Eland Energy, Inc. v. Seagull Energy E & P, Inc.

135 S.W.3d 122, 2004 WL 306006
CourtCourt of Appeals of Texas
DecidedJune 10, 2004
Docket14-02-00709-CV
StatusPublished
Cited by6 cases

This text of 135 S.W.3d 122 (Eland Energy, Inc. v. Seagull Energy E & P, Inc.) 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
Eland Energy, Inc. v. Seagull Energy E & P, Inc., 135 S.W.3d 122, 2004 WL 306006 (Tex. Ct. App. 2004).

Opinion

OPINION

KEM THOMPSON FROST, Justice.

In this breach-of-contract case, we decide whether certain oil and gas operating agreements impose liability on former working-interest owners to reimburse the operator for costs paid by the operator after the former working-interest owner assigned its entire interest to a third party. Under the unambiguous language of the agreements in question, we find no such liability. Therefore, we reverse the trial court’s judgment to the extent it awards damages against appellant/defendant Eland Energy, Inc., and we render judgment that appellee/plaintiff Seagull Energy E & P, Inc. take nothing.

I. Factual and PROCEDURAL Background

Seagull Energy E & P, Inc. (hereafter, the “Operator”) is the designated operator in operating agreements relating to two oil and gas leases of submerged lands on the Outer Continental Shelf off the coast of Texas. After the working-interest owners in these two leases entered into operating agreements regarding operations on each respective lease, Eland Energy, Inc. acquired a working interest in both leases (collectively referred to herein as ‘Working Interests”). As part of the assignment of the Working Interests to Eland, Eland agreed to assume and be hable for a proportionate part of the obligations created by the existing offshore operating agreements pertaining to each interest.

Less than two years after obtaining title to the Working Interests, Eland decided to have these interests sold at an auction that required no minimum bid. In this auction, Nor-Tex Gas Corporation was the successful bidder, and under the terms of the auction, Eland (hereafter, the “Assignor”) assigned the Working Interests to Nor-Tex (hereafter, the “Assignee”), which paid $500 for each as consideration for the assignments. As part of these assignments, the Assignee agreed to assume and be hable for a proportionate part of the obligations created by the existing offshore operating agreements pertaining to each of the Working Interests. The trial court determined that the Assignor vahdly assigned the Working Interests to the As-signee, and the Operator does not contend otherwise on appeal.

*124 The Assignee defaulted in its obligations under the operating agreements by failing to reimburse the Operator for its share of the costs relating to the Working Interests. The Assignee eventually filed for bankruptcy under Chapter 7 of the United States Bankruptcy Code. After the Assign-ee’s default, the Operator demanded reimbursement from the Assignor. While the Assignor owned the Working Interests, it reimbursed the Operator for its share of the operator-incurred costs; however, the Assignor refused to reimburse the Operator for costs incurred after it assigned the Working Interests to the Assignee.

The Operator asserted breaeh-of-con-tract claims against the Assignor and the Assignee and sought reimbursement as to costs incurred after the Assignor assigned the Working Interests to the Assignee. The Operator filed a motion for summary judgment, arguing that the Assignor and the Assignee were jointly and severally liable as a matter of law for breach of the offshore operating agreements relating to the Working Interests. As to the Assign- or, the Operator asserted (1) the Assignor was a party to these operating agreements; (2) the Assignor therefore was required to reimburse the Operator even after it assigned the Working Interests; and (3) the Assignor’s assignment of the Working Interests did not affect the Assignor’s liability under the operating agreements.

The Assignor opposed the Operator’s summary-judgment motion and filed its own motion for partial summary judgment, asserting that, under the unambiguous language of the operating agreements, the Assignor did not have any contractual obligation to reimburse the Operator for costs incurred after the Assignor assigned the Working Interests.

The trial court granted the Operator’s motion and denied the Assignor’s motion. In its interlocutory summary-judgment order, the trial court ruled: (1) the Assignee is liable to the Operator for breach of the operating agreements; (2) although the Assignor assigned the Working Interests to the Assignee, as a matter of law, the Assignor remains liable for performance of its obligations under the operating agreements; and (3) the Assignor breached the operating agreements by failing to reimburse the Operator for the proportionate share of costs relating to the Working Interests after the Assignor assigned these interests to the Assignee.

After a bench trial on the remaining issues, the trial court signed a final judgment that incorporated the court’s prior summary-judgment rulings and that made the following additional rulings: (1) the Assignor and the Assignee are jointly and severally liable to the Operator for $268,418.99, plus prejudgment interest, postjudgment interest, costs, and attorney’s fees; and (2) based on the Assignor’s cross-action against the Assignee, the As-signee must indemnify the Assignor for all of the amounts awarded the Operator against the Assignor in the judgment. The trial court made findings of fact and conclusions of law stating, among others things, that the actual damages awarded the Operator fairly and reasonably compensate the Operator for the failure of the Assignor and the Assignee to comply with the operating agreements.

II. Issue Peesented