In Hall Street Associates, LLC v. Mattel, Inc., 2008 WL 762537 (U.S. 2008), the Supreme Court held that the grounds for vacatur and modification of arbitration awards provided by §§ 10 and 11 of the Federal Arbitration Act (“FAA”) are exclusive.
Continue Reading...By Jana Grauberger
and Anna Knull
On November 21, 2007, the Louisiana Fourth Circuit Court of Appeal affirmed the trial court’s ruling in favor of Chevron U.S.A., Inc. (“Chevron”), the Plaquemines Parish Government (“PPG”), and others in a dispute with the State of Louisiana over the validity of a 1938 mineral lease granted by the Buras Levee District (“BLD”). The State of Louisiana had previously created the BLD and transferred to it all lands belonging to the State within its geographic borders, including the tract involved in the instant matter (Tract 1). In 1975, the BLD merged and consolidated with the PPG. The State of Louisiana asserted, among other arguments, that the merger and consolidation of the BLD with the PPG constituted an impermissible alienation of state minerals and that the State was entitled to the mineral revenues attributable to Tract 1 as an unleased owner. Faced with competing claims for royalty payments from the PPG and State of Louisiana, Chevron, as sublessee of the 1938 BLD lease, filed a petition for concursus and deposited royalty payments into the court registry.
Ultimately, the Fourth Circuit affirmed the trial court’s finding that the State’s claims were barred by res judicata. Previously, in 1990, Chevron had filed a concursus to seek a resolution of competing claims made by the PPG and the State of Louisiana as to royalties applicable to a separate tract covered by the 1938 BLD Lease, Tract 87. In that prior litigation, the Louisiana Fourth Circuit affirmed a judgment in favor of PPG, finding that the 1938 BLD Lease was valid.
Here, the Fourth Circuit found that the instant case was barred by the doctrine of res judicata, since the present action concerning Tract 1 arose out of the same transaction or occurrence as the litigation concerning Tract 87. The court observed that the 1938 BLD Lease’s validity had been recognized by courts since 1943. Further, the real “cause of action” for res judicata purposes in both the Tract 87 litigation and the instant case was the immovable known as the 1938 BLD Lease, not any single tract of land contained therein. The court concluded that “[t]his is exactly the type of case to which res judicata applies” and “[t]o find otherwise would permit the State to file a series of separate actions challenging the ownership of mineral rights in each and every tract contained in the 1938 BLD Lease.” Chevron U.S.A., Inc. v. State of Louisiana, et al., No. 2007-CA-0673, pp. 7-8 (La. App. 4th Cir. 11/21/07).
In Martin v. JKD Investmens, LLC, the Court of Appeal of Louisiana, Second Circuit, rejected a plaintiff's fraud claim because the plaintiff had failed to read the contract that he signed which transferred the mineral rights on his property to JKD Investments, LLC ("JKD").
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Continue Reading...Supreme Court of Texas decides Superior Snubbing: In a case of substantial importance to the energy industry, the Supreme Court of Texas held that an oilfield service contractor sued by an injured employee of another contractor is entitled to enforce the indemnity provision in a Master Service Agreement between the operator and the contractor whose employee was injured.
Continue Reading...By Anna Knull:
In Cedyco Corp. v. Petroquest Energy LLC, No. 05-20493, the Fifth Circuit considered claims for breach of contract and specific performance brought under Texas law and arising from the sale of the working interest in two Louisiana oil wells at auction. The wells were sold under the condition that PetroQuest would not sell or assign the mineral rights without first obtaining the written consent of Exxon, from whom PetroQuest had subleased the interest. Exxon granted consent conditioned on PetroQuest remaining obligated for the original sublease and indemnifying Exxon for any liability arising from Ceydco's operation of the lease. PetroQuest refused to complete the sale to Ceydco under these terms, and Ceydco sued PetroQuest for breach of the contract for sale and specific performance. In reversing summary judgment in favor of Ceydco, the Fifth Circuit held that though a contract for the sale of the wells had been formed, the contract contained a condition precedent that Exxon consent to the assignment. Because PetroQuest was not obligated to accept Exxon's terms, Exxon's conditional consent was not consent under the contract; consequently, PetroQuest's obligation to perform under the contract never came due.
In Haspel & Davis Milling & Planting Co., Ltd. v. Board of Commissioners of the Orleans Levee District, the United States Court of Appeals for the Fifth Circuit reversed a grant of summary judgment in favor of plaintiffs on a takings claim. In 1984, the Louisiana Legislature ordered the Levee Board to return land expropriated to build the Bohemia Spillway to its former owners and to provide them with an accounting of all revenues received from the property. After the Levee Board failed to pay the landowners the mineral royalties that it had received on the affected property, the plaintiffs sued, arguing that the Levee Board's continued collection of and failure to return royalties was an unconstitutional taking. After 12 years of litigation, the parties entered a settlement agreement that provided that the Levee Board would pay one lump sum to plaintiffs and then pay further as money was appropriated for that purpose. After the Levee Board failed to pay further, the plaintiffs filed suit in federal court in June 2006, arguing that the Levee Board's failure to pay the terms of the settlement agreement was an unconstitutional taking. The district court agreed. The Fifth Circuit reversed, holding that because the landowners entered a "Settlement Agreement, the landowners compromised their takings claim against the Levee Board, and thus, extinguished any takings claim they may have had." Therefore, "the landowners' only recourse is to enforce their rights under the Settlement Agreement and Consent Judgment." To read the full opinion, click here.
By Collette Ross
The Louisiana legislature has amended Louisiana Revised Statute § 44:104(E) to allow a notice of a mineral lease to be recorded for public records purposes instead of the full lease. Filing a memorandum or extract of a mineral lease was formerly permitted by Louisiana Revised Statute § 9:2721.1, but that section was repealed on July 1, 2006. The current legislation resolves this problem. As to mineral leases, in addition to other requirements under § 44:104, the notice shall include the primary term of the lease and any additional period during which the lease may be maintained by the payment of rentals. The amendment of § 44:104(E) took effect on June 18, 2007. Click here to view the Act amending this statute.
Boldrick v. BTA Oil Producers, No. 11-06-00029-CV, 2007 WL 865811 (Tex. App.—Eastland March 22, 2007).
The Eleventh Court of Appeals of Texas recently affirmed a District Court ruling granting summary judgment to BTA Oil Producers (BTA) on the basis that that the joint operating agreement (JOA), which governed the assignment of an overriding royalty interest to Plaintiff/Appellant, specifically provided guidelines for payments owed on an overriding royalty interest created by a non-consenting party. As BTA’s actions were consistent with the JOA, the court upheld the decision that no funds are due to Boldrick until the non-consent penalty provisions of the JOA are fully recouped and BTA itself receives payment for production from the well at issue.
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