*1 578 any judgment
liability
may
based
U.S.
52 S.Ct.
The district stay court lifted the in re-
sponse stipulation. appeals
Two “R” lifting stay stipulation contends that the was insuf-
ficient because it did not concede the value of the vessels as set forth in the owners’ FREY, al., Frederick J. et complaint. We consider Two “R” to be Plaintiffs-Appellants, protected by stipulation and affirm the action of the district court. COMPANY, AMOCO PRODUCTION shipowner’s The issues of a limita Defendant-Appellee.
tion liability only are issues for the admiralty court, recognized but it is well No. 90-3553. that a may pursue claimant the claim be United States Appeals, Court of jury fore a in state court for resolution of Fifth Circuit. those beyond issues jurisdic the exclusive tion of the admiralty court. Where the Oct. claimant admiralty concedes the court’s ex jurisdiction clusive to determine all issues
relating to the liability, limitation of
district court any stay should lift against
the state proceeding. parte Green, See Ex *2 MeKowen, Ellis, C. Thomas W. Frederick Bates, Dennis, Ellis, Mayhall & Strain,
IV, Smith, Ba- Ellison, Jr., Ellison & David M. La., plaintiffs-appellants. for Rouge, ton Belew, H. Peragine, Christina Frank J. Redfearn, New & Simon, Peragine, Smith defendant-appellee. Orleans, La., for JONES, REAVLEY, KING and Before Judges. Circuit Judge: REAVLEY,. Circuit other Frey and J. Frederick Frey) appeal (collectively owners interest (1) rulings that: district court’s from the gas lease Louisiana terms received issue, at are gas sales contract under its the lessee realized amount part of the (2) royalty miscalculation gas; sale than paid more royalties claims based prescribed; years before suit three operator Agreement past Amoco's status as unit of the ment and future Morganza subject deficiencies in that Amoco delivered to field does not its records Morganza to Louisiana's Public Records Act. We Columbia under the Contract. royalties hold that are due on $280.2 Amoco shared the million with *3 receipts Frey's under Louisiana lease Frey gas royalty provi- under the Lease's prescription and that ruling the district court's sion, similarly $66.5 but it did not share the supported by is not sufficient find- take-or-pay proceeds. million in settlement ings, agree but we with the court's decision Frey April 1988, alleging sued Amoco in regarding Louisiana's Public Records Act. subjected receipts that the Lease Amoco's take-or-pay payments settlement I. BACKGROUND Frey's royalty interest and that Amoco Frey accounting owns interests under a min- made mistakes which caused it (the Lease) part underpay Frey's royalty eral lease that covers on the de- Morganza livered to Columbia. natural field in Louisi- (Amoco) pre- ana. Amoco Production Co. granted partial The district court Amoco pared the Lease from a Bath Louisiana summary judgment that the Lease does not Frey's form and executed it in 1975 with Frey entitle to a share of the take- predecessor-in-interest, (F F & L Planters or-pay by amounts received Amoco under L). produced & Amoco has and sold Agreement. Frey the Settlement v. Amo- pursuant to the Lease since 1982. Co., F.Supp. 783, co Production 708 787 provides Frey "royalty (E.D.La.1989). Frey's The Lease At the close of case- by (1/5) [at] during trial, sold Lessee one-fifth in-chief a bench the district amount realized at the well from such Frey's royalty court ruled that miscalcula- 1981, agreed pertaining period sales." In Amoco to sell the tion claims before produce April 18, by that it would under the Lease 1985 are barred Louisiana's Corporation to Columbia Gas Transmission three-year prescription Frey statutе. (Columbia). The contract between Amoco post-April Amoco then settled all of their (the Morganza Contract) and Columbia con- accounting disputes. trial, 1985 After "take-or-pay" provision tains a re- Frey's request court denied for a declarato- quires pay Columbia to Amoco for a mini- ry judgment subject that Amoco is to Loui- year regardless mum amount of each Frey siana's Public Records Act. v. Amo- of whether Columbia takes the minimum Co., F.Supp. 601, co Production amount. (E.D.La.1990). Frey challenges these three rulings.
By July 1985, Amoco and Columbia were
litigation
approximately
embroiled in
over
take-or-pay
$265 million in
liabilities that
II. DISCUSSION
Morganza
Amoco claimed under the
tract. Amoco and Columbia resolved their
Con-
A. ROYALTYON TAKE-OR-PAYSETTLEMENT
PROCEEDS
take-or-pay dispute in their Settlement
Agreement.
