Libersat v. Sundance Energy, Inc.

• Decision Date: 26 October 2020
• Docket Number: No. 20-30121,20-30121
• Citation: 978 F.3d 315
• Parties: Julie Romero LIBERSAT; Charles E. Scarbrough, Testamentary Executor of Succession of Gerald D. Libersat, Plaintiffs—Appellants, v. SUNDANCE ENERGY, INCORPORATED; SEA Eagle Ford, L.L.C. ; Noble Energy, Incorporated, Defendants—Appellees.
• Court: U.S. Court of Appeals — Fifth Circuit

978 F.3d 315

Julie Romero LIBERSAT; Charles E. Scarbrough, Testamentary Executor of Succession of Gerald D. Libersat, Plaintiffs—Appellants,

v.SUNDANCE ENERGY, INCORPORATED; SEA Eagle Ford, L.L.C. ; Noble Energy, Incorporated, Defendants—Appellees.

No. 20-30121

United States Court of Appeals, Fifth Circuit.

FILED October 26, 2020

Roger Chadwick Edwards, Jr., Edwards & Bellaire, Abbeville, LA, for Plaintiffs - Appellants

Kenneth M. Klemm, Sarah Katherine Casey, Baker, Donelson, Bearman, Caldwell & Berkowitz, P.C., New Orleans, LA, for Defendants - Appellees Sundance Energy Incorporated, SEA Eagle Ford, L.L.C.

Justin Paul Lemaire, Esq., Gary Langlois, Jr., Stone Pigman Walther Wittmann, L.L.C., New Orleans, LA, for Defendant - Appellee Noble Energy Inc.

Before Smith, Clement, and Oldham, Circuit Judges.

Edith Brown Clement, Circuit Judge:

Plaintiffs Gerald Libersat and Julie Romero Libersat (jointly, "Libersat") sued Sundance Energy, Inc., SEA Eagle Ford, L.L.C., and Noble Energy, Inc., among others, for royalties pursuant to a Texas mineral lease. Libersat alleges that the defendants negligently calculated royalty distributions and attempted to coerce Libersat to sign an indemnity agreement when the error was brought to their attention. The district court dismissed all claims against Sundance, SEA Eagle, and Noble without prejudice for lack of personal jurisdiction. We AFFIRM.

I. FACTS AND PROCEEDINGS

In 1984 Clayton Williams, Jr., leased the mineral rights to property in McMullen County, Texas, owned by the Libersat family, who lived in Louisiana. Williams then assigned his rights to Clayton Williams Energy, Inc. Some of those rights (the portion at issue here) were assigned to Eagle Ford Shale Exploration, LLC, which, in turn, assigned them to SEA Eagle in 2014. In 2017, Noble acquired Clayton Williams Energy. Sundance is SEA Eagle's sole member and administers royalty payments for SEA Eagle, but has no direct interest in the lease.

In 2018 Sundance transmitted division orders proposing an allocation of royalties based on an allegedly faulty mineral title opinion. The division order allegedly allocated to Libersat only a 1/3 interest—based on faulty assumptions about how original lessor May Libersat's estate had been passed down—when Libersat should have been allocated a 2/3 interest. The other 1/3 was incorrectly allocated to third parties, who allegedly ratified and collected royalties based on the erroneous division orders.¹

Libersat alleges that when he alerted Sundance to its error, Sundance responded by sending a corrected division order containing an indemnity clause that would have prevented Libersat from recovering several months’ worth of misallocated royalties. When Libersat refused to sign this order, Sundance allegedly ceased all royalty payments as leverage to force Libersat to sign the indemnifying division order.

Libersat sued in Louisiana state court. SEA Eagle and Sundance removed the case to the Federal District Court for the Western District of Louisiana, then moved to dismiss for lack of personal jurisdiction, lack of subject matter jurisdiction, and improper venue. Shortly thereafter, Noble also moved to dismiss on similar grounds.

The district court found that none of the three defendants were sufficiently "at home" in Louisiana to justify general personal jurisdiction, nor did any have sufficient minimum contacts related to the cause of action to justify specific personal jurisdiction. So the district court dismissed without prejudice. The district court considered but declined to rule on the defendants’ argument that the local action rule precluded subject matter jurisdiction. Libersat timely appealed.

II. STANDARD OF REVIEW

We review a district court's decision to dismiss for lack of personal jurisdiction de novo. Halliburton Energy Servs., Inc. v. Ironshore Specialty Ins. Co. , 921 F.3d 522, 539 (5th Cir. 2019). Although the plaintiffs bear the burden of establishing jurisdiction over the defendants, the plaintiffs are only required to make a prima facie showing because the district court did not hold an evidentiary hearing. Johnston v. Multidata Sys. Int'l. Corp. , 523 F.3d 602, 609 (5th Cir. 2008). We will accept as true the uncontroverted allegations in the complaint and resolve factual conflicts in favor of the plaintiffs. Halliburton Energy Servs. , 921 F.3d at 539.

