Coushatta Bayou Land Co. v. Goodrich Petroleum Co. (In re Goodrich Petroleum Corp.)
| Decision Date | 20 March 2019 |
| Docket Number | ADVERSARY NO. 18-03005,CASE NO: 16-31975 |
| Citation | 600 B.R. 361 |
| Parties | IN RE: GOODRICH PETROLEUM CORPORATION, et al, Debtors Coushatta Bayou Land Company LLC, Plaintiff v. Goodrich Petroleum Company LLC, et al, Defendants |
| Court | U.S. Bankruptcy Court — Southern District of Texas |
William Alan Pesnell, The Pesnell Law Firm, New Orleans, LA, for Plaintiff.
Nugent D. Beaty, Jesse Rucker Pierce, Pierce O'Neill LLP, John F Higgins, IV, Jonna Noel Summers, Porter Hedges LLP, Houston, TX, Frank C. Brame, Attorney at Law, Dallas, TX, for Defendants.
Coushatta Bayou Land Company, LLC entered into a mineral lease with Goodrich Petroleum Company, LLC in February 2010. (ECF No. 39-2 at 8 ). The terms of the lease provided Coushatta with royalty payments that are free from the costs of production. However, the royalty clause contains an exception: the parties must share production costs from "unaffiliated third parties" in which Goodrich does not have a "beneficial interest." (ECF No. 38 at 4 ). Coushatta and Goodrich dispute the interpretation of this provision. Coushatta argues that its royalty payments are free from the costs of operating wells on the property, while Goodrich claims Coushatta must share operating expenses because they arise from an unaffiliated third party. (ECF Nos. 38 at 2–3; 39-2 at 8).
Goodrich's motion for summary judgment is granted. Coushatta's motion for summary judgment is denied.
Coushatta owns land and associated mineral interests in the Bossier and Bienville Parishes of Louisiana. (ECF No. 39-2 at 8 ). In February 2010, Goodrich entered into an Oil, Gas, and Mineral Lease with Goodrich Petroleum Corporation which entitled Coushatta to receive a 30% royalty payment and a one-time bonus payment of $ 2,000,000.00 upon execution. (ECF No. 39-2 at 8 ). This lease was renegotiated in May 2010 after Coushatta agreed to return the bonus payment in exchange for a higher royalty payment of 35.0%. (See ECF No. 1 at 6 ). Both leases contain the following provision within "Exhibit A" which modifies the royalty clause:
The royalty interest of [Coushatta] provided for in this lease shall not be charged, and shall not bear, any costs whatsoever in connection with the production, compression, gathering and transportation costs except charges incurred by [Goodrich] from unaffiliated Third Parties in which [Goodrich] does not have a beneficial interest.
BHP Billiton Petroleum was retained as the operator for the lease and eventually drilled nine producing wells on Coushatta's property. (ECF No. 38 at 3 ). Oil and gas produced from these wells was sold and BHP then distributed Coushatta's royalty proceeds either directly to Coushatta, or to Goodrich who would then remit the proceeds to Coushatta. (ECF No. 38 at 4 ). In either case, Coushatta's royalty payments were proportionately reduced by the amount of BHP's production costs. (ECF No. 38 at 4 ).
These royalty payments form the basis of this dispute. Coushatta initiated this adversary proceeding on January 8, 2018, alleging that Goodrich improperly withheld royalty payments due under this lease. (ECF No. 1 at 7–8 ). Coushatta argues that Goodrich is affiliated with, and holds a beneficial interest in, BHP based on marketing and contractual relationships. (ECF No. 39-2 at 17–18 ). Thus, allegedly under the language of the lease, Coushatta argues its royalty payments should be free from any costs attributable to BHP's operations. (See ECF No. 39-2 ).
Goodrich disputes Coushatta's view, arguing that its business transactions with BHP were arm's length negotiations between separate companies without an affiliate relationship or beneficial interest. (ECF No. 38 at 9 ). To Goodrich, the royalty provision of the lease requires that Coushatta pay its proportionate share of BHP's costs. (ECF No. 38 at 8 ).
The District Court has jurisdiction over this proceeding under 28 U.S.C. § 1334(a). This is a core proceeding under 28 U.S.C. § 157(b)(2)(A), (B), and (O). Pursuant to 28 U.S.C. § 157(a), this proceeding has been referred to the Bankruptcy Court by General Order 2012-6.
"The court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and that the movant is entitled to judgment as a matter of law." FED. R. CIV. P. 56(a). FED. R. BANK. P. 7056 incorporates FED. R. CIV. P. 56 in adversary proceedings. A party seeking summary judgment must demonstrate the absence of a genuine dispute of material fact by establishing the absence of evidence supporting an essential element of the non-movant's case. Sossamon v. Lone Star State of Tex. , 560 F.3d 316, 326 (5th Cir. 2009). A genuine dispute of material fact is one that could affect the outcome of the action or allow a reasonable fact finder to find in favor of the non-moving party. Gorman v. Verizon Wireless Tex., L.L.C. , 753 F.3d 165, 170 (5th Cir. 2014) (citing Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986) ).
