Aj & K Operating Co., Inc. v. Smith

• Decision Date: 08 January 2004
• Docket Number: No. 03-232.,03-232.
• Citation: 355 Ark. 510,140 S.W.3d 475
• Parties: AJ & K OPERATING COMPANY, INC., et al. v. Grover SMITH, et al.
• Court: Arkansas Supreme Court

140 S.W.3d 475

355 Ark. 510

AJ & K OPERATING COMPANY, INC., et al. v. Grover SMITH, et al.

No. 03-232.

Supreme Court of Arkansas.

January 8, 2004.

Appeal from the Union Circuit, David Guthrie, J Chisenhall, Nestrud & Julian, P.A., by: Charles R. Nestrud and Ann P. Faitz, Little Rock, for appellants Kerr-McGee Corporation; Kerr-McGee North American Onshore Corp.; and Kerr-McGee Oil Industries, Inc.

Gooding & Dodson, by: Robert Dodson, for appellants Kerr-McGee Corp., Kerr-McGee Onshore Corp.; Kerr-McGee Oil Indus., Inc.; and Devon Energy Corp.

Anderson, Murphy & Hopkins, by: Randy Murphy, Little Rock, for appellants Jaykay Oil Co., LLC; J.C. Langley Oil Company, by and through his Guardians, Jerry Langley and Janice Warwick; Needmore Oil Co.; Alpha Production, Inc.; Atlanta Production, Inc.; Pierce Land & Title Company.

Heidleberg & Woodliff, by: Richard Edmondson, for appellants Jaykay Oil Co., LLC, and J.C. Langley Oil Company, by and through his Guardians, Jerry Langley and Janice Warwick.

Dunn, Nutter, Morgan & Shaw, by: Wilford Dunn, for appellants Chapman Energy, Inc.; Coda Energy, Inc.; Chapman Acquisition Corp.; Excepted Corp.; Schuler Drilling Co. Mitchell, Williams, Selig, Gates & Woodyard, by: Sherry Bartley, Little Rock, for appellant Moore & Munger Marketing, Inc.

Compton, Prewett, Thomas & Hickey, by: Floyd Thomas, for appellant Cross Oil Refining & Marketing, Inc.

Bridges, Young, Matthews & Drake, by: Stephen A. Matthews, Pine Bluff, for appellant Sales Excavating, Inc.

Shackleford, Phillips, Wieland & Ratcliff, by: Brian Ratcliff, El Dorado, for appellants Lion Oil Refining Company and Monsanto Company.

Smith Stag, L.L.C., by: Stuart Smith and Michael G. Stag, New Orleans,; and Boswell, Tucker & Brewster, by: Ted Boswell and Dennis Davis, Bryant, for appellees.

ROBERT L. BROWN, Justice.

The appellants in this case, AJ & K Operating Co., Inc., et al. (Oil Companies), appeal from the circuit court's order denying their motion to modify a temporary restraining order which was entered against them. The Oil Companies sought permission from the court to complete the plugging of wells and closure of pits on the property of the landowner appellees (Landowners), who had leased their properties to the Oil Companies for oil production. The Oil Companies assert four points on appeal: (1) that there was no irreparable harm to support injunctive relief; (2) that the existence of concurrent jurisdiction before the Arkansas Oil and Gas Commission and a court of law does not authorize the injunction entered in this case; (3) that the public policy of the State demands that remediation take place under the direction of appropriate regulatory authorities; and (4) that the reason for granting the injunction, which was to preserve the Landowners'"cost of repair" damage claim, was based on misinterpretation of Arkansas law. We agree that the circuit court abused its discretion in concluding that there was irreparable harm to the Landowners and in refusing to modify the temporary restraining order. We reverse and remand.

On October 19, 1999, the Landowners filed a complaint in which they alleged that the Oil Companies, which leased the Landowners' land for the production of oil, caused contamination and damage to that land. The Landowners specifically asserted eight claims for relief: (1) negligence/negligence per se; (2) nuisance; (3) continuing trespass to land; (4) breach of contract; (5) waste; (6) strict liability; (7) outrageous conduct; and (8) assault and battery. They sought monetary damages, punitive damages, a declaratory judgment, and an injunction enjoining the Oil Companies from entering onto or disturbing their land "under the guise of performing cleanup activities" without their consent "as to the duration, type and manner of activities intended to be performed[.]"

