O'Brien Oil, L.L.C. v. Norman, 2010 OK CIV APP 23 (Okla. Civ. App. 1/22/2010)
| Decision Date | 22 January 2010 |
| Docket Number | Case Number: 107001. |
| Parties | O'BRIEN OIL, L.L.C., Plaintiff/Appellee, v. JOHN W. NORMAN; CECILIA A. NORMAN; RANDALL A. MOCK, TRUSTEE OF THE NORMAN CHILDREN 1985 IRREVOCABLE TRUST, Defendants/Appellants. |
| Court | United States State Court of Criminal Appeals of Oklahoma. Court of Civil Appeals of Oklahoma |
APPEAL FROM THE DISTRICT COURT OF LOGAN COUNTY, OKLAHOMA, HONORABLE DONALD L. WORTHINGTON, JUDGE.
AFFIRMED IN PART, REVERSED IN PART AND REMANDED
Jeff L. Hirzel, William, Hirzel & Hurst, Guthrie, Oklahoma, James R. Waldo, Mock, Schwabe, Waldo, Elder, Reeves & Bryant, Oklahoma City, Oklahoma, for Appellants.
Tim W. Green, Guthrie, Oklahoma, for Appellee.
¶ 1 Defendants/Appellants, John W. Norman, Cecilia A. Norman, and Randall A. Mock, Trustee of the Norman Children 1985 Irrevocable Trust (Landowners), seek review of the trial court's order granting judgment to Plaintiff/Appellee, O'Brien Oil, L.L.C. (Lessee), on its request for a judgment declaring its right to use an abandoned wellbore located on Landowners' surface estate. In this accelerated review proceeding, Landowners challenge the order as affected by errors of both law and fact.
¶ 2 In 1983, a prior lessee of minerals underlying a 40 acre drilling and spacing unit in Section 33, T16N, R3W, I.M., Logan County, Oklahoma, drilled the Theodore No. 1 well in the SE/4 SE/4 of Section 33, and set casing to a depth of four hundred forty feet. The lessee subsequently abandoned and plugged the well-bore with cement, leaving the casing in place. In 1989, Landowners acquired the surface estate.
¶ 3 Lessee now holds valid leases of the minerals underlying Landowners' surface estate. Lessee proposed additional mineral exploration by re-entry through the existing plugged casing of the Theodore No. 1 well, and offered Landowners compensation for both use of the wellbore and surface damages. When Landowners rejected Lessee's proposal, Lessee applied for and obtained from the Oklahoma Corporation Commission a Permit to Re-Enter the plugged well. When Landowners objected to Lessee's operations, Lessee commenced the instant action for declaratory judgment.
¶ 4 Lessee subsequently filed a motion for summary judgment, and argued that its permit to re-enter specifically allowed its use of the plugged Theodore No. 1 wellbore. Lessee also argued that, by virtue of the existing order of the Corporation Commission establishing a 40-acre drilling and spacing unit, and location of the plugged Theodore No. 1 well at a permitted place within the drilling and spacing unit, it was entitled to use of so much of the surface estate, including the abandoned Theodore No. 1 wellbore, as was reasonable for mineral exploration.
¶ 5 Landowners objected and filed a counter-motion for summary judgment. Landowners asserted that they owned the abandoned Theodore No. 1 wellbore and casing, and that Lessee obtained its Permit to Re-enter without notice to them. Landowners further asserted that their surface estate (including the wellbore and casing) was not subject to Lessee's private taking without their consent, or that, at the very least, Lessee should be required to compensate them for its use. Landowners also set up a counterclaim against Lessee for surface damages, and alleged the existence of another action pending between the same parties concerning the same surface damages.
¶ 6 Upon consideration of the parties' submissions and arguments, the trial court granted the motion for summary judgment of Lessee, denied the motion for summary judgment of Landowners, and dismissed the remaining claims, holding:
1. The Corporation Commission of the State of Oklahoma has oversight and regulatory authority of the drilling and plugging of oil and gas wells in the State of Oklahoma.
2. The Theodore No. 1 well was plugged pursuant to regulations of the Corporation Commission and its official Plugging Record entered on June 11, 1983.
3. Upon plugging and abandonment of the Theodore No. 1 well the 441 feet of surface casing was affixed to and became a part of the surface realty.
4. The Corporation Commission has issued to Plaintiff its" Permit to Re-enter" the Theodore No. 1 well and to utilize the bore hole in its drilling operations to a depth of 6,350 feet, including the 441 feet of surface casing.
5. The owners of the oil, gas and other mineral rights have the right to use so much of the surface realty as is reasonably necessary to explore, produce and market such oil, gas and other minerals.
6. The use of the bore hole of the Theodore No. 1 well in Plaintiff's oil and gas operations reasonably requires the use of the 441 feet of surface casing which is a part of the surface realty.
