On Friday, December 15, the Louisiana Supreme Court granted three separate writ applications filed by each of the defendants in Gloria’s Ranch, L.L.C. v. Tauren Exploration, Inc. These applications sought review of the Louisiana Second Circuit’s June 2, 2017 decision affirming the trial court’s ruling that Wells Fargo, a mortgage lender with a security interest in a mineral lease, was solidarily liable with its borrowers (the mineral lessees) for a breach of the mineral lessees’ contractual and statutory obligations to produce in paying quantities, pay royalties, and respond to the mineral lessor’s demands regarding those obligations. The defendants previously moved for rehearing with the Second Circuit, which although denied in a 3-2 decision, resulted in a vigorous dissent that warned of the opinion’s “[d]evastating economic repercussions” for the lending industry, and “[s]erious and harmful impact on the oil and gas industry.” A detailed summary of the original decision can be found here, and a summary of the dissent from the rehearing denial can be found here. By granting the defendants’ writ applications, the Louisiana Supreme Court has recognized the importance of this issue to the State of Louisiana and its industries and will soon weigh in on this issue in one way or another.
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