United States Court of Appeals
Fifth Circuit
F I L E D
In the June 20, 2006
United States Court of Appeals Charles R. Fulbruge III
for the Fifth Circuit Clerk
_______________
m 05-30219
_______________
WATERFOWL LIMITED LIABILITY COMPANY AND LACASSANE COMPANY, INC.,
Plaintiffs-Appellees,
JARDIN MINERALS COMPANY AND BRUIERE MINERALS COMPANY,
Intervenor Plaintiffs-Appellees,
VERSUS
UNITED STATES OF AMERICA,
Defendant-
Intervenor Defendant-
Appellant.
____________________________________
Appeal from the United States District Court
for the Western District of Louisiana
_____________________________________
Before JOLLY, SMITH, and GARZA, its mineral royalty, attached to mineral servi-
Circuit Judges. tudes on the relevant land, had (except for a
forty-one acre tract) prescribed in accordance
JERRY E. SMITH, Circuit Judge: with Louisiana law because of the lack of qual-
ifying production for a period in excess of ten
The United States appeals a judgment that years. We reverse and remand.
for ten years, and parties could not contract to
I. extend the ten-year prescription period.2 In
A. 1940, however, Louisiana passed Act 315,
In 1937, acting under the authority of the which provided as follows:
Migratory Bird Conservation Act, 16 U.S.C.
§ 715 et seq., the United States purchased ap- When land is acquired by conventional
proximately 13,000 acres of land in Cameron deed or contract, condemnation or expro-
Parish, Louisiana, from plaintiff Lacassane priation proceedings by the United States
Co., Inc. (“Lacassane”), to be included in the of America, or any of its subdivisions or
Lacassine National Wildlife Refuge. A portion agencies from any person, firm or corpora-
of the acreage was subject to a pre-existing tion, and by the act of acquisition, order or
mineral servitude (the “Gardiner Servitude”) judgment, oil, gas or other minerals or roy-
held by a previous owner of that tract.1 The alties are reserved, or the land so acquired
Gardiner Servitude was a one-half interest in is by the act of acquisition conveyed subject
the minerals contained in the relevant parcel. to a prior sale or reservation of oil, gas, or
other minerals or royalties, still in force and
In its deed of sale, Lacassane reserved for effect, the rights so reserved or previously
itself all mineral rights in the entire acreage sold shall be imprescriptible.
(the “Lacassane Servitude”). Because the
Gardiner Servitude was created first, the La- United States v. Little Lake Misere Land Co.,
cassane Servitude was subject to the Gardiner Inc., 412 U.S. 580, 584 (1973) (quoting the
Servitude. As a result, after selling the land to statute); see also LA. REV. STAT. § 31:149
the government, Lacassane held all mineral (current successor to Act 315). Act 315 was
rights in the land not subject to the Gardiner meant to “facilitat[e] federal land acquisitions
Servitude and a one-half mineral interest in the by removing uncertainty on the part of reluc-
land subject to the Gardiner Servitude. tant vendors over the duration of mineral res-
ervations retained by them.” Little Lake Mis-
B. ere, 412 U.S. at 599.
At the time the United States acquired the
land, all mineral servitudes in Louisiana were Despite the apparently forward-looking
subject to the rule of “liberative prescription.” purpose of the Act, the Louisiana Supreme
A servitude would prescribe if it went unused Court held that it applied even to federal ac-
quisitions, such as the government’s purchase
of land from Lacassane, that had taken place
1
Louisiana does not recognize separate mineral before the Act was passed. See Whitney Nat’l
estates. Mineral rights “can only be held separate Bank v. Little Creek Oil Co., 33 So. 2d 693,
from the surface land in the form of a mineral
servitude.” Cent. Pines Land Co. v. United States,
2
274 F.3d 881, 884 (5th Cir. 2001) (citing See Hightower v. Martizky, 195 So. 518, 520-
Frost-Johnson Lumber Co. v. Salling’s Heirs, 91 21 (La. 1940). Lacassane’s reservation of mineral
So. 207, 245 (La. 1920)). A mineral servitude is rights in the 1937 acquisition contract contained an
“the right of enjoyment of land belonging to an- express term of prescription similar to that existing
other for the purpose of exploring for and produc- under Louisiana law. The current Louisiana rules
ing minerals and reducing them to possession and for prescription of a servitude are codified at LA.
ownership.” LA. REV. STAT. § 31:21. REV. STAT. §§ 31:27-61.
