GEOFFREY H. BRACKEN
Gardere Wynne Sewell LLP
1000 Louisiana, Suite 3400
Houston, Texas 77002
(713) 276-5500
(713) 276-6739 (Direct Fax)
[email protected]
PETER SCAFF
Gardere Wynne Sewell LLP
1000 Louisiana, Suite 3400
Houston, Texas 77002
(713) 276-5193
(713) 276-6193 (Direct Fax)
[email protected]
DOUG REEDER
Gardere Wynne Sewell LLP
1000 Louisiana, Suite 3400
Houston, Texas 77002
(713) 276-5204
(713) 276-6204 (Direct Fax)
[email protected]
29
THANNUAL ERNEST E. SMITH
OIL, GAS & MINERAL LAW INSTITUTE
March 21, 2003
Houston, Texas
TABLE OF CONTENTS Page I. Introduction ... 1 II. Activities ... 1 A. A. A. A. Seismic/Blasting ... 1 B. B. B. B. Drilling... 2 C. C. C. C. Pollution... 2 D. D. D. D. Blow-out ... 2 III. Parties... 2 A. A. A. A. Plaintiffs... 2 1. Surface Estate Owners ... 2 2. Adjoining/Neighboring land owners... 3 B. B. B. B. Defendants ... 3 C. C. C. C. Cross-actions... 4 IV. Causes of action ... 4
A. A. A.
A. Negligence ... 4 1. Proof of Negligence ... 4 2. Res ipsa loquitur... 5 B.
B. B.
B. Trespass and Nuisance Theories... 6 V. Vicarious Liability... 6 VI. Damages ... 7 A. A. A. A. Permanent Damages ... 7 B. B. B. B. Temporary Damages... 7 C. C. C. C. Damage to Crops ... 7 VII. Conclusion... 8
LIABILITY FOR SURFACE DAMAGES
I.I. I.
I. INTRODUCTIONINTRODUCTIONINTRODUCTION INTRODUCTION
This paper provides a general overview of Texas law as applied to cases seeking recovery for surface damages related to oil and gas activities. The multi-volume treatise on Oil & Gas Law authored by Williams & Meyers begins its chapter on Operator Conduct as follows:
Year after year there have been considerable litigation concerning the liability of an oil and gas operator for injury to surface, structures, grass, crops, water, supply, livestock, and growing timber as a result of the conduct of exploration, development, production, and transportation operations.
OIL & GAS LAW, Williams & Meyers §217 (Matthew Bender & Co. 2002). While this statement is certainly true and applies to the dockets of Texas courts, it fails to contemplate the diversity of combinations and permutations that potentially arise in a lawsuit alleging surface damages1 as a result of oilfield activities. Usual
plaintiffs include surface rights owners and adjoining landowners and can number from one to more than one hundred. Likely defendants range from mineral rights owners and their operators to various subcontractors and consultants involved in the exploration or development process. Depending on the nature of the defendant and the activity conducted, plaintiffs may choose from a variety of legal theories under which to seek relief. Of course, among the oilfield entities that might be sued, indemnification and other risk-shifting provisions and principles often come into play once suit is commenced. In many instances, these agreements and circumstances require the involvement of various insurers. Adding to the complexities of parties and relationships, the issues involved are not easily explained. Thus, a
1
While this article attempts to limit itself to actions alleging damage to the surface of land, some analogous or otherwise instructive cases dealing with subsurface damages, such as damages to water supply, are included where appropriate.
variety of expert witnesses invariably are required to address issues such as standard of care, industry custom, causation and, of course, damages.
II. II. II.
II. ACTIVITIESACTIVITIESACTIVITIES ACTIVITIES
Nearly every facet of oilfield work depends on large, heavy and powerful equipment. Additionally, work in the oilfield routinely requires insertion of volatile, corrosive and destructive compounds into the earth, commonly at high pressures. If successful, one is rewarded by the extraction of another volatile compound. As such, whether by mistake or simply as a natural byproduct of operations, oilfield exploration and development provide numerous opportunities for damages to result.
