CHESAPEAKE OPERATING INC. v. KAST TRUST FARMS

2015 OK CIV APP 5, 352 P.3d 1231, 2013 Okla. Civ. App. LEXIS 145, 2013 WL 10128922
CourtCourt of Civil Appeals of Oklahoma
DecidedOctober 16, 2013
Docket109,914
StatusPublished
Cited by3 cases

This text of 2015 OK CIV APP 5 (CHESAPEAKE OPERATING INC. v. KAST TRUST FARMS) is published on Counsel Stack Legal Research, covering Court of Civil Appeals of Oklahoma primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
CHESAPEAKE OPERATING INC. v. KAST TRUST FARMS, 2015 OK CIV APP 5, 352 P.3d 1231, 2013 Okla. Civ. App. LEXIS 145, 2013 WL 10128922 (Okla. Ct. App. 2013).

Opinions

JERRY L. GOODMAN, Judge.

T1 Chesapeake Operating Inc. (Chesapeake) appeals the trial court's August 30, 2011, order denying its motion for new trial or remittitur of a March 21, 2011, journal entry entered after jury trial under the Surface Damages Act, 52 0.9.2011, 818.2 et seq. Kast Trust Farms (Trust) also appeals the March 21, 2011, journal entry.1 Both parties appeal a December 6, 2011, order granting Trust's motion for an attorney's fee and costs. Based upon our review of the facts and applicable law, we reverse and remand with directions.

FACTS

12 On October 16, 2009, Chesapeake sent via certified mail a notice of entry letter to Trust, via Dr. Ronald George Wollmann (Dr. Wollmann), notifying it of its intent to drill an oil and gas well on its property: the SW/4 See. 22, T-11N, R-17W, Washita County, Oklahoma. Dr. Wollmann is the settler, trustee, and sole beneficiary of the Trust. The body of the letter contained an error in the location of the proposed well: it provided the well would be drilled and operated approximately 200 feet from the South line and 990 feet from the East line of the referenced section. However, it should have stated the "West line" rather than the East Line. It further provided construction was estimated to begin on or before October 30, 2009. The parties began negotiations regarding damages to the surface.

3 On December 9, 2009, Chesapeake sent Trust a second letter with the correct well location and an estimated construction date of December 21, 2009. Dr. Wollmann expressed concerns regarding the location and environmental impact of the drilling to the surface, noting a winery and vineyard were on the property. Negotiations between the parties subsequently failed, and Chesapeake filed a petition to appoint appraisers on March 11, 2010. Trust filed a counterclaim on April 9, 2010, asserting a claim for treble damages.

T4 Chesapeake subsequently notified Trust that it was moving the wellbore 20 feet from its original location. Chesapeake entered the property on March 15, 2010.

15 On May 5, 2010, the report of the appraisers was filed, finding the diminution in value of the property to be $28,000.00. On June 8, 2010, Chesapeake filed an exception, which it subsequently withdrew. Additional pre-trial motions were filed by the parties including Trust's demand for jury trial, which was ultimately held on January 25, 2011.2 [1235]*1235The jury returned a verdict for Trust in the amount of $86,750.00. A journal entry of judgment was entered on March 21, 2011.

6 On March 30, 2011, Chesapeake filed a motion for new trial or for remittitur. By order filed on August 30, 2011, the court denied Chesapeake's motion as well as Trust's request for treble damages. Trust subsequently filed a motion for an attorney's fee and costs, which the court granted in the amount of $45,000.00. Both parties appeal.

STANDARD OF REVIEW

T7 A motion for new trial is addressed to the trial court's sound discretion and will not be reversed on appeal unless it is apparent the trial court erred on a pure question of law or acted arbitrarily. Barringer v. Baptist Healthcare of OK, 2001 OK 29, ¶ 5, 22 P.3d 695, 698. The appellate court indulges every presumption in favor of the trial court's decision. Capshaw v. Gulf Ins. Co., 2005 OK 5, ¶ 7, 107 P.3d 595, 600.