2
696 (La. 1947). In addition, the court held Having determined that Act 315 could not
that Act 315 superseded not only the prior de- govern the federal land acquisitions at issue,
fault statutory rule of prescription but also pre- the Court did not need to choose between
existing contractual terms of prescription. See adopting “residual” Louisiana law (Louisiana
Leiter Minerals, Inc. v. Cal. Co., 132 So. 2d law excepting Act 315) and “formulating an
845, 854-55 (La. 1961). Under the regime set independent federal ‘common law’ rule” of
up by the Louisiana Supreme Court, servitudes prescription. The explicit prescription terms of
on land owned by the United States, which the acquisition contract controlled, rendering
were prescriptible by statute or by contract the servitudes at issue prescriptible and already
when created, became imprescriptible under prescribed. Id. at 604.
Act 315.
C.
In Little Lake Misere, 412 U.S. at 592, the The instant plaintiffs, intervenors, and their
United States Supreme Court reversed, in part, ancestors in title, holders of the Lacassane and
these decisions of the Louisiana Supreme Gardiner Servitudes, were in a position similar
Court, holding that when a land acquisition by to that of the Little Lake Misere plaintiffs.
the United States arises from and bears heavily The United States had acquired the land sub-
on a federal regulatory program, state law ject to said servitudes before passage of Act
cannot, of its own force, govern the acquisi- 315, and the acquisition contract contained an
tion. Instead, federal law must provide the express term of prescription for the Lacassane
rule of decision. Although state law often Servitude.3 The holders of the Gardiner and
should be “borrowed” as the federal rule of de- Lacassane Servitudes sued in federal court in
cision, “specific aberrant or hostile state rules 1984, seeking a declaratory judgment that
do not provide appropriate standards for their servitudes, although prescriptible pursu-
federal law.” Id. at 596. The Court held that ant to Little Lake Misere, had not yet pre-
Act 315 could not be borrowed as the law scribed.4
governing certain pre-1940 federal land acqui-
sitions pursuant to the Migratory Bird Con-
servation Act, because 3
As we have noted, the Gardiner Servitude had
been created before the government’s acquisition of
[a]s applied to a consummated land trans- the relevant land. The government therefore could
action under a contract which specifically not bargain for an explicit term of prescription for
defined conditions for prolonging the ven- that servitude. We held in Central Pines, 274 F.3d
dor’s mineral reservation, retroactive appli- at 891-92, however, that a federal interest “in
cation of Act 315 to the United States de- obtaining . . . mineral rights via the default rule of
prives it of bargained-for contractual inter- prescription in place before Act 315” is strong
ests. . . . To permit state abrogation of the enough to prevent the borrowing of Act 315 as the
explicit terms of a federal land acquisition rule of decision for pre-1940 federal land acquisi-
would deal a serious blow to the congres- tions, even where there is no explicit contractual
sional scheme contemplated by the Migra- term of prescription for the relevant servitude. The
tory Bird Conservation Act and indeed all relevance of Central Pines is discussed more
other federal land acquisition programs. thoroughly infra.
4
The underlying litigation is Brewer v. United
Id. at 597. (continued...)
3
In 1988, the parties entered into a settle- erals from land owned by another or land sub-
ment agreement with the United States, which ject to a mineral servitude owned by another.
confirmed that the Gardiner and Lacassane Unless expressly qualified by the parties, a roy-
Servitudes remained validly in existence. In alty is a right to share in gross production free
exchange, the servitude owners agreed to of mining or drilling and production costs.”
carve a mineral royalty and bonus and rental LA. REV. STAT. § 31:80. When a royalty right
rights out of the servitudes and to convey them is “created by one whose title terminates at a
to the United States. particular time or upon the occurrence of a
certain condition,” such as an owner of a
Pursuant to the settlement, the servitude servitude, the royalty extinguishes when the
owners executed an act of conveyance, which underlying title extinguishes. Id. § 31:83.
