Justia Energy, Oil & Gas Law Opinion Summaries

In these consolidated cases, BP appealed three settlement awards, related to the 2010 Deepwater Horizon oil spill, that it paid to nonprofits through its Court-Supervised Settlement Program. On appeal, BP argued that the Claims Administrator improperly interpreted the Settlement Agreement. The awards were based on the Claims Administrator’s determination that nonprofits may count donations and grants as “revenue” under the terms of the Agreement (the Nonprofit-Revenue Interpretation). As a preliminary matter, the court concluded that it has jurisdiction over this appeal under the collateral order doctrine and that BP's appeals were timely. On the merits, the court concluded that BP failed to show that the Nonprofit-Revenue Interpretation violates the plain language of the Agreement. The court held that the Nonprofit-Revenue Interpretation does not alter the class definition in violation of Rule 23 or Article III. Finally, the court concluded that there was no abuse of discretion in the district court's denial of review of the individual awards. Accordingly, the court affirmed the judgment. View "In Re: Deepwater Horizon" on Justia Law

BP and the Economic Property Damages Class entered into a Settlement Agreement in connection with the 2010 Deepwater Horizon oil spill. At issue is the district court's order approving the Final Rules Governing Discretionary Court Review of Appeal Determinations for claims processed through the Settlement Program. After determining that the court had jurisdiction over the appeal under the collateral order doctrine, the court concluded that the parties preserved their right to appeal from the district court under the settlement agreement. The court followed its sister circuits' decisions in similar cases involving consent decrees to hold that, where a settlement agreement does not resolve claims itself but instead establishes a mechanism pursuant to which the district court will resolve claims, parties must expressly waive what is otherwise a right to appeal from claim determination decisions by a district court. In this case, the parties have preserved their right to appeal. Finally, the court concluded that the Final Rules violate the right for parties to appeal claim determinations to this court where the district court failed to provide for the docketing of its orders regarding requests for review. Accordingly, the court vacated and remanded. View "Lake Eugenie Land v. BP" on Justia Law

Plaintiff, a mineral owner, sued Defendant alleging breach of contract, failure to pay royalties, and fraud. The claims centered on three oil and gas leases that Plaintiff, the lessor, executed with Defendant, the lessee. Plaintiff prevailed on the majority of his claims in the trial court. As relevant to this appeal, the jury determined that Plaintiff, in the exercise of reasonable diligence, discovered the fraud less than four years before filing suit. The trial court therefore concluded that the claims were not time barred. The court of appeals reversed, concluding that the fraud should have been discovered, as a matter of law, more than four years before Plaintiff filed suit because Plaintiff should have discovered the relevant information in the Texas Railroad Commission’s public records. The Supreme Court reversed, holding that Plaintiff’s reasonable diligence in discovering the underlying fraud was a question of fact for the jury. Remanded. View "Hooks v. Samson Lone Star, Ltd. P’ship" on Justia Law

The parties in this case owned interests in certain oil and gas leases in Sublette County, Wyoming. In the underlying litigation, the district court granted a monetary judgment against Defendants for amounts due to Plaintiffs. Defendants paid the monetary judgment. Plaintiffs subsequently filed a motion to enforce judgment, claiming that Defendants were not properly accounting to them as required by the prior declaratory judgment and a net profits contract (NPC). After the district court issued its judgment, Defendants appealed the court’s decisions on the merits and its order requiring Defendants to pay attorney fees. The Supreme Court affirmed as revised, holding that the district court (1) properly assumed jurisdiction over the issues presented; (2) correctly interpreted its prior judgment and Defendants’ accounting responsibilities under the NPC; and (3) properly granted Plaintiffs’ request for attorney fees with one minor exception. View "Ultra Resources, Inc. v. Hartman" on Justia Law

