Covey Park Gas, LLC v. Bull Run Acquisitions II, LLC and Beaver River Resources

Judgment rendered January 13, 2021.
Application for rehearing may be filed
within the delay allowed by Art. 2166,
La. C.C.P.

No. 53,670-CA

COURT OF APPEAL
SECOND CIRCUIT
STATE OF LOUISIANA

*****

COVEY PARK GAS, LLC Plaintiff-Appellant

versus

BULL RUN ACQUISITIONS II, LLC Defendant-Appellees
AND BEAVER RIVER
RESOURCES, ET AL.

*****

Appealed from the
Forty-Second Judicial District Court for the
Parish of DeSoto, Louisiana
Trial Court No. 80,436

Honorable Amy Burford McCartney, Judge

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SHUEY SMITH, LLC Counsel for Appellant
By: Richard E. Hiller Beaver River Resources

OTTINGER HEBERT, LLC Counsel for Appellee
By: J. Michael Fussell Bull Run Acquisitions
Ryan P. McAlister

HARGROVE SMELLEY & STRICKLAND Counsel for Appellee
By: Jonathan J. Rose Covey Park Gas, LLC

JOHN S. EVANS Counsel for Appellee
James Burdick

CYNTHIA LOUISE BURDICK-BURNS In Proper Person
CHARLES J. BARLOW In Proper Person
TAMARA C. BARLOW-RUGGLES In Proper Person
JACQUELINE K. MACKEY In Proper Person

*****
Before MOORE, GARRETT, and BLEICH (Pro Tempore), JJ.

MOORE, C.J.

Beaver River Resources (“BRR”), an Oklahoma partnership, appeals a

partial summary judgment that dismissed it from a concursus claim

involving mineral royalties from two tracts of land in DeSoto Parish.

In 2008, Covey Park Gas became the unit operator of HA RA SU61, a

unit in DeSoto Parish. It drilled three wells which are drawing production

from three tracts within the unit, and it began paying royalties to BRR, the

apparent mineral owner of the tracts. However, in 2019, Covey Park

received a demand letter from another entity, Bull Run Acquisitions II LLC

(“Bull Run”), claiming that it owned the minerals for two of the tracts.

Covey Park suspended royalty payments, filed this concursus against Bull

Run, BRR, and various absentee claimants, and began placing royalties in

the court registry. Bull Run filed a motion for partial summary judgment to

dismiss BRR’s claim. The district court granted this, and BRR has appealed.

For the reasons expressed, we affirm.

FACTUAL BACKGROUND

The subject property is an undivided mineral interest (11.4285 mineral

acres) in two tracts in DeSoto Parish, described as follows (with emphasis

added, here and below):

South Half of the Southwest Quarter (S/2 of SW/4) of
Sec. 32, T 14 N, R 15 W, DeSoto Parish, La.

South Half of the Northeast Quarter of the Southwest Quarter
(S/2 of NE/4 of SW/4) of Sec. 32, T 14 N, R 15 W, DeSoto Parish, La.

The common ancestor for these rights was Mrs. Naomi Brewer, of

Hot Springs, Arkansas, who bought a 2/7 mineral interest in the subject

property in 1946. She also bought a 2/7 mineral interest in a third tract:

South Half of the Southeast Quarter (S/2 of SE/4) of
Sec. 32, T 14 N, R 15 W, DeSoto Parish, La.

Mrs. Brewer died in 2005; her will gave her Louisiana assets to Bank

of America, as trustee for her various nieces, nephews, and other collateral

heirs. In the succession proceeding, Bank of America filed a detailed

descriptive list that referred to an undivided mineral interest in “319.09 acres

more or less in the West one-half (W/2)” of Sec. 32, “including that certain

0.01116100 RI in the LaGrone-Tucker Well.” The court rendered judgment

to close the succession, transferring the described assets to Bank of America.

This judgment was filed in the succession proceeding but not in the

conveyance records of DeSoto Parish.

Bank of America listed Mrs. Brewer’s property on EnergyNet.com.