granted the United States one-half of all royal-
ties received by the servitude owners on oil, In addition, royalty rights, like servitudes,
gas, or other minerals attributable to the land are real property rights owned separately from
subject to the Lacassane and Gardiner Servi- “perfect title” in the land and are subject to
tudes, with certain articulated exceptions. The prescription after ten years of nonuse. See id.
servitude owners also conveyed to the govern- § 31:85. There are different rules for servi-
ment “one-half of all rentals and bonuses re- tudes and royalty rights, however, with regard
ceived by [the servitude owners] under the to what counts as a qualifying use capable of
terms of any oil, gas and mineral lease of the interrupting the prescription period.
[subject land] . . . from and after such time as
one-half of the income from such bonuses and Most notably, good faith drilling opera-
rentals shall equal the sum of $750,000.00.”5 tions, even if unsuccessful, interrupt prescrip-
tion running against a servitude. See id.
Under Louisiana law, a mineral royalty is § 31:27 et seq. On the other hand, only actual
“the right to participate in production of min- production of minerals subject to the royalty
interest interrupts prescription running against
a royalty. See id. § 31:85 et seq. Thus, while
4 a mineral royalty carved out of a servitude is
(...continued)
always extinguished when the servitude ceases
States, No. 84-0270 (W.D. La.) (the “Brewer
litigation”). to exist, it also can be extinguished before the
servitude expires. The royalty, in other words,
5
The conveyance to the United States of bonus is prescriptible separately from the servitude.
and rental rights under mineral leases is not central
to this action. A mineral lease is “a contract by In 2003, Waterfowl Limited Liability Com-
which the lessee is granted the right to explore for pany (“Waterfowl”), holder of a two-thirds in-
and produce minerals.” LA. REV. STAT. § 31:114. terest in the Gardiner Servitude, and Lacas-
A bonus is “money or other property given for the sane, holder of the Lacassane Servitude, sued
execution of a mineral lease, except interests in for a declaratory judgment that the govern-
production from or attributable to property on ment’s mineral royalty on production from the
which the lease is given.” Id.. § 31:213(1). A
Gardiner and Lacassane servitudes had (with
rental is “money or other property given to main-
the exception of a forty-one acre tract subject
tain a mineral lease in the absence of drilling or
mining operations or production of minerals.” Id.
to the Garrison No. 1 well) prescribed in
§ 31:213(4). accordance with Louisiana law as a result of
4
the lack of qualifying production for a period The parties forewent a trial and agreed that
in excess of ten years. In an amended com- the district court should enter final judgment
plaint, Waterfowl and Lacassane included a on the basis of the stipulations, submitted doc-
claim under the Quiet Title Act, 28 U.S.C. umentary evidence, and briefs. Applying Loui-
§ 2409, seeking a determination that the min- siana law of its own force, and in the alterna-
eral rights conveyed by the servitude owners tive borrowing state law as the federal rule of
to the United States had been extinguished by decision, the court entered judgment in favor
application of the Louisiana Mineral Code. of the servitude owners as to all claims. The
United States appeals.
The district court allowed Jardin Minerals
Company (“Jardin”) and Bruiere Minerals II.
Company (“Bruiere”) to intervene because We review questions of law, including
they own mineral rights affected by the gov- choice of law and contract interpretation, de
ernment’s royalty. Jardin holds a one-third in- novo.7 Because this matter involves determin-
terest in the Gardiner Servitude, and Bruiere ing whether federal or state law applies, and
holds the mineral royalty and executive rights also involves interpreting a settlement agree-
attributable to Jardin’s interest.6 ment, we utilize that standard here.
