Highlighting the importance of proving a factual timeline in a statute of limitations analysis, the Texas Supreme Court held that a cattle ranch owners’ claims related to alleged contamination from long-dormant oil and gas operations were barred by Texas’s statute of limitations. See ExxonMobil v. Lazy R Ranch, LP , No. 15-0270 (Tex. Feb. 24, 2017). However, the court did not reach the issue of whether a plaintiff can obtain injunctive relief, e.g. for remediation, that costs more than the diminution of property value.
The Lazy R Ranch is a nearly 20,000-acre ranch in western Texas where the defendant ExxonMobil conducted oil and gas operations for almost 60 years. After the defendant sold the operation in 2008, ranch owners hired an environmental manager to investigate potential contamination from the oil and gas operations. Plaintiffs filed suit in 2009 alleging contamination in four specific areas that had been under the defendant’s control, totaling a little over one acre in size. Plaintiffs claimed it would cost $6.3 million to remediate the contamination. Defendant moved for summary judgment. At a hearing on the motion, Defendant argued that the statute of limitations barred the ranch’s claims and, even if the claims could go forward, that the ranch was not entitled to remediation damages in excess of the diminution of the value of the property. The trial court granted summary judgment but did not specify why. Subsequently, the court of appeals reversed and remanded. Defendant appealed this decision to the Texas Supreme Court.
On appeal, the Texas Supreme Court reasoned that because the defendant abandoned its oil and gas operations at two of the four sites long before the limitations period, there was no evidence that contamination could have occurred during the limitations period. The statute of limitations, therefore, barred Plaintiffs’ claims for these two sites. However, the court found that Plaintiffs’ claims at the other two sites, which were still in operation during the limitations period, were not barred. In dismissing claims at the two older sites, the court rejected Plaintiffs’ argument that the discovery rule should have tolled the limitations period. Under Texas law, the “discovery rule applies when a type of injury is objectively verifiable and inherently undiscoverable within the limitations period.” ExxonMobil, slip op. at 7–8. However, the court found that there was nothing "inherently undiscoverable" about the contamination.
The court left unaddressed the important issue of whether the limit on monetary damages under Texas law also applies to injunctive relief. During the trial court hearing on Defendant’s summary judgment motion, Defendant also argued Plaintiffs were not entitled to damages that exceeded the difference in value before and after the alleged contamination. Plaintiffs originally sued for $6.3 million, the estimated cost of remediation. But they amended their complaint to instead request an injunction ordering remediation instead of damages to pay for remediation. This raised the question of whether a claim for injunctive relief is bound by the same value-loss limitation as a claim for damages. However, the court found the issue was not properly before it and therefore declined to address it. This issue is likely to come up in proceedings related to Plaintiffs’ remaining claims and future contaminated property litigation.
