Justia Contracts Opinion Summaries

Daniel and Debra Bearce appealed the district court’s grant of summary judgment in favor of Yellowstone Energy Development, LLC. In June 2006, representatives of a business entity that would eventually become Yellowstone went to the home of Daniel and Debra Bearce seeking to purchase 170 acres of land owned by the Bearces. Yellowstone successfully secured an exclusive option to purchase the land. In 2008, Yellowstone exercised its option to purchase the land, and the parties entered into a contract for deed. In 2009, Yellowstone and the Bearces modified the contract for deed to alter some of the payment terms. Both the original contract for deed and the 2009 modified contract for deed included the following term providing for the payment of a portion of the purchase price with “shares” of a contemplated ethanol plant. Yellowstone subsequently abandoned its plan to build an ethanol plant on the Bearces’ land. Yellowstone then negotiated a long-term lease with a third party to build an oil train loading facility on the Bearces’ land. In July 2010, Yellowstone sent a letter to the Bearces advising them $100,000 in “value” would be issued despite Yellowstone’s abandonment of the plan to build an ethanol plant. In December 2011, the Yellowstone Board of Directors approved a multiplier of three units per $1 invested for individuals who had provided initial cash investment in Yellowstone. The Bearces’ interest in Yellowstone was not given the 3:1 multiplier. Units representing ownership interest in Yellowstone were allocated and placed on a ledger sometime after December 4, 2012. After receiving a “unit ledger” indicating their interest in Yellowstone would not receive the 3:1 multiplier, the Bearces objected. Despite the objection, Yellowstone refused to apply the 3:1 multiplier to the Bearces’ interest in Yellowstone. The Bearces sued Yellowstone, asserting claims for breach of fiduciary duty, fraudulent inducement, and breach of contract. On appeal, the Bearces argued the district court erred in concluding Yellowstone did not owe them a fiduciary duty and that, if a duty was owed, the Yellowstone Board of Directors did not breach its fiduciary duty. Finding no reversible error, the North Dakota Supreme Court affirmed the district court. View "Bearce v. Yellowstone Energy Development" on Justia Law

The Supreme Court affirmed the decision of the State Corporation Commission finding that a pumped storage hydroelectric facility (or pumped storage) generates "renewable energy" under the former definition in Va. Code 56-576 and that the amended definition would not apply to contracts executed before the amendment's effective date, holding that there was no error.The Commission concluded that pumped storage satisfied the statutory definition of renewable energy in effect at the time that the service provider executed its contracts and declined to find that the amended definition would apply retroactively to contracts executed before the amendment's effective date. The Supreme Court affirmed, holding (1) the Commission did not err in its interpretation of the statute or its finding that pumped storage satisfied the former definition of renewable energy; and (2) the Commission did not err in refusing retroactively to apply the amended statutory definition of renewable energy to the service provider's contracts that were executed before the amendment took effect. View "Virginia Electric & Power Co. v. State Corporation Commission" on Justia Law

The Supreme Court affirmed the judgment of the court of appeals concluding that Petitioners (collectively, BPX) were not entitled to summary judgment on the issue of whether Margaret Strickhausen impliedly ratified an unauthorized pooling agreement, holding that BPX did not establish implied ratification as a matter of law.BPX was a lessee of Strickhausen's mineral interest. The lease required BPX to obtain Strickhausen's express written consent before pooling her tract with others. Strickhausen never gave express written consent to BPX, which meant that BPX could not pool "under any circumstances." Strickhausen sued BPX for breach of contract, among other claims, after BPX filed a certificate of pooling authority for a well on her tract. BPX filed a motion for summary judgment, arguing that Strickhausen impliedly ratified the pooling because she accepted royalty payments calculated on a pooled basis. The trial court granted an interlocutory summary judgment for BPX on Strickhausen's wrongful pooling, commingling, and failure to account claims. The court of appeals reversed. The Supreme Court affirmed, holding that summary judgment for BPX on the issue of implied ratification was improper. View "BPX Operating Co v. Strickhausen" on Justia Law

