Franklin et al v. Regions Bank

Filing 305

MEMORANDUM RULING entering Findings of Fact and Conclusions of Law, and setting a briefing schedule on the issue of damages. Signed by Judge Terry A Doughty on 8/17/2023. (crt,Crawford, A)

Case 5:16-cv-01152-TAD-KDM Document 305 Filed 08/17/23 Page 1 of 16 PageID #: 13348

UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF LOUISIANA
SHREVEPORT DIVISION

ELIZABETH FRY FRANKLIN ET AL

CASE NO. 5:16-CV-01152 LEAD

VERSUS

JUDGE TERRY A. DOUGHTY

REGIONS BANK

MAG. JUDGE KAYLA D. MCCLUSKY
MEMORANDUM RULING

Per a Memorandum Order [Doc. No. 242] dated October 3, 2022, this Court issued a ruling
ordering that this proceeding be reopened for the limited purpose of introducing extrinsic evidence
to determine the intent of the parties as to the royalty provisions in a 2008 Petrohawk lease. In the
October 3, 2022 Memorandum Ruling, this Court found the terms of a 2008 Petrohawk lease1 were
ambiguous requiring extrinsic evidence to be presented.
The hearing on the reopened proceeding was heard in Shreveport, Louisiana on June 20,
2023. After closing arguments, this matter was taken under advisement. This Court hereby enters
the following findings of fact and conclusions of law. To the extent that any finding of fact
constitutes a conclusion of law, the Court hereby adopts it as such. To the extent that any
conclusion of law constitutes a finding of fact, the Court hereby adopts it as such.
I.

FINDINGS OF FACT
The United States Court of Appeals for the Fifth Circuit remanded this case to this Court

to determine whether the remaining Plaintiffs, Franklin and Peironnet, suffered damages for the
loss of royalties as a result of a difference in royalty rates between an August 2004, Matador lease
and an October 2008, Petrohawk lease.

[Doc. No. 205-3]

1

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Franklin and Peironnet each owned an undivided one-third (1/3) interest in an 1805.34acre tract of land (“The Farm”) located in Caddo Parish, Louisiana. The Farm sits over an area in
northwest Louisiana known as the Haynesville Shale Formation (“Haynesville Shale”). The
Haynesville Shale is a rock formation that lies at depths of 10,500 feet and more below the land’s
surface. The Haynesville Shale contains vast quantities of natural gas. Prior to 2008, technology
was not present to extract the natural gas at these depths.
In response to the new technology, oil and gas companies announced in 2008 that they
would begin obtaining leases to extract natural gas from the Haynesville Shale. This announcement
set off what was referred to as a “modern day gold rush,” resulting in skyrocketing lease bonus
payments for oil and gas leases in this area.
Franklin and Peironnet had signed Agency Agreements with Regions, which allowed
Regions to manage their oil and gas assets. John Moore (“Moore”) had recently taken over the
management of Plaintiffs’ assets from Joseph Eugene Hand, Jr. (“Hand”). Plaintiffs contended
that as a result of a negligently mishandled lease extension by Regions Bank (“Regions”) employee
Moore in July 2007, they lost millions of dollars in potential royalties. The following issues in
this matter have been determined.
1) Regions employee Moore was at fault in signing a lease extension for Plaintiffs
(intended to only extend the lease as to 168.95 acres), which extended the lease
extension by eighteen (18) months as to the entire 1805.34-acre tract;
2) The negligent actions of Moore were not excluded under the Agency Agreements
signed by Franklin and Peironnet with Regions; and
3) Franklin and Peironnet did not sustain any damages for lease bonuses.
The previous Opinion,2 did not resolve the royalty issue, resulting in the present remand.

2

[Doc. No. 207]

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The only issues remaining for this Court to determine are whether the differing royalty rates in the
2004 Matador lease and the 2008 Petrohawk lease caused damages to Franklin and Peironnet, and
if so, the amount of damages. The Court bifurcated3 the extrinsic evidence issue from the damage
issue, so the present proceeding only is to determine the intent of the parties with regard to the
royalty provision of the 2008 Petrohawk lease.
A.

