Hilliard v. Amoco Production Co.

688 So. 2d 1176, 95 La.App. 3 Cir. 1366, 137 Oil & Gas Rep. 40, 1996 La. App. LEXIS 2386, 1996 WL 577514
CourtLouisiana Court of Appeal
DecidedOctober 9, 1996
DocketNos. 95-1366, 95-1367
StatusPublished
Cited by2 cases

This text of 688 So. 2d 1176 (Hilliard v. Amoco Production 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
Hilliard v. Amoco Production Co., 688 So. 2d 1176, 95 La.App. 3 Cir. 1366, 137 Oil & Gas Rep. 40, 1996 La. App. LEXIS 2386, 1996 WL 577514 (La. Ct. App. 1996).

Opinions

ItSAUNDERS, Judge.

These two suits were instituted on behalf of plaintiffs who are the land owners within the confines of the P.L. Lawrence No. 2 Well. The plaintiffs, who are the mineral interest owners in this production unit, have sued the defendant, Amoco 12Production Company, for interest, double royalties, and attorney’s fees due to the alleged unreasonable delay in the payment of royalties.

FACTS

In the latter part of 1987, the defendant, Amoco Production Company (hereinafter Amoco), completed the P.L. Lawrence No. 2 Well in Crowley, Louisiana. The Louisiana Department of Conservation established the NARA-SUA unit, effective March 23, 1988, to regulate the production from this well. In July 1987, before the initiation of production, the defendant began compiling information for a final unit plat and division order for the unit to determine the interest of each mineral rights owner, which was based on their ownership of surface acreage.

Between March 11, 1989, and December 19, 1989, plaintiffs, Lorraine L. Bolyard, Michael and Katherine Habetz, Thomas and Betty Fortson, Thomas Fortson, Jr., Rebecca Lawhun, Donald Hilliard, Leroy and Grace Beard, Delores Dugan, Donald and Deanna Hargrave, Findley Hilliard, Paul Butaud, Wilber and Ena Leleux, James and Rita Trumps, Noah and Ruby Monceaux, and An[1178]*1178thony and Janet Douget, sent written demand letters to the defendant for payment of royalties. Within the 30 day statutory limit provided by the mineral code, the defendant made initial royalty payments to all plaintiffs. With regard to three plaintiffs, Trumps, Monceaux and Douget, the initial payment was only a part of what was owed. Thereafter, the defendant continued to make royalty payments to plaintiffs on a timely basis until production of the P.L. Lawrence No. 2 Well ceased. The defendant also made up the partial payments owed to Trumps, Monceaux and Douget.

Robert Frost, the defendant’s land survey- or, testified that he prepared the unit plat of the P.L. Lawrence No. 2 Well. He began in April of 1988 by reviewing abstracts and compiling an abstract sketch. In late June and early July 1988, he went|3with a crew to conduct a field survey, and completed his calculations and data compilation in September 1988. By October 1988, he had spoken with the attorneys involved in the curative work and in November 1988, received the original title opinion from them for an area known as Stewartville. By December 1988, he had completed his work in the Stewart-ville area involving many conveyances of rights-of-way and expropriations.

The defendants’ lead broker, James “Pittman” Hesterly, who worked on the P.L. Lawrence No. 2 Well, testified that this was the most complex unit he had ever worked on in his seventeen years of experience. Mr. Hes-terly testified that the unit consisted of 2,000 royalty owners and 234 tracts of land in the 320 acre unit. Also, within the unit were 12 to 15 subdivisions and land on which Highway 100 is located, owned by the State of Louisiana, Interstate 10, which is owned by the federal government, and Parkersons Avenue, parts of which are publicly owned and parts of which are privately owned. Due to the complexity of the unit, he stated that he worked full-time approximately 10 to 12 hours a day, 6 to 7 days a week.

Because of the amount of curative work involved, 10 to 12 sub-brokers were also hired. Mr. Hesterly testified that there were no restrictions placed by the defendant on the cost or the manpower necessary to complete the job as expeditiously as possible. Normally, curative work takes between 30 and 60 days. In this case, it took two years. At its completion, the Stewartville abstract alone consisted of 6,000 pages.

Scott Bailey, a 15 year employee for the defendant, testified that since the unit was so complex, the defendant deviated from the usual practice of curing the title of an entire unit before placing any of the owners in pay status. In this instance, the defendant paid the mineral interest owners on a “piecemeal” basis as different title | opinions were finalized. In April 1989, over one year after the ereation of the unit, plaintiffs commenced making demand for the payment of royalties. The defendant testified that, although payment on these demands creates a risk of overpayment or payment to the wrong party, the defendant chose to comply with the demands received.

An employee of defendant’s in its accounting department, Ms. Jennie Gard, stated that the plaintiffs were placed in pay status as soon as possible. Her records reflected that the three plaintiffs, Monceaux, Trumps and Douget, received initial payments, which included the current month’s oil production but not royalties for the prior month’s production. Subsequent royalty checks sent to these plaintiffs included all prior months’ royalties. The plaintiffs conclude that the defendant’s delay in payment is unjustified and was a willful withholding of royalty payments without reasonable cause.

DISCUSSION

The plaintiffs first assert that the lower court erred in not finding that the inordinate delays in making royalty payments to the plaintiffs by the defendant, Amoco, were unjustified and amounted to willful withholding of royalty payments without reasonable cause.

In determining whether or not the delays were willful and unjustified, the trial court had to weigh all the factual findings and credibility of witnesses in determining this matter. The trial judge’s factual findings are subject to the manifest error rule under which the reviewing court does not decide [1179]*1179whether the factual findings are right or wrong, but whether they are reasonable. Stobart v. State, Through DOTD, 617 So.2d 880 (La.1993).

|sThe trial judge applied La.R.S. 31:137 through 31:139 in rendering his decision. La.R.S. 31:137, 31:138, and 31:139 reads as follows:

See. 137:
If a mineral lessor seeks relief for the failure of his lessee to make timely or proper payment of royalties, he must give his lessee written notice of such failure as a prerequisite to a judicial demand for damages or dissolution of the lease.
Sec. 138:
The lessee shall have thirty days after receipt of the required notice within which to pay the royalties due or to respond by stating in writing a reasonable cause for nonpayment. The payment or nonpayment of the royalties or stating or failing to state a reasonable cause of nonpayment within this period has the following effect on the remedies of dissolution and damages.
Sec. 139:
If the lessee pays the royalties due in response to the required notice, the remedy of dissolution shall be unavailable unless it be found that the original failure to pay was fraudulent. The court may award as damages double the amount of royalties due, interest on that sum from the date due, and a reasonable attorney’s fee, provided the original failure to pay royalties was either fraudulent or willful and without reasonable grounds. In all other cases, such as mere oversight or neglect, damages shall be limited to interest on, the royalties computed from the date due, and a reasonable attorney’s fee if such interest is not paid within thirty days of written demand therefor.

Applying the above law to this case, we note that the plaintiffs made demands upon the defendant for payment of royalties.

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Bluebook (online)
688 So. 2d 1176, 95 La.App. 3 Cir. 1366, 137 Oil & Gas Rep. 40, 1996 La. App. LEXIS 2386, 1996 WL 577514, Counsel Stack Legal Research, https://law.counselstack.com/opinion/hilliard-v-amoco-production-co-lactapp-1996.