In this contract dispute involving the correct interpretation of a mineral lease's "continuous drilling program" provision the Supreme Court held that the court of appeals erred in reversing partial summary judgment for the lessee on the contract-construction issue.Lessor and Lessee were the successors-in-interest to an oil-and-gas top lease covering a 30,450-acre parcel of land. At the end of the primary term, Lessee was required to reassign to Lessor all of Lessee's operating rights in each tract of the lease not then held by production unless Lessee was engaged in a "continuous drilling program." Notwithstanding Lessee's continued drilling operations, Lessor filed a suit seeking a declaration that the lease had terminated. The trial court granted partial summary judgment for Lessor, concluding that the lease had not terminated as to non-producing tracts. The court of appeals reversed. The Supreme Court reversed, holding (1) under the lease's special definition of drilling operations, activities other than spudding-in a well are sufficient to maintain the lease as to non-producing tracts; and (2) the record conclusively established that Lessee was engaged in a continuous drilling program within the meaning of the lease. View "Sundown Energy LP v. HJSA No. 3" on Justia Law

The Supreme Court affirmed in part and reversed in part the trial court's decision resolving all issues in this oil and gas dispute favorably to the lessors of a mineral lease and awarding damages for underpayment of royalties, holding that remand was required to determine damages, if any, for off-premises compressor-fuel use.One lease provision in this case required the lessee to "compute and pay royalties on the gross value received." The other lease provision at issue required royalties to be "computed at the end of the mouth of the well." The Supreme Court affirmed the lower courts' judgments except as to the portion of the judgment awarding damages for royalties on compressor fuel, holding (1) the lower courts correctly concluded that the lessee's deduction of postproduction costs was in error because the mineral lease explicitly resolved the conflict in favor of a gross-proceeds calculation; and (2) because the compressor-fuel damages were not conclusively established in the amount awarded, remand was required. View "BlueStone Natural Resources II, LLC v. Randle" on Justia Law

In 2013, a refinery unit (“Unit”) at the Sinclair Wyoming Refinery Co. (“Sinclair”) in Sinclair, Wyoming caught fire and exploded because its “FV-241” control valve fractured and released flammable hydrogen gas. A high temperature hydrogen attack (“HTHA”) weakened the valve and caused the fracture. FV-241 was made from carbon steel, which was more susceptible to HTHA than stainless steel. Sinclair had purchased the Unit in 2004. Sinclair moved the Unit from California to Wyoming and converted it from its previous use to a hydrotreater, a refinery unit that introduced hydrogen to remove impurities from the product stream. Sinclair contracted the design, engineering, and construction work to other companies. During the moving and conversion process, FV-241 was remanufactured and installed on the Unit. Sinclair brought a diversity action against seven companies involved in dismantling the Unit, converting it to a hydrotreater, rebuilding it in Wyoming, and remanufacturing and installing FV-241. Sinclair alleged various contract and tort claims. The district court granted several motions to dismiss and motions for summary judgment that eliminated all of Sinclair’s claims. The court also entered summary judgment in favor of certain Defendants’ indemnity counterclaim. Although its analysis diverged from the district court's judgment in some respects, the Tenth Circuit affirmed orders dismissing or granting summary judgment on all of Sinclair's claims, and granting summary judgment on the indemnity counter claim. View "Sinclair Wyoming Refining v. A & B Builders" on Justia Law

In this dispute over the meaning of an oil and gas lease covering an 11,300-acre tract in Howard County, the Supreme Court reversed the judgment of the court of appeals affirming the trial court's grant of summary judgment for Energen Resources Corp. and John Quinn, holding that the contested provision of the lease in this case was ambiguous.The lease at issue allowed Endeavor Energy Resources, L.P. to retain its leasehold interest in the parcel only by drilling a new well every 150 days, with the exception that Endeavor could "accumulate unused days in any 150-day term...in order to extend the next allowed 150-day term between the completion of one well and the drilling of a subsequent well." At issue on appeal was how to calculate the number of "unused days." Energen and Quinn argued that the contested provision unambiguously allowed unused days earned in any term to be carried forward only once to the next 150-day term. The trial court agreed, and the court of appeals affirmed. The Supreme Court reversed, holding that the disputed provision was ambiguous. View "Endeavor Energy Resources, LP v. Energen Resources Corp." on Justia Law

