Union Pacific Res. Co. v. Cooper: Property Owner Cannot Seek Damages for Fear

In 1998, Eugene and Marjorie Cooper ("Owners") entered into an oil, gas, and mineral lease with Bayou Black Royalty Company for a fifty acre tract of land on which their home was located. Bayou Black later assigned this lease to the Union Pacific Resources Company ("Company").

In 2000, the Company applied to the Texas Railroad Commission ("Commission") for permission to drill a well on a neighbor's property. The Company had pooled the Owners' mineral rights with other mineral rights it held in the area. The proposed drilling site was 700 feet from Owners' home.

The Commission's rules require companies who may encounter sulphide gas (a.k.a. "sour gas") during drilling to develop an evacuation plan for the surrounding area, as exposure to sour gas can be deadly. The Company developed an evacuation plan, and the Commission approved the Company's evacuation plan.

As the Company began its drilling activities in June 2000, it instructed an employee to meet weekly with the Owners to address any concerns they may have about the drilling. The Owners told this individual that they were concerned that they wouldn't be able to evacuate the site quickly enough if an evacuation was ordered. When it became apparent that the Owners wanted to leave their home during the drill, the Company offered to assist the Owners in moving to a vacant farmhouse. The parties reached an agreement that the Company would pay the Owners a specified fee every month as reimbursement for the costs incurred in living away from their home.

Following the Owners' moving to the farmhouse, a representative from the Company visited the Owners at their new home in early August 2000 in order to deliver the Company's payment to them. At that time, the Owners stated that they had filed a lawsuit against the Company and refused to accept the payment. On September 1, 2000, the Company drilled below where the sour gas would be encountered and no gas was present. On September 20, 2000, the Owners moved back into their home.

The Owners lawsuit alleged nuisance and also sought quantum meruit damages. The nuisance allegations were based on the Owners' fear of sour gas. A jury awarded the Owners $85,000 under the nuisance theory, and the Company appealed.

The Court of Appeals of Texas reversed the trial court's ruling, finding there was no evidence to support the allegations. The Company argued that the nuisance allegations were based entirely on fear and apprehension, which is insufficient to support a nuisance claim.

The court looked at the legal standards for alleging a nuisance claim. A nuisance can occur in the following ways: physical harm to the property, such as encroachment of a damaging substance or property's destruction; physical harm to the property owner, such as an assault on the owner's senses or other type of personal injury; or emotional harm to the owner from the loss of enjoyment of his/her property. The court also found that the public policy of Texas does not allow fear or apprehension of lawful operations of industrial activities to support a nuisance complaint.

Looking at this case, the court found that the Company's activities were lawful industrial activities and the Company's drilling activities encountered no sour gas. Since the Owners' claims were solely based on their fear of a lawful activity, the court ruled that the evidence was insufficient to support a nuisance claim. Thus, the court reversed the jury verdict and entered judgment in favor of the Company.

Union Pacific Res. Co. v. Cooper, 109 S.W.3d 557 (Tex. App. 2003).