adjusting his gloveQuiz: How is baseball not like litigation?

  1. Sloppy play can lose the game
  2. Production sometimes declines after a big signing
  3. Lawyers don’t wear athletic supporters to work
  4. When the judge says “Call your next witness”, lawyers don’t step out of the batters’ box to adjust their gloves while the jury waits
  5. “Pace of play” is a constant debate
  6. Baseball doesn’t have a clock

Plaintiffs who fail to pay attention to the clock that is the statute of limitations end up as just more detritus littering courtrooms everywhere. See Ranchero Esperanza. Ltd. v. Marathon Oil Company.

What Happened and When

1989 – Marathon plugs and abandons Well 812 in Crockett County, Texas.

2004 – Rancho Esperanza purchases a 32-section ranch and undivided half in the Trinity Aquifer beneath the property. Well 812 is on the ranch.

July 2008 – The well begins leaking salt water onto the surface, apparently due to injection activity in other wells nearby.

July 22, 2008 – Aspen, now the operator of nearby wells, notices saltwater flowing from Well 812, stops the flow, and cleans and remediates the area.

July 28, 2008 – The day RE says it discovers the leak.

July 27, 2010 – RE sues

Did RE Have Standing to Sue?

Yes. The cause of action for injury to land is a personal right belonging to the person owning the property at the time of injury.  A subsequent purchaser cannot recover for an injury committed before his or her purchase unless that right is assigned to it.  R E had standing to file the suit.  The injury occurred in 2008 when the saltwater appeared, not in 1989 when Marathon negligently plugged the well.

Was RE Too Late?

Yes. When does a cause of action accrue for injury to property?  When a wrongful act causes some legal injury, even if the fact of the injury is not discovered until later and even if all resulting damages have not yet occurred.

RE’s cause of action accrued in July 2008 when the surface damages first resulted from the alleged deficient plugging.

RE’s bigger problem was that it waited too long to bring suit.  The claims were subject to the two-year statute of limitations.  The leak was discovered on July 20, 2008 and RE sued on July 27, 2010.  RE’s foreman saw the leak on July 28 (in which case the filing would have been just in time) but he admitted that had he driven to the well a week earlier he might have discovered the leak.

The discovery rule did not apply because the nature of the injury incurred – surface damages arising from saltwater flowing from a well onto the surface – is not inherently undiscoverable.

And we’ll never know if the  jury would have deemed Marathon negligent.

Musical Interludes – Other things that are bad for you besides being too late to the courthouse:

One we all know about

A common human experience

One that starts out good but can go really wrong

 

james carvilleCo-author Brooke Sizer

Another Louisiana court has ruled that the Subsequent Purchaser Rule applies to damages following a mineral lease. In Bundrick v. Anadarko Petroleum Corp. it is the 3rd Circuit.

The Rule:

An owner of property had no right or actual interest in recovering from a third party for damage which was inflicted on the property before his purchase, in the absence of an assignment or subrogation of the rights belonging to the owner of the property when the damage was inflicted.

The Case

The plaintiffs bought seven tracts in St. Martin Parish that had been previously leased and subject to oil and gas production. They acquired the property after the expiration of the mineral leases and without obtaining an assignment of their predecessor-in-interest’s right to proceed against responsible parties. Oops!

Plaintiffs argued that the 12 defendants were negligent and strictly liable for the damage and that their conduct created a continuing and damaging nuisance and continuing trespass on the property.

They were denied recovery because they had not been assigned the rights of the prior owners to sue for damages. That right is a personal right and is not transferred to a subsequent owner without a clear stipulation to that effect.

Why is This Case Different from Eagle Pipe?

The plaintiffs wanted it to be, but the court said it isn’t. In Eagle Pipe and Supply, Inc. v. Amerada Hess Corp. the Louisiana Supreme Court relied upon the Subsequent Purchaser Rule to deny recovery to plaintiffs for contamination.

In Eagle Pipe the defendants operated under a surface lease and the Supreme Court specifically declined to rule on whether the doctrine applied to mineral leases. A different 3rd Circuit panel had ruled that the Rule did not apply to operations under a mineral lease. But the Supreme Court later told the 1st Circuit that they should apply Eagle Pipe to facts involving mineral leases. In Bundrick the 3rd Circuit did just that.

