Justia Contracts Opinion Summaries

Two companies, Gulf Coast Investments, LLC and Trigger Energy Holdings, LLC, sold their membership interests in Blueprint Energy Partners, LLC to TCU Holdings, LLC. Blueprint, formed in 2017 for shale oil operations in Wyoming, originally had three equal members: Gulf Coast, Trigger, and TCU, with Aladdin Capital, Inc. as the manager and primary creditor. After financial struggles and interpersonal conflicts, the parties negotiated the buyout in 2019. TCU’s principal, Kent Stevens, threatened to leave and take staff and clients unless Gulf Coast and Trigger agreed to a set price, known as the “dynamite option.” Despite these threats, the plaintiffs were represented by counsel who advised them of alternatives, and negotiations spanned several months, culminating in a signed purchase agreement.The Circuit Court of the Second Judicial Circuit, Minnehaha County, South Dakota, reviewed the plaintiffs’ post-sale lawsuit alleging economic duress, breach of operating agreement, breach of fiduciary duty, tortious interference, shareholder oppression, unjust enrichment, and sought accounting and injunctive relief. The circuit court granted summary judgment for the defendants on all counts, reasoning that the plaintiffs voluntarily entered the agreement, had legal alternatives, and that the contract itself contained a waiver of further claims. The court also addressed each substantive claim on its merits, finding no legal basis for recovery.On appeal, the Supreme Court of the State of South Dakota affirmed the circuit court’s grant of summary judgment. The Supreme Court held that, under either the three-part or two-part test for economic duress, the plaintiffs failed to show involuntary acceptance or lack of reasonable alternatives. The court also found no breach of the operating agreement or fiduciary duties, no tortious interference or shareholder oppression, and no basis for unjust enrichment or usurpation. The holding confirms the validity and enforceability of the purchase agreement and disposes of all claims against the defendants. View "Trigger Energy Holdings v. Stevens" on Justia Law

This case concerns a contractual dispute between two companies engaged in the purchase and sale of natural gas. In 2010, the parties entered into a base contract using a standard industry form that governed their future transactions, with specific delivery obligations detailed in transaction confirmations executed in October 2020. Under these confirmations, one party was required to deliver fixed and variable amounts of gas to the other at agreed prices. During Winter Storm Uri in February 2021, significant disruptions in natural gas supply occurred, and the seller delivered far less gas than contracted over a six-day period. The seller invoked the contract’s force majeure provision, citing weather-related supply loss and declarations by its affiliates. The buyer, however, disputed the sufficiency and applicability of this claim, asserting the seller could have obtained gas from other sources.After the seller initiated a declaratory judgment action in Texas state court, the case was removed to the United States District Court for the Southern District of Texas. The district court granted partial summary judgment to the seller, holding that force majeure excused its nonperformance, and found the contract did not require the purchase of replacement gas. The question of how to allocate delivered gas between the two contracts (with differing prices) went to a jury, which found for the buyer, concluding that available gas should be allocated first to the fixed-price contract.Upon appeal, the United States Court of Appeals for the Fifth Circuit reviewed the case. The court reversed the district court’s summary judgment on force majeure, finding factual disputes about the seller’s gas supply and its reasonable efforts to avoid nonperformance. The court affirmed the jury’s verdict regarding allocation, holding that trade usage could supplement the contract and sufficient evidence supported the jury’s finding. The case was remanded for further proceedings on force majeure. View "MIECO v. Targa Gas Marketing" on Justia Law

