Chevron Usa, Inc. v. Vermillion Parish School Bd.

• Decision Date: 29 January 2001
• Docket Number: Civil Action No. 00-0281.,Civil Action No. 00-0295.,Civil Action No. 00-0297.,Civil Action No. 00-0282.,Civil Action No. 00-0279.,Civil Action No. 00-0296.,Civil Action No. 00-0280.
• Citation: 128 F.Supp.2d 961
• Parties: CHEVRON USA, INC. v. VERMILLION PARISH SCHOOL BOARD Texaco, Inc., et al v. Vermillion Parish School Board Amerada Hess Corp. v. Vermillion Parish School Board Union Oil Co. of California v. Vermillion Parish School Board Mobil Oil Corp., et al v. Vermillion Parish School Board Exxon Mobil Corp. v. Guidry Exxon Mobil Corp. v. Vermilion Parish School Board
• Court: U.S. District Court — Western District of Louisiana

128 F.Supp.2d 961

CHEVRON USA, INC. v. VERMILLION PARISH SCHOOL BOARD

Texaco, Inc., et al v. Vermillion Parish School Board

Amerada Hess Corp. v. Vermillion Parish School Board

Union Oil Co. of California v. Vermillion Parish School Board

Mobil Oil Corp., et al v. Vermillion Parish School Board

Exxon Mobil Corp. v. Guidry

Exxon Mobil Corp. v. Vermilion Parish School Board

Civil Action No. 00-0279.

Civil Action No. 00-0280.

Civil Action No. 00-0281.

Civil Action No. 00-0282.

Civil Action No. 00-0295.

Civil Action No. 00-0296.

Civil Action No. 00-0297.

United States District Court, W.D. Louisiana, Lafayette-Opelousas Division.

January 29, 2001.

John M. Wilson, Cheryl M. Kornick, Jonathan A. Hunter, Liskow & Lewis, New Orleans, LA, for Chevron USA, Inc.

Joe B. Norman, Stevia M. Walther, Endya E. Delpit, Liskow & Lewis, New Orleans, LA, David R Dugas, Jeffrey M Baudier, Caffery Oubre et al, Lafayette, LA, for Texaco, Inc. Lawrence P. Simon, Jr., Charles B. Griffis, Liskow & Lewis, Lafayette, LA, for Amerada Hess Corp.

Howell A. Dennis, Jr., Strain Dennis et al, Lafayette, LA, William Seay Strain, Thomas C. McKowen, IV, Strain Dennis et al, Baton Rouge, LA, Gerri M. Fore, Exxon Co U S A, Houston, TX, for Exxon Mobil Corp.

Bob Forrest Wright, Domengeaux Wright et al, Lafayette, LA, Calvin E. Woodruff, Jr., Abbeville, Jules B. LeBlanc, III, Charles S. Lambert, Jr., LeBlanc Maples & Waddell, Baton Rouge, LA, Spencer Hosie, John B. McArthur, Hosie Frost et al, San Francisco, CA, William F. Large, Hosie Frost et al, Anchorage, AK, Michael V. Ardoin, Robert K. Hammack, Lafayette, for School Board Vermilion Parish, Marshall W. Guidry.

MEMORANDUM RULING

MELANCON, District Judge.

Before the Court are Cross Motions For Partial Summary Judgment, filed by plaintiffs Chevron USA, Inc. [doc. no. 22]; Texaco, Inc. [doc. no. 22]; Amerada Hess Corporation [doc. no. 23]; Union Oil Company of California [doc. no. 23]; Mobil Oil Corporation [doc. no. 39]; and, Exxon Mobil Corporation [doc. no. 28] (hereinafter collectively referred to as "the Oil Companies") and the Vermilion Parish School Board [doc. no. 25]; [doc. no. 27]; [doc. no. 28]; [doc. no. 27]; [doc. no. 43]; and [doc. no. 34], respectively, as well as Cross Motions For Partial Summary Judgment filed by plaintiff Exxon Mobil Corporation [doc. no. 26] and Marshall W. Guidry [doc. no. 32] (the Vermilion Parish School Board and Marshall W. Guidry will hereinafter be referred to as "the Royalty Owners"). As the central issues in each of the foregoing motions are identical, the Court will address all of the motions in this ruling.¹ For the reasons that follow, the Oil Companies' motions will be granted and the Royalty Owners' motions will be denied.

I. Background

By individual letters, the Royalty Owners made demands upon the Oil Companies pursuant to the Louisiana Mineral Code, on behalf of the Royalty Owners and "all similarly situated royalty owners" for additional royalties on natural gas liquids which they alleged the Oil Companies had underpaid pursuant to mineral leases executed by the Royalty Owners and the Oil Companies (the "Liquids Demand"). By individual letters, the Oil Companies responded to the Liquids Demand. (Id. at ¶ 4). Subsequently, by individual letters, the Royalty Owners made demands upon the Oil Companies pursuant to the Louisiana Mineral Code, on behalf of the Royalty Owners and "all similarly situated royalty owners" for additional royalties on dry natural gas which they alleged the Oil Companies had underpaid pursuant to mineral leases executed by the Royalty Owners and the Oil Companies (the "Dry Gas Demand"). The Oil Companies responded to the Dry Gas Demand by individual letters. The Oil Companies filed the instant actions for declaratory judgment pursuant to Title 28 of the United States Code section 2201, et seq. based on the Liquids Demand, and amended their complaints to include the Dry Gas Demand. The Royalty Owners filed answers to the Oil Companies' complaints and amended complaints as well as counterclaims against the Oil Companies on behalf of the Royalty Owners individually and as representative of a class of all others similarity situated on the "Liquids Demand" and the "Dry Gas Demand."

