Denbury Onshore, L.L.C. v. Pucheu
| Decision Date | 11 March 2009 |
| Docket Number | No. 2008-1210.,2008-1210. |
| Citation | 6 So.3d 386 |
| Parties | DENBURY ONSHORE, L.L.C. v. Jean Fontenot PUCHEU, et al. |
| Court | Court of Appeal of Louisiana — District of US |
Joseph C. Giglio, Jr., Liskow & Lewis, Lafayette, Louisiana, for Plaintiffs/Appellees, Denbury Onshore, L.L.C. Suncoast Land Services, Inc.
A.J. Gray, III, Bart R. Yakupzack, The Gray Law Firm, Lake Charles, Louisiana for Defendants/Appellees, Loris M. Davidson, Max D. Davidson, Inc., Janzen Family Trust, Robert C. Henderson, Stacey R. Henderson, Shirley Ann Henderson Van Dyke, Stephen Fred Gordon, Thomas C. Ross, III, Janet Ross Marberry, Diana Ross Steinmetz, Craig Lee Davidson, Mark D. Davidson, Stacey R. Henderson, Jr., Courtney Lawrence Russell, Shirley Gilbert Henderson, Robin C. Henderson, Kelly Henderson Nelson, Dana Henderson Norton.
Court composed of ULYSSES GENE THIBODEAUX, Chief Judge, JIMMIE C. PETERS, and MICHAEL G. SULLIVAN, Judges.
This concursus proceeding concerns the disbursement of oil and gas royalties attributable to production from a well situated in Jefferson Davis Parish, which occurred prior to a unit being established by the Office of Conservation. Lessors of the property on which the well is situated appeal the trial court's grants of summary judgment in favor of their lessee and their adjoining landowners and its denial of their motion for summary judgment. For the following reasons, we reverse.
In July 2003, Jean F. Pucheu and Germaine F. Rhodes (the Pucheus)1 granted an oil, gas, and mineral lease in favor SunCoast Land Services, Inc. (SunCoast). Their adjoining neighbors to the north, Loris M. Davidson, Max D. Davidson, Inc., Janzen Family Trust, Robert C. Henderson, Stacey R. Henderson, Shirley Ann Henderson Van Dyke, Stephen Fred Gordon, Thomas C. Ross, III, Janet Ross Marberry, Diana Ross Steinmetz, Craig Lee Davidson, Mark D. Davidson, Stacey R. Henderson, Jr., Courtney Lawrence Russell, Shirley Gilbert Henderson, Robin C. Henderson, Kelly Henderson Nelson, and Dana Henderson Norton (the Davidsons), also executed an oil, gas, and mineral lease in favor of SunCoast. SunCoast assigned the leases to Denbury Onshore, L.L.C. (Denbury).
On October 12, 2003, Denbury spudded a well, the (the well), on the Pucheus' property. In November, Denbury requested that the Pucheus execute an escrow agreement, which authorized it to escrow royalties that would accrue prior to unitization of the well and disburse the royalties in accordance with the unit order that would be issued by the Office of Conservation.
John and Jacque Pucheu are the sons of Jean F. Pucheu and shareholders in Fontenot-Pucheu, L.L.C. They are both attorneys and represented the Pucheus in the matters preceding this litigation. John McDaniel, a landman with Denbury, dealt with John and Jacque to get the escrow agreement executed. After John and Jacque discussed the escrow agreement with Mr. McDaniel and with SunCoast's landman, Jerry Thomas, the Pucheus executed the escrow agreement on December 5, 2003. The well was successfully completed on December 23, 2003. Denbury obtained permission from the Commissioner of Conservation to produce the well on a lease basis, and the well began producing gas and condensate for sale on December 31, 2003.
On January 14, 2004, Denbury filed a pre-application notice with the Commissioner of Conservation, advising of its intent to establish a unit for the Bol Perca Zone, Reservoir P, in the South Thornwell Field. The following day, a geologist hired by the Davidsons to monitor the drilling of the well and to protect their interests confirmed with Denbury that it had obtained an escrow agreement from the Pucheus. On February 6, 2004, Denbury filed an application with the Office of Conservation to establish the unit identified in its January 14, 2004 notice. On March 8, 2004, the Pucheus notified Denbury that, effective January 1, 2004, they revoked and canceled the escrow agreement and demanded immediate payment of all royalties attributable to pre-unitization production, together with penalties, interest, and attorney fees. The Office of Conservation issued Order No. 479-C-36, establishing the unit as requested on April 19, 2004. The Order provided that the unit was effective March 16, 2004.
