Patch LLC et al v. Indio Minerals LLC et al  was a dispute over title to a 1/8th NPRI in land in Midland County. Viola Ash, an Illinois resident, executed a warranty deed in 1932 for land in Midland County, reserving a 1/8 NPRI. Viola died in 1974 leaving no children.

Due diligence

Patch’s due diligence concluded that Viola died without a will and Patch purchased mineral interests from most of her living heirs. Patch made offers to other heirs but Indio had already purchased those interests.

In its own due diligence, Indio found Viola’s will that had been filed in the probate records of Macon County, Illinois, three days after her death. Her interest was devised to ancestors of Ms. Shook and others who had conveyed to Indio.

in order to establish its title, Indio filed a small estate affidavit in Midland County in 2020 and initiated the probate of Viola’s will in Macon County. The will was filed in the Deed Records of Midland County in 2021 and admitted to ancillary probate in 2022.

When did title vest?   

In Texas if a person dies leaving a lawful will, all of the estate that is devised by the will vests immediately in the devisees. A a copy of a foreign will takes effect as a conveyance beginning at the time the instrument is delivered to the Clerk in Texas to be recorded.

So, which is it here?  It depends on whether the will is a foreign will.  Viola’s will that was probated in Illinois had the same effect as a domestic will and transferred title to her devisees on the date of her death.

Patch was not a bona fide purchaser

When Patch acquired its interest Viola’s will was on deposit in Illinois. The Estates Code regarding the deposit of a will only pertains to a deposit in Texas. The will of a testator not domiciled in Texas may be admitted to probate at any time in Texas if proof is presented that the will was probated in another state.

In Illinois, there is no limitations period following the testator’s death in which a will may be admitted to probate. Patch, contended it was a bona fide purchaser, which it could have been if it had purchased the property from the decedent’s heirs after the fourth anniversary of the decedent’s death.  But that rule does not apply to foreign wills.

Patch’s misery was compounded by the admission by a Patch witness that before Patch purchased the interests, the Clerk of Macon County informed him that Viola had a will on file.

The court relied on several sections of the Estates Code and the Property Code to arrive at these conclusions. It’s worth a read if this is an immediate issue for you. 

What does your mineral deed convey?

Patch acquired its interests by both a “Quitclaim Deed” and a “Mineral and Royalty Deed”. A party that acquires a real property interest in a quitclaim deed cannot be an innocent purchaser for value because the grantee receives only whatever right, title, interest or claim the grantor has, not the property itself. The grantee is on notice of legal or equitable claims in favor of a third person.

Patch’s Mineral and Royalty Deed granted “all right, title and interest that grantor may own”. The court agreed with Indio: that language indicated a quitclaim deed.

The result

Indio acquired its interest from Viola’s devisees under her duly probated Illinois will, and Patch was not a bona fide purchaser.

Your musical interlude. Muddy probably was not thinking about Lent.

Boren Descendants et al v. Fasken Oil and Ranch, LTD, offers something to talk about beyond interpretation of the fixed-or-floating NPRI question.  At issue was this reservation, expressed as a double fraction, in a 1933 deed:, “an undivided … 1/4th of the usual … 1/8th royalty” from a conveyance of real property”.

The court of appeals affirmed the trial court’s judgment that the deed conveyed a 1/4th floating NPRI in the grantor (Fasken). Grantees and their successors (Boren/Mabee) failed to rebut the presumption that the term “1/8th“ was a term of art to refer to the total mineral estate and not merely 1/8th .

Now, for the interesting part: The court of appeals affirmed the trial court’s rejection of several affirmative defenses asserted by Boren/Mabee that might have prevented Fasken from claiming that its interest is anything other than a fixed 1/32 NPRI.

Estoppel – Grantor wins.