BRR bought it at auction, receiving an “Oil and Gas Deed” from Bank of

America, effective September 1, 2008. However, the Oil and Gas Deed

described the subject property as follows:

DESOTO PARISH, LOUISIANA
2/7THS MI 11.4285 ACS NW4 SE4 SEC 32-14N-15W 1/8 RI
LAGRONE-TUCKER

The Oil and Gas Deed was filed in the conveyance records, and

notably omitted describing anything in the Southwest Quarter.

Around this same time, at the height of the Haynesville Shale play,

Covey Park became the unit operator and drilled three wells that have been

producing since 2008. Covey Park began paying royalties to BRR.

In September 2018, Bank of America sued to reopen Mrs. Brewer’s

succession. It alleged that it “recently [came] to the petitioner’s attention”

that the Oil and Gas Deed described only the tract in the Southeast Quarter,

whereas Mrs. Brewer’s deeds also described the subject property, two tracts

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in the Southwest Quarter. Bank of America sought judgment to distribute

these “remaining trust assets” to 16 named beneficiaries. The court rendered

judgment to this effect on September 20, 2018, and the judgment was filed

in the conveyance records.

At this point, Bull Run entered the scene, approaching the dispersed

(seven different states) beneficiaries and negotiating with them to buy all

their interest in the subject property, without warranty. Between October

and December 2018, Bull Run executed identical mineral deeds describing

the two tracts in the Southwest Quarter. Citing these mineral deeds, Bull

Run sent a demand letter, R.S. 31:137, to Covey Park in February 2019.

Covey Park responded that it was already paying BRR, but something was

wrong. It filed this concursus in May 2019.

PROCEDURAL HISTORY

Bull Run immediately answered and alleged that BRR’s Oil and Gas

Deed did not describe the subject property, only the adjacent tract in the

Southeast Quarter. By contrast, Bull Run’s mineral deeds did describe the

subject property, the two tracts in the Southwest Quarter.

BRR answered, asserting that it “acquired, and believes it acquired,”

the subject property.

Bull Run filed this motion for partial summary judgment seeking to

dismiss BRR on grounds that (1) the Oil and Gas Deed did not transfer any

interest in the subject property to BRR, and (2) the property description in

the Oil and Gas Deed did not describe the subject property sufficiently to

place third parties on notice. In support, it attached the affidavit of its

registered agent, Russell Busby; copies of the title documents (Mrs.

Brewer’s 1946 mineral deeds, BRR’s Oil and Gas Deed, the 2018 judgment
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of possession); the letters between Bull Run and Covey Park; and the

petition for concursus and BRR’s answer.

BRR opposed the motion. It conceded that its Oil and Gas Deed

conveyed only one of Mrs. Brewer’s three tracts and omitted the subject

property; the succession had been reopened to distribute the subject property

to the beneficiaries; and those beneficiaries sold their interest to Bull Run. It

argued, however, that both BRR and Bank of America had intended to

convey all three tracts to BRR, and the error was discovered only in 2018.

In support, it showed that its petition to close Mrs. Brewer’s succession, and

the judgment of possession, both described all three tracts; it contended that

the discrepancy between these documents and the Oil and Gas Deed should

have placed any third person on notice that the latter was in error. BRR also

argued that the Oil and Gas Deed was “subject to reformation,” in light of

the evidence; that Bull Run would be bound by the reformed Oil and Gas

Deed; and that Bull Run was in bad faith because it “took advantage” of the

mistake in the Oil and Gas Deed. In support, it offered the affidavit of its

principals, Dan Janzen and Mike Reddick, asserting their intent to acquire

the subject property by auction in 2008, and several documents already

offered by Bull Run.

After a hearing in January 2020, the court granted Bull Run’s motion

and rendered judgment dismissing BRR as a claimant, with findings that the

Oil and Gas Deed (1) did not convey any mineral interests in the Southwest

Quarter, and (2) did not sufficiently describe the subject property. The court

designated this a final judgment, immediately appealable, La. C.C.P. art.

