Mustafa v. Americo Energy Res., 14-20-00202-CV

CourtCourt of Appeals of Texas
Writing for the CourtMargaret Meg Poissant, Justice
Docket Number14-20-00202-CV
Decision Date12 April 2022



No. 14-20-00202-CV

Court of Appeals of Texas, Fourteenth District

April 12, 2022

On Appeal from the 190th District Court Harris County, Texas Trial Court Cause No. 2017-68458

Panel consists of Chief Justice Christopher and Justices Hassan and Poissant (Poissant, J., majority).


Margaret "Meg" Poissant, Justice

Appellants Ali Mustafa and Ali Reza Lahijani appeal the trial court's granting of summary judgment in favor of appellee Americo Energy Resources, LLC ("Americo") based on statute of limitations. In two issues, which we construe as one, appellants argue that the trial court erred in granting Americo's amended motion for summary judgment as to appellants' negligence claim. We affirm.


I. Background

The underlying facts are generally uncontested. In 1947, Union Producing Company became the lessee of an oil, gas and mineral lease (the "Bash Lease") on 225 acres of land. The Bash lease afforded the lessee the right to operate and drill the land for five years; the lessee could continue to operate on the land if the lessee continued to produce oil from the property.

In 2000 and 2004, appellants acquired the lessor's rights under the Bash lease by purchasing the ownership of several of the tracts of land covered by the lease. The combined land was over thirteen acres of undeveloped property and contained two oil wells: Bash A6 and Bash 1. When appellee purchased the Bash Lease in 2002, Bash A6 had ceased production in marketable quantities, but Bash 1 continued production until November 2008.

In March 2016, Lahijani inspected the property with Pedram Lelazari, [1] a potential business partner for developing the land. Lelazari noticed a "white area" around the saltwater tanks near Bash 1, which Lelazari believed was an indication that the tank was leaking. No contamination was ever noticed or alleged to have occurred near Bash A6. Lahijani contacted the Texas Railroad Commission ("TRC") and requested an investigation. The TRC ordered Americo to treat the soil and remove leftover debris. In its letter to Americo, TRC also stated, "[d]uring the inspection, Mr. Lahijani alleged that numerous spills have occurred in the past resulting in dead vegetation on the lease."

In June 2017, Americo was notified that appellants had again contacted the TRC and that a joint inspection revealed oil-stained soil and salt crystals. In


response, Americo hired a company to perform a solution treatment to the affected area. Americo sent samples from the treated area to the TRC, which found that the samples were within the regulatory limits.

In response, appellants hired David Heslep to test the soil and groundwater on the property. In his affidavit, Heslep opined that "[a]ll evidence clearly indicates the property has contamination as a result of the oil and gas operations over time."

In October 2017, appellants filed suit against Americo for breach of contract, declaratory judgment, conversion, and negligence. The breach of contract, declaratory judgment, and conversion claims were based on Americo's alleged failure to pay royalties to appellants and Americo's potential drilling without consent on the property. The negligence cause of action was based on Americo's failure to take the "requisite steps to prevent leaks or pollution to the property once the wells became inactive."

Americo's original answer alleged that appellants' claims were barred by two-year and four-year statutes of limitations. Appellants filed an amended petition, pleading the discovery rule and asserting that the statute of limitations regarding negligence should be tolled because the allegedly negligent acts and omissions of Americo were not discovered until March 18, 2016.

In May 2019, Americo filed a motion for summary judgment, arguing that all of appellants' causes of actions were barred by two-year and four-year statute of limitations. As to appellants' breach of contract, conversion, and declaratory judgment claims that were predicated on Americo's failure to pay royalties up until 2008 when production ceased, Americo argued appellants' claims for royalties beginning in 2008 and earlier were barred by the four-year statute of limitations that govern contractual agreements. See Tex. Civ. Prac. & Rem. Code Ann.


§ 16.004; Headington Oil Co., L.P. v. White, 287 S.W.3d 204, 214 (Tex. App.- Houston [14th Dist] 2009, no pet.) ("The statute of limitations for the recovery of royalty payments is four years.").

