In the watershed Corbello[1] decision, the Louisiana Supreme Court affirmed a $33 million award—the cost to restore property valued at $108,000 to its “original condition” after it was damaged by oil and gas operations. If Corbello pressed the accelerator on “legacy” litigation, Eagle Pipe tapped the brakes.
The Louisiana Supreme Court’s decision in Eagle Pipe & Supply v. Amerada Hess Corp.[2] held that a landowner does not have a claim for property damage that occurred before his ownership (absent an assignment or subrogation to that right from the seller). As a practical consequence of Louisiana’s long oil heritage, many current landowners acquired their property long after oil and gas operations—and any attendant damages—first occurred. Thus, the “subsequent purchaser doctrine” has become a key defense for mineral lessee defendants in legacy litigation. (For more information on how the subsequent purchaser doctrine has been applied in legacy cases, click here.)
Recently, the subsequent purchaser defense was applied to dismiss claims against a mineral servitude owner in Sterling Sugars, Inc., v. Amerada Hess Corporation, No. 100091, 17th JDC, Lafourche Parish. Article 22 of the Mineral Code states that a mineral servitude owner “is obligated, insofar as practicable, to restore the surface to its original condition at the earliest reasonable time.” The Sterling Sugars landowner, which acquired its property in 1998, argued that Article 22 obligated the mineral servitude owner to restore the property to its pre-operation condition. Operations began in 1937; thus, the plaintiff’s claims would have required the servitude owner to repair alleged damage predating the landowner’s ownership by 60 years.
After the trial court applied the subsequent purchaser doctrine to dismiss the plaintiff’s claims for pre-1998 damage against the mineral lessee, the mineral servitude owner filed its own motion for partial summary judgment arguing that the subsequent purchaser doctrine likewise applied to the plaintiff’s mineral servitude claims. The trial court accepted the argument, and ruled that “all claims against the [mineral servitude owner] for damage that occurred prior to plaintiff’s acquisition of the property at issue, including claims for monetary relief or restoration, are DISMISSED with prejudice.”[3]
The plaintiff sought writs from the First Circuit Court of Appeal. Yesterday, (June 13, 2016), the First Circuit denied the writ “on the showing made.” Sterling Sugars Inc., v. Amerada Hess, et al., 2015-CW-1857 (La. App. 1 Cir. 6/13/16). Thus, the writ denial supplies jurisprudential support that the subsequent purchaser defense applies to claims against mineral servitude owners, including claims for “original condition” restoration under Mineral Code article 22. As applied in Sterling Sugars, the subsequent purchaser doctrine sets the condition to which a mineral servitude owner must restore encumbered property to the condition which existed when the current landowner purchased the property.
[1] Corbello v. Iowa Prod., 2002-0826 (La. 2/25/03); 850 So.2d 686.
[2] 10-2267 (La. 10/25/11); 79 So. 3d 246.
[3] Sterling Sugars Inc., v. Amerada Hess Corporation, No. 100091, 17th JDC (Judgment on PXP Gulf Coast LLC and PXP Louisiana LLC’s Motion for Summary Judgment Based on the Subsequent Purchaser Doctrine (November 25, 2015)).
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