STATE OF LOUISIANA COURT OF APPEAL, THIRD CIRCUIT
05-1207
DANIEL A. HARDEE, III, ET AL.
VERSUS
ATLANTIC RICHFIELD, ET AL.
************
APPEAL FROM THE FOURTEENTH JUDICIAL DISTRICT COURT, PARISH OF CALCASIEU, NO. 2004-2319, DIVISION “B” HONORABLE RICK BRYANT, DISTRICT JUDGE
JIMMIE C. PETERS JUDGE
Court composed of Jimmie C. Peters, Michael G. Sullivan and Glenn B. Gremillion, Judges.
REVERSED AND REMANDED.
Donald T. Carmouche Victor L. Marcello John H. Carmouche Kenneth Jay DeLouche William R. Coenen, III Talbot, Carmouche & Marcello 214 W. Cornerview Post Office Box 759 Gonzales, LA 70707-0759 (225) 644-7777
COUNSEL FOR PLAINTIFFS/APPELLANTS: Daniel A. Hardee, III, et al.
Grady J. Abraham Attorney at Law 120 E. Third Street Post Office Drawer 2309 Lafayette, LA 70502-2309 (337) 234-4523 COUNSEL FOR PLAINTIFFS/APPELLANTS: Daniel A. Hardee, III, et al.
Harry T. Lemmon 650 Poydras Street, Suite 2335 New Orleans, LA 70130 (504) 581-5644 COUNSEL FOR PLAINTIFFS/APPELLANTS: Daniel A. Hardee, III, et al.
John R. DeRosier DeRosier Law Firm 125 W. School Street Post Office Box 4902 Lake Charles, LA 70605 (337) 474-0820 COUNSEL FOR PLAINTIFFS/APPELLANTS: Daniel A. Hardee, III, et al.
Richard E. Gerard, Jr. Scofield, Gerard, Singletary & Pohorelsky Post Office Box 3028 Lake Charles, LA 70602 (337) 433-9436 COUNSEL FOR DEFENDANTS/APPELLEES: Appearing by consent on behalf of Marathon Oil Company and the following Defendants/Appellees: Union Oil Company of California Triumph Energy, Inc. Petroleum Engineers, Inc. Proton Energy, L.L.C. Siesta Oil and Exploration Company, Inc. BP America Production Successor in Interest to Atlantic Richfield Company Saxon Energy, Inc. Great Southern Oil & Gas Company, Inc. Billingsley Engineering Company PETERS, J.
The plaintiffs1 are property owners in the Gueydan Oil Field in Vermilion
Parish, Louisiana. They filed suit to recover damages from seventeen oil companies2
who operate well sites in that field and have appealed a trial court judgment granting
exceptions of prematurity filed by some of the defendant oil companies. In granting
the exceptions, the trial court dismissed all of the plaintiffs’ claims against all of the
defendants, but without prejudice. For the reasons that follow, we reverse the
judgment granting the exceptions and remand the matter to the trial court for further
proceedings.
DISCUSSION OF THE RECORD
On April 8, 2004, the plaintiffs filed this suit in Calcasieu Parish, Louisiana,
seeking to recover damages they claim to have suffered as a result of the named
defendants’ operation of over one hundred well sites on several tracts of land located
in the Gueydan Oil Field. They claimed damages under several theories of recovery,
including contract, tort, and the Louisiana Mineral Code, and asserted that the
defendants were solidarily liable.
