A class action lawsuit charging the City of Shreveport and Caddo Parish with illegally leasing the mineral rights on adjudicated property to companies drilling for natural gas in the Haynesville Shale today was filed in Caddo District Court.
Plaintiff in the lawsuit is a limited liability company named Red Sox Investments, listed in the Louisiana Secretary of State’s Corporation Database as first filing as a Louisiana LLC in 2003 and being in good standing with the Secretary of State. Red Sox Investments owned a number of adjudicated properties leased to energy companies by the City and Parish.
The company’s registered agent is Richard Hiller, who, along with attorneys Byron Richie and Michael Wainwright, brought the suit.
After filing the suit late this afternoon, Richie said he expects many more people who owned adjudicated property to join the suit as they learn it has been filed. Right now, there are around 500 separate properties in play, but Richie said, “my best guess is there will probably be in excess of a thousand – I’m guessing from 1,000 to 1,500 (adjudicated properties illegally leased by the City and Parish).
The suit alleges as the City and Parish executed leases on their own property, they also included property they did not own – properties that were levied by City or Parish governments when taxes were not paid.
Although adjudication gives government certain rights and powers over the property, it does not give ownership, nor does it give the power to keep money earned through leasing property.
The government can legally lease the property, but, the suit states Louisiana law requires the government credit any income from that lease be credited toward the outstanding tax debt. Once that debt is satisfied, the adjudication should be cancelled and ownership is restored to the original owner. In addition, the suit claims the law requires any money in excess of the taxes owed – such as bonuses and royalties – are to be paid to the rightful property owner.
The suit lists a number of specific mineral leases in adjudicated property between either the City or Parish and various energy companies executed beginning in July 2009 and ending in September 2013 on adjudicated properties.
The suit asks for an accounting from the City and Parish, requesting all mineral leases executed on adjudicated properties, the bonus and royalty payments received on those properties and the amount of money required for each individual class member to satisfy delinquent taxes. It also asks for permanent and preliminary injunctions prohibiting the City or Parish from selling those properties.
Finally, the suit asks that adjudicated property be restored to owners and all bonuses and royalties after satisfaction of the tax debt be paid to the owners.