Taylor et al v. N R G New Roads Holdings L L C
Filing
20
MEMORANDUM RULING re 3 MOTION to Dismiss Complaint filed by N R G New Roads Holdings L L C. Signed by Judge S Maurice Hicks on 06/05/2014. (crt,McDonnell, D)
UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF LOUISIANA
SHREVEPORT DIVISION
EVELYNE CAMPBELL TAYLOR,
ET AL.
CIVIL ACTION NO. 14-0067
VERSUS
JUDGE S. MAURICE HICKS, JR.
NRG NEW ROADS HOLDINGS,
LLC
MAGISTRATE JUDGE HORNSBY
MEMORANDUM RULING
Before the Court is a Rule 12(b)(6) Motion to Dismiss (Record Document 3) filed by
Defendant NRG New Roads Holdings, LLC (“NRG”). NRG seeks dismissal of Plaintiffs’
claims on multiple grounds, all of which are based on the October 14, 1999 Confirmation
Order entered by the United States Bankruptcy Court for the Middle District of Louisiana.
See id. Plaintiffs opposed the Motion to Dismiss. See Record Document 14. For the
reasons which follow, the Motion to Dismiss is DENIED.
BACKGROUND
This is an action for declaratory relief under 28 U.S.C. §2201 that arises from a
dispute between Plaintiffs and NRG as to the current ownership of the mineral rights on
three tracts of land in Red River Parish, Louisiana (“the Property”). See Record Document
1 (Complaint) at ¶ III(A). “Plaintiffs claim that they collectively own 100% of the mineral
rights on the Property, whereas . . . NRG . . . asserts that it is the owner of the mineral
rights.” Id.
The following facts are drawn from Plaintiffs’ factual allegations set forth in the
Complaint. Cajun Electric Power Cooperative, Inc. (“Cajun Electric”) was a Louisiana
cooperative association vested with the authority to expropriate property under Louisiana
law. See id. at IV(A). Cajun Electric expropriated surface rights to the Property in state
court expropriation proceedings and judgments of expropriation were entered in 1980 and
1981. See id. at IV(B). Plaintiffs and/or their predecessors in title were the record owners
of the Property at the time of the expropriation. See id. at IV(C). The judgments of
expropriation expressly provided that the mineral rights in and to the Property were
reserved unto Plaintiffs and/or their predecessors in title. See id. at IV(D).
Cajun Electric filed a petition for Chapter 11 bankruptcy relief in 1994 in the United
States Bankruptcy Court for the Middle District of Louisiana. See id. at IV(E). The Property
became property of the Cajun Electric bankruptcy estate pursuant to 11 U.S.C. §541,
subject to the rights and obligations of Cajun Electric before it filed bankruptcy, including,
without limitation, its obligations to Plaintiffs under Article 149 of the Louisiana Mineral
Code. See id. at IV(F). Cajun Electric, acting through Ralph R. Mabey, its duly appointed
bankruptcy trustee, purported to sell its interest in the Property to Louisiana Generating
LLC by Act of Cash Sale dated March 27, 2000, effective March 31, 2000, filed in the
conveyance records of Red River Parish, Louisiana. See id. at IV(G). By Act of Cash Sale
dated March 27, 2000, effective March 31, 2000, filed in the Conveyance Records of Red
River Parish, Louisiana, Louisiana Generating LLC purported to sell its interest in the
Property to NRG. See id. at IV(H).
At the time of the 2000 sales, Article 149 of the Louisiana Mineral Code provided in
pertinent part that:
(A)
Louisiana’s ten year prescription of non-use would not run on mineral
reservations as long as the surface of the property was held by a
purchaser with expropriation authority; and
(B)
before an expropriating authority could sell property that had been
expropriated, such as the Property, it was required to provide the prior
owner(s) of the Property who reserved mineral servitudes in their
conveyances, or their successors, with notice of the proposed sale
and a right of first refusal to purchase the Property.
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Id. at IV(I), citing La. R.S. 31:149. Plaintiffs allege that Cajun Electric did not provide them
and/or their ancestors in title with notice of the proposed sale and their right of first refusal
and opportunity to purchase the Property, all in violation of Plaintiffs’ fundamental due
process rights. See id. at IV(J). More specifically, Plaintiffs contend that the interest of the
Cajun Electric bankruptcy estate in the Property was at all times subject to Article 149 of
the Louisiana Mineral Code; therefore, any purported sale or transfer of the Property in the
Cajun Electric bankruptcy case was subject to Plaintiffs’ vested right of first refusal. See
id. at IV(K).
Plaintiffs allege because they were never (1) given notice of the proposed sale of
the Property and (2) afforded an opportunity to exercise the right of first refusal, the two
sales of the Property are absolute nullities and are void ab initio under Louisiana law. See
id. at IV(L). Because the Property was never legally transferred from Cajun Electric,
Plaintiffs allege they own a mineral servitude on the Property pursuant to the reservation
of mineral rights in their favor and/or their ancestors in title that was made when the
Property was expropriated. See id. at IV(M).
