Tiger Prod. Co. v. Pace
| Decision Date | 20 October 2022 |
| Docket Number | 2021-IA-00315-SCT |
| Parties | TIGER PRODUCTION COMPANY, LLC, CCORE ENERGY MANAGEMENT COMPANY, LLC, ROBERT MARSH NIPPES AND HARRY WALTERS v. JOHN WEBB PACE, JEANETTE PACE AND JOHN GREGORY PACE |
| Court | Mississippi Supreme Court |
BEFORE KITCHENS, P.J., COLEMAN AND ISHEE, JJ.
¶1. On July 2, 2018, John Webb Pace, Jeannette Pace, and John Gregory Pace (the Paces) filed a complaint against Tiger Production Company, LLC, CCore Energy Management Company, LLC, Robert Marsh Nippes, and Harry Walters (collectively, "Tiger Production") in the Circuit Court of Wayne County, Mississippi. Each defendant filed a motion to dismiss the Paces' claims for failure to exhaust their administrative remedies before the Mississippi Oil and Gas Board (MSOGB). After hearing oral arguments, the circuit court denied the motions to dismiss, determining that all of the Paces' claims are based in common law and cannot be remedied by the MSOGB. Tiger Production timely sought interlocutory appeal, which was granted by this Court on May 5, 2021.
¶2. This Court finds that the circuit court was correct. We therefore affirm the circuit court's judgment and remand the case to the circuit court for further proceedings.
¶3. The Paces are the owners of 103 acres of land in Wayne County. It is not disputed that they acquired the property in 1994.[1] Tiger Production is the designated operator by the MSOGB for several oil wells and saltwater disposal wells in Wayne County.[2]
¶4. On July 2, 2018, the Paces filed suit in the Circuit Court of Wayne County against Tiger Production seeking compensatory and punitive damages. In their complaint, the Paces sought relief on four grounds: trespass, negligence and/or wantonness, nuisance, and damages. The Paces' trespass claim is based on Tiger Production's laying of a saltwater disposal line across their property. The complaint alleged that Tiger Production constructed a saltwater line across the Paces' property, without their consent, in order to connect the line to the Long Leaf Disposal Well. The Paces alleged that Tiger Production showed a "willful, wanton, reckless, grossly negligent and/or intentional disregard for the rights of [the Paces]" by Tiger Production's use of part of the Paces' land that was crossed by the saltwater disposal line.
¶5. The Paces' claim for negligence and/or wantonness was based on a saltwater or chemical leak that occurred in their pasture. This saltwater leak resulted in the poisoning and, in some instances, death of some of the Paces' cattle. The Paces alleged also that crude oil was discovered above ground in their pasture, leading to more severe health problems for their livestock.
¶6. The Paces' damages claim was based on a loss of income they say resulted from Tiger Production's construction of a waste reserve pit on their property. They alleged that the construction of this pit caused interruption of their cattle business and prevented their being able to provide a clean water source for their herd. The reserve pit was built in conjunction with the development of an oil well, and this pit has remained in place since the time the well was drilled. The Paces claimed that all of these actions by Tiger Production constituted direct and continuing nuisance.
¶7. On August 9, 2018, Tiger Production filed individual motions to dismiss the Paces' claims for their having failed to exhaust the administrative remedies available to them from the MSOGB. The trial judge heard the motions on February 13, 2020, and denied them by memorandum and order on March 5, 2021. In denying Tiger Production's motions to dismiss, the circuit court held that the common law claims do not relate to administrative remedies, and that the MSOGB lacked jurisdiction over the common law claims. Tiger Production timely filed a petition for interlocutory appeal on March 26, 2021, which this Court granted on May 5, 2021.
¶8. Tiger Production relies on Chevron U.S.A., Inc. v. Smith, 844 So.2d 1145 (Miss. 2002), arguing that the Paces' claims can be remedied either in part or in whole by the MSOGB. Specifically, Tiger Production contends that the Paces' claims arise from "damages to their land from regulated oil and gas exploration and production activities within a regulated oil field, or for violation of permits issued by the [MSOGB]."
¶9. After Tiger Production's petition for interlocutory appeal had been granted, this Court decided Petro Harvester Oil &Gas Co., LLC v. Baucum, 323 So.3d 1041 (Miss. 2021), which held that plaintiffs are not always required to exhaust their administrative remedies before seeking relief in the trial court. The Paces argue that the Court's decision in Baucum supports the order of the trial court. They aver that the Baucum holding "confirms that common law claims for damages are properly the subject of [c]ircuit [c]ourt jurisdiction."
