LOGA Industry Report - Fall 2008 - (Page 41)

LEGAL UPDATES by Thomas G. Smart and Jasmine B. Bertrand, Onebane Law Firm Risk Fee Statute Amended Act 115 of the 2008 Regular Session, effective June 6, 2008, amended La. R.S. 30:10(A)(2)(b)(i) to increase the penalty for a non-consent owner and for owners who fail to pay expenses from 100 percent to 200 percent of the tract’s allocated share of the cost of drilling, testing and completing the unit well. This is a penalty in addition to the ability to recover such tract’s allocated share of the actual reasonable expenditures incurred in drilling, testing, completing, equipping and operating the unit well, together with a charge for supervision, which remains unchanged. The penalty is still not applicable to unleased interests not subject to an oil, gas and mineral lease. Explicit Language of Acceptance Required by Donee Succession of Jones, 2008 La. App. LEXIS 844 (La. App. 2 Cir. 6/4/08), serves as a warning to pay particular attention to the requirement that an act of donation be accepted by the donee. In this case, the plaintiff-son ﬁled an action to annul a donation inter vivos of 11 acres made by his father, prior to death, to defendant-son. The Second Circuit afﬁrmed the trial court’s ruling that the donation was void for lack of formal acceptance, despite the fact that the donation deed was actually signed by both the father and the son in the presence of two witnesses and a notary. Relying on Louisiana Civil Code Article 1540, which requires that a donation inter vivos be accepted in precise terms, the court found that the defendant did not explicitly accept the donation, even though he signed the donation. The court held that the defendant-son’s signing of the document was not sufﬁcient because there was no explicit language signifying No Cause of Action for Unjust Enrichment Resulting from Underpayment of Royalties In Hall v. James, 2008 La. App. LEXIS 855 (La. App. 2 Cir. 6/4/08), the Second Circuit Court of Appeals addressed the issue of whether one mineral owner has a claim for unjust enrichment against another mineral owner who was overpaid under the mineral lease covering the property subject to the mineral ownership. In July of 1996, the Jameses purchased certain immovable property in Webster Parish from Gray Investments, owned by Mary and Leon Gray, subject to a reservation of half of the minerals and royalties. The property was under lease, and division orders were prepared by the lessee and the Jameses began receiving royalty payments. During the succession proceedings of Leon Gray, the Gray heirs perceived that an excessive amount of royalties had been paid to the Jameses. Inquiries were made to Samson Lone Star, the lessee at that time. Samson determined that, pursuant to the division orders executed by Mr. Gray and the Jameses, the Jameses were paid half of the total royalties owned by and owed to Gray Investments and Mr. Gray, rather than the half due to them for royalties on the purchased property. The Gray heirs ﬁled a petition for recovery of mineral proceeds from both Samson, for underpayment of the royalty, as well as the Jameses, claiming that the Jameses were unjustly enriched by receiving royalty payments in excess of their ownership interest in the property. The Gray heirs were apparently trying to circumvent the three year prescriptive period in Louisiana Civil Code Article 3494 for the recovery of underpayments or overpayments of mineral royalties (the prescriptive period for a claim for unjust enrichment is 10 years). In examining whether the Gray heirs had a cause of action against the Jameses for unjust enrichment, the Second Circuit cited Louisiana Civil Code Article 2298, which provides as follows: “A person who has been enriched without cause at the expense of another person is bound to compensate that person. The term ‘without cause’ is used in this context to exclude cases in which the enrichment results from a valid juridical act or the law. The remedy declared here is subsidiary and shall not be available if the law provides another remedy for the impoverishment or declares a contrary rule.” The Second Circuit emphasized that unjust enrichment is a remedy of last resort, available only when no other remedy is available. Because, according to the court, the Gray heirs had a cause of action against Samson to recover for the underpayment of royalties, it found that they had no claim for unjust enrichment against the Jameses, as the requirement that there be no other remedy at law was not satisﬁed. The court also noted that if Samson ﬁled a third-party claim against the Jameses to recover for the overpayment, Samson’s claim would be restricted to the three-year prescriptive period provided for recovery of overpayment of royalties. www.loga.la | 41 http://www.loga.la

Table of Contents Feed for the Digital Edition of LOGA Industry Report - Fall 2008

LOGA Industry Report - Fall 2008 Contents Chairman's Corner President's Perspective Commissioner's Comments From the Pipeline... Supreme Court Upholds Act 312 LOGA Challenges Commission's Ad Valorem Tax Rules The Haynesville Shale - Waiting for the Gas to Come In 2008 Legislative Recap Gulf Coast Prospect Expo 2008 2nd Annual LAGCOE Open Golf Tournament Conservationist by Trade Katrina Relief Fund Update DNR Intent Natural Gas Production Surges: A Free Market At Work IPAA Washington Report Legal Updates New Members Index to Advertisers

LOGA Industry Report - Fall 2008

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