A. A. A.
A. Seismic/Blasting
Seismic exploration activities present the first such opportunity. To some extent the posture of the cases are defined by the state-of-the-art. The early seismic cases deal with damage caused by explosives or blasting incident to seismic activities. See Klosterman v.
Houston Geophysical Co., 315 S.W.2d 664
(Tex. Civ. App.—San Antonio 1958, writ ref’d) (alleging damage to homes caused by defendant’s discharge of heavy explosives at distance of approximately 1000 feet); Stanolind
Oil & Gas v. Giles, 197 F.2d 290 (5th Cir. 1952). Early Texas caselaw is supplemented by analogous cases dealing with damages caused by blasting, though the blasting was unrelated to oilfield activities. See, e.g., Kelly v. McKay, 233 S.W.2d 121 (Tex. 1950) (affirming award against defendants for damages to improvements caused by blasting conducted in adjoining landowner’s caliche pit).
Although tamer than the use of explosives, modern seismic technologies do not eliminate the potential for surface damages, or at least the allegations thereof. As discussed in Part IV.a.
infra, Texas courts have chosen not to allow
recovery for concussion damages under a theory of strict liability for ultrahazardous activities and, instead, require a finding of fault or wrongdoing. See Stafford v. Thornton, 420
Page 2 S.W.2d 153 (Tex. Civ. App.—Amarillo 1967,
writ ref’d n.r.e.). As such, no reason exists for believing the older cases dealing with concussion damages caused by explosives would not apply to cases alleging damages caused by modern seismic techniques.
B. B. B.
B. Drilling
Operations incident to drilling an oil or gas well may also cause damages to the surface of real property or its improvements. See
Domengeaux v. Kirkwood & Co., 297 S.W.2d
748 (Tex. Civ. App.—San Antonio 1956, no writ) (alleging, under a nuisance theory, that noise, fumes, lights and vibration incident to drilling operations injured plaintiffs); Ellis
Drilling Corp. v. McGuire, 321 S.W.2d 911
(Tex. Civ. App.—Eastland 1959, writ ref’d n.r.e.) (alleging negligent drilling into salt water and air causing flooding of surface tracts and destruction of fertility); Perryman v. Self, 546 S.W.2d 670 (Tex. App.—Waco 1977, no writ) (alleging defendant driller negligently drove truck into barn, damaged fences and used a defective mud pump).
C. C. C.
C. Pollution
Likewise, oilfield activities can support an action to recover for surface (and sub-surface) pollution.2 See Landers v. East Texas Salt Water
Disposal Co., 248 S.W.2d 731 (Tex. 1952)
(alleging broken pipe line allowed salt water pumped from oil well to flow over adjoining landowner’s property, destroying fish pond); see
also Sun Oil Co. v. Robicheaux, 23 S.W.2d 713
(Tex. Civ. App.—Beaumont 1928) (alleging salt water disposal into bayou rendered water unfit for irrigation and causing loss of rice crops), overruled by Landers v. East Texas Salt Water
Disposal Co., 248 S.W.2d 731 (Tex. 1952); Ellis Drilling Corp. v. McGuire, 321 S.W.2d 911
(Tex. Civ. App.—Eastland 1959, writ ref’d n.r.e.) (surface owner sued operator and driller for salt water damages).
2
Although beyond the scope of this article, emissions from oilfield activities potentially form the basis of claims for personal injury as well. See Doddy v. Oxy
USA, Inc., 101 F.3d 448 (5th Cir. 1996) (affirming summary judgment for defendants where plaintiff unsuccessfully attempted to recover for personal injuries from well emissions against operator and various service companies).
D. D. D.
D. Blow-out
As expected, well blow-outs can also comprise the basis for a damages suit from a neighboring landowner or owner of the surface.
