SGC Land, LLC v. La. Midstream Gas Servs.
| Citation | 939 F.Supp.2d 612 |
| Decision Date | 03 August 2013 |
| Docket Number | Civil Action No. 10–1778. |
| Parties | SGC LAND, LLC v. LOUISIANA MIDSTREAM GAS SERVICES, Chesapeake Operating, Inc., and Chesapeake Louisiana, LP. |
| Court | U.S. District Court — Western District of Louisiana |
OPINION TEXT STARTS HERE
Amy Burford McCartney, Michael Alan Marino, Philip E. Downer, III, Downer Huguet & Wilhite, Shreveport, LA, for SGC Land, LLC.
Michael B. Donald, Adan D. Briones, Joshua A. Norris, Jones, Walker, Waechter, Poitevent, Carrere & Denegre L.L.P., Houston, TX, for Louisiana Midstream Gas Services, Chesapeake Operating, Inc., and Chesapeake Louisiana, LP.
MEMORANDUM RULING
Before the Court is a Motion for Summary Judgment (Record Document 112) filed on behalf of Defendants, Louisiana Midstream Gas Services, L.L.C., Chesapeake Operating, Inc., and Chesapeake Louisiana, L.P. (collectively, “Chesapeake”).1 Plaintiffs, SGC Land, L.L.C. and Smithburg, Inc., filed a Cross–Motion for Partial Summary Judgment (Record Document 113) with respect to the alleged improper location and operation of a pipeline on the property at issue. Additionally, the Plaintiffs oppose Chesapeake's Motion for Summary Judgment on all other issues. (Record Document 116). For the reasons that follow, Chesapeake's Motion for Partial Summary Judgment (Record Document 112) is hereby GRANTED in part and DENIED in part. It is further ordered that Plaintiffs' Motion for Partial Summary Judgment (Record Document 113) is hereby DENIED.
On March 7, 2008, Smithburg, predecessor-in-title to SGC, entered into an Oil, Gas and Mineral Lease (the “Lease”) with Suncoast Land Services, Inc. covering approximately 567 acres located in Section 12, Township 13 North, Range 13 West, DeSoto Parish, Louisiana and Section 7, Township 13 North, Range 12 West, DeSoto Parish, Louisiana (the “Smithburg Property”). Record Document 112–14 ¶ 1, 2; 113–12 ¶ 1. In addition to the general provisions found in the form lease, the lease contains Exhibit A which was proposed and drafted by Urban E. Smith, Smithburg's president. Record Document 112–14 ¶ 4; 113–12 ¶ 4. This exhibit contains a surface damage payment provision requiring the lessee to pay $2,000/acre for “well locations, access roads and pipeline rights of way as damages for all surface areas physically contacted by Lessee's operation on the lease premises.” Record Document 112–2 ¶ 22. The exhibit also contained the following two paragraphs:
23. In the event the land is placed in a pooled unit or units, the leased 567.08 acres cannot be used for roads, canals, pipelines, tanks, water wells, disposal wells, injection wells, pits, electric and telephone lines, power lines or power stations, unless the well is drilled on the 567.08 acres.
26. Lessee may not use any portion of the Lessor's land leased herein for the herein leased operations or related activities unless the actual well site is located on Lessor's 567.08 acres.
Record Document 112–2 ¶ 23, 26; 112–14 ¶ 5. Suncoast subsequently assigned all of its right, title and interest in and to the lease to Chesapeake Louisiana, L.P. Record Document 113–12 ¶ 6. In February, 2009, Chesapeake spudded the Smithburg 7H No. 1 well (the “Smithburg Well”) on the 567.08 acres (the “Smithburg property”). Smithburg and Chesapeake then entered into a Surface Damage Release and Grant of Surface Easement (“SDR”) on March 12, 2009, which discharged and acquitted the operator of all liability for damage to a specified area within the leased property, approximately 4.11 acres in size. Record Document 112–5. This SDR also granted an easement for the construction, operation, and maintenance of a pipeline to service the Smithburg Well referenced in the release. Id. In conjunction with the operations of the Smithburg Well, Chesapeake constructed and utilized a “frac pond,” road, and a well site for parking vehicles and equipment.
