Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Quality Environmental Processes, Inc. v. IP Petroleum Co., Inc.

Court of Appeals of Louisiana, First Circuit

April 12, 2017

QUALITY ENVIRONMENTAL PROCESSES, INC., MICHAEL X. ST. MARTIN, AND VIRGINIA RAYNE ST. MARTIN
v.
IP PETROLEUM COMPANY, INC., INTERNATIONAL PAPER COMPANY, MONTGOMERY BARNETT, L.L.P, AND JOHN Y. PEARCE

         On Appeal from the 32nd Judicial District Court In and for the Parish of Terrebonne State of Louisiana Trial Court No. 149, 973, Div. B The Honorable John R. Walker, Judge Presiding

          Jamie S. Manuel and H. Alston Johnson, III Attorneys for Appellants/Cross-Appellees Defendants-IP Petroleum Company, Inc. and International Paper Company

          W. Shelby McKenzie Amy C. Lambert Kelley Dick, Jr. Attorneys for Appellants/Cross-Appellees Defendants - Montgomery Barnett, L.L.P. and John Y. Pearce

          A.J. Gray, III Attorney for Appellees/Cross-Appellants Plaintiffs - Michael X. St. Martin, Virginia Rayne St. Martin, and Quality Environmental Processes, Inc.

          Michael X. St. Martin Christopher J. St. Martin Attorneys for Appellees/Cross-Appellants Plaintiffs - Quality Environmental Processes, 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 defendants IP Petroleum Company, Inc. (hereinafter "IP Petroleum") and International Paper Company challenge a trial court judgment on remand that awarded the plaintiffs, Quality Environmental Processes, Inc. (hereinafter "Quality"), Michael X. St. Martin, and Virginia Rayne St. Martin: (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 in statutory attorney's fees pursuant to La. R.S. 31:139; and (E) $691, 752.30 in intentional tort damages. The plaintiffs assert their own appeal of the judgment on remand insofar as the judgment: (F) dismissed their claim for $817, 464.29 in mineral royalties. In this appeal, we amend, in part, the judgment of the trial court, and affirm as amended.

         In a related appeal, also rendered this date, 2016 CA 0171 consolidated with 2016 CA 0172, the plaintiffs appeal a judgment granting partial summary judgment in favor of the defendant, IP Petroleum, and dismissing with prejudice the plaintiffs' claims for mineral royalties attributable to production on the IP Pet. PPCO No. 1 well prior to April 1, 2001.

         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. LP. Petroleum Co., Inc., 2013-1582 (La. 5/7/14), 144 So.3d 1011 (rehearing denied July 1, 2014) (hereinafter "Quality I")[2]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.[3] That 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. It is referred to by the parties as the "Blue Line I" litigation. See Quality I, 144 So.3d at 1018. The Blue Line I litigation is the subject of the related appeal before this court, 2016 CA 0171 consolidated with 2016 CA 0172.

         In the Blue Line I suit, 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 (September 2002), in the amount of $817, 464.29.[4] The trial court later 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 Blue Line I 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 (hereinafter "previously-paid royalties"), while the remaining $106, 977.66 in royalties (derived from production on the well between April 1. 2001, and September 1, 2002) were placed in escrow by the law firm of Montgomery, Barnett, Brown, Read, Hammond & Mintz, L.L.P. (hereinafter "escrowed royalties"). See Quality I, 144 So.3d at 1018.