The Royalty Issue

On August 26, 2004, a lease between Franklin, Peironnet and Prestige Exploration, Inc.
(“Prestige”) was recorded in the Conveyance records of Caddo Parish, Louisiana. The term of the
lease began June 22, 2004, with a primary term of three years. This lease was subsequently
assigned to Matador Resources (“Matador”) on October 13, 2004.4 This lease will be referred to
as the 2004 Matador lease.
Royalties on the gas produced from the property were to be paid to Franklin and Peironnet
at one fifth (1/5 or 20%) of the higher of the value of the “gross proceeds” received by Matador or
a fair and reasonable price for the area determined by arms-length negotiations.5
Matador was developing the Cotton Valley formation, which is an area above the
Haynesville Shale formation. Due to a horizontal depth clause6 in the Matador lease, the Matador
lease would expire at the end of the three-year term because there had been no drilling to a depth
of 10,500 feet. Therefore, Matador desired to extend the lease by eighteen (18) months to the
168.95-acre tract to keep the lease from expiring.
In an effort to extend the lease, Matador contacted Regions in June 2007. Regions was
handling the oil and gas assets of Franklin and Peironnet. Regions originally assigned Hand to

3

[Doc. No. 283]
[Doc. No. 205-4], (Exh. PX-4)
5
[Doc. No. 205-3, ¶ 3(b)(1)], (Exh. PX-3)
6
“Pugh” clause
4

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manage the property. Due a reorganization of files, Regions transferred the Franklin and Peironnet
property to Moore. Matador representative, Russell Mouton (“Mouton”), spoke with Moore about
the proposed extension of the 168.95-acre tract on May 14, 2007. The parties negotiated and came
to an agreement to extend the Matador lease as to the 168.95 acres for a lease bonus price of $75.00
per acre.
Although the parties negotiated an extension only to the 168.95-acre tract, when the
proposed written lease extension was sent to Moore, the lease extension did not limit the extension
to the 168.95-acre tract and limiting language was not added by Moore. The legal effect of this
extension was that it extended the lease by eighteen months to the entire 1805.34-acre tract,
including the deep rights. The lease extension was signed by Moore on August 22, 2007.7
Unfortunately, the extension was executed approximately seven months prior to the Haynesville
Shale announcement in March 2008.
The mistake in the lease extension resulted in a cloud on the Plaintiffs’ title after the
Haynesville Shale project was announced. This cloud on title kept Franklin and Peironnet from
signing a lease to the deep rights. However, Petrohawk Energy Corp. (“Petrohawk”) thought
Plaintiffs would be successful in a lawsuit against Matador to obtain their deep rights back, and
they joined Plaintiffs in this suit. Petrohawk was willing to offer Franklin and Peironnet a “top
lease” in the event there were successful in the lawsuit. They ultimately were not successful.8
The negotiations with Petrohawk began in April 2008, and concluded on July 18, 2008,
when Regions accepted Petrohawk’s offer letter.9 The agreement provided: 1) $8,750.00 per acre

7

[Doc. No. 205-5], (Exh. PX-5)
Peironnet v. Matador Resources Co., 144 So.3d 791 (La. 2013).
9
[Doc. No. 205-14], (Exh. PX-20)
8

