Energen Resources Corporation v. Wallace

• Decision Date: 11 March 2022
• Docket Number: 20-0451
• Citation: 642 S.W.3d 502
• Parties: ENERGEN RESOURCES CORPORATION, Petitioner, v. Bryce J. WALLACE, Elite Drillers Corporation, and United Fire & Casualty and Its Parent, United Fire Group, Inc., Respondents
• Court: Texas Supreme Court

642 S.W.3d 502

ENERGEN RESOURCES CORPORATION, Petitioner,

v.Bryce J. WALLACE, Elite Drillers Corporation, and United Fire & Casualty and Its Parent, United Fire Group, Inc., Respondents

No. 20-0451

Supreme Court of Texas.

Argued September 16, 2021

OPINION DELIVERED: March 11, 2022

Ryan D. Clinton, Davis, Gerald & Cremer, P.C., Austin, Jill Christine Pennington, John A. "Jad" Davis Jr., Davis, Gerald & Cremer, P.C., Midland, for Petitioner.

Ryan John McNeel, Brockett & McNeel LLP, Midland, Scott Kidd, Gauntt, Koen, Binney & Kidd, LLP, Spring, Jason Hamm, Hamm Law Group, PLLC, Midland, for Respondents.

Wanda McKee Fowler, Raffi O. Melkonian, Wright Close & Barger, LLP, Houston, for Amicus Curiae.

Justice Busby delivered the opinion of the Court, in which Chief Justice Hecht, Justice Lehrmann, Justice Boyd, Justice Devine, Justice Bland, and Justice Huddle joined.

Chapter 95 of the Civil Practice and Remedies Code limits a property owner's liability when an independent contractor or its employee, hired to "construc[t], repai[r], renovat[e], or modif[y]" an improvement to the owner's property, brings a "claim for damages caused by negligence" that "arises from the condition or use" of that improvement. TEX. CIV. PRAC. & REM. CODE §§ 95.001(1), 95.002(2). In this case, we consider whether a negligence claim can arise from the condition or use of an improvement even when negligence elsewhere is alleged to have contributed to the plaintiffs’ injuries. We conclude that it can so long as the other statutory requirements are satisfied.

In particular, Chapter 95 does not apply to a claim simply because the plaintiffs were injured by the condition or use of an improvement on which they were working. Rather, the "claim for damages caused by negligence" must "aris[e] from th[at] condition or use." Id. In other words, negligence that was a cause of the plaintiffs’ damages must involve the condition or use of the improvement on which they were working.

Here, the defendant owner offered uncontroverted evidence—and the plaintiffs’ own petition alleged—that there was negligence regarding a condition of the water well the plaintiffs were drilling and this negligence was a cause of their damages. Chapter 95 therefore applies. Because the defendant also proved conclusively that it could not be held liable under Chapter 95 given its lack of control over the work, the trial court properly granted summary judgment in its favor. We reverse the court of appeals’ contrary judgment and reinstate the trial court's judgment.

BACKGROUND

Petitioner Energen Resources Corporation obtained mineral leasehold rights to land in Reeves County, Texas, in 2011. In late 2013, Energen hired Nabors Drilling Technologies USA, Inc. and New Prospect Company (NPC) to drill an oil well on the lease. After Nabors and NPC began work on the oil well, Energen contracted with Dubose Drilling, Inc. to complete a water well which, once finished, would facilitate the drilling and operations of the oil well.

Dubose was unsuccessful in its initial attempts to find a water source. Dubose later subcontracted with respondent Elite Drillers Corporation to complete the water well, and Elite assigned its president, respondent Bryce J. Wallace, to supervise the project. The wells were roughly five hundred feet apart from each other, and Energen continued drilling the oil well while Elite worked on the water well.

On January 14, 2014, a "gas kick"—an unexpected migration of gas from the reservoir to the wellbore—occurred at the oil well. Shortly thereafter, the oil well was shut in to prevent any further loss of natural gas. In the following days, reports on the oil well noted a loss of circulation and no returns.

On January 17, Wallace supervised as Elite's crew sent pressurized air into the water well to clear drilling mud. Upon noticing that the air pressure had increased substantially, Wallace shut off the air compressor, but the pressure continued to build. Wallace realized that natural gas was flowing out of the wellbore and warned those nearby to run. Moments later, the gas flowing from the water well caught fire and exploded. Wallace suffered severe burns and Elite's drilling equipment was damaged.

Elite, Wallace, and Elite's insurers United Fire & Casualty Company and United Fire Group, Inc. (collectively, "plaintiffs") brought claims for negligence, gross negligence, and trespass to chattels against Energen.¹ Energen filed a traditional motion for summary judgment, asserting that Chapter 95 of the Civil Practice and Remedies Code applied to plaintiffs’ claims. Energen also observed that if plaintiffs were contending a condition of the oil well—rather than the water well—gave rise to their claims, the water well's purpose to facilitate the oil well's production brought the claims within Chapter 95's ambit. Finally, Energen contended that Chapter 95 barred the suit because Energen did not "exercis[e] or retai[n] some control over the manner in which the work [was] performed." TEX. CIV. PRAC. & REM. CODE § 95.003(1).