This case involves a class action dispute over late payments of oil proceeds to royalty and working interest owners in Oklahoma. The plaintiff, an Oklahoma landowner with royalty interests in three oil wells, alleged that Sunoco, Inc. and Sunoco Partners Marketing & Terminals, L.P. failed to pay statutory interest on late payments as required by Oklahoma’s Production Revenue Standards Act (PRSA). The PRSA mandates that first purchasers of oil must pay proceeds within strict timeframes and include 12 percent interest on any late payments. The class was defined to include all owners who received late payments from Sunoco without the required interest.After Sunoco removed the case to the United States District Court for the Eastern District of Oklahoma, the court certified the class in 2019, finding common questions predominated, including whether Sunoco owed interest on untimely payments and whether a demand was required. The district court granted partial summary judgment on liability for the PRSA claim, and after a bench trial, awarded the class over $103 million in actual damages (including prejudgment interest) and $75 million in punitive damages. Sunoco appealed, challenging class certification, standing for certain class members, the calculation of prejudgment interest, and the punitive damages award. The Tenth Circuit previously remanded for clarification on damages allocation for unidentified owners, which the district court addressed.On appeal, the United States Court of Appeals for the Tenth Circuit affirmed the district court’s rulings on class certification, ascertainability, standing, and the award of actual damages including prejudgment interest. The court held that the PRSA requires automatic payment of statutory interest on late payments, and that prejudgment interest should be compounded until paid. However, the Tenth Circuit vacated the punitive damages award, holding that punitive damages are not available for breach of contract claims under Oklahoma law when the only claim proven was a PRSA violation. The case was remanded for amendment of the judgment consistent with this opinion. View "Cline v. Sunoco" on Justia Law

Fieldwood Energy LLC, an oil and gas company, contracted with Island Operating Company, Inc. (IOC) through a Master Services Contract (MSC) to provide workers for oil and gas production services on offshore platforms in the Gulf of Mexico. The MSC defined the work as “Lease Operators,” and a subsequent work order requested “A Operators” to perform tasks such as compliance testing and equipment checks on the platforms. The contract required Fieldwood to provide marine transportation for workers and equipment, which it did by hiring Offshore Oil Services, Inc. (OOSI) to transport IOC employees, including Tyrone Felix, to the platforms. Felix was injured while disembarking from OOSI’s vessel, the M/V Anna M, and subsequently made a claim against OOSI.OOSI filed a complaint for exoneration or limitation of liability in the United States District Court for the Eastern District of Louisiana. OOSI also sought indemnification from IOC under the MSC’s indemnity provision. IOC moved for summary judgment, arguing that Louisiana law, specifically the Louisiana Oilfield Anti-Indemnity Act (LOAIA), rendered the indemnity provision unenforceable. The district court agreed, finding that the MSC was not a maritime contract because vessels were not expected to play a substantial role in the contract’s performance, and thus Louisiana law applied. The court granted summary judgment for IOC on indemnity and insurance coverage, and later on defense costs after OOSI settled with Felix.On appeal, the United States Court of Appeals for the Fifth Circuit reviewed the district court’s summary judgment de novo. The Fifth Circuit held that the MSC was not a maritime contract because neither its terms nor the parties’ expectations contemplated that vessels would play a substantial role in the contract’s completion. As a result, Louisiana law applied, and the LOAIA barred enforcement of the indemnity provision. The Fifth Circuit affirmed the district court’s summary judgment in favor of IOC. View "Offshore Oil Services, Inc. v. Island Operating Co." on Justia Law

Several individuals and an LLC, who own oil and gas interests in West Virginia, leased their mineral rights to EQT, a group of related energy companies. The leases, numbering nearly 3,843, required EQT to pay royalties to the lessors. During the period from January 1, 2012, to February 28, 2021, EQT extracted “wet gas” from the wells, which contains valuable natural gas liquids (NGLs) like propane and butane. EQT sold the wet gas at the wellhead to its own affiliates and paid royalties to the lessors based on the energy content (BTU) of the wet gas, not on the value of the NGLs. EQT then separated and sold the NGLs to third parties but did not pay additional royalties for these sales. In 2021, EQT notified lessors it would begin calculating royalties based on the separate value of NGLs and residue gas.The plaintiffs filed a putative class action in the United States District Court for the Northern District of West Virginia, alleging breach of contract and fraudulent concealment, and sought class certification. The district court granted partial summary judgment, finding EQT’s affiliates were its alter egos, and certified classes for both claims, later dividing the class into three subclasses based on lease language. EQT petitioned for interlocutory appeal of the class certification order.The United States Court of Appeals for the Fourth Circuit reviewed the district court’s certification order. The Fourth Circuit affirmed the certification of the breach of contract claim, holding that the class was ascertainable and that common questions of law and fact predominated, given EQT’s uniform royalty payment method and the immateriality of lease language variations under West Virginia law. However, the Fourth Circuit reversed the certification of the fraudulent concealment claim, holding that individual questions of reliance would predominate, making class treatment inappropriate for that claim. Thus, the district court’s order was affirmed in part and reversed in part. View "Glover v. EQT Corporation" on Justia Law

