Waller Bros., Inc. v. Exxon Corp.

• Decision Date: 12 July 1993
• Docket Number: Civ. A. No. 2:92cv89PN.
• Citation: 836 F. Supp. 363
• Parties: WALLER BROTHERS, INC., Plaintiff, v. EXXON CORPORATION, Defendant.
• Court: U.S. District Court — Southern District of Mississippi

836 F. Supp. 363

WALLER BROTHERS, INC., Plaintiff, v. EXXON CORPORATION, Defendant.

Civ. A. No. 2:92cv89PN.

United States District Court, S.D. Mississippi, Hattiesburg Division.

July 12, 1993.

COPYRIGHT MATERIAL OMITTED

William L. Waller, Sr., Russel P. Grant, Jr., Jackson, for plaintiff.

E. Otis Johnson, Jr., Sam Thomas, Jackson, for defendant.

MEMORANDUM OPINION AND ORDER

PICKERING, District Judge.

This matter is before the Court on motions by both the Plaintiff and the Defendant for summary judgment. The Court, having reviewed the briefs and the authorities cited, having heard oral arguments and being otherwise fully advised in this matter, finds as follows, to-wit;

FACTUAL BACKGROUND

The Plaintiff, Waller Brothers, Inc. ("Waller Brothers"), is an oil and gas company that owns a leasehold interest in a 640-acre gas unit. The 640-acre gas unit was formed by Order ("July 20, 1989 Order") of the State Oil and Gas Board dated July 20, 1989. The effect of such order gave the Defendant Exxon Corporation ("Exxon") the right to force integrate the 640-acre gas unit and the right to charge "alternate charges" as well as drilling and completion costs to non-consenting owners who did not agree to participate in the well or agree to assign or lease their interest within a given time period. Before the unit was integrated, the Plaintiff and other non-consenting owners were extended the opportunity to either participate in the well as consenting owners or to convey their interests in the unit to the Defendant by assignment or lease or an agreement known in the industry as a "farm-out". No agreement was reached between the Plaintiff and the Defendant before July 20, 1989. Therefore, the Plaintiff and the other non-consenting owners were given notice of the proceeding that was to be held in front of the State Oil and Gas Board. The Plaintiff elected not to appear or to oppose the Defendant's proposed relief. The Plaintiff had a period of twenty (20) days after the July 20, 1989 Order was issued to enter an agreement with the Defendant or thirty (30) days to seek relief by appeal as provided by Mississippi law. An agreement was not reached within the twenty (20) days, nor was the Order appealed by the Plaintiff within thirty (30) days. However, negotiations between the Plaintiff and Dan Koontz, a representative from the Defendant's Houston office, to (1) sell, (2) farm out, or (3) pay its way continued before and after the July 20, 1989 Order.

During the on-going negotiations with the Plaintiff, the Defendant successfully tested a well from the unit; the test indicated the well would probably be productive. On August 23, 1990, the Plaintiff sent the Defendant a detailed cover letter and a check for $98,771.36 in payment of its share of drilling and completion costs. The letter was addressed to D.C. Jones, Supervisor, Financial Analysis of Exxon in New Orleans. After some delay, the check was deposited in the Defendant's bank account. However, within eight days after the Plaintiff's check was deposited, the Defendant discovered that the check was not in furtherance of an agreement reached between the parties and attempted to refund the check to the Plaintiff. The Plaintiff refused to accept the refunded check and subsequently brought this suit against the Defendant. The Plaintiff claims that acceptance of its payment constituted an accord and satisfaction whereby the Defendant waived the right to charge and collect from the Plaintiff alternate charges. The Plaintiff also contends that the Defendant breached various statutory duties.

STANDARD OF REVIEW

The Federal Rules of Civil Procedure, Rule 56(c) authorizes summary judgment where "the pleadings, depositions, answers to interrogatories and admissions on file, together with affidavits, if any, show that there is no genuine dispute as to any material fact and that the moving party is entitled to judgment as a matter of law." Celotex Corp. v. Catrett, 477 U.S. 317, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). A judge's function at the summary judgment stage is not himself to weigh the evidence and determine the truth of the matter, but to determine whether there is a genuine issue for trial. There is no issue for trial unless there is sufficient evidence favoring the non-moving party for a jury to return a verdict for that party. If the evidence is merely colorable, or is not significantly probative, summary judgment may be granted. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986).

Although Rule 56 is peculiarly adapted to the disposition of legal questions it is not limited to that role. Professional Managers, Inc. v. Fawer, Brian, Hardy & Zatzkis 799 F.2d 218, 222 (5th Cir.1986). "The mere existence of a disputed factual issue, therefore, does not foreclose summary judgment. The dispute must be genuine, and the facts must be material." Id. "With regard to `materiality' only those disputes over facts that might affect the outcome of the lawsuit under the governing substantive law will preclude summary judgment." Phillips Oil Co. v. OKC Corp., 812 F.2d 265, 272 (5th Cir. 1987).

