Wallace v. Energen Res. Corp.

Decision Date24 April 2020
Docket NumberNo. 08-17-00248-CV,08-17-00248-CV
Citation603 S.W.3d 499
Parties Bryce J. WALLACE, Elite Drillers Corporation, and Intervenor United Fire & Casualty Company and its parent, United Fire Group, Inc., Appellants, v. ENERGEN RESOURCES CORPORATION, Appellee.
CourtTexas Court of Appeals

ATTORNEY FOR APPELLANTS, Jason B. Hamm, Hamm French, PLLC, 3000 N. Garfield, Ste. 205, Midland, TX 79705.

ATTORNEYS FOR APPELLEE, Ryan Clinton, Davis, Gerald & Cremer, P.C., 300 West Sixth Street, Ste. 1830, Austin, TX 78701, Jill C. Pennington, Davis, Gerald & Cremer, P.C., 400 West Illinois, Suite 1400, Midland, TX 79701.

Before Alley, C.J., Rodriguez, and Palafox, JJ.

OPINION

GINA M. PALAFOX, Justice

Appellants Bryce J. Wallace, Elite Drillers Corporation (Elite), and United Fire & Casualty Company and its parent, United Fire Group, Inc. (collectively, Wallace and Elite1 or claimants) appeal from an order granting a take-nothing summary judgment on their negligence claims against Appellee Energen Resources Corporation (Energen).2 The stated basis of the order is that Energen is not liable under Chapter 95 of the Texas Civil Practice and Remedies Code because Energen did not exercise or retain control over the work performed by Wallace and Elite as a matter of law. On appeal, Wallace and Elite assert: (1) that Energen failed to conclusively establish that Chapter 95 applied to their claims of negligence; and (2) even if Chapter 95 does apply such that the evidentiary burden shifted to claimants, they assert that a genuine issue of material fact exists as to whether Energen exercised or retained some control over the work they performed thereby precluding summary judgment. We reverse and remand.

I. BACKGROUND

Energen owns a mineral leasehold estate in Reeves County, Texas. In September 2013, Energen received regulatory approval to drill its Langley 2-36 1H oil and gas well. (Oil Well or Langley Well). Energen contracted with Nabors Drilling Technologies USA, Inc. (Nabors) to drill the well on its property.3 Pursuant to their drilling agreement, Nabors furnished equipment and labor to perform drilling services under the "direction, supervision and control" of Energen, and Energen assumed all risk, responsibility and liability for the drilling of the Oil Well and its operations. Based on geological data, Energen planned for Nabors to drill the Oil Well to a total vertical depth of 10,945 feet. On a daily basis, Energen received reports of well activity, events and operations.

To assist with the drilling and operations of the Oil Well, Energen contracted with Dubose Drilling, Inc. (Dubose) to drill a nearby Water Well on its property to a depth of approximately 500 to 550 feet. Energen set the Water Well site approximately 500 feet from the Oil Well. Initially, Dubose drilled the Water Well to the target depth but found no water. Energen then suspended any further drilling. But later, after further input from their in-house geologists, Energen decided it wanted to resume drilling the Water Well to a deeper depth. Geologists recommended drilling to a depth of 800 feet based on their research of known aquifers in the area. When contacted for further drilling, Dubose informed Energen it had already scheduled its rig for another job, but it offered to locate another contractor.

Dubose subcontracted with Elite to complete the drilling of the Water Well. Working for Elite, Wallace was assigned to supervise the work of completing Energen's Water Well. After drilling to a depth of approximately 900 feet, Elite workers confirmed they found an acceptable amount of water in the aquifer that had been targeted and they were instructed to complete the well. While Elite workers completed the Water Well, Energen's drilling activity continued on the nearby Oil Well.

On January 14, 2014, the Oil Well experienced a gas kick that resulted in gas circulating to the surface causing workers to shut in the well with mud. For days afterwards, workers noted continuing instances of lost circulation and lost returns while the well remained operating and otherwise flowing. Meanwhile, on the nearby Water Well, Wallace continued supervising Elite workers as they completed casing of the water well with a steel liner, welded joints, and packed in gravel.

On January 17, 2014, while completing the Water Well, Wallace noticed air pressure increasing when they ran the drill pipe to a depth of nearly 500 feet to blow out drilling mud. After shutting off the air compressor, Wallace soon realized that the increased pressure originated not from Elite's equipment but from natural gas arising from down hole. Reacting, he yelled for everyone to run. Soon, the gas exploded into a ball of fire that engulfed Wallace and the well site generally. Following the explosion, natural gas continued flowing and the Water Well remained on fire for several days. From the fire, Wallace sustained severe burns to his body. Elite sustained property damage to its rig and equipment that resulted in lost business.

