A Louisiana judge has awarded more than $11 million to a Houma, La., family stemming from a dispute over unpaid oil royalties. Michael St. Martin and his wife, Virginia, filed a lawsuit in December 2006 alleging that I.P. Petroleum Co. and other parties failed to pay nearly $925,000 in royalties on oil and gas they produced from a well owned by the family. The well, just west of Houma, is owned by the St. Martins and the Delaware-based Quality Environmental Processes.
There are a number of wells on the property. Apparently, the family never had any troubles with the land prior to I.P. Petroleum coming along. It had subleased the well from Mobil, which was leasing it from the St. Martins and Quality Environmental. Quality is owned by members of the St. Martin family. It was alleged that I.P. Petroleum stopped paying royalties on July 1, 1997.
Royalties, which are fees companies agree to pay to a landowner for the right to produce oil on his or her property, are usually a percentage of the value of oil and gas produced. Questions arose over ownership of the well when royalties were due. Those claims had been settled in a separate lawsuit, but the royalties remained unpaid.
It was also alleged that I.P. Petroleum; International Paper Co. of Bastrop, its lawyer, John Pearce, and his law firm, Montgomery, Barnett, Brown, Read, Hammond & Mintz, “conspired and developed a plan by which (I.P.) retained for itself `suspended’ royalty payments” totaling about $107,000. The money was to be held until it was determined who owned the land. A five-day bench trial was held in May and September 2009 before District Judge Johnny Walker.
Judge Walker issued two orders last month in favor of the St. Martins and Quality Environmental. In one, he ordered I.P. Petroleum and International Paper Co. to pay about $6.7 million in combined penalties, which includes the royalties due, interest, damages and attorneys’ fees. The judge in that order said:
Despite legal demand by Plaintiffs, I.P. Petroleum Co. Inc., without legal justification or reasonable grounds, willfully and deliberately refused to pay Michael St. Martin and Virginia Rayne St. Martin, and Quality Environmental Processes Inc.
Judge Walker also ruled that Pearce and the New Orleans-based law firm, in a separate order, must pay about $4.55 million, including royalties, damages and attorneys’ fees. The court found that the $107,000 in royalties were deposited in the law firm’s account in 2003. According to the judge’s order, “(t)he funds were kept by Defendants, not returned to Pure Resources Inc., nor ever forwarded to Plaintiffs.”
Source: Claims Journal
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