Ellis v. Arkansas Louisiana Gas Co.

• Decision Date: 13 November 1979
• Docket Number: No. 78-1453,78-1453
• Parties: James C. ELLIS and Wanda Lou Ellis, his wife, Plaintiffs-Appellants, v. ARKANSAS LOUISIANA GAS COMPANY, Defendant-Appellee.
• Court: U.S. Court of Appeals — Tenth Circuit

Page 436

609 F.2d 436

James C. ELLIS and Wanda Lou Ellis, his wife, Plaintiffs-Appellants, v. ARKANSAS LOUISIANA GAS COMPANY, Defendant-Appellee.

No. 78-1453.

United States Court of Appeals, Tenth Circuit.

Argued Sept. 11, 1979.

Decided Nov. 13, 1979.

Jack R. Bard, Oklahoma City, Okl. (Charles B. Grethen, Purcell, Okl., on the brief), for plaintiffs-appellants.

William D. Curlee of Lytle, Soule & Emery, Oklahoma City, Okl., for defendant-appellee.

Before DOYLE, BREITENSTEIN and LOGAN, Circuit Judges.

LOGAN, Circuit Judge.

This appeal is from the judgment in a diversity suit brought by James C. and Wanda Lou Ellis against Arkansas Louisiana Gas Company (Arkla). Plaintiffs, who own the surface rights to certain land in Oklahoma, sought damages and injunctive relief for the allegedly unauthorized storage of natural gas by Arkla in strata underlying their property. Arkla was using the strata for storage under leases from the mineral fee owners.

The district court held that the mineral fee owners did not own the strata or have the right to lease it for storage and therefore could not give Arkla the right to storage use. The court also determined that an easement for pipelines and gas injection wells on the surface granted to Arkla by the Ellises did not give the right to store gas under that property. But the court found Arkla had acquired an easement by prescription for storing the gas. Ellis v. Arkansas Louisiana Gas Co., 450 F.Supp. 412 (E.D.Okl.1978).

The issues on appeal concern only the court's conclusion that Arkla acquired a prescriptive easement. No one contests the other determinations.

Because the facts are fully described by the trial court in its memorandum opinion, 450 F.Supp. at 414-19, we will only summarize. In 1963 the Ellises acquired the surface rights to 76 acres of land in Pototonoc County, Oklahoma; in 1972 they acquired the surface rights to an additional 21/2 acres. Severance of the surface and mineral estates had been effected by their predecessors in title in a series of conveyances, the last occurring in 1945. Prior to severance the owners of the tracts leased the right to produce natural gas from the underlying strata, and the natural gas was totally depleted by 1928. Since then the strata has been used for gas storage. The record contains gas storage leases, dated in 1946 and 1947 executed by the mineral interest owners, purporting to lease to Southwest Natural Gas Company the subsurface strata for the purpose of storing natural gas. The leases contained a 1978 expiration date. No surface owner participated in the execution of any gas storage lease. Arkla thereafter acquired Southwest's rights and has continuously used the substrata for gas storage since 1949. The gas storage lease under the larger tract was recorded in the office of the County Clerk of Pototonoc County in 1947; the lease under the smaller tract was similarly recorded in 1952.

In April 1976 Arkla brought a condemnation action in Oklahoma district court against several surface owners, including plaintiffs, seeking to acquire by condemnation the rights to subsurface storage. The Ellises brought the present suit against Arkla in June 1976 in state court, from which Arkla removed it to the United States district court.

I

Plaintiffs first contend the trial court erred in reaching the prescription issue, which was neither pleaded nor mentioned in the pretrial order. Arkla freely concedes the issue was not raised formally, but asserts the trial court correctly concluded the issue had been tried with the implied consent of the parties. See 450 F.Supp. at 423.

