Opinion ID: 2534600
Heading Depth: 2
Heading Rank: 3

Heading: Was Cimarex's Failure to Pay Reasonable?

Text: Perhaps the most crucial question before this Court is whether the trial court erred in finding Cimarex did not state a reasonable cause for nonpayment under Mineral Code art. 212.23(B). Appellate review of a verdict rendered after a bench trial is subject to the same manifest error standard as a jury verdict. Pinsonneault v. Merchants & Farmers Bank & Trust Co., 2001-2217 (La.4/3/02), 816 So.2d 270, 273. The trial court's determination of a party's good faith is highly contingent on credibility evaluations, and is due a high degree of deference. Authement v. Larpenter, 97-0579 (La.App. 1 Cir. 5/15/98), 713 So.2d 712, 715, writ denied, 724 So.2d 771. Cimarex argues it reasonably believed there were competing claims to the royalty money based on 1) a letter from the Mauboles' attorney, Kenneth Privat, claiming the prescription interruption clause in the contract between the Mauboles and Ereunao was invalid, and 2) a telephone conversation in which Privat suggested there may have been some sort of fraud on the part of Ereunao. This argument fails both on the facts and on the law. First, the Mauboles never clearly articulated any facts in support of their fraud claim. When pleading fraud or mistake, the circumstances constituting fraud or mistake shall be alleged with particularity. La.Code Civ. Proc. art. 856. At no point have the Mauboles clearly articulated any claim of fraud; indeed, their pleadings in the concursus proceeding do not even allege fraud. Although Cimarex paid the Mauboles $7,500 to offset their legal fees in a suit against Ereunao, no such suit was ever filed. Presumably the Mauboles realized they did not have sufficient evidence to prosecute any claim against Ereunao. At some point Cimarex should likewise have realized the Mauboles' stated claim was simply bogus. [3] I also note the mineral royalties in question were due in April 2004, yet the concursus was not filed until December 2004. If Cimarex had believed there was a real dispute over the royalties, it should have filed the concursus when those royalties were due. Instead, Cimarex delayed making payment as long as it possibly could. This illegitimate delay is a clear sign of bad faith on Cimarex's part. [4] More importantly, even if the Mauboles had been able to demonstrate fraud on the part of Ereunao, it would have had no legal effect on the validity of Orange River's interest. Orange River purchased the mineral royalty rights in good faith and in full reliance of public records showing Ereunao as owner of those rights. For at least 120 years Louisiana law has protected the rights of a bona fide purchaser of immovable property [5] who relies on public records. Broussard v. Broussard, 13 So. 699, 45 La. Ann. 1085, 1088 (La.1893)(It is settled in this court by a jurisprudence too inveterate to admit of question that whatever the secret equities between a vendor and vendee, the former can not claim them against a subsequent purchaser in good faith.), Cole v. Richmond, 156 La. 262, 275, 100 So. 419 (La.1924)(Neither fraud, nor want of consideration, nor secret equities between the parties, who have placed on the public records a title valid upon its face, can be urged against a bona fide purchaser or value, who has acted on the faith of such recorded title.) This doctrine was codified in 1984 as Civil Code article 2035: Nullity of a contract does not impair the rights acquired through an onerous contract by a third party in good faith. If the contract involves immovable property, the principles of recordation apply to a third person acquiring an interest in the property whether by onerous or gratuitous title. In Sonnier v. Conner, 43,811 (La.App. 2 Cir. 12/03/08) 998 So.2d 344, writ denied, 6 So.3d 773 (La.2009), plaintiff Lovenda Sonnier was the longtime possessor of three tracts of land with a convoluted chain of title. During the 1980s and 1990s, these tracts of land had apparently been transferred to Rennie and Gloria Sonnier. Plaintiff alleged the acts of sale were simulations and absolute nullities under Civil Code art. 2025. Id. at 348. The tracts were later passed to defendants Andrea Sonnier Conner and Thomas Sonnier, who recorded their interests and transferred the tracts to Diamond McCattle Co., LLC. Id. at 349. Plaintiff's claim against Diamond McCattle was dismissed based on an exception of no cause of action, as Diamond McCattle was held to be a bona fide purchaser and protected under article 2035. Even if plaintiff proved the prior acts of sales were absolute nullities, this would have no effect on Diamond McCattle: The transferee in the exchange of an immovable need only look to the public records to determine ownership and, if such records show no adverse claim of ownership, the transferee obtains good title from the record owner notwithstanding the transferee's personal knowledge of title defects outside the record. McDuffie v. Walker, 125 La. 152, 51 So. 100 (1909); Hodgeson v. McDaniel, 233 La. 180, 96 So.2d 481 (1957); Speights v. Nance, 142 So.2d 418 (La.App. 2d Cir.1962); Succession of Wilson v. Wilson, 509 So.2d 714 (La.App. 3d Cir.1987), writ denied, 512 So.2d 439 (La.1987); Anglin v. Anglin, 05-1233 (La.App. 1st Cir.6/9/06), 938 So.2d 766. Id. at 361. Similarly, if the Mauboles had been able to prove fraud by Ereunaowhich they did not even come close to doingEreunao's fraud would in no way affect Orange River's status as a bona fide purchaser. There is no question that Orange River is a third party to the contract between Ereunao and the Mauboles, that Orange River acted in good faith, and that it relied on the recorded title in favor of Ereunao and its successors. Orange River is entitled to the full protection of Civil Code art. 2035. Mauboles' alleged claim to the mineral royalties is without factual or legal support, and the trial court did not commit manifest error in finding Cimarex's refusal to timely pay was unreasonable.