The government stipulates that its royalty III.
has prescribed under Louisiana law, but it con- Little Lake Misere sets up a two-tiered in-
tends that Louisiana law does not govern the quiry for determining what law governs the
rights established in the settlement agreement rights at issue in cases such as this. First, we
and the implementing act of conveyance. must determine whether federal law controls
Rather, the government argues that pursuant or state law applies of its own force. Second,
to Little Lake Misere and Central Pines, fed- if we decide that federal law controls, we must
eral law controls the rights at issue. Further- determine the content of the applicable federal
more, the government contends that the rele- law. Specifically, we must decide whether to
vant rules of the Louisiana Mineral Code adopt state law as the federal rule of decision.
cannot be borrowed as the federal rule of Because the government has conceded that its
decision because the state rules are hostile to royalty has prescribed under Louisiana law, it
the government’s interests. The government can succeed only if federal law applies and
asserts that the terms of the settlement agree- state law is not borrowed as the federal rule of
ment and act of conveyance establish that the decision.
royalty is not separately prescriptible and can
cease to exist only when the underlying servi-
tudes are extinguished.
7
See Adams v. Unione Mediterranea di Si-
curta, 220 F.3d 659, 674 (5th Cir. 2000); Dell
6
For the sake of simplicity, the remainder of Computer Corp. v. Rodriguez, 390 F.3d 377, 384
this opinion will refer to Waterfowl, Lacassane, (5th Cir. 2004); see also Guidry v. Halliburton
Jardin, and Bruiere collectively as the “servitude Geophysical Serv., Inc., 976 F.2d 938, 940 (5th
owners,” even though Bruiere does not hold a Cir. 1992) (stating that “[a] settlement agreement
servitude interest. is a contract”).
5
A. remaining operative conditions of Little Lake
In answering the initial choice of law ques- MisereSSa purchase pursuant to a federal
tion, the Court in Little Lake Misere, 412 U.S. statute with the United States as a party to the
at 592, placed particular emphasis on whether acquisitionSSwere present. We stated that
the transaction at issue “is one arising from
and bearing heavily upon a federal regulatory [w]hether or not the United States bar-
program.” If this condition is met, state law gained over the creation of the servitude,
cannot apply to the transaction of its own the acquisition subject to the existing servi-
force. In determining that federal law con- tude created a federal interest in the poten-
trolled the particular acquisition before it, the tial prescription of the mineral servitude
Court reasoned as follows: conveyed by the 1929 deed via the rule of
prescription in place at the time of contract.
We deal with the interpretation of a land . . . The term at issue in Little Lake in ef-
acquisition agreement (a) explicitly autho- fect set the prescriptive period for the re-
rized, though not precisely governed, by served mineral servitude. The Govern-
the Migratory Bird Conservation Act and ment’s contract “right” was to obtain the
(b) to which the United States itself is a mineral rights after the contractual pre-
party. As in Clearfield and its progeny, scriptive period had elapsed. Similarly, in
“the duties imposed upon the United States this case the Government’s right is to ob-
and the rights acquired by it find their roots tain the mineral rights after the default pre-
in the same federal sources . . . . In ab- scriptive period has elapsed. This right, as
sence of an applicable Act of Congress it is in Little Lake, is federalSSthough arguably
for the federal courts to fashion the govern- weaker because it arises from a default rule.
ing rule of law according to their own stan-
dards.” 274 F.3d at 888-89.
Id. at 594 (quoting Clearfield Trust Co. v. Based on Little Lake Misere and Central
United States, 318 U.S. 363, 366-67 (1943)). Pines, federal law undoubtedly controlled the
rights at issue in the Brewer litigation out of
In Central Pines, we dealt with a federal which the government’s mineral royalty arose.
land acquisition similar to the one in Little By purchasing the land subject to the Gardiner
Lake Misere, with one notable distinction. In and Laccassane Servitudes pursuant to the Mi-
Little Lake Misere, the acquisition contract gratory Bird Conservation Act and before the
contained an express term of prescription for passage of Act 315, the United States acquired
the relevant servitude created at the time of the interests in the reversion of the mineral rights
acquisition. The servitude at issue in Central on the extinction of those servitudes following
Pines, however, was already in existence when the end of the contractual period of prescrip-
the United States purchased the relevant land; tion with respect to the Lacassane Servitude
thus, there was no express term of prescription and the end of the then-existing statutory pre-
in the acquisition contract, because the gov- scription period with respect to the Gardiner
ernment was incapable of bargaining for such Servitude. Those reversionary interests, per
a term. We held that the absence of an explicit Little Lake Misere and Central Pines, are
contractual right was not enough to render governed by federal law.
