How Courts Look At Fixed Or Floating Royalty Disputes

Montgomery Trustee v. ES3 Minerals and Echo Minerals is another Texas fixed or floating royalty case. Before diving into the details, perhaps it's best to describe the pattern the courts seem to fall into to resolve these disputes. These are general rules of construction one sees time after time in these cases:

• To the extent possible apparent inconsistencies or contradictions must be harmonized by construing the document as a whole. In other words, the court will consider the entire document, not just each party's favorite parts.
• To discern the parties' intent, words and phrases of the instrument must be construed together and in context, not in isolation.
• Words and phrases generally bear their ordinary meaning unless the context supports a technical meaning or different understanding.