John C. Duck v. Hunt Oil Company

STATE OF LOUISIANA
COURT OF APPEAL, THIRD CIRCUIT

13-628

JOHN C. DUCK

VERSUS

HUNT OIL COMPANY, ET AL.

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APPEAL FROM THE
SEVENTH JUDICIAL DISTRICT COURT
PARISH OF CONCORDIA, NO. 45,505
HONORABLE GLEN W. STRONG, DISTRICT JUDGE

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PHYLLIS M. KEATY
JUDGE

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Court composed of John D. Saunders, Shannon J. Gremillion, and Phyllis M.
Keaty, Judges.

REVERSED AND REMANDED.

James J. Davidson, III
Christopher J. Piasecki
Davidson, Meaux, Sonnier,
McElligott, Fontenot, Gideon & Edwards
Post Office Drawer 2908
Lafayette, Louisiana 70502
(337) 237-1660
Counsel for Plaintiff/Appellant:
John C. Duck

V. Russell Purvis
Smith, Taliaferro & Purvis
Post Office Box 298
Jonesville, Louisiana 71343
(318) 339-8526
Counsel for Plaintiff/Appellant:
John C. Duck

J. Michael Veron
J. Rock Palermo
Alonzo P. Wilson
Veron, Bice, Palermo & Wilson, LLC
Post Office Box 2125
Lake Charles, Louisiana 70602-2125
(337) 310-1600
Counsel for Plaintiff/Appellant:
John C. Duck

Albert M. Hand, Jr.
Scott L. Zimmer
James R. Sterritt
Ryan C. Williams
Cook, Yancy, King & Galloway
Post Office Box 22260
Shreveport, Louisiana 71120-2260
(318) 221-6277
Counsel for Defendant/Appellee:
Hunt Oil Company

Alex L. Andrus, III
James T. Guglielmo
Guglielmo, Lopez, Tuttle,
Hunter & Jarrell, L.L.P.
Post Office Drawer 1329
Opelousas, Louisiana 70571-1329
(337) 948-8201
Counsel for Defendant/Appellee:
Harvest Petroleum, Inc.

Leonard L. Kilgore, III
Esteban Herrera, Jr.
L. Victor Gregoire
Melissa M. Cresson
Richard D. McConnell, Jr.
Victor J. Suane, Jr.
Kean Miller LLP
Post Office Box 3513
Baton Rouge, Louisiana 70821-3513
(225) 387-0999
Counsel for Defendant/Appellee:
Chevron U.S.A., Inc.

Michael R. Phillips
Louis M. Grossman
Kean Miller LLP
909 Poydras Street, Suite 1400
New Orleans, Louisiana 70112
(504) 585-3050
Counsel for Defendant/Appellee:
Chevron U.S.A., Inc.

John P. Wolff, III
Nancy B. Gilbert
Stephen M. Whitlow
Martin E. Golden
Keogh, Cox & Wilson, Ltd.
Post Office Box 1151
Baton Rouge, Louisiana 70821
(225) 383-3796
Counsel for Defendant/Appellee:
David New Operating Co., Inc.

Morgan J. Wells, Jr.
Evan J. Godofsky
Larzelere Picou Wells Simpson Lonero, LLC
3850 N. Causeway Boulevard, Suite 1100
Metairie, Louisiana 70002
(504) 834-6500
Counsel for Defendant/Appellee:
Radzewicz Operating Corporation

James C. McMichael, Jr.
McMichael, Medlin, D’Anna, Wedgeworth & Lafargue, L.L.C.
Post Office Box 72
Shreveport, Louisiana 71101-0072
(318) 221-1004
Counsel for Defendant/Appellee:
Seagull Operating Co., Inc.

Paul M. Adkins
Blanchard, Walker, O’Quin & Roberts
Post Office Drawer 1126
Shreveport, Louisiana 71163-1126
(318) 221-6858
Counsel for Defendant/Appellee:
Pinnacle Operating Co., Inc.

KEATY, Judge.