Agree-
The terms of a Louisiana mineral
Under the Settlement
ment,
paid
aрproximately
obligations
signa
Columbia
Amoco
lease determine the
of its
"recoupable take-or-pay
Producing
$45.6 million as a
tories. See Odom v. Union
payment," meaning
five-year Co.,
649,
(1961).
that over a
243 La.
141 So.2d
period,
Frey
dispute
$45.6
Columbia could take
million
and Amoco
whether
required
worth of
over its minimum
received
Amoco under its
purchase.
agreed
annual
pay
Columbia also
contract with Columbia are
approximately
$20.9
Amoco
million as
"amount realized" from
sold Amo
what Columbia and Amoco call a "nonre-
summary judg
co. On cross-motions for
ment,
eoupable take-or-pay payment."
interpreted
Columbia
the district court
recoup
by taking
gas royalty
requiring
mnnot
gas. Finally,
this sum
extra Lease's
clause as
paid
ap-
Frey only
receipts
Columbia
Amoco
Amoco to account to
proximately
specific gas production.
$280.2 million under the Settle-
attributable to
(5th Cir.1990)
parties'
Oil
905 F.2d
851-52
The court considered the
dispute
contract
(predicting
Mississippi Supreme
Court
controlled Diamond Shamrock
price ceilings
Exploration
Hodel,
1159, would consider federal
in de-
Co. v.
853 F.2d
(5th Cir.1988)
granted
par-
termining
meaning
of "market value"
summary judgment
gas royalty contract). Finally,
tial
that it owes
the De-
partment
no
monies received
of Interior as lessor wrote the
Frey,
F.Supp.
lease,
here,
from Columbia.
at 787. Diamond Shamrock
while
interpreta-
prepared
We review de novo the court's
Amoco as lessee
presented
the Lease and
legal
tion of the Lease's
effect. FED.
it to F & L for execution. So
56;
Corp.
Tanenbaum, Diamond Shamrock does not control the
R.Civ.P.
USX
(5th Cir.1989).
result in this case.
*4
paragraph 7(b)
The Lease's
establishes
1. Production and Diamond Shamrock
royalty
the
on
sold
Lessee to be
Shamrock,
In Diamond
this court
(1/5)
one-fifth
of the amount realized at
"production,"
held that
as used in a mineral
the well from such sales.
prepared by
Department
lease
or,
the
of Interi-
physical
means the actual
severance of The district court held that "a `sale' of
ground.
physical production
minerals from the
Shamrock,
Diamond
cannot occur absent
holding
gas." Frey,
any determination of the
under
market value of
permits
premises
which ...
leased
exclusively
either the lessor
inure
gross
or lessee to
receive
lessee.6
*7
recognize
why
enjoyed by
5. We
that our statement of
Co-
the lessee
the
to
exclusion of the
gave
White,
take-or-pay
lumbia
Amoco
monies
Right
Royalties
lessor.
The
To Recover
Settlements,
contradict Diamond Shamrock’s assertion that
"take-or-pay payments
Take-Or-Pay
on Natural Gas
41
payment
pipe-
are
for the
at 673. We refute his assertions to
Okla.L.Rev.
line-purchaser's
purchase
gas.”
to
...
