Appealed from the Forty-Second Judicial District Court for the Parish of DeSoto, Louisiana. Trial Court No. 72601. Honorable Robert E. Burgess, Judge.
REVERSED AND REMANDED.
DAVIDSON, JONES & SUMMERS, By: Randall S. Davidson, William Lake Hearne, Jr., Counsel for Appellant, George A. Olsen, Jr.
PETTIETTE, ARMAND, DUNKELMAN, WOODLEY, BYRD & CROMWELL, L.L.P., By: Lawrence W. Pettiette, Jr., Joseph S. Woodley, PETTIETTE, ARMAND, DUNKELMAN, WOODLEY, BYRD & CROMWELL, L.L.P. By: Lawrence W. Pettiette, Jr. Joseph S. Woodley.
WIENER, WEISS & MADISON, By: John M. Frazier, Margorie Frazier Amerine, Armand L. Roos, Counsel for Appellee, Armand L. Roos, Executor of the Succession of Fred Langford Houston.
BLANCHARD, WALKER, O'QUINN & ROBERTS, By: William Timothy Allen, John Andrew Durrett, Michael E. Riddick, Counsel for J-W Operating Co.
Before DREW, MOORE & PITMAN, JJ.
[49,925 La.App. 2 Cir. 1]
[49,925 La.App. 2 Cir. 1] Defendants/Appellants George A. Olsen, Jr. and Hanh T. Williams (" Trustee Williams" ) appeal the trial court's granting of summary judgment in favor of Armand L. Roos, in his capacity as testamentary executor of the succession of Fred Langford Houston (" the Succession" ), in finding that Defendants (assignees of an oil and gas lease on property owned by the Succession) were solidarily liable to the Succession for the full amount of royalties they received prior to the invocation of this concursus proceeding filed by J-W Operating Company (" J-W" ), subject to a credit for the original amount paid by the first assignee of the subject oil and gas lease. For the following reasons, we reverse the judgment of the trial court and remand for further proceedings.
J-W, an oil well owner and operator, filed this matter as a concursus proceeding, naming as defendants George A. Olsen, Trustee Williams and the Succession.
In July 1974, Fred L. Houston (" Houston" ) and his wife granted a mineral lease to Tenneco (" Tenneco Lease" ) over 40 acres of land they owned in DeSoto Parish. Tenneco, or its assignees, drilled ten wells on the three units affecting the tract. The lease has been highly productive. At some point, J-W became the owner and operator of these wells and units. Mrs. Houston died, and Houston became the sole owner of the tract and the lease.
In August 2005, Houston formed an inter vivos trust named the Fred [49,925 La.App. 2 Cir. 2] L. Houston Trust (" the Trust" ). He placed various assets, including the Tenneco Lease, in the trust corpus. The instrument declared the Trust " irrevocable and may not be revoked at any time under any circumstances," including " any action to . . . modify or negate Settlor's intended effect of protecting the properties and assets transferred to the Trust." Houston was both the income and principal beneficiary, with the provision that, upon his death, " his interest in the trust shall vest in his estate (his heirs or legatees) free of trust." The Trust was also designated as a spendthrift trust to the maximum extent permitted by the applicable laws governing such trusts. It gave the trustee, insurance broker Hanh T. Williams, broad management powers and a compensation of 50 percent of all revenue from a separate lease in Webster Parish. Trustee Williams signed not only the instrument of trust, but also the act of assignment whereby Houston transferred the Tenneco Lease to the Trust corpus.
Mr. Olsen, president of Noble House Investments, Inc. (" Noble House" ), desired to purchase the Trust's mineral interest in the Tenneco Lease from Houston; as a result, Noble House made an offer to Houston to buy for $34,000. On April 26, 2006, Houston, in his personal capacity, executed an assignment of royalty interest in the Tenneco Lease to Noble House (" Noble House Assignment" ). The assignment made no mention of the irrevocable trust Houston had created and in which this particular property was placed. Trustee Williams did not sign this assignment.
By letter agreement that same day, Noble House promised to assign to Trustee Williams 50 percent of the interest purchased as soon as the new [49,925 La.App. 2 Cir. 3] division orders were complete. Noble House executed such an assignment to Trustee Williams in August 2006 (" Williams Assignment" ) after she paid $14,000 for her share of the minerals. The remaining 50 percent of Noble House's interest was assigned to Mr. Olsen in September 2007 (" Olsen Assignment" ).
Houston died in September 2008. Under the Trust instrument, the corpus, including the Tenneco Lease, immediately vested in his estate. Although Trustee Williams was named in Houston's will as the independent executor of his estate and was to receive an executor's fee of 20 percent of the gross estate, the court confirmed attorney Armand Roos as testamentary executor of the Succession. Mr. Roos notified J-W that the Trust, and the Succession, claimed the Tenneco Lease. This resulted in J-W filing the concursus proceeding in DeSoto Parish naming Mr. Olsen, Trustee Williams and the Succession as defendants. At issue was ownership of accrued royalties of $67,240.98, which J-W placed in the registry of the court.
