Carrigan v. Exxon Co. U.S.A.
| Citation | 877 F.2d 1237 |
| Decision Date | 11 July 1989 |
| Docket Number | No. 87-1350,87-1350 |
| Parties | Jon R. CARRIGAN, Larry Carrigan and LaVelle Carrigan, Plaintiffs-Appellants, v. EXXON CO. U.S.A., Defendant-Appellee. |
| Court | United States Courts of Appeals. United States Court of Appeals (5th Circuit) |
Dan Sullivan, Andrews, Tex., for plaintiffs-appellants.
Michael D. Jones, Exxon Co., Houston, Tex., for defendant-appellee.
Appeal from the United States District Court for the Western District of Texas.
Before THORNBERRY, KING and JONES, Circuit Judges.
Plaintiffs-appellants are landowners who sued defendant-appellee for damages resulting from its oil and gas operations on the plaintiffs' land. Plaintiffs also sought an injunction requiring that defendant bury its pipelines on the land. The district court awarded money damages to the plaintiffs, but denied injunctive relief. Plaintiffs appeal that portion of the district court's decision which denies the injunction requiring pipeline burial. Finding that the district court correctly interpreted the oil and gas lease and its modifications so as not to include the right plaintiffs seek to assert here, we affirm.
The original plaintiffs, Jon R. Carrigan and Larry Carrigan ("the Carrigans") 1 are the surface owners of property in Andrews County, Texas (the "property"). The Carrigans' predecessors in interest executed identical oil, gas and mineral leases (the "original leases" or the "leases") to various sections of land that they then owned, including the property, on March 7, 1934. 2 The defendant Exxon Corporation ("Exxon") 3 is the successor in interest to the original lessee of the mineral estate. The property is also subject to a unitization agreement (the "Unitization Agreement" or the "Agreement") 4 which was ratified by the Carrigans' predecessors in title and which became effective in February 1954.
The Carrigans filed this suit against Exxon seeking money damages, injunctive relief and attorneys' fees. The complaint alleged that Exxon, as the successor to the original lessee and the current oil and gas operator of the property, had damaged the Carrigans' interest through use of more of the property than was reasonably necessary, through oil and chemical spills and through the careless discarding of litter and debris. Further, the Carrigans sought to permanently enjoin Exxon to bury all of its pipelines below plow depth, to abandon the cut-off roads they had been using, to clean up the property and to provide safety training to the Carrigans, their families and their employees concerning the dangers of H2 S gas. 5 Exxon removed the action to the United States District Court for the Western District of Texas, asserting diversity of citizenship as the ground for removal.
After removal, Exxon answered the complaint and asserted a counterclaim against the Carrigans. In the counterclaim, Exxon alleged that the Carrigans had repeatedly violated the terms of the leases and the Unitization Agreement by barring Exxon's access to the property. Exxon sought to permanently enjoin them from continuing to block Exxon's access to the property and sought costs and attorneys' fees.
After a bench trial, the district court entered judgment awarding money damages to the Carrigans for damage to the surface of the property resulting from saltwater spills, cathodic wells, excessive litter and for damages to the Carrigans' cattle grazing business. The district court found that the money damages were an adequate remedy for the claims of property damage and also concluded that the Carrigans were not entitled to injunctive relief. The court based this conclusion on two grounds: 1) the provision in the original lease which allowed the lessor to require the lessee to bury its pipelines below plow depth had been abrogated by the later Unitization Agreement, and 2) the deeds which conveyed the surface interest in the property to the Carrigans reserved to the grantor the right to require the burial of pipelines, and therefore, the Carrigans obtained no such right. The court therefore refused to award the Carrigans the injunction they sought, and, because it held against them on this point, it also denied attorneys' fees. 6 The Carrigans appeal to this court only those portions of the district court's judgment which refused to grant an injunction requiring Exxon to bury its pipelines on the property and refused attorneys' fees.
