Grynberg v. Total, S.A.

Decision Date26 August 2008
Docket NumberNo. 06-1328.,No. 06-1355.,06-1328.,06-1355.
Citation538 F.3d 1336
PartiesJack J. GRYNBERG; Grynberg Production Corporation, and its successors; Grynberg Petroleum Company, and its successors, Plaintiffs-Appellants, v. TOTAL S.A., Defendant-Appellee. Jack J. Grynberg; Grynberg Production Corporation and its successors; Grynberg Petroleum Company, and its successors, Plaintiffs-Appellants, v. Shell Exploration B.V. and Shell International Exploration and Production B.V. f/k/a Shell International Petroleum Maatschappij B.V., Defendants-Appellees.
CourtU.S. Court of Appeals — Tenth Circuit

John P. Bowman (William J. Boyce, Jennifer Lee Price, and Christopher R. Hart, with him on the briefs) of Fulbright & Jaworski L.L.P., Houston, TX, for Defendant-Appellee, TOTAL S.A.

Roger A. Jatko, Grynberg Petroleum Company, Greenwood Village, CO, for Plaintiff-Appellant Jack J. Grynberg; Grynberg Production Corporation and its successors; Grynberg Petroleum Company, and its successors.

Graham Kerin Blair, Baker & McKenzie LLP, Houston, TX (Marcy G. Glenn and John F. Shepherd, Holland & Hart LLP, Denver, CO, and David A. Brakebill and J. Chad Newton, Baker & McKenzie LLP, with him on the briefs), for Defendants-Appellees, Shell Exploration B.V. and Shell International Exploration and Production B.V. f/k/a Shell International Petroleum Maatschappij B.V.

Before HARTZ, McKAY, and TYMKOVICH, Circuit Judges.

HARTZ, Circuit Judge.

I. INTRODUCTION

Jack Grynberg (Mr. Grynberg), Grynberg Production Corporation, and Grynberg Petroleum Company (collectively, Grynberg) appeal from summary judgments in two separate lawsuits, one against Total S.A. and one against Shell Exploration B.V. and Shell International Exploration and Production B.V. (collectively Shell). Both lawsuits, which were filed in 2003 in the United States District Court for the District of Colorado as diversity actions, see 28 U.S.C. § 1332, raised essentially identical claims based on essentially the same factual allegations. Grynberg alleged that through its special relationship with authorities in the Soviet Union and Kazakhstan, it obtained valuable information regarding potential oil and gas reserves in Kazakhstan. After obtaining authority from Kazakhstan to form a consortium of companies to join with Kazakhstan in exploring for and developing these reserves, Grynberg approached Shell and Total in 1990 with its information and reached agreements on joining a consortium. Shell and Total, however, joined a different consortium and obtained rights to oil and gas in the very area that was to be the subject of the Grynberg consortium. Grynberg's suits against Shell and Total raise against each a tort claim for breach of fiduciary duty and an equitable claim for unjust enrichment. Shell and Total moved for summary judgment on the ground that Grynberg's claims were untimely, barred by the applicable statute of limitations and laches. The district judges granted the motions.

We have jurisdiction under 28 U.S.C. § 1291, consolidate the two appeals, and affirm. The limitations period for Grynberg's tort claims was three years, and well more than three years before Grynberg filed suit it should have known — from news reports and from information disclosed in a settlement with a consortium partner of Shell and Total — that it could have sued Shell and Total for acquiring oil and gas interests in the area that Grynberg's consortium was to explore and develop. As for Grynberg's unjust-enrichment claims, they were barred by laches because Grynberg has failed to point to any extraordinary circumstance that would justify extending the laches period beyond the limitations period for the closely allied tort claims.

II. THE COMPLAINTS

The allegations at issue on appeal are those in Grynberg's Second Amended Complaint against Shell (the Shell Complaint) and its First Amended Complaint against Total (the Total Complaint), which overlap substantially. They allege the following:

Mr. Grynberg is fluent in Russian and has "extensive knowledge, training and experience in the field of oil and natural gas discovery and development." Shell Compl. at 16; Total Compl. at 13. After a mining convention in September 1989, he helped obtain plane tickets to Washington, D.C., for a Soviet official and his aide who had been bumped from a flight. The official expressed his gratitude and, at Mr. Grynberg's request, invited him to Moscow in early November to review secret seismic data pertaining to the Caspian Sea and Northwestern Kazakhstan. Mr. Grynberg reviewed the data and decided to focus his attention on one particular region (which he calls the Area of Mutual Interest (AMI)) "because of its enormous potential, and because of its inaccessibility to others at that time." Shell Compl. at 12; Total Compl. at 9. The AMI includes "the largest oil, natural gas, and sulphur discovery in the world in over 40 years." Shell Compl. at 3; Total Compl. at 2.

