Royalty Owners And The Duty To Discover

In 2011 the Texas Supreme Court issued three opinions in which the claims of royalty for mineral owners were barred by the statute of limitations. These cases continue the general notion that the lessor/royalty owner is on notice of matters that could be discovered by a search of publicly available matters so that the statute of limitations starts to run when such material should have been discovered; this concept was broadened in HECI Exploration Co. v. Neel, et al., 982 S.W.2d 881 (Tex. 1998; corrected opinion filed Feb. 6, 1999) to include filings in Railroad Commission Records. The broadened concept was also applied to the owner of a reassignment right when production ceased in Hutchison v. Union Pacific Resources Co., S.W. 2d 368 (Tex. App. – Austin 1999). It has been previously applied to notice of payout in Rodessa Resources, Inc. and Louisiana Land and Exploration Company v. Arcadia Exploration and Production Company, 5 S.W.3d 363, 366 (Tex. App.-Texarkana 1999).

Exxon v. Emerald

Exxon Corporation v. Emerald Oil & Gas Company, L.C., 348 S.W.3d 194 (Tex. 2011), has a long and complicated history. First filed in 1996, it reached the Supreme Court in 2005. There were allegations of failure to develop, sabotage, negligent misrepresentation, fraud, and tortious interference with business opportunity. The royalty owners' claims were for statutory and common law waste, breach of alleged regulatory duty to plug wells properly, negligence, negligence per se, negligent misrepresentation, tortious interference with economic opportunity, breach of lease, and fraud.

Exxon argued that the statute of limitations barred some of the plaintiff's claims. Causes of action accrue and statutes of limitations begin to run when facts come into existence that authorize a claimant to seek a judicial remedy. Emerald (a subsequent lessee) and the royalty owners claimed that Exxon's plugging operations caused them injury. Exxon advised the royalty owners by letter in August 1991 that it had completed plugging all wells in the field. Thus, the alleged tortious conduct occurred by August 1991. Emerald filed suit in June 1996, and the royalty owners intervened in the lawsuit in September 1996 to assert claims against Exxon. Both Emerald and the royalty owners filed suit more than two years after the injuries occurred for these claims but each said that Exxon fraudulently concealed its wrongful conduct, thereby tolling the statute of limitations, and that the nature of their injuries was...