KEY OPERATING & EQUIPMENT, INC., Pеtitioner, v. Will HEGAR and Loree Hegar, Respondents.
No. 13-0156.
Supreme Court of Texas.
Argued Feb. 4, 2014. Decided June 20, 2014.
435 S.W.3d 794
The court of appeals reversed, 369 S.W.3d 268, holding that Stinson‘s suit against the County in federal court entitled Fontenot to dismissal under
In Alexander, we explained that subsеction (f) is the appropriate avenue for dismissing a government employee considered to have been sued in his official capacity, while subsection (a) bars suit against an employee in his individual capacity. 435 S.W.3d at 791 (citing TAGO, 408 S.W.3d at 357-58). For purposes of the TTCA, an employee is considered to have been sued in his official capacity when the suit (1) is based on conduct within the general scope оf his employment, and (2) could have been brought under the TTCA against the government.
In the case at bar, Stinson doеs not dispute that her suit against Deputy Fontenot is based on conduct within the general scope of his employment. Further, as in Alexander, the suit could have been brought under the TTCA against the County. 435 S.W.3d at 792 (citing Franka v. Velasquez, 332 S.W.3d 367, 379-80 (Tex. 2011) (holding that, barring an independent statutory waiver of immunity, tort claims against the government are brought under the TTCA for subsection (f) purposes even when the TTCA does not waive immunity for those claims)). Consequently, Fontenot was considered to have been sued in his official capacity only. For this reason, subsection (a) does not bar the suit, but Fontenot was entitled to dismissal under subsection (f). Alexander, 435 S.W.3d at 790.
Accordingly, the trial court erred in denying Fontenot‘s motion for summary judgment, and the court of appeals correctly reversed. We grant Stinson‘s petition for review, and, without hearing oral argument, affirm the judgment of the court of appeals. See
Mark C. Harwell, Cotham & Harwell, P.C., Houston, TX, for Respondent.
Everard A. Marseglia Jr., Jillian Marullo, Liskow & Lewis, PLC, Houston, TX, for Amicus Curiae.
Justice JOHNSON delivered the opinion of the Court.
At issue in this casе is whether, when parts of two mineral leases have been pooled but production is from only one lease, the mineral lessee has the right to use a road across the surface of the lease without production in order to access the producing lease. The trial court determined that the lessee does not and granted declaratory and injunctive relief. The court of aрpeals affirmed. Concluding that the lessee has such a right, we reverse and render.
I. Background
Key Operating and Equipment, Inc., (Key) has operated the Richardson No. 1 well on the sixty-acre Richardson tract since 1987. In 1994 Key acquired oil and gas leases on a 191-acre contiguous tract—the Curbo/Rosenbaum Tract—and reworked the Rosenbaum No. 2, an existing well on that property. That same year Key built a road on the Curbo/Rosenbaum tract to access both the Richardson No. 1 and the Rosenbaum No. 2. The Rosenbaum No. 2 stopped producing in 2000, and Key‘s lease on the Curbo/Rosenbaum tract expired. But also in 2000, Key‘s owners purchased an undivided twelve-and-a-half percent interest in the mineral estate of the Curbo/Rosenbaum Tract, which they promptly leased to Key. The lease gave Key the right to pool the minerals with other property in the immediate vicinity. Key then pooled its leased minerals under ten acres from the Curbo/Rosenbaum tract with its leased minerals under thirty acres from the adjoining Richardson Tract.
In 2002, Will and Loree Hegar bought eighty-five acres of the Curbo/Rosenbaum Tract (the Hegar Tract). Their acreage included the road Key used to access the Richardson No. 1, and they were aware when they bought the tract that Key used the road in its mineral operations.