         Ultimately, Mobil was dismissed from the Blue Line I 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. See Quality I, 144 So.3d at 1018. IP Petroleum is the sole remaining defendant in the Blue Line I suit.[5]

         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, L.L.P. See Quality I, 144 So.3d at 1018. 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 the instant suit on December 1, 2006, against IP Petroleum, International Paper Company, Montgomery Barnett, L.L.P., and Mr. Pearce, which is the subject of this appeal. The plaintiffs again asserted a claim for unpaid royalties for production from the IP Pet. PPCO No. 1 well against IP Petroleum and International Paper, specifically, the previously-paid royalties in the amount of $817, 464.29. The plaintiffs also asserted a claim against IP Petroleum and International Paper Company for double the amount of royalties due, interest, and attorney's fees pursuant to La. R.S. 31:137, et seq. The plaintiffs asserted a claim against Mr. Pearce and Montgomery Barnett, L.L.P. for the escrowed royalties, in the amount of $106, 977.66, as well as damages and attorney's fees. Further, the plaintiffs sought damages against all the defendants for certain alleged "willful and deliberate acts" under the Louisiana Unfair Trade Practices Act (hereinafter "LUTPA"), La. R.S. 51:1401, et seq. See Quality I, 144 So.3d at 1018. Additionally, under LUTPA, the plaintiffs sought three times the actual damages shown at the trial of this matter for the defendants' knowing commitment of the alleged unfair and deceptive acts. The instant suit bears trial court docket number 149, 973 and was assigned to a different division of the 32nd JDC in Terrebonne Parish-Division B-which is presided over by Judge John R. Walker. This suit is referred to by the parties as the "Blue Line II" litigation.[6] See Quality I, 144 So.3d at 1018.

         The case came before the trial court for trial on May 11, 12, and 13, and September 14 and 15, 2009. Thereafter, the trial court signed a judgment on October 28, 2011, in favor of the plaintiffs and against the defendants, decreeing 100% ownership of the mineral rights in the plaintiffs, and ordering IP Petroleum to pay a total of $6, 725, 375.98 for unpaid royalties, penalties (twice the royalties due), interest on unpaid royalties and penalties from July 1, 1997, through October 28, 2011, and 25% attorney's fees. As to the LUTPA claim, the judgment ordered IP Petroleum, International Paper Company, Mr. Pearce, and Montgomery Barnett, L.L.P. to pay a total of $4, 549, 227.91 in penalties (triple unpaid royalties), interest on treble damages from the date of demand, and 25% attorney's fees. See Quality I, 144 So.3d at 1019.

         The defendants suspensively appealed the October 28, 2011 judgment of the trial court. The plaintiffs did not appeal any portion of the trial court's judgment. On appeal, this court vacated the judgment of the trial court in an unpublished, summary opinion. See Quality Environmental Processes, Inc. v. IP. Petroleum Co., Inc., 2012-CA-0776, 2013 WL 690535 (La.App. 1 Cir. Feb. 25, 2013). This court held the trial court erred in finding that the plaintiffs obtained 100% ownership rights in the mineral rights at issue, and erred in awarding damages, penalties, interest, attorney's fees, and costs to the plaintiffs. This court remanded the case to the trial court to consider the plaintiffs' claims in connection with any mineral interests they may have obtained by virtue of their 2001 and 2005 settlements with Phillips and Noble Energy. This court did not address the merits of the plaintiffs' LUTPA claims, and the defendants unsuccessfully sought rehearing regarding those claims. Following the decision of this court, the plaintiffs and defendants each filed writ applications with the Louisiana Supreme Court, which were granted.[7]

         The supreme court affirmed the decision of this court in Quality I, holding: (1) the 1966 mineral deed was sufficiently specific to identify the property to be conveyed and thus, to create a valid mineral servitude and to place third parties on notice of the existence of that servitude; (2) the St. Martins and Quality did not acquire the mineral rights to the subject property via the 1992 warranty deed whereby they purchased the St. Martin property; (3) the actions of the defendants did not rise to the level of an unfair trade practice within the meaning of LUTPA; and (4) affirmed this court's remand of the case to the trial court for consideration of any royalty payment issues stemming from the after-acquired rights, if any, arising out of the 2001 and 2005 settlements. See Quality I, 144 So.3d at 1027.

