author: PITMAN, J.

text:
    George M. GILMER, Jr., Plaintiff-Appellant v. PRINCIPLE ENERGY, L.L.C., f/k/a Regal Energy, L.L.C., and Classic Production Services, Inc., Defendant-Appellee
    No. 52,218-CA
    Court of Appeal of Louisiana, Second Circuit.
    Judgment rendered September 26, 2018
    THE PESNELL LAW FIRM, By: Billy R. Pesnell, J. Whitney Pesnell, W. Alan Pesnell, Shreveport, Counsel for Appellant
    COLVIN, SMITH & McKAY, By: Cole B. Smith, James H. Colvin, Taunton Melville, Shreveport, Counsel for Appellee, Principle Energy, L.L.C., f/k/a Regal Energy, L.L.C.
    KEAN MILLER, LLP, By: William R. Huguet, Ann Rene Hankins, Shreveport, Counsel for Appellee, Classic Production Services, Inc.
    RANDAZZO, GIGLIO & BAILEY, LLC, By: Matthew J. Randazzo, III, Shawn Alexander Carter, Lafayette, Counsel for Appellee, XTO Energy, Inc.
    Before PITMAN, GARRETT, and McCALLUM, JJ.
   PITMAN, J.

Plaintiff George M. Gilmer, Jr., appeals the judgment of the trial court which granted motions for summary judgment filed by Defendants, Principle Energy, L.L.C., f/k/a/ Regal Energy, L.L.C. ("Principle"), and Classic Production Services, Inc. ("Classic"), finding that the drilling of a shut-in well, which had been tested for production of minerals, interrupted prescription on a royalty interest. Plaintiff also appeals the trial court's denial of his cross-motion for summary judgment. For the following reasons, we affirm the judgment of the trial court.

FACTS

On April 1, 2008, Plaintiff signed a royalty conveyance of 50 percent of 1/5th of 8/8ths interest in six tracts of land in DeSoto Parish to Regal Energy, L.L.C. The conveyance stated that the deed "shall have a prescriptive period of three (3) years, rather than ten (10) years ordinarily provided under Louisiana law. A shut-in well shall perpetuate the term of this Deed." Regal Energy, L.L.C., subsequently changed its name to Principle Energy, L.L.C.

On October 13, 2008, XTO Energy, Inc. ("XTO"), spudded the E. B. Brown, et al. No. 1 Well ("the Brown well") on Plaintiff's property, and the well was completed on January 23, 2009. The Brown well was tested by FESCO, Inc., on January 28-29, 2009, by an open-flow surface production test. The test showed that the well could produce 1,156 thousand cubic feet ("MCF") per day. The well was never placed in production due to lack of a pipeline and was classified by the Louisiana Department of Conservation as a shut-in well waiting on pipeline. Another type of test, a DT-1 surface production test (deliverability test), was not performed on the Brown well. On June 30, 2009, the Louisiana Commissioner of Conservation issued Order No. 191-H-45, which created the HA RA SU58 unit and designated the Brown well as the unit well. The order stated that its effective date was "on and after May 12, 2009."

In November 2010, the Louisiana Commissioner of Conservation issued Order No. 191-H-129, which authorized Chesapeake Operating, Inc. ("Chesapeake"), to drill and operate a well called the Davis 17-15-14H Well No. 001-Alt ("the Davis well") as an alternative unit well for the HA RA SU58 unit. The Davis well was spudded on October 13, 2010, and completed on April 30, 2011. Since then, the Davis well has produced in paying quantities. On July 8, 2011, Principle conveyed a portion of its interest to Classic.

Since the royalty conveyance was signed on April 1, 2008, and was for a term of three years, and the Davis well was not completed until April 30, 2011, Plaintiff first attempted to convince Principle and Classic to release the royalty deed. When the companies refused, he filed a petition against them in DeSoto Parish entitled "Petition to Annul and Cancel Royalty Conveyances and Recover Royalty Payments and Ancillary Relief." He alleged the above facts, but also claimed that the Brown well was never completed, as shown by a Department of Conservation Inspection Report dated April 15, 2011, and that XTO never filed a "Well Completion Report" with the Conservation Department concerning the Brown well.

Plaintiff also alleged that no DT-1 test was performed on the Brown well, in accordance with Statewide Order 29-B, and that the well has never produced any gas. He further alleged that when Chesapeake applied to the Louisiana Commissioner of Conservation, it created the HA RA SU58 unit for the Haynesville Shale Zone by order effective May 12, 2009. In that order, the Commissioner found that the unit could "be efficiently and economically drained by one well" and designated the Brown well as the unit well and XTO as the operator of the well.

Plaintiff also alleged that Chesapeake applied for an amended drilling permit and received permission to drill the Davis well, which was completed on April 30, 2011. Because this date fell outside of the three-year term for the royalty conveyance, he sought a finding that prescription had accrued. He stated he had made demand on Principle and Classic to release the royalty conveyance, and both had refused. He claimed he was entitled to a release of the royalty conveyance, attorney fees incurred in the prosecution of the action and an accounting from Principle and Classic with respect to all payments received by each of them under their respective royalty conveyances.

In September 2012, Plaintiff amended his petition and changed the caption to "Petition to Annul and Cancel Royalty Conveyances and Recover Royalty Payments and For Relief from Operator's Breach of its Duty to Produce and Market Gas." He added XTO as a defendant and included three more paragraphs alleging that if the court found the Brown well was capable of producing gas in paying quantities, then XTO, as operator, had breached its duties by failing to diligently produce and market the gas. For this, he alleged he is entitled to damages. The petition against XTO was amended a second time. Although XTO filed several objections to the suit, its objections were overruled, and XTO is not a party to this appeal.

In October 2012, Principle filed a motion for summary judgment and sought dismissal of Plaintiff's suit, claiming prescription was interrupted and began anew by operation of law, specifically pursuant to La. R.S. 31:91 and by the compulsory unitization of lands, including lands covered by the Gilmer conveyance, which contained a shut-in well capable of producing in paying quantities. Apparently, no action was taken for years on this motion for summary judgment.

Prior to a decision on the motion for summary judgment, Plaintiff amended his petition a second time and indicated that on July 13, 2007 (prior to the royalty conveyance), he had signed an oil, gas and mineral lease in favor of Chesapeake covering the lands to which the royalty conveyance applied. Other than that change, he simply reiterated his demands from the first amended petition.