The Third Circuit Court of Appeals certified a question of Pennsylvania law to the Pennsylvania Supreme Court. In August 2007, Appellee Wayne Harrison entered into a lease with Appellant Cabot Oil & Gas Corporation, per which Cabot obtained the exclusive right to explore oil-and-gas resources on Harrison's property. In exchange, the company agreed to pay an initial bonus plus a one-eighth royalty on oil or gas successfully produced from the land. Approximately halfway through the primary lease term, Harrison and his wife commenced a civil action against Cabot in a federal district court, seeking a declaration that the lease was invalid. The Harrisons alleged the company had fraudulently induced Mr. Harrison to enter into the lease via an agent's representation that Mr. Harrison would never receive any more than $100 per acre as a threshold bonus payment from a gas producing company. The Harrisons learned of other landowner-lessors receiving higher payments. The Pennsylvania Court accepted certification from the Third Circuit to address whether the primary term of an oil-and-gas lease should have been equitably extended by the courts, where the lessor pursued an unsuccessful lawsuit challenging the validity of the lease. In its counterclaim, Cabot sought a declaratory judgment that, in the event the Harrisons' suit failed, the primary term of the lease would be equitably tolled during the period of time during which the suit was pending, and, concomitantly, the lease would be extended for an equivalent period of time beyond what was provided by its actual terms. The district court awarded summary judgment in Cabot's favor on the suit to invalidate the lease. The court, however, resolved the counterclaim in the Harrisons' favor, concluding that Pennsylvania law does not provide for equitable extensions of oil and gas leases under the circumstances. Cabot appealed, arguing that it would be deprived of the full benefit of the bargained-for terms of its contract with the Harrisons by their "meritless lease challenges." Cabot contended Pennsylvania law provided that a party repudiates a contract, and thus effectuates an essential breach, when he makes an unequivocal statement that he will not perform in accordance with his agreement. The Pennsylvania Supreme Court disagreed with Cabot's contention, holding that the Harrisons' lease challenge was not an anticipatory breach of the lease. "Our reluctance, in this respect, is bolstered by the Harrisons' observation that oil-and-gas-producing companies are free to proceed according to their own devices to negotiate express tolling provisions for inclusion in their leases. [. . .] Certainly, in light of the voluminous decisional law, such companies are on sufficient notice of the prospect for validity challenges to warrant their consideration of such protective measures. [ . . .] Our determination is only that, consistent with the prevailing substantive law of this Commonwealth, the mere pursuit of declaratory relief challenging the validity of a lease does not amount to such." View "Harrison v. Cabot Oil & Gas Corp." on Justia Law

Bill Head, who owns and operates the Silver Spur Truck Stop in Pharr, Texas, hired Petroleum Solutions, Inc. to manufacture and install an underground fuel system. After the discovery that a major diesel-fuel release leak had occurred, Head sued Petroleum Solutions for its resulting damages. Petroleum Solutions filed a third-party petition against Titeflex, Inc., the alleged manufacturer of a component part incorporated into the fuel system, claiming indemnity and contribution. Titeflex filed a counterclaim against Petroleum Solutions for statutory indemnity. The trial court rendered judgment in favor of Head and in favor of Titeflex. The court of appeals affirmed. The Supreme Court (1) reversed as to Head’s claims against Petroleum Solutions, holding that the trial court abused its discretion by charging the jury with a spoliation instruction and striking Petroleum Solutions’ defenses, and the abuse of discretion was harmful; and (2) affirmed as to Titeflex’s indemnity claim, holding that Titeflex was entitled to statutory indemnity from Petroleum Solutions and that any error with respect to the indemnity claim was harmless. View "Petroleum Solutions, Inc. v. Head" on Justia Law

Westar Energy was an electric company based in Topeka, Kansas that owned several sources of electricity, including the Jeffrey Energy Center (JEC). The JEC was a coal-fired power plant composed of three units: Unit 1, Unit 2, and Unit 3. In 2005, Westar began a project to upgrade the JEC’s existing flue gas desulfurization (FGD) system. Wahlcometroflex Inc. (Wahlco) was a Delaware corporation that designed and manufactured a number of products including FGD dampers. On December 22, 2006, Westar and Wahlco entered into a contract under which Wahlco agreed to manufacture and deliver dampers to Westar for Units 1, 2, and 3. This case involved a dispute over the meaning and application of a liquidated damages in that contract provision under Kansas law. The district court held that Westar did not need to establish that Wahlco's late delivery of the equipment actually delayed Westar’s production schedule in order to recover contractual liquidated damages. Finding no error in that judgment, the Tenth Circuit affirmed. View "Wahlcometroflex v. Westar Energy" on Justia Law

