Justia Energy, Oil & Gas Law Opinion Summaries

Prairie Land Electric Cooperative, Inc. (Prairie Land), which purchases wholesale electricity from various suppliers and distributes that electricity to retail customers, entered into temporally overlapping, long-term all-requirements contracts with two different wholesale electricity suppliers, Sunflower Electric Power Corporation (Sunflower) and Kansas Electric Power Cooperative, Inc. (KEPCo). After a dispute arose regarding which supplier had the right to serve a certain pumping station delivery point, Prairie Land filed a petition for declaratory judgment asking the district court to determine which supplier was entitled to serve the new delivery point. The district court ruled in favor of Sunflower, which entered into the first all-requirements contract with Prairie Land. The court of appeals reversed. The Supreme Court reversed the court of appeals’ decision and affirmed the district court’s judgment, holding that under the facts of this case, Prairie Land must meet its obligations under its contract with Sunflower, the first supplier, before it may comply with any obligations under its contract with KEPCo, the second supplier. View "Prairie Land Elec. Coop., Inc. v. Kan. Elec. Power Coop., Inc." on Justia Law

Plaintiffs filed suit seeking a declaratory judgment quieting title to an interest in the Bakken formation that Phillip Armstrong purchased from Berco. Armstrong also filed suit against Encore for breaching a Letter Offer and for trespassing on, and converting the oil and gas attributable to, Armstrong's interest. Berco counterclaimed. The court affirmed the dismissal of Armstrong's quiet-title claim, based on the district court's conclusion that the Purchase Agreement and Assignment, taken together, conveyed to Armstrong a wellbore-only assignment; Armstrong's trespass claim was properly dismissed because Armstrong did not assert that Encore interfered with his use of the two wellbores; Armstrong's conversion claim was properly dismissed because Armstrong has an interest in only the Thompson and Yttredahl wellbores, the equipment associated with those wellbores, and the production through those two wellbores; the breach of contract claim was properly dismissed because Armstrong had no leasehold interest to transfer and thus could not comply with the Letter Offer; and the district court correctly ruled that Armstrong's unilateral alteration of Exhibit A before recording it rendered the recorded Assignment null and void. Accordingly, the court affirmed the judgment of the district court. View "Armstrong, et al. v. Berco Resources, LLC, et al." on Justia Law

First Tennessee and members of the Gregg family filed suit against Pathfinders and its assignees for breaching an oil and gas lease. The district court granted summary judgment in favor of Pathfinder, finding the case analagous to Frein v. Windsor Weeping Mary, LP. The court concluded, as in Frein, the best evidence of Arkansas law, that a large-up front payment with a surrender clause creates an option to cancel the lease, which Pathfinder exercised. Accordingly, the court affirmed the judgment of the district court. View "First Tennessee Bank Nat'l Assoc., et al. v. Pathfinder Exploration, et al." on Justia Law

Appellant, a coal mine operator, filed suit against the Secretary, challenging a Department of the Interior regulation requiring mine operators to pay a reclamation fee when the coal is ultimately sold or used, rather than immediately after the coal is removed from the ground. Appellant argued that the regulation could not be constitutionally applied to coal sold for export because the Export Clause of the Constitution states that "No Tax or Duty shall be laid on Articles exported from any state." U.S. Const. Art. I. 9, cl.5. Section 1276 of the Surface Mining Control and Reclamation Act, 30 U.S.C. 1276(a)(1) explicitly provides that all challenges to regulations promulgated under the Act must be brought within sixty days of a rule's promulgation. The court concluded that section 1276 was applicable in this case and the court agreed with the district court that appellant's challenge was untimely. Accordingly, the court affirmed the judgment of the district court. View "Coal River Energy, LLC v. Jewell, et al." on Justia Law