The plaintiffs also argued a cause of action for remediation of the contaminated property pursuant to Louisiana Mineral Code Art.11, because mineral rights are real rights that pass with the property to the subsequent purchaser without the need for a specific assignment. According to the court, Eagle Pipe clearly stated that leases convey personal rights only and these rights must be expressly assigned.

Why is That Man in This Blog?

Visit here often enough and you won’t usually find agreement with LSU grad James Carville. But then there was his address to the 2015 graduating class of LSU’s Manship School of Communication. Always entertaining, he decried the looming destruction of Louisiana higher education by Gov. Bobby Jindal and asked what the grads – and proud parents – are going to do about it.

Here’s something to do about it: Think of Bobby Jindal as you would an unprincipled, ambitious college football coach.  He cheats, achieves fame and success, and is off to a bigger contract before sanctions hit the fan. Or see him as an abscess. Tea Party tax relief metastacizes, and breaks catastrophically bad for those around him. He is Grover Norquist’s “girlfriend”. His lust for the power of higher office could leave Louisiana healthcare and higher education impoverished for years.

Mr. Carville and the crowd closed with this sing-along.

dunceI often wonder if anybody actually reads our modest, quasi-weekly offerings. They do! And they respond! To criticize!  I earn my keep being “critiqued” by impatient judges, aggressive opposing counsel and, occasionally, less-than-happy clients, so – challenge accepted.

“Critique” One:

Lipsky was not Range’s lessor, therefor I know nothing about the case. Surely, this person lives in my house, where I enjoy a long history of knowing nothing about anything. (Memo to self: check progress on subpoena for kids’ “sent” box). And the inquisitor is as adept as my beloved family in drawing expansive and incorrect conclusions from meager evidence.

As for Mr. Lipsky, he was a nearby landowner and not a lessor.  But the point – and the lesson – remain the same: His big mouth spread accusations that Range says are untrue. Range wanted to put a stop to it and was partially rebuked. Whether against a lessor or a stranger, it will be more difficult than in the past for anyone to use litigation as a tool to quash criticism.

“Critique” Two:

The EPA did not find Lipsky’s claims to be false, says our inquisitor. To evaluate this one, let’s use the time-honored, citizen-friendly, and court-validated process invoked by the TCPA: Can the reader draw rational inferences from circumstantial evidence in determining what the EPA believed about Mr. Lipsky’s claims?

What Really Happened?

The Railroad Commission ordered Range to test its gas, launched an investigation, and held a formal hearing – in which Mr. Lipsky and the EPA were invited to participate (they declined). The RRC considered scientific testimony on “geology, hydrogeology, microseismic analysis, hydraulic fracturing, geochemical gas fingerprinting, and petroleum engineering” and determined that gas in Mr. Lipsky’s water well was most likely from the Strawn formation, found at 200 to 400 feet, and not the Barnett Shale, from which the Range wells produced at 7,000+/- feet, and that Range’s wells did not contribute to the contamination. Shortly thereafter, the EPA – declining to explain why – withdrew its earlier finding that Range’s wells were an imminent and substantial endangerment to a public drinking water aquifer. The inquisitor blames “political pressure”.

A Quiz:

Who had the motive and stroke to apply “political pressure” on the EPA to withdraw its report?

A.  EPA BFF then-Gov. Rick Perry

B. Sen. Ted “Hands Across the Aisle” Cruz

B. Al Armendariz

C. The ghost of George Mitchell

Who is it?

Who is our nemesis, the avenger of truth, the harbinger of a world purified by its abstinence from hydrocarbons? The inquisitor claimed to be “Sharon Wilson”. Given the anger revealed in the communications and on a certain Website, I assume it is “Texas Sharon”. Those running for high office adhere to a cardinal rule: Never name your adversary. However, this is a public service. When you hear a story, consider the source. Get to know Texas Sharon as a source. Then draw your own inferences, rational or otherwise.

Answer to the Quiz:

Nobody. It was a trick question. My “inference”: The EPA realized they were wrong and, wisely, drug the report off into a gloomy corner of the bureaucratic netherworld where it died, alone and abandoned, shorn of its misshapen graphs, charts and footnotes.

