Judgment rendered April 14, 2021. Application for rehearing may be filed within the delay allowed by Art. 2166, La. C.C.P.
No. 53,896-CA
COURT OF APPEAL SECOND CIRCUIT STATE OF LOUISIANA
*****
DIAMOND MCCATTLE COMPANY, L.L.C. Appellants AND BWW HOLDINGS, L.L.C.
versus
RANGE LOUISIANA OPERATING, LLC Appellee
Appealed from the Second Judicial District Court for the Parish of Jackson, Louisiana Trial Court No. 35267
Honorable Jimmy C. Teat, Judge
THE PESNELL LAW FIRM, A P.L.C. Counsel for Appellants By: Billy R. Pesnell John W. Pesnell
ALAN PESNELL LAWYER, LLC By: W. Alan Pesnell
COOK, YANCY, KING & GALLOWAY Counsel for Appellees, By: J. William Fleming Range Louisiana John T. Kalmbach Operating, LLC and W. Drew Burnham James Browning
Before PITMAN, STONE, and COX, JJ. COX, J.
This suit arises out of the Second Judicial District Court, Jackson
Parish, Louisiana. Plaintiffs, Diamond McCattle Company, LLC, and BWW
Holdings, LLC brought suit against Range Louisiana Operating, LLC
(“Range”), and James Browning1 for subsurface trespass. Range filed a
motion for summary judgment (“MSJ”), and Plaintiffs filed a partial MSJ.
The trial court denied Plaintiffs’ partial MSJ, granted Range’s MSJ, and
dismissed Plaintiffs’ suit with prejudice. Plaintiffs now appeal.
FACTS
Plaintiffs are the owners of the following described tract of land
(hereinafter referred to as the “Subject Property”):
A certain piece, parcel or lot of ground, together with all improvements thereon, rights, ways and privileges thereunto belonging or in any way appertaining; being, lying and situated in Section 12, Township 16 North, Range 1 West, Jackson Parish, Louisiana, and being more particularly described as follows, to wit:
The East one-half (E 1/2) of the Southwest Quarter (SW 1/4), Section 12, Township 16 North, Range 1 West, LESS AND EXCEPT: 4.87 acres in the Southwest corner of Northeast Quarter (NE 1/4) of Southwest Quarter (SW 1/4), Section 12, Township 16 North, Range I West, being 267.85 feet East and West by 792 feet North and South. Containing 75 acres more or less, situated in Jackson Parish, Louisiana.
On January 12, 2018, Plaintiffs filed a petition for judicial relief from
subsurface trespass against Range. Plaintiffs alleged that Range acted
intentionally and in bad faith by horizontally drilling the Tri Delta 13-12 H
No. 1 well (the “Well”) under the Subject Property. Plaintiffs asserted that
1 Mr. Browning was not named in the original petition, but was later added by Plaintiffs as he was Range’s drill site supervisor for the subject well. they are entitled to recover damages and be recognized as the owner of the
well bore hole to the extent it is located on the Subject Property.
The Well’s surface location is in the West Half of Section 13,
Township 16 North, Range 1 West, on property owned by Tri-Delta Timber
Group, LLC, on which Range had the right to conduct operations. Range
applied for and obtained a drilling permit dated October 2, 2017, authorizing
the drilling of a lease well to test the non-unitized “L Gray Sand.”
The Well was actually drilled to the Lower Cotton Valley Formation,
Reservoir A, for the Vernon Field, Jackson Parish, Louisiana (referred to as
the “LCV RA Formation”). The LCV RA Formation is defined as being at
the depth of 12,100 feet to 14,920 feet. Range drilled a total vertical depth of
14,243 feet, which correlates with the LCV RA Formation. After drilling to
a total vertical depth of 14,243 feet, Range turned the drill bit and drilled
horizontally (from south to north) for a total measured depth of 19,131 feet.2
At a measured depth of 17,679.31 feet, the horizontal lateral crossed the
underground plane between Sections 12 and 13, such that 1,443 feet of the
wellbore is in the West half of Section 12, on the Subject Property. The Well
is within two pre-existing drilling and production units created by the
Louisiana Commissioner of Conservation—the LCV RA SU148 and LCV
RA SU55.
