Woods v. Ratliff

407 So. 2d 1375
CourtLouisiana Court of Appeal
DecidedDecember 16, 1981
Docket8517
StatusPublished
Cited by15 cases

This text of 407 So. 2d 1375 (Woods v. Ratliff) 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
Woods v. Ratliff, 407 So. 2d 1375 (La. Ct. App. 1981).

Opinion

407 So.2d 1375 (1981)

Lyle WOODS, et al., Plaintiffs-Appellees,
v.
James E. RATLIFF, et al., Defendants-Appellants.

No. 8517.

Court of Appeal of Louisiana, Third Circuit.

December 16, 1981.

*1376 Sholars, Gunby, Allbritton & Hayden, Clifford L. Lawrence, Jr., Monroe, for defendants-appellants.

Gaharan & Wilson, Joseph Wilson, Jena, for plaintiffs-appellees.

Before FORET, SWIFT and LABORDE, JJ.

LABORDE, Judge.

Plaintiffs filed suit against defendants seeking cancellation of a mineral lease, attorney's fees, and proceeds from oil sales allegedly due them. Defendants reconvened for the amount of its movable equipment allegedly appropriated by plaintiffs or alternatively, for rent of that equipment. Defendants also sought production payments, damages and attorney's fees. The trial court rendered judgment ordering cancellation of the mineral lease and awarding plaintiffs $2,288.98 in proceeds from oil sales and $7,500.00 in attorney's fees. Defendants were awarded $3,500.00 for plaintiffs' use of their movable equipment. Defendants appeal and raise the following issues:

1. Whether the mineral lease should have been ordered cancelled?

2. Whether plaintiffs were entitled to attorney's fees and if so was the amount awarded excessive?

3. Whether the damages awarded defendants on its reconventional demand should be increased?

4. Who owns the movable equipment located on the leased premises?

Following a recitation of the facts, each issue will be discussed separately.

FACTS

On December 18, 1973, George H. Woods, his wife Laurel, and their two sons Lyle and Donald, as record owners, executed an oil, gas and mineral lease covering property in LaSalle Parish, Louisiana. By a series of assignments and subleases, the leasehold "working interest" was acquired by the defendants —Tennessee Fuel Sales, Inc., Harry C. Powell, J. T. Blong, and James E. Ratliff. Ratliff conducted business under the trade name "Jena Oil Company" which was designated as operator of the Woods No. 1 Well in July of 1976.

The Woods No. 1 Well is the only producing well on the leased premises and is the subject of this lawsuit.

*1377 Jena Oil Company operated the well, occasionally shutting it down for repairs or for other reasons but always resuming operations until May 2, 1979, when the high speed gear in the pumping unit broke. The broken gear was removed and a new one ordered to replace it with delivery expected by mid-June. Delivery of the new gear was delayed and no further operations were conducted by Jena Oil Company after May 2, 1979.

On August 2, 1979, Laurel, Lyle and Donald Woods, as record owners, granted an oil, gas and mineral lease covering the same property to RLS Partnership. On September 2, 1979, RLS Partnership commenced operations using Jena Oil Company's movable equipment except for the pumping unit which it installed.

In January of 1980, Laurel, Lyle, and Donald Woods and RLS Partnership instituted this suit against Tennessee Fuel Services, Inc., Harry C. Powell, J. T. Blong, and James E. Ratliff.

CANCELLATION OF THE MINERAL LEASE

In seeking a cancellation of the December 18, 1973, lease ultimately acquired by defendants, plaintiffs allege that the lease expired due to defendants' failure to produce the well or to conduct additional drilling or reworking operations without cessation in operations of more than ninety consecutive days as provided by the lease.

It is defendants' position that the lease was maintained by both production and operations until May 2, 1979. Beyond that date, defendants contend that their obligations as lessees were suspended under the force majeure provisions of the lease. Finally, defendants contend that in any event, plaintiffs' suit should have been dismissed because the law requires a putting in default prior to filing a suit for cancellation of a mineral lease.

Section 2 of the lease in question sets forth its term. More particularly it provides:

"2. Subject to the other provisions herein contained, this lease shall be for a period of Ninety Days from this date (called `primary term') and as long thereafter as (1) oil, gas, sulphur or other mineral is produced from said land hereunder or from land pooled therewith; or (2) it is maintained in force in any other manner herein provided."

Section 7 of the same lease, in pertinent part, provides:

"... If at the expiration of the primary term or at the expiration of the ninety day period provided for in the preceding sentence, oil, gas, sulphur or other mineral is not being produced on said land or on land pooled therewith but Lessee is then engaged in drilling operations or reworking operations thereon, or if production previously secured should cease from any cause after the expiration of the primary term, this lease shall remain in force so long thereafter as Lessee either (a) is engaged in drilling operations or reworking operations with no cessation between operations or between such cessation of production and additional operations of more than ninety consecutive days; or (b) is producing oil, gas, sulphur or other mineral from said land hereunder or from land pooled therewith...."

In accordance with these provisions then, the primary term of the lease extended ninety days from December 18, 1973, and if minerals were being produced at the end of the ninety day period, the primary term was extended and continued until production ceased. At the expiration of the primary term, however, the lease remains in force only if the lessee is producing minerals or is engaged in drilling or reworking operations with no cessation in these operations of more than ninety consecutive days.

Returning to the facts, plaintiffs established that the lease's primary term had expired due to the cessation of production caused by breakdowns following the initial ninety day period. Thereafter, the lease *1378 remained in force only by production of minerals or by drilling or reworking operations conducted with no cessation in operations of more than ninety consecutive days. In this regard, plaintiffs established that on May 2, 1979, the well was shut down and in excess of ninety consecutive days thereafter, defendants neither produced minerals nor drilled or reworked the well. The evidence compels the conclusion that by its terms, the lease terminated ninety days after May 2, 1979, unless, as defendants argue, it was suspended under its force majeure provisions. We now turn to a discussion of this possibility.

The force majeure provisions appear in Section 14 of the lease which, in pertinent part, provides:

"When drilling, reworking, production or other operations are delayed or interrupted by force majeure, that is, by storm, flood or other acts of God, fire, war, rebellion, insurrection, riot, strikes, differences with workmen, or failure of carriers to transport or furnish facilities for transportation, ... or as a result of any cause whatsoever beyond the control of the Lessee, the time of such delay or interruption shall not be counted against Lessee, ... but this lease shall be extended for a period of time equal to that during which Lessee is so prevented from conducting such drilling or reworking operations on, or producing oil, gas, ... or other minerals from the premises; ..."

The trial court was not impressed, from the evidence, that defendants were prevented from producing the well by either force majeure or by any cause beyond their control.

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Bluebook (online)
407 So. 2d 1375, Counsel Stack Legal Research, https://law.counselstack.com/opinion/woods-v-ratliff-lactapp-1981.