In re Equinox Oil Co., Inc.

• Decision Date: 12 August 2002
• Docket Number: No. 01-30747.,01-30747.
• Citation: 300 F.3d 614
• Parties: In the Matter of: EQUINOX OIL COMPANY, INC., Debtor. Unsecured Creditors Disbursement Committee, through its Representative Richard J. Johnston and Jonathan E. Daniel, Liquidating Trustee for Equinox Oil Company, Inc., Appellee, v. Antill Pipeline Construction Company, Inc.; Burner Fire Control, Inc.; IWC Services, Inc., a wholly owned subsidiary of Boots & Coots International Well Control, Inc.; Chevron USA, Inc.; Chris Hansen, doing business and Chris' Exxon Marine Service; Epic Divers, Inc.; Filco International, Inc.; Gravel Pack Rental, Inc.; Gulf Marine, Inc.; Hot Energy Services, Inc., formerly known as Houma Oil Treaters, Inc.; Newman Crane Service, Inc.; New Tech Engineering and Well-Quip and Service Company; Parker Drilling Offshore USA, LLC, formerly known as Mallard Bay Drilling LLC; Phillip Services/Louisiana Inc.; Professional Divers of New Orleans; Quality Wireline Service, Inc.; Western Oil Fields Supply Company, doing business as Rain for Rent; Tetra Technologies, Inc.; Venture Transport, Inc.; Well-Quip and Supply Corporation; Weatherford US, LP, Appellants. In the Matter of: Equinox Oil Company, Inc., Debtor. Baker Hughes Oilfield Operations, Inc., doing business as Baker Oil Tools; Computalog USA, Appellants, v. Official Unsecured Creditor's Committee; Jon Daniel, Liquidating Trustee (Successor to Alma Energy Corporation and Equinox Oil Company, Inc.), Appellees.
• Court: U.S. Court of Appeals — Fifth Circuit

300 F.3d 614

In the Matter of: EQUINOX OIL COMPANY, INC., Debtor.

Unsecured Creditors Disbursement Committee, through its Representative Richard J. Johnston and Jonathan E. Daniel, Liquidating Trustee for Equinox Oil Company, Inc., Appellee, v. Antill Pipeline Construction Company, Inc.; Burner Fire Control, Inc.; IWC Services, Inc., a wholly owned subsidiary of Boots & Coots International Well Control, Inc.; Chevron USA, Inc.; Chris Hansen, doing business and Chris' Exxon Marine Service; Epic Divers, Inc.; Filco International, Inc.; Gravel Pack Rental, Inc.; Gulf Marine, Inc.; Hot Energy Services, Inc., formerly known as Houma Oil Treaters, Inc.; Newman Crane Service, Inc.; New Tech Engineering and Well-Quip and Service Company; Parker Drilling Offshore USA, LLC, formerly known as Mallard Bay Drilling LLC; Phillip Services/Louisiana Inc.; Professional Divers of New Orleans; Quality Wireline Service, Inc.; Western Oil Fields Supply Company, doing business as Rain for Rent; Tetra Technologies, Inc.; Venture Transport, Inc.; Well-Quip and Supply Corporation; Weatherford US, LP, Appellants.

In the Matter of: Equinox Oil Company, Inc., Debtor.

Baker Hughes Oilfield Operations, Inc., doing business as Baker Oil Tools; Computalog USA, Appellants, v. Official Unsecured Creditor's Committee; Jon Daniel, Liquidating Trustee (Successor to Alma Energy Corporation and Equinox Oil Company, Inc.), Appellees.

No. 01-30747.

United States Court of Appeals, Fifth Circuit.

August 12, 2002.

Stewart F. Peck (argued), Mary S. Langston, Lugenbuhl, Wheaton, Peck, Rankin & Hubbard, New Orleans, LA, for Appellee.

Stephen O. Scandurro, Scandurro & Layrisson, New Orleans, LA, for Hansen, Quality Wireline Serv., Inc. and Quality Pipeline Constr. Co., Inc.

