Amco Energy Inc. v. Tana Exploration Co.

• Decision Date: 24 March 2011
• Docket Number: Civil Action No. H–10–3846.Adversary No. 08–3310.
• Citation: 455 B.R. 584
• Parties: AMCO ENERGY, INC.; fka Capco Offshore, Inc., et al., Appellants,v.TANA EXPLORATION COMPANY, et al., Appellees.
• Court: U.S. District Court — Southern District of Texas

455 B.R. 584

AMCO ENERGY, INC.; fka Capco Offshore, Inc., et al., Appellants,

v.TANA EXPLORATION COMPANY, et al., Appellees.

Civil Action No. H–10–3846.Adversary No. 08–3310.

United States District Court, S.D. Texas, Houston Division.

March 24, 2011.

Robin Clay Hoblit, Hoblit Ferguson Darling LLP, Corpus Christi, TX, Jeffrey R. Elkin, Paul Andrew Dyson, Porter Hedges, L.L.P., Houston, TX, for Appellees.

MEMORANDUM AND ORDER

KENNETH M. HOYT, District Judge.I. INTRODUCTION

Before the Court is the appellants, Amco Energy, Inc., f/k/a Capco Offshore, Inc., and Capco Energy, Inc.'s (“Capco”) appeal from an bankruptcy adverse ruling in adversary proceeding number 08–3310, that arises from bankruptcy cause number 08–32282–H2–11. Capco has filed its brief. [Dkt. No. 6]. And, as well, the appellees, Ryder Scott Company, L.P., [“Ryder”], Tana Exploration Company LLC, TRT Holdings, Inc. [“Tana”] and Tristone Capital, LLC [“Tristone”] have filed their respective briefs in response. [Dkt. Nos. 9 and 10, respectively]. The Court's jurisdiction over this appeal is not in dispute. See 28 U.S.C. § 158(a)(1) and (c) (1)(A). This Court has reviewed the record provided, and the bankruptcy court's decision and determines that the relief sought by Capco should be denied and that the bankruptcy court's judgment should be affirmed.

II. FACTUAL BACKGROUND

The facts underlying this dispute are relatively undisputed. Capco accuses the appellees of committing fraud, negligent misrepresentation, and various business torts arising out of the purchase of certain oil and gas reserves located in the Gulf of Mexico, and owned by Tana. The acquisition consisted of 13 Gulf of Mexico properties that Tana desired to sell. In preparation for a sale, Tana employed the services of Tristone as its investment advisor and agent for marketing the properties. Tana also employed the services of Ryder, which provided an estimate of the remaining volumes of oil and gas reserves, future production and potential income.

Based in part on the Ryder reserves report provided on or about April 1, 2006, Capco executed a Purchase and Sale Agreement with Tana on June 2. Within a week, Capco and its lender met with Ryder regarding the properties and employed Ryder to present “a detailed presentation” concerning the “data underlying [the] report, including geologic maps, well log reports and similar documents.” In turn, Ryder submitted an invoice to Capco for its preparation and presentation and Capco paid the fee. However, the invoice did not cover any of the services that had been provided to Tana and necessary in preparation of the reserves report.

On August 31, 2006, Tana and Capco closed the transaction and employed Ryder to prepare a projection reserves report on the 13 properties as of December 31, 2006. According to Capco, Ryder's report was “significantly and materially less than [the figures] reflected in the earlier April 1, 2006, report.” Capco complains that even after taking into account intervening production and forecast declines, the “proved reserves” were significantly below those upon which it relied on August 31. As a result of the shortfall, Capco filed for bankruptcy and initiated this adversary proceeding.

III. CAPCO'S ASSERTIONS—TANA AND RYDER'S RESPONSESA. Capco's Contentions

In three points of error, Capco contends that the bankruptcy court erred: (1) when it found that Capco acquired the Tana properties prior to June 9, 2006, and that it could not have relied on Ryder's “professional services” and/or statements; (2) in holding that Capco did not engage Ryder to render a professional opinion with respect to the Tana properties; and (3) in holding that the closing occurred prior to August 28, 2006, and therefore, Capco could not have relied on statements made by Tana on or around that date.

