Calvin J. Hill, Individually and as the of the Succession of Elnora Johnson Hill v. TMR Exploration, Inc., Park Exploration, Inc., and Vitol Resources, Inc.

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NO. 2020 CA 0667

CALVIN J. HILL, INDIVIDUALLY AND AS THE EXECUTOR OF THE
SUCCESSION OF ELNORA JOHNSON HILL

VERSUS

TMR EXPLORATION, INC., PARK EXPLORATION, IN
AND VITOL RESOURCES, INC. I
Judgment Rendered:
JAN 2 7 2021

Appealed from the 18"' Judicial District Court
In and for the Parish of West Baton Rouge
State of Louisiana
Suit No. 41, 245

The Honorable Tonya S. Lurry, Judge Presiding

Brent K. DeLee Counsel for Plaintiffs/Appellants

Kirby J. Guidry Calvin J. Hill, et al.
Baton Rouge, Louisiana

Chad A. Aguillard Counsel for Plaintffs/ Intervenors/

New Roads, Louisiana Appellants

and Roosevelt Hill, et al.
Thomas A. Nelson
New Roads, Louisiana

Monique M. Edwards Counsel for Plaintiff/Intervenor/
Baton Rouge, Louisiana Appellant

and Felix F. Hill

Isaac Jackson, Jr.
Plaquemine, Louisiana

Nicole M. Duarte Counsel for Defendants/ Appellees
Krystal P. Scott Sunoco Partners Marketing &
Houston, Texas Terminals, L.P., Sunoco, Inc.
and R & M, and Sunoco Logistics

James C. Percy Partners Operations G. P. L.L.C.
Thomas McCall

Tiffany Dupree
Baton Rouge, Louisiana

BEFORE: GUIDRY, McCLENDON, AND LANIER, JJ.

Im

LANIER, J.

In this dispute involving a claim for damages for a subsurface trespass,

plaintiffs -appellants, Calvin J. Hill, et al., and intervenors, Roosevelt Hill, et al.

and Felix F. Hill ( sometimes collectively referred to as " the Hills"), challenge the

district court's judgment granting a motion for summary judgment in favor of

defendants, Sunoco Partners Marketing & Terminals, L.P. (" Sunoco Partners"),

Sunoco Logistics Partners Operations G.P., L. L.C. (" Sunoco Logistics"), and

Sunoco, Inc. R & M (" Sunoco, Inc."). For the reasons that follow, we affirm.

The history of this case is familiar as it dates back to 2014 and has

previously been before this court on numerous occasions. Plaintiffs are the owners

of various undivided interests in a 22. 768 -acre tract of immovable property, more

particularly described as being located in the North 1/ 3 of Lot 5, Section 93,

Township 7 South, Range 10 East, Parish of West Baton Rouge (" Hills' property")

Plaintiffs all trace their ownership interests to the Successions of Peter Hill and

Elnora Johnson Hill.

In May 2007, the Louisiana Commissioner of Conservation

Commissioner") granted TMR, a Texas corporation, a pen nit
- to drill for the

minerals on property identified as solely owned by " A. Wilbert's Sons, LLC." On

May X18, 2007, a permit to drill the well designated as " A. Wilbert' s Sons, LLC, 93

No. I" (" the well") was issued, and the well began production in January 2008.

According to plaintiffs, TMR intended to drill directionally to the proposed

coordinates; however, ultimately the bottom of the hole of the well was completed

at a location underneath the Hills' property, without their knowledge or permission.

TMR operated the well until July 1, 2010. Subsequently, the Commissioner

issued an amended permit to drill that designated Park Exploration, Inc. (" Park")

was designated as the second operator of the well. Park, in turn, operated the well

3

until the Commissioner issued an amended permit, effective December 1, 2012,

designating Vitol Resources, Inc. (" Vitol") as the third operator of the well.

In their original petition, plaintiffs named only TMR, Park, and Vitol as

defendants. Plaintiffs claimed that TMR and the two successor operators produced

and sold the minerals drained from the well underneath the Hills' property without

plaintiffs' knowledge or permission. Plaintiffs alleged that TMR had " unlawfully

damaged [ the Hills'] property by performing the subsurface trespass and removing

minerals from beneath [ the Hills'] property, and by converting said minerals to its

use and benefit to the detriment of [plaintiffs]." The same claims were alleged

against Park and Vitol as successor operators. Plaintiffs sought damages, including

the value of all minerals produced by TMR, Park, and Vitol.'