The following day, October 20, 1999, the circuit court issued a temporary restraining order which restrained the Oil Companies from remediating or otherwise disturbing the Landowners' land. The circuit court noted that prior to filing the instant action, the Landowners had previously sought relief in the federal district court which dismissed the matter for lack of subject-matter jurisdiction. The circuit court then said in its order:

4. Plaintiffs [Landowners] allege that after dismissal of the federal action and prior to the filing of this action, certain Defendants [Oil Companies] announced their intention to attempt to remediate Plaintiffs' property. Defendants refused to supply Plaintiffs with any information regarding the methods to be used or the proposed disposition of the waste.

5. According to Rule 65 of the Arkansas Rules of Civil Procedure, a temporary restraining order may issue where it appears that irreparable harm might otherwise result. The Court finds that Plaintiffs may be irreparably harmed if valuable evidence in this case is destroyed by the proposed remediation, and/or if any proposed remediation conducted is performed inadequately or improperly. Moreover, Plaintiffs allege that Defendants' mineral leases have expired and their equipment has been abandoned, and they do not have the right to access Plaintiffs' property, and thus said remediation would constitute a trespass.

A date for a hearing was then set by the court.

On October 26, 1999, the Landowners filed a motion for preliminary and permanent injunction and/or for protective order. In that motion, they alleged that because the Oil Companies had not conceded liability, there was valuable evidence that remained on their property. The Landowners asked for a protective order to enjoin the Oil Companies from entering the Landowners' land for any purpose that might disturb evidence, including but not limited to equipment and/or contaminated soils. That same day, a hearing was held on the motion, at which time the parties agreed to a modification of the temporary restraining order.

On November 15, 1999, the Oil Companies answered the Landowners' complaint. They first asserted that the complaint failed to state a claim upon which relief could be granted. They then generally denied each of the counts set forth in the Landowners' complaint. In addition to other defenses claimed, the Oil Companies stated that the Landowners had a duty to mitigate their damages by taking, or permitting to be taken, remedial actions as may be reasonable under the circumstances.

On November 16, 1999, the circuit court, in accordance with the parties' agreement, issued a modified temporary restraining order and protective order. In that order, the court allowed some of the Oil Companies fourteen days within which to remove their surface equipment and tubing from the Landowners' properties and required them to give reasonable notice prior to the commencement of the removal so that the Landowners could have their experts present to observe the activity. The court also directed the Oil Companies to take all reasonable precautions "to avoid unnecessarily disturbing or disrupting alleged surface contamination during this process, but this shall not preclude [them] from taking all steps reasonably necessary when plugging a well and removing tubing." The court further directed the Oil Companies to submit their closure plan to the Landowners and to prepare any necessary documents for the Arkansas Oil and Gas Commission and any other appropriate agencies and to provide those documents as well to the Landowners. Finally, the court directed the Oil Companies, after removal of the surface equipment and tubing, to hold those items at a location accessible to the Landowners' experts for thirty days prior to "cleaning, refurbishing, reusing or otherwise disturbing said equipment."

On August 5, 2002, the Oil Companies moved for authority to complete plugging the wells and closure of the pits. The motion stated that in compliance with the circuit court's modification order dated November 15, 1999, and filed November 16, 1999, the Oil Companies completed the remediation on December 1, 1999, and had advised the Landowners' counsel that the equipment was being held for inspection by their experts. The motion added that counsel for the Landowners did not seek any inspection. The motion asked for an order lifting the restraining order on the basis that the Landowners had had over thirty-three months to investigate and sample the well sites in question, and their experts had rendered reports on both soil and groundwater samples. The motion further stated that a trial date of October 28, 2002, had been set and added:

9.

These Defendants respectfully request an Order lifting the Restraining Order and specifically authorizing the Defendants to complete the plugging of the wells in accordance with Rule B-8 of the General Rules and Regulations promulgated by the Arkansas Oil and Gas Commission. Said Rules requires that the plugging of the wells be performed under the supervision of a duly authorized representative of the Oil and Gas Commission. See Rule B-7.

10.

Although these Defendants specifically deny any obligation to close the pits, these Defendants would voluntarily agree to perform this task. Therefore, these Defendants further move that as part of the well plugging procedure, this Court specifically authorize the Defendants to close the pits located on the Plaintiffs' property in conjunction with the well sites at issue in this litigation.... These Defendants would further move that any such pit closures be under the supervision of a representative of ADEQ and such other conditions as required by this Court.

A hearing was held on the motion and following the hearing, the circuit court denied the motion orally:

I find myself getting into a position of a counsel trying a case or mediating a case between these parties. The Court would agree with Mr. Smith [the Landowners' counsel] and not compel his client to accept this remediation of the damaged property. So your motion will be...