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Munro v. British American Oil Producing Co.

Court of Appeals of Louisiana, Third Circuit

November 8, 2017

MARGARET FISK MUNRO, ET AL.
v.
BRITISH AMERICAN OIL PRODUCING COMPANY, ET AL.

         ON REMAND FROM THE LOUISIANA SUPREME COURT ON APPLICATION FOR SUPERVISORY WRITS FROM THE THIRTY-EIGHTH JUDICIAL DISTRICT COURT PARISH OF CAMERON, NO. 10-19049 HONORABLE PENELOPE Q. RICHARD, DISTRICT JUDGE

          Leonard L. Kilgore, III, Esteban Herrera, Jr., Victor J. Suane, Jr., Sam O. Lumpkin, Richard D. McConnell, Jr., Kean Miller, LLP COUNSEL FOR DEFENDANTS/RELATORS: Devon Energy Production LP as successor to Pennzoil Petroleum Company Pennzoil Exploration and Production Company PennzEnergy Exploration & Production Company

          Alan J. Berteau, Charles S. McCowan, III, L. Victor Gregoire, Jr., Kean Miller, LLP COUNSEL FOR DEFENDANTS/RELATORS: Chevron U.S.A., Inc. Gulf Oil Corporation Chevron USA as successor in interest of British American Oil Producing Company

          Michael R. Phillips, Kean Miller, LLP, COUNSEL FOR DEFENDANTS/RELATORS: Chevron U.S.A., Inc. Gulf Oil Corporation Chevron USA as successor in interest of British American Oil Producing Company

          John E. W. Baay, II J. Michael DiGiglia Eric S. Charleston Gieger, Laborde & Laperouse, L.L.C. COUNSEL FOR DEFENDANT/RELATOR: Nippon Oil Exploration USA Limited

          Seth B. Hopkins, Tanya E. Dugas, Raley & Bowick, LLP, COUNSEL FOR DEFENDANT/RESPONDENT: Black Elk Energy Offshore Operations, LLC

          J. Michael Veron, Alonzo P. Wilson, J. Rock Palermo, III, Turner D. Brumby, Veron, Bice, Palermo & Wilson, L.L.C. COUNSEL FOR PLAINTIFFS/RESPONDENTS: Margaret Fisk Munro, Barton Fisk, Dianne Marie Fisk, Audra Dawn Cabral, Deena Greenhaw

          Michael H. Schwartzberg, Shane Hinch, Vamvoras Schwartzberg & Associates, LLC COUNSEL FOR PLAINTIFFS/RESPONDENTS:, Margaret Fisk Munro, Barton Fisk, Dianne Marie Fisk, Audra Dawn Cabral, Deena Greenhaw

          Court composed of Sylvia R. Cooks, Marc T. Amy, and Billy Howard Ezell, Judges.

          BILLY H. EZELL, JUDGE

         Multiple defendants in an oilfield contamination lawsuit filed a joint motion to dismiss the Plaintiffs' suit against them due to abandonment under La.Code Civ.P. art. 561. The Plaintiffs opposed the motion to dismiss, asserting that a bankruptcy filing against one of the Defendants automatically stayed all state court claims against, not only the bankrupt Defendant, but the other Defendants as well. After the trial court denied the motion to dismiss, the Defendants, who moved for dismissal, filed an application for supervisory writs with this court. A panel of this court denied the application. The matter returns to this court upon remand by the Louisiana Supreme Court for briefing, argument, and a full opinion. Following that consideration, the Defendants' application for supervisory writs is denied.

         Factual and Procedural Background

         The Plaintiffs[1] filed the petition instituting this claim in June 2012, alleging that the Defendant energy companies[2] damaged their Calcasieu Parish property in the course of conducting oil and gas exploration activities on the property pursuant to a lease that was repeatedly amended and assigned. The petition alleged that the Defendants were solidarily liable for the damages occasioned by alleged trespass and contamination of the property. Due to these purported actions, the Plaintiffs sought cancellation of the lease, compensatory damages, and exemplary damages. The Plaintiffs also advanced a cause of action pursuant to La.R.S. 30:29.