In their petition, the plaintiffs alleged that they “own[,] reside [on] and/or use”
their individual property and that they derive their individual rights in the litigation
1 The plaintiffs were originally six in number: Daniel A. Hardee, III, Velma Humble Hebert, Doris M. Humble, Margaret Humble Lantz, David Simon, and Stansel Properties L.L.C. However, after the appeal was filed, three of the plaintiffs (Velma Humble Hebert, Doris M. Humble, and Margaret Humble Lantz) moved to have the appeal dismissed as to themselves. Pursuant to that request, this court executed a judgment of partial dismissal. 2 The seventeen defendants were Atlantic Richfield Company, B. M. Oil, Inc., Triumph Energy, Inc., Petroleum Engineers, Inc., Siesta Oil and Exploration Company, Inc., Billingsley Engineering Company, Great Southern Oil & Gas Company, Inc., Fortune Gas and Oil, Inc., Devon Louisiana Corporation, Proton Energy, L.L.C., Pharaoh Oil & Gas, Incorporated, Union Oil Company of California, Kaiser-Francis Oil Company, The Exploration Company of Louisiana, Inc., Saxon Energy, Inc., Marathon Oil Company, and Vincent & Welch, Inc. Two defendants, Fortune Gas and Oil, Inc. and Devon Louisiana Corporation (identified also as Devon Energy Production Company, L.P. in the record), have been dismissed from the litigation. from “certain oil, gas and mineral leases between plaintiff and defendants, or own[]
property contaminated by the oil and gas activities conducted or controlled by one or
more of the defendants.” The petition further asserted that, by their conduct or
control pursuant to the mineral leases at issue, the defendants had contaminated or
otherwise damaged the property belonging to the plaintiffs. According to the
plaintiffs’ pleadings, the contamination or damage was caused by the improper
disposal of oilfield wastes and this conduct caused the soil, surface water, and
groundwater on their individual properties to be contaminated. Furthermore, the
plaintiffs asserted that “[r]ather than remove these substances during and after oil and
gas exploration and production activities” the defendants “chose to conceal and cover
up this contamination.” The defendants’ actions and inactions, according to the
plaintiffs, have allowed the contamination to migrate and spread throughout the
properties at issue and the contamination will continue to occur in the future absent
remedial action. In pleading the conduct of the defendants and the damage sustained
as a result thereof, the plaintiffs used such terms and phrases in their pleadings as
“contamination,” “pollution,” “knew or should have known,” “actively concealed
from plaintiffs,” and “ongoing migration of this oilfield waste.”
The plaintiffs based their right of recovery on both contract and tort theories.
Specifically, in support of their claims, they point to the language of the mineral
leases; the provisions of the Louisiana Mineral Code, particularly the “prudent
operator” requirement of La.R.S. 31:122; the Louisiana Civil Code articles dealing
with leases, particularly La.Civ.Code arts. 2719 and 2720; and La.Civ.Code art. 2315
as it relates to their claim in tort.
2 The various defendants individually responded to the petition by filing either
answers or exceptions, with some of the defendants filing dilatory exceptions of
prematurity. On October 12, 2004, the trial court held a hearing on, among other
matters, the exceptions of prematurity. With regard to that exception, most of the
defendants sought relief on two specific grounds: First, they asserted that the
plaintiffs had failed to exhaust their administrative remedies before the Louisiana
Office of Conservation or the Department of Environmental Quality, and, second,
they asserted that the plaintiffs’ rights will arise only upon termination of the mineral
leases at issue. At the hearing on the exceptions, those defendants abandoned the first
ground, but argued the second.
On November 10, 2004, the trial court filed written reasons for judgment
granting the exceptions of prematurity and on December 17, 2004, executed a
judgment to that effect, dismissing the plaintiffs’ demands against all the defendants.
In its judgment, the trial court specifically found that, because of its ruling on the
exceptions of prematurity, “all remaining motions and exceptions are moot.” After
the trial court rejected the plaintiffs’ request for a new trial, they perfected this appeal.
The primary issue on appeal involves determining the point at which a property
owner can bring an action against a mineral lessee to recover for property damages
caused by the actions or inactions of the mineral lessee.
OPINION
The dilatory exception of prematurity provided for in La.Code Civ.P. art.
926(A)(1) raises the question of whether the cause of action has matured to the point
where it is ripe for judicial determination. Williamson v. Hosp. Serv. Dist. No. 1 of
Jefferson, 04-0451 (La. 12/1/04), 888 So.2d 782. Its function is to assert that a
3 judicial cause of action does not yet exist because of some unmet prerequisite
condition. Steeg v. Lawyers Title Ins. Corp., 329 So.2d 719 (La.1976). The action
is premature when it is brought before the right to enforce it has accrued. La.Code
Civ.P. art. 423.
