South Cent. Petroleum, Inc. v. Long Bros. Oil Co., 91-3690
| Decision Date | 08 June 1992 |
| Docket Number | No. 91-3690,91-3690 |
| Citation | 974 F.2d 1015 |
| Parties | 36 Fed. R. Evid. Serv. 1096 SOUTH CENTRAL PETROLEUM, INC.; Jerry R. Sawyer, Appellees, v. LONG BROTHERS OIL COMPANY; Charles L. Long; David B. Long; Kenneth F. Long; Pat W. Long; Imogene Long, Appellants. A. V. Beebe; Harold Wisenhunt. . Submitted: |
| Court | U.S. Court of Appeals — Eighth Circuit |
Robert C. Compton, El Dorado, Ark., argued (William I. Prewett, on the brief), for appellants.
B. Michael Bennett, Dallas, Tex., argued, for appellees.
Before JOHN R. GIBSON, Circuit Judge, HEANEY, Senior Circuit Judge, and BEAM, Circuit Judge.
In this diversity action, Long Brothers Oil Company appeals the district court's grant of summary judgment and order that South Central Petroleum and Jerry Sawyer pay Long Brothers Oil Company $62,627 in exchange for one-half ownership of an oil well. We affirm.
In 1985, Long Brothers Oil Company (Long Brothers), along with several other investors, purchased Fouke (oil) Field in Miller County, Arkansas, from Phillips Petroleum Company (Phillips). As part of the transaction with Phillips, Long Brothers bought all but an 11.22 percent interest in a gas well known as the Silberberg B-1. Long Brothers did, however, acquire from Phillips a preferential right to purchase the unsold interest, which was owned by Texaco Producing, Inc. (Texaco); Long Brother's preferential purchase right enabled it to successfully match any offer made to Texaco for the 11.22 percent interest.
Long Brothers began "producing" Fouke Field in 1986. On September 27, 1988, Long Brothers signed an agreement with South Central Petroleum and Jerry Sawyer "to work together in an effort to buy Texaco's one-eighth ( 1/8) working interest in the Silberberg # B-1 unit." To pursue this goal, Long Brothers agreed to contact Texaco and attempt to acquire Texaco's Silberberg B-1 interest "for a price not to exceed $400,000." If Long Brothers succeeded and if the property was not quickly resold, the parties agreed to purchase and own the interest according to a 50 percent (Long Brother's purchase and ownership share), 37.5 percent (South Central Petroleum), and 12.5 percent (Sawyer) arrangement. The parties further agreed that their agreement would become effective September 15, 1988 and "continue in effect for a period of six (6) months, and thereafter until terminated by any of the parties to this agreement with thirty (30) days prior written notice."
On December 5, 1988, Texaco agreed to sell its Silberberg B-1 interest to a third party. On February 14, 1989, Long Brothers notified Sawyer that it was terminating their agreement pursuant to the thirty-day termination provision. Less than thirty days later, on March 15, 1989, Long Brothers exercised its preferential purchase right and purchased Texaco's interest in the Silberberg B-1 for $137,500. Long Brothers then divided its new acquisition among the partners who had originally organized to purchase Fouke Field. Long Brothers did not notify Sawyer or South Central Petroleum of the Texaco acquisition.
When Sawyer and South Central Petroleum learned of Long Brothers' acquisition of Texaco's interest on January 15, 1991, they demanded that Long Brothers convey one-half of the acquisition pursuant to the September 27, 1988 agreement. Long Brothers refused, and this action ensued.
Arguing that their contract with Long Brothers should be enforced, Sawyer and South Central Petroleum moved the district court for summary judgment. The district court granted their motion. After conducting a trial to determine a remedy, the district court ordered Long Brothers to transfer one-half of the acquired Texaco interest to Sawyer and South Central Petroleum, who in return were ordered to pay Long Brothers one-half of the purchase price and transaction costs ($90,928) minus an offset ($28,301), representing one-half of the income minus expenses earned by Long Brothers from the Texaco interest from the time Long Brothers acquired it until the district court's order. This offset resulted in a net payment of $62,627 by Sawyer and South Central Petroleum to Long Brothers in exchange for the transfer of one-half of the acquired Texaco interest.
Long Brothers first appeals the district court's grant of summary judgment. According to Long Brothers, Sawyer and South Central Petroleum sat on their rights to own the Texaco property until such ownership appeared profitable, and thus, Sawyer and South Central Petroleum waived their right to enforce their agreement with Long Brothers. 1 See Sanders v. Flenniken, 180 Ark. 303, 21 S.W.2d 847, 848 (1929) ().
Long Brothers, however, does not dispute that Sawyer and South Central did not discover Long Brothers' acquisition of the Texaco property until nearly two years after its purchase. In fact, with respect to this issue, Long Brothers limited its evidence to the affidavit of Charles Long, who claimed that if Long Brothers knew that Sawyer and South Central Petroleum would attempt to exercise their right, Long Brothers would have settled an independent foreclosure litigation differently, and in the process, would have resolved the current dispute. The district court characterized Long's opinion as "pure speculation." We agree with this characterization. See generally Resource Developers, Inc. v. Statue of Liberty-Ellis Island Found., 926 F.2d 134, 141 (2d Cir.1991) () (citation omitted). In any event, Long's affidavit does not indicate that Sawyer and South Central Petroleum were aware of their right to acquire their share of the Texaco property during the foreclosure litigation mentioned by Long.
Under Arkansas law, four elements must be satisfied to apply the doctrine of estoppel:
(1) the party to be estopped must know the facts; (2) he must intend that his conduct shall be acted on or must so act that the party asserting the estoppel had a right to believe it is so intended; (3) the latter must be ignorant of the true facts; and (4) he must rely on the former's conduct to his injury.
Burdine v. Dow Chem. Co., 923 F.2d 633, 635 (8th Cir.1991) (citations omitted). Despite raising waiver as an affirmative defense, Long Brothers has not established the first element of knowledge. For that matter, the second element of intention has not been satisfied either. As the district court noted, even if Sawyer and South Central Petroleum were aware of their right, "there is simply no showing whatsoever that the failure to be involved in the foreclosure litigation is inconsistent with an intention to enforce the contract with Long Brothers assuming that Long Brothers received title to the property." Thus, Long Brothers' waiver argument fails, and we interpret the contract as we would any other.
The contract provided for termination upon thirty days notice. Long Brothers elected termination on February 14, 1989. This termination took effect thirty days later on March 16, 1989. Long Brothers acquired the Texaco interest on March 15, 1989, at which time the agreement remained effective. Accordingly, the district court correctly granted summary judgment for Sawyer and South Central Petroleum and ordered Long Brothers to transfer one-half of the acquired Texaco interest to Sawyer and South Central Petroleum.
Following its summary judgment order for specific performance, the district court held a trial to assist it in fashioning an appropriate remedy. After this trial, rounding all figures to the nearest dollar, the district court ordered that Sawyer and South Central Petroleum pay Long Brothers $88,928 in acquisition costs and $2,000 in attorneys fees. Neither party disputes the $90,928 amount. Long Brothers objects, however, to the district court's award of an offset credit in favor of Sawyer and South Central Petroleum, which reduced the amount they owed to Long Brothers by $28,301.
Under the law of Arkansas, a cotenant possesses a right of accounting for revenues (minus expenses) stemming from the...
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