Avanzalia Panamá and its parent company, Avanzalia Solar, built a solar plant in Panama and sought to connect it to the El Coco substation, owned by Goldwind USA's affiliate, UEPI. Avanzalia alleged that Goldwind tortiously blocked their access to the substation, preventing them from selling electricity. Avanzalia filed a complaint with Panama's Autoridad de Servicios Públicos (ASEP), which required them to submit updated electrical studies and obtain an access agreement with UEPI. Despite obtaining the agreement, Avanzalia faced further delays and was unable to connect to the substation until May 2020.The United States District Court for the Northern District of Illinois granted summary judgment to Goldwind. The court found that Avanzalia could not satisfy the Illinois state law requirement for tortious interference, which necessitates that the defendant's actions be directed at a third party. The court also applied collateral estoppel, concluding that ASEP's findings were binding and precluded Avanzalia's claims related to pre-access agreement delays.The United States Court of Appeals for the Seventh Circuit reviewed the case. The court affirmed the district court's decision to afford comity to ASEP's order and apply collateral estoppel, barring Avanzalia's claims related to pre-access agreement delays. However, the appellate court found that the district court erred in not considering the impossibility theory of tortious interference under Restatement (Second) of Torts § 766A. The court vacated the summary judgment on this issue and remanded for further proceedings to determine whether Goldwind wrongfully prevented Avanzalia from performing its contractual obligations. The judgment was affirmed in all other respects. View "Avanzalia Solar, S.L. v. Goldwind USA, Inc." on Justia Law

Michigan Electric Transmission Company (METC) owns a high-voltage transmission line with Michigan Public Power Agency (MPPA) and Wolverine Power Supply Cooperative. The case concerns the ownership of new transmission facilities, or "network upgrades," connecting a new solar generation park to the transmission line. METC claims exclusive ownership based on existing agreements, while MPPA and Wolverine disagree.The Federal Energy Regulatory Commission (FERC) reviewed the case and found that no agreement conclusively determined ownership rights. FERC declined to decide the ownership question, leading METC to petition for review.The United States Court of Appeals for the District of Columbia Circuit reviewed the case. The court agreed with FERC's interpretation that the relevant agreements did not grant METC exclusive ownership of the network upgrades. The court found that the Styx-Murphy line qualifies as a "system" under the Transmission Owners Agreement (TOA), and since METC is not the sole owner, it cannot claim exclusive ownership. The court also found that the Styx-Murphy Agreements did not preclude MPPA and Wolverine from owning network upgrades.The court denied METC's petitions for review, upholding FERC's decision. View "Michigan Electric Transmission Company, LLC v. FERC" on Justia Law

