Articles Posted in Property

In 1960, Hunt Petroleum Corporation (“Hunt”) entered into a surfaces lease with the Reynolds family. In 1997, Kinder Gas Processing Corporation (“Kinder Gas”), one of Hunt’s successors in interest, notified the Reynolds of an environmental study “that showed a few things [Kinder Gas] wanted to clean up,” and that it was “in the process of cleaning them up.” Over several years, Kinder Gas discussed with the Reynolds the possibility of buying part of the property and cancelling the entire lease. On January 14, 2008, the Reynolds (through a real estate appraiser) offered to sell the entire property to Kinder Gas. The offer referred to environmental problems on the property caused by Kinder Gas or its predecessors.

In 2010, Kinder Gas brought suit for a declaratory judgment against the Reynolds to avoid liability for damage to the Reynolds’ property. In turn, the Reynolds sought damages against Kinder Gas and other successors (“the Gas Companies”) in connection with toxic wastes that were spilled or disposed on the property. The Reynolds relied on theories of strict liability, nuisance, continuing trespass, and breach of contract. They asserted that the lease was cancelled as a result of the Gas Companies’ breach of contract. The Gas Companies countered that the tort claims had prescribed, and that the breach of contract claim was premature.

The Kinder Gas v. Reynolds trial court agreed with the Gas Companies, finding that the Reynolds’ had constructive knowledge of possible contamination prior to the real estate agent’s January 14, 2008 offer. Citing Marin v. Exxon Mobil Corp. and Hogg v. Chevron USA, the court held that the Reynolds’ failure to file their tort claims within a year from this date resulted in prescription. The court also found that the lease was still in effect. Relying on Dore Energy Company v. Carter-Langham, Inc., the court held that the Reynolds’ contract claim for restoration of land on which operations were ongoing was premature.

In Louisiana v. Louisiana Land and Exploration, the State of Louisiana and the Vermilion Parish School Board brought suit against Union Oil Company of California (“Unocal”) and other oil companies for remediation of polluted state property in Vermilion Parish. Unocal admitted that it was responsible for environmental damage on the property and filed a motion to refer the case to the Louisiana Department of Natural Resources (LDNR) pursuant to Act 312 of 2006, La.R.S. 30:29. Plaintiffs objected, arguing that such a referral could not take place until all Defendants admitted responsibility and the private claims were tried to the jury. The trial court agreed with Plaintiffs.

Unocal filed a motion for partial summary judgment limiting Plaintiffs’ remediation damage claims to the amount determined by LDNR to be “the most feasible plan to evaluate or remediate the environmental damage” under La.R.S. 30:29(c)(3). Unocal argued that this language served as a cap on remediation damages resulting from a tort or the implied restoration obligation of a mineral lease. The trial court agreed.Plaintiffs appealed to the Louisiana Third Circuit Court of Appeals, which issued a decision on the case on February 1, 2012.

In considering whether La.R.S. 30:29 limited Plaintiff’s recoverable remediation damages to the cost of a “feasible plan,” the appeals court first looked to the language of the statute. The court quoted the first sentence of La.R.S. 32:29(H): “This section shall not preclude an owner of land from pursuing a judicial remedy or receiving a judicial award for private claims suffered as a result of environmental damage, except as otherwise provided in this Section.” The court found that this language clearly contemplated the landowner receiving an award in addition to that provided by the feasible plan.