WPM EXPLORATION INC v. LAND OF LAKES SPORTSMAN CLUB LLC (2026)

WPM Exploration, Inc. (“WPM”) appeals a summary judgment the trial court granted in favor of Land of Lakes Sportsman's Club, L.L.C. (“LOLSC”). The trial court denied WPM's motion for summary judgment. For the following reasons, we affirm.

FACTS

LOLSC, originally established as a hunting club, executed an operating agreement in May 1995 among its members (“May 1995 Operating Agreement”). The members used LOLSC to purchase land. WPM was a founding member of LOLSC along with Coronado Mining & Minerals, Inc., Southside Holding Company, L.L.C., Robert Rainwater, and Kenneth Juban.

The May 1995 Operating Agreement was amended in 1998 and 2016. WPM argues that the amendments made to the May 1995 Operating Agreement in 2016 (“2016 Amendments”) was a novation and amounted to a new operating agreement. In 2023, WPM elected to withdraw its membership in LOLSC. LOLSC sent a letter accepting WPM's withdrawal. LOLSC then sent a check to WPM in the amount of its contributions minus amounts owed to LOLSC. WPM did not accept the check. WPM claimed it was entitled to the fair market value of its share of LOLSC as of the date of withdrawal in April 2023 in line with La. R.S. 12:1325(B). LOLSC stated that WPM is entitled to the amount contributed on the date it became a member in May 1995 arguing the statute at the time the operating agreement was created stated that “the fair market value as of the date contributed of the member's capital contribution.”

On June 12, 2023, WPM filed suit. On February 12, 2024, LOLSC filed its motion for summary judgment setting forth that it had properly paid WPM and there was no genuine issue of material fact. WPM filed its own motion for summary judgment arguing that the 2016 amendments to the May 1995 Operating Agreement amounted to a novation and that the amount owed was the fair market value at the time of its withdrawal. On April 10, 2025, the trial court, in its written judgment, granted summary judgment in favor of LOLSC and denied WPM's motion. WPM now appeals. WPM argues that the trial court erred by: 1) granting LOLSC's motion for summary judgment; 2) no novation of the May 1995 Operating Agreement; 3) denying WPM's motion for summary judgment; 4) and, finding that there was no novation to the LOLSC operating agreement.

LAW AND DISCUSSION

Standard of Review

Summary judgment procedure is favored and “designed to secure the just, speedy, and inexpensive determination of every action ․ and shall be construed to accomplish these ends.” La. Code Civ. P. art. 966(A)(2).

In ruling on a motion for summary judgment, the trial court's role is not to weigh the evidence or to determine the truth of the matter, but instead to determine whether there is a genuine issue of triable fact. Quereau v. Sam & Brett LLC, 2024-0243 (La. App. 1 Cir. 10/03/24), 405 So. 3d 847, 852, citing Kasem v. State Farm Fire and Cas. Co., 2016-0217 (La. App. 1 Cir. 02/10/17), 212 So. 3d 6, 12-13. A genuine issue is one as to which reasonable persons could disagree; if on the state of the evidence, reasonable persons could reach only one conclusion, there is no need for a trial on that issue. A fact is material when its existence or nonexistence may be essential to plaintiff's cause of action under the applicable theory of recovery. See Kasem, 212 So. 3d at 13, quoting Smith v. Our Lady of the Lake Hospital, Inc., 1993-2512 (La. 07/05/94), 639 So. 2d 730, 751.

On appeal, this court applies a de novo standard of review using the same criteria applied by trial courts to determine whether summary judgment is appropriate. Bass v. Disa Glob. Sols., Inc., 2019-1145 (La. App. 1 Cir. 06/12/20), 305 So. 3d 903, 906, writ denied, 2020-01025 (La. 11/04/20), 303 So. 3d 651. The mover bears the burden of proving that it is entitled to summary judgment. See La. Code Civ. P. art. 966(D)(1). If proven, the burden shifts to the adverse party to produce factual support sufficient to establish the existence of a genuine issue of material fact or that the mover is not entitled to judgment as a matter of law. La. Code Civ. P. art. 966(D)(1).

