Opinion
2013 CA 0213
02-27-2014
OSAGE OIL & GAS, LLC v. PAXTON OIL COMPANY, LLC
Donald R. Beard Baton Rouge, Louisiana Counsel for Plaintiffs/Appellants Osage Oil & Gas, LLC Jaime S. Manual Baton Rouge, Louisiana Counsel for Defendants/Appellees Paxton Oil Company, LLC Jenna S. Ard Metairie, Louisiana Counsel for 3rd Party Defendant/Appellee Tripletall Investments, LLC Jeffery J. Waltz New Orleans, Louisiana Counsel for 3rd Party Defendant/Appellee Rapiere Resources Company
NOT DESIGNATED FOR PUBLICATION
On Appeal from the Seventeenth Judicial District Court
In and for the Parish of Lafourche
State of Louisiana
No. 113974
Honorable Jerome J. Barbera, III, Judge Presiding
Donald R. Beard
Baton Rouge, Louisiana
Counsel for Plaintiffs/Appellants
Osage Oil & Gas, LLC
Jaime S. Manual
Baton Rouge, Louisiana
Counsel for Defendants/Appellees
Paxton Oil Company, LLC
Jenna S. Ard
Metairie, Louisiana
Counsel for 3rd Party
Defendant/Appellee
Tripletall Investments, LLC
Jeffery J. Waltz
New Orleans, Louisiana
Counsel for 3rd Party
Defendant/Appellee
Rapiere Resources Company
BEFORE: KUHN, MCDONALD, AND McCLENDON, JJ.
McCLENDON, J .
Plaintiff appeals a judgment granting the defendant's motion for summary judgment on plaintiff's forfeiture ciaim. For the reasons that follow, we reverse.
FACTS AND PROCEDURAL HISTORY
This matter arises out of an oil and gas venture that began in 2008. Paxton Oil Company, LLC. developed a prospect in Lafourche Parish, Louisiana. Osage Oil & Gas, L.L.C. was interested in participating in the venture, which resulted in Paxton and Osage signing a participation agreement and a joint operating agreement ("JOA") on January 23, 2008. The parties thereby agreed to participate in drilling of the VUA Dorothy Tabor, et al. No. 1 Well ("the well") in Lafourche Parish. Paxton was designated as the operator of the well. Paxton's working interest was 35.575% and Osage's working interest was 45%.
In regard to the JOA, Article XV I contains the following provision:
FAILURE TO FUND THE DRY HOLE COSTS FOR THE INITIAL TEST PRIOR TO SPUD OF THE WELL WILL RESULT IN LOSS OF ALL INTEREST IN THE PROSPECT UNLESS OPERATOR [PAXTON] AGREES IN WRITING TO EXTEND TIME FOR PAYMENT OF DRY HOLE COSTS OF SAID WELL.The well was spud on April 8, 2008. On January 15, 2010, Osage filed a petition for declaratory judgment against Paxton, seeking a declaration that Paxton had not paid its proportionate share of dry hole costs prior to the well's spud date, resulting in Paxton forfeiting its interest in the well pursuant to the provision of the JOA cited above.
On March 12, 2010, Osage recorded a notice of lis pendens in accordance with LSA-C.C.P. article 3751. On April 1, 2010, Paxton was removed as operator of the well and replaced by Rapiere Resources, Inc. Based on the notice of lis pendens, Rapiere suspended payment of any revenues from the well to Paxton, effective April 1, 2010.
Louisiana Code of Civil procedure article 3751 provides:
The pendency of an action or proceeding in any court, state or federal, in this state affecting the titie to, or asserting a mortgage or privilege on, immovable property does not constitute notice to a third person not a party thereto unless a notice of the pendency of the action or proceeding is made, and filed or recorded, as required by Article 3752.