Mr. Olsen and Trustee Williams both answered the concursus proceeding, claiming that the assignment from Houston to Noble House, if conveying a thing he did not own, was only a relative nullity (not an absolute nullity), which included a warranty against eviction. They contended that, upon Houston's death, the Tenneco Lease reverted to his estate and the Succession was bound to honor the warranty. Each demanded recognition of his or her 50 percent interest.
The Succession filed an answer to the concursus proceeding, asserting its ownership of 100 percent of the money deposited in the registry of the court. In addition, it filed cross-claims against Mr. Olsen and Trustee [49,925 La.App. 2 Cir. 4] Williams, as defendants, and asserted in " Count I" that the assignments by Houston to Noble House, and those from Noble House to Trustee Williams and then Mr. Olsen, were absolute nullities and, further, that all of the right, title and interest in the Tenneco Lease became, and still remained, the property of the Succession.
In " Count II" asserted by cross-claim against only Trustee Williams, the Succession alleged that she had committed a breach of trust under La. R.S. 9:2081, et seq. It further alleged that, as trustee, she was prohibited by law from buying or selling any property of the Trust to or from her business associates, unless the Trust document provided otherwise, or unless specifically authorized by a court of competent jurisdiction after a contradictory hearing. The Succession also alleged that Trustee Williams and Mr. Olsen were the only two members of a Louisiana limited liability company known as Platinum Interests, LLC, and were, therefore, business associates. It claimed that, at all times between August 2005 (when the Trust was created) and September 2008 (when Houston died), all right, title and interest in the Tenneco Lease was the property of the Trust and that Trustee Williams was personally liable for any loss of depreciation in value of the Trust estate resulting from the breach and for any profit made by her through the breach, or that she was liable for any profit that would have accrued to the Trust estate had there been no breach.
In the cross-claims, the Succession prayed to declare the assignments null and for judgment awarding the Succession the value of all sums paid to Noble House, Trustee Williams and Mr. Olsen pursuant to the Tenneco Lease, minus a credit for
the $35,000 paid by Noble House to Houston; [49,925 La.App. 2 Cir. 5] awarding the Succession attorney fees and costs from Trustee Williams; and denying her all compensation or, in the alternative, awarding only a reduced compensation for services rendered as Trustee.
Both Mr. Olsen and Trustee Williams filed many exceptions to the Succession's cross-claims, including peremptory exceptions of no right of action, no cause of action and prescription. They also filed dilatory exceptions of nonconformity of the petition, vagueness and improper form of the pleading. Declinatory exceptions of lack of jurisdiction and improper venue were also filed, arguing that the Succession could not bring the claims of " Count II" of the cross-claim in DeSoto Parish and that the proper venue was the district court of the parish in which Houston was domiciled when the Trust was created or the parish in which Trustee Williams was domiciled. The Succession filed a reply memorandum regarding the declinatory exceptions of lack of jurisdiction and improper venue, stating that it intended to amend the cross-claim to remove " Count II" against Trustee Williams for violation of La. R.S. 9:2085(A) and a corresponding breach of trust under La. R.S. 9:2081 and that the claim would be brought in a separate action.
The trial court rendered a judgment sustaining Mr. Olsen's exception of nonconformity of the petition as required by to La. C.C.P. art. 891 as it related to the parties' domicile and found the exceptions of lack of jurisdiction and improper venue were well-founded. Those exceptions were [49,925 La.App. 2 Cir. 6] sustained at the Succession's cost. However, all of the other exceptions filed by Mr. Olsen were denied. On the same day, the trial court also sustained Trustee Williams's exceptions of lack of jurisdiction and improper venue as to " Count II," and denied the exceptions of no right of action, no cause of action and improper form of the pleadings.
The Succession then filed an amended cross-claim to cure the alleged defects by setting forth the domicile of the parties and removing " Count II" for violations due to breach of trust. Despite the deletion of " Count II" from the amended cross-claim, the Succession still prayed for judgment awarding it the value of all sums paid to Noble House, Trustee Williams and Mr. Olsen pursuant to the Tenneco Lease, minus a credit for the $35,000 paid by Noble House to Houston pursuant to " Count I" of the original cross-claim.
The Succession filed a motion for partial summary judgment seeking a declaration that the Succession owned the Tenneco Lease and for an award of all accrued royalties, less a credit for the purchase price paid by Noble House. It argued that all three assignments were absolute nullities that violated the spendthrift provision of the Trust instrument and that the Noble House assignment was actually orchestrated by Trustee Williams, who, as trustee, was prohibited from acquiring Trust property. Mr. Olsen filed a cross-motion for partial summary judgment seeking an ...