Quality Envtl. Processes, Inc. v. Energy Dev. Corp.

• Decision Date: 12 April 2017
• Docket Number: 2016 CA 0171, 2016 CA 0172
• Citation: 218 So.3d 1045
• Parties: QUALITY ENVIRONMENTAL PROCESSES, INC., Michael X. St. Martin, and Virginia Rayne St. Martin v. ENERGY DEVELOPMENT CORPORATION and Phillips Petroleum Company Mandalay Oil & Gas, L.L.C. v. Energy Development Corporation, Michael X. St. Martin, Virginia Rayne St. Martin, and Quality Environmental Processes, Inc.
• Court: Court of Appeal of Louisiana — District of US

218 So.3d 1045

QUALITY ENVIRONMENTAL PROCESSES, INC., Michael X. St. Martin, and Virginia Rayne St. Martin

v.ENERGY DEVELOPMENT CORPORATION and Phillips Petroleum Company

Mandalay Oil & Gas, L.L.C.

v.Energy Development Corporation, Michael X. St. Martin, Virginia Rayne St. Martin, and Quality Environmental Processes, Inc.

2016 CA 0171, 2016 CA 0172

Court of Appeal of Louisiana, First Circuit.

APRIL 12, 2017

A.J. Gray, III, Lake Charles, Louisiana, Attorney for Appellants Plaintiffs—Michael X. St. Martin, Virginia Rayne St. Martin, and Quality Environmental Processes, Inc.

Michael X. St. Martin, Christopher J. St. Martin, Houma, Louisiana, Attorneys for Appellant Plaintiff—Quality Environmental Processes, Inc.

Jamie S. Manuel, Baton Rouge, Louisiana and H. Alston Johnson, III, Baton Rouge, Louisiana, Attorneys for Appellee Defendant—I.P. Petroleum Company, Inc.

BEFORE: PETTIGREW, McDONALD, AND CALLOWAY,¹ JJ.

CALLOWAY, J.

The protracted litigation in this case involves mineral rights and royalties associated with a production well, IP Pet. PPCO No. 1 well, located on a certain tract of land owned by the plaintiffs in Terrebonne Parish (hereinafter "St. Martin property"). In this appeal, the plaintiffs, Quality Environmental Processes, Inc. (hereinafter "Quality"), Michael X. St. Martin, and Virginia Rayne St. Martin, appeal a trial court judgment granting partial summary judgment in favor of the defendant, IP Petroleum Company, Inc. (hereinafter "IP Petroleum"), and dismissing with prejudice the claims of the plaintiffs for mineral royalties attributable to production on the IP Pet. PPCO No. 1 well prior to April 1, 2001. In this appeal, we affirm the partial summary judgment in favor of IP Petroleum.

In a related appeal, also rendered this date, 2016 CA 0230, IP Petroleum and International Paper Company challenge a trial court judgment on remand which awarded the plaintiffs: (A) $107,612.67 in unpaid mineral royalties; (B) $215,225.34 in statutory penalties pursuant to La. R.S. 31:139 ; (C) $230,563.83 in interest from October 31, 2002, on the unpaid royalties and penalties; (D) $138,350.46 representing 25% statutory attorney fees on unpaid royalties, penalties, and interest; and (E) $691,752.30 in damages for intentional tort. The plaintiffs assert their own appeal of the judgment on remand which: (F) dismissed their claim for $817,464.29 in mineral royalties.

FACTS AND PROCEDURAL HISTORY

The background facts and procedural history of this case are more detailed and fully set forth in the Louisiana Supreme Court's opinion in Quality Environmental Processes, Inc. v. I.P. Petroleum Co., Inc., 2013-1582 (La. 5/7/14), 144 So.3d 1011 (rehearing denied July 1, 2014) (hereinafter " Quality I "). For additional background facts, see Quality Environmental Processes, Inc. v. I.P. Petroleum Co., Inc., 2012–0776, 2013 WL 690535 (La. App. 1 Cir. Feb. 25, 2013). For efficiency, we discuss only the facts and procedural history relevant to the current appeal.

On June 29, 2000, Quality and the St. Martins filed a petition for declaratory judgment and damages against Energy Development Corporation (hereinafter "EDC"), Phillips Petroleum Corporation (hereinafter "Phillips"), Mobil Exploration & Producing U.S., Inc. (hereinafter "Mobil"), and IP Petroleum.² The plaintiffs alleged they were entitled to receive from the defendants all mineral royalties on production from the IP Pet. PPCO No. 1 well attributable to the St. Martin property from June 29, 1997, through the date the well was plugged and abandoned.³ The petition sought: (1) a declaratory judgment that the 1966 mineral deed did not create a mineral servitude; (2) an accounting of all pre–1992 royalties from Mobil, Phillips, and IP Petroleum; (3) an accounting of all post–1992 royalties from IP Petroleum and Phillips; (4) payment by Mobil and Phillips to plaintiffs "as damages" double the amount of royalties due and unpaid; (5) cancellation of described mineral leases; and (6) unspecified damages for non-payment of royalties. The trial court granted the plaintiffs leave to amend their suit to add Noble Energy, Inc. (hereinafter "Noble Energy"), as the successor to EDC, as a defendant.