The Well was completed on January 10, 2018. Range filed an
application with the Office of Conservation on February 28, 2018, to have
the permit amended from a “lease” well to a “unit” well. The Office of
2 The total measured depth is the sum of both the vertical and horizontal depths.
2 Conservation issued an order designating the Well a unit well, effective
March 27, 2018.
Defendants answered on January 14, 2019.3 They denied the
allegations by Plaintiffs, but admitted to the following: they did not have a
lease with Plaintiffs; they did permit, drill, perforate, fracture, and complete
the Well in the LCV RA Formation; and, they had no obligation to provide
Plaintiffs with pre-entry notice. Defendants stated that Plaintiffs have failed
to state a claim on which relief can be granted. Defendants asserted that the
Well was drilled to depths subject to the LCV RA SU55 and LCV RA SU148
units, which include the Subject Property, and qualifies as a unit well for
these two production units. They state that because of this, Plaintiffs are
categorized as unleased owners and only have a claim for their share of
production payments.
Plaintiffs amended their petition and stated that Range filed an “As
Drilled” plat with the Office of Conservation, which showed that the bottom
hole and lower perforation point of the Well are on Plaintiffs’ property.
Plaintiffs asserted that Range intentionally and knowingly drilled the Well on
their property and Defendants acted in bad faith in drilling the Well. They
also amended their petition to state that Range initially filed its well
application as a “lease” well, but on February 28, 2018, it filed an application
to amend its drilling permit to designate the well as a “unit” well. Plaintiffs
3 On February 26, 2018, Range filed a notice of removal to Federal Court, arguing the parties were citizens of different states and the amount in controversy was over $75,000. Range asserted that its sole member is Range Resources Louisiana, Inc., a Delaware corporation, whose principal place of business is Texas. It stated the remaining parties are all Louisiana citizens. On April 16, 2018, the federal court found that subject matter jurisdiction existed pursuant to 28 U.S.C. §1332. Both parties filed multiple motions in federal court before the federal court granted Plaintiff’s motion to remand to the 2nd JDC, Jackson Parish, Louisiana.
3 requested to be recognized as owners of the profits derived from the Subject
Property, as well as the “works constructed” by Range on the Subject
Property.
Defendants filed their MSJ arguing that their operations were unit
operations; therefoer, Plaintiffs have no cause or right of action. They asked
the court to dismiss Plaintiffs’ claim with prejudice because there are no
genuine issues of material fact and they are entitled to summary judgment as
a matter of law. They asserted the following: The Commissioner of
Conservation had previously included the Subject Property in the compulsory
drilling and production unit for the LCV RA Formation; the Well was drilled
to and completed in the LCV RA Formation; and, their operations in
connection to the Well constituted unit operations for the existing LCV RA
Formation drilling and production unit.
In support of their MSJ, Defendants submitted the affidavit of Philip
N. Asprodites, attorney and former Louisiana Commissioner of
Conservation. He stated it is a “common, normal, accepted practice” for the
Office of Conservation to permit a well to a deeper, non-unitized formation,
although the operator’s main objective is to test a shallower, unitized
formation. He also stated, “Consistent with the Office of Conservation
accepted practices and procedures, all operations in connection with the
[Well] are deemed to be unit operations for the LCV RA SU 148 and LCV
RA SU 55 drilling and production.”
Defendants also attached the affidavit of Jeffrey Klam, former land
manager for Range. His responsibilities included overseeing the Well. He
stated that Range originally sought a permit to test the “non-unitized L-
4 Gray,” and from the commencement of operations, it was Range’s intention
that the Well would be drilled to the LCV RA Formation. He stated that
Range then filed the appropriate paperwork with the Office of Conservation
and the Commissioner found that the Well was drilled to the LCV RA
Formation and designated it a unit well for the LCV RA SU55 and LCV RA
SU148 units.
Defendants included the affidavit of James Browning. Mr. Browning
stated he was working as a drilling supervisor for the Well beginning in
November 2017. He described his responsibilities as implementing and
overseeing Range’s drilling plans, which put him in direct contact with
Range regarding its plans. He stated that from the first day of drilling,
Range’s target was the “Lower Red,” which is entirely within the LCV RA
Formation.