Se, e.g., Elliff v. Texon Drilling Co., 210 S.W.2d
558 (Tex. 1948) (blow-out damaged plaintiff’s land and cattle and allowed escape of hydrocarbons from below plaintiff’s land).
III. III. III.
III. PARTIESPARTIESPARTIES PARTIES A. A. A. A. Plaintiffs 1. 1.1.
1. Surface Surface Estate OwnersSurface Estate Owners Surface Estate OwnersEstate Owners
In Texas the mineral estate is considered “dominant,” and the mere granting of mineral rights impliedly vests in the mineral estate the right to use of the surface as is “reasonably necessary” for production and development. See
Texaco, Inc. v. Faris, 413 S.W.2d 147 (Tex. Civ.
App.—El Paso 1967, writ ref’d n.r.e.); see also
Wilderness Cove, Ltd. v. Cold Spring Granite Co., 62 S.W.3d 844 (Tex. App.—Austin 2001,
no pet.) (explaining that “without the right to reach and extract the minerals, a mineral estate would be worthless”). The dominant estate doctrine applies to and obligates the surface owner and its lessees, as well as the mineral owner and its lessees. See Delhi Gas Pipeline
Corp. v. Dixon, 737 S.W.2d 96 (Tex. App.—
Eastland 1987, writ denied); TDC Engineering,
Inc. v. Dunlap, 686 S.W.2d 346 (Tex. App.—
Eastland 1985, writ ref’d n.r.e.) (surface owner sued operator for unnecessary use); Getty Oil
Co. v. Royal, 422 S.W.2d 591 (Tex. Civ. App.—
Beaumont 1967, writ ref’d n.r.e.) (mineral owner sued surface owner to enjoin placement of gates or otherwise interfering with mineral estate’s access to property); Cozart v. Crenshaw, 299 S.W. 499 (Tex. Civ. App.—Fort Worth 1927, no writ) (mineral owner sued surface lessee to enjoin lessee from construction of refinery alleged to interfere with drilling of oil and gas wells).
Under Texas law, a mineral lease gives a large measure of deference to the mineral lessee’s view of reasonableness of interference with surface use. See Vest v. Exxon, 752 F.2d 959 (5th Cir. 1985); Grimes v. Goodman Drilling
Page 3 1919, writ dism’d w.o.j.) (holding that lessees
could dill as many wells as appeared reasonably necessary to develop the land for oil and gas, provided that the drilling of any subsequent wells would not necessitate the removal of any of the houses on the land when the lease contract was made).
Alternatively, the lease or conveyance may be express in the surface rights and obligations afforded to the mineral owner. See id. If specifically expressed, the standard created by the language controls over the implied “reasonably necessary” standard. See Landreth
v. Melendez, 948 S.W.2d 76 (Tex. App.—
Amarillo 1997, no writ) (holding that broad reservation to mineral owners “to take all usual, necessary and convenient means” to explore for, produce and remove minerals precluded application of “accommodation doctrine,” wherein rights of surface owners in their existing use of land is taken into account). A plaintiff may sue on either the implied easement or the express language in the conveyance on the theory that whichever standard applies has been exceeded.
Lastly, neither the dominant estate doctrine nor the existence of a surface damage clause precludes a surface owner from bringing a suit in negligence against the mineral owner, its operator, or its contractors. See Elliff v. Texon
Drilling Co., 210 S.W.2d 558 (Tex. 1948)
(noting, in suit against drilling company for damages resulting from blowout of a gas well, that the rule of capture3 should not be extended
so as to include the negligent waste or destruction of oil and gas); Ellis Drilling Corp.
v. McGuire, 321 S.W.2d 911 (Tex. Civ. App.—
Eastland 1959, writ ref’d n.r.e.) (holding, in light of plaintiffs’ allegations that defendants negligently drilled into salt water causing salt water to flood plaintiffs’ land and destroy fertility, that while oil and gas lessee had right to use as much of surface and to use it in such manner as was reasonably necessary to effectuate purpose of lease, it did not have right
3
Generally, the rule of capture provides that a landowner acquires title to oil or gas produced from wells produced on his land, though oil and gas may have migrated from adjoining lands.
to negligently destroy the lessor’s land and adjoining land); see also Dresser Industries, Inc.
v. Page Petroleum, Inc., 853 S.W.2d 505 (Tex.
