Preview
CAUSE NO. 2015-47031
QRE OPERATING, LLC IN THE DISTRICT COURT OF
Plaintiff
vs. HARRIS COUNTY, TEXAS
ROGER D. PARSONS, IN HIS
CAPACITY AS TRUSTEE OF THE
LL&E ROYALTY TRUST
Defendant RD JUDICIAL DISTRICT
THIRD-PARTY DEFENDANT THE LOUISIANA LAND AND EXPLORATION
COMPANY LLC’S FIRST AMENDED ANSWER AND COUNTERCLAIM
AGAINST THIRD PARTY PLAINTIFF ROGER D. PARSONS, IN HIS
CAPACITY AS TRUSTEE OF THE LL&E ROYALTY TRUST
Third Party Defendant The Louisiana Land and Exploration Company LLC (“LLEC”) files
this First Amended Answer and Counterclaim in response to the Eighth Amended Answer,
Amended Counterclaim, and Amended Third-Party Petition filed by Defendant Roger D. Parsons,
in his capacity as Trustee of the LL&E Royalty Trust (“Parsons”), and would respectfully show as
follows:
GENERAL DENIAL
In accordance with Rule 92 of the Texas Rules of Civil Procedure, LLEC generally denies
each and every, all and singular, of the allegations contained in the above-referenced Third-Party
Petition and demands strict proof thereof.
AFFIRMATIVE DEFENSES
Pursuant to Rule 93 of the Texas Rules of Civil Procedure, LLEC specifically
pleads that there is a defect in the parties with respect to the LL&E Royalty Trust (the “Trust”) to
15031261v1
the extent the Trust terminated and no longer exists and Parsons was not effectively made a
Trustee.
2. LLEC also specifically pleads that to the extent the Trust terminated and no longer
exists – and Parsons purports to bring claims on behalf of the LL&E Royalty Partnership (the
“Partnership”) – there is a defect in parties with respect to the Partnership because the Partnership
dissolved upon termination of the Trust and therefore no longer exists.
3. Parsons’ claims are barred, in whole or in part, by the doctrines of waiver and
estoppel due to prior trustees’ actions.
4. Parsons’ claims are barred, in whole or in part, by modification.
5. Parsons’ claims are barred, in whole or in part, by laches.
6. Parsons’ claims are barred, in whole or in part, by unclean hands.
7. Parsons’ claims are barred, in whole or in part, by release.
8. Parsons’ claims are barred, in whole or in part, by ratification and consent.
9. Parsons’ claims are barred, in whole or in part, by applicable statutes of limitation.
10. Parsons’ claims are barred, in whole or in part, by lack of capacity.
11. Parsons’ claims are barred, in whole or in part, pursuant to Section 7.06 of the
LL&E Royalty Trust Agreement. Decisions made regarding the Trust were made in good faith
reliance on the opinions of experts. Per Section 7.06 of the Trust Agreement, the opinions of
parties deemed to be experts by “shall be full and complete authorization and protection in respect
of any action taken or suffered by it hereunder in good faith and in accordance with the opinion of
any such party.” To the extent that Parsons’ claims are based on decisions made in good faith
reliance on the opinions of experts, such claims are barred by the Trust Agreement.
2
15031261v1
12. Parsons’ claims are barred, in whole or in part, pursuant to Section 5.04 of the
Agreement of General Partnership of LL&E Royalty Partnership (the “Partnership Agreement”).
The Managing General Partner shall not be held liable or responsible to any other Partner or to the
Partnership for any losses sustained, or liabilities incurred, in connection with, or attributable to,
errors in judgment or other fault of the Managing General Partner, except that which is attributable
to the Managing General Partner’s negligence, bad faith or fraud, and except to the extent the
Managing General Partner shares in any such losses or liabilities by virtue of its Sharing Ratio.
13. To the extent the Trust terminated on or about December 31, 2007, prior to the
onset of this litigation, Parsons lacks standing to bring any of the claims raised in his Eighth
Amended Petition.
14. To the extent the LL&E Partnership in which the Trust had an interest dissolved
upon the Trust’s termination on or about December 31, 2007, Parsons lacks standing to assert the
claims raised in his Eighth Amended Petition.
