Toce Oil Co. v. Central Industries, Inc.

488 So. 2d 331, 92 Oil & Gas Rep. 317, 1986 La. App. LEXIS 6955
CourtLouisiana Court of Appeal
DecidedMay 14, 1986
DocketNo. 85-450
StatusPublished
Cited by2 cases

This text of 488 So. 2d 331 (Toce Oil Co. v. Central Industries, Inc.) 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
Toce Oil Co. v. Central Industries, Inc., 488 So. 2d 331, 92 Oil & Gas Rep. 317, 1986 La. App. LEXIS 6955 (La. Ct. App. 1986).

Opinion

DOMENGEAUX, Judge.

This suit was brought by Toce Oil Company (Toce) in order to recover damages incurred due to the drilling of an oil well at the wrong location. Defendant John E. Chance & Associates, Inc. (Chance) was the surveyor that staked both the correct location for the well and the location that was incorrectly drilled. Defendant Central Industries, Inc. (Central) was the boardroad contractor that bid on and prepared the incorrect site for drilling. Liberty Mutual Insurance Company was Central’s liability insurer. After trial on the merits, the district judge rendered judgment in favor of Toce against the defendants and assigned percentages of negligence to all parties concerned. Chance and Central have appealed the trial court’s judgment.

FACTS

In February of 1981 Tom Schiller, Executive Vice-President and Land Manager for Toce, contacted Chance concerning the surveying work at issue in this suit. Schiller spoke with the manager of Chance’s land surveying department and asked him to locate a site and prepare a plat in Section 7 of Township 9 South, Range 7 West, Calca-sieu Parish, in the Gillis-English Bayou Field because Toce’s geologist had proposed the drilling of an oil well at that location. Although the well at issue was to be drilled on property owned by Texaco and leased by Toce, which area was referred to as “J.C. Nickerson Fee”, it is important to note the precise terminology Schiller used in his conversation with Chance’s land survey manager. Significantly, Schiller did not name the fee but told Chance’s land manager to locate a well site in the N/2 of NW/4 of the Section 7. No further designation was made of the well site to be drilled.

Toce’s topographical maps indicated that the proposed site was in a swamp and would be extremely expensive to drill. Schiller therefore asked that Chance locate the proposed site and, if it proved to be in a swamp as suspected, have the surveyor move south toward the road and exercise his discretion in locating and staking an alternate site on more suitable drilling ground. Schiller also informed Chance of a purported Texaco mound in the vicinity and directed that it also be staked if extant.

In accordance with these instructions, Chance sent a field team out to perform the requested survey work on February 17, 1981. The team first confirmed that the [334]*334proposed well site was deep in the swamp. A stake was placed at that location and labeled with Toce’s name. The trial court held that the stake was labeled “Toce Oil Proposed Location.” Next the survey crew moved south and slightly west approximately 300 feet toward higher ground near the road. A second stake was placed at this site and labeled with Toce’s name and the words “Alternate No. 1.” This location was adjacent to a pipeline and approximately one-half of the well site was in swamp.

The Chance team then proceeded to look for a Texaco mound, as Schiller had directed. Ultimately, they found an area of high ground, large enough to contain the entire drill site. A second alternate stake was placed at this point, approximately 1,200 to 1,400 feet from the primary stake and almost 100 feet off the Nickerson Pee.1

The next morning Tom Schiller was apprised of the precise locations of the three stakes and the terrain at each. During this telephone conversation Schiller informed Chance that the Alternate No. 2 stake was not on the Texaco lease on which Toce was planning to drill and directed Chance to “forget” about that location. However, Schiller did not request that Chance remove the Alternate No. 2 stake.

Eventually, Toce made the decision to drill at the Alternate No. 1 location. Desiring to contract out the well site preparation work, Toce contacted Oilfield Construction (Oilfield) and asked them to prepare a written bid on the Alternate No. 1 site and an oral estimate on the originally proposed location in the swamp. Toce gave Oilfield the distance calls for those two locations but did not mention the presence of a third stake (i.e., Alternate No. 2) in the vicinity.

The Oilfield team found all three of the stakes placed by Chance. The location of one of the stakes matched the distance calls supplied by Toce and was labeled “Alternate No. 1”. However, in an abundance of caution, the Oilfield team called its office which contacted Toce to confirm which stake marked the intended site. Oilfield then proceeded to prepare its written bid for the Alternate No. 1 location.

Toce contacted Chance, informed the surveying company of the wellsite selection (Alternate No. 1), and requested the preparation of a state permit plat and an application for a wetland permit from the Corps of Engineers. Chance prepared three additional plats as attachments to that permit, and a fifth plat was later drawn to obtain a Calcasieu Parish permit. All five plats and the permit application were furnished to Toce who then prepared a bid package consisting of the plats prepared by Chance and a sample bid form containing the specifications outlined on the Oilfield bid already received by Toce. This bid package was furnished to three location contractors— Supreme, Soloco, and Central.

Central sent Charles Domingue out to look at the proposed location on April 8th for purposes of preparing its bid. Central had been provided with and was in possession of the plats in the bid package, but only the state permit plat was given to Domingue to take with him to the field. Domingue found the Alternate No. 2 stake but never found either of the other stakes. Domingue testified at trial that he did not consult the state permit plat to see if the information contained therein matched the site he had found. Domingue also testified that he called John Chance’s office and received verification that he had reached the proper location. Chance’s employee denied that such a telephone conversation ever occurred. The trial court resolved this directly conflicting testimony by concluding as a matter of fact “[t]hat no such call was made by Domingue.”

Central submitted two bids for preparation of the Alternate No. 2 drill site to Toce — one for a “dry location” and one for a “wet location with fill.” It was awarded the contract and proceeded to build a [335]*335boardroad and prepare the drill site at the Alternate No. 2 location, beginning its work on June 10,1981. Contrary to the bid specifications, no pilings seemed to be needed. After a test piling was driven on July 27th, the decision was made by Toce’s representative at the drilling site, Central, and Greywolf (the drilling company), to dispense with the pilings indicated on the bid specifications. Toce was also aware that preparation of the site at the correct location would have required that a nearby pipeline be moved, and its budget for the well included this work as an expense. Central’s preparations, however, entailed no relocation of a pipeline. Central’s location work was completed on July 9, 1981. A Greywolf drilling rig was brought onto the site and drilling began on August 12, 1981.

On September 8, 1981, Mr. Troy Freund, who had an interest in Toce’s drilling activities by virtue of an override on the Nicker-son lease, called Schiller and inquired about the “new” calls for the well and whether an amended permit had been procured. He told Schiller his inquiry was based on his first-hand observation that the well being drilled was not at the location he had seen designated on the permit plat.

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Related

Toce Oil Co. v. Central Industries, Inc.
492 So. 2d 1221 (Supreme Court of Louisiana, 1986)
Toce Oil Co. v. John E. Chance & Associates, Inc.
492 So. 2d 1222 (Supreme Court of Louisiana, 1986)

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Bluebook (online)
488 So. 2d 331, 92 Oil & Gas Rep. 317, 1986 La. App. LEXIS 6955, Counsel Stack Legal Research, https://law.counselstack.com/opinion/toce-oil-co-v-central-industries-inc-lactapp-1986.