bolster and further define our conclusion as to
failure
6. A price negotiated by producer commentator two economic benefits legitimately from a presumably higher lease that he claims are short-term contract and the especially marketing strategy, as to a lease de- not have courts Although Louisiana equivocal or language is lease’s by where presented question take-or-pay cided not coun- does reading that a supports the Lease of interpretation case, our a conflict. tenance Louisiana of aspects several with accords Henry. to in addition jurisprudence decision Supreme mineral Court’s The Louisiana Louisiana, La. In Oil Producers’ Wemple v. in per- to supports is bound our ... also lessee mineral 83 So. [a] to and faith at good The in lease contract the Lease. of interpretation form leased property royalty of one- operate the provided develop Wemple and in issue operator prudent produced and reasonably $200 and oil saved eighth as of for his les- and off any if used for per year mutual per well himself of benefit Wemple After the premises. sor. the leased execution, became aware the lessee 1989)(em lease’s (West 31:122 § La.Rev.Stat.Ann. tech- production new oil employed a and obligates Amo added). This statute phasis oil more produced indisputably nology that to se diligence reasonable exercise co to new process. The other available than it discovers that for a market cure cas- efficiently drew method also pumping Co. Oil Shell property. See leased under well, the lessee which gas from inghead (La. 798, 803 Inc., 428 So.2d Williams, gasoline, natural produce to condensed 1983). lease. Wemple in addressed product not in share did not If lessors oil produce right to its cited The lessee incentive have an would lessees payments, its efficiency of the lease under under prices compromise volume it contending owned that method chosen pipe with or settlements contracts their by-product gasoline natural rights all favorable exchange for lines Wemple process. The рroduction Roy To White, Right Recover terms. equity princi- applied It disagreed. court Take-Or-Pay Set Gas on Natural alties cannot the lessor to decide ples 670-72; Com at tlements, Okla.L.Rev. away a valuable given to have presumed Payments Take-or-Pay ment, Royalty premises leased arising Accruing to Considerations and Related lessor that both nothing in return n. Producers, 27 Houston L.Rev. be benefit- entitled owner “the [are] Production (1990); see also tech- lucrative, production new by the ed” Pyote, 579 Baptist Church First v.Co. at Id. in the lease. nology addressed Paso (Tex.Civ.App. 280, 287 S.W.2d - El 237-38; also La.Civ. 1045-48, see So. at compro n.r.e.) (lessee who 1979, writ ref’d 1987) (West 2053, 2055 arts. Ann. Code for benefits volume mises inter- equitable subject to contracts (vague is accountable lessors not accrue did pretation). as term lease typical lessors). law or No *8 “amount by Leаse’s the covered If not in representation of royalty owners sures payments, take-or-pay language, realized” pipelines; lessees between negotiations Wemple, in gas at issue casinghead the like negotiations in represented not was Frey the derived a benefit constitute the would Given Columbia. between not did parties the that premises 31:122,we leased by R.S. on lessees imposed duty Lease, but which in the allocate explicitly conflict-of-interest not countenance will lease, so ain its interest imately pledge is By next contract. the under price obtainable amount. only that improved position bid- lessor’s credit the reasoning, does the lessee our ding is attributable bargain benefit that this economic the Because lessor with and shares the producer’s interest pipeline. exclusively with the it reachеs les- royalties "the on this when example expect no lease, concerns can next lessor White’s the as production similarly profits on future pledges payments the are Take-or-pay see benefit. producer is the While producer’s for a loan. inter- exclusively collateral obtaining the attributable gas, it from the value economic pipeline’s the they stem from est because royalty the net pay obligation no under shared must which gas, value of the to take Id. But position.” credit improvement of its lessee. the lessor between legit- producer that the only the collateral inequitably keep plaintiffs Amoco would Finally, for itself. from the time that the receive royalty interpretation their spite checks to a later date. De our of the Lease against the mandate of article 3495 as to the Amoco accords with LA.CIv.C0DE beginning three-year prescriptive pe (West 1987): "[ijn ANN.art. 2056 case of riod, apply resolved, Louisiana courts the contra doubt that cannot be otherwise suspend pen.