In re: Samson Resources Corporation

Filing 28

MEMORANDUM. Signed by Judge Richard G. Andrews on 9/27/2018. (nms)

IN THE UNITED ST ATES DISTRICT COURT
FOR THE DISTRICT OF DELAWARE

INRE:

Chapter 11

SAMSON RESOURCES CORPORATION, et al. ,

Case No. 15-11934-BLS

Reorganized Debtors.

(Jointly Administered)

CALVIN WILLIAMS ,
Civ. No. 18-84-RGA
Appellant,
V.

SAMSON RESOURCES CORPORATION, et al. ,
Appellees.

MEMORANDUM

Pending before this Court is appellant Calvin Williams' prose appeal from a December
13, 2017 Order (B.D.I. 2956) ("Claim Objection Order") 1 entered by the United States Bankruptcy
Court for the District of Delaware (the "Bankruptcy Court"), which sustained the above-captioned
debtors' objection to Appellant' s proof of claim. For the reasons set forth below, the Settlement
Trust's motion for leave to intervene (D.I. 14) ("Motion to Intervene") is granted2 and the Claim
Objection Order is affirmed.

1

The docket of the chapter 11 cases, captioned In re Samson Resources Corp., et al. , Case No. 1511934-BLS (Bankr. D. Del.), is cited herein as "B.D.I. _ ." The Appendix to Appellee' s Brief,
D.I. 21 , is cited herein as "SA_ ."
2

The Settlement Trust was created pursuant to Debtors' confirmed plan ofreorganization (B .D.I.
2019) ("Plan"). The Plan granted the Settlement Trust sole authority to file, withdraw, or litigate
to judgment any objections to general unsecured claims asserted against the Debtors. The
Settlement Trust is responsible for making distributions to holders of allowed general unsecured
claims in accordance with the Plan, as well as liquidating, monetizing, and pursuing the causes of
action for the benefit of holders of allowed general unsecured claims. On February 9, 2018, the
Settlement Trust filed its Motion to Intervene in this appeal. (D.I. 14). The Motion to Intervene
meets the requirements set forth in Federal Rule of Bankruptcy Procedure 8013(g). Among other
things, the Settlement Trust has a strong interest regarding the issues of whether Appellant' s claim

1.

Background. Samson Resources Corporation and certain affiliates ("Debtors")

operate in the oil and gas industry. In September of 2015, Debtors filed voluntary petitions for
relief under Chapter 11 of the Bankruptcy Code. In early 2017, the Bankruptcy Court confirmed
the Plan, and the Debtors emerged from bankruptcy as reorganized entities. (B.D.I. 2070).
2.

The Lease. The following facts appear uncontested. Appellant' s royalties arise

from a lease, executed in 1949 by Will Seamster (as amended, "Lease"), which granted Leroy
Connell exclusive mineral rights to the land described as the "Northeast Quarter of Northwest
Quarter (NE ¼ of NW ¼), Section 35, Township 18 North, Range 9 West" in Webster Parish,
Louisiana (the "Seamster Tract"). The Lease provides that Will Seamster "grants, leases and lets
exclusively unto lessee for the purpose of investigating, exploring, prospecting, drilling and
mining for and producing oil, gas and all other minerals." In return for the mineral rights, the
Lease provides that Will Seamster will be paid a one-eighth (1 /8) royalty of all oil and gas
produced from the wells, in addition to an initial payment of $1,000. The Lease was amended on
May 21 , 1951 to provide that drilling on any land unit with which the Seamster Tract was pooled
would be sufficient to satisfy the ten-year prescriptive period for developing the mineral rights for
the entire Seamster Tract, and not just the portion that was pooled. The pooling arrangement was
subsequently amended, as reflected in the Amended Division Order, dated April 18, 1977.
3.