Estoppel does not create a new contractual right, nor does it alter existing contractual rights. The court dispensed with a discussion of equitable estoppel. Quasi estoppel does not require a false representation or detrimental reliance. It precludes a party from asserting to another’s disadvantage a right inconsistent with the position previously taken. It applies when it would be unconscionable to allow a person to maintain a position inconsistent with one in which he acquiesced or from which he accepted a benefit.

Estoppel by deed or contract precludes parties to a valid instrument from denying its force and effect. Boren/Mabee referred to decades of conduct on the part of Fasken, such as execution of deeds, leases and division orders, that bound it to a fixed 1/32nd interest. However, Boren/Mabee were not parties to any of those documents and were not bound by them.

Boren/Mabee were not strictly required to establish justifiable reliance in order to recover on quasi estoppel; however, the court believed it needed to consider whether under the circumstances it would be unconscionable for Fasken to seek recovery of overpayments to Boren/Mabee. 

Fasken’s acknowledgment of its interest in documents that are otherwise unrelated to its relationship with Boren/Mabee did not render Fasken’s claims unconscionable.

The purpose of division order estoppel is to protect operators and payors from double liability. Fasken’s division orders were not binding between the distributees themselves.

Judicial estoppel – Grantor wins.

Judicial estoppel is not so much an estoppel as it is a rule of procedure based on justice and sound public policy and is intended to prevent a party from playing fast and loose with judicial system for their own benefit. In a suit by a taxing authority for a .03125 royalty interest (which is the fixed portion of the royalty at issue here), Fasken asserted that the interest belonged to it. Those statements were made at a time when the courts generally used a straightforward mathematical approach to multiplying double fractions to establish the fractional royalty interest (that is, before Hysaw v. Dawkins).

Waiver – Grantor wins.

Waiver permanently alters the parties’ contract rights. Fasken requested and accepted payments of a 1/32nd royalty during a period in which the law relating to the interpretation of double fractions was unsettled. Again, Fasken could not have formed a clear understanding of its rights in connection with a double fraction conveyance with the law was unsettled as it was at the time. 

Ratification – Grantor wins.

Ratification permanently alters the parties’ contract rights. Again, Fasken’s acceptance of a 1/32nd royalty was at a time when the law was unclear. The evidence was insufficient to demonstrate that Fasken formed an intention to be legally and permanently bound to the 1/32nd interest it was then receiving.

Presumed grant doctrine – the court passes

The court declined to rule on the presumed grant theory because the parties did not include that defense within the list of issues identified by the trial court in its order permitting an interlocutory appeal.

Limitations – Grantees win, mostly.

Boren/Mabee argued that Fasken’s recovery should be governed by the two-year statute of limitations for unjust enrichment (money had and received) and not the four-year statute for breach of contract.

The trial court erred when it denied Boren/Mabee’s motion for summary judgment on Fasken’s claim for breach of contract. There was no evidence that any of the defendants entered into a contract to ensure that royalty payments were correctly distributed or to turn over payments received from a payor or producer. Boren/Mabee win.

As for unjust enrichment, a payee’s execution of conveyances, division orders, and other documents that are not directly related to its relationship with other payees does not prevent the assertion of claims that such other payees have been overpaid pursuant to the relevant contracts between the parties.

The record wasn’t sufficient to support a defense that Fasken’s claim for money had and received is barred in its entirety. The trial court did not err when it denied Boren/Mabee‘s motion for partial summary judgment on the two-year statute of limitations. Its back to the trial court for more evidence, presumably to determine the amount of royalties paid before and after the two years before suit was filed.

Your musical interlude.

After four stops at the lower courts, Kenneth Hahn v. ConocoPhillips has been resolved by the Supreme Court of Texas. The Court opined on the effect of two instruments often used to clarify land titles in Texas:  ratifications of an oil and gas lease and stipulations of interests.  

See this post for background. And remember: These brief posts are not presented as fulsome discussions of the cases we report on. We promise not to “hallucinate”, as with AI and 1960’s rock-and-rollers, but we can’t discuss every nuance and detail of these often long and complicated decisions.   

