J & L Family, L.L.C. v. BHP Billiton Petroleum Props. ( N.A.), L.P
J & L Family, L.L.C. v. BHP Billiton Petroleum Props. ( N.A.), L.P
Opinion of the Court
*618Before the Court is Defendants' Motion for Partial Summary Judgment. [Record Document 48]. Defendants, BHP Billiton Petroleum Properties (N.A.), L.P., Petrohawk Energy Corporation, BHP Billiton Petroleum (KCS Resources), L.L.C., and BHP Billiton Petroleum (TxLa Operating) Company (collectively "BHP") seek summary judgment on several narrow issues related to the availability of attorney fees: (1) Plaintiff's claim for penalties and attorney fees under La. R.S. 31:212.21 -.23; (2) Plaintiff's claim for contract fraud and associated attorney fees; (3) Plaintiff's claim for attorney fees for tort fraud; and (4) Plaintiff's claim for attorney fees under La. R.S. 31:212.31. For the reasons discussed below, the Court GRANTS BHP's motion and DISMISSES WITH PREJUDICE each of these four claims.
I. Background
A. Factual Background
While there are numerous factual disputes between BHP and Plaintiff, J & L Family, L.L.C. ("J & L"), both parties agree on the facts relevant to this motion. [Record Documents 48-1 and 58-1]. J & L owns land that lies within two drilling units-the Jestma Unit and the Powers Unit-created by the Louisiana Commissioner of Conservation ("Commissioner"), but J & L's interest is not subject to any oil and gas lease. [Record Documents 48-1 at 1-2 and 58-1 at 1-2]. BHP operates wells on the drilling units. [Record Documents 48-1 at 2 and 58-1 at 2-3]. J & L and BHP have neither signed formal contracts concerning the wells nor executed division orders, formal joint operating agreements, or formal marketing election letters. [Record Documents 48-1 at 3 and 58-1 at 3]. Instead, the parties' relationship is controlled by statute such that BHP is required to pay J & L its pro rata share of the proceeds from the sale of the oil and gas extracted from the units. [Record Documents 1-2 at 5, 10, 12 and 5 at 2]. See
B. Procedural Background
J & L filed suit alleging the following: (1) that BHP's regular reports to J & L regarding production from the units did not satisfy statutory requirements, (2) that BHP improperly sought operating expenses from J & L, (3) that BHP improperly calculated J & L's ownership interest, (4) that BHP failed to properly pay J & L its pro rata share of revenues, and (5) that BHP engaged in fraudulent conduct in its dealings with J & L. [Record Document 1-2 at 3-15]. Of particular relevance to the instant motion, J & L sought attorney fees "based upon [BHP's] fraudulent actions," as well as under La. R.S. 31:212.21 -.23, La. R.S. 31:212.31, and "other applicable provisions of the Louisiana Mineral Code." [Record Document 1-2 at 16]. Both parties moved for partial summary judgment on the issue of whether BHP had adequately complied with the reporting requirements of La. R.S. 30:103.1 -.2. [Record Documents 12 and 22]. Following oral argument, the Court denied the motions, finding that unresolved questions of fact precluded summary judgment. [Record Document 57].
*619Shortly before oral argument, BHP filed the instant motion seeking partial summary judgment on the issue of J & L's ability to recover attorney fees. [Record Document 48].
II. Summary Judgment Standard
Federal Rule of Civil Procedure 56(a) directs a court "to grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law."
Summary judgment is always appropriate "where the only issue before the court is a pure question of law." Sheline v. Dun & Bradstreet Corp. ,
III. Law and Analysis
A. Penalties and Attorney Fees Under La. R.S. 31:212.21 -.23
The Louisiana Mineral Code provides for penalties and, in certain instances, attorney fees when a mineral lessee fails to timely pay royalties or other production payments to the "owner of a mineral production payment or a royalty owner other than a mineral lessor."
Although it is not clear that an unpublished Fifth Circuit opinion necessarily binds this Court,
Adams does not fall within the scope of Sections 31.212.21-.23 because he is not a "purchaser of a mineral production payment." Rather, he is an unleased mineral interest owner. While Adams is correct that a section's title does not constitute part of the law, it does provide some aid in interpreting legislative intent where the language of the statute is unclear. Section 31:212.21 merely states that it covers "the owner of a mineral production payment or a royalty owner." "[O]wner" could refer to a party who recently purchased a production payment or to someone who acquired the production payment through some other means. Because Section 31:212.21 is ambiguous as to the parties encompassed within the statute, we examine the title of that section of the Mineral Code to determine the scope of the statute. Based on the title to Sections 31:212[.21]-[.]23, it is apparent that Sections 31:212.21-.23 were intended to cover the "purchasers of mineral product payments." Accordingly, Adams may not bring a claim pursuant to Sections 31:212.21-.23.
