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Holley v. NL Indus. NL Acme Tool Co – Case Brief Summary (Texas)

In Holley v. NL Indus. NL Acme Tool Co., 718 S.W.2d 813 (Tex. App.--Austin 1986, writ ref'd n.r.e.), the Austin Court of Appeals stated that "the drilling of an oil well does not involve construction, in the sense of assembling materials to make a permanent whole.

The drilling rig, itself, is not a permanent fixture, but rather is removed from the well-site after drilling is completed." Id. at 815.

The issue in Holley was whether a contract for the drilling of an oil well was a construction contract, as defined by section 162.001(a) of the Texas Property Code, such that a contractor that furnished materials for the drilling operation would be entitled to construction contract trust funds. Id. at 813-14.

The Holley court concluded that the drilling of an oil well did not constitute an improvement, because the drilling rig itself was not a permanent fixture and because "drilling a hole in the ground does not involve the assembly of various materials into a permanent structure." Id. at 815.

The court noted further that casing pipe involved permanent construction, but the court reasoned that it was placed in the hole simply to preserve the hole and prevent it from collapsing.