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Oleum America LLC v. Stelly

United States District Court, W.D. Louisiana

December 7, 2018

OLEUM AMERICA LLC
v.
VIRGIE STELLY ET AL.

         SECTION: “H”

          ORDER AND REASONS

          JANE TRICHE MILAZZO UNITED STATES DISTRICT JUDGE.

         Before the Court are Plaintiff's Cross-Motion for Summary Judgment (Doc. 12) and Defendants' Cross-Motion for Summary Judgment (Doc. 16). For the following reasons, Plaintiff's Motion is DENIED, and Defendants' Motion is GRANTED IN PART.

         BACKGROUND

         Plaintiff Oleum America, LLC (“Oleum”) brings this action seeking a declaration that an agreement with Defendants remains in effect. Defendants seek a declaration that the agreement was terminated and that Plaintiff is trespassing on their property.

         In 2008, Toce Energy, LLC (“Toce”) drilled an oil well on land owned by Defendants Marion Elizabeth Berry, Marion Stelly Berry, Michael George Berry, Patrick George Berry, Randy James Stelly, Rodney Joseph Stelly, Jr., and Virgie Bertrand Stelly. The well thereafter began making saltwater, and Toce entered into an agreement with Defendants to use a plugged and abandoned well on Defendants' property as a saltwater disposal well (“Saltwater Disposal Agreement”). On October 15, 2008, Toce and Defendants entered into the Saltwater Disposal Agreement at issue here, and Toce began converting and using the plugged and abandoned well to dispose of saltwater from the oil well. In September 2017, Toce sold the oil well, the mineral leases held in connection therewith, and the Saltwater Disposal Agreement to Plaintiff, Oleum.

         The Saltwater Disposal Agreement provided that Toce was granted the option to extend the term of the agreement each year by payment of $2, 000.00. Toce exercised this option each year from October 2008 to October 2017. Prior to October 2017, Toce tendered payment for an additional extension, however, Defendants did not cash the check. Instead, Defendants notified Toce, and later Oleum, that they sought to cancel the Saltwater Disposal Agreement, effective October 15, 2017.[1] The notices requested that Toce and Oleum plug and abandon the well and remove their equipment in accordance with the terms of the Agreement. Despite these requests, Defendants allege that Plaintiff continues to operate the saltwater disposal well and store its equipment on Defendants' property.

         Plaintiff has filed a motion for summary judgment, seeking judgment that the Saltwater Disposal Agreement remains in effect. Defendants have likewise filed a motion for summary judgment, seeking a holding that the Saltwater Disposal Agreement was terminated effective October 15, 2017 and that Plaintiff's continued activity on their property constitutes trespass.

         LEGAL STANDARD

         Summary judgment is appropriate “if the pleadings, depositions, answers to interrogatories, and admissions on file, together with affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.”[2] A genuine issue of fact exists only “if the evidence is such that a reasonable jury could return a verdict for the nonmoving party.”[3]

         In determining whether the movant is entitled to summary judgment, the Court views facts in the light most favorable to the non-movant and draws all reasonable inferences in his favor.[4] “If the moving party meets the initial burden of showing that there is no genuine issue of material fact, the burden shifts to the non-moving party to produce evidence or designate specific facts showing the existence of a genuine issue for trial.”[5] Summary judgment is appropriate if the non-movant “fails to make a showing sufficient to establish the existence of an element essential to that party's case.”[6] “In response to a properly supported motion for summary judgment, the non-movant must identify specific evidence in the record and articulate the manner in which that evidence supports that party's claim, and such evidence must be sufficient to sustain a finding in favor of the non-movant on all issues as to which the non-movant would bear the burden of proof at trial.”[7] “We do not . . . in the absence of any proof, assume that the nonmoving party could or would prove the necessary facts.”[8] Additionally, “[t]he mere argued existence of a factual dispute will not defeat an otherwise properly supported motion.”[9]

         LAW AND ANALYSIS

         The parties do not dispute that the Saltwater Disposal Agreement is a contract of lease governed by Louisiana law. The parties do, however, dispute the term of the lease ...


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