Hilcorp Energy I, L.P. v. Merritt Operating, Inc.

NOT DESIGNATED FOR PUBLICATION

STATE OF LOUISIANA
COURT OF APPEAL, THIRD CIRCUIT

CM 13-250

HILCORP ENERGY I, L.P.

VERSUS

MERRITT OPERATING, INC.

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APPEAL FROM THE
SIXTEENTH JUDICIAL DISTRICT COURT
PARISH OF ST. MARTIN, NO. 75441
HONORABLE CHARLES LEE PORTER, DISTRICT JUDGE

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ELIZABETH A. PICKETT

JUDGE

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Court composed of Elizabeth A. Pickett, Phyllis M. Keaty, and John E. Conery,
Judges.

SUSPENSIVE APPEAL DISMISSED.
APPEAL MAINTAINED AS DEVOLUTIVE.

Guy Earl Wall
Sara Lewis
Wall, Bullington & Cook, L.L.C.
540 Elmwood Park Boulevard
Harahan, LA 70123
(504) 736-0347
COUNSEL FOR DEFENDANT/APPELLEE:
Merritt Operating, Inc.

George Hardy Robinson
Liskow & Lewis
Post Office Box 52008
Lafayette, LA 70505-2008
(337) 232-7424
COUNSEL FOR PLAINTIFF/APPELLANT:
Hilcorp Energy I, L.P.

PICKETT, Judge.

Defendant-Appellee, Merritt Operating, Inc. (Merritt), moves to dismiss an

unlodged appeal. For the reasons given herein, we grant the motion to dismiss the

suspensive appeal, but maintain the appeal as devolutive.

This case arises out of a dispute over revenues derived from oil and gas

produced in a well unit located in St. Martin Parish. Merritt has allegedly been

operating the well and selling the production to Plains Marketing, L.P. (Plains).

Plaintiff, Hilcorp Energy I, L.P. (Hilcorp), claims that it owns approximately forty-

seven percent of the working interest for the well unit at issue. As such, Hilcorp

alleges that it is entitled to a percentage of the oil production revenues and that its

right to those revenues is secured by a privilege. Merritt disputes Hilcorp’s claim

of an ownership interest in the well, and asserts that even if Hilcorp had an interest

in the oil production revenues, Hilcorp’s share of the production costs would need

to be deducted from the revenues.

When Merritt refused to pay Hilcorp a share of the oil production revenues,

Hilcorp filed suit seeking to share in the revenues in proportion to its share of

ownership interest in the well. Hilcorp also filed a Non-Operator Privilege in the

mortgage records. After Hilcorp filed its statement of privilege, Plains stopped

paying Merritt the purchase price for the oil production derived from the well at

issue. While Plains has continued to pay twenty-four percent of the oil revenues

directly to the mineral lessors involved, the remaining seventy-six percent of the

revenues, which is attributable to the working interest, is being held in suspense by

Plains. The current total for the amount being held in suspense is $1,351,361.54.

Merritt filed a motion for summary judgment seeking cancellation of

Hilcorp’s lien and privilege. On October 19, 2012, the trial court signed a partial

final judgment granting Merritt’s motion for summary judgment, dismissing

Hilcorp’s claim of privilege, and ordering the cancellation of Hilcorp’s statements

of privileges and notices of lis pendens filed in the public records of St. Martin and

Assumption Parishes. The trial court designated the judgment immediately

appealable pursuant to La.Code Civ.P. art. 1915(B). The notice of judgment was

mailed on October 25, 2013. Thereafter, Hilcorp petitioned the trial court for a

suspensive appeal without the requirement of a suspensive appeal bond. The trial

court granted the suspensive appeal without requiring a bond.

At this time, Merritt has filed the instant motion seeking to have this court

dismiss the unlodged suspensive appeal for failure to post a suspensive appeal

bond. Alternatively, Merritt seeks to have this court convert the appeal into a

devolutive appeal. Merritt contends that Hilcorp failed to post security for a

suspensive appeal within the delays set forth in La.Code Civ.P. art. 2123. Merritt

notes that pursuant to Article 2123, the bond for a suspensive appeal must be filed

within the 30-day delay for taking a suspensive appeal. Merritt asserts that since

the notice of judgment was mailed on October 25, 2012 and no motion for new

trial was filed, the delay for taking a suspensive appeal and for posting security

expired on December 5, 2012, thirty days after the expiration of the expiration of

the seven-day delay for applying for a new trial. However, Merritt contends that

Hilcorp did not ask the trial court to fix an appeal bond and did not post a bond.

