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Mary v. QEP Energy Co.

United States District Court, W.D. Louisiana, Shreveport Division

December 7, 2017

CYNTHIA SUE MARY, ET AL.
v.
QEP ENERGY COMPANY

          HORNSBY MAGISTRATE JUDGE.

          MEMORANDUM RULING

          S. MAURICE HICKS, JR., CHIEF JUDGE

         Before the Court are three Motions: (1) Defendant QEP Energy Company's (“QEP”) Motion to Strike (Record Document 88) the affidavits of Eric L. Glover (“Glover”) and William J. Wood, Jr. (“Wood”); (2) QEP's Motion for Partial Summary Judgment (Record Document 49) seeking the dismissal of Plaintiffs Cynthia Sue Mary and Paul's Land Company, LLC's (“Plaintiffs” or “Marys”) claims for a disgorgement of profits; and (3) Plaintiffs' Cross Motion for Partial Summary Judgment (Record Document 93) against QEP on the issue of QEP's bad faith, requiring a disgorgement of profits. For the reasons stated in the instant Memorandum Ruling, QEP's Motion to Strike is GRANTED IN PART and DENIED IN PART; QEP's objection to the affidavit of Michael E. White is SUSTAINED; Plaintiffs' objection to the affidavit of Alaina Szlavy is SUSTAINED IN PART and OVERRULED IN PART; QEP's Motion for Partial Summary Judgment is GRANTED; and Plaintiffs' Cross Motion for Partial Summary Judgment is hereby DENIED.

         FACTUL AND PROCEDURAL BACKGROUND

         On September 20, 2006, Paul E. Mary, III and Cynthia Sue Mary (the “Marys”) entered into separate oil and gas leases (the “Leases”) with Whitmar Exploration Company (“Whitmar”) covering approximately 160 acres located in Section 14, Township 15 North, Range 10 West, Bienville Parish, Louisiana. See Record Document 1-3 at 1. The Leases granted Whitmar the right to explore for and develop oil and gas, and to conduct the operations reasonably incidental thereto, “including the use of the surface and a right-of-way for the collection of geological and geophysical data, the drilling of core samples, the installation of lease roads, the drilling and completion of oil and gas production wells, the laying of pipelines …to produce, save and deliver to market the oil and gas products produced from the leasehold premises.” Record Document 49-4 at 1. Whitmar subsequently assigned all of its rights to Questar Exploration and Production Company on March 19, 2007, which subsequently became QEP. See Record Document 1-3 at 2.

         In late 2009, each of the Marys entered into a Surface Use Payment and Release Agreement with QEP agreeing upon a location for the drilling pad for the Mary 14H No. 1 Well (“Mary Well”) and for the construction of a road to service the Mary Well. See Record Documents 49-6 and 49-7. QEP paid $41, 882.00 for the use of the service road described in the agreement. See id. On February 18 and 19, 2010, the Marys entered into a Pipeline Servitude Agreement with QEP pursuant to which the Marys granted QEP a thirty-foot wide permanent servitude for the installation of two gas and one saltwater pipelines, covering a distance of approximately 6, 258 feet. See Record Document 49-8. QEP paid the Marys $189, 645.00 pursuant to this Pipeline Servitude Agreement. See id. QEP spudded the Mary Well on August 12, 2010. See Record Document 1-3. at 3. The Marys and QEP then entered into a Subsurface Easement, pursuant to which the Marys granted an easement for the purpose of drilling three directional well bores beneath the Marys' property. See Record Document 49-9. QEP paid the Marys $30, 000.00 for this Easement. See id. On May 11, 2011, Paul E. Mary, III transferred all of his interest, including his mineral and lease rights, to the subject property to Paul's Land Company, L.L.C. See Record Document 1-3 at 3.

