Sparks v. United Title & Abstract, LLC

56 So. 3d 302, 182 Oil & Gas Rep. 62, 2010 La. App. LEXIS 1716
CourtLouisiana Court of Appeal
DecidedDecember 15, 2010
DocketNo. 45,766-CA
StatusPublished
Cited by3 cases

This text of 56 So. 3d 302 (Sparks v. United Title & Abstract, LLC) 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
Sparks v. United Title & Abstract, LLC, 56 So. 3d 302, 182 Oil & Gas Rep. 62, 2010 La. App. LEXIS 1716 (La. Ct. App. 2010).

Opinion

STEWART, J.

[¡.The plaintiffs, Claude Edward Sparks and Linda G. Sparks (“the Sparks”), appeal a summary judgment dismissing their claims of negligence and breach of a title insurance contract against the defendants, United Title & Abstract, LLC, (“United Title”), and First American Title Insurance Company (“First American”). The issue presented is the same as that addressed in Thomas v. Lewis, 475 So.2d 52 (La.App. 2d Cir.1985), namely, “whether the exercise of an option to renew in a recorded lease is required to be recorded to have effect as to third party purchasers of the property.” Id., at 54. We now |sreaffirm our prior decision and hold that the exercise of an option to renew contained in a recorded lease need not be recorded to be effective against third parties. Accordingly, we affirm the trial court’s judgment.

FACTS

On June 5, 2009, the Sparks filed suit against United Title and First American. According to the petition, the Sparks had purchased tracts of land totaling 10 acres in Caddo Parish from Glenda Fay Smith Eppes, Wilbert Leon Smith, Gary Wayne Smith, Theresa Lyn Smith Raymond, and David Ray Smith (referred to collectively as “the sellers”). The Sparks and the sellers had agreed that the Sparks would receive 75% of the mineral rights, with 25% reserved by the sellers. However, the deed prepared by United Title stated that the sellers reserved 75% of the mineral rights. The petition further alleged that XTO Energy, Inc., (“XTO”), offered the Sparks $20,000 per acre to lease the mineral rights. However, when the title examination by XTO revealed that the Sparks had only a 25% interest in the mineral rights, XTO refused to enter the lease. The Sparks contacted United Title, which prepared and filed an Act of Correction on November 7, 2008. By then, XTO was no longer |4leasing mineral interests, and the Sparks were deprived of $150,000, the amount they would have received for their 75% ownership of the mineral rights over the 10 acres if XTO had paid $20,000 per acre for a lease. The Sparks claimed this loss as damages due to United Title’s negligence in preparing the deed and First American’s breach of the title insurance policy, which allegedly contained the same error.

After answering, United Title and First American filed an exception of no cause of action on the basis that the Sparks’ petition really alleged negligent interference with contractual relations, which they asserted is not recognized as a cause of action under the law of this state. The defendants also filed a motion for summary judgment asserting that the Sparks would not be able to meet the evidentiary burden of proving that the error in the reservation of mineral rights caused their damages. They asserted that the only proof of loss was Claude Sparks’ unsubstantiated allegations regarding XTO’s offer.

Shortly after filing the motion for summary judgment, the defendants supplemented the motion to assert that the Sparks had sustained no damages due to the fact that they had no mineral rights to lease to XTO. At the time of the Sparks’ purchase of the 10 acres, |fithe mineral rights were subject to a recorded mineral lease granted by the sellers in favor of St. Mary Land & Exploration Co., (“St. Mary”), on August 22, 2005, which is here[304]*304after referred to as the “St. Mary lease.” Though the St. Mary lease had a primary term of three years and was to expire on August 22, 2008, it included an option for the lessee (St.Mary) to renew for an additional two years by payment of an additional bonus of two-thirds the original bonus before the end of the primary term. St. Mary exercised the option to renew on March 31, 2008, by paying the additional bonus payment to the sellers. Therefore, the lease was extended for an additional two years until August 22, 2010. To support the motion for summary judgment, the defendants offered the affidavit of Steve Causey, St. Mary’s senior landman who exercised the option to extend the lease, a copy of the letter Causey sent to the sellers on March 31, 2008, regarding the extension of the lease, and a copy of the bonus check paid to the sellers for the lease extension.

In opposing the motion for summary judgment, the Sparks offered the affidavit of Teresa Mercer, who had spoken with Claude Sparks about leasing his mineral interests on behalf of XTO and who discovered the error in the reservation of mineral rights recited in the Indeed. Mercer’s affidavit also stated that her title examination revealed “an old lease which had expired earlier in 2008” and that there were no recorded extensions or renewals of the lease. The Sparks asserted that because the extension of the St. Mary lease was not recorded, it was not effective against them or XTO.

On January 27, 2010, the trial court ruled in favor of the defendants on their motion for summary judgment. The trial court’s reasons stated that the St. Mary lease, which was recorded in the public records, included an extension provision. Just as there is no requirement that notice of production must be recorded to extend a lease, there is no requirement that an automatic extension under the lease be noticed in the public records. With a “modicum of investigation,” XTO should have discovered the extension provision, which provided notice of a potential claim against the property, and the fact that the St. Mary lease had been extended. Citing La. R.S. 9:2721(C) and referring to Thomas, supra, the trial court concluded that the Sparks could not have entered a mineral lease with XTO because the property was already subject to the recorded St. Mary lease. Accordingly, the Sparks would not be able to prove that the 17error attributed to United Title and First American caused them damages.

Because it granted the motion for summary judgment, the trial court did not address the defendants’ peremptory exception of no cause of action. Judgment dismissing the Sparks’ claims was rendered on February 10, 2010. The Sparks now appeal.

DISCUSSION

As in all summary judgment matters, we conduct a de novo review on appeal. Town of Haynesville, Inc. v. Entergy Corp., 36,519 (La.App.2d Cir.1/31/03), 840 So.2d 597, mit denied, 2003-0627 (La.6/6/03), 845 So.2d 1090; Green v. State Farm General Ins. Co., 35,775 (La.App.2d Cir.4/23/02), 835 So.2d 2. Summary judgment is appropriate when the pleadings, answers to interrogatories, depositions, and admissions on file, together with affidavits, if any, show that there is no genuine issue of material fact and that the mover is entitled to summary judgment as a matter of law. La. C.C.P. art. 966(B).

The Sparks argue that the trial court erred in granting summary judgment and in following Thomas, supra. They assert that Thomas, supra, is inconsistent with McDuffie v. Walker, 125 La. 152, 51 So. 100 (1909), at odds with the Louisiana [305]*305Public Records Doctrine in general, and not followed by the fourth circuit. The Sparks conclude that Thomas, supra, should be overruled and the summary judgment reversed. We disagree.

In Thomas, supra, the plaintiffs, who were the owners of a shopping center, sought the eviction of the defendants, who were tenants. The defendants had leased space from the shopping center’s prior owners. The lease, which included options to renew for additional terms, was recorded. The option to renew was exercised prior to the purchase of the shopping center by the plaintiffs, but renewal of the lease was not reflected in the public records.

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Bluebook (online)
56 So. 3d 302, 182 Oil & Gas Rep. 62, 2010 La. App. LEXIS 1716, Counsel Stack Legal Research, https://law.counselstack.com/opinion/sparks-v-united-title-abstract-llc-lactapp-2010.