On October 3, 2012, Paxton filed motion for summary judgment, seeking dismissal of Osage's claim. Paxton contended that it did in fact grant a written extension in accordance with JOA Article XV I prior to the spud of the well. In support, L. Wayne Paxton, sole manager/member of Paxton, attested that in March 2008, following his conversations with Lawrence McAlpine, he, acting in his capacity as the operator of the well, issued a hand-written inter-office memorandum on March 20, 2008 indicating that Paxton was exercising its right to an extension for payment of the dry hole costs. The memorandum which was attached to the affidavit, provides, in pertinent part:
Hereinafter, Paxton Oil Company will be referred to as Paxton and L, Wayne Paxten will be referred to as Mr. Paxton,
Lawrence McAipine is the husband of Gretchen McAlpine, the sole member of Bonne Terre Land Consultants. LLC. Bonne Terre is a working interest owner in the well. Mr. Paxton asserts that Mr. McAlpine brought JOA Article XV 1 to his attention when Mr. and Mrs. McAlpine were in the process of reviewing the terms of the JOA,
Permission is hereby given to allow U [you] 2 [to] have the following discretionary its [rights] wrt [with respect to] your share of expenses on the well---In light of the foregoing memorandum, Paxton alleged it was entitled to summary judgment and that Osage's forfeiture claim should be dismissed.
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4) U [you] may extend the time of payment of all costs until 6 mths [months] after an audit is completed showing u [you] have a balance due & owing, including DHC [dry hole costs], CC [completion costs] or LOEs [lease operating expenses].
In opposition to Paxton's motion, Osage asserted that a motion for summary judgment was not proper, contending that the trial court was required to make a credibility determination concerning the validity of the March 20, 2008 memorandum. Osage averred that the only evidence supporting Paxton's motion was the self-serving memorandum, the existence of which was not made known to Osage until April 2012.
Following a hearing on Paxton's motion for summary judgment, the trial court dismissed the forfeiture claim, reasoning as follows:
So, I'm going to grant the motion, because I think there's no dispute of material fact about what happened, and this is not a credibility call. It's a document And Osage would have to overcome that document at trial, and they haven't shown in opposition to the motion that they have anything to present. ... The
Boisvert Farms appealed the judgmeras. In its appeal, Boisvert Farms assigns the following as error:
Because the judgments appeared to be partial summary judgments, this Court, on May 14, 2013, issued a show cause order regarding the finality of the judgments, instructed the parties to file briefs on the issue, and remanded the matter to the trial court to either advise this Court that the judgments did not warrant a designation under LSA-C.C.P. art. 191SB or sign amended judgments containing the designation and provide this Court with a per curiam containing reasons why there was no just reason for delay based on the factors expressed in R.J. Messinger, Inc. v. Rosenblum, 04-1664 (La. 3/2/05), 894 So.2d 1113, 1122-23. On June 10, 2013, the parties filed an unopposed motion to dismiss the remaining trespass claim and a motion to certify the judgments as final. On June 11, 2013, the trial court signed its order dismissing plaintiffs' trespass claim with prejudice and, finding no just reason for delay, designated the August 1, 2012 judgments as final. Although a duty panel made a preliminary determination to maintain the appeal, the propriety of the trial court's designation of finality was reserved to this panel in connection with our duty to review the merits of the appeal. Considering the criteria set forth by the Louisiana Supreme Court in R.J. Messinger, Inc., we have reviewed the propriety of the trial court's designation of finality and conclude that the trial court's designation of its judgment as final was proper.
1. The trial court erred in granting summary judgment based on good faith acquisitive prescription when it was not pled or raised in the motion for summary judgment.
2. The trial court erred in granting summary judgment when the undisputed evidence before it established ownership, prior possession, and continued possession in Boisvert Farms.
SUMMARY JUDGMENT
A motion for summary judgment is a procedural device used to avoid a full-scale trial when there is no genuine factual dispute. Lewis v. Morgan, 11-2182 (La.App. 1 Cir. 6/8/12), 93 So.3d 741, 743. It should be granted only if the pleadings, depositions, answers to interrogatories, and admissions on file, together with any affidavits, show that there is no genuine issue of material fact and that mover is entitled to judgment as a matter of law. LSA-CCP. art. 966B. The summary judgment procedure is expressly favored in the law and is designed to secure the just, speedy, and inexpensive determination of non-domestic civil actions. LSA-C.C.P. art. 966A(2). Its purpose is to pierce the pleadings and to assess the proof in order to see whether there is a genuine need for trial. Hines v. Garrett, 04-0806 (La. 6/25/04), 876 So.2d 764, 769 (per curiam). Summary judgments are reviewed on appeal de novo. An appellate court thus asks the same questions as does the trial court in essential to the adverse party's caim, action, or defense. Thereafter, if the adverse party fails to produce factual support sufficient to establish that he will be able to satisfy his evidentiary burden of proof at trial, there is no genuine issue of material fact. LSA-CC.P. art. 966(C)(2).