In cases involving the interpretation of a contract, summary judgment is only appropriate where the language of the contract is unambiguous. See Nowak v. Ironworkers Local 6 Pension Fund , 81 F.3d 1182, 1192 (2d Cir. 1996) ; Cooper Indus., LLC v. Precision Castparts Corp. , 2016 WL 4939565, at *6 (S.D. Tex. Sept. 14, 2016).
A court views the facts and evidence in the light most favorable to the non-moving party at all times.
Ben-Levi v. Brown , ––– U.S. ––––, 136 S.Ct. 930, 194 L.Ed.2d 231 (2016). Nevertheless, the Court is not obligated to search the record for the non-moving party's evidence. Keen v. Miller Envtl. Grp. , Inc. , 702 F.3d 239, 249 (5th Cir. 2012). "Summary judgment may not be thwarted by conclusional allegations, unsupported assertions, or presentation of only a scintilla of evidence." Hemphill v. State Farm Mut. Auto. Ins. Co. , 805 F.3d 535, 538 (5th Cir. 2015), cert. denied , ––– U.S. ––––, 136 S.Ct. 1715, 194 L.Ed.2d 811 (2016).
A party asserting that a fact cannot be or is genuinely disputed must support that assertion by citing to particular parts of materials in the record, showing that the materials cited do not establish the absence or presence of a genuine dispute, or showing that an adverse party cannot produce admissible evidence to support that fact. FED. R. CIV. P. 56(c)(1). The Court need consider only the cited materials, but it may consider other materials in the record. FED. R. CIV. P. 56(c)(3). The Court should not weigh the evidence. Wheat v. Fla Par.Juvenile Justice Comm'n , 811 F.3d 702, 713 (5th Cir. 2016). A credibility determination may not be part of the summary judgment analysis. E.E.O.C. v. LHC Grp., Inc. , 773 F.3d 688, 694 (5th Cir. 2014). However, a party may object that the material cited to support or dispute a fact cannot be presented in a form that would be admissible in evidence. FED. R. CIV. P. 56(c)(2). Moreover, the Court is not bound to search the record for the non-moving party's evidence of material issues. Willis v. Cleco Corp. , 749 F.3d 314, 317 (5th Cir. 2014).
"The moving party bears the initial responsibility 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 of material fact." Nola Spice Designs, L.L.C. v. Haydel Enterprises, Inc. , 783 F.3d 527, 536 (5th Cir. 2015). The evidentiary support needed to meet the initial summary judgment burden depends on whether the movant bears the ultimate burden of proof at trial.
If the movant bears the burden of proof on an issue, a successful motion must present evidence entitling the movant to judgment at trial. Celotex Corp. v. Catrett , 477 U.S. 317, 326, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). Upon an adequate showing, the burden shifts to the non-moving party to establish a genuine dispute of material fact. FED. R. CIV. P. 56(c)(1) ; Celotex , 477 U.S. at 322–24, 106 S.Ct. 2548. The non-moving party must cite to specific evidence demonstrating a genuine dispute. FED. R. CIV. P. 56(c)(1) ; Celotex , 477 U.S. at 324, 106 S.Ct. 2548. The non-moving party must also "articulate the manner in which that evidence supports that party's claim." Duffie v. United States , 600 F.3d 362, 371 (5th Cir. 2010). Even if the movant meets its initial burden, the motion should be granted only if the non-movant cannot show a genuine dispute of material fact.
Both parties agree that Louisiana law controls interpretation and effect of this contract. (See ECF Nos. 38 at 8, 39-2 at 13). Under Louisiana law, contracts are interpreted according to their plain meaning. Lifemark Hospitals, Inc. v. Liljeberg Ent., Inc. (In re Liljeberg Ent., Inc.) , 304 F.3d 410, 439 (5th Cir. 2002) (quoting Nat'l Union Fire Ins. Co. of Pittsburgh, Pa. v. Circle, Inc. , 915 F.2d 986, 989 (5th Cir. 1990) ). "[W]here the words of a contract are clear and explicit and lead to no absurd consequences, the contract's meaning and the intent of its parties must be sought within the four corners of the document and cannot be explained or contradicted by extrinsic evidence."
Am. Totalisator Co., Inc. v. Fair Grounds Corp. , 3 F.3d 810, 813 (5th Cir. 1993). "If a court finds the contract to be unambiguous, it may construe the intent from the face of the document—without considering extrinsic evidence—and enter judgment as a matter of law." Id. An ambiguous contract is "uncertain as to the parties' intentions and susceptible to more than one reasonable meaning under the circumstances and after applying established rules of construction." Davis Oil Co. v. TS, Inc. , 145 F.3d 305, 308 (5th Cir. 1998). "This established rule of strict construction does not allow the parties to create an ambiguity where none exists and does not authorize courts to create new contractual obligations where the language of the written...
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