Exxon Corp. v. Emerald Oil & Gas Co., L.C

In Exxon Corp. v. Emerald Oil & Gas Co., L.C., No. 05-0729, 2009 WL 795760 (Tex. March 27, 2009, reh'g granted), the Texas Supreme Court first addressed whether Section 85.321 of the Natural Resources Code created a private cause of action for the claims asserted by Emerald. Section 85.321 provides, in part, as follows: "A party who owns an interest in property or production that may be damaged by another party violating the provisions of this chapter that were formerly a part of Chapter 26, Acts of the 42nd Legislature, 1st Called Session, 1931, as amended, or another law of this state prohibiting waste or a valid rule or order of the commission may sue for and recover damages and have any other relief to which he may be entitled at law or in equity." The Texas Supreme Court held that the clear language of Section 85.321 creates a private cause of action for damages resulting from violations of (1) provisions of Chapter 85, (2) other laws of this state prohibiting waste, and (3) valid rules and orders of the Railroad Commission. The court explained that, while the first two categories refer to claims for waste, the third category is not so limited. Thus, a violation of any Railroad Commission rule or order triggers the third category of actions. After concluding that Section 85.321 creates a private cause of action, the Texas Supreme Court then addressed whether Emerald's status as a subsequent mineral lessee impacted its standing to bring a cause of action under Section 85.321. The court explained that, in Section 85.321, the legislature had provided a private cause of action to a person who "owns an interest . . . that may be damaged by another party violating the provisions of this chapter." Id. Based on this language and applying the common-law principle that a purchaser of real property cannot recover for an injury to the property that occurred before he acquired his interest, the court concluded that Emerald lacked standing to bring a cause of action under Section 85.321 because it did not own an interest in the mineral leases when Exxon allegedly damaged the interest. The court briefly addressed Emerald's negligence per se claim. The court concluded that, "because our holding that a subsequent lessee has no standing to bring a claim under section 85.321 stems from common law principles, Emerald lacks standing to bring a negligence per se claim for the same reasons." Emerald stands for two propositions: (1) that Section 85.321 creates a private cause of action; (2) that the private cause of action does not extend to subsequent lessees.