1915 B(1).

BRR appealed suspensively.
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APPLICABLE LAW

The motion for summary judgment is a procedural device used when

there is no genuine issue of material fact for all or part of the relief prayed

for by a litigant. Peironnet v. Matador Res. Co., 12-2292 (La. 6/28/13), 144

So. 3d 791; Bank of America NA v. Green, 52,044 (La. App. 2 Cir. 5/23/18),

249 So. 3d 219. The motion shall be granted if the motion, memorandum,

and supporting documents show that there is no genuine issue of material

fact and that the mover is entitled to judgment as a matter of law. La. C.C.P.

art. 966 A(3). The summary judgment procedure is designed to secure the

just, speedy, and inexpensive determination of actions; it is favored and must

be construed to accomplish these ends. La. C.C.P. art. 966 A(2). Review of

summary judgments is de novo. Murphy v. Savannah, 18-0991 (La. 5/8/19),

282 So. 3d 1034; J & L Oil Co. v. KM Oil Co., 51,898 (La. App. 2 Cir.

2/28/18), 247 So. 3d 147.

Reformation of instruments is an equitable remedy which lies only to

correct mistakes or errors in written instruments when such instruments, as

written, do not express the true contract of the parties. Merritt v. Hays, 237

La. 557, 111 So. 2d 771 (1959); Lewis v. Saucer, 26,685 (La. App. 2 Cir.

4/5/95), 653 So. 2d 1254. It is a personal action, even when applied to real

estate, in which the burden is on the person seeking reformation to establish

the mutual error or mistake by clear and convincing proof, parol evidence

being admissible for this purpose. Id. A written instrument may be

reformed to make it express truly and correctly the intention of the parties,

provided the rights of third parties have not intervened. Reynaud v. Bullock,

195 La. 86, 196 So. 29 (1940); Lewis v. Saucer, supra. An instrument may

not be reformed or corrected to the prejudice of third parties who are
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authorized to rely on the integrity of the instrument or who have relied on

the public records. Id. The action for reformation is subject to ten years’

liberative prescription. La. C.C. art. 3499; Tealwood Props. LLC v.

Succession of Graves, 45,975 (La. App. 2 Cir. 4/27/11), 64 So. 3d 397;

Ward’s Creek Inv’rs LLC v. L & C Baton Rouge LLC, 2018-1258 (La. App.

1 Cir. 5/24/19), 277 So. 3d 1187.

The Louisiana public records doctrine is generally set forth in La.

C.C. art. 3338, which provides, in pertinent part:

The rights and obligations established or created by the
following written instruments are without effect as to a third
person unless the instrument is registered by recording it in the
appropriate mortgage or conveyance records pursuant to the
provisions of this Title:

(1) An instrument that transfers an immovable or
establishes a real right in or over an immovable.

Under this doctrine, a third person need only look to the public

records to determine adverse claims. Compass Energy Oper. LLC v. Robena

Prop. & Royalty Co., 52,468 (La. App. 2 Cir. 2/27/19), 265 So. 3d 1160;

Carr v. Oaktree Apts., 45,514 (La. App. 2 Cir. 8/11/10), 46 So. 3d 793, writ

denied, 10-2092 (La. 11/12/10), 49 So. 3d 896. The primary focus of the

public records doctrine is the protection of third persons from unrecorded

interests. Cimarex Ener. Co. v. Mauboules, 09-1170 (La. 4/9/10), 40 So. 3d

931. Because it does not create rights but rather denies the effect of certain

rights unless they are recorded, the public records doctrine is referred to as a

negative doctrine. Id.; Carr v. Oaktree Apts., supra.

The description in a deed must be such that the property intended to

be conveyed can be located and identified, and the general rule is that the

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description must fully appear within the four corners of the instrument itself,

or that the deed should refer to some map, plat, or other deed as part of the

description, so that the description may be clear. Quality Envtl. Processes

Inc. v. I.P. Petroleum Co., 13-1582 (La. 5/7/14), 144 So. 3d 1011, 184 Oil &

Gas Rep. 690; Taylor v. Dumas, 48,055 (La. App. 2 Cir. 5/15/13), 115 So.

3d 755, writ denied, 13-1715 (La. 11/1/13), 125 So. 3d 432. The courts have

not established precise criteria to determine whether a property description is

sufficient; rather, they take every case on its own facts and apply a liberal

construction so as to sustain, rather than defeat, the conveyance. Quality

Envtl. Processes v. I.P. Petroleum, supra; Nitro Energy LLC v. Nelson

Energy Inc., 45,201 (La. App. 2 Cir. 4/14/10), 34 So. 3d 524, 177 Oil & Gas

Rep. 648.

