Kihneman v. Humble Oil & Refining Company

• Decision Date: 31 March 1970
• Docket Number: Civ. A. No. 67-595.
• Citation: 312 F. Supp. 34
• Parties: William J. KIHNEMAN, Plaintiff, v. HUMBLE OIL & REFINING COMPANY, Defendant.
• Court: U.S. District Court — Eastern District of Louisiana

312 F. Supp. 34

William J. KIHNEMAN, Plaintiff, v. HUMBLE OIL & REFINING COMPANY, Defendant.

Civ. A. No. 67-595.

United States District Court, E. D. Louisiana, New Orleans Division.

March 31, 1970.

Russell J. Schonekas, New Orleans, La., for plaintiff.

William J. Kihneman, in pro. per.

H. H. Hillyer, Jr., R. King Milling, New Orleans, La., for defendant.

RUBIN, District Judge:

I. FINDINGS OF FACT

This suit, like a pride of others, was born when Humble Oil and Refining Company (Humble) sued Jack F. Harang (Harang), a Louisiana geologist, and named a number of other persons co-defendants. William J. Kihneman (Kihneman), one of the defendants, here seeks to recover damages for invasion of privacy, malicious prosecution, and defamation, all arising out of the filing of that suit.

Humble's complaint, filed in 1966,¹ claimed that Harang had entered into a secret arrangement with one of Humble's then trusted geologists by which the two had improperly profited from transactions with Humble. Humble contended that, in one instance (the Avondale Field), the proof of the arrangement was in writing and that Harang acted on his own behalf. Humble claimed that, in other instances, Harang acted through brokers, and the proof of the agency was not a matter of public record. The leases acquired by Harang on his own behalf were held in Harang's name whereas the leases and overriding royalties acquired through agents were held in the names of the individual agents, one of whom was Kihneman. Humble now contends also that, when Civil Action 66-697 was filed, Humble did not know whether or not these agents had executed counter letters or unrecorded assignments in favor of Harang.

The affidavits and depositions filed in connection with Humble's motion for summary judgment establish beyond genuine dispute that, before the pleadings in Civil Action 66-697 were drawn, Humble consulted counsel to determine whether it had a cause of action against Harang; and that the lawyers consulted advised that grounds for action appeared to exist, based on several legal theories. Humble decided to file suit and to allege the different legal theories in separate counts of a single complaint. This was done.

The First Count alleged various facts that may or may not be established at the trial against Harang. It sought recovery in tort from Harang and a corporation that he allegedly controlled, Geological, Geophysical Associates, Inc. (GGA), for tortious interference with the employment relationship between Humble and its former employee. The Second Count sought an accounting from Harang and GGA of all secret profits derived by them from the alleged tortious use of Humble's confidential information, in addition to the damages demanded in the First Count. The Third Count was an alternative one; it sought equitable relief on theories of breach of trust and unjust enrichment so as to require, first, an accounting for all secret profits derived from the transactions affecting certain described mineral leases, and, second, specific relief respecting certain overriding royalty interests, either in the form of the impression of a trust or a decree of ownership. The Fourth Count sought injunctive relief to maintain the status quo respecting documents in the hands of the defendants. Kihneman, like the other agents through whom Harang is alleged to have acted, was named as a co-defendant. Kihneman claims no damage from Counts One and Two, which did not name him, but does claim that he was defamed, his privacy was violated, and he was maliciously prosecuted by the filing of the Third and Fourth Counts and the affidavit attached to the complaint.

The allegations made with respect to Kihneman were:

(1) "Also made parties defendant * * * are certain persons who are not charged with knowing participation in any fraudulent activity herein alleged, viz: * * * William J. Kihneman * * *."