Principle's motion for summary judgment was reurged, and Plaintiff filed his cross-motion for summary judgment on August 3, 2015. Classic filed its motion for summary judgment on June 6, 2017, although it is not individually noted in the record. Instead, there is a document entitled "Motion to Cause Classic Production Services, Inc.'s Motion for Summary Judgment to be Filed under Seal," dated June 20, 2017. On August 14, 2017, a hearing was held on these motions for summary judgment, and the trial court took the matter under advisement. On November 16, 2017, it rendered judgment in accordance with its written reasons dated September 15, 2017, denying Plaintiff's cross-motion for summary judgment, granting Classic's and Principle's motions for summary judgment and dismissing all of Plaintiff's claims against them with prejudice.

In its reasons for judgment, the trial court stated that the issue raised in all three motions for summary judgment was whether the mineral royalty interest had prescribed due to nonuse. The underlying question it addressed was whether the Mineral Code required a specific surface production test to prove capability to produce minerals in paying quantities. After examining the Mineral Code and the jurisprudence, it found that it was undisputed that the Brown well had never been placed in production. Further, the minerals produced from the open-flow surface production test were not saved. Thus, prescription could not have been interrupted under La. R.S. 31:87 or 88.

However, the trial court found that the law provided an alternative method of interrupting prescription. That method required that there be a shut-in well, located on either land burdened by a mineral royalty or land included in a conventional or compulsory unit, that had been proved through surface production testing to be capable of producing minerals in paying quantities. The well had to have been tested and shut in prior to the creation of the unit. It noted that the law does not require any specific surface test to prove capability to produce minerals in paying quantities. La. R.S. 31:90 and 91.

The trial court found that the six tracts included in the April 1, 2008 instrument were included in a compulsory unit and that the Brown well was classified as a shut-in well. It also noted that Plaintiff's counsel had conceded that had the results of the January 28-29, 2009, open-flow surface production test been obtained through a DT-1 test, those results would show capability to produce minerals in paying quantities; thus, it found that all three requirements to interrupt prescription under La. R.S. 31:91 had been met.

Accordingly, the trial court found that prescription of nonuse was interrupted under La. R.S. 31:91 on May 12, 2009, when the Louisiana Commissioner of Conservation issued the order which created the HA RA SU58 unit and designated the Brown well as the unit well. Prescription began to run anew on that date. It also found that prescription of nonuse was interrupted under La. R.S. 31:87 on April 30, 2011, when the Davis well began production of minerals and that it continues to be interrupted by the continuous production of minerals by the Davis well and that no specific surface test is required to prove capability to produce minerals in paying quantities.

Plaintiff filed this appeal seeking review of the judgment granting Defendants Classic and Principle's motions for summary judgment and denying his cross-motion.

DISCUSSION

Plaintiff admits that the royalty conveyance deed expressly established a prescriptive period of three years, rather than the ten years ordinarily provided by Louisiana law, and that a shut-in well would perpetuate the term of the deed. However, he argues that the prescription of nonuse began to run on the date the royalty interest was created, April 1, 2008, and accrued on April 1, 2011, unless interrupted. He asserts that the burden of proving an interruption of prescription is on the mineral royalty owners, i.e., Principle and Classic, and that they have been unable to meet that burden.

Plaintiff argues that the Brown well did not interrupt the accrual of prescription on the royalty conveyance deed because it never produced any oil, gas or other hydrocarbons which were saved, used and/or sold; it was never connected to a pipeline; and it never had a deliverability test performed as required by the Louisiana Mineral Code before prescription on a royalty can be interrupted. He states that Defendants also rely upon production from the Davis well, which was not completed until April 30, 2011, and placed in production on May 1, 2011. He claims this reliance is misplaced because the Davis well did not begin producing until after the three-year term of the royalty conveyance had expired.

Plaintiff contends that the "open-flow surface production test," which was conducted on the Brown well on January 28-29, 2009, by FESCO, Inc., did not comply with the regulations issued by the Department of Conservation and was not conducted as required by the U.S. Bureau of Mines. He asserts that instead of being saved, used or sold, the gas was flared into the atmosphere. He argues that Defendants failed to show by proper test that the Brown well was capable of producing gas in paying quantities as required by La. R.S. 31:90 and 91 and that the well has not been shown to be properly viewed, classified or treated as a "shut-in" well as that term is used in those code articles.

Based on these arguments, Plaintiff contends that prescription was never interrupted during the three-year period between the signing of the conveyance deed and the anniversary of the third year on April 1, 2011. Further, he argues that the trial court erred in denying him reasonable attorney fees incurred by him in the prosecution of this proceeding in accordance with La. R.S. 31:207.

Defendants both argue that the trial court correctly granted their motions for summary judgment because the royalty conveyance specifically stated that a shut-in well, capable of production, would operate to interrupt prescription, and the Brown well fits that description. They contend that there is no law which requires a specific test, i.e., the DT-1 test, be performed to show that a well is capable of producing in paying quantities.

The Brown well was shut in and the field was unitized by the Department of Conservation in 2009. Defendants argue that it was shown by testing of surface production to be capable of producing minerals in paying quantities; and, therefore, prescription was interrupted when the HA RA SU58 unit was declared. They assert that the shutting in of the Brown well, which was capable of producing in paying quantities prior to the creation of a unit, interrupted prescription upon unitization of a mineral royalty on lands within the unit. As a result of the shut-in well and the unitization, prescription was interrupted and began anew.

Defendants further argue that when Chesapeake was given permission by the Louisiana Commissioner of Conservation to drill the Davis well as an alternative well, and it was completed and producing prior to the expiration of the three-year period beginning in 2009, that well, and its production, also operated to interrupt prescription. For these reasons, Defendants claim the trial court correctly granted their motions for summary judgment and denied Plaintiff's motion. The trial court did not award Plaintiff attorney fees; therefore, Defendants did not address the issue in their briefs.

An appellate court will apply the de novo standard of review when reviewing a summary judgment and will use the same criteria that govern the trial court's consideration of whether summary judgment is appropriate. Goins v. Wal-Mart Stores, Inc. , 01-1136 (La. 11/28/01), 800 So.2d 783. La. C.C.P. art. 966(A)(3) states that after an opportunity for adequate discovery, a motion for summary judgment shall be granted if the motion, memorandum and supporting documents show that there is no genuine issue as to material fact and that the mover is entitled to judgment as a matter of law. No genuine issues of material fact exist in this case. The parties only dispute the legal interpretation of the provisions of the royalty deed and whether prescription was interrupted by a well that was deemed to be capable of producing gas and then was shut in, awaiting a pipeline, by the Louisiana Department of Conservation.