         The matter progressed initially with the trial court resolving exceptions filed by a number of the Defendants in December 2012. Thereafter, in September 2013, the Defendants answered the petition, doing so jointly. However, on August 19, 2015, attorneys for the present-day lessee, Black Elk Energy Offshore Operations, LLC, filed a "Notice of Bankruptcy Stay" (citation omitted) indicating that:

[O]n August 11, 2015, an involuntary petition of bankruptcy was filed against Black Elk Energy Offshore Operations, LLC in the United States Bankruptcy Court, Southern District of Texas. . . . Pursuant to U.S.C. § 362(a), all creditors of the debtor(s) are stayed from any act, the commencement or continuation of any act, enforcement of any lien or judgment obtained against the debtor(s) or the property of their estate, or any court proceeding with respect to the enforcement of a lien or judgment against the debtor(s) or the property of their estate from and after the filing date of the bankruptcy petition, except as otherwise provided for by U.S.C. § 362(b).
All claims asserted against Black Elk Energy Offshore Operations, LLC, including all claims for fraudulent transfer and to pierce the corporate veil, are assets of the bankruptcy estate and can only be prosecuted by the bankruptcy trustee.

         The issue now under review was instituted on October 17, 2016, when the Defendants, other than Black Elk, (hereinafter "Movants")[3] filed a "Joint Ex Parte Motion and Incorporated Memorandum To Dismiss With Prejudice on Grounds of Abandonment." Therein, the Movants observed that more than three years had passed since September 23, 2013, the time that all Defendants filed their joint answer and affirmative defenses. The Movants asserted that "[n]o further step by the parties in the prosecution or defense of this action, including discovery, has occurred since" the filing of that answer. Notably, the Movants suggested that "the filing of notice of Black Elk's bankruptcy is not an action taken in the state district court and does not toll the prescriptive period for abandonment as to Movants." They contended that, although abandonment operates without order, a formal order of dismissal should be entered by the trial court upon ex parte motion of a party.

         However, the trial court did not enter such a formal order, but instead denied the ex parte motion to dismiss, noting on the judgment, that it did so after considering both the motion and "Plaintiffs' Opposition[.]" Afterwards, the Movants filed a motion for new trial, which was set for hearing. At the hearing, the Movants first challenged the trial court's denial of the formal order upon filing of the ex parte motion pursuant to the procedure of La.Code Civ.P. art. 561. On the merits, the Movants pointed out the passage of three years since the filing of their answer and also argued that, although the matter was stayed as to Black Elk, it was not stayed as to them. In opposition, the Plaintiffs argued that the trial court must consider the matter stayed as to all Defendants, noting that Black Elk had assumed the defense for all of the Defendants and that all Defendants shared common counsel. The trial court denied the motion for new trial, finding that the parties were sufficiently intertwined so as to require the application of the bankruptcy stay to the entire proceeding.[4]

         The Movants re-urged the motion to dismiss in an application for supervisory writs filed with this court. That application was denied by a panel of this court. See Munro v. British American Oil Producing Co., 16-1057 (La.App. 3 Cir. 12/28/16) (an unpublished writ ruling wherein the majority of the panel ruled: "WRIT DENIED. We find no error in the trial court's ruling."). Subsequently, on June 16, 2017, the Louisiana Supreme Court granted the Movants' application for supervisory writ filed before that court, ruling: "Granted. Remanded to the court of appeal for briefing, argument, and full opinion." See Munro v. British American Oil Producing Co., 17-655 (La. 6/16/17).

         Upon return to this court, the Movants assign the following as error in their brief to this court:

1. The district court erred by failing to recognize that the case had in fact been abandoned by operation of law pursuant to La. CCP art. 561.
2. The district court erred in denying the Joint Ex Parte Motion to Dismiss With Prejudice on Grounds of Abandonment (hereinafter "Joint Motion to Dismiss") when such a motion was filed pursuant to La. CCP art. 561 demonstrating that no parties had taken any steps in the prosecution or defense of the case over the prior three year period.
3. The district court erred by failing to enter a formal order of dismissal in response to the Joint Motion to Dismiss as required by La. CCP art. 561.
4. The district court also erred when it considered the Appellees' "Opposition" as a basis for the Denial of the Joint Motion to Dismiss (hereinafter "Denial") and failed to either ignore or strike the Appellees' "Opposition."
5. The district court erred when it ruled that the bankruptcy of defendant Black Elk Energy Offshore Operations, LLC ("Black Elk") stayed the entire case and served to interrupt the abandonment period with respect to Appellees' claims against the applicants.

         Discussion

         Abandonment

         Louisiana Code of Civil Procedure Article 561 provides, in pertinent part, for the abandonment of a civil ...


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