Plaintiffs opposed Defendants’ MSJ and filed a cross-motion for
partial summary judgment. They claimed that Mr. Klam’s affidavit is an
unsworn declaration and Mr. Asprodites’ affidavit is not based on personal
knowledge, and both are not proper for consideration on MSJ. They argued
that “Range falsely represented to the Commissioner of Conservation in its
Application for a Drilling Permit that it had the consent or permission of all
surface owners upon which ‘drilling operations’ for the [Well] would be
conducted.” Plaintiffs stated that they have been the owners of the Subject
Property at all times relevant and never gave consent or authorization for
Range to conduct any drilling on their property.
Plaintiffs argued that Defendants’ MSJ is not supported by applicable
law. They contrast their suit from that of Nunez v. Wainoco Oil & Gas Co.,
5 488 So. 2d 955 (La. 1986). They highlighted that the Nunez drilling permit
stated it was for “any zone” down to a certain a depth. They asserted that the
law of trespass is premised on the “fundamental sanctity of private property
from arbitrary invasion.” They cited case law which states trespass includes
subsurface trespass. Plaintiffs also pointed out that Defendants drilled under
the Subject Property, located the bottom hole under the Subject Property, and
fracked the Well long before it was classified as a unit well. They also
highlighted that Range began producing on January 22, 2018, after this suit
was filed. Therefore, these were not unit operations and Range trespassed
when it drilled on the Subject Property without consent. Plaintiffs claimed
that they are entitled to be recognized as the owners of the Well’s bottom
hole and bore hole, to the extent they are located on the Subject Property.
They also claimed they are entitled to an accounting from Range to
determine their share of the profits both before and after the March 27, 2018
approval date.
Defendants opposed Plaintiffs’ cross-motion for partial summary
judgment, and adopted in extenso their arguments made in their own MSJ.
They argued that Nunez is controlling, and that the intent of the operator
determines if it is a unit operation or lease operation. They asserted that
because it is a unit operation, which was their intent, there can be no claim
for subsurface trespass. Defendants claim that the Plaintiffs’ arguments
relating to the initial permit as a lease well is a red herring because the
Commissioner’s Order, which was attached to the permit approval, stated
that the Well must be completed in compliance with the 798 series of orders,
which encompasses the LCV RA Formation.
6 Defendants argued that if the Plaintiffs were to prevail on the lease
well designation, “then all of the other mineral owners in the unit would lose
the right to share in the Well’s production.” Finally, Defendants asserted that
there cannot be a trespass for failure to provide a “pre-entry notice” because
those notices are only for surface operations.
Defendants attached the affidavit of Bob Anderson. Mr. Anderson
stated that the Office of Conservation allows the permitting activity like that
which occurred in this case (lease well amended to unit well) because it
allows unit wells to be permitted to accommodate an operator’s need to drill
the well before a public hearing can be held recognizing the well as a
substitute unit well, an alternate unit well, or a cross-unit horizontal well.
Additionally, he stated that the well is deemed a unit well from the date of
first production, notwithstanding the initial lease well designation.
A hearing on the motions was held on March 12, 2020. Both parties
reiterated the same arguments they made in their filings. On June 23, 2020,
the trial court issued its written reasons for judgment on the MSJ and partial
MSJ. First, the trial court stated that the affidavits were permissible because
they were expert opinions pertaining to the practices and procedures of the
Office of Conservation. As to the affidavit of Mr. Browning, the trial court
stated it established that Range’s intention was always to drill a unit well.
The trial court stated that Range was not required to provide pre-entry notice.
It ordered Defendants to provide Plaintiffs with initial and quarterly reporting
of the Well’s costs and revenues, but overruled the remaining arguments by
Plaintiffs in their partial MSJ. The trial court then cited Nunez and granted
7 Defendants’ MSJ and dismissed Plaintiffs’ claims with prejudice. Plaintiffs
were assessed with all costs of the proceedings. Plaintiffs now appeal.
