Marin v. Exxon Mobil Corp.

• Decision Date: 19 October 2010
• Docket Number: Nos. 2009-C-2368, 2009-C-2371.,s. 2009-C-2368, 2009-C-2371.
• Citation: 48 So.3d 234
• Parties: Donald MARIN, Sr., Engsfeld F. Marin, III, Clyde J. Breaux and Veronica Marin Breaux v. EXXON MOBIL CORPORATION, formerly known as and Successor in Interest to Exxon Corporation ND Humble Oil & Refining Company, Atlantic Richfield Company, Legacy Resources Co., L.P., MJF Property Management, L.L.C. and Mike Bourgeois.
• Court: Louisiana Supreme Court

48 So.3d 234

Donald MARIN, Sr., Engsfeld F. Marin, III, Clyde J. Breaux and Veronica Marin Breaux

v.EXXON MOBIL CORPORATION, formerly known as and Successor in Interest to Exxon Corporation ND Humble Oil & Refining Company, Atlantic Richfield Company, Legacy Resources Co., L.P., MJF Property Management, L.L.C. and Mike Bourgeois.

Nos. 2009-C-2368, 2009-C-2371.

Supreme Court of Louisiana.

Oct. 19, 2010.

Liskow & Lewis, PLC, Donald R. Abaunza, Jamie D. Rhymes, Robert Beattie McNeal, Joe Barrelle Norman, New Orleans, for Applicant in No. 2009-C-2368 and Respondent in No. 2009-C-2371.

Martin Bofill Duhe; Talbot, Carmouche & Marcello, Victor L. Marcello, John Hogarth Carmouche, Donald T. Carmouche, Gonzales; Weeks & Gonzalez, APLC, Patricia Elise Weeks, John Paul Gonzalez, New Orleans, for Respondent in No. 2009-C-2368.

Talbot, Carmouche & Marcello, Donald T. Carmouche, Victor L. Marcello, John Hogarth Carmouche, Gonzales; Weeks & Gonzalez, APLC, Patricia Elise Weeks, John Paul Gonzalez, New Orleans, for Applicant in No. 2009-C-2371.

Marshall Taylor Darden, New Orleans, for amicus curiae Louisiana Landowners Association.

VICTORY, J.^*

**1 We granted writ applications in this oilfield contamination "legacy litigation" ¹ primarily to consider complicated issues of prescription, subsequent purchaser rights, restoration obligations, punitive damages, and ground water remediation obligations. After considering the record and the applicable law, we find the lower courts erred in applying the doctrine ofcontra non valentem to suspend prescription on plaintiffs' tort claims. Further, the oilfield contamination at issue does not constitute a continuing tort. Accordingly, plaintiffs' tort claims have prescribed. However, as mineral and surface leases are still in effect as to the "Marin plaintiffs," ² Exxon Mobil **2 Corporation ("Exxon") owes a duty to remediate the contaminated property which they have failed to do; therefore, the Marin plaintiffs have a valid contract claim against Exxon. However, because there is no lease in effect on the land now owned by the "Breaux plaintiffs" and any tort claims they may have had have prescribed, we need not analyze their rights as subsequent purchasers. Further, as the Marin plaintiffs' tort claims have prescribed, they are not entitled to punitive damages. The Marin plaintiffs are entitled to compensatory damages as awarded by the trial court. Finally, as found by the trial court, the Groundwater Act does not apply to plaintiffs' claims because the groundwater involved is a Classification III aquifer, and plaintiffs are not entitled to damages for cleanup of this Class III aquifer.

FACTS AND PROCEDURAL HISTORY

This suit involves two pieces of property in St. Mary Parish upon which Exxon, or its predecessors,³ conducted oil and gas exploration, production and transportation activities. The first piece of property, hereinafter referred to as the "Marin Property," consists of 204 acres of marsh and fields owned by siblings E.F. ("Engsfeld") Marin, III, Veronica Marin Breaux, and Donald Marin. They inherited this land from their father, E.F. Marin, Sr., in 1978. In 1936, E.F. Marin, Sr., granted a mineral lease to W.S. Mackey in exchange for payment of 1/8 of all oil and gas production (the "Marin Lease"). The Marin Lease was later acquired by Humble. In 1941, E.F. Marin, Sr. granted a surface lease to Humble on approximately twenty acres of the Marin Property, where it built a canal and a landing/terminal for coastal operations. This lease, as amended and novated in 1994, 1997 and 2001, is referred to as the **3 "Surface Lease." ⁴ Subsequently, in 1977 and 1978, Clyde Breaux and Veronica Marin Breaux purchased approximately 70 acres very near the Marin Property (the "Breaux Property"). This property was subject to a mineral lease granted by Canal Bank and Trust Company ("CBT") to Humble (the "CBT Lease") in 1937. E.F. Marin, Sr., lived on the Marin Property until his death in 1987, while Engsfield Marin III has lived there all his life. The Breauxs have lived on their property ever since they built their home there in 1986. In addition to the oil and gas activity conducted by Exxon, these properties have been used for sugarcane cultivation.

