Filed: Nov. 01, 2000
Latest Update: Mar. 02, 2020
Summary: IN THE UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT No. 99-31170 RICHARD H. FRIEDBERG, Plaintiff-Appellant, versus BELCO ENERGY LP; ET AL., Defendants, BELCO ENERGY LP; BELCO OPERATING CORP., Defendants-Appellees. - Appeal from the United States District Court for the Western District of Louisiana USDC No. 97-CV-1822 - October 27, 2000 Before REAVLEY, BENAVIDES and DENNIS, Circuit Judges. BENAVIDES, Circuit Judge:* Richard Friedberg (“Friedberg”) transferred his mineral interest in land
Summary: IN THE UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT No. 99-31170 RICHARD H. FRIEDBERG, Plaintiff-Appellant, versus BELCO ENERGY LP; ET AL., Defendants, BELCO ENERGY LP; BELCO OPERATING CORP., Defendants-Appellees. - Appeal from the United States District Court for the Western District of Louisiana USDC No. 97-CV-1822 - October 27, 2000 Before REAVLEY, BENAVIDES and DENNIS, Circuit Judges. BENAVIDES, Circuit Judge:* Richard Friedberg (“Friedberg”) transferred his mineral interest in land t..
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IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
No. 99-31170
RICHARD H. FRIEDBERG,
Plaintiff-Appellant,
versus
BELCO ENERGY LP; ET AL.,
Defendants,
BELCO ENERGY LP; BELCO OPERATING CORP.,
Defendants-Appellees.
--------------------
Appeal from the United States District Court
for the Western District of Louisiana
USDC No. 97-CV-1822
--------------------
October 27, 2000
Before REAVLEY, BENAVIDES and DENNIS, Circuit Judges.
BENAVIDES, Circuit Judge:*
Richard Friedberg (“Friedberg”) transferred his mineral
interest in land that he co-owned with W.A. Moncrief (“Moncrief”)
to the Plan Trust in his Chapter 11 bankruptcy. Friedberg is a
remainderman to the estate in that he has the right to receive
any surplus from the bankruptcy estate. In the administration of
*
Pursuant to 5TH CIR. R. 47.5, the court has determined that
this opinion should not be published and is not precedent except
under the limited circumstances set forth in 5TH CIR. R. 47.5.4.
the estate, the trustee sold this mineral interest to Belco
Energy (“Belco”). In the present suit, Friedberg disputes this
sale, claiming that Belco failed to fully inform the trustee of
the value of the mineral interest before the close of the
transaction, thereby breaching his duty to disclose. The
district court granted Belco’s motion for summary judgment. We
AFFIRM.
Facts
Prior to Friedberg’s bankruptcy, Friedberg and Moncrief
owned a 50% mineral interest in land located in Louisiana, 25%
each in indivision. Thereafter, Moncrief acquired a lease to the
other 50% of the mineral interest. Thus, Moncrief had a lease to
50% of the mineral interest and owned 25% of the mineral
interest.
In May 1996, Moncrief, who at this time controlled 75% of
the minerals, 25% in ownership and 50% in leaseholder rights,
leased his 75% mineral interest to Belco. In the lease, Belco
agreed to operate a well on the estate and to continue the
drilling of the well Moncrief had initiated prior to the May 1996
transaction.
Discussion
Fraud based on suppression of information requires a
fiduciary or special relationship that creates a duty to speak.
Greene v. Gulf Coat Bank,
593 So. 2d 630 (La. 1992). “To find
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fraud from silence or suppression of the truth, there must exist
a duty to speak or to disclose information.”
Id. at 632.
Friedberg concedes that there is no fiduciary duty between the
parties. Friedberg’s argument that Belco had a duty to disclose
to the trustee the results of production tests on the mineral
estate rest entirely on Articles 176 and 109 of the Louisiana
Mineral Code (“Mineral Code”).
According to Friedberg, Article 176 creates a “higher than
ordinary” duty between co-owners of mineral interests through its
reference to Article 109. Friedberg notes that the comments
following Article 109 provide that this duty is “intended [to] be
a somewhat higher duty than that of ordinary care and good
faith.” Friedberg’s argument overlooks Article 169 of the
Mineral Code, which provides that “[c]o-ownership does not exist
. . . between the owners of separate mineral rights.” LA. REV.
STAT. ANN. §§ 31:169. Moreover, Article 176 pertains to the
authority of a co-owner of a mineral servitude to act to prevent
waste, destruction, or extinction of the servitude. It does not
refer to co-owners of mineral interest in general. Also, Article
109 pertains to the obligation of the owner of an executive
interest when granting mineral leases.
Belco, despite the fact that it was the operator of the
well, was only a lessee. Friedberg does not argue that because
Belco was the operator there is a higher standard of care. In
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fact, there was no operating agreement between Belco and
Friedberg creating any kind of duty between the parties.
Moreover, Friedberg concedes that Belco did not make any false or
misleading statements.
At the time of the sale, Belco, as lessee, and the trustee,
as owner, held different mineral rights. Without co-ownership,
Belco and the trustee do not share a duty of trust that would
support a duty to disclose. Also, Friedberg is not alleging the
Belco acted improperly with respect to waste, destruction or
extinction of the servitude or that Belco improperly executed a
mineral lease.
Belco and the Plan Trust have separate mineral rights and
are not co-owners; therefore, Friedberg’s argument that Belco had
a duty to disclose is incorrect. In sum, we find that there is
no special or contractual relationship between Friedberg’s estate
and Belco creating a duty to disclose. Because our holding
disposes of this appeal we need not address the alternate
arguments advanced by Belco in support of the judgment of the
district court. The judgment of the district court is AFFIRMED.
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