- provision interpreted non valen tern doctrine to the in a contract must be beginning against party od's while the cause of action is who furnished its text." plaintiff through not knowable summary We reverse the district court's diligence. exercise of reasonable Ed for Amoco on issues mundson v. Amoco Production plaintiffs and hold that the are entitled to (5th Cir.1991) (citing cases); F.2d 83-84 their share of one-fifth of all Plaquemines see also Parish Comm'n received Amoco that are at- Development Co., Council v. Delta premises. tributable to the leased On re- (La.1987) (contra So.2d 1055-56 non mand, the district court will calculate the exception prescrip vаlentem still viable amounts due. Louisiana). tion statutes in ruling," As "the basis for the court's B. PREscRIFPI0NONROYALTYMISCALCULA- stated, district court "that which is know- TIONCLAIMS easily by parties able and obtainable is not Frey also sued Amoco for miscella suspending running to be a basis for royalty underpayments neous that are inde prescription." We must take this state- pendent take-or-pay payments. In Loui ment in concert with the time-bar date cho- siana, royalty underpayment claims for sen the court to mean that at the time subject three-year prescrip to a liberative plaintiffs royalty received their checks (effectively limitations) tion a statute of month, they and statements each enough had day pay that "commences to run from the them, information to enable exigible." ment is 3494(5), 7 LA.CIV.CODEANN.arts. through the exercise of reasonable dil- (West Supp.1991). At the igence, they to discover that hаd a cause of Frey's case-in-chief, close of the district against action Amoco for miscalcu- Frey's court held that claims for findings lation. The court did not issue miscalculations that occurred more than support required fact to its conclusion as years April three before filed suit in under Federal Rule of Civil Procedure Frey appeals 1988 are time-barred. difficulty discerning any sup- and we have involuntary pre- court's dismissal of his port in the evidence for that conclusion. April miscalculation claims. law, three-year Under Louisiana See FED.R.CIv.P.41. prescriptive period begin did not to run on undisputed payment Frey's royalty It is is demand. miscalculation claim until upon receipt plaintiffs through able under article 3495 of s could have known only diligence check. We need determinE the exercise of reasonable whether Louisiana's doctrine of contro they against had such a cause of action a,qere praes(cid:127) Perhaps non valentem criptio operates nulla cur'rit Amoco.9 the district court decided beginning plaintiffs, through to shift the that the the exercise of three-year statutory prescriptive period diligence, reasonable could have known of Frey's "Exigible" synonymous "requireable" *9 counselto Amoco. But the earliest of 7. with and "demandable."Webster'sThirdNewInter- February7, 1986, they theseletterswasdated only go so Dictionary English Language prove date, Frey national Unabridged to whether (1968). could have known of his cause of action through Frey diligence. the exerciseof reasonable prescription 8. This Latinism means that "no April1988, years filedsuit in withinthree against person bring runs tion." F.2d unable to an ac- sending letter, of cannot reasonably thе first demand so the letters Ayo Corp., v. Johns-ManvilleSales help prove Frey Amoco that couldhave (5th Cir.1985). royalty known of the miscalcula- parties prior April 9. The wastedconsiderabletime discuss- tions to ing significance of demandletterssentfrom paid for, royalty by examining Amoco but not and unaccount- miscalculations royalty ed for gy differentials based on the ener- their check stubs each month. royal content of volumes of sold. We do Amoco attaches documentation to its ty reading not understand from our checks that contains all of the informa transcript, required by royalty trial and the district court does tion Louisiana's disclosure explain, plaintiffs periodically not how the could have sta tute.10 Amoco also simply by plaintiffs explaining known of these occurrences ing read- sent the booklets royalty significancе royal their check stubs. Absent sus- of the numbers on their picion Amoco, plaintiffs ty inviting questions had no rea- check stubs and about request son to further information from royalty calculations. But Louisiana law they internally Amoco when and if received guarantee does not Amoco that it will not explanations royalty consistent ceipts. of their re- royalty underpayments be sued for more years than three after the have accepted. royalty been If the check stub We reverse the district court's inconsistency cogniza upon ruling prescription contains an internal based its document, against Frey ble from the face of the may then it claim for miscal- recipient culations and direct the court to reconsider be held that the stub's could reasonably light opinion have known of a cause of action the issue in of this on remand. receipt. from the date of simply But if the stub Frey prescription also claims that gas pro understates the volume of suspended was under contra non valen- well, recipient duced from a need not tern for the entire time that Amoco refused production call for an audit of the well's supply requested well-accounting infor preserve right each month to royalty underpayment. to sue for prescription suspended mation. While It is not until the prevent Louisiana when a defendant acts to suspect owner has reason to an plaintiff discovering from a cause of ac duty understatement to investi tion, Edmundson, 924 F.2d at gate further arises. merely did not so act in this case. Amoco right keep properly apply asserted its its information To Louisiana law on con- confidential, valentem, and this alone is insufficient to tra non the distriсt court must suspend prescription. Frey Id. at 82-83. Ab consider when first had cause to sus- voluntary disclosure, Frey may only pect royalty by Amoco, sent get miscalculations ei- by asserting ther from internal inconsistencies shown on information from Amoco statutory right, including stubs, rumors, Frey's or contractual