Property owner appeals the trial court’s judgment granting motions for

summary judgment and exceptions of no cause of action and no right of action in

favor of the defendants. For the following reasons, we reverse and remand.

FACTS AND PROCEDURAL HISTORY

The facts are not in dispute. John C. Duck acquired a half interest in a 5.2

acre tract of property located in Concordia Parish, Louisiana, on July 1, 2004.1

The act of sale did not contain an express transfer or assignment of any rights from

the former owner of the property. In April of 2010, after a well was drilled on the

property, Duck discovered that the well only produced saltwater. On May 20,

2010, Duck filed a petition for damages against various defendants, seeking to

recover the cost of ridding his property of contamination allegedly caused by the

defendants’ oilfield operations pursuant to mineral leases that had been entered

into in 1950 and 1951. The first mineral lease was executed by Charles W. Burrill

to Gulf Refining Company (the Burrill Lease) on September 30, 1950, and expired

by its own terms in 1991. It covered eighty acres, which included the 5.2 acre tract

subsequently acquired by Duck. The second mineral lease was executed by C.F.

Farrar to Gulf Refining Company (the Farrar lease) on February 21, 1951, and did

not cover the property that Duck subsequently acquired. In response to the petition,

some of the defendants filed exceptions of no right of action and/or exceptions of

no cause of action and motions for summary judgment, asserting that Duck could

not claim damages for contamination caused by operations that took place prior to

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Duck was married when he bought the property in 2004. When he and his wife later
divorced, Duck acquired his former wife’s interest in the property by quitclaim deed dated
August 14, 2006.

his purchase of the property. The following motions and exceptions were

addressed at a January 10, 2013 contradictory hearing:

1. Motion for Summary Judgment filed by Hunt Oil Company,

2. Motion for Summary Judgment filed by Chevron U.S.A., Inc.,

3. Motion for Summary Judgment filed by Pinnacle Operating
Company, Inc.,

4. Motion for Summary Judgment filed by Seagull Operating
Company, Inc.,

5. Motion for Summary Judgment and Exception of No Cause of
Action and No Right of Action filed by Radzewicz Operating
Corporation and Radzewicz Exploration and Drilling Company,

6. Exception of No Right of Action filed by David New Operating
Co., Inc., and

7. Exception of No Cause of Action and No Right of Action filed
by Harvest Petroleum, Incorporated.

At the close of the hearing, the trial court granted the motions and

exceptions in open court and dismissed Duck’s claims against those defendants

with prejudice and at his costs.2 Written judgment was signed on January 24, 2013.

Duck now appeals, alleging that the trial court erred: 1) in applying the subsequent

purchaser theory described in Eagle Pipe and Supply, Inc. v. Amerada Hess Corp.,

10-2267, 10-2272, 10-2275, 10-2279, 10-2289 (La. 10/25/11), 79 So.3d 246, to bar

his claims; and 2) in finding that the oil and gas leases affecting the property did

not constitute a stipulation pour autrui in his favor.

DISCUSSION

Generally, an action can only be brought by a person having a real and
actual interest which he asserts. La.Code Civ. Proc. art. 681. The
exception of no right of action is designed to test whether the plaintiff

2
Although other defendants were named in Duck’s original petition, when we refer to the
defendants in this opinion, we are only referring to those defendants in whose favor judgment
was rendered on January 24, 2013.

2

has a real and actual interest in the action. La.Code Civ. Proc. art.
927(5). The function of the exception of no right of action is to
determine whether the plaintiff belongs to the class of persons to
whom the law grants the cause of action asserted in the suit. The
exception of no right of action assumes that the petition states a valid
cause of action for some person and questions whether the plaintiff in
the particular case is a member of the class that has a legal interest in
the subject matter of the litigation.

. . . [E]vidence is admissible on the trial of an exception of no
right of action to “support or controvert any of the objections pleaded,
when the grounds therefor do not appear from the petition.” La.Code
Civ. Proc. art. 931.

Indus. Cos., Inc. v. Durbin, 02-665, pp. 11-12 (La. 1/28/03), 837 So.2d 1207, 1216

(citations omitted).