Will Seamster owned a portion (159/160, or approximately 99.4%) of the 40-acre

tract covered by the Lease, and that tract is only one-sixteenth (1/16) part of the 640 acres covered
by the Stewart 35 Unit with which his land is pooled. Because of this, his 1/8 royalty interest must

constitutes an allowed general unsecured claim, and the Settlement Trust actively participated in
litigation of these issues before the Bankruptcy Court. Appellant's various responses to the
Motion to Intervene fail to address any of statute' s legal requirements or any of the legal
arguments made in support of the reliefrequested. (See D.I. 8, 16, 18). The Courts finds the relief
requested in the Motion to Intervene is appropriate under the circumstances of this case and it is
hereby granted.
2

be reduced by multiplying it by 159/160 and then by 1/ 16. This results in a .0077637 fractional
royalty interest held by Will Seamster. Will Seamster had five children, including Beatrice
Seamster Williams. Beatrice Williams, inherited one-fifth (1 /5) of Will Seamster' s royalty interest
or .00155274 royalty interest in the Seamster Tract. Beatrice Williams had six children, including
Willie Willams, each of whom inherited one-sixth (1 /6) of Beatrice' s royalty interest or .00025879
royalty interest in the Seamster Tract. Willie Williams had ten children, including Appellant.
Two of Willie Williams ' children predeceased Willie with no descendants, and therefore, in
accordance with applicable law, Willie Williams' interest was divided into eighths and not tenths.
Appellant has a one-eighth (1 /8) interest of Willie Williams ' royalty interest, or .00003235 royalty
interest in the Seamster Tract. 3
4.

The Williams Heirs 4 own royalty interests in connection with nine wells (the

"Wells") located in Webster Parish in which the Debtors owned interests, including, in some
instances, the operating interests. All of the Wells are primarily gas-producing wells. However,
the operating Wells also produce oil which is called "condensate" and is collected by Samson.
Samson acquired the Lease in 2003. (SA849 at 61:19-21 ; SA813 at 25:16-20).
5.

The Sale Order. As part of their reorganization, Debtors pursued various asset

sales, and, on January 29, 2016, filed a motion seeking authority to sell certain assets (B.D.I. 621 )
("Sale Motion"), including the Debtors' working interests in certain oil and gas leases. Appellant
filed various pleadings objecting to the Sale Motion. (See SA5-23 (B.D.I. 665) (objection to Sale
Motion through attached letter asserting Lease was obtained by fraud, was illegally amended in

3

A full description of the heirship and calculation of Appellant' s Owner Decimal of 0.00003235
(647/20,000,000) is set out at SA602-06.

4

An illustration of the Williams Heirs' family tree can be found at SA603 . As the Bankruptcy
Court noted in the Claim Objection Order, this heirship was not challenged at trial by the Williams
Heirs. (See B.D.I. 2956 at n. 12).
3

1951 and again in 1972 and was obtained from a party under disability) ; SA24-47 (B.D.I. 770)
(asserting that Lease was not held by timely production of minerals); SA454-74 (B.D.I. 832)
(asserting same)). Appellant argued that because the Lease was invalid, the Debtors could not sell
their interest in the Lease. (Id.)
6.

On June 7, 2016, the Bankruptcy Court held an evidentiary hearing on the Sale

Motion and heard evidence and argument from the Williams Heirs in support of their claims.
(SA480-550). Appellant made various arguments, focusing on his belief that royalty payments
were not properly made (see id. at 44:24-45:3) and that the Lease was invalid because it had
expired by its own terms (41 :18-44:19; 50:19-51:12). Debtors presented evidence and testimony
setting forth, inter alia, the difference between the Debtors' working interest in the assets and
Appellant's royalty interest in the assets;5 the continued validity of the Lease and the Debtors '
ownership of a working interest thereunder; evidence showing that drilling sufficient to hold the
Lease by production had occurred within ten years after entry into the Lease (see SA93-97
(showing "spud" dates of 1951 , 1953, 1955)); and the fact that the proposed sale did not include
Appellant's royalty interest. (See id. 15:22-41 :3). The Debtors further argued that, even if that
were not the case, Appellant's challenge to the Lease could not be sustained because the relevant
prescriptive period6 under Louisiana law had long since passed, and Appellant and his predecessor
in interest had accepted payments arising from the Lease. (Id. at SA58-60).

5

Debtors' witness testified generally that a typical oil and gas lease creates and governs separate
interests in the wells. (See SA496-97 at 17:14-18:10). Generally speaking, the owner of the
"working interest" has the right to come onto the property to drill and operate the well. The owner
of the "royalty interest" is the mineral owner who receives a portion of the revenue generated by
oil and gas produced by the well. (Se e id.)
6

"In Louisiana, claims for royalty underpayment are subject to a three-year liberative prescription
(effectively a statute oflimitations) that ' commences to run from the day payment is exigible. " '
Frey v. Amoco Prod. Co., 943 F.2d 578, 586 (5th Cir. 1991) (quoting LA. Crv. CODE A . arts.
3494(5), 3495 (West Supp.1991 )), opinion withdrawn in part on reh 'g, 951 F.2d 67 (5th Cir.
1992), certified question accepted, 592 So. 2d 1308 (La. 1992), and certified question answered,
4

7.

