Mitchell Energy Corp. v. Bartlett

• Decision Date: 13 November 1997
• Docket Number: No. 2-96-227-CV,2-96-227-CV
• Citation: 958 S.W.2d 430
• Parties: MITCHELL ENERGY CORPORATION, Appellant, v. James BARTLETT, Patricia Bartlett, Kelly James Bryant, John E. Baran, Carrie W. Baran, Robert F. Drury, Dorothy Drury, Quention Gilbert, Shelva J. Gilbert, Tommy Wallace, Richelle Wallace, G.W. Manning, Betty J. Manning, Ronnie Manning, Gina Manning, William Reynolds and Patricia Reynolds, Appellees.
• Court: Texas Court of Appeals

Page 430

958 S.W.2d 430

MITCHELL ENERGY CORPORATION, Appellant, v. James BARTLETT, Patricia Bartlett, Kelly James Bryant, John E. Baran, Carrie W. Baran, Robert F. Drury, Dorothy Drury Quention Gilbert, Shelva J. Gilbert, Tommy Wallace, Richelle Wallace, G.W. Manning, Betty J. Manning, Ronnie Manning Gina Manning, William Reynolds and Patricia Reynolds, Appellees.

No. 2-96-227-CV.

Court of Appeals of Texas Fort Worth.

Nov. 13, 1997.

Rehearing Overruled Dec. 18, 1997.

Shannon, Gracey, Ratliff and Miller, Anne Gardner, Cantey & Hanger, Sloan Blair, Fort Worth, Clements, O'Neill, Pierce & Nickens, Jack O'Neill, Houston, Sewell & Forbis, Christopher Forbis, Decatur, for Appellant.

Womble & Spain, William Womble, Houston, Woodruff, Wren & Simpson, Michael A. Simpson, Decatur, Gardere & Wynne, Cynthia Hollingsworth, Dallas, Bourland, Kirkman, Seidler & Evans, William L. Kirkman, Fort Worth, for Appellees.

Before DAY, BRIGHAM and HOLMAN, JJ.

OPINION

BRIGHAM, Justice.

In this case concerning alleged permanent injury to land, the primary issues we must determine are whether appellees ¹ timely filed their lawsuits against appellant Mitchell Energy Corporation (Mitchell) and whether the evidence establishes that Mitchell caused appellees' alleged injuries. We hold that most of appellees' claims are time-barred and that there is no evidence of causation. Consequently, we reverse the trial court's judgment and render judgment that appellees take nothing from Mitchell.

I. Background Facts and Procedural History.

Appellees are all landowners in rural Wise County. They obtain their residential water from wells located on their land. For many years, the water in the vicinity of appellees' land has had a bad taste and odor, often compared to the smell of rotten eggs. The smell of the water has long been a matter of general knowledge in the area, and many of appellees knew of the poor quality of the water when they bought their land.

Mitchell is an oil and gas exploration company. Mitchell began drilling and operating gas wells in Wise County in the 1950s and has drilled approximately 3,700 gas wells in Wise and adjoining counties. Currently, Mitchell has approximately 2,000 active wells in the area.

The Texas Railroad Commission (TRC) regulates oil and gas operations in Texas and has designated the area as the Boonsville Bend Conglomerate Gas Field (BBC). In the early 1950s, oil and gas operations were governed by TRC's statewide rules. In November 1957, TRC enacted field rules that governed operations in the BBC (the BBC rules).

Most BBC gas is produced from the Atoka formation, which is from 5,000 to 7,000 feet below the ground. However, gas also exists in areas as shallow as 500 feet. The Atoka formation is found in Paleozoic age rock. Overlying the Paleozoic rock is Cretaceous period rock. In Wise County, the Trinity aquifer exists within the Cretaceous formation. An aquifer is an underground rock stratum with sufficient permeability to permit movement of water through it. The Trinity aquifer consists of two separate aquifers, the Paluxy, which is found at depths of 90 to 120 feet, and the Twin Mountain, which is found at depths of 200 to 400 feet. Appellees' wells draw water from the deeper, Twin Mountain aquifer.

Appellees bought their land at different times between 1977 and 1993. In April 1987, the Bartletts sued Mitchell, alleging that it was responsible for polluting the water under their land. The other appellees filed their lawsuits in January 1995, and all of the cases were consolidated.

Appellees alleged that their water had been polluted by twelve of Mitchell's gas wells. Appellees contended that Mitchell placed insufficient surface casing on the wells, failed to properly repair casing leaks in the wells, failed to place cement over potentially productive zones in the wells, failed to properly plug one of the wells, and failed to properly cement surface casing in one of the wells. Appellees alleged causes of action for nuisance, negligence, trespass, violation of TRC and BBC rules, and fraud. They also sought punitive damages based on alleged gross negligence, fraud, and malice.

The jury found in appellees' favor on all five of their causes of action. The jury also found that appellees had brought suit within two years of discovering the cause of their damages. The jury awarded appellees compensatory damages for mental anguish, physical pain, "discomfort, annoyance, and inconvenience," out-of-pocket expenses, property damages, and diminished value of real estate.