The case involves a class action lawsuit brought by Jacklin Romeo, Susan S. Rine, and Debra Snyder Miller against Antero Resources Corporation. The plaintiffs, who own oil and gas interests in Harrison County, West Virginia, allege that Antero breached the terms of their leases by failing to pay the full one-eighth royalty specified in the leases. They argue that Antero improperly deducted postproduction costs from the gross sale proceeds of the gas, contrary to West Virginia Supreme Court precedents in Wellman v. Energy Resources, Inc. and Estate of Tawney v. Columbia Natural Resources, L.L.C.The United States District Court for the Northern District of West Virginia, presided over by Chief Judge Thomas S. Kleeh, certified two questions to the Supreme Court of Appeals of West Virginia. The first question asked whether the requirements of Wellman and Estate of Tawney extend only to the "first available market" as opposed to the "point of sale" when the duty to market is implicated. The second question asked whether the marketable product rule extends beyond gas to require a lessee to pay royalties on natural gas liquids (NGLs) and, if so, whether lessors share in the cost of processing, manufacturing, and transporting the NGLs to sale.The Supreme Court of Appeals of West Virginia reaffirmed its previous rulings in Wellman and Estate of Tawney, holding that the requirements extend to the point of sale, not just to the first available market. The court also held that royalties are payable on NGLs, but absent express language in the lease, lessors do not share in the costs of processing, manufacturing, and transporting residue gas and NGLs to the point of sale. The court emphasized that any deductions for postproduction costs must be clearly and unambiguously stated in the lease agreements. View "Romeo v. Antero Resources Corporation" on Justia Law

This case involves a dispute between American Midstream (Alabama Intrastate), LLC (AMID) and Rainbow Energy Marketing Corporation (Rainbow) over a contract (MAG-0005) for the transportation and balancing of natural gas. Rainbow had contracts to transport gas through two interconnected pipelines, the Transco and the Magnolia, and used the MAG-0005 to leverage AMID’s balancing flexibility. The contract allowed Rainbow to run imbalances, withdrawing gas without simultaneously supplying an equal amount, provided they resupplied by the end of each month. Disputes arose when Transco began limiting imbalances more strictly, leading to AMID curtailing Rainbow’s nominations on several occasions.The trial court found in favor of Rainbow on all its claims, including breach of contract, repudiation, fraud, fraudulent inducement, and negligent misrepresentation, awarding over $6 million in lost profits. The court interpreted Section 9.1 of the MAG-0005 as excusing AMID’s performance only under specific conditions involving scheduled and physical imbalances. The Court of Appeals for the First District of Texas affirmed the trial court’s decision, agreeing with its interpretation of the contract and the award of damages.The Supreme Court of Texas reviewed the case and held that the trial court had erroneously inserted language into Section 9.1 of the MAG-0005. The correct interpretation of Section 9.1 excused AMID from providing balancing services on any day that Transco required AMID or Rainbow to limit imbalances attributable to Rainbow, without distinguishing between types of imbalances. The Supreme Court reversed the lower courts' decisions, rendered judgment for AMID on Rainbow’s contract-repudiation and tort claims, and remanded for a new trial on the breach-of-contract claims to determine if Transco mandates excused AMID’s performance on the days in question. View "AMERICAN MIDSTREAM (ALABAMA INTRASTATE), LLC v. RAINBOW ENERGY MARKETING CORPORATION" on Justia Law

A certified class of Ohio landowners alleged that a Colorado-based mining company, Antero Resources Corporation, underpaid them $10 million in natural gas royalties. The landowners claimed that Antero improperly deducted costs for processing and fractionation from their royalties. Antero counterclaimed, seeking authority to deduct additional costs related to gathering, dehydrating, compressing, and transporting the unrefined natural gas. The district court certified the class, denied Antero's motion for summary judgment, granted the landowners' motion, and entered a final judgment after the parties stipulated damages.The United States District Court for the Southern District of Ohio ruled in favor of the landowners, finding that Antero improperly deducted processing and fractionation costs from the royalties. The court determined that these costs were necessary to transform the gas into marketable form and thus could not be deducted under the lease agreement.The United States Court of Appeals for the Sixth Circuit reviewed the case and affirmed the district court's decision. The court held that Antero could not deduct the costs of processing and fractionation from the landowners' royalties. The court found that the lease agreement's Market Enhancement Clause allowed deductions only for costs that enhanced the value of already marketable products, not for costs required to make the products marketable. The court concluded that the gas products first became marketable after processing and fractionation, and thus, these costs were not deductible. The court also noted that the Fourth Circuit had reached a similar conclusion in a related case involving the same defendant and lease terms. View "The Grissoms, LLC v. Antero Resources Corp." on Justia Law