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Suire v. Oleum Operating Co.

Court of Appeals of Louisiana, Third Circuit

November 2, 2017

JERRY J. SUIRE, ET AL.
v.
OLEUM OPERATING COMPANY, ET AL.

         APPEAL FROM THE FOURTEENTH JUDICIAL DISTRICT COURT PARISH OF CALCASIEU, NO. 2007-697 HONORABLE RONALD F. WARE, DISTRICT JUDGE

          Joseph P. Hebert Paul Matthew Jones Brian W. Capell Liskow & Lewis Counsel for Defendants/Appellants: Oleum Operating Company, L.C. AKSM, L.C.

          Guy E. Wall Jonathan R. Cook Maurine Wall Laborde Wall, Bullington & Cook, LLC Counsel for Defendant/Appellant: Sweet Lake Land & Oil Company, L.L.C.

          Chadwick W. Collings C. Randall Loewen Milling Benson Woodward L.L.P. Counsel for Plaintiffs/Appellees: Jerry J. Suire Antonia Suire J & J Onshore Production, Inc.

          Brett P. Furr Edward D. Hughes Taylor, Porter, Brooks, & Phillips, LLP Counsel for Intervenors/Appellees: Preston Andrews Price Susan R. Price Steven Haller Paula Haller.

          Court composed of Ulysses Gene Thibodeaux, Chief Judge, Phyllis M. Keaty, and Candyce G. Perret, Judges.

          PHYLLIS M. KEATY, JUDGE

         In this suit for damages arising out of a mineral lease, the current operators/lessees, Oleum Operating Company, L.C. and AKSM, L.C., and the owner/lessor, Sweet Lake Land & Oil Company, L.L.C., appeal the trial court's grant of a Motion for Partial Summary Judgment in favor of the overriding royalty interest (ORI) owners, Jerry J. Suire, Antonia Suire, J & J Onshore Production, Inc., [1] Preston Andrews Price, Susan R. Price, Steven Haller, and Paula Haller. For the following reasons, the trial court's judgment is affirmed.

         FACTS AND PROCEDURAL BACKGROUND

         This court is familiar with the factual and procedural history in light of Suire v. Oleum Operating Co., L.C., 13-736 (La.App. 3 Cir. 2/5/14), 135 So.3d 87, writs denied, 14-982 (La. 8/25/14), 147 So.3d 1120 and 14-987 (La. 9/12/14), 147 So.3d 707. As the facts have not materially changed since that opinion, we adopt the facts set forth therein by reference as though set forth in full herein:

This litigation involves the alleged failure of Oleum Operating Company, L.C. and AKSM, L.C. (collectively referred to as Oleum)[2]to pay the overriding royalty interest (ORI) due Jerry J. and Antonia G. Suire, Preston Andrews and Susan R. Price, and Steven and Paula Haller (collectively referred to as ORI owners). The property subject to the mineral lease at issue is located in Calcasieu Parish, and the owner/lessor of the property is Sweet Lake Land & Oil Company (Sweet Lake). The current operator/lessee is Oleum. The present parties' interests stem from the execution of a mineral lease in 1947 by Sweet Lake and J.A. Bonham.[3]
Since 1947, there have been several different operators/lessees of the property owned by Sweet Lake. A portion of the ORI at issue in this litigation was created in 1989, when Flash Oil & Gas granted an ORI to its owners, Preston Price and Steven Haller (and their wives Susan R. Price and Paula Haller), collectively amounting to 2.0153%, and a 3% ORI to Jerry Suire. [4] In later years, J & J Onshore Production, Inc. (J & J) became the operator/lessee of the Old Lease, and it continued to pay the ORI to the Flash Overrides.
Over time, the relationship between Sweet Lake and J & J, particularly Mr. Suire, became strained, and, in 2000, Sweet Lake sued J & J, claiming that the Old Lease was terminated.[5] In that litigation, Sweet Lake also alleged that J & J failed to pay royalties, failed to develop the property, and failed to produce oil and gas in paying quantities. During this contentious period, Oleum became involved when it purchased J & J's operating interest and assigned an additional ORI to Mr. Suire. [6] Ultimately, in 2003, a settlement agreement was reached between Sweet Lake, J & J, and Oleum wherein the terms, rights, and obligations of the parties under the Old Lease were changed.[7] For five years thereafter, Oleum continued as operator/lessee until further disputes arose between it and Sweet Lake in 2008.
In 2008, Sweet Lake sent a letter to Oleum, claiming that it violated the terms of the 1947 Amended Lease. Sweet Lake demanded that Oleum vacate the property and return all fruits derived from the 1947 Amended Lease, dating back to 2003. At this juncture, negotiations ensued between Sweet Lake and Oleum. As a result of these negotiations, on July 2, 2008, Oleum unilaterally executed an Act of Release of Oil, Gas and Mineral Lease thereby releasing the 1947 Amended Lease.[8] The 2008 Release was executed without the knowledge of the ORI owners, who, as a result thereby, were divested of all of their ORI. Also on July 2, 2008, another lease was entered into by Oleum, through Mike Snell, an owner and operator.[9] Notably, Mr. Snell transferred the divested ORI owners' rights to himself, personally, in the New Lease. The consequences of the 2008 Release and the New Lease are at the heart of the current litigation.
As a result of these events, suit was instituted by the Suires against Oleum and AKSM, initially seeking unpaid ORI, penalties, and attorney fees. After the initial petition was filed, a number of incidental demands were made by and against the various parties. Claims of intervention were asserted by the Prices and the Hallers for their unpaid ORI, penalties, and attorney fees. Oleum filed a reconventional demand against the Suires, asserting that it was entitled to an offset and/or recoupment of ORI payments made to Mr. Suire and, further, that their ORI was subject to a reduction based upon the [proportionate reduction clause]. Oleum later supplemented its reconventional demand against the Suires, seeking damages for a misrepresentation of the condition of the C-8 wellbore.
Oleum also filed a third party claim against J & J, claiming that it was entitled to a reimbursement of the ORI payments erroneously made to J & J. Alternatively, Oleum asserted that if it were determined that it had improperly taken certain offsets, that these amounts were still owed by J & J to Oleum. Claims were also made against J & J for damages relative to the C-8 wellbore.
J & J filed a reconventional demand against Oleum, alleging that Oleum breached the terms of their May 15, 2000 Purchase and Sale Agreement, whereby J & J sold its interest in the 1947 Amended Lease to Oleum by failing to pay Mr. Suire his 1.98% ORI and in failing to provide J & J notice of its attempt to release the lease. Further, J & J contended that Oleum's failure to obtain J & J's agreement was a breach of the 2003 settlement agreement.
. . . .
After a trial on the merits, the trial court recited oral reasons for judgment in favor of the ORI owners and dismissed the other ancillary claims between the parties.[10] In accordance therewith, the trial court signed a judgment October 15, 2012[.]