Plaintiffs subsequently filed several supplemental and amending petitions,

adding more parties, as well as modifying and amending their claims. There were

also two interventions in the instant action, one filed by Felix F. Hill, and another

filed by a group collectively referred to as " Roosevelt Hill, et al." Similar to

plaintiffs, these parties claimed to be owners of various undivided interests in the

Hills' property, and also claimed that their interests in the property at issue

devolved from the Successions of Peter Hill and Elnora Hill Johnson. Pertinent to

this appeal are Felix Hill' s first supplemental and amending petition of

intervention, the fourth supplemental and amending petition filed by Roosevelt

Hill, et al., and plaintiffs' fifth supplemental and amending petition, which added

claims against Sunoco Partners, Sunoco Logistics, and Sunoco, Inc. ( collectively

Sunoco"), as a purchaser of oil from the allegedly trespassing operators, Park and

moll

I In a judgment signed on April 10, 2019, the district court granted the Hills' motions for partial
summary judgment against TMR, Park, and Vitol, finding that TMR, Park, and Vitol violated the
provisions of La. Civ. Code art. 667 by producing oil from the well, thereby making them liable
to the Hills for damages pursuant to Article 667.

M

In response to the Hills' claims,
Sunoco filed a motion for summary

judgment, asserting that there was no genuine issue as to any material fact in
dispute with respect to Sunoco and that summary judgment was warranted.

Sunoco argued that its only relationship to the suit was as a third -party buyer of oil

and that it had no obligation under law or contract to pay the Hills any royalty
payments.

The Hills filed an opposition to the motion for summary judgment, arguing

that there were genuine issues of material fact remaining that precluded summary
judgment in this case. The Hills argued that because the operators of the well did

not have the right to obtain, capture, or possess the Hills' oil, they did not have the
authority to sell the oil to Sunoco. Thus, the Hills maintained, they could recover

from Sunoco unless Sunoco was entitled to the protection provided for in La. R.S.

31: 210.
Sunoco and the Hills filed documentary evidence supporting and opposing
the motion for summary judgment.

Following a hearing on the motion for summary judgment, the district court

signed a judgment on July 22, 2019, granting same and dismissing, with prejudice,

all claims filed by the Hills against Sunoco. The Hills filed a timely motion for

new trial and/ or reconsideration of ruling, which was denied by the district court.

This appeal by the Hills followed. The sole issue for our review is whether

the district court legally erred in applying the good faith purchaser defense
provision set forth in La. Civ. Code arts. 521- 524, rather than applying the

provisions of the Mineral Code, specifically, La. R.S. 31: 210, and the registry

mandate contained therein.

SUMMARY JUDGMENT

A motion for summary judgment is a procedural device used to avoid a full-

scale trial when there is no genuine issue of material fact. Georgia- Pacific

Consumer Operations, LLC v. City of Baton Rouge, 2017- 1553 ( La. App. I

61

Cir. 7/ 18/ 18), 255 So. 3d 16, 21, writ denied, 2018- 1397 ( La. 12/ 3/ 18), 257 So. 3d

194. After an opportunity for adequate discovery, a motion for summary judgment

shall be granted if the motion, memorandum, and supporting documents show that

there is no genuine issue as to material fact and that the mover is entitled to

judgment as a matter of law. La. Code Civ. P. art. 966( A)(3). Because the

applicable substantive law determines materiality, whether a particular fact in

dispute is material must be viewed in light of the substantive law applicable to the

case. Bryant v. Premium Food Concepts, Inc., 2016- 0770 ( La. App. I Cir.

4/ 26/ 17), 220 So. 3d 79, 82, writ denied, 2017- 0873 ( La. 9/ 29/ 17), 227 So. 3d 288.

The burden of proof rests with the mover. Nevertheless, if the mover will

not bear the burden of proof at trial on the issue that is before the court on the

motion for summary judgment, the mover's burden on the motion does not require

him to negate all essential elements of the adverse party' s claim, action, or defense,

but rather to point out to the court the absence of factual support for one or more

elements essential to the adverse party' s claim, action, or defense. The burden is

on the adverse party to produce factual support sufficient to establish the existence

of a genuine issue of material fact or that the mover is not entitled to judgment as a

matter of law. La. Code Civ. P. art. 966( D)( 1).

In reviewing the trial court's decision on a motion for summary judgment,

this court applies a de novo standard of review using the same criteria applied by

the trial courts to determine whether summary judgment is appropriate. Jackson

v. Wise, 2017- 1062 ( La. App. I Cir. 4/ 13/ 18), 249 So. 3d 845, 850, writ denied,

2018- 0785 ( La. 9/ 21/ 18), 252 So. 3d 914. Factual inferences reasonably drawn

from the evidence must be construed in favor of the party opposing a motion for

summary judgment, and all doubt must be resolved in the opponent' s favor.

