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SUMMARY: Oil exploration company drills various failed wells in KY
county, abandons them, convincing the property owners to take out
bonds to cover liability for the wells (instead of paying to close
them itself). These bonds are represented as "insurance" to the
mostly illiterate property-holders. Eventually, one of these
abandoned wells explodes, leaving property-holder with liability.
Bond issuer then tries to collect.
DETAIL:
Circa 1985, a non-KY "wildcat" oil operation begins exploration in
rural Kentucky. It's typical MO was evidently to sign exclusive
leases with small farmers, promising a percentage of profits,
assay, and drill on a subsection of the contracted properties.
It may or may not be relevant that said operations were evidently
fairly lax, from (allegedly) employing contractees in the operations
at below-market rates and transferring costs to them, to flaunting
environmental regulations and illegally dumping large amounts of crude
oil in the course of operations.
This operation eventually fails and moves out, leaving unsalvageable
equipment, etc on the properties in areas rendered unsuitable for use/
sale.
As well, rather than close existing wells, the company engages in a
pattern of transferring liability to the property owners. This is
conducted via the devise of stories that the company is leaving
equipment because of current problems but will be back, that the
wells have inherent value that "just needs to be developed later," --
and by directing the owners to sign security bonds with a third-party
company (in order to cover state liability requirements).
Most of the property owners are functionally illiterate, and by all
accounts, each was led to believe that they were purchasing an
insurance policy on the well when in fact they were purchasing a
surety bond which would have to be repaid if executed.
In particular, one of these bonds is issued to a pair of property
owners who are senior citizens.
Twenty-some years later, one of the wells on said seniors property--
the surviving widow is in her mid-80s and senile-- is uncapped and
causes damages due to the negligent actions of yet another party.
The state EPA conducts emergency cleanup, invokes the bond, bond
company pays without further research, and bills the surviving senior
widow.
QUESTIONS
Is the surviving widow responsible for this expense?
Does the widow have legal recourse against any party in this case?
THANKS.
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Aid,
...
SUMMARY: Oil exploration company drills various failed wells in KY
county, abandons them, convincing the property owners to take out
bonds to cover liability for the wells (instead of paying to close
them itself). These bonds are represented as "insurance" to the
mostly illiterate property-holders. Eventually, one of these
abandoned wells explodes, leaving property-holder with liability.
Bond issuer then tries to collect.
Twenty-some years later, one of the wells on said seniors property--
the surviving widow is in her mid-80s and senile-- is uncapped and
causes damages due to the negligent actions of yet another party.
The state EPA conducts emergency cleanup, invokes the bond, bond
company pays without further research, and bills the surviving senior
widow.
QUESTIONS
Is the surviving widow responsible for this expense?
Does the widow have legal recourse against any party in this case?
You clearly state that the problems were the result of the negligent
actions of yet another party. You seem to be ignoring this simple answer to
your question. Find this party and pursue them. All of your post suggests
that you're not going after the right party. The bond "scam" has nothing to
do with this problem.
Good luck,
Dave M.
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On Apr 17, 8:20=A0am, kylegal...@gmail.com wrote:
SUMMARY: =A0Oil exploration company drills various failed wells in KY
county, =A0abandons them, =A0convincing the property owners to take out
bonds to cover liability for the wells (instead of paying to close
them itself). =A0These bonds are represented as "insurance" to the
mostly illiterate property-holders. =A0Eventually, =A0one of these
abandoned wells explodes, =A0leaving property-holder with liability.
Bond issuer then tries to collect.
QUESTIONS
Is the surviving widow responsible for this expense?
Does the widow have legal recourse against any party in this case?
While IANAL, one thing is certain, the Surety Bond company isn't a
party to any fraud (if what you're thinking is that they sure eat the
loss). They, in good faith, issued a surety bond, and expect to be
paid. Just compare this to a home mortgage pool. You, as a private
investor, buy, say, $25,000 worth of bundled mortgage bonds for your
IRA. You expect to be paid accrued interest plus return of principle
over the life of the mortgages in the pool. You don't care that some
76 year-old widow is complaining that she "didn't understand" that she
was taking out a mortgage on her house. You bought into the mortgage
pool in good faith, and all the documentation on file verifies that
your bond is backed by legally drawn and signed home mortgages. You
are not a party to the circumstances under which a mortgage was
originated; rather, all you know is that you own a piece of the loan,
and you expect to be paid off either monthly by the borrower or upon
sale (or foreclosure) of the property.. The Surety Bond company is in
the same situation in this case.
Clearly if there's anybody to go after, it's those who she claimed
told her she was purchasing a liability policy, and even if you do
find them, good luck in proving your case. From my legal education
from Judge Wapner, Judge Joe Brown, and Judge Judy, I can just imagine
how their lawyers will try to beat down any of your
"misunderstandings" concerning what you were buying. And I'm also
sure they will deny the allegation that they had no intention of ever
resuming drilling (it'll probably be that "circumstances changed" or
"I don't recall why we never came back.").
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