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lease bonuses for the acreage;10 2) royalties of 25%; 3) a three-year primary term; and 4) Petrohawk
paying up the $50,000.00 in attorney fees for the state lawsuit against Matador.11
In a prior Opinion12, this Court found that Franklin and Peironnet sustained no lease bonus
damages because Regions accepted Petrohawk’s offer and received the same amount of lease
bonuses ($8,750.00 per acre) that they would have received even without Moore’s error. However,
there remains an issue regarding royalty damages. The Petrohawk lease would have paid 25%
royalty compared to the Matador 20% royalty. Although Franklin and Peironnet received the lease
bonuses, they did not receive the 25% royalty under the Petrohawk lease because Petrohawk was
not able to drill on Plaintiffs’ property. This was directly caused by the fault of John Moore.
The determination of whether royalty damages are owed to Franklin and Peironnet depends
upon the type of each royalty. There was conflicting testimony at the original trial between
Plaintiffs’ expert Robert McGowen (“McGowen”) and Defendant expert David N. Fuller
(“Fuller”) as to whether the Petrohawk lease royalty provision was a “gross proceeds” royalty or
an “at the wellhead” royalty. There is an important distinction between these two types of
royalties. The parties do not contest that the Matador 20% royalty lease was a “gross proceeds”
royalty where expenditures for processing, compressing, and transporting are not taken out of the
royalty owner’s share.
An “at the wellhead” royalty provision results in costs for processing, compressing,
transporting, and other costs being taken out of the royalty paid to the owner. There is no dispute
that if royalty percentages are the same, the landowner receives more royalties for a “gross
proceeds” royalty than an “at the wellhead” royalty.

10

Less than the then market value due to the cloud on title.
[Doc. No. 205-8]
12
[Doc. No. 207]
11

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B.

The Leases

The royalty provisions of two leases are at issue: 1) 2004 Matador lease; and 2) 2008
Petrohawk lease.
1.

2004 Matador Lease

The royalty provisions of the 2004 Matador lease read as follows:
3. The royalties to be paid by Lessee on production from wells on the leased
premises or on lands pooled therewith are:
(b) The royalty on gas, including casinghead gas or other gaseous substances
produced from the leased premises shall be as set out below. However, Lessee
hereby agrees, without further notice, to market Lessor’s royalty portions of the
said gas so long as any part of Lessee’s portion of said gas is being sold and/or
marketed. Lessee further agrees that all such sales must be at a price that is fair and
reasonable for the area as determined by “arm’s length” negotiations and must be
at least equal to the gross amount being paid for Lessee’s gas, casinghead gas, or
other gaseous substances at the wellhead, unless otherwise set forth below. Lessee
also further agrees that Lessor shall never be obligated in any manner to take
Lessor’s royalty portion in kind.
(1) On gas sold at the well or sold or used off the leased premises (other than for
processing at a plant as described in paragraph 3(b)(3) hereof) one-fifth (1/5) of the
higher of the value of the “gross proceeds” received by Lessee or a fair and
reasonable price for the area determined by “arm’s length” negotiations.13
No one disputes that the 2004 Matador lease has a “gross proceeds” royalty provision of
20%. The dispute lies with the 2008 Petrohawk lease.
2.

2008 Petrohawk Lease

The royalty provisions of the 2008 Petrohawk lease read as follows:
4.(b) On gas, including casinghead gas, or other gaseous substance produced from
said land and sold or used off the premises or for the extraction of gasoline or other
products therefrom, the market value at the well of one-eighth.
The 2008 Petrohawk lease also makes reference to attached Exhibit “A”, which reads:
See Exhibit “A” attached hereto and made a part hereof for additional
provisions.
13

[Doc. No. 205-3], (Exh. PX-3)

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The pertinent provisions of Exhibit “A” of the 2008 Petrohawk lease reads
as follows:
Exhibit “A”14
1.
In the event of a conflict between the language as stated in this
Exhibit “A” and the language as stated hereinabove, the language in Exhibit “A”
shall prevail.
3.a.
It is hereby agreed and understood between the parties hereto that
wherever the term of one-eighth (1/8) appears in the printed lease form attached
hereinabove, said term is hereby deleted and the term 25% is inserted and
substituted, therefore.
3.c.
There shall be no cost charged to the royalty interest created under
this lease, except severance and applicable taxes.
There appears to be no dispute that the first page of the 2008 Petrohawk lease sets forth a royalty
of one-eighth (1/8) value “at the wellhead.” There is also no dispute that provision 3.a. of Exhibit
“A” changes the royalty from one-eighth to 25%. The dispute lies in whether 3.c. of Exhibit “A”
changes the terms from an “at the wellhead” royalty to a “gross proceeds” royalty.
C.