The Supreme Court affirmed the order of the circuit court denying the motion filed by Plaintiff, an oil and gas drilling company, for summary judgment and denying Plaintiff a favorable declaratory judgment, holding that the circuit court did not err in refusing to imply into an existing oil and gas lease a covenant to pool and unitize the lease with nearby mineral estates.Plaintiff brought this action seeking a declaration that the oil and gas lease at issue contained an implied covenant to pool or unitize the lease with other mineral interests. The circuit court rejected Plaintiff's request for a declaratory judgment, holding that the circuit court correctly concluded that there can be no implied covenant to pool or unitize in the absence of language in the lease showing the parties contemplated that a lessor has a right to pool and unitize the lease with other estates. View "Ascent Resources - Marcellus, LLC v. Huffman" on Justia Law

Gulf LNG Energy, LLC owned and operated a liquefied natural gas (“LNG”) terminal in Mississippi (the “Pascagoula Facility”). Gulf LNG Pipeline, LLC (collectively with Gulf LNG Energy, LLC, “Gulf”), owned and operated a five-mile long pipeline that distributed LNG from the Pascagoula Facility to downstream inland pipelines. Eni USA Gas Marketing LLC (“Eni”), marketed natural gas products and offered related services to customers in the U.S. In 2007, Gulf and Eni entered into a Terminal Use Agreement (the “TUA”), whereby Gulf would construct the Pascagoula Facility, and Eni would use the Facility to receive, store, regasify, and deliver imported LNG to downstream businesses. Under the TUA, Eni agreed to pay Gulf fees for using the Facility, including monthly Reservation Fees and Operating Fees. In 2016, Eni filed for arbitration, alleging the U.S. natural gas market had undergone a “radical change” due to “unforeseen, vast new production and supply of shale gas in the United States [that] made import of LNG into the United States economically irrational and unsustainable.” Eni alleged the essential purpose of the TUA had been frustrated and thus terminated because of “fundamental and unforeseeable change in the United States natural gas/LNG market,” and sought a declaration that Eni could terminate the TUA at any time because Gulf breached warranties and covenants. After the first arbitration, the panel order Eni to pay Gulf "just compensation ...for the value their partial performance of the TUA conferred upon Eni." Gulf subsequently sued Eni to collect the arbitration award; judgment was entered in Gulf's favor. Eni initiated a second arbitration, again asserting breaches of the TUA. Gulf moved to dismiss the second arbitration. The Court of Chancery ruled the issues raised in the second arbitration were already decided in the first (and subsequent court case). The Delaware Supreme Court, after its review of these proceedings, determined: (1) the Court of Chancery had jurisidction to enjoin a collateral attack on the first arbitration award; and (2) the Court of Chancery should have enjoined all claims in the second arbitration between the parties, because the admitted goal of the second arbitration was to "raise irregularities and revisit the financial award in the first arbitration." The Court, therefore, affirmed part of the Court of Chancery's judgment affirming dismissal of the second arbitration, and reversed any part of the lower court's judgment allowing certain issues in the second arbitration to be considered. View "Gulf LNG Energy v. ENI USA Gas Marketing" on Justia Law

The Supreme Court affirmed the circuit court's order granting Antero Resources Corporation partial summary judgment on its claim for declaratory judgment, holding that the court did not err in concluding that the Antero top lease took priority over the EQT Production Company base lease covering the same property.Larry and Linda Lemasters, who owned the oil and gas underlying a tract of land, entered into an oil and gas lease (the base lease) with an LLC that later assigned the lease to EQT. The Lemasters subsequently entered into an oil and gas lease with Antero (the top lease). The lease was made effective immediately upon expiration of the primary term of the base lease. The Lemasters and EQT (together, Defendants) subsequently entered into a base lease amendment agreeing to extend the primary term of the base lease. Antero filed a complaint against Defendants asserting claims for, inter alia, breach of contract and declaratory judgment. The circuit court awarded summary judgment for Antero on its declaratory judgment claim, determining that the base lease and its amendment were subject to the Antero top lease. The Supreme Court affirmed, holding that the court did not err in declaring that the top lease was the valid and existing oil and gas lease covering the subject property. View "EQT Production Co. v. Antero Resources Corp." on Justia Law