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Weyerhaeuser Co. v. Pardee Minerals, LLC

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

October 2, 2018

WEYERHAEUSER CO.
v.
PARDEE MINERALS, LLC, ET AL

          DOUGHTY JUDGE

          REPORT AND RECOMMENDATION

          Mark L. Hornsby U.S. Magistrate Judge

         Introduction

         Weyerhaeuser Company (“Weyerhaeuser”) filed this action against several defendants 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. It later filed an amended complaint that asserted a claim for damages and attorney's fees under La. R.S. 31:206 & 207 for failure to furnish a recordable act evidencing the expiration of a mineral right.

         One of the defendants is EP Energy E&P Company, LP (“EP”), which formerly owned mineral interests that were dependent on the challenged servitude. Before the court is EP's Motion to Dismiss (Doc. 69) the claim brought against it under Sections 206 & 207. EP argues that (1) Weyerhaeuser did not make proper pre-suit demand, (2) the lease to EP was not extinguished within the meaning of the statutes, and (3) EP no longer owns mineral rights that it could release. For the reasons that follow, it is recommended that EP's motion be granted based on its third argument.

         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. First Amended Complaint (Doc. 63) ¶¶ 9, 12. One of the tracts contains approximately 1, 260 acres and is at issue in this suit. ¶ 13. Pardee Minerals, LLC is now the putative owner of the Pardee mineral servitude. ¶ 14.

         Weyerhaeuser is the successor to Willamette so now owns the land at issue. ¶ 10. It challenges the current validity of the Pardee mineral servitude on its land. Weyerhaeuser 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, and EP later established units that affected the property and began to operate wells within those units. EP, in 2013, assigned its working interest in the Carnes Lease to Wildhorse Resources II, LLC, which took over EP's role as operator of the units. ¶¶ 20-23. The complaint named as defendants Pardee Minerals, LLC; EP; Carnes; Wildhorse; plus a number of companies and individuals who hold overriding royalty interests in the lease.

         The original complaint included a demand that each defendant claiming an interest in the Pardee Mineral Servitude or the Carnes Lease furnish a recordable act evidencing the extinction or expiration of those interests in the land at issue.

         Analysis

         Weyerhaeuser's original complaint cited La. R.S. 31:206, which provides that “when a mineral right is extinguished by the accrual of liberative prescription, expiration of its term, or otherwise, the former owner shall, within thirty days after written demand by the person in whose favor the right has been extinguished or terminated, furnish him with a recordable act evidencing the extinction or expiration of the right.” The complaint made a demand pursuant to Section 206 “requesting that each Defendant claiming a current interest in the Pardee Mineral Servitude and/or Carnes Lease furnish to Plaintiff a recordable act evidencing the extinction or expiration” of the servitude and the lease as to Weyerhauser's land. Doc. 1, ¶ 26. Weyerhauser's amended complaint, filed more than 30 days later, alleged that Weyerhaeuser had served the demand asserted in the original complaint on the defendants, but no defendant provided a recordable act of release. Doc. 63, ¶ 26.1-26.4

         EP argues in its motion to dismiss that it was not obligated to provide such an act of release because, by the time demand was made, it no longer owned an interest in the Carnes Lease so was not “the former owner” who is obligated to provide a release under Section 206. The facts alleged in the complaint, as amended, are that the Pardee Servitude expired in 1999, but in 2001 Pardee granted the Carnes Lease to Carnes Oil, which assigned the lease to EP. EP assigned its working interest in the Carnes Lease to Wildhorse in 2013. Thus, EP never owned an interest in the Pardee Servitude, and it had no ownership interest in the Carnes Lease after 2013, which was four years before Weyerhauser made its demand for a recordable release.

         Section 206 states that when a mineral right is extinguished by prescription “the former owner shall, ” within 30 days after demand, furnish a recordable act evidencing expiration of the right. Section 207 provides for an award of damages and attorney's fees for a violation of Section 206. It ...


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