June 20, 2023 Trial Testimony

The June 20, 2023 trial was to determine, by extrinsic evidence, the intent of the parties as
to whether 3.c. of Exhibit “A” attached to the 2008 Petrohawk lease changes the royalty provisions
from an “at the wellhead” royalty to a “gross proceeds” royalty. The determination is significant
because a “gross proceeds” royalty does not allow deduction of post-production expenses (except
severance taxes) while an “at the wellhead” royalty does allow deduction of post-production costs.

14

[Doc. No. 205-9], (Exh. PX-13)

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1.

Edward Waller (Video Deposition)

Edward Waller (“Waller”) is a Regions Bank property manager who helps manage the oil
and gas properties held by Regions Bank’s trust department. Waller stated his job is to represent
the best interests of his clients and to get clients as much money as possible.
Part of his job requires negotiating lease terms. Waller testified the Haynesville Shale boom
made negotiating oil and gas leases in this area easier because the landowners were in a favorable
position. Another part of his job was to make sure oil and gas royalties were being paid correctly.
Regions Bank’s trust department reviews every check received to make sure the royalties are being
paid correctly.
Waller had not received the payment records for the parties Petrohawk lease15 so he is
unable to say whether post-production costs were deducted. In reviewing the May 28, 2008,16
Petrohawk lease, he believed the language in Exhibit “A” meant the lease was intended by the
parties to be a “gross proceeds” lease.
2.

Joey Hand

Joey Hand (“Hand”) is a Regions Bank Senior Vice-President and Oil & Gas Property
Manager. Hand was the property manager for both Franklin and Peironnet. He was involved in
negotiating two leases for Franklin and Peironnet with Petrohawk. These leases were a May 28,
2008 lease,17 and a July 18, 2008 Petrohawk lease.18 Other than the legal description of the
property’s leases, the terms of both PX-12 and PX-13 were identical and involved the exact same

[Doc. No. 299-1] (hereinafter referred to as “PX-12”)
Comparing PX-12 and PX-13 is important because Petrohawk actually paid royalties to Franklin and Peironnet in
PX-12.
17
[PX-12]
18
[Doc. No. 205-9] (hereinafter referred to as “PX-13”)
15
16

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parties. The main body of both leases are identical and the Exhibit “A” addendum in each lease is
also identical.
Hand testified that in attaching the Exhibit “A” addendum to PX-12 and PX-13 his intent
was for both PX-12 and PX-13 to be “gross-proceeds” leases. Exhibit “A” for both PX-12 and PX13 were supplied by Regions Bank. The main body of the lease for both PX-12 and PX-13 were
supplied by Petrohawk. Hand testified that in negotiating the two leases, his intent was to get
Franklin and Peironnet better deals than they had.
Hand also reviewed the royalties paid out on the May 2008 Petrohawk lease. Hand testified
the owner’s side did not show post-production costs being charged to Franklin and Peironnet. Hand
also reviewed other leases he had negotiated with Petrohawk, and they had the same language as
PX-12 and PX-13.
Although Hand had given previous deposition testimony and testified at the June 20, 2023
trial that he intended for PX-12 and PX-13 to be “gross proceeds” leases, when called as a witness
by Regions Bank in their part of the case, Hand added that although it was his intent to make PX12 and PX-13 “gross proceeds” leases, he did not think that he accomplished that. This Court
interprets Hand’s testimony to be that his intent was for both PX-12 and PX-13 to be “gross
proceeds” leases but based upon Regions Bank’s position that PX-13 was not converted to a “gross
proceeds” lease, he was legally unable to properly convert the lease with the language he added.
3.

