Audubon Exploration v. Linder Oil Co.

573 So. 2d 1180, 114 Oil & Gas Rep. 297, 1991 La. App. LEXIS 57, 1991 WL 6524
CourtLouisiana Court of Appeal
DecidedJanuary 16, 1991
DocketNo. 90-CA-515
StatusPublished

This text of 573 So. 2d 1180 (Audubon Exploration v. Linder Oil Co.) 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
Audubon Exploration v. Linder Oil Co., 573 So. 2d 1180, 114 Oil & Gas Rep. 297, 1991 La. App. LEXIS 57, 1991 WL 6524 (La. Ct. App. 1991).

Opinion

GOTHARD, Judge.

This is an oil and gas case. The plaintiff appeals the trial judge’s dismissal under La.C.C.P. art. 1672(B) of its suit for finder fees and royalty interest in the defendant’s well.

Audubon Exploration Consultants, Inc. (“Audubon”), the plaintiff, is a corporation of which Daniel Muhs is president and John Higgins is vice-president. Both men are geologists and are the sole shareholders of the corporation. Audubon developed an oil and gas prospect1 in Cameron Parish, known as “Second Lake Prospect.”

The defendant is a partnership, Linder Oil Company, (“Linder Oil”) of which a geologist, Roger Linder, is president and the other partners are Miles Biggs, an attorney and land man, and Richard Gilmore, also a geologist. Linder Oil obtained from Liberty Oil a lease on 110 acres of land, which was also included in the Second Lake or Audubon prospect. In 1986, Linder Oil brought in a producing well within the Liberty Oil lease on a prospect known as “Grand Chenier,” or the “Broadbridge prospect.” Geologist David Broadbridge had developed the prospect while in the employ of Liberty Oil. Broadbridge and John Harlan had formed a partnership after leaving Liberty Oil in 1983 and had a retainer agreement with Linder Oil. The two men remained on good terms with Liberty’s president, James Moore.

The dispute between Audubon and Lin-der Oil involves an alleged conflict of interests over the two geological “ideas” or prospects, specifically that Linder drilled in a geographical and geological area that had previously been presented to it by Audubon. Audubon claimed that Linder Oil used the information in the Audubon prospect and owed it an override on the well’s production, alleging Linder received an unjust enrichment.

As stipulated between the parties, in November, 1985 John Higgins had met with Biggs and Gilmore and presented the Second Lake prospect to Linder Oil; two weeks later, Linder Oil declined the prospect by letter signed by Gilmore and returned Audubon’s maps and reports. Early in 1986, Roger Linder told Biggs he had learned that the 110-acre plot leased by Liberty was available and he had decided to drill the Broadbridge prospect, which he had seen earlier. Allegedly, James Moore, president of Liberty, had planned to drill the lease up until that time, hence Linder had disregarded the prospect. Biggs mentioned to Roger Linder the possibility of a conflict because he and Gilmore had reviewed the Audubon prospect in November. After considering the matter Linder concluded there was no conflict because of differences between the prospects as to location and depth.

In April, 1986 Muhs and Higgins learned that Linder Oil was planning to drill and arranged a meeting with Roger Linder to discuss what they perceived to be a con[1182]*1182flict. Upon looking at the Audubon maps, Linder stated that he personally had not seen the prospect before, compared them against the Broadbridge maps, and said he would get back to them. After an attorney’s letter and a personal telephone call demanding compensation produced no results, Audubon filed suit on October 9, 1986, seeking $40,000 in finder fees, 3% overriding royalty interest of 8/8 ths. resulting from any production on the property, and attorney’s fees.

Trial was held on December 18 and 19, 1989. At the close of the plaintiff’s case, the defendant moved for dismissal under La.C.C.P. art. 1672(B). On December 21, 1989 the trial court signed a judgment dismissing the lawsuit, with reasons for judgment.

Audubon raises three issues: 1) whether the court erred in finding that Audubon’s prospect and the prospect purportedly relied upon by Linder were different; 2) whether, under an unjust enrichment analysis, Linder had the benefit of Audubon’s prospect when it drilled a well involving land and targeting subsurface mineral deposits virtually identical to those shown Linder by Audubon; and 3) whether the court erred in finding that the key lease necessary for the drilling of the well was unavailable at the time of Audubon’s presentation to Linder.

