QuarterNorth Energy LLC v. Atl. Mar. Servs. LLC (In re Fieldwood Energy LLC)

• Citation: 637 B.R. 712
• Decision Date: 23 February 2022
• Docket Number: CASE NO: 20-33948,ADVERSARY NO. 20-3476
• Parties: IN RE: FIELDWOOD ENERGY LLC, et al., Debtors. QuarterNorth Energy LLC and Certain of Its Affiliates, Plaintiff, v. Atlantic Maritime Services LLC, Defendant.
• Court: United States Bankruptcy Courts. Fifth Circuit. U.S. Bankruptcy Court — Southern District of Texas

637 B.R. 712

IN RE: FIELDWOOD ENERGY LLC, et al., Debtors.QuarterNorth Energy LLC and Certain of Its Affiliates, Plaintiff,

v.Atlantic Maritime Services LLC, Defendant.

CASE NO: 20-33948

ADVERSARY NO. 20-3476

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

Signed February 23, 2022

Alfredo R. Perez, Weil Gotshal et al., Houston, TX, for Plaintiff.

Matthew D. Cavenaugh, Jackson Walker LLP, Houston, TX, Stewart F. Peck, Lugenbuhl Wheaton et al., New Orleans, LA, for Defendant.

MEMORANDUM OPINION

Marvin Isgur, United States Bankruptcy Judge

QuarterNorth filed a motion for reconsideration of the Court's December 7, 2021 oral ruling in this adversary proceeding. The motion alleges that the Court made manifest factual errors. The Court has concluded that it was mistaken on the factual premises of its oral ruling. Upon consideration of the correct facts, the Court revises its earlier ruling and concludes that Fieldwood's confirmed Plan extinguished Atlantic's alleged LOWLA privileges.

BACKGROUND

Most of the relevant background is documented in the memorandum opinion issued on October 15, 2021. (ECF No. 84). Atlantic Maritime Services, LLC performed drilling services for Fieldwood Energy, LLC. (ECF No. 35 at 8). Fieldwood did not pay Atlantic and later filed for bankruptcy. (ECF Nos. 1 at 4; 31 at 7). Atlantic asserted privileges under the Louisiana Oil Well Lien Act ("LOWLA") on certain property owned by Fieldwood and other working interest owners. (ECF No. 35 at 9). On August 27, 2021 (the "Effective Date"), Fieldwood sold certain assets to QuarterNorth Energy, LLC. (ECF No. 65 at 2–3). QuarterNorth alleges that it will likely be required to indemnify the working interest owners if Atlantic is successful in enforcing any LOWLA privileges. (ECF Nos. 24 at 31, 32; 32 at 23). QuarterNorth seeks a ruling that Fieldwood's bankruptcy plan (the "Plan") extinguished Atlantic's LOWLA privileges. (ECF No. 24 at 5).

The Court orally ruled on December 7, 2021 that Fieldwood's Plan did not extinguish Atlantic's LOWLA privileges and that Atlantic was no longer barred from proceeding with its LOWLA claims in Louisiana District Court. (ECF No. 138). The oral ruling was stayed by an order entered on December 15, 2021. (ECF No. 145). In issuing the oral ruling, the Court was mistaken on three facts: (1) that the Disclosure Statement failed to say that the Plan would extinguish the LOWLA claims; (2) that Fieldwood had previously indicated that the Plan would not cause Atlantic to lose any rights; and (3) that the Plan sought an injunction.

Error One. The Disclosure Statement says that Fieldwood filed an amended complaint in this adversary proceeding seeking a determination by this Court that "upon the satisfaction, settlement, and discharge of Atlantic's claims pursuant to the Plan, any Louisiana privileges held by Atlantic will be ‘extinguished’ under LOWLA section 4864, including any alleged Louisiana privileges that extend to the WIOs’ working interests in such leases." (Case No. 20-33948, ECF No. 1285 at 57–58). The section heading for the reference to the adversary complaint is bolded, underlined, and italicized as "Adversary Complaint Against Atlantic Maritime Services, LLC ." (Case No. 20-33948, ECF No. 1285 at 57).

Error Two. The Court misconstrued Fieldwood's statement that "Atlantic will not be prejudiced if the stay remains in place—particularly given that the Effective Date is anticipated to take place before Atlantic claims it "may" lose alleged rights (which the Debtors dispute) ...." (Case No. 20-33948, ECF No. 1492 at 2). On May 19, 2021, Atlantic moved this Court to lift the automatic stay to allow it to commence lawsuits against Fieldwood's co-working interest owners and to file lis pendens notices. (Case No. 20-33948, ECF No. 1380). In its motion, Atlantic alleged that its LOWLA liens may not be preserved if the stay were to remain in place. (Case No. 20-33948, ECF No. 1380 at 1–2). Fieldwood argued that the continued imposition of the stay would not cause Atlantic to miss its July 16, 2021 filing deadline because Fieldwood intended for its Plan to have gone effective before then, at which point Atlantic would no longer require relief from the stay. (Case No. 20-33948, ECF No. 1492 at 2). In its objection, Fieldwood states that the Debtors dispute whether Atlantic may lose alleged rights. The Court construed that statement to mean that the Debtors disputed whether the plan would cause Atlantic to lose rights. On closer examination, Fieldwood merely meant that it disputed whether the continued imposition of the stay would cause Atlantic to miss a deadline.¹

Error Three. The Disclosure Statement in support of the then-proposed Plan disclosed that that this adversary proceeding sought an injunction against Atlantic to prevent it from pursuing its alleged LOWLA privileges. The Plan itself does not impose the injunction.

