Supreme Court of Texas Blog: Legal Issues Before the Texas Supreme Court

No. 14-0534
TAMES

RAILROAD COMMISSION OF TEXAS v. GULF ENERGY EXPLORATION CORPORATION

Oral argument was held on September 22, 2015. The Court issued an opinion resolving the case on January 29, 2016. It then denied rehearing on January 30, 2015 File Closed

In the news...

Tracking 1 article about this case.

January 29, 2016

Challenge to school religious policy not moot; two oil and gas cases; timing is crucial in arguing for an easement to a roadway [Jan. 29, 2016]

from SCOTXblog

This article also mentions 5 other cases.

The Court has issued opinions:

Opinion

January 29, 2016

Lehrmann
Hecht
Green
Johnson
Willett
Guzman
Boyd
Devine
Brown

Justice Lehrmann delivered the opinion of the Court. PDF

 

Court of Appeals

Appellate District:13th Court of Appeals
Outcome Below:Affirmed
COA Docket No.:13-12-00252-CV
Opinion Author:Honorable Rogelio Valdez

Trial Court

Trial Court:267th District Court
County:Calhoun
Trial Judge:Honorable Kemper Stephen Williams
Trial Docket:09-08-0809

Docket Entries

Date Event Outcome  
2016-03-11 Mandate issued  
2016-01-29 Court approved judgment sent to attorneys of record Issued
2016-01-29 Opinion issued   Court of Appeals' judgment reversed; cause remanded to trial court
  This case was awaiting the Court's decision after oral argument between September 30, 2015 and January 29, 2016.  
2015-09-30 Post submission brief filed (Respondent)  
2015-09-28 Post submission brief filed (Petitioner)  
2015-09-22 Oral argument  
2015-09-21 Exhibits in case/cause filed  
  This case was waiting for oral argument between July 21, 2015 and September 21, 2015.  
2015-07-21 Oral Argument Submission Form from Attorney received  
2015-07-20 Oral Argument Submission Form from Attorney received  
2015-07-10 Case set for oral argument   Case set for oral argument
2015-06-12 Petition for Review granted
2015-06-12 Petition for Review disposed   Filing granted
2015-05-14 Surreply filed (Respondent)  
2015-05-11 Reply Brief (Petitioner)  
2015-04-24 Brief on the Merits (Respondent)  
2015-04-08 Brief on the Merits (Petitioner)  
2015-03-30 Motion for Extension of Time disposed.   Filing granted
2015-03-30 Motion for Extension of Time to File Brief filed  
2015-02-23 Motion for Extension of Time to File Brief filed  
2015-02-23 Motion for Extension of Time disposed.   Filing granted
2015-02-05 Case Record Filed  
2015-02-02 Record Requested in Petition for Review  
2015-01-30 Brief on the Merits Requested  
2015-01-30 Petition Reinstated
2015-01-30 Previous Order of the Court withdrawn  
2015-01-30 Motion for Rehearing - Disposed Filing granted
2014-12-30 Surreply filed (Respondent)  
2014-12-23 Reply to Response to Motion for Rehearing filed (Petitioner)  
2014-12-16 Response to Motion for Rehearing (Respondent)  
2014-12-02 Supreme Court of Texas Requested Response  
2014-11-18 Case forwarded to Court
2014-11-17 Motion for Rehearing  
2014-11-06 Motion for Extension of Time to File Motion for Rehearing disposed   Filing granted
2014-11-05 Motion for Extension of Time to File Motion for Rehearing  
2014-10-24 Petition for Review disposed Denied
2014-09-18 Reply to Response (Petitioner)  
2014-09-09 Case forwarded to Court
2014-09-02 Response to Petition (Respondent)  
2014-08-13 Petition for Review (Petitioner)  
2014-07-09 Motion for Extension of Time to File Petition for Review filed  
2014-07-09 Motion for Extension of Time to File Petition for Review disposed   Filing granted

Parties

Party Counsel Role
Railroad Commission of Texas
Mr. Joseph David 'Jody' Hughes
Mr. Jonathan F. Mitchell
Mr. Charles Kenneth Eldred
Mr. Daniel T. Hodge
Attorney General Gregory W. Abbott
Mr. J. R. Schneider Jr.
Mr. Gaston M. Broyles Jr.
Petitioner
Gulf Energy Exploration Corporation
Mr. Kenneth R. Wynne
Mr. David Roberts
Mr. David Edwards Wynne
Respondent
 
 

The Railroad Commission can defeat a claim for breach of contract or negligence by showing its officials acted with subjective good faith

jury charges oil and gas regulatory sovereign immunity

This case involves a well that was plugged in error by the Railroad Commission. The Commission was in discussion about the need to plug a number of wells, which included the one at issue here. A meeting was held, where it is alleged a preliminary oral agreement was reached to delay plugging these wells to give the operator more time to try to reestablish production.

Subsequently, an official from the Railroad Commission misread a map and plugged this well. When a dispute arose, the Legislature passed a resolution authorizing these plaintiffs to bring a lawsuit against the Railroad Commission despite the state's sovereign immunity. The case proceeded to trial, and the trial court refused to submit a question to the jury about whether the officials had acted with "good faith." The trial court found the Railroad Commission to be liable.

The Texas Supreme Court holds that the trial court should have submitted a question to the jury about "good faith," which the statute makes a substantive defense to liability. The Court rejected the argument that this had been procedurally waived. (The Court's discussion of how error can be preserved through proposed questions is worth more careful study.) And it rejected the argument that the Legislature's jurisdictional permission to bring this suit was also a waiver of this substantive defense.

The Court did not find, however, that the evidence was so conclusive about "good faith" to permit it to render judgment in favor of the Commission. Instead, the Court remanded this for a new trial, with the clarification that the kind of "good faith" contemplated by the statute is merely subjective good faith of the officials involved, not the higher burden of showing objective good faith.

With regard to the contract claim, the jury charge asked merely whether the Commission had breached an agreement—without specifying the timing of when that agreement was formed. Here, that fact was crucial. The plaintiffs argued that the Commission's actions taken just before the final agreement was signed constituted a breach of the agreement, the basic terms of which had already been agreed weeks before that formality. The jury charge, echoing Texas's very broad pattern jury charge, did not distinguish between the two contracts. The Texas Supreme Court holds that the distinction mattered and that the Commission's objections made below were specific enough to preserve this error. The Court also holds that the "good faith" defense mentioned in the statute is, because of the way the law was drafted, equally applicable to this breach of contract claim. So in the second trial, the Commission will be able to argue that it should not be liable for contract damages where its officials acted in subjective good faith.

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