Dyco Petroleum Corp. v. Smith, 65630
| Citation | 1989 OK 51,771 P.2d 1006 |
| Decision Date | 04 April 1989 |
| Docket Number | No. 65630,65630 |
| Parties | DYCO PETROLEUM CORPORATION, Appellant, Counter-Appellee, v. Orlin R. and Janet SMITH, Husband and Wife, Appellees, Counter-Appellants. |
| Court | Oklahoma Supreme Court |
Appeal from District Court of Washita County; Ralph W. Emerson, trial judge.
Appellant oil company filed petition under oil and gas surface damages act requesting appointment of appraisers for determination of damages to surface estate resulting from proposed drilling operations. Appellant filed exceptions to subsequent report of appraisers. Trial court refused the exceptions and confirmed the report and appellant paid appraised amount into court. Appellant appealed, arguing four propositions of error: 1) that the trial court improperly instructed appraisers that they could consider personal inconvenience as element of damages; 2) that appraisers considered damages to lands not actually used in drilling operations; 3) that appraisers improperly considered future damages; and 4) that trial court improperly required payment of prejudgment interest on damage award. Appellee landowners counter--appealed on the trial court's requirement that they post security before being allowed to withdraw the damage award funds from court.
REVERSED AND REMANDED.
Gist, Grimes and Gelders by Gordon H. Rowe III, and George, Moore, Nuttle, Hammons & Hunter by James W. George and Andrew J. Moore, Oklahoma City, for appellant, counter-appellee.
Cornell, Wright & Tisdal by J. Martin Tisdal, Clinton, for appellees, counter-appellants.
Appellant, Dyco Petroleum Corporation, held the right to go on to the surface of a 160 acre tract of land owned by appellees Orlin and Janet Smith for the purpose of conducting oil and gas drilling operations as the appointed operator under a forced pooling order entered by the Oklahoma Corporation Commission.
In May 1985 appellant filed a petition in the District Court of Washita County alleging that it had entered into good faith negotiations with appellees in regard to surface damages to be incurred as a result of appellant's proposed drilling operations on appellees' property. The petition stated that the parties had been unable to reach agreement on this subject and sought appointment of appraisers pursuant to 52 O.S.Supp.1982 § 318.5(A).
After the action was filed appellant entered upon the property and commenced the drilling of a well in the approximate center of the SW/4 with the area of the drillsite, pit and access road occupying approximately 8.3 acres. At the time the appraisers went upon the property there were oil and gas drilling activities in progress at the drillsite. The well at that time, however, had not been completed as a producer, or abandoned. The well was subsequently completed as a producing well.
The report of the appraisers returned to the trial court indicated that the appraisers considered the full 160 acre tract to be affected by the drilling operations and found the amount of surface damages to be $34,600. The report however set the amount of compensation to be paid to appellees as $45,400.
Appellant filed exceptions to the appraisers' report, arguing that the court's instructions had allowed the appraisers to consider improper elements of damage, particularly citing personal inconvenience, as well as improperly allowing the appraisers to consider damages beyond the land actually used in the drilling operations.
The trial court rejected appellant's exceptions and confirmed the appraisers' report. Additionally the trial court entered an order directing appellant to pay prejudgment interest on the award from the date of entry on appellees' land.
Subsequently, on motion of appellees to withdraw the proceeds of the award, the trial court ordered appellant to pay the award into court. Appellees were allowed to withdraw the award on the condition that they post security for the amount of the award.
Appellant brought the present appeal from the trial court's order confirming the award of the appraisers and requiring payment of interest on the award. Appellees counter-appealed the trial court's imposition of conditions on the withdrawal of the award proceeds.
Appellant presents four arguments on appeal. The first is that the trial court improperly instructed the appraisers that they might consider as damages personal inconvenience to the appellees resulting from appellant's operations. We agree that this was an erroneous instruction, and, because the report of the appraisers fails to give any factual basis for the valuation of the award beyond what is listed as "surface damages," it appears that the appraisers may have improperly included personal inconvenience as an element of damages. As this Court stated in Davis Oil Co. v. Cloud, 766 P.2d 1347 (Okla.1986), inconvenience may be a proper element of damages, but to be compensable the inconvenience must have an effect on the value of the land. Purely personal inconvenience is not compensable under the surface damages act.
The second argument presented by appellant is that the trial court erred in failing to instruct the appraisers that damages could only be assessed for the land actually used in the oil and gas drilling operations. In Davis we found the damage standard intended by the Legislature to be the diminution in fair market value of the surface property resulting from the drilling operations. The trial court's instructions in the present case were not in conflict with this point. The present case presents an excellent example of the propriety of considering damages to the surface beyond the land actually taken. Here the entire 160 acres was irrigated farm land, serviced by a center pivot irrigation system. The placement of the well in this case interfered with the irrigation system and as a result took a portion of the land outside of the irrigation system's reach, which in turn directly affected the productivity of that portion of the land.
Appellant's third argument is that...
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