Freeport-McMoran Energy, LLC v. Cedyco Corp.

54 So. 3d 813, 2010 La.App. 4 Cir. 0367, 181 Oil & Gas Rep. 925, 2011 La. App. LEXIS 5, 2011 WL 38843
CourtLouisiana Court of Appeal
DecidedJanuary 5, 2011
DocketNo. 2010-CA-0367
StatusPublished
Cited by3 cases

This text of 54 So. 3d 813 (Freeport-McMoran Energy, LLC v. Cedyco Corp.) 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
Freeport-McMoran Energy, LLC v. Cedyco Corp., 54 So. 3d 813, 2010 La.App. 4 Cir. 0367, 181 Oil & Gas Rep. 925, 2011 La. App. LEXIS 5, 2011 WL 38843 (La. Ct. App. 2011).

Opinion

CHARLES R. JONES, Judge.

|/The defendant/appellant, Cedyco Corporation (“Cedyco”) appeals an adverse judgment by the district court awarding the appellees, Freeport-McMoran Energy L.L.C. (hereinafter referred to as “Free-port”), $270,809.49, plus legal interest. We amend in part, reverse in part, and affirm as amended.

This case concerns two oil and gas leases on property located in Plaquemines Parish. In September of 1976, the owner of the immovable property, Freeport Minerals Company, and is also the alleged predecessor in interest to the appellee Freeport, entered into an agreement with Hilliard Oil and Gas, Inc., to explore and develop properties in Louisiana. Thereafter, on July 23, 1977, Freeport Minerals entered into an oil and gas lease for the well subsequently referred to as the “Plaquemines Parish Commission Council No. 1 Well.”

On January 25, 1978, Freeport Minerals Company and Hilliard Oil and Gas entered into another lease of the property where the “Freeport Sulphur Company No. 1 Well” was drilled, also located in Plaque-mines Parish. The operative |2language of the two leases at issue is identical, the only exception being the site of the two wells.

The subject oil and gas leases identically provide at Paragraph 12 that, when production of oil and gas ceases in paying quantities,

Lessee shall, at its sole cost and expense and within no more than ninety (90) days after the date whereon Lessee ceases actual drilling or reworking operations on said well, plug and abandon said well and restore the surface of the land in and around the location thereof to as nearly the same condition as it was in prior to the commencement of operations for drilling thereof.

As the lessor and alleged successor in interest, Freeport brought this suit to enforce the obligation of Cedyco, as successor of Hilliard Oil. Freeport alleges that Cedyco, as the Gas Company under both leases, had a responsibility to properly plug and abandon the two wells on its land, and to have its property at the well sites properly restored as required by Paragraph 12 of the two leases.

Freeport filed a petition for declaratory judgment, specific performance and damages on June 25, 2008. Therein, Freeport averred that it is the successor lessor of Freeport Minerals Company under both of the subject leases. The petition also set forth that that there had been no oil and gas production from either well “for many years” and averred that Cedyco, as lessee, was required by the terms of the leases to plug and abandon the wells and otherwise restore the well sites upon cessation of production.

In the petition, Freeport also averred that it had made formal demands upon Cedyco to plug and abandon the wells. Freeport further alleged that Cedyco, | ^despite having received demand to plug and abandon the wells, had refused to do so. The alleged refusal of Cedyco to comply with the terms of the lease prompted Freeport to seek damages pursuant to La. C.C. art. 2315. Alternatively, Freeport sought to require Cedyco to plug and abandon the well by specific performance. In addition, the petition of Freeport [816]*816sought damages for breach of contract, declaratory relief, a demand for attorney’s fees pursuant to La. R.S. 31:207 and La. R.S. 31:209, as well as a claim for statutory penalties.

On August 1, 2008, Cedyco filed a pro se answer which raised an objection to venue in Orleans Parish. In paragraph III of its answer Cedyco stated that it denied each and every allegation that called for payment by Cedyco to Freeport.

On August 15, 2008, fourteen (14) days after Cedyco filed its answer, Freeport filed its motion for partial summary judgment.

On August 27, 2008, Freeport filed a motion to compel Cedyco to answer discovery. On October 8, 2008, the district court issued an order directing Cedyco to answer discovery and other discovery requests of Freeport by October 13, 2008. The district court specifically warned that by its failure to comply with the aforementioned order, Cedyco risked waiving its right to object to interrogatories and requests for production of Freeport. However, by October 14, 2008, Cedyco had failed to comply with the order of the district court. On October 20, 2008, the district court issued an order designating that the right of Cedyco to object to the interrogatories and requests for production of Freeport was waived.

[4A hearing on the motion for partial summary judgment was originally set for September 18, 2008, but was later reset for October 24, 2008. The motion for partial summary judgment of Freeport was unopposed. On October 24, 2008, the district court granted the motion for partial summary judgment of Freeport, and ordered that the two subject leases between the parties be terminated. The judgment of the district court further required Cedyco to plug and abandon both wells, restore the surface of the well site, and provided Freeport with a recordable act evidencing the termination of the leases.

On October 27, 2008, attorney Martin Morgan filed a motion to enroll on behalf of Cedyco. Immediately thereafter, Mr. Morgan filed a memorandum in support of a declinatory exception of improper venue, which Cedyco had originally raised in its answer. The exception alleged that venue was improper in Orleans Parish due to the fact that the petition of Freeport concerned rights in immovable property, and therefore venue would only be proper in Plaquemines Parish, where the immovable property was located.

On November 3, 2008, the district court rendered its judgment denying the exception of improper venue of Cedyco. Nearly three weeks later, on November 21, 2008, Cedyco gave its notice of intent to seek supervisory review concerning the denial of its exception of improper venue. Trial was subsequently scheduled for June 29, 2009.

| sOn February 3, 2009, Freeport filed a motion for sanctions arising out of the failure of Cedyco to comply with the order of the district court compelling discovery. On March 16, 2009, the district court entered a judgment granting the motion for sanctions and ordered Cedyco to pay $1,500.00, and to answer the outstanding discovery.1

Subsequently, on March 19, 2009, this Court denied the writ application of Cedy-co which had sought review of the district court judgment denying the exception of improper venue.

On May 26, 2009, Freeport filed a motion to strike the answer to discovery requests of Cedyco and requested entry of [817]*817judgment by default. Freeport maintained that Cedyco had failed to comply with the prior orders rendered by the district court regarding discovery.

Three days later, on May 29, 2009, Ce-dyco filed an exception of no right of action. Therein, it maintained that Freeport had not sufficiently established that it was in fact the successor in interest to Free-port Minerals Company. Thus, Cedyco maintained that Freeport had no right of action to assert claims pursuant to the leases in question.

After a hearing on June 18, 2009 on the motion and exceptions, the district court denied Freeport’s motion to strike the answer of Cedyco and accompanying request for entry of judgment by default.2 In addition, the district court also denied the exception of no right of action of Cedyco. However, the district court ordered ^alternative relief and barred Cedyco from presenting any witnesses or evidence of its own at the June 29th trial.

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54 So. 3d 813, 2010 La.App. 4 Cir. 0367, 181 Oil & Gas Rep. 925, 2011 La. App. LEXIS 5, 2011 WL 38843, Counsel Stack Legal Research, https://law.counselstack.com/opinion/freeport-mcmoran-energy-llc-v-cedyco-corp-lactapp-2011.