DISCUSSION
Plaintiffs seek review of the trial court’s denial of their partial MSJ
and granting of Defendants’ MSJ. A de novo standard of review is required
when an appellate court considers rulings on summary judgment motions,
and the appellate court must use the same criteria that governed the trial
court’s determination of whether summary judgment was appropriate. Bank
of New York Mellon v. Smith, 15-0530 (La. 10/14/15), 180 So. 3d 1238;
Davis v. Heniff Transp., LLC, 52,048 (La. App. 2 Cir. 5/23/18), 249 So. 3d
183.
A court must grant a motion for summary judgment if the motion,
memorandum, and supporting documents show that there is no genuine issue
as to material fact and that the mover is entitled to judgment as a matter of
law, pursuant to La. C.C.P. art. 966(A)(3). Davis v. Heniff Transp., LLC,
supra. A fact is material if it potentially ensures or precludes recovery,
affects a litigant’s ultimate success, or determines the outcome of the legal
dispute. Green v. Brookshire Grocery Co., 53,066 (La. App. 2 Cir. 9/25/19),
280 So. 3d 1256. A genuine issue of material fact is one as to which
reasonable persons could disagree; if reasonable persons could reach only
one conclusion, there is no need for trial on that issue and summary judgment
is appropriate. Jackson v. City of New Orleans, 12-2742 (La. 1/28/14), 144
So. 3d 876, cert. denied, 574 U.S. 869, 135 S. Ct. 197, 190 L. Ed. 2d 130
(2014); Green v. Brookshire Grocery Co., supra. In determining whether an
issue is genuine, a court should not consider the merits, make credibility
8 determinations, evaluate testimony, or weigh evidence. Green v. Brookshire
Grocery Co., supra.
Plaintiffs argue that the trial court erred in granting Defendants’ MSJ
because the affidavits submitted in support of the MSJ were not admissible
and there exist genuine issues of material fact, which preclude summary
judgment. Specifically, they argue that the affidavits of Mr. Asprodites, Mr.
Mr. Anderson, and Mr. Browning do not controvert or deny any of Range’s
filings with the Office of Conservation. They assert that Mr. Browning’s
affidavit stating that Range’s intention was to drill to the LCV RA Formation
is hearsay and directly contradicts Range’s representation to the Office of
Conservation in its permit to drill to the deeper, L-Gray Sand.
Our jurisprudence indicates that it is the intent of the operator and the
operations conducted which determine whether drilling operations constitute
unit operations or merely lease operations. See Nunez v. Wainoco Oil & Gas
Co., supra. In the case before us, Mr. Browning, the drilling supervisor,
stated it was Range’s intention all along to drill within the LCV RA
Formation, specifically the Lower Red. Mr. Klam, Range’s land manager,
stated that Range drilled to its intended vertical depth of 14,243 feet. This is
the vertical depth listed on Range’s drilling permit. This depth correlates
with the LCV RA Formation, not the deeper, L-Gray Sand.
Plaintiffs argue that Mr. Browning’s affidavit is irrelevant and
immaterial because it purports to vary or contradict Range’s drilling
application. Supporting and opposing affidavits shall be made on personal
knowledge, shall set forth such facts as would be admissible in evidence, and
shall show affirmatively that the affiant is competent to testify to the matters
9 stated therein. La. C.C.P. art. 967. It is insufficient for an affiant to merely
declare that he has personal knowledge of a fact. The affidavit must
affirmatively establish that the affiant is competent to testify as to the matter
by a factual averment showing how he came by the knowledge. Chanler v.
Jamestown Ins. Co., 51,320 (La. App. 2 Cir. 5/17/17), 223 So. 3d 614, writ
denied, 2017-01251 (La. 10/27/17), 228 So. 3d 1230. The court must first
determine whether the supporting affidavits and documents presented by the
moving party are sufficient to resolve all material issues of fact. If they are
not sufficient, summary judgment is not appropriate. Id.
Mr. Browning’s affidavit is based on his personal knowledge as the
drilling supervisor for the Well. He stated that he knew Range’s intentions in
drilling because it was his responsibility to implement and oversee Range’s
drilling plans with respect to the Well. He stated that from the beginning of
drilling, the target formation was the Lower Red, within the LCV RA
Formation. This affidavit was properly considered by the trial court in
determining Range’s intentions during well operations.