Pursuant to the Marin, CBT, and Surface Leases, Exxon installed and operated oil and gas facilities and a landing/dockterminal on plaintiffs' properties. In conjunction with the various production facilities, Exxon built separators, oil gathering systems, and pits used for skimming oil from saltwater and other fluids routinely produced with oil and gas. As oil was skimmed from saltwater in the pits, byproducts of oil and gas operations, including oil, sludge, barium, chlorides, and other contaminants, were accumulated inside the pits in varying amounts. These pits were open and unlined, as was the industry practice and custom at that time. The produced water ⁵ in these pits was discharged into a nearby waterway.

By 1958, sugarcane farmers on the Marin Property were aware that sugarcane growth was affected on and near former unused pit sites. In the 1980s, plaintiffs were concerned that sugarcane would not grow properly in the pit areas. E.F. Marin, Sr.'s son-in-law, Clyde Breaux, acted as the "family representative" on matters involving Exxon and demanded that Exxon clean the fields and make them usable for cane **4 farming. Breaux characterized the problems they saw as follows:

We had pipe in the field. We had cement in the field. We had something in the field that wouldn't allow us to grow cane in spots. We didn't know what it was, though. We just knew we had bare spots in the field.

Between 1988-1990, Breaux made numerous demands upon Exxon to clean up the property so that they could continue to grow sugarcane, including that "every bit of contamination [be] removed from the site and new dirt hauled in."

At about the same time, in 1986, the Louisiana Department of Natural Resources ("DNR") amended Statewide Order 29-B to require the registration and closure of existing unlined oilfield pits. The amended regulations also required that various enumerated contaminants in the soil be remediated to certain standards. Between 1987 and 1991, Exxon closed all of the remaining pits on the Breaux and Marin properties and represented that it was remediating the pit areas to Statewide Order 29-B standards. During the pit closure process, Breaux routinely communicated with Exxon employees regarding the remediation work. The last efforts to remediate the pits occurred in 1991. On September 4, 1991, Exxon instructed Breaux that in order to have his land returned to him for farming, he would have to sign a release, which he did. ⁶ Thereafter, on May 18, 1994, the Marin plaintiffs and Exxon entered into a Lease and Novation Agreement that superseded the 1941 Surface Lease. This agreement was amended in December, 1997 and April, 2001. In conjunction with these amendments and leases, Exxon compensated the plaintiffs for sugarcane loss. Although production on the properties began to dwindle in the 1980s, the Marin Lease and the Surface Lease as amended and novated remained in effect at the time suit was filed.

**5 On February 23, 2003, this Court issued its decision in Corbello v. Iowa Production, 02-0826 (La.2/25/03), 850 So.2d 686.⁷ Evidently prompted by that decision,plaintiffs hired an environmental expert, Gregory Miller, who began an assessment of the property in July of 2003. Miller reported that there was significant contamination at both the Breaux and Marin properties.

On November 26, 2003, the plaintiffs filed suit against Exxon asserting claims for remediation of the soil and groundwater and other damages arising out of Exxon's oil and gas activities. Plaintiffs alleged that Exxon knowingly disposed of oilfield wastes in unlined earthen pits and/or released the waste directly into waterways, resulting in contamination to their property. Plaintiffs alleged that the oilfield wastes deposited into these pits and water bodies contained naturally occurring radioactive material ("NORM"), produced water, drilling fluids, chlorides, hydrocarbons, heavy metals and other toxic substances. Plaintiffs claims were in tort and breach of contract including: negligence under La. C.C. art. 2315; strict liability under La. C.C. arts. 667, 2317 and 2322; continuing nuisance and trespass; breach of oil, gas and mineral leases, breach of the Mineral Code; breach of the obligation to restore the property to its original condition under La. C.C. arts. 2719 and 2720; punitive **6 damages under La. C.C. art. 2315.3; injunctive relief; and liability under La. C.C. art. 486 for fruits of continuing trespass and unjust enrichment.

At trial, plaintiffs produced evidence of extensive contamination of soil and groundwater arising out of Exxon's operations on the plaintiffs' property, primarily caused by Exxon's use of unlined earthen pits to store and dispose of produced water and other oilfield wastes. The evidence showed that although it was the common industry practice, Exxon knew as early as the 1930s that environmental damage, particularly saltwater seepage, resulted from the use of unlined earthen pits. By 1970, Exxon knew of "chronic pit pollution problems" on plaintiffs' property but continued to use the unlined pits to handle produced water and drilling water for decades and ignored best industry practices for handling this waste. Exxon's test results from 1987 showed salt contamination from a depth of 4-20 feet. Further, the evidence showed that Exxon was discharging vast amounts of saltwater into a freshwater canal, Leopard Bayou, pursuant to a permit that was issued based on misrepresentations made by Humble to obtain the permit. This permit was granted in 1942 based on Humble's representations that Leopard Bayou was a saltwater environment and that they were producing 31 barrels per day. In 1966, an internal memo revealed that they were actually producing 70,953 barrels...