1993) (mineral owner opted to seek damages in negligence against service companies rather than breach of written contract); but see Abraxas
Petroleum Corp. v. Hornburg, 20 S.W.3d 741
(Tex. App.—El Paso 2000, no pet.) (holding that joint operating agreement, which governed operator’s conduct with respect to production, prevented plaintiff working-interest owners from maintaining common law waste action).
2. 2.2.
2. Adjoining/Neighboring Adjoining/Neighboring land Adjoining/Neighboring land Adjoining/Neighboring land land owners
ownersowners owners
Adjacent landowners usually do not stand in privity with their neighboring mineral owners. Therefore, they generally look to recover under various tort theories. Klosterman v. Houston
Geophysical Co., 315 S.W.2d 664 (Tex. Civ.
App.—San Antonio 1958, writ ref’d) (alleging damage to adjoining landowner’s home by negligent discharge of explosives); Stanolind Oil
& Gas v. Giles, 197 F.2d 290 (5th Cir. 1952) (alleging damage to adjoining landowner’s home by negligent discharge of explosives); Dellinger
v. Skelly Oil, 236 S.W.2d 675 (Tex. Civ. App.—
Eastland 1951, writ ref’d n.r.e.) (alleging operator’s negligence in conducting seismic activities damaged adjoining landowner’s well);
Domengeaux v. Kirkwood & Co., 297 S.W.2d
748 (Tex. Civ. App.—San Antonio 1956, no writ) (alleging, under a nuisance theory, that noise, fumes, lights and vibration by driller injured adjoining landowners.
B. B. B.
B. Defendants
It is sufficient to say that, dependant on the particular facts of the case, any person or entity that has either an ownership interest or provides goods or services ancillary to the exploration and development of minerals is a potential defendant. The list of potential defendants includes the mineral owner and its operator. The list further includes any and all contractors and subcontractors, including seismic companies, drillers and consultants. In other words, all those involved in oilfield activities have a duty not to negligently damage the property of either
Page 4 the surface owner or adjoining landowners.4 See
Eliff v. Texon Drillling Co., 210 S.W.3d 558
(Tex., 1948). In addition to tort duties, the surface owner may seek relief based upon any contractual provisions or covenants made in various agreements or in the conveyance documents.
C. C. C.
C. Cross-actions
Parties are free to agree on the allocation of risk under a contract. Green International, Inc.
v. Solis, 951 S.W.2d 384 (Tex. 1997). Written
agreements between oilfield actors generally contain a variety of provisions setting forth responsibility for damage to their own property, as well as the property of third parties. As between the operator and the various well contractors, these provisions commonly, but not exclusively, provide for mutual indemnification with regard to each parties’ own negligence. To the extent addressed by the written contract, disputes between the various oilfield entities concerning payment responsibility for surface damages may be decided simply as matters of contract interpretation. See, e.g., Wil-Roye
Investment Co. II v. Alleder, Inc., 2001 WL
903179; Tesoro Petroleum Corp. v. Nabors
Drilling USA, Inc., __ S.W.3d __ (Tex. App.—
Houston [14th Dist.] 2002, no pet. hist.) (available at Westlaw 2002 WL 31771135). Alternatively, an oilfield defendant may attempt to deflect liability as a matter of contribution.
See Dresser Industries, Inc. v. Page Petroleum, Inc., 853 S.W.2d 505 (Tex. 1993). Likewise, an
oilfield entity who itself has been damaged may assert another company’s negligence as the basis for its own recovery, notwithstanding the existence of others seeking recovery from it.
See Rowan Companies, Inc. v. Transco Exploration Co., Inc., 679 S.W.2d 660 (Tex.
