Adams v. JPD Energy, Inc.

46 So. 3d 751, 178 Oil & Gas Rep. 796, 2010 La. App. LEXIS 1144, 2010 WL 3156821
CourtLouisiana Court of Appeal
DecidedAugust 11, 2010
Docket45,420-CA
StatusPublished
Cited by12 cases

This text of 46 So. 3d 751 (Adams v. JPD Energy, Inc.) is published on Counsel Stack Legal Research, covering Louisiana Court of Appeal primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Adams v. JPD Energy, Inc., 46 So. 3d 751, 178 Oil & Gas Rep. 796, 2010 La. App. LEXIS 1144, 2010 WL 3156821 (La. Ct. App. 2010).

Opinion

WILLIAMS, J.

| defendant, JPD Energy, Inc., appeals the district court’s ruling denying its motion for summary judgment and granting summary judgment in favor of plaintiffs, Vernon D. Adams and Glenda P. Adams. For the reasons that follow, we affirm.

FACTS

In 2008, JPD Energy, Inc. (“JPD”), an independent landman company, was retained by Chesapeake Exploration, L.L.C. (“Chesapeake”) to obtain mineral leases in areas in and around the “Haynesville Shale Play” in Northwest Louisiana. Plaintiffs, Vernon D. Adams and Glenda P. Adams, are the owners of a seven-acre tract of land in Caddo Parish. In February 2008, Jeff Pierce, a representative of JPD, contacted Vernon Adams regarding acquiring a mineral lease on his property. Subsequently, Pierce and plaintiffs met to discuss the terms of the lease. According to Vernon Adams, he and Pierce had agreed, inter alia, to include a depth limitation provision in the lease and that Adams would be paid royalties in the amount of one-fourth (25%) of production.

The mineral lease was executed on February 22, 2008. The terms of the lease gave JPD the right to explore for minerals at any depth beneath the leased property. Additionally, the royalty provision of the lease stated:

* * *
4. The royalties to be paid by Lessee are: (a) on oil, and other hydrocarbons ..., one-eighth of that produced and saved from said land ...; (b) on gas, including casinghead gas, or other gaseous substance produced from said land and sold or used, ... the royalty shall be one-eighth of the amount realized from such sale ...; (c) on all other minerals mined and marketed, one-eighth, either in kind or value at the well or mine, at Lessee’s 12election[.]
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After executing the lease, Adams stated that he read the lease “real slow to try to comprehend all of it.” At that point, he realized that the terms he and Pierce had allegedly agreed upon had not been included. During a deposition, Adams testified as follows:

1. Pierce never informed him that JPD was working for Chesapeake;
2. Pierce proposed a royalty of one-fourth (25%) on production, with a bonus *753 of $250 per acre; Adams requested a bonus in the amount of $850 per acre.
3. Pierce agreed to include a depth limitation provision in the lease, limiting the leased area from the surface to the base of the Cotton Valley formation.
4. Pierce agreed to exclude all surface operations because Adams did not want a well drilled on his property.
5. Pierce ended the meeting, stating that he would “check with his boss” about the terms of the lease, have a new lease typed and bring it back to Adams.
6. Adams understood Pierce to mean that he agreed with the terms he and Adams had discussed and the only thing he needed to “check with his boss” about was the amount of the bonus per acre.
7. Pierce returned a few days later with a lease, informing Adams that “his boss” had rejected the $350 bonus proposal, but was willing to pay $300 per acre.
8. Pierce assured Adams that the clauses that they had agreed upon in their meeting — one-fourth (25%) royalty, depth limitation and no surface use— had been included in the lease.
9. Due to his poor eyesight, he was unable to read the lease at that time, but he “trusted [Pierce] all the way.”

Pierce signed an affidavit in which he stated that in February 2008, helmet with Vernon and Glenda Adams “to discuss [a] leasing opportunity.” Pierce also stated that he offered Adams a royalty of “one-fifth, which was the standard royalty that JPD paid at that time for leases[.]” Pierce further attested that Adams accepted the one-fifth royalty, and that he never offered Adams a one-fourth royalty. Additionally, Pierce stated that the lease “incorrectly stated that the royalty to be paid to Mr. and Mrs. Adams was a one-eighth royalty ... [but] should have provided instead for the one-fifth royalty that had been agreed upon[.]”

On May 22, 2008, Adams and his wife, Glenda P. Adams, filed a petition to rescind the mineral lease on the grounds of fraud, error and failure of cause. In the alternative, plaintiffs alleged that they are entitled to reformation of the lease, on the ground of mutual error, to contain a one-fourth (25%) royalty and a depth limitation. JPD answered the petition and admitted that the royalty provision was incorrectly stated in the lease. JPD alleged that the parties had agreed to a one-fifth (20%) royalty, rather than one-eighth royalty specified in the lease. JPD also admitted that Adams requested that the lease exclude surface operations on his property, and Pierce informed Adams that JPD was agreeable to a clause prohibiting surface usage. However, JPD denied plaintiffs’ allegation that the parties had agreed to include a depth limitation.

On April 27, 2009, JPD moved for summary judgment, requesting reformation of the lease “to reflect a royalty of one-fifth; and dismissing the remainder of the plaintiffs’ claims against JPD.” JPD argued that plaintiffs’ claims of fraud and unilateral error were negated by their admission that |4they did not read the lease before signing it. With regard to plaintiffs’ request to reform the lease, JPD argued that the lease should be reformed to include a one-fifth (20%) royalty, rather than the one-fourth (25%) royalty requested by plaintiffs.

Plaintiffs filed a cross-motion for summary judgment, arguing that “the lease is null and void, and subject to cancellation, due to the failure of the parties to have any meeting of the minds regarding the royalty percentage.” Plaintiffs also argued that, based upon JPD’s admissions, there was no genuine issue of fact with regard to the nullity of the lease, and JPD *754 failed to submit any evidence to prove its claim that the parties agreed to a one-fifth (20%) royalty.

Following a hearing, the district court denied JPD’s motion for summary judgment, granted plaintiffs’ cross-motion for summary judgment and entered a judgment declaring the mineral lease “null, void and cancelled.” The court noted that the lease agreement stated that the amount of royalties would be one-eighth of production; Adams testified that he was under the impression that the royalties would be one-fourth of production; and JPD stated that the royalty provision should have stated one-fifth of production. Therefore, the court concluded that the lease was null because there was no “meeting of the minds as far as what the royalties were going to be.”

JPD appeals.

DISCUSSION

JPD contends the district court erred in granting summary judgment |ñin favor of plaintiffs. JPD argues that plaintiffs were entitled to summary judgment rescinding the lease only if the evidence established that there was a lack of a “meeting of the minds” with regard to the amount of royalties.

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Bluebook (online)
46 So. 3d 751, 178 Oil & Gas Rep. 796, 2010 La. App. LEXIS 1144, 2010 WL 3156821, Counsel Stack Legal Research, https://law.counselstack.com/opinion/adams-v-jpd-energy-inc-lactapp-2010.