Opinion
No. 98-1925.
June 23, 1999. Writ Denied November 5, 1999
APPEAL FROM NINTH JUDICIAL DISTRICT COURT, PARISH OF RAPIDES, NO. 182,139, STATE OF LOUISIANA, HONORABLE THOMAS YEAGER, J.
Robert G. Nida, Alexandria, for Johnco, Inc.
John M. Madison, Jr., New Orleans, for Jameson Interests, et al.
Before PETERS, AMY, and GREMILLION, Judges.
This is an appeal by the plaintiff, Johnco, Inc., from the trial judge's decision in favor of the defendants, Jameson Interests, Peter K. Jameson, and Thomas G. Jameson. For the reasons set forth below, we affirm.
FACTS
This case involves litigation between Johnco, Inc., a Texas corporation whose sole shareholder is Andrew Jameson, and Jameson Interests, a Texas partnership consisting of brothers Peter and Thomas Jameson. The parties to this suit are the grandchildren of John B. Jameson, Sr. He owned approximately 17, 320 acres in Rapides, Evangeline, and Vernon Parishes. When he died, this property passed to his three children, John B. Jameson, Jr., Robert D. Jameson, and Jane Jameson Lord, who became owners of undivided equal shares. The principal players in this suit are the children of Robert (Robert, Jr., Thomas, and Peter) and John, Jr., (Andrew). In 1985, the three branches of the family divided the surface area of the property with each receiving acreage of equal value, but they continued to own the minerals in indivision.
In 1986, Thomas Jameson met R.W. Boebel, a geologist. Thomas asked Boebel to evaluate some seismic data the three branches had acquired to see if development of the minerals was a worthwhile cause. After an analysis of the data, he reported that the "present economics" did not support development. However, in 1991, Boebel contacted Thomas to once again review the seismic data because recent developments in the production of shallow gas might make the project viable. Boebel secured the help of Luis J. Batista, a New Orleans geophysicist, who specialized in shallow gas development.
After Boebel and Batista determined that development was possible, they entered into an agreement with Jameson Interests (Peter, Thomas, and Robert) for the development of the 17, 320 acres. Under the agreement, Boebel and Batista would split with Jameson Interests one-half of any overriding royalties they received from the lease exceeding two percent. Additionally, Jameson Interests would receive one-half of any monies in excess of $50,000.00 received by Boebel and Batista for finder's fees, consulting fees, or for any payment related to the lease.
Robert Jameson, Jr., would later withdraw from this deal.
In 1992, Boebel and Batistsi reached a tentative agreement with Bridwell Oil Company for the development of the 17,320 acres. Under this agreement, Boebel and Batista would receive a five percent overriding royalty interest, Bridwell would receive a seventy-five percent revenue interest, and the remaining twenty percent would be paid to the mineral owners. Bridwell made it known that it desired to lease the mineral rights to the entire 17,320 acres. However, the Lords decided not to pursue the development of their undivided interest in the minerals.
On January 11, 1994, Peter wrote to Andrew and proposed a partition of the minerals owned by the three families, followed by a reuniting of the mineral rights of Jameson Interests and Johnco. In March, Johnco, Jameson Interests, and the Lords partitioned the mineral rights of the property. On March 29, Johnco and Jameson Interests combined their mineral rights in proportions of an undivided 53.9663% to Jameson Interests and an undivided 46.0337% to Johnco. On April 4, 1994, Bridwell leased the minerals of Jameson Interests, and on April 5, 1994, Bridwell leased the minerals of Johnco. Soon afterwards, Boebel assigned an overriding royalty interest to Jameson Interests pursuant to the January 11, 1994 agreement. Andrew learned of the assignment because of the recordation of the assignment, and on November 13, 1995, Johnco filed suit against Jameson Interests, Peter, and Thomas, seeking an accounting of all profits from the January 11, 1994 agreement. In a supplemental and amending petition, Johnco named Batista as a defendant.