In 2003 or 2004, the Hegars built a house on their acreage, used the road to access it, and for several years took no action to restrict Key‘s use of the road. That forbearance stopped when Key drilled the Richardson No. 4 well on the Richardson tract. Following that drilling, traffic on the road increased, prompting the Hegars to file suit claiming that by using the road, Key was trespassing. They sought a declaratory judgment that Key had no legal right to “access or use the surface of the Hegar Tract in order to produce minerals from the Richardson Tract.” At trial, the Hegars called a petroleum engineer who testified that the Richardson No. 4 was the only well on the pooled acreage with significant current production; the size of the reservoir from which it produced was three-and-a-half surface acres; the well‘s drainage area did not reach the Hegars’ property; and the well was not draining oil from the Hegars’ property.
The trial court enjoined Key from using the part of the road that was on the Hegars’ property for any purpose related to producing minerals from the adjoining Richardson Tract. The court entered find
Key appealed. The court of appeals initially reversed, but granted the Hegars’ motion for rehearing, withdrew its opinion, and affirmed. 403 S.W.3d 318. The court held that Key had the right to use the Hegars’ surface to produce oil only from beneath the Hegar tract, determined that evidence supported the triаl court‘s finding that Key was only producing oil from the adjacent Richardson Tract, and affirmed the trial court‘s conclusion that Key had no right to use the Hegars’ surface to produce minerals exclusively from the Richardson Tract. Id. at 336. The court also held that Key‘s lease and pooling agreements, which were not part of the Hegars’ chain of title, could not contractually expand Key‘s right to use thе Hegars’ surface. Id. at 326.
Key petitioned this Court for review,1 arguing that it has the right to use the Hegars’ surface estate in producing minerals from any part of the pooled unit. It asserts that the court of appeals erred by relying on the accommodation doctrine and in its application of Robinson v. Robbins Petroleum Corp., 501 S.W.2d 865 (Tex. 1973). Key also claims that the court of appeals incorrectly assumed that because the recоrd did not contain the original document severing the mineral and surface estates, Key‘s predecessor did not have the right to pool and Key did not have the right to use the road.
The Hegars first respond that because Key failed to brief its opposition to the Hegars’ motion for rehearing in the court of appeals, it waived its current arguments. They also argue that a mineral owner has an impliеd easement to use the surface of a property only if production is from that property, which it is not in this case. As for the absence from the record of the document severing the mineral estate, the Hegars claim that they met their burden of proof to establish they are the exclusive owners of the surface estate and Key did not argue in the lower courts that the missing document would provе its permission to use the road.
II. Discussion
A. Key‘s Failure to Oppose Rehearing
After the Hegars filed a motion for rehearing, the court of appeals requested a response from Key. Key did not file one. The Hegars assert that the arguments Key raises in this Court should have been briefed in opposition to their motion for rehearing, and the arguments are waived because Key did not do so. We disagree.
An issue raised in this Court must have been assigned as error in the court of appeals if it originated in the trial court.
Further, the Rules of Appellate Procedure provide that a motion for rehearing is not a prerequisite to filing a petition for review in this Court, nor is it required to preserve error.
B. Key‘s Use of the Surface
The owner of the dominant mineral estate in a tract has the right to go upon the surface of that land to produce and remove the minerals, and also the incidental rights necessary for that production and removal. Merriman v. XTO Energy, Inc., 407 S.W.3d 244, 248-49 (Tex. 2013). The mineral lessee‘s incidental rights include the right to usе as much of the surface as is reasonably necessary to produce the minerals. Id. at 249.
Key argues that because its production from a tract pooled with others is legally treated as production from each tract within the unit, it has the right to use the surface of any of the units’ pooled tracts in its production activities. We agree.
