Roxo Energy Company, LLC; Roxo Energy, LLC; Rec Minerals, LLC; Roxo Fw, LLC; And Vortus Investment Advisors, LLC v. Baxsto, LLC

Supreme Court of Texas

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No. 23-0564

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Roxo Energy Company, LLC; Roxo Energy, LLC; REC Minerals,

LLC; Roxo FW, LLC; and Vortus Investment Advisors, LLC,

Petitioners,

v.

Baxsto, LLC,

Respondent

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On Petition for Review from the

Court of Appeals for the Eleventh District of Texas

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PER CURIAM

“Written agreements, relative to oral agreements, serve a purpose

under the law to provide greater certainty regarding what the terms of

the transaction are and that those terms will be binding, thereby

lessening the potential for error, misfortune, and dispute.”

Barrow-Shaver Res. Co. v. Carrizo Oil & Gas, Inc., 590 S.W.3d 471, 498

(Tex. 2019) (internal quotation omitted). This case requires us to again

consider the viability of claims based on alleged oral representations

that are inconsistent with the parties’ written contracts. The district

court rejected all claims on summary judgment. The court of appeals

reversed. Relying primarily on Barrow-Shaver, we reverse the court of

appeals’ judgment and reinstate the district court’s summary judgment

on all claims.

I

In October 2016, Baxsto LLC began negotiating a lease of its

mineral interests with Todd Fitzgerald, Roxo Energy’s CEO. Roxo 1 was

partially funded by Vortus, a private equity group that participated in

some of the negotiations.

Baxsto owned mineral interests in Howard and Borden Counties.

Fitzgerald allegedly represented that (1) if Baxsto would execute a lease

quickly, Roxo would give Baxsto the most favorable deal of any owner in

the area; (2) Roxo was “not in the business of flipping mineral interests”

and intended to drill the acreage; and (3) Roxo planned to make its

money “at the bit” by drilling and developing the land. Roxo indicated

throughout the lease negotiations that it was also interested in

purchasing the mineral interests.

The initial negotiations resulted in three written agreements: a

“paid-up” 2 oil and gas lease, a lease purchase agreement, and a lease

memorandum. The lease purchase agreement established conditions on

which Roxo could purchase the paid-up lease (as distinguished from a

purchase of the minerals, which happened later). The lease

1 “Roxo” refers to several related entities with which the parties are

familiar.

2 “A ‘paid-up’ lease is one under which all delay rentals bargained for

are paid in advance, and this single payment maintains the lease during the

primary term.” ConocoPhillips Co. v. Koopmann, 547 S.W.3d 858, 874 (Tex.

2018).

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memorandum summarized the instruments for the purpose of recording

in the property records. These agreements provided, among other

things, that (1) Roxo could only record the lease after it paid a bonus of

$5,000 per acre to Baxsto and (2) Roxo had an option period in which to

purchase the lease (“lease purchase option”). Without Baxsto’s

knowledge, Roxo recorded the lease memorandum before making any

bonus payment.

In a later meeting, Vortus represented that it only invested in

companies that drilled acreage. Both Roxo and Vortus again stated that

they were not in the business of “flipping” mineral interests.

Roxo was given two extensions of time on its lease purchase

option. The first extension included a “most favored nations” clause,

which provided that if, within the next six months, Roxo paid a larger

bonus to a qualifying lessor, Roxo would pay the same amount to Baxsto.

Before the second extension was signed, Roxo disclosed that it was

negotiating with Navigator Oil and Gas, a mineral owner in the same

acreage as Baxsto. After the second extension, Roxo paid the bonus and

acquired the lease. At this time, Roxo revealed Vortus had reduced its

funding commitments for developing the minerals. Baxsto was

disappointed in this development and was eager to monetize its mineral

interests one way or another. The parties began negotiating an outright

sale of Baxsto’s mineral interests to Roxo.

On May 26, 2017, the parties closed on the sale of Baxsto’s

mineral interests for $5,666,602.50. Roxo never drilled a well on

Baxsto’s acreage or any other land as an operator. Roxo later sold the

acquired minerals to another operator. Baxsto then learned that

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Navigator had been paid an $11,000 bonus per acre. Baxsto claims

Roxo’s representations during their negotiations were false and made

with the intent to induce Baxsto to “lock itself into” an unproductive

lease and then later sell its mineral interests at a price lower than true

market value. Baxsto asserted claims against Vortus and Roxo for

fraud, fraudulent inducement, statutory fraud, and fraud by

non-disclosure.

