Justia Contracts Opinion Summaries

The Supreme Court of Texas reviewed a case involving Samson Exploration, LLC and several families, including the Bordages, from whom Samson held oil-and-gas leases. The families sued Samson for unpaid royalties under those leases. The Bordages claimed that they were entitled to late charges on the late charges, arguing that the leases' Late Charge Provision imposed late charges on late charges, compounding them each month. Samson disagreed, asserting that the late charges were not compounded.Previously, the trial court found Samson liable for breach of contract and awarded the Bordages $12,955,919 in contract damages, based on the interpretation of the Late Charge Provision. The Bordages argued that collateral estoppel prevented the Supreme Court from deciding whether the Late Charge Provision calls for simple or compound interest because that issue was previously resolved in another case involving Samson and a different lessor, the Hooks case.The Supreme Court of Texas held that Texas law disfavors compound interest, and an agreement for interest on unpaid amounts is an agreement for simple interest absent an express, clear, and specific provision for compound interest. The court also held that Samson’s prior litigation of the issue does not collaterally estop it from asserting its claims here. The court reversed the judgment of the court of appeals and remanded the case to the trial court for further proceedings. View "SAMSON EXPLORATION, LLC v. BORDAGES" on Justia Law

This case involves a dispute over a lease agreement between Tera, L.L.C., and Rice Drilling D, L.L.C., and Gulfport Energy Corporation. The lease granted Rice Drilling and Gulfport Energy certain mineral rights in the geological formations known as the Marcellus Shale and the Utica Shale beneath Tera’s land. The dispute arose when Tera claimed that the defendants had intentionally drilled six wells into the Point Pleasant formation, which Tera argued was not included in the lease agreement.The trial court awarded summary judgment to Tera, concluding that the lease agreement clearly limited the rights granted to the defendants to the Marcellus and Utica formations and reserved rights to all other formations. The court also found that the defendants had trespassed in bad faith, and a jury awarded Tera over $40 million in damages.The Court of Appeals for Belmont County affirmed the trial court's decision. The court concluded that the lease language was unambiguous and that the phrase "Utica Shale" had a technical stratigraphic meaning that did not include the Point Pleasant formation.The Supreme Court of Ohio reversed the lower courts' decisions. The court found that the lease agreement was ambiguous because it did not clearly establish whether the Point Pleasant was or was not to be considered part of the Utica Shale. The court concluded that resolving the meaning of ambiguous terms in a contract is a matter of factual determination for the fact-finder. Therefore, the court remanded the case to the trial court for further proceedings. View "Tera, L.L.C. v. Rice Drilling D, L.L.C." on Justia Law

Latigo Oil & Gas, Inc., an Oklahoma corporation, filed a lawsuit against BP America Production Company, a Delaware corporation, to enforce its preferential right to purchase certain mineral interests that BP had offered for sale as part of a package deal to a third party. Prior to trial, Latigo requested a temporary restraining order and preliminary injunctive relief to prevent BP from selling the interests to the third-party buyer pending trial. The trial court granted Latigo's request for preliminary injunctive relief.The Court of Civil Appeals reversed the trial court's decision, finding that the evidence did not show Latigo was likely to succeed on the merits. The court held that BP did not owe Latigo a duty to provide a good-faith allocation of value to the interests burdened by Latigo's preferential right. It found that whether the allocations provided by BP were inflated as alleged by Latigo was irrelevant, as the notices provided by BP met the terms of the operating agreements.The Supreme Court of the State of Oklahoma granted certiorari and held that the trial court's grant of injunctive relief was not an abuse of discretion. The court noted that while there was no binding precedent on whether an allocation of value within a package deal must be made in good faith, substantial support for Latigo's position could be found in both Oklahoma precedent and in other jurisdictions. The court affirmed the trial court's decision to grant preliminary injunctive relief and remanded for further proceedings consistent with its opinion. View "LATIGO OIL & GAS v. BP AMERICA PRODUCTION CO." on Justia Law