Together, Wallace and Elite filed suit against Energen and other parties seeking recovery for personal injury and property damages proximately caused by the explosion and fire.4 By their suit, they alleged that Energen's negligent drilling of the nearby Oil Well caused high volumes of natural gas to enter the aquifer from which Wallace and Elite were drilling to complete the Water Well. They further alleged that "the high volumes of natural gas were not present in the aquifer as a result of natural reasons, but such presence [was] directly connected to the drilling of the Oil Well and the actions and/or omissions of those involved in the drilling of the Oil Well."

Energen filed a traditional motion for partial summary judgment asserting that Chapter 95 of the Texas Civil Practice and Remedies Code applied to limit liability for claims against a property owner (i.e., Energen) for personal injury or property damages to a subcontractor (i.e., Elite) or an employee of a subcontractor (i.e., Wallace) that arose from the condition or use of an improvement to real property (i.e., the Water Well and Oil Well). Energen contended that Chapter 95 applied given that Wallace and Elite sought recovery for injuries and damages caused by the fire that occurred while they were drilling the Water Well. Energen further claimed that—to the extent that plaintiffs claimed that their injuries were caused by a condition of Energen's Oil Well and not the Water Well—that Chapter 95, nonetheless, applied to those claims.

Responding, Wallace and Elite asserted that by relying on Chapter 95, Energen asserted an affirmative defense on which it carried the evidentiary burden, yet it failed to conclusively establish the factual basis required to establish that the defense applied. Relying on Ineos USA, LLC v. Elmgren , 505 S.W.3d 555, 567 (Tex. 2016), they asserted there was no dispute that their work did not in any way involve the constructing, repairing, renovating or modifying of the Oil Well, which was the improvement which they alleged was either defective or negligently used. In the alternative, Wallace and Elite further argued that, even if Chapter 95 applied, that genuine issues of material fact existed as to the elements required to establish an exception to the statute's liability limitation.

In ruling on the motion, the trial court agreed with Energen and ordered that Wallace and Elite take nothing on their negligence claims against Energen. This appeal followed.

II. DISCUSSION

Wallace and Elite present two related issues contending the trial court erred in granting summary judgment. In Issue One, they contend that Energen failed to meet its evidentiary burden of establishing that Chapter 95 applied as a matter of law. In Issue Two, they argue in the event that Chapter 95 does apply, that a factual issue precludes judgment on the sole statutory element challenged by Energen's motion that would be required to establish an exception to liability protection—that is, whether Energen exercised or retained some control over the manner in which Wallace and Elite performed their work.

We begin with the threshold question of whether Energen conclusively established the application of Chapter 95 in this instance.

A. Chapter 95

In Issue One, Wallace and Elite argue that Chapter 95 does not apply to their claims against Energen. When construing a statute, we necessarily begin with its language. State v. Shumake , 199 S.W.3d 279, 284 (Tex. 2006). By its terms, Chapter 95 applies to a claim:

(1) against a property owner, contractor, or subcontractor for personal injury, death, or property damage to an owner, a contractor, or a subcontractor or an employee of a contractor or subcontractor; and
(2) that arises from the condition or use of an improvement to real property where the contractor or subcontractor constructs, repairs, renovates, or modifies the improvement.

TEX. CIV. PRAC. & REM. CODE ANN. § 95.002.

To establish liability, section 95.003 provides as follows:

A property owner is not liable for personal injury, death, or property damage to a contractor, subcontractor, or an employee of a contractor or subcontractor who constructs, repairs, renovates, or modifies an improvement to real property, including personal injury, death, or property damage arising from the failure to provide a safe workplace unless :
(1) the property owner exercises or retains some control over the manner in which the work is performed, other than the right to order the work to start or stop or to inspect progress or receive reports; and
(2) the property owner had actual knowledge of the danger or condition resulting in the personal injury, death, or property damage and failed to adequately warn.

Id. § 95.003 (emphasis added).

Relevant to this case, Chapter 95 applies only to claims of negligence asserted against a property owner for personal injury or property damages to a subcontractor or employee of a subcontractor "that arise[ ] from the condition or use of an...

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    • United States
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    ...inadequate warning—in order to trigger the exception to a property owner's liability protection." Wallace v. Energen Res. Corp., 603 S.W.3d 499, 505 (Tex. App.—El Paso 2020, pet. filed); see also e.g., Cox v. Air Liquide Am., LP, 498 S.W.3d 686, 689 (Tex. App.—Houston [14th Dist.] 2016, no ......
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    ...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......

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