Woody Investment, LLC v. Sovereign Eagle, LLC

2015 NMCA 111, 9 N.M. 1
CourtNew Mexico Court of Appeals
DecidedJuly 28, 2015
DocketDocket 32,830; 35,532
StatusPublished
Cited by3 cases

This text of 2015 NMCA 111 (Woody Investment, LLC v. Sovereign Eagle, LLC) is published on Counsel Stack Legal Research, covering New Mexico Court of Appeals primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Woody Investment, LLC v. Sovereign Eagle, LLC, 2015 NMCA 111, 9 N.M. 1 (N.M. Ct. App. 2015).

Opinion

OPINION

VIGIL, Judge.

{1} This is a case that involves claims brought under the Surface Owners Protection Act (SOPA), NMSA 1978, §§ 70-12-1 to -10 (2007), and the common law as a result of geophysical seismic surveys conducted on lands owned or leased by Plaintiffs. The only claims that proceeded to trial were Plaintiffs’ claims of negligence and trespass because the district court granted summary judgment on Plaintiffs’ SOPA and breach of contract claims. The jury determined there was no liability for negligence and trespass, and Plaintiffs appeal from the summaryjudgments. We reverse. We also briefly address Plaintiffs’ argument that the district court erred in not allowing their expert witness on damages to testify at the trial and Defendants’ cross-appeal.

BACKGROUND

{2} Sovereign Eagle, LLC (Sovereign) is a gas and oil operator that operates wells on lands owned by Woody Investments, LLC (Woody). Sovereign contracted with Dawson Geophysical Company (Dawson) to conduct geophysical seismic surveys in what is called the Tule Field in order to evaluate potential future oil and gas operations. The surveys were to be conducted on land that Woody and Pipkin Corporation (Pipkin) either owned or leased from the State Land Office.

{3} Pursuant to SOPA, Sovereign gave notice of the planned geophysical survey to Woody and Pipkin (Plaintiffs) 1 and when the parties were not able to agree on the terms of a surface use and compensation agreement, Sovereign posted a SOPA bond to enter upon Plaintiffs’ lands and conduct the geophysical survey. See Section 70-12-5 (setting forth procedures required under SOPA before entry upon lands to conduct oil and gas operations, including advanced notice and requirements for negotiating a proposed surface use and compensation agreement that governs operations and compensation for damages to the surface); see Section 70-12-6 (stating that when no surface use and compensation agreement has been made, the operator may enter the surface owner’s property and conduct oil and gas operations after posting a bond). In addition, Dawson obtained a permit from the State Land Office to conduct the geophysical survey.

{4} Dawson then entered Plaintiffs’ lands and conducted the geophysical survey. In order to conduct the survey, cables and seismic equipment were laid on the surface by foot, AT Vs, pickup trucks, and vibroseis trucks equipped with balloon tires. Geophysical seismic surveys generate, record, and analyze soundwaves that travel through the earth and are reflected back from the different types of rock below the surface. The two main methods used to generate seismic waves are (1) the drilling of shot holes and the detonation of explosives placed in the holes, and (2) vibroseis. In this case, shot holes were not drilled and no detonating explosives were used. Where vibroseis is used, a line or grid of receivers, or geophones, is placed on the surface connected with cables for transmission of the data to a centralized vehicle. A vibroseis truck weighs 62,000 pounds and the truck’s “terra tires” or balloon tires displace the weight of the vehicle to eighteen pounds per square inch. The soundwaves caused by the vibrations ofthe vibroseis truckbounce off geologic formations beneath the earth and return to the surface to be captured by the geophones. When the detailed images are combined with other information, geologists can map seismic geomorphology and reservoir quality. Dawson conducted a two-dimensional survey, in which seismic readings were taken from points laid down a straight line, as well as a three-dimensional survey, in which seismic readings were taken from points laid out in a grid.

{5} After the survey was completed, Plaintiffs filed a complaint against Sovereign and Dawson (Defendants) seeking damages for negligence, breach of contract, violation of SOPA, and trespass. The district court granted summary judgment on the SOPA and breach of contract claims, and trial proceeded on the negligence and trespass claims. The jury found that Defendants were not liable on these claims. Plaintiffs appeal from the summary judgments granted to Defendants on the SOPA and breach of contract claims. Plaintiffs also appeal from the order of the district court that barred Plaintiffs’ expert from expressing his opinion on damages.

DISCUSSION

{6} The standard we apply in reviewing an order granting summary judgment is well settled. “We review the district court’s decision to grant summary judgment de novo. Summary judgment is appropriate where the facts are undisputed, and the movant is entitled to judgment as a matter of law. We review the facts in a light most favorable to the nonmoving party. Further, all reasonable inferences from the record should be made in favor of the nonmoving party. New Mexico courts view summary judgment with disfavor.” T.H. McElvain Oil & Gas Ltd. P’ship v. Benson-Montin-Greer Drilling Corp., 2015-NMCA-004, ¶ 19, 340 P.3d 1277, cert. granted, 2014-NMCERT-012, 344 P.3d 988 (alterations, internal quotation marks, and citations omitted). To the extent applicable, we discuss additional authorities and facts which pertain to each issue discussed.

A. The SOPA Claim

{7} The district court granted summary judgment on the SOPA claim based on its conclusion that “Defendants’ geophysical survey is a non-surface disturbing activity as defined in SOPA §70-12-5(A) and not an oil and gas operation as defined in SOPA” and therefore “Plaintiffs have no claim for damages under SOPA resulting from Defendants’ geophysical survey.” For the following reasons, we conclude that the district court erred as a matter of law by concluding that Defendants’ geophysical seismic survey is not an “oil and gas operation” covered by SOPA.

{8} “Statutory interpretation is a question of law, which we review de novo.” First Baptist Church of Roswell v. Yates Petroleum Corp., 2015-NMSC-004, ¶ 9, 345 P.3d 310 (internal quotation marks and citation omitted). In interpreting a statute, our primary goal is to ascertain and give effect to the Legislature’s intent. Id. “Under the rules of statutory construction, when a statute contains language which is clear and unambiguous, we must give effect to that language and refrain from further statutory interpretation.” Id. (alteration, internal quotation marks, and citation omitted). We look at the statute as a whole. Id.

{9} The purpose of SOPA is to balance surface owners’ and mineral lessees’ interests. SOPA aims to minimize damage and loss of available surface for agriculture caused by oil and gas operations, Section 70-12-4, to promote a fair negotiation process between the surface owner and the mineral lessee, Section 70-12-5, and to not delay exploration and development of minerals, Section 70-12-6.

{10} Before the enactment of SOPA, surface owners could only recover damage to the land if they had a contract with oil and gas operators that had an express reclamation provision or if the oil and gas operators unreasonably, negligently, or excessively used the land. See Amoco Prod. Co. v. Carter Farms Co., 1985-NMSC-071, ¶¶ 11-12, 103 N.M. 117, 703 P.2d 894, abrogated by McNeill v. Burlington Res. Oil & Gas Co., 2008-NMSC-022, 143 N.M. 740, 182 P.3d 121.

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Cite This Page — Counsel Stack

Bluebook (online)
2015 NMCA 111, 9 N.M. 1, Counsel Stack Legal Research, https://law.counselstack.com/opinion/woody-investment-llc-v-sovereign-eagle-llc-nmctapp-2015.