(2) "In the Potash Field, Plaquemines Parish, La., using Humble's secret information * * * Harang caused a lease broker * * * to acquire for Harang's or GGA's account a lease on the A. Treadway tract and a lease on the A. T. Ballay, et al. tract. * * * Harang then caused the broker to assign a 1/48th override on the Treadway tract to a second broker, who is a person interposed for Harang or GGA and holds for Harang's or GGA's undisclosed account, and that Harang then caused the first broker to transfer said leases to Harang's attorney, Kihneman, and thereafter caused said attorney, for Harang's or GGA's undisclosed account, to offer them to Humble for a total price of $5,250.00. When Harang caused Kihneman to offer said leases to Humble, Harang concealed from Humble that the leases had been acquired as a result of the ex-employee's betrayal of trust and that the ex-employee or Tammany a corporation allegedly controlled by the ex-employee was interested therein. Humble, not knowing of the betrayal of trust and that its confidential information was being used against it, accepted the transfer and paid the price. * * *" (3) "Humble does not charge Messrs. * * * and Kihneman with knowledge of or knowing participation in the fraudulent conspiracy above alleged, but believes that they were merely persons interposed for Harang or GGA and the unwitting tools of Harang's machinations. However, by reason of their holding title for Harang's or GGA's account, as aforesaid, they are made defendants herein."

(4) "Humble prays that there be judgment in its favor * * * against * * * Kihneman * * * impressing a trust in their respective hands of the overriding royalty interests acquired by the use of Humble's confidential information as aforesaid, or alternatively, decreeing said overriding royalty interests to inure to Humble's benefit."

(5) "It lies within the power of * * * Kihneman * * * to destroy or otherwise dispose of or conceal documents, records, checks, maps and other writings relating to the transactions described * * * before Humble can obtain sufficient discovery to specify the documents in question and require the production thereof."

(6) "Humble believes, and hence avers, that Harang, and the other persons above named at his command or urging, will conceal, destroy, or otherwise dispose of or attempt to place beyond the reach of the Court documents, records, checks, maps and writing (sic) relating to the transactions above alleged unless enjoined from so doing by this Court, pending final determination of this action. * * *"

(7) "Humble demands judgment enjoining the defendants and each of them from concealing, destroying, or otherwise disposing of or attempting to place beyond the reach of the Court, any document, record, check, map or writing relating to the transactions described in * * * this Complaint * * *."

The prayer of the Third Count sought an accounting of the profits derived by Harang and GGA from the sale of mineral leases affecting Louisiana immovable property, and claimed ownership of the overriding royalties affecting them from Harang. Whether or not Harang or GGA is ultimately shown to have derived such profits, it is undisputed in this action that, except for Avondale, Harang's beneficial ownership of either leases or overrides was not a matter of public record, and that Humble did not know whether unrecorded counter letters or assignments in his favor were in existence. The public records reflected that the leases in question had been taken by a lease broker and (except for Avondale and Good Hope) transferred by that lease broker to another lease broker who in turn transferred them to Humble.

Humble contends that it will be necessary to establish Harang's beneficial ownership of the overriding royalties in order to obtain an accounting, and that the parol evidence rule will apply to bar proof of these facts by testimony alone in the Harang suit. In support of this contention Humble cites various Louisiana cases, including Hayes v. Muller, 1963, 245 La. 356, 158 So.2d 191.

In Hayes, Knox, Muller, and Hayes entered into a verbal joint adventure agreement to invest in certain mineral interests. The parties had previously entered into similar joint adventures through which mineral leases and royalties were obtained in the name of one of the parties, each party was later assigned his proportionate share, and the proceeds and properties resulting from the different transactions were ultimately equally divided. Muller obtained, in his own name, an oil and gas lease in the area agreed upon in the joint venture contract. Before assigning the other parties their respective interests, Muller sold the lease and refused to pay Knox and Hayes their interests in the proceeds. Hayes and Knox sought judicial enforcement of the agreement and, alternatively, an accounting of the profits derived from the sale of the lease. On rehearing, the Supreme Court stated that parol evidence would not be admissible to show the terms of the verbal agreement. "The parol evidence rule has been applied by this court not only in cases involving contracts which directly affect title to realty but also in others where the litigants merely sought to derive benefits growing out of verbal agreements relating to the sales of immovable property." 158 So.2d at 198.

There are however Louisiana cases indicating that this doctrine is limited to actions between the parties and that the parol evidence rule would not apply to prevent Humble from proving Harang's ownership of the mineral leases involved. See Fontenot v. Fontenot, La.App.1965, 175 So.2d 910, 912, and the cases cited therein. But that question need not be decided now. For, whether or not Humble's counsel were correct in their appraisal of the Louisiana rule, it is undisputed that they reached a good faith conclusion that Kihneman should be sued, based on their interpretation of Hayes v. Muller and other Louisiana decisions, and advised their client to act on this interpretation of the law. They were of the opinion that, if Humble...