Libersat v. Sundance Energy Inc.

• Decision Date: 31 January 2020
• Docket Number: CASE NO. 6:19-CV-00421
• Citation: 437 F.Supp.3d 557
• Parties: Gerald D. LIBERSAT et al. v. SUNDANCE ENERGY INC. et al.
• Court: U.S. District Court — Western District of Louisiana

437 F.Supp.3d 557

Gerald D. LIBERSAT et al.

v.SUNDANCE ENERGY INC. et al.

CASE NO. 6:19-CV-00421

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

Signed January 31, 2020

Roger Chadwick Edwards, Jr., Edwards & Edwards, Abbeville, LA, for Plaintiffs.

Kenneth M. Klemm, Sarah Katherine Casey, Baker Donelson et al., Gary M. Langlois, Jr., Justin Paul Lemaire, Stone Pigman et al., New Orleans, LA, for Defendants.

MEMORANDUM RULING

ROBERT R. SUMMERHAYS, UNITED STATES DISTRICT JUDGE

The present matters before the Court are two motions to dismiss: (1) Motion to Dismiss for Lack of Jurisdiction, or in the Alternative, Motion to Transfer filed by defendants SEA Eagle Ford LLC and Sundance Energy Inc. ("Sundance/SEA Eagle Motion to Dismiss") [Doc. 8], and (2) Motion to Dismiss for Lack of Jurisdiction filed by defendant Noble Energy Inc. ("Noble Motion to Dismiss") [Doc. 23].¹ As the Court further explains below, the Sundance/SEA Eagle and Noble Motions to Dismiss are GRANTED and the claims against Sundance, SEA Eagle, and Noble Energy are DISMISSED without prejudice on the grounds that the Court lacks personal jurisdiction over these defendants.

I. BACKGROUND

This case involves a dispute over royalties paid pursuant to a Texas mineral lease. This lease was obtained by Clayton W. Williams and was signed on or about April 2, 1984 by the Louisiana-based lessors, May G. Libersat, Gerald D. Libersat, Rodney J. Libersat, and Donald J. Libersat (the "Libersat Lease").² The Libersat Lease covers 269.97 acres in McMullen County, Texas and was recorded in the McMullen County deed records.³ Williams traveled to Louisiana to meet with the lessors and negotiate the terms of the lease.⁴ The lease was subsequently assigned to Clayton Williams Energy, Inc., and then to Eagle Ford Shale Exploration, LLC ("Eagle Ford Shale").⁵ Eagle Ford Shale assigned its interest in the lease to defendant SEA Eagle Ford, LLC in 2014 and the assignment was recorded in the deed records of McMullen County, Texas.⁶ SEA Eagle is a Texas limited liability company with its principal place of business in Denver, Colorado. Sundance is SEA Eagle's sole member.⁷ Unlike SEA Eagle, Sundance owned no interest in the Libersat Lease nor is it an operator of any of the three wells on the leased land.⁸ Sundance's role with respect to the Libersat Lease is the coordination of royalty payments. ⁹

Sundance is a Colorado corporation with its principal place of business in Denver, Colorado.¹⁰ Defendant Noble Energy is a Delaware Corporation with its principal place of business in Houston, Texas.¹¹ Plaintiffs allege that Noble Energy acquired (and is the successor to) defendant Clayton Williams Energy.¹²

Following the lease assignment, SEA Eagle obtained a title opinion identifying the royalty interests under the Libersat Lease as follows:¹³

Owner	Interest
Gerald D. Libersat	1/3
Dorothy M. Libersat	1/6
Defendant Roxanne Marie Gilton	1/4
Judy Granger Broussard	1/12
Defendant Mark Libersat (Includes the apparent 1/12 interest of Denise Libersat, deceased)	1/6

Sundance then sent division orders to these owners reflecting the ownership interests from the title opinion, including plaintiff Gerald Libersat.¹⁴ Two of the owners identified in the title opinion, Roxanne Gilton and Mark Libersat, signed their division orders and Sundance commenced royalty payments pursuant to those division orders.¹⁵ Plaintiffs contend that Gerald Libersat never signed his division orders.¹⁶ In 2018, Gerald and Julie Libersat notified SEA Eagle and Sundance that the ownership percentages reflected in the title opinion and division orders were incorrect. Plaintiffs contend that the title opinion and the division orders were incorrect because SEA Eagle and Sundance failed to research the record title and thus "knowingly and intentionally breached their obligations under the lease by diverting [plaintiffs'] revenues to third persons."¹⁷ According to Plaintiffs, SEA Eagle and Sundance conducted further research and suspended payments to owners who had inherited their ownership interests through May Guidry Libersat, one of the original lessors.¹⁸ SEA Eagle and Sundance subsequently sent revised division orders to Plaintiffs. Plaintiffs allege that these revised division orders failed to address the erroneous payments made under prior division orders.¹⁹ According to Plaintiffs, SEA Eagle and Sundance then notified Plaintiffs that payments due under the Libersat Lease would be withheld unless Plaintiffs indemnified them for the erroneous royalty payments that were distributed under the prior division orders.²⁰