The following provisions of the Louisiana Mineral Code are applicable to the issues presented in this case.

Prescription of nonuse of a mineral royalty commences from the date on which it is created. La. R.S. 31:86.
Prescription of nonuse running against a mineral royalty is interrupted by the production of any mineral covered by the act creating the royalty. Prescription is interrupted on the date on which actual production begins and commences anew from the date of cessation of actual production. La. R.S. 31:87.
To interrupt prescription it is not necessary that minerals be produced in paying quantities but only that they actually be produced and saved. La. R.S. 31:88.
When there exists on a tract of land burdened by a mineral royalty, or on a conventional or compulsory unit that includes all or part thereof, a shut-in well proved through testing by surface production to be capable of producing minerals in paying quantities, prescription is interrupted on the date production is obtained by such testing. If only a part of the tract burdened by the royalty is included in a unit and the unit well is on land other than that burdened by the royalty, the interruption of prescription extends only to that portion of the tract burdened by the royalty included in the unit. Prescription commences anew from the date on which the well is shut in after such testing. La. R.S. 31:90.
If the land or part thereof, burdened by a mineral royalty is included in a conventional or compulsory unit on which there is a well shut in prior to the creation of the unit, located on other land within the unit, and capable of producing in paying quantities as required by Article 90, prescription is interrupted on and commences anew from the effective date of the order or act creating the unit. La. R.S. 31:91.

In Delatte v. Woods , 232 La. 341, 94 So.2d 281 (1957), the court stated that the completion and the existence of a shut-in gas well on a validly created unit are equivalent to production on all tracts in order to interrupt the prescription accruing against a royalty interest and to preserve the same from extinction by prescription. Citing Union Oil Co. of Cal. v. Touchet , 229 La. 316, 86 So.2d 50 (1956) ; Le Blanc v. Haynesville Mercantile Co. , 230 La. 299, 88 So.2d 377 (1956).

In Webb v. Hardage Corp ., 471 So.2d 889 (La. App. 2 Cir. 1985), the court stated that, ordinarily, proof sufficient to carry the burden of showing production in paying quantities is a finding of commercial productivity resulting from the performing of the initial potential test required by the Department of Conservation. Citing Lee v. Goodwin , 174 So.2d 651 (La. App. 2 Cir. 1965), writ ref'd , 248 La. 149, 177 So.2d 118 (1965). The test is a necessary prerequisite to classification of the well as a gas or an oil well and to the obtaining of an allowable and the authority to sell oil or gas from the well. The court also noted that while other kinds of evidence of production potential could also be considered, such as the results of logs and cores, the flaring of the wells for periods of time and the history of the wells in the same zone in the field, the importance of actual testing of surface production is obvious and is the most direct indication of production capability. The court stated that La. R.S. 31:34 and 90, which address the testing of shut-in wells in the context of interrupting prescription on mineral servitudes and mineral royalties, respectively, both provide for interruption of prescription by shut-in wells proved through testing by surface production to be capable of producing minerals in paying quantities.

In the case sub judice , the evidence showed that the royalty deed was executed on April 1, 2008, and was to have a prescriptive period of three years, rather than the ten years ordinarily provided under Louisiana law, and it specifically stated that a "shut in well shall perpetuate the term of this Deed." Therefore, barring an interruption of prescription, the royalty would have prescribed on April 1, 2011.

It is uncontroverted that although the Brown well was completed on January 23, 2009, and was tested by FESCO, Inc., on January 28-29, 2009, via an open-flow surface production test, which showed the well was capable of producing 1,156 MCF per day, the well was shut in and never placed in production due to lack of a pipeline. For these reasons, it is clear that under La. R.S. 31:87 and 88, prescription was not interrupted by production and saving of the production.

The deed, however, conveying the royalty interest stated that a shut-in well would operate to "perpetuate the Deed." After the surface production test was completed in January 2009, the Brown well was classified as a shut-in well. On May 12, 2009, the Louisiana Commissioner of Conservation issued Order No. 191-H-45, which created the HA RA SU58 unit and designated the Brown well as the unit well.

As a result of the issuance of Order No. 191-H-45 and pursuant to La. R.S. 31:91, the land at issue, which was burdened by a mineral royalty, was included in a compulsory unit on which there was a well shut in prior to the creation of the unit, located on other land within the unit and capable of producing in paying quantities as required by La. R.S. 31:90. Therefore, prescription was interrupted on, and commenced anew, from the effective date of the order or act creating the unit.

It should also be noted that when the Davis well began production of minerals on April 30, 2011, within the three-year period that commenced on May 12, 2009, the production interrupted prescription of nonuse under La. R.S. 31:87. Prescription continues to be interrupted by the continuous production of minerals by the Davis well. Accordingly, the judgment of the trial court is affirmed.

Further, we note that attorney fees are only due if the former owner's mineral right is extinguished or expired and the former owner is forced to file suit to have the extinguishment recognized. The comments to La. R.S. 31:206 state, "In the case of interests other than mineral leases, the party demanding the cancellation is not entitled to damages or attorney's fees if there is a good faith dispute concerning whether the interest in question has expired." Perkins v. Long-Bell Petroleum Co ., 227 La. 1044, 81 So.2d 389 (1955). For these reasons, Plaintiff is not entitled to attorney fees.

CONCLUSION

For the foregoing reasons, the judgment of the trial court granting the motions for summary judgment filed by Defendants Principle Energy, L.L.C., f/k/a Regal Energy, L.L.C., and Classic Production Services, Inc., and denying the motion for summary judgment filed by Plaintiff George M. Gilmer, Jr., is affirmed. Costs of this appeal are assessed to Plaintiff George M. Gilmer, Jr.

AFFIRMED.


source: Caselaw Access Project

license: Public Domain

text:
    VICTUS 1, INC., d/b/a Benchmark Business Brokers, Plaintiff-Appellee v. STOCKY'S WORLD FAMOUS PIZZA #14, INC., d/b/a Smitty's Pizza, Defendant-Appellant
    No. 52,221-CA
    Court of Appeal of Louisiana, Second Circuit.
    September 26, 2018
    E. RAY KETHLEY, Counsel for Appellant.
    B. WOODROW NESBITT, JR., THOMAS, SOILEAU, JACKSON, BAKER & COLE, L.L.P., By: Steven E. Soileau, Counsel for Appellee.
    Before WILLIAMS, PITMAN, and STONE, JJ.
   PITMAN, J.