App.—Houston [1st Dist.] 1984, writ ref’d n.r.e.);
4
Of course, as among the potential oilfield defendants, indemnification or other risk-shifting provisions may affect the ultimate responsibility for payment of any claims. See Part III.c., infra.
IV. IV. IV.
IV. CAUSES OF ACTIONCAUSES OF ACTIONCAUSES OF ACTION CAUSES OF ACTION A.
A. A.
A. Negligence
By necessity or decision, most plaintiffs bringing surface damage claims in Texas do so under negligence theories. In no small part, this results from Texas’ rejection of strict liability as a basis for recovery. See Klosterman v. Houston
Geophysical Co., 315 S.W.2d 664 (Tex. Civ.
App.—San Antonio 1958, writ ref’d) (refusing to hold that seismic operations constitute an ultrahazardous activity); Doddy v. Oxy USA,
Inc., 101 F.3d 448 (5th Cir. 1996) (concluding, after undertaking an Erie doctrine analysis in a case alleging personal injuries from toxic chemicals escaped from a well, that “the Texas Supreme Court has clearly rejected strict liability for abnormally dangerous activities”);
see also Stafford v. Thornton, 420 S.W.2d 153
(Tex. Civ. App.—Amarillo 1967, writ ref’d n.r.e.) (analogously applying negligence standard to use of explosives).
1. 1.1.
1. Proof of NegligenceProof of Negligence Proof of NegligenceProof of Negligence
“In the conduct of one’s business or in the use and exploitation of one’s property, the law imposes upon all persons the duty to exercise ordinary case to avoid injury or damage to the property of others.” See Elliff v. Texon Drilling
Co., 210 S.W.2d 558 (Tex. 1948); Currey v. Ingram, 397 S.W.2d 484 (Tex. Civ. App.—
Eastland 1965, writ ref’d n.r.e.) (noting that the duty not to negligently injure the surface estate exists despite its servient nature). Under this general principle, all injured landowners acquire standing to bring an action in negligence for damages to land.5 However, with respect to
surface owners, the legal duty owed must be considered in conjunction with “reasonable use” doctrine that inures in favor of the mineral lessee. See Oryx Energy Co. v. Shelton, 942 S.W.2d 637 (Tex. App.—Tyler 1996, no writ) (citing Humble Oil & Ref. v. Williams, 420 S.W.2d 133 (Tex. 1967), for the proposition that “[a] person who seeks to recover from the lessee
5
But see Abraxas Petroleum Corp. v. Hornburg, 20 S.W.3d 741 (Tex. App.—El Paso 2000, no pet.) (holding that joint operating agreement, which governed operator’s conduct with respect to production, prevented plaintiff working-interest owners from maintaining common law waste action).
Page 5 for damages to the surface has the burden of
alleging and proving either specific acts of negligence or that more of the land was used by the lessee than was reasonably necessary”);
Macha v. Crouch, 500 S.W.2d 902 (Tex. Civ.
App.—Corpus Christi 1973, no writ) (differentiating between the allegations required to support a finding of negligence against a lessee and those required to support a finding of unreasonable use); see also Satanta Oil Co. v.
Henderson, 855 S.W.2d 888 (Tex. App.—El
Paso 1993, no writ) (“There is a clear distinction between land cases and injury-to-livestock cases. . . . In the absence of a lease provision to the contrary, the only duty owed by the operator of an oil lease to the owner or lessee of the surface, who is pasturing cattle, is not to injure such cattle intentionally, willfully, or wantonly.”); Weaver v. Reed, 303 S.W.2d 808 (Tex. App.—Eastland 1957, no writ) (stating that while a lessee would not be liable for injury to cattle that had died as a result to licking lubricated pipe, since such lubrication was an “indispensable incident” to the well’s operation, the lessee would be liable, on the other hand, for negligently leaving an open can of a poisonous substance in a location where it would be eaten by lessor’s cattle).
