*1 578 any judgment

liability may based U.S. 52 S.Ct. 76 L.Ed. 1212 (1932); rendered in said state court action. Complaint Dammers & Van derheide, (2d herein, Cir.1988). stipulat- while not 3. Claimants $460,887.06 agreeing to as the to or only fault which Two “R” finds petitioner’s combined value interest in Rogers’ stipulation is the failure to Rig pend- “R” 20 and her vessel Two concede the value of the vessels and ing freight petition- and/or the value of freight. However, parties agreed have in the er’s interest vessel CER 701 and that the amount of the limitation must be pending freight, her hereby stipulate court, resolved in the federal and the feder judgment that in the there event is a or al court jurisdiction has retained in the recovery in the state court action in ex- event that issue has to be resolved. Under $460,887.06, against cess of whether Two stipulation Rogers claimants cannot Inc., “R” Drilling Company, any or other $460,887.06 recover more than the without party parties may liable or who make adjudication future in the federal district against cross claim or over claims Two court. Nor may Rogers obtain Inc., Drilling Company, “R” in no event judgment in state court that would have will claimants herein seek to enforce that any preclusive upon effect the issue of the recovery excess insofar as value of the admiralty vessels. The juris may expose same Drilling Two “R” Com- diction of the rights federal court and the Inc., pany, $460,- liability in excess of fully protected. Two “R” are agree We pending adjudication 887.06 prior with the decisions of the Eastern Dis complaint liability of limitation of in this trict of question. Louisiana on this See In Court. Cooper/T. re: Smith Stevedoring 4. stipulate Claimants herein agree F.Supp. (E.D.La.1990); In Re: Mister Drilling Inc., that if Two “R” Company, Wayne, 729 F.Supp. (E.D.La.1989); responsible attorneys’ is held for fees Kattelman v. Engineering Corp., Otis and costs which against be assessed F.Supp. (E.D.La.1988). byit party co-liable defendant a seek- ing indemnification AFFIRMED. attorneys’ fees costs, and such pri- claim shall have ority over the claim of claimants herein.

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 statute. (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 approximately 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, 853 F.2d at 1168. This and severance of the F.Supp. 708 gas royalties Though made under the lease there at at 786. the court cited only gas actually produced authority proposition issue due on for the that in Louisi take-or-pay payments ana, gas apart and not on received pipeline- from the mineral estate lessee-producer buyer the from the cannot be owned the until it is purchaser. produced, id., Id. see the court assumed that a thing distinguish must be owned to be sold.1 How Several facts Diamond ever, Foremost, under Louisiana law a Shamrock from this case. the language. thing cases concern different lease In sale is sometimes made of a come: as of what shall accrue from an to Shamrock, Diamond the lessor received as royalty estate, yet unborn, a fraction of the "amount or value of animals or such production saved, removed, or sold" things, although yet like other not exist- whereas is entitled to a fraction "of ing. [the the amount realized at the well from (West 1952). LA.CIV.CODEANN. art. 2450 gas]." Compare sale of rock, Diamond Sham- importantly, gives expla- More the court no (emphasis added) 853 F.2d at 1163 why take-or-pay payments nation for Frey, F.Supp. Second, with 708 at 786. the not considered of the total considera- applied Diamond Shamrock court federal tion for the .to take determining meaning law in of the De- Morganza Contract. partment issue, of Interior leases there at predict The Lease affords on the amount but we must how the Louisiana sales, production. Supreme take-or-pay realized from not on Cf. Court would allocate Shamrock, 1161; See, e.g., Diamond 853 F.2d at Ki under the Lease. Pi- Bruni, 264, ney Country llam Oil Co. v. 806 S.W.2d Woods Life School v. Shell Corp. Vela, 866, (Tex. agree & Gas v. 429S.W.2d 871 1. We with the court that Louisianalaw place. 1968) determineswhena saleof mineralstakes and held that the market valueof is Piney Country See Woods LifeSchoolv.ShellOil determinedat the timethat a salescontract Co., 225, (5th Cir.1984), opposed gas pro 726 F.2d 234 cert. de is executedas duced. SeealsoUnitedLandsCo.v.Pan-Ameri to when the nied, 1005, 1868, 471U.S. 105S.Ct. 85 L.Ed.2d (1985). 