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CAUSE NO, 2015-47031
QRE OPERATING, LLC, § IN THE DISTRICT COURT OF
§
Plaintiff, §
§
v. § HARRIS COUNTY, TEXAS
§
ROGER D. PARSONS, IN HIS §
CAPACITY AS TRUSTEE OF THE §
LL&E ROYALTY TRUST, §
§
Defendants, § 133" JUDICIAL DISTRICT
PLEA IN ABATEMENT, OR IN ALTERNATIVE, MOTION TO STAY,
AND ORIGINAL ANSWER OF DEFENDANT ROGER D. PARSONS
TO THE HONORABLE JUDGE OF SAID COURT:
Defendant Roger D. Parsons, in his capacity as Trustee of the LL&E Royalty Trust
(“Parsons”), files this Plea in Abatement, or in the Altemative, Motion fo Stay, and Original
Answer, and requests that this Court abate, or stay, this action and in support thereof would
respectfully show as follows:
I. PLEA INABATEMENT / MOTION TO STAY
1. This case arises out of a dispute over a contract conveying royalty interests in an
oil and gas field located in Alabama and Florida. Parsons is a resident of Michigan, and
Plaintiff, QRE Operating, LLC (“QRE”), is a Delaware limited liability company with its
principal place of business in Houston, Texas. QRE filed this action on August 12, 2015 as a
simple declaratory judgment action requesting a declaration regarding the rights and obligations
of QRE and Parsons under a contract, the Conveyance of Overriding Royalty Interests (the
“Conveyance”) dated June 28, 1983.
PLEA IN ABATEMENT, OR IN THE ALTERNATIVE, MOTION TO STAY.
AND ORIGINAL ANSWER OF DEFENDANT ROGER D. PARSONS - Page 12. As admitted by QRE in the Plaintiffs Original Petition for Declaratory Judgment,
this action was originally filed by Parsons as Trustee of the LL&E Royalty Trust (the “Trust”),
on October 3, 2014. (Petition 7). That action included other entities related to QRE, and was
initially styled as The LL&E Royalty Trust, by Roger D. Parsons, Trustee v. Quantum Resources
Management, LLC, QR Energy, LP and QRE Operating, LLC; Case No. 14-13833-GCS-MJH;
United States District Court, Eastern District of Michigan (the “Michigan Federal Action”). A
true and correct copy of the Complaint filed in the Michigan Federal Action is attached hereto as
Exhibit “A.”
3. On July 14, 2015, the federal court granted a motion to dismiss the Michigan Federal
Action for lack of subject matter jurisdiction (Petition 411), but did not actually enter a final
order of dismissal or judgment at that time. Instead, through in decision and order dated July 14,
2015, the federal court in the Michigan Federal Action gave Parsons thirty (30) days, until
August 13, 2015 to amend its Complaint. A true and correct copy of the Opinion and Order
Granting Motion to Dismiss and Offering Plaintiff 30 Days to File Amended Complaint is
attached hereto as Exhibit “B.”
4. On September 3, 2015, the federal court in the Michigan Federal Action issued its
Order and Judgment Dismissing the Michigan Federal Action Without Prejudice. A true and
correct copy of the Order is attached hereto as Exhibit “C.”
5. Thus, when this action was filed by QRE on August 12, 2015, the Michigan
Federal Action was still open, and the federal court in Michigan still had carriage of this case.
Accordingly, QRE filed this action prematurely.
6. Further, on September 16, 20151 Parsons’ promptly refiled his claims in Michigan
State Court in The LLKE Royalty Trust, by Roger D. Parson, Trustee v. Quantum Resources
PLEA IN ABATEMENT, OR IN THE ALTERNATIVE, MOTION TO STAY,
AND ORIGINAL ANSWER OF DEFENDANT ROGER D. PARSONS - Page 2Management, LLC; QR Energy, LP, QRE Operating, LLC, Breitburn Energy Partners, LP,
Breithurn Management Company, LLC and Wells Fargo Bank, N.A., Cause No. 20147-CKB,
Oakland County Circuit Court, State of Michigan (the “Michigan State Action”). Moreover, on
September 17, 2015, Parsons filed a Motion for Partial Summary Disposition in the Michigan
State Action. Both the Michigan Federal Action and the Michigan State Action arises out of the
Conveyance, and include other parties involved in the operation of the oil and gas field and the
proper payment of royalties under the Conveyance, and include claims beyond a mere
declaration of rights such as conversion, breach of fiduciary duty and fraudulent conveyance.’
