State v. La. Land & Exploration Co.

• Decision Date: 06 May 2020
• Docket Number: 19-248
• Citation: 298 So.3d 296
• Parties: STATE of Louisiana, et al. v. LOUISIANA LAND & EXPLORATION CO., et al.
• Court: Court of Appeal of Louisiana — District of US

298 So.3d 296

STATE of Louisiana, et al.
v.
LOUISIANA LAND & EXPLORATION CO., et al.

19-248

Court of Appeal of Louisiana, Third Circuit.

May 6, 2020

Thomas E. Balhoff, Rodell, Parsons, Koch, Blache, Balhoff & McCollister, A Law Corporation, 8440 Jefferson Hwy., Suite 301, Baton Rouge, LA 70809, (225) 929-7033, COUNSEL FOR DEFENDANT/APPELLEE: Louisiana Department of Natural Resources

Russell K. Zaunbrecher, Edwards, Stefanski & Zaunbrecher, P.O. Drawer 730, Crowley, LA 70527-0730, (337) 783-7000, COUNSEL FOR PLAINTIF/ APPELLANT: Vermilion Parish School Board State of Louisiana

K. Wade Trahan, Ottinger Hebert, L.L.C., P. O. Drawer 52606, Lafayette, LA 70505-2606, (337) 232-2606, COUNSEL FOR DEFENDANT/APPELLEE: Chevron U.S.A., Inc., Union Oil Company of California, Chevron Midcontinent, L.P., Carrollton Resources, LLC, Union Exploration Partners, LP

Michael R. Phillips, Louis M. Grossman, Claire E. Juneau, Jeffrey J. Gelpi, Kean Miller, LLP, 909 Poydras Street, Suite 3600, New Orleans, LA 70112, (504) 585-3050, COUNSEL FOR DEFENDANT/APPELLEE: Chevron U.S.A., Inc., Union Oil Company of California, Chevron Midcontinent, L.P., Carrollton Resources, LLC, Union Exploration Partners, LP

L. Victor Gregoire, Alan J. Berteau, Kean Miller, LLP, 400 Convention Street, Suite 700, Baton Rouge, LA 70802, (225) 387-0999, COUNSEL FOR DEFENDANT/APPELLEE: Chevron U.S.A., Inc., Union Oil Company of California, Chevron Midcontinent, L.P., Carrollton Resources, LLC, Union Exploration Partners, LP

Grady J. Abraham, Attorney at Law, 5040 Ambassador Caffery Parkway, Lafayette, LA 70508, (337) 234-4523, COUNSEL FOR PLAINTIFF/APPELLANT: Vermilion Parish School Board, State of Louisiana

Jerold Edward Knoll, The Knoll Law Firm, L.L.C., 233 South Main Street, Marksville, LA 71351, (318) 253-6200, COUNSEL FOR PLAINTIFF/APPELLANT: State of Louisiana, Vermilion Parish School Board

Ryan M. Seidemann, Assistant Attorney General, P. O. Box 94005, Baton Rouge, LA 70804-9005, (225) 326-6085, COUNSEL FOR PLAINTIFF/APPELLANT: State of Louisiana

Donald T. Carmouche, Victor L. Marcello, John H. Carmouche, William R. Coenen, III, Brian T. Carmouche, Todd J. Wimberley, Ross J. Donnes, D. Adele Owen, Leah C. Poole, Caroline H. Martin, Christopher D. Martin, Talbot, Carmouche & Marcello, 17405 Perkins Road, Baton Rouge, LA 70810, (225) 400-9991, COUNSEL FOR PLAINTIFF/APPELLANT: Vermilion Parish School Board State of Louisiana

Kathy S. Boudreaux, Attorney at Law, 220 S. Jefferson Street, Abbeville, LA 70510, (337) 898-5777, COUNSEL FOR PLAINTIFF/APPELLANT: Vermilion Parish School Board, State of Louisiana

Robert E. Meadows, Carol M. Wood, Andrew M. Stakelum, King & Spalding LLP, 1100 Louisiana, Suite 4000, Houston, TX 77002, (713) 751-3200, COUNSEL FOR DEFENDANT/APPELLEE: Chevron U.S.A., Inc., Union Oil Company of California, Chevron Midcontinent, L.P., Carrollton Resources, LLC, Union Exploration Partners, LP

Court composed of John D. Saunders, Elizabeth A. Pickett, and Van H. Kyzar, Judges.

SAUNDERS, Judge.

298 So.3d 300

This case involves the State of Louisiana (the state) and the Vermilion Parish School Board (VPSB) suing various defendants invcluding Union Oil Company of California (Unocal) seeking remediation of the Sixteenth Section School Lands in Vermilion Parish. The land is owned by the State and is managed by VPSB.