¶10. "Jurisdictional issues are reviewed by this Court de novo." Jones v. Billy, 798 So.2d 1238, 1239 (Miss. 2001) (citing Harrison v. Boyd Miss., Inc., 700 So.2d 247, 248 (Miss. 1997)). Additionally, we have held:
"The standard of review for a trial court's grant or denial of a motion to dismiss is de novo." Burch v. Illinois Cent. R.R. Co., 136 So.3d 1063, 1064-65 (¶ 3) (Miss. 2014). "A Rule 12(b)(6) motion to dismiss for failure to state a claim tests the legal sufficiency of the complaint." Rose v. Tullos, 994 So.2d 734, 737 (¶ 11) (Miss. 2008). "When considering a motion to dismiss, the allegations in the complaint must be taken as true and the motion should not be granted unless it appears beyond doubt that the plaintiff will be unable to prove any set of facts in support of his claim." Scaggs v. GPCH-GP, Inc., 931 So.2d 1274, 1275 (¶ 6) (Miss. 2006).
The circuit court correctly held that the Paces were not required to exhaust their administrative remedies regarding their claims.
¶11. "Where an administrative agency regulates certain activity, an aggrieved party must first seek relief from the administrative agency before seeking relief from the trial courts." Chevron, 844 So.2d at 1148 (citing State v. Beebe, 687 So.2d 702, 704 (Miss. 1996)); see also Baucum, 323 So.3d at 1046. But "where no adequate administrative remedy is provided, the exhaustion doctrine is not applicable." Baucum, 323 So.3d at 1046 (internal quotation mark omitted) (quoting Donald v. Amoco Prod. Co., 735 So.2d 161, 176 (Miss. 1999)).
¶12. Tiger Production argues that, based on Chevron, the Paces were required to exhaust their administrative remedies before seeking relief in the trial court because the asserted claims come from "damages to [the Paces'] land from regulated oil and gas exploration and production activities within a regulated oil field, or for violation of permits issued by the [MSOGB]." The Paces assert that their claims are based in common law, and, because of that, they were not required to exhaust their administrative remedies prior to filing suit in the circuit court. The Paces cite this Court's recent case, Baucum, 323 So.3d at 1048, for support.
¶13. In 2002, this Court decided Chevron, which was an oil field contamination case. Chevron, 844 So.2d at 1146. There, a jury awarded $2,349,275 to the plaintiffs as damages for the pollution and contamination of their property from oil and gas exploration and production. Id. at 1146. This Court reversed the award of damages, holding that oil field surface owners seeking the cleanup and remediation of their property were required to exhaust their administrative remedies before the MSOGB prior to seeking relief in the courts. Id. at 1149. The Court determined that the MSOGB had authority because "pollution clean up operations have been deemed the responsibility of the [MSOGB]." Id. at 1148. The Court explained that no court of law can require a party "to expend the award on decontaminating the property" and that "[t]he citizens of this state are better served by having an expert regulatory agency enforce the environmental statutes[.]" Id. Therefore, "in cases where private plaintiffs are seeking clean up of oil production byproducts, the [MSOGB] 'remedy is adequate and should . . . [be] exhausted prior to filing a private suit.'" Id. () (quoting Donald, 735 So.2d at 177). As a result, the Court "reverse[d] the trial court's judgment, and we render[ed] judgment . . . dismissing the Smith's complaint and [the] action without prejudice for failure to exhaust administrative remedies." Id. at 1146.
¶14. In August 2021, this Court decided Baucum Baucum, 323 So.3d at 1041. Thus, that case became an intervening decision during the pendency of this appeal. The plaintiffs in Baucum owned land in Jones County that joined land owned and controlled by an oil and gas company. Id. at 1042. The plaintiffs asserted claims for "trespass, public and private nuisance, and negligence," alleging that the defendant had disposed of oil and gas production waste on their land illegally. Id. at 1042. Later, the plaintiffs amended their complaint to include a personal injury claim in which they alleged that the defendant's illegal dumping of oil production waste was the cause of a plaintiff's cancer. Id. at 1044. The Court recognized that while Mississippi statutory law gives the MSOGB "jurisdiction over the noncommercial disposal of oil-field waste[,]" "that is not to...
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