Chesapeake subsequently assigned to Louisiana Midstream Gas Services, Inc. (“Midstream”) its right “to construct, operate, and maintain a pipeline, rights of ingress and egress to the leased premises and all other necessary rights and purposes incident to construction, operation and maintenance of the pipeline.” Record Document 112–6 at 3. However, rather than simply construct a pipeline in accordance with the rights granted to Chesapeake under the lease and subsequently assigned to Midstream, Midstream entered into an additional and separate contract with Smithburg on July 22, 2009. Record Document 112–7. This contract, labeled “Easement and Right of Way Agreement,” allowed for the installation of a pipeline across a specified portion of the property with no restrictions preventing or limiting the pipeline from being used to transport third-party gas. Id. Furthermore, based upon the email correspondence between Midstream and Smithburg, it is clear that this easement was executed to ensure that the Midstream was permitted to flow third-party gas through the pipeline. Record Document 113–11 at 3. Accordingly, Midstream built the pipeline and subsequently transmitted gas from both the Smithburg Well and the “Allen Well” (HA RC SUAA; Allen 18–13–12–H No. 1 Well, Serial No. 241015) through the pipeline. Record Document 113–12 ¶ 15–17. The Allen Well is not located on the leased property and/or properties unitized with the Smithburg property governed by the lease. Id. By its own admission, Midstream constructed a portion of the pipeline outside of the agreed upon Right of Way (less than 30 feet of the pipeline was constructed no more than 4.4 feet outside of the designated area.) Id. Additionally, Chesapeake has continued to use the “frac pond,” road, and well site, which were built on the Smithburg property in connection with the drilling and operations of the Smithburg Well, to service the Allen Well located on the adjacent property. The Plaintiffs have filed suit alleging that despite specific limitations to the contrary, Chesapeake has, and continues to permit use of a frac pond, pipelines, and a parking area for use in servicing other wells not located on the property. Record Document 1–3 ¶ 12–16. Additionally, Plaintiffs allege Chesapeake has, without permission or right, located its pipeline outside of the agreed to right of way and trespassed upon the Plaintiffs' property. Id., ¶ 23. Chesapeake subsequently filed the instant Motion for Summary Judgment (Record Document 112) urging the Court to dismiss all claims. Plaintiffs responded by filing a Motion for Partial Summary Judgment with respect to the claims involving the improper location and operation of the pipeline at issue. Record Document 113–1 at 1.
Summary judgment is proper pursuant to Rule 56 of the Federal Rules of Civil Procedure when “there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” 2Quality Infusion Care, Inc. v. Health Care Serv. Corp., 628 F.3d 725, 728 (5th Cir.2010). “A genuine issue of material fact exists when the evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Id. (citations omitted). “ Rule 56[ (a) ] mandates the entry of summary judgment, after adequate time for discovery and upon motion, against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial.” Patrick v. Ridge, 394 F.3d 311, 315 (5th Cir.2004). If the movant demonstrates the absence of a genuine dispute of material fact, “the nonmovant must go beyond the pleadings and designate specific facts showing that there is a genuine issue for trial.” Gen. Universal Sys., Inc. v. Lee, 379 F.3d 131, 141 (5th Cir.2004).
The nonmovant's burden may not be satisfied by conclusory allegations, unsubstantiated assertions, metaphysical doubt as to the facts, or a scintilla of evidence. Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir.1994); Wallace v. Texas Tech Univ., 80 F.3d 1042, 1047 (5th Cir.1996). Where critical evidence is so weak or tenuous on an essential fact that it could not support a judgment in favor of the nonmovant, then summary judgment should be granted. See Boudreaux v. Swift Transp. Co., 402 F.3d 536, 540 (5th Cir.2005). Factual controversies are to be resolved in favor of the nonmovant, “but only when there is an actual controversy, that is, when both parties have submitted evidence of contradictory facts.” Wallace, 80 F.3d at 1048 (quoting Little, 37 F.3d at 1075);see also, S.W.S. Erectors, Inc. v. Infax, Inc., 72 F.3d 489, 494 (5th Cir.1996). Unless there is sufficient evidence for a jury to return a verdict in the nonmovant's favor, there is no genuine issue for trial. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249–51, 106 S.Ct. 2505, 2511, 91 L.Ed.2d 202 (1986). When the nonmovant has the burden of proof at trial, he “must come forward with evidence which would be sufficient to enable it to survive a motion for directed verdict at trial.” Stults v. Conoco, Inc., 76 F.3d 651, 656 (5th Cir.1996). If the nonmovant can not meet this burden, then “the motion for summary judgment must be granted.” Id.;Little, 37 F.3d at 1076.
“The Lease contract is the law between the parties, defining their respective legal rights and obligations ... as well as the rules for interpretation of contracts as laid down in the Civil Code.” Frey v. Amoco Prod. Co., 603 So.2d 166, 172 (La.1992) (citations omitted).
The purpose of interpretation is to determine the common intent of the parties. SeeLa.Civ.Code art. 2045. Words of art and technical terms must be given their technical meaning when the contract involves a technical matter, seeLa.Civ.Code art. 2047, and words susceptible of different meanings are to be interpreted as having the meaning that best conforms to the object of the contract. SeeLa.Civ.Code art. 2048. A doubtful...
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