The result

The Supreme Court reversed a court of appeals judgment favoring Hahn. Hahn’s NRPI was reduced to a floating interest as a result of a Stipulation between the parties but not as a result of a Ratification. It’s complicated. Read on.

The facts

Briefly stated: Hahn owned a 1/8 NPRI in “Tract A” and ratified a subsequently negotiated oil and gas lease from mineral owners the Gipses to ConocoPhillips which paid a ¼ royalty.  After the Gips lease was pooled title questions arose. At the request of ConocoPhillips, Hahn executed a “Ratification of Oil Gas and Mineral Lease” and he and the Gipses executed a “Stipulation of Interest’’.

The Ratification

An NPRI owner like Hahn has the option to ratify or repudiate a lease containing provisions which as to his interest the executive right owner has no authority to insert into the lease. But if an NPRI owner ratifies a pooling agreement (or a lease with such an agreement) his interest is bound by the entire agreement. He cannot accept provisions that benefit him and reject provisions that are detrimental to him.

The Gips lease’s royalty provision did not apply to Hahn’s nonpossessory interest in production because of the different nature of those property interests. An NPRI is neither ownership of the mineral fee nor a fractional title to the mineral fee. It is not leasable. The standard lease provision obligating the lessee to pay royalty to the mineral fee owner does not also apply to a pre-existing fixed NPRI and does not create an NPRI that floats with the lease royalty.

Because Hahn’s royalty interest was fixed it remained constant regardless of the royalty in the subsequently negotiated Gips lease.

The Stipulation

This instrument told a different story. The Stipulation included a cross-conveyance of interests between Hahn and the Gipses. Stipulations are favored in the law as a way to avoid litigation and clarify land titles. The parties agreed that if the Stipulation was effective, Hahn’s NPRI would float with the lease royalty. On its way to finding the Stipulation to be enforceable, the Court discussed in detail what is required for a written contract to satisfy the Statute of Frauds (See pp. 14 -16).

The Stipulation referred to the NPRI reserved to Hahn in the Gips deed as a 1/8 “of royalty”. Thus, the Stipulation changed Hahn’s NPRI from fixed to floating.

Clarifying Ellison

The Court clarified its ruling in Concho Resources v. Ellison regarding the effect of a stipulation of title:

  1. No proof of subjective uncertainty of the parties is required to make a stipulation enforceable, and
  • Stipulations are not limited to agreements establishing the physical location of a property boundary.

Roberta Flack RIP

Kouatli v. Endeavor Energy Resources L.P.  offers valuable (and obvious) lessons on how NOT to perform a Master Service Agreement in the oil patch (or, per Billly Bob and friends, “The Patch”), to wit:

  1. Don’t bother to comply with the most basic and unambiguous requirements of the contract.
  2. Take informality for granted.
  3. Assume that if your counterparty ignores those most basic and unambiguous requirements for 10 years the court will force him to keep on doing it.

The litigants were parties to an MSA which provided:

  1. When Operator (Endeavor) desired work to be performed by Contractor (Kouatli), Operator will request a Work Order, which could also be a purchase order, letter, memorandum or other document, or it may be oral.
  2. Upon acceptance of the Work Order, Contractor will commence performance of the work.
  3. A requested Work Order “shall be” confirmed in writing within three business days by Contractor.   
  4. Any Work Order not in conformity with the MSA “shall be null and void”.
  5. The MSA constituted the entire understanding between the parties and would supersede all negotiations, prior discussions, prior agreements and understandings relating to the subject matter.
  6. The MSA could not be modified or amended except by express written consent.

None of this is surprise to those who deal in MSAs.

Kouatli sued for breach of the MSA alleging that Endeavor failed to remit payment for 16 invoices. Endeavor’s motion for summary judgment stated that Kouatli had no evidence that:

  1. The work described in the invoices was requested by Endeavor either through a written Work Order or an oral request confirmed in writing,
  2.  Kouatli correctly performed the work described in each invoice in compliance with the MSA and a Work Order, and
  3. An authorized officer of both parties agreed to waive compliance with the requirements of the MSA with respect to the work described in the invoices.