15. Alternatively, to the extent the Trust and/or the LL&E Partnership were terminated
and dissolved on or about December 31, 2007, Parsons lacks capacity to assert the claims raised
either on behalf of the Partnership or the Trust in his Eighth Amended Petition.
16. LLEC pleads that Parsons is not entitled to the recovery of attorneys’ fees.
17. LLEC pleads entitlement to all fees and expenses available under applicable Texas
statutory and common law.
PLEA IN BAR AND ALTERNATIVE PLEA IN ABATEMENT
18. LLEC also asserts this Plea in Bar and Alternative Plea in Abatement in the event
the Court finds that the Trust terminated and the Partnership dissolved on or about December 31,
2007.
3
15031261v1
19. To the extent the Trust terminated and the Partnership dissolved on or about
December 31, 2007, the Trust, the Partnership, and Parsons lack standing and capacity to recover
on the claims it has asserted in this matter. Section 9.01 of the Trust Agreement provides that the
Trust “shall terminate . . . at such time as its net revenues for each of two successive years are less
than $5,000,000 per year.” According to SEC filings and a declaration from Parsons, “the Trust
is required to terminate effective December 31, 2007” because the net revenues for the Trust in
2006 and 2007 were $1,634,740 and $2,094,225, respectively. Exhibit A (Declaration of Andy
Harmon) at ¶ 6. Accordingly, the Trust terminated in 2007 pursuant to Section 9.01 and no longer
exists.
20. In addition, Section 10.01(b) of the Partnership Agreement states that the
Partnership was required to dissolve upon “termination of the trust.” It appears that any purported
action taken related to the Trust after 2007 is a void act – which would include Parsons becoming
Trustee in June 2013. As a consequence, neither Parsons, the Trust, nor the Partnership has
standing, privity, or capacity to bring the claims alleged and they are not entitled to recover the
relief and damages sought in the pleadings. No Trustee (Parsons or anyone else) would have the
power to bring and maintain a lawsuit after the Trust’s termination.
21. Some courts have required defendants seeking to challenge a plaintiff’s capacity to
do so via a plea in abatement. See, e.g., Lighthouse Church of Cloverleaf v. Tex. Bank, 889 S.W.2d
595, 600 (Tex. App.—Houston [14th Dist.] 1994, writ denied). However, a plea in abatement only
postpones a pending action until a defect in the action can be cured—to the extent it is possible to
cure the defect. See, e.g., M & M Const. Co., Inc. v. Great Am. Ins. Co., 747 S.W.2d 552, 554
(Tex. App.—Corpus Christi 1988, no writ) (explaining that a plea in abatement must “set forth the
information necessary to guide the plaintiff to a correct procedure if the defect is one which can
4
15031261v1
be cured”); Atkinson v. Reid, 625 S.W.2d 64, 67 (Tex. App.—San Antonio 1981, no writ). When
a plea in abatement is sustained, a plaintiff must typically be given an opportunity to amend, but
only “if it is possible to do so” and “thereby remove the obstacle which defeated the suit.” Id.
Other courts have held that when the facts show a plaintiff has no right to recover, and thus a
plaintiff’s lack of capacity cannot be cured, the appropriate plea is a plea in bar. See Couger v.
Allen, 25 S.W.2d 666, 669 (Tex. Civ. App.—Fort Worth 1930, no writ) (“The general rule is that
whenever the subject matter of the plea or defense is that the plaintiff cannot maintain any suit at
any time in respect of the supposed cause of action such matter should be pleaded in bar, while
that which merely defeats the present proceeding and does not show that the plaintiff is forever
concluded should be pleaded in abatement. Pleas in bar, unlike pleas in abatement, offer matters
which are conclusive answers or defenses to actions on the merits.”).
22. Here, the defect in the Trust’s capacity is not one which can be cured by abating
the case and providing the Trust an opportunity to amend. If the Trust terminated prior the onset
of this litigation, and the Partnership thereby dissolved, the Trust is not a proper party and has no
capacity to pursue claims on behalf of the Trust or the Partnership. No pleading amendment can
correct that issue.