         Following remand, IP Petroleum and International Paper, and Montgomery Barnett, L.L.P. and Mr. Pearce, filed peremptory exceptions raising the objection of res judicata, wherein the defendants argued that the supreme court's dismissal of the plaintiffs' LUTPA claims in Quality I barred the plaintiffs from asserting any further tort claims related to, or arising from the same conduct that was the subject of the supreme court's dismissal of the LUTPA claims.[8] The plaintiffs opposed the exceptions. The trial court denied the defendants' exceptions pleading res judicata. The defendants filed supervisory writs with this court and writs of certiorari with the supreme court, which were denied.[9]

         On September 21 and November 10, 2015, the trial court conducted a bench trial in accordance with the supreme court's remand order in Quality Ho consider "any royalty payment issues stemming from the after-acquired rights, if any, arising out of the 2001 and 2005 settlements." See Quality I, 144 So.3d at 1027. At the conclusion of the bench trial, the trial court held the plaintiffs were not entitled to $817, 464.20 in previously-paid royalties, and dismissed that claim.[10] The trial court held, however, the plaintiffs were entitled to unpaid mineral royalties in the amount of $107, 612.67, which was the amount of the mineral royalties held in escrow by Montgomery Barnett, L.L.P. on behalf of its client, IP Petroleum; $215, 225.34 in statutory penalties pursuant to La. R.S. 31:139 (double the royalty award); $230, 563.83 in interest on the unpaid royalties and penalties from October 31, 2002, through October 31, 2015; and $138, 350.46 in attorney's fees, representing 25% of the total award of the royalties, penalties, and interest. The trial court also considered whether the plaintiffs were entitled to any damages arising out of the defendants' alleged tortious conduct relative to the escrowed royalties. The trial court ruled that the defendants did intentionally withhold money (i.e., the escrowed royalties), which it held the plaintiffs were entitled to receive, and awarded the plaintiffs $691, 752.30 in damages (which happens to be the sum of the escrowed royalties, the penalty award, interest, and attorney's fees award).

         The trial court signed a judgment in accordance with its ruling on December 21, 2015. The judgment provided that all the awards provided for therein would bear legal interest in accordance with law and assessed all costs against the defendants. Thereafter, IP Petroleum, International Paper, Montgomery Barnett, L.L.P., and Mr. Pearce suspensively appealed the trial court's December 21, 2015 final judgment.[11] The plaintiffs filed a devolutive appeal of the trial court's judgment.

         ASSIGNMENTS OF ERROR

         IP Petroleum and International Paper assign the following as error on appeal:

1.
The trial court erred in denying IP Defendants' exception of res judicata with respect to the plaintiffs' claim for tort damages.
2.
The trial court erred in awarding mineral royalties, a statutory penalty[, ] and attorney fees to plaintiffs when plaintiffs did not prove that the relevant settlements and conveyances gave them any rights to the royalties nor did they prove an unreasonable failure to pay them; it erred in miscalculating any penalty due; and, if a statutory penalty and attorney fees are awarded, it was error for the trial court to calculate judicial interest on those awards from any date other than the date of the judgment awarding them (December 21, 2015).
3.
The trial court erred in awarding tort damages for an intentional tort when the plaintiffs did not prove that a tort had been committed or that they suffered any damages, if it had.
4.
The trial court erred in awarding duplicate damages to the plaintiffs by "measuring" their tort damages by the very same amounts (and awarding those amounts) that they had already been awarded on their claim for royalties, and in the calculation of judicial interest on the tort damages.
5.
The trial court erred in failing to provide that its dismissal of the plaintiffs' claim for $817, 464.29 in previously-paid royalties was with prejudice and in failing to dismiss with prejudice any and all remaining claims of the plaintiffs other than the intentional tort claim upon which relief was granted.