Summary judgment “is designed to secure the just, speedy, and inexpensive

determination of every action.” La.Code Civ.P. art. 966(A)(2). “The procedure is

favored and shall be construed to accomplish these ends.” Id. Summary judgment

“shall be rendered forthwith if the pleadings, depositions, answers to

interrogatories, and admissions, together with the affidavits, if any, . . . show that

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

as a matter of law.” La.Code Civ.P. art. 966(B)(2).

“The standard of review for both the motion for summary judgment and the

exception of no right of action/no cause of action is de novo.” Richard v. Apache

Corp., 12-441, p. 3 (La.App. 3 Cir. 3/20/13), 111 So.3d 1156, 1158, writs denied,

13-865, 13-869 (La. 6/21/13), 118 So.3d 416.

At the start of the January 10, 2013 hearing, the parties agreed that through

the exceptions and motions set for hearing that day, the defendants were asserting

the subsequent purchaser defense to all of Duck’s claims, whether they sounded in

tort, contract/lease, or in the nature of violation of the mineral code. Likewise,

when the trial court granted the exceptions and motions at the close of the hearing,

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it did so as to all of them without specifically referring to any individual exception,

motion, or defendant.

Duck contends that the defendants are liable to him because their oilfield

operations resulted in contamination to the property that he now owns,

notwithstanding the fact that he did not own the property when the damage was

incurred and/or the fact that he was not assigned any rights to recover for any pre-

existing property damage claims in the act of sale in which he acquired the

property. In support of his argument, Duck relies on the Mineral Code,3 which

provides that mineral rights are real rights and that the mineral lease is one of the

basic mineral rights that can be created by a landowner. See La.R.S. 31:16.

Quoting Hoover Tree Farm, L.L.C. v. Goodrich Petroleum Co., L.L.C., 46,153, p.

11 (La.App. 2 Cir. 3/23/11), 63 So.3d 159, 166, writs denied, 11-1225, 11-1236

(La. 9/23/11), 69 So.3d 1161, 1162, Duck submits that the “obligations of the

lessee that are created in a mineral lease are real obligations and not merely

personal.” Moreover, Duck points out that according to La.Civ.Code art. 1764,

Revision Comments–1984 (b) and (c), “[a] real obligation attaches to a thing” and

“passes to a subsequent acquirer of the thing to which it is attached without need of

a stipulation to that effect.” Focusing on the real rights versus personal rights

distinction made by the Eagle Pipe court, Duck contends that the trial court erred

in applying the subsequent purchaser theory to bar his claims. Duck further

submits that because the Burrill and Farrar Leases created real rights with

correlative real obligations, those real rights attached to the land that he now owns

without the need of an assignment of those rights. In addition, Duck claims that

3
Louisiana Revised Statutes 31:1 provides that Title 31 “shall be known as the Louisiana
Mineral Code and that the provisions within it “may be referred to or cited either as Articles of
the Mineral Code or as Sections of the Revised Statutes.”

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the Burrill and Farrar Leases created stipulations pour autrui in his favor thereby

giving him a direct contractual right of action against the defendants to recover

damages for the cost of ridding his property of contamination allegedly caused by

their oilfield operations.

Subsequent Purchaser Theory

In Eagle Pipe, the plaintiff, a purchaser of land who discovered radioactive

material on property it had acquired two decades earlier, filed suit against the

former landowners and the oil and trucking companies that had leased the property

and were allegedly responsible for the contamination. According to the petition,

during a seven-year period before the plaintiff bought the land, the former

landowners leased the property to Union Pipe and Supply, Inc., which operated a

pipe yard/pipe cleaning facility on the property. The petition further alleged that

Union Pipe purchased used oilfield tubing from the oil company defendants which

it then cleaned and sold. The tubing was allegedly transported by the trucking

company defendants from the oil companies to Union Pipe’s pipe yard. The

plaintiff asserted a claim for redhibition against the former landowners. It asserted

causes of action for breach of contract, negligence, strict liability, fraud, and

conspiracy against the remaining defendants.

