Strong Dissent Warns of “Devastating Economic Repercussions” of Second Circuit’s Decision in Oil & Gas Case

In Gloria’s Ranch, L.L.C. v. Tauren Exploration, Inc., the Louisiana Second Circuit upheld a trial court’s ruling that Wells Fargo, a mortgage lender with a security interest in a mineral lease, was solidarily liable with its borrowers (the mineral lessees) for a breach of the mineral lessees’ contractual and statutory obligations to produce in paying quantities, pay royalties, and respond to the mineral lessor’s demands regarding those obligations.  A detailed summary of that decision is available here. Continue Reading

The End of LIBOR: What’s Next for Lenders and Borrowers?

According to Britain’s Financial Conduct Authority, the London Interbank Offered Rate, or LIBOR, will be phased out and abandoned by the end of 2021.  This phase out will put lenders and borrowers in a tricky situation as LIBOR is the most commonly used interest rate index and is estimated to be tied to over $350 trillion of financial products globally, including commercial mortgages, corporate loans and swap transactions.  LIBOR is calculated daily and aims to provide the average interest rate at which the 10 to 20 contributing banks may obtain loans from each other.  Over the past ten years, LIBOR has been highly susceptible to rigging scandals and market manipulation since the calculation is often not underpinned by actual market transactions, leading to its eventual abandonment. Continue Reading

Dusky Gopher Frog’s Louisiana Critical Habitat Spawns U.S. Supreme Court Writ

A group of Louisiana landowners, Weyerhaeuser Company, and the Pacific Legal Foundation filed Petitions for Writs of Certiorari this month asking the U.S. Supreme Court to overturn the U.S. Fish and Wildlife Service’s (USFWS) decision to designate 1,544 acres of private land in St. Tammany Parish, Louisiana as critical habitat for the endangered dusky gopher frog.

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United States Fifth Circuit Confirms Remedies Available to Subrogated Insurer

On July 7, 2017, the United States Fifth Circuit Court of Appeal, in Associated International Insurance Company v. Scottsdale Insurance Company, held that, under Texas law, the subrogation clause of an insurance agreement allowed a subrogated insurer to seek reformation of a contract between its insured and a third party.  In that appeal, the defendant’s primary and excess insurer settled a lawsuit.  The excess insurer, Associated International Insurance Co., then sought reimbursement from Scottsdale, an insurer that had also issued a commercial umbrella policy to the insured defendant.  Scottsdale argued Associated could not seek reimbursement because the property that had been at issue in the underlying suit was not listed on Scottsdale’s schedule of covered properties. Continue Reading

Trial Court Rules that Article 22’s “Original Condition” Refers to Property’s Condition at the Creation of a Mineral Servitude

A July 3, 2017 ruling from the 17th Judicial District establishes that a mineral servitude owner’s obligation under Mineral Code article 22 “to restore the surface to its original condition” means the condition of the property at the creation of the servitude—and not the property’s pristine, pre-operation condition.  The court’s commonsense ruling in Sterling Sugars v. Amerada Hess Corporation, No. 100091 (17th JDC) appears to be the first time a state court has directly interpreted the meaning of the phrase “original condition” in the Article 22 context. Continue Reading

Plaquemines Parish Amends Petition for Damages In Coastal Zone Management Act Litigation

The Parish of Plaquemines amended its petitions in two of the Coastal Zone Management Act (“CZMA”) cases on June 19, 2017.  Prior to the amendment of the petitions, Judge Clement sustained Defendants’ Exceptions of Vagueness in the two cases, namely: The Parish of Plaquemines v. Rozel Operating Co., et al. and The Parish of Plaquemines v. Equitable Petroleum Corporation, et al.  As a result, the Court signed Judgments ordering the Parish of Plaquemines to amend the petitions to “more specifically set forth the factual basis for their claims as to each defendant individually.” Continue Reading

U.S. Fifth Circuit Greenlights Contribution Action for Purely Economic Damages Under Oil Pollution Act (OPA)

In Settoon Towing, L.L.C. v. Marquette Transportation Company, L.L.C., No. 16-30459 (5th Cir. Jun. 9, 2017), the United States Fifth Circuit Court of Appeals held for the first time that a Responsible Party under the Oil Pollution Act of 1990 (“OPA”) has a statutory claim for contribution to recover purely economic damages from a partially liable third party.

Settoon arose out of a February 2014 collision on the Mississippi River near Convent, Louisiana.  A tug owned by Marquette collided with an oil-carrying barge owned by Settoon as the Marquette tug attempted to overtake the Settoon flotilla.  As a result of the collision, approximately 750 barrels of light crude oil discharged into the river. Continue Reading

Louisiana Second Circuit Finds Holder of Mortgage Encumbering a Mineral Lease Solidarily Liable with Mineral Lessees for Damages Under the Louisiana Mineral Code

In Gloria’s Ranch, L.L.C. v. Tauren Exploration, Inc., the Louisiana Second Circuit upheld a trial court’s ruling that the holder of a security interest in mineral leases was solidarily liable for damages under the Louisiana Mineral Code stemming from its mineral lessees/mortgagors’ actions.[1] In the case, a landowner sued its mineral lessees for: (1) failure to provide a recordable act evidencing the expiration of a mineral lease under Mineral Code articles 206-209 and (2) failure to pay royalties under Mineral Code articles 137-140.[2] Continue Reading

Louisiana Second Circuit Provides Clarity on Production in Paying Quantities and Affirms Lease Cancellation Under Mineral Code Article 140 for Failure to Pay Royalties

On June 2, 2017 the Louisiana Second Circuit Court of Appeal affirmed a trial court’s judgment cancelling a mineral lease under Mineral Code article 140 and provided further clarity on a production in paying quantities analysis under Louisiana Mineral Code article 124.[1]  The dispute in Gloria’s Ranch, L.L.C. v. Tauren Exploration, Inc., arose from a 2004 mineral lease covering nearly 1,400 acres in Sections 9, 10, 15, 16, and 21, Township 15 North, Range 15 West, in Caddo Parish.[2]  The lease was granted by Gloria’s Ranch, L.L.C. (“Gloria’s Ranch”) to Tauren Exploration, Inc. (“Tauren”) and contained a three year primary term as well as a horizontal and vertical Pugh clause.[3]  Tauren subsequently assigned a 49% interest in the lease to Cubic Energy, Inc. (“Cubic”).[4] Continue Reading

U.S. Fifth Circuit Adopts Broad Definition of “Good Faith” for Louisiana Environmental Whistleblower Claims

On June 1, 2017, the United States Fifth Circuit Court of Appeals in Borcik v. Crosby Tugs, L.L.C. applied a broad definition of the intent required of a plaintiff under the Louisiana Environmental Whistleblower Act.  In doing so, both the Fifth Circuit and the Louisiana Supreme Court apply a more plaintiff friendly standard to claims of environmental whistleblowers. Continue Reading

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