Defendant-Appellant Stocky's World Famous Pizza # 14, Inc., d/b/a Smitty's Pizza ("Smitty's Pizza"), appeals the district court's granting of summary judgment in favor of Plaintiff-Appellee Victus 1, Inc., d/b/a Benchmark Business Brokers ("Benchmark"). For the following reasons, we affirm.

FACTS

On July 10, 2017, Benchmark filed a petition for breach of contract against Smitty's Pizza. Benchmark is a company involved in acquiring, selling and franchising businesses, and Smitty's Pizza is a restaurant located in Shreveport. On February 21, 2016, Smitty's Pizza entered into a listing agreement (the "Agreement") with Benchmark granting Benchmark the exclusive right to sell or contract to sell the business, for a period of 12 months. Smitty's Pizza agreed to pay Benchmark a broker fee of 10 percent of the purchase price at the time of the sale. The Agreement provided that if Smitty's Pizza cancels the contract or if the property is withdrawn from the listing for sale during the listing term, the commission, based on the asking price, shall be immediately due by Smitty's Pizza to Benchmark. Prior to the expiration of the 12-month term, Smitty's Pizza notified Benchmark in a text message from its president that she was "going to keep the place for a while," thereby withdrawing from and terminating the Agreement. Benchmark contended that this termination was a clear violation of the Agreement. It stated that the asking price for the sale of the property was $499,000. Benchmark made demand for the 10 percent broker fee to no avail. It noted that the Agreement provided that should a suit commence to enforce the broker's rights, the prevailing party shall pay expenses in connection therewith, including attorney fees. Benchmark contended that it is entitled to the commission of $49,900, plus attorney fees, expenses, legal interest and all costs of the proceeding.

On July 26, 2017, Smitty's Pizza filed an answer. It admitted the provisions of the Agreement stated in the petition. It alleged that Benchmark's representative expressly released Smitty's Pizza from the Agreement on November 29, 2016, that any obligation was extinguished at that time and that Benchmark should be estopped from claiming the contract continued for a period of 12 months.

On August 30, 2017, Benchmark filed a motion for summary judgment. It attached a memorandum in support of its motion; an affidavit of Marc Able, an officer and member of Benchmark, who entered into the Agreement with Smitty's Pizza; a copy of the Agreement; the listing of the property; and a screen shot of text messages with Shelly Stockton, the president of Smitty's Pizza.

On October 13, 2017, Smitty's Pizza filed an amending and supplemental answer. It stated that Benchmark never complied with its obligation under the Agreement and that Smitty's Pizza's statement about desiring to retain the business did not preclude Benchmark from finding a buyer of the business for $499,000 and earning its commission.

On November 17, 2017, Smitty's Pizza filed an opposition to the motion for summary judgment. It attached a memorandum, a copy of the Agreement, screen shots of text messages between Mr. Able and Ms. Stockton and portions of the depositions of Mr. Able and Ms. Stockton. In a November 29, 2016 text message, Mr. Able told Ms. Stockton, "I'm not going to ask that you honor the contract i just don't want to waste anymore time talking to people if you really don't want to sell." In a February 13, 2017 text message, Ms. Stockton told Mr. Able, "I know you're going to think I'm crazy, but after this weekend I've decided I'm going to keep the place for a while." Ms. Stockton sent this text message eight days before the Agreement's 12-month term expired. Smitty's Pizza contended that Ms. Stockton was relying on Mr. Able's November 29 text message when she made this statement. It noted that Benchmark never procured a qualified buyer for Smitty's Pizza and that there is nothing in the Agreement stating that Benchmark gets anything if it is unable to sell the business at a price not asked for or agreed upon by Smitty's Pizza. Smitty's Pizza argued that genuine issues of material fact existed as to the issue of an enforceable contract.

On November 21, 2017, Benchmark filed a reply memorandum in support of its motion for summary judgment. It stated that Smitty's Pizza's sole defense to its refusal to honor the Agreement is a text message by Mr. Able to Ms. Stockton that he was not going to ask her to honor the Agreement. Benchmark noted that Ms. Stockton responded to this text message by refusing to accept the offer to let Smitty's Pizza out of the Agreement and instead responded, "No. I know the contract I signed with you is for a year [.]" Benchmark stated that it continued to market the property and attempt to sell it from November 2016 until February 2017 when Ms. Stockton unilaterally decided to withdraw it from the market before the 12-month period expired. Benchmark noted that in Ms. Stockton's deposition she agreed that the Agreement states that no material modification shall be valid or binding unless made in writing and signed by both parties and that there was no such document signed by the parties.

A hearing on the motion for summary judgment was held on December 11, 2017. The district court determined that the text messages between the parties were not writings signed by both parties; and, therefore, the parties did not modify the Agreement. Following the hearing, it filed a judgment granting the motion for summary judgment in favor of Benchmark and against Smitty's Pizza in the sum of $49,900 plus attorney fees of $7,500 and all costs of the proceedings.

Smitty's Pizza appeals.

DISCUSSION

Summary Judgment

Smitty's Pizza presents four assignments of error in support of its fifth assignment of error, in which it argues that the district court erred in granting summary judgment on the evidence submitted. Benchmark argues the judgment was correct.

Appellate courts review motions for summary judgment de novo , using the same criteria that govern the district court's consideration of whether summary judgment is appropriate. Milazzo v. Harvey , 51,653 (La. App. 2 Cir. 1/10/18), 245 So.3d 346, citing Peironnet v. Matador Res. Co. , 12-2292 (La. 6/28/13), 144 So.3d 791.

A motion for summary judgment shall be granted if the motion, memorandum and supporting documents show that there is no genuine issue as to material fact and that the mover is entitled to judgment as a matter of law. La. C.C.P. art. 966(A)(3). A fact is material if it potentially ensures or precludes recovery, affects a litigant's ultimate success or determines the outcome of the legal dispute. Jackson v. City of New Orleans , 12-2742 (La. 1/28/14), 144 So.3d 876. A genuine issue of material fact is one as to which reasonable persons could disagree; if reasonable persons could reach only one conclusion, there is no need for trial on that issue and summary judgment is appropriate. Id. , citing Smitko v. Gulf S. Shrimp, Inc. , 11-2566 (La. 7/2/12), 94 So.3d 750. In determining whether an issue is genuine, a court should not consider the merits, make credibility determinations, evaluate testimony or weigh evidence. Milazzo v. Harvey , supra , citing Chanler v. Jamestown Ins. Co. , 51,320 (La. App. 2 Cir. 5/17/17), 223 So.3d 614, writ denied , 17-01251 (La. 10/27/17), 228 So.3d 1230.