In the name of “debate”, we have this musical interlude.

Invasion Update:

The dog barked last night; thought I heard the rumble of tanks from the invasion. Turned out it was just thunder.

Here The Come
Here They Come

May a court “draw rational inferences from circumstantial evidence” when determining if a plaintiff  has met its burden in a suit in which the defendant has invoked the Texas Citizens Participation Act . That was the question in In re Lipsky.

What is The Anti-SLAPP Statute?

The purpose of the TCPA (the “Anti-SLAPP” statute) is to protect citizens from retaliatory lawsuits seeking to intimidate or silence them on matters of public concern. The procedure for expedited dismissal of such suits involve a two-step process: First, a defendant-movant must show by a preponderance of the evidence that the plaintiff’s claim “is based on, relates to or is in response to the movant’s exercise of (1) the right of free speech; (2) the right to petition; or (3) the right of association.” If the movant demonstrates that the plaintiff’s claim implicates one of those rights, the burden shifts to the plaintiff to establish by “clear and specific evidence” a prima facia case for each essential element of the claim.

Applied to Lipsky and Range

Mr. and Mrs. Lipsky sued Range Resources for polluting their water well by Range’s gas wells in the area. You will remember the infamous video of Mr. Lipsky lighting the garden hose on fire. (Ultimately the Lipsky’s claims were determined by the Railroad Commission and the EPA to be false.) Range counterclaimed, alleging defamation, business disparagement and civil conspiracy. The Lipskys moved to dismiss the counterclaim under the TCPA.

The court focused on the second prong. Lipsky said “clear and specific” means “evidence unaided by presumptions, inferences or intendments”.  No, said the Supreme Court. In TCPA cases, like in others – fraud for example – “clear and specific evidence” can include drawing of inferences from circumstantial evidence. That’s the way people make decisions about a lot of things.

The court decided that Range’s evidence would support a claim for defamation but not business disparagement, and there was no clear and specific evidence to support a case against Mrs. Lipsky or consultant Alisa Rich. Range’s only remaining claim is against Mr. Lipsky for defamation.

What Does This Mean To Me?

Operator: You can’t intimidate your loud-mouthed lessor as easily as your predecessors once could.  Lessor: You are still on the hook for crushing legal fees and potential big-money liability if you persist in wildly exaggerated or untruthful accusations to anyone who will listen.  The anti-frackers aren’t your friends. They will repeat it, truth-be-damned, to anyone who will listen, causing you more grief and despair than you bargained for.

One if By Land, Two if By Sea 

While we’re here, let’s apply Lipsky to the real world. What “rational inferences from circumstantial evidence” can our elected officials draw so as to conclude there is a risk that the U. S. Government, in conducting its Jade Helm 15 military exercise, intends to invade the state, convert vacant west-Texas Walmarts to detention facilities, and incarcerate the true patriots? You could ask it this way: How irrational is it to believe that home-grown SEALS and Green Berets are going to storm the Rio Grande, pillage and plunder their way north to Dallas, and turn their wives, mothers, sisters, fathers and brothers over to the CIA? Prove to me they won’t, I guess.

Two musical interludes – one “subversive”, one not:   RIP Jack Ely and Ben E. King.

Co-author Maryann Zaki

You might recall previous entries (here is one) discussing the $2.9 million Dallas County verdict and judgment in Parr v. Aruba. Not all similar suits have the same result.

Michael and Myra Cerny sued Marathon Oil Corp. and Plains Exploration & Production Company, alleging, as in Parr,  private nuisance, negligence, and negligence per se. As in Parr, among  the allegations were:

  • continuous release of “ … strong odors and noxious chemicals into the environment, including the plaintiffs’ property, causing injury and harm to the plaintiffs’ property and to their persons;” and
  • health problems, including headaches, rashes, chest pain, “strange nerve sensations,” high blood pressure, nausea, difficulty breathing, and nosebleeds.

Plains’ defense was that in order to prevail, the Cernys had to prove exposure specifically to Plains’ hydrocarbons, not just hydrocarbons in general.

The trial court observed that proving causation – that Plains’ operations and not something else – caused injury was a “high hurdle that has to be jumped”, and dismissed all defendants. Gray Reed attorneys, led by Jim Ormiston, represented Plains.

