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Covey Park Gas, LLC v. Bull Run Acquisitions II, LLC and Beaver River Resources, et al.
Case Number: 53,670-CA
Judge: Robin D. Pittman
Court: COURT OF APPEAL
STATE OF LOUISIANA
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Shreveport, LA - Mineral royalties attorney represented Beaver River Resources with appealing a partial summary judgment that dismissed it from a concursus claim involving mineral royalties from two tracts of land in DeSoto Parish.
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
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
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.
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
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.
BRR appealed suspensively.
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
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
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
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
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
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 American intended to sell
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
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.
Outcome: For the reasons expressed, the judgment is affirmed. All costs are to
be paid by the appellant, Beaver River Resources.