23. Accordingly, LLEC asserts this Plea in Bar and ask the Court to dismiss Parsons’
claims and render a take nothing judgment in favor of the LLEC. See Martin v. Dosohs I, Ltd.,
Inc., 2 S.W.3d 350, 355 (Tex. App.—San Antonio 1999, pet. denied). In the alternative, LLEC
respectfully requests the Court abate this action.
5
15031261v1
COUNTERCLAIM
Parties
24. Third Party Defendant The Louisiana Land & Exploration Company (“LLEC”) is
organized under the laws of the state of Maryland with its principal office in Bartlesville,
Oklahoma. It is authorized to conduct business in the state of Texas.
25. Third Party Plaintiff Roger D. Parsons, who has been sued and sues in his capacity
as Trustee of the LL&E Royalty Trust (“Parsons”), is an individual residing in Oakland County,
Michigan. Parsons has made an appearance in this action.
Background
26. LLEC is the Managing General Partner of the LL&E Royalty Partnership (the
“Partnership”), which was formed on June 1, 1983 as between LLEC and the LL&E Royalty Trust.
LLEC has been sued in its capacity as Managing General Partner by Parsons for breach of contract,
breach of fiduciary duty, tortious interference, inducement of breach of fiduciary duties, and
conspiracy.
27. As a direct result of the discharge of its duties as Managing General Partner, LLEC
has been required to retain counsel and incur out-of-pocket expenses. Section 5.03 of the
Agreement of General Partnership of LL&E Royalty Partnership (the “Partnership Agreement”)
states:
The Managing General Partner, however, shall be entitled to reimbursement from the
Partnership for all out-of-pocket expenses . . . incurred in discharging its duties hereunder
including, but not limited to, all fees with respect to the employment of accountants,
lawyers, engineers or other professionals not employed as employees of the Managing
General Partner.
28. Accordingly, Parsons is contractually liable to LLEC for its fees and expenses.
6
15031261v1
Claim
29. In accordance with the foregoing, LLEC claims that it is entitled to reimbursement
of its costs pursuant to Section 5.03 of the Agreement of General Partnership and seeks recovery
of its fees and expenses from the Third-Party Plaintiff Roger D. Parsons, in his capacity as Trustee
of the LL&E Royalty Trust.
PRAYER
Accordingly, LLEC respectfully requests that:
a. the Trust (and, to the extent the Trust might contend that its pleadings bring claims on
behalf of the Partnership, the Partnership) take nothing by reason of this lawsuit;
b. the Court dismiss Parsons’ claims;
c. LLEC recover its attorneys’ fees, court costs, and expenses; and
d. any and all other costs be taxed against the Trust (and, to the extent the Trust might
contend that its pleadings bring claims on behalf of the Partnership, the Partnership).
e. LLEC also requests such other, further, or alternative relief to which it may be legally
or equitably entitled.
Dated: November 21, 2023.
7
15031261v1
Respectfully submitted,
PORTER HEDGES LLP
/s/ Joseph G. Thompson III
Joseph G. Thompson III
State Bar No. 00788534
Andrew B. Raber
State Bar No. 24063730
Nabeela K. Arshi
State Bar No. 24134422
1000 Main Street, 36th Floor
Houston, Texas 77002
Telephone: (713) 226-6704
Facsimile: (713) 226-6304
Email: joe.thompson@porterhedges.com
araber@porterhedges.com
narshi@porterhedges.com
Attorneys for Third-Party Defendant The
Louisiana Land and Exploration Company LLC
8
15031261v1
CERTIFICATE OF SERVICE
This is to certify that a true and correct copy of the foregoing has been served upon all
counsel of record on this 21st day of November 2023.
John Kim
David A. McDougald
The Kim Law Firm
4309 Yoakum, Suite 2000
Houston, Texas 77006
jhk@thekimlawfirm.com
david@thekimlawfirm.com
Geoff A. Gannaway
Joe W. Redden, Jr.
Allison Standish Miller
Joel T. Towner
Beck Redden LLP
1221 McKinney Street, Suite 4500
Houston, Texas 77010
ggannaway@beckredden.com
jredden@beckredden.com
amiller@beckredden.com
jtowner@beckredden.com
Joseph Y. Ahmad
Ryan Hackney
Emily Merritt
Ahmad, Zavitsanos, Anaipakos, Alavi & Mensing, P.C.
