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Wagoner v. Chevron USA, Inc.

ELR Citation: 40 ELR 20237
Nos. No. 45-507, (La. Ct. App., 08/18/2010)

A Louisiana appellate court reversed a lower court decision denying property owners' right to sue oil and gas companies for contamination and damages due to their past operations on the site. The operations were conducted under mineral leases that remain active today. The owners purchased the site in 2004, and the 2004 deed of sale does not include a specific assignment of the right to sue for property damages that may have occurred prior to their acquisition of the property. The lower court held that the owners' tort/contract action was a personal right and that the owner of real property who sells it after damage has occurred, but without assigning the right to the damages, is the proper person to sue for the damages. But according to the Third Circuit, the right to restoration of damaged property is a real right that attaches to the property. Moreover, the Mineral Code places the lessee under an obligation to act as a prudent operator as to both the surface and subsurface. An assignment does not relieve the lessee of its obligation under the mineral lease. Rather, the leasehold owners—the oil and gas companies—have a continuing and correlative responsibility as to the surface owner. But in all other respects, the lower court's decision was affirmed.