         In July 2011, the Marys entered into an Amended Pipeline Servitude Agreement which amended the earlier Pipeline Servitude Agreement and granted QEP the right to install one additional above ground valve on its existing pipeline, paying $2, 500.00 for this right. See Record Document 49-10. On July 22 and 26, 2011, the Marys entered into an additional Pipeline Servitude Agreement (the “Mary Pipeline Servitude”), which the Marys granted QEP an additional pipeline servitude covering a distance of approximately 147.55 feet. See Record Document 49-11. The purpose of this Pipeline Servitude was to allow QEP to connect the Pedro Wells, which were not located on the Marys' property, to the Mary pipeline which was on the Marys' property. See id. However, the gas pipeline “cut the corner” of the servitude granted by the Marys, and ran for a distance of approximately thirty-one feet outside the designated boundaries of the servitude. See Record Document 49-12. In addition, the saltwater pipeline deviated outside the Mary Pipeline Servitude for approximately fifteen feet. See id. These deviations are the subject of the instant Motions.

         Plaintiffs originally filed suit on June 3, 2013, in the Second Judicial District of Bienville Parish, Louisiana. See Record Document 1-3. QEP removed the action by a Notice of Removal filed on July 2, 2013, based upon diversity of citizenship grounds. See Record Document 1. QEP filed its Motion for Partial Summary Judgment on March 24, 2016. See Record Document 49. QEP asks the Court to dismiss Plaintiffs' claims seeking a disgorgement of profits, and seeking an election by Plaintiffs as to whether to keep the pipelines located on their property or require their removal. See id. Plaintiffs originally opposed QEP's Motion (Record Document 69), but subsequently filed its own Cross Motion for Partial Summary Judgment (Record Document 93) on June 16, 2016, asserting QEP acted in bad faith in constructing and possessing the pipelines located outside of the Mary Pipeline Servitude. QEP also moves to strike the affidavits of Glover and Wood, which were offered by Plaintiffs in opposition to QEP's Motion for Partial for Summary Judgment. See Record Document 88.

         LAW AND ANALYSIS

         I. LEGAL STANDARDS

         A. SUMMARY JUDGMENT

         Rule 56 of the F.R.C.P. governs summary judgment. This rule provides that the court “shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” F.R.C.P. 56(a). Also, “a party asserting that a fact cannot be or is genuinely disputed must support the motion by citing to particular parts of materials in the record, including . . . affidavits . . . or showing that the materials cited do not establish the absence or presence of a genuine dispute, or that an adverse party cannot produce admissible evidence to support the fact.” F.R.C.P. 56(c)(1)(A) and (B). “If a party fails to properly support an assertion of fact or fails to properly address another party's assertion of fact as required by Rule 56(c), the court may . . . grant summary judgment.” F.R.C.P. 56(e)(3).

         In a summary judgment motion, “a party seeking summary judgment always bears the initial responsibility of informing the district court of the basis for its motion, and identifying those portions of the pleadings . . . [and] affidavits, if any, which it believes demonstrate the absence of a genuine issue of material fact.” Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 2553 (U.S. 1986) (internal quotations and citations omitted). If the movant meets this initial burden, then the non-movant has the burden of going beyond the pleadings and designating specific facts that prove that a genuine issue of material fact exists. See Celotex, 477 U.S. 317, 325, 106 S.Ct. 2548, 2554 (U.S. 1986); see Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir. 1994). A non-movant, however, cannot meet the burden of proving that a genuine issue of material fact exists by providing only “some metaphysical doubt as to the material facts, by conclusory allegations, by unsubstantiated assertions, or by only a scintilla of evidence.” Little, 37 F.3d 1069, 1075 (5th Cir. 1994).

         Additionally, in deciding a summary judgment motion, courts “resolve factual controversies in favor of the nonmoving party, but only when there is an actual controversy, that is when both parties have submitted evidence of contradictory facts.” Id. Courts “do not, however, in the absence of any proof, assume that the nonmoving party could or would prove the necessary facts.” Id.

         “A partial summary judgment order is not a final judgment but is merely a pre-trial adjudication that certain issues are established for trial of the case.” Streber v. Hunter, 221 F.3d 701, 737 (5th Cir.2000). Partial summary judgment serves the purpose of rooting out, narrowing, and focusing the issues for trial. See Calpetco 1981 v. Marshall Exploration, Inc., 989 F.2d 1408, 1415 (5th Cir.1993).

