The Intersection of Louisiana Succession Law and Mineral Code Article 190: Quantum Resources v. Pirate Lake Oil

• Author: Alexander Baynham
• Position: J.D./D.C.L., 2015, Paul M. Hebert Law Center, Louisiana State University.
• Pages: 829-863

The Intersection of Louisiana Succession Law and

Mineral Code Article 190: Quantum Resources v.

Pirate Lake Oil

Introduction ..........................................................................830

I. Louisiana’s Institution of Forced Heirship, the Surviving

Spouse Usufruct, and Mineral Code Article 190 .................835

A. Protecting the Heirs with Forced Heirship .....................835

B. The Surviving Spouse Usufruct as a Permissible

Burden ............................................................................837

C. Louisiana Mineral Code Article 190: Expanded

Rights for the Surviving Spouse ....................................843

II. Quantum Resources v. Pirate Lake Oil: A Flawed

Analysis ................................................................................846

III. A Scholarly Debate: The Proper Method of Reduction

When a Testator Bequeaths All of His Property in Full

Ownership to His Surviving Spouse ....................................848

A. The Debate .....................................................................848

B. The Solution: Usufruct for Life over Separate and

Community Property with the Power to Dispose of

Nonconsumables ............................................................852

C. Application to Quantum .................................................855

IV. Quantum and Mineral Code Article 190: The Importance

of Properly Classifying a Usufruct ......................................856

A. Classifying a Usufruct That Is Reduced from Full

Ownership Under Current Law ......................................857

B. Application to Quantum: Old Law Controls ..................861

Conclusion ...........................................................................863

830 LOUISIANA LAW REVIEW [Vol. 75

INTRODUCTION

Oil is black gold1––where there is oil, there is money to be

made. Louisiana holds close to 10% of the nation’s oil reserves,

and its reserves of other minerals, such as natural gas, are even

more significant.2 Not surprisingly, the ownership of mineral rights

is frequently litigated in Louisiana, often involving family

members at war, fighting for the right to claim lucrative mineral

rights.3 To avoid family turmoil, a mineral rights owner may

choose to prepare a last will and testament to ensure that, upon his

death, the rights are given to the intended beneficiary. Although

deference to a testator’s intent is a fundamental principle of

Louisiana succession law,4 recent jurisprudence interpreting the

inception and classification of the surviving spouse usufruct and

how it applies to Louisiana Mineral Code article 190 has produced

uncertainty as to whether Louisiana courts will actually uphold a

testator’s final wish.5

Imagine a testator who creates a last will and testament

bequeathing everything he owns to his spouse. Included in the

testator’s estate is a piece of immovable property located in

Louisiana that is rich with oil, which could provide for his family for

years to come. Unbeknownst to the testator, Louisiana recognizes a

doctrine called forced heirship, which reserves for the testator’s

children a portion of his estate called the forced portion.6 As forced

heirs, his children have the right to demand their share of his estate

even though the testator bequeathed all of his property to his

spouse.7 The children successfully move to have the testator’s

bequest to the spouse judicially reduced in order to satisfy their

Copyright 2015, by ALEXANDER BAYNHAM.

1. Black Gold, MERRIAM WEBSTER, http://www.merriam-webster.com

/dictionary/black%20gold, archived at http://perma.cc/7SL6-6YB9 (last visited

Jan. 23, 2014). See also Michael A. Ogline, Black Gold: An Oil and Gas Primer

for Estate Planners, 20 OHIO PROB. L.J. 31 (2009).

2. “Louisiana co ntains just u nder 10 per cent of all known U.S. oil reserves

and is the country’s third largest producer of petroleum. Its reserves of natural gas

are even larger and it produces just over one-quarter of all U.S. supplies.”

INFOLOUISIANA, http ://doa.louisiana.gov/about_economy.htm, archived at h ttp:

//perma.cc/AT6V-ZTAU (last visited Jan. 23, 2014).

3. See Quantum Res. Mgmt. v. Pirate Lake Oil Corp., 105 So. 3d 867 (La.

Ct. App. 2012); Darby v. Rozas, 580 So. 2d 984 (La. Ct. App. 1991).

4. See LA. CIV. CODE art. 1611 (2015); Succession of Mydland, 653 So. 2d

8, 11–12 (La. Ct. App. 1995).

5. See infra Part II.

6. See discussion infra Part I.A.

7. See discussion infra Part I.A.

2015] COMMENT 831

forced portion.8 As a result, the testator’s children are recognized

as the naked owners of the Louisiana property,9 leaving his spouse

with only a usufruct over that property10––even though the testator

wished to give all of his property to his spouse.

A few years later, oil operations begin on the Louisiana property

and generate hundreds of thousands of dollars in royalties. Both the

testator’s spouse and his children believe that they are entitled to the

proceeds, the spouse as usufructuary and the children as naked

owners of the land. A lawsuit is filed to determine who is legally

entitled to the mineral rights. Unfortunately for the spouse, the court

relies on a recent Louisiana Fifth Circuit Court of Appeal decision,

which leads the court to make two erroneous determinations as to

the inception and classification of the usufruct.11

First, the court holds that the spouse’s usufruct was created

when the trial court granted a judgment of possession, which is the

stage in succession proceedings recognizing the relationship of the

parties to the decedent.12 Further, the court finds that the judgment

of possession occurred prior to the commencement of the oil

production on the property. This analysis is problematic, however,

because Louisiana law is clear that a judgment of possession does

not create rights––it merely recognizes inheritance rights already

conferred by operation of law.13 This incorrect finding as to when

8. Reduction is the right of forced heirs to reduce excessive donations to

the extent necessary to eliminate impingements on the portion tha t t hey a re

guaranteed. See LA. CIV. CODE art. 1503 (2015).

9. “The naked o wner enjoys prerogatives of ownership to the extent that

they do not interfer e with the enjoyment o f the usufr uctuary. Accordingl y, during

the existence of the usufruct, the rights of the naked owner begin where the rights

of the usufructuary end.” A. N. YIANNOPOULOS, PERSONAL SERVITUDES § 5:3, in

3 LOUISIANA CIVIL LAW TREATISE 341 (5th ed. 2011). The naked o wner may also

“dispose of the naked o wnership, but he cannot thereby affect the usufruct.” LA.

CIV. CODE art. 603 (2015).

10 . A usufruct is a “real right of limited duration on the property of

another.” LA. CIV. CODE art. 535 (2015). A usufructuary is entitled to the usus

and the fructus over the property, but the usufructuary is not entitled to the

abusus. Generally, this means that a usu fructuary is only entitled to use and

enjoy the fruits of the property but has no power to alienate the thing. See

discussion infra Part I.A.

11. See infra Part II; Quantum Res. Mgmt. v. Pirate Lake Oil Corp., 105 So.

3d 867 (La. Ct. App. 2012).

12. See LA. CODE CIV. PROC. art. 3062 (2012).

13. Id. (“The judgment of possession rendered in a succession proceeding

shall be prima facie evidence of the relationship to the deceased of the parties

recognized therein, as heir, legatee, surviving spouse in community, or

usufructuary, as the case may be, and of their right to the possession of the estate

of the deceased.”); Ronald J. Scalise, Jr., The Chaos and Confusion of Modern

Collation: A Critical Look into an Institution of Louisiana Successions Law, 75