1221 McKinney, Suite 2500
Houston, Texas 77010
joeahmad@azalaw.com
rhackney@azalaw.com
emerritt@azalaw.com
/s/ Andrew B. Raber
Andrew B. Raber
9
15031261v1
Preview
CAUSE NO. 2015-47031 QRE OPERATING, LLC IN THE DISTRICT COURT OF Plaintiff vs. HARRIS COUNTY, TEXAS ROGER D. PARSONS, IN HIS CAPACITY AS TRUSTEE OF THE LL&E ROYALTY TRUST Defendant RD JUDICIAL DISTRICT THIRD-PARTY DEFENDANT THE LOUISIANA LAND AND EXPLORATION COMPANY LLC’S FIRST AMENDED ANSWER AND COUNTERCLAIM AGAINST THIRD PARTY PLAINTIFF ROGER D. PARSONS, IN HIS CAPACITY AS TRUSTEE OF THE LL&E ROYALTY TRUST Third Party Defendant The Louisiana Land and Exploration Company LLC (“LLEC”) files this First Amended Answer and Counterclaim in response to the Eighth Amended Answer, Amended Counterclaim, and Amended Third-Party Petition filed by Defendant Roger D. Parsons, in his capacity as Trustee of the LL&E Royalty Trust (“Parsons”), and would respectfully show as follows: GENERAL DENIAL In accordance with Rule 92 of the Texas Rules of Civil Procedure, LLEC generally denies each and every, all and singular, of the allegations contained in the above-referenced Third-Party Petition and demands strict proof thereof. AFFIRMATIVE DEFENSES Pursuant to Rule 93 of the Texas Rules of Civil Procedure, LLEC specifically pleads that there is a defect in the parties with respect to the LL&E Royalty Trust (the “Trust”) to 15031261v1 the extent the Trust terminated and no longer exists and Parsons was not effectively made a Trustee. 2. LLEC also specifically pleads that to the extent the Trust terminated and no longer exists – and Parsons purports to bring claims on behalf of the LL&E Royalty Partnership (the “Partnership”) – there is a defect in parties with respect to the Partnership because the Partnership dissolved upon termination of the Trust and therefore no longer exists. 3. Parsons’ claims are barred, in whole or in part, by the doctrines of waiver and estoppel due to prior trustees’ actions. 4. Parsons’ claims are barred, in whole or in part, by modification. 5. Parsons’ claims are barred, in whole or in part, by laches. 6. Parsons’ claims are barred, in whole or in part, by unclean hands. 7. Parsons’ claims are barred, in whole or in part, by release. 8. Parsons’ claims are barred, in whole or in part, by ratification and consent. 9. Parsons’ claims are barred, in whole or in part, by applicable statutes of limitation. 10. Parsons’ claims are barred, in whole or in part, by lack of capacity. 11. Parsons’ claims are barred, in whole or in part, pursuant to Section 7.06 of the LL&E Royalty Trust Agreement. Decisions made regarding the Trust were made in good faith reliance on the opinions of experts. Per Section 7.06 of the Trust Agreement, the opinions of parties deemed to be experts by “shall be full and complete authorization and protection in respect of any action taken or suffered by it hereunder in good faith and in accordance with the opinion of any such party.” To the extent that Parsons’ claims are based on decisions made in good faith reliance on the opinions of experts, such claims are barred by the Trust Agreement. 2 15031261v1 12. Parsons’ claims are barred, in whole or in part, pursuant to Section 5.04 of the Agreement of General Partnership of LL&E Royalty Partnership (the “Partnership Agreement”). The Managing General Partner shall not be held liable or responsible to any other Partner or to the Partnership for any losses sustained, or liabilities incurred, in connection with, or attributable to, errors in judgment or other fault of the Managing General Partner, except that which is attributable to the Managing General Partner’s negligence, bad faith or fraud, and except to the extent the Managing General Partner shares in any such losses or liabilities by virtue of its Sharing Ratio. 13. To the extent the Trust terminated on or about December 31, 2007, prior to the onset of this litigation, Parsons lacks standing to bring any of the claims raised in his Eighth Amended Petition. 14. To the extent the LL&E Partnership in which the Trust had an interest dissolved upon the Trust’s termination on or about December 31, 2007, Parsons lacks standing to assert the claims raised in his Eighth Amended Petition. 