The initial burden of proof remains with the mover and it is not shifted to the non-moving party until the mover has properly supported the motion and carried the initial burden of proof. Only then must the non-moving party submit evidence showing the existence of specific facts establishing a genuine issue of material fact. See Scott v. McDaniel, 96-1509 (La.App. 1 Cir. 5/9/97), 694 So.2d 1189, 1191-92, writ denied, 97-1551 (La. 9/26/97), 701 So.2d 991. If the non-moving party fails to do so, there is no genuine issue of material fact, and summary judgment should be granted. LSA-CC.P. arts. 966 and 967.
In determining whether summary judgment is appropriate, appellate courts review evidence de novo under the same criteria that govern the trial court's determination of whether summary judgment is appropriate. Boudreaux v. Vankerkhove, 07-2555 (La.App. 1 Cir. 8/11/08), 993 So.2d 725, 729-730. Furthermore, an appellate court asks the same questions as does the trial court in determining whether summary judgment is appropriate: whether there is any genuine issue of material fact, and whether the mover is entitled to judgment as a matter of law. Guardia v. Lakeview Regional Medical Center, 08-1369 (La.App. 1 Cir. 5/8/09), 13 So.3d 625, 627. A "genuine issue" is a "triable issue,'' that is, an issue on which reasonable persons could disagree. If, on the state of the evidence, reasonable persons could reach only one conclusion, there is no need for a trial on that issue. Jones v. Estate of Santiago, 03-1424 (La. 4/14/04), 870 So.2d 1002, 1006. In determining whether an issue is genuine, a court should not consider the merits, make credibility determinations, evaluate testimony, or weigh evidence. Fernandez v. Hebert, 06-1558 (La.App, 1 Cir. 5/4/07), 961 So.2d 404, 408, writ denied, 07-1123 (La. 9/21/07), 964 So.2d 333. In deciding a motion for summary judgment, the court must assume that all witnesses are credible, and factual inferences reasonably drawn from the evidence must be construed in favor of the party opposing the motion, and all doubt resolved in the opponent's favor. Janney v. Pearce, 09-2103 (La.App. 1 Cir. 5/7/10), 40 So.3d 285, 289, writ denied, 10-1356 (La. 9/24/10), 45 So.3d 1078.
DISCUSSION
Osage asserts that Paxton's entire basis to support its motion for summary judgment is reliance on the March 20, 2008, memorandum, which forgives Paxton in the event he did not pay his share of dry hole costs prior to the spud date of the well. We note that the purported extension was first referenced in Paxton's answer filed in August 2011, more than three years after the spud date of the well, wherein Paxton specifically plead: "Paxton affirmatively asserts that it was excused in writing from advance of dry hole costs for the drilling of the Dorothy Tabor, et al, No. 1 Well prior to its spud date pursuant to Article XV. 1. of the JOA." Also, in his deposition taken on April 26, 2012, while discussing what the language set forth in JOA Article XV I meant, Osage notes that the following exchange took place between Mr. Paxton and Osage's counsel:
A. That unless the operator, who was me, made a written statement, anybody who could put their money up, lost their interest in the well.Moreover, Osage notes that Paxton admitted his deposition that this was the only internal office memorandum that he had ever written.
Q. Okay. Did you make a written statement extending the - -
A. Of course I did.
Q. Where is it?
A. It is in my files.
Q. Why has it not been produced?
A. Nobody has asked for it.
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Q. You could have saved everybody an awful lot of time and money if you would have produced that before.
A. If you would have asked for it, I would have given it to you... Y'all wouldn't have gone away, trust me. Y'all wouldn't have gone away, bro, and you know, it.
Osage contends that Paxton had an obligation to deal with its working interest owners in good faith. LSA-C.C. art. 1759. Osage avers that Paxton breached this duty when Mr. Paxton allegedly hand-wrote the memorandum, put it in one of his files, and did not tell anyone about it, including his co-working interest owners. Osage additionally asserts that the memorandum is nothing more than an unsworn, out-of-court statement that should not be trusted, and questions the actual date that it was prepared.