DISCUSSION

By its first assignment of error, BRR urges the district court erred by

finding, as a matter of law, that the Oil and Gas Deed did not convey the

subject property to BRR, as BRR’s “unresolved prospective claim for

reformation” of the Oil and Gas Deed created a genuine issue for trial.

BRR first argues that the existence of a viable prospective claim for

reformation creates a genuine issue, as in Dunn v. Pons, 03-1486 (La. App. 5

Cir. 4/27/04), 873 So. 2d 811, Western v. Stoot, 05-186 (La. App. 5 Cir.

10/6/05), 916 So. 2d 1195, and Washington v. Montgomery Ward Life Ins.

Co., 25,921 (La. App. 2 Cir. 6/22/94), 640 So. 2d 822, writ denied, 94-2302

(La. 11/18/94), 646 So. 2d 385. BRR concedes that these cases were all

insurance coverage claims in which an insured defeated summary judgment

by showing that the policy did not reflect his true intent and that he could

possibly reform it. However, BRR submits that deeds are subject to the
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same rules of interpretation as insurance policies, as stated in Ford v. Lester,

48,932 (La. App. 2 Cir. 5/14/14), 139 So. 3d 22, writ denied, 14-1567 (La.

11/7/14), 152 So. 3d 175, and DeMoss v. Pine Hills Golf & Country Club

Inc., 42,033 (La. App. 2 Cir. 4/4/07), 954 So. 2d 316.

BRR next argues that the affidavit of its principals, Janzen and

Reddick, clearly established that BRR intended to acquire all three of Mrs.

Brewer’s tracts, including the subject property. In light of this fact, and the

obvious discrepancy between the succession papers and the Oil and Gas

Deed, BRR submits that it could easily win a suit for reformation against

Bank of America. Finally, it submits that such a suit would be timely, as the

10-year prescriptive period did not begin to run until BRR discovered the

error. In support, it cites Ward’s Creek Inv’rs v. L & C Baton Rouge, supra.

On de novo review, we find that BRR’s theoretical claim for

reformation of the Oil and Gas Deed does not create a genuine issue of

material fact. A written instrument may not be reformed or corrected to the

prejudice of third parties who relied on the integrity of the instrument or on

the public records. Reynaud v. Bullock, supra; Lewis v. Saucer, supra. To

reform the Oil and Gas Deed to add the subject property would obviously

prejudice Bull Run, which relied on public records showing that the subject

property belonged to somebody else, from whom it acquired title. This fact

distinguishes the case from the two-party claims in Dunn v. Pons, supra,

Washington v. Montgomery Ward Life Ins., supra, and the other insurance

coverage cases cited by BRR.

Moreover, the Oil and Gas Deed was executed August 11, effective

September 1, 2008. By the time Covey Park filed its concursus, in May

2019, the action for reformation had prescribed, as it must be brought within
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10 years. La. C.C. art. 3499; Tealwood Props. v. Succession of Graves,

supra. BRR correctly shows that the prescriptive period does not begin to

run until the party seeking reformation discovers or should have discovered

the error. Agurs v. Holt, 232 La. 1026, 95 So. 2d 644 (1957); Ward’s Creek

Inv’rs v. L & C Baton Rouge, supra. However, BRR’s theory of the case is

that the description in the Oil and Gas Deed is so deficient that Bull Run

should have recognized the error on the face of the document; if this is so,

then it was facially deficient enough to place BRR on the same notice, on the

date of execution. In that event, prescription has tolled.

Finally, we observe that if BRR had actually filed a petition for

reformation, this would have entailed a notice of pendency of action, La.

C.C.P. art. 3752, and subjected the concursus to lis pendens until the claim

of reformation could be resolved. BRR’s decision to forgo this basic

procedure reinforces our de novo finding that the rights of third parties and

the running of prescription would negate the action for reformation.

On this record, the “prospective claim” for reformation does not

create a genuine issue of material fact that would bar summary judgment.

