GLORIA'S RANCH, L.L.C. Plaintiff-Appellee
TAUREN EXPLORATION, INC., CUBIC ENERGY, INC., WELLS FARGO ENERGY CAPITAL, INC. AND EXCO USA ASSET, LLC Defendant-Appellants
Appealed from the First Judicial District Court for the
Parish of Caddo, Louisiana Trial Court No. 541, 768 Honorable
Ramon Lafitte, Judge
GORDON, ARATA, MONTGOMERY, ET AL By: Samuel E. Masur Paul B.
Simon Counsel for Defendant/Appellant Tauren Exploration
W. HAMMOND, APLC By: Kevin W. Hammond WIENER, WEISS &
MADISON By: Jeffrey W. Weiss Counsel for Plaintiff/Appellee
Gloria's Ranch, LLC
BULLINGTON & COOK, LLC By: Guy E. Wall Paul E. Bullington
Maurine Wall Laborde LISKOW & LEWIS By: Michael David
Rubenstein Kathryn Z. Gonski Counsel for Defendant/ Appellee
Cubic LA, LLC
WILLIAMS, MOORE, and THOMPSON, JJ.
Exploration Inc., the principal lessee, appeals a summary
judgment that ordered it to pay Gloria's Ranch LLC, the
mineral lessor, two-thirds of the damages, penalties and
attorney fees for breach of a mineral lease. The case is on
remand from the Louisiana Supreme Court to consider all the
lessees' virile share liability. Gloria's Ranch
LLC v. Tauren Expl. Inc., 2017-1518 (La. 9/7/18), 251
So.3d 392 (on rehearing). For the reasons expressed, we
FACTS (PRIOR PROCEEDINGS)
2004, Gloria's Ranch granted a mineral lease, covering 1,
390 acres, to Tauren. The lease had a term of three years.
Tauren performed exploration only down to the Cotton Valley
formation. In 2006, Tauren assigned a 49% undivided interest
in the lease to Cubic Energy Inc. Close to the end of the
lease, in 2007, an operator hired by Tauren drilled three
wells on the lease, one of which (the Gloria's Ranch
16-1) was intended to go all the way down into the
Haynesville Shale, but it was completed only into the Cotton
Valley. In 2008, another operator drilled a horizontal well
into the Haynesville Shale on adjacent land that was later
unitized with the Gloria's Ranch lease; still later,
Tauren granted that operator a top lease. With the exception
of the unitized well, none of these produced in paying
quantities. In October 2009, Tauren sold its 51% interest in
the lease to EXCO USA, but only as to rights below the Cotton
December 2009, Gloria's Ranch sent letters to Tauren,
Cubic, EXCO, and their lender, Wells Fargo, asking if the
wells were still profitable. In response, Tauren admitted it
had "miscalculated" some expenses, but asserted
that the wells were still producing. Gloria's Ranch
disagreed, and sued all four for failure to comply with
Mineral Code Arts. 206 and 207. In August 2014, Gloria's
Ranch settled with EXCO.
Ranch then proceeded to a bench trial against the remaining
three defendants - Tauren, Cubic, and Wells Fargo. The
district court rendered judgment in August 2015, essentially
agreeing with Gloria's Ranch. The court found that the
lease had indeed expired; the defendants failed to provide a
recordable act to that effect; and the three defendants were
solidarily liable to Gloria's Ranch. The court fixed
damages of $22, 806, 000, penalties of $726, 087, and
attorney fees of $936, 803.
three defendants appealed. This court affirmed the judgment
and awarded Gloria's Ranch additional attorney fees of
$125, 000 for having to defend the appeal. Gloria's
Ranch LLC v. Tauren Expl. Inc., 51, 077 (La.App. 2 Cir.
6/2/17), 223 So.3d 1202.
three defendants applied for writs to the Supreme Court. In
an original opinion, the high court held that the lender,
Wells Fargo, was not liable as a lessee, under the Mineral
Code; reduced the penalty to $484, 058; and reduced the
appellate attorney fee to $50, 000. However, it found a
"clear admission" that Tauren's management knew
of the obligation to pay royalties and did not pay them. It
affirmed the solidary liability of Tauren, Cubic, and EXCO.
Gloria's Ranch LLC v. Tauren Expl. Inc.,
2017-1518 (La. 6/27/18), 252 So.3d 431.
applied for rehearing, which was granted in part. The court
remanded the case "for the trial court to consider the
effect of the reversal of Wells Fargo's liability has on
the award, particularly as it relates to the virile share
accounted for ...