Louisiana Civil Code article 1759 provides:
Good faith shaii govern the conduct of the obligor and the obligee in whatever pertains to the obligation.
In opposition to the motion for summary judgment, Osage introduced the affidavits of three principals of Osage, who all attested that they and Mr. Paxton attended a meeting at a hunting club soon after the well was drilled. At the meeting, Mr. Paxton insisted that he had paid his money prior to the spud of the well. The affiants also indicated that Mr. Paxton never mentioned a written memorandum excusing his payment.
The affiants were Richard Brown, manager of Osage, and Claude Penn and Terry Calongne, both members of Osage.
Mr. Paxton later recognized that he had not paid the full amount due prior to the spud of the well.
Osage avers that in considering the validity of the March 20, 2008, memorandum, the court should also consider that Paxton's income stream from the well was suspended effective April 1, 2010. The amount Osage has deposited into the registry of the court attributable to Paxton's interest is approximately $300,000.00. Osage contends that had Paxton been forthcoming with the memorandum (if it in fact existed prior to the spud of the well), he could have avoided the interruption of income for over two years. Osage contends that one rational explanation for suppressing the memorandum for four years and for more than two years after the suit was filed is that "this cryptic and self-serving memorandum simply did not exist at the time." Osage concludes that it is simply not logical to assume that someone who has so much to gain by bringing forth a document would have failed to do so.
In response, Paxton submits that there are no specific facts which directly controvert the issuance date of the interoffice memorandum. Paxton asserts that the mere fact that it believed it had paid its proportionate share of dryhole costs would not stop Paxton from issuing the interoffice memorandum as insurance against application of Article XV I in the event that was not the case. Paxton submits that Osage has failed to submit evidence of actual contradictory facts, such that the evidence submitted by Osage does not create a genuine issue of material fact as to the issuance date of the interoffice memorandum. Paxton asserts that in this case, there are no "elusive concepts, of motive or intent" at issue—rather a written document is being questioned. See Carter v. BRMAP, 591 So.2d 1184, 1190 (La.App. 1 Cir. 1991) quoting from Medina-Munoz v. R.J. Reynolds Tobacco Co., 896 F.2d 5, 8 (1 Cir. 1990) ("Even in cases where elusive concepts such as motive or intent are at issue, summary judgment may be appropriate if the non-moving party rests merely upon conclusory allegations, improbable inferences, and unsupported speculation.") Paxton concludes because there is no "actual controversy" of fact, the trial court did not have to make a credibility determination and its judgment granting Paxton's motion was proper.
We disagree. We note that the March 20, 2008 memorandum was signed solely by Mr. Paxton and there were no witnesses to the memorandum. This was the only memorandum Mr. Paxton had ever drafted and he failed to disclose the memorandum to any of the partners. Rather, its existence was not known to other partners until, at the very earliest, when Paxton filed its answer to Osage's petition. Under the unique circumstances in this case, and given that Paxton essentially had the ability to grant itself an extension, we conclude that genuine issues of material fact exist regarding whether the document was created prior to the well being spud.
Had the document been in authentic form, it would have cloaked it with the presumption of genuineness such that a party contesting the authenticity would assume the burden of proving the invalidity. See LSA-C.C. arts. 1833 and 1835 and Couvitlion v. Couvillion, 03-2006 (La.App. 1 Cir. 6/25/04), 886 So.2d 474, 475, writ denied, 04-1892 (La. 10/29/04), 885 So.2d 596.
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CONCLUSION
For the foregoing reasons, the judgment of the district court dated December 12, 2012, granting Paxton's summary judgment and awarding attorneys' fees is hereby reversed. Costs of this appeal are assessed to appellee, Paxton Oil Company, L.L.C.
REVERSED.
OSAGE OIL & GAS, LLC
VERSUS
PAXTON OIL COMPANY, LLC
FIRST CIRCUIT
COURT OF APPEAL
STATE OF LOUISIANA
2013 CA 0213
KUHN, J., concurring.
The majority is correct in the result reached. There are numerous issues of material fact which exist requiring the denial of the motion for summary judgment. The respondent has met their burden of proof and the material issues of fact remain.