Short Oil and Gas Update
The following is an excerpt from the newsletter of the oil and gas section of the Kansas Bar Association. I have enjoyed serving as co-editor of the newsletter with Karl Hess for the last couple of years. We have been cranking out two issues per year. Attorneys, subscribe to the KBA and the Oil and Gas Section to receive these updates right when the newsletter is published. C'mon, what is it, $20 per year? Any persons who are not attorneys and who are interested in receiving copies of the newsletter, please feel free to send me an email at lrpalmateer@gmail.com.
Oil and Gas Interests in Other Areas of Law
By Lane R. Palmateer, Law Office of Lane R. Palmateer, Wichita
The following three cases describe disputes that involved oil and gas interests but also involve negligence, probate, partition, and divorce law.
Alford Ranches, LLC v. TGC Industries, Inc. dba Tidelands Geophysical Company, Kan. Ct. of Appeals, Case No. 14-112375-A (February 16, 2016) (unpublished). This action concerns a landowner’s action against a seismic surveyor company to recover damages in the form of ruts left in the soil. Alford owned only the surface rights in this case, used the land for hunting and cattle grazing, discovered ruts in the soil after a seismic survey, and was offered the industry standard of $5 per acre by the seismic company. He did not cash a check for $6,100, indicating 1,220 acres. The District Court of Kiowa County, Kansas, issued its Journal Entry in Case No. 2011-CV-24 on January 21, 2014, based upon the jury’s verdict that $88,000 in damages were recoverable. This decision was reversed by the Kansas Court of Appeals as unsupported by the evidence when viewed in the light most favorable to Alford. The Court of Appeals indicated this was a case of first impression regarding whether a seismic surveyor owed a duty to the surface owner, independent of any contract, to act in a reasonable manner. The Court found that a duty did exist, but it stated that damages were limited to those occurring from conduct in excess of what is reasonable within the industry. While the Court of Appeals appears to have made a reasonable decision in this case, landowners pleading a negligence action appear to be stuck in a rut (please forgive the pun) unless a seismic surveying company acts in a truly offensive manner.
Nickelson v. Bell, Kan. Ct. of Appeals, Case No. 114,507 (Opinion Issued September 16, 2016). This was a quiet title action in Graham County that relied on the mineral lapse statute. Nickelson argued that without a judicial decree of descent or probate proceeding the defendants’ claims of ownership were unprovable and should be barred. The District Court disagreed and allowed the claims to proceed. This decision was affirmed by the Court of Appeals, holding that the mineral interest, being an interest in real property, passed immediately through intestate succession without the need for a judicial decree and provided standing in the quiet title action.
In re Estate of Einsel, 304 Kan. 567 (2016). This partition proceeding discusses a 1993 divorce decree assigning an interest in real estate to the ex-wife with an option for the ex-husband to pay $22,500 within 6 months to void the assignment. The property included mineral interests in land that included 14 oil and gas wells in Kiowa and Comanche County. In short, the Court determined that based upon the plain language of the 1993 divorce decree, a present interest in land was given to the wife with an option to purchase the land back for a specified sum. This decision affirmed the Court of Appeals and reversed the District Court, which had viewed the ex-wife’s interest as being a money judgment based on the appraisal of the property.