Wiggins et al v. Chesapeake Energy Corp et al

Filing 10

MEMORANDUM RULING re 4 MOTION to Dismiss For Failure to State a Claim filed by Chesapeake Operating Inc, Chesapeake Energy Marketing Inc, Chesapeake Louisiana L P, Chesapeake Energy Corp. Signed by Judge S Maurice Hicks on 8/20/2012. (crt,McDonnell, D)

UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF LOUISIANA
SHREVEPORT DIVISION
BERTY B. WIGGINS, ET AL.

CIVIL ACTION NO. 12-0541

VERSUS

JUDGE S. MAURICE HICKS, JR.

CHESAPEAKE ENERGY CORP.,
ET AL.

MAGISTRATE JUDGE HORNSBY

MEMORANDUM RULING
Before this Court is a Motion to Dismiss filed pursuant to Rule 12(b)(6). See Record
Document 4. The motion was filed May 05, 2012 by Defendants Chesapeake Energy
Corporation, Chesapeake Louisiana, L.P., Chesapeake Operating, Inc., and Chesapeake
Energy Marketing, Inc. (hereinafter collectively referred to as “Chesapeake”). Plaintiffs
Berty B. Wiggins and the Ben & Carolyn Wiggins Class Trust (hereinafter collectively
referred to as “the Wiggins”) opposed the motion on May 15, 2012. See Record Document
8. Chesapeake filed a reply on May 24, 2012. See Record Document 9. For the following
reasons, the Motion to Dismiss is GRANTED pursuant to Rule 12(b)(6).
BACKGROUND
The Wiggins’ complaint concerns royalty payments stemming from approximately
260 leased acres in Bienville and Red River Parishes. See Record Document 1 at ¶ 4,
Exhibits 1-7 (Leases). The Wiggins assert that Chesapeake failed to pay the correct
amount of royalties due. See id. at ¶ 25. The complaint seeks declaratory relief and asserts
causes of action for breach of contract, violation of the Louisiana Mineral Code, violation
of the Louisiana Unfair Trade Practices Act (“LUTPA”), and unjust enrichment. See id. at
¶¶ 19-40. All of the causes of action stem from the same premise, Chesapeake’s alleged
underpayment of royalties. See id.

In response to the Wiggins’ complaint, Chesapeake filed both an Answer and a Rule
12(b)(6) Motion to Dismiss the unjust enrichment claim. See Record Documents 4-5.
Chesapeake argues that the unjust enrichment claim should be dismissed because it is a
“subsidiary remedy available only when a plaintiff has no other remedy available at law.”
Record Document 4-1 at 3. The Wiggins oppose the motion, relying on case law holding
that an alternative pleading of unjust enrichment is permissible. See Record Document 8
at 4. Chesapeake filed a reply, maintaining that the present case is factually distinguishable
from those upon which the Wiggins rely. See Record Document 9.
LAW AND ANALYSIS
I.

Rule 12(b)(6) Standard.
Chesapeake’s Motion to Dismiss is filed under Federal Rule of Civil Procedure

12(b)(6) for “failure to state a claim upon which relief can be granted.” F.R.C.P. 12(b)(6).
In addressing a motion to dismiss for failure to state a claim, the court must accept as true
all well-pleaded facts in the complaint and view those facts in the light most favorable to the
plaintiff. See In re Katrina Canal Breaches Litigation, 495 F.3d 191, 205 (5th Cir. 2007).
To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted
as true, to “state a claim to relief that is plausible on its face.” Bell Atlantic Corp. v.
Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 1974 (2007); accord Ashcroft v. Iqbal, 556
U.S. 662, 129 S. Ct. 1937 (2009). In other words, the plaintiff’s factual allegations, when
assumed to be true, must raise a right to relief above the speculative level. See Bell
Atlantic Corp., 550 U.S. at 555-556, 127 S.Ct. at 1965. Further, if the allegations set forth
in the complaint, even if true, could not raise a claim of entitlement to relief, courts will
address the basic deficiency “at the point of minimum expenditure of time and money by
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the parties and the court.” Cuvillier v. Taylor, 503 F.3d 397, 401 (5th Cir. 2007).
II.

