XTO Energy, Inc. v. Armenta

2008 NMCA 078, 185 P.3d 383, 144 N.M. 212
CourtNew Mexico Court of Appeals
DecidedApril 24, 2008
Docket27,329
StatusPublished

This text of 2008 NMCA 078 (XTO Energy, Inc. v. Armenta) 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
XTO Energy, Inc. v. Armenta, 2008 NMCA 078, 185 P.3d 383, 144 N.M. 212 (N.M. Ct. App. 2008).

Opinion

OPINION

VIGIL, Judge.

{1} Defendant appeals from a district court order granting Plaintiff authority to relocate a road used to access Plaintiffs gas wells on Defendant’s property. Defendant argues that Plaintiff is required to maintain and repair the existing access road, which was washed out by the adjacent river and made impassable, rather than relocate the access road. We affirm the district court, holding that the district court did not abuse its discretion in granting Plaintiff reasonable access to its wells by relocating the access road.

FACTUAL AND PROCEDURAL BACKGROUND

{2} Defendant’s parents entered into an oil, gas, and mineral lease with Plaintiffs predecessor-in-interest in 1955. Pursuant to the lease, Defendant retained ownership of the surface property, while Plaintiff was granted rights to explore for and produce gas found below the surface. The lease expressly grants Plaintiff authority to build roads in order to conduct its operations. However, the lease does not address maintenance of the roads.

{3} In late 1991, Plaintiffs predecessor-in-interest brought suit against Defendant, alleging that Defendant was interfering with its right to conduct business. Defendant filed a counterclaim, alleging harassment and damage to his surface estate. The parties resolved the case by entering into the Stipulated Permanent Injunction, which the district court approved and adopted. The Stipulated Permanent Injunction recites, among other things, “[Plaintiff] has a contractual and property right to use the access roads and to conduct its business on the premises without interference----[and it orders that Defendant] shall not take any steps or make an effort to preclude reasonable access to [Plaintiffs] wells by employees or agents of [Plaintiff].”

{4} In July 2004, Plaintiff and Defendant entered into a Damage Release in response to new allegations by Defendant of damage to his surface property. Pursuant to this release, Plaintiff paid Defendant a sum of money in full settlement and discharge of Defendant’s claims. Additionally, the release requires Plaintiff to “conduct all operations on the lands in a good and workmanlike manner, and shall use all normal precautions to prevent future damages to said land.” The release did not address maintenance of access roads.

{5} The road historically used to access the wells was located adjacent to the San Juan River. The Endangered Species Act, 16 U.S.C. § 1531 (2000), required high spring flows to be released upstream from the Navajo Reservoir in May 2005. This caused portions of the south bank of the San Juan River to erode. It is undisputed that none of the erosion is attributable to Plaintiff and that it was caused only by the river flow. Further, it is undisputed that because the erosion is from the reservoir release mandated by the Endangered Species Act, the river bank will continue to erode in the future. The erosion rendered Plaintiff unable to access its wells, so Plaintiff began investigating alternatives to gain access. Plaintiff acquired three estimates: one to rebuild the river bank and road; one to build a new road on the east side of the property; and one to build a new road just south of the old road. The estimate to rebuild the river bank and road was $133,079.06, whereas the estimates to build the new roads were $24,573.82 and $20,398.13 respectively.

{6} Plaintiff approached Defendant to negotiate placement of a new road. However, Defendant was unwilling to discuss the possibility of building a new road, insisted that Plaintiff repair the old road, and denied Plaintiff permission to temporarily access its wells by driving around the eroded area. Defendant continued to deny Plaintiff temporary access even though there was a gas spill on the property that needed to be cleaned up. As a result of its inability to access its wells, Plaintiff was forced to shut in the wells to reduce environmental risks. This resulted in substantial loss of revenue to Plaintiff.

{7} Plaintiff then filed a motion to enforce the Stipulated Permanent Injunction, arguing that Defendant was denying it reasonable access to its wells. The district court held a multi-day evidentiary hearing in which Plaintiff argued the need to relocate the access road, and Defendant argued that Plaintiff was required to repair and continue to use the old access road. Ultimately, the district court found that Plaintiff has a right to access its wells on Defendant’s property, that neither party is obligated to repair the river bank and old road, and that Plaintiff is entitled to relocate the access road. The district court appointed a special master to make recommendations concerning the route of the road and appropriate compensation for the resulting loss of surface rights. In accordance with the special master’s recommendations, the district court granted Plaintiff the right to construct a new road near the old road to join up with the old road past the eroded portion. In addition, the district court awarded Defendant annual compensation for lost hay production where the new road is to be located. Defendant appeals.

STANDARD OF REVIEW

{8} This case involves equitable enforcement of the Stipulated Permanent Injunction, and ultimately the oil, gas, and mineral lease. Our review is whether the district court abused its discretion. Builders Contract Interiors, Inc. v. Hi-Lo Indus., Inc., 2006-NMCA-053, ¶ 6, 139 N.M. 508, 134 P.3d 795.

DISCUSSION

{9} Defendant argues that Plaintiff had a duty to maintain and continue to use the original road. In support of his argument, Defendant relies on cases which discuss the obligation of one who uses an easement to maintain it if he wishes to continue to use it. See McGarry v. Scott, 2003-NMSC-016, ¶¶ 21-22, 134 N.M. 32, 72 P.3d 608 (discussing Dyer v. Compere, 41 N.M. 716, 720, 73 P.2d 1356, 1359 (1937) (“The owner of the servient estate is under no obligation, in the absence of special agreement, to repair or maintain the way, the rule being that he who uses the easement must maintain it in proper condition or suffer the resulting inconvenience.”) and Kennedy v. Bond, 80 N.M. 734, 738, 460 P.2d 809, 813 (1969) (affirming the trial court apportionment of the cost of maintaining a road easement in relation to its relative use by the parties)). See also Walsh v. United States, 672 F.2d 746, 749-50 (9th Cir.1982) (noting the common law duty of the owner of an easement to repair and maintain it); Koeppen v. Bolich, 2003 MT 313, ¶ 52, 318 Mont. 240, 79 P.3d 1100 (stating that the owner of an easement cannot select a new route without the consent of the owner of the servient estate); Island Improvement Ass’n v. Ford, 155 N.J.Super. 571, 383 A.2d 133, 134 (App.Div.1978) (noting that in the absence of an agreement, the owner of an easement has a duty to maintain and repair it).

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Amkco, Ltd., Co. v. Welborn
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McGarry v. Scott
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Dyer v. Compere
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Builders Contract Interiors, Inc. v. Hi-Lo Industries, Inc.
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Bluebook (online)
2008 NMCA 078, 185 P.3d 383, 144 N.M. 212, Counsel Stack Legal Research, https://law.counselstack.com/opinion/xto-energy-inc-v-armenta-nmctapp-2008.