Francis Jospeh Lobrano, Lobrano & Lobrano, Belle Chasse, LA, for Gulf Marine Inc.

Scott Jospeh Sonnier, Christovich & Kearney, New Orleans, LA, for Epic Divers Inc.

George Pivach, II, Timothy Thriffiley, Pivach & Pivach, Belle Chasse, LA, for Newman Crane Serv. Inc.

Elton F. Chip Duncan, III, Duncan Courington & Rydberg, New Orleans, LA, for Hot Energy Services Inc. William W. Hall, William W. Hall & Associates, Metairie, LA, for Gravel Pack Rental Inc.

John W. Waters, Jr. (argued), Bienvenu, Foster, Ryan & O'Bannon, New Orleans, LA, for Parker Drilling Offshore USA, LLC.

Philip K. Jones, Jr., Liskow & Lewis, New Orleans, LA, for Chevron USA, Inc.

S. Daniel Meeks, Patrice W. Oppenheim, Reich, Meeks & Treadaway, Metairie, LA, for Venture Transport Inc.

Patrick Douglas Devine (argued), Ware, Snow, Fogel & Jackson, Houston, TX, for Baker Hughes Oilfield Operating Inc. and Computalog USA.

Paul J. Goodwine, Schully, Roberts, Slattery, Jaubert & Marino, New Orleans, LA, for Antill Pipeline Constr. Co. Inc.

Wilbur J. "Bill" Babin, Jr., Turner, Young, Hebbler & Babin, New Orleans, LA, for Professional Divers of New Orleans.

Covert James Geary, Carl David Rosenblum, Jones, Walker, Waechter, Poitevent, Carrere & Denegre, New Orleans, LA, for Western Oil Fields Supply Co. and Tetra Technologies Inc.

Warren D. Rush, Rush, Rush & Calogero, Lafayette, LA, for Burner Fire Control Inc.

Jeffrey Edward Ackerman, Durio, McGoffin, Stagg & Ackerman, Lafayette, LA, for Filco Intern, Inc.

Ilene Helen Goldman, Metairie, LA, for IWC Services Inc.

Roy Keezel, Houston, TX, for New Tech Engineeering and Well-Quip and Serv. Co. and Well-Quip and Supply Corp.

Stephen A. Roberts (argued), Strasburger & Price, Austin, TX, R. Andrew Black, Strasburger & Price, Houston, TX, for Philip Services/Louisiana Inc.

Teresa L. De Ford, Rathwell & Nizalek, The Woodlands, TX, for H B Rentals L C.

Appeals from the United States District Court for the Eastern District of Louisiana.

Before DAVIS, DeMOSS and STEWART, Circuit Judges.

W. EUGENE DAVIS, Circuit Judge:

This appeal is from decisions in two separate adversarial proceedings related to the Chapter 11 bankruptcy of Equinox Oil Company. In Civil Action No. 00-3320, we agree with the bankruptcy court and the district court that a pre-existing mortgage in favor of Den norske Bank, ASA and other banks primes liens filed by certain creditors pursuant to the Louisiana Oil Well Lien Act. In Civil Action No. 00-3502, we agree with the district court that the proceeds of the debtor's well control insurance policy are included in the property of the debtor's estate.

I.

Equinox Oil Company, Inc. (Equinox) operates oil and gas leases owned by Alma Energy Corp. (Alma). The two companies have common ownership. Den norske Bank, ASA, individually and as agent for BNP Paribas and Comerica Bank — Texas (the Bank Group) loaned over $106 million to Equinox and Alma. The loan was secured by mortgages and other security rights in all the assets of Alma. Equinox incurred unpaid debts to numerous service providers in the course of operating the leases. These creditors filed liens pursuant to Louisiana's Oil Well Lien Act (LOWLA) against the property securing the Bank Group mortgages. The mortgages and related financing statements were filed of record prior to the effective date of the LOWLA liens. In Civil Action 00-3320, the bankruptcy court and the district court agreed that the Bank Group's mortgage primed the LOWLA liens.