Merritt notes that Hilcorp did not pay the appeal costs until December 12, 2012.

Thus, Merritt asserts that even if the payment of appeal costs could constitute

security for a suspensive appeal, Hilcorp did not submit the appeal costs to the trial

court within the delay set forth in La.Code Civ.P. art. 2123.

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With regard to the furnishing of security for a suspensive appeal, La.Code

Civ.P. art. 2124(B), provides, in pertinent part, as follows:

B. The security to be furnished for a suspensive appeal is determined
in accordance with the following rules:
(1) When the judgment is for a sum of money, the amount of
the security shall be equal to the amount of the judgment, including
the interest allowed by the judgment to the date the security is
furnished, exclusive of the costs.
....
(2) When the judgment distributes a fund in custodia legis, only
security sufficient to secure the payment of costs is required.
(3) In all other cases, the security shall be fixed by the trial
court at an amount sufficient to assure the satisfaction of the judgment,
together with damages for the delay resulting from the suspension of
the execution.

In its opposition to Merritt’s motion to dismiss the appeal, Hilcorp takes the

position that no appeal bond is required because this case is governed by La.Code

Civ.P. art. 2124(B)(2). Hilcorp argues that because the judgment being appealed

does not require any performance or delivery of property by Hilcorp, no security is

required other than the amount that the trial court determines is enough to secure

the payment of the appeal costs. Hilcorp contends that the appeal costs were paid

one day after the estimated costs were provided to Hilcorp. Hilcorp asserts that it

could not have paid the costs any sooner because the costs were unknown. Also,

Hilcorp contends that the costs were paid in accordance with the procedure set

forth in La.Code Civ.P. art. 2126, which requires that the appeal costs be paid

within twenty days of the mailing of the notice of the estimated appeal costs.

Hilcorp notes that the trial court granted Hilcorp’s suspensive appeal without

requiring a bond. Thus, Hilcorp maintains that it simply relied on the trial court’s

determination that no separate bond or security was required under La.Code Civ.P.

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art. 2124(B)(2). As such, Hilcorp asserts that its suspensive appeal should not be

dismissed for nonpayment of an appeal bond.

On the other hand, Merritt argues that Hilcorp is not entitled to a suspensive

appeal with only the furnishing of security for costs. Merritt notes that La.Code

Civ.P. art. 2124(B)(2) permits the filing of a suspensive appeal with only enough

security sufficient to cover the appeal costs in a situation in which the judgment

being appealed “distributes a fund in custodia legis.” However, Merritt argues that

the judgment at issue in this case does not distribute funds “in custodia legis.” In

that regard, Merritt notes that “in cusodia legis” means in the care or custody of the

court. Merritt points out that the October 19, 2012, judgment dismisses Hilcorp’s

claim of privilege and cancels the privilege and notices of lis pendens filed in the

public records. Merritt maintains that the judgment does not distribute funds that

are in the custody of the court because no funds are being held by the court and

because the judgment does not distribute the funds held by Plains, which is not

even a party in this case. Merritt contends that even if the funds had been

deposited into the registry of the court, Hilcorp would have still have had to furnish

timely security for the payment of costs pursuant to La.Code Civ.P. art. 2124(B)(2).

Merritt asserts that the security required by Article 2124(B)(2) should be paid in

addition to the estimated appeal costs required by La.Code Civ.P. art. 2126.

Further, Merritt argues that even if Hilcorp were correct in its assertion that the

payment of estimated appeal costs constitutes both the security required by Article

2124(B)(2) and the payment of costs required by Article 2126, Hilcorp’s payment

was not made within the delay required for a suspensive appeal.