Fed.R.Civ.P. 15(b) provides, "(w)hen issues not raised by the pleadings are tried by express or implied consent of the parties, they shall be treated in all respects as if they had been raised in the pleadings." Whether an issue was tried by implied consent is to be determined by the trial court, whose finding will not be disturbed absent a showing of abuse of discretion. See deHaas v. Empire Petrol. Co., 435 F.2d 1223, 1229 (10th Cir. 1970); Simms v. Andrews, 118 F.2d 803, 807 (10th Cir. 1941). The test for determining whether the pleadings should be deemed amended is whether the opposing party had a fair opportunity to defend and whether it could offer additional evidence if the case were retried on the different theory. DeHaas,435 F.2d at 1229.

Pursuant to the trial court's request, and more than three weeks before trial, the parties filed proposed findings of fact and conclusions of law. Paragraph twelve of Arkla's proposed conclusions of law stated that

(e)xcept for the fact that defendant and its predecessors were using the well for gas injection and the Upper Cromwell Sand for gas storage under express grants from plaintiffs and their predecessors, Defendant long since would have acquired the prescriptive right to do so, all other elements of adverse possession having been shown by the evidence.

(Emphasis added). This paragraph is sufficient to provide plaintiff with notice that evidence bearing on the prescriptive rights issue would be offered at trial by Arkla. Plaintiffs did not object to the proposed conclusion, or to the introduction at trial of substantial evidence directly relevant to this issue. Plaintiffs objected to the prescriptive rights consideration only in a post-trial brief solicited by the court. Although plaintiffs claim to be prejudiced by the court's consideration of the issue, they have not shown lack of a fair opportunity to defend or the existence of any evidence not already in the record that they would have introduced in opposition to the prescriptive easement theory.

Implied consent may not be inferred merely because evidence relevant to a properly pleaded issue incidentally tends to prove a fact not within the pleadings. See Simms v. Andrews, 118 F.2d 803, 807 (10th Cir. 1941). Plaintiffs apparently contend the evidence supporting the prescriptive rights claim was relevant to their request for injunctive relief, I. e., whether Arkla's use of the storage strata was willful and continuing. Arkla admitted in its answer, however, that it had intentionally used the storage strata under the leases executed in 1946 and 1947. Thus, Arkla's willful use of the strata was never a contested matter. Moreover, most of the evidence relied upon by the court on the prescriptive issue was introduced by Arkla, not the plaintiffs, in support of its continuing assertion of the right to store the gas. 450 F.Supp. at 423. From our review of the record, we hold that the trial court did not abuse its discretion.

II

Plaintiffs next contend that Arkla is estopped from claiming a prescriptive easement because of the doctrine of preclusion against inconsistent positions in judicial proceedings. In the state court condemnation proceeding Arkla alleged that the Ellises owned the interests in the storage strata at issue in this case. Applying the governing principles of Oklahoma law, we hold Arkla's claim is not barred.

To avoid repetitious litigation and to protect justifiable reliance on opposing parties' positions in litigation, the Oklahoma courts have fashioned the doctrine of preclusion against inconsistent positions in judicial proceedings. See, e. g., State ex rel. Hunt v. Liberty Investors Life Ins. Co., 543 P.2d 1390 (Okl.1975); Magnolia Petrol. Co. v. Ouart, 200 Okl. 258, 192 P.2d 698 (1947). For a position asserted in one judicial proceeding to be barred because of litigation in a prior proceeding it must be shown that

" . . . (1) The inconsistent position first asserted must have been successfully maintained; (2) a judgment must have been rendered; (3) the positions must be clearly inconsistent; (4) the parties and questions must be the same; (5) the party claiming estoppel must have been misled and have changed his position; and (6) it must appear unjust to one party to permit the other to change."

Halliburton Co. v. Scroggins, 520 P.2d 667, 669 (Okl.1974), quoting 28 Am.Jur.2d Estoppel and Waiver § 70.

We think the positions are not clearly inconsistent. Arkla's claim for the underground storage rights was only for a limited period expiring in 1978, measured by the length of the term in its leases from the mineral estate owners. It made no claim of a right to possess beyond that date without a new lease from an appropriate lessor or the condemnation judgment. It is simply trying to avoid liability for the storage use before the 1978 expiration date. Also, Arkla's allegation in the condemnation case that the Ellises owned the storage strata or an interest therein does not necessarily exclude the assertion of its ownership of an easement. An easement by definition is an interest...