Following argument, the Bankruptcy Court ruled from the bench. (SA539-46 at

60:4-67:4). As the Bankruptcy Court explained, " [W]hat's in front of me today is whether or not
the Debtors can sell their alleged working interest in the Seamster tract to a third party. What's
not in front of me today is anything to do with the royalty payments .. . The royalty issue and who
owns the working interests are two separate things." (Id. at 60:7-60 :20). The Bankruptcy Court
determined, based on the facts and evidence presented, that "there is a valid lease," that " [t]he
lease was entered in 1949, production began prior to 1959 and continues to today," and that "the
Debtor has the ability to sell that working interest." (Id. at 65 :9-65:12).7 The next day, the
Bankruptcy Court entered the Order overruling Appellant's objection and approving Debtors ' Sale
Motion with respect to the assets. (B.D.I. 1024) ("Sale Order").
8.

On July 11 , 2016, Appellant filed a Motion to Present New Evidence (B.D.I. 1154)

("First Reconsideration Motion"). The Bankruptcy Court treated this as a motion for
reconsideration under Federal Rule of Civil Procedure 59, held a hearing on September 7, 2016,
and denied the First Reconsideration Motion the same day. (B.D.I. 1325). On September 15,
2016, Appellant filed a Motion to A lter or Amend the Judgment Pursuant to Fed. R. Civ. P. 59(e)

603 So. 2d 166 (La. 1992), and opinion reinstated in p art on reh 'g, 976 F.2d 242 (5th Cir. 1992).
See also Louisiana Land & Exp!. Co. v. Pennzoil Exp!. & Prod. Co., 962 F. Supp. 908, 921 (E.D.
La. 1997) ("[T]here is a three year prescriptive period in which to contest royalty
miscalculations").
7

The Bankruptcy Court also set forth alternative bases for overruling Appellant' s objection to the
sale. "In the alternative, the Court could find .. . the fact that the beneficiaries of the Seamster
lease received and continue to receive ro yalty payments prior to 1959 and have continued to
receive them to this day, that under Louisiana law, that constitutes sufficient evidence that there ' s
a valid lease. (SA544 at 65 :13-65 :19). "That is not my primary ruling. My primary ruling is
factual in nature. My secondary ruling, only to the extent my primary ruling is wrong, would
reach the same result. Those checks have been received, they' ve been cashed; as a legal matter
that' s sufficient to establish the lease." (Id. at 65:20-65:25). The Bankruptcy Court also observed
that the relevant statute of limitations provided a third basis for overruling Appellant' s objection to
the sale. (SA545 at 66 : 1-66:20).
5

to Prevent Manifest Injustice (B.D.I. 1355), and subsequently filed a revised version on October 5,

2016 (B.D.I. 1446) ("Second Reconsideration Motion"). The Bankruptcy Court held another
hearing to consider the Second Reconsideration Motion on November 16, 2016, and again denied
Appellant' s request for relief by order entered the same day. (Civ. No. 16-1124-RGA at D.I. 22,
11/16/16 Hr' g Tr. at 56:19-58:20; B.D.I. 1663).
9.

Appeal of Sale Order. On December 5, 2016, Appellant filed his Notice of Appeal

of the Sale Order. (B.D.I. 1719). On August 30, 2017, this Court dismissed Appellant' s appeal of
the Sale Order as untimely. (See Williams v. Samson Resources Corp., Civ. No. 16-1124-RGA
(D. Del. Aug. 30, 2017) at D.I. 60, 61). Appellant appealed that decision to the Court of Appeals.
(Id. at D.I. 69). On April 12, 2018, the Third Circuit affirmed the dismissal. (Id. at D.I. 83-1). On

May 15, 2018, Appellant's petition for rehearing en bane was denied by the Third Circuit.
Appellant filed a Petition for Writ of Certiorari with the United States Supreme Court on June 8,
2018, which remains pending at No. 18-5661.

IO.

