Typical Common Law Claims: Breach of Contract

Michael Goldman
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An accomplished litigator representing his clients in complex environmental disputes throughout the country.

A breach of contract claim is sometimes available in an environmental lawsuit.  Contractual duties typically arise from lease agreements especially in the oil and gas context.  For instance, a breach of contract claim could arise from a breach of a mineral lease agreement between the mineral estate owner and the operator or breach of a surface use agreement between the operator and the surface estate owner.  Such agreements might contain clauses that require the operator to restore the property to pre-drilling conditions following operations.[1]  The presence of contamination might be a breach of these agreements as well as a breach of an implied covenant to manage and administer the lease as a reasonably prudent operator.[2] In order to prove a breach of contract, the plaintiff must show that:

  1. There is a valid and enforceable contract;
  2. The plaintiff is a proper party to sue for breach of the contract;
  3. The plaintiff performed, tendered performance of, or was excused from performing its contractual obligations; 
  4. The defendant breached the contact; and
  5. The defendant’s breach  caused the plaintiff’s injury.[3]

In Fiorentino v. Cabot Oil and Gas Corp., the plaintiffs claimed that the oil and gas lease required the operator to test the plaintiffs’ water supplies following commencement of drilling operations in order to ensure that they would not be adversely affected by its operations.[4] The plaintiffs claimed that the gas leases also required the operator to take all steps necessary to return plaintiffs’ water supplies to pre-drilling conditions.[5]  Finally, the plaintiffs claimed that the operator expressly warranted to plaintiffs that their land would remain safe and undisturbed despite its drilling activities.[6] 

Success is walking from failure to failure with no

loss of enthusiasm.” Winston Churchill

In Fenner v. Samson Resources Co., the plaintiff alleged breach of a lease agreement which required the operators to “restore the surface of the land” at termination of the lease.[7] The term “surface” was not defined.[8]  As a result, the court applied the plain definition of surface which included “the upper boundary or top of ground or soil, exposed to air.”  The parties also did not agree to restore to original condition, since the phrase “original condition” was not included in the lease.[9]  The court held that restoring “surface” did not include an obligation to restore the “subsurface” and in absence of an express or implied provision, a lessee has no implied duty to restore the property.[10]

It should be noted that in Kamuck v. Shell Energy Holdings GP, LLC, the court found that the plaintiff could not maintain a breach of contract action against defendants for their natural gas extraction activities on adjoining properties since the plaintiff had no current contractual relationship with the defendants and could not maintain a claim based upon their former lease agreements.[11] Since the breach of contract claim was barred, the plaintiff’s claim of a breach of duty of good faith, which was wholly dependent upon the existence of a contractual relationship, also failed.[12]

Key Points

  • A breach of contract claim is sometimes available in an environmental lawsuit. 
  • Contractual duties typically arise from lease agreements especially in the oil and gas context. 
  • Such agreements might contain clauses that require the operator to restore the property to pre-drilling conditions following operations.  
  • The presence of contamination might be a breach of these agreements as well as a breach of an implied covenant to manage and administer the lease as a reasonably prudent operator. 
  • In order to prove a breach of contract, the plaintiff must show that: (1) there is a valid and enforceable contract; (2) the plaintiff is a proper party to sue for breach of the contract; (3) the plaintiff performed, tendered performance of, or was excused from performing its contractual obligations; (4) the defendant breached the contact; and (5) the defendant’s breached cased the plaintiff’s injury.
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[1] Corbello v. Iowa Prod., 850 So. 2d 686, 692 (La. 2003).

[2] In re ExxonMobil Prod. Co., 340 S.W.3d 852, 855 (Tex. App.—San Antonio 2011, orig. proceeding).

[3] See Marquis Acquisitions, Inc. v. Steadfast Ins., 409 S.W.3d 808, 813-14 (Tex. App.—Dallas 2013, no pet.); Zuniga v. Wooster Ladder Co., 119 S.W.3d 856, 862 (Tex. App.—San Antonio 2004, no pet.).

[4] Fiorentino v. Cabot Oil and Gas Corp., No. 3:09-cv-02284 (M.D. Pa., Nov. 19, 2009) (Doc. 19, pages 25-27).

[5] Id.

[6] Id.

[7] Fenner v. Samson Resources Co., 2005 WL 2123043, at *3 (Tex. App.—Houston [1st Dist.] 2005, pet. denied).

[8] Id.

[9] Id.

[10] Id. at *6.

[11] Kamuck v. Shell Energy Holdings GP, LLC, 2012 WL 1463594, at *5-6 (M.D. Pa. 2012).

[12] Id.

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