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Click here for the full text of this decision FACTS:This appeal follows a jury trial in an oil and gas case. Emerald Oil & Gas LC, a subsequent lessee, and intervening royalty interest owners brought suit against Exxon Corp. and Exxon Texas Inc., as successor in interest to Humble Oil & Refining Co., for wrongful conduct in the development and abandonment of oil and gas wells in the Mary Ellen O’Connor Field, near Refugio, Texas. The trial court granted Exxon’s motion for directed verdict and entered a take-nothing judgment against Emerald. The jury found in favor of the royalty interest owners on their causes of action against Exxon for waste and breach of contract and awarded the intervenors both actual and punitive damages. The trial court entered judgment in accordance with the verdict. All parties appealed. HOLDING:The judgment of the trial court is affirmed in part and reversed and remanded in part. Having overruled Exxon’s issues on appeal, the court affirms the judgment of the trial court in favor of the royalty interest owners. The court sustains Emerald’s issues on appeal and reverse and remand its causes of action to the trial court. Exxon first contends that the discovery rule is not applicable because the intervenors claim that their waste claim is a temporary injury to real property, as opposed to a permanent injury to real property. The Supreme Court of Texas has recognized, but not addressed, the issue regarding whether the categorization of an injury as permanent or temporary affects the running of limitations. HECI Exploration Co. v. Neel, 982 S.W.2d 881 (Tex. 1998). In terms of limitations, a permanent nuisance claim accrues when injury first occurs or is discovered; a temporary nuisance claim accrues anew upon each injury. The determination of whether an injury is categorized as temporary or permanent is either made by the court, as a matter of law, or is a question of fact for the jury. The parties’ own characterization of the claims at issue is not controlling. The discovery rule may apply whether the injury is permanent or temporary. The court questions the applicability of the distinction between temporary and permanent damage to land, traditionally applied in nuisance cases, to a case involving waste of oil and gas and breach of contract. The injuries in the instant case do not readily fall within either temporary or permanent categories, and in fact display aspects of both. The discovery rule applies if 1. the injury is inherently undiscoverable and 2. the evidence of the injury is objectively verifiable. The court holds that waste as alleged in this case is, by its nature, unlikely to be discovered within the prescribed limitations period despite due diligence. The record is replete with physical evidence pertaining to the intervenors’ injury, that is, cut casing, shifted casing, refuse in the well bores, and unexpected plugs and obstacles in the well bores. Experts testified that the wells were damaged. It is undisputed that Exxon was the party responsible for plugging and abandoning the wells in the field. Accordingly, intervenors’ injury is objectively verifiable. The court reiterates its conclusion in Emerald Oil & Gas, L.C. v. Exxon Corp., No. 13-99-757-CV, 2005 Tex. App. LEXIS 591 (Tex. App. – Corpus Christi Jan. 27, 2005, pet. filed,) that there is a private cause of action for statutory waste. The court rejects this contention. Exxon next contends that the trial court erred in instructing the jury that the term waste may include “whatever dictates of reason, fairness and good judgment under all the facts would lead one to conclude was wasteful” when that definition is not found anywhere in Chapter 85 of the Texas Natural Resources Code, which contains the statutory definition of waste. The court finds that this argument was not adequately preserved for appeal. The court concludes the evidence is legally and factually sufficient to support the jury’s finding that Exxon committed waste. Exxon argues that the some intervenors are precluded from recovering under a theory of common law waste because they failed to plead such a theory. The court rejects this argument. A pleading will be liberally construed in favor of the pleader and is sufficient if it gives fair and adequate notice of the facts upon which the pleader bases his claim. Exxon argues that the evidence conclusively establishes Exxon’s defense that it acted as a reasonably prudent operator. There was evidence that Exxon’s plugging procedures on the Mary Ellen O’Connor field both varied from those it utilized at other fields and conflicted with industry standards and commission rules. This is inconsistent with the definition of a reasonably prudent operator. The value of the unrecovered minerals is a proper measure of damages for waste. The court finds the evidence sufficient to permit intervenors to recover damages for the cost of drilling new wells. The court finds no merit in Exxon’s arguments that the intervenors’ lost bonus damages are not recoverable because they are too speculative. Exxon contends the evidence is legally and factually insufficient to support an award of $5 million in actual damages for waste. The evidence is sufficient to support the jury’s award for waste. Exxon argues that the trial court erred in awarding the intervenors $10 million in punitive damages on their waste claim. The court overrules this issue. Considering the court’s charge as a whole, the court concludes that the jury charge adequately connected the malice question with the underlying tort of waste. Based on the specific expansive language used by the Legislature in �85.321, the court concludes that the Legislature did not intend to preclude punitive damages as a remedy for statutory waste. Exxon argues that the statute of limitations bars intervenors from recovering on their breach of contract claim when the intervenors filed suit against Exxon more than four years after Exxon abandoned the Mary Ellen O’Connor Field. Exxon contends that the trial court erred in allowing the intervenors to rely on fraudulent concealment to toll the running of limitations. The evidence supports the jury’s finding that Exxon fraudulently concealed its failure to develop the property and that intervenors neither discovered, nor in the exercise of reasonable diligence, should have discovered Exxon’s failure to develop until February 1999. According to the trial testimony, intervenors first learned that Exxon failed to develop two productive zones in 1999 when Exxon first produced certain of its well logs for the field during discovery in the instant lawsuit. Exxon contends that the trial court improperly instructed the jury, over Exxon’s objection, on the elements of fraud by nondisclosure instead of the elements of fraudulent concealment. Because the question adequately addresses the relevant issue, the court doesn’t conclude that the trial court abused its discretion. Based on the leases as a whole, the court concludes that the habendum and surrender clauses here were controlled by the development requirement, which Exxon failed to meet. The intervenors’ damages were separate and distinct, that is 1. damages for the failure to develop under the leases and 2. damages for the destruction of the well bores and the consequent loss of reserves. The theories of breach of contract and waste are not mutually exclusive. The court concludes that the jury properly awarded separate and distinct damage awards based on each theory. Emerald argues that the trial court erred in granting Exxon’s motion for a directed verdict on Emerald’s causes of action for fraud, negligent misrepresentation and tortious interference with economic opportunity. The court believes that there is some evidence of probative value sufficient to raise an issue of material fact on Emerald’s fraud claim. Exxon also contends that there is no evidence that it made the representations in its Texas Railroad Commission Form W-3 plugging reports for the purpose of guiding Emerald in the conduct of its business. Exxon thus supplied information to a limited group and anticipated that it would be relied upon by that group. The court sustains Emerald’s issue. Emerald argues that Exxon was not entitled to a directed verdict on Emerald’s cause of action for tortious interference with contract or economic opportunity. As early as July 1989, Exxon knew that Pace Production Co., a predecessor of Emerald, was interested in leasing the property in question. Exxon’s conduct in filing false Form W-3 plugging reports and in effectively sabotaging the wells to prevent or hamper re-entry interfered with Emerald’s performance under its lease with the intervenors. Emerald sustained costs far in excess of those that would have been reasonable and necessary costs for the redevelopment of the Mary Ellen O’Connor Field. Examining the evidence in the light most favorable to Emerald, the court concludes that there is evidence of probative value raising an issue of material fact on the question presented. OPINION:Valdez, C.J.; Valdez, C.J., Hinojosa and Castillo, JJ.

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