15. Alternatively, to the extent the Trust and/or the LL&E Partnership were terminated and dissolved on or about December 31, 2007, Parsons lacks capacity to assert the claims raised either on behalf of the Partnership or the Trust in his Eighth Amended Petition. 16. LLEC pleads that Parsons is not entitled to the recovery of attorneys’ fees. 17. LLEC pleads entitlement to all fees and expenses available under applicable Texas statutory and common law. PLEA IN BAR AND ALTERNATIVE PLEA IN ABATEMENT 18. LLEC also asserts this Plea in Bar and Alternative Plea in Abatement in the event the Court finds that the Trust terminated and the Partnership dissolved on or about December 31, 2007. 3 15031261v1 19. To the extent the Trust terminated and the Partnership dissolved on or about December 31, 2007, the Trust, the Partnership, and Parsons lack standing and capacity to recover on the claims it has asserted in this matter. Section 9.01 of the Trust Agreement provides that the Trust “shall terminate . . . at such time as its net revenues for each of two successive years are less than $5,000,000 per year.” According to SEC filings and a declaration from Parsons, “the Trust is required to terminate effective December 31, 2007” because the net revenues for the Trust in 2006 and 2007 were $1,634,740 and $2,094,225, respectively. Exhibit A (Declaration of Andy Harmon) at ¶ 6. Accordingly, the Trust terminated in 2007 pursuant to Section 9.01 and no longer exists. 20. In addition, Section 10.01(b) of the Partnership Agreement states that the Partnership was required to dissolve upon “termination of the trust.” It appears that any purported action taken related to the Trust after 2007 is a void act – which would include Parsons becoming Trustee in June 2013. As a consequence, neither Parsons, the Trust, nor the Partnership has standing, privity, or capacity to bring the claims alleged and they are not entitled to recover the relief and damages sought in the pleadings. No Trustee (Parsons or anyone else) would have the power to bring and maintain a lawsuit after the Trust’s termination. 21. Some courts have required defendants seeking to challenge a plaintiff’s capacity to do so via a plea in abatement. See, e.g., Lighthouse Church of Cloverleaf v. Tex. Bank, 889 S.W.2d 595, 600 (Tex. App.—Houston [14th Dist.] 1994, writ denied). However, a plea in abatement only postpones a pending action until a defect in the action can be cured—to the extent it is possible to cure the defect. See, e.g., M & M Const. Co., Inc. v. Great Am. Ins. Co., 747 S.W.2d 552, 554 (Tex. App.—Corpus Christi 1988, no writ) (explaining that a plea in abatement must “set forth the information necessary to guide the plaintiff to a correct procedure if the defect is one which can 4 15031261v1 be cured”); Atkinson v. Reid, 625 S.W.2d 64, 67 (Tex. App.—San Antonio 1981, no writ). When a plea in abatement is sustained, a plaintiff must typically be given an opportunity to amend, but only “if it is possible to do so” and “thereby remove the obstacle which defeated the suit.” Id. Other courts have held that when the facts show a plaintiff has no right to recover, and thus a plaintiff’s lack of capacity cannot be cured, the appropriate plea is a plea in bar. See Couger v. Allen, 25 S.W.2d 666, 669 (Tex. Civ. App.—Fort Worth 1930, no writ) (“The general rule is that whenever the subject matter of the plea or defense is that the plaintiff cannot maintain any suit at any time in respect of the supposed cause of action such matter should be pleaded in bar, while that which merely defeats the present proceeding and does not show that the plaintiff is forever concluded should be pleaded in abatement. Pleas in bar, unlike pleas in abatement, offer matters which are conclusive answers or defenses to actions on the merits.”). 22. Here, the defect in the Trust’s capacity is not one which can be cured by abating the case and providing the Trust an opportunity to amend. If the Trust terminated prior the onset of this litigation, and the Partnership thereby dissolved, the Trust is not a proper party and has no capacity to pursue claims on behalf of the Trust or the Partnership. No pleading amendment can correct that issue. 