Take the Fifth

Designated for publication

• B.A. Kelly Land Co. v. Aethon Energy Operating, L.L.C., 20-30090, appeal from W.D. La.
  • Dennis, J. (Higginbotham, Smith, Dennis), mineral law
  • Reversing in part, rendering in part, vacating in part, and affirming in part district court’s summary judgment in favor of defendant operator of two oil and gas production units and denial of leave to amend, on plaintiff’s claims seeking declaration that defendant’s forfeiture of right to seek contribution of operating costs from plaintiff, an owner of mineral rights within the unit that were not subject to an oil and gas lease.
  • Under La. R.S. §§ 30:103.1 and 103.2, operators of unitized tracts have certain reporting obligations to owners of unleased oil and gas interests, with the penalty for noncompliance being forfeiture of the right to demand contribution for operating costs. The oil and gas interests here had been subject to a mineral lease until 2013, when the owner of the mineral servitude on the plaintiff’s property died and the mineral rights reverted to the landowner. In 2017, the landowner provided notice to the unit operator of its unleased status; in 2018, the landowner brought this suit. After the landowner filed a motion for partial summary judgment on two of its forfeiture claims, the district court denied that motion, then sua sponte rendered summary judgment in favor of the defendant, dismissing the plaintiff’s forfeiture claims (one direct forfeiture claim and one successor forfeiture claim); the district court also denied plaintiff leave to amend to implead a separate Aethon entity, Aethon LP.
  • The Court summarized the purpose of La. R.S. §§ 30:103.1 and 103.2: “Taken together, §§ 103.1 and 103.2 address an information asymmetry that arises from the forced pooling of mineral resources when there is no lease or contract between the operator and the owner of the oil and gas interest. Where, as here, unitization is governmentally instituted, nonoperators, like Kelly, lack access to the data showing the well production and costs in the unit in which they share. Thus, §§ 103.1 and 103.2 help remedy the information asymmetry by creating an enforceable mechanism for nonoperators that have unleased interests in the minerals to obtain an accounting of what the operator is doing.” (Internal quotation marks and citations omitted).
  • As to the plaintiff’s direct forfeiture claim, the Court held, “Kelly’s December 15, 2017 letter to Aethon satisfied the express requirements of § 103.1: it was (1) in writing; (2) sent by certified mail addressed to Aethon; and (3) contained the name and address of Kelly, the unleased owner. Beyond complying with the statute’s express requirements, the import of Kelly’s letter was sufficiently clear to give Aethon, as operator of the Units, notice that Kelly, an unleased owner, was requesting reports pursuant to § 103.1. … It is undisputed that Aethon did not send reports within thirty days of its receipt of Kelly’s second letter on April 20, 2018. Aethon contends that the April 17, 2018 letter was vague and asserts that its landman contacted a Kelly representative purportedly to discuss precisely what information Kelly sought. This argument misses the mark. That Aethon may have requested clarification or confirmation about the meaning of the April 17, 2018 letter does not mean that a reasonable operator would have failed to appreciate that the letter constituted notice under § 103.2 that it was in default on its reporting obligations under § 103.1. An operator like Aethon cannot shirk its duty without incurring the consequences the legislature has prescribed to protect the owners of unleased mineral interests.”
  • The Court held that the district court imposed requirements on the plaintiff’s notice that was not required by the statute: “Contrary to the district court’s view, the text of § 103.1 does not require that an unleased owner’s request for reports specifically cite statutes, either by title or section number, or expressly use the terms ‘initial reports’ or ‘quarterly reports.’ Rather, a faithful reading of the statute demonstrates that its text primarily imposes a duty on operators to send reports when requested by unleased owners. … Nor does § 103.2 demand the unleased owner provide notice to the operator of every possible consequence of failure to comply with its terms.” The Court reversed the dismissal of the plaintiff’s direct forfeiture claim, and rendered partial summary judgment in the plaintiff’s favor.
  • As to the plaintiff’s successor forfeiture claim, the Court held that determination of that claim required analysis of evidence not in the summary judgment record, and so vacated the district court’s dismissal of that claim.
  • The Court then affirmed the district court’s denial of plaintiff’s motion to for leave to amend and add the defendant’s principal, Aethon, LP.