On appeal the Carrigans argue that neither ground for the decision below is valid. With respect to the first, the Carrigans assert that their predecessors in interest, who owned the surface estate, royalty interests and a reversionary interest in the mineral estate at the time of the execution of the Unitization Agreement, entered that Agreement in their capacities as royalty interest owners, not as owners of the surface estate, and therefore could not have abrogated their right to require the lessee to bury its pipelines. With respect to the second ground for the decision below, the Carrigans contend that the district court's construction of the deeds is erroneous. They argue that the Carrigans' predecessors in title reserved to themselves the reversionary interest in the severed mineral estate, but that the right to require pipeline burial is a covenant running with the land which will not be detached without express language detaching it. Such express language, the Carrigans contend, is not present here. 7 Because we agree with the district court that the Unitization Agreement abrogated the surface owners' right to require pipeline burial, and because such an abrogation is dispositive of this appeal, 8 we do not address the other ground the Carrigans assert for reversal.
The Carrigans' arguments for reversal are based upon contentions that the district court erroneously construed written instruments. The construction of the unambiguous terms of a contract is a question of law and as such is subject to de novo review. Strachan Shipping Co. v. Dresser Indus., Inc., 701 F.2d 483, 487 (5th Cir.1983). The determination of whether a contract's terms are ambiguous is also subject to de novo review. City of Austin v. Decker Coal Co., 701 F.2d 420, 425-26 (5th Cir.), cert. denied, 464 U.S. 938, 104 S.Ct. 348, 78 L.Ed.2d 314 (1983). The parties' intent in entering a contract may also be a question of law if such intent is "revealed solely by the contract." Id. at 426 n. 18. Therefore, because the district court's decision relied on no factual determinations extrinsic to the various contracts and written instruments at issue, we review its determination de novo. Our jurisdiction in this case is based on diversity of citizenship. We therefore function as an Erie court and must, to the best of our ability, apply Texas law as we think a Texas court would.
It is well-settled in Texas law that, absent express lease provisions to the contrary, the mineral estate is dominant to the surface estate, and the owner of the mineral estate may use as much of the surface estate and in such a manner as is reasonably necessary for its operations. Vest v. Exxon, 752 F.2d 959, 961 (5th Cir.1985); Humble Oil & Refining Co. v. Williams, 420 S.W.2d 133, 134 (Tex.1967). The Carrigans do not assert on appeal that above-the-ground pipelines are not reasonably necessary to Exxon's operations; rather, they argue that they have an express right to require burial. We therefore look to the original leases coupled with the later Unitization Agreement to determine if they contain an express provision requiring burial.
The original leases, executed by the Carrigans' predecessors in interest and under which Exxon owns a determinable interest in the mineral estate, contain two relevant provisions. The first is found in paragraph 1 of the leases:
Lessor in consideration of--Ten and no/100 Dollars ($10.00), in hand paid, of the royalties herein provided, and of the agreements of Lessee herein contained, hereby grants, leases and lets exclusively unto Lessee for the purpose of investigating, exploring, prospecting, drilling and mining for and producing oil, gas and all other minerals, laying pipe lines, building tanks, power stations, telephone lines and other structures thereon to produce, save, take care of, treat, transport and own said products, and housing its employees [the property].
(Emphasis added). Paragraph 6 of the instruments contains the following provisions: Therefore, the leases unambiguously provided the right to require pipeline burial. The leases contain no other provisions explicitly protecting the rights of the surface estate; 9 under these leases, aside from having the power to require pipeline burial, the lessor would have had no contractual remedy in the event that the lessee's operations interfered with the surface estate. Reading & Bates Offshore Drilling Co. v. Jergenson, 453 S.W.2d 853, 854-55 (Tex.App.--Eastland 1970, writ ref'd n.r.e.). Rather, in such circumstances, the lessor would have had to turn to the implied covenant of reasonable and non-negligent use for a remedy. See Brown v. Lundell, 162 Tex. 84, 344 S.W.2d 863, 865 (1961). If the lessee's operations were determined to be reasonable and not negligent, the lessor would not have been able to obtain any relief. Vest, 752 F.2d at 961; Humble Oil, 420 S.W.2d at 134-35.
The Carrigans' predecessors in interest to the property ratified the Unitization Agreement in 1953, approximately nineteen years after the original leases were executed. The Agreement grants to the Unit Operator the exclusive right...
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