Hazelwood Farm, Inc. v. Liberty Oil and Gas Corp.

844 So. 2d 380, 2002 La.App. 3 Cir. 266, 158 Oil & Gas Rep. 35, 2003 La. App. LEXIS 797, 2003 WL 1733712
CourtLouisiana Court of Appeal
DecidedApril 2, 2003
Docket02-266
StatusPublished
Cited by19 cases

This text of 844 So. 2d 380 (Hazelwood Farm, Inc. v. Liberty Oil and Gas Corp.) is published on Counsel Stack Legal Research, covering Louisiana Court of Appeal primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Hazelwood Farm, Inc. v. Liberty Oil and Gas Corp., 844 So. 2d 380, 2002 La.App. 3 Cir. 266, 158 Oil & Gas Rep. 35, 2003 La. App. LEXIS 797, 2003 WL 1733712 (La. Ct. App. 2003).

Opinion

844 So.2d 380 (2003)

HAZELWOOD FARM, INC.
v.
LIBERTY OIL AND GAS CORPORATION, et al.

No. 02-266.

Court of Appeal of Louisiana, Third Circuit.

April 2, 2003.
Rehearing Denied May 7, 2003.

*383 James Paul Doherty Jr., Andrus & Doherty, Opelousas, LA, Harry T. Lemmon, Gladstone N. Jones, III, Peter N. Frieberg, Jones, Verrs & Freiberg, Stuart H. Smith, Jack W. Harang, Smith & Harang, New Orleans, LA, for Plaintiff/Appellee/Cross Appellant: Hazelwood Farm, Inc.

Stephen C. Carleton, Scott E. Mercer, Henry D.H. Olinde, Jr., Simoneaux, Carleton, Dunlap & Olinde, L.L.C., Baton Rouge, LA, for Defendant/Appellant: Chevron U.S.A., Inc.

Court composed of NED E. DOUCET, Jr., Chief Judge, MICHAEL G. SULLIVAN and GLENN B. GREMILLION, Judges.

DOUCET, Chief Judge.

Defendant, Chevron U.S.A., Inc. (Chevron), appeals a judgment of the district court awarding Plaintiff, Hazelwood Farm, Inc. (Hazelwood), $2,000,000, for damages to Hazelwood's property occasioned by Chevron's breach of contract. Although the judgment was based on a jury verdict, all of Chevron's assignments of error are addressed to rulings of the court. These rulings are said to be erroneous because they (1) allowed Hazelwood to recover for breach of contract, (2) awarded damages which occurred before Hazelwood acquired the land, (3) gave an award that was more than the property was worth, (4) rejected pleas of prescription, and (5) failed to find Hazelwood had judicially confessed adverse facts. Hazelwood cross-appeals alleging the trial court erred (1) in not letting its claim for punitive damages go to the jury, (2) in setting the expert witnesses' fees too low, and (3) in denying a request by Hazelwood for some items of discovery, resulting in Hazelwood's inability to meaningfully cross-examine some opposing witnesses thereby resulting in the award of inadequate restoration damages. After a recitation of the basic facts, we will address each of these eight assignments of error.

FACTS

Hazelwood, a corporation, owns a 686 acre tract of farmland near Port Barre in St. Landry Parish. It acquired title to the property in 1991, but the land has been in the Edmundson family (the owners of the corporation) since 1968. Ernest E. Edmundson, Jr., bought the property in 1968 from John E. Wells. John Wells reserved the minerals. Hazelwood has no mineral interest in the property.

On August 10, 1926, the 686 acres was leased by the then owner, Wilson & Cochran, to J.B. Ferguson for oil and gas exploration. The parties maintained the right to assign the lease and provided that the lease provisions would be binding on the parties' successors and assigns. Mr. Ferguson *384 assigned the lease three days later to Gulf Refining Company (Gulf).

The lease further provided: "The use of the surface of the land is granted only for the purpose hereof. Grantee [Ferguson and assigns] shall be responsible for all damages caused by his operations."