As a result, because J & L has not purchased the stream of revenue from the production on the units, Sections 31:212.21-.23 do not apply to J & L's interest. Therefore, J & L is entitled to neither statutory penalties nor attorney fees. Hence, the Court grants BHP's motion for summary judgment on this issue.
B. Attorney Fees for Contract Fraud
BHP argues that, as there was no contract between J & L and BHP, J & L has no cause of action for contract fraud and so cannot recover the attorney fees available in an action to rescind a contract on the basis of fraud. [Record Document 48-2 at 4-6]. In response, J & L appears to concede that there is no contract between J & L and BHP, but argues that attorney fees should still be available for BHP's alleged breach of its duty to deal fairly with J & L. [Record Documents 58 at 5-8 and 62 at 5-6]. J & L argues on the basis of the recent Louisiana Supreme Court decision in Stutts v. Melton , 2013-0557 (La. 10/15/13);
1. Availability of Attorney Fees Under Article 1958
The parties agree that the wells at issue were drilled pursuant to the Commissioner's compulsory pooling power and that the parties have executed no formal contracts. [Record Documents 48-1 at 1-3 and 58-1 at 2-3]. The Louisiana Civil Code provides: "The party against whom rescission is granted because of fraud is liable for damages and attorney fees." La. Civ. Code. Ann. art. 1958 (2008). Here, however, no contract was ever formed between BHP and J & L; therefore, there is nothing to rescind. On this basis, BHP argues that it cannot be liable for attorney fees under Article 1958. [Record Document 48-2 at 7]. J & L essentially concedes that on its face Article 1958 does not apply to J & L's noncontractual obligee-obligor relationship *621with BHP. [Record Document 58 at 7 and 62 at 5]. Therefore, because there is no contract between BHP and J & L, attorney fees are not available under the strict terms of Article 1958.
2. Availability of Attorney Fees for Actions in Quasi-Contract
Aware that it is not in privity of contract with BHP, J & L characterizes their relationship as quasi-contractual and argues that attorney fees should be available by analogy to Article 1958's provision of attorney fees in the context of a contract. [Record Document 62 at 5]. In Louisiana, attorney fees are available only when "authorized by statute or contract." Sher v. Lafayette Ins. Co. , 2007-2441, p. 18 (La. 4/8/08);
3. Availability of Attorney Fees Under Stutts v. Melton
J & L also argues that Stutts v. Melton grants courts authority to craft an "equitable remedy" of attorney fees where the statute authorizing the cause of action does not expressly provide for fee recovery, but an analogous statute does. [Record Document 58 at 5-8]. Because Mineral Code provisions applicable to other obligee-obligor relationships provide for fee recovery, J & L maintains that equity requires the Court to award attorney fees on the basis of an analogy between those relationships and that of J & L as an unleased mineral interest owner to BHP as the unit operator. [Record Document 58 at 7-8].
In Stutts , the defendants committed fraud by misrepresenting the condition of the roof of a home that they sold. 2013-0557, p. 8;
To determine the substantive law of Louisiana, the Fifth Circuit has instructed courts to look first to "final decisions of the Louisiana Supreme Court." In re Katrina Canal Breaches Litig. ,
[W]e must make an Erie guess and determine, in our best judgment, how that court would resolve the issue if presented with the same case. In making an Erie guess, we must employ Louisiana's civilian methodology, whereby we first examine primary sources of law: the constitution, codes, and statutes. Jurisprudence, even when it rises to the level of jurisprudence constante, is a secondary law source in Louisiana. Thus, although we will not disregard the decisions of Louisiana's intermediate courts unless we are convinced that the Louisiana Supreme Court would decide otherwise, we are not strictly bound by them.
Thus, the Court must first determine whether Stutts provides an answer to the present question. As discussed above, the literal language of Article 1958 authorizes recovery of attorney fees only when a fraudulent contract is rescinded. La. Civ. Code Ann. art. 1958. A careful reading of Stutts reveals that the availability of attorney fees in the context of fraud where a plaintiff does not seek rescission turns upon whether the plaintiff "under the facts of th[e] case and the findings of the trial court ... would have been entitled to [rescission]." Stutts , 2013-0557, p. 9;
In the alternative, the Court will consider a broader reading of Stutts suggested by J & L's position. In Stutts , the Louisiana Supreme Court applied the law of sales by analogy to a cause of action that arose as a result of a sale but that was brought under the law of conventional obligations. Id. at p. 7;
Following the procedure established by the Fifth Circuit, the Court looks first to primary sources of Louisiana law. See La. Civ. Code Ann. art. 1 (2013) ("The sources of law are legislation and custom."). Under the Civil Code, "[o]bligations arise from contracts and other declarations of will. They also arise directly from the law, regardless of a declaration of will, in instances such as wrongful acts, the management of the affairs of another, unjust enrichment and other acts or facts."
A sale is a nominate contract; the rules of conventional obligations thus apply wherever they are not superseded by provisions specific to the law of sales.
