Articles Posted in Energy, Oil & Gas Law

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After the Mississippi Supreme Court held in "Jones County School District v. Mississippi Department of Revenue," (111 So. 3d 588 (Miss. 2013)), that a school district was not liable for oil and gas severance taxes on royalties derived from oil and gas production on sixteenth-section land, the Chancery Court of Wayne County held that Wayne County School District (WCSD) was owed interest by the Mississippi Department of Revenue (MDOR) on its overpayment of severance taxes at the rate of one percent (1%) per month. The chancellor determined, based on Section 27-65-53 of the Mississippi Code, that the payment should have started on June 5, 2013, ninety days after the Jones County decision. Finding that the chancellor correctly applied the statute, the Supreme Court affirmed the judgment of the chancery court. View "Wayne County School District v. Morgan" on Justia Law

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Randy Braswell sued Ergon Oil Purchasing, Inc. in Amite County over some oil contracts. Two days later, Ergon brought a declaratory judgment action against Braswell in Rankin County over those same contracts. Ergon removed the Amite County action to federal court, where it remained for eighteen months before it was remanded. In the meantime, Ergon obtained summary judgment against Braswell in Rankin County. Braswell appealed, arguing that the Rankin County judge erred when he granted summary judgment in Ergon's favor and when he refused to transfer the action to Amite County. The Supreme Court agreed with Braswell that the action should have been transferred to Amite County, and reversed the judgment of the Rankin County circuit judge based on the doctrine of priority jurisdiction, and remanded the case to the circuit court. View "Braswell v. Ergon Oil Purchasing, Inc." on Justia Law

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A city pipeline buried beneath a road leaked odorless natural gas which infiltrated a nearby home, causing an explosion. Residents alleged that the natural gas lacked its distinctive rotten egg smell, and that the odorant that was designed to provide the warning odor was defective because it faded. After reviewing Plaintiffs’ products-liability and assorted negligence claims against the odorant manufacturer, odorant distributor, and transmission pipeline, the Mississippi Supreme Court concluded that these claims failed as a matter of law. The Court therefore affirmed the circuit court’s grant of summary judgment to the odorant manufacturer and transmission pipeline, and reversed the circuit court’s denial of the odorant distributor’s motion for summary judgment to render judgment in its favor. View "Elliott v. El Paso Corporation" on Justia Law

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In 2006, Tellus Operating Group, LLC, sought to integrate the interests of various owners for the purpose of drilling a well unit in Jefferson Davis County. In accordance with its statutory duty to make a good-faith effort to negotiate the voluntary integration of the owners’ interests on reasonable terms, Tellus mailed option forms to the owners in June and July of 2006. In this case, the issue this case presented for the Supreme Court's review was a challenge to a Mississippi Oil and Gas Board pooling order force-integrating various owners’ interests in a proposed drilling unit. After review, the Court held that the Board’s order was supported by substantial evidence. The Court also found that one owner’s attempt to voluntarily integrate his interest within twenty days of the Board’s pooling order did not satisfy Section 53-3-7(2)(g)(iii). View "Tellus Operating Group, LLC v. Maxwell Energy, Inc." on Justia Law