Americo argued that appellants' negligence claim accrued when the Bash lease stopped producing in paying quantities. Americo further averred that appellant's pleadings failed to establish that the injury was inherently undiscoverable. In further support of its position, Americo asserted that due to the oil field equipment left on the ground and readily visible after oil production ceased in 2008, the type of injury complained of by appellants was inherently discoverable in nature. Thus, according to Americo, appellants' claims for negligence were barred by the two-year statute of limitations applicable to claims for injury to property because appellants failed to perform any due diligence to discover the injury. See Tex. Civ. Prac. & Rem. Code Ann. § 16.003(a).

In support of their motion for summary judgment, Americo submitted the affidavit of Mehdi Sadeghi, one of Americo's petroleum engineers. According to Sadeghi, Americo acquired the Bash A6 and Bash 1 wells in 2002. Bash A6 ceased producing oil in 1998 before Americo even acquired it, and Bash 1 ceased production in 2008.

Appellants filed an opposition to Americo's motion for summary judgment. In their opposition, appellants admitted that prior to his visit in 2016, Lahijani had not visited the property since 2010. But appellants claimed that they did not discover or have a reason to discover any problems with the property until 2016, when Lelazari indicated that the white areas around the well should be investigated, which appellants claim was the first indication that soils and water should be tested. Appellants claimed that evidence of visible oil equipment above ground was not sufficient to make appellants aware of any possible contamination,


nor was the presence of equipment an indication that a landowner should perform due diligence to discover potential contamination.

In its amended motion for summary judgment, Americo again argued that appellants' alleged injury was not inherently undiscoverable. Americo averred that appellants should have discovered the nature of their injury by November 1, 2008, when all production stopped, or at the latest by February 2015, when the tanks were cleaned out and all oil products were removed. Americo attached the affidavit of Malek Hadipour, the lease operator, to support its claim. According to the affidavits of both Sadeghi and Hadipour, JEM Field services removed the contents of the steel production tanks on the Bash 1 site in February 2015, but left the tank bottoms on site after they finished the cleanout. According to Sadeghi, "[t]he tank bottoms consisted of sand, soil, oil and salt water residue from produced water, leaving a noticeable area of stained soil." The affidavit of Sadeghi further explains that Hadipour personally observed there were not leaks or spills during the removal process, but that staining from the tank bottoms remained after the February 2015 tank clean out. Hadipour concluded that "[n]o other activities or operations were conducted on the Property that could have caused any deposit of tank bottoms, oil stain or deposit of salt crystals after February 27, 2015." Because appellants did not file their lawsuit until October 2017, more than two years after February 27, 2015, Americo claimed that appellants' negligence claim was barred by the statute of limitations.

On December 30, 2019, the trial court granted Americo's motion for summary judgment and dismissed appellants' claims with prejudice. Appellants timely filed their appeal.

II. Discovery rule

In their sole issue, appellants argue that the trial court erred in granting


Americo's motion for summary judgment as to their negligence claim for soil and groundwater contamination based on statute of limitations.[2] Appellants argue that the trial court erred in finding that: (1) the presence of equipment, debris, and soil discoloration do not prohibit the application of the discovery rule; and (2) Americo met its burden of negating the existence of any factual dispute regarding its statute of limitation defense.

A. Standard of Review

A party moving for traditional summary judgment must establish there is no genuine issue of material fact and it is entitled to judgment as a matter of law. See Tex. R. Civ. P. 166a(c); Provident Life & Accident Ins. Co. v. Knott, 128 S.W.3d 211, 215-16 (Tex. 2003); Markwardt v. Tex. Indus., Inc., 325 S.W.3d 876, 881 (Tex. App.-Houston [14th Dist] 2010, no pet.). A defendant moving for summary judgment must conclusively negate at least one element of the plaintiffs theory of recovery or plead and conclusively establish each element of an affirmative defense. Centeq Realty, Inc. v. Siegler, 899 S.W.2d 195, 197 (Tex. 1995). If the defendant establishes its right to summary judgment, then the burden shifts to the plaintiff to raise a genuine issue of material fact. Id. We review the granting of summary judgment de novo. Knott, 128 S.W.3d at 215. We take as true all evidence favorable to the nonmovant and indulge every reasonable inference and resolve any doubts in favor of the nonmovant. See Markwardt, 325 S.W.3d at 881.


B. Applicable Law

"As a general rule, 'a cause of action accrues when a wrongful act causes some legal injury, even if the fact of injury is not discovered until later, and even if all resulting damages have not yet...

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