The Claim. Appellant filed a proof of claim (Claim No. 732) ("Claim") against

Samson in the Chapter 11 cases. Appellant's Claim asserted that Samson owed him an
undetermined amount for fraud, theft, and misappropriation of funds. (See SAl-4)). The Claim
did not include any supporting documentation. (See id.)
11.

Claim Objection Order. Following the Bankruptcy Court's entry of the Sale

Order, on May 5, 2017, Debtors filed the Claim Objection. (SA551-67). The Claim Objection
asserted that the Debtors' books and records reflected no liability to Appellant and that Appellant
failed to provide the requisite documentation to support his claim. (SA565-67). Appellant filed a
response on May 12, 2017 (SA568-73) and an additional response on July 24, 2017 (SA592-95 ).
Appellant again asserted that certain grants of interest in mineral servitudes on the Seamster Tract
that were created prior to the Lease (the "Pre-Lease Grants") expired by operation of law.
6

(SA570-72; SA592). Appellant further asserted that the Pre-Lease Grants had not been extended
under Louisiana law. (Id.) In addition, Appellant asserted that the Lease "that assigns to me a 1/8
share of all oil and gas and it also expired under its own terms absent sufficient drilling and
operations" was amended in 1951 to exclude interests in oil. (SA571). Appellant claimed that the
Debtors had not produced a payment history for the initial lessee, and also claimed that the first
well was not drilled on the property until 1971. (SA572). Appellant further asserted that the PreLease Grants somehow relate to the Debtors ' interest in the Seamster Tract and resulted in an
unjust enrichment. (SA592).
12.

On August 7, 2017, the Debtors filed a reply and declaration in support of the

Claim Objection. (See SA596-777; SA778-97 ("Johnson Declaration")). Debtors argued that
Appellant's challenge to the validity of the Lease was res judicata as it already had been fully
presented and ruled upon the by Bankruptcy Court. (SA599). Even if the Bankruptcy Court' s
previous opinion did not have preclusive effect, Debtors submitted several independent bases to
conclude that the prescriptive period barred any challenge to the Lease. (SA609). Debtors
submitted evidence demonstrating Appellant had accepted benefits under that contract and
therefore could not challenge the Lease. (SA609-10). Debtors also submitted evidence supporting
their thorough review of the relevant documents, calculations of Appellant's royalty interest, and
full payment to Appellant for that interest. (SA601-614; see also SA781-86).
13.

On August 10, 2017, the Bankruptcy Court held an evidentiary hearing to consider

the Claim Objection. (SA798-854). The Bankruptcy Court indicated that the issue before it was
not whether the parties had a valid lease, but instead "royalties and whether they' ve been paid and
whether they' ve been received and whether they were appropriate." (See SA805 at 17: 18-20).
Appellant agreed that the issue before the Bankruptcy Court was the payment ofroyalties. (Id. at
17:22-25). At the hearing the Debtors introduced Exhibits A through N of their supplemental
7

response and the Johnson Declaration, which were each admitted without objection. (SA802 at
14:4-22; SA615-777 at Exhs. A-N) . Additionally, Ms. Johnson, a Division Order Analyst with 27
years of experience in the oil and gas industry, testified at the hearing in support of the Claim
Objection. (SA809-l O at 21 :2-22: 16). Ms. Johnson testified that the Lease granted a 1/8 mineral
royalty to Will Seamster, that a 1/8 mineral royalty was the standard interest granted to land
owners through the 1990s, and that none of the terms of the Lease were out of the ordinary.
(SA811 -12 at 23:5 -24:18). She further testified that no division orders had altered the rights of
royalty holders under the Lease to receive payment for all oil, gas, or other hydrocarbons extracted
under the Lease. (SA820 at 32:11-15; SA822 at 34:22-25; SA823 at 35:10-17). She also testified
that she had confirmed Appellant's "Owner Decimal" (that is, the royalty percentage of gas, oil
and other mineral proceeds that Appellant had a right to receive under the Lease) after accounting
for the other persons that had inherited interests in the Lease. (SA816-l 7 at 28:20-29:4; SA82526 at 37:16-38:25). Ms. Johnson further testified that none of the Pre-Lease Grants had any effect
on that analysis. (SA815-16 at 27:23-28:19; SA817 at 29:17-24). Ms. Johnson further testified
that she confirmed that the Debtors had paid Appellant completely for his interests, and that such
payments had been made by direct deposit to Appellant' s bank account at his request. (SA827 at
39:1-10; SA849-50 at 61:19-62:7; see also SA782 at 5, ,r 11). She further testified that the
Debtors regularly reported their oil and gas extractions to Appellant in his check detail and to the
Louisiana Department of Natural Resources and that those records were publicly available.
(SA827-28 at 39:11 -40:8; SA830-31 at 42:3-43:5).
14.

