Louisiana Supreme Court Grants Writs from Second Circuit Decision Finding Holder of Mortgage Encumbering a Mineral Lease Solidarily Liable with Mineral Lessees for Damages Resulting from the Mineral Lessees’ Breach of Contractual and Statutory Obligations

On Friday, December 15, the Louisiana Supreme Court granted three separate writ applications filed by each of the defendants in Gloria’s Ranch, L.L.C. v. Tauren Exploration, Inc.  These applications sought review of the Louisiana Second Circuit’s June 2, 2017 decision affirming the trial court’s ruling that Wells Fargo, a mortgage lender with a security interest in a mineral lease, was solidarily liable with its borrowers (the mineral lessees) for a breach of the mineral lessees’ contractual and statutory obligations to produce in paying quantities, pay royalties, and respond to the mineral lessor’s demands regarding those obligations.  The defendants previously moved for rehearing with the Second Circuit, which although denied in a 3-2 decision, resulted in a vigorous dissent that warned of the opinion’s “[d]evastating economic repercussions” for the lending industry, and “[s]erious and harmful impact on…

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