Trident Oil & Gas Corp. v. John O. Clay Exploration, Inc.
Docket: No. 25041-CA
Court: Louisiana Court of Appeal; August 18, 1993; Louisiana; State Appellate Court
Plaintiff Trident Oil and Gas Corp. filed a suit against John O. Clay Exploration, Inc. for specific performance to enforce an assignment of interest in mineral leases. The trial court ruled in favor of Clay, dismissing Trident's claims. The dispute arose from a June 29, 1990 letter agreement for Trident to acquire a 21.48% interest in mineral leases from Pentagon Petroleum, Inc. for $195,000, with Trident's share to be paid through credits owed by Pentagon. However, the July 27, 1990 act of sale indicated that Clay acquired 100% of the leases. Trident alleged an oral modification to the agreement where Clay would assign Trident its intended interest post-sale. The trial court rejected Trident's parol evidence, stating the July 27 act of sale superseded previous agreements. On appeal, Trident argued that the July 27 act was a simulation misrepresenting ownership and that the June 29 letter represented their true agreement. Under Louisiana Civil Code Articles 2025-2027, a simulation occurs when a contract does not reflect the true intent of the parties, with absolute simulations indicating no effect and relative simulations indicating a disguised transfer. The consideration stated in the July 27 assignment was $1,000, which Trident contested as inadequate.
William B. Moran, president of Trident, confirmed that Clay paid the specified consideration for the mineral leases, reinforcing that the transaction cannot be deemed a simulation under Louisiana law, as any consideration validates the transfer (citing Russell v. Culpepper and Succession of Cloud). Even if the assignment was considered a simulation, Trident would not be entitled to recover, as its claim regarding the counter letter is unfounded. Trident alleged that an oral agreement permitted it to buy a 21.48% interest in the leases after the letter agreement was signed. However, under LSA-C.C. Art. 1848, while parol evidence can clarify modifications to a written agreement, any oral agreement to sell an interest in mineral rights is invalid, as these rights are governed by laws requiring written contracts for ownership transfers (citing LSA-C.C. Arts. 1832, 1839, 1848, 2440, and Billingsley v. Bach Energy Corp.). Consequently, the trial court's decision to dismiss Trident's suit for specific performance was upheld, with costs assessed to Trident. The judgment is affirmed, with concurrence from Judge Norris.