Thompson v. Center for Pediatric and Adolescent Medicine, L.L. C., 2017-

I

1088 ( La. App. I Cir. 3/ 15/ 18), 244 So3d 441, 445, writ denied, 2018- 0583 ( La.

6/ 1/ 18), 243 So. 3d 1062.

DISCUSSION

In the instant case, the Hills' claims against Sunoco are based on Sunoco's

purchase of oil from Park and Vitol. According to pleadings, Sunoco allegedly

purchased illegal oil without valid title, division orders and without protection

under La. R.S. 31: 210 due to said Defendants' failure to file notice in the registry

of West Baton Rouge Parish that the minerals were being purchased by them." It

is further alleged that Sunoco is solidarity liable with other defendants named in

this matter for its " failure to investigate, check title, and perforin due diligence or

determine the actual ownership of the oil produced from the trespassing well prior

to the transfer or sale of [the Hills'] oil to others."

In granting Sunoco' s motion for summary judgment, the district court found

that Sunoco was a good faith purchaser of oil, noting that there was no " actual

knowledge or any imputed knowledge that Sunoco had reason to believe that the

seller of the oil wasn' t the actual owners of the oil," preventing liability on the part

of Sunoco. In denying the Hills' motion for new trial and/ or reconsideration, the

district court held that La, R.S. 31: 210 did not apply to Sunoco.

On appeal, the Hills argue that the district court " applied the ' good faith

doctrine' found in [ La. Civ.] Code art, 524, and erroneously gave precedence to the

Civil Code over the Mineral Code." The Hills maintain that in this case, the

Louisiana Civil Code is preempted by the Mineral Code and that the district court

failed to correctly apply the law clearly defined in La. R. S. 31: 210. They further

argue that because Sunoco failed to file notice of its contracts to purchase oil from

both Park and Vitol pursuant to La. R. S. 31: 210, Sunoco is not entitled to the

protection provided therein.

7

Sunoco counters that the Louisiana Civil Code provides " for the ' good faith

purchaser' defense as a general matter in all sales transactions involving movables

not required by law to be registered and, importantly, contain[ s] no exclusion for

transactions involving oil sales." Sunoco further argues that based on the history

of La. R.S. 31.-210, the " last record owner" protection of La. R.S. 31: 210 has only

been applied to the specific situation involving a third -party purchaser buying oil
Z:)

or gas from the lessee of the " last record owner" of the property from which

production was obtained where the purchaser has not been made aware that there

was a title dispute concerning the actual title of the " last record owner." Thus,

Sunoco maintains, there is no conflict between the Mineral Code and Louisiana

Civil Code articles in this instance, and the district court correctly applied La. Civ.

Code arts. 522- 524 in holding that Sunoco was protected from the Hills' claims as a

good faith purchaser. We agree.
1

The good faith purchaser doctrine as it relates to movables is codified in La.

Civ. Code arts. 518 and 521- 525. " These articles were meant to carve out an

exception to the foundational rule protecting owners established in [ Louisiana Civ.

Code art,] 2452, which provides, ' The sale of a thing belonging to another does not

convey ownership."' Sinclair, The Louisiana Good Faith Purchaser Doctrine:

Codified Confusion, 89 Tul. L. Rev. 517, 522 ( 2014). Louisiana Civil Code article

521 provides, in pertinent part, " One who has possession of a lost or stolen thing

may not transfer its ownership to another. For purposes of this Chapter, a thing is

stolen when one has taken possession of it without the consent of its owner."

Pursuant to Article 522, a good faith purchaser acquires ownership of a

movable even if the title of the transferor is annulled on account of a vice of

consent. La. Civ. Code art. 522. For the purposes of the good faith purchaser

doctrine, a person is in good faith " unless he knows, or should have known, that

n.

the transferor was not the owner." La. Civ. Code art, 523. Comment ( b) of Article

523 is instructive, stating:

A transferee is in good faith when he ignores, without fault on his
part, that the transferor is not the owner of the movable. If the acquirer
has notice of facts that would put a reasonably prudent man on
inquiry, he is under duty to investigate with the view to ascertaining
the true situation. If he does not do so, he cannot claim that he is a
purchaser in good faith. [ Citation omitted.]

Article 524 provides that if a good faith purchaser buys a lost or stolen

movable at a public auction or from a merchant who customarily sells similar

things, the owner must reimburse the purchaser for the purchase price in order to

recover the thing. La. Civ. Code art. 524. " These articles reflect a change in

public policy, as enunciated by the legislature, to the effect that the good faith

purchaser of a stolen movable is to be protected at the expense of the true owner."