The net result of Texas’ rejection of strict liability coupled with the legal duty to use ordinary care to avoid injury to others’ property is that a plaintiff must prove more than the existence of damage to recover. See Carter v.
Simmons, 178 S.W.2d 743 (Tex. Civ. App.—
Waco 1944, no writ) (claiming that oil and gas lessee’s negligence in permitting storage tanks to overflow, resulted in death of lessors’ cattle from drinking escaped oil). This requirement may be couched in terms of either breach or causation. For example, in Carter v. Simmons, the court found the plaintiff lessor’s evidence insufficient in both respects. See id. (finding that the “mere fact” that the lessee allowed oil storage tanks to overflow, absent any showing of the operating conditions on the lease failed to establish breach of any duty and that proof of causation was also deficient in that it was equally likely that the cattle died from drinking oil from other sources as opposed to the overflowed storage tanks). Likewise, in Phillips
Petroleum Co. v. West, 284 S.W.2d 196 (Tex.
Civ. App.—Galveston 1955, writ ref’d n.r.e.), it was held that the plaintiff surface owner failed to provide sufficient causal proof that saltwater overflowing from the oil and gas lessee’s pits caused injury to rice crops. On the other hand, in Currey v. Ingram, 397 S.W.2d 484 (Tex. Civ. App.—Eastland 1965, writ ref’d n.r.e.), uncontroverted expert testimony regarding standard of care and causation was held sufficient to support a jury verdict. See Currey, 397 S.W.2d at 487 (recounting and finding sufficient expert’s testimony that failure to cement off injection stream prior to injecting salt water fell below the standard of care and that salt water percolating out of nearby seismic shot holes was from the injected well).
2. 2.2.
2. Res Res ipsa loquiturRes ipsa loquitur Res ipsa loquituripsa loquitur
In the absence of direct causal proof, Texas courts have presupposed that a plaintiff seeking recovery for surface damages may ease its burden through application of the doctrine of res ipsa loquitur. See Klosterman v. Houston
Geophysical Co., 315 S.W.2d 664 (Tex. Civ.
App.—San Antonio 1958, writ ref’d) (noting, in dicta, that “[u]nder a proper set of circumstances, the doctrine could undoubtedly be relied upon”). For example, in the blasting case of Stanolind Oil Co. v. Giles, 197 F.2d 290 (5th Cir. 1952), application of res ipsa was affirmed as proper because even though specific acts of negligence were not proven, such negligence could be inferred through expert testimony establishing causal connection to damages. See id. at 292-93. On the other hand, in Roskey v. Gulf Oil Corp., 387 S.W.2d 915 (Tex. App.—Houston [1st Dist.] 1965, writ ref’d n.r.e.), it was held that the trial court properly refused submission of a res ipsa instruction. The
Roskey court distinguished its facts from other
cases in that the plaintiff in Roskey was only able to establish a loud noise and rattling windows from seismic blast, as opposed to immediate and evident damage. See id. at 918-19 (distinguishing McKay v. Kelly, 233 S.W.2d 121 (Tex. 1950), on its facts).
Additionally, the “reasonable use” doctrine prohibits application of res ipsa loquitur to cases brought by surface owners against mineral
Page 6 owners. See Lynn v. Magg, 220 F.2d 703 (5th
Cir. 1955) (noting that under Texas law, mineral lessee is not insurer of servient estate and the doctrine of res ipsa loquitur is not applied) (citing Warren Petroleum Corp. v. Martin, 277 S.W.2d 410 (Tex. 1954)); Carter v. Simmons, 178 S.W.2d 743 (Tex. Civ. App.—Waco 1944). B.
B. B.
B. Trespass and Nuisance Theories
Texas courts have shown little support for plaintiffs attempting to recover for surface damages under trespass6 or nuisance theories.
