work on, Quigley told him, “Don’t worry Bennett, I’ll take care of you.” Bennett spent three or four days working on the maps and graphs and then participated in the presentation to Dreyfus in April or May 1997. Dreyfus decided not to purchase the leases but Quigley kept the maps Bennett prepared. Quigley continued to market his leases and in April 1998, Coastal Oil & Gas bought them. Quigley secured an overriding royalty interest as part of the transaction. After the leases sold to Coastal, Bennett mentioned his compensation to Quigley, but the two did not discuss the matter in depth. Around August 2001, after Coastal drilled two producing wells on the Samano leases, Quigley and Bennett met for the purpose of determining Bennett’s compensation. The issue was not resolved. In February 2002, Bennett sued Quigley, asserting causes of action for quantum meruit, conversion and fraud, and seeking attorneys’ fees. The case was tried to a jury. Bennett presented evidence that he was a generating geologist, a class of professionals who are usually compensated by receipts of overriding royalty interests in the prospects they generate. He testified that he personally only accepted mineral prospect work for compensation of a royalty interest in the prospect. Bennett offered proof at trial that the value of a 1 percent royalty interest in the past and estimated future production of the Samano leases was approximately $4 million. Bennett also offered evidence that geologists who worked for cash compensation rather than overriding royalty interests earned between $500 a day and $20,000 per job. The jury found in Bennett’s favor on all three theories of liability. The jury awarded damages in the amount of $2,500 on the quantum meruit claim, $1 million on the fraud claim and $1 million on the conversion claim. In connection with the quantum meruit claim the jury found that: by August 2001, Bennett should have discovered that Quigley was not going to pay and Quigley fraudulently concealed from Bennett that Quigley was not going to pay, thereby causing Bennett to delay filing suit. The jury also found reasonable attorneys’ fees for Bennett in the amount of $185,000 for trial and appeal. Quigley appealed. The 4th Court of Appeals determined that Quigley had an oral agreement with Bennett for Bennett to provide geological services. It affirmed the judgment on Bennett’s fraud claim but did not address the other jury findings. The 4th Court also held that the fraud damages question submitted an improper measure of damages but that: Quigley did not object to the submission; Quigley did not preserve error as to the proper measure of damages; and there was evidence to support the jury finding based on the charge submitted. HOLDING:Reversed and remanded. The Texas Supreme Court framed the question as whether evidence of the value of a royalty interest in minerals can be considered in determining compensation for geologic services when the services were not rendered pursuant to a written agreement. It determined “that it cannot.” An overriding royalty interest in an oil and gas lease, the court stated, is considered an interest in real estate that falls within the statute of frauds. Absent a writing, the court stated, an agreement to transfer such an interest is unenforceable. Allowing recovery of the value of a royalty interest, the court stated, when the interest itself could not be recovered because the statute of frauds bars recovery would circumvent protections of the statute. Thus, the court stated that evidence of the value of a royalty interest, which Bennett sought as compensation, cannot be given any weight or effect and legally cannot be considered as evidence supporting the jury’s finding. Absent evidence of the value of a royalty interest, the court stated that the only evidence of damages was testimony as to cash-based compensation for a geologist. The testimony regarding cash-based compensation was some evidence of the value of Bennett’s work, the court stated. But such testimony, the court found, was legally insufficient to support the entire $1 million fraud damages finding. Thus, the court found that the 4th Court’s judgment must be reversed. The court found some evidence that Bennett suffered damages from Quigley’s actions which the jury found constituted fraud. It also found some evidence of quantum meruit. “We believe,” the court stated, “the proper course is to remand the case to the court of appeals for consideration of the issues and contentions of the parties which that court did not previously address.” OPINION:Johnson, J., delivered the opinion of the court, in which Jefferson, C.J., and O’Neill, Wainwright and Medina, J.J., joined. Green, J., did not participate in the decision. CONCURRENCE IN PART, DISSENT IN PART:Brister, J., filed an opinion concurring in part and dissenting in part, in which Hecht and Willett, J.J., joined. “I agree with the Court that the jury’s million-dollar verdict must be set aside under the Statute of Frauds. But there is no reason to set aside the jury’s quantum meruit verdict. As the jury answered that question and no one challenges its factual or legal sufficiency, an appellate court cannot set it aside on the possibility that another jury might award a higher or lower figure. As the Court does not render judgment for the plaintiff in that amount, I dissent to that extent.”

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