161 Butwe think that Louisianacourts Co., 84, (La.Ct.App.1943) can Prod. 14So.2d compensation would treat Amoco'stotal from (per curiam)(oil pay "`sold' ... indicatesthe compensation Columbiaas to Amocofor the purchaseprice obligation ment of a pay purchaseprice"); or the gas regardless "sale"of produced,owned, of whetherthe is v. Piney Woods, cf. Henry or in existence. In Corp., (that Mississippi apply F.2d at 233-38 would 1334, Ballard& Cordell 41 418So.2d 1338- supportsMississippi Vela rule that not sold (La.1982), Supreme the Louisiana Courtex produced). until presslyrejectedthe rule announcedin TexasOil (Tex.App. make-up gas? Antonio writ later takes If 266-67 the fair - San Pennzoil 762 P.2d requested); v. rises, State pipeline market value of (no (Wyo.1988) royalty on take-or- usually responsible paying for the pay payments explicitly leases tie where make-up gas at the increased market val- production). This court before gets proportionate ue. The [lessor] take-or-pay arrangements can has held that share of the increased market value as brings effect a “sale” of take-or- make-up gas for the now taken. jurisdiction pay arrangements within lessee-producer then pay has to despite Commission Federal Power additional due on the increased possibility producer may not deliv value, necessitating roy- fair market two pursuant arrangement. any gas er alty payments purchase gas. on one Properties, Cattery Inc. Federal Power (5th Comm’n, gas drops, depending If the Cir. 1964), grounds, contract, rev’d on other U.S. pipeline-purchaser could 223, 230, 360, 364-65, 15 L.Ed.2d 86 S.Ct. pipeline due a If gets refund. (1965). explicitly Lease That the bases refund, certainly then eq- it would be oil miscellaneous mineral—but lessee-producer get uitable for the gas royalties production strongly sug — overpaid royalties. problem refund on A *5 gests interpret production that we not to be length arises here with the of the make- prerequisite royalties gas.2 on See up period, usually years, being longer (West 1987) La.Civ.Code Ann. art. 2050 than the [applicable statute of limitations (each provision contractual must be inter royalty to lessees’ refund In this claim]. preted light provi of contract’s other situation, quite possible it is sions). producers would never be able to recover practical contends that Amoco account- overpaid royalties take-or-pay pay- on keep difficulties should us from divid- ments. ing recoupable take-or-pay payments be- Shamrock, Diamond 853 F.2d at 1166 Frey. tween it and Amoco relies on the (footnotes omitted). language If the Lease following Diamond statement Shamrock require and Louisiana Frey law to share in support argument: take-or-pay payments, we could not hold [Requiring payments to be simply otherwise because Amoco could would lead to absurd results. shared] have Frey to send two checks to instead of example, royalty payable For if cur- gas one if the market rently take-or-pay payment when the value of rises when made, happens pipeline what when the Columbia takes it.3 provides: 2. operations, The Lease’s clause nents thereof used in lease or unit injected or into subsurface strata as herein- Subject provisions Paragraphs to the (d) ($1.00) provided; after One Dollar royalties paid by and 10 hereof the to be pounds sulphur, payable each ton (a) (which of 2240 Lessee are: on oil includes conden- marketed; (e) (i/s) when and hydrocarbons one-fifth liquid sep- sate and other when units), market by ((/s) value at the well or mine of all other separator arated lease one-fifth produced minerals produced and saved or mined and of that and saved the land and from conducting operations marketed. not used for fuel in on added). (or (emphasis property acreage pooled Lease 7 on therewith If thereof), any part treating or with or in such marketable; represent Frey’s royalty 3. The first check (b) would liquids gas, to make them take-or-pay payment (’/s) share of the and the second one-fifth of the market value at the well represent Frey’s royalty gas by would share operations of the dif- used Lessee in gas’ ference between the market pooled connected with the land leased value when or land; containing Columbia took it and its market value unit all or a of said when gas take-or-pay payment. Columbia sold Lessee submitted its to be one-fifth (!/s) of the amount We do not read at the well Diamond Shamrock to coun- realized from sales; (c) (l/s) possibility such one-fifth of the market tenance the that a owner gas’ value at the mouth of the well of used could demand a share of the full manufacturing gasoline by- Lessee in or other market value both when Columbia submits its products, except computing take-or-pay payment that in such val- and when it takes the ue, compo- pays price there shall be excluded all and Amoco a market differential. case, reject language, On the facts of this we the Lease's "at the well" we interpret according possibility drop this term-of-art to its that a in market demand meaning" price pipeline "received in the oil and in- and between the time that a dustry. Kavanaugh Berkett, take-or-pay payment recoups 407 So.2d submits a (La.1981); see also