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A recent case from the Houston Court of Appeals reminds us that, at least in Texas, if you are renting a house and you walk over broken concrete for months, you cannot sue your landlord if you fall on the broken concrete. See Phillips v. Abraham, 517 S.W.3d 355 (Tex.Civ.App. – Houston [14th Dist.] 2017, no pet.). The broken concrete is going to be deemed “open and obvious” at that point and, if no exceptions apply, you will not recover a judgment against your landlord. The case is a victory for common sense.

Facts of Case

During 2012 and 2013, the plaintiff leased a house in Friendswood from the owners and signed a written residential lease. In January 2013, the plaintiff lost his footing and fell while attempting to walk up the driveway which, according to the plaintiff, “was in disrepair with many loose and broken rocks.” As a result of the fall, the plaintiff claims that he broke his back. He sued for negligence and sought exemplary damages based on alleged gross negligence of the landlord.

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In 1924, Cora McCrabb (along with two co-owners) owned 1,448.50 acres of farm and pasture land. In that same year, Cora executed her Last Will and Testament, bequeathing all of her “farm lands and pasture lands” equally to her three grandchildren, Jessie, J.F., and Mary Lee McCrabb. Cora gave the residue of her estate to only one of the grandchildren, Jessie.

In 1927, Cora and her co-owners sold the 1,448.50 acres of “farm lands and pasture lands” in fee simple to J. L. Dubose. Dubose simultaneously conveyed to Cora and her co-owners an undivided one-half interest in the oil, gas, and minerals in and under the 1,448.50 acres of farm lands and pasture lands. Cora did not change her Last Will and Testament. Cora died in 1929.

Many years later, in 2013, the heirs of J.F. and Mary McCrabb filed a petition for a declaration that Cora’s share of the undivided mineral interest under the “farm lands and pasture lands” passed equally to all three grandchildren. The heirs of Jessie McCrabb filed a counterclaim asking for a declaration that Cora’s entire mineral interest passed to Jessie McCrabb alone pursuant to the residuary clause in the 1924 Last Will and Testament. The trial court sided with the heirs of Jesse McCrabb.

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In a recent case, FP Stores Inc. v. Tramontina US, Inc., the Houston Court of Appeals provided guidance, for the first time, on what constitutes “bad faith” by a commercial landlord that fails or refuses to return a security deposit.

Facts of the Case

The FP Stores case involved a sublease for commercial premises located in Sugar Land, Texas. The original lease was signed in 2010 for the entire premises. Thereafter, several subleases were signed for various portions of the premises. In this case, the relevant sublessor was FP Stores, the sublessee was Tramontina US, Inc. and the master lessor was ProLogis Texas II, LLC.

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A recent Texas Supreme Court case, Allen-Pieroni v. Pieroni, teaches that the proper measure of damages for a slander of title suit is the difference between the lost contract price on the property and the fair market value when the slanderous cloud on title is removed.

Texas Slander of Title: Facts of Case

Marc Pieroni was married for 10 years to Bonnie Pieroni. When they divorced, Mr. Pieroni (“Marc”) agreed to pay a total lump sum to the former Mrs. Pieroni (“Bonnie”) of $500,000 in $10,000 increments. Marc never failed to pay and was never in default of his obligations under the divorce decree. Ultimately, Marc paid Bonnie the entire $500,000 by August of 2013.

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A recent Texas case decided by the San Antonio Court of Appeals, Texas Outfitters Limited, LLC v. Nicholson, offers some lessons on an executive rights owner’s fiduciary duties to the non-executive mineral owner in the context of oil and gas leases. At trial, the executive interest owner, Texas Outfitters, was found to have breached its fiduciary duty and a judgment of $867,654.32 was awarded to the non-executive.

What is “The Executive Right”?

Under Texas law and under the laws of most states, real property can have two co-existing estates – the surface estate and the mineral estate (covering minerals, oil, and gas below the surface). As the Texas Supreme Court has held, the property rights granted by the mineral estate are a “bundle” of rights and one of the “sticks” in the bundle is called the “executive right.” In general, the executive right is the right to make decisions affecting the exploration and development of the mineral estate and, more specifically, is the right to decide whether to execute a mineral lease and to determine the terms of the lease. These concepts were discussed by the Texas Supreme Court in Lesley v. Veterans Land Board of Texas, 352 S.W.3d 479 (Tex. 2011). As discussed in this article, holders of the executive rights sometimes owe fiduciary duties to any non-executive co-tenants.