check or otherwise. right discovery in a lawsuit. miscalculation claims concern tax rebates that Amoco received from Colum- C. LOUISIANAPUBLICRECORDSACT Frey's royalty interest, bia free of account- statutory gas balancing among working asserts a substantive Morganza Morganza field, gas to all of Amoco's records interests in the used (4) price per Owner'sfinal realizable barrel 10. Louisiana's disclosure statute re- quires or MCF. (5) pro- payment Totalamountof severanceand other ~wJhenever is made for oil or taxes, exception production owner, pur- duction with thе of windfall to an interest whether order, lease,servitude, profit suant to a division other tion shallbe includedon the checkstubor on or tax. agreement, following (6) after taxes are deducted. (7) property all of the informa- Netvalueof total salesfrom the payment, interest, expressed an attachmentto the form of the informationis otherwise unless Interest owner's as a provided on a fraction, production (1) decimal above. regular basis: (1) number, any, Lease identification if (8) Interestowner'sshareof the totalvalueof appropriateagreement referenceto tificationof the wellor unit from which withiden- prior sales tax deductions. pro- (9) Interest owner'sshare of the sales value ductionis attributed. production lesshis shareof the and severance year purchases Monthand of salesor in- tаxes, applicable. as payment. *10 cludedin the 31:212.31(B)(West1989). § LAREV.STAT.Ar1N. Totalbarrels of crude oil or MCFof purchased. Act, under Louisiana’s Public Records issues prescription. The deny- La. decision (West 44:1(A)(2) 1982). § Ann. Rev.Stat. Public Records coverage Act of Amo- Frey’s claim is based on the fact that the co’s upheld. records is We REMAND the Louisiana Conservation Commission unit- case for further proceedings consistent ized Morganza field in 1982 and ap- opinion. with this pointed operator. field as The dis- REVERSED and REMANDED. interpreted trict court the Public Records excluding Act as Amoco’s Morganza records from its definition of “public JONES, EDITH H. Judge, Circuit F.Supp. at record.”11 741 602-03. We concurring: agree. join I rendered on the purpose of the Public Records Act is facts of this case three First, reasons. to foster “the inherent public we are not attempting to overrule the Dia- reasonably to be informed as man case, mond Shamrock whose outcome de- ner, basis, and upon reasons govern which pended upon a standard production-type affairs mental are conducted.” Trahan v. royalty clause. so; We could not do for it Larivee, 365 So.2d 298 (La.Ct.App. follows from our rule that one panel of the 1978). Regardless many of how lessors’ circuit not prior overrule a panel that interests affected and much how mon a later decision in conflict previ- with the ey unitization, is involved in a the decision ous, controlling authority is precedent. to unitize and the choice of operator a unit Umphlet See Connick, v. only private affect individuals corpora (5th Cir.1987).
tions.
inOnly
Second,
Lewis Spurney,
opinion
456 So.2d
this
recognizes that the
(La.Ct.App.1984)
question
did a court mandate
dis-
lessors’
entitlements to
private
closure from a
entity under
proceeds
Louisi-
or settlements is ini
ana’s Public Records Act.
per-
The court
tially
resolved
construction
partic
of the
a newspaper
mitted
to access the records
ular lease under applicable state law. See
corporation
of a
that received $25 million in
1 E. Smith
Weaver,
& J.
Texas Law of Oil
promote
state funds to
the world’s fair. & Gas 209
seq.
et
(Supp.1991). Compare
But the court restricted access to records Killam
Bruni,
Oil Co. v.
We REVERSE the district port court’s judg- a lessor’s claim to share in take-or-pay ment because of rulings on take-or-pay settlements of types, various but there are 44:1(A)(2) (West 1982) pro- conductеd, § La.Rev.StatAnn. was ... or authority vides that state, of the constitution or laws of this ... books, records, [a]ll having [etc.] ... any public been order body "public ... are used, conduct, ... in the any business, ... records," ... transaction, work, duty, or function which *11 against arguments economic substantial rata share simple pro receiving a lessors’ Herrmann, See, e.g., settlements. such Settlements: Contract on Gas Royalty J. 61 & Gas Falls, Texas Oil
Other Shoe Take-or-Pay Comment, Royalty on (1990); Ac- Consideration Related
Payments Producers, Hou.L.Rev.
cruing to such is- not reach ease does
(1990). Our
sues. if, pursuant Third, opinion states settlement, a make-up clause
to a market higher gas at took
pipeline later on which the one
value than entitled to based, the lessor were
proceeds receive two should proceeds in such
share reimburse would checks, of which one original share between
the differences n. See value. higher market corollary necessary agree. I supra. explic- be also should understanding value however; market stated, if the
itly the settlement the time of
falls up pursuant made sales time prepared settlement, must the lessor accept an producer to reimburse difference. royalty for that his
offset tailor its yet; a court could
Better danger of from the producer protect pro- settlement over-paying
ceeds. C.
Jeffrey and Shannon G. RUSS
Russ, Plaintiffs-Appellants, COMPANY, PAPER
INTERNATIONAL
Defendant-Appellee.
No. 90-1445. Appeals, States Court
United Circuit.
Fifth 7, 1991.
Oct. Banc Rehearing En
Rehearing and 13, 1991.
Denied Nov.