Applicable Statute

At the time LOLSC was established, the law provided that a withdrawing member was entitled to the fair market value as of the date contributed. Louisiana Revised Statutes 12:1325 (B) provided:

Except as otherwise provided in this Chapter, on withdrawal or resignation, a withdrawing or resigning member is entitled to receive such distributions, if any, to which the member is entitled under a written operating agreement and, if not otherwise provided in a written operating agreement, within a reasonable time after withdrawal or resignation, the fair market value as of the date contributed of the member's capital contribution.

Louisiana Revised Statutes 12:1325, was amended on June 27, 1995, after the formation of LOLSC.² The amended statute set forth that a withdrawing member is entitled to receive the fair market value as of the date of the member's withdrawal. La. R.S. 12:1325(C). However, this change has no retroactive application. The Legislature did not express any intent that it be retroactive, and this Court in Sage v. Radiology & Diagnostic Servs., L.L.C., 2001-2445 (La. App. 1 Cir. 11/8/02), 831 So. 2d 1053, writ denied, 2003-0292 (La. 4/4/03), 840 So. 2d 1218, confirmed that this statute is not retroactive. However, WPM is not asking the court to apply La. R.S. 12:1325 retroactively. WPM argues that the amendments made to the May 1995 Operating Agreement in 2016 (“2016 Amendments”) was a novation and amounted to a new operating agreement. WPM therefore argues the law in 2016 is applicable.

2016 Amendments

We look to the amendments made to the May 1995 Operating Agreement. Before the 2016 Amendments, 3.5 provided:

3.5 Expulsion Period. A member may be expelled from the L.L.C. by a vote of eighty (80) percent of the membership. A Member may only be expelled on the occurrence of the following:

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2. The failure of a Member to make an additional capital contribution to the Company in any given fiscal year, in an amount not to exceed One Thousand ($1,000.00) Dollars per fiscal year, when the need for such capital contribution has been determined by the Management Committee, the Member has been notified of the assessment of the additional capital contribution and the failure of the Member to make the additional capital contribution continues for a period in excess of sixty (60) days from the date of notification of the assessment.

In connection with its participation in government programs for monetary benefits, LOLSC amended section 3.5 to remove the language that capped the amount required for the capital contribution. Section 3.5, as amended, provides:

3.5 Expulsion Period. A member may be expelled from the L.L.C. by a vote of seventy-five (75%) percent of the membership. A Member may only be expelled on the occurrence of the following:

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2. The failure of a Member to make an additional capital contribution to the Company when the need for such capital contribution has been determined by the Members, the Member has been notified of the assessment of the additional capital contribution and the failure of the Member to make additional capital contribution continues for a period in excess of sixty (60) days from the date of notification of the assessment.

The 2016 Amendments documents are labeled as “amendments.” We note WPM did not sign the 2016 Amendments. However, because 75 percent of the members agreed, WPM was subject to the changes.

The 2016 Amendments included the addition of Article XIV entitled “Additional Capital Contributions.” This section was created to provide that if LOLSC qualifies and is selected to participate in government programs, and the amount LOLSC is qualified to receive is reduced, then the Member who causes a reduction in funds shall be required to make a monetary contribution to LOLSC in the amount of the reduction made by the program. The 2016 Amendments, specifically section 14.3, states, in part:

This contribution shall not be a Capital Contribution on the part of the Member making it, but shall be due solely to make up the reduction in government payment and thereby equalize the financial contribution made by or on behalf of the Members by the [program] and shall be known as the ‘Equalizing Payment.’

