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Marlborough Oil & Gas, L.L.C. v. Baker Hughes Oil Field Operations, Inc.

Court of Appeals of Louisiana, First Circuit

November 14, 2018

MARLBOROUGH OIL & GAS, L.L.C.
v.
BAKER HUGHES OIL FIELD OPERATIONS, INC. AND T.F. SERVICES, L.L.C.

          On appeal from the Eighteenth Judicial District Court In and for the Parish of West Baton Rouge State of Louisiana Docket No. 43, 554 Honorable Edward J. Gaidry, Judge Pro Tempore

          Wade P. Webster New Orleans, LA Counsel for Plaintiff/Appellee Marlborough Oil & Gas, LLC.

          Stewart F. Peck New Orleans Counsel for Defendant/Appellant Baker Hughes, a GE Company f/k/a Baker Hughes Oilfield Operations, Inc.

          BEFORE: GUIDRY, THERIOT, AND PENZATO, JJ.

          GUIDRY, J.

         A contractor that provided equipment and supplies to a lessee for work on a well that was ultimately found to be a dry hole, appeals a declaratory judgment finding that an oil well lien perfected by the contractor is "of no legal effect" as to a mineral servitude holder and a second well located in the same field as the well for which the services, equipment, and supplies supporting the lien were provided. For the following reasons, we reverse.

         FACTS AND PROCEDURAL HISTORY

         Through a series of transactions, Marlborough Oil & Gas, LLC acquired ownership of a mineral servitude, and pursuant to its ownership, it executed an oil and gas lease on July 8, 2010, of the following described property (hereinafter referred to as the "leased property"):

Commence at a point which is common to the southwest corner of Section 28, and the southeast corner of Section 29, Township 8 South, Range 11 East, thence run east along the south line of Section 28 to a point on the line which separates the east half from the west half of said Section 28; thence in a northerly direction along said line to a point sufficiently distant from the south line of said Section 28 so that a line drawn from such point parallel to the south line of Section 28 and extending westerly to the boundary line between the Parishes of West Baton Rouge and Iberville, and along such parish line back to the point of beginning, which will embrace two hundred (200) acres; being the same property included in a lease from the Morley Cypress Company, to the Gulf Refining Company of record in Book 22, folio 364 of the Conveyance records of the Parish of West Baton Rouge.

         Included within the parameters of the leased property are two wells, the Marlborough Oil & Gas, LLC No. 1 and the Marlborough Oil & Gas, LLC No. 3.

         Baker Hughes Oilfield Operations, Inc., a company that furnishes labor, equipment, machinery, materials, and related services in support of the development, exploration, maintenance, and operation, provided goods, equipment, supplies, materials, and related services to Northwind Oil & Gas, Inc., from September 17, 2012 to October 8, 2012, in connection with Northwind's operations[1] on the Marlborough Oil & Gas, LLC No. 3 well. Northwind, however, failed to pay the $412, 415.64 owed for the goods and services provided by Baker Hughes. As a consequence, on March 14, 2013, Baker Hughes recorded an "Oil Well Lien Affidavit, Notice of Claim of Lien and Statement of Privilege," in the mortgage records of West Baton Rouge Parish, wherein it described Marlborough Oil &.Gas, LLC No. 3 well and claimed a privilege for the $412, 415.64 owed, plus interest, attorney fees, and costs, pursuant to the Louisiana Oil Well Lien Act (LOWLA), La. R.S. 9:4861-4873. Baker Hughes also filed suit against Northwind and recorded a notice of lis pendens regarding the suit in the mortgage records of West Baton Rouge Parish on April 10, 2013. Finally, Baker Hughes secured a summary judgment against Northwind on November 14, 2013, wherein Baker Hughes was awarded the sum of $412, 415.54, plus interest, costs, and attorney fees. The judgment further "recognized and foreclosed" Baker Hughes' lien and privilege in the amount of $412, 415.54 against the Marlborough Oil & Gas, LLC No. 3 well "as provided in" the LOWLA.

         On March 20, 2017, Marlborough filed a petition for declaratory judgment against Baker Hughes, [2] seeking to have the court declare that the March 14, 2013 oil well lien and the November 14, 2013 summary judgment obtained by Baker Hughes did not affect or encumber Marlborough's mineral servitude or any "tubing, casing, equipment, pipelines, or other constructions" situated on the leased property. In response to the petition, Baker Hughes denied Marlborough's allegations that the lien and judgment should be deemed ineffective in any respect.[3]Thereafter, Marlborough filed a pleading titled "Motion for Summary Judgment, or Alternatively for Partial Summary Judgment."

         In its memorandum in support of its motion, Marlborough prayed that (1) Baker Hughes' oil well lien against the Marlborough Oil & Gas, LLC No. 3 well be declared invalid as to the Marlborough Oil & Gas, LLC No. 1 well; and (2) Baker Hughes' oil well lien be declared "wholly ineffective" as to Marlborough, its successors, assigns and lessees, because it did not receive a Mennonite[4] notice of Baker Hughes' suit to confirm its oil well lien. In a reply memorandum in further support of its motion, Marlborough alternatively prayed for partial summary judgment declaring that the Baker Hughes' oil well lien did not attach to the casing and tubing that is "downhole" in the Marlborough Oil & Gas, LLC No. 1 well, as such items should be considered component parts of the land because they cannot be easily removed.

         Following a hearing on Marlborough's motion for summary judgment, and alternative motion for partial summary judgment, the trial court signed a judgment on August 29, 2017, in favor of Marlborough, declaring Baker Hughes' oil well lien, the notice of lis pendens, and the November 14, 2013 summary judgment in favor of Baker Hughes "of no legal effect or consequence, insofar and only insofar as to (1) [Marlborough], its successors, lessees and assigns and (2) the mineral servitude owned by [Marlborough]" affecting the leased property as described in the judgment. The judgment further declared Baker Hughes' oil well lien, the notice of lis pendens, and the November 14, 2013 summary judgment in favor of Baker Hughes "of no legal effect or consequence insofar and only insofar as the Marlborough No. 1 Well." Following the denial of its motion for new trial, Baker Hughes was granted a devolutive appeal of the August 29, 2017 judgment.[5]

         ASSIGNMENTS OF ERROR

         On appeal, Baker Hughes assigns the following as error committed by the trial court:

I. The [trial court] erred in granting summary judgment when the opposing summary judgment evidence established that the description provided in the Oil Well Lien satisfies LOWLA;
II. The [trial court] erred in granting summary judgment on the issue of proper ...

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