Merritt also argues that Hilcorp is incorrect in its assertion that the failure to

post a bond is imputable to the trial court. Rather, Merritt contends that the error

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in not setting a suspensive appeal bond is imputable to Hilcorp, who, as the

appellant, is responsible for filing the motion for appeal and supplying security

within the deadlines provided by statute. In that regard, Merritt notes that Hilcorp

presented the trial court with an order which permitted Hilcorp to take a suspensive

appeal without the requirement of an appeal bond.

Merritt contends that the effect of the suspension of the October 17, 2012,

judgment is that while the appeal is pending, Merritt would not receive the more

than $1,300,000.00 worth of oil production revenues being held by Plains. As such,

Merritt contends that should Plans become insolvent while the appeal is pending,

Plains could lose the full amount. Merritt also contends that the suspension of the

judgment being appealed means that Merritt will have to continue pay for the

production expenses for the well without receiving any revenues during the

duration of the appeal. Therefore, Merritt asserts that Hilcorp should have been

required to post a suspensive appeal bond.

This court has stated the following,

Louisiana Code of Civil Procedure Art. 2123 requires that in
order to perfect a suspensive appeal, the order of appeal must be
granted and the suspensive appeal bond must be posted no later than
thirty days from either the expiration of the delays for seeking a new
trial or from the notice of denial of the motion for new trial.

Guillory v. Allied Waste Services, Inc., 10-159 (La.App. 3 Cir. 3/3/10), 32 So.3d

1024, 1025.

In the instant case, we note that Hilcorp seeks to appeal the trial court’s

judgment dismissing Hilcorp’s claim of privilege and ordering the cancellation of

Hilcorp’s privilege from the public records. However, no appeal bond was posted

within the time delay set forth in La.Code Civ.P. art. 2123. Louisiana Code of

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Civil Procedure Article 2124(B) lists three separate provisions for the posting of

security for a suspensive appeal, depending on the nature of the judgment being

appealed. We find that the provision set forth in La.Code Civ.P. art. 2124(B)(1)

is not applicable to the instant case because the judgment appealed does not award

any money. We also find that the provision set forth in La.Code Civ.P. art.

2124(B)(2) is not applicable to this case because the judgment does not involve the

distribution of any funds being held in the custody of the trial court. As such, we

find that the furnishing of security for Hilcorp’s appeal is governed by La.Code

Civ.P. art. 2124(B)(3), which provides that “[i]n all other cases, the security shall

be fixed by the trial court at an amount sufficient to assure the satisfaction of the

judgment, together with damages for the delay resulting from the suspension of the

execution.” In the instant case, Hilcorp petitioned the court for a suspensive appeal

without the requirement of an appeal bond. So, no bond was posted in accordance

with La.Code Civ.P. art. 2124(B). As such, we find that the suspensive appeal was

not perfected within the time delays permitted by La.Code Civ.P. art. 2123.

We note that La.Code Civ.P. art. 2161, in pertinent part, states that “[a]n

appeal shall not be dismissed because of any other irregularity, error or defect

unless it is imputable to the appellant.” Inasmuch as it is the responsibility of the

appellant to obtain an order of appeal and to timely post an appeal bond, we find

no merit in Hilcorps’s argument that the failure to post an appeal bond is not

imputable to Hilcorp simply because the trial court signed the order permitting a

suspensive appeal without the requirement of a bond. We note that this is not a

situation in which the appellant asked the trial court to set a suspensive appeal

bond and the trial court declined to do so. See, e.g., Magnolia Petroleum Co. v.

Marks, 223 La. 662, 66 So.2d 585, 587 (La.1953). Rather, in the instant case,

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Hilcorp (the appellant), presented the trial court with a suspensive appeal order

without the requirement of an appeal bond. Therefore, we find that the failure to

timely post a suspensive appeal bond is imputable to Hilcorp.

For the foregoing reasons, we hereby grant the instant motion to dismiss the

suspensive appeal and maintain the appeal as devolutive.

SUSPENSIVE APPEAL DISMISSED.
APPEAL MAINTAINED AS DEVOLUTIVE.

THIS OPINION IS NOT DESIGNATED FOR PUBLICATION.
Rule 2-16.3 Uniform Rules, Court of Appeal.

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