Modification of the Agreement

In its first assignment of error, Smitty's Pizza argues that the district court erred in failing to acknowledge that parties can orally and by mutual actions modify a written contract even if the contract provides that all modifications be in writing and signed by all parties. It contends that Mr. Able's text message stating, "I'm not going to ask that you honor the contract [.]" was not an offer to let Smitty's Pizza out of the Agreement, but was, instead, a termination of the Agreement by Mr. Able. It argues that by their conduct after this termination, the parties modified the Agreement to be if Mr. Able could find a buyer at the purchase price of $499,000, then Ms. Stockton would pay him the 10 percent commission.

Benchmark argues that there was no oral modification of the Agreement. It emphasizes that the Agreement cannot be modified except in writing signed by both parties, which was not done. It agrees that a written contract may be orally modified, but it contends that Smitty's Pizza did not meet the burden of proving that a modification occurred.

Contracts have the effect of law for the parties. La. C.C. art. 1983. A contract is formed by the consent of the parties established through offer and acceptance. La. C.C. art. 1927. Unless the law prescribes a certain formality for the intended contract, offer and acceptance may be made orally, in writing or by action or inaction that under the circumstances is clearly indicative of consent. Id. Unless otherwise specified in the offer, there need not be conformity between the manner in which the offer is made and the manner in which the acceptance is made. Id.

The law is clear that written contracts may be modified by oral contracts and the conduct of the parties. Grosjean v. Grosjean , 45,529 (La. App. 2 Cir. 10/13/10), 50 So.3d 233, writ denied , 10-2619 (La. 2/4/11), 56 So.3d 980, and writ denied , 10-2623 (La. 2/4/11), 57 So.3d 311. A party who asserts that an obligation has been modified must prove the facts or acts giving rise to the modification. La. C.C. art. 1831.

Smitty's Pizza contends that the text messages between the parties demonstrate a modification of the Agreement. Both parties provided screen shots of portions of their text message exchange. A compilation of these screen shots provides the following exchange: On November 29, 2016, Mr. Able sent a text message to Ms. Stockton, which stated, "Hello Shelly. Have you withdrawn your business for sale?" Ms. Stockton replied, "No. I know the contract I signed with you is for a year. I've just been busy with other things and the restaurant has been doing good. Tell me again what you need to date to be able to discuss with prospective buyers." Mr. Able responded, "2015 tax return and most recent profit and loss statement. I'm not going to ask that you honor the contract i just don't want to waste anymore time talking to people if you really don't want to sell." Ms. Stockton did not respond. On December 8, 2016, Mr. Able texted to Ms. Stockton, "Shelly??" The next text messages between the parties that are in the record occurred in February 2017. Mr. Able asked Ms. Stockton, "Any luck with the P & L?" She responded, "I just sent CPA a follow up ... She said she believes she has everything and will look at when she gets to office in morning. I'll let you know as soon as I hear from her." He replied, "Thanks." Several days later on February 13, 2017, Mr. Able asked, "Any word??" Ms. Stockton responded, "I know you're going to think I'm crazy, but after this weekend I've decided I'm going to keep the place for a while. Thank you for everything you've done and I apologize." Mr. Able replied, "You know Shelly I have many hours of work promoting this and have spoken with many people. Many hours have been spent working on selling your restaurant." Then on March 2, 2017, Mr. Able stated, "I have a qualified buyer willing to offer you $450k for your place. Are you interested?" Ms. Stockton replied, "No thank you."

Although Smitty's Pizza is correct that a written contract may be modified orally and by the conduct of the parties, it has not proven that such a modification occurred in this case. It has not provided evidence of any oral conversations or agreements between the parties. It also has not proven that the parties modified the Agreement by their conduct. The text messages between the parties demonstrate that they did not agree to modify the contract. Although Mr. Able offered Ms. Stockton the opportunity not to honor the Agreement, she did not accept this offer. The parties' conduct then continued under the terms of the Agreement, e.g., they continued to discuss the finances of Smitty's Pizza and Benchmark continued to market the property, until their text message exchange on February 13, 2017, when Ms. Stockton withdrew the property from sale.

Text Messages

In its second assignment of error, Smitty's Pizza argues that the district court erred in finding that text messages between the parties are not writings and signed by both parties. It contends that the text messages between Mr. Able and Ms. Stockton were writings as defined by the Code of Evidence and in criminal jurisprudence and that they were signed by both parties in that the names of Mr. Able and Ms. Stockton are identifiable.

Benchmark argues that a text message is not a writing signed by both parties.

La. C.E. art. 1001(1) defines "writings" as follows:

"Writings" and "recordings" consist of letters, words, numbers, sounds, or their equivalent, set down by handwriting, typewriting, printing, photostating, photographing, magnetic impulse, mechanical or electronic recording, or other form of data compilation.

Paragraph 18 of the Agreement provides, in part, that "No amendment, material modification or extension of this Agreement shall be valid or binding unless made in writing and signed by both Seller and an Officer of the Broker." Although a text message might be a writing as contemplated by the La. C.E. art. 1101, neither Louisiana legislation nor Louisiana jurisprudence supports Smitty's Pizza's contention that the text messages exchanged between the parties were "made in writing and signed" by the parties as to constitute an amendment or modification to the Agreement. Even if the text messages were made in writing and signed by the parties, the parties did not agree to amend or modify the Agreement in their text message exchange.

Construing of Provisions of the Agreement

In its third and fourth assignments of error, Smitty's Pizza argues that the district court erred in failing to construe provisions of the Agreement against Benchmark as the furnisher of the text of the Agreement. It contends that the provision in the Agreement requiring a writing signed by both parties to modify the Agreement was fulfilled by the text messages; and, therefore, Benchmark released it from the Agreement by text message. It alleges that it was Ms. Stockton's reasonable understanding that the Agreement had been terminated or, at least, that Mr. Able had waived the right to enforce it as it was originally written because of his text message that stated that he would not ask her to honor the Agreement.