In consolidated appeals, the issue before the Supreme Court concerned the attorney’s fees and costs awarded in the 2006 Trans-Alaska Pipeline System tax assessment case. The superior court decided that the Fairbanks North Star Borough, the City of Valdez, and the North Slope Borough were prevailing parties for purposes of attorney’s fees and costs because they had prevailed on the main issues of the case. The superior court also applied the enhancement factors to raise the presumptive award from 30 percent to 45 percent of the prevailing parties’ reasonable attorney’s fees. The owners of the Trans-Alaska Pipeline System appealed, arguing the superior court should have applied Alaska Appellate Rule 508 instead of Civil Rules 79 and 82. In the alternative, they contended: (1) that the three municipalities did not prevail as against the owners; (2) that fees should have been allocated between separate appeals; (3) that none of the prevailing parties were entitled to enhanced attorney’s fees; and (4) that the Fairbanks North Star Borough’s award should have been reduced as recommended by a special master. The Fairbanks North Star Borough and the City of Valdez cross-appealed, arguing that the superior court should have viewed this case as one involving a money judgment for purposes of an attorney’s fees award under Rule 82(b)(1) and, in the alternative, that they were entitled to a greater enhancement of their fees. Finding no reversible error, the Supreme Court affirmed. View "BP Pipelines (Alaska) Inc. v. Alaska, Dept. of Revenue" on Justia Law

Lightning strikes and animal contacts can cause wires of the power grid to short. Such “low voltage events” can damage wind turbines, which previously disconnected from the grid during a low voltage event. As wind began providing a greater percentage of overall power, utilities began to require low voltage ride-through. GE’s 985 patent, directed to controlling components of a wind turbine that would allow it to remain connected to the grid and to safely ride through a low voltage event, names five co-inventors who were based in Germany. Wilkins is not named. Wilkins was involved in adapting wind turbines to meet certain requirements in the U.S. The German team consulted Wilkins for confirmation that their invention would work with U.S. grid. Wilkins left GE in 2002. The 985 patent is asserted by GE against Mitsubishi in several lawsuits. Mitsubishi challenged the validity of the patent and hired Wilkins, who worked 1,000 hours in an effort to invalidate the 985 patent. Mitsubishi also argued that the patent was unenforceable because GE intentionally failed to name Wilkins as a co-inventor. The administrative law judge found that Wilkins had co-invented the patent but that GE did not intend to deceive the PTO. Later, Wilkins asserted ownership rights in the 985 patent and another patent. Wilkins entered into additional agreements with Mitsubishi and was paid more than $1.5 million. GE sought to quiet title to the patents. Wilkins counterclaimed. After refusing to take an unqualified oath to tell the truth at his deposition, behavior that the court deemed “not acceptable,” Wilkins filed a declaration calling the court “ignorant.” The district court dismissed GE’s ownership claims as time-barred and held that Wilkins and Mitsubishi failed to establish that Wilkins co-invented any claim of the 985 patent. The Federal Circuit affirmed, noting that Wilkins had filed additional claims for malicious prosecution and abuse of process against GE and its counsel. View "Gen. Elec. Co. v. Wilkins" on Justia Law

In 2008, Plaintiffs S. Lavon Evans Jr. and his companies S. Lavon Evans Jr. Operating Company, Inc.; S. Lavon Evans Jr. Drilling Ventures, LLC; and E & D Services, Inc. sued Defendants the law firm of Baker & McKenzie, LLP, and one of its partners, Joel Held. The complaint also named as defendants Laredo Energy Holdings, LLC, and its related subsidiaries S. Lavon Evans Operating Texas, LLC, and E & D Drilling Services, LLC. Plaintiffs listed seven causes of action in the complaint: counts one and seven charged the Baker Defendants with legal malpractice and breach of contract; counts two through six charged all the defendants with breach of fiduciary duty, negligent omission and misstatements of material facts, civil conspiracy, aiding and abetting, tortious interference, and breach of duty of good faith and fair dealing. Defendants Laredo Energy Holdings, LLC; S. Lavon Evans Operating Texas, LLC; and E&D Drilling Services filed a cross-claim against the Baker Defendants claiming legal malpractice, breach of contract, breach of duty of good faith and fair dealing, and breach of fiduciary duty. Evans asserted that in 2007, he lost access to his companies’ two largest assets (two oil drilling rigs) and was sued in Texas by the Baker Defendants on behalf of Reed Cagle (Evans’s business partner), who was acting on behalf of Laredo Energy Holdings, LLC. This triggered a flurry of liens and suits by vendors against Evans and his companies – all because, as Evans claims - he made decisions and entered agreements based on advice and recommendations from the Baker Defendants, who Evans believed to be his lawyers. Evans claimed that his businesses once were worth more than $50 million but now were accountable for debts exceeding $31 million as a result of the conduct by the Baker Defendants. The Mississippi case was tried, and the jury returned a verdict of $103,400,000 in actual damages for Plaintiffs and Cross-Plaintiffs. S. Lavon Evans Jr. was awarded $1 million from defendant Joel Held and $30 million from Baker & McKenzie. S. Lavon Evans Operating Company, Inc., was awarded $1 million from Joel Held and $29 million from Baker & McKenzie. E&D Services, LLC, was awarded $1 million from Joel Held and $19 million from Baker & McKenzie. The jury also assessed Evans, individually, with ten-percent comparative fault. And the trial court reduced the $31 million amount awarded to Evans, individually, by ten percent. The Cross-Plaintiffs were separately awarded $22.4 million from Joel Held and Baker & McKenzie, collectively. A divided jury awarded $75,000 in punitive damages to Plaintiffs and $75,000 in punitive damages to Cross-Plaintiffs. The trial court denied the Baker Defendants’ post-trial motions for judgment notwithstanding the verdict, new trial, and remittitur. This appeal followed. After careful consideration of the trial court record, the Supreme Court affirmed as to the Baker Defendants’ liability. But because the Court found the jury was not properly instructed, it reversed and remanded the case for a new trial on proximate cause and damages.View "Baker & McKenzie, LLP v. Evans, Jr." on Justia Law