Endeavor thus asserted that there was no evidence of:

  1. Fulfillment of a condition precedent (written Work Order or written confirmation of a verbal Work Order)
  2. Kouatli’s performance, or
  3. Breach by Endeavor.

Koualtli responded by affidavit testimony that:

  1. The work was verbally authorized,
  2. Kouatli submitted daily reports that described the work, and
  3. Endeavor’s representatives signed each report thereby accepting and confirming the work.

Endeavor objected for evidentiary reasons having nothing to do our purposes here (see p. 2 of the opinion).

The trial court dismissed Kouatli’s suit.

On appeal Kouatli argued that the manner of conduct by which the parties operated for 10 years precluded enforcement of requirements of the MSA. The court determined that there was no legal authority that Endeavor’s conduct precluded Kouatli from enforcing the MSA related to the work.

Kouatli did not expressly argue that he fulfilled or was excused from fulfilling the alleged condition precedent (submission of a Work Order or written confirmation) nor did he argue that confirmation was not a condition precedent. Koutali admitted that he never submitted written confirmation of any verbal Work Order.

The affidavit did not raise a genuine issue of fact on Kouatli’s own performance under the MSA. The affidavit was devoid of facts to support Endeavor’s waiver of the contract requirements.

The result: Kouatli (it appears) did a lot of work in return for nothing.

Your musical interludes, a carnival of covers:

Bob Dylan by Sam Bush and Jerry Douglas

Bob Dylan by Pete Townshend

Beatles by Michael Jackson

Eurythmics by Toni Lindgren

By Stephen A. Cooney

Who owns produced water in Texas?  And what is produced water anyway – oil and gas waste and part of the mineral estate, or groundwater and part of the surface estate?  We may be closer to an answer to these questions now that the Texas Supreme Court has agreed to hear a highly anticipated case out of Reeves County. 

Produced water, a byproduct of oil and gas activities, has historically been treated as waste and disposed.  However, recycling technologies have made produced water a potentially valuable commodity. 

In Cactus Water Services, LLC v. COG Operating, LLC, COG acquired oil and gas leasehold rights covering 37,000 acres in Reeves County.  Thereafter, Cactus Water entered “Produced Water Lease Agreements” with a surface owner covering the same property and included the produced water generated from COG’s oil and gas activities.  The agreements provide that Cactus has “the right to sell all water produced from oil and gas wells” under the property.  COG sued, seeking a declaratory judgment that it has the sole right to the produced water through its mineral leases and common law.  Cactus countersued, claiming its right to the produced water because it is groundwater, which belongs to the surface owner.  The district court agreed with COG; Cactus has “no rights in or to the product stream from COG’s wells.”  Cactus appealed and the El Paso Court of Appeals, in a 2 to 1 decision, affirmed the district court decision.   COG asserts that it owns all matter incidental to the product stream, including produced water, which makes it part of the mineral estate.  Cactus Water asserts that groundwater is groundwater, no matter how dirty it is – and it is well-established that groundwater is part of the surface estate. 

With the evolution of treatment and recycling technologies, this conflict was inevitable.  This case could have extraordinary implications for the oil and gas industry, water transactions, water resources and of course to landowners with oil and gas operations on their property.  This continues a line of monumental water law cases the Texas Supreme Court has heard and ruled on in just the last 15 years.  See Gray Reed’s articles and blog posts on this topic here:

Who Owns Produced Water in Texas? – Energy & the Law Blog post, September 2023, in which we discuss the opinion and he dissent in the court of appeals decision.

Produced Water – Groundwater or Waste? – Gray Reed Legal Alert, August 2023

Produced Water in Texas – Waste or Groundwater? Who Owns It? – Gray Reed Insights, February 2020

Your musical interlude.