Based on the foregoing allegations, Plaintiffs seek a judgment declaring that:
(1)
[NRG] has no ownership interest in the Property, including the mineral
rights appurtenant thereto, because the purported sale of the Property
to [NRG’s] predecessor was an absolute nullity;
(2)
Plaintiffs’ mineral servitudes in the Property reserved in the
expropriation proceedings are still in force and effect;
(3)
The prescription of non-use relative to [P]laintiffs’ mineral servitude
has never commenced, and will never commence unless and until the
Cajun Electric validly conveys the Property in accordance with
Louisiana law, subject to a right of first refusal in favor of [P]laintiffs.
Id. at V.
NRG has now filed a Rule 12(b)(6) Motion to Dismiss, arguing that Plaintiffs’
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collateral attack on the Confirmation Order is improper. See Record Document 3-1 at 2.
More specifically, NRG argues that this Court should grant its motion because (1) it
purchased the Property free and clear of whatever rights Plaintiffs held with respect to the
Property; (2) whatever rights Plaintiffs held with respect to the Property were released
pursuant to the Confirmation Order; and (3) Plaintiffs are enjoined from bringing this action
under the express provisions of the Confirmation Order. See id. at 4-5. Alternatively, NRG
contends that the appropriate forum for Plaintiffs to present their dispute is in the
Bankruptcy Court. See id. at 4; Record Document 18 at 2-3, 9-10.
LAW AND ANALYSIS
I.
Rule 12(b)(6) Standard.
A defendant may challenge a complaint by filing a motion to dismiss for failure to
state a claim under Federal Rule of Civil Procedure (b)(6). In assessing the motion, 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 Rule 12(b)(6) motion to dismiss, a complaint ‘does
not need detailed factual allegations,’ but must provide the plaintiff’s grounds for entitlement
to relief-including factual allegations that when assumed to be true ‘raise a right to relief
above the speculative level.’” Cuvillier v. Taylor, 503 F.3d 397, 401 (5th Cir.2007), quoting
Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 1964–1965 (2007).
The facts alleged, taken as true, must state a claim that is plausible on its face. See
Amacker v. Renaissance Asset Mgmt. LLC, 657 F.3d 252, 254 (5th Cir.2011). “A claim has
facial plausibility when the plaintiff pleads factual content that allows the court to draw the
reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v.
Iqbal, 129 S.Ct. 1937, 1949 (2009). A complaint is not sufficient if it offers only “labels and
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conclusions,” or “a formulaic recitation of the elements of a cause of action.” Id., quoting
Twombly, 550 U.S. at 555, 127 S.Ct. at 1965.
II.
Analysis.
The Court finds that Plaintiffs’ factual allegations raise a right to relief above the
speculative level. The well-plead allegations of Plaintiffs’ complaint, if accepted as true,
show that Plaintiffs were unconstitutionally deprived of their property rights without notice
of any kind, much less the specific form of notice required by Louisiana law and federal
bankruptcy law. See La R.S. 31:149; 11 U.S.C. § 363(f); Federal Rule of Bankruptcy
Procedure 2002(a) & 6004(a). NRG’s argument that Plaintiffs must have had notice of the
Cajun Electric bankruptcy case is misplaced at this stage of the litigation, as this Court
must accept as true all well-pleaded facts in the complaint and view those facts in the light
most favorable to Plaintiffs. Moreover, most, if not all, of the cases cited by NRG pertain
to creditors who participated in the bankruptcy proceeding in some manner. The facts
plead in the complaint easily show that Plaintiffs in no way participated in the Cajun Electric
bankruptcy case.
Based on the factual allegations set forth in the complaint, it is
reasonable to infer that the sale of the Property was an absolute nullity; that Plaintiffs’
mineral servitudes in the Property reserved in the expropriation proceedings are still in
force and effect; and that the prescription of non-use has never commenced. Because it
is reasonable to infer that Plaintiffs can offer evidence that would entitle them to relief,
NRG’s Rule 12(b)(6) Motion to Dismiss must be DENIED. Additionally, at this stage, the
Court declines NRG’s alternative request to refer this matter to the Bankruptcy Court.
CONCLUSION
Based on the foregoing analysis, the Court finds that Plaintiffs’ well-plead factual
allegations raise a right to relief above the speculative level and it is reasonable to infer that
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Plaintiffs can offer evidence that would entitle them to relief. Accordingly,
IT IS ORDERED that NRG’s Rule 12(b)(6) Motion to Dismiss (Record Document 3)
be and is hereby DENIED. Additionally, at this stage, the Court declines NRG’s alternative
request to refer this matter to the Bankruptcy Court.
THUS DONE AND SIGNED, in Shreveport, Louisiana, this 5th day of June, 2014.
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