Oil and Gas Leases: Rescission; Error; Lesion

摘要

The Salvatore A. Cascio Trust, No. 2 (Trust) enters into an oil, gas, and mineral lease with Twin Cities Development, LLC covering a 76-acre tract owned by the Trust in Bossier Parish, Louisiana. Several months later, Salvatore Cascio and John Sardisco, co-trustees of the Trust, file suit seeking rescission of the lease on the basis that error vitiated the Trust's consent. Specifically, the plaintiffs allege that they did not know the Haynesville Shale formation is located beneath the property at the time the Trust enters the lease, while Twin Cities was aware of this fact. The trial court grants summary judgment in the lessee's favor, holding that "an error as to the existence of a mineral deposit is not an error as to a cause 'without which the obligation would not have been incurred' [and] is not an error as to a substantial quality which would vitiate consent." Plaintiffs appeal. Held: affirmed. Accepting as true the plaintiffs' assertion that they were not aware of the existence of the Haynesville Shale beneath the property, the court of appeal finds that the speculative nature of mineral exploration, and the intrinsic uncertainty as to the existence and value of minerals on leased property, precludes a finding that the lessors' ignorance of the potentially valuable shale deposit underlying the land constitutes an error regarding a substantial quality of the object of the contract that would serve to vitiate their consent. Further, a claim of error as to the value of a mineral lease is a claim of lesion beyond moiety, which is not an available basis for rescission of a mineral lease under article 17 of the Louisiana Mineral Code.