XXI Oil & Gas, LLC v. Hilcorp Energy Co.

206 So. 3d 885, 16 La.App. 3 Cir. 269, 2016 La. App. LEXIS 1783
CourtLouisiana Court of Appeal
DecidedSeptember 28, 2016
Docket16-269
StatusPublished
Cited by7 cases

This text of 206 So. 3d 885 (XXI Oil & Gas, LLC v. Hilcorp Energy 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
XXI Oil & Gas, LLC v. Hilcorp Energy Co., 206 So. 3d 885, 16 La.App. 3 Cir. 269, 2016 La. App. LEXIS 1783 (La. Ct. App. 2016).

Opinions

EZELL, Judge.

| hilcorp Energy Company appeals a trial court judgment which found it liable-to XXI Oil & Gas, LLC for penalties pursuant to La.R.S. 30:103.2 in the amount of $367,231.30. For the reasons assigned in this opinion, we affirm the judgment of the trial court.

FACTS

On. December 7, 2010, the Louisiana Commissioner of Conservation created a drilling unit designating it the Trahan No. 1 well. A prior operator drilled the unit well. Hilcorp recompleted the well, which began producing on January 11, 2011. XXI acquired mineral leases over lands located in the drilling unit in February 2011.

XXI filed suit against Hilcorp in September 2011 for its failure to provide XXI with a sworn, detailed, and itemized statement of costs as required by La.R.S. 30:103.1. The pertinent facts pertaining to correspondence between the two parties regarding the requests by XXI for information pursuant to La.R.S. 30:103.1 can be found in our previous opinion at XXI Oil & Gas, LLC v. Hilcorp Energy Co., 13-410 (La.App. 3 Cir. 10/9/13), 124 So.3d 530.

In response, Hilcorp filed an exception of no cause of. action claiming that La.R.S. 30:103.1 and 30:103.2 do not apply to XXI as a mineral lessee. After the trial court denied Hilcorp’s exception of no cause of action, it sought supervisory writs with this court. This court found no error in the trial court’s ruling and denied Hilcorp’s writ application on April 17, 2012.

Subsequently, the trial court granted a partial summary judgment in favor of XXI finding that Hilcorp should be penalized under La.R.S. 30:103.2 for failing to provide a sworn, detailed, and itemized statement of costs to XXI as required by La. R.S. 30:103.1. Hilcorp then filed an appeal in this court. On appeal, this court |aagreed with the trial court and held that “Hil-corp’s actions and omissions amounted to a substantial breach of the disclosure requirements of La.R.S. 30:103.1 [and] [t]he statement of costs Hilcorp sent to XXI was [888]*888not sworn, and thus was inadequate under this statute.” XXI Oil & Gas, LLC, 124 So.3d at 535. This court then held that “La.R.S. 30:103.2 forfeiture is the clear remedy.” Id.

A bench trial was held on September 21, 2015. The trial consisted of stipulations entered into between the parties and exhibits introduced into evidence. The trial court entered judgment on December 14, 2015, finding Hilcorp liable to XXI for penalties in amount of $367,231.30. This amount was calculated by utilizing the stipulated amount of revenue from the well of $1,743,355.49 to calculate XXI’s share of revenue for the leases that it owns which cover 21.0646257% of the unit: ($1,743,-355.49 x 21.0646257%= $367,231.30). Hil-corp then filed the present appeal.

NO CAUSE OF ACTION

Once again,' as it argued previously to the court, Hilcorp has assigned as error the trial court’s application of La.R.S. 30:103.1 and 30:103.2 to XXI arguing that the statute is not applicable to mineral lessees. Hilcorp argues that the statutes refer to oil and gas interests that are not leased at all as opposed to not leased by the operator. In support of its position, it cites TDX Energy, LLC v. Chesapeake Operating, Inc., 2016 WL 1179206 (W.D.La. 2016)(unpublished opinion), which held that La.R.S. 30:103.1 does not apply to mineral lessees. XXI argues that this court’s previous decisions should be considered law of the case precluding review of the issue on appeal.

