Plugging the Wrong Well is Likely to Impact Your Pocketbook

by Gray Reed & McGraw

Thanks to Alexandria Moore – Baylor 2L  and Gray Reed summer clerk – for help on this post.

The Texas Railroad Commission’s contractor, Superior, plugged the 708S-5 well on behalf of the Commission. Oops! The contractor plugged the wrong well. Gulf and the Commission had entered into an agreement that if Gulf, who had a lease from the Commission on the land where the well was located, would make a cash deposit of $400,000 to satisfy the eventual cost of plugging the 708S-5 well, and apply for rescission of the RRC’s plug order for the well, the Commission would postpone plugging. The Commission had a contract with Superior to plug other wells on the same tract, but not the 708S-5.

In Railroad Commission v. Gulf  Energy Exploration Corporation, the jury awarded Gulf damages in the amount of $7 million, which was the cost of drilling a replacement well and the value of lost reserves. The Commission appealed.

The appeal dealt mostly with whether the Commission could complain about the jury questions. Before we get into those “inside baseball”, trial lawyer issues, some lessons can be learned:


  • A governmental agency sometimes must pay for its mistakes at a place other than the ballot box.
  • Operators: Know whether your standard agreements with your contractors addresses this situation. Maybe you are willing to contract away your right to recover from your contractor, maybe not, but at least you will have thought about it.
  • If you lose the jury, you will have a tough time on an appeal for insufficiency of evidence.
  • Lawyers: Always be mindful about whether you are preserving error.  Trial judges aren’t perfect. Sometimes they are even out to get you.
  • Clients: That is sometimes more difficult than it looks.

The Jury Questions

The Commission complained about two jury questions:

No. 1: Did the Railroad Commission fail to comply with its agreement to postpone plugging and abandoning the 708S-5 and

No 8: Did the negligence, if any, of the Commission proximately cause the occurrence in question?”

Error was not preserved. To preserve a complaint of jury charge error a party must

  1. present to the trial court a timely request, motion, or objection;
  2. State the specific ground for the relief requested; and
  3. Obtain a ruling.

At the charge conference at the end of the trial the judge, after listening to the lawyers, decides what questions will be put to the jury. Without a reporter’s record, the appellate court can’t determine if there was reversible error.

The Commission didn’t preserve error because it didn’t object to the charge. In Question One it assumed a contract had been created. A request for a directed verdict did not preserve the error and neither did the Commission’s objection to the admissibility of evidence.

The Commission argued that there was not enough evidence to establish an enforceable agreement, and complained about Gulf’s standing to sue. The court found evidence in the record that the trial court could have relied on to support these findings.

But it didn’t matter. These arguments, and several others, weren’t preserved either.


DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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