Firm attorneys George H. Robinson, Jr. and April Rolen-Ogden of the Lafayette office and Joe Giarrusso of the New Orleans office recently won a Motion for Summary Judgment on behalf of our client, TOTAL PETROCHEMICALS, U.S.A. Inc. (“TOTAL”) in an oilfield cleanup case. The case, Raymond Thomas, et al versus Ashley Investments, et al, 5th Judicial District Court, Docket No. 38839–C, Parish of Richland, State of Louisiana, involved approximately 70 tracts of land, more than 50 Plaintiffs, 10 Defendants, some 10,000 acres in 2 separate oil fields in north Louisiana. Plaintiffs’ experts advocated remediation costs in excess of $500,000,000.00. The Delhi Field and Delhi Unit contained the majority of the Plaintiffs and the property involved. TOTAL had no contractual or tort liability to those Plaintiffs in the Delhi Field with whom its corporate and leasehold predecessors never had oil gas and mineral leases, and on whose property no physical operations were never conducted.

Plaintiffs argued that even though they never had lease relationships with TOTAL, and TOTAL never operated on their property, they were entitled to sue TOTAL based on TOTAL’s participation in operations under a contractually-established drilling and production unit. Plaintiffs argued that they were third party beneficiaries of the Unitization Agreement and Unit Operating Agreement, signed in 1952, and that TOTAL’s participation on the Operator’s Committee for the Delhi Unit formed a legal basis for tort liability for the damage allegedly caused to the Plaintiffs’ lands. The Court held:

(1) The Unitization Agreement and the Unit Operating Agreement conferred no third party beneficiary status on the claimants based on Louisiana law regarding third party beneficiary contracts or stipulations. The Court relied on Lejeune Brothers, Inc. versus Goodrich Petroleum Co., LLC, 2006-1557 (La. App. 3rd Cir. 11/28/07) 98 S.2d. 23, writ denied 2008 – 02/98 (La. 4/4/08) 978 S.2d 327, and the established Louisiana jurisprudence regarding third party beneficiary contracts.

(2) Article 122 of the Mineral Code regarding the implied obligation of clean-up was inapplicable, because Plaintiffs could not show a mineral lease agreement with TOTAL or its predecessors.

(3) The Defendants were also entitled to summary judgment on the tort claims:

(a) The jurisprudence of the state embraces the legal theory that tort claims are personal rights which are not acquired by mere transfer of title to the land and these Plaintiffs had no express legal assignment of the tort claims with the respective tracts of land.

(b) There was no “continuing tort.”

(c) The tort claims had prescribed.

The immediate significance of the decision is that it eliminated for TOTAL any basis for contractual or tort liability on Plaintiffs and lands covering some 85 to 90% of the area at issue in the suit. The decision has also precipitated constructive settlement discussions. More broadly, the decision establishes important limits on landowner claims to third party beneficiary status, and supports the view that mere participation in a unit does not render the owner of the unitized interest liable for damage claims of the owner of the surface where unit operations are conducted. The holding that a purchaser of property may not sue on tort claims that accrued in favor of his seller without an express assignment of those rights follows recent trends in Louisiana law. It is especially significant, because there must be tort liability in order to successfully assert a punitive damages claim under repealed Civil Code Article 2315.3, which was effective from 1984 until 1996.