The lessee's rights under the 1926 lease were subsequently assigned, either wholly or partially, to others, including Chevron. Chevron became the successor to Gulf when they merged in 1985. Oil and gas operations under the lease began shortly after the 1926 lease date and were still going on at the time of trial.

Gulf conducted oil and gas operations on the property from 1926 until 1956. When it assigned the mineral lease to another in 1956, it retained ownership of 25% of the oil produced. Pursuant to two underground storage leases, Gulf had also constructed an underground natural gas storage cavern beneath the property. Gulf assigned the underground storage lease rights to Warren Petroleum Corporation (Warren) in 1958, but then acquired Warren in 1971, along with the underground storage lease rights. In 1972 it assigned these rights again.

No one has ever lived on the property. About two-thirds of it is in cultivation. During the seventeen years before the suit was filed while the Edmundson family owned it, either individually or through an estate or through a corporation, local tenant farmers raised rice and soybeans on the 400 and some-odd acres in cultivation. There is an irrigation well on the property.

In 1997 Hazelwood brought this lawsuit, asserting causes of action in both contract and tort and alleging that activities on the property by the mineral lessees caused environmental contamination to the surface and under the surface. The alleged activities included the construction of certain pits, including a 12-acre evaporation pond[1] into which were dumped oil, grease, salt water, and other hazardous and/or toxic oil production wastes. As a result, Hazelwood claimed that the property had become contaminated with radioactive materials and that the water in the aquifers was polluted.

Hazelwood sued several entities along with Gulf and Chevron. Before trial Hazelwood settled its claims against all defendants except Gulf/Chevron and dismissed those defendants. As stated earlier, Chevron is the successor to Gulf. The real defendant is Chevron, but we will refer to it as Gulf/Chevron, the designation used during the trial and in the briefs. The case went to trial against Gulf/Chevron alone.

The trial took three weeks. Of the twenty-five witnesses who testified sixteen were qualified as experts. Eight expert witnesses testified for Hazelwood and six experts testified for Gulf/Chevron, then two additional experts testified for Hazelwood in rebuttal. Hazelwood's experts in its case in chief were two petroleum engineers, a health physicist, an agronomist, a hydrogeologist, an expert in radiation protection and remediation, a natural gas consultant, and a witness who had expertise in plugging and abandoning old wells. Gulf/Chevron's defense experts were a real estate appraiser, a petroleum engineer, an agronomist, a soil scientist, a medical doctor, and a hydrogeologist. Hazelwood's rebuttal experts were a toxicologist, and a witness who had expertise in chemistry, *385 petroleum engineering, occupational safety and health.

There were nine fact witnesses. They included Robert D. Edmundson, whose family owned Hazelwood, two tenant farmers of the land, and Richard Brackin, a representative of the Louisiana Department of Environmental Quality (DEQ).

Some, but not all of the experts, went on the property and gathered eyewitness information and scientific test results which they used in their opinions. The parties engaged in considerable pretrial discovery; many experts who testified were armed with knowledge of the opinions of their counterparts on the other side, with the result that a number of experts spent a lot of time defending their own and challenging their opponent's views. Of the thousands of pages of trial testimony, a substantial part dealt with radioactivity, and the rest focused on oil and gas operations and environmental pollution, especially water pollution. Except for a few pages that dealt with mundane subjects that a jury might find familiar, such as growing rice, farming soybeans, or drilling water wells, most of the trial took the jury into unfamiliar scientific territory. The case was thoroughly tried.

The jury rendered a verdict in the form of responses to eighteen written interrogatories. As to Hazelwood's contract claim, the jury found that Gulf/Chevron breached the 1926 Oil & Gas Lease Contract and that this breach damaged Hazelwood's property. Moreover, the jury found that the Defendant acted in bad faith and that $2,000,000 would fairly compensate Hazelwood for the property damage due to the breach of contract.

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844 So. 2d 380, 2002 La.App. 3 Cir. 266, 158 Oil & Gas Rep. 35, 2003 La. App. LEXIS 797, 2003 WL 1733712, Counsel Stack Legal Research, https://law.counselstack.com/opinion/hazelwood-farm-inc-v-liberty-oil-and-gas-corp-lactapp-2003.