The defendants filed peremptory exceptions of no right of action asserting

that the plaintiff had no right to assert claims for damages to the property which

occurred before it acquired the land. The trial court sustained the exceptions and

dismissed the plaintiff’s claims, and it denied the plaintiff’s motion for new trial.

On appeal, the fourth circuit initially affirmed the trial court’s ruling, but on

rehearing, a five-judge panel reversed the trial court’s sustaining of the exceptions

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of no right of action. See Eagle Pipe and Supply, Inc. v. Amerada Hess Corp., 09-

298 (La.App. 4 Cir. 2/10/10), 47 So.3d 428.

The Louisiana Supreme Court granted certiorari and reversed, explaining:

[I]njury to property must be understood as damage to the real rights in
the property. A tortfeasor who causes injury or damage to a real right
in property owes an obligation to the owner of the real right. This
relationship arises as a matter of law and provides to the owner of the
real right a personal right to sue the tortfeasor for damages. In the
absence of an assignment or subrogation of this personal right, a
subsequent purchaser of the property cannot recover from a third party
for property damage inflicted prior to the sale.

Eagle Pipe, 79 So.3d at 279. After examining the act of sale in which the plaintiff

acquired the property, the supreme court found “no express assignment or

subrogation of the former property owners’ personal right to sue for damage.” Id.

at 281. The supreme court was careful to note, however, that it “express[ed] no

opinion as to the applicability of [its] holding to fact situations involving mineral

leases or obligations arising out of the Mineral Code.” Id. at n.80.

The lease at issue in Eagle Pipe was a surface lease whereas the leases at

issue in the matter before us are mineral leases. By its own terms, Eagle Pipe does

not apply to situations involving mineral leases. Thus, the trial court erred in

applying the subsequent purchaser theory recognized in Eagle Pipe to bar the

claims that Duck asserts in this matter as those claims arise under mineral leases.

Stipulation Pour Autrui

Article 16 of the Mineral Code provides that:

The basic mineral rights that may be created by a landowner are
the mineral servitude, the mineral royalty, and the mineral lease. This
enumeration does not exclude the creation of other mineral rights by a
landowner. Mineral rights are real rights and are subject either to the
prescription of nonuse for ten years or to special rules of law
governing the term of their existence.

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Citing Article 16, Duck maintains that because mineral leases are classified

as real rights, those rights, along with their correlative real obligations,

automatically attached to the land that he now owns without the need for any

assignment of those rights to him. We disagree.

“Although, Louisiana R.S. 31:16 provides that a mineral lease, as a mineral

right, is a real right, a review of the Mineral Code and the jurisprudence shows that

it is not purely a real right that automatically attaches to the property.” Frank C.

Minvielle, L.L.C. v. IMC Global Operations, Inc., 380 F.Supp.2d 755, 774

(W.D.La.2004).

Strictly speaking, the mineral lease creates a kind of servitude called a
“limited personal servitude.” See 3 A.N. Yiannopoulis, Louisiana
Civil Law Treatise: Personal Servitudes § 223, at 450 (3d ed.1989).
“Limited personal servitudes are real rights that confer on a person
limited advantages of use or enjoyment over an immovable[, i.e.,
realty,] belonging to another person.” Id. at 448-49.

Id. at 774-75 (quoting Sketoe v. Exxon Co., 188 F.3d 596, 601 (5th Cir.1999).

“Thus, it is in the nature of a limited personal servitude that the mineral lease is a

real right.” Id. at 775. “Although a right of use, i.e., a personal servitude, is a real

right, it is one granted in favor of a person rather than an estate, and therefore it

does not pass with the property upon sale of the property.” Id. Given the

foregoing, the Minvielle court concluded that in order to file suit based upon an

expired mineral lease, the subsequent landowner needed to have either “privity of

contract, assignment of rights, or be the beneficiary of a stipulation pour autri.” Id.

at 776.

Based on the reasoning in Minvielle, we conclude that the right to sue the

defendants for damages under the Burrill and Farrar Leases did not automatically

pass to Duck when he acquired the land at issue. Further, because Duck was not a

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party to those leases and because he was not assigned any such rights when he

purchased the land at issue, we must now determine whether the trial court erred in

finding that the Burrill and Farrar Leases did not contain stipulations pour autrui in

his favor.