The record reflects that Appellant did not put on any evidence regarding the

payment of royalties or the calculation of his Owner Decimal. (See, generally, SA831 -49 at
43 : 11-61: 18). The calculation of his royalty interest was not disputed in the record, but rather
was explained at length by the Debtors' witness. (SA834-40 at 46:20-52 :2 (explaining that
8

additional fractional interests in the calculation of owner decimals and working interest decimals
reduce the calculated decimal rather than increasing it)). Appellant did not introduce any

evidence regarding mineral extractions associated with the Seamster Tract or the Debtors'
payments of his royalty interest. (See generally, SA831-49 at 43 :11-61 :18).
15.

On December 13, 2017, the Bankruptcy Court entered the Claim Objection Order

denying Appellant' s claim. (SA855-64). The Bankruptcy Court held that its Sale Order
definitively answered Appellant' s claims regarding the effect of the Pre-Lease Grants, the alleged
termination of the Lease, and the alleged alteration of royalty rights under the Lease. (SA862).
The Court further noted that the Sale Order, which has not been disturbed on appeal, was binding
and dispositive of the issues Appellant raised regarding the validity of the Lease. (Id.) With
respect to Appellant's claim of underpayment, the Bankruptcy Court concluded that the Debtors
had properly calculated Appellant's Owner Decimal and had paid Appellant in full for the
amounts that he was owed for "hydrocarbon extractions (gas, oil and otherwise)." (SA862-64).
The Bankruptcy Court noted that Appellant had not presented any rebuttal evidence regarding the
"amount of gas, oil or otherwise, extracted from the subject Wells" and did not rebut Debtors'
evidence regarding his Owner Decimal or how that Owner Decimal was calculated. (Id.)
Accordingly, the Bankruptcy Court disallowed Appellant's Claim in its entirety. (Id.)
l 6.

Appeal of Claim Objection Order. Appellant filed a notice of appeal with respect

to the Claim Objection Order on December 22, 2017. (B.D.I. 2978). The merits of the appeal
have been fully briefed. (D.I. 12, 13, 15, 20, 21, 22, 23).
17.

Jurisdiction and Standard of Review. The Court has appellate jurisdiction over

all final orders and judgments from the Bankruptcy Court. See 28 U.S.C. § 158(a)(l). This Court
"review[s] the bankruptcy court' s legal determinations de nova, its factual findings for clear error
and its exercise of discretion for abuse thereof. " See In re Trans World Airlines, Inc. , 145 F.3d
9

124, 130 (3d Cir. 1998) (noting that both the Third Circuit and the district court "exercise the same
standard of review") (internal quotations and citations omitted).
18.

Discussion. While not entirely clear from the pleadings, Appellant argues that the

Lease is invalid due to fraud, that the Pre-Lease Grants were fraudulently obtained, granted
unconscionable benefits to the counter parties, and somehow relate to the Lease in such a way that
it also was fraudulently obtained and unconscionable. (See D.I. 12 at 4-5). Appellant further
argues that the Lease terminated through non-production prior to 1959 and alternatively that he
has not been paid in full for the 1/8 royalty interest provided under the Lease. (Id. at 5-13).
Conversely, Debtors argue that, having already litigated these issues in connection with the Sale
Order, Appellant is precluded from arguing that the Pre-Lease Grants or the alleged expiration of
the Lease for non-production, or any other event, invalidated the Lease. (See D.I. 20 at 15-20).
19.