18 We review the reasonableness of an attorney's fee award using the abuse of discretion standard. However, the question of whether a fee is authorized by law presents a question of law, which is reviewed de movo. In a de novo review, this Court affords a "non-deferential, plenary and inde'pendent review" of the trial court's legal ruling. Boston Ave. Mgmt., Inc. v. Associated Res., Inc., 2007 OK 5, ¶ 10, 152 P.3d 880, 884-885.

ANALYSIS

I. Chesapeake's Appeal

T9 On appeal, Chesapeake asserts several propositions of error, which will be combined and addressed as follows.

110 First, Chesapeake asserts the trial court erred by admitting evidence of personal nuisance-related damages immaterial to the property's diminution in value.

{11 The Surface Damage Act (Act), 52 O.S.2011, 818.2 et seq., permits the recovery of damages "which the surface owner has sustained or will sustain by reason of entry upon the land and by reason of drilling or maintenance of oil or gas production on the land." Ward Petroleum Corp. v. Stewart, 2003 OK 11, ¶ 6, 64 P.3d 1113, 1115 (citing 52 O.S.2001, 318.5(C)). The damage standard under the Act is the "diminution in the fair market value of the surface property resulting from the drilling and maintenance operations." Id., at ¶ 6, 64 P.3d at 1113, 1115 (citing Davis Oil Co. v. Cloud, 1986 OK 78, I 22, 766 P.2d 1347, 1852). This measure of damages is appropriate because the action "partakes of the nature of a condemnation action by virtue of 52 O.S. 318.5(F), which provides that a trial under the Act shall be conducted and judgment entered in the same manner as railroad condemnation cases." Ward, 2003 OK 11, at ¶ 6, 64 P.3d at 1115. See also Dyco Petroleum Corp. v. Smith, 1989 OK 51, 771 P.2d 1006 (an action under the Act clearly partakes of the nature of a condemnation action).

{12 In Davis the Oklahoma Supreme Court identified factors a jury may consider in determining damages under the Act:

1. The location or site of the drilling operation;
2. The quality and value of the land used or disturbed by said drilling operations;
3. Incidental features resulting from said drilling operations which may affect convenient use and further enjoyment;
4, Inconvenience suffered in the actual use of the land by operator;
5. Whether the damages, if any, are temporary or permanent in nature;
6. Changes in physical condition of the tract;
7. Irregularity of shape and reduction, or denial, of access; and
8. The destruction, if any, of native grasses, and/or growing crops, if any, caused by drilling operation.
[1236]*1236However, evidence relating to these factors may be considered only as it affects the fair market value of the land.

Id., at ¶ 22, 766 P.2d at 1852.

118 Accordingly, a jury may consider the personal inconvenience suffered by a surface owner. However, personal inconvenience is not an additional or separate element of damages and may only be considered insofar as it affects the fair market value of the surface estate. Id., at ¶ 24, 766 P.2d at 1353. Purely personal inconvenience is not compen-sable under the Act. Dyco, 1989 OK 51, at ¶ 9, 771 P.2d at 1008.

$14 The record provides Dr. Woll-mann testified to various elements of personal inconvenience including truck traffic, noise, and dust. Chesapeake objected. The trial court denied the objections and permitted the testimony. The court subsequently, and properly, instructed the jury that it may consider the Davis factors, including personal inconvenience, but only as it affects the fair market value of the surface estate. We find no error. There is no indication in the record that the jury awarded purely personal nuisance-related damages.

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CHESAPEAKE OPERATING INC. v. KAST TRUST FARMS
2015 OK CIV APP 5 (Court of Civil Appeals of Oklahoma, 2013)

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2015 OK CIV APP 5, 352 P.3d 1231, 2013 Okla. Civ. App. LEXIS 145, 2013 WL 10128922, Counsel Stack Legal Research, https://law.counselstack.com/opinion/chesapeake-operating-inc-v-kast-trust-farms-oklacivapp-2013.