M.J. Farms, Ltd. v. Exxon Mobil Corp.

• Citation: 998 So.2d 16
• Decision Date: 01 July 2008
• Docket Number: No. 2007-CA-2371.,2007-CA-2371.
• Parties: M.J. FARMS, LTD. v. EXXON MOBIL CORPORATION, et al.
• Court: Supreme Court of Louisiana

998 So.2d 16

M.J. FARMS, LTD. v. EXXON MOBIL CORPORATION, et al.

No. 2007-CA-2371.

Supreme Court of Louisiana.

July 1, 2008.

Order on Rehearing September 19, 2008.

James D. Caldwell, Attorney General, Ryan Michael Seidemann, Megan Kathleen Terrell, Assistant Attorneys General; Liskow & Lewis, PLC, Katherine Miller Determan, Robert Beattie McNeal, Carey Lyon Menasco, Anundra Martin Dillon, Mark LeRay McNamara, New Orleans; Krebs, Farley & Pelleteri, Matthew Joseph Farley, Elizabeth S. Sconzert, Thomas Matthew Beh, New Orleans; Gordon, Arata, McCollam, Duplantis & Egan, Sara Emily Mouledoux, Loulan Joseph Pitre, Jr., New Orleans, Matthew Joseph Randazzo, III, Lafayette, Aimee Williams Hebert,

Abaigeal Lynn Van Deerlin, Michelle Chavonne Purchner, New Orleans, for Appellant.

Dupuy & Didier, Marc Dupuy, Jr., Marksville; Bice, Palermo & Veron, John Michael Veron, Alonzo P. Wilson, Lake Charles; Blanchard, Walker, O'Quin, & Roberts, William Timothy Allen, III, Paul M. Adkins, Shreveport; Davidson, Meaux, Sonnier & McGelligott, James J. Davidson, III, Christopher Joseph Piasecki, Lafayette; Mangham & Associates, L.L.C., Michael R. Mangham, Lafayette; Smith, Taliaferrro, Purvis & Boothe, Virgil Russell Purvis, Jr., Jonesville; Wall & Bullington, Guy Earl Wall, Paul Edward Bullington, Jonathan Robert Cook, New Orleans, for Appellee.

Alex L. Andrus, III, and James T. Guglielmo, Opelousas, for Four Rivers Exploration, Inc., Amicus Curiae.

G. William Jarman and Linda Sarradet Akchin, Baton Rouge, for Louisiana Oil and Gas Association and Louisiana Med-Continent Oil and Gas Association, Amicus Curiae.

Thomas Martin McNamara, Patrick Wise Gray and Amy Elizabeth Allums Lee, for Shell Oil Co., Amicus Curiae.

KNOLL, Justice.^*

This matter arises from the plaintiff's constitutional challenge to Act 312 of 2006 ("Act 312"), a legislative enactment related to litigation claiming environmental damages arising from oilfield operations. The case is before us on direct appeal from a judgment by the district court declaring 2006 La. Acts 312, unconstitutional on the grounds that it violated La. Const. art. V, § 16 (divestiture of the district courts of original jurisdiction), the Fifth Amendment of the United States Constitution (the deprivation of a landowner of his property without due process), and La. Const. art. I, § 4 (divestiture of the landowner's right to acquire, own, control, use, enjoy, protect and dispose of private property). After reviewing the record, 2006 La. Acts 312, and the constitutional provisions at issue, we conclude the district court erred in finding Act 312 of 2006 unconstitutional. Accordingly, we reverse the judgment of the district court, and remand this matter to the district court for further proceedings consistent with the views expressed herein.

FACTS AND PROCEDURAL HISTORY

In 2005, M.J. Farms, Ltd. ("M.J. Farms") purchased approximately 42,000 acres located in Catahoula and Avoyelles Parishes.¹ M.J. Farms' purchase was made subject to various mineral reservations and pre-existing oil and gas leases. M.J. Farms was strictly a surface owner, having no mineral rights to the purchased property.

On April 25, 2006, M.J. Farms filed the present suit against numerous defendants,² including Exxon Mobil Corporation ("Exxon"), Wagner Oil Company ("Wagner") and Benedict Corporation ("Benedict"). Essentially, M.J. Farms alleged defendants caused environmental damages to the property when they conducted oil and gas exploration and production activities, causing the surface, subsurface, ground waters and subsurface aquifers to be contaminated with oil, grease, radioactive materials, toxic heavy metals and other hazardous chemicals. M.J. Farms asserted multiple causes of action: breach of contract, negligence, strict liability, trespass, nuisance, and unjust enrichment. M.J. Farms further particularized a claim for restoration of its property as provided in La.Rev.Stat. § 31:22,³ La. Civ.Code art. 2683 (duty of the lessee to return the thing in the same condition), and La. Civ.Code art. 2692 (duty to repair the damage for excessive use). M.J. Farms sought damages for the costs of containment, clean-up, remediation and restoration of the surface to its original condition, exemplary damages under La. Civ.Code art. 2315.3,⁴ as well as costs of the action and attorneys' fees, and for the loss of civil fruits (such as loss of income due to crops losses).

