Millions Awarded in Louisiana Oil Lawsuit
A Terrebonne Parish, Louisiana judge has awarded more than $11 million to a Houma family stemming from a dispute over unpaid oil royalties.
The Courier reports attorney Michael St. Martin and his wife, Virginia, filed a lawsuit in December 2006 alleging that I.P. Petroleum Co. and other parties failed to pay nearly $925,000 in royalties on oil and gas they produced from a well owned by the family.
The well, just west of Houma, is owned by the St. Martins and the Delaware-based Quality Environmental Processes.
“We’ve been waiting for this for a long time,” Michael St. Martin said. “There are a number of wells on that property. I’ve never had any troubles (with the land) until these people came along.”
I.P. Petroleum subleased the well from Mobil, which was leasing it from the St. Martins and Quality Environmental. Quality is owned by members of the St. Martin family. I.P. Petroleum stopped paying royalties July 1, 1997, court papers say.
Royalties are fees companies agree to pay to a landowner for the right to produce oil on his or her property. They are usually a percentage of the value of oil and gas produced.
Questions arose over ownership of the well when royalties were due. Those claims were settled in a separate lawsuit, according to court papers, but the royalties remained unpaid.
The suit also says I.P. Petroleum; International Paper Co. of Bastrop; its attorney, John Pearce; and his law firm, Montgomery, Barnett, Brown, Read, Hammond & Mintz; “conspired and developed a plan by which (I.P.) retained for itself `suspended’ royalty payments” totaling about $107,000. The money was to be held until it was determined who owned the land.
A five-day bench trial was held in May and September 2009 before Terrebonne District Judge Johnny Walker.
Walker issued two judgments in favor of the St. Martins and Quality Environmental.
In one, Walker ordered I.P. Petroleum and International Paper Co. to pay about $6.7 million in combined penalties, which includes the royalties due, interest, damages and attorney fees.
“Despite legal demand by plaintiffs, I.P. Petroleum Co. Inc., without legal justification or reasonable grounds, willfully and deliberately refused to pay Michael St. Martin and Virginia Rayne St. Martin, and Quality Environmental Processes Inc.,” the judge’s ruling says.
In the other judgment, Walker ordered Pearce and the New Orleans-based law firm to pay about $4.55 million, including royalties, damages and attorney fees.
The judgment says the $107,000 in royalties were deposited in the law firm’s account in 2003. Pearce originally told the St. Martins that the money would be set aside until court proceedings could determine who owns the land, court papers show.
“The funds were kept by defendants, not returned to Pure Resources Inc., nor ever forwarded to plaintiffs,” the judgment says.
Jamie Manuel, the Baton Rouge-based attorney representing I.P. Petroleum and International Paper, said that he and his clients are “still processing the results of the judgment.”
“We are obviously disappointed in the result, but we are going to pursue whatever avenue we think is proper,” Manuel said.