7. The matters of surface damages, if any, by virtue of Plaintiff's operations on the land are better addressed in case number CV-2008-17 brought under the Surface Damages Act pending in this court and Defendants' Motion to Dismiss Plaintiff's second cause of action in this case should be sustained, the second cause of action dismissed and Defendants' counter-claim in this case dismissed.
Landowners appeal, and the matter stands submitted on the trial court record.1
¶ 7 "Summary relief issues stand before us for de novo review[,] [and] [a]ll facts and inferences must be viewed in the light most favorable to the non-movant." Reeds v. Walker, 2006 OK 43, ¶9, 157 P.3d 100, 106-107. (Footnotes omitted.) "Summary judgment will be affirmed only if the appellate court determines that there is no dispute as to any material fact and that the moving party is entitled to judgment as a matter of law." Lowery v. Echostar Satellite Corp., 2007 OK 38, ¶11, 160 P.3d 959, 963-964. (Citations omitted.) "Summary judgment will be reversed if the appellate court determines that reasonable men might reach different conclusions from the undisputed material facts." Id.
¶ 8 This appeal presents three issues concerning (1) Lessee's right to re-enter the well bore, if any, pursuant to the order of the Corporation Commission, as against (2) Landowners' ownership of the casing and wellbore, and (3) their right to compensation, if any, for its use. From our review of the authorities, it appears the first and second issues have been settled, but the third has not.
¶ 9 "[C]asing in wells, derricks, engines and other machinery placed upon the land by the lessee for developing and operating the land for oil and gas purposes are considered trade fixtures." Garr-Woolley v. Martin, 1978 OK CIV APP 11, ¶10, 579 P.2d 206, 208-209; Luttrell v. Parker Drilling Co., 1959 OK 29, ¶11, 341 P.2d 244, 246. Upon expiration of a mineral lease, the lessee is granted a reasonable time to remove the casing, equipment and machinery used in the production of oil or gas. Garr-Woolley, 1978 OK CIV APP 11, ¶ ¶10-11, 579 P.2d at 208-209; Luttrell, 1959 OK 29, ¶11, 341 P.2d at 246. See also, 4 Kuntz, A TREATISE ON THE LAW OF OIL AND GAS, §50.3 (Matthew Bender 1972); 4 Williams & Meyers, OIL AND GAS LAW, §674.2 (Matthew Bender 2007).
¶ 10 However, "oil and gas equipment left on the landowner's property for an unreasonable length of time after the termination of the lease will become the landowner's property." Garr-Woolley, 1978 OK CIV APP 11, ¶12, 579 P.2d 206, 208-209. "Oil well casings are trade fixtures," and, because "[c]asings, as objects ' imbedded' in land, are by statutory definition real property," "when the casing is not removed by the lessee within a reasonable time, it becomes property of the landowner." Gutierrez v. Davis, 618 F.2d 700, 702 ( .
¶ 11 The casing of the Theodore No. 1 well clearly became a part of the surface estate upon the lessee's failure to remove it within a reasonable time after logging the Theodore No. 1 well in 1983. Landowners acquired the surface estate in 1989. As owners of the surface estate, Landowners now also own the casing of the Theodore No. 1 well as part of their surface estate.
¶ 12 "The owner of land in fee has the right to the surface and to everything permanently situated beneath or above it." 60 O.S. 2001 §64; Lewis v. Sac and Fox Tribe of Oklahoma Housing Authority, 1994 OK 20, ¶30, 896 P.2d 503, 515-516, fn. 83. In considering the issue of the ownership of an abandoned wellbore, the Oklahoma Supreme Court held over sixty-five years ago that the owner of the surface also owned an abandoned wellbore on the land. Sunray Oil Co. v. Cortez Oil Co., 1941 OK 77, ¶30, 112 P.2d 792, 795. Landowners own the plugged and abandoned wellbore of the Theodore No. 1 well.
¶ 13 In this appeal, Landowners first assert the Corporation Commission's order is entirely silent as to the use of the Theodore No. 1 casing, and consequently, grants no such rights to Lessee. Landowners secondly assert the Corporation Commission has no jurisdiction to determine title to real property, and the Permit to Re-Enter, allowing use of their casing, constitutes an impermissible determination of title. Landowners lastly assert Lessee's use of their casing, without their consent, amounts to an unconstitutional private taking of their property under the Oklahoma Constitution, art. II, §23.
1. Taking of Private Property
¶ 14 Article II, §23 of the Oklahoma Constitution absolutely proscribes the taking or damage of private property "for private use, with or without compensation, unless by consent of the owner." So, Landowners argue, absent their express consent, Lessee is not permitted to use any of Landowners' property in the course of its mineral exploration.
¶ 15 However, the owner of the surface has no standing to object to the unitized development of the underlying mineral resources. Turley v. Flag-Redfern Oil Co., 1989 OK 144, 782 P.2d 130. The owner of the surface cannot prevent the drilling of a well at the site chosen by the...
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