Were Audubon’s prospect and Broad-bridge’s Prospect Different?

The threshold issue of the case is whether or not the court’s factual finding regarding the similarity or not of the two prospects is correct.

The Supreme Court’s most recent summary of the manifest error rule appears in Lirette v. State Farm Ins. Co., 563 So.2d 850, 852 (La.1990), as follows:

It is well settled that a court of appeal may not set aside a finding of fact by a trial court or a jury in the absence of “manifest error” or unless it is “clearly wrong,” and where there is conflict in the testimony, reasonable evaluations of credibility and reasonable inferences of fact should not be disturbed upon review, even though the appellate court may feel that its own evaluations and inferences are as reasonable. Rosell v. ESCO, 549 So.2d 840, 844 (La.1989); Arceneaux v. Domingue, 365 So.2d 1330, 1333 (La.1978); Canter v. Koehring Co., 283 So.2d 716, 724 (La.1973).
When findings are based on determinations regarding the credibility of witnesses, the manifest error — clearly wrong standard demands great deference to the trier of fact’s findings; for only the fact finder can be aware of the variations in demeanor and tone of voice that bear so heavily on the listener’s understanding and belief in what is said. Rosell, supra at 844; Canter, supra at 724; Virgil v. American Guarantee & Liability Ins. Co., 507 So.2d 825 (La. 1987); Boulos v. Morrison, 503 So.2d 1 (La.1987).
The rule that questions of credibility are for the trier of fact applies to the evaluation of expert testimony, unless the stated reasons of the expert are patently unsound. Sistler v. Liberty Mutual Ins. Co., 558 So.2d 1106 (La.1990); ... [Remaining citations omitted.]

Audubon called Daniel Muhs, Roger Lin-der, John Higgins, and expert geologist Louis Lamarie to testify. All the geologists agreed that petroleum geology is an inexact science. Muhs explained that the geologists’ predictions of where oil and gas might be found are based largely on the logs of wells previously drilled.

The court's decision was based primarily on the testimony of Louis Lamarie, qualified as an expert in geology and in oil and gas operations. Lamarie explained that although all geologists use the same material, e.g. well logs and base maps, a prospect is developed by interpretation. He said:

... [I]f you gave five geologists the same set of data, you’d probably get five different interpretations. They would all have some similarities but there’d be some differences....

In the case before us he felt that “the two sets of geological data represented the same prospect,” although there were slight differences in interpretation.

[1183]*1183The trial judge gave the following reasons for finding that there was no conflict between the two prospects because of the differences:

1) The Grand Chenier prospect required drilling to 8,500 feet at the shallowest and 11,500 feet at the deepest as opposed to a range of 8,200 feet to 9,500 feet for the Second Lake prospect.
2) The Grand Chenier prospect “keyed off of” (i.e., was oriented from) a Tenne-co well as opposed to the Cox well used by the Two Lake prospect.

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Related

Virgil v. American Guar. & Liability Ins.
507 So. 2d 825 (Supreme Court of Louisiana, 1987)
Lirette v. State Farm Ins. Co.
563 So. 2d 850 (Supreme Court of Louisiana, 1990)
Arceneaux v. Domingue
365 So. 2d 1330 (Supreme Court of Louisiana, 1978)
Edmonston v. A-Second Mortgage Co. of Slidell, Inc.
289 So. 2d 116 (Supreme Court of Louisiana, 1974)
Rosell v. Esco
549 So. 2d 840 (Supreme Court of Louisiana, 1989)
Sistler v. Liberty Mut. Ins. Co.
558 So. 2d 1106 (Supreme Court of Louisiana, 1990)
Boulos v. Morrison
503 So. 2d 1 (Supreme Court of Louisiana, 1987)
Canter v. Koehring Company
283 So. 2d 716 (Supreme Court of Louisiana, 1973)

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Bluebook (online)
573 So. 2d 1180, 114 Oil & Gas Rep. 297, 1991 La. App. LEXIS 57, 1991 WL 6524, Counsel Stack Legal Research, https://law.counselstack.com/opinion/audubon-exploration-v-linder-oil-co-lactapp-1991.