In response, plaintiffs asserted that Chapter 95 did not apply because the improvement on which they were working (the water well) was not the same improvement from which their claims arose (the oil well). Because the negligent drilling of the oil well caused their injuries, they argued that Chapter 95 did not apply. Even if Chapter 95 applied, plaintiffs contended that they had raised a genuine issue of material fact regarding whether Energen exercised or retained some control over the drilling of the water well.

The trial court granted Energen's motion, rendering a take-nothing judgment. The trial court did not specify which of Energen's theories for Chapter 95's applicability it found persuasive.

On appeal, plaintiffs raised two issues. First, they asserted that Energen failed to establish that Chapter 95 applied as a matter of law. According to plaintiffs, Energen's main argument for Chapter 95's applicability—that the presence of natural gas was a "condition" of the water well—had not been raised in its motion for summary judgment. Second, if Chapter 95 applied, plaintiffs contended that they had raised a genuine issue of material fact with respect to Energen's control under section 95.003(1).

The court of appeals reversed the trial court's summary judgment and remanded for further proceedings. 603 S.W.3d 499, 501 (Tex. App.—El Paso 2020). Regarding the first issue, the court held that Chapter 95 did not apply. Id. at 514. Reasoning that Chapter 95 distinguishes between claims for negligent acts and conditions, the court began by examining the "true nature" of the claims. Id. at 511 (citing Keetch v. Kroger Co. , 845 S.W.2d 262, 264 (Tex. 1992) ). It was undisputed that Elite and Wallace were working on the water well at the time of the explosion. Id. at 510. Therefore, the court concluded that Chapter 95 would apply only "if Energen conclusively established that the injuries arose from a premises defect of the Water Well." Id.

After examining the pleadings, the court held that plaintiffs not only alleged negligent activity at the oil well, but also raised a fact issue regarding whether that activity occurred contemporaneously with their injuries. Id. at 511–12. The court distinguished this case from Keetch , where a grocery-store customer slipped on a wet floor at least thirty minutes after an employee finished spraying plants nearby. Id. at 511, 513. Unlike the evidence in Keetch , which established a "complete absence of ongoing activity," the court thought the evidence here—in particular, the reports of lost circulation and returns—raised a fact issue regarding contemporaneous negligent activity. Id. at 513–14.

The court of appeals concluded that Energen "failed to conclusively establish as a matter of law that no contemporaneous activity occurred on the Oil Well that resulted in the creation of a dangerous condition on the Water Well." Id. at 514. Because Energen did not prove conclusively that Chapter 95 applied, the court did not reach the second issue: "whether Wallace and Elite carried their burden on the challenged element of control." Id. at 514–15.

Energen filed a petition for review, which we granted.

ANALYSIS

I. Standard of review

"We review summary judgments de novo, taking as true all evidence favorable to the nonmovant, and indulging every reasonable inference and resolving any doubts in the nonmovant's favor." Barbara Techs. Corp. v. State Farm Lloyds , 589 S.W.3d 806, 811 (Tex. 2019). A party that moves for traditional summary judgment must demonstrate that there is no genuine issue of material fact and that it is entitled to judgment as a matter of law. TEX. R. CIV. P. 166a(c). In addition, "[t]he nonmovant has no burden to respond ... unless the movant conclusively establishes its cause of action or defense." Rhône-Poulenc, Inc. v. Steel , 997 S.W.2d 217, 222–23 (Tex. 1999).

This case also involves a question of statutory construction, which is a legal one that we review de novo. Youngkin v. Hines , 546 S.W.3d 675, 680 (Tex. 2018). "In construing a statute, our objective is to determine and give effect to the Legislature's intent." City of San Antonio v. City of Boerne , 111 S.W.3d 22, 25 (Tex. 2003). We begin by examining the plain meaning of the statute's language. Crosstex Energy Servs., L.P. v. Pro Plus, Inc. , 430 S.W.3d 384, 389–90 (Tex. 2014). "If the statute is clear and unambiguous, we must read the language according to its common meaning ‘without resort to rules of construction or extrinsic aids.’ " Id. at 389 (quoting State v. Shumake , 199 S.W.3d 279, 284 (Tex. 2006) ).

II. Energen conclusively established that Chapter 95 applies to plaintiffs’ claims.

When Chapter 95 applies, it limits a real property owner's liability for common-law negligence claims that arise out of a contractor's or subcontractor's work on an improvement to the property.² As we recently observed, Chapter 95 applies to a claim

(1) for damages caused by negligence

...