SEA Eagle filed a petition in the 156th Judicial District Court, McMullen County, Texas against Mark Libersat and Roxanne Gilton, the two royalty owners under the Libersat Lease who received royalties erroneously as a result of the original division orders.²¹ In that case, SEA Eagle and Sundance assert claims for breach of contract and unjust enrichment, and request injunctive relief freezing the erroneous royalty payments to these owners.²² The contract and unjust enrichment claims are based on representations in the signed division orders confirming Mark Libersat's and Roxanne Gilton's ownership interests as well as an agreement to indemnify SEA Eagle and Sundance for any payments made pursuant to the division orders.²³ Five months later, Gerald Libersat and Julie Libersat filed a petition in the 15th Judicial District Court, Vermilion Parish, Louisiana, Docket No. 106342-J, against SEA Eagle, Sundance, Thomas B. Moore, Robert L. Graham, T. M. Shepard, John H. Sowell, III, Clayton W. Williams, Jr., Clayton Williams Energy, Inc., and Noble Energy, Inc.²⁴ Plaintiffs allege that Sundance and SEA Eagle breached their obligations under the Libersat Lease and acted in bad faith by erroneously calculating their royalty interest based on a title opinion that, according to Plaintiffs, they knew or should have known was erroneous. Plaintiffs further allege that Sundance and SEA Eagle breached the lease by paying their royalties to other interest owners and then refusing to make any royalty payments to Plaintiffs unless they agreed to indemnify them for the prior erroneous payments.²⁵ As far as Moore, Graham, Shepard, and Sowell, these defendants are alleged to be "working interest or overriding royalty owners and [assignees] of Clayton W. Williams, Jr."²⁶ The Complaint does not allege any actions by the Individual Assignees with respect to the Libersat Lease or how these defendants caused harm to Plaintiffs. With respect to the other defendants, Plaintiffs merely allege that "[a]t this time petitioners have no information that defendants, Clayton W. Williams, Jr., and/or Noble Energy, Inc., have breached their obligation to perform in good faith as a prudent operator, but are necessary parties to this action."²⁷ SEA Eagle and Sundance removed the case to federal court on April 3, 2019 on the grounds of diversity jurisdiction under 28 U.S.C. § 1332.²⁸ SEA Eagle and Sundance then filed the Sundance/SEA Eagle Motion to Dismiss seeking dismissal under Rules 12(b)(1) and 12(b)(2) on the grounds that the court lacks personal jurisdiction over SEA Eagle and Sundance and, in the alternative, that the "Local Action Doctrine" precludes a federal court in Louisiana from hearing a case involving real property interests located in Texas. Noble Energy subsequently filed the Noble Motion to Dismiss arguing for dismissal on the same grounds as the Sundance/SEA Eagle Motion to Dismiss. Plaintiff Gerald Libersat died on November 4, 2019, and the court granted an unopposed motion to substitute the testamentary executor of his estate, Charles E. Scarbrough, as a plaintiff in this matter.²⁹

II. PERSONAL JURISDICTION

A. The Relevant Standards

The present case was removed based on diversity jurisdiction under 28 U.S.C § 1332. In a diversity case, a federal court may exercise personal jurisdiction over a non-resident defendant if the forum state's long-arm statute confers personal jurisdiction over that non-resident defendant and if the exercise of personal jurisdiction satisfies the requirements of due process under the United States Constitution. McFadin v. Gerber, 587 F.3d 753,759 (5th Cir. 2009) (citing Moncrief Oil Int'l, Inc. v. OAO Gazprom et al., 481 F.3d 309, 311 (5th Cir. 2007) ). The reach of the Louisiana Long-Arm Statute is co-extensive with the limits of due process under the Constitution. Petroleum Helicopters, Inc. v. Avco Corp. et al., 513 So. 2d 1188, 1192 (La. 1987). As a result, the jurisdictional analysis under the Louisiana Long-Arm Statute collapses into a single inquiry of whether the exercise of personal jurisdiction comports with due process. Id. ; see also In re Chinese-Manufactured Drywall Products Liability Litig., 753 F.3d 521, 546 (5th Cir. 2014).

Where, as here, the court decides a motion to dismiss for lack of personal jurisdiction without a hearing, the plaintiff need only demonstrate a prima facie basis for personal jurisdiction. Wilson v. Belin, 20 F.3d 644, 648 (5th Cir.), cert. denied, 513 U.S. 930, 115 S.Ct. 322, 130 L.Ed.2d 282 (1994) ; Johnston v. Multidata Systems, Intern. Corp., 523 F.3d 602, 609 (5th Cir. 2008). The plaintiff is not required to demonstrate personal jurisdiction by a preponderance of the evidence. Wilson, 20 F.3d at 648. A plaintiff can demonstrate a prima facie basis for personal jurisdiction through the allegations contained in the complaint. However, if the defendant disputes the factual grounds for personal jurisdiction, the district court may consider the record before it, including "affidavits, interrogatories, depositions, oral testimony, or any combination of the recognized methods of discovery." Quick Technologies, Inc. v. Sage Group PLC, 313 F.3d 338, 344 (5th Cir. 2002). In judging whether a plaintiff has met his or her prima facie burden, a court must construe all uncontroverted allegations in the plaintiff's complaint as true. Johnston, 523 F.3d at 609. If ...