Alas, we might never know. Opiela v. Railroad Commission of Texas and Magnolia Oil & Gas Operating, was a challenge to the Commission’s authority to issue permits for allocation wells and wells drilled under Production Sharing Agreements. The parties have submitted a Joint Unopposed Motion For Reversal and Remand Pursuant to the Parties’ Settlement, which the Court granted.

The lawsuit, with potentially game-changing ramifications for PSA’s and allocation wells, attracted attention from the horizontal well drilling community (which includes just about everybody in the business in Texas) and we have reported it regularly: First on the trial court result, second on the Austin Court of Appeals result, and finally on the Supreme Court briefing. Those posts will tell you a lot about the dispute.

Because outsiders like you and me (or at least me) are not privy to the black box that is the parties’ settlement agreement, we don’t know what the parties truly believed about the strength of their respective cases.

What does it mean? It’s been business as usual at the Commission since the suit was filed. Time will tell if that changes. Parties in the future can be guided by the opinion of the Austin court: What they said and declined to say about, among others, the “65 percent rule”, the Commission’s authority to evaluate a permit applicant’s good faith claim to the right to drill a well, the Commission’s authority to resolve title issues, and the relationship between pooling and PSA’s.

Your musical interlude

The message in RSM Production Corporation v. Gaz du Cameroun SA: According to the federal Fifth Circuit, an arbitration tribunal’s construction of a contract and the arbitration rules governing the dispute “hold, however good, bad, or ugly.” Translation: Good for one party, bad or ugly for the other, just like the courthouse.

RSM was granted an oil concession with the Republic of Cameroon giving RSM the right to explore and develop hydrocarbons in the Logbaba Block. RSM and Guz du Cameroun (GdC) entered into farmin and joint operating agreements. GdC was the operator. The farmin granted RSM 100% participating interest in the concession in exchange for GdC’s agreement to operate. After GdC recovered 100% of drilling costs out of 100% of production revenues (“Payout”), the would share 60% to GdC, 40% to RSM.

A dispute arose over the payout calculation. The parties arbitrated, applying Texas Law and International Chamber of Commerce Rules. RSM had three claims. The tribunal ruled in favor of RSM on “Claim 1” and awarded $10 million+ in damages. The tribunal deemed RSM’s Claims 2 and 3 as moot, having ruled for RSM on Claim 1.

GdC contested the Partial Final Award.  An Addendum to Partial Final Award corrected Claim 1 and considered Claims 2 and 3. GdC prevailed on the merits of the contested claims, reducing RSM’s award by $4 million+.

Under ICC Rule 36, an arbitrator may correct a clerical, computational, or typographical error “or errors of similar nature”. Was GdC’s request a correction of law, which would exceed the tribunal’s authority, or a correction of a fact, which was within the bounds of Rule 36?

RSM sued in district court to vacate to the Addendum. That court vacated the part of the Addendum that reduced RSM’s recovery, concluding that the tribunal exceeded its powers by conducting a “merits re-do”.

GdC appealed, maintaining that the district court failed to apply the courts’ well-established, highly deferential approach to judicial review of arbitral awards. The court of appeal reversed, upholding the tribunal’s Addendum.

The court’s saw its task as determining the limits of an arbitrator’s power to reconsider a previously issued decision. (FYI, ICC Rule 36 is similar to the American Arbitration Association Rule 40.) So long as an arbitral award draws its essence from the contract, a court must uphold the award even if it was based on error. Convincing a court of even a grave error is not enough to justify vacatur.

Rule 36 prohibits redetermination of the merits of a dispute. The court concluded that the tribunal not only had the contractual authority to correct computational errors but also had the authority to determine what constituted a computational error in the first place.

The tribunal classified its error in the Partial Final Award as computational. The agreement established the tribunal’s authority to construe the meaning of the ICC rules themselves and whether an error truly is computational or not.

