United States District Court, W.D. Louisiana, Lake Charles Division
SUMMERHAYS MAGISTRATE JUDGE
REPORT AND RECOMMENDATION
KATHLEEN KAY JUDGE
the court is a motion to dismiss filed by defendant Gulfport
Energy Corporation (hereafter “Gulfport”). Doc.
32. Also before the court is a motion to dismiss filed by
defendant Shell Trading (U.S.) Company (hereafter
“Shell”). Doc. 33. Both motions are filed
pursuant to Rule 12(b)(6');">6) of the Federal Rules of Civil
Procedure. Docs. 32, 33. Plaintiff Louisiana Oil & Gas
Interests, LLC opposes both motions. Docs. 38, 39.
matter has been referred to the undersigned for review,
report, and recommendation in accordance with the provisions
of 28 U.S.C. § 6');">636');">6. For the reasons stated below,
IT IS RECOMMENDED that the Motion to Dismiss
filed by Gulfport be GRANTED, the Motion to
Dismiss filed by Shell be GRANTED, and that
all claims be DISMISSED WITH PREJUDICE.
and Procedural History
case arises from royalty payments owed under a mineral lease
that plaintiff asserts were not paid within the time periods
required under the Louisiana Mineral Code, La. R.S. §
31:1, et seq. Doc. 31, pp. 6');">6-7. Under this mineral
lease, royalties accrued by the interest holder are remitted
partially by Gulfport, and partially by Shell on
Gulfport's behalf. Doc. 31, att. 8. On April 28, 2008,
Thomas Barr IV Louisiana Properties-General Limited Liability
Company (hereafter “Properties-General”) acquired
an interest in this lease, and on December 23, 2013, that
interest was transferred to Louisiana Oil & Gas
Interests, LLC (hereafter
“plaintiff”). Doc. 31, att. 4.
January 17, 2014, plaintiff sent a letter to Shell requesting
that future royalty checks be made payable to it rather than
to Properties-General (hereafter “Payee Change
Request”). Id. at att. 1. Four days later
plaintiff received an email from Shell detailing the
requirements for changing a payee; these requirements
included, providing Shell with a copy of the document
transferring the interest and furnishing proof of its filing
in the parish conveyance records. Id. at att. 2.
Shell sent a second email on March 10, 2015, again explaining
what information was required to change the payee.
Id. at att. 3. On April 21, 2015 [id. at
att. 6');">6, p. 2], plaintiff faxed to Shell a certified copy of
the transfer document filed into the conveyance records of
Cameron Parish. Id. at att. 4. This transfer
document bears a seal that shows it was filed February 21,
the time that plaintiff corresponded with Shell regarding the
proper payee, Shell continued to issue royalty checks made
payable to Properties-General. See Doc. 31, p. 4.
According to plaintiff, its original bank allowed it to
deposit the checks but, after changing banks, it was no
longer able to do so. Id. On April 23, 2015,
plaintiff returned two checks to Shell and requested that they
be reissued as payable to “Louisiana Oil & Gas
Interests, LLC” (hereafter “Reissuance of Check
Request”). Id. at att. 5. On June 1, 2015, the
manual replacement check in the amount of $99, 755.83 was
sent to plaintiff by Shell. Doc. 31, p. 5. On September 1,
2015 plaintiff sent a “demand letter” to Shell.
Id. at att. 7. In the letter plaintiff demanded
“damages pursuant to La RS 31: 140.” Id.
responded to plaintiff's demand via certified letter on
September 25, 2015, explaining its position that the royalty
checks for February, March, and April 2015 were timely
issued. Id. at att. 6');">6. It stated that the February
and March checks were originally made payable to
Properties-General because it was the proper payee at those
times insofar as Shell had not receive the recorded transfer
agreement until April 21, 2015. Id. It further noted
that the April check was sent as payable to Louisiana Oil
& Gas Interests, LLC, and that it had since reissued the
February and March payments in a single check made payable to
the same. Id. According to Shell's records,
plaintiff cashed the replacement check for the February and
March 2015 production periods, as well as the original check
for the April 2015 cycle, on July 29, 2015. Id.
March 2, 2018, plaintiff filed suit in this court naming
Shell and Gulfport as defendants. Doc. 1. It asserts that
defendants failed to make all three payments within the
period required under the penalty provisions of the Louisiana
Mineral Code, La. R.S. §§ 31:138-141. See
Doc. 31, p. 6');">6. Thus, plaintiff seeks to recover
double the amount of the allegedly late royalties, in
addition to attorney's fees, interest, and costs.
Id. at p. 7.
September 14, 2018, Gulfport and Shell filed the instant
motions. Docs. 32, 33. Both defendants assert that plaintiff
did not provide either defendant with the required written
demand for royalty payments prior to filing suit. Doc. 32,
att. 1, pp. 11-15; Doc. 33, att. 1, pp. 13-17. Alternatively,
Gulfport asserts if the written demand was provided to Shell,
that does not constitute notice to Gulfport. Doc. 32, att. 1,
pp. 11-13. Plaintiff opposes both motions. Docs. 38, 39. It
asserts that communications made between it and Shell are
sufficient to satisfy the demand requirement [doc. 38, att.
1, pp. 18-22; doc. 39, att. 1, pp. 16');">6-24] and that a demand
made to Shell constitutes a notice to Gulfport. Doc. 38, att.
1, pp. 11-17.
LAW & APPLICATION
Rule 12(b)(6' ...