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SCHNEBERGER v. APACHE Corp. - 1994 OK 117, 890 P.2d 847

Rule:

The measure of damages to real property is generally determined according to whether the injury is abatable or permanent. Where damages are of a permanent nature, the measure of damage is the difference between the actual value immediately before and immediately after the damage is sustained. Where property can be repaired and substantially restored to its former condition, the measure of damage is the reasonable cost of repairing the damage and restoring it to its former condition.

Facts:

Plaintiffs, Fred and Zola Schneberger are the owners of a 154.95-acre tract located in Washita County, Oklahoma. On June 1982, defendant Apache Corporation (Apache) commenced drilling an oil and gas well on the Schneberger property. Plaintiffs thereafter filed a complaint against Apache, alleging that the latter had polluted their property with various harmful and deleterious substances in its drilling and operation, causing numerous property and personal damages. By the Agreement dated March 4, 1986, the parties settled the action, pursuant to which, Apache paid the plaintiffs a total of $80,000 for damages and expenses. It was further agreed that Apache would request the Oklahoma Corporation Commission (Commission) to stay further proceedings regarding a Commission-mandated cleanup. Apache continued to be subject to the cleanup plan approved by the Commission. Apache has spent significant sums implementing the cleanup plan ordered by the Commission. In 1989, plaintiffs filed the present action alleging, inter alia, breach of the settlement agreement in that Apache has failed to achieve the reduced level of water contaminants for which plaintiffs contracted. Plaintiffs contended that the proper measure of damages was cost of remediation. Apache contended that the proper measure of damages was diminution in value of the property.

Issue:

  1. Under Oklahoma law, was the measure of damages for breach of a settlement agreement to reduce water pollutants caused by oil and gas drilling operations of the defendant, equivalent to plaintiffs’ cost of remediation?
  2. If the measure of damages is plaintiffs' cost of remediation, may the jury consider a remediation plan different from that approved by the Oklahoma Corporation Commission?

Answer:

1) No. 2) Did not answer.

Conclusion:

As to the first issue, the Court held that under the Oklahoma law, the diminution in value was the maximum measure of damages for breach of a settlement agreement to reduce water pollutants. According to the Court, for a breach of an obligation arising from a contract, the general measure of damages was the amount that would compensate the party aggrieved for all the detriment proximately caused thereby, or which, in the ordinary course of things, was likely to result therefrom. Since the Court determined that the cost of remediation was not the proper measure of damages, it refused to pass upon the second issue.

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