Unocal admitted it was responsible for environmental damage to the property under the 2006 version of La.R.S. 30:29, i.e., Act 312. This admission was specifically for the purpose of Act 312's goal of assuring that funds awarded for damaged property were used to actually repair the property to a suitable status under state environmental regulations. This admission by Unocal was not an admission relative to any damage claims brought against it. In May of 2015, a jury returned a verdict awarding damages to the plaintiffs in addition to remediation. In accordance with the 2006 version of La.R.S. 30:29, the matter

298 So.3d 301

was referred to the Louisiana Department of Natural Resources, Office of Conservation (LDNR), for a public hearing. LDNR rejected both parties’ plans and structured its own plan, which was subsequently adopted by the trial court. The initial cost estimate for the Plan was $1,411,190.00.

Additionally, the jury found Unocal strictly liable for damage to the lands and awarded $1,500,000.00. The jury denied plaintiffs’ remaining claims. Both Unocal and VPSB appeal.

FACTS AND PROCEDURAL HISTORY

VPSB on its behalf, and that of the state, filed a petition for damages to Sixteenth Section School Lands on September 2, 2004, seeking damages and remediation of property owned by the state and managed by VPSB. The property at issue was allegedly polluted by oil and gas exploration and production performed pursuant to an oil, gas, and mineral lease originally granted on the property in 1935 and a surface lease granted in 1994. The plaintiffs claim damages to the land's soil, surface waters, and ground waters.

The plaintiffs urge various causes of action in their petition including negligence, strict liability, unjust enrichment, trespass, breach of contract, and other violations of both the Mineral Code and the Civil Code. The plaintiffs seek money damages for a comprehensive evaluation of the contamination of the property, remediation of the property, diminution in the property's value, mental anguish, and inconvenience. Further, the plaintiffs seek punitive and stigma damages.

Several defendants were named in the original petition and in supplemental and amending petitions as companies which conducted, directed, controlled, or participated in various oil and gas exploration and production activities as operators and/or working interest owners, and/or joint venturers in the East White Lake Field. The defendants are: Unocal, Carrollton Resources, LLC, Chevron, U.S.A., Inc. ("Chevron, U.S.A."), and Chevron Midcontinent, L.P.

The defendants removed the matter to federal court in the Western District of Louisiana based on diversity jurisdiction under 28 U.S.C. § 1332. VPSB filed motions to remand, arguing that diversity jurisdiction does not exist because the state is a plaintiff. The district court denied the motions to remand because it concluded that the state is a nominal party with no real interest in the controversy. After denying the motions to remand, the district court granted the plaintiffs permission to immediately appeal the decision under the authority 28 U.S.C. § 1292(b).

The plaintiffs filed an appeal with the United States Fifth Circuit. The Fifth Circuit concluded that "the State of Louisiana is a real party in interest ... the presence of which defeats diversity jurisdiction." The court reversed the order of the district court and remanded the matter to federal district court with instructions to remand the entire case to state court.

Thereafter, for purposes of Act 312 of 2006, under La.R.S. 30:29(C), Unocal admitted that it was responsible for environmental damage on the property and filed a motion to refer the case to the LDNR as required by the Act. The plaintiffs objected, arguing that such a referral to LDNR could not take place until all the defendants admitted responsibility, and the private claims were tried by a jury. The trial court agreed with the plaintiffs. Unocal sought writs in this court and the supreme court. These writ applications were denied.

On October 28, 2008, defendants filed a peremptory exception of prescription, noting that VPSB's tort claims are untimely

298 So.3d 302

and barred. In response, VPSB filed a motion to refer prescription to the merits. VPSB argued at the time that the evidence necessary to prove the case is the same as that to prove entitlement to relief. Accordingly, according to VPSB, although issues of prescription are ordinarily decided by a court prior to trial, this case fell into an exception for cases where "the evidence on the merits and on prescription is intertwined, and where judicial resources would be wasted by holding separate trials on the prescription exception and the merits." VPSB urged the Court to defer defendants’ exceptions of prescription to the merits of the case. Further, VPSB pointed out that the state was a party to the proceedings, and prescription does not run against the state.

On June 1, 2009, the trial court granted the VPSB's motion. Thus, it deferred the exception of prescription to after the trial on the merits.

Unocal then filed a motion for partial summary judgment limiting the plaintiffs’ remediation damage claims to the amount needed to fund the "feasible plan" mandated by Act 312. Unocal argued that Act 312 acts as a substantive cap on remediation damages resulting from a tort or the implied restoration obligation of a mineral lease. The trial court agreed.

The plaintiffs filed a writ application to this court on this issue. While the writ application was under consideration, the plaintiffs filed a motion in the trial court seeking to have Act 312 declared unconstitutional as applied. The trial court denied this motion and this court, likewise, denied a writ on the constitutionality of Act 312,...