B. Appellees' Combined Contentions

The appellees argue that the Bankruptcy Court did not commit error when it granted summary judgments in their respective behalves. They argue that throughout the negotiation and purchase of the Tana properties, Capco acknowledged and agreed that it was responsible for its own due diligence concerning quality, quantity and recoverability of the oil and gas reserves. The appellees point to the Confidentiality Agreement between Capco and Tana and the Confidential Evaluation Brochure prepared by Ryder, each containing disclaimer language concerning the accuracy, completeness, or materiality of the reserve report(s) and specifically disclaiming that any representations or warranties, concerning the data and materials, were made. As well, the appellees point to language where Capco specifically waives any representations or warranties presumably made by Tana, in particular. The appellees further argue that even if the bankruptcy court committed error in some respect, summary judgment is, nevertheless, appropriate and, therefore, the bankruptcy court's judgment should be affirmed. The Court will review the summary judgment evidence de novo. Guerra v. Lehman Commer. Paper, Inc., 2007 WL 419517, 2007 U.S. Dist. LEXIS 7940 (S.D.Tex.2007) (citing In re CPDC, Inc., 337 F.3d 436, 440–41 (5th Cir.2003)).

IV. SUMMARY JUDGMENT STANDARD

Summary judgment is appropriate if no genuine issue of material fact exists and the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56. A fact is “material” if its resolution in favor of one party might affect the outcome of the suit under governing law. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). “Factual disputes that are irrelevant or unnecessary will not be counted.” Id. at 248, 106 S.Ct. 2505. An issue is “genuine” if the evidence is sufficient for a reasonable jury to return a verdict for the nonmoving party. Id. If the evidence rebutting the motion for summary judgment is only colorable or not significantly probative, summary judgment should be granted. Id. at 249–50, 106 S.Ct. 2505; see also Shields v. Twiss, 389 F.3d 142, 149–50 (5th Cir.2004).

Under Rule 56(c) of the Federal Rules of Civil Procedure, the moving party bears the initial burden of “informing the district court of the basis for its motion and identifying those portions of [the record] which it believes demonstrate the absence of a genuine issue for trial.” Matsushita Elec. Ind. Co. v. Zenith Radio Corp., 475 U.S. 574, 586–87, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986); Adams v. Travelers Indem. Co. of Connecticut, 465 F.3d 156, 163 (5th Cir.2006). Where the moving party has met its Rule 56(c) burden, the nonmovant must come forward with “specific facts showing that there is a genuine issue for trial.” Matsushita, 475 U.S. at 586–87, 106 S.Ct. 1348 (quoting Fed.R.Civ.P. 56(e)) (emphasis in original); Celotex Corp. v. Catrett, 477 U.S. 317, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986); and Adams, 465 F.3d at 164. To sustain the burden, the nonmoving party must produce evidence admissible at trial showing that reasonable minds could differ regarding a genuine issue of material fact. Anderson, 477 U.S. at 250–51, 255, 106 S.Ct. 2505; Morris v. Covan World Wide Moving, Inc., 144 F.3d 377, 380 (5th Cir.1998). In deciding a summary judgment motion, “[t]he evidence of the nonmovant is to be believed, and all justifiable inferences are to be drawn in his favor.” Anderson, 477 U.S. at 255, 106 S.Ct. 2505.

V. ANALYSIS AND DISCUSSIONA. No Professional Engineering Relationship Existed Between Capco and Ryder

In its first point of error, Capco argues that it could and did in fact, rely upon the professional services, information and opinions, rendered by Ryder at the June 9, 2006, meeting. It contends that it had a right to rely upon Ryder's information and opinions because Ryder was paid for the services rendered. Capco points out that even Ryder described its presentation—“[F]or services rendered in connection with the review of Capco Energy's Reserves and the Tana acquisition reserves with Union Bank of California.” Hence, Ryder asserts that a professional relationship and contract for professional services existed between Capco and Ryder.

Internally, under this point, Capco argues: that the bankruptcy court misstated the facts concerning the date when the purchase of the Tana properties was consummated. Capco, argues that it, had the ability to withdraw from the transaction with a minimum loss up to August 31. Thus, it contends the date on which it executed the Purchase and Sale Agreement, was not the closing date; hence it did not become the owner of the Tana properties on April 1. Assuming that Capco is correct in its assessment of the bankruptcy court's factual findings, that error does not aid Capco cause.

The seminal question that must be addressed is under what...