Id. at 89-92.

         The parties appealed, and this court issued a ruling on February 5, 2014. Suire, 135 So.3d 87. Therein, this court affirmed the trial court's judgment ordering payment to the Suires, Prices, and Hallers of past-due ORIs "through July 2, 2008." Id. at 104. It reversed the trial court's judgment with respect to payment of past-due ORIs "post 2008 Release and New Lease (i.e., July 2, 2008)."[11] Id. The third circuit found that Sweet Lake was "a party needed for just adjudication[.]" Id. at 96. On rehearing, this court supplemented its previous disposition by "ordering a remand of the matter to the trial court for further proceedings." Id. at 105. Writs were then denied by the Louisiana Supreme Court on August 25, 2014 and September 12, 2014. Id.

         Following remand to the trial court, the ORI owners amended their petitions and named Sweet Lake and Michael Snell as additional Defendants. Oleum and Mr. Snell filed exceptions of res judicata and no cause of action-law of the case. Following a hearing on June 15, 2015, and pursuant to a written judgment rendered on July 1, 2015, the trial court denied the exceptions. Writs were denied by both this court and the Louisiana Supreme Court. Suire v. Oleum, 15-667 (La.App. 3 Cir. 10/2/15) and 15-2011 (La. 12/7/15).

         On April 11, 2016, the Suires and J & J Onshore filed a Motion for Partial Summary Judgment, which was subsequently adopted by the Hallers and Prices. Oleum and Sweet Lake filed oppositions. The ORI owners filed reply memorandums, objecting to certain exhibits attached to Oleum and Sweet Lake's opposition memorandums. The Motion for Partial Summary Judgment was ultimately granted in favor of the ORI owners following a hearing on July 18, 2016. A written judgment was signed on August 15, 2016. Thereafter, Oleum and Sweet Lake filed motions for a new trial, which were denied by the trial court on October 11, 2016. Oleum and Sweet Lake appealed the trial court's judgment.[12]

         On appeal, Oleum asserts the following assignments of error:

1. The trial court erred in granting Plaintiffs' Motion and ruling that the 2008 Release and the 2008 [Top] Lease are null and void.
2. The trial court erred in granting Plaintiffs' Motion and ruling that the Old Lease has been maintained in force and effect.
3. The trial court erred in granting Plaintiffs' Motion and ruling that Plaintiffs' overriding royalty interests remain in full force and effect.
4. The trial court erred in refusing to consider trial testimony from this case when ruling upon Plaintiff's [sic] Motion.
5. The district court erred by considering the Invalid Release Theory raised by Plaintiffs' Motion and denying Oleum and AKSM's Exception of Res Judicata because the judgment previously rendered by this Court denying the claim is final and controlling.
6. The district court erred by considering the Invalid Release Theory raised by Plaintiffs' Motion and denying Oleum and AKSM's Exception of No Cause of Action based on the Law of the Case Doctrine because the judgment previously rendered by this Court has already rejected the claim in this litigation.

         Sweet Lake asserts the following assignments of error:

1. The trial court erroneously granted plaintiffs' partial summary judgment that the [2008] Release and 2008 [Top] Lease are null and void because they were signed without J & J's consent.
2. The trial court erred in granting plaintiffs' partial summary judgment that the [1947] Lease has been maintained in force and effect in accordance with its terms.
3. The trial court improperly excluded the certified records of the Office of Conservation offered by [Sweet Lake] in opposition to plaintiffs' ...

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