642 S.W.3d 518
Tex.2022Background
- Aruba Petroleum held a minority working interest in the Donnell 2H wellsite, served as operator of record, and received an operations fee from the majority owner, USG.
- While Aruba was operator (2013) a gas pipeline was installed; Aruba and USG paid proportional construction costs.
- Aruba conveyed its ownership interest to USG in April 2017 and ceased as operator; Eagleridge became operator May 1, 2017.
- The pipeline later ruptured and injured Lovern; Eagleridge sued USG and designated Aruba as a responsible third party under Chapter 33, alleging Aruba acted as an independent contractor in installing/maintaining the line.
- The trial court struck Aruba’s designation; the court of appeals affirmed; Eagleridge sought mandamus from the Texas Supreme Court.
- The Texas Supreme Court held Occidental Chemical Corp. v. Jenkins controls: an owner who improves its own property acts in an ownership capacity (premises liability) and responsibility for the condition ordinarily transfers on conveyance; Aruba’s designation was properly struck and mandamus denied.
Issues
| Issue | Plaintiff's Argument (Eagleridge) | Defendant's Argument (Lovern/USG) | Held |
|---|---|---|---|
| Whether a former owner–operator who was paid to operate can be treated as an independent contractor whose duty for an improvement survives conveyance | Aruba was paid as operator and thus acted under an agreement as an independent contractor; that duty survives sale | Occidental forbids a "dual-role" for owners improving their own property; duties run with ownership and pass to purchaser | Held: Occidental controls; owner–creator liability is premises-based and passed to buyer, so Aruba had no post-conveyance duty; designation properly struck |
| Whether receiving an operations fee converts an owner into a third-party contractor for purposes of post-conveyance liability | Payment to Aruba for operating functions makes it a third-party contractor with independent negligence duties | Payments among co-owners merely reallocate costs/revenues and do not create a third‑party relationship | Held: Payment does not transform owner into independent contractor; no exception to Occidental for compensated co-tenant operators |
| Whether mandamus was appropriate to review striking of a responsible-third-party designation | Relator contends trial court abused discretion in striking the designation and mandamus is warranted | Real parties contend mandamus is generally inappropriate for orders like a no-evidence summary-type ruling | Held: Court did not decide the broader mandamus-appropriateness question but found no abuse of discretion here and denied mandamus |
Key Cases Cited
- Occidental Chem. Corp. v. Jenkins, 478 S.W.3d 640 (Tex. 2016) (property owner who creates a dangerous condition acts in an ownership capacity and duty runs with ownership, generally passing on sale)
- Strakos v. Gehring, 360 S.W.2d 787 (Tex. 1962) (independent contractors may remain liable for dangerous conditions they create even after work is accepted)
- In re Mobile Mini, Inc., 596 S.W.3d 781 (Tex. 2020) (mandamus may be appropriate when trial court erroneously denies a timely motion to designate a responsible third party)
- Byrom v. Pendley, 717 S.W.2d 602 (Tex. 1986) (co-tenants have possessory rights in mineral property and accounting duties for production)