JURISDICTION

The Court has jurisdiction over this matter pursuant to 28 U.S.C. § 1334. This adversary proceeding seeks enforcement of the Plan. A bankruptcy court has continuing core jurisdiction to enforce its own orders. See Ins. Co. of N. Am. v. NGC Settlement Tr. & Asbestos Claims Mgmt. Corp. (In re Nat'l Gypsum Co.) , 118 F.3d 1056, 1063 (5th Cir. 1997) (recognizing that actions calling on a bankruptcy court to construe and enforce its own orders are core proceedings). Additionally, a proceeding is core if it "could arise only in the context of a bankruptcy case." Citizens Bank & Tr. Co. v. Case (In re Case) , 937 F.2d 1014 (5th Cir. 1991) (citing Wood v. Wood (In re Wood) , 825 F.2d 90, 97 (5th Cir. 1987) ). Adjudicating this matter requires an interpretation of the Plan, which could only arise in the context of a bankruptcy case. Venue is proper in this District consistent with 28 U.S.C. §§ 1408 and 1409.

DISCUSSION

I. RECONSIDERATION AND REVISION

Neither the Federal Rules of Civil Procedure nor the Federal Rules of Bankruptcy Procedure specifically provide for a motion for reconsideration. See Shepherd v. Int'l Paper Co. , 372 F.3d 326, 328 n.1 (5th Cir. 2004) ; In re Garrett-Beck Corp. , No. 09-37774, 2012 WL 3727318, at *3 (Bankr. S.D. Tex. Aug. 27, 2012). A motion to alter or amend, or for reconsideration, may be made under Federal Rules of Civil Procedure 59(e) or 60(b). Garrett-Beck , 2012 WL 3727318, at *3. Federal Rule of Civil Procedure 54(b) grants courts the discretion to revise interlocutory orders:²

[A]ny order or other decision, however designated, that adjudicates fewer than all the claims or the rights and liabilities of fewer than all the parties does not end the action as to any of the claims or parties and may be revised at any time before the entry of a judgment adjudicating all the claims and all the parties’ rights and liabilities.

FED. R. CIV. P. 54(b).³ See Jackson v. Roach , 364 Fed. App'x. 138, 139 (5th Cir. 2010) ("The order ... was not a final judgment and thus, could be revised ...."); Willhauck v. Halpin , 919 F.2d 788, 793 (1st Cir. 1990) ("Where the lower court does not designate an order as final under Rule 54(b), it has the power to modify, revise, or even reverse its decision at any time prior to making such a designation or properly closing the entire case."); Hewitt v. McCrary , 17-CV-10917, 2019 WL 1365135, at *1 (E.D. Mich. Mar. 26, 2019) ("[ Rule 54(b) ] gives district courts broad discretion to revise interlocutory orders ... in order to prevent manifest injustice."). The Court may revise an interlocutory order "for any reason it deems sufficient, even in the absence of new evidence or an intervening change in or clarification of the substantive law." Jackson , 364 Fed. App'x. at 139.

QuarterNorth argues that Federal Rule of Civil Procedure 54(b) allows the court to reconsider an interlocutory order. (ECF No. 143 at 6–7). The Court's December 7, 2021 oral ruling focused only on Counts VI and IX of Fieldwood's amended complaint when the Court ruled that the "satisfaction" and "settlement" language in Fieldwood's Plan did not extinguish Atlantic's LOWLA liens. The oral ruling was not dispositive of the entire case––QuarterNorth still has other arguments by which it believes Atlantic is prevented from pursuing its LOWLA claims. Therefore, the oral ruling was an interlocutory order. The appropriate vehicle for amending the Court's interlocutory order is through the revision process of Rule 54(b). The Court finds sufficient reason to revise its December 7, 2021 oral ruling.

QuarterNorth seeks reconsideration under Rule 54(b), but reconsideration would also be appropriate under Rules 59 and 60. See Garrett-Beck , 2012 WL 3727318, at *3. Though the Court will, in the process of revising its interlocutory order, "reconsider" its ruling, Rule 54(b) only provides for revision. Because the oral ruling was an interlocutory order governed by Rule 54(b), the Court will revise its earlier ruling. See Armstrong v. Capshaw, Goss & Bowers, 404 F.3d 933, 936 (5th Cir. 2005) (noting district courts must determine the true nature of a pleading by its substance, rather than its labels); Edwards v. City of Houston , 78 F.3d 983, 995 (5th Cir. 1996) (en banc ) (citing Bros Inc. v. W.E. Grace Mfg. Co. , 320 F.2d 594, 606 (5th Cir.1963) ) ("[W]e have oft stated that ‘[t]he relief sought, that to be granted, or within the power of the Court to grant, should be determined by substance, not a label.’ ").

II. FIELDWOOD'S PLAN EXTINGUISHED ATLANTIC'S LOWLA LIENS

LOWLA exists in the Louisiana Revised Statutes. La. R.S. § 9:4861 – 9:4873. Its plain meaning should prevail. La. R.S. § 1:3 ("Words and phrases shall be read with their context and shall be construed according to the common and approved usage of the language."); La. R.S. § 1:4 ("When the wording of a Section is clear and free of ambiguity, the letter of it shall not be disregarded under the pretext of pursuing its spirit."). The Louisiana Civil Code's rules of statutory interpretation are similar. La. Civ. Code art. 9 (...