Louisiana Civil Code Article 1978 provides that “[a] contracting party may

stipulate a benefit for a third person called a third party beneficiary.” Duck claims

that the two mineral leases under which the defendants historically conducted

oilfield operations on the property he now owns, i.e., the Burrill Lease, or property

adjacent to the property that he now owns, i.e., the Farrar Lease, each contained

damage clauses intended for the benefit of third parties such as himself who later

acquire the property after the expiration of the lease and thereafter discover

underground contamination that has destroyed his fresh water supply. The damage

clauses contained in section eight of the Burrill and Farrar Leases provided, in

pertinent part, as follows (emphasis added):

No well shall be drilled nearer than two hundred (200) feet to the
house or barn on said land without the written consent of Lessor, and
Lessee shall be responsible for all damages caused by Lessee’s
operations other than damages necessarily caused by the exercise of
the rights herein granted. No injections of fluids herein authorized
shall be made in fresh water strata which are capable of furnishing
Lessor fresh water for irrigation, domestic or stock uses.

The Eagle Pipe court recognized that a subsequent purchaser could recover

for damages done to the property if the contract between the former landowner and

the oil and trucking companies, who allegedly damaged the property that they

leased, contained a stipulation to benefit a third party, or a stipulation pour autrui,

in his favor. After noting that such a stipulation pour autrui cannot be presumed,

the supreme court directed that a party claiming the benefit of such a contract had

the burden of proving that: “1) the stipulation for a third party is manifestly clear;

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2) there is certainty as to the benefit provided the third party; and 3) the benefit is

not a mere incident of the contract between the promisor and the promisee.” Eagle

Pipe, 79 So.3d at 283 (quoting Joseph v. Hosp. Serv. Dist. No. 2 of Parish of St.

Mary, 05-2364 (La. 10/15/06), 939 So.2d 1206). Since the issue arose in the

context of an exception of no right of action, the supreme court accepted as true the

allegations made in the plaintiff’s petition as to elements one and two. As to

element three, however, the supreme court found that any third-party benefit

contained in the contract was intended “for the employees and subcontractors of

the pipeyards entering into these contracts with the oil companies, and not for a

subsequent purchaser of the property.” Id. Moreover, the supreme court found

that “any benefit that [the subsequent purchaser] derived from these provisions of

the contracts . . . would be incidental to the contracts themselves, inasmuch as any

person coming into contact with land has an interest in the land not being

contaminated.” Id. Thus, the supreme court found that the contracts between

Union Pipe and its customers did not include provisions for third-party

beneficiaries such as the plaintiff.

In LeJeune Brothers, Inc. v. Goodrich Petroleum Co., L.L.C., 06-1557

(La.App. 3 Cir. 11/28/07), 981 So.2d 23, writ denied, 08-298 (La. 4/4/08), 978

So.2d 327, a case that was decided before Eagle Pipe, this court considered

whether a property owner was a third-party beneficiary to a mineral lease entered

into between his predecessor in interest and a well operator so as to maintain a

contract action against the well operator for damages to the property that resulted

from the well operations. The damage clause in LeJeune had been modified from

the version contained in the original lease. The original damage clause provided

that “The Lessee shall be responsible for all damages to timber and growing crops

9

of Lessor caused by Lessee’s operations.” Id. at 29. The clause was modified to

omit the words “timber and growing crops of” so that the final damage clause read,

“The Lessee shall be responsible for all damages to Lessor caused by Lessee’s

operations.” We concluded that damages permitted by the lease “were limited to

the damages suffered by the Lessor,” and thus found no error in the trial court’s

conclusion that the plaintiff was not a third-party beneficiary of the lease. Id. In

doing so, we distinguished Hazelwood Farm, Inc. v. Liberty Oil and Gas Corp.,

02-266 (La.App. 3 Cir. 4/2/03), 844 So.2d 380, writs denied, 03-1585, 03-1624 (La.