The trial court granted summary judgment for Roxo on all of

Baxsto’s claims. The court of appeals reversed. 668 S.W.3d 912, 922

(Tex. App.—Eastland 2023). It held that the parties’ written

agreements did not so directly contradict Roxo’s alleged oral

representations as to make Baxsto’s reliance on the representations

unjustifiable. Id. at 939. It further held there were insufficient red flags

to put Baxsto on notice that it could not rely on Roxo’s oral

representations. Id. at 940.

The allegedly fraudulent representations fall into three

categories: (1) Roxo’s representations that it would not “flip” the lease

but would instead make significant investments to develop it, (2) the

size of the bonus amounts Roxo would pay to Baxsto relative to other

mineral owners in the area, and (3) the promise to pay the bonus to

Baxsto before recording the lease.

II

Justifiable reliance is an element of each of Baxsto’s fraud claims.

See Zorrilla v. Aypco Constr. II, LLC, 469 S.W.3d 143, 153 (Tex. 2015)

(reciting elements of common-law fraud and fraudulent inducement); see

also Bombardier Aerospace Corp. v. SPEP Aircraft Holdings, LLC,

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572 S.W.3d 213, 219-20 (Tex. 2019) (recognizing reliance element of

fraud by non-disclosure). To prove justifiable reliance, Baxsto must

show that (1) it actually relied on the defendant’s representation, and

(2) such reliance was justifiable. See JPMorgan Chase Bank, N.A. v.

Orca Assets G.P., L.L.C., 546 S.W.3d 648, 653 (Tex. 2018). “[R]eliance

upon an oral representation that is directly contradicted by the express,

unambiguous terms of a written agreement between the parties is not

justified as a matter of law.” Id. at 658 (internal quotation omitted).

A contract sufficiently contradicts an extra-contractual

representation if the “meaning of [the] contract ‘conflict[s] with the

earlier representation such that a reasonable person could not read the

agreement and still plausibly claim to believe the earlier

representation.’” Barrow-Shaver, 590 S.W.3d at 498 (quoting Orca

Assets, 546 S.W.3d at 658). The contract language need not explicitly

contradict and correct the prior oral representation. See id. “[S]uch a

requirement is simply too strict to be workable as it essentially requires

the contract and extra-contractual representation to use precisely the

same terms.” Id. Thus, “even when the terminology appearing in the

representation and the writing are not exactly the same,” their

substance may nevertheless be contradictory, such that reliance on the

extra-contractual representation in the face of the contract language is

not justifiable. Id.

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A

Baxsto claims Roxo made the following misleading statements

regarding its intent to develop Baxsto’s acreage rather than “flip” the

lease:

• Roxo would drill and develop Baxsto’s land.

• Roxo planned to make its money “at the bit.”

• Roxo and Vortus were not in the business of leasing and flipping

minerals to other operators.

• Vortus only invested in companies that drilled acreage.

• Vortus had committed $200-250 million to the project.

Essentially, Baxsto seeks to bind Roxo to its oral promise to drill

on and develop the lease. Roxo points out, however, that the lease

Baxsto signed contains no obligation to drill or develop the land. To the

contrary, the lease contains a typical assignment provision, which

allows “the interest of either Lessor or Lessee hereunder to be assigned,

devised, or otherwise transferred in whole or in part.”

Even if Roxo told Baxsto it would drill rather than “flip” the lease,

both parties later signed an agreement giving Roxo an unqualified right

to transfer the lease rather than drill. This unqualified transfer right,

clearly expressed in writing and agreed to by Baxsto, directly contradicts

the notion that Roxo bound itself orally not to transfer the lease and

instead to drill. We confronted a similar circumstance in

Barrow-Shaver. There, the plaintiff complained that the lessor refused

to consent to an assignment after orally promising never to withhold its

consent. 590 S.W.3d at 476. The parties’ written agreement, however,

gave the lessor the right to give or withhold consent. Id. at 477. We

held that the unqualified consent-right stated in the contract made it

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unjustifiable for the plaintiff to rely on a prior oral promise that consent

would be given. Id. at 499-500. The same reasoning holds true here.