III. DISCUSSION

"A ‘federal court sitting in diversity may assert jurisdiction if (1) the state's long-arm statute’ allows it; and (2) exercising jurisdiction would not violate the Due Process Clause of the Fourteenth Amendment." Halliburton Energy Servs. , 921 F.3d at 539 (quoting Cycles, Ltd. v. W.J. Digby, Inc. , 889 F.2d 612, 616 (5th Cir. 1989) ). Because "[t]he limits of the Louisiana Longarm Statute and the limits of constitutional due process are" effectively "coextensive," Petroleum Helicopters, Inc. v. Avco Corp. , 513 So. 2d 1188, 1192 (La. 1987), the sole inquiry is whether exercising jurisdiction would violate the Due Process Clause, see Walk Haydel & Assocs., Inc. v. Coastal Power Prod. Co. , 517 F.3d 235, 242–43 (5th Cir. 2008).

A court may exercise personal jurisdiction based on specific or general jurisdiction. Although Libersat argued to the district court that Louisiana courts could exercise personal jurisdiction based on either theory, he has since abandoned the general jurisdiction argument. This is wise, as Noble is a Delaware corporation with its principal place of business in Houston, Texas, Sundance is a Colorado corporation with its principal place of business in Denver, Colorado, and SEA Eagle is a Texas limited liability company with its principal place of business in Colorado and with Sundance as its sole member. No defendant has the type of continuous and systematic contacts with Louisiana that would "render [it] essentially at home in the forum State." See Daimler AG v. Bauman , 571 U.S. 117, 139, 134 S.Ct. 746, 187 L.Ed.2d 624 (2014) (quoting Goodyear Dunlop Tires Operations, S.A. v. Brown , 564 U.S. 915, 919, 131 S.Ct. 2846, 180 L.Ed.2d 796 (2011) ).

Thus, we consider only specific jurisdiction. We use a three-step analysis that asks

(1) whether the defendant has minimum contacts with the forum state, i.e., whether it purposely directed its activities toward the forum state or purposefully availed itself of the privileges of conducting activities there; (2) whether the plaintiff's cause of action arises out of or results from the defendant's forum-related contacts; and (3) whether the exercise of personal jurisdiction is fair and reasonable.

Seiferth v. Helicopteros Atuneros, Inc. , 472 F.3d 266, 271 (5th Cir. 2006) (quoting Nuovo Pignone, SpA v. Storman Asia M/V , 310 F.3d 374, 378 (5th Cir. 2002) ).

A.

Before we can examine the defendants’ alleged jurisdictional contacts, we must address Libersat's pervasive effort to join together all of the various defendants’ contacts into a single corpus for consideration. To decide whether the defendants have sufficient minimum contacts, we must first decide which alleged contacts to consider for each defendant. Libersat argues that, because they are solidary obligors,² each defendant's respective contacts with Louisiana should be imputed to every other defendant. Libersat asks, "If two corporations are obligated for the same performance and can be judicially sanctioned for conduct related to said obligation irrespective of the presence of the other, are they not alter egos?"

No, they are not. Sharing liability is not the same as sharing an identity. As our colleagues in the Ninth Circuit explained, "Liability and jurisdiction are independent.... Regardless of their joint liability, jurisdiction over each defendant must be established individually." Sher v. Johnson , 911 F.2d 1357, 1365 (9th Cir. 1990). Lumping defendants together for jurisdictional purposes merely because they are solidary obligors "is plainly unconstitutional." Rush v. Savchuk , 444 U.S. 320, 332, 100 S.Ct. 571, 62 L.Ed.2d 516 (1980). Libersat's reliance on solidary liability arising specifically from the assignment of a lease is unavailing. Courts that have looked at assignor / assignee relationships have "determined that an assignee does not step automatically into the shoes of the assignor for purposes of personal jurisdiction." Purdue Rsch. Found. v. Sanofi-Synthelabo, S.A. , 338 F.3d 773, 784 (7th Cir. 2003) (collecting cases). Without more, the Constitution does not permit us to impute the jurisdictional contacts of each defendant to all the others.

Although joint liability is not a permissible basis for imputing the jurisdictional contacts of one defendant to another, imputing contacts may be permissible where defendants form certain relationships. Libersat argues that the defendants may be linked via such relationships, including agency, In re Chinese-Manufactured Drywall Prods. Liab. Litig. , 753 F.3d 521, 534 (5th Cir. 2014), alter ego, Jackson v. Tanfoglio Giuseppe, S.R.L. , 615 F.3d 579, 586–87 (5th Cir. 2010), or successor-entity relationships, Patin v. Thoroughbred Power Boats Inc. , 294 F.3d 640, 653–54 (5th Cir. 2002). Purely for the sake of convenience, we will assume that some of these relationships may apply and thereby arrange the defendants into two groups.

It is far from clear that Libersat has alleged sufficient facts to find that Sundance is merely an alter ego of SEA Eagle. See Jackson , 615 F.3d at 587–88 (refusing to impute contacts among closely-affiliated entities where their "brands and products appear identical and their business relationships are deeply intertwined," and they shared office space, phone numbers, and directors). However, Sundance appears to have conducted business on behalf of SEA Eagle, including handling royalty payments, procuring the title opinion at issue, and communicating with lessors.

Thus, for the sake of convenience, we will assume—without deciding—that SEA Eagle and Sundance can be treated collectively hereinafter as the "Su...