Broussard v. Hilcorp Energy Co.

24 So. 3d 813, 40 Envtl. L. Rep. (Envtl. Law Inst.) 20260, 170 Oil & Gas Rep. 49, 2009 La. LEXIS 2981, 2009 WL 3380638
Supreme Court of Louisiana·Decided October 20, 2009·No. 2009-C-0449, 2009-C-0469·Published·Cited by 26 cases

Opinions

JOHNSON, Justice.*

_JjWe granted this writ application to determine whether La. R.S. 31:136 applies to the plaintiffs’ claims, thus requiring plaintiffs to provide defendants with pre-suit notice and an opportunity to perform prior to filing suit. For the following reasons, we affirm the court of appeal, and hold that La. R.S. 31:136 is inapplicable to the plaintiffs’ claims.

FACTS AND PROCEDURAL HISTORY

Plaintiffs, Kern Broussard and Nettie Ann Dubois Broussard, own certain real [815] property in Vermilion Parish, Louisiana, on which mineral, surface, and subsurface |2leases were granted to various corporate entities to conduct oil and gas operations. On March 31, 2004, Plaintiffs filed suit against numerous companies, including applicants ConocoPhillips Company (“Cono-co”) and Chevron U.S.A., Inc. (“Chevron”), alleging that the defendants negligently conducted their oil and gas operations, resulting in contamination of the property, and alleging that the property required restoration.1

Defendants filed numerous exceptions, including exceptions of improper venue, lack of subject matter jurisdiction, improper cumulation of actions, prematurity/want of amicable demand, and vagueness. At issue in the instant consolidated writ applications are the exceptions of prematurity/want of amicable demand filed by defendants Conoco and Chevron. These exceptions are based on Conoco’s and Chevron’s assertions that La. R.S. 31:136, also known as Mineral Code article 136,2 mandates that the Plaintiffs provide defendants with written notice and a reasonable opportunity to perform, prior to filing suit, where there are allegations that a mineral lessee breached an obligation to operate the leased property as a reasonably prudent operator.

The exceptions were heard by the trial court on May 7, 2007. Several exceptions, including the exception of prematurity, were granted, and Plaintiffs were given additional time to cure the bases for granting the exceptions. Following Plaintiffs’ Fourth Supplemental and Amending Petition, defendants re-urged several |sexceptions, including the exceptions of prematurity/want of amicable demand. On October 3, 2007, the trial court found that the amended petition had not cured the defects underlying the exceptions and made the basis of the court’s ruling of May 7, 2007, and dismissed Plaintiffs’ action, without prejudice.

Plaintiffs appealed the trial court’s ruling, arguing that they were not required to make amicable demand prior to suit, and that their claims were ripe for review. The court of appeal affirmed the trial court’s ruling in part, but reversed the trial court’s dismissal of the action based on the failure to provide the written notice required by Article 136.3 Conoco and Chevron (“Applicants”) filed the instant writ applications solely on the issue of whether plaintiffs were required to provide written notice pursuant to Mineral Code Article 136 prior to filing suit. This Court granted the writ applications.4

DISCUSSION

The issue in this case involves the interpretation of Mineral Code article [816]*816136. Thus, it is a question of law, and reviewed by this Court under a de novo standard of review. Thibodeaux v. Donnell, 2008-2436, p. 3 (La.5/5/09), 9 So.3d 120, 122-123; Holly & Smith Architects, Inc. v. St. Helena Congregate Facility, Inc., 2006-0582 (La.11/29/06), 943 So.2d 1037. After our review, we “render judgment on the record, without deference to the legal conclusions of the tribunals below. This court is the ultimate arbiter of the meaning of the laws of this state.” Thibodeaux, 08-2436 at p. 3, 9 So.3d at 123 (citing Holly & Smith Architects, Inc., 943 So.2d at 1045).

In deciding whether Article 136 requires notice, or amicable demand, in this case, we first examine the concept of “putting in default,” and its history in the Civil |4Code and Mineral Code. “Putting in default” exists in the civilian system as a general requirement that an “obligor’s failure to perform must be turned into a default that entails legal consequences.” Litvinoff, 6 Louisiana Civil Law Treatise: The Law of Obligations, § 1.2 (1999). Thus, the concept generally provides that the obligor is held responsible for the damage his nonperformance may cause only from the time that he is put in default. Id. The Civil Code articles relative to Obligations specifically provide for the circumstances and methods of putting an obligor in default.

At the time the Mineral Code was enacted, the Civil Code made a distinction between “active” and “passive” breaches of a contract. La. C.C. art. 1931 (1870). Former Civil Code article 1931 generally defined an active violation as “doing something inconsistent with the obligation it has proposed” and a passive violation as “not doing what was covenanted to be done, or not doing it at the time, or in the manner stipulated or implied from the nature of the contract.” Id. This distinction was relevant because it governed whether a putting in default was necessary. La. C.C. art.1932 (1870). At that time, the Civil Code provided that damages arising from an active breach were due from the moment of the breach, whereas damages for a passive breach were only due from the time that the debtor had been put in default. La. C.C. arts. 1932-1933 (1870).

The Louisiana Mineral Code, set forth in La. R.S. 31:1, et seq., was enacted in 1974, and went into effect on January 1, 1975 (Acts 1974, No. 50, § 1). Relative to the issues of “notice” and “putting in default” is Article 135, which provides that “[t]he provisions of the Louisiana Civil Code concerning putting in default are applicable to mineral leases subject to the following modifications.” La. R.S. 31:135.

One modification provided by the Mineral Code was set forth in Article 136, |sand related to claims for damages resulting from drainage. Article 136, as originally enacted in 1974, provided:

A putting in default is a prerequisite to a demand for damages arising from drainage of the property leased. If a lessee is found to have had actual or constructive knowledge of drainage and is held responsible for consequent damages, the damages may be computed from the time a reasonably prudent operator would have protected the leased premises from drainage. In other cases they may be computed only from the time of the putting in default.

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Broussard v. Hilcorp Energy Co., 24 So. 3d 813, 40 Envtl. L. Rep. (Envtl. Law Inst.) 20260, 170 Oil & Gas Rep. 49, 2009 La. LEXIS 2981, 2009 WL 3380638 (La. 2009).

24 So. 3d 813 (Broussard v. Hilcorp Energy Co.) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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