Introduction
In a significant decision for the oil and gas industry and contract law practitioners, the Texas Supreme Court in Roxo Energy Company, LLC v. Baxsto, LLC, 713 S.W.3d 404 (Tex. 2025), reversed the Eastland Court of Appeals and reinstated a trial court’s summary judgment in favor of Roxo Energy. The case centered on allegations of fraud and misrepresentation in the negotiation and execution of mineral lease and purchase agreements. The ruling reinforces the primacy of written contracts over oral representations and sets a high bar for justifiable reliance in fraud claims.
Analysis of the Court’s Opinion
Background
Baxsto LLC, the mineral interest owner, sued Roxo Energy and its affiliates for various fraud-related claims, including common-law fraud, fraudulent inducement, statutory fraud, and fraud by non-disclosure. Baxsto alleged that Roxo misrepresented its intent to develop the leased acreage rather than flip it, misled Baxsto about bonus payments, and prematurely recorded the lease in violation of their agreement. Baxt claimed that as a result of these false representations, Baxsto was induced to sell the mineral interests to Roxo at lower than true market value.
The trial court granted summary judgment for Roxo, but the appellate court reversed. The Texas Supreme Court, however, found that Baxsto’s reliance on Roxo’s oral representations was unjustifiable given the written agreements.
Key Holdings
- Oral vs. Written Agreements: The Court emphasized that oral representations contradicting express, unambiguous terms of a written contract cannot form the basis for justifiable reliance. Roxo’s lease contained a standard assignment clause allowing transfer without obligation to drill, directly contradicting any oral promise to develop the land.
- Bonus Payment Misrepresentations: Baxsto claimed it was misled about the bonus payments compared to other mineral owners. The Court found that the written agreements clearly specified the bonus amount and included a “most favored nations” clause, which Baxsto did not allege was breached. The absence of written confirmation of these oral promises was deemed a red flag.
- Fraud by Non-Disclosure: The Court held that Roxo had no legal duty to disclose the premature recording of the lease, as the parties were in a business relationship, not a fiduciary one. Public deed records provided constructive notice.
- Intent to Induce Sale: Baxsto’s claim that Roxo’s actions were part of a scheme to induce a below-market sale of its mineral interests lacked evidentiary support. The Court found no connection between the timing of lease recordation and the eventual sale.
Practical Implications
For Attorneys
This decision reinforces the importance of ensuring that all material terms and representations are captured in the written contract. Attorneys should advise clients to avoid reliance on oral promises and to negotiate for explicit contractual protections.
For Businesses and Professionals
The ruling serves as a cautionary tale for parties entering complex transactions. Sophisticated parties are expected to understand and negotiate the terms they sign. Courts will not rescue parties from unfavorable outcomes based on oral assurances that contradict written agreements.
For the Oil & Gas and Real Estate Sector
The opinion underscores the limitations of fraud claims in mineral & real estate transactions. It also highlights the need for diligence in verifying public records and understanding lease & real property provisions.
Conclusion
The Texas Supreme Court’s decision in Roxo Energy v. Baxsto is a reaffirmation of contract law fundamentals: written agreements govern, and reliance on contradictory oral statements is legally untenable. This case is a must-read for legal professionals and industry stakeholders navigating mineral transactions and fraud litigation.