Court Opinion

ID: 22406
Source: CourtListenerOpinion
Date Created: 2010-04-25 07:55:30+00
Date Added: 2024-06-11T15:04:45.324825
License: Public Domain

IN THE UNITED STATES COURT OF APPEALS
                      FOR THE FIFTH CIRCUIT

                             No. 99-31170

     RICHARD H. FRIEDBERG,

                                            Plaintiff-Appellant,

                                versus

     BELCO ENERGY LP; ET AL.,

                                            Defendants,

     BELCO ENERGY LP; BELCO OPERATING CORP.,

                                            Defendants-Appellees.

                       --------------------
          Appeal from the United States District Court
              for the Western District of Louisiana
                        USDC No. 97-CV-1822
                       --------------------
                          October 27, 2000

Before REAVLEY, BENAVIDES and DENNIS, Circuit Judges.

BENAVIDES, Circuit Judge:*

     Richard Friedberg (“Friedberg”) transferred his mineral

interest in land that he co-owned with W.A. Moncrief (“Moncrief”)

to the Plan Trust in his Chapter 11 bankruptcy.     Friedberg is a

remainderman to the estate in that he has the right to receive

any surplus from the bankruptcy estate.     In the administration of

     *
       Pursuant to 5TH CIR. R. 47.5, the court has determined that
this opinion should not be published and is not precedent except
under the limited circumstances set forth in 5TH CIR. R. 47.5.4.
the estate, the trustee sold this mineral interest to Belco

Energy (“Belco”).   In the present suit, Friedberg disputes this

sale, claiming that Belco failed to fully inform the trustee of

the value of the mineral interest before the close of the

transaction, thereby breaching his duty to disclose.    The

district court granted Belco’s motion for summary judgment.    We

AFFIRM.

                               Facts

     Prior to Friedberg’s bankruptcy, Friedberg and Moncrief

owned a 50% mineral interest in land located in Louisiana, 25%

each in indivision.   Thereafter, Moncrief acquired a lease to the

other 50% of the mineral interest.     Thus, Moncrief had a lease to

50% of the mineral interest and owned 25% of the mineral

interest.

     In May 1996, Moncrief, who at this time controlled 75% of

the minerals, 25% in ownership and 50% in leaseholder rights,

leased his 75% mineral interest to Belco.    In the lease, Belco

agreed to operate a well on the estate and to continue the

drilling of the well Moncrief had initiated prior to the May 1996

transaction.

                            Discussion

     Fraud based on suppression of information requires a

fiduciary or special relationship that creates a duty to speak.

Greene v. Gulf Coat Bank, 593 So.2d 630 (La. 1992).     “To find

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fraud from silence or suppression of the truth, there must exist

a duty to speak or to disclose information.”     Id. at 632.

Friedberg concedes that there is no fiduciary duty between the

parties.   Friedberg’s argument that Belco had a duty to disclose

to the trustee the results of production tests on the mineral

estate rest entirely on Articles 176 and 109 of the Louisiana

Mineral Code (“Mineral Code”).

     According to Friedberg, Article 176 creates a “higher than

ordinary” duty between co-owners of mineral interests through its

reference to Article 109.    Friedberg notes that the comments

following Article 109 provide that this duty is “intended [to] be

a somewhat higher duty than that of ordinary care and good

faith.”    Friedberg’s argument overlooks Article 169 of the

Mineral Code, which provides that “[c]o-ownership does not exist

. . . between the owners of separate mineral rights.”    LA. REV.

STAT. ANN. §§ 31:169.   Moreover, Article 176 pertains to the

authority of a co-owner of a mineral servitude to act to prevent

waste, destruction, or extinction of the servitude.    It does not

refer to co-owners of mineral interest in general.    Also, Article

109 pertains to the obligation of the owner of an executive

interest when granting mineral leases.

     Belco, despite the fact that it was the operator of the

well, was only a lessee.    Friedberg does not argue that because

Belco was the operator there is a higher standard of care.      In

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fact, there was no operating agreement between Belco and

Friedberg creating any kind of duty between the parties.

Moreover, Friedberg concedes that Belco did not make any false or

misleading statements.

     At the time of the sale, Belco, as lessee, and the trustee,

as owner, held different mineral rights.      Without co-ownership,

Belco and the trustee do not share a duty of trust that would

support a duty to disclose.   Also, Friedberg is not alleging the

Belco acted improperly with respect to waste, destruction or

extinction of the servitude or   that Belco improperly executed a

mineral lease.

     Belco and the Plan Trust have separate mineral rights and

are not co-owners; therefore, Friedberg’s argument that Belco had

a duty to disclose is incorrect.       In sum, we find that there is

no special or contractual relationship between Friedberg’s estate

and Belco creating a duty to disclose.      Because our holding

disposes of this appeal we need not address the alternate

arguments advanced by Belco in support of the judgment of the

district court.   The judgment of the district court is AFFIRMED.

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