While this suit was pending, the Louisiana Legislature passed Act 312. Act 312 amended and reenacted La.Rev.Stat. §§ 30:82(6) (defining "producing oilfield site" or "exploration and production site"), 89.1 (providing for credits for judgments or compromises for the remediation of oilfield sites and exploration and production sites) and 2015.1(B), (C)(1), (2), and (4), (D), (E)(1), (F)(2), (H), (I), and (K) (provisions applicable to the remediation of usable ground water) and enacted La. Rev. Stat §§ 30:29 (providing procedures for the remediation of oilfield sites and exploration and production sites), 29.1 (providing for landowner notification of environmental testing), and 2015.1(L) (reiterating that the provisions for the remediation of usable ground water is inapplicable to oilfield sites or exploration and production sites).

Act 312 became effective on June 8, 2006. Section 3 of the Act 312 contains a clause, providing that the Act "shall not apply to any case in which the court on or before March 27, 2006, has issued or signed an order setting the case for trial, regardless of whether such trial setting is continued." M.J. Farms filed the present suit prior to the effective date of Act 312, but after March 27, 2006. Thus, as of March 27, 2006, there was no order yet signed setting the present case for trial.

Thereafter, Wagner and several other defendants filed a "Motion to Enforce Stay Provision of Act 312 or Alternatively to Extend Time in Which to File Responsive Pleadings." Defendants argued M.J. Farms failed to provide proper notice to both LDNR and the Attorney General. Therefore, they requested the trial court to stay the proceedings until 30 days after the Attorney General has been notified as provided by Section 1 of Act 312 of 2006, codified under La.Rev.Stat. § 30:29(B).

Additionally, Exxon and some other defendants concurrently filed exceptions of prematurity, asserting M.J. Farms failed to exhaust its administrative remedies under Act 312, which requires plaintiff to give notice of its claims to LDNR and the Louisiana Department of Environmental Quality ("LDEQ"). Accordingly, defendants requested the case be dismissed or stayed pending referral to the above-mentioned agencies for review and determination.⁵ Alternatively, Exxon filed an "exception of lack of subject matter jurisdiction based upon the doctrine of primary jurisdiction."⁶ Exxon argued Act 312 grants primary jurisdiction in claims for environmental damage to the Commissioner of Conservation of LDNR and requested the trial court to dismiss the action and refer the matter to LDNR for adjudication.

M.J. Farms opposed defendants' motions and exceptions. It first argued Act 312 was inapplicable to the present litigation because the Act seeks to amend and enact only provisions of Title 30, while plaintiff asserted claims under Title 31 and under the Civil Code. Notwithstanding, M.J. Farms indicated it provided notices to LDNR and LDEQ at the time it filed this action under the form and procedure prescribed by the law in effect at that time. M.J. Farms further asserted it did not provide such notice to the Attorney General because the law prior to Act 312 did not require such notice.

In the alternative, M.J. Farms contended Act 312 cannot be applied retroactively to the present litigation because the original petition was filed prior to the enactment of Act 312, which became effective June 8, 2006. Citing Bourgeois v. A.P. Green Industries, Inc., 00-1528 (La.4/3/01), 783 So.2d 1251, M.J. Farms argued its cause of action vested at the time the suit was filed and subsequent legislation cannot retroactively divest it of its cause of action.

The trial court conducted a hearing on defendants' motions and exceptions on August 28, 2006. Thereafter, the trial court took the matter under advisement.⁷ On September 11, 2006, while the trial court ruling in this matter was pending, the State of Louisiana through the Attorney General ("the State") filed a Petition for Intervention of Right.⁸ In that pleading, the State conditionally sought to intervene in the proceedings, only if the provisions of Title 30 and Act 312 are applicable to the present claim.⁹

In addition, the State filed a Memorandum defending the constitutionality of Act 312 against the arguments M.J. Farms raised in its opposition to defendants' motions to stay. Essentially, the State argued Act 312 is procedural in nature and it is not intended to strip M.J. Farms of its cause of action. Thus, the State argued M.J. Farms may still recover with the only difference that it must follow the procedures Act 321 sets forth.

On January 8, 2007, the trial court issued its judgment with respect to defendants' motion to stay, thereby declaring Act 312 unconstitutional and unenforceable.

The State, Exxon and several other defendants appealed the trial court's judgment to this Court. After considering the matter,¹⁰ this Court found M.J. Farms failed to raise the issue of constitutionality through a proper pleading as required by Vallo v. Gayle Oil Company, Inc., 94-1238 (La.11/30/94), 646 So.2d 859. Accordingly, we vacated the judgment of the district court and remanded the case to allow plaintiffs to specially plead the unconstitutionality of Act 312. M.J. Farms, Ltd. v. Exxon Mobil Corporation, 07-0450 (La.4/27/07), 956 So.2d 573.

After remand, M.J. Farms filed a "Motion to dismiss and/or strike and/or for declaratory judgment declaring Act 312 of 2006 unconstitutional and inapplicable to the instant case." It first argued Act...