Kleas v. Mayfield

404 So. 2d 500
CourtLouisiana Court of Appeal
DecidedSeptember 23, 1981
Docket8323
StatusPublished
Cited by10 cases

This text of 404 So. 2d 500 (Kleas v. Mayfield) 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
Kleas v. Mayfield, 404 So. 2d 500 (La. Ct. App. 1981).

Opinion

404 So.2d 500 (1981)

Lelah B. KLEAS, et al., Plaintiffs-Appellees,
v.
M. L. MAYFIELD, et al., Defendants-Appellants.

No. 8323.

Court of Appeal of Louisiana, Third Circuit.

July 22, 1981.
Orders on Denial of Rehearing September 23, 1981.

*501 G. William Jarman of Sanders, Downing, Kean & Cazedessus, Baton Rouge, and Preston N. Aucoin, Ville Platte, for defendants-appellants.

Beyt & Beyt, Raymond A. Beyt, Lafayette, for plaintiffs-appellees.

James T. Skelly, New Orleans, David R. Stevenson, Houston, Tex., and Fruge & Vidrine, Jack C. Fruge, Ville Platte, for defendants-appellees-appellants.

Before DOMENGEAUX, GUIDRY and CUTRER, J.,

DOMENGEAUX, Judge.

Plaintiffs-lessors, Lelah Mae Broussard Kleas and Charles L. Broussard, sought and received a judgment in the trial court ordering defendants, M. L. Mayfield and Gulf Oil Corporation, as record owners, to grant a recordable release of an oil, gas, and mineral lease granted by their now-deceased mother, Lelah Gournay Broussard, on January 9, 1940, on her undivided interest in certain lots in that tract of land in Evangeline Parish known as the Easton Townsite. The trial court found that this lease expired under its own terms in 1967 when the unit well holding the lease, the Easton Townsite Unit No. 2 well, went off production and no effort was made to restore production to the well within sixty days as provided under the terms of the lease. Additionally, plaintiffs were awarded a judgment for attorney's fees against Mayfield and Gulf because of their failure to grant a recordable release after due demand. These fees were set by the court in the amount of $7,500.00.

Plaintiffs' claim for damages, however, was denied. This claim consisted of interest on working interest funds due plaintiffs from that well known as the Inexco Oil Company-J. Reed No. 1 Well which well is located on property adjacent to the Easton Townsite and presently unitized therewith. Those funds have been suspended by the operator of the well, Inexco Oil Company, ostensibly because of the dispute between Mayfield and the plaintiffs.

This case was tired on the merits on April 25, 1980, with the written opinion filed on June 30, 1980, and a judgment rendered on September 16, 1980.

THE ISSUES

Mayfield has appealed to argue that (1) the lease has not expired and should therefore not be released; (2) the doctrine of equitable estoppel should have been applied to prevent the plaintiffs from complaining that the lease had terminated; (3) attorney's fees should not have been awarded; and (4) the depositions of two non-parties should have been excluded from evidence.

Gulf has appealed from the court's determination that it is liable to plaintiffs for attorney's fees. Gulf has also appealed from the court's dismissal of its third-party demand against Mayfield, wherein Gulf maintains that Mayfield is obliged to hold Gulf harmless in the event that judgment is rendered against Gulf in this suit.

Plaintiffs answered the appeal seeking a reversal of that portion of the judgment denying plaintiffs' damages. Plaintiffs also *502 seek an increase in the amount of attorney's fees for services rendered at trial and for additional services rendered on appeal.

For the reasons assigned below, we affirm all portions of the judgment except that we reverse the trial court's dismissal of Gulf's third party demand against Mayfield, and render judgment in Gulf's favor on that demand.

FACTS

On the trial of this case all parties entered into a Joint Stipulation of Fact. It was stipulated that Lelah Gourney Broussard, plaintiffs' mother, granted to one S. P. Benckenstein on January 9, 1940, an oil, gas and mineral lease covering her undivided interest in certain lots in the Easton Townsite for a primary term of five years. That lease was assigned to the defendant, Gulf, on February 12, 1940. Pursuant to the pooling provisions contained in the lease, Gulf created a declared unit on November 14, 1941, by pooling the lease with other leases in the area. This unit covered a portion of the Easton Townsite and was designated as the Easton Townsite Unit No. 2. It was stipulated that operations were commenced on land contained in the unit but not covered in the disputed lease, which resulted in the successful completion of a well on December 12, 1941. Gulf thereafter began producing the unit well, labeling it the Easton Townsite Unit No. 2 Well.

It was established that Gulf maintained and produced the unit well until 1951, at which time it sublet the leases in the unit, including the disputed lease, to Mayfield, Gulf retaining in that act a right to receive before payout a "net yield" and thereafter a "net profit" from the operation of the leases.

DID THE LEASE EXPIRE?

The January 9, 1940 lease provided:

"* * *

2. Subject to the other provisions herein contained, this lease shall be for a term of five (5) years from this date (called `primary term') and as along thereafter as oil, gas, sulphur and other mineral is produced from said land or land with which said land is pooled hereunder.

* * * * * *

6. ... if after discovery of oil, gas, sulphur or other mineral, the production thereof should cease from any cause, this lease shall not terminate if Lessee commences additional drilling or reworking operations within 60 days thereafter...."

It was established by the testimony of plaintiffs' witness, Mr. Charles G. Dannelly, former Production Superintendent for Mayfield, and the man in charge of the Easton Townsite Unit No. 2 Well located in the Pine Prairie Field, that by August of 1967, the Townsite Well was producing less than three barrels of oil per day. Efforts to increase oil production, first, by pumping gas from an extraneous source into the well thereby forcing the oil out, and, second, by installing a "volume chamber" in the well, met with very limited success. Mr. Mayfield testified that any gas in the well had long since been depleted by this time.

Due to this low rate of production, Mr. Dannelly recommended and Mr. Mayfield agreed to abandon the Easton Townsite Unit No. 2 Well as non-commercial. As indicated by the testimony of Mr. Dannelly, it was costing more to pump gas into the well than the value of the oil that was being produced. Thus, on August 1, 1967, Mr. Dannelly wrote the Department of Conservation requesting that the allowable for the unit well, which is the authority to produce granted by the Department of Conservation, be cancelled effective August 1, 1967, as the well had declined below an economic level. As a result of this letter, the allowable for the unit well was cancelled on August 7, 1967, effective August 1, 1967, due to the well being off production.

By letter to Mr. Mayfield dated August 1, 1967, Mr. Dannelly confirmed their earlier conversation in which he recommended the abandonment of the unit well and informed Mr. Mayfield of the effective date of the *503 well's abandonment. Pursuant to the 1951 assignment from Gulf, Mr. Mayfield, by letter dated August 22, 1967, informed Gulf of the decision to plug and abandon the Easton Townsite Unit No. 2 Well due to the non-commercial production.

As indicated by Mr. Dannelly's testimony and by his letter to Mr. Mayfield of August 1, 1967, noted above, though no cement was actually placed in the shaft of the well, the high pressure gas line going to the well for the gas lift was plugged as well as the flow line which allowed the oil to be produced from the well. Mr. Dannelly testified that the well could not

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Bluebook (online)
404 So. 2d 500, Counsel Stack Legal Research, https://law.counselstack.com/opinion/kleas-v-mayfield-lactapp-1981.