On Friday the Texas Supreme Court issued two important premises liability decisions, the first adding to the jurisprudence surrounding Chapter 95, TPCR, critical piece of the 1995 tort reform package, and the second reaffirming a prior decision of the Court absolving a former owner of the premises from a continuing responsibility for injuries caused by a condition of the property after conveyance to a new owner. Chapter 95 limits the liability of a property owner from claims for damages caused by negligence asserted by independent contractors and their employees retained to “construct, repair, renovate, or modify” an improvement to the owner’s property. In order to apply to a claim, Chapter 95 requires the claim to “arise from the condition or use of the improvement. A plaintiff can overcome the application of the statute by demonstrating that the owner (1) exercised or retained some control over the manner in which the work was performed,” and (2) had actual knowledge of the danger or condition resulting in the claimant’s damages and failed to adequately warn.

The two cases, Energen Resources Corporation v. Bryce J. Wallace, Elite Drillers Corporation, and United Fire & Casualty and Its Parent, United Fire Group Inc. (No. 20-0451) and In re Eagleridge Operating LLC (No. 20-0505) involve accidents stemming from oil and gas drilling operations. In Energen, gas from an adjacent drilling site migrated into a water well being drilled by Dubose, a subcontractor of Elite Drillers, with whom Energen had contracted to do the work. In Eagleridge, a gas line from a well operated by Eagleridge exploded, injuring the plaintiff. In Energen, the plaintiffs asserted that Chapter 95 did not apply because the improvement upon which they were working, the water well, was not the same improvement from which the claims “arose,” the oil well that allegedly caused the injuries. They also argued that even if Chapter 95 applied, they raised a genuine issue of material fact regarding whether Energen exercised some control over the drilling of the water well. In Eagleridge, the plaintiffs sued the operator, who then attempted to designate a prior owner-operator as a responsible third party. Invoking Occidental Chemical Corp. v. Jenkins, 478 S.W.3d 640 (Tex. 2016) (a case in which TCJL participated as amicus curiae), the plaintiffs successfully moved to strike the prior owner’s designation on the basis that a former premises owner has not duty, and thus no responsibility, with respect to the condition of property after conveyance, even if that owner may have created the allegedly defective improvement.

In reversing the El Paso Court of Appeals and affirming the Dallas Court of Appeals, respectively, SCOTX affirmed trial court orders. In Energen, the trial court applied Chapter 95 and granted the owner-operator’s motion for summary judgment. Writing for the Court in Energen, Justice Busby emphasizes the necessity of a “causal connection between the plaintiff’s damages and negligence regarding the use or improvement on which the plaintiff was working.” In other words, Chapter 95 requires “that the damage-causing negligence [must] arise from the condition or use of the improvement on which the plaintiff was working.” Here Energen conclusively established that Chapter 95 applies by virtue of the plaintiff’s own pleadings, which alleged that Energen “failed to exercise reasonable care in relation to the defective and/or dangerous conditions in the drilling and completion of the Water Well.” Thus the plaintiffs identified both the relevant improvement (the water well), the damage-causing negligent act arising from a dangerous condition at the water well (gas migration into the water well). The possibility that there may also have been a negligent act at the oil well causing the gas to migrate makes no difference to the analysis, since there is so “sole cause requirement” limiting the application of Chapter 95. And because Chapter 95 encompasses both premises defect and negligence claims, there is no basis for the court of appeals’ attempt to apply Chapter 95 only to negligence claims.

In Eagleridge, the trial court applied Occidental to strike the operator’s motion to designate the prior owner as a responsible third party. Justice Devine’s opinion focuses on the dissent in the court of appeals that would have applied the rule in Strakos v. Gehring, 360 S.W.2d, 787 (Tex. 1962) to hold the prior owner-operator potentially liable for a dangerous property condition when that person acts as both a partial owner with premises liability duties and an actual independent contractor under contract with a third party. Eagleridge alleged that the prior owner-operator met the Strakos test based on the fact that during the time that the prior owner-operator, Aruba, installed the gas line that ultimately ruptured, it was the operator of record for the wellsite. Aruba thus served as both an owner and an independent contractor with respect to the gas line. But as Justice Devine pointed out, ownership of the well was held in a co-tenancy arrangement between Aruba and another operator, USG. Even though Aruba was paid a fee to operate the well, as co-tenants either owner could have constructed improvements without the consent of the other.  Four years after installation of the gas line, Aruba conveyed its ownership interest to USG, which then contracted with Eagleridge to serve as operator. The gas line ruptured a few months later. Under these facts, Justice Devine concluded that Occidental controlled because Aruba at all relevant times was the owner of the premises, precluding the “dual role” argument that the Court rejected in that case.

We applaud SCOTX for consistently reinforcing Chapter 95 and the separation between owners and independent contractors for purposes of the application of that statute. These cases also remind us that tort reform is only as good as the courts charged with applying the law as the Legislature writes it, not making it up on their own.


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