Just as an unqualified contractual right to withhold consent contradicts

a prior oral promise to give consent, an unqualified contractual right to

transfer a lease contradicts a prior oral promise not to do so.

Baxsto complains that Roxo falsely represented itself as “in the

business” of developing land rather than flipping leases. The court of

appeals considered this representation actionable despite the written

agreement. 668 S.W.3d at 938. We disagree. Whatever Roxo said about

being “in the business” of developing land, Baxsto freely agreed to a

written agreement that allows Roxo, at its election, to no longer be “in

the business” of developing Baxsto’s land.

The kinds of obligations to which Baxsto claims Roxo orally bound

itself are addressed, often in multiple ways, by nearly every oil and gas

lease, including this one. An obligation not to transfer the lease can of

course be written into the lease, and Baxsto could have refused to agree

in writing to a transfer clause at odds with Roxo’s oral promises. It did

not. Baxsto also could have insisted on a habendum clause imposing a

timely drilling obligation on Roxo. It did not. See Anadarko Petroleum

Corp. v. Thompson, 94 S.W.3d 550, 554-55 (Tex. 2002) (recognizing that

most habendum clauses implicitly recognize that no drilling or

development is necessary for the lessee to maintain the lease during the

primary term). Even more to the point, under this “paid-up” lease, the

lessee’s right not to drill for a time had already been purchased. See

ConocoPhillips, 547 S.W.3d at 874 (discussing “paid-up” leases).

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Thus, in multiple ways, the lease Baxsto signed is inconsistent

with the oral deal it claims to have made. Having signed such an

agreement, Baxsto cannot now hold Roxo to whatever version of the deal

the parties may have previously discussed orally. All of Baxsto’s claims

premised on Roxo’s alleged promises to develop the acreage rather than

“flip” it fail for lack of justifiable reliance.

B

Baxsto also complains about Roxo’s representations regarding

bonus payments. The alleged misrepresentations are:

• Roxo reduced its bonus offer to Navigator to $3,500 per acre.

• Roxo would not pay Navigator a higher bonus than $5,000 per

acre.

• Baxsto’s bonus was the highest that would be given to any of the

area’s owners.

• Roxo’s purchase offer was a “great deal” because Baxsto had

already received the highest bonus, and Navigator was currently

being offered a lower bonus.

The only mention of these matters in the parties’ written

agreements is a “most favored nations” clause in the agreements

extending Roxo’s lease purchase option. This clause provided that for

the following six months, if Roxo paid a larger bonus to a qualifying

lessor, Baxsto would get the same amount. Baxsto does not allege that

Roxo breached this clause. Instead, it alleges that Roxo’s

misrepresentations about how Baxsto’s bonus compared to Navigator’s

bonus induced Baxsto to agree to a less favorable deal.

To determine whether Baxsto justifiably relied on those alleged

misrepresentations, we first observe that none of them made it into the

parties’ agreements. See Barrow-Shaver, 590 S.W.3d at 496-97. The

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agreements provide for a fixed bonus payment of $5,000 per acre, which

was paid. As for any connection between Baxsto’s bonus payments and

those of comparable parties, the only thing that ever achieved the

written consent of both parties is a single “most favored nations” clause

containing a six-month expiration date. There is no remaining

allegation that this clause was breached. Indeed, its presence in the

parties’ agreements indicates that Baxsto understood how to negotiate

for matching treatment to be guaranteed in writing when it desired to

do so.

As in Barrow-Shaver, the absence from the written agreements of

language confirming the alleged representations or cementing the

parties’ alleged oral agreement is itself a red flag negating justifiable

reliance. Id. at 501. When a party like Roxo proffers written contract

language that makes no mention of matters the parties have previously

discussed, this alone should make it obvious to a reasonably

sophisticated party like Baxsto that the previous discussions may no

longer be part of the deal. The prudent response is to demand that the

parties’ discussions be reflected in the writing—not to sign an

agreement that makes no mention of the promises and then try to hold

your counterparty to them anyway.

