Fortune Natural Res. Corp. v. U.S. Dep't of Interior

• Decision Date: 19 November 2015
• Docket Number: No. 15–20151.,15–20151.
• Citation: 806 F.3d 363
• Parties: FORTUNE NATURAL RESOURCES CORPORATION, Appellant v. UNITED STATES DEPARTMENT OF INTERIOR; ATP Oil & Gas Corporation, Appellees.
• Court: U.S. Court of Appeals — Fifth Circuit

806 F.3d 363

FORTUNE NATURAL RESOURCES CORPORATION, Appellant

v.UNITED STATES DEPARTMENT OF INTERIOR; ATP Oil & Gas Corporation, Appellees.

No. 15–20151.

United States Court of Appeals, Fifth Circuit.

Nov. 19, 2015.

Matthew Scott Okin, Brian Dean Roman, Esq., Okin & Adams, L.L.P., Houston, TX, for Appellant.

Victor W. Zhao, Attorney, U.S. Department of Justice, Washington, DC, Charles Stephen Kelley, Mayer Brown, L.L.P., Houston, TX, for Appellees.

Opinion

EDITH BROWN CLEMENT, Circuit Judge:

Fortune Natural Resources Corporation (“Fortune”) owns a percentage working interest in a lease with ATP Oil & Gas Corporation (“ATP”), who filed for bankruptcy.¹Fortune asserted a claim in ATP's bankruptcy proceedings for decommissioning costs related to the lease. ATP sought and received approval from the bankruptcy court—over Fortune's objection—to sell certain shelf and deepwater assets. The Final Sale Order was not stayed, and the sale closed. Fortune appealed the Final Sale Order to the district court. The district court dismissed the appeal, holding that Fortune lacked standing to appeal the bankruptcy court's ruling and that, in any event, the appeal was statutorily moot. Fortune appeals this dismissal order contending that it has standing to appeal and that the appeal is not moot. Because Fortune has failed to prove that it was directly and adversely affected pecuniarily by the ruling of the bankruptcy court, it lacks standing to appeal, and we AFFIRM.

I.

ATP, a former offshore oil and gas exploration and production operator on the Outer Continental Shelf in the Gulf of Mexico, filed for bankruptcy relief on August 17, 2012. Fortune owned a 12.5 percent working interest in a lease that was considered one of ATP's assets (the “Fortune Lease” or “Lease”). Fortune and ATP were parties to a Joint Operating Agreement, which mandated that any plugging and abandonment operations be accomplished by ATP, as operator, with the costs, risk, and net proceeds, if any, to be shared by co-lessees in proportion to their participating interests. The Fortune Lease terminated on November 11, 2010. As a result, ATP was required to conduct decommissioning operations on two wells, a platform, and a pipeline. Fortune filed its proof of claim on January 28, 2013, in the amount of $3,385,300, representing the portion of the decommissioning liability it would be forced to cover in the event that ATP did not fulfill its decommissioning obligations under the Joint Operating Agreement.

During the bankruptcy proceeding, ATP filed motions seeking bankruptcy court approval of a sale of substantially all of its assets (the “Sale”).²The United States Department of the Interior (“Interior”) objected to the Sale because it had not consented to it, and among other reasons, the Sale would have left ATP incapable of performing its remaining decommissioning obligations under federal law. Fortune also objected to the Sale, even though the Fortune Lease was not part of the assets of the Sale.³Interior withdrew its objection prior to the Sale following successful negotiations with Bennu Oil & Gas, LLC (“Bennu”), the ultimate purchaser, after Bennu agreed to fund a $44,255,000 trust (“Trust”) to be administered by the Bureau of Ocean Energy Management (“BOEM”), an agency under the Interior, to address ATP's remaining decommissioning obligations. Initially, Fortune filed a limited objection and reservation of rights with respect to the shelf sale in the event that the shelf sale would not produce sufficient funds to cover the decommissioning obligations under the Fortune Lease. Subsequently, Fortune asserted an objection at the Interim Sale Hearing—after the shelf assets and deepwater assets were combined into one Sale—when it realized that BOEM planned to use the trust funds for leases where there were no co-liable parties, i.e.,not the Fortune Lease. Fortune argued that the proposed use of the sale proceeds was contrary to the language contained in the Interim Sale Order and proposed Final Sale Order, which Fortune believed required funding for the Fortune Lease's decommissioning costs. The bankruptcy court overruled Fortune's objection to the sale.

On October 17, 2013, the bankruptcy court entered a Final Sale Order approving the sale of ATP's assets to Bennu. The bankruptcy court's Final Sale Order was not stayed, and the Sale closed. On October 31, 2013, Fortune appealed the Final Sale Order to the district court. Interior moved to participate as appellee, and the district court granted its motion. The district court issued an order dismissing Fortune's appeal, holding that Fortune lacked standing to appeal the bankruptcy court's ruling and that, in any event, the appeal was statutorily moot. Fortune appeals the dismissal order.

II.

This court reviews a district court's dismissal for lack of standing de novo. Joffroin v. Tufaro,606 F.3d 235, 238 (5th Cir.2010). “[T]he putative appellant shoulders the burden of alleging facts sufficient to demonstrate that it is a proper party to appeal.” Rohm & Hass Tex., Inc. v. Ortiz Bros. Insulation, Inc.,32 F.3d 205, 208 (5th Cir.1994). “In ruling on a motion to dismiss for want of standing, both the trial and reviewing courts must accept as true all material allegations of the complaint, and must construe the complaint in favor of the complaining party.” Id.at 207(quoting Warth v. Seldin,422 U.S. 490, 501, 95 S.Ct. 2197, 45 L.Ed.2d 343 (1975)). Furthermore, to determine whether a party has standing in bankruptcy court, courts use the “person aggrieved” test. In re Coho Energy Inc.,395 F.3d 198, 202 (5th Cir.2004). “The ‘person aggrieved’ test is an even more exacting...