state law applicable of its own force where the
6
The question, however, is whether the roy- rant or hostile state rules do not provide ap-
alty right conveyed to the United States as part propriate standards for federal law.” The
of the settlement of the Brewer litigation must Court asserted that, at the very least, state law
also be governed by federal law. The servi- should not be borrowed as the rule of decision
tude owners argue, and the district court where doing so would deprive the government
agreed, that because the royalty was obtained of a bargained-for contractual interest. Id. at
as consideration in a settlement agreement 597.
rather than as part of a land acquisition pursu-
ant to a federal program, federal law does not We elaborated on Little Lake Misere in
control. The government contends, to the Central Pines, stating that we
contrary, that rights obtained in the settlement
of a dispute over federal interests are equally begin with the premise that state law should
matters of federal law. The government ar- supply the federal rule unless there is an
gues that by modifying the rights established expression of legislative intent to the con-
between the parties as part of the 1937 acqui- trary, or, failing that, a showing that state
sition, the Brewer settlement did not displace law conflicts significantly with any federal
the Migratory Bird Conservation Act as the interests or policies present in this case.
legal foundation for those rights. Refusing to apply state law is appropriate
when national uniformity is required, as
We agree with the government. The United well as when state law conflicts with federal
States was able to obtain the instant royalty interests. The application of state law may
interest only because it had the authority under in some cases so strongly conflict with
the Migratory Bird Conservation Act to pur- federal interests that it can be rejected
chase the land to which the royalty was at- without further analysis. However, if state
tached and to acquire, as part of that purchase, law only arguably interferes with federal
reversionary interests in the mineral rights on interests, then the state’s interests in appli-
that land. The fact that the United States ob- cation of its own rules must be weighed.
tained the royalty as part of a reorganization of
the rights the parties held under the initial deed Cent. Pines, 274 F.3d at 890. We added that
should not render federal law inoperative. In the government’s interest in the application of
the language of Clearfield Trust, the govern- the default prescription rules in place at the
ment’s royalty right finds its root in the same time of contracting, while not as strong as a
federal source that allowed the 1937 acquisi- bargained-for contractual interest, is neverthe-
tion. Accordingly, federal law controls the less strong enough to militate against applica-
right, including its prescriptibility. tion of a revised state law rule that would
deprive the government of that “expectancy
B. interest.” Id. at 891.
Having determined that federal law controls
the royalty right in issue, we must decide The relevant state law did not change be-
whether to adopt Louisiana law as the federal tween the time the settlement agreement was
rule of decision, notwithstanding that Louisi- reached and the filing of the servitude owners’
ana law does not apply of its own force. As lawsuit. As far as this litigation is concerned,
we have noted, the Court stated in Little Lake mineral royalties have always been separately
Misere, 412 U.S. at 596, that “specific aber- prescriptible under Louisiana law. The gov-
7
ernment therefore does not have the kind of separately from the underlying servitudes.9 If
expectancy interest that was relevant in Cen- the government did so, it has a bargained-for
tral Pines. Indeed, with respect to land acqui- contractual interest in a royalty not separately
sition contracts the United States entered into prescriptible that, per Little Lake Misere,
after passage of Act 315, Central Pines holds contrary state law cannot abrogate.10
that “Act 315 provides the background rule
that the United States bargained under. With- The government points to two persuasive
out ‘significant conflict’ between the applica- pieces of evidence in the settlement agreement
tion of state law and the federal interest as- and act of conveyance that indicate an intent to
serted, state law should be borrowed as the avoid application of Louisiana law with re-
rule of decision.” Id. at 892-93. spect to the royalty right. First, the granting
clause of the act of conveyance states that “the
Crucially for this case, Central Pines goes rights herein conveyed” are given to the Unit-
on to state that the government’s mere “inter- ed States and its “successors or assigns for-
est in adding funds to the Treasury” is not sig- ever.” A grant to an individual or entity and
nificant enough to bar the borrowing of state its “successors or assigns forever” is a legal
law. Id. at 893. Thus, the fact that cutting off term of art that establishes that the object or
the royalty right of the United States could interest is conveyed absolutely and uncondi-
diminish the amount of money flowing into its tionally.11 Of course, a mineral royalty is by its
coffers is not a sufficient reason for refusing to
borrow the prescription regime of the Louisi-
ana Mineral Code as the rule of decision.8 9
Based on Little Lake Misere and Central
Pines, we must conclude that state law provides a
To avoid the application of state law, then, default regime. Absent a relevant intervening
the government must show that it contracted change in state law, state law is presumed to pro-
around the Louisiana Mineral Code in the set- vide the operative federal rule of decision unless
tlement agreement and act of conveyance to the parties opt out of it.