Brown & Root, Inc. v. Southeast Equipment Co., Inc., 470 So. 2d 516, 517 ( La.

App. I Cir. 1985) ( citing Southeast Equipment Co., Inc. v. Office of State

Police, 437 So.2d 1184 ( La. App. 4 Cir. 1983). Because good faith is presumed,

the true owner must establish sufficient facts to show the purchaser was put on

notice his seller's ownership was questionable. Brown & Root, Inc., 470 So. 2d at

518.

With regard to the relationship between the Mineral Code and the Louisiana

Civil Code, La. R. S. 31: 2 provides as follows:

The provisions of this Code are supplementary to those of the
Louisiana Civil Code and are applicable specifically to the subject
matter of mineral law. In the event of conflict between the provisions
of this Code and those of the Civil Code or other laws the provisions
of this Code shall prevail. If this Code does not expressly or
impliedly provide for a particular situation, the Civil Code or other
laws are applicable.

Moreover, La. R.S. 31: 210 provides for a process whereby a purchaser is protected

in making payment to any party in interest under a mineral lease. The statute

provides as follows:

9

A purchaser of minerals produced from a recorded lease
granted by the last record owner holding under an instrument
translative of title to the land or mineral rights leased is fully protected
in making payment to any party in interest under the lease unless and
until a suit is filed testing title to the land or mineral rights embraced
in the lease and the purchaser receives notification of it by registered
mail. The purchaser is not entitled to this protection unless he has
filed for registry in the conveyance records of the parish in which the
land subject to the lease is located notice that the minerals produced
have been and will be purchased by him.

In its motion for summary judgment, Sunoco argued that it was not an

operator or a mineral lessee, but rather it was a third -party purchaser of oil.

Furthermore, Sunoco averred that each of the operators from whom Sunoco

purchased oil guaranteed and warranted that it had title to the oil Sunoco

purchased. Sunoco asserted that the Hills' negligence claim against it fails because

Sunoco owed no duty to the Hills and the Hills had no independent damages

against Sunoco.' Sunoco supported the motion with several exhibits, including

two affidavits, the Hills' responses to discovery propounded by Sunoco, and a copy

of plaintiffs' fifth supplemental and amending petition.

In his affidavit, Eric G. Koelling, the Senior Manager for Sunoco Partners,

attested that Sunoco never drilled, operated, or produced any oil from the well or

had any control over such activities. Moreover, Mr. Koelling indicated that

Sunoco never entered into any mineral lease covering any portion of the Hills'

property, nor did it ever enter into any contract with the Hills. Rather, according to

Mr. Koelling and the exhibits attached to his affidavit, Sunoco purchased oil from

the well pursuant to purchase agreements it had with Park and Vitol, both of which

provided a warranty of title to Sunoco.

In opposition to the motion for summary judgment, the Hills state that their

claims against Sunoco arise not under a duty/risk analysis or a contract between the

2 Sunoco noted that there were other elements of the duty -risk analysis that the Hills could not
satisfy. However, for simplicity, Sunoco focused on the " duty" and " damages" elements
In

acknowledging that a negative answer to any single element would result in no liability.

In

Hills and Sunoco, but rather under the obligations found in La. Civ. Code arts,

2438, etseq. Citing Article 2452, the Hills argued that Park and Vitol had neither

title nor the right to extract and possess the oil from the well. Thus, the Hills

alleged Park and Vitol had no authority to sell the oil to Sunoco, entitling the Hills

to recovery from Sunoco unless Sunoco is entitled to the protection afforded under

La. R.S. 31: 210. The Hills further contended that La. R.S. 31: 18 supported their

position in that it mandates "[ a]]] sales, contracts, and judgments affecting mineral

rights are subject to the laws of registry." La. R.S. 31: 18. The Hills noted that

Sunoco chose not to record notice that it was purchasing oil from the well and,

thus, is not entitled to the statutory protection of La. R.S. 31: 210. In support of

their argument, the Hills adopted five pages from one of the exhibits introduced by

Sunoco. In addition, they introduced an affidavit and Sunoco' s responses to

interrogatories, request for production of documents, and request for admissions

propounded by the Hills.

From our de novo review of the evidence submitted for purposes of the

motion for summary judgment, we find that Sunoco met its burden of pointing out

the absence of factual support for one or more elements essential to the Hills'

negligence claim. The Hills have failed to come forward with sufficient evidence

precluding summary judgment. Relying on the undisputed facts, the district court

found that pursuant to the Louisiana Civil Code, Sunoco was a good faith

purchaser of the oil and that La. R.S. 31: 210 did not apply to Sunoco. We find no

error of law by the district court in its findings. The Hills did not produce any

evidence to dispute Sunoco' s good faith purchaser status.