Robert McGowen

Robert McGowen (“McGowen”) is a petroleum engineer retained as an expert by Franklin
and Peironnet. He previously testified at the April 2021 trial. In this hearing, McGowen testified
as to oil and gas industry usages and the industry methodology of the calculation and payout of oil
and gas royalties.

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McGowen examined both PX-12 and PX-13. PX-12 was a lease executed by Franklin and
Peironnet with Petrohawk in May 2008, covering 665 acres. Royalties were paid by Petrohawk to
Franklin and Peironnet on PX-12. Royalties were not paid by Petrohawk to Franklin and Peironnet
on PX-13. PX-13 was a “top-lease,” which is a lease executed when another lease is in effect, and
would only take effect if the lease in effect was cancelled or expired. PX-13 never took effect
because litigation with Matador over the 2004 Matador lease was unsuccessful.
The language and the parties in both PX-12 and PX-13 were identical. McGowen testified
the base lease in both PX-12 and PX-13 was a market value “at the wellhead” lease with a 1/8
royalty provision. However, Exhibit “A” changed the royalty from 1/8 to 1/4 and added an
overriding provision that there would be no cost charged to the owner’s royalty interest except
severance and applicable taxes. McGowen testified that it is customary in the oil and gas industry
to have a form lease overridden by an addendum. McGowen also testified it was not unusual in
the oil and gas industry to not use the term “gross proceeds” or “market value at the well.”
Additionally, McGowen examined all of the monthly pay records of royalties paid to
Franklin and Peironnet under PX-12 from 2010 to 2023. McGowen also looked at the annual
statements for each year. McGowen testified he did a cross-check by making sure a sample part of
the production paid coincided with the production that was reported by the operators to the
Louisiana Department of Conservation.
McGowen testified that according to his examination of the monthly pay records and
annual reports, Petrohawk paid royalties to Franklin and Peironnet without deduction postproduction costs (except severance and taxes). In other words, McGowen testified Petrohawk paid
royalties on PX-12 as a “gross-proceeds” lease. According to McGowen, no deductions were
made to Franklin and Peironnet for transportation, processing, compression, and other post-

10

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production costs. McGowen never saw any evidence showing that Regions Bank’s trust
department ever disagreed with the way Petrohawk was paying royalties on PX-12.
4.

John D. Collinsworth

John Collinsworth (“Collinsworth”) is a professional landman who testified at the April
2021 trial. He testified at the June 28, 2023 trial as to industry usages in mineral leasing in
northwest Louisiana. Collinsworth testified that the language in Exhibit “A” of both PX-12 and
PX-13 is language customarily used by the oil and gas industry in northwest Louisiana to reflect a
gross-proceeds royalty provision.
Collinsworth testified there are a number of ways to express a gross-proceeds royalty
provision in northwest Louisiana and in his opinion, the language Exhibit “A” of PX-12 and PX13 reflects intent to make the royalty a “gross-proceeds” royalty in northwest Louisiana.
5.

David Fuller (Deposition Excerpts and Testimony)

David Fuller (“Fuller”) was called by Regions Bank as an expert financial analyst. He also
previously testified at the April 2021 trial. He did not testify live on June 20, 2023, but his previous
trial testimony was referenced19 and previous deposition excerpts were submitted.20
In Fuller’s April 2021 trial testimony, he testified that the July 2008 Petrohawk lease (PX13), was an “at the wellhead” lease, which would have required deduction of post-production costs
had royalties been paid to Franklin and Peironnet. He testified he was not giving a legal opinion,
but stated the parties could easily have used the words “gross proceeds” had the parties been
intending to change the type of royalty provision when Exhibit “A” was added.
Additionally, Fuller testified that in the absence of the lease agreement, he disputed that
McGowen was able to look at the check stubs showing payments to Franklin and Peironnet by the

19
20

[Doc. No. 215, pp. 1-47]
[Doc. Nos, 83, 85 and 82]

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PX-12 lease and determine whether post-production costs were being deducted from the royalty.
Fuller did state you can “make an inference” because he can see that the expenses listed were not
deducted from the owners, but that the records McGowen examined were insufficient to make a
determination of whether the royalty payments were “gross proceeds” or market value at the well.
II.