When assessing red flags, we view “the circumstances in their

entirety while accounting for the parties’ relative levels of

sophistication.” Orca Assets, 546 S.W.3d at 656. Assuming the truth of

Baxsto’s allegation that Roxo was the more sophisticated party, the

unrebutted summary-judgment evidence nevertheless shows that

Baxsto’s representative, Cole Stout, was an experienced oil and gas

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businessman who should have appreciated the significance of the

disparities between the signed agreement and the alleged oral promises

now claimed. In the two years before the parties began negotiations,

Stout negotiated at least fifty oil and gas leases. This deal alone

involved 548 mineral acres, 6,200 physical acres, and $8 million. The

parties executed numerous written agreements, including the lease, the

extensions, and the sale contract. As in Barrow-Shaver, “[a] similarly

situated ‘savvy participant’ would have recognized that [Defendant]

could change its mind, if [the] representations were binding at all, and

would have weighed the risk of that happening before entering into the

agreement.” 590 S.W.3d at 501.

Whether or not Stout was as sophisticated a negotiator as Roxo,

he was in a position to intelligently assess the merits of the $8 million

deal he was making, and he was in a position to understand the

differences between the deal he was signing and any prior discussions

not contained in the documents he signed. He was also in a position to

seek and obtain information other than Roxo’s self-serving statements

when assessing the value of Baxsto’s mineral interests. Baxsto’s

reliance on Roxo’s alleged misrepresentations about bonus payments

was unjustifiable as a matter of law, and the trial court correctly granted

summary judgment in this regard.

C

We next address Baxsto’s claim that Roxo fraudulently failed to

disclose that it had recorded the lease too early, in violation of the

parties’ agreement that the lease would not be recorded until the bonus

was paid. Fraud by non-disclosure arises only when the defendant,

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among other things, has a legal duty to disclose facts to the plaintiff. See

Bombardier Aerospace Corp., 572 S.W.3d at 219-20 (reciting elements).

Generally, no duty of disclosure arises “without evidence of a

confidential or fiduciary relationship.” Id. at 220. Whether there is a

duty to speak is a question of law. In re Int’l Profit Assocs., Inc., 274

S.W.3d 672, 678 (Tex. 2009).

Roxo and Baxsto were counterparties in a business deal, not

aligned parties in a confidential or fiduciary relationship. Thus, Roxo

had no legal duty to report to Baxsto that it had prematurely recorded

the lease, and nothing in the summary-judgment record indicates that

any such duty arose. The contents of deed records are public, and

recorded instruments put all parties on constructive notice of their

contents. HECI Expl. Co. v. Neel, 982 S.W.2d 881, 886-87 (Tex. 1998).

Had Baxsto been concerned at the time with whether the lease had been

prematurely recorded, it could have searched the deed records rather

than relying on Roxo to keep it updated on their contents. Summary

judgment on this aspect of Baxsto’s fraud claim was proper.

Finally, Baxsto claims that Roxo’s promise not to record the lease

until after paying the bonus was knowingly false when made. As Baxsto

sees it, this fraudulent promise was made as part of a scheme to induce

it into ultimately selling its minerals to Roxo at an artificially low price.

Such a claim requires, among other things, proof that the defendant

knew the representation was false when made and intended to induce

the plaintiff’s detrimental reliance on it. Orca Assets, 546 S.W.3d at 653;

Ernst & Young, L.L.P. v. Pac. Mut. Life Ins. Co., 51 S.W.3d 573, 577

(Tex. 2001).

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Baxsto has adduced no evidence that Roxo intended, by its

statements about the timing of the lease recordation, to induce the

ultimate sale of Baxsto’s minerals. A promise not to record the lease is

highly attenuated from the supposed object of the inducement—the

sale—which did not happen for several more months. None of the

evidence connects Roxo’s statements about when it would record the

lease to Baxsto’s ultimate decision to sell its mineral interests, a decision

Baxsto freely made and that Roxo could not force it to make. Nothing

but Baxsto’s suspicion and conjecture supports the notion that the

timing of Roxo’s recordation of the lease was a key part of a fraudulent

plot to “force” Baxsto to sell its minerals. Summary judgment on this

tenuous and vague theory of liability was proper.

III

For the foregoing reasons, without hearing oral argument, we

grant the petition for review, reverse the court of appeals’ judgment, and

reinstate the district court’s judgment. See TEX. R. APP. P. 59.1.

OPINION DELIVERED: May 9, 2025

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