Energy Law

Federal Court Remands Mineral Lease Dispute for Lack of Evidence of Amount in Controversy

By Kelly Becker

By Emma J. Hinnigan

In Sullivan v. Chesapeake Louisiana, L.P., 09-0579, 2009 WL 3735798 (W.D. La. Nov. 6, 2009), the Western District of Louisiana remanded a case seeking rescission of a mineral lease back to state court after the defendant failed to provide proof of the amount in controversy, namely the total value of the lease. The Sullivan plaintiff filed suit in state court seeking rescission, alleging that (1) the bonus payment was paid untimely, and (2) the defendant had violated Louisiana's Blue Sky Law. The defendant filed a notice of removal, in response to which the plaintiff argued that the market value of the lease bonus fell far short of the requisite jurisdictional amount. However, because the plaintiff was seeking declaratory relief, the amount in controversy was not merely the potential monetary judgment, but the total value of the lease, including the value of any undisturbed minerals. The court explained that because the value of the undisturbed minerals was not 'facially apparent,' it would look to affidavits or other 'summary judgment-type' evidence to determine the amount in controversy. However, the defendant only offered two unauthenticated press releases that referenced production rates for wells in the same area. The court concluded that the press releases were inadmissible hearsay, and ultimately held that the defendant failed to satisfy its burden of showing that federal jurisdiction existed.

Full post as published by The Energy Law Blog on February 02, 2010 (boomark / email).