## Facts

- PGI generated seismic survey data and, between 1979 and 1989, licensed TXO Production Company to use specified data under contracts that included confidentiality provisions.
- Each contract prohibited the data from being “sold, traded, disposed of, or otherwise made available to third parties.”
- TXO was a wholly owned subsidiary of Marathon Oil Company.
- Marathon and TXO completed a statutory merger under Texas law, with Marathon as the surviving corporation.
- TXO notified PGI that the seismic data rights would vest in Marathon by operation of merger statutes.
- PGI asserted the merger constituted a “transfer” requiring payment of a $200-per-mile transfer fee; Marathon refused to pay.
- M.D. Mark, Inc., as successor to PGI’s rights, sued TXO and Marathon for breach of contract, conversion, and misappropriation of trade secrets based on Marathon’s post-merger use and nonpayment.

## Issues

1. Whether a statutory merger between a parent and its wholly owned subsidiary, resulting in the parent’s succession to the subsidiary’s assets by operation of law, constitutes a prohibited “transfer” or making data available to a “third party” under the contracts’ confidentiality clauses.
2. Whether limitations barred the conversion and trade-secret misappropriation claims.
3. Whether the trial court properly handled evidentiary objections (affidavit) and awarded attorney’s fees and post-judgment interest.

## Decision

- The court of appeals reversed the trial court’s summary judgment for Mark and rendered judgment for TXO and Marathon.
- The merger did not, as a matter of law, violate the confidentiality provisions because it did not effect a prohibited transfer or disclosure to a “third party.”
- Because Mark’s contract liability theory failed, the judgment awarding damages, attorney’s fees, and interest could not stand.

## Legal Principles

- Contract interpretation of unambiguous language is a question of law suitable for summary judgment.
- A statutory merger that vests assets in the surviving corporation by operation of law is generally treated as corporate continuity, not a conventional assignment or transfer to a new third party, absent clearer contractual language.
- A restriction barring making property “available to third parties” is not triggered merely because a surviving parent corporation succeeds to a wholly owned subsidiary’s rights through merger, where control and ownership remain within the same corporate family.

## Conclusion

The court held that a parent’s succession to a wholly owned subsidiary’s seismic-data rights through statutory merger is not a prohibited “transfer” to a third party under standard confidentiality language, so Mark could not recover on a breach theory premised solely on the merger.


TXO Prod. Co. v. M.D. Mark, Inc., 999 S.W.2d 137 (Tex. App.—Houston [14th Dist.] 1999)