Johnco proceeded to trial under several theories. It alleged that the combined efforts of Johnco, Jameson Interests, Boebel, and Batista constituted a joint venture and that the secret dealings between Jameson Interests and Boebel and Batista were a violation of the fiduciary duty owed to one another as joint venturers. In the alternative, Johnco claimed that by their actions, Jameson Interests, Boebel, and Batista were bound to the duties as agents under the doctrine of negotiorum gestio. In a supplemental and amending petition, Johnco further asserted that the secret dealings constituted a charge, claim, or encumbrance on the minerals and the failure to disclose this deal was an intentional act of concealment and, therefore, a breach of warranty. In the alternative, it also alleged that Jameson Interests were liable under the doctrine of unjust enrichment.
Prior to trial, Batista's exception of no cause of action was sustained, and Boebel was dismissed via motion for summary judgment. A trial on the merits was held on March 10, 1998; and the judgment was signed on September 11, 1998. In this judgment, the trial court made the following findings:
1. There did not exist an explicit or implicit agreement producing a legal relationship between Johnco, Inc., and the Jameson Interests which would have created a joint venture.
2. The doctrine of negotiorum gestio was inapplicable because the Jameson Interests did not undertake to manage or protect the interests of Johnco, Inc.
3. The breach of warranty claim was inapplicable because the agreement was between the Jameson Interests and Boebel and Batista.
4. The agreement between the Jameson Interests and Boebel and Batista did not constitute an unjust enrichment because Johnco, Inc. was not impoverished by the agreement; it received its ten percent royalty as did the Jameson Interests.
Johnco, Inc., appeals and raises five issues on appeal.
STANDARD OF REVIEW
"The ultimate determination with regard to the existence or nonexistence of an obligation and/or contract . . . [is a question] of fact for the jury which should not be disturbed in the absence of clear or manifest error." Roddy v. Crawford, 618 So.2d 1229, 1237 (La.App. 3 Cir. 1993). In Canter v. Koehring Co., 283 So.2d 716, 724 (La. 1973), the supreme court commented on the deference afforded factual findings:
[T]he reviewing court must give great weight to factual conclusions of the trier of fact; where there is conflict in the testimony, reasonable evaluations of credibility and reasonable inferences of fact should not be disturbed upon review, even though the appellate court may feel that its own evaluations and inferences are as reasonable.
NEGOTIORUM GESTIO
The first issue raised by Johnco is whether the activities of Peter and Thomas Jameson in pursuing the development of minerals owned in indivision with Johnco, give rise to application of the doctrine of negotiorum gestio, and if so, whether Peter and Thomas Jameson breached the fiduciary duty that exists between the de facto agent and principal under that doctrine.
Negotiorum gestio occurs "when a person . . . acts without authority to protect the interests of another, the owner, in the reasonable belief that the owner would approve of the action if made aware of the circumstances." La.Civ. Code art. 2292. "It is essential to negotiorum gestio that the manager be doing another's business, not his own business." Burns v. Sabine River Auth., 614 So.2d 1337, 1340 (La.App. 3 Cir.), writ denied, 617 So.2d 935 (La. 1993). The comments to Article 2292 provide guidance when determining whether the acts bring about a negotiorum gestio:
(b) This Article accords with Article 2295 of the Louisiana Civil Code of 1870. The affair managed may be a material act, such as the protection of property from fire or flood, or the execution of a juridical act, such as the sale of perishable things.
(c) According to French doctrine and jurisprudence that is pertinent for Louisiana, the Civil Code provisions governing the management of affairs apply when there is a necessity or when the owner derives some benefit from the acts of the manager. See 7 Ripert et Planiol, Traité pratique de droit civil français 8 (2d ed. Esmein 1954). In Kirkpatrick v. Young, 456 So.2d 622 (La. 1984), the Louisiana Supreme Court declared that a person does not qualify as negotiorum gestor unless he undertakes the management with the "benefit" of the owner in mind.
(d) This Article does not apply when the person who undertakes management acts in his own interest or contrary to the actual or presumed intention of the owner. In such a case, there is a usurpation, and the person who manages an affair under these circumstances may incur liability under the law of delictual obligations.
The evidence and testimony clearly show that Jameson Interests was acting to advance their own interests and not seeking to protect the interest of Johnco. From the beginning, Jameson Interests was seeking to develop their minerals, and there was no evidence that it was acting without authority to protect Johnco's interests. Therefore, we find that the trial court was correct in finding that the doctrine of negotiorum gestio was inapplicable to this case.
