pjc-oil-and-gas-2022-lib

D AMAGES

PJC 313.18

PJC 313.18 Question and Instruction on Damages for Breach of Implied Covenant to Develop [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 Larry Lessee ’s failure to drill additional wells on the lease that a reasonably prudent operator would have drilled? The measure of damages for Larry Lessee ’s failure to reasonably develop is the amount of royalties that Paul Payne would have received from the drilling of additional wells on the lease. 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 313.18 should be used to determine damages for breach of the implied covenant to develop and should be predicated on a “Yes” answer to PJC 303.12. Source of question and instruction. PJC 313.18 is derived from Texas Pacific Coal & Oil Co. v. Barker , 6 S.W.2d 1031, 1036–37 (Tex. 1928). 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). Damages. The measure of damages for breach of the development covenant is the royalty lost on past and future production by the lessee’s failure to prevent drainage. Kerr-McGee Corp. v. Helton , 133 S.W.3d 245, 253 (Tex. 2004) (quoting Texas Pacific Coal & Oil Co. , 6 S.W.2d at 1036–37).

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