LAW AND ANALYSIS
The interpretation of a contract is a legal question. Gulf Engineering Co. v. Dow Chemical

Co., 961 F.3d 763, 766 (5th Cir. 2020). Under Louisiana’s Civil Code, contractual interpretation
is the determination of the common intent of the parties 961 F.3d at 766. When the words of a
contract are clear and explicit and lead to no absurd consequences, no further interpretation may
be made in search of the parties’ intent. La. Civ. Code Art. 2046. If, however, a contract’s language
is ambiguous, extrinsic evidence is admissible to interpret the intent behind an ambiguous
provision. Greenwood 950 LLC v. Chesapeake La., L.P., 683 F.3d 666, 668-69 (5th Cir. 2012).
As previously explained, this Court found provision 3(c) in Exhibit “A” of PX-13 was
ambiguous and subject to more than one interpretation.21 The June 20, 2023 hearing was to
determine whether the parties’ intent was to convert the 2008 Petrohawk lease (PX 13) from an
“at the wellhead” lease to a “gross proceeds” lease.
A.

Regions Bank’s Position

Regions Bank continues to maintain the pertinent provisions are not ambiguous. Regions
argues that pursuant to Wall v. United Gas Public Service Company, 152 So.561 (La. 1934) and
subsequent case law, royalties in Louisiana are analyzed using a four-step process. The process
requires: 1) calculating the market value at the well using either comparable sales or the
reconstruction approach; 2) determining the royalty percentage by multiplying the market value

21

[Doc No. 242 pp.13-15]

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at the well by the royalty percentage; 3) deducting the permissible post-production costs; and 4)
making the royalty payment.22
Regions maintains that all 3(c) of Exhibit “A” means is that after the royalty is calculated,
no costs can be charged to that interest except severance and applicable taxes. According to
Regions’ position, post-production costs are held out when calculating the royalty and therefore
Exhibit “A” 3(c) does not change the lease from an “at the wellhead” to a “gross proceeds” lease.
Regions’ alternative position is that Franklin and Peironnet have the burden of proof and
are unable to prove that the intent of the parties was to convert PX-13 from an “at the wellhead”
lease to a “gross proceeds” lease. Regions cites the testimony of Fuller and Hand. Fuller testified
Plaintiffs’ expert could not determine how the comparable lease PX-12 was paid by looking at the
payment receipts. Hand testified he intended to create a “gross proceeds” lease but did not believe
he had done so.
B.

Plaintiffs’ Position

Plaintiffs Franklin and Peironnet maintain that provision 3(c) of Exhibit “A” of the 2008
Petrohawk lease is ambiguous and that they have proven that the intent of the parties was to change
PX-13 from an “at the wellhead” lease to a “gross proceeds” lease.
Plaintiffs cite the testimony of Hand, Waller, McGowen and Collinsworth. Hand, who
negotiated PX-13, testified it was his intent to change PX-13 from an “at the wellhead” lease to a
“gross proceeds” lease. Waller also testified that was the intent.
McGowen testified that, after examining the monthly pay records of PX-12, an identical
lease between Plaintiffs’ and Petrohawk, Petrohawk was paying royalties to Plaintiffs without
deducting post-production costs. In other words, Petrohawk paid royalties under PX-12 as a “gross

22

Ottinger, Louisiana Mineral Lease: a Treatise (2016)

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proceeds” lease. McGowen further testified that the language of Exhibit “A” of PX-13 was
customary in the oil and gas industry for converting an “at the wellhead” lease to a “gross
proceeds” lease.
Collinsworth, a professional landman, also testified that the language in Exhibit “A” of
PX-13 reflects language customarily used in the oil and gas industry in northwest Louisiana to
convert an “at the wellhead” lease to a “gross proceeds” lease.
C.

