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Magnolia Point Minerals LLC v. Chesapeake Louisiana LP

United States District Court, Western District of Louisiana, Shreveport Division

February 10, 2015

MAGNOLIA POINT MINERALS, LLC
v.
CHESAPEAKE LOUISIANA, LP, ET. AL,

HICKS, JUDGE

MEMORANDUM ORDER

MARK L. HORNSBY, MAGISTRATE JUDGE

Introduction

This case arises out of the Haynesville Shale natural gas play. Plaintiff, Magnolia Point Minerals, LLC ("Plaintiff"), alleges that Defendant, Chesapeake Louisiana, LP ("Chesapeake") breached a "no cost" provision contained in an addendum to an oil & gas lease between Plaintiff and Chesapeake. Plaintiff argues that the no cost provision should be interpreted to prohibit Chesapeake from deducting post-production costs from Plaintiff's royalty. In ruling on various dispositive motions, Judge Hicks has determined that an examination of extrinsic evidence, include evidence on the custom, pattern, or practice in the industry, is required in order to determine the meaning of the "no cost" provision.

Plaintiff has propounded written discovery to Chesapeake seeking information and documents regarding Chesapeake's leasing practices in North Louisiana, the use of no cost provisions, and Chesapeake's understanding of the industry custom regarding the use of no cost provisions. Plaintiff also issued subpoenas to two lease brokers, J.W. Porter and Beta Land Services, seeking essentially the same information. Chesapeake objects to Plaintiff's discovery and the subpoenas on numerous grounds, including ambiguity, relevance, undue burden, and privilege.

Motion to Compel

Before the court is Plaintiff's Motion to Compel (Doc. 119). The court has reviewed each of the interrogatories and requests that were briefed by the parties. For the reasons that follow, the motion is granted in part and denied in part.

Discovery Requests Regarding Extrinsic Evidence

As a general matter, Chesapeake's objections to Plaintiff's discovery regarding extrinsic evidence are baseless.

Ambiguity

Chesapeake objects to several requests on the basis that the requests are unclear or ambiguous. For example, Chesapeake argues that the terms "No Cost Provision" is unclear and requests a legal conclusion, even though Plaintiff defined the term in its requests. That definition makes clear that the term is designed to focus and limit the interrogatories and requests to leases containing language referring to costs, charges, or expenses that might be interpreted as limiting, altering or otherwise affecting what Post Production Costs, if any, are to be borne by the lessor's royalty interest. These requests are not ambiguous. In fact, it is difficult for the court to envision how these requests could have been made more clear.

Undue Burden

It is not an undue burden to require Chesapeake to identify its North Louisiana leases containing no cost provisions. It may be time consuming to search its databases, but that is not an ...


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