1. Pooling
Mineral lessees of multiple tracts may pool some or all of the tracts by combining them into a single unit, provided pooling is authorized by the leases. See S.E. Pipe Line Co. v. Tichacek, 997 S.W.2d 166, 170 (Tex. 1999). The policy of Texas is to encourage the recovery of minerals, and the Legislature has made waste in the production of oil and gas unlawful. See R.R. Comm‘n of Tex. v. Manziel, 361 S.W.2d 560, 569-70 (Tex. 1962); see also
Both the Curbo/Rosenbaum and Richardson leases permit pooling.2 The Curbo/Rosenbaum lease provides that Key has “the right and power to pool or combine the acreage covered by this lease ... with any other land, lease, or leases in the immediate vicinity thereof.” The primary legal consequence of pooling is that “production and operations anywhere on the pooled unit are treated as if they have taken place on each tract within the unit.” Tichacek, 997 S.W.2d at 170 (citing Southland Royalty Co. v. Humble Oil & Ref. Co., 151 Tex. 324, 249 S.W.2d 914, 916 (1952)).
2. Title Documents
The court of appeals first considered whether Key had the contractual right to use the road across the Hegars’ property by virtue of its lease and pooling agreement. 403 S.W.3d at 325. The court concluded that the Hegars were not bound by the lease or the pooling agreement because those documents were not executed at the time the mineral and surface estates were first severed and, therefore, they were not within the Hegars’ chain of title. Id. at 326. The court further considered Key‘s implied surface rights and concluded that those rights did not allow Key to use the road across the Hegar tract. Id. at 333.
3. Implied Surface Rights
Applying the “primary legal consequence” of рooling to this case—that production anywhere on a pooled unit is treated as production on every tract in the unit—we conclude that once pooling occurred, the pooled parts of the Richardson and Hegar Tracts no longer maintained separate identities insofar as where production from the pooled interests was located. So the legal consequence of production from the pooled part of the Richardson Tract is that it is also production from the pooled part of the Hegar Tract, and the Hegars do not contend that Key did not have the right to use the road to produce minerals from their acreage. Because production from the pooled part of the Richardson Tract was legally also produсtion from the pooled part of the Hegar tract, Key had the right to use the road to access the pooled part of the Richardson tract. See Prop. Owners of Leisure Land v. Woolf & Magee, Inc., 786 S.W.2d 757, 760 (Tex.App.-Tyler 1990, no writ) (holding that an implied surface easement of reasonable usage extended to the surface of tracts that had been pooled with a tract contained a producing well).
The court of appeals recognized that a mineral lessee‘s implied surface 3 easement extends to the surface of the entire pooled area. 403 S.W.3d at 325. But the court concluded, and the Hegars argue, that Key did not have an implied right to use the Hegars’ surface to produce minerals only from another tract, which the evidence showed and the trial court found was the situation here. Id. at 331. The court of appeals concluded that Key‘s surface easement was only implicated when Key used the road to produce oil from beneath the Hegar Tract. Id. This conclusion conflicts with the legal consequence of pooling that production anywhere on the pooled unit and operations incidental to that production are regarded as taking place on each pooled tract. Tichacek, 997 S.W.2d at 170.
The Hegars argue that their position is supported by Robinson v. Robbins Petroleum Corp., in which this Court held that a surface tract may not be used for рroduction on adjacent tracts without the surface owner‘s consent. 501 S.W.2d 865 (Tex. 1973). In Robinson, R.O. Robinson owned an eighty-acre surface estate subject to the Wagoner mineral lease. Id. at 866. The Wagoner lease included adjacent tracts that had been leased to Robbins Petroleum when the tracts were all owned by the same owners. Id. Sometime after Robinson purchased his surface estate, three waterflood units that did not include the Wagoner Lease were formed. Id. The well operator began using a former oil well on the Robinson Tract to produce salt water that it then used in the three waterflood units that were not part of the Wagoner Lease. Id. This Court held that “Robinson, as owner of the surface, is entitled to protection from uses thereof, without his consent, for the benefit of owners
The Hegars assert that Robinson prohibits a mineral lessee from using one surface to aid operations on another tract. But Robinson is distinguishable from the situation here. The minerals under Robinson‘s surface had not been, and could not be, pooled with tracts where the water was being used. Id. at 867 (“Robinson‘s complaint is against the lower court holding that the operator has the right to takе salt water ... without his consent and without compensation for benefits flowing to premises not covered by or authorized to be pooled by the Wagoner lease.” (emphasis added)). And Robinson himself recognized that the lack of pooling was significant, arguing in the court of appeals that he had authority to control use of the water subject to a lessee‘s water use to assist with production under his traсt or “underlying tracts pooled therewith.” Robinson v. Robbins Petroleum Corp., 487 S.W.2d 794, 797 (Tex.App.-Tyler 1972), rev‘d 501 S.W.2d 865 (Tex.1973). Robinson does not control here.