When a dilatory exception is tried, “evidence may be introduced to support or
controvert any of the objections pleaded, when the grounds thereof do not appear
from the petition.” La.Code Civ.P. art. 930. The defendant pleading the exception
of prematurity has the burden of establishing that the action is premature. Cook v.
AAA Worldwide Travel Agency, 360 So.2d 839 (La.1978).
In the matter now before us, the defendants introduced no evidence in support
of their exception. Therefore, we must look to the petition alone to determine
whether the objection of prematurity was properly granted. See Williamson, 888
So.2d 782; Dore Energy Corp. v. Carter-Langham, Inc., 04-1202, 04-1233, 04-1373,
05-0006 (La.App. 3 Cir. 5/4/05), 901 So.2d 1238, writs denied, 05-1484, 05-1493,
05-1496, 05-1492, 05-1503, 05-1521, 05-1576, 05-1577, 05-1582 (La. 1/9/06), 918
So.2d 1042, 1043, 1044, 1045, 1046, 1047. Based on our review of the record before
us, we conclude that an examination of the petition alone does not establish that the
action is premature.
We first note that, although the petition does not allege that the mineral leases
at issue were terminated before the plaintiffs filed suit, neither does it allege that the
leases are still in effect. The petition does, however, routinely allege that the damages
were caused by past operations. The petition’s regular use of the past tense in its
allegations of damage indicates that the activities causing the damage are no longer
taking place. While there are allegations that “the continuous and ongoing migration
4 of this oilfield waste is causing new and ever increasing damage to plaintiffs’
property, and such damages will continue until such time as these wastes are removed
and remediated,” these allegations pertain to activities originating in the past and
cannot be construed to mean that there is current lease activity on the property. The
tenor of the petition is that all operations have ceased, but the issue is not entirely free
from doubt.3 Thus, the petition being unclear on the prematurity issue of whether the
leases have terminated, “the grounds thereof do not appear from the petition,” and the
defendants had the burden of introducing evidence to support their position. See
La.Code Civ.P. art. 930.
While they did not introduce any evidence at the hearing on the exceptions, the
defendants point to an attachment to their joint memorandum filed in opposition to
the plaintiffs’ motion for new trial as evidence of the continued operations on the
property at issue. The attachment is a downloaded list of wells from a website posted
by the Louisiana Department of Natural Resources which purports to show eleven of
the 102 wells identified in the plaintiffs’ petition as still producing. However, the
defendants did not introduce this at the hearing on the exceptions, and its belated
appearance as an attachment to a brief is not evidence. In any event, the list is
unreliable as it is not identified by website citation, including its dates of posting or
last revision.
Even assuming that some wells subject to the leases at issue are still producing,
we find no merit in the defendants’ primary argument that the plaintiffs’ cause of
action does not arise in any event until after the leases are terminated. The trial court
3 Vagueness was among the exceptions filed. At the hearing, the defendants argued vagueness as vigorously as they did the exception of prematurity. However, the trial court’s ruling mooted the vagueness exception.
5 agreed with the defendants, relying on the following language from the supreme
court’s decision in Corbello v. Iowa Production, 02-826, p. 23 (La. 2/25/03), 850
So.2d 686, 703, to the effect that “[t]he duty to repair the leased premises does not
arise until the lease expires, at which time the lessee must return the property in good
order.” We find that the trial court erred in its reliance on the language in Corbello
as it applies to the matter now before us. Instead, we find that our recent decision in
Dore Energy Corp., 901 So.2d 1238, is dispositive of the issues now before us.