The tribunal had both the authority to correct computational errors and the more foundational authority to determine what counted as one in the first place. Rule 36 was broad enough to authorize the tribunal to analyze its ruling regarding RSM’s Claim 1 to determine whether a computational error occurred. The tribunal concluded that the authority to correct computational errors is within Rule 36’s purview and the tribunal had the authority to determine whether the error was computational or something else.

Musical interludes: artists you could have seen had you attended the 2025 30A Songwriters Festival:

Chuck Cannon (Chuck wrote it. It’s a “songwiters” festival)

Maddie Font

Lera Lynn

Austin Jenckes

Tia Sillers

Gina Venier

In In the Matter of Offshore Oil Services, Inc., Offshore owned and operated the M/V Anna. Offshore sued Island Operating Company for exoneration and/or limitation of liability for a personal injury claim by an employee of Island. The question (after a series of earlier rulings): After reaching a settlement with the employee of Island, did Offshore retain the right under the Louisiana Oilfield Anti-Indemnity Act to require Island to defend and indemnify Offshore for its losses?

Says the United States District Court for the Eastern District of Louisiana, No.

On its journey to reach that result, the Court reviewed a short history of recent LOAIA cases involving efforts by settling parties to obtain indemnity. The Court held that Tanksley v. Gulf Oil Corporation is still good law in Louisiana. What does that mean?

The LOAIA nullifies oilfield indemnity provisions that purport to provide for defense or indemnity against loss or liability for damages or bodily injury caused by the sole or concurrent negligence or fault of the indemnitee.

In Tanksley, Chevron (f/k/a Gulf, in case you forgot) sought indemnity from its contractor related to injuries suffered by the contractor’s employee. Chevron and the employee Tanksley agreed to settle without involving the contractor. Chevron sought a trial to determine it was not at fault. The Fifth Circuit determined that Chevron was not entitled to an adjudication of its fault because it voluntarily foreclosed such a determination by settling with the employee. Without a finding that Chevron was free from fault, the LOAIA nullified Chevron’s indemnification rights. In arriving at its result, the Fifth Circuit relied on the Louisiana Supreme Court’s answer to a certified question.

In Tanksley, Chevron was the indemnitee. A subsequent Fifth Circuit case, American Home Insurance Company v. Chevron USA and several Louisiana state appellate court decisions did not overrule Tanksley. For example, in American Home the indemnitor, not the indemnitee, settled with the underlying plaintiff. Those are distinguishing facts.

The court granted Island’s motion to dismiss all of Offshore’s claims.

Garth Hudson RIP

Here’s a more low key Garth

MDC Enegy LLC v. Crosby Energy Services Inc. et al. was an indemnity dispute in which the players were many and the facts complicated.

But first

Gray Reed’s own Mitch Ackal and Jeremy Walter will present an entertaining and informative webinar on Texas Business Courts on January 29 at noon. Use this link to learn about the presentation and RSVP.

Here is the report on the case, with lots of details omitted:

There were two Master Services and Supply Contracts:

  • Between MOF as “Contractor” and MDC as “Company”; 
  • Between Crosby as “Contractor” and MDC as “Company”. That agreement included MDC affiliate Reeves in the “Company Group”.

In a suit by an employee of MOF against Crosby and its employee Marrufo, Crosby/Marrufo demanded contractual defense and indemnity from MDC and its related entities. Crosby/Marrufo were performing under both agreements and claimed to be additional insureds as subcontractors under the Crosby-MDC agreement.  

Crosby/Marrufo’s contention: MOF was a Contractor of MDC but also a subcontractor of the MDC entities under the Crosby-MDC agreement and therefore included in the definition of “Company Group”. Because MOF was part of the Company Group, Crosby/Marrufo as “Contractor” were entitled to be indemnified by the MDC entities.

MDC’s contention: It owed no indemnity because MOF was MDC’s Contractor, and “Company Group” included only subcontractors. (The parties agreed that if MOF was not a subcontractor of any entity included in the definition of “Company Group” then the MDC entities were not required to defend Crosby/Marrufo.)  