LA.CIV.CODE could necessitate a refund from the (West 1987) ("Words take-or-pay payments. ANN.art. 2047 of art lessor who shares in given paid approximately and technical terms must be their $45.6 Columbia meaning recoupable take-or-pay pay technical when the contract in- million as a matter."). volves a technical Before "at Agreement ment under the Settlement widely gas leases, the well" became used in exchange, $45.6 was allowed to take Louisiana courts held that the value of was to be determined at the well absent a years. million worth of over five Agreement price Settlement establishes the provision contrary. lease Sartor v. (MCF) for each thousand cubic feet Corp., Arkansas Natural Gas 321 U.s. recouped by during period, Columbia this 620, 622, 724, 726, 64 S.Ct. 88 L.Ed. 967 gas taken, so here the volume of not the (1944). Later, refining to allocate price paid, varied with market over transportation among costs the lessor and make-up period. Thus, no refund from lessee, parties specified place at which necessary could have been royalty purposes. is to be valued for Agreement.4 Settlement See Merritt v. Southwestern Elec. Power argument (La.Ct.App.1986). We notice another worth 499 So.2d consideration, questioned but not raised Amoco. When we Amoco's counsel The words "amount realized at the well significance about the of the term "at the [gas] during argument, sales" could indicate that Amo well" oral he did not language anything co and F & L understood that Amoco would contend that did *6 gas transportation pay royalties only other than allocate marketing and on amounts it received gas physically present costs between Amoco and F & for "at the well" L. gas only present and that could be at the during production. But, again, well Cooperative Ventures and Louisi- Lease demonstrates that Amoco knew how ana Law royalties explicitly dependent to make production Because Amoco and F & L did not but did not do so. Rather than specifically take-or-pay inferring production requirement address whether a from po- possible facts, DiamondShamrockcourt'sconcernsabout 4. Evenif a refundwere on other authority proposition inequitiesarising we know of no that for the tential right from a owner's accountingcomplications abrogate recoupabletake-or-paypay- should to share in legalrights. stating possibleinequity ments. In that a couldresultif the marketdemandand Onecommentatorforeseesshared during make-up decreases statute of limitations runs for term but afterthe accountingproblems complicated even more over- than those considered the DiamondSham- payments,the DiamondShamrockcourt relied keep pipeline-purchaser rockcourt. To out on a federaladministrativestatuteof limitations bankruptcy, gas producer agree a could to Shamrock, not at issuehere. SeeDiamond F.2d at 1166n. 31 accepttransportation gas for direct sale (citing § 43 U.S.C. 1339: producer pipe- the line's liam H. on Natural Gas OKLA.L.REV. 670 to an end-userin lieu of the government-lessoradministrativerefundsof ex obligations. volume SeeWil- royalty payments only cess allowed if refund White, Right Royalties The ToRecover request years payment filed within two after Take-Or-PaySettlements, made). Moreover, the Diamond Shamrock 663, (1988). producer strictlyconstruing If the court cited no casesso tion sec take-or-paypayments 1339, recognized precise mustshare withthe lessor and even that "the producer every- requirements requests and weassumethat the actedin for refund are still un by executing settlement, Indeed, one'sbest interest questionsregarding clear." Id. theFederalCircuitCourtof Appeals already whatthe lessorreceivesun- construedsection1339in accordancewith other limitationsstatutes to has litigated. der the settlement haveto be Id. facts,though, runningonly Evenon these the wewouldnot allow commence or should know of their after "claimantsknow complicated potential natureof a settlementbetween claims." U.S.A., States, pipeline producer compromise Chevron 830, Inc. v. United a rights and a third-party (Fed.Cir.1991). of the lessee. Sowe do not sharethe revenues property part greater of the amount realized from the Lease the sale of and because from contemplated than the fractional division gas royalties production, does not base lease, by the should be considered inher- gas royalty interpret the Lease’s clause we ently contrary to the basic nature of the in a manner consistent with Lease’s only lease and be sustained the clear- object nature. La.Civ.Code Ann. arts. est of cases. (West 1987); Henry v. Ballard Id., Develop- Harrell, at quoting 1338 n. Corp., & (La. Cordell 418 So.2d Law, Regulatory ments Non Oil & Gas 1982). glean objective We nature 30th The Annual Institute on Oil & Gas Supreme of a lease from Louisiana’s Taxation, & Legal Law Southwestern Court: Foundation, added). (emphasis provides the mineral