create a mineral royalty that is not prescriptible 10
As we have said, Louisiana law does not al-
low parties to extend or contractually to obliterate
statutory rules of prescription. Under this prong of
the Little Lake Misere analysis, however, Loui-
siana law would not operate of its own force.
Rather, it would be used only as a “borrowed”
8
Under the Refuge Revenue Act, 16 U.S.C. federal rule of decision where it is not in conflict
§ 715s, if the United States receives proceeds from with federal interests. If the federal government
the royalty, those proceeds would be set aside in a contracted for a royalty that is not separately pre-
fund, most of which would ultimately be paid over scriptible, Louisiana’s rules of prescription would
to Cameron Parish. The Parish would then distrib- be in conflict with that contractual interest and
ute the funds to affected local governments to therefore could not be borrowed as the federal rule
offset property taxes lost as a result of the exis- of decision.
tence of the Lacassine National Wildlife Refuge.
11
The fact that the United States has determined that Cf. Porter v. Acadia-Vermilion Irrigation
the best use of mineral royalty proceeds is obtained Co., 479 So. 2d 1003, 1008 (La. App. 3d Cir.
by paying such proceeds over to local governments 1985) (stating that “according to settled jurispru-
does not change our analysis in any way. (continued...)
8
nature an interest inferior to fee simple, or Given that the United States bargained for
“perfect,” title in land. Nevertheless, the use a royalty that is not subject to the Louisiana
of traditional fee simple language in the grant- Mineral Code (particularlynot the prescription
ing clause indicates that the royalty conveyed regime of the Code), it would be inappropriate
to the United States was meant to endure as to borrow state law as the federal rule of de-
long as possibleSSin other words, as long as cision. Instead, Little Lake Misere counsels
the servitude to which it was attached sur- that as a matter of federal law the government
vives.12 should be given the benefit of its bargain. Ac-
cordingly, the government’s mineral royalty is
Second, as part of the settlement, the par- not prescriptible separately from the Gardiner
ties explicitly agreed that Louisiana law, Act and Lacassane Servitudes, and therefore the
315 excepted, governs the underlying servi- royalty has not yet prescribed.
tudes. Language adopting Louisiana law as
controlling is absent from the sections of the The judgment is REVERSED, and this
agreement that deal with the royalty right. matter is REMANDED for further appropriate
Standing alone, this silence does not prevent proceedings as necessary.
us from nevertheless borrowing state law as
the rule of decision with regard to the pre-
scriptibility of the royalty. Taken in conjunc-
tion with the granting clause, however, that sil-
ence is indicative of an intent to opt out of 13
(...continued)
Louisiana law.13 parties could not have “expected or understood”
that Louisiana law would supply the rule of deci-
sion because it is uncertain what type of interests
11
(...continued) the government obtained under the relevant agree-
dence . . . a grant ‘forever’ connotes an unlimited ments. The government contends that it is not
grant and a sale in fee simple”), cert. denied, 483 pointing out this supposed confusion in order to
So. 2d 1019 (La. 1986). argue that its interest has not prescribed under
Louisiana law (an argument it cannot make, be-
12
The language in a granting clause is not con- cause it stipulated prescription under Louisiana
clusive where the clause is part of a form or where law in proceedings below), but merely to demon-
there is other evidence in the contract that an un- strate that there could be no expectation that Lou-
limited grant was not intended. See Porter, 479 isiana law would apply if it’s not even clear from
So. 2d at 1008; City of Eunice v. Sunland Props., the agreements what rights are at issue.