Also in November 1989, the United States State Department asked Mr. Grynberg to host a delegation from Kazakhstan that had expressed interest in his cattle-feeding operation. The delegation included First Secretary Nursultan A. Nazarbaev. Mr. Grynberg held a dinner for Nazarbaev, who asked him to assemble teams of experts in the petroleum and mining industries and travel to Kazakhstan to determine whether the region could support those industries. His trip to Kazakhstan in February 1990 confirmed his belief that the AMI had significant potential for oil and natural-gas production. Before returning to the United States, Mr. Grynberg contacted British Gas, British Petroleum, and BP Exploration Operating Company Limited (collectively BP) to discuss the possibility of oil exploration in Kazakhstan.

In April 1990 Mr. Grynberg convinced the President of Venezuela to invite Nazarbaev, who was by then the President of Kazakhstan, to Caracas, where he spent a week with Mr. Grynberg observing western-led oilfield development. During this trip Nazarbaev "reaffirmed his commitment to Grynberg to assist Grynberg in forming an international oil and natural gas consortium to explore, develop and produce oil and natural gas in the AMI of Kazakhstan." Shell Compl. at 13; Total Compl. at 10.

Mr. Grynberg returned to Kazakhstan the next month with a BP executive and a BP team of experts. Nazarbaev permitted Mr. Grynberg to call him by his first name, "indicat[ing] a close relationship, and friendship." Shell Compl. at 14; Total Compl. at 11. At the end of the trip Mr. Grynberg was authorized by a Kazakh government protocol to form an international consortium for oil and gas exploration in the AMI. To allay Nazarbaev's fears that oil exploration could lead to a natural disaster that would harm the Caspian Sea's sizable premium caviar industry, Mr. Grynberg invited a Kazakh delegation to observe Arctic drilling in Alaska. In June he hosted the delegation as it toured the United States, ending in Alaska with a visit to Prudhoe Bay and the Endicott Oil Fields in the Beaufort Sea, which he used as an example of a large offshore operation conducted without polluting the sea.

The visit led to the signing of additional protocols covering development in the AMI. Mr. Grynberg credited his fluency in Russian, close relationship with Nazarbaev and other important players, and his expertise in the oil-and-gas industry (particularly with regard to advances in undersea production) for his success in negotiating with Kazakh and Soviet officials and obtaining the protocols.

In July 1990 Mr. Grynberg proposed to Shell and Total that they join a consortium led by him in partnership with the Republic of Kazakhstan for the purpose of developing "a profitable and potentially gigantic oil and natural gas industry in the AMI in Kazakhstan." Shell Compl. at 4-5; see also Total Compl. at 3-4. Under this proposed consortium agreement, Grynberg was to obtain a 20% working interest in the AMI. The agreement also provided that Grynberg's share of the costs associated with acquiring and developing properties in the AMI would be carried by Shell and Total, who would be reimbursed out of Grynberg's share of future revenue. To convince Shell and Total that oil exploration in the AMI was a viable prospect, Grynberg gave them "access to geologic maps and seismographic data, together with a detailed economic, technical, and scientific analysis," and told them that he believed that "billions of barrels of oil and trillions of cubic feet of natural gas" could be recovered from the AMI. Shell Compl. at 6; Total Compl. at 5.

Shell accepted Grynberg's proposal. Total responded to the proposal in a letter dated July 20, 1990, which stated, "[W]e basically agree on the proposed principles as set out in your draft." Total Compl. at 4. But nothing came of Grynberg's arrangements with Shell and Total, and the complaints skip seven years to 1997, when Shell, Total, BP, and other oil companies signed an agreement with the government of Kazakhstan giving them oil production rights in the AMI. Although Shell and Total thereby profited greatly from Grynberg's efforts, Grynberg was not included in the deal. In 2002 the Kashagan Field in the AMI was declared commercial. The estimated value of each defendant's interest in the entire AMI is $10 billion.

The Shell Complaint summarizes the alleged misconduct as follows:

[S]everal huge oil companies, including Shell, by their exploration efforts based upon Grynberg's confidential information, were able to determine the value and extent of some of the Kazakhstan oil and natural gas deposits in the AMI. This, they were only able to do as a result of acquiring Grynberg's research, contacts, analysis of...

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