Parr and Cerny are on appeal to different courts. The question for those courts is likely to be: What evidence is necessary to prove causation in a hydrocarbon exposure case?

What Does the Texas Supreme Court Say?

The Texas Supreme Court held in Bostic v. Georgia Pacific Corporation that where multiple sources of exposure exist, the plaintiffs must prove substantial factor causation. Proof of “some exposure” or “any exposure” will not establish causation. There must be defendant-specific evidence relating to the approximate dose of the defendant’s product to which the plaintiff was exposed, along with evidence that the dose was a substantial factor in causing the plaintiff’s disease. The dose must be quantified but need not be established with mathematical precision.

Also, under Merrell Dow Pharmaceuticals, Inc. v. Havner, to establish substantial factor causation plaintiffs must prove with scientifically reliable expert testimony that a plaintiff’s exposure to the defendant’s product more than doubled the plaintiff’s risk of contracting the disease.

Bostic involved exposure to asbestos, but the decision could be a factor in any multiple-exposure case, including claims alleging exposure to emissions from oil and gas operations.

In light of this precedent one thing remains clear: Texas plaintiffs asserting toxic tort claims must show that their injuries were caused by exposure to the defendant’s activities. Their success will depend on how well they present reliable epidemiological and scientific evidence.

Cerny, Parr and other Texas hydrocarbon injury cases have drawn attention. See Lawyers and Settlements.com (discussing these kinds of cases generally), the San Antonio Express News (discussing the ruling), Texas Lawyer (discussing inconsistent results in Texas courts) and Inside Climate News (misunderstanding the judicial system and the defendants’ legal position).

Keep watching. These issues, and the future of hydrocarbon exposure claims, are not going to be resolved soon.

Co-author Maryann Zaki

In case you’ve been living in your van down by the river, you’ve heard that a Texas jury awarded $2.9 million to landowners in a case involving alleged hydrocarbon exposure due to hydraulic fracturing operations. Here is the jury verdict. The Parrs sued Aruba Petroleum, alleging that drilling and fracing at Aruba’s 22 wells located within two miles of the Parr’s 40-acre property in Wise County was making them sick. They alleged a wide array of health issues, including nose bleeds, irregular heartbeat, muscle spasms, and open sores, all of which were allegedly caused by hazardous gases and airborne chemicals emanating from Aruba’s well sites.

The Original Claims

The original claims against a number of operators with wells in the area included assault, intentional infliction of emotional distress, negligence, gross negligence, civil conspiracy, private nuisance and trespass. All defendants other than Aruba either settled before trial on undisclosed terms, were dismissed, or obtained summary judgment.

Proceeding on Nuisance

The case proceeded to the jury only on the nuisance claim. The award, for intentionally creating a private nuisance, comprised $275,000 for loss in property value, $2 million for past pain and suffering, $250,000 for future pain and suffering, and $400,000 for past mental anguish. The jury did not find evidence of the malice necessary to justify an award of punitive damages.

The Takeaways

  • What effect will the verdict have? Although this is not the first lawsuit against an energy company for damages related to fracing, the verdict has been coined as the “first fracing verdict in U.S. history.” The trial judge has not yet entered a judgment on the verdict, which will almost certainly be challenged by the defendant in post-trial motions, and on appeal if necessary.
  • Whether a compressor station was a nuisance was discussed in one of our long-ago  entries. See that entry for a general discussion of what constitutes a public nuisance in Texas.
  • It remains to be seen whether the Parrs will ultimately prevail in holding Aruba solely liable for their alleged injuries, when there are dozens of other wells and facilities operated by other companies within a two mile radius of the Parr home.
  • This verdict has inspired debate and raised questions. Will people living near oilfield operations begin running to the courthouse to file similar lawsuits, and will such claims ultimately succeed?
  • Several of our Gray Reed colleagues are participating in litigation similar to Parr. We are following Parr and other cases and from time to time will be commenting.

Acknowledging that those who don’t know better see fracing as malignant, we offer this musical interlude. (Tolerate the ad; the rest is worth it.)