The issues raised in the Motion for Summary Disposition address the issues QRE is attempting
to raise in this case by declaratory relief.
7. In an effort to circumvent the rights and obligations of all the parties, and in order
to seek a more favorable “home court”, QRE filed this action before the Michigan Federal
Action was dismissed. Since the issues necessary to determine all the of the parties rights and
obligations, and all of the claims asserted by the Trust will be decided in the Michigan State
Action, this lawsuit should be abated, or stayed, pending the entry of a final non-appealable
judgment in the Michigan State Action. Abating, or staying, this case is in the best interests of
comity and of the parties. Parsons, on behalf of the Trust, and most of the Trust’s unit owners,
are citizens of Michigan. Moreover, additional parties and claims are involved in the Michigan
State Action, and as a result the two courts may end up with conflicting rulings. Whereas any
ruling in the Michigan State Action would be res judicata in this case. QRE will not suffer any
' Parsons requests this Court to take judicial notice of the Complaints and Orders filed in the Michigan Federal
Action and Michigan State Action attached hereto as Exhibits A—D. freedom Comms. v. Coronado, 372 $.W.3d
621, 623 (Fex. 2012),
PLEA IN ABATEMENT, OR IN THE ALTERNATIVE, MOTION TO STAY,
AND ORIGINAL ANSWER OF DEFENDANT ROGER D. PARSONS - Page 3prejudice by abating, or staying, this case until the resolution of the Michigan State Action. QRE
already has counsel in Michigan and it litigated the Michigan Federal Action for nearly a year.
Il ORIGINAL ANSWER
Subject to and without waiver of their Plea in Abatement, or in the Alternative, Motion to
Stay, Parsons answers Plaintiff's Original Petition for Declaratory Judgment as follows:
1. Parsons denies each and every, all and singular, the material allegations contained
within Plaintiff's Original Petition for Declaratory Judgment, and demands strict proof thereof
by a preponderance of the evidence.
OL AFFIRMATIVE DEFENSES
2. By way of affirmative defense, if such be necessary, Parsons raises all issues and
claims asserted in its Complaint filed in the Michigan State Action.
3. Parsons reserves the right to amend and supplement this answer in accordance
with the Texas Rules of Civil Procedure.
WHEREFORE, PREMISES CONSIDERED, Defendant Roger D. Parsons, in his
capacity as Trustee of the LL&E Royalty Trust, prays this Court abate, or stay, this action
pending resolution of the Michigan State Action, and that after such abatement, or stay, to enter
an order that Plaintiff take nothing, that Defendant Parsons be granted his attorneys’ fees and
costs, and that he recover such other and further relief, at law or in equity, to which he may show
himself justly entitled.
PLEA IN ABATEMENT, OR IN THE ALTERNATIVE, MOTION TO STAY,
AND ORIGINAL ANSWER OF DEFENDANT ROGER D. PARSONS - Page 4Respectfully submitted,
SIMON PLC
Attorneys & Counselors
By: {sf
David A. Stephan
Texas Bar No. 19143900
10000 North Central Expressway
Suite 400
Dallas, Texas 75231
(214) 890-4085 Telephone
(214) 890-9249 Facsimile
dstephan@simonattys.com
and
Craig T. Mierzwa
Marjan Neceski
37000 Woodward Avenue
Suite 250
Bloomfield Hills, Michigan 48304
(248) 720-0290 Telephone
(248) 720-0291 Facsimile
emierzwa@simonattys.com
ATTORNEYS FOR DEFENDANT
ROGER D. PARSONS, in his capacity as
Trustee of the LL&E Royalty Trust
PLEA IN ABATEMENT, ORIN THE ALTERNATIVE, MOTION TO STAY.
