Suggestions to Texas lessors after ExxonMobil v. Lazy R Ranch, et al: Claiming that you were not aware of contamination from oil spills you’ve known about for 20 years is a tough sell, and suing your long-time lessee for millions right after it sells your lease looks a wee bit opportunistic.
For nearly 60 years Exxon operated wells on the 20,000 acre Lazy R Ranch before selling the lease in 2008. The Ranch hired an environmental engineer who identified a total of 1.2 acres in four areas where hydrocarbon contamination exceeded levels set by state law.
In 2009 the Ranch sued Exxon for contamination and sought damages for remediation of the 1.2 acres that would cost $6.3 million. (At least they waited to bite until the hand was no longer dispensing the groceries).
The damage claim presented a problem for the Ranch. Under Texas law the recovery for damages for a permanent injury to real property is generally limited to the difference in value of the property before and after the injury.
Realizing this reality, the Ranch dropped the claim for damages and sought injunctive relief for remediation of the conditions, no matter how much it cost. The ranch argued that the surface contamination was spreading into the subsurface and would eventually reach the groundwater aquifer.
The Ranch can’t overcome limitations
Worse for the Ranch, Exxon asserted the defense of the two and four year statutes of limitations. A nuisance claim accrues when the injury occurs, not when the full extent of the injury is known. It was clear from the record that, whatever the extent, evidence of the contamination occurred long before 2005 and the family had known about it for years.
For example, there was a 1986 stipulation in which Exxon was required to clean up leaks involving contaminated soil. One tank battery had been abandoned for 10 to 20 years, had not been used since, and remained unchanged. One owner drove over the property for years and, while she noticed evidence of oil spills, had no idea there was actual contamination.
The discovery rule did not apply because there was nothing inherent in the possibility of contamination that kept the Ranch from hiring the expert sooner than it did. Nor was there fraudulent concealment, which requires that the defendant actually knows of the injury and conceals the fact to deceive the plaintiff. That’s difficult to accomplish with long-abandoned and easily visible tank batteries and similar conditions. The court also declined to find that as a continuing nuisance, limitations did not apply.
In the end the only relief the Ranch wanted was remediation of the contamination, requiring essentially the same operations for which it sought costs and damages, and an injunction to stabilize the existing contamination and prevent it from migrating to uncontaminated groundwater resources. Unfortunately for the curious among us, the court didn’t reach the question of the Ranch’s entitlement to injunctive relief because the issue was not properly presented to the trial court.