The Dore litigation arose in Cameron Parish, Louisiana, and involved claims
for damage associated with mineral operations. The plaintiff asserted in its petition
that the defendants (seventeen corporations and one individual) had conducted oil and
gas exploration and production operations on its property consisting of 18,000 acres
of land under one mineral lease and that their operations had caused damage to the
property. The plaintiff sought damages based on negligence, breach of contract,
restoration under the Louisiana Mineral Code, exemplary damages, trespass, and
maritime tort.
When the plaintiff in Dore filed its suit, mineral operations were continuing on
a portion of the property, and, as in the case presently before us, some of the
defendants filed exceptions of prematurity, raising the same argument now before us
in the instant litigation. They too relied on the supreme court’s language in Corbello,
850 So.2d 686, and the trial court agreed. The plaintiff appealed the grant of the
exception, assigning essentially the same errors that are before us in the instant
litigation.
This court reversed the trial court’s grant of the exception of prematurity, but
only in part. In doing so, this court noted that the language cited above from
6 Corbello was dicta and further noted that the supreme court clarified that statement
in Terrebonne Parish School Board v. Castex Energy, Inc., 04-968, p. 13 (La.
1/19/05), 893 So.2d 789, 798 (quoting Corbello, 850 So.2d at 694), by explaining
that the Corbello decision “involved an express lease provision obligating the lessee,
upon termination of the lease, to ‘reasonably restore the premises as nearly as
possible to their [condition at the beginning of the lease].’” In other words, the
Corbello decision was based on “general principles of contract interpretation.” Id.
Finding no allegation in the plaintiff’s petition suggesting that the mineral lease
contained any contractual language regarding a duty to restore the property, this court
in Dore then turned its attention to the duties statutorily imposed by La.R.S. 31:122,
which provides as follows:
A mineral lessee is not under a fiduciary obligation to his lessor, but he is bound to perform the contract in good faith and to develop and operate the property leased as a reasonably prudent operator for the mutual benefit of himself and his lessor. Parties may stipulate what shall constitute reasonably prudent conduct on the part of the lessee.
In considering the duty imposed by La.R.S. 31:122, this court stated the following:
Regarding an implied duty in La.R.S. 31:122 to restore the surface of the leased premises, the supreme court stated in Terrebonne Parish School Board, 893 So.2d at 799, that [the] court, in
Rohner v. Austral Oil Exploration Co., 104 So.2d 253 (La.App. [1] Cir.1958), properly articulated the rule concerning the scope of any implied duty to restore the surface. The plaintiff in Rohner sought damages of $250 per acre to four acres of his property that he claimed were damaged by the defendant lessee’s placement of a drilling rig and turnaround, and the digging of pits necessary to drill a well. Id. at 255. The court stated the relevant rule governing a lessee’s obligation to restore the surface as follows:
Unless provided for in the lease, the lessee is not responsible for damages which are inflicted without negligence upon the lessor’s property in the course
7 of necessary drilling operations. Moreover when the damaging of the lessor’s property by the mineral lessee is not negligent per se, the lessor must prove that the injury was caused by unreasonable or negligent operations of the lease.
Id. (citing William O. Bonin, Comment, Mines and Minerals-Oil and Gas-Surface Rights of Lessor and Mineral Lessee, 26 TUL. L.REV. 522, 523 (1952)). Applying this rule, the court denied recovery, finding that the plaintiff had not shown that his land was damaged due [to] any negligent or unreasonable operations by the defendant. Id. Rather, the damage to the plaintiff’s land was attributable solely to “the ordinary, customary, and necessary acts which must be done by a drilling company in order to put down a well.” Id.
Ultimately, the supreme court held that “in the absence of an express lease provision, Mineral Code article 122 does not impose an implied duty to restore the surface to its original, pre-lease condition absent proof that the lessee has exercised his rights under the lease unreasonably or excessively.” Terrebonne Parish School Board, 893 So.2d at 801.
Dore Energy Corp., 901 So.2d at 1241-42 (alteration in original).
This court in Dore then proceeded to the procedural issue before it, i.e., the
determination of when the lessor could sue to enforce the lessees’ obligation to
restore the land under the pleadings in that case. With regard to that issue, this court
acknowledged that the Louisiana Mineral Code does not provide a specific answer.