AND GRIGINAL ANSWER OF DEFENDANT ROGER D. PARSONS - Page 5VERIFICATION
STATE OF TEXAS §
COUNTY OF DALLAS: §
On. this. day,.David A, Stephan, attorney for Roger D. Parsons, in his capacity as Trustee
of the LL&E Royalty Trust, and in. accordance with the Texas Rules of Civil Procedure,
appeared: before ‘te, the: undersigned notary: public, and being. by nie duly sworn on his oath
David A. Stephan.
Sworh to and Subscribed befote the by David A. Stephan on: this the / gh day of
September, 2015.
Notary Public in and for the
State of Texas
My, Commuission Expires:
LGUs / f abi Gq MASHELL M BORDERS
My Commission Expires:
August.7, 2019"
PLEA IN ABATEMENT, ORIN THE ALTERNATIVE, MOTION TO STAY.
AND. ORIGINAL, ANSWER: OF DEFENDANT ROGER D. PARSONS - Page 6FIAT
A hearing on the Plea in Abatement, or in the Alternative, Motion to Stay, has been set
for the day of » 2015 at o’clock _.m. in the 133
District Court of Harris County, Texas.
JUDGE PRESIDING
CERTIFICATE OF SERVICE
This is to certify that a true and correct copy of the foregoing Plea in Abatement, or in the
Alternative, Motion to Stay, and Original Answer of Defendant Roger D. Parsons was served
pursuant to the Texas Rules of Civil Procedure on the following parties on the 18" day of
September, 2015:
Thomas J. Heiden
Latham & Watkins LLP
330 North Wabash Avenue, Suite 2800
Chicago, Illinois 60611
(312) 993-9767 — Facsimile JS
David Stephan
PLEA IN ABATEMENT, OR IN THE ALTERNATIVE, MOTION TO STAY,
AND ORIGINAL ANSWER OF DEFENDANT ROGER D. PARSONS - Page 7
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CAUSE NO, 2015-47031 QRE OPERATING, LLC, § IN THE DISTRICT COURT OF § Plaintiff, § § v. § HARRIS COUNTY, TEXAS § ROGER D. PARSONS, IN HIS § CAPACITY AS TRUSTEE OF THE § LL&E ROYALTY TRUST, § § Defendants, § 133" JUDICIAL DISTRICT PLEA IN ABATEMENT, OR IN ALTERNATIVE, MOTION TO STAY, AND ORIGINAL ANSWER OF DEFENDANT ROGER D. PARSONS TO THE HONORABLE JUDGE OF SAID COURT: Defendant Roger D. Parsons, in his capacity as Trustee of the LL&E Royalty Trust (“Parsons”), files this Plea in Abatement, or in the Altemative, Motion fo Stay, and Original Answer, and requests that this Court abate, or stay, this action and in support thereof would respectfully show as follows: I. PLEA INABATEMENT / MOTION TO STAY 1. This case arises out of a dispute over a contract conveying royalty interests in an oil and gas field located in Alabama and Florida. Parsons is a resident of Michigan, and Plaintiff, QRE Operating, LLC (“QRE”), is a Delaware limited liability company with its principal place of business in Houston, Texas. QRE filed this action on August 12, 2015 as a simple declaratory judgment action requesting a declaration regarding the rights and obligations of QRE and Parsons under a contract, the Conveyance of Overriding Royalty Interests (the “Conveyance”) dated June 28, 1983. PLEA IN ABATEMENT, OR IN THE ALTERNATIVE, MOTION TO STAY. AND ORIGINAL ANSWER OF DEFENDANT ROGER D. PARSONS - Page 12. As admitted by QRE in the Plaintiffs Original Petition for Declaratory Judgment, this action was originally filed by Parsons as Trustee of the LL&E Royalty Trust (the “Trust”), on October 3, 2014. (Petition 7). That action included other entities related to QRE, and was initially styled as The LL&E Royalty Trust, by Roger D. Parsons, Trustee v. Quantum Resources Management, LLC, QR Energy, LP and QRE Operating, LLC; Case No. 14-13833-GCS-MJH; United States District Court, Eastern District of Michigan (the “Michigan Federal Action”). A true and correct copy of the Complaint filed in