Clem G. Flowers v. Diamond Shamrock Corporation

TATE, Circuit Judge:

In this Texas diversity suit, the plaintiffs (the Flowers), lessors of the mineral rights of Texas oil and gas fields, seek additional royalties under a market value royalty provision contained in their leases with the defendant, Diamond Shamrock Corporation (Shamrock). The Flowers contend that Shamrock did not base royalty payments on the “market value” of subsequent sales of the gas from the leased properties, but rather only on the lower amount of the actual proceeds from Shamrock’s long-term sales contract with an intrastate distributor. The plaintiffs Flowers’ cause…