See Turner v. Big Lake Oil Co., 96 S.W.2d 221
(Tex. 1936) (refusing to attach liability on defendant for allowing salt water to overflow onto property of adjoining landowner absent a finding of negligence and providing the rationale for such departure from English common law that “[i]n Texas we have conditions that are very different from those which obtain in England”). This general principle has been taken to mean that an action for trespass causing injury to land must be predicated on a finding of negligence.
See Moran Corp. v. Murray, 381 S.W.2d 324
(Tex. Civ. App.—Texarkana 1964, no writ) (holding that trespass issue was improperly submitted to jury and irrelevant because landowner could recover for damage occasioned by salt water from break in wall of salt water pit on defendant’s adjacent oil lease only on basis that defendant’s negligence was proximate cause of injury); see also Klosterman v. Houston
Geophysical Co., 315 S.W.2d 664 (Tex. Civ.
App.—San Antonio 1958, writ ref’d) (declaring that there is “no tender regard” for rules of law which impose liability absent negligence).
Similar results result from Plaintiffs attempting to recover for surface damages based on a nuisance theory. See Domengeaux v.
Kirkwood & Co., 297 S.W.2d 748 (Tex. Civ.
App.—San Antonio 1956, no writ) (declaring that under Texas law, drilling operations do not constitute a nuisance per se and finding, in this
6
The authors would point out that this article is limited in scope to allegations of surface damages and does not extend to trespass cases involving claims by mineral owners, such as slant-well drilling, or disputes within the jurisdiction of the Texas Railroad Commission. Likewise the topic of “geophysical trespass” is beyond the scope of this article.
instance, that there also was no nuisance in fact in these circumstances). Since the required elements for nuisance-in-fact include a finding that defendant’s conduct was (1) negligent, (2) intentional, or (3) abnormal and out of place in its surroundings, it appears unlikely that any set of facts would support a finding that oil and gas operations constituted a nuisance-in-fact in Texas absent a finding of fault. See City of Tyler
v. Likes, 962 S.W.2d 489 (Tex. 1997); see also Turner v. Big Lake Oil Co., 96 S.W.2d 221
(Tex. 1936) (“Texas has many great oil fields, tens of thousands of wells in almost every part of the state.”).
V. V. V.
V. VICARIOUS VICARIOUS LIABI LITYVICARIOUS LIABI LITY VICARIOUS LIABI LITYLIABI LITY
In as much as a principal/agent relationship exists between the mineral owner or operator and those working on the well, the owner may be held responsible under the doctrine of respondeat superior. See, e.g., Dellinger v.
Skelly Oil Co., 236 S.W.2d 675 (Tex. Civ.
App.—Eastland 1951, writ ref’d n.r.e.) (alleging that seismic operator was agent of operator);
Lynn v. Maag, 220 F.2d 703 (5th Cir. 1955) (finding, in the trial court, that driller was the agent of oil and gas lessee). Of course, allegations of agency are subject to dispute and most modern contracts establish an independent contractor relationship as a matter of law.
Although not properly classified as “vicarious liability,” another method for obtaining a similar effect is to obtain a finding of indivisible injury. See Landers v. East Texas
Salt Water Disposal Co., 248 S.W.2d 731 (Tex.
1952) (“Where the tortious acts of two or more wrongdoers join to produce an indivisible injury, that is, an injury which from its nature cannot be apportioned with reasonable certainty to the individual wrongdoers, all of the wrongdoers will be held jointly and severally liable for the entire damages and the injured party may proceed to judgment against any one separately or against all in one suit.”); Natural Gas
Pipeline Co. of America v. Pool, 30 S.W.3d 618
(Tex. App--Amarillo 2000, pet. granted);
Producers Chem. Co. v. McKay, 348 S.W.2d 91
(Tex. App.—Amarillo 1961) aff’d by 366 S.W.2d 220 (Tex. 1963) (applying Landers in personal injury setting). Under Landers, those
Page 7 chosen as defendants by a plaintiff have the
burden to bring in other parties who also might share liability. See Landers, 248 S.W.2d at 734. VI.
