Surface and Surface Use: Damages; Measurement

摘要

Owners of a cattle ranch in Lea County, New Mexico bring an action against the former holder of an oil and gas lease covering part of the ranch alleging negligence, trespass and private nuisance for subsurface contamination of their property resulting from lessee's failure to properly close the reserve pit for produced water from an oil well drilled by lessee's predecessor. The trial court rules that the injury to surface owners' property is permanent. It concludes that the appropriate measure of damages is diminution in the fair market value of the property damaged, and excludes testimony regarding the cost of removal of the contaminated material. The case goes to trial before a jury. At the conclusion of evidence, me trial court grants lessee's motion for a directed verdict on the private nuisance claim. The jury returns a verdict for surface owners on the negligence and trespass claims, and awards damages in the amount of $135,000. Surface owners appeal on the issues of the jury instructions for damages and private nuisance, and lessee cross-appeals, raising other issues. Held: reversed and remanded for new trial. The Court of Appeals of New Mexico holds that the determination of whether damage to real property is permanent or temporary is an issue of fact for the jury to decide. If the injury is permanent, then based on Amoco Production Co. v. Carter Farms Co., 103 N.M. 117, 703 P.2d 894, 86 O.&G.R. 84 (N.M. 1985), the correct measure of damages is the diminution in fair market value of the entire property, not just the portion damaged. If the injury is temporary, then the correct measure of damages is the cost of repair or remediation, capped at the diminution in fair market value of the property. Even where the injury is permanent, evidence regarding cost of repair or remediation should be allowed. The trial court did not err in disallowing surface owners' private nuisance claim, because other theories of recovery (standard negligence and trespass) were available. The Court of Appeals also rejects three arguments raised by lessee on cross-appeal. Lessee's argument that claims for surface damages have been waived by deed was not raised in a timely manner. Lessee's argument that the quitclaim deed to certain surface owners did not convey to them the causes of action in the case is rejected because the causes of action accrued after execution of the deed. Finally, the court finds substantial support for the conclusion that the action was filed within four years from the time when surface owners knew or should have known of their causes of action, and thus is not barred by the statute of limitations.