Louisiana Third Circuit Affirms Dismissal of Royalty and Other Claims Based Upon Prescription

In a straightforward application of Louisiana’s prescriptive principles, the Louisiana Court of Appeal for the Third Circuit affirmed the trial court’s grant of exceptions of prescription, finding plaintiff’s claims for fraud, under the Louisiana Unfair Trade Practices Act (LUTPA), and for unpaid royalties all prescribed in Karen May v. The Succession of Mayo Romero.

In 2006, a Petition to Open Succession with Administration was filed, which sought to open the succession of petitioners ancestors’ in title with administration due to various legal issues, including “oil & gas royalty claims,” because, “Decedents owned property…wherein oil & gas was extracted by various companies and fraudulently paid to other parties.” The petitioners in the 2006 proceeding stated that they believed it was necessary for the succession to hire counsel to investigate and litigate these claims.

Despite the successful opening of the succession with administration in 2006, the Succession did not file suit against Defendants, including adjacent landowners and various oil and gas companies, for unpaid royalties, fraud and violations of LUTPA until 2018. In response to the Succession’s petition, Defendants therefore filed exceptions of prescription, claiming that the petition filed in the succession proceedings clearly demonstrated the Succession’s knowledge of the claims asserted against them. At the hearing on the exception, the trial court received evidence and heard testimony from the administratrix of the succession. The trial court granted the Defendants’ exceptions of prescription and the Succession appealed.

The Louisiana Third Circuit affirmed, relying on bedrock principles of prescription under Louisiana law and refusing to apply exceptions to the running of prescription under Appellant’s theory of contra non valentem in so doing. The court reasoned that, while contra non valentem may suspend the running of prescription in various instances, such as when the defendants themselves prevent the plaintiff from availing himself of his cause of action by concealing the claims, or when the cause of action is not known or reasonably knowable (the “discovery” rule), such limited exceptions did not apply to the instant case. First, the Appellant did not present any facts or evidence of Defendants’ alleged concealment of the claims, and even if Defendants did conceal the claims, the concealment ended by 2006, when the Petition to Open Succession with Administration was filed demonstrating knowledge of these potential claims. Second, the appellate court found that the discovery rule did not suspend the running of prescription. The appellate court rejected the Succession’s argument that, since the administratrix did not personally learn about oil and gas activity on the property until 2017, the claims were timely, recognizing that her personal knowledge was irrelevant since she was appearing in a representative capacity only. Moreover, as the petition in the 2006 succession proceedings demonstrated that the Succession was well aware of its potential claims back in 2006, and more than 12 years had passed between the pleading demonstrating this knowledge and the 2018 suit against Defendants—ample time to conduct discovery to further illuminate its claims.

A copy of the Third Circuit’s decision can be found here. Liskow & Lewis attorneys Kelly Becker, Kathryn Gonski, and Trinity Morale represented Defendants Chevron USA, Inc. and Texaco, Inc. before the trial and appellate courts.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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