Energy Lawyer & Attorney : Liskow & Lewis Law Firm : Gulf Coast, Offshore

By Everard Marseglia:

Last Friday, the Supreme Court of Texas issued decisions in two companion cases, No. 05-1076; Exxon Corp., et al. v. Emerald Oil & Gas Co., et al. (“Miesch”), and No. 05-0729; Exxon Corp., et al. v. Emerald Oil & Gas Co. (“Emerald”). Butch Marseglia, counsel in Liskow & Lewis’s Houston office, submitted a brief for the Texas Oil & Gas Association (“TxOGA”) as amicus curiae.

 

In Emerald, the Court held that Section 85.321 of the Texas Natural Resources Code creates a private cause of action, but it does not extend to a subsequent lessee against a prior lessee for damages to the subsequent lessee’s interest. Because the plaintiff Emerald owned no interest in the mineral leases when the prior lessee allegedly damaged the interest, the plaintiff lacked standing to assert the cause of action the Court recognizes under section 85.321. The Court also held that Emerald also lacked standing to bring a claim against its prior lessee based on negligence per se.

 

In Miesch, the Court held that statutory and common law waste, negligence per se, negligent misrepresentation, and tortious interference claims against the former lessee were time-barred. The Court also held that no evidence supported the lessors’; claim for breach of development claims under the oil and gas lease. Finally, the court affirmed the court of appeals’ judgment, for different reasons, reversing the trial court’s directed verdict with respect to fraud claims based on allegedly misrepresentation in Railroad Commission plugging reports filed by the former lessee, and remanded that claim to the trial court for further proceedings.

Click here for a link to the Miesch decision.

Click here for a link to the Emerald decision.

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The Texas Supreme Court this morning issued its long-awaited decision in Coastal Oil & Gas Corp. v. Garza Energy Trust, holding that the rule of capture bars recovery for damages for subsurface trespass caused by hydraulic fracturing. A concurring opinion and an opinion concurring in part and dissenting in part were also filed. Copies of the opinions are available at: http://www.supreme.courts.state.tx.us/historical/082908.asp

 The Court also held

 1. Mineral lessors with a reversionary interest have standing to bring an action for subsurface trespass causing actual injury;

2. The measure of damages for breach of the implied covenant to protect against drainage is the value of the mineral lost because of the lessee’s failure to act with reasonable prudence, and there was no evidence of such in this case;

3. Some evidence supported the jury’s finding of breach of the implied covenant to develop;

4. Some evidence supported the jury’s finding of bad faith pooling;

5. Admission into evidence of a memorandum containing a racial slur was reversible error; and

6. The trial court did not abuse its discretion in refusing to abate this case for two related cases.

 Liskow attorney Everard A. Marseglia, Jr., submitted a brief as amicus curiae on behalf of the Texas Oil & Gas Association. A copy of the TxOGA brief is available at this link.
 

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By Anna Knull:

In Hamilton v. Morris Resources, Ltd., the San Antonio Court of Appeals affirmed a decision in favor of holders of oil and gas deeds executed in the 1920s and 1930s over the claims of lessor, holding that, based on the four corners of the conveyances in question, the original deed holders did not intend to convey mineral estates differing in magnitude and duration, and that they had conveyed a mineral interest that did not convert to a fixed royalty interest under a subsequent Correction Deed.

Hamilton v. Morris Res., No. 04-05-00904-CV, 2007 WL 460648 (Tex. App.--San Antonio Feb. 14, 2007).

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By Jonathan A. Hunter

In Weyerhaeuser Co. v. A. D. Hinton,  No. 07-30117 (5th Cir., May 1, 2007), the Fifth Circuit upheld a decision by the Federal District Court for the Western District of Louisiana rejecting a challenge to a group of mineral servitudes created in 1971. The plaintiff landowner, Weyerhaeuser Company, asserted that a series of formal "acknowledgments" executed by its corporate predecessor to interrupt prescription were part of an attempt to create fifty-year mineral servitudes in violation of Louisiana law. In a Memorandum Ruling, the district court held that the challenged acknowledgments fully complied with Louisiana Mineral Code articles 54 and 55; accordingly, the acknowledgments interrupted prescription running against the mineral servitudes. Weyerhaeuser Co. v. A. D. Hinton, et al., No. 06-0272 (W.D. La., Dec. 29, 2006, Walter, J.). On May 1, 2007, the Fifth Circuit heard oral argument on Weyerhaeuser’s appeal. That same day, the Fifth Circuit issued its per curiam decision upholding the district court’s ruling.   Click here to view the ruling.

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In Waterfowl Limited Liability Co. v. United States, No. 05-30219 (5th Cir. Dec. 12, 2006), the United States Court of Appeals for the Fifth Circuit granted the petition for panel rehearing, withdrew its earlier panel opinion, and held that Louisiana law did not apply to a settlement agreement that arose out of earlier litigation over mineral servitudes.   Continue Reading...

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By Stevia M. Walther

A deed reserving a mineral servitude for a period of ten years does not create a ten-year fixed servitude, but instead re-affirms the statutory ten-year prescription of nonuse applicable to mineral servitudes established in article 27 of the Louisiana Mineral Code. Thus, the right did not expire after the passage of ten years, but was kept alive by mineral production. In St. Mary Operating Company v. Lester Joseph Champagne, 06-984 (La. App. 3 Cir. 12/06/06), 2006 La. App. LEXIS 2750, the Louisiana court of appeal determined that a reservation “all of the minerals underlying or which may be produced from the above described tracts for a period of ten years” was a mineral servitude, not a mineral royalty, and that the servitude was subject to the statutory prescriptive period.

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