Unjust Enrichment Claim.
Under Louisiana law, a claim for unjust enrichment is governed by Civil Code Article

2298. The relevant portion provides:
A person who has been enriched without cause at the expense of another
person is bound to compensate that person. The term “without cause” is
used in this context to exclude cases in which the enrichment results from a
valid juridical act or the law. The remedy declared here is subsidiary and shall
not be available if the law provides another remedy for the impoverishment
or declares a contrary rule.
La. C.C. Art. 2298 (emphasis added). The Louisiana Supreme Court has held that “the
unjust enrichment remedy is ‘only applicable to fill a gap in the law where no express
remedy is provided.’” Walters v. MedSouth Record Mgmt., LLC, 2010-0351 (La. 6/4/10),
38 So.3d 245, 246. The Walters court held that, “[b]ecause the law provided plaintiff with
another remedy, we find he has failed to state a cause of action in unjust enrichment.” Id.
at 247. Likewise, in Hall v. James, 43,263 (La.App. 2 Cir. 6/4/08), 986 So.2d 817, the
Louisiana Second Circuit noted that Article 2298 provides that unjust enrichment is a
remedy of last resort, available only when no other remedy is available. See id. at 820
(“Certainly, the plaintiffs have a cause of action against Samson to recover for the
underpayment of royalties to them and overpayment to the Jameses. Therefore, the
requirement that the plaintiffs have no other remedy at law is not satisfied.”). Here,
Chesapeake argues that because of the available and pled claims for breach of contract
and violation of the Louisiana Mineral Code, the Wiggins cannot state a claim for unjust
enrichment.
The Wiggins argue that their unjust enrichment claim should survive dismissal
because an alternative pleading is permissible and well accepted. See Record Document
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8 at 4-6. The Court is unconvinced by this argument due to the rationale set forth in
Conerly Corp. v. Regions Bank, No. 08-813, 2008 WL 4975080, 9 (E.D.La. Nov. 20, 2008):
“It is not the success or failure of other causes of action, but rather the
existence of other causes of action, that determine whether unjust
enrichment can be applied.” Garber v. Badon & Ranier, 981 So.2d 92, 100
(La.Ct.App. 2008). That plaintiffs have pled their claims against
AmSouth/Regions in the alternative also does not change that plaintiffs
have a cause of action for breach of contract against Beechgrove.
Unjust enrichment is a remedy of last resort under Louisiana law and “is only
applicable to fill a gap in the law where no express remedy is provided.”
Board of Sup’rs of La. St. Univ., 984 So.2d at 81. Plaintiffs have several other
remedies at law for their alleged “unjust impoverishment,” both against
defendants and against Beechgrove. Plaintiffs therefore fail to state a claim
for unjust enrichment.
Id. at *9 (emphasis added); see also O’Gea v. Home Depot USA, Inc., No. 08-4744, 2009
WL 799757, *6 (E.D.La. March 20, 2009) (“Because O’Gea has alternative remedies at law,
he cannot assert a claim for unjust enrichment.”). Thus, the Wiggins’ alternative pleading
argument fails.
The Wiggins further maintain that “because the Court has not determined a valid
contract exists, Defendant’s request [for a 12(b)(6) motion] is premature.” Record
Document 8. Specifically, the Wiggins rely heavily upon Jewel Williams v. Chesapeake
Operating, Inc., et al., Civil Action No. 10-1906, United States District Court, Western
District of Louisiana, Shreveport Division. In Williams, Judge Foote denied Chesapeake’s
motion to dismiss the plaintiff’s unjust enrichment claim under Rule 12(b)(6), reasoning that
such dismissal was premature because it has not yet been determined whether a valid
contract existed to provide her with an available remedy at law. See Record Document 38
at 5-6, Jewel Williams v. Chesapeake Operating, Inc., et al., Civil Action No. 10-1906,
United States District Court, Western District of Louisiana, Shreveport Division.
This Court finds that the Wiggins’ prematurity argument likewise fails, as the
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Williams case is inapplicable to this matter because it is factually distinguishable. Here, the
Wiggins contend in their opposition that no determination has been made as to the validity
of the lease contracts. See Record Document 8 at 6. However, the Wiggins’ complaint
acknowledges the existence of mineral leases and specifically contends that they are not
being paid royalties “as required under the Leases.” Record Document 1 at ¶¶ 5, 7, 11, 14.
Additionally, in the answer, Chesapeake admitted that “Defendant Chesapeake Louisiana,
LP presently holds the mineral lessee rights with respect to the mineral lease granted by
[the Wiggins].” Record Document 5 at ¶ 5. Thus, the pleadings in this matter negate the
need for a judicial determination as to whether there is a valid contract under which the
Wiggins can seek relief.

By virtue of the complaint and answer, there are judicial

admissions establishing the existence of a valid contract, in contrast to the Williams case
wherein it had not yet been determined whether a valid contract existed.
CONCLUSION
Based on the foregoing, the Court finds that dismissal under Rule 12(b)(6) is
appropriate because the alternative pleading and prematurity arguments asserted by the
Wiggins fail. Thus, Chesapeake’s Motion to Dismiss (Record Document 4) is GRANTED
and the Wiggins’ unjust enrichment claim is DISMISSED.
An order consistent with the terms of the instant Memorandum Ruling shall issue
herewith.
THUS DONE AND SIGNED, at Shreveport, Louisiana, this 20th day of August,
2012.

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