The Third Circuit has identified four general requirements for the application of

collateral estoppel: "(1) the identical issue was previously adjudicated; (2) the issue was actually
litigated; (3) the previous determination was necessary to the decision; and (4) the party being
precluded from relitigating the issue was fully represented in the prior action." Henglein v. Colt
Indus. Op. Co., 260 F.3d 201 , 209 (3d Cir. 2001) (quoting Raytech Corp. v. White , 54 F.3d 187,

190 (3d Cir. 1995)). Here, the arguments raised in opposition to the Claims Objection concerning
validity of the Lease (see B .D.I. 321, 599) - that encumbrances on the mineral servitudes of the
Seamster Tract were acquired by fraud, that those encumbrances expired, and that the Lease had
not been held by production of minerals within the required time - are identical to the arguments
raised in his opposition to the Sale Motion (see SA5-23 ; SA24-47; SA454-74). The record
reflects these issues were actually litigated in connection with the Sale Motion and were the focus
of the evidence and arguments Appellant submitted in connection therewith. It is clear that the
Sale Order resolved those issues. (B.D.I. 1024, 1030). The validity of the Lease was necessarily
10

central to the Bankruptcy Court's determination that the Debtors could alienate and sell their
interests in the Lease. Appellant's interests were fully represented as a party to the proceeding,
and he was given a full and fair opportunity to litigate the validity of the Lease. That Appellant
represented his own interests pro se does not change the analysis. See, e.g. , Eaton v. Jeff White 's
Auto Inc ., 2014 WL 5780708, at *4 (D. Del. Nov. 5, 2014) (holdingpro se plaintiffs claims were

previously litigated and resolved by state court and were thus barred by collateral estoppel).
Addressing these same arguments in connection with the Claim Objection, the Bankruptcy Court
correctly recognized that the validity of the Lease has been decided after substantial litigation by a
previous order of the Bankruptcy Court, and Appellant cannot re-litigate these arguments in this
matter. 8 (See B.D.I. 2956 at 8).
20.

Debtors argue that, even if these issues had not been adjudicated already in

connection with the Sale Motion and Sale Order, Appellant's challenge to the Lease's validity is
barred under Louisiana law for two reasons: 1) the prescriptive period to challenge the Lease has
long since passed, and 2) Appellant voluntarily accepted benefits under the Lease, and therefore
cannot challenge its validity. (See D.I. 20 at 20-23). The Court must agree.
21 .

Under Louisiana law, a party cannot challenge the validity of an agreement after

accepting benefits under that agreement. See, e.g. , Mony Fin. Servs. v. Savoie , 1990 WL 178711 ,
at *2 (E.D. La. Nov. 8, 1990). Here, Debtors submitted uncontroverted evidence that Appellant
has accepted benefits under the Lease and therefore cannot be heard to challenge it. (See SA827 at
39:1-10; SA849-50 at 61 :19- 62:7; see also SA782 at 5, ,r 11). Indeed, the Bankruptcy Court
8

Appellant has continued his appeal of the Sale Order. As Debtors correctly argue, however, it is
not necessary for appeal of the Sale Order to be completely resolved for issue preclusion to apply.
United States v. 5 Unlabeled Boxes, 572 F.3d 169, 175 (3d Cir. 2009) ("[T]he pendency of an
appeal does not affect the potential for res judicata flowing from an otherwise-valid judgment.");
see also In re Brown, 951 F.2d 564, 569 (3d Cir.1991) ("In this case, the order of the state court
granting summary judgment on liability was not final for purposes of appeal, but that does not
deny it preclusive effect in the bankruptcy court.").
11

included this as an alternative basis for overruling Appellant's objection to the Sale Motion. " In
the alternative, the Court could find .. . the fact that the beneficiaries of the Seamster lease
received and continue to receive royalty payments prior to 1959 and have continued to receive
them to this day, that under Louisiana law, that constitutes sufficient evidence that there' s a valid
lease. (SA544 at 65 :13-65:19). "That is not my primary ruling. My primary ruling is factual in
nature. My secondary ruling, only to the extent my primary ruling is wrong, would reach the same
result. Those checks have been received, they've been cashed; as a legal matter that's sufficient to
establish the lease." (Id. at 65 :20-65 :25).
22.