Benchmark argues that Smitty's Pizza's claim that the district court erred in failing to properly construe contract provisions is without merit. It contends that Smitty's Pizza was not released from the Agreement. It states that the Agreement is not ambiguous; and, therefore, there is nothing to construe against Benchmark. It contends that Smitty's Pizza's argument that Benchmark waived the right to the enforcement of the Agreement is without legal authority.

When the words of a contract are clear and explicit and lead to no absurd consequences, no further interpretation may be made in search of the parties' intent. La. C.C. art. 2046. In case of doubt that cannot be otherwise resolved, a provision in a contract must be interpreted against the party who furnished its text. La. C.C. art. 2056. A contract executed in a standard form of one party must be interpreted, in case of doubt, in favor of the other party. Id.

Although Smitty's Pizza relies on La. C.C. art. 2056 to support its contention that the Agreement should be interpreted in its favor and against Benchmark, this article is not applicable to this case. La. C.C. art. 2056 is applicable when the language of a contract is ambiguous. The words of the Agreement in this case are clear and explicit. Specifically, Paragraph 18, which requires any amendments or modifications to be made in writing and signed by the parties, is clear and explicit. This provision is not ambiguous; and, therefore, it will not be construed against Benchmark.

The district court did not err in granting Benchmark's motion for summary judgment. The motion, memorandum and supporting documents show that there are no genuine issues as to material fact-the parties entered into the Agreement, the parties did not modify or amend the Agreement and Smitty's Pizza withdrew the property from sale before the 12-month term expired. Therefore, Benchmark was entitled to judgment as a matter of law.

Accordingly, these assignments of error lack merit.

Monetary Awards

In its sixth assignment of error, Smitty's Pizza argues that the district court erred in awarding $49,900 based solely on the fact that it was 10 percent of the list price of an offer which was never produced by Mr. Able and that $7,500 in attorney fees is unreasonable and was not based on any evidence. It contends that there is nothing in the Agreement stating that Benchmark receives a commission if it is unable to sell the business at a price not asked for or agreed upon by Ms. Stockton. It notes that Mr. Able never procured a qualified buyer for Smitty's Pizza at Ms. Stockton's $499,000 asking price.

Benchmark argues that the amount of the judgment based upon the asking price was correct. It notes that the terms of the Agreement provided that a 10 percent commission shall be based upon the asking price. It states that Smitty's Pizza's argument that no buyer was located is irrelevant because Smitty's Pizza withdrew the business from sale during the 12-month period. Benchmark also argues that the award of attorney fees was reasonable.

The Agreement provides, in pertinent part:

2. The purchase price for the Business shall include all cash or non-cash consideration, received by the Seller including, but not limited to, cash equivalents, notes, liabilities assumed, earn outs, licensing fees, non-compete and consulting agreements. Seller agrees to pay Broker at closing a fee as follows: 10% of the purchase price.
3. Seller agrees that if this listing is cancelled or the property withdrawn from sale during the listing term by Seller, the commission (based on the asking price) shall become immediately due by Seller to Broker. If Seller refuses or is unable to comply with the listing terms for any reason, thereby preventing disposition of the property during the listing term upon the terms set forth above, the commission (based on the asking price) shall become immediately due by the Seller to the Broker.
* * *
8. This Agreement shall commence on the day and year set forth below and continue for a period of twelve (12) months.
9. Should any suit be commenced to enforce the Broker's rights herein, the prevailing party agrees the other party shall pay the expenses connected therewith, including attorney's fees incurred.

Shelly Stockton signed the Agreement on February 21, 2016. She withdrew the property from sale on February 13, 2017, i.e., during the 12-month listing term. Therefore, Paragraph 3 of the Agreement applies, and the commission of 10 percent of the asking price was immediately due by Smitty's Pizza to Benchmark. The listing price of $499,000 is evidenced in the record by a copy of the listing of the property on a website for selling businesses. Therefore, the district court did not err in awarding Benchmark $49,900.

An appellate court reviews an award of attorney fees for an abuse of discretion. Volentine v. Raeford Farms of La., LLC , 50,698 (La. App. 2 Cir. 8/15/16), 201 So.3d 325, writ denied , 16-1924 (La. 12/16/16), 212 So.3d 1171, and writ denied , 16-1925 (La. 12/16/16), 212 So.3d 1171, citing Covington v. McNeese State Univ. , 12-2182 (La. 5/7/13), 118 So.3d 343. A reasonable attorney fee is determined by the facts of an individual case. Cupit v. Hernandez , 45,670 (La. App. 2 Cir. 9/29/10), 48 So.3d 1114, writ denied , 10-2466 (La. 12/17/10), 51 So.3d 7. The trial court has discretion to determine the amount of an attorney fee based upon the court's own knowledge, the evidence and the court's observation of the case and the record. Id. A court does not have to hear evidence concerning time spent or hourly rates charged in order to make an award because the record will reflect much of the services rendered. Id.

Based upon the facts of this case, the district court did not abuse its discretion in awarding attorney fees of $7,500. Paragraph 9 of the Agreement provides for the awarding of attorney fees. The transcript of the hearing on the motion for summary judgment demonstrates that the parties and the district court discussed the award of attorney fees off the record before the district court awarded fees. The district court noted that the amount of the award included additional collection that may be necessary by Benchmark's attorney.

Accordingly, this assignment of error lacks merit.

Benchmark's Request to Increase Attorney Fees

Benchmark argues that Smitty's Pizza's appeal is a frivolous appeal and requests that the award of attorney fees be increased on appeal due to additional fees and costs incurred.

La. C.C.P. art. 2164 states:

The appellate court shall render any judgment which is just, legal, and proper upon the record on appeal. The court may award damages, including attorney fees, for frivolous appeal or application for writs, and may tax the costs of the lower or appellate court, or any part thereof, against any party to the suit, as in its judgment may be considered equitable.