Co-author Ann Weissmann

The Dietz family sued several lessees for injunctive relief and restorative damages arising out of leases on two non-contiguous tracts in Acadia Parish. In Dietz, et al. v. Superior Oil Company, et al  the trial court granted the lessees’ dilatory exceptions of prematurity and improper cumulation and dismissed the plaintiff’s suit without prejudice.

The family asserted that the lessees improperly used and abandoned oil field waste storage pits and exploration and production equipment, causing contamination of the soil and groundwater. The defendants filed the exceptions to avoid the suit.

Prematurity 

The defendants’ dilatory exception of prematurity asserted that they were not given notice prior to the suit as required by Mineral Code Article 136 and that the claims were premature, as the lease was still in effect.

The trial court’s grant of the prematurity exception was because the defendants had not been given written notice as required by Article 136. The appellate court found that the trial court erred in granting the prematurity exception. Claims for restoration of contamination are not governed by Mineral Code Article 136 and do not require advanced written notice as these claims “are separate and distinct from any claims that defendants failed to develop and operate the property”.

A suit for contamination of soil and groundwater may be brought before the lease expires. The lessee has obligations set out in the Mineral Code and in Civil Code Articles 2683, 2686, 2687 and 2692. Civil Code Article 2683 specifically defines the Lessee’s obligations. While Article 2683 has obligations which arise at the end of the lease, there is “absolutely no language to suggest that the other obligations imposed by these codal provisions are not operational until termination of the lease.”

Improper Cumulation

The trial court’s grant of the exception of improper cumulation was because there was a lack of community of interest between the joined parties. These exceptions were affirmed. In order to determine if there is a community of interest between the parties, the courts will look to see if the causes of action arise from the same facts and present the same legal and factual issues. Is there an overlap “present between the cases to make it commonsensical to litigate them together”? Proof of damages and liability would be different for each party. There were numerous defendants and non-contiguous lands, with each defendant having different lease obligations with different facts being proven for each operator. Therefore, there would be a lack of overlap required for a proper cumulation. The court affirmed dismissal of the suit without prejudice.

Driven to know the elements of improper cumulation? See Code of Civil Procedure Article 463.

Takeaways

I see two: 

The plaintiff-landowners lost this round but lived to fight another day.

The is no end soon to pollution claims against legacy producers in Louisiana oil fields.

In a case from Acadia Parish, how can we not pay musical tribute to J. D. Miller’s recording studio in Crowley.  Here is an example. 

It’s Mardi Gras. If you see my college-student daughter chasing beads, dubloons and coconuts, tell her to get back to the library where she said she was going.   

In Walton vs. Burns, another legacy pollution case, a Louisiana court of appeal ruled, among other things, that a surface owner has the right to assert a claim under Louisiana Mineral Code Article 22 against a mineral servitude owner for the servitude owner’s obligation to restore the surface insofar as practicable to its original condition before oil and gas operations. This claim is different than the one the surface owner might have against an operator, which is based on Mineral Code Article 122’s obligation of the lessee to act as a “reasonably prudent operator”. These are two distinct legal theories, and also implicate Article 11, requiring the owner of a mineral right to exercise his rights “with reasonable regard to those” of the surface owner.

Walton had a history prior to the Louisiana Supreme Court ruling in Eagle Pipe & Supply, Inc. vs. Amerada Hess in October 2011, in which the court invoked the subsequent purchaser doctrine to deprive certain surface owners of a cause of action for surface damages. Walton involves many procedural goings-on which will be avoided here because they are of an interest only to lawyers who go to the courthouse.

The essential question, according to the Court, was whether mineral servitude owners and oil company defendants as lessees owe the same duties to plaintiff-surface owners for damages and remediation after oil and gas operations have ceased.

The court acknowledged that, especially with the enactment of Act 312 (La. RS 30:29), there is a special procedure to resolve claims of environmental damage arising from oil field operations. The court noted that Act 312 requires those parties whom a court finds legally responsible for damages from operations to develop a plan of remediation.

The Court considered the fact that different defendants – lessees, operators and servitude owners – may have different obligations to evaluate and remedy contamination. In the end the Court decided that given the various rights, obligations and duties under the Mineral Code, servitude owners should be a part of the same lawsuit as lessees.

In keeping with the season, here is Iko Iko.

