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Weyerhaeuser Co v. Pardee Minerals LLC

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

March 20, 2018


          DOUGHTY JUDGE.


          Mark L. Hornsby U.S. Magistrate Judge.


         Weyerhaeuser Company (“Weyerhaeuser”) filed this action seeking (1) a declaration that a mineral servitude on its land extinguished by non-use and (2) an award of damages based on mineral production from the land after the alleged expiration. One of the defendants, EP Energy E&P Company, LP (“EP”), which operated wells in the area, filed cross-claims against several of its co-defendants and prayed that, if Weyerhaeuser is successful, those defendants be ordered to return all royalty payments that EP made to them. Those defendants responded with cross-claims against EP and demanded an accounting for all royalties associated with the property and payment of any sums due.

         Before the court is EP's Motion to Dismiss Cross-Claims (Doc. 42) on the grounds that the court lacks jurisdiction over the cross-claims. The parties to the cross-claims are not diverse, so there is no original jurisdiction. EP argues that there is also no basis for supplemental jurisdiction because the cross-claims for royalty accounting against the operator are not part of the same case or controversy as Weyerhaeuser's initial demand for a decision on the viability of the servitude. For the reasons that follow, it is recommended that EP's motion be granted and that the cross-claims be dismissed for lack of subject-matter jurisdiction.

         Relevant Allegations

         In 1971, the Pardee Company sold over 8, 000 acres of non-contiguous tracts of property in Bienville Parish to Willamette Industries, Inc. Pardee, in the act of sale, reserved all of its mineral rights under the properties, thereby establishing a mineral servitude on each of the several tracts. Complaint, ¶¶ 9, 12. One of the tracts contains approximately 1, 260 acres and is at issue in this suit. ¶ 13.

         Weyerhaeuser is the successor to Willamette. ¶ 10. It contends that Louisiana law requires a mineral servitude be used within 10 years of its creation or any prior use, or it is extinguished. The servitude can be used and prescription interrupted by production of minerals, La. R.S. 31:36, or good faith operation for the discovery and production of minerals if the operations meet certain statutory requirements. La. R.S. 31:29. ¶¶ 15-16. There were drilling operations on the tract in past years, but Weyerhaeuser contends they did not result in the production of minerals or meet the requirements of the statute. ¶ 18. It asserts that the servitude prescribed by non-use and ended no later than December 21, 1999. ¶ 19.

         Despite the alleged extinguishment of the Pardee servitude in 1999, Pardee granted a mineral lease on the land in January 2001 to Carnes Oil Corporation. Carnes assigned the lease to EP, which established units that affected the property and began to operate wells within those units. Wildhorse Resources II, LLC took over EP's role as operator of the units in 2013. ¶¶ 20-23. Carnes and Wildhorse are also defendants.

         Weyerhaeuser contends that it is entitled to all production attributed to its property after the extinguishment of the mineral servitude. It makes demand upon EP and Wildhorse for the proceeds of all production during the relevant time. The complaint also names as defendants five companies and individuals who hold overriding royalty interests in the lease. Weyerhaeuser prays that they be ordered to disgorge and remit to Weyerhaeuser any revenue obtained by them after December 21, 1999 from any mineral production attributable to Weyerhaeuser's land.

         EP filed an answer that denied the servitude was extinguished. EP also asserted reimbursement cross-claims against fellow defendants Pardee Minerals, LLC and the five overriding royalty owners. The cross-claims prayed that if Weyerhaeuser were successful in proving that the Carnes lease is a nullity and EP must pay Weyerhaeuser for production from the land, then the court should order Pardee and the overriding royalty defendants to return to EP all royalty payments they received under the lease that were attributable to the Weyerhaeuser tract. Doc. 27, ¶ 11. There is no diversity of citizenship between EP and the cross-claim defendants, so EP invoked supplemental jurisdiction pursuant to 28 U.S.C. § 1367(a).

         Pardee and the overriding royalty owners filed separate answers (Docs. 38 and 39) to EP's cross-claims and asserted their own cross-claims against EP. Their cross-claims, which also rely on supplemental jurisdiction, provide little in the way of facts. Each simply alleges:

Plaintiff-in-Cross is entitled to receive a full and complete accounting from Defendants-in-Cross for all production, production proceeds, deductions and royalties associated with the Carnes Lease at issue in the above-captioned litigation. To the extent that Defendants-in-Cross have failed to make proper royalty payments to Plaintiff-in-Cross due under the Carnes Lease, Plaintiff-in-Cross demands that ...

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