Based on a statement in Robinson, the Hegars also argue that because Key‘s owners never owned a portion of the Hegars’ surface estate, their title to the minerals did not empower them to broaden the burdens on the Hegars’ surface to benefit adjacent tracts. The statement on which they rely is as follows:
Robinson took his surface title subject to the Wagoner lease and the implied right of the mineral owner to make reasonable use of the surface to produce certain minerals from the land covered by the Wagoner lease. Nothing in the Wagoner lease or the reservation contained in Robinson‘s deed authorized the mineral owner to increase the burden on the surface estate for the benefit of additiоnal lands.
Robinson, 501 S.W.2d at 867-68. But the Hegars took their surface title subject to the mineral lease assigned by Key‘s owners to Key. See Day & Co. v. Texland Petroleum, Inc., 786 S.W.2d 667, 669 (Tex. 1990) (holding that the right to lease—the executive right—is a right of the mineral estate and is an interest in property, not a product of contract); 1 Ernest E. Smith & Jacqueline Lang Weaver, TEXAS LAW OF OIL AND GAS § 2.1[A][2] (“[T]he owner of a severed surface estate has no right to participate in executing oil and gas leases.“). And unlike the lease in Robinson, the lease to Key authorized it to pool the acreage with other tracts, which it did and which provision gave rise to Key‘s right to use the road.
Further, because they owned part of the minerals under the Hegar tract, Key‘s owners had the right to use the surface of the tract to develop and remove minerals from it, including the right of ingress and egress to do so. See Lesley v. Veterans Land Bd., 352 S.W.3d 479, 481 n. 1 (Tex. 2011). They also had the right to pool. Wagner & Brown, Ltd. v. Sheppard, 282 S.W.3d 419, 422-23 (Tex.2008). Thus Key, through its mineral lease, also had the right of ingress and egress, Ball v. Dillard, 602 S.W.2d 521, 523 (Tex.1980), and the right to pool. Tichacek, 997 S.W.2d at 170. The right of ingress and egress includes the right to ingress and egress over the surface of any pooled acreage for the purpose of producing minerals from any part of the pooled acreage. Accordingly, Key‘s owners did not increase the burdens on the surface estate by leasing their minerаl interest to Key, nor did Key increase the burdens by pooling the Richardson and Curbo/Rosenbaum tract minerals.
C. Accommodation Doctrine
Under the accommodation doctrine, a surface owner may obtain relief on
Key asserts that the accommodation doctrine was not raised in the trial court or the court of appeals, and even if it were, the court of appeals erred by relying on it to hold that Key trespassed on the Hegars’ surface estate. The Hegars agree that the doctrine was not raised below and is not properly before us.
Because it was not raised in the trial court, the accommodation doctrine as related to Key‘s use of the Hegar Tract‘s surface was not properly before the court of appeals and we need not determine whether it was correctly applied. See Mack Trucks, Inc. v. Tamez, 206 S.W.3d 572, 577 (Tex.2006) (“Except for fundamental error, appellate courts are not authorized to consider issues not рroperly raised by the parties.“).
V. Conclusion
Key has the right to use the road across the pooled Hegar Tract for production of minerals from all the acreage with which it is pooled. We reverse the court of appeals’ judgment and render judgment for Key accordingly.
Lionel GONZALES, Appellant v. The STATE of Texas.
No. PD-1313-13.
Court of Criminal Appeals of Texas.
June 25, 2014.