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ExxonMobil and Hess Oil do not have to pay royalties on an oil lease signed decades ago, the U.S. Court of Appeals for the Fifth Circuit decided.
The case was filed by Anthony Griffin and Dorothy Joachain, on behalf of Morel Griffin, against the oil and gas companies. The plaintiffs appealed a district court’s granting of summary judgment in favor of Hess and ExxonMobil related to their failure to pay royalties on the oil lease.
Anthony Griffin and Joachain are the children of Morel Griffin, who died in 1976. Morel Griffin had sought out unpaid royalties from lessors of an Avoyelles Parish property whose owners included their great-grandfather, Jack Griffin, according to the appeals court opinion.
For the next 20-plus years, the plaintiffs researched the question of oil wells on the property and determined that they were due unpaid royalties from the oil companies. The plaintiffs contacted ExxonMobil directly to discuss their unpaid royalty claims, according to the opinion. ExxonMobil’s representative researched the question and responded that the company could find no records of any sales after 1954 and that there were no records showing ExxonMobil had a current interest in the property. There were also no records of any outstanding payments due to Morel or his sister, court documents say.
Morel and Joachain filed suit against the oil companies in October 2014, claiming that oil was produced on the property but no royalties were made to their father. Hess and ExxonMobil then filed a motion for summary judgment, arguing that the claims were invalid, noting that the Louisiana Civil Code provides only a three-year prescription period for royalties.
Morel and Joachain "were not required to bring the suit upon initially learning of royalties from their mother in 1983 or 1984, and any delay in doing so was justifiable because many members in the family lacked sufficient education to provide the full information required to bring suit,” the Nov. 3 opinion says.
They cited a doctrine called contra non valentem, which Louisiana courts have recognized as an extension on a prescription period, applicable when “... the defendant prevents the plaintiff from availing himself of his cause of action or (where) the action was not known or reasonably knowable by the plaintiff.”
In affirming the lower court’s granting of summary judgment, however, the appellate court said that argument isn’t valid, and plaintiffs waited for years and ignored legal advice in bringing the suit.
“Although Appellants may be correct that their level of education may, by itself, support application of the doctrine, the court cannot disregard the substance of their actions which do not indicate an inability to bring this claim ..." the appeals decision says. "Additionally, Appellants received advice and meaningful information from three different lawyers on various occasions throughout their investigation of the royalty claims. These conversations ultimately culminated in them contacting ExxonMobil directly in 2008. That they now summarily deem this advice unreliable does not warrant the suspension of the prescription period.”