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Mineral owners in Texas often sign oil and gas leases that include language that requires that oil or gas be produced in commercially paying quantities in order to keep the lease alive. When production falls below that level, the lease may terminate or lapse, and the mineral interest reverts to the landowner, or to other leases with subsequent rights to the property (i.e., top lease holders). In addition, many leases contain what is called a “shut in royalty” clause, which often goes something like this: “where gas from any well or wells capable of producing gas . . . is not sold or used during or after the primary term and this lease is not otherwise maintained in effect, the lessee may pay or tender … shut-in royalty . . . , and if such shut-in royalty is so paid or tendered

and while lessee’s right to pay or tender same is accruing, it shall be considered that gas is being produced in paying quantities, and this lease shall remain in force during each twelve-month period for which shut-in royalty is so paid or tendered . . .” . It is important to notice that the shut in royalty clause can only be invoked if the well in question is capable of producing in paying quantities.

BP America Production Co. v. Red Deer Resources LLC is a case involving a marginal well operated by BP that was producing at very low levels. BP invoked the shut-in royalty clause of their lease  with the mineral owners. However, questions arose as to whether BP’s use of the shut in royalty clause was valid and whether the lease had actually terminated.

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As readers may recall, the US Environmental Protection Agency published a draft report in 2015 that concluded that there was no evidence that hydraulic fracturing (“fracing”) led to widespread, systemic impacts on drinking water resources in the United States.

Environmental groups went ballistic over this conclusion. Bowing to public pressure, the EPA decided to rewrite the report. In 2016, the EPA published a redrafted final report that you can read here. That report concluded that activities in the hydraulic fracturing water cycle “can” impact drinking water resources “under some circumstances”.

Shari Dunn-Norman, associate professor in the petroleum engineering department at Missouri University of Science & Technology, was a member of the 31-person Scientific Advisory Board panel of “subject matter experts” that reviewed EPA’s work during the study. Professor Dunn-Norman recently shared her thoughts about the experience at a Hydraulic Fracturing Technology Conference put on by the Society of Petroleum Engineers in The Woodlands, Texas.

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Texas residents are required by law to call 811 before digging any deeper than 16 inches. Once that call is made, all companies with any pipelines, water lines or utility lines in that area come out and mark their respective lines so that the excavation can avoid those lines. This is an obvious and common sense safety measure to protect the public as well as whoever is doing the digging.digger-at-work

House Bill 1818 recently extended the authority of the Texas Railroad Commission regarding pipelines. Previously, the RRC had jurisdiction only over intrastate pipelines (lines that begin and end within Texas). Now, the RRC has authority over interstate pipelines as well (lines that cross state boundaries).

Under the new RRC Rules (that you can review here), excavators must report any damage not later than one hour after the damage occurs. Next, a written report must be filed with the RRC within 30 days.

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The U.S. Geological Survey released an updated report (that you can read here) regarding the alleged link between induced earthquakes, defined as earthquakes triggered by commercial activities, disposal wells or and hydraulic fracing.

A Preliminary Forecast Model For Induced Quakes

USGS scientists studied 17 geographical areas spanning eight states, where increased seismic activity has been recorded that is presumably attributable to human activities and commercial endeavours, to try to develop a preliminary forecast model designed to determine how induced earthquakes could be assessed in geographical regions where increased oil and gas operations are occurring. The report is the first comprehensive study conducted on the hazard levels associated with human activity induced earthquakes.

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When an oil and gas well is no longer producing (or if it needs major repairs but the production is not sufficient to justify the cost of repairs), Texas Railroad Commission rules require that the well must be plugged. The plugging procedure (which you can read about here) involves cementing the wellbore and is designed to be permanent. The plugging is designed specifically to protect against leaks into aquifers. Unfortunately, occasionally a production or waste water well gets plugged improperly or negligently, and salt water from these wells leaks out over time and on to the adjacent property, resulting in very unhappy property owners. Salt water leakage can cause damage to the surface of the property, such as contaminating the land so that crops can no longer be grown, or can seep through the ground to contaminate aquifers beneath the surface. Of course, plugged wells should not leak, and if they do, the property owner may have an actionable claim against the company that plugged the well.

The case of Ranchero Esperanza, Ltd. v. Marathon Oil Co. addressed a number of issues that arise in this kind of case. Some of these issues, such as standing (i.e., the right to sue), the statute of limitations, the applicability of the discovery rule and when a cause of action accrues, were addressed by the Texas Eighth Court of Appeals in El Paso in the Ranchero Esperanza case.

In connection with standing, the Court repeated the well-known legal precept that a cause of action for injury to land is a personal right belonging to the person owning the property at the time of the injury. A subsequent owner can’t recover for an injury committed before their ownership unless they received an express assignment of the cause of action from the former owner. In this case, the injury did not occur until saltwater was released from the plugged well onto the surface of the property in July 2008. Since Ranchero Esperanza was the owner of the property at that time, it had standing.