Faced with possible claims by the Pucheus and the Davidsons for penalties, interest, and attorney fees for failing to timely and properly pay royalties, Denbury filed this concursus proceeding on April 7, 2004. It named the Pucheus and the Davidsons as defendants and deposited all disputed royalties into the registry of the court to allow the trial court to determine ownership of the deposited funds. Denbury asserted that it "had planned to distribute royalty proceeds in accordance with the [escrow] agreement believing both that it was authorized to do so by the Pucheus and that such treatment was fair to both sets of its lessors." Moreover, Denbury asserted that because of its escrow agreement with the Pucheus, it did not attempt to determine the precise distance between the bottom hole and the Davidsons' property until after receipt of the Pucheus' notice of revocation of the escrow agreement.
The Pucheus filed a reconventional demand, naming Denbury as defendant and SunCoast as third-party defendant. They claimed Denbury committed fraud and/or breached their lease because it did not notify them that the escrow agreement was not needed to obtain the production allowable and that Denbury made misrepresentations to them concerning the need for the escrow agreement. They asked for dissolution of the lease and/or 100% of the pre-unitization royalties, or, alternatively, statutory penalties under La.R.S. 31:139 and any other applicable law; attorney fees as provided in La.R.S. 31:139 and/or La.Civ.Code art. 1958; and if the escrow letter was found to be a valid contract, "damages arising from the loss of the disputed funds and for the inconvenience of having to litigate this matter."
Thereafter, all parties filed motions for summary judgment. Denbury and Sun-Coast filed a motion for summary judgment, seeking dismissal of the Pucheus' claims; the Pucheus filed a motion for partial summary judgment in which they seek a judgment declaring them to be the owners of all royalties attributable to production from the well for the period of December 31, 2003, and March 16, 2004; and the Davidsons filed a cross motion for summary judgment, seeking a judgment denying the Pucheus the right to revoke the escrow agreement on the basis that they detrimentally relied on the Pucheus' execution of the escrow agreement and did not take action to protect their interests. They also seek 40% of the pre-unitization production.
After a hearing, the trial court granted summary judgment in favor of Denbury and the Davidsons; it denied the Pucheus' motion for partial summary judgment. After the trial court issued its Reasons for Decision, but before a judgment in conformity with those Reasons was signed, Denbury filed two more motions for summary judgment pertaining to disbursement of the funds deposited in the concursus.
The Pucheus assign as error the trial court's grant of summary judgment in favor of Denbury, dismissing their claims for breach of lease, rescission of the escrow agreement, damages, and penalties and attorney fees for failure to timely pay royalties. They also assign as error the trial court's reliance on principles of equity to grant summary judgment in favor of the Davidsons and its refusal to strike Mr. McDaniel's affidavit that was filed in connection with Denbury's third motion for summary judgment.
A motion for summary judgment will be granted "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to material fact, and that mover is entitled to judgment as a matter of law." La.Code Civ.P. art. 966(B). Summary judgment is favored and shall be construed "to secure the just, speedy, and inexpensive determination of every action." La.Code Civ.P. art. 966(A)(2).
The mover bears the initial burden of proof to show that no genuine issue of material fact exists. La.Code Civ.P. art. 966(C)(2). However, if the mover will not bear the burden of proof at trial, he need not negate all essential elements of the adverse party's claim, but he must point out that there is an absence of factual support for one or more elements essential to the claim. Id. Once the mover has met his initial burden of proof, the burden shifts to the nonmoving party to produce factual support sufficient to establish that he will be able to satisfy his evidentiary burden at trial. Id.
Appellate courts review motions for summary judgments de novo, asking the same questions the trial court asks to determine whether summary judgment is appropriate. Champagne v. Ward, 03-3211 (La.1/19/05), 893 So.2d 773. This inquiry seeks to determine whether any genuine issue of material fact exists and whether the mover is entitled to judgment as a matter of law. La.Code Civ.P. art. 966(B).
A fact is material if it potentially insures or precludes recovery, affects a litigant's ultimate success, or determines the outcome of the legal dispute. A genuine issue is one as to which reasonable persons could disagree; if reasonable persons could reach only one conclusion, there is no need for trial on that issue and summary judgment is appropriate.
Hines v. Garrett, 04-806, p. 1 (La.6/25/04), 876 So.2d 764, 765-66 (citation omitted).
If issues regarding subjective facts are present, such as intent, knowledge, motive, malice, or good faith, a summary judgment determination is usually not appropriate. Murphy's Lease &...
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