pjc-oil-and-gas-2022-lib

D AMAGES

PJC 313.17

PJC 313.17 Question and Instruction on Drainage Damages of a Lessee or Royalty Owner [Insert predicate, PJC 313.1.] QUESTION ______ What sum of money, if any, if paid now in cash, would fairly and reasonably compensate Paul Payne for the lost royalties, if any, that resulted from [ insert description of act or omission for which liability was determined ]? Do not add any amount for interest on damages, if any. Answer in dollars and cents for damages, if any. 1. Damages sustained in the past. Answer: _______________ 2. Damages that, in reasonable probability, will be sustained in the future. Answer: _______________ COMMENT When to use. PJC 313.17 should be used to determine damages for failure to pre vent substantial drainage and should be predicated on a “Yes” answer to PJC 303.11. Source of question and instruction. PJC 313.17 is derived from Texas Pacific Coal & Oil Co. v. Barker , 6 S.W.2d 1031, 1036–37 (Tex. 1928). Modification depending on lease terms. If the lease provisions contain an express damage remedy for drainage, then that provision should be used rather than the common law measure in the damages instruction. Causation. To recover damages for breach of contract, a plaintiff must establish damages sustained as a result of the breach. Southern Electrical Services, Inc. v. City of Houston , 355 S.W.3d 319, 324 (Tex. App.—Houston [1st Dist.] 2011, pet. denied). Common law damages. The common law measure of damages for breach of the drainage covenant is the royalty lost on past and future production by the lessee’s fail ure to prevent drainage. Mandell v. Hamman Oil & Refining Co. , 822 S.W.2d 153, 164 (Tex. App.—Houston [1st Dist.] 1991, writ denied); Wes-Tex Land Co. v. Simmons , 566 S.W.2d 719, 721 (Tex. App.—Eastland 1978, writ ref’d n.r.e.). In most cases, the alleged failure to protect against drainage will be a failure of the lessee to drill or timely drill an offset well to prevent the drainage. Accordingly, the damages are calcu-

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