The case revolves around a dispute between Anne Carl and related parties (the royalty holders) and Hilcorp Energy Company (the producer) over the calculation of royalties from a mineral lease. The lease stipulates that royalties are to be calculated based on the market value of the minerals "at the well," meaning before any post-production efforts have increased their value. However, the minerals are often not sold until after these efforts have taken place, resulting in a higher sale price. To account for this disparity, the producer deducted the proportionate share of post-production costs from the royalty payment, a method known as the "workback method." The royalty holders were dissatisfied with this reduced payment and sued, arguing that the lease required payment of a royalty on all gas produced from the well.The case was initially heard in a federal district court, which sided with the producer. The court found that the lease did indeed convey an "at-the-well" royalty, meaning the royalty holders were obligated to share proportionately in the post-production costs. The court also found no fault with the producer's method of accounting for these costs, which involved using some of the gas produced from the well to power post-production activities conducted off the lease. The value of this gas was considered a post-production cost and was therefore deducted from the total volume of gas used to calculate the royalty.The case was then certified to the Supreme Court of Texas, which affirmed the lower court's decision. The court agreed with the producer's interpretation of the lease and found that the royalty holders, as holders of an "at-the-well" royalty, were indeed obligated to bear their usual share of post-production costs. The court also found that the producer's method of accounting for these costs was permissible. The court concluded that the royalty holders were not shortchanged and that the producer's calculation was one acceptable way to convert the downstream sales price into an at-the-well market value on which to pay the royalty, as required by the lease. View "CARL v. HILCORP ENERGY COMPANY" on Justia Law

This case involves a dispute over the interpretation of an assignment of mineral rights. In 1987, Shell Western E&P, Inc. sold a large bundle of Texas oil-and-gas properties to the predecessor of Citation 2002 Investment LLC. The assignment included an exhibit that listed the properties being transferred, some of which included depth specifications. In 1997, Shell purported to assign all its interests in the same leases to Occidental Permian’s predecessor. Occidental claimed that Shell had reserved to itself interests beyond the depth specifications of the 1987 assignment. Citation, however, claimed that it received the entirety of Shell’s leasehold interests in the 1987 assignment.The trial court granted Occidental’s motion for summary judgment, concluding that the depth-specified tracts listed in the exhibit reserved to Shell the mineral-estate depths beyond the notations. Citation appealed, and the court of appeals reversed, holding that the 1987 assignment unambiguously conveyed the entirety of Shell’s interests in the leasehold estates without reserving portions of those interests to Shell.The Supreme Court of Texas affirmed the court of appeals' decision. The court held that the disputed assignment unambiguously conveyed all right, title, and interest that Shell owned in the leasehold estates listed in the exhibit, without reserving portions of those interests to itself through further notations about specific tracts within those estates. The court reasoned that the assignment's broad granting language, coupled with the absence of explicit reservation language, indicated that the entirety of the leasehold interests were conveyed. The court also noted that the depth specifications in the exhibit served a concrete purpose of providing notice of depth-specific third-party interests that continue after the leasehold estates are assigned. View "OCCIDENTAL PERMIAN, LTD. v. CITATION 2002 INVESTMENT LLC" on Justia Law

The case revolves around a dispute over oil and gas interests between Spottie, Inc., a Nevada corporation, and several other Nevada corporations and a limited liability company. Spottie alleged that the defendants had wrongfully claimed title to these interests, which were once owned by Edward Davis, who had formed Spottie as a holding company. The defendants countered that they had entered into an agreement with Davis to acquire these interests, and that Davis and Spottie had transferred the disputed interests to one of the defendants via an assignment in 2016.The district court dismissed several of Spottie's claims, leaving only a quiet title claim and a claim for unjust enrichment. After a three-day bench trial, the court ruled in favor of the defendants, finding that the assignment from Davis and Spottie to one of the defendants was valid. The court also found that Spottie had erroneously received revenue from the disputed interests and awarded damages to the defendants.Spottie appealed the decision, arguing that the district court had erred in its ownership determination, its rejection of Spottie's laches defense, its binding of a non-party to the judgment, and its award of attorney fees and costs. The Supreme Court of North Dakota affirmed in part, concluding that the district court did not err in its ownership determination and its award of attorney fees. However, it reversed in part, finding that the court had erred in awarding costs for non-legal expenses. The case was remanded for the court to recalculate its cost award and to consider the defendants' request for additional attorney fees and legal costs. View "SPOTTIE v. BAIUL-FARINA" on Justia Law

The case originated as a class action dispute about the underpayment of oil and gas royalties due on wells in Oklahoma. The plaintiff, Chieftain Royalty Company, sued SM Energy Company, the operator of the wells, under various tort theories, including fraud, breach of contract, and breach of fiduciary duty. In 2015, the claims were settled for approximately $52 million. Following the settlement, Chieftain's counsel moved for attorneys’ fees, and Chieftain sought an incentive award for its CEO, Robert Abernathy. Two class members objected to the awards and appealed. The court affirmed the settlement but reversed the attorneys’ fees and incentive awards, remanding to the district court for further proceedings.On remand, the district court re-awarded the fees and incentive award. The class did not receive notice of the 2018 attorneys’ fees motion as required under Federal Rule of Civil Procedure 23(h)(1), so the court vacated the district court order awarding attorneys’ fees and remanded with instructions to direct class-wide notice of the 2018 attorneys’ fees motion and to re-open the period for objections. The court did not reach the merits of the appellate challenge to the re-awarded attorneys’ fees. The court affirmed the district court’s incentive award to Mr. Abernathy. View "Chieftain Royalty Company v. SM Energy Company" on Justia Law