ANALYSIS

This Court believes Franklin and Peironnet have proven, by extrinsic evidence, that the
intent of the parties in adding Exhibit “A” to PX-13 was to create a “gross proceeds” lease that did
not deduct post-production costs except for severance and other applicable taxes.
Both Hand and Waller, the Regions Bank employees that negotiated the lease, testified that
the intent in adding Exhibit “A” to PX-13 was to create a “gross proceeds” lease. This is
corroborated by the favorable conditions at the time the terms of the lease were negotiated.
Although Hand did testify that, after the fact, he believes he intended, but did not create a “gross
proceeds” lease, that testimony was a legal conclusion of an issue to be decided by this Court.23
McGowen’s testimony is significant with regard to the royalty payments. An identical lease
(PX-12) between Petrohawk and Plaintiffs paid royalty payments to Plaintiffs as a “gross
proceeds” lease rather than as an “at the wellhead” lease. PX-12 was a May 2008 lease and PX-13
was a July 2008 lease. Since the provisions of both leases, including Exhibit “A”, were identical,
Petrohawk would more likely than not have paid the royalties to Plaintiffs on PX-13 without
deducting post-production costs.

Additionally, this Court notes that, if in fact Hand failed to properly convert PX-13 to a “gross proceeds” lease as
intended, it could open up Regions Bank to another lawsuit by Plaintiffs.
23

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Louisiana Civil Code Article 2053 requires ambiguous provisions of a contract to be
interpreted in light of the nature of the contract, equity, usages, the conduct of the parties before
and after the formation of the contract, and of other contracts of a like nature between the parties.
These factors favor Plaintiffs. The terms of the contract were negotiated and provided by Regions
Bank. Plaintiffs had no part in the negotiations. Additionally, an identical lease agreement between
the same parties paid royalties to Plaintiffs without deduction of post-production costs.
Even if Regions is correct in their analysis of how a royalty is computed, that analysis does
not apply here. This Court believes the terms of the lease were ambiguous, subject to more than
one meaning, The weight of evidence presented at the June 20, 2023 hearing shows the intent of
the parties was to convert the 2008 Petrohawk lease to a “gross proceeds” lease. Because an
identical lease agreement (PX-12) paid royalties to Franklin and Peironnet without deducting postproduction costs, this Court finds Plaintiffs have proven they were damaged due to the fault of
Regions by Plaintiff’s receiving 20% royalties under the 2008 Matador lease instead of 25%
royalty payments under the 2008 Petrohawk lease.
The issue of damages was bifurcated24 from the determination of the intent of the parties.
Because that determination has now been made, the issue of damages can now be determined. This
Court will allow briefing by the parties on the damages issue in accordance with the briefing set
herein.
III.

CONCLUSION
For the reasons set forth herein, this Court finds the intent of the parties by the addition of

Exhibit “A” to the 2008 Petrohawk lease PX-13 was to create a “gross proceeds” lease without
deduction of post-production costs, except for severance and applicable taxes.

24

[Doc. No. 283]

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This Court also finds Franklin and Peironnet have been damaged as a result of the fault of
Regions Bank employee John Moore.
A briefing schedule on the damage issue is set forth as follows:
Plaintiffs’ brief is due by September 6, 2023;
Defendants’ brief is due within 20 days of the filing of Plaintiffs brief;
Plaintiffs’ reply brief is due within 7 days of the filing of Defendants’ brief.
No additional evidence or testimony will be allowed in making the damage determination.
Arguments should be made by the parties based on the evidence and testimony previously
submitted.
MONROE, LOUISIANA this 17th day of August 2023.

____________________________________
TERRY A. DOUGHTY
UNITED STATES DISTRICT JUDGE

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