WPM argues that the initial obligation that ensured no member would pay more than $1,000.00 in a fiscal year was extinguished with the 2016 Amendments. WPM further argues that, “[LOLSC] substituted a capped obligation with uncapped and unlimited new obligations which were not compatible with the existence of the original obligation.” The capital contributions payments limited to $1,000.00 in the original May 1995 Operating Agreement is entirely separate from the new “Equalizing Payment” obligations. According to WPM, the “Equalizing Payment” is a new obligation, and therefore the 2016 Amendments created a new operating agreement was created through novation. WPM avers the changes made must be compatible with the original obligation and not extinguish it if it were indeed just a modification. Here, according to WPM, the new obligations are not compatible with the original obligation. In 2023, seven years after the 2016 Amendments, WPM withdrew and argues that the amendments made to the May 1995 Operating Agreement allow for the fair market value at the time of withdrawal from LOLSC.

Novation

Louisiana Civil Code article 1879 defines novation as “the extinguishment of an existing obligation by the substitution of a new one.” Louisiana Civil Code article 1880 provides, “[t]he intention to extinguish the original obligation must be clear and unequivocal. Novation may not be presumed.” See also Ciolino v. First Guar. Bank, 2012-2079 (La. App. 1 Cir. 10/30/13), 133 So. 3d 686, 691. The burden of proving novation falls on the party who seeks its protection. Id. Further, Louisiana Civil Code article 1881 provides, “․ [i]f any substantial portion of the original performance is still owed, there is no novation.” Article 1881 also states, “Mere modification of an obligation, made without intention to extinguish, does not affect a novation. The execution of a new writing, the issuance of a renewal of a negotiable instrument, or the giving of new securities for performance of an existing obligation are examples of such a modification.”

As the party with the burden of proof, WPM must establish that there was in fact a novation.³ In support of it motion for summary judgment, WPM attached the May 1995 Operating Agreement: amendments made to the May 1995 Operating Agreement in 1998 and 2016; 2015 Income Tax Form 1065; a 2022 screening assessment letter from United States Department of Agriculture; and a letter regarding LOLSC's tentative selection in an Agriculture Conservation Easement Program. In support of its motion for summary judgment, LOLSC attached: an affidavit of James Hanks; amendments to the May 1995 Operating Agreement; WPM notice of a withdrawal letter; letter to William P. Mills; letter to WPM's attorney; WPM's invoice; a copy of the check sent to WPM; LOLSC's 2016, 2017, 2018 Tax Form 1065; affidavit of William Mills; LOLSC's articles of organization; and, depositions of Loren Kleinpeter and James Hanks.

The deposition of Hanks, a member of Southside Holding, LLC, a founding member of LOLSC, explained in his deposition that in 1995, “[members] bought the property for recreation but [ ] wanted to make sure that it could make money to sustain itself.” Hanks gave examples of how they tried to sustain themselves, such as: LOLSC rented the property for duck hunting, land improvement projects, and commercial aspects of the business including incentives from Ducks Unlimited. Thereafter, according to Hanks, the members decided to use the property for government grant programs and capital contributions were necessary to effectuate the programs. Hanks opined that WPM seemed to be in favor of entering the government programs. With the participation in the new government programs, the members updated the provisions in the Operating Agreement and passed the 2016 Amendments.

Loren Kleinpeter, manager of Southside Holding Company, stated in his affidavit that one of the original LOLSC members, Rob Rainwater, unilaterally withdrew as a member in 1998 and was paid the amount of his capital contribution. Kleinpeter also acknowledged that he prepared the 2016 Amendments and it “did not address nor change the provisions on payment amount upon withdrawal or resignation.” Kleinpeter stated that at the time of its withdrawal, WPM owned 23.701% of LOLSC shares.

WPM claims that the 2016 Amendments altered the obligations of the members and offered a “new purpose.” In his affidavit, William Mills, President of WPM, stated that the 2016 Amendments created duties and obligations not contemplated in the May 1995 Operating Agreement and he opposed the amendments According to Mills, the 2016 Amendments only harmed WPM, and not the other members. Mills admitted in his affidavit that he opposed the changes and he did not sign several documents. Nonetheless, in 2018, WPM was sent an invoice in the amount of $9,716.38 entitled “Reduction in payments made to LOLSC by NRCS as a result of WPM, or its imbedded owners/entities exceeding the AGI ceiling.” WPM paid this invoice. By WPM's continued participation as a member of LOLSC, we find that it acknowledged the 2016 Amendments and tacitly conceded that the amendments did not extinguish the May 1995 Operating Agreement.