VI. VI.
VI. DAMAGESDAMAGESDAMAGES DAMAGES
In actions concerning injury to land, the proper measure of damages depends on whether the injury is permanent or temporary. See
Bayouth v. Lion Oil Company, 671 S.W.2d 867
(Tex. 1984). In Bayouth, the Texas Supreme Court described the difference as follows:
The character of an injury as either permanent or temporary is determined by its continuum. Permanent injuries to land result from an activity of such a character and existing under such circumstances that it will be presumed to continue indefinitely; the injury must be constant and continuous, not occasional, intermittent or recurrent. Temporary injuries, however, have been found where the injury is not continuous, but is sporadic and contingent upon some irregular force such as rain.
Id. at 868. An injury that can be terminated is
not temporary. See Kraft v. Langford, 565 S.W.2d 223 (Tex. 1978).
A. A. A.
A. Permanent Damages
“Permanent injuries to land give rise to a cause of action for permanent damages, which are normally measured as the difference in value of the property before and after the injury; temporary injuries give rise to temporary damages, which are the amount of damages that accrued during the continuance of the injury covered by the period for which the action is brought.” See Bayouth, 671 S.W.2d at 868 (Tex. 1984). The concepts of temporary and permanent damages are mutually exclusive, and a plaintiff may not recover for both. See Kraft, 565 S.W.2d at 227. The burden is on plaintiff to establish its damages with reasonable certainty to enable jury to compute them. See Oryx
Energy Co. v. R. B. Shelton 942 S.W.2d 637
(Tex. App.—Tyler 1996, no writ) (holding as sufficient the expert testimony of an appraiser,
who opined on the market value of the property immediately prior to lessee’s unreasonable use in spilling oil and saltwater and the market value immediately after the injury); but see Vest v.
Exxon Corp., 752 F.2d 959 (5th Cir. 1985) (holding that evidence of what amount plaintiff was willing to sell property constituted no evidence of market value). If damage is permanent and continuing, the normal measure of damages may be inadequate or unduly restrictive. See Burns v. Lamb, 312 S.W.2d 730 (Tex. Civ. App.—Fort Worth 1958, writ ref’d n.r.e.) (approving of jury question inquiring as to value immediately prior to injury from salt water and “since it has become damaged” because “[t]he first damage may not have been the last, or the greatest”).
B. B. B.
B. Temporary Damages
When damages are temporary, the proper measure of damages is the amount required to put the injured party in the same position as prior to the injury. See Kraft v. Langford, 565 S.W.2d 223 (Tex. 1978). Generally, this goal is obtained by awarding cost of repairs of restoration. See North Ridge Corp. v. Walraven, 957 S.W.2d 116 (Tex. App.—Eastland 1997, pet. denied). However, restoration damages are limited by the concept of “economic feasibility.”
See id. at 119. When the cost of restoration
exceeds the diminution in fair market value (or, in the case of total destruction, the fair market value of the land immediately prior to the injury), then diminution in value is the proper measure. See id. (reversing jury verdict awarding cost of restoration six times the value of the land).
C. C. C.
C. Damage to Crops
For damages to growing crops, the proper measure of recovery is the value of the crop just as it stood on the ground at the time and place of its destruction. See Robinson Drilling Co. v.
Moses, 256 S.W.2d 650 (Tex. Civ. App.—
Eastland 1953, no writ). This measure is calculated by determining “the probable yield of the crop and its reasonable market value when matured, less the cost of cultivating, harvesting and marketing.” Union Producing Co. v. Allen, 297 S.W.2d 867 (Tex. Civ. App.—Beaumont
Page 8 1957, no writ). In other words, the proper
measure is one of lost profits. VII.
VII. VII.
VII. CONCLUSIONCONCLUSIONCONCLUSION CONCLUSION
Surface damages cases can be challenging and interesting. While Texas courts have simplified surface litigation by limiting the causes of action under which a plaintiff may seek recovery, this aspect is more than made up for by the complexity of the facts and issues involved.
