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Case Study: Merriman vs. XTO – Accommodation Doctrine and Surface Owners

Posted 6:45 AM, September, 16th 2014 by Manning Wolfe & filed under Blog, Case Studies, Legal

Issue:

What did Merriman, the surface owner, have to prove in court to prevail against XTO, the lessee, for lack of accommodation of surface use when XTO drilled a well?

Background:

Merriman, a pharmacist and part-time cattle rancher, owned the surface of a 40 acre tract of land in Limestone County, Texas. Merriman had a house, barn, fencing, and corrals that he used in his cattle operation. XTO leased the mineral estate and contacted Merriman about drilling a gas well. Merriman was opposed to the well because he claimed it would interfere with his cattle operation. XTO proceeded to drill the well anyway. After the well was completed Merriman sought a permanent injunction to require XTO to remove the well because the well allegedly interfered with Merriman’s existing use of the surface.

Lower Court Disposition:

Both sides filed motions for summary judgment. The Trial Court granted summary judgment in favor of XTO and the Court of Appeals affirmed.
Texas Supreme Court Ruling: The Court affirmed the summary judgment against Merriman on “no evidence” grounds holding that Merriman failed to raise a material fact issue as to whether XTO failed to accommodate his use.

Reasoning on Accommodation Doctrine:

In the opinion, the Texas Supreme Court restated Texas law regarding the accommodation of surface uses by lessees of the mineral estate. Under the accommodation doctrine, XTO had the right to go onto the surface of the land to extract the minerals and also had the incidental rights reasonably necessary to accomplish this.

The court defined the “incidental rights” to include “the right to use as much of the surface as is reasonably necessary to extract and produce the minerals.” Therefore, the mineral estate is “dominant” and the surface estate “subservient.”

If XTO had only one viable method for extracting the minerals, XTO may use that method even if it precludes or substantially impairs an existing use of the surface estate by Merriman. However, if XTO had reasonable alternative uses of the surface to extract the minerals, one of which prevented Merriman’s existing use and one that did not, then XTO must use the method that allows the Merriman to continue the existing use.

Burden of proof Claim:

The problem arose when Merriman failed to prove his case. The Court stated that in order to obtain relief on a claim that the mineral lessee has failed to accommodate an existing use of the surface, the surface owner has the burden to prove that: (1) the mineral lessee’s use “completely precludes” or “substantially impairs” the existing use; and (2) there is no reasonable alternative method available to the surface owner by which the existing use can be continued, and the financial burden of the alternative is unreasonable.

Even if Merriman carried this burden, Merriman had to also prove that given the particular circumstances, there were alternative reasonable, customary, and industry-accepted methods available to XTO, which would allow recovery of the minerals and also allow Merriman to continue the existing use.

Reasoning on the Ruling:

Although the Supreme Court disagreed with the standard applied by the court of appeals, ultimately, the Court affirmed the summary judgment against Merriman because Merriman only produced evidence showing that XTO’s well precluded or substantially impaired his existing use of the cattle corrals and pens and created an inconvenience and additional financial burden to him. This evidence, however, was not sufficient because Merriman failed to produce evidence to raise a material fact issue to show that he had no reasonable alternative means of maintaining his cattle operations on the 40-acre tract. Even if Merriman had met that burden, he would still have had to show that XTO had other acceptable alternatives to extract the minerals without disturbing Merriman’s existing use.

Bottom Line:

In order to prevail under an accommodation doctrine claim, a surface owner must prove that the mineral lessee’s use of the property either completely precludes or substantially impairs the existing use and that there are no reasonable alternative methods available to continue that existing use; and that the mineral lessee has other acceptable alternatives to extract the minerals.

Note: Merriman v. XTO Energy, Inc., 407 S.W.3d 244 (Tex. 2013).

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