         B. FEDERAL COURT SITTING IN DIVERSITY

         Since this case is before the Court under its diversity jurisdiction, the Court must apply the substantive law of Louisiana. See Bradley v. Allstate Ins. Co., 620 F.3d 509, 517 n. 2 (5th Cir. 2010), citing Erie R. R. v. Tompkins, 304 U.S. 64 (1938). The Fifth Circuit in In re Katrina Canal Breaches Litigation stated the appropriate methodology to be applied by a Federal Court sitting in diversity in Louisiana:

“To determine Louisiana law, we look to the final decisions of the Louisiana Supreme Court in the absence of a final decision by the Louisiana Supreme Court, we must make an Erie guess and determine, in our best judgment, how that court would resolve the issue if presented with the same case. In making an Erie guess, we must employ Louisiana's civilian methodology, whereby we first examine primary sources of law: the constitution, codes, and statutes. Jurisprudence, even when it rises to the level of jurisprudence constante, is a secondary law source in Louisiana. Thus, although we will not disregard the decisions of Louisiana's intermediate courts unless we are convinced that the Louisiana Supreme Court would decide otherwise, we are not strictly bound by them.”

495 F.3d 191, 206 (5th Cir. 2007) (citations and internal quotation marks omitted).

         However, diversity cases in federal court are governed by federal, not state, rules of evidence. See Fed.R.Evid. 101; Morris v. Homco Int'l, Inc., 853 F.2d 337, 341 (5th Cir. 1988), citing Hanna v. Plumer, 380 U.S. 460, 473-74, 85 S.Ct. 1136, 1145 (1965).

         I. ANALYSIS

         A. Motions to Strike

         QEP moves to strike the affidavits of Glover and Wood on the grounds that the affidavits are not based upon personal knowledge, include opinion testimony the affiants are not qualified to render, include rank speculation and conclusory opinions, and include assertions regarding facts which are irrelevant. See Record Document 88-1 at 1. Although not included in its Motion to Strike, QEP also objects to the affidavit of Michael E. White (“White”).[1] See Record Document 100 at 3. Plaintiffs, in turn, object to the affidavit testimony of Alaina Szlavy (“Szlavy”). See Record Document 69-36 at 10.

         i. Affidavit of Glover

         Glover is the owner and manager of Horizon Land Works, L.L.C. (“Horizon”), which has performed numerous surveys of pipeline servitudes for QEP, including the plat of survey attached to the Pipeline Servitude Agreement between the Marys and QEP. See Record Document 87 at 1. QEP asserts the affidavit fails to offer any basis for Glover's qualifications or expertise to opine about any issue relating to the survey, specifically Glover's opinion that “[i]t is also obvious from Winn's ‘as built' survey that QEP and/or its contractor tried to ‘rope' the pipelines into the pipeline servitude … This sort of installation would have saved QEP and/or its contractor money on pipe and fittings.” See Record Document 88-1 at 5. QEP considers Glover's testimony as “rank speculation” and “opinions unsupported by information actually known to [the Affiant].” Id. Plaintiffs believe Glover's position as owner of Horizon qualifies him to give his opinions under Rule 701 of the Federal Rules of Evidence.

         This Rule provides:

If a witness is not testifying as an expert, testimony in the form of an opinion is limited to one that is:
(a) rationally based on the witness's perception;
(b) helpful to clearly understanding the witness's testimony or to determining a fact in issue; and
(c) not based on scientific, technical, or other specialized knowledge within the scope of Rule 702.

Fed. R. Evid. 701. Under this Rule “a lay opinion must be based on personal perception, must be one that a normal person would form from those perceptions, and must be helpful to the [fact finder].” Texas A & M Research Found. v. Magna Trans., Inc., 338 F.3d 394, 403 (5th Cir. 2003). “In particular, the witness must have personalized knowledge of the facts underlying the opinion and the opinion must have a rational connection to those facts.” Id., quoting Mississippi Chem. Corp. v. Dresser-Rand Co., 287 F.3d 359, 373 (5th Cir. 2002). “[R]ule 701 does not preclude testimony by business owners or officers on matters that relate to their business affairs.” Id.

         In the instant case, the Court finds that Glover has not been shown to have personalized knowledge regarding the facts underlying his opinions on the issue of pipeline construction costs. Glover's opinion regarding this issue is based solely on the “as built” plat of survey made by Winn Surveying & Engineering, L.L.C., which shows the Mary pipeline “cutting the corner” of the L-shaped servitude. However, the affidavit does not show Glover has any knowledge regarding construction ...


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