The Texas Supreme Court recently applied the accommodation doctrine in the context of a no-evidence motion for summary judgment. In Merriman v. XTO Energy, Inc., No. 11-0494 (Texas June 21, 2013), plaintiff Homer Merriman owned the surface estate of a 40-acre tract of land, which he used in a cattle operation, and leased several other tracts of land that he also used in the cattle operation. Defendant XTO Energy, Inc. was the lessee of the mineral estate of the 40 acres, and wished to drill a gas well on the land. Merriman opposed the well and filed suit, claiming that the well would interfere with his cattle operation.
Under Texas law, the mineral estate has the right to go on the surface of the land to extract minerals, and also has incidental rights including the right to use as much of the surface as is reasonably necessary to obtain the minerals. If the mineral owner has only one method to obtain the minerals, then it may use that method even if it precludes or substantially impairs an existing use of the surface estate. But, under the accommodation doctrine, if the mineral estate has more than one method to obtain the minerals, and if one of these methods allows the surface estate to continue using the surface while another method does not, then the mineral owner must use the method that allows the surface estate to continue using the surface.
After XTO drilled the well, Merriman sought a permanent injunction requiring XTO to remove the well. Merriman claimed that XTO had failed to accommodate his cattle operation and therefore exceeded its rights in the mineral estate, so that the well constituted a trespass.
XTO moved for no-evidence summary judgment, claiming that Merriman had produced no evidence that XTO failed to accommodate Merriman’s use of the surface. The trial court granted the motion and the appeals court affirmed, finding that Merriman had produced no evidence that he had no reasonable alternatives to continue his cattle operation. According to the appeals court, not only did Merriman have reasonable means of developing the 40 acres for “agricultural” purposes, but he could also relocate his cattle operations to the leased land.
The Texas Supreme Court affirmed the appeals court, but rejected its reasoning. The Supreme Court found that the appeals court incorrectly considered the leased land under the accommodation doctrine. “Requiring a surface owner to show that it could not alternatively conduct its existing use on land held by short term leases would too greatly alter the balance between [the surface and mineral estates]. Such a requirement would reduce the mineral owner’s obligation to accommodate existing uses of the surface because of the fortuity that the surface owner had separate holdings, even though the holdings might soon be lost by the leases lapsing or being terminated.”
The Supreme Court also disagreed with the appeals court’s classification of Merriman’s use of the land as “agricultural.” “Merriman’s use can . . . be classified more narrowly than the broad ‘agricultural’ category applied by the Court of Appeals. His use of the land was for a cattle operation and its essential parts. That use is what must be considered in balancing his rights with those of XTO.” The Supreme Court therefore framed the issue as whether Merriman had any reasonable alternatives for conducting his cattle operations on the 40 acres, not whether he had any reasonable alternatives for conducting general agricultural uses on both the 40 acres and the leased land.
The Supreme Court concluded that Merriman had produced no evidence that he had no reasonable alternatives for conducting his cattle operations on the 40 acres. Merriman’s evidence consisted of affidavit and deposition testimony that “the roundup, sorting, working, and loading of the cattle were essential parts of [his] cattle operations” on the 40 acres, and that XTO’s well interfered with “the placement of his temporary corrals [and] the flow of his working stock pens” by causing more phases to occur, increasing transportation costs, and causing delays and other inefficiencies—all resulting in lost profits. This evidence, according to the appeals court, was mere “conclusory statements” with insufficient supporting facts, and the Supreme Court suggested that this was so.
But even if this evidence was not conclusory, the Supreme Court found that it still did “not provide facts or evidence showing that there was no reasonable alternative method for him to conduct the sorting, working, and loading activities somewhere else on the tract.” For example, “he did not discuss whether he could construct corrals and pens in another location on the tract, or if he could, what it will cost.” This was therefore “evidence only that XTO’s well precludes or substantially impairs the use of his existing corrals and pens, creates an inconvenience to him, and will result in some amount of additional expense and reduced profitability because to continue his cattle operation he will have to build new corrals or conduct his operations in more phases.” And evidence “that the mineral lessee’s operations result in inconvenience and some unquantified amount of additional expense to the surface owner” is not evidence that “the surface owner has no reasonable alternative method to maintain the existing use.”
Because Merriman had produced no evidence that XTO failed to accommodate his existing use of the surface, the Court did not consider whether such failure, if it had occurred, would have been sufficient for injunctive relief. The Court therefore affirmed the grant of summary judgment in favor of XTO.
The full opinion is available here: http://www.supreme.courts.state.tx.us/historical/2013/jun/110494.pdf