In 2010, Idaho Power entered into two Firm Energy Sales Agreements, one with New Energy Two, LLC, and the other with New Energy Three, LLC, under which Idaho Power agreed to purchase electricity from them that was to be generated by the use of biogas. The agreement with New Energy Two stated that the project would be operational on October 1, 2012, and the agreement with New Energy Three stated that the project would be operational on December 1, 2012. Both contracts were submitted for approval to the Idaho Public Utilities Commission, and were both approved on July 1, 2010. Each of the agreements contained a force majeure clause. By written notice, New Energy Two and New Energy Three informed Idaho Power that they were claiming the occurrence of a force majeure event, which was ongoing proceedings before the Public Utilities Commission. New Energy asserted that until those proceedings were finally resolved "the entire circumstance of continued viability of all renewable energy projects in Idaho is undecided"and that as a consequence "renewable energy project lenders are unwilling to lend in Idaho pending the outcome of these proceedings."Idaho Power filed petitions with the Commission against New Energy Two and New Energy Three seeking declaratory judgments that no force majeure event, as that term was defined in the agreements, had occurred and that Idaho Power could terminate both agreements for the failure of the projects to be operational by the specified dates. New Energy filed a motion to dismiss both petitions on the ground that the Commission lacked subject matter jurisdiction to interpret or enforce contracts. After briefing from both parties, the Commission denied New Energy's motion to dismiss. The Commission's order was an interlocutory order that is not appealable as a matter of right. New Energy filed a motion with the Supreme Court requesting a permissive appeal pursuant to Idaho Appellate Rule 12, and the Court granted the motion. New Energy then appealed. Finding no reversible error, the Supreme Court affirmed the Commission's order. View "Idaho Power v. New Energy Two" on Justia Law

The issue this case presented to the Supreme Court centered on the lower courts’ interpretation of portions of a written mineral agreement. The agreement was prepared by a mineral leaseholder and ostensibly conveyed to an exploration company an “exclusive option to sublease” at least 15 percent of the leaseholder’s mineral rights. The lower courts interpreted the agreement as imposing an obligation on the exploration company to execute the sublease rather than simply allowing the exploration company the right to execute the sublease. Because the exploration company did not execute such a sublease, the lower courts awarded damages to the leaseholder for breach of contract. When the Court granted certiorari review, the lower courts had awarded to the leaseholder other damages, related to the exploration company’s obligation to execute a mineral sublease. The Supreme Court determined that the lower courts erred in ruling that the exploration company was obligated by the agreement to sublease mineral rights. Instead, the Court found the agreement afforded the exploration company a non-binding option to sublease (for which the exploration company paid $1.4 million), but that if the exploration company exercised the non-binding option, it was then obligated to sublease at least 15 percent of the leaseholder’s rights described in the agreement. Accordingly, the damage award on the breach of contract claim for failing to sublease at least 15 percent of the leaseholder’s mineral rights was reversed. However, the Court also found the exploration company breached its obligation to complete a seismic survey, and the Court affirmed the corresponding award of damage. Because the record did not support a finding that the exploration company acted in bad faith, we examine the effects of a contractual prohibition against consequential damages that the lower courts refused to apply based on those courts’ findings of bad faith. Because of the court of appeal's error, any meaningful review of the merits of the exploration company’s argument that its reconventional demand for improper use and sharing of its seismic data was improperly dismissed. The case was therefore remanded to the court of appeal the question of the propriety of that dismissal and, as that court then deems necessary, the question of whether the record supports the exploration company’s request for relief, or whether remanding to the district court for the taking of additional evidence is required. View "Olympia Minerals, LLC v. HS Resources, Inc." on Justia Law

Rita Sue Rasnic, (f/k/a Johnson) appealed the grant of summary judgment quieting title to disputed mineral interests in McKenzie County to Norris and Beverly Hildre. Rasnic argues she was entitled to the disputed mineral interests because those mineral interests were subject to a mortgage held by her predecessor in interest, American State Bank. Upon review, the North Dakota Supreme Court concluded the plain language of the Hildres' 1988 mortgage applied only to mineral interests owned by them when the mortgage was executed and title to the disputed mineral interests, which was acquired by the Hildres after the mortgage was executed, did not inure to American State Bank as security for the Hildres' debt under N.D.C.C. section 35-03-01.2(4). Accordingly, the Court affirmed the judgment quieting title in the disputed mineral interests to the Hildres. View "Rasnic v. ConocoPhillips Co." on Justia Law