The Question:

Did MOF fall within the definition of ”Company Group” in the Crosby-MDC agreement? That depended on the interpretation of “subcontractor” as used in the Crosby-MDC agreement.

What is a “subcontractor” anyway?

The Court interpreted the plain and ordinary meaning of the unambiguous contract term “subcontractor”, which Merriam-Webster defines as “an individual or business firm contracted to perform part or all of another’s contract”. Black’s Law Dictionary and the Fifth Circuit pretty much agree.

The Crosby-MDC agreement used “Contractor” to refer to Crosby and “contractor” when the word did not mean Crosby.  “Subcontractor” appeared in both agreements as a defined term in the definition of Contractor Group. “Subcontractor” was defined to mean contractors retained by Crosby.

The record was devoid of evidence that MOF’s work comported with the definition of “subcontractor” under the Crosby-MDC agreement. The evidence demonstrated that MOF was not a subcontractor of any entity listed in the agreement’s definition of “Company Group”. The court referred to “creative but ultimately unpersuasive arguments” to overcome the absence of a contract from which Crosby took a portion.

The Texas mineral lien statute.

MOF did not meet the statute’s definition of “mineral subcontractor’. There was no contractual relationship between MOF or MDC on the one hand and any MDC entity on the other. The statute requires a contractual link between the principal party (Party A), mineral contractor (Party B), and mineral subcontractor (Party C) in order to meet the definition.

The evidence demonstrated that MOF was a Contractor, not a subcontractor. MOF was not included in the definition of Company Group in the Crosby-MDC agreement for whose conduct MDC owed Crosby/Marrufo indemnity.  

The result

MDC had no duty to defend, indemnify and provide insurance coverage to Crosby/Marrufo.

Peter Yarrow RIP

Sam Moore RIP

For the Osage Indian Tribe, it’s more like “IMBY if you pay me”.  In the latest interation of United States and Osage Minerals Council v. Osage Wind LLC et al the US District Court for the Eastern District of Oklahoma awarded a judgment for damages against the defendants. Much more important was the order for injunctive relief in the form of a mandate that defendants remove 84 wind towers from Indian lands in Osage County as the remedy for defendants’ continuing trespass over the land. Removal is estimated by defendants to cost a whopping $259 million.   

The takeaway: Asking for forgiveness later rather than asking for permission first is not always the most clever path to action.

The District Court, affirmed on appeal, had already found the defendants liable on the plaintiff United States and intervenor Osage Mineral Council’s claims of conversion, trespass and continuing trespass. We described the underlying facts and the ruling in our report on the first District Court order.

The Court also awarded damages of $242,000+ for conversion of extracted minerals and $66,000+ for trespass for the value of a mineral lease defendants should have obtained before constructing the 84-tower wind farm.

The Court heard from three experts who testified about the value of extracted mineral material, in particular limestone, and the value of the lease that defendants failed to obtain before extracting material from the mineral estate. The defendants found themselves buried in a literal and figurative hole dug by their very own selves when the Court found in the earlier proceeding that the defendants were liable for continuing trespass by failing to obtain a lease despite repeated requests from the Osage Tribe.

The court denied defendants’ request that it order the removal only of backfill and replace it with substitute materials as a more narrowly tailored remedy for trespass. The court noted that the harm resulting from defendants’ continuing trespass is not only the continued use of backfill but also the interference with the Osage Nation’s sovereignty by the presence of the towers. The court referred to this effort as “a backdoor attempt to seek reconsideration of the prior grant of injunctive relief”.

In response to the defendants’ claim that removal would take 18 months the court allowed 12 months, citing provisions in the surface leases that required defendants to remove all wind power facilities within 12 months of the expiration or termination of the surface lease.

The Court agreed with the defendants that it would not be appropriate to award both injunctive and monetary damages for the continuing trespass.

Considering the upcoming “regime change”, your musical interlude.