10/31/03), 857 So.2d 476 and Andrepont v. Acadia Drilling Co., 255 La. 347, 231

So.2d 347 (1969), cases where stipulations pour autrui were found to exist because

the damage clauses at issue in those cases did not restrict liability to just the

damages suffered by the lessors. We believe that a review of the facts in those

cases is relevant to the issue now before us.

In Hazelwood Farm, Inc. v. Liberty Oil and Gas Corp., 01-345 (La.App. 3

Cir. 6/20/01), 790 So.2d 93, the owner of a property which had been the location of

oil and gas operations under a 1926 lease and which was still active at the time suit

was filed in 1997 sought tort and contract damages from the alleged contamination

to both the surface of the property and the underground aquifer. The 1926 lease

provided that “Grantee shall be responsible for all damages caused by his

operations.” Id. at 101. All of the defendants had, at some point, operated wells

pursuant to the 1926 lease. When the plaintiff bought the property, his ancestor in

title reserved the mineral rights. As a result, this court held that the plaintiff did

“not have a right of action as a party to or assignee of the mineral lease.” Id. at 100.

Nevertheless, we went on to interpret the 1926 as providing a stipulation pour

autrui in favor of the plaintiff. In doing so, we noted that “[t]he fact that

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Hazelwood was not specifically named as a third-party beneficiary in the mineral

lease is of no consequence” because “[o]ur jurisprudence recognizes that

stipulations may be made in favor of undetermined persons.” Id. at 101. Based on

the stipulation pour autrui, we concluded that the trial court erred in using a motion

to strike to dispose of the plaintiff’s contract claims. After the case was remanded

to the trial court on other grounds, the matter went to trial and the defendants were

cast in judgment. On appeal to this court, the defendants challenged our prior

ruling that the 1926 lease created a stipulation pour autrui in favor of the plaintiff.

We declined to revisit the issue on the basis that our earlier ruling was the law of

the case and not clearly erroneous. Hazelwood, 844 So.2d 380.

Andrepont was a suit by a share crop tenant farmer who had entered into a

verbal surface lease with the landowner, who later executed an oil and gas lease on

the property. The named defendants were the mineral lessees whom the plaintiff

alleged had damaged his crops through their operations.

Paragraph 8 of the [mineral] lease originally read, “The lessee
shall be responsible for all damages to timber and growing crops of
lessor caused by lessee’s operations.” However, the words “to timber
and growing crops of lessor” were struck out. Thus the lease
provided: “The lessee shall be responsible for all damages caused by
lessee’s operations.”

Andrepont, 231 So.2d at 348. In our original opinion, we failed to consider the

farmer’s argument that the mineral lease created a stipulation pour autrui in his

favor, and instead held that the farmer could not recover from the defendants since

his oral lease with the property owner was unrecorded and the defendants were

third persons. On rehearing, however, we recognized that the mineral lease did

create a stipulation pour autrui and that as a beneficiary of that stipulation, the

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farmer had “a direct right of action against the oil and gas lessee to recover for his

damages.” Id. at 350.

The trial court in the instant matter found that the language in the Burrill and

Farrar Leases does not provide Duck with a third-party beneficiary claim. After

comparing the damage clause language in the Burrill and Farrar Leases, i.e.,

“Lessee shall be responsible for all damages caused by Lessee’s operations,” to the

damages clause of the leases in LeJeune, Hazelwood, and Andrepont, we conclude

that the Burrill and Farrar Leases do contain a stipulation pour autrui for the

benefit of third parties. Like the damage clauses in Hazelwood and Andrepont, the

damage clauses at issue herein do not restrict liability to only the damages suffered

by the lessors. Thus, the trial court erred in finding that Duck is not a third-party

beneficiary of the Burrill and Farrar Leases. Accordingly, this matter is remanded

to the trial court for further proceedings.

DECREE

For the foregoing reasons, the judgment of the trial court is reversed, and the

matter is remanded for further proceedings consistent with this opinion. All costs

of this appeal are assessed against the defendants.

REVERSED AND REMANDED.

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