Bopco, L.P. v. Ward

103 So. 3d 1159, 12 La.App. 3 Cir. 316, 2012 La. App. LEXIS 1382, 2012 WL 5417023
Louisiana Court of Appeal·Decided November 7, 2012·No. No. 12-316·Published

Opinion

AMY, Judge.

I, The plaintiff is the operator of an oil well in which the defendants are interest owners. The defendants opted not to participate in the plaintiffs proposal to undertake certain workover repairs necessary for continued production, thereby forfeiting their future interest in the well. Subsequently, the plaintiff sought judgment declaring that, despite the forfeiture of the interests, the defendants will be liable for future plugging and abandonment costs pursuant to the venture’s Operating Agreement. Both the plaintiff and the defendants filed motions for summary judgment on the issue of continuing obligation to the well costs. The trial court granted the plaintiffs motion and rejected that of the defendants. The defendants have appealed. We affirm.

Factual and Procedural Background

The parties entered into an Operating Agreement in 2003 for the acquisition and operation of a Vermilion Parish oil well. The plaintiff in this matter, Bass Enterprises Production Company (hereinafter “BOPCO”), is the Operator of that well. This matter arose in 2007 when BOPCO submitted an Authority for Expenditure to the interest owners, proposing $1,256,000 in expenditures for a workover required in order to return the well to production. The defendant interest owners rejected the proposal, either failing to return the Authority for Expenditure or by expressly denying the request.

This controversy arose when BOPCO filed a petition for declaratory judgment1 in which it asserted that the defendants had indicated that they “would not pay their share of the costs to plug and abandon the well[.]” The plaintiff therefore sought a declaration that the defendants “are obligated to pay their proportionate share of 1 plugging and abandonment costs as and when same become due at the time the same are incurred[.]” In answers and reconventional demands, the defendants denied the plaintiffs allegations and sought a declaration that they were not, in fact, responsible for future plugging and abandonment costs given their “non-consent” to the workover project. The parties ultimately filed motions for summary judgment on the issue of liability of future plugging and abandonment costs under the terms of the Operating Agreement.

Following a hearing on this limited issue, the trial court entered judgment in [1161] favor of the plaintiff, declaring that the defendants “have remained obligated for their proportionate shares of the plugging and abandonment costs of the Well, except for any additional plugging and abandonment costs or expenses caused by the additional operations in which said defendants elected not to participate.” The trial court denied the defendants’ cross-motions for summary judgment. The judgment was made final pursuant to La.Code Civ.P. art. 1915.

The defendants appeal, questioning the trial court’s interpretation of the Operating Agreement.

Discussion

Summary Judgment

An appellate court reviews a trial court’s ruling on a motion for summary judgment under the de novo standard of review. Louisiana Safety Ass’n of Timbermen Self-Insurers Fund v. Louisiana Ins. Guar. Ass’n, 09-0023 (La.6/26/09), 17 So.3d 350. It does so using the same criteria that governed the trial court’s consideration of the motion, i.e., whether any genuine issues of material fact exist and whether the moving party is entitled to judgment as a matter of law. Id. See La.Code Civ.P. art. 966(B).

Is Contract Interpretation

The limited question before this court focuses only on the contents of the Operating Agreement. Articles 2045 through 2057 of the Louisiana Civil Code guide the interpretation of a contract. Particularly, Article 2046 instructs that: “When the words of a contract are clear and explicit and lead to no absurd consequences, no further interpretation may be made in search of the parties’ intent.” Additionally, insofar as we review this case on appeal, we are mindful that, when a contract can be construed from its four corners without resorting to consideration of extrinsic evidence, contractual interpretation is a matter of law. Sims v. Mulhearn Funeral Home, Inc., 07-0054 (La.5/22/07), 956 So.2d 583. See also La.Civ.Code art. 2046.

Operating Agreement

The parties here rely on different portions of the 2003 Operating Agreement now at issue in advancing their respective arguments regarding the prospective liabilities of the defendants who, under the terms of the Operating Agreement, became non-participating parties after they did not consent to the proposed workover operations. We turn to consideration of the pertinent Articles, emphasizing those portions of the Articles focused upon by the parties.

Article 10 of the Operating Agreement specifically addresses “non-consent operations” and provides that:

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Bopco, L.P. v. Ward, 103 So. 3d 1159, 12 La.App. 3 Cir. 316, 2012 La. App. LEXIS 1382, 2012 WL 5417023 (La. Ct. App. 2012).

103 So. 3d 1159 (Bopco, L.P. v. Ward) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

Related

Sims v. Mulhearn Funeral Home, Inc.
956 So. 2d 583 (Supreme Court of Louisiana, 2007)