In September 1998, a blow out occurred at a well on an Alma lease near Port Sulfur, Louisiana. The blow out caused property damage and an oil spill. Equinox notified its insurer, National Union Fire Insurance Company (National Union) of the accident. Numerous companies provided services and equipment (the Remediation Creditors) to Equinox to stop the blowout and clean up the spill. Equinox presented a proof of loss form to National Union. National Union paid Equinox over $700,000 in partial settlement of the insurance claim related to the clean up. Equinox paid some of the assisting companies a portion of what they were owed, but failed to pay many of the Remediation Creditors.

In May 1999, Equinox was placed in involuntary bankruptcy under Chapter 7, which Equinox converted to Chapter 11. In June, 1999, Alma also filed a Chapter 11 proceeding and the bankruptcy court joined their two proceedings. In Civil Action 00-3320, the bankruptcy court and the district court agreed that the Bank Group's mortgage primed the LOWLA liens. In Civil Action 00-3502, the bankruptcy court determined that the National Union insurance proceeds were not property of the bankruptcy estate. The district court reversed. This appeal followed.

II.

As a preliminary matter, this court directed the parties to brief whether the order of the district court affirming in part and reversing in part the bankruptcy court is a final order for purposes of appeal, citing In re: Aegis Specialty Marketing Inc. of Ala., 68 F.3d 919 (5th Cir.1995). Aegis held that an order of the district court reversing the bankruptcy court and remanding for further proceedings is not a final appealable order. All of the parties agree, as do we, that Aegis does not apply here. In this case, the district court's order reversing the bankruptcy court did not include remand for further proceedings and all that was required in the bankruptcy court was entry of an order consistent with the district court's decision.

As a separate matter, Philip Services, one of the Remediation Creditors, argues that the district court, and therefore this court, did not have jurisdiction over the appeal of Adversary proceeding 99-1209, which is Philip Services' suit against Equinox, National Union and four banks that were secured lenders of Equinox. The district court addressed this issue in its Opinion dated June 11, 2001. We reject Philip Services' argument for essentially the reasons stated by the district court in that opinion.

III.

In Civil Action No. 00-3320, the lien creditors argue that their liens filed pursuant to Louisiana's Oil Well Lien Act (LOWLA) are superior in ranking to the Bank Group's mortgage based on the language of the mortgage instruments, the policy of LOWLA to provide liberal protections to providers of services to oil and gas producing properties and principles of equity and unjust enrichment. These arguments must fail. LOWLA makes it clear that mortgages that are effective as to third persons before the privilege is established are superior in rank and priority to the liens. LA.R.S. 9:4870(B)(2). The creditors do not argue that their liens arose prior to the recordation of the Bank Group's mortgage. For this reason and on the basis of the district court's careful opinion on this issue dated June 11, 2001, we affirm the district court's judgment.

IV.

The remaining issue in this appeal is whether the proceeds from Equinox's well-control insurance policy are property of Equinox's bankruptcy estate. The Remediation Creditors argue that because the well-control policy covers Equinox for the cost of the work they did, the proceeds of the policy should be excluded from the bankruptcy estate and instead paid directly to them.

Section 541 of the Bankruptcy Code defines property included within the bankruptcy estate to include "all legal and equitable interests of the debtor in property as of the commencement of the case" and "proceeds ... of or from property of the estate." 11 U.S.C. § 541(a)(1) and (6). Section 541 is read broadly and is interpreted to "include all kinds of property, including tangible or intangible property, causes of action ... and all other forms of property currently specified in section 70a of the Bankruptcy Act." United States v. Whiting Pools, Inc., 462 U.S. 198, 204-05 & n. 9, 103 S.Ct. 2309, 2313 & n. 9, 76 L.Ed.2d 515 (1983). An insurance policy owned by the debtor is generally considered property of the estate. In re: Edgeworth, 993 F.2d 51, 55 & n. 13. But, whether the proceeds of a particular insurance policy is property of the estate depends on the nature of the policy.

Two cases in this circuit have addressed this question: In re: Edgeworth; and In re: Louisiana World...