This finding is supported by the persuasive authority of the Louisiana Third Circuit's Anderson decision. In Anderson v. Moreno Air Conditioning, Inc. , the court of appeal rejected an argument that Stutts authorizes attorney fees in an action to recover damages resulting from a lessee's allegedly fraudulent conduct. 2014-27, pp. 3, 12-13;
Additionally, in Louisiana, "the award of attorney fees is exceptional and penal in nature;" hence, attorney fee statutes must be strictly construed. Frank L. Beier Radio, Inc. v. Black Gold Marine, Inc. ,
Therefore, the Court finds that Stutts does not allow this Court to apply the fee recovery provisions available for contract fraud or for wrongdoing in the context of different obligee-obligor relationships to the alleged wrongdoing in the quasi-contractual relationship between J & L and BHP. The Court thus grants BHP's motion as it pertains to J & L's claim of entitlement to attorney fees whether under Article 1958 directly, by analogy to Article 1958, or by analogy to provisions in the Mineral Code.
C. Attorney Fees for Tort Fraud
J & L has alleged that BHP has engaged in tortious misrepresentations actionable under La. C.C. art. 2315 and seeks to recover both damages and attorney fees. [Record Document 1-2 at 13-15]. BHP argues that attorney fees are not recoverable in tort barring express statutory authorization. [Record Document 48-2 at 7]. J & L has not responded to this argument. [Record Documents 58 and 62].
Because Article 2315 does not expressly provide for attorney fees, Louisiana courts have held that attorney fees are not available in tort actions. See Hoffman v. 21st Century N. Am. Ins. Co. , 2014-2279, p. 8 (La. 10/2/15);
D. Attorney Fees Under La. R.S. 31:212.31
J & L seeks attorney fees under a statute requiring that payments to mineral interest owners include specific information on the check stub. [Record Document 1-2 at 16]. As it does with J & L's claim for attorney fees for BHP's alleged tortious misrepresentation, BHP argues that the Court cannot award attorney fees because fee recovery is available only when authorized by contract or statute. [Record Document 48-2 at 6-7]. J & L has not responded to BHP's arguments in any subsequent filing. [Record Documents 58 and 62]. Because the text of the check stub statute does not provide for attorney fees, see
E. Louisiana Unfair Trade Practices Act ("LUTPA") Claims
In its opposition, J & L argues that attorney fees are recoverable "under alternative theories of recovery which apply to the facts that support delictual recovery under Article 2315." [Record Document 58 at 8]. J & L then argues that attorney fees are available under LUTPA, see
IV. Conclusion
Therefore, in light of the foregoing, the Court GRANTS BHP's Motion for Partial Summary Judgment, [Record Document 48], on each claim raised in its motion: (1) J & L's claim for penalties and attorney fees under La. R.S. 31:212.21 -.23; (2) J & L's claim for contract fraud and associated attorney fees; (3) J & L's claim for attorney fees for tort fraud; and (4) J & L's claim for attorney fees under La. R.S. 31:212.31.
The Court declines to consider whether J & L has properly pleaded a cause of action under LUTPA.
IT IS FURTHER ORDERED that the claims on which summary judgment has been granted are DISMISSED WITH PREJUDICE .
THUS DONE AND SIGNED , in Shreveport, Louisiana this 6th day of February, 2018.
Rule 56 was amended effective December 1, 2010. Per the comments, the 2010 amendment was intended "to improve the procedures for presenting and deciding summary judgment motions and to make the procedures more consistent with those already used in many courts. The standard for granting summary judgment remains unchanged." Therefore, the case law applicable to Rule 56 prior to its amendment remains authoritative, and this Court will rely on it accordingly.
In the Fifth Circuit, unpublished decisions issued prior to January 1, 1996 are precedent. 5th Cir. R. 47.5.3. However, unpublished opinions issued on or after January 1, 1996 are not precedent except in limited circumstances such as res judicata, collateral estoppel, and law of the case, none of which are applicable here. 5th Cir. R. 47.5.4.
J & L attempts to distinguish Anderson by arguing that because the court went on to find that no fraud had been committed, the principle of law articulated by the court regarding the application of Stutts can be ignored. [Record Document 62 at 6]. While J & L is correct that the Third Circuit's ultimate holding was that fraud had not been committed, the court expressly found Stutts inapplicable:
We find Stutts , which involved a purchase agreement, is not applicable to this case based on the trial court's determination that the relationship between the Estates and MACI was "under a verbal month-to-month lease." This case is governed by the long line of cases in which Louisiana courts have long held that attorney fees are not allowed except where authorized by statute or contract.
Anderson , 2014-27, p. 13;
Reference
- Full Case Name
- J & L FAMILY, L.L.C. v. BHP BILLITON PETROLEUM PROPERTIES (N.A.), L.P
- Cited By
- 7 cases
- Status
- Published