Shreveport & Caddo Shale $$$$$ Rights Litigation


by Marion Marks

RROShale_Rights_lawsuit Attorneys of Richie, Richie & Oberle have made it quite clear that the class action charging the City of Shreveport and Caddo Parish with illegally leasing mineral rights on adjudicated property to companies drilling for natural gas in the Haynesville Shale filed in Caddo District Court will require taxpayer and officials full attention. Unfortunately, of course, the present city administration will be gone before it must answer for perhaps quite illegal actions. The parish, too, may be required to answer similar questions.Haynesville Shale formation region

Legal staffs – and top elected officials of Shreveport and Caddo governments will be held accountable. The current class of 500+ may be the beneficiaries of poor decisions, and taxpayers may foot the bill for actions by local government which will require some extraordinary explaining. If the legal advice that determined imprudent actions by government officials, millions of dollars and quite a few years will be required to make restitution.

The essential allegation is that there was no legal basis at all for local governments taking these properties / lease payments / continuing production income from properties where the government had no clear title.

The plaintiff in the initial suit is a limited liability company named Red Sox Investments, listed in the Louisiana Secretary of State’s Corporation Database as first filing as a Louisiana LLC in 2003 and being in good standing with the Secretary of State. Red Sox Investments owned a number of adjudicated properties leased to energy companies by the City and Parish.

The company’s registered agent is Richard Hiller, who, along with attorneys Byron Richie and Michael Wainwright, are listed as attorneys in the litigation.

Haynesville Shale Production map
Haynesville Shale Production map

Richie said he expects many more people who owned adjudicated property to join the suit as they learn it has been filed.At this time 500 separate properties qualify to join the suit, but Richie told KTAL, “my best guess is there will probably be in excess of a thousand – I’m guessing from 1,000 to 1,500 (adjudicated properties illegally leased by the City and Parish).

The basis of the litigation is that the City and Parish executed leases on their own property and determined they could also included property they did not own – properties that were “levied by City or Parish governments when taxes were not paid.

Essentially, the government determined, arbitrarily, certain rights and powers over property It does not have clear ownership. The government entities also chose to keep money earned through leasing the property that it did not have clear title.

They will stand in line!
They will stand in line!

According to the suit, government can legally lease the property, but, the suit further states Louisiana law requires the government credit any income from that lease toward the outstanding tax debt. Once that debt is satisfied, the adjudication should be cancelled and ownership restored to the original owner. In addition, the suit claims the law requires any money in excess of the taxes owed – such as bonuses and royalties – are to be paid to the rightful property owner.

Specific mineral leases in adjudicated property between either the City or Parish and various energy companies executed beginning in July 2009 and ending in September 2013 on adjudicated properties are listed in the suit.

The City and Parish will be required to account for all mineral leases executed on adjudicated properties, the bonus and royalty payments received on those properties and the amount of money required for each individual class member to satisfy delinquent taxes. The suit asks for permanent and preliminary injunctions prohibiting the City or Parish from selling those properties or entering into additional contracts related to adjudicated properties.

Finally, the suit asks that adjudicated property be restored to owners and all bonuses and royalties after satisfaction of the tax debt be paid to the owners. Essentially, the city and parish will probably be tied in legal knots and any slush funds of the parish or cushion of the city will be in limbo.