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A.A. was electrocuted while playing on the farmland of David and Sherry Melton. Riley Berry, who worked for the Meltons, had parked a cotton picker under an allegedly sagging power line, which was owned by Entergy Mississippi, Inc. Ultimately, A.A. climbed onto the cotton picker, touched the power line, and was electrocuted. At the time of the accident, A.A.'s mother, Mary Bethanne Acey, was en route to Moon Lake, in Coahoma County with her son and Charles Graves. A 911 dispatcher called Graves to inform him of the accident. Graves immediately turned the car around to proceed to the Meltons' home. Acey then spoke with the dispatcher, who explained the gravity of the situation to Acey and informed her that A.A. had been "shocked." Emergency medical responders arrived shortly after Acey's arrival. A.A. suffered severe burns to both of her arms and her hip. A.A. subsequently was airlifted to Le Bonheur Children's Hospital in Memphis, Tennessee, and was later transferred to Shriners Hospitals for Children in Cincinnati, Ohio, which specializes in treating burn patients. Thereafter, Acey commenced legal action on behalf of A.A., and individually, against defendants Entergy, David and Sherry Melton, Melton Farms, Mary Mac, Inc., and Norfleet Investments, LP. Defendants settled all claims on behalf of A.A. Regarding Acey's individual bystander claims for emotional distress, Entergy moved for summary judgment and moved to strike the affidavits of Acey and Dr. William Hickerson. The trial court subsequently denied each motion. According to the trial court, based on the nature of A.A.'s injuries, this case "cries out for the expansion of" the factors provided by the California Supreme Court in "Dillon [v. Legg," 441 P. 2d 912, 920 (Cal. 1968)], adopted by the Mississippi Supreme Court in "Entex, Inc. v. McGuire,"(414 So. 2d 437 (Miss. 1982)). Thereafter, Entergy was granted interlocutory appeal. Because the Mississippi Court found that Entergy's motion for summary judgment should have been granted, the Court reversed and remanded the case for further proceedings. View "Entergy Mississippi, Inc. v. Acey" on Justia Law

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In 2008, Plaintiffs S. Lavon Evans Jr. and his companies S. Lavon Evans Jr. Operating Company, Inc.; S. Lavon Evans Jr. Drilling Ventures, LLC; and E & D Services, Inc. sued Defendants the law firm of Baker & McKenzie, LLP, and one of its partners, Joel Held. The complaint also named as defendants Laredo Energy Holdings, LLC, and its related subsidiaries S. Lavon Evans Operating Texas, LLC, and E & D Drilling Services, LLC. Plaintiffs listed seven causes of action in the complaint: counts one and seven charged the Baker Defendants with legal malpractice and breach of contract; counts two through six charged all the defendants with breach of fiduciary duty, negligent omission and misstatements of material facts, civil conspiracy, aiding and abetting, tortious interference, and breach of duty of good faith and fair dealing. Defendants Laredo Energy Holdings, LLC; S. Lavon Evans Operating Texas, LLC; and E&D Drilling Services filed a cross-claim against the Baker Defendants claiming legal malpractice, breach of contract, breach of duty of good faith and fair dealing, and breach of fiduciary duty. Evans asserted that in 2007, he lost access to his companies’ two largest assets (two oil drilling rigs) and was sued in Texas by the Baker Defendants on behalf of Reed Cagle (Evans’s business partner), who was acting on behalf of Laredo Energy Holdings, LLC. This triggered a flurry of liens and suits by vendors against Evans and his companies – all because, as Evans claims - he made decisions and entered agreements based on advice and recommendations from the Baker Defendants, who Evans believed to be his lawyers. Evans claimed that his businesses once were worth more than $50 million but now were accountable for debts exceeding $31 million as a result of the conduct by the Baker Defendants. The Mississippi case was tried, and the jury returned a verdict of $103,400,000 in actual damages for Plaintiffs and Cross-Plaintiffs. S. Lavon Evans Jr. was awarded $1 million from defendant Joel Held and $30 million from Baker & McKenzie. S. Lavon Evans Operating Company, Inc., was awarded $1 million from Joel Held and $29 million from Baker & McKenzie. E&D Services, LLC, was awarded $1 million from Joel Held and $19 million from Baker & McKenzie. The jury also assessed Evans, individually, with ten-percent comparative fault. And the trial court reduced the $31 million amount awarded to Evans, individually, by ten percent. The Cross-Plaintiffs were separately awarded $22.4 million from Joel Held and Baker & McKenzie, collectively. A divided jury awarded $75,000 in punitive damages to Plaintiffs and $75,000 in punitive damages to Cross-Plaintiffs. The trial court denied the Baker Defendants’ post-trial motions for judgment notwithstanding the verdict, new trial, and remittitur. This appeal followed. After careful consideration of the trial court record, the Supreme Court affirmed as to the Baker Defendants’ liability. But because the Court found the jury was not properly instructed, it reversed and remanded the case for a new trial on proximate cause and damages. View "Baker & McKenzie, LLP v. Evans, Jr." on Justia Law