CO-OWNERS — FIDUCIARY DUTY
The second issue raised by Johnco is whether it was a co-owner along with the Jameson Interests of the minerals, and if so, whether Jameson Interests breached its fiduciary duty owed as a co-owner.
The trial court found that Johnco and Jameson Interests were not co-owners of the minerals. The March 29, 1994 transfer of mineral interests provided the trial court with a reasonable basis on which it could have found that Johnco and Jameson Interests were, in fact, not co-owners. In 1985, the Lords, Johnco and Jameson Interests divided the surface of the property but continued to own the minerals in indivision. In 1994, when the Lords expressed their desire not to pursue the development of the minerals, the three groups acquired full ownership of the minerals lying under the property owned by each group. Subsequently, Johnco and Jameson Interests combined their mineral ownerships and then conferred a pro rata share of an undivided 53.9663% interest on Jameson Interests and an undivided 46.0337% interest on Johnco. Under this agreement, what Jameson Interests acquired was not a right to a 53.9663% share of the minerals, but the right to 53.9663% of the minerals. Conversely, Johnco gained the right to 46.0337% of the minerals. See Clark v. Tensas Delta Land Co., 172 La. 913, 136 So. 1 (1931). As such, the trial court was not clearly wrong or manifestly erroneous in finding that co-ownership did not exist. Therefore, we find no merit in this assignment of error.
JOINT VENTURERS
The next issue raised by Johnco, is whether the relationship between the parties constituted a joint venture, and if so, whether Jameson Interests violated its fiduciary duty with the secret agreement.
In Latiolais v. BFI of Louisiana, Inc., 567 So.2d 1159, 1161-62, (La.App. 3 Cir. 1990), the court defined joint venture:
It is well settled that while what constitutes a joint venture is a question of law, the existence or nonexistence of a joint venture is a question of fact. Grand Isle Campsites, Inc. v. Cheek, 262 La. 5, 262 So.2d 350 (1972):; Cajun Electric Power Cooperative, Inc. v. MeNamara, [ 452 So.2d 212 (La.App. 1 Cir.), writ denied, 458 So.2d 123 (La. 1984)].
"As a general rule, in order to constitute a joint venture it is necessary that the parties agree to share losses, and an important test in determining whether or not a joint venture exists is whether or not there is an agreement to share in losses. The term "losses' for purposes of the general rule is not limited to monetary losses, but includes time expenditures and out of pocket expenses, especially where one party to the venture furnishes property and the other only services.
The absence of an express agreement to share in losses is not conclusive as to the nature of the relationship, since such an agreement may he implied from an agreement to share profits. Moreover, it has been held not to be essential that the parties agree, expressly or impliedly, to share the losses, and when the nature of the undertaking is such that no losses other than time and labor in carrying out the undertaking are likely to occur, the agreement of the parties to divide profits may be sufficient to stamp the undertaking a joint venture." 48A C.J.S. Joint Ventures § 13. (Emphasis ours)
In Guilbeaux v. Times of Acadiana, Inc., 96-360, p. 10 (La.App. 3 Cir. 3/26/97); 693 So.2d 1183, 1188, writ denied, 97-1840 (La. 10/17/97); 701 So.2d 1327, we stated:
Since the essential elements of a joint venture and a partnership are the same, joint ventures are generally governed by partnership law. Latiolais v. BFI of Louisiana, Inc., 567 So.2d 1159 (La.App. 3 Cir. 1990). Louisiana Civil Code Article 2801 defines partnership as:
[A] juridical person, distinct from its partners, created by a contract between two or more persons to combine their efforts or resources in determined proportions: and to collaborate at mutual risk for their common profit or commercial benefit. A joint venture requires:
(1) A contract between two or more persons;
(2) A juridical entity or person is established;
(3) Contribution by all parties of either efforts or resources;
(4) The contribution must be in determinate proportions;
(5) There must be joint effort;
(6) There must be a mutual risk vis-a-vis losses;
(7) There must be a sharing of profits.
