Calpine Producer Services v. Wiser Oil Co.

169 S.W.3d 783, 167 Oil & Gas Rep. 186, 2005 Tex. App. LEXIS 6558, 2005 WL 1971020
CourtCourt of Appeals of Texas
DecidedAugust 17, 2005
Docket05-04-01025-CV
StatusPublished
Cited by61 cases

This text of 169 S.W.3d 783 (Calpine Producer Services v. Wiser Oil Co.) is published on Counsel Stack Legal Research, covering Court of Appeals of Texas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Calpine Producer Services v. Wiser Oil Co., 169 S.W.3d 783, 167 Oil & Gas Rep. 186, 2005 Tex. App. LEXIS 6558, 2005 WL 1971020 (Tex. Ct. App. 2005).

Opinion

OPINION

Opinion by

Justice LANG.

Calpine appeals a summary judgment awarding Wiser damages for natural gas purchased by Calpine under a “Gas Sales and Purchase Agreement.” Pursuant to the agreement, Calpine purchased natural gas, “from time-to-time,” from Wiser, the producer. Then, Calpine resold the natural gas. The trial court’s decision assessing liability and damages was on consideration of cross motions for summary judgment, with many facts being stipulated. The parties agree that the agreement is unambiguous.

In two issues, Calpine asserts that the trial court erred in deciding against Cal-pine and in favor of Wiser. We decide in Calpine’s favor on both issues. Therefore, we reverse and render judgment that Wiser take nothing on its claim against Cal-pine.

I. Factual Context and Procedural History

The subject of this action is the interpretation of a “Gas Sales and Purchase Agreement” dated September 1, 1997, between Wiser, as Seller, and Calpine, then known as Highland Energy Company, as Buyer. Pursuant to the agreement, Calpine purchased natural gas from Wiser during November 2001, and resold the gas to Enron, pursuant to a separate resale contract. It *785 is undisputed that pursuant to the terms of the resale contract between Enron and Calpine, Enron was obligated to pay Cal-pine $732,906.39 ($727,161.81 of which was payable to Wiser) for the Wiser gas, on or before December 26, 2001. In early December 2001, Enron filed for bankruptcy protection under Chapter 11 of the United States Bankruptcy Code and did not pay for the gas as provided in its resale contract with Calpine.

Since Calpine failed to pay Wiser for the gas, Wiser sued Calpine on March 28, 2002, seeking recovery of the full purchase price of the gas based on Calpine’s alleged breach of the agreement. Calpine answered the suit, asserting failure of a condition precedent as an affirmative defense.

During the pendency of this action, Cal-pine filed a proof of claim in the Enron bankruptcy making claims for sums due regarding gas resold to Enron by Calpine for Wiser and other companies. Calpine’s proof of claim against Enron was settled and Calpine was paid a portion of its claim. Then, Calpine paid Wiser $254,495.49 for the Wiser gas. This $254,495.49 was equal to 61.45% of Calpine’s total recovery from Enron, which, according to Calpine, represented Wiser’s proportionate share of Cal-pine’s claim against Enron. Wiser now claims that Calpine owes the remaining balance of the original amount due under the agreement.

Both Calpine and Wiser moved for summary judgment based on the gas purchase agreement’s unambiguous language. Cal-pine’s motion for summary judgment was granted, in part, and Wiser’s was denied.

Then, the trial court granted Wiser’s motion for reconsideration and vacated the partial summary judgment in favor of Cal-pine. The parties filed stipulations concerning certain facts and renewed their motions for summary judgment. At that point, the trial court granted Wiser’s motion for summary judgment, denied Cal-pine’s motion, and entered judgment for Wiser. Calpine timely filed its notice of appeal.

The basic relationship between Calpine and Wiser is outlined in the recitals and paragraph 2.1:

WHEREAS, Seller owns or controls certain natural gas production from properties in which it owns an interest and which are more particularly described herein.
WHEREAS, Seller may have available for sale volumes of said natural gas production from time-to-time; and WHEREAS, Buyer may have markets for and may desire to purchase all or a portion of said production from time-to-time subject to the provisions of this Purchase Agreement;
NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained, Seller and Buyer do hereby covenant and agree as follows:
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2.1 Subject to the other provisions hereof, Seller commits to the performance of this Purchase Agreement the Daily Purchase Quantity and grants to Buyer the sole and exclusive right to purchase such gas during the term hereof, and Buyer commits to use good faith and all reasonable efforts to purchase pursuant to the Purchase Agreement the Daily Purchase Quantity.
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Paragraph 6.1 provides for sale and delivery:

6.1 Gas sold and delivered hereunder shall be delivered at the Point of Delivery. Additional provisions set out the *786 mechanics for the pricing of and payment for the gas purchases:
7.1 The price to be paid by Buyer to Seller for all gas purchased hereunder during each month shall be based upon the Average Daily Volume (as hereinafter defined) in effect for that month and shall be the weighted average of the applicable percentages set forth below multiplied by the Net Proceeds (as hereinafter defined) received by Buyer for gas owned or controlled by Seller and resold by Buyer under the Resale Contract(s), it being understood that Buyer shall utilize reasonable efforts in entering into Resale Contract(s) to obtain the best terms (including without limitation price terms) reasonably available in the area where the subject gas was produced:
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As used herein “Average Daily Volume” shall mean the arithmetic average daily volume of gas purchased by Buyer hereunder obtained by dividing the total volume of gas purchased by Buyer hereunder during a month by the number of calendar days in that month and rounding the result to the next whole number. As used herein, the term “Net Proceeds” shall mean, with respect to any particular calendar month, the difference between “Gross Proceeds” for such calendar month and “Authorized Costs” for such calendar month, where “Gross Proceeds” equal the sum of (a) the gross proceeds received by Buyer for gas owned or controlled by Seller and resold by Buyer under the Resale Contract(s) during such calendar month, and (b) the amount of any imbalance penalty or similar charge that benefits Buyer and Seller for such calendar month, and further where “Authorized Costs” equal the sum of (a) any reasonable transportation, gathering or similar third party charges, or third party charges for fuel or line loss, incurred by Buyer and paid for such calendar month, and (b) subject to proviso contained in the last sentence of Section 4.2 hereof, 100% of any imbalance penalty charges for such calendar month.
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8.1 Buyer shall make payment to Seller for all volumes of gas delivered at the Point of Delivery hereunder which are purchased by Buyer from Seller and resold under the Resale Contract(s). Buyer shall make payment to Seller on the later of either (i) the last day of the month of production or (ii) within five (5) business days of the date it receives payment from its customers under the Resale Contract(s) for gas purchased hereunder;

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Bluebook (online)
169 S.W.3d 783, 167 Oil & Gas Rep. 186, 2005 Tex. App. LEXIS 6558, 2005 WL 1971020, Counsel Stack Legal Research, https://law.counselstack.com/opinion/calpine-producer-services-v-wiser-oil-co-texapp-2005.