the Michigan Federal Action is attached hereto as Exhibit “A.” 3. On July 14, 2015, the federal court granted a motion to dismiss the Michigan Federal Action for lack of subject matter jurisdiction (Petition 411), but did not actually enter a final order of dismissal or judgment at that time. Instead, through in decision and order dated July 14, 2015, the federal court in the Michigan Federal Action gave Parsons thirty (30) days, until August 13, 2015 to amend its Complaint. A true and correct copy of the Opinion and Order Granting Motion to Dismiss and Offering Plaintiff 30 Days to File Amended Complaint is attached hereto as Exhibit “B.” 4. On September 3, 2015, the federal court in the Michigan Federal Action issued its Order and Judgment Dismissing the Michigan Federal Action Without Prejudice. A true and correct copy of the Order is attached hereto as Exhibit “C.” 5. Thus, when this action was filed by QRE on August 12, 2015, the Michigan Federal Action was still open, and the federal court in Michigan still had carriage of this case. Accordingly, QRE filed this action prematurely. 6. Further, on September 16, 20151 Parsons’ promptly refiled his claims in Michigan State Court in The LLKE Royalty Trust, by Roger D. Parson, Trustee v. Quantum Resources PLEA IN ABATEMENT, OR IN THE ALTERNATIVE, MOTION TO STAY, AND ORIGINAL ANSWER OF DEFENDANT ROGER D. PARSONS - Page 2Management, LLC; QR Energy, LP, QRE Operating, LLC, Breitburn Energy Partners, LP, Breithurn Management Company, LLC and Wells Fargo Bank, N.A., Cause No. 20147-CKB, Oakland County Circuit Court, State of Michigan (the “Michigan State Action”). Moreover, on September 17, 2015, Parsons filed a Motion for Partial Summary Disposition in the Michigan State Action. Both the Michigan Federal Action and the Michigan State Action arises out of the Conveyance, and include other parties involved in the operation of the oil and gas field and the proper payment of royalties under the Conveyance, and include claims beyond a mere declaration of rights such as conversion, breach of fiduciary duty and fraudulent conveyance.’ The issues raised in the Motion for Summary Disposition address the issues QRE is attempting to raise in this case by declaratory relief. 7. In an effort to circumvent the rights and obligations of all the parties, and in order to seek a more favorable “home court”, QRE filed this action before the Michigan Federal Action was dismissed. Since the issues necessary to determine all the of the parties rights and obligations, and all of the claims asserted by the Trust will be decided in the Michigan State Action, this lawsuit should be abated, or stayed, pending the entry of a final non-appealable judgment in the Michigan State Action. Abating, or staying, this case is in the best interests of comity and of the parties. Parsons, on behalf of the Trust, and most of the Trust’s unit owners, are citizens of Michigan. Moreover, additional parties and claims are involved in the Michigan State Action, and as a result the two courts may end up with conflicting rulings. Whereas any ruling in the Michigan State Action would be res judicata in this case. QRE will not suffer any ' Parsons requests this Court to take judicial notice of the Complaints and Orders filed in the Michigan Federal Action and Michigan State Action attached hereto as Exhibits A—D. freedom Comms. v. Coronado, 372 $.W.3d 621, 623 (Fex. 2012), PLEA IN ABATEMENT, OR IN THE ALTERNATIVE, MOTION TO STAY, AND ORIGINAL ANSWER OF DEFENDANT ROGER D. PARSONS - Page 3prejudice by abating, or