23. Accordingly, LLEC asserts this Plea in Bar and ask the Court to dismiss Parsons’ claims and render a take nothing judgment in favor of the LLEC. See Martin v. Dosohs I, Ltd., Inc., 2 S.W.3d 350, 355 (Tex. App.—San Antonio 1999, pet. denied). In the alternative, LLEC respectfully requests the Court abate this action. 5 15031261v1 COUNTERCLAIM Parties 24. Third Party Defendant The Louisiana Land & Exploration Company (“LLEC”) is organized under the laws of the state of Maryland with its principal office in Bartlesville, Oklahoma. It is authorized to conduct business in the state of Texas. 25. Third Party Plaintiff Roger D. Parsons, who has been sued and sues in his capacity as Trustee of the LL&E Royalty Trust (“Parsons”), is an individual residing in Oakland County, Michigan. Parsons has made an appearance in this action. Background 26. LLEC is the Managing General Partner of the LL&E Royalty Partnership (the “Partnership”), which was formed on June 1, 1983 as between LLEC and the LL&E Royalty Trust. LLEC has been sued in its capacity as Managing General Partner by Parsons for breach of contract, breach of fiduciary duty, tortious interference, inducement of breach of fiduciary duties, and conspiracy. 27. As a direct result of the discharge of its duties as Managing General Partner, LLEC has been required to retain counsel and incur out-of-pocket expenses. Section 5.03 of the Agreement of General Partnership of LL&E Royalty Partnership (the “Partnership Agreement”) states: The Managing General Partner, however, shall be entitled to reimbursement from the Partnership for all out-of-pocket expenses . . . incurred in discharging its duties hereunder including, but not limited to, all fees with respect to the employment of accountants, lawyers, engineers or other professionals not employed as employees of the Managing General Partner. 28. Accordingly, Parsons is contractually liable to LLEC for its fees and expenses. 6 15031261v1 Claim 29. In accordance with the foregoing, LLEC claims that it is entitled to reimbursement of its costs pursuant to Section 5.03 of the Agreement of General Partnership and seeks recovery of its fees and expenses from the Third-Party Plaintiff Roger D. Parsons, in his capacity as Trustee of the LL&E Royalty Trust. PRAYER Accordingly, LLEC respectfully requests that: a. the Trust (and, to the extent the Trust might contend that its pleadings bring claims on behalf of the Partnership, the Partnership) take nothing by reason of this lawsuit; b. the Court dismiss Parsons’ claims; c. LLEC recover its attorneys’ fees, court costs, and expenses; and d. any and all other costs be taxed against the Trust (and, to the extent the Trust might contend that its pleadings bring claims on behalf of the Partnership, the Partnership). e. LLEC also requests such other, further, or alternative relief to which it may be legally or equitably entitled. Dated: November 21, 2023. 7 15031261v1 Respectfully submitted, PORTER HEDGES LLP /s/ Joseph G. Thompson III Joseph G. Thompson III State Bar No. 00788534 Andrew B. Raber State Bar No. 24063730 Nabeela K. Arshi State Bar No. 24134422 1000 Main Street, 36th Floor Houston, Texas 77002 Telephone: (713) 226-6704 Facsimile: (713) 226-6304 Email: joe.thompson@porterhedges.com araber@porterhedges.com narshi@porterhedges.com Attorneys for Third-Party Defendant The Louisiana Land and Exploration Company LLC 8 15031261v1 CERTIFICATE OF SERVICE This is to certify that a true and correct copy of the foregoing has been served upon all counsel of record on this 21st day of November 2023. John Kim David A. McDougald The Kim Law Firm 4309 Yoakum, Suite 2000 Houston, Texas 77006 jhk@thekimlawfirm.com david@thekimlawfirm.com Geoff A. Gannaway Joe W. Redden, Jr. Allison Standish Miller Joel T. Towner Beck Redden LLP 1221 McKinney Street, Suite 4500 Houston, Texas 77010 ggannaway@beckredden.com jredden@beckredden.com amiller@beckredden.com jtowner@beckredden.com Joseph Y. Ahmad Ryan Hackney Emily Merritt Ahmad, Zavitsanos, Anaipakos, Alavi & Mensing, P.C. 1221 McKinney, Suite 2500 Houston, Texas 77010 joeahmad@azalaw.com rhackney@azalaw.com emerritt@azalaw.com /s/ Andrew B. Raber Andrew B. Raber 9 15031261v1