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J & L Family L.L.C. v. BHP Billiton Petroleum Properties (N.A.), L.P

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

February 6, 2018

J & L FAMILY, L.L.C.
v.
BHP BILLITON PETROLEUM PROPERTIES (N.A.), L.P, ET AL.

          HORNSBY, MAGISTRATE JUDGE

          MEMORANDUM RULING

          ELIZABETH ERNY FOOTE, UNITED STATES DISTRICT JUDGE.

         Before the Court is Defendants' Motion for Partial Summary Judgment. [Record Document 48]. Defendants, BHP Billiton Petroleum Properties (N.A.), L.P., Petrohawk Energy Corporation, BHP Billiton Petroleum (KCS Resources), L.L.C., and BHP Billiton Petroleum (TxLa Operating) Company (collectively “BHP”) seek summary judgment on several narrow issues related to the availability of attorney fees: (1) Plaintiff's claim for penalties and attorney fees under La. R.S. 31:212.21-.23; (2) Plaintiff's claim for contract fraud and associated attorney fees; (3) Plaintiff's claim for attorney fees for tort fraud; and (4) Plaintiff's claim for attorney fees under La. R.S. 31:212.31. For the reasons discussed below, the Court GRANTS BHP's motion and DISMISSES WITH PREJUDICE each of these four claims.

         I. Background

         A. Factual Background

         While there are numerous factual disputes between BHP and Plaintiff, J & L Family, L.L.C. (“J & L”), both parties agree on the facts relevant to this motion. [Record Documents 48-1 and 58-1]. J & L owns land that lies within two drilling units-the Jestma Unit and the Powers Unit-created by the Louisiana Commissioner of Conservation (“Commissioner”), but J & L's interest is not subject to any oil and gas lease. [Record Documents 48-1 at 1-2 and 58-1 at 1-2]. BHP operates wells on the drilling units. [Record Documents 48-1 at 2 and 58-1 at 2-3]. J & L and BHP have neither signed formal contracts concerning the wells nor executed division orders, formal joint operating agreements, or formal marketing election letters. [Record Documents 48-1 at 3 and 58-1 at 3]. Instead, the parties' relationship is controlled by statute such that BHP is required to pay J & L its pro rata share of the proceeds from the sale of the oil and gas extracted from the units. [Record Documents 1-2 at 5, 10, 12 and 5 at 2]. See La. Stat. Ann. §§ 30.10, 103.1 (2017).

         B. Procedural Background

         J & L filed suit alleging the following: (1) that BHP's regular reports to J & L regarding production from the units did not satisfy statutory requirements, (2) that BHP improperly sought operating expenses from J & L, (3) that BHP improperly calculated J & L's ownership interest, (4) that BHP failed to properly pay J & L its pro rata share of revenues, and (5) that BHP engaged in fraudulent conduct in its dealings with J & L. [Record Document 1-2 at 3-15]. Of particular relevance to the instant motion, J & L sought attorney fees “based upon [BHP's] fraudulent actions, ” as well as under La. R.S. 31:212.21-.23, La. R.S. 31:212.31, and “other applicable provisions of the Louisiana Mineral Code.” [Record Document 1-2 at 16]. Both parties moved for partial summary judgment on the issue of whether BHP had adequately complied with the reporting requirements of La. R.S. 30:103.1-.2. [Record Documents 12 and 22]. Following oral argument, the Court denied the motions, finding that unresolved questions of fact precluded summary judgment. [Record Document 57]. Shortly before oral argument, BHP filed the instant motion seeking partial summary judgment on the issue of J & L's ability to recover attorney fees. [Record Document 48].

         II. Summary Judgment Standard

         Federal Rule of Civil Procedure 56(a) directs a court “to 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.”[1] Summary judgment is appropriate when the pleadings, answers to interrogatories, admissions, depositions, and affidavits on file indicate that there is no genuine issue of material fact and that the moving party is entitled to judgment as a matter of law. See Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). If the movant satisfies its initial burden of showing that there is no genuine dispute of material fact, the nonmovant must demonstrate that there is, in fact, a genuine issue for dispute at trial by going “beyond the pleadings” and designating specific facts for support. Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir. 1994) (citing Celotex, 477 U.S. at 325).

         Summary judgment is always appropriate “where the only issue before the court is a pure question of law.” Sheline v. Dun & Bradstreet Corp., 948 F.2d 174, 176 (5th Cir. 1991). Questions of statutory interpretation are questions of law. Khanh Nhat Thuy Le v. Holder, 732 F.3d 425, 427 (5th Cir. 2013).The availability of attorney fees, either as a general matter or under a particular statute, is a question of law. AG Acceptance Corp. v. Veigel, 564 F.3d 695, 701 (5th Cir. 2009). Here J & L's claims for attorney fees turn on the interpretation of various statutes and thus present pure questions of law appropriate for summary judgment.

         III. Law and Analysis

         A. Penalties and Attorney Fees Under La. R.S. 31:212.21-.23

         The Louisiana Mineral Code provides for penalties and, in certain instances, attorney fees when a mineral lessee fails to timely pay royalties or other production payments to the “owner of a mineral production payment or a royalty owner other than a mineral lessor.” La. Stat. Ann. §§ 31:212.21-.23 (2000). Because J & L is an unleased owner, BHP argues that J & L falls outside the class of persons protected by the statute and so can claim neither penalties nor attorney fees. [Record Document 48-2 at 3-4], In support it cites Adams v. Chesapeake Operating Co., a recent Fifth Circuit case holding that the statute is inapplicable to unleased mineral interest owners. 561 Fed.Appx. 322, 326 (5th Cir. 2014). In response, J & L concedes that the case is binding upon the Court, but insists that it was wrongly decided. [Record Document 58 at 2-5].

         Although it is not clear that an unpublished Fifth Circuit opinion necessarily binds this Court, [2] the Court finds that the Fifth Circuit panel reasonably resolved the ambiguity in the statutory language by looking to the enacting legislation's title, which states that the new law will “provide for the remedies and procedures for obtaining payment by a royalty owner other than a mineral lessor and by the purchaser of a mineral production payment.” Adams, 561 Fed.Appx. at 326 (emphasis added). On the basis of this language, the court found:

Adams does not fall within the scope of Sections 31.212.21-.23 because he is not a “purchaser of a mineral production payment.” Rather, he is an unleased mineral interest owner. While Adams is correct that a section's title does not constitute part of the law, it does provide some aid in interpreting legislative intent where the language of the statute is unclear. Section 31:212.21 merely states that it covers “the owner of a mineral production payment or a royalty owner.” “[O]wner” could refer to a party who recently purchased a production payment or to someone who acquired the production payment through some other means. Because Section 31:212.21 is ambiguous as to the parties encompassed within the statute, we examine the title of that section of the Mineral Code to determine the scope of the statute. Based on the title to Sections ...

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