Plaintiffs have not submitted any evidence to contradict Range’s stated
intent. Plaintiffs’ arguments all center around the original permit, which lists
the zone or reservoir of proposed completion as the L-Gray Sand. However,
directly under the L-Gray designation, the permit states the true vertical
depth is 14,243 feet, which is shallower than the L-Gray. Additionally,
Defendants submitted the affidavits of experts to clarify the permitting
process and why the L-Gray designation is not controlling.
Mr. Asprodites, a former Commissioner of the Office of Conservation,
stated that it is a “common, normal, accepted practice” to permit a well to a
10 deeper, non-unitized formation, although the operator’s main objective is to
test a shallower, unitized formation. Plaintiffs did not present any evidence
or their own expert to controvert Mr. Asprodites’ statements.
Mr. Anderson, a petroleum engineer and 20-year employee of the
Office of Conservation, stated that the Well was a cross-unit well, requiring a
public hearing. He explained that it is common practice in the Office of
Conservation for cross-unit wells to be first named as lease wells in order to
accommodate the operator’s need to drill before a hearing can be held
recognizing the well as cross-unit well.
We disagree with Plaintiffs’ arguments and find these expert affidavits
to be admissible. An affidavit of an expert may set forth opinions “as would
be admissible in evidence under Louisiana Code of Evidence Article 702,”
and shall show affirmatively the affiant is competent to testify to the matters
stated therein. See La. C.C.P. art. 967(A). Article 702 permits an expert
witness to testify in the form of an opinion if (1) the witness’s expertise will
help the trier of fact to understand the evidence or to determine a fact in
issue, (2) the testimony is based on sufficient facts or data, (3) the testimony
is the product of reliable principles and methods, and (4) the expert has
reliably applied the principles and methods to the facts of the case. La C.C.P.
art. 967(B) states the following:
When a motion for summary judgment is made and supported as provided [in section A], an adverse party may not rest on the mere allegations or denials of his pleading, but his response, by affidavits or as otherwise provided above, must set forth specific facts showing that there is a genuine issue for trial. If he does not so respond, summary judgment, if appropriate, shall be rendered against him.
11 Mr. Asprodites has been accepted in both state and federal courts as an
expert in the Louisiana Office of Conservation’s practices, procedures, and
the application of their rules, regulations, and governing statutes. His
affidavit is helpful in understanding the Office of Conservation’s procedures
and practices. His affidavit is based on sufficient facts, i.e. Range’s filings
with the Office of Conservation. Mr. Asprodites’ affidavit is based on the
principles governing the operation of the Office of Conservation and applied
those principles. For these reasons, we see no issue in the trial court allowing
the affidavit of Mr. Asprodites.
Mr. Anderson also relied on Range’s filings with the Office of
Conservation. He then explained the procedure within the Office of
Conservation for a cross-unit well to be recognized. Mr. Anderson’s
knowledge was based on 20 years of employment with the Office of
Conservation, as well as employment as a petroleum engineer. He has
handled hundreds of drilling applications and hearings before the Office of
Conservation, making him very familiar with the policies and procedures of
that office. We find no error in the trial court allowing the affidavit of Mr.
Anderson.
Defendants’ supporting affidavits are sufficient to resolve all issues of
material fact. Plaintiffs did not counter these affidavits with their own
evidence of Range’s intent or that these were not the procedures of the Office
of Conservation. After our de novo review of this record, we find that there
are no genuine issues of material fact which render summary judgment in
favor of Defendants improper at this time. Because the facts show the Well
to be a unit well, we also find that the Plaintiffs have not shown that Range
12 committed a subsurface trespass, and therefore, their partial MSJ was
properly denied.4
CONCLUSION
For the reasons stated above, we affirm the trial court’s granting of
Defendants’ MSJ, dismissal of Plaintiffs’ suit with prejudice, and denial of
Plaintiffs’ partial MSJ. The costs of this Court are assessed to the Plaintiffs,
Diamond McCattle Company, LLC, and BWW Holdings, LLC.
AFFIRMED.
4 Any challenge to the Office of Conservation’s policies and procedures regarding lease wells being amended to unit wells is not properly before this Court.