Moreover, based on the facts and circumstances of this case, the Hills'

argument that the registry mandate of La. R.S. 31: 210 preempts the provisions of

the Louisiana Civil Code has no merit. The Hills point to the title of Chapter 13,

Part 2 of the Mineral Code, " Protection of Purchasers of Production," as support

or their position that La. R.S. 31: 210 specifically applies to this case and that it

provides certain protection to purchasers of oil, but only if the registry mandate is

satisfied. Thus, the Hills aver, pursuant to La. R.S. 31: 2, the Mineral Code must

prevail.

We find, however, that La. R.S. 31: 210 does not apply to the instant case.

All claims made by the Hills are derived from the alleged subsurface trespass,

which are separate and distinct from the " recorded lease” over the lands of "A.

Wilbert's Sons, LLC." The purpose and intent of La. R.S. 31: 210 is to address

rental and royalty payments due to parties holding an interest in the " leased

property" when a dispute or defect in the title exists.

Pursuant to La. R.S. 31: 12, the Mineral Code provides that a landowner

may protect his rights in minerals against trespass, damage, and other wrongful

acts of interference by all means available for the protection of ownership."

Furthermore, we have been unable to find any provision in the Mineral Code that

expressly or impliedly" applies to the purchase of oil produced from the property

of an unleased mineral owner, nor have the parties directed us to any such

provision. Thus, the district court correctly applied the Louisiana Civil Code good

faith purchaser doctrine to Sunoco in granting summary judgment in favor of

Sunoco and dismissing the Hills' claims. See La. R.S. 31: 2. It is clear from the

record facts that Sunoco is a good faith third -party purchaser.

Furthermore, with regard to the Hills' argument concerning the applicability

of Article 2452 to their claims against Sunoco, Louisiana law is well settled that oil

and gas in place are fugitive minerals not subject to ownership by the owner of the

land. See Burley v. Sunbelt Royalty, Inc., 534 So. 2d 101, 103 ( La. App. 3 Cir.

1988); see also Frost -Johnson Lumber Co. v. Salling' s Heirs, 150 La. 756, 91

So. 207 ( 1922); Wernple v. Nabors Oil & Gas Co., 154 La. 483, 97 So. 666, 668-

669 ( 1923). The landowner does have the right to draw the minerals through the

12

soil and bring them into his possession. Breaux v. Pan Am. Petroleum Corp.,

163 So. 2d 406, 409 ( La. App. 3 Cir. 1964). However, until they are in his

possession, he is not the owner of the fugitive minerals. Burley 534 So.2d at 103.

Thus, based on this jurisprudence, it is clear that any attempt to get to Sunoco

through an argument that the Hills owned the oil that Park and Vital sold to

Sunoco fails as well,

CONCLUSION

For the above and foregoing reasons, we affirm the July 22, 2019 judgment

of the district court, granting summary judgment in favor of defendants, Sunoco

Partners Marketing & Terminals, L.P., Sunoco Logistics Partners Operations G.P.,

L.L.C., and Sunoco, Inc. R & M., and dismissing, with prejudice, all claims filed

by plaintiffs -appellants, Calvin J. Hill, et al., and intervenors, Roosevelt Hill, et al.

and Felix F. Hill, against these defendants We assess all costs of this appeal

against plaintiffs -appellants.

13

STATE OF LOUISIANA

COURT OF APPEAL

FIRST CIRCUIT

NUMBER 2020 CA 0667

CALVIN J. HILL, INDIVIDUALLY AND AS THE EXECUTOR OF THE
SUCCESSION OF ELNORA JOHNSON HILL

VERSUS

TMR EXPLORATION, INC., PARKER EXPLORATION, INC., AND VITOL
RESOURCES, INC.

GUIDRY, J., dissents with reasons.

GUIDRY, J., dissenting.

I respectfully disagree with the majority opinion. I would find that La. R. S.

3 1: 2 10 applies, as the defendant is a purchaser of minerals produced as a result of a

recorded lease. The ownership of said minerals are now disputed. The defendant

can only be protected by registration of that purchase in the parish records. There is

no good faith exception under La. R. S. 31: 210. Furthermore, this specific

provision, dealing with the purchase of minerals, conflicts with and trumps the

more general civil code provision and its good faith exception. For these reasons, I

respectfully dissent.