This assignment of error lacks merit.

By its second assignment of error, BRR urges the court erred by

finding, as a matter of law, that the Oil and Gas Deed did not describe the

subject property sufficiently to put third parties on notice that the subject

property was intended to be transferred, when the Oil and Gas Deed is

coupled with the documents filed in Ms. Brewer’s succession. BRR

concedes that the Oil and Gas Deed “did not perfectly describe” the subject

property, but argues that the correct description, in the succession papers,

placed a reasonable buyer on notice that Bank of America intended to sell
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the subject property to BRR. BRR submits that even a faulty property

description may be adequate, “if it is not so inaccurate or faulty as to be

misleading,” Carr v. Oaktree Apts., supra; Compass Energy Oper. v.

Robena Prop. & Royalty Co., supra. Finally, BRR suggests that because

Bull Run could have discerned the true intent of the Oil and Gas Deed, it is

not an “innocent purchaser” but took title at the peril of BRR’s claim.

Compass Energy Oper. v. Robena Prop. & Royalty Co., supra; Burt v.

Valois, 144 So. 2d 196 (La. App. 1 Cir. 1962).

Third persons need only look to the appropriate mortgage or

conveyance records to determine adverse claims. La. C.C. art. 3338; Carr v.

Oaktree Apts., supra. The summary judgment evidence shows that Bank of

America’s petition to transfer assets and close succession, and the resulting

judgment, were filed in the suit record of the succession proceeding, but not

in the conveyance records. Documents filed only in a suit record, and not in

the conveyance records, do not place third parties on notice. Camel v.

Waller, 526 So. 2d 1086 (La. 1988); Biggs v. Hatter, 46,910 (La. App. 2 Cir.

4/11/12), 91 So. 3d 1148, writ denied, 12-1075 (La. 9/21/12), 98 So. 3d 337.

On de novo review, we find no properly recorded instrument with a property

description that would have placed Bull Run on notice as to a potential title

claim, thus distinguishing the case from Compass Energy v. Robena Prop.

and Burt v. Valois, supra.

Finally, we have considered whether the Oil and Gas Deed may be

interpreted to describe the subject property, given the courts’ liberal

construction of deeds to give effect to transfers, Quality Envtl. Processes v.

I.P. Petroleum, supra; Nitro Energy v. Nelson Energy, supra. Various cases

have reformed deeds, or fixed boundaries, when an inaccurate description in
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the deed can be corrected by examining geographical landmarks or human

constructions, Agoff v. Boutte, 420 So. 2d 1168 (La. App. 5 Cir. 1982), and

Dupont v. Percy, 28 So. 2d 359 (La. App. 1 Cir. 1946); by the presence of

“other descriptive designations” in the deed, Snelling v. Adair, 196 La. 624,

199 So. 782 (1941); or by the incorporation by reference of exhibits or maps,

Quality Envtl. Processes v. I.P. Petroleum, supra; Compass Energy Oper. v.

Robena Prop. & Royalty Co., supra. However, a deed that describes a

different tract from the one intended is ineffective as to third parties, Quatre

Parish Co. v. Beauregard Parish Sch. Bd., 220 La. 592, 57 So. 2d 592

(1952); Roberson v. Chance, 50,169 (La. App. 2 Cir. 11/18/15), 182 So. 3d

203, writ denied, 16-0253 (La. 4/4/16), 190 So. 3d 1208; Ryan v. Lee,

38,352 (La. App. 2 Cir. 4/14/04), 870 So. 2d 1137, writ denied, 04-1531 (La.

10/1/04), 883 So. 2d 991.

The Oil and Gas Deed described a tract in the Southeast Quarter of

Section 32, with no reference to geographical features, constructions,

exhibits or maps, or “other descriptive designations.” On de novo review,

we find the description inadequate to affect two completely different tracts

in the Southwest Quarter of Section 32. The district court did not err in

finding no genuine issue of material fact on this question. This assignment

of error lacks merit.

CONCLUSION

For the reasons expressed, the judgment is affirmed. All costs are to

be paid by the appellant, Beaver River Resources.

AFFIRMED.

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