lease for Where Supreme We think that Louisiana’s payment to the lessor of a fractional take-or-pay payments Court would hold interest, arrangement the lease cooperative venture: part of the “amount realized” from the in the nature of a sale of under the lessor contributes the land and the Lease. Amoco se- capital expertise right lessee the neces- take-or-pay payments cured the mu- develop sary to the minerals only by executing a contract to sell the for parties tual both .... acquired pursuant that Amoco benefit of to the objective ... The ultimate payments, Lease. The like the market provisions of a lease is to fix taken, the division price paid constitute econom- between the lessor and lessee of the eco- ic benefits that Amoco grant- received from anticipated nomic the de- right benefits from Columbia the to take velopment the minerals. premises, the leased got that Amoco Id. at 1338 through (emphasis added). contrary the Lease.5 It would be court approval cites with to the nature cooperative Professor Harrell’s of the lease as a statement venture to allow benefit name is attributable to the

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 853 F.2d at 1167. But even if Diamond Sham- sharing the of all economic benefits. depends rock’s rationale on this statement of explains example White his first of a shared take-or-pay-clause purpose, nothing supports the economic benefit: argument that the Diamond Shamrock court longer A term contract shifts the risk of pur- intended to or could have established the price pipeline future market decreases the to pose take-or-pay of clauses for all those who price pro- and future market increases to the come before this court. Similarly, ducer. a commitment to take a wholly It is unrealistic to think that one larger gas amount of shifts the risk to the pay gas would to not take outside the context of pipeline. producer obligated Yet the is not to securing right a sales contract the to certain pay royalties aspects on these economic “payments gas” reserves. In that the to not take royalties contract. No court has held that are only ancillary right gas, are to the to take we computed on a value based the contract believe, jurispru- in accordance with Louisiana length required. or the volume of takes dence, they that are an economic benefit attrib- producer required Id. But while the is not to utable to the sale of under the Lease and royalties pay on economic benefits derived from subject royalty. therefore to Our character- purchase specifi- the contract term and volume ization of the as economic benefits se, per effectively cations the lessor shares in price from the Lease instead of of example, producer these benefits. For if a ne- any gas taken under the Lease avoids the theo- short-term, gotiates fixed-price a contract in a problem retical of attribution when no price rising, market where demand and taken under a lease. See id. at 1166-67. the lessor receives a share of both the posits

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 production 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 Lease’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 reaches 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 valentem 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 had 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 the 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 significance 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 district 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 the 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- taxes, 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. 806 S.W.2d 264 concerning expenditure public’s (Tex.App. Ant.1991, denied) writ - San funds, stating public “[t]he entitled (adopting Diamond Shamrock); State v. exactly see where all money has Pennzoil 752 P.2d 975 (Wyo.1988) been spent.” Id. at 208. The empha- court (adopting Shamrock). Diamond This sized public nature of the records case does not any general favor presump required its regardless decision pri- tion that lessors must share pro in such vate entity nature of the maintaining the ceeds, nor does its pertain rationale to oth records. Id. at 207. types er of settlement clauses in the resolu Because Morganza Amoco’s field tion of records producer-pipeline take-or-pay dis bear no similar or public putes, discernable na- such as contract buy-down ture, the district court properly agreements; held that or releases reduction of mini they public are not records under mum quantities; R.S. “take” or blanket settle 44:1(A)(2). ments covering multiple leases perhaps different lessors. In some jurisdictions, III. CONCLUSION implied covenant to may sup market

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- conducted, § 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.