"[J]oint adventures arise only where the parties intended the relationship to exist. They are ultimately predicated upon contract either express or implied." Pillsbury Mills, Inc. v. Chehardy, 231 La. 111, 124, 90 So.2d 797, 801 (1956) (citing Daspit v. Sinclair Refining Co., 199 La. 441, 6 So.2d 341 (1942)).
The trial court determined that no specific or implied contractual relationship existed between Jameson Interests and Johnco. After a review of the record, we find no evidence suggesting that the trial court committed manifest error concerning the intent of the parties. Therefore, we find no merit in this assignment of error.
BREACH OF WARRANTY
Johnco further asserts that the trial court erred in finding that the secret December 16, 1991 agreement was not an encumbrance. Johnco cites American Legion, Ed. Brauner Post No. 307, Inc. v. Southwest Title Insurance Company, 207 So.2d 393 (La.App. 4 Cir. 1968), annulled on other grounds, 253 La. 608, 218 So.2d 612 (1969), to support its contention that the agreement was an encumbrance. The court in American Legion defined encumbrance as follows:
Black's Law Dictionary, Fourth Edition, defines incumbrance (encumbrance) to be "any right to, or interest in, land which may subsist in another to the diminution of its value, but consistent with the passing of the fee. * * * A claim, lien, charge or liability attached to and binding real property." Webster's New International Dictionary, Second Edition, defines encumbrance: "Law. A burden or charge upon property; a claim or lien upon an estate which may diminish its value; specifically any interest or right in land existing to the diminution of the value of the fee, but not preventing the passage of the fee by conveyance."
Id. at 400. Johnco asserts that this definition would include the agreement for the overriding royalty on the minerals because the agreement diminished the value of the minerals. We disagree with Johnco's assertion that the overriding royalty agreement diminished the value of the minerals. Clearly, this agreement did not constitute a claim, lien, charge or liability attached to the real property because the proceeds received by Jameson Interest came from Boebel and Batista's interest from their contract with Bridwell. Neither Johnco nor Jameson Interests were privy to that agreement. Therefore, we dismiss this assignment of error.
UNJUST ENRICHMENT
In the final issue raised, Johnco asserts that the trial court erred in finding that the doctrine of unjust enrichment was inapplicable.
A person who has been enriched without cause at the expense of another person is bound to compensate that person. The term "without cause" is used in this context to exclude cases in which the enrichment results from a valid juridical act or the law. The remedy declared here is subsidiary and shall not be available if the law provides another remedy for the impoverishment or declares a contrary rule.
La.Civ. Code art. 2298. Comment(b) to this Article explains the requirement of an enrichment and impoverishment:
(b) A person is enriched within the meaning of this Article when his patrimonial assets increase or his liabilities diminish. Correspondingly, a person is impoverished when his patrimonial assets diminish or his liabilities increase. There must be a causal connection, whether direct or indirect, between a person's enrichment and another person's impoverishment.
In Carriere v. Bank of Louisiana, 95-3058, p. 17 (La. 12/13/96); 702 So.2d 648, 671, the Louisiana Supreme Court provided the five requirements for showing an unjust enrichment:
[T]his court held on several occasions that the five requirements for a showing of unjust enrichment or action de in rem verso are: (1) there must be an enrichment; (2) there must be an impoverishment; (3) there must be a connection between the enrichment and the resulting impoverishment; (4) there must be an absence of "justification" or "cause" for the enrichment and impoverishment; and (5) there must be no other remedy at law available to plaintiff.
Johnco rightly asserts that the kickback of finders fees and commissions received by Jameson Interests represents an enrichment. Further, Johnco alleges that this enrichment constitutes an impoverishment to it because this payment is an overriding royalty interest from the production of the minerals it owns. However, we note that in this contract, Boebel and Batista assigned a portion of their fees to Jameson Interests. As owners of the minerals, both Johnco and Jameson Interests received a twenty percent royalty interest to be divided in proportion to each party's undivided interest. Therefore, we cannot agree with Johnco's assertion that it was impoverished from this deal, and, as such, we dismiss this assignment of error.
CONCLUSION
The judgment of the trial court is affirmed. All costs of this appeal are assessed to the plaintiff-appellant, Johnco, Inc.
AFFIRMED.
AMY, J., CONCURS AND ASSIGNS REASONS.