This provision is penal in nature and is to be strictly construed. Cox v. O'Brien , 49,278 (La. App. 2 Cir. 8/13/14), 147 So.3d 809, writ denied , 14-1907 (La. 11/21/14), 160 So.3d 972. Appeals are always favored and, unless the appeal is unquestionably frivolous, damages will not be allowed. Id. Damages for frivolous appeal are only allowed when it is obvious that the appeal was taken solely for delay, that the appeal fails to raise a serious legal question or that counsel is not sincere in the view of the law he advocates, even though the court is of the opinion that such view is not meritorious. Id. The award of damages and attorney fees for a frivolous appeal are utilized to curtail the filing of appeals that are intended to delay litigation, harass another party or those that have no reasonable basis in fact or law. Nesbitt v. Nesbitt , 46,514 (La. App. 2 Cir. 9/21/11), 79 So.3d 347, writ denied , 11-2301 (La. 12/2/11), 76 So.3d 1178.

After a review of the record, we do not consider Smitty's Pizza's appeal to be frivolous. It does not appear that Smitty's Pizza appealed for the purpose of delaying litigation or to harass another party. This appeal has a reasonable basis in fact and law. Therefore, we decline to award Benchmark's request for additional attorney fees.

CONCLUSION

For the foregoing reasons, we affirm the district court's granting of summary judgment in favor of Plaintiff-Appellee Victus 1, Inc., d/b/a Benchmark Business Brokers, and against Defendant-Appellant Stocky's World Famous Pizza # 14, Inc., d/b/a Smitty's Pizza. Costs of this appeal are assessed to Defendant-Appellant Stocky's World Famous Pizza # 14, Inc., d/b/a Smitty's Pizza.

AFFIRMED.

      Benchmark's description of the order of these text messages is mistaken. Screen shots of the text messages provided in the record show that Mr. Able first asked Ms. Stockton if she had withdrawn her business from sale, she responded that she had not and knew the Agreement was for a year and Mr. Able then responded that he would not ask her to honor the contract. Ms. Stockton did not respond to this text message.


author: KING, JUSTICE, FOR THE COURT:

text:
    In the MATTER OF the ESTATE OF Brian K. COLE, Deceased:
    Wayne E. Ferrell, Jr., James W. Nobles, Jr., and Angelo J. Dorizas v. Gregory Cole, Administrator and GuideOne Specialty Mutual Insurance Company
    NO. 2017-CA-00774-SCT
    Supreme Court of Mississippi.
    August 23, 2018 Rehearing Denied November 29, 2018
    ATTORNEYS FOR APPELLANTS: W. BRADY KELLEMS, BROOKHAVEN, CHUCK McRAE
    ATTORNEYS FOR APPELLEES: BRIAN K. HERRINGTON, H. WESLEY WILLIAMS, III
    BEFORE KITCHENS, P.J., KING AND BEAM, JJ.
   KING, JUSTICE, FOR THE COURT:

¶ 1. Brian Cole's Estate had a court-approved contingency fee contract with Eugene Tullos, and only Eugene Tullos, to represent the Estate in wrongful death litigation. The Ferrell Group claims that this contract renders it an interested party entitled to notice of the Estate's final accounting under Mississippi Code Section 91-7-295. The trial court found that the Ferrell Group was not an interested party pursuant to the notice statute. Because the Ferrell Group did not probate a claim or have a contract with the Estate, or otherwise show a direct pecuniary interest in the Estate, this Court affirms the trial court's judgment as to Section 91-7-295.

FACTS & PROCEDURAL HISTORY

¶ 2. Brian Cole was killed in a motor vehicle accident in 2001. On May 13, 2002, the chancery court entered an order approving the hiring of Eugene Tullos to represent Cole's Estate in ongoing wrongful death litigation against Ford Motor Company. The court granted the Estate leave to join the wrongful death litigation, and approved the contingency fee contract between Tullos and the Estate. At some point during the wrongful death litigation, Tullos apparently associated other attorneys, including the appellants Wayne Ferrell, James Nobles, Jr., and Angelo Dorizas ("The Ferrell Group"). The record contains no court order approving these attorneys to represent the Estate. The wrongful death litigation ultimately ended with a large settlement, and the attorneys and beneficiaries disputed the distribution of the proceeds. During the wrongful death litigation, GuideOne Insurance Company advanced more than $200,000 toward litigation expenses on behalf of the Estate. GuideOne Insurance Company filed the only creditor claim against the Estate after notice to creditors was published pursuant to Mississippi Code Section 91-7-145.

¶ 3. On June 6, 2011, the chancery court ordered a partial distribution of the settlement proceeds, representing "a compromise of undisputed issues[.]" It ordered a payment to the Estate and qualified it only by stating that the amount would be "placed in the Estate account pending further Orders of this Court." The attorneys involved also received partial distributions in the June 2011 court order. The court found that, after distribution, "all other and further remaining funds in said account shall there remain until further Orders of this Court pending the resolution and final disposition of the remaining issues."

¶ 4. The current attorney for the Estate, Brian Herrington, negotiated with GuideOne regarding its creditor claim, and settled with GuideOne for an amount less than the distribution made to the Estate. The administrator of the Estate petitioned to close the Estate, and the chancery court granted that petition on April 25, 2016. The amount left from the distribution to the Estate after the GuideOne payment had been made was distributed in equal shares among all heirs-at-law.

¶ 5. On May 6, 2016, the Ferrell Group filed a Petition to Set Aside or Amend Order Closing Estate and Providing Other Relief or in the Alternative Motion to Reconsider. It claimed that it was an interested party and that the Estate was required to give it notice of the petition to close, because of "its" contract with the Estate. The contract on which it relies is the contract between the Estate and Tullos, and only Tullos, approved by the May 2002 court order. The Ferrell Group argued it should be allowed to assert its contingency fee contract with the Estate. In the alternative, it requested the court order that it is entitled to forty percent of the remainder of the distribution.

¶ 6. The chancery court found that the Ferrell Group was not an interested party entitled to notice. It relied on a transcript of a January 2011 hearing regarding the partial settlement distributions, and stated that it was "abundantly clear from the representations made to the court ... that as of January 24, 2011, neither 'The Ferrell Group,' nor any other attorney involved in the prosecution of the litigation on behalf of the Cole wrongful death heirs against Ford Motor Company or any other defendant expected to receive any fees whatsoever from the paltry funds set aside to the Estate of Brian K. Cole." It further found that none of these attorneys, including Tullos, performed any services for the Estate after January 24, 2011. Thus, the chancery court concluded that none of the attorneys was an interested party in the Estate. It further found that the claim was without substantial justification and set a hearing regarding sanctions.