The law of the case doctrine embodies the principles of the binding force of trial court rulings during later stages of the proceedings, the conclusive effects of ^appellate rulings in the trial court on remand, and that an appellate court generally does not revisit its own rulings of law on a subsequent appeal in the same case. Kaleel v. Div. Transp., 00-803 (La.App. 3 Cir. 8/23/00), 769 So.2d 110, writ denied, 00-2976 (La. 12/15/00), 777 So.2d 1232. “‘The reasons for this doctrine are: (1) avoidance of indefinite litigations; (2) consistency of results in same litigation; (3) essential fairness between the parties; and, (4) judicial efficiency.’” Id. at 111 (quoting Schultz v. Doyle, 98-1113, p. 6 (La.App. 3 Cir. 2/3/99), 727 So.2d 691, 693-94, writ denied, 99-994 (La. 5/28/99), 743 So.2d 670), “ ‘[T]he doctrine applies with equal force to writ decisions as it does to judgments rendered at the conclusion of the appellate process.’” Id. An appellate court may exercise discretion in application of the doctrine and choose not to apply it in cases where the former appellate decision was clearly erroneous or if a manifest injustice would occur. Id.

Not only did we previously deny Hilcorp’s writ application, thus recognizing XXI’s cause of action under La.R.S. 30:103.1 and 30:103.2, we further found that Hilcorp’s actions and omissions were a breach of La.R.S. 30:103.1 as it pertained to XXI entitling it to a forfeiture under La.R.S. 30:103.2. Furthermore, while decisions of federal courts are considered persuasive, especially cases concerning federal law, they are not binding on the courts of the State of Louisiana, especially on matters concerning the interpretation of state law which have been ruled upon. Shell Oil Co. v. Sec’y, Revenue and Taxation, 96-929 (La. 11/25/96), 683 So.2d 1204.

We maintain our position that when an owner or operator drills a well, and that owner or operator has no valid oil, gas, or mineral lease on a portion of that land, the mineral lessee of those portions not leased by the operator or producer of |4the well has a claim to demand an accounting pursuant to La.R.S. 30:103.1, as an owner of a valid oil, gas, or mineral lease.

[889]*889COSTS OF DRILLING OPERATIONS

Hilcorp argues that the trial court erred in failing to strictly construe La.R.S. 30:103.2 by interpreting “costs of the drilling operations” to include both pre-production and post-production costs. As noted by Hilcorp, the trial court’s basis for its ruling was that La.R.S. 30:103.1(A)(2)(c) requires the operator to send quarterly reports of operating costs and revenue after production has begun. Hilcorp argues that quarterly reports were required until the legislature amended La.R.S. 30:103.1 in 2001. Hilcorp further argues that had the legislature intended to include costs other than “drilling” costs, it would have delineated them as it did in the companion provision, La.R.S. 30:103.1 (i.e., completing, equipping, and operating), when the amendments were enacted. It is Hilcorp’s position that “costs of the drilling operations” pertain only to those costs incurred prior to the establishment of production to drill and complete the well. Hilcorp reasons that once production has been established, drilling operations cease.

“The fundamental question in all cases of statutory interpretation is legislative intent and the ascertainment of the reason or reasons that prompted the Legislature to enact the law.” Pumphrey v. City of New Orleans, 05-979 (La. 4/4/06), 925 So.2d 1202, 1209. “The rules of statutory construction are designed to ascertain and enforce the intent of the Legislature.” Id. “Legislation is the solemn expression of legislative will, and therefore, interpretation of a law involves primarily a search for the Legislature’s intent.” Id.-, La.Civ. Code art. 2.

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206 So. 3d 885, 16 La.App. 3 Cir. 269, 2016 La. App. LEXIS 1783, Counsel Stack Legal Research, https://law.counselstack.com/opinion/xxi-oil-gas-llc-v-hilcorp-energy-co-lactapp-2016.