However, this court concluded that, while the duty of the lessee to restore the land to
its former state, reasonable wear and tear excepted, was an obligation not due until
completion of operations, the claims for negligence, breach of contract, exemplary
damages, damages for trespass, and maritime tort arising from the lessee’s obligation
to maintain the leased land as a reasonably prudent operator as required under La.R.S.
31:122 did not have to wait until completion of operations to be heard.
8 We agree with this court’s decision in Dore in its application of the
jurisprudence to the pleadings before it. Applying that law to the pleadings now
before us, we too advert to Terrebonne Parish School Board for guidance and quote
again from that case its holding relied on by Dore that, “in the absence of an express
lease provision, Mineral Code article 122 does not impose an implied duty to restore
the surface to its original, pre-lease condition absent proof that the lessee has
exercised his rights under the lease unreasonably or excessively.” Terrebonne Parish
Sch. Bd., 893 So.2d at 801.
Applied to the petition before us, this means that if the defendants have
exercised their rights under the leases unreasonably or excessively, La.R.S. 31:122
impliedly imposes the duty of restoration even if there is no express lease provision
requiring restoration. This has two consequences in the present case. First, because
the petition alleges that the defendants exercised their rights under the lease
unreasonably and excessively, the petitioners have alleged a violation of the implied
statutory obligation of the defendants under that statute. Second, having alleged
specific conduct that violates the lease obligation, the plaintiffs have the right to
proceed to trial and prove, if they can, that the defendants have in fact violated the
terms of the lease, as well as their statutory obligations under the Louisiana Mineral
Code and the Louisiana Civil Code. It is a matter of a defense on the merits, and not
an objection to the petition as being prematurely filed, that by the terms of the lease
and whatever specific rights may have been granted to the lessees therein, the
petitioners gave their assent to the alleged changes in the property or that it was
“‘worn and torn’” in the manner the parties’ contemplated. See Terrebonne Parish
Sch. Bd., 893 So.2d at 800. If such a defense exists, however, it is not the
9 responsibility of the plaintiffs to anticipate that defense and plead against it at the risk
of the petition being found premature for failure to so plead.
For these reasons, we reverse the exceptions of prematurity in their entirety.
The Dore panel, which affirmed the exception only in part, was faced with the
formidable task of framing an appellate response to one appeal and three writ
applications, each presenting common legal questions; however, in only one, the
appeal, did the court mention the allegations of fact—and those only to the extent
necessary to make its ruling. The opinion does not state the pleaded facts in the writ
cases. This court in Dore decided that, to the extent the claims involved either a
prayer to maintain the leased land as a reasonably prudent operator as required under
La.R.S. 31:122, or to restore land upon which operations had been completed to the
extent that the use of such land was negligent, the exceptions of prematurity should
be overruled. This overruling applied to the plaintiff’s claims for both negligence and
breach of contract. This court felt that the only claims that were premature were those
that involved the obligation of the defendants-lessees to restore lands on which
operations were ongoing. While this was technically an affirmation of the
prematurity finding as to a non-specific part of the plaintiff’s demands in the
consolidated matters, it perhaps had little practical significance, as the affected parts
of the demands might have to await a merits evaluation to ascertain to what extent
any claim was premature. The only one of the two rulings of the court in Dore having
practical application was the overruling of the exception of prematurity.
In our present case, we deem it unnecessary to rule that the trial court might
have been correct to some extent in sustaining the exceptions. As a practical matter,
the extent to which the trial court may have been correct can be determined only by
10 a trial on the merits because the full facts necessary for such a determination can be
revealed only by a trial on the merits. We accordingly reverse the judgment in its
entirety and remand the matter for further proceedings.
DISPOSITION
For the foregoing reasons, the judgment of the trial court is reversed, the
exceptions of prematurity are overruled, and the case is remanded to the trial court for
further proceedings. The defendants-appellees will pay the costs of this appeal.