WPM owed additional Equalizing Payments. In 2021, LOLSC invoiced WPM for an Equalizing Payment on December 9, 2021, in the amount of $9,716.38. On January 31, 2023, LOLSC sent an invoice for another Equalizing Payment to WPM in the amount of $6,758.00. According to Section 14.3 ⁴ of the May 1995 Operating Agreement, the payments were due upon receipt. WPM did not pay either the 2021 or 2023 invoices totaling $16,474.38. WPM does not dispute the 2021 or 2023 invoices. As such, WPM's argument that the trial court improperly granted summary judgment, allowing LOLSC to reduce its capital contribution by the amount of the Equalizing Payments owed to LOLSC, is without merit. La. C.C. art. 1893. In its letter on June 15, 2023, LOLSC states the amount of the total capital contributions in the amount of $124,842.50, in accordance with the May 1995 Operating Agreement. After deducting the amount owed, the net amount of $108,368.12 was due to WPM at the time of withdrawal as a member in LOLSC.

WPM knew LOLSC's purpose. The members of LOLSC amended the terms of the Operating Agreement which they were entitled to do to address any purpose of the company under law. WPM remained a member in LOLSC after the 2016 Amendments until withdrawing in 2023. There is no evidence of the members’ intent to change the withdrawal amount to be payment of the fair market value upon withdrawal; nor did the parties show intent to extinguish the company so as to somehow incorporate the 2016 Amendments version of La. R.S. 12:1325. Other than suggesting the 2016 Amendments themselves was enough to prove it created a new contract, WPM has offered no evidence of the members’ intent to incorporate the amended La. R.S. 12:1325 with the May 1995 Operating Agreement. Accordingly, since the May 1995 Operating Agreement was still in effect, the amount owed to WPM upon withdrawal is the amount contributed. See La. R.S. 12:1325(B) (May 1995).

After our de novo review, we find the trial court was correct that there was no genuine issue of material fact. There was no change or substitution of the May 1995 Operating Agreement. WPM offered no evidence of the members’ intent for a novation to create a new “2016 Operating Agreement.” As such, WPM cannot avail itself of the amended version of La. R.S. 12:1325. As stated, a novation is never presumed, and intent must be clearly shown. Considering the record in the instant case, we cannot find a novation occurred.

CONCLUSION

For the foregoing reasons, the trial court's April 10, 2025 judgment is affirmed. Costs of this appeal are to be borne by WPM Exploration, Inc.

AFFIRMED.

FOOTNOTES

2.   See Acts 1995, No. 847, § 3

3.   See City of Donaldsonville. v. Thiac, 542 So. 2d 1111,1161 (La. App. 1 Cir. 1989) (finding novation did not occur because claimant failed to establish by clear and unequivocal proof that lessor intended to release the original lessee and substitute a new lease). See also Wiger v. Meyer, 459 So. 2d 117, 119-120 (La. App. 2d Cir. 1984) (finding subsequent agreement changing the payment and interest scheme and adding a fixed term and resolutory condition was a modification, not a novation of the original contract of sale); Sterlington Bank v. Terzia Lumber & Hardware, Inc., 146 So. 2d 233, 236 (La. App. 2d Cir. 1962) (holding novation did not occur when employer gave check since the mere giving of the instrument was not sufficient to accomplish a novation without the clear intention to novate).

4.   [An Equalizing Payment] shall be due from a Member(s) without any additional vote or other action of the members and shall become due immediately upon the notification from the United States department or agency of the reduction in payment to the Company.

BALFOUR, J.

Haggerty, J concurs