Taylor v. N R G New Roads Holdings L L C
5:14-cv-00067
W.D. La.Jun 5, 2014Background
- Plaintiffs seek a declaratory judgment that they own 100% of the mineral rights on three tracts in Red River Parish, Louisiana, and that NRG has no ownership because prior transfers were void.
- Cajun Electric expropriated surface rights in 1980–81 but expressly reserved mineral rights to the record owners (Plaintiffs or their predecessors).
- Cajun Electric entered Chapter 11 in 1994; the bankruptcy trustee purported to sell the property in 2000 to Louisiana Generating LLC, which then purportedly conveyed to NRG.
- Under La. R.S. 31:149 (as of 2000) an expropriating authority must give prior owners who reserved mineral servitudes notice and a right of first refusal before selling; also prescription of non-use does not run while a purchaser with expropriation authority holds the surface.
- Plaintiffs allege they received no notice and were denied their right of first refusal in violation of state law and due process; they therefore allege the 2000 transfers are nullities and their mineral servitudes remain effective.
- NRG moved to dismiss under Rule 12(b)(6), arguing the bankruptcy Confirmation Order released Plaintiffs’ rights, NRG took the property free and clear, and Plaintiffs are enjoined from collaterally attacking the Confirmation Order; court denied dismissal.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Validity of 2000 sales given lack of notice/right of first refusal under La. R.S. 31:149 | Sales are void ab initio because Plaintiffs never received the statutory notice or opportunity to exercise right of first refusal | Sales valid under bankruptcy process and transfers conveyed free and clear to NRG | Court: At pleading stage, Plaintiff’s factual allegations plausibly show lack of notice and a reasonable inference that sales could be nullities; denial of dismissal |
| Effect of bankruptcy Confirmation Order — releases/enjoins Plaintiffs’ claims | Confirmation Order does not automatically preclude Plaintiffs’ separate constitutional/state-law claim if they never received required notice | Confirmation Order released claims and enjoins collateral attack on bankruptcy sale | Court: Cannot resolve on Rule 12(b)(6); factual allegations permit challenge to the sale despite Confirmation Order; dismissal denied |
| Proper forum for dispute (district court v. bankruptcy court) | District court may adjudicate declaratory relief here; Plaintiffs did not participate in bankruptcy | Matter belongs in Bankruptcy Court; alternative request to refer | Court: Declines referral at this stage; denies dismissal and declines to refer now |
Key Cases Cited
- In re Katrina Canal Breaches Litig., 495 F.3d 191 (5th Cir. 2007) (standard for accepting well-pleaded facts on a Rule 12(b)(6) motion)
- Cuvillier v. Taylor, 503 F.3d 397 (5th Cir. 2007) (pleading must provide grounds for entitlement to relief above speculative level)
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) (complaint must plead factual content allowing reasonable inference of liability)
- Amacker v. Renaissance Asset Mgmt. LLC, 657 F.3d 252 (5th Cir. 2011) (facial plausibility standard explained)
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (labels and conclusions insufficient; plausibility required)