Denkmann Associates v. IP Timberlands Operating Co.

710 So. 2d 1091, 1998 La. App. LEXIS 303, 1998 WL 79071
CourtLouisiana Court of Appeal
DecidedFebruary 20, 1998
DocketNo. 96 CA 2209
StatusPublished
Cited by12 cases

This text of 710 So. 2d 1091 (Denkmann Associates v. IP Timberlands Operating 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
Denkmann Associates v. IP Timberlands Operating Co., 710 So. 2d 1091, 1998 La. App. LEXIS 303, 1998 WL 79071 (La. Ct. App. 1998).

Opinions

LOTTINGER, Chief Judge.

This is a suit for declaratory judgment seeking a judicial interpretation of a purchase option clause contained within a long-term lease contract affecting some 95,000 acres of non-contiguous timberlands situated in five Louisiana parishes.1 The plaintiff-appellants are Denkmann Associates, Den-miss Corporation and 48 individual mineral distributees (hereafter, collectively referred to as “Denkmann” or “plaintiffs-lessors”). The defendant-appellees are IP Timberlands Operating Co. Ltd. and International Paper Company (hereafter, collectively referred to as “IP” or “defendants-lessees”).

Previously, both parties filed separate suits for declaratory judgment seeking a judicial determination as to their rights under the lease agreement. These actions were consolidated prior to trial, and later, this court, through our earlier opinion in IP Timberlands Operating Company, Limited v. Denmiss Corporation, 93-1687 (La.App. 1st Cir. 5/23/95), 657 So.2d 282, writs denied, 95-1593, 95-1691, 95-1958 (La.10/27/95), 661 So.2d 1348, upheld the jury’s finding that the lease agreement was not terminated, and that the option clause contained therein was valid and enforceable.

Following a denial of writs by the Louisiana Supreme Court, plaintiff-lessors filed the present action seeking a judicial clarification of the provisions of the option clause. In response, defendant-lessees filed peremptory exceptions and argued that consideration of the issues raised by plaintiffs-lessors was barred by res judicata. Plaintiff-lessors now appeal the dismissal of their suit following the trial court’s granting of defendant-lessees’ exception.

BACKGROUND and PRIOR COURT PROCEEDINGS

As we have noted, this is not the first time the parties hereto have appeared before this court. We will, therefore, turn to our previous decision in Timberlands for a recitation of the pertinent background history of the parties:

During the early 1940s, the timberlands in question were owned by Natalbany Realty Company and Natalbany Lumber Company (collectively, “Natalbany”), the latter having been formed in 1902 to operate the Natalbany sawmill as a joint project of the Denkmann and Weyerhaeuser families. By December of 1941, Natalba-ny’s timberlands were in poor condition, and the corporation was deeply indebted to its sister company in Mississippi, Denk-mann Lumber Company. Natalbany’s board of ^directors decided to implement a plan to wind up the affairs of the insolvent company.
First, Natalbany granted a comprehensive oil and gas lease to Cities Service Oil Co. covering the minerals underlying the Louisiana lands. Then, subject to the lease, Natalbany transferred its mineral rights to its own shareholders, the “mineral distributees”[2] previously identified. [1093]*1093Finally, Natalbany transferred the timber and the land, less the mineral rights, to Denkmann Lumber Company, which accepted the dation valued at $471,828 in partial satisfaction of Natalbany’s debt.
In 1945 Denkmann Lumber Company entered into a contract (“1945 Agreement”) with a subsidiary of IP, Southern Kraft Timberland Corporation (“Southern Kraft”). Denkmann (as “vendor”) conveyed to Southern Kraft (as “vendee”) “the timber, trees, wood and other forest products ... standing, growing and being situated, or that may in the future ... stand, grow or be situated” on 95,000 acres for a term of 99 years. Consideration for the “sale,” the “lease,” and the “future operating and cutting privileges” was a cash price equal to the fair market value of the standing timber, which amounted to $2,445,000. Additionally, Southern Kraft obligated itself to pay annual taxes on the land and the timber, including any severance taxes on the timber but excluding any taxes separately assessed on minerals or increases in the land assessments directly caused by mineral development. There was no general termination provision in the 1945 Agreement.[3]
The vendee’s use of the land was to be governed by good forestry practices, and the 1945 Agreement specified:
“It is agreed and recognized that one of the primary purposes for which the Vendee hereunder is acquiring said property and its rights hereunder, is the right to use the said lands in the future during the life of this contract for the purpose of growing timber, wood and other forest products, and promoting the supply, stand and growth of timber, wood and forest products on the land, and removing and marketing the same from time to time and at will, which right of the Vendee is in the nature of a lease of the land upon which the timber stands for said purposes, and that the consideration paid herefor covers all such rights and privileges as herein provided, in addition to the purchase of the timber, wood and other forest products presently on said property.”
Denkmann reserved to itself the “right to make and grant any and all oil, gas, gravel and other mineral leases and contracts necessary |5or desirable to the full mineral development of the said lands.... ” The reservation included the surface rights necessary for the performance of mineral contracts and for full mineral development. Southern Kraft agreed that if Denkmann required “exclusive” use of any of the lands for mineral development, Denkmann’s right would be “paramount” to any rights being conveyed in the 1945 Agreement, provided the value of forest products lost or damaged be paid.
Finally, the 1945 Agreement contained an option to purchase the land, which option was to be exercised any time between January 1, 1986, and December 31, 1995. Denkmann granted Southern Kraft the option subject to a “full reservation” to itself of all mineral rights. The option clause provided that three arbitrators would be named to fix a price when the option was exercised.
Twenty-four years after the 1945 Agreement, the parties signed a second agreement (“1969 Agreement”), confirming the parties’ interpretation of the first one. The only additional rights conveyed in the 1969 Agreement dealt with sub-leases for recreational purposes, such as, hunting and fishing leases.
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On August 15, 1986, IP filed in federal court an action seeking relief in the form of a declaratory judgment interpreting the option clause in the 1945 Agreement and an injunction prohibiting Denkmann from interfering with IP’s rights under the [1094]*1094Agreement, including the option granted to IP.
On the same date, August 15, 1986, the Denkmann corporations, but not the individual mineral distributees, filed an action seeking damages for breach of contract and termination of the 1945 Agreement. Denkmann alleged that the contract had been breached in the following ways: 1) failure to use good forestry practices; 2) allowing encroachments on the land with resultant losses of acreage to third parties; 3) unauthorized permitting of trash sites to be established on the lands; and 4) unauthorized grants of surface leases to third parties. Additionally, Denkmann alleged that the 1945 Agreement had expired in 1975 by operation of law because the provisions of the 1945 Agreement amounted to a usufruct to a corporation, which is limited to a 30-year duration.

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Bluebook (online)
710 So. 2d 1091, 1998 La. App. LEXIS 303, 1998 WL 79071, Counsel Stack Legal Research, https://law.counselstack.com/opinion/denkmann-associates-v-ip-timberlands-operating-co-lactapp-1998.