In making its determinations of fact on a motion for summary judgment, the Court must view the evidence submitted by the parties in a light more favorable to the non-moving party. McPherson v. Rankin, 736 F.2d 175, 178 (5th Cir.1984).

The moving party has the duty to demonstrate the lack of genuine issue of material fact and the appropriateness of judgment as a matter of law to prevail on his motion. Union Planters Nat'l Leasing v. Woods, 687 F.2d 117 (5th Cir.1982). Once a properly supported motion for summary judgment is presented, the nonmoving party must rebut with "significant probative" evidence. Ferguson v. National Broadcasting Co., Inc., 584 F.2d 111, 114 (5th Cir.1978). In other words, the "nonmoving litigant is required to bring forward `significant probative evidence' demonstrating the existence of a triable issue of fact." In re Municipal Bond Reporting Antitrust Litig., 672 F.2d 436 (5th Cir.1982). To defend against a proper summary judgment motion, one may not rely on mere denial of material facts nor on unsworn allegations in the pleadings or arguments and assertions in briefs or legal memoranda. The nonmoving party's response, by affidavit or otherwise, must set forth specific facts showing that there is a genuine issue for trial. Fed.R.Civ.P. 56(e); see also Union Planters Nat'l Leasing v. Woods, 687 F.2d at 119.

LEGAL ARGUMENTS

A. Accord and Satisfaction

The Mississippi Supreme Court has recognized four basic elements of an accord and satisfaction. The elements are:

(1) something of value offered in full satisfaction of demand;

(2) accompanied by acts and declarations as amount to a condition that if the thing offered is accepted, it is accepted in satisfaction;

(3) the party offered the thing of value is bound to understand that if he takes it, he takes subject to such conditions; and

(4) the party actually does accept the item.

Lovorn v. Iron Woods Products Corp., 362 So.2d 196, 197 (Miss.1978). The Fifth Circuit in Woods-Tucker Leasing Corp. of Georgia v. Kellum, 641 F.2d 210, 213-14 (5th Cir. 1981) defined an accord as "an agreement to give and accept something in full settlement of a claim." Satisfaction is defined as "the execution of the accord, which discharges the old claim." Id. at 214. The Kellum Court further stated "in order to effect an accord and satisfaction, however, the parties must intend that the payments constitute an accord and satisfaction." Id. (citing Rivervalley Co. v. Deposit Guaranty Nat'l Bank, 331 F.Supp. 698, 708-09 (N.D.Miss.1971)) (emphasis added). The essence of an accord and satisfaction is there must be a "meeting of the minds" and all essential elements of a contract must be met. Cook v. Bowie, 448 So.2d 286, 287 (Miss.1984). "The burden of proving an accord and satisfaction is upon the one who maintains the affirmative of that issue" and the proof must be clear and convincing. Simmons v. Langston, 128 So.2d 749, 750 (Miss.1961). If there is "an offer of part payment of a creditor's claim in full satisfaction of the whole" claim, the offer "must be clear and unequivocal in order to bind the creditor by the acceptance thereof." Metropolitan Life Ins. Co. v. Perrin, 192 So. 12, 14 (Miss.1939).

The Plaintiff contends that it is entitled to summary judgment as a matter of law in that the Defendant's acceptance of the Plaintiff's August 23, 1990 check for $98,771.36 amounted to an accord and satisfaction. The Plaintiff argues that the purpose of its payment was clear since the check, which unambiguously spelled out what the payment was for, was accompanied by a detailed cover letter, which also explained what the check was for. The check along with the cover letter was sent to D.C. Jones, the Defendant's Supervisor, Financial Analysis. See Exhibits H and I to Plaintiff's Motion for Summary Judgment. To support its position that the Defendant knew or should have known what the payment was for the Plaintiff presented evidence showing that negotiations between the Plaintiff and the Defendant had been ongoing for over a year and six specific contacts had been made in the months of June, July and August of 1990, just prior to the check being mailed. See Exhibits A-D, F, and G to Plaintiff's Motion for Summary Judgment. To further support its position the Plaintiff cited case law which stands for the proposition that the contract required in an accord and satisfaction may be implied from the circumstances surrounding each case. See Rivervalley Co. v. Deposit Guaranty Nat'l Bank, 331 F.Supp. 698 (N.D.Miss.1971); Cook v. Bowie, 448 So.2d 286 (Miss.1984); Roberts v. Finger, 86 So.2d 463 (Miss.1956); see also Mid-Continent Tel. Corp. v. Home Tel. Co., 319 F.Supp. 1176, 1191 (N.D.Miss.1970) (intention to be bound by a contract is shown "where one party begins performance, with knowledge and approval of the...