This case involves a well that was plugged in error by the Railroad Commission. The Commission was in discussion about the need to plug a number of wells, which included the one at issue here. A meeting was held, where it is alleged a preliminary oral agreement was reached to delay plugging these wells to give the operator more time to try to reestablish production.

Subsequently, an official from the Railroad Commission misread a map and plugged this well. When a dispute arose, the Legislature passed a resolution authorizing these plaintiffs to bring a lawsuit against the Railroad Commission despite the state's sovereign immunity. The case proceeded to trial, and the trial court refused to submit a question to the jury about whether the officials had acted with "good faith." The trial court found the Railroad Commission to be liable.

The Texas Supreme Court holds that the trial court should have submitted a question to the jury about "good faith," which the statute makes a substantive defense to liability. The Court rejected the argument that this had been procedurally waived. (The Court's discussion of how error can be preserved through proposed questions is worth more careful study.) And it rejected the argument that the Legislature's jurisdictional permission to bring this suit was also a waiver of this substantive defense.

The Court did not find, however, that the evidence was so conclusive about "good faith" to permit it to render judgment in favor of the Commission. Instead, the Court remanded this for a new trial, with the clarification that the kind of "good faith" contemplated by the statute is merely subjective good faith of the officials involved, not the higher burden of showing objective good faith.

With regard to the contract claim, the jury charge asked merely whether the Commission had breached an agreement—without specifying the timing of when that agreement was formed. Here, that fact was crucial. The plaintiffs argued that the Commission's actions taken just before the final agreement was signed constituted a breach of the agreement, the basic terms of which had already been agreed weeks before that formality. The jury charge, echoing Texas's very broad pattern jury charge, did not distinguish between the two contracts. The Texas Supreme Court holds that the distinction mattered and that the Commission's objections made below were specific enough to preserve this error. The Court also holds that the "good faith" defense mentioned in the statute is, because of the way the law was drafted, equally applicable to this breach of contract claim. So in the second trial, the Commission will be able to argue that it should not be liable for contract damages where its officials acted in subjective good faith.