Inc., 597 So. 2d 1198, 1201 (La. App. 3d Cir.
1992). Neither of those conditions is present, how- This particular argument is ineffective, because
ever. In fact, as discussed infra, the language of it is plain from the face of the settlement agreement
the settlement agreement bolsters the conclusion and act of conveyance that the United States was
that the granting clause in the implementing act of given a mineral royalty, with attendant rights to
conveyance is significant. bonuses and rentals, and not some sort of “special”
interest undefined by Louisiana law. The act of
13
The government extends this argument even conveyance is entitled “Act of Conveyance of
further, asserting not only that the parties’ silence Mineral Royalty Interest,” and in describing the
as to the applicability of Louisiana law is evidence rights held by the United States, the settlement
of an intent to opt out of that law, but also that the agreement and act of conveyance refer to “royal-
(continued...) ties” and “royalty interests.”
9
EMILIO M. GARZA, Circuit Judge, dissenting in part:
I agree with the majority’s conclusion that Louisiana law does not apply of its own force in this
case. I also agree that Louisiana law should not be absorbed to provide the federal rule of decision
if doing so would deprive the government of a bargained-for right. However, I conclude that the
language of the contract itself does not reveal that the parties intended to contract around Louisiana
law with respect to the government’s mineral royalty in the Lacassane and Gardiner servitudes.
Accordingly, I would remand the case to the district court for additional fact finding on that issue.
The majority tacitly invokes the principle of “inclusio unius est exclusio alterius,” reasoning that
the inclusion of a choice-of-law provision with respect to a specific portion of a contract indicates
an intent that the same law does not govern the remainder of the contract. The choice-of-law
provision in the settlement agreement at issue in this case, however, is more complex than the
majority indicates. It states that the servitudes “are governed by the Louisiana Mineral Code, except
as modified by this agreement and the holding of the United States Supreme Court in United States
v. Little Lake Misere Land Co., 412 U.S. 880 (1973) in so far as that case holds that LSA RS 9:5806
does not make the subject mineral servitudes imprescriptable.” While the majority emphasizes the
selection of Louisiana law, it seems that the real significance of this provision is that it clarifies where
Louisiana law does not govern, i.e., where it conflicts with Little Lake Misere or where it was
modified by the agreement. The choice-of-law provision is therefore equally consistent with the
parties’ intending Louisiana law to govern the entire arrangement, except in the one narrow area
where they specified that it would not, as it is with their intending that state law would govern only
the servitudes. The choice-of-law provision is therefore equivocal in supporting the conclusion that
10
the parties bargained with the understanding that Louisiana law would not apply to the United States’
mineral interest.
As for the granting clause, the majority concedes that the term, “forever,” used therein cannot
“connote[] an unlimited grant and a sale in fee simple,” as it usually does in contracts governed by
Louisiana law. Porter v. Acadia-Vermilion Irrigation Co., 479 So. 1003, 1008 (La. App. 3d Cir.
1985). For that reason, it is unclear what the parties intended the term to mean. While they might,
as the majority concludes, have intended for the royalty to last as long as the underlying servitudes,
they might have merely meant that whatever rights were conveyed in the settlement agreement were
not subject to any time constraint other than those, like LA.REV. STAT. § 31:85, that define the scope
of the rights themselves. The granting clause therefore does not demonstrate that the government
bargained for a right that is inconsistent with the application of Louisiana law.
In this case, the district court did not make factual findings as to which law the parties intended
to govern the servitudes. Because nothing in the contract affirmatively evidences the parties’ intent,
I would remand this case to the district court for additional fact finding. See In re Mercer, 246 F.3d
391, 404 (5th Cir. 2001) (remanding for further fact finding on the question of intent to deceive);
Texas Dept. of Hous. and Comm. Affairs v. Verex Assur., Inc., 68 F.3d 922, 931 (5th Cir. 1995)
(remanding for further fact finding on the issue of mutual mistake). Accordingly, I respectfully
dissent in part.
11