The jury found that Mitchell's conduct constituted gross negligence and was committed with malice. The jury awarded appellees punitive damages of $200,000,000, allocated equally among each individual. The trial court rendered judgment for appellees on the jury's verdict, and this appeal followed.

Mitchell raises 31 points of error on appeal, contending that:

the trial court improperly denied Mitchell's motion for judgment notwithstanding the verdict (MJNOV) because the claims for nuisance, negligence, TRC and BBC rules violations, and trespass of all appellees except the Bartletts are barred by limitations;

the trial court improperly denied Mitchell's MJNOV because the fraud claims of all appellees except the Bartletts and the Barans are barred by limitations;

the evidence is legally and factually insufficient to support most of the jury's findings;

the trial court improperly denied Mitchell's motion for new trial;

the punitive damages award is excessive and violates Mitchell's constitutional rights; and

the trial judge was disqualified from presiding over the trial.

II. Statute of Limitations.

A. The trial court improperly premised the statute of limitations jury issue on when appellees discovered the cause in fact of their injury.

In its second point, Mitchell contends that the jury question on when appellees discovered their injury was improper. Jury Question 6 asked the jury:

Do you find that the plaintiffs listed below filed their lawsuits within two years of the date the plaintiffs discovered, or in the exercise of reasonable diligence, should have discovered the cause in fact of the pollution, if any, and the injury arising from the pollution, if any? [Emphasis added.]

Mitchell contends that this question is improper because, under the discovery rule, the test is not discovery of the cause of the injury; rather, the test is discovery of the injury itself. We agree.

Appellees' personal injury and property damage claims are governed by the two-year statute of limitations and were required to be brought within two years from the date of accrual. See TEX. CIV. PRAC. & REM.CODE ANN. § 16.003(a) (Vernon Supp.1997); Hues v. Warren Petro. Co., 814 S.W.2d 526, 529 (Tex.App.--Houston [14th Dist.] 1991, writ denied) (negligence, trespass, and nuisance claims based on alleged gas leaks and improper brine disposal subject to two-year statute of limitations); Matysek v. Medders, 443 S.W.2d 929, 929-30 (Tex.Civ.App.--Amarillo 1969, writ ref'd n.r.e.) (two-year statute of limitations applicable to cause of action for damages caused by pollution of sub-surface strata of fresh water); William R. Keffer, Drilling for Damages: Common Law Relief in Oilfield Pollution Cases, 47 SMU LAW REVIEW 523, 532 (1994) (claims for permanent injury to property are barred in most jurisdictions if brought more than two years after discovery of the injury).

Ordinarily, the statute of limitations begins to run when a particular cause of action accrues. See S.V. v. R.V., 933 S.W.2d 1, 4 (Tex.1996). Determining what rule of accrual to apply is a question of law. See Moreno v. Sterling Drug, Inc., 787 S.W.2d 348, 351 (Tex.1990); Willis v. Maverick, 760 S.W.2d 642, 644 (Tex.1988). Generally, a cause of action accrues when a wrongful act causes an injury, regardless of when the plaintiff learns of the injury. See Murray v. San Jacinto Agency, Inc., 800 S.W.2d 826, 828 (Tex.1990); Moreno, 787 S.W.2d at 351.

However, Texas courts have applied the discovery rule of accrual to causes of action for damage to property. See Bayouth v. Lion Oil Co., 671 S.W.2d 867, 868 (Tex.1984); Hues, 814 S.W.2d at 529. The discovery rule is a judicially constructed test used to determine when a plaintiff's cause of action accrued. When applied, this rule operates to toll the running of the limitations period until the plaintiff discovers or through the exercise of reasonable care and diligence should have discovered the "fact of injury." Moreno, 787 S.W.2d at 351, 357 (emphasis in original); see also Bell v. Showa Denko K.K., 899 S.W.2d 749, 753-54 (Tex.App.--Amarillo 1995, writ denied) (discovery rule defers accrual until "an injury ... is discovered, or until the party acquires knowledge of facts which, in the exercise of reasonable diligence would lead to discovery of the injury."); Hoover v. Gregory, 835 S.W.2d 668, 671 (Tex.App.--Dallas 1992, writ denied) (discovery occurs when plaintiff has knowledge of facts that would cause a reasonably prudent person to make inquiry that would lead to discovery of cause of action).

Regarding claims for permanent injury to property, Texas law is especially clear that the action accrues and the statute of limitations begins to run "upon discovery of the first actionable injury and not on the date when the extent of the damages to the land are fully ascertainable." Bayouth, 671 S.W.2d at 868; Hues, 814 S.W.2d at 529. An action for permanent damages to property must be brought within two years from the time of discovery of the injury. Bayouth, 671 S.W.2d at 868. Moreover, knowledge of facts that could cause a reasonably prudent person to make an inquiry that would lead to discovery of the cause of action is "in the law equivalent to knowledge of the cause of action for limitation purposes." See Bayou Bend Towers Council v. Manhattan Constr. Co., 866 S.W.2d 740, 747 (Tex.App.--Houston [14th Dist.] 1993, writ denied).

This rule is...