The Bankruptcy Court also included the expiration of applicable statutes of

limitations as an alternative basis for overruling Appellant' s objection to the Sale Motion. (See
SA545 at 66: 1-20). In connection with this appeal, Debtors raise the same argument. Under
Louisiana law, the prescription period for an action to annul a contract, including for fraud, is five
years. (See D.I. 20 at 20 (citing LA. CODE Crv . ART. 2032); Whitten v. Moorman , 973 So. 2d 159,
164 (La. Ct. App. 2007) (applying 5-year prescription period for allegations of fraud in the
inducement)). As the Bankruptcy Court correctly noted, the prescription period for claims
contesting royalty miscalculation is three years. (See B.D.I. 2956 at 2 n.4). Here, the Lease was
executed and recorded more than 50 years ago, and the Lease was inherited by Will Seamster' s
children in 1970, more than 30 years before Appellant inherited his partial interest in the Lease.
The legal right to challenge the Lease for non-production or fraud was therefore prescribed long
before Appellant had any interest in the Lease. The record reflects that Appellant failed to meet
his burden of showing the action was not prescribed under Louisiana law. See Carter v. Haygood,
892 So.2d 1261 , 1267 (La. 2005) (" [I]f prescription is evident on the fact of the pleadings, the
burden shifts to the plaintiff to show the action is not prescribed.")

12

23 .

Appellant's remaining arguments are also unavailing. Although Appellant did not

provide any documentation in support of his Claim (see SAl-4), Appellant again argues that he
has been underpaid for his interest in the Lease. (See D.I. 12 at 4). The record reflects that
Debtors introduced voluminous evidence concerning the calculation of Appellants' royalty interest
and the payments that have been made to him.9 Appellant did not challenge the Debtors'
calculation of his mineral royalty interest under the Lease or introduce any evidence relating to the
Debtors' calculation of that interest. Likewise, Appellant did not introduce any evidence
regarding the Debtors' production of minerals or the payments that he received from the Debtors
on account of that production. Accordingly, Appellant cannot prevail on his claim of
underpayment as there is no evidentiary basis for the Court to rule in his favor.
24.

Appellant also argues that Will Seamster somehow lacked mental capacity to enter

into the Lease and cites Succession of Molaison, 34 So.2d 897 (La. 1948), in support of his
proposition that courts can undo a contract entered into between parties where one party is of
"limited mental capacity and one [is] experienced in business affairs." (See D.I. 5 at 2; D.I. 12 at
1, 6-7). In response, Debtors cite cases demonstrating that the Molaison decision has been widely
criticized and distinguished and further argue that the case is factually distinguishable. (See D.I.
20 at 27-28). Debtors also point out that Appellant has provided no authority to support the
proposition that the holding in Molaison would overcome Louisiana' s prescriptive statutory
period. (See id.). Debtors argue that even if the Court applied Molaison ' s holding, Appellant still
would not prevail because he has not shown that Will Seamster fits the narrow category of people
that the Louisiana court sought to protect in that case - i.e., a person of limited mental capacity.
9

Debtors introduced evidence demonstrating: (i) the derivation and calculation of Appellant's
partial royalty interest (see, e.g. SA781 at 4, 7); SA601-6; SA825-26 at 37:13-38:18); (ii) the
volume and type of minerals extracted from the Seamster Tract (SA685-88,711-77 at Exhs. M-1,
N); and (iii) the payments made to Appellant on account of those mineral extractions (id. at
SA711-77, Exh. N; SA782; SA826-27 at 38:16-39:10).
13

(See id. at 28). The Court agrees with Debtors. Appellant argues that Will Seamster had no

formal education, a submission allegedly supported by U.S. census data (id.; D.I. 13 at 2), but
offers nothing in support of his assertion that Will Seamster lacked mental capacity. Even
construed liberally, Appellant does not allege that his great-grandfather was mentally disabled, nor
did he introduce any evidence that could support such a finding.
25 .

Appellant' s overall argument is that his Claim should be allowed because the Lease

was obtained by fraud or that it otherwise is unconscionable, but Appellant adduced no evidence
to support these assertions. (See D.l. 10-11). Debtors, on the other hand, put on testimony to
establish that the royalty rate set under the Lease was standard for such leases and that its terms
were otherwise ordinary. (See SA81 l-12 at 23 :5-24:18). None of the documents that Appellant
cites and relies upon altered the mineral royalty granted under the Lease or the calculation of
Appellant's inherited percentage of that mineral royalty.
26.

Conclusion. Debtors submitted unrebutted testimonial and documentary evidence

that Appellant had been paid in full for his proportional interest under the Lease. Appellant failed
to adduce evidence sufficient to establish his Claim. Accordingly, the Bankruptcy Court did not
clearly err in holding that Appellant had been paid in full for his interests and did not have a claim
against the Debtors. A separate order shall be entered.

Enteredthis

Z7

~~~
UnitedStatesD~rict Judge

dayofSeptember,2018.

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