Suire v. Oleum Operating Co.

235 So. 3d 1215
CourtLouisiana Court of Appeal
DecidedNovember 2, 2017
Docket17-117
StatusPublished
Cited by3 cases

This text of 235 So. 3d 1215 (Suire v. Oleum Operating 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
Suire v. Oleum Operating Co., 235 So. 3d 1215 (La. Ct. App. 2017).

Opinion

KEATY, Judge.

I An this suit for damages arising out of a mineral lease, the current operators/lessees, Oleum Operating Company, L.C. and AKSM, L.C., and the owner/lessor, Sweet Lake Land & Oil Company, L.L.C., appeal the trial court’s grant of a Motion for Partial Summary Judgment in favor of the overriding royalty interest (QRI) owners, Jerry J. Suire, Antonia Suire, J & J Onshore Production, Inc.,1 Preston Andrews Price, Susan R. Price, Steven Haller, and Paula Haller, For the following reasons, the trial court’s judgment is affirmed.

FACTS AND PROCEDURAL BACKGROUND

This court is familiar with the factual and procedural history in light of Suire v. Oleum Operating Co., L.C., 13-736 (La. App. 3 Cir. 2/5/14), 135 So.3d 87, writs denied, 14-982 (La. 8/25/14), 147 So.3d 1120 and 14-987 (La. 9/12/14), 147 So.3d 707. As the facts have not materially changed since that opinion, we adopt the facts set forth therein by reference as though set forth in full herein:

This litigation involves the .alleged failure of Oleum Operating Company, L.C. and AKSM, L.C. (collectively referred to as Oleum)2 to pay the overriding royalty interest (ORI) due Jerry. J. and Antonia G. Suire, Preston Andrews and Susan R, Price, and Steven and Paula Haller (collectively referred to as ORI owners). The property subject to the mineral lease at issue is located in Calcasieu Parish, and the ownerfiessor of the property is Sweet Lake Land & Oil Company (Sweet Lake).' The current op-eratorAessee is Oleum. The preseht parties’ interests stem from the execution of a mineral lease-in 1947 by Sweet Lake and J.A. Bonham.3
Since 1947, there have been several different operatorsAessees of the property owned by Sweet Lake. A portion of the .-ORI. at issue in this litigation was -created in 1989, when Flash Oil & Gas granted an ORI to its - owners, Preston Price and Steven Haller (and their wives Susan R. Price and Paula Haller), collectively amounting to 2.0153%,-12and a 3% ORI to Jerry Suire.4 In later years, J & J Onshore Production, Inc. (J & J) became the operato,rAessee of the Old Lease, and it continued to pay the ORI to the Flash Overrides.
Over time,' the relationship between Sweet Lake,and.J & J, particularly Mr. Suire, became strained,, and, in 2000, Sweet Lake sued J & J, claiming that the Old Lease was terminated.5 In that litigation, Sweet Lake also alleged that J & J failed to pay royalties, failed to develop the property, and failed to produce oil and gas in paying quantities. During this contentious period, Oleum became involved when it purchased J & J’s operating interest and assigned an additional ORI to Mr. Suire.6 Ultimately, in 2003, a settlement agreement was reached between Sweet Lake, J & J, and Oleum wherein the terms, rights, and obligations of the parties under the Old Lease were changed.7 For five years thereafter, Oleum "continued as operator/iessee until further disputes arose between it and Sweet Lake in 2008.
In 2008, Sweet Lake sent a letter to Oleum, claiming that it violated the terms of the 1947 Amended Lease. Sweet Lake demanded that Oleum vacate the property and return all fruits derived from the 1947 Amended Lease, dating back to 2003. At this juncture, negotiations ensued between Sweet Lake and Oleum. As a result of these negotiations, on July 2, 2008, Oleum unilaterally executed an Act of Release of Oil, Gas and Mineral Lease thereby releasing the 1947 Amended Lease.8 The 2008 Release was executed without the knowledge of the ORI owners, who, as a result thereby, were divested of all of their ORI. Also on July 2, 2008, another lease was entered into by Oleum, through Mike Snell, an owner and operator.9 Notably," Mr. Snell transferred the divested ORI owners’ rights to himself, personally, in the New Lease. The consequences of the 2008 Release and the New Lease are at the heart of the current litigation.
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Is As a result of these events, suit was instituted by the Suires against Oleum and AKSM, initially seeking unpaid ORI, penalties, and attorney fees. After the initial petition was filed, a number of incidental demands were made by and against the various parties. Claims of intervention were asserted by the Prices and the Hallers for their unpaid ORI, penalties, and attorney fees. Oleum filed a reconventional demand against the Sumes, asserting that it was entitled to an offset and/or recoupment of ORI payments made to Mr. Suire and, further, that their ORI was subject to a reduction based upon the [proportionate reduction clause]. Oleum later supplemented its reconventional demand against the Suires, seeking damages for a misrepresentation of the condition of the C-8 wellbore.
Oleum also filed a third party claim against J & J, claiming that it was entitled to a reimbursement of the ORI payments erroneously made to J & J. Alternatively, Oleum asserted that if it were determined that it had improperly taken certain offsets, that these amounts were still owed by J & J to Oleum. Claims were also made against J & J for damages relative to the C-8 wellbore.
J & J filed a reconventional demand against Oleum, alleging that Oleum breached the terms of their May 15, 2000 Purchase and Sale Agreement, whereby J & J sold its interest in the 1947 Amended Lease to Oleum by failing to pay Mr. Suire his 1.98% ORI and in failing to provide J & J notice of its attempt to release the lease. Further, J & J contended that Oleum’s failure to obtain J & J’s agreement was a breach of the 2003 settlement agreement.
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After a trial on the merits, the trial court recited oral reasons for judgment in favor of the ORI owners and dismissed the other ancillary claims between the parties.[10] In accordance therewith, the trial court signed a judgment October 15, 2012[.]

Id. at 89-92.

. The parties appealed, and this court issued a ruling on February 5, 2014. Swire, 135 So.3d 87. Therein, this court affirmed the trial court’s judgment ordering payment to the Suires, Prices, and Hallers of past-due ORIs “through July 2, 2008.” Id. at 104. It reversed the trial court’s judgment with respect to payment 14of past-due ORIs “post 2008 Release and New Lease (i.e., July 2, 2008).”11 Id. The third circuit found that Sweet Lake was “a party needed for just adjudication^]” Id. at 96. On rehearing, this court supplemented its previous disposition by “ordering a remand of the matter to the trial court for further proceedings.” Id. at 105. Writs were then denied by the Louisiana Supreme Court on August 25, 2014 and September 12, 2014. Id.

Following remand to the trial court, the ORI owners amended their petitions and named Sweet Lake and Michael Snell as additional Defendants. Oleum and Mr. Snell filed exceptions of res judicata and no cause of action—law of the case.

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235 So. 3d 1215, Counsel Stack Legal Research, https://law.counselstack.com/opinion/suire-v-oleum-operating-co-lactapp-2017.