¶ 7. The Ferrell Group appeals, arguing that the attorneys were interested parties entitled to notice that the Estate would be closing. The Ferrell Group conflates whether it is an interested party pursuant to the notice statute with the claim on the merits that it may have some entitlement to this money. It further argues that the trial court erred by denying its request to call witnesses and introduce documentary evidence and erred by making erroneous factual findings. In addition to rebutting these arguments, the Estate claims that the appeal is frivolous under Mississippi Rule of Appellate Procedure 38, and maintains that this Court should award the Estate damages and costs.

ANALYSIS

¶ 8. Neither party addresses the standard of review. This Court employs a limited standard of review when reviewing a chancellor's decisions. McNeil v. Hester , 753 So.2d 1057, 1063 (Miss. 2000). This Court will not disturb a chancellor's findings unless the chancellor was manifestly wrong, was clearly erroneous, or applied the wrong legal standard. Id. Questions of law, however, are reviewed de novo. Id.

¶ 9. To close an estate, "[s]ummons shall be issued or publication be made for all parties interested" and those interested parties may "show cause, if any they can, why the final account of the executor, administrator, or guardian should not be allowed and approved." Miss. Code Ann. § 91-7-295 (Rev. 2013). The only issue before this Court is whether the Ferrell Group is an interested party under Section 91-7-295, and was thus entitled to notice regarding the final account. The statute does not define interested parties for the purpose of Section 91-7-295, nor does caselaw. However, the statutes and caselaw have indicated who qualifies as an interested party in other wills and estates circumstances.

¶ 10. The statute regarding will contests provides that all interested parties must be made parties to a will contest. Miss. Code Ann. § 91-7-25 (Rev. 2013). This Court has noted that interested parties under the will contest statute are those whose direct pecuniary interests will be affected by the will. Garrett v. Bohannon , 621 So.2d 935, 937 (Miss. 1993). Interested parties includes heirs-at-law, beneficiaries under earlier wills, and beneficiaries under the will being contested. Id. The Mississippi Court of Appeals has noted that interested parties in a will contest may also include creditors, as they may have a direct pecuniary interest in the estate. See In re Estate of Necaise , 126 So.3d 49, 56 (Miss. Ct. App. 2013). A similar standard should be used to define interested parties regarding the final accounting under Section 91-7-295. To be an interested party under the statute, the party must have some legal tie to the estate in the fashion of a direct pecuniary interest. The Ferrell Group has not shown that it had a direct pecuniary interest in the Estate such that it was entitled to notice as an interested party - it shows no privity with the Estate.

¶ 11. In this case, the record does not indicate that the Ferrell Group was an interested party. It did not probate or attempt to probate a claim against the Estate, despite the Estate having published notice in 2002. See Miss. Code Ann. §§ 91-7-145, 91-7-149 (Rev. 2013) (containing the procedures for notifying those with claims, and for probating claims). The record does not indicate that the Ferrell Group had a contract with the Estate, despite its claims otherwise. The Ferrell Group points only to the contract the Estate had with Tullos; the appellants' names are nowhere in that contract. The record indicates that Tullos may have contracted with the Ferrell Group, but the contract between those parties, to which the Estate is ostensibly not a party and which did not have the approval of the chancery court with regard to the Estate, does not tie the Ferrell Group directly to Cole's Estate. Rather, if anything, it may tie it to Tullos. Nothing contained in the record indicates that the Ferrell Group had a direct pecuniary interest in the Estate.

¶ 12. Because the Ferrell Group was not an interested party in the Estate pursuant to Section 91-7-295, it was not entitled to notice of the final accounting, and we affirm the judgment of the trial court. Accordingly, this Court need not address the evidentiary issues the Ferrell Group raises.

¶ 13. The Estate argues that this appeal is frivolous under Mississippi Rule of Appellate Procedure 38. Rule 38 provides that if this Court determines an appeal is frivolous, it shall award damages to the appellee. An appeal is frivolous when the appellant has no hope of success. Matter of Estate of Smith v. Boolos , 204 So.3d 291, 316 (Miss. 2016). This Court has never passed directly on the issue of who is an interested party under Section 91-7-295. And the Ferrell Group did show some ties to the Estate, even if not direct. Because this was something of a novel legal issue, and because parts of the record (namely, the January 2011 hearing transcript and the chancellor's memory) relied upon by the trial court to hold a Rule 11 hearing are not in the record before this Court, this Court finds that the appeal is not frivolous under Rule 38. While the Ferrell Group does not appear to have much hope of success, it cannot be said on this record that the appellant had no hope of success.

CONCLUSION

¶ 14. The Ferrell Group did not probate a creditor claim and does not have a contract with the Estate. It has shown no direct pecuniary interest in the Estate. Accordingly, it is not an interested party entitled to notice of the final account under Section 91-7-295. This Court therefore affirms the trial court judgment. Furthermore, because this particular issue previously had not been interpreted by this Court, the Ferrell Group's appeal is not frivolous under Rule 38.

¶ 15. AFFIRMED.

WALLER, C.J., KITCHENS, P.J., COLEMAN, MAXWELL, BEAM, CHAMBERLIN AND ISHEE, JJ., CONCUR. RANDOLPH, P.J., NOT PARTICIPATING.

      This file is under seal due to the confidential settlement amount of the wrongful death litigation.

      The record indicates that a passenger in the vehicle may have filed a cross-claim against the Estate.

      Herrington has been the attorney for the Estate since at least 2010, but the record is unclear as to exactly when he became involved.

      The transcript does not appear to be in the record.

      The chancery court to some extent also conflated the issues, appearing to find to some degree that the Ferrell Group had no entitlement to the money, ergo , it is not an interested party. But on this record, we can determine whether the Ferrell Group is an interested party without reaching the question regarding any entitlement to the money. The two issues need not be combined.

      We need not decide the ultimate claim regarding whether the Ferrell Group had some entitlement to this money, because we conclude that it was not an interested party to the Estate under the notice statute.

      The Ferrell Group does not and cannot claim fraud. It clearly was abundantly aware that this distribution was paid to the Estate and was aware of any claim or potential claim it had on this money in 2011. But it did not file anything with the Estate in the ensuing five years regarding its potential claim.

      Tullos has since died. His Estate was represented at the Rule 59 hearing, but did not make arguments. It did not join this appeal.

      While we do not decide this issue, the Ferrell Group may have an indirect pecuniary interest in the Estate's distribution, if Tullos did indeed have an interest in the Estate and if the Ferrell Group had a contract with Tullos. Its remedy, if any, would be with Tullos's Estate.