II. Summary Judgment Standard

A motion for summary judgment shall be granted if the pleadings, depositions, and affidavits submitted show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. Fed R.Civ.P. 56. Once the movant produces such evidence, the burden shifts to the respondent to direct the attention of the court to evidence in the record sufficient to establish that there is a genuine issue of material fact requiring a trial. Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). The responding party may not rest on mere allegations made in the pleadings as a means of establishing a genuine issue worthy of trial. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248-49, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). If no issue of fact is presented and if the mover is entitled to judgment as a matter of law, the court is required to render the judgment prayed for. Id. Before it can find that there are no genuine issues of material fact, however, the court must be satisfied that no reasonable trier of fact could have found for the non-moving party. Id.

III. Analysis

The issues before the Court are (1) whether the demand letters submitted by the Royalty Owners pursuant to the Louisiana Mineral Code constitute the required written notice for a class of complainants, the "putative class" and (2) whether the contents of the demand letters were adequate or sufficient to put the Oil Companies on notice of the claims of the Royalty Owners individually, as well as the putative class. The parties agree that these issues present no questions of fact, but rather are legal issues which are appropriate for determination by summary judgment at this stage of the proceedings.

A. The Notice Requirement of the Louisiana Mineral Code

The Oil Companies contend that because Louisiana Revised Statute 31:137 requires individual lessors to make an individual demand in the lessor's individual name, the use of a "class action" demand letter is insufficient to satisfy the requirements of 31:137.² The Oil Companies further contend that, to the extent that the rules governing class actions permit such an interpretation, they are in conflict with the Mineral Code. The Oil Companies assert, therefore, that the demand letters sent to the Oil Companies by the Royalty Owners individually and as representative of a class of similarly situated royalty owners, purporting to make demand for the underpayment of liquid gas and dry gas royalties on production in Louisiana were not an adequate pre-litigation demand as to the unnamed class members.

"The applicable law as to notice and demand is set forth in the Louisiana Mineral Code. Louisiana Revised Statute 31:137 et seq. establishes the procedure to be followed by a mineral lessor seeking the proper payment of royalties. Article 137 provides that, `[i]f a mineral lessor seeks relief for the failure of his lessee to make timely or proper payment of royalties, he must give his lessee written notice of such failure as a prerequisite to a judicial demand for damages or dissolution of the lease.' When the written notice has been given, the provisions of article 138 become applicable. This provision affords the mineral lessee thirty (30) days after receipt of the required notice within which to pay the royalties due or to respond, in writing, by stating a reasonable cause for non-payment. Under article 139, if the lessee pays the royalties demanded within thirty (30) days after receipt of the lessor's written notice, the remedy of dissolution becomes unavailable to the lessor, unless the lessee fraudulently withheld payment. Under article 140, if the lessee fails to pay royalties due or fails to inform the lessor of a reasonable cause for failure to pay in response to the notice, the court may award as damages double the amount of royalties due, interest on that sum from the date due, and a reasonable attorney's fee, regardless of the cause for the original failure to pay royalties. The court may, in its discretion, dissolve the lease." Lewis v. Texaco Exploration and Production Co., Inc., 698 So.2d 1001, 1008 (La.App. 1 Cir. 1997).

"The Official Comment to 31:137³ states `[i]t is the intent of [Mineral Code] Articles 137 [through] 141 to provide lessors with a meaningful remedy while simultaneously giving operators who have made substantial investments in producing properties the security of title which the nature and size of their investment deserves.' These provisions provide lessors with some meaningful remedy, besides recovery of interest, to assure timely payment of the production royalties, and are balanced with the harshness of lease cancellation, which may involve the investment of millions of dollars. The Comment further notes that 31:137 does not intend that this notice be a demand for performance, as in the case of the traditional default under the Louisiana Civil Code, since the lessor may not desire performance. Rather, the device of notice is merely to inform the lessee he has not paid royalties deemed by the lessor to be due. The total effect of the articles is to provide an impetus to timely payment of royalties due, while giving lessees a reasonable way in which to avoid the harsh remedy of cancellation. It also affords the lessee an opportunity to evaluate a non-payment situation and to make a decision regarding whether the royalties allegedly due should be paid." Id. at 1009.

"This statutory scheme evidences a legislative determination that a mineral lessor does not have a right of action to judicially complain of the failure of his lessee to make timely or proper payments of royalties until he gives written...