Whitetail Wave LLC, a Montana Limited Liability Company, sued XTO Energy, Inc., a Delaware corporation, the Board of University and School Lands of the State of North Dakota, the State of North Dakota, and the Department of Water Resources and its Director. Whitetail Wave claimed ownership of certain property in McKenzie County, North Dakota, and alleged that XTO Energy had breached their lease agreement by failing to make required royalty payments. Whitetail Wave also claimed that the State's assertion of an interest in the mineral interests associated with the property constituted an unconstitutional taking without just compensation.The District Court of McKenzie County granted summary judgment in favor of the State and XTO Energy. The court concluded that the State owned certain mineral interests within the ordinary high watermark as defined by North Dakota law. The court also found that XTO Energy was within the safe harbor provision provided by North Dakota law and did not breach the parties’ lease agreement when it withheld the royalty payments. The court awarded XTO Energy recovery of its attorney’s fees.On appeal, the Supreme Court of North Dakota affirmed the judgment of the district court. The Supreme Court found that the district court did not err in dismissing Whitetail Wave's claim of an unconstitutional taking against the State, as the State's actions were limited to a title dispute. The Supreme Court also found that the district court did not err in dismissing Whitetail Wave's claim against XTO Energy for the non-payment of royalties, as XTO Energy fell within the safe harbor provision of North Dakota law. Finally, the Supreme Court found that the district court did not err in awarding XTO Energy a recovery of its attorney’s fees as the prevailing party. View "Whitetail Wave v. XTO Energy" on Justia Law

In the case of Maryann Jones v. Solgen Construction, LLC and GoodLeap, LLC, the Court of Appeal of the State of California Fifth Appellate District affirmed the trial court's decision not to compel arbitration. The case concerned a business relationship involving the installation of home solar panels. The appellants, Solgen Construction and GoodLeap, had appealed the trial court's denial of their separate motions to compel arbitration, arguing that the court had erred in several ways, including by concluding that no valid agreement to arbitrate existed.Jones, the respondent, had filed a lawsuit alleging fraudulent misrepresentation, fraudulent concealment, negligence, and violations of various consumer protection laws. She contended that she had been misled into believing she was signing up for a free government program to lower her energy costs, not entering into a 25-year loan agreement for solar panels. The appellants argued that Jones had signed contracts containing arbitration clauses, but the court found that the appellants had failed to meet their burden of demonstrating the existence of a valid arbitration agreement. The court also held that the contract was unenforceable due to being unconscionable.The appellate court affirmed the trial court's decision, rejecting the appellants' arguments that an evidentiary hearing should have been held and that the court had erred in its interpretation of the evidence and the law. It found that the trial court had not abused its discretion and that its finding that the appellants failed to meet their burden of proof was not erroneous as a matter of law. View "Jones v. Solgen Construction" on Justia Law

In this case from the Supreme Court of North Dakota, Fonda Jo Powell and Mary T. Henke, as co-personal representatives of the Estate of June A. Slagle, alongside Helen Verhasselt, the trustee of the June Slagle Family Mineral Trust, filed an appeal against Statoil Oil & Gas LP (now known as Equinor Energy LP). The plaintiffs appealed from a judgment of dismissal entered after the district court granted Statoil's motion for summary judgment, concluding that a dispute of title allowed Statoil to suspend royalty payments and that the plaintiffs were not entitled to statutory interest. The plaintiffs argued that the district court erred in concluding there was a title dispute, while Statoil argued that this action was barred by the statute of limitations.The Supreme Court of North Dakota reversed the decision of the district court, concluding that the action was not barred by the statute of limitations and that the court erred in concluding that Statoil lawfully suspended royalty payments. The court determined that a ten-year statute of limitations applied to the claim for untimely payment of royalties under the oil and gas lease, as per N.D.C.C. § 28-01-15(2). Furthermore, the court concluded that, when a dispute is between the mineral developer and the mineral owner, notice of the dispute is required under N.D.C.C. § 47-16-39.4. As Statoil did not provide evidence that it had notified June Slagle of a title dispute, it was required to pay interest on the unpaid royalties at a rate of 18% per annum. The case was remanded for further proceedings consistent with this opinion. View "Powell v. Statoil Oil & Gas" on Justia Law