 

Louisiana Governor Bobby Jindal signed into law two bills significantly revising Louisiana’s oilfield cleanup statute, La. R. S 30:29. The new law affects the procedures for remediating oil field pollution and resolving oilfield contamination claims.  The purupose is to expedite the remediation process and the resolution of claims.

For the highlights that were important to the Louisiana Oil and Gas Association, I refer to the analysis of Donald Briggs, president of LOGA, as reported by the American Oil & Gas Reporter in its July issue:

  • In an effort to accelerate remediation, parties can assume responsibility for environmental damage according to a regulatory standard without admitting liability for private damages.
  • Once a party claims responsibility, the Department of Natural Resources will structure a feasible cleanup plan.
  • Cleanup plans will be subject to review by the DNR, secretary of the Department of Environmental Quality, and the commissioner of agriculture.
  • Both the remediation plans and the agencies’ comments are admissible in court.
  • No employee, contractor, nor representative of the state is allowed to engage in any ex parte communications with department employees  while plans are being designed.
  • Any party that admits responsibility waives the right to enforce contractual rights to indemnification for punitive damages caused by the responsible party.

Other features of the new law are meaningful (as a lawyer, I gravitate toward the procedural stuff):

  • A defendant can request an early dismissal from a suit. There will be an evidentiary hearing at which the plaintiff can provide evidence of the defendant’s liability. The defendant will have an opportunity to rebut. The defendant could be brought back into the suit if evidence is discovered later in the proceeding.
  • A plaintiff can interrupt prescription by delivering a notice of intent to investigate to the DNR. Certain information must be included in the notice.

To say this musical interlude is relevant to today’s topic is a stretch. But what if the aforesaid Gov. Jindal becomes one heartbeat away from the presidency?  Other than that, it’s here because I like it.

You’re driving while texting your engineers about enhancing reservoir performance with LPG gel fracturing technology, and you rear-end a broken-down 15-year old Kia. The owner demands to be made whole. Is he entitled to the equivalent of another jalopy just as good as the one he had or, say, the brand-new Mercedes he says he needs? The Louisiana Supreme Court, in its latest pronouncement in a legacy pollution case, says he gets the jalopy.

 In  Eagle Pipe and Supply, Inc. v. Amerada Hess Corporation, a plaintiff who purchased property after environmental damage had been done did not have a right of action against those who caused the damage unless his seller specifically transferred that right in the Act of Sale.  That right was not transferred to Eagle. Thus, the subsequent purchaser doctrine deprived the plaintiff of its “Mercedes”.  The  court also rejected the plaintiff’s contention that the continued pollution was an ongoing tort, denying that cause of action. The court’s view was that the pollution was a result of past activities and not ongoing action in and of itself.

On a practical level, the rationale of the majority of the court is that the buyer is presumed to know the overt condition of the property when he buys it and to take that condition into account in agreeing to the sales price. Here, the plaintiff made an as-is, where-is sale.

For those wondering how different the civil law can be from the common law, the decison features a thorough analysis of Louisiana law pertaining to the transfer of property. Welcome to the difference between jurisprudence constante (judicial decisions are persuasive) and stare decisis (decisions are authoritative); obligations that are personal (a right that can be enforced by the obligee only), heritable (the right can be transferred) and real (such as servitudes and other aspects of ownership ); and stipulations pour autrui (think third party beneficiary in common law).   

The Louisiana Mineral Code requires a servitude owner to return property used in oil and gas activities to its original condition after use has been terminated.  Could there be a different result with respect to liability of a servitude owner to the surface owner?  The extent of that liability is not clear. Does the subsequent purchaser doctrine also bars claims against

On a practical level, the rationale of the majority of the court in this 4-3 decision is that the buyer is presumed to know the overt condition of the property when he buys it and to take that condition into account in agreeing to the sales price. Here, the plaintiff made an as-is, where-is sale.servitude owners under the Mineral Code where the plaintiff knew what he was purchasing and made an as-is-where-is sale?  If the property must be returned to its original condition, should it be the condition when the plaintiff purchased the property? Finally, when does the duty to restore the surface accrue? Not until operations are complete?

This decision does not signal the end of this debate. Eagle is one of many similar cases working their way through the Louisiana courts.  Legislation on this subject has passed the legislature and will be the subject of another post soon.