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The Forrest County Board of Supervisors passed an ordinance requiring oil and gas facilities located within the county be fenced in. Delphi Oil, Inc. appealed a circuit court order that upheld the Board's ordinance, arguing that the regulatory authority of the State Oil and Gas Board (OGB) preempted any local regulations of oil and gas activity. The Supreme Court found the state law did not preempt the local ordinance, and affirmed. View "Delphi Oil, Inc. v. Forrest County Board of Supervisors" on Justia Law

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Three main issues were raised on appeal to the Supreme Court in this case: (1) whether a school district is liable for oil and gas severance taxes on its royalty interests derived from oil and gas production on sixteenth-section land (the chancellor ruled that it is not); (2) whether the statute of limitations restricts the time period in which a school district can seek a refund of severance taxes that it had paid erroneously (the chancellor ruled that a three-year statute of limitations applied to any refund claims); and (3) whether a school district is liable for administrative expense taxes on its royalty interests derived from oil and gas production on sixteenth-section land (the chancellor ruled that it is). Upon review of the applicable code and in consideration of the arguments of the parties to this case, the Supreme Court found that the chancellor's judgment should be affirmed in part and reversed in part: (1) school districts are not liable for oil and gas severance taxes on sixteenth-section royalty interests: school districts, as political subdivisions of the state, are not included within the definition of "persons" made subject to these taxes; (2) pursuant to the Mississippi Constitution, statutes of limitation in civil causes do not run against the state or its subdivisions; and (3) school districts are liable for administrative expense taxes on sixteenth-section royalty interests: "[t]hese assessments are 'fees,' not 'taxes'; the Legislature has expressly made the state and its subdivisions subject to these fees; and no constitutional provision or other law is violated by requiring school districts to pay them." View "Jones County School District v. Mississippi Department of Revenue" on Justia Law

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This interlocutory appeal stemmed from litigation concerning a contract dispute among Williams Transport, LLC (Williams Transport), Driver Pipeline Company, Inc. (Driver Pipeline), Buckley Equipment Services, Inc. (Buckley Equipment), and other unnamed defendants. Based on an arbitration clause in the contract, Driver Pipeline filed a motion to compel arbitration. The trial court denied the motion to compel arbitration as well as a subsequent motion for reconsideration. Driver Pipeline filed a petition for interlocutory appeal, which the Supreme Court accepted as a notice of appeal. Finding no error by the trial court in denying Driver Pipeline's motion to compel arbitration, the Supreme Court affirmed. View "Driver Pipeline Company, Inc., Buckley Equipment Services, Inc. v. Williams Transport, LLC" on Justia Law

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The plaintiffs (collectively "Tellus") alleged that they owned the "shallow gas" rights in a tract of land known as the Bilbo A Lease. While ownership of the shallow gas was disputed, all parties agreed that the defendants (collectively "TPIC") owned the gas rights below 8,000 feet and the oil rights in both the shallow and deep zones. In 2004, Tellus sued TPIC, alleging that it had produced Tellus's shallow gas through one if its wells known as the A-1 well. After much pretrial litigation and a two-month jury trial, the trial judge declared that the plaintiffs were the rightful owners and submitted the plaintiffs' conversion and negligence claims to a jury. The jury returned a general verdict in favor of the defendants, and both sides appealed. Finding no reason to reverse, the Supreme Court affirmed the jury verdict and the trial court's declaratory judgment. View "Tellus Operating Group, LLC, v. Texas Petroleum Investment Co." on Justia Law