• Bevill v. Fletcher, 20-40250, appeal from E.D. Tex.
  • Stewart, J. (Davis, Stewart, Oldham), Oldham, J., dissenting; qualified immunity
  • Affirming denial of motion to dismiss on qualified immunity grounds the plaintiff’s § 1983 claims that he was fired from the Quitman Police Department “in retaliation for making unflattering statements about Defendants-Appellants Wood County Sheriff Tom Castloo, Wood County District Attorney James Wheeler, and Texas Judge Jeff Fletcher.”
  • Plaintiff brought suit arising from the defendants’ alleged conspiracy to have him fired for signing an affidavit in support of moving trial venue in an unrelated criminal case due to the personal friendship among the defendant judge, district attorney, and county sheriff, alleging that they had pressured the police chief and town mayor to fire him by threatening to not take any criminal prosecutions from Quitman until the plaintiff was fired; and arising from onerous pretrial conditions they placed on the plaintiff on a perjury charge arising from the affidavit.
  • The Court held that the plaintiff was validly asserting First Amendment rights that the Police Department could not curtail when he signed the affidavit in his personal capacity and not as an employee of the Department, that he “could not have acted for the benefit and subject to the control of his employer when he engaged in speech against his employer’s interest. … Through submitting the affidavit, Bevill sought on his own accord to help a friend outside of the workplace. He did not inform anyone at QPD that he intended to submit the affidavit. This kind of activity, which has ‘an analogue to speech by citizens who are not public employees,’ is protected by the First Amendment.”
  • The Court then held that this right was clearly established at the time it was infringed. The Court drew out a flow chart to show the applicable case determining the clearly established right was the decision in Kinney v. Weaver, 367 F.3d 337 (5th Cir. 2004) (en banc).
  • The Court also held that the plaintiff had adequately stated a claim for conspiracy to cause the clearly established constitutional violation, holding that the minimum standard of pleading enough facts to raise a reasonable expectation that discovery will reveal evidence of the illegal agreement.
  • Judge Oldham dissented. He would have found that the law was not clearly established. “Whatever one might think about qualified immunity, I think we’re duty bound to say the law is not clearly established when it takes a full-page flow chart to hold otherwise.”

• Kreit v. Quinn, 21-20067, appeal from S.D. Tex.
  • Smith, J. (Higginbotham, Smith, Ho), bankruptcy
  • Affirming district court and bankruptcy court regarding issuance of sanctions to three doctors who had served on board of debtor when they filed an adversary proceeding asserting causes of action that the bankruptcy court had placed in trust for the debtor’s creditors. The bankruptcy court “conclud[ed] that by attempting to seize control of trust property, the doctors had knowingly violated its order confirming the liquidation plan.” The bankruptcy court also, in a separate order, dismissed the adversary proceeding with prejudice.
  • The Court first held that it did not have jurisdiction over the dismissal of the adversary proceeding, because the doctors had failed to file a notice of appeal from that ruling. The Court also held that it did not have jurisdiction to review the bankruptcy court’s imposition of forward-looking sanctions for future violations, because the district court had already reversed that part of the order and the trustee had not cross-appealed from that.
  • As to the imposition of sanctions for the past actions of the doctors, the Court held that it did have jurisdiction to review that, even though the trustee’s role had terminated prior to the imposition of sanctions when the trust ended by operation of law. The Court held that the bankruptcy court’s sanctions order was under its inherent powers under § 105, and that the trustee was defending the subsequent appeal such that “standing” to prosecute a claim was not at issue. The Court held that the trustee still had an ongoing interest in the dispute. “True, Quinn no longer has legal ownership of the trust assets. Nonetheless, as even the doctors recognized at oral argument, the assets are still in a bank account that he controls. Quinn has a cognizable interest in continuing to possess the assets. On termination, a former trustee like Quinn has a duty to return the trust property to the beneficiaries of the trust. And a former trustee’s fiduciary duty with respect to that property doesn’t end until the property has been distributed to beneficiaries.”
  • On the merits, the Court held that “[t]he doctors’ remaining claims have none.”

• U.S. v. Rodriguez-Flores, 21-40277, c/w 21-40275, appeal from S.D. Tex.
  • per curiam (Dennis, Southwick, Wilson), criminal, sentencing
  • Remanding to district court to correct judgment on conviction for illegal reentry to reflect conviction under 8 U.S.C. § 1326(b)(1) rather than § 1326(b)(2), because the district court had committed plain error in classify a prior Texas conviction for sexual assault as an “aggravated felony.”

Unpublished

• Parra v. Interstate Express, Inc., 20-11230, appeal from N.D. Tex.
  • per curiam (Davis, Willett, Oldham), personal tort
  • Affirming district court’s denial of new trial and remittitur after verdict for plaintiff in personal injury action.

• U.S. v. Gardner, 20-50481, appeal from W.D. Tex.
  • per curiam (Higginbotham, Stewart, Wilson), criminal, search and seizure, guilty plea
  • Vacating and remanding on district court’s denial of defendant’s motion to withdraw guilty plea so that he could raise motion to suppress.

• Young v. BL Development Corp., 20-60992, appeal from N.D. Miss.
  • per curiam (Dennis, Higginson, Costa), personal tort
  • Affirming summary judgment in favor of hotel defendant in slip-and-fall suit.

• U.S. v. Trevizo-Cortez, 21-50640, appeal from W.D. Tex.
  • per curiam (Higginbotham, Higginson, Duncan), criminal, sentencing
  • Granting summary affirmance of conviction and sentence for illegal reentry.