Oil and Gas Lawyer Blog
Marsden v. Titan Operating, decided by the Fort Worth Court of Appeals in August 2015, is another case in which a landowner sought nuisance damages from the drilling of wells close to their home. After a jury trial, the trial court awarded damages of $36,000 to the Marsdens. The court of appeals reversed. The Marsdens have asked the Texas Supreme Court to hear the case.
The facts are these. The Marsdens bought 6 acres in Parker County in 1997, near Aledo, where they made their home with their two daughters. They signed an oil and gas lease covering the property in 2004. It was on the company’s printed form, but the Marsdens negotiated provisions they added by an addendum to the lease. The printed form provided that no well could be drilled nearer than 200 feet to any house on their property. But the addendum provided that no drilling operations could be conducted on the surface of their property – a “no-surface-use” lease.
In 2011, Titan, who acquired the Marsden lease and leases on adjacent properties, constructed a pad site immediately adjacent to the Marsdens’ property and within about 200 feet of their home. The rig for the initial well on the pad site was just over 300 feet from the house. The well was completed on a pooled unit in which the Marsdens’ property was included, and the Marsdens signed division orders and receive royalties from the unit. Titan subsequently drilled five more wells on the pad.
The Marsdens sued Titan claiming that the drilling and production activities constituted a nuisance entitling them to compensation. The jury found that Titan’s operations substantially interfered with the use and enjoyment of their land and constituted a nuisance, and awarded the Marsdens $36,000. In answer to a a separate question, the jury said the Marsdens were not estopped from complaining of the Titans’ activities by signing the oil and gas lease and accepting royalties from the wells. The jury was instructed that the Marsdens would be estopped – legally barred — from seeking damages for nuisance if they had knowledge of the facts and accepted the benefits of a transaction and later took an inconsistent position in order to avoid corresponding obligations or effects. Estoppel applies “when it would be unconscionable to allow a person or party to maintain a position inconsistent with one in which he acquiesced or from which he earlier accepted a benefit.” The trial court entered judgment for the Marsdens in accordance with the jury’s verdict.
The Fort Worth Court of Appeals held that the Marsdens were estopped “as a matter of law” from claiming nuisance damages by their execution of the oil and gas lease and accepting benefits of the lease. They held that the doctrine of “quasi-estoppel” applies to these facts, and that the Marsden’s claim of nuisance was inconsistent with the terms of their lease contract and it would therefore be “unconscionable” to allow the Marsdens to recover for nuisance.
The facts in this case present another example of the interesting intersection of oil and gas law and the common-law cause of action for nuisance. Under the cause of action for nuisance, a landowner can recover damages for interference with the use and enjoyment of their property caused by activities taking place on adjacent property, even if those activities are otherwise lawful. If the Marsdens owned only the surface estate of their six acres and had not signed an oil and gas lease, there is no question that they could have recovered for interference to their use and enjoyment caused by Titan’s activities on the adjacent land. Titan argues that, because the Marsdens’ lease allows it to drill a well as close as 200 feet to their home, the Marsdens agreed that such a well could be drilled even if it impaired the enjoyment of their home. The Marsdens argue that their lease addendum prohibited any drilling on their 6 acres, and that they were not agreeing that a well on adjacent lands could be drilled so close to their home and disrupt the use of their property.
A case to watch.
