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Defending Louisiana Environmental Litigation: Grace Ranch (Part II) — Defeating Assignments as Efforts to Avoid the Subsequent Purchaser Doctrine

Written by Kristin Lausten

 In part one of this series, we discussed direct challenges made to the subsequent purchaser doctrine in the recent decision from the Louisiana Court of Appeal captioned Grace Ranch, LLC, v. BP America Production Co., Case No. 17-1144 (La. App., 3rd Cir. July 18, 2018). As noted in part one, the Court of Appeals rejected every argument put forth by the plaintiffs in the case. Under Louisiana law, a current landowner is barred from suing for damage to the land that occurred before the landowner purchased the property. This is known as the subsequent purchaser doctrine (“SPD”). Most of the cases filed with respect to damage to land involve claims of environmental contamination caused by oil, gas, and mineral production and extraction activities.

One method of avoiding the application of the SPD is for the current landowner to obtain a proper and enforceable assignment of rights. We wrote about what constitutes a valid assignment in our discussion of Catahoula Lake Investments v. Hunt Oil, 237 So. 3d 585 (La. App. 3rd Cir. January 10, 2018) (panel being Judges Gremillion, Keaty, and Savoie). In Catahoula Lake, the Court of Appeals held that the language of the assignment was too vague to be valid.

With respect to the assignment issues, a similar result was reached in Grace Ranch (panel being the Chief Judge and Judges Thibodeaux, Keaty and Savoie; the Chief Judge and Judge Thibodeaux concurred in the result reached). This article discusses the assignment issues.

Defending Louisiana Environmental Litigation: Assignments in Grace Ranch

 In Grace Ranch, the plaintiff owned 40 acres of immovable property located in Jefferson Davis Parish. The plaintiff, Grace Ranch, LLC, became fully vested as the owner of all surface and mineral rights in 2016. In 2017, Grace Ranch amended its previously-filed lawsuit to allege, among other things, tortious contamination of its property resulting from the historical oil and gas exploration and production activities of multiple defendants dating back to the 1940s. The various defendants asserted the SPD as a defense and the trial court agreed.

Among other arguments offered to defeat summary judgment, Grace Church claimed that it possessed valid assignments from various previous owners. The trial court rejected those arguments and the Court of Appeals affirmed.

Grace Ranch Assignments: The LeBlancs and General Farms

Being fully aware of the SPD, Grace Ranch obtained what it argued were valid assignments from various previous owners. Of particular importance, Grace Ranch obtained assignments from individuals we will collectively call the “LeBlancs” and from a corporation called “General Farms.” Variously, the members of the LeBlanc family and General Farms owned the surface estate and the mineral servitudes during the 1970s and 1980s when the oil and gas production was ongoing. The Court of Appeals held the assignments to be invalid for these reasons:

  • The one-year prescription period obviated the potential effect of LeBlancs’ assignment which was received in 2013. The claims were not filed until 2017 and the court held the tort claims did not relate back to the original filing as a supplementing pleading, not an amending pleading.
  • General Farms was a dissolved corporation at the time it signed its assignment — under the applicable rules relevant at the time, General Farms could not maintain any claims or causes of action and, therefore, had “nothing to assign”.
  • General Farms possessed its mineral servitude based on a 1986 mineral lease, however, by the time General Farms signed its assignment (2013), said lease had expired. A lessee cannot transfer rights to an assignee under an expired mineral lease.
  • The court utilized the same reasoning for any rights the LeBlancs might have had under the mineral lease.

Lessons for Practitioners

 With respect to the issue of assignments, Grace Ranch and Catahoula Lake establish a hefty and well-stocked arsenal of potential challenges to efforts by plaintiffs to avoid the SPD by obtaining assignments from previous owners.

Litigating Legacy Environmental Litigation: Contact New Orleans Attorney Kristin M. Lausten

Need assistance? Have questions? Contact Kristin M. Lausten. Kristin has experience litigating cases in both state and federal courts throughout Louisiana.

In addition, we provide legal consultation and planning so that you can decrease your risks of being sued for torts related to toxic substances.

The author may be contacted at:

Kristin M. Lausten

New Orleans, Louisiana
Telephone: 504.377.6585

This article is provided as an educational service for general informational purposes only. The material does not constitute legal advice or rendering of professional services.