The issue this case presented to the Supreme Court involved mineral rights and royalties associated with a production well located on a certain tract of land owned by the plaintiffs in Terrebonne Parish. Two conveyances were at issue: a 1966 mineral deed and a 1992 cash sale. The plaintiffs asserted the 1966 mineral deed did not create a valid mineral servitude and, consequently, sought to be declared as owning 100% of the mineral rights since their purchase of the subject property by act of cash sale in 1992, and demanded to be awarded the royalties due from June 29, 1997, until the well stopped producing sometime in 2001 or 2002. Plaintiffs further asserted a violation of the Louisiana Unfair Trade Practices Act based on the allegation that various acts of the defendants amounted to a tortious conspiracy to deprive the plaintiffs of the royalties due them. The trial court ruled in the plaintiffs’ favor, finding the 1966 deed did not create a valid servitude over the subject property, plaintiffs were the owners of the mineral rights as of the 1992 purchase, and the defendants’ conduct amounted to unfair trade practices. The appellate court reversed and vacated the judgment, finding that the 1966 mineral deed had created a valid mineral servitude and that the 1992 act of cash sale had placed the plaintiffs on notice that the mineral rights to the property had been previously conveyed. The appellate court then remanded the case for consideration of the remaining issues associated with any rights the plaintiffs may have acquired from settlements with predecessor mineral interest owners in 2001 and 2005. After its review of the case, the Supreme Court affirmed the court of appeal: the 1966 mineral deed was sufficiently specific to identify the property to be conveyed and, thus, to create a valid mineral servitude and to place third parties on notice of the existence of that servitude. Plaintiffs did not acquire the mineral rights to the subject property via the 1992 warranty deed. Furthermore, the actions of the defendants did not rise to the level of an unfair trade practice within the meaning of the act. View "Quality Environmental Processes, Inc. v. St. Martin" on Justia Law

Following the 1941 attack on Pearl Harbor, each of the Oil Companies entered into contracts with the government to provide high-octane aviation gas (avgas) to fuel military aircraft. The production of avgas resulted in waste products such as spent alkylation acid and “acid sludge.” The Oil Companies contracted to have McColl, a former Shell engineer, dump the waste at property in Fullerton, California. More than 50 years later, California and the federal government obtained compensation from the Oil Companies under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), 42 U.S.C. 9601, for the cost of cleaning up the McColl site. The Oil Companies sued, arguing the avgas contracts require the government to indemnify them for the CERCLA costs. The Court of Federal Claims granted summary judgment in favor of the government. The Federal Circuit reversed with respect to breach of contract liability and remanded. As a concession to the Oil Companies, the avgas contracts required the government to reimburse the Oil Companies for their “charges.” The court particularly noted the immense regulatory power the government had over natural resources during the war and the low profit margin on the avgas contracts. View "Shell Oil Co. v. United States" on Justia Law

Greggory Tank appealed a judgment quieting title to certain McKenzie County oil, gas and mineral interests in Debbora Rolla, the personal representative of the estate of George Tank. Because the district court did not err in ruling the challenged quitclaim deeds reserved mineral interests in George Tank and reserved in him a life estate in the surface only, the Supreme Court affirmed.View "Rolla v. Tank" on Justia Law