Face Challenges Confidently

002 Amarillo Oil Co. v. Energy-Agri Products, Inc.

Friday, September 4th, 2015


Richard F. Brown

The following is not a legal opinion. You should consult your attorney if the case may be of significance to you.
Amarillo Oil Company v. Energy-Agri Products,_Inc., S.W.2d (Tex. App.–Amarillo, 5/13/87). Amarillo Oil Company owned a prolific-gas well in Carson County which produced gas and no oil for more than 30 years from the Brown Dolomite formation. The oil and casinghead gas rights were severed from the gas leasehold estate by a farmout of the original oil and gas lease. Near the gas well, Energy-Agri Products, Inc., as the owner of oil and casinghead gas rights, drilled two wells into the Brown Dolomite and began production. The Railroad Commission classified Energy- Agri’s wells as oil wells. Amarillo Oil sued to quiet title to the natural gas in the Brown Dolomite formation. The jury found that Energy-Agri’s wells could and did produce crude petroleum oil from the Brown Dolomite, and that the Brown Dolomite was not an horizon productive of natural gas only. The trial court entered a judgment that Amarillo Oil take nothing. On appeal, the appellate court refused to accept any of Amarillo Oil’s arguments that there was no evidence to support the jury’s findings. By a cross-point, Energy-Agri argued that the case should never have even gone to trial, but should have been dismissed for lack of jurisdiction. Energy-Agri claimed that Amarillo Oil’s “title claim” was actually an attempt to reclassify EnergyAgri’s oil wells as gas wells, and that only the Railroad Commission has jurisdiction over well classification.
Issue: Did the trial court or the Railroad Commission have jurisdiction to decide this case? Held: the Railroad Commission. The majority of the court reasoned and held that the case should be dismissed because it was a collateral attack on an order of the Railroad-Commission which, by statute, can only be challenged in the courts of Travis County. The dissenting opinion argued that the judgment of the trial court should be affirmed. It reasoned that the dispute in the case was centered upon the ownership of the substance that was being produced, and that the Railroad Commission has no authority to determine the ownership of oil or gas. The dissenting opinion would hold that the trial court could and did properly determine the ownership of the substance being produced, and that the judgment of the trial court should be affirmed.
The case is significant because if only the Travis County courts have jurisdiction, then many of the pending “White Oil” and “High Perf” cases may have to be dismissed and perhaps refiled in Travis County. Because of the lapse of time, it may now be contended that significant portions of the damages attributable to past production are now barred by limitations. It may be contended that no challenge to the well classification in Travis County can be made for any purpose except as it affects prospective production. The burden of proof in a challenge to the Railroad Commission’s well classification may also be significantly different. These issues are significant if this opinion means that gas produced from a well classified as an oil well is, absent fraud, casinghead gas. The case is also significant because at least in this case, the jury found (and the court found sufficient evidence to support the jury) that the Brown Dolomite can produce crude petroleum oil. The impact of this recent decision on other pending litigation is complex and unclear, and the opinion itself raises a number of questions.

NO. 07-83-0058-CV

JUNE 10, 1987



Before REYNOLDS, C.J., and DODSON and KEITH, *JJ.


Amarillo Oil Company has filed a motion for rehearing seeking a reversal of the judgments of this Court and the trial court, and the rendition of judgment in its favor, on the same contentions resolved against it on original submission, but with the addition of one new matter. Further comment on the contentions would not be beneficial, but the new matter requires an address.
In its rehearing motion, Amarillo Oil accurately points out that at the beginning of the fourth paragraph in the majority opinion, it is incorrectly stated that ”[t]he trial court granted a temporary injunction to plaintiff but, in an unpublished opinion, we reversed the judgment and dissolved the injunction for want of a complete record.” In the interest of accuracy, it is noted, and now there is made the correction, that as explained in the unpublished opinion, the trial court’s order granting a temporary injunction to Amarillo Oil was affirmed on the theory that no abuse of discretion ton the part of the trial court was found. Energy-Agri Products, Inc. v. Amarillo Oil Company, No. 07-82- 0253-CV (Tex.App.–Amarillo 7, 1982, no writ).
*Justice, Court of Appeals, Ninth District (Retired), sitting by designation. Tex. Gov’t Code Ann. §73.012 (Vernon Pamp. 1987).
The affirmance of the temporary injunction order, Amarillo Oil argues, in effect disposed of the jurisdictional issue by allowing the trial court to proceed with the case. This obtains, the argument continues, because Energy-Agri submitted on the appeal that “as a matter of law, any gas produced from the (Kimberlin) wells is casinghead gas . . . because the Railroad Commission of Texas has classified [Energy-Agri]’s wells as ‘oil wells’.” Consequently, the argument concludes, this Court’s ruling became the law of the case, binding this Court to the ruling that the trial court had jurisdiction to hear the case. The argument is not well premised.
In the appeal from the order granting the temporary injunction, the focus was only on the question whether the trial court abused its discretion in granting the temporary injunction. As was stated in the opinion, “in order to find an abuse of discretion by the trial court, this court would have to accept as established matters which can only be decided upon the trial upon the merits.” More particularly, the opinion explained that ” [t]he question of the construction, validity and effect of Railroad Commission rules is a-complex one and should be decided only after a full development of all evidence bearing on the question and consideration of ancillary legal considerations, which was not done at the hearing on application for temporary injunction.”
Obviously, then, the legal question of jurisdiction was not determined on the prior appeal. The doctrine of the law of the case does not apply to a question of law that was not decided on a prior appeal, Denny v. White House Lumber Co., 150 S.W.2d 296, 300-01(Tex. Civ. App.–Amarillo 1941, writ dism’d judgmt cor.), albeit the question might have been decided. United States v. McClain, 593 F.2d 658, 664 (5th Cir.), cert. denied, 444 U.S. 918, 100 S.Ct. 234, 62 L.Ed.2d 173 (1979). Accordingly, Amarillo Oil’s new contention is overruled.
The motion for rehearing is overruled.
Charles L. Reynolds Chief Justice
Keith, J., not participating.
Dodson, J., dissents to the overruling of the motion for rehearing only to the extent that he would grant the motion on the issue of the dismissal of the case for want of jurisdiction.
Publish. Tex. R. App. Proc. 90(e).