In Ageron Energy LLC v. ETC Texas Pipeline, LTD Justice Busby authored a concurring opinion in the denial of a petition for review to the Supreme Court in which he criticized the majority opinion of the Court of Appeals saying it undermines important protections afforded mineral rights owners. To understand this case, see the COA’s opinion in a prior case, Regency Field Services v. Swift Energy and the COA majority opinion in this case. Also, Lightining Oil v. Anadarko E&P, was heavily cited by Justice Busby.

Res judicata

The COA majority held that a lessee’s suit can be barred by res judicata even if a claim for interference with subsurface development in a prior suit was not ripe and could not have been brought earlier. According to the COA majority, a surface injury claim that accrued before Ageron leased the minerals resulted in accrual of any and all other claims arising from the same allegedly unlawful conduct, including Ageron’s. To require parties to assert unripe claims would be pointless; the unripe claims will be swiftly dismissed. Regency did not alter Supreme Court cases holding that res judicata bars only claims that could have been asserted in the initial action.

The COA made two errors, says the Justice:

• First, they ruled that the fact that a claim may be unripe will not stop it from accruing at the same time as a ripe claim based on an earlier injury caused by the same wrongful conduct.
• Second, the COA misunderstood when a complete and present cause of action accrues for injury to mineral development rights.

The COA failed to appreciate that when different property interests are involved, the injuries are often distinct. The holding was contrary to the very definition of res judicata, an essential requirement of which is that the claims in the current suit could have been litigated in the prior suit. Ageron’s claims here could not have been litigated in the prior suit. Mere migration of contaminants into subsurface space is not, by itself, an injury to the mineral estate.

The single action rule

The COA was mistaken in applying the single action rule, which is a species of res judicata that prohibits splitting a single cause of action and subsequently asserting claims that could have been litigated in the first instant. It does not require asserting claims that were not yet actionable.

The question the COA should have decided is when Ageron’s claims for interference with mineral development rights accrued. Could the plaintiffs in Regency have asserted such claims in their prior suit, or at some other time before Ageron acquired its lease?

Texas law distinguishes between interfering with the place where minerals are found, which belongs to the surface owner, and interference with the minerals themselves, which belongs to the mineral rights owner or lessee. Interference with the subsurface is actionable only if it infringes the lessee’s ability (Busby’s emphasis) to exercise its rights.  

No harm, no foul
Because there was some evidence that trespassing gas infringed on mineral development before Ageron acquired its interest, the question of whether the evidence was conclusive was not important to the jurisprudence of the State. It was not clear that the COA’s legal errors led to an improper judgment, so he joined denying the petition for review

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