         In their appeal of the trial court's judgment, Mr. Pearce and Montgomery Barnet, L.L.P. assert the following as error on appeal:

1) The trial court erred in denying the exceptions of res judicata with respect to the tort claim.
2) The trial court erred in holding that an attorney can be liable for the intentional tort of conversion for holding funds in a trust account where ownership of those funds is and remains in dispute.
3) The trial court erred in awarding damages for intentional tort in the absence of any evidence that a tort had been committed or that damages had been incurred.
4) The trial court erred in awarding duplicate damages, as well as interest on interest, to the Plaintiffs by "measuring" tort damages by the very same amounts already awarded on the claim for royalties.

         Quality and the St. Martins also appeal the judgment of the trial court. On appeal, the plaintiffs assign error to the trial court's dismissal of their claim to the previously-paid royalties in the amount of $817, 464.29.

          LAW AND DISCUSSION

         Defendants' Exceptions Pleading Res Judicata

         In their first assignments of error, the defendants argue the trial court erred in denying their peremptory exceptions pleading the objection of res judicata with respect to the plaintiffs' claims for tort damages. The trial court's denial of the defendants' peremptory exceptions raising the objection of res judicata is interlocutory in nature and generally not appealable. However, when an unrestricted appeal is taken from a final judgment, the appellant is entitled to seek review of all adverse interlocutory rulings, in addition to review of the final judgment. Cajun Constructors, Inc. v. EcoProduct Solutions, LP, 2015-0049 (La.App. 1 Cir. 9/18/15), 182 So.3d 149, 155, writ denied, 2015-1908 (La. 11/20/15), 180 So.3d 1287.

         The question before the trial court was whether, following appeal and the supreme court's ruling and remand order in Quality I, res judicata barred the plaintiffs from litigating their intentional tort claims on remand. The defendants contend that the supreme court's opinion in Quality I unanimously held that the plaintiffs were not entitled to damages under LUTPA because their claims of alleged tortious conduct by the defendants did not rise to the level of a LUTPA violation; the supreme court likened the alleged conduct to a discovery dispute, which could potentially violate rules pertaining to discovery or ethical conduct. Thus, according to the defendants, the supreme court's rejection of the plaintiffs' LUTPA claims in Quality I completely resolved, in the favor of the defendants, all theories of recovery sounding in tort. The defendants further argue that the plaintiffs are barred by res judicata from relitigating any tort claims because this court, affirmed by the supreme court, remanded the matter solely on the narrow issue of after-acquired titles, if any, to the mineral rights.

         The plaintiffs assert their petition includes, and has always included, tort claims that are distinguishable and independent of the LUTPA claims. The plaintiffs contend that following trial in 2009, the trial court found that all of their allegations of tortious conduct by the defendants were supported, and that this court, in our 2013 summary opinion, did not disturb any of the factual determinations made by the trial court. The plaintiffs further argue that although the supreme court held in Quality I that the defendants' actions did not rise to the level of a LUTPA violation, the supreme court did not absolve the defendants of all tort liability, and further argued that its remand on the narrow issue of the after-acquired titles was a partial judgment and did not encompass issues related to the defendants' alleged tortious conduct.

          Res judicata, literally "the thing adjudged, " bars relitigation of a subject matter arising from the same transaction or occurrence of a previous suit and promotes judicial efficiency and final resolution of disputes. Landry v. Town of Livingston Police Department, 2010-0673 (La.App. 1 Cir. 12/22/10), 54 So.3d 772, 776. Louisiana Revised Statutes 13:4231 provides for res judicata as follows:

Except as otherwise provided by law, a valid and final judgment is conclusive between the same parties, except on appeal or other direct review, to the following extent:
(1) If the judgment is in favor of the plaintiff, all causes of action existing at the time of final judgment arising out of the transaction or occurrence that is the subject matter of the litigation are extinguished and merged in the judgment.
(2)If the judgment is in favor of the defendant, all causes of action existing at the time of final judgment arising out of the transaction or occurrence that is the subject matter of the litigation are extinguished and the ...

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.