At the time the instant suit was filed, some $817,464.29 in royalties had been paid by IP Petroleum to Noble Energy and Phillips between June 29, 1997, and April 1, 2001, while the remaining $106,977.66 in royalties (derived from production between April 1, 2001, and September 1, 2001) had been placed in escrow. See Quality I, 144 So.3d at 1018. The instant suit bears trial court docket number 129,412 and was assigned to Division D of the 32nd JDC in Terrebonne Parish, presided over by Judge David W. Arceneaux. This suit is referred to by the parties as the "Blue Line I" litigation. See Quality I, 144 So.3d at 1018.

Ultimately, Mobil was dismissed from the instant suit. The plaintiffs settled their claims with Phillips in 2001 and with Noble Energy in 2005, who were also dismissed from the suit. See Quality I , 144 So.3d at 1018. In the 2001 and 2005 settlement agreements with Phillips and Noble Energy, the plaintiffs obtained all of the mineral interests in the St. Martin property that had belonged to Phillips and Noble Energy respectively, i.e., the "after-acquired mineral rights." See Quality I , 144 So.3d at 1018. IP Petroleum is the sole remaining defendant in this suit.

In 2006, the plaintiffs attempted to amend their petition to add as a defendant International Paper Company (the parent company of IP Petroleum) and to assert a claim for tortious conspiracy against the defendants, as well as the attorneys for IP Petroleum, John Y. Pearce and the law firm of Montgomery, Barnett, Brown, Read, Hammond & Mintz, L.L.C. See Quality I, 144 So.3d at 1018. By judgment rendered February 27, 2007, the trial court denied the plaintiffs' motion to amend their pleadings to add the above-described defendants. See Quality I, 144 So.3d at 1018.

Thereafter, Quality and the St. Martins filed a second suit against IP Petroleum and International Paper, asserting their claim for unpaid royalties from June 29, 1997, through the date the well was plugged and abandoned. The plaintiffs also sought damages under the Louisiana Unfair Trade Practices Act (hereinafter "LUTPA") against IP Petroleum, International Paper, and IP Petroleum's attorneys, Mr. Pearce and the law firm of Montgomery Bamett. See Quality I , 144 So.3d at 1018. The second suit bears trial court docket number 149,973 and was assigned to Division B of the 32nd JDC in Terrebonne Parish, presided over by Judge John R. Walker. The second suit is referred to by the parties as the "Blue Line II" litigation. See Quality I, 144 So.3d at 1018. The Blue Line II suit is the subject of the related appeal pending before this court, 2016 CA 0230.⁴

In August 2007, the plaintiffs filed a motion for partial summary judgment, seeking judgment against IP Petroleum for royalties due since June 29, 1997.⁵ IP Petroleum opposed the motion. Following a hearing, the trial court denied the plaintiffs' motion.

On November 13, 2008, IP Petroleum filed a motion for partial summary judgment, seeking dismissal of the plaintiffs' claims. Following a hearing, the trial court denied IP Petroleum's motion in a judgment signed May 8, 2009.⁶

On August 29, 2014, IP Petroleum filed a motion for partial summary judgment, seeking dismissal of "all of the claims of the plaintiffs herein to any and all mineral royalties from production prior to April 1, 2001 from the IP Pet. PPCO No. 1 well," that is, the $817,464.29 in previously-paid royalties by IP Petroleum to Noble Energy and Phillips between the stipulated dates of June 29, 1997, and April 1, 2001. Royalties derived from production between April 1, 2001, and September 1, 2001, in the amount of $106,977.66 and placed in escrow, were not at issue in IP Petroleum's motion. IP Petroleum prayed for partial summary judgment in its favor and "that plaintiffs' claims for the sum of $817,464.29 in royalties paid to Phillips and [Noble Energy] prior to April 1, 2001 be dismissed, with prejudice and at their costs." The plaintiffs opposed the motion.

On November 10, 2014, the plaintiffs filed a motion to dismiss IP Petroleum's motion for partial summary judgment on the grounds that it was filed untimely, based on a previously issued pre-trial order. IP Petroleum opposed the plaintiffs' motion. Additionally, on November 13, 2014, the plaintiffs filed a motion requesting ex parte dismissal of the entire matter based on abandonment. See La. C.C.P. art. 561. The next day, the trial court entered an ex parte order dismissing the case. IP Petroleum subsequently filed a motion to set aside the order of dismissal on November 19, 2014.

Following a hearing, the trial court granted IP Petroleum's motion to set aside the order of dismissal, denied the plaintiffs' motion to dismiss IP Petroleum's motion for partial summary judgment filed August 29, 2014, and took IP Petroleum's motion for partial summary judgment under advisement. On April 8, 2015, the trial court signed a judgment granting IP Petroleum's motion for partial summary judgment and dismissing all claims of the plaintiffs against IP Petroleum for previously-paid mineral royalties attributable to production prior to April 1, 2001, with prejudice. The trial court assessed all costs associated with IP Petroleum's motion for partial summary judgment against the plaintiffs. The trial court also issued written reasons for judgment. On August 28, 2015, the trial court, at the request of IP Petroleum, issued an order certifying the April 8, 2015 judgment rendered in its favor as a final judgment in accordance with La. C.C.P. art. 1915.

Quality and the St. Martins now suspensively appeal the April 8, 2015 certified final judgment of the trial court, designating portions of record on appeal.⁷ See La. C.C.P. art. 2128 ; see also Uniform Rules, Courts of Appeal, Rule 2—1.17.

APPELLATE JURISDICTION

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