staying, this case until the resolution of the Michigan State Action. QRE already has counsel in Michigan and it litigated the Michigan Federal Action for nearly a year. Il ORIGINAL ANSWER Subject to and without waiver of their Plea in Abatement, or in the Alternative, Motion to Stay, Parsons answers Plaintiff's Original Petition for Declaratory Judgment as follows: 1. Parsons denies each and every, all and singular, the material allegations contained within Plaintiff's Original Petition for Declaratory Judgment, and demands strict proof thereof by a preponderance of the evidence. OL AFFIRMATIVE DEFENSES 2. By way of affirmative defense, if such be necessary, Parsons raises all issues and claims asserted in its Complaint filed in the Michigan State Action. 3. Parsons reserves the right to amend and supplement this answer in accordance with the Texas Rules of Civil Procedure. WHEREFORE, PREMISES CONSIDERED, Defendant Roger D. Parsons, in his capacity as Trustee of the LL&E Royalty Trust, prays this Court abate, or stay, this action pending resolution of the Michigan State Action, and that after such abatement, or stay, to enter an order that Plaintiff take nothing, that Defendant Parsons be granted his attorneys’ fees and costs, and that he recover such other and further relief, at law or in equity, to which he may show himself justly entitled. PLEA IN ABATEMENT, OR IN THE ALTERNATIVE, MOTION TO STAY, AND ORIGINAL ANSWER OF DEFENDANT ROGER D. PARSONS - Page 4Respectfully submitted, SIMON PLC Attorneys & Counselors By: {sf David A. Stephan Texas Bar No. 19143900 10000 North Central Expressway Suite 400 Dallas, Texas 75231 (214) 890-4085 Telephone (214) 890-9249 Facsimile dstephan@simonattys.com and Craig T. Mierzwa Marjan Neceski 37000 Woodward Avenue Suite 250 Bloomfield Hills, Michigan 48304 (248) 720-0290 Telephone (248) 720-0291 Facsimile emierzwa@simonattys.com ATTORNEYS FOR DEFENDANT ROGER D. PARSONS, in his capacity as Trustee of the LL&E Royalty Trust PLEA IN ABATEMENT, ORIN THE ALTERNATIVE, MOTION TO STAY. AND GRIGINAL ANSWER OF DEFENDANT ROGER D. PARSONS - Page 5VERIFICATION STATE OF TEXAS § COUNTY OF DALLAS: § On. this. day,.David A, Stephan, attorney for Roger D. Parsons, in his capacity as Trustee of the LL&E Royalty Trust, and in. accordance with the Texas Rules of Civil Procedure, appeared: before ‘te, the: undersigned notary: public, and being. by nie duly sworn on his oath David A. Stephan. Sworh to and Subscribed befote the by David A. Stephan on: this the / gh day of September, 2015. Notary Public in and for the State of Texas My, Commuission Expires: LGUs / f abi Gq MASHELL M BORDERS My Commission Expires: August.7, 2019" PLEA IN ABATEMENT, ORIN THE ALTERNATIVE, MOTION TO STAY. AND. ORIGINAL, ANSWER: OF DEFENDANT ROGER D. PARSONS - Page 6FIAT A hearing on the Plea in Abatement, or in the Alternative, Motion to Stay, has been set for the day of » 2015 at o’clock _.m. in the 133 District Court of Harris County, Texas. JUDGE PRESIDING CERTIFICATE OF SERVICE This is to certify that a true and correct copy of the foregoing Plea in Abatement, or in the Alternative, Motion to Stay, and Original Answer of Defendant Roger D. Parsons was served pursuant to the Texas Rules of Civil Procedure on the following parties on the 18" day of September, 2015: Thomas J. Heiden Latham & Watkins LLP 330 North Wabash Avenue, Suite 2800 Chicago, Illinois 60611 (312) 993-9767 — Facsimile JS David Stephan PLEA IN ABATEMENT, OR IN THE ALTERNATIVE, MOTION TO STAY, AND ORIGINAL ANSWER OF DEFENDANT ROGER D. PARSONS - Page 7