PETERS, J., DISSENTS AND ASSIGNS REASONS.
I agree with the majority opinion that an affirmation is warranted in this matter. However, I differ with that portion of the opinion discussing whether the parties were co-owners and what type of fiduciary duties may or may not have been breached by the defendant's actions. My review of the facts presented here leads me to believe that the parties were co-owners of the mineral rights both before and after the time of the negotiations with the geologist and, in turn, his negotiations with the oil company. While the plaintiff and defendant may have partitioned their interest in the mineral rights at some point, they rejoined their portions in indivision once again.
Due to my conclusion regarding co-ownership, I believe the next critical inquiry to be whether any duties stemming from the co-owner relationship were breached. I find no demonstration that any fiduciary responsibility arising from the relationship was breached. According to La.R.S. 31:176, a co-owner of a mineral servitude may act to prevent waste, destruction, or extinction of the servitude. The statute also provides that the co-owner "may lease or otherwise contract regarding the full ownership of the servitude but must act at all times in good faith and as a reasonably prudent mineral servitude owner whose interest is not subject to co-ownership." Furthermore, the comments to La.R.S. 31:176 indicate the requirement of good faith and reasonable prudence may entail duties less comprehensive than those of a full fiduciary relationship.
After considering the above standard, I do not find that the defendant's negotiations with outside parties, and the failure to disclose the resulting relationship, constitute a breach of duty stemming from the co-ownership. Rather, in my view, the defendant was validly exercising its rights as an owner of a mineral servitude. This view is supported by the comment to La.R.S. 31:109, which is cited in the comment to La.R.S. 31:176. Regarding the obligation owed by an executive interest owner, the comment to La.R.S. 31:109 provides as follows:
The comment to La.R.S. 31:176 indicates that the mineral servitude co-owner owes the same duty as the executive interest owner.
[T]he executive should not be bound to bargain selflessly as a fiduciary but should be free to consider his own economic position in determining which way to structure the lease transaction.
The illustrations contained in that comment further indicate, however, that the executive interest owner should not be allowed to structure the transaction in such a manner as to deprive the mineral royalty owner of a share in additional royalty. In the instant matter, no such problem occurred, as the plaintiff obtained the same royalty on its proportional interest as the defendant. It was only the override portion that the plaintiff did not share in. Accordingly, I do not find that the defendant has breached any duty owed.
I respectfully disagree with the conclusion reached by this panel that the trial court's judgment should be affirmed. The principal opinion rejects the plaintiffs co-ownership argument, while the concurring opinion recognizes that the litigants were co-owners of the minerals at issue but finds that the Jameson Interests did not violate any fiduciary duty owed to its co-owners. I agree with the conclusion reached in the concurring opinion on this assignment, but conclude that the Jameson Interests did violate a fiduciary duty it owed to its co-owners.
The secret profit arose as a result of an agreement entered into with Boebel and Batista in 1992. At that time, the litigants were clearly co-owners of the minerals, and the Jameson Interests owed a fiduciary duty to its co-owners. Specifically, "[a] use or possession of a mineral right inures to the benefit of all co-owners of the right." La.R.S. 31:174. Additionally, La.R.S. 31:175 provided at the time relevant to these proceedings:
A co-owner of a mineral servitude may not conduct operations on the property subject to the servitude without the consent of co-owners owning at least an undivided eighty percent interest in the servitude, provided that he has made every effort to contact such co-owners and, if contacted, has offered to contract with them on substantially the same basis that he has contracted with another co-owner. A co-owner of the servitude who does not consent to such operations has no liability for the costs of development and operations except out of his share of production.
(Emphasis added.)
I agree that a co-owner of a mineral servitude has the authority to act to "prevent waste or the destruction or extinction of the servitude. . . ." La.R.S. 31:176. However, that statute is not applicable to the matter before us because there is no suggestion that such action was necessary. Additionally, that statute provides that the action taken must be "at all times in good faith. . . ." See id.
This is simply a matter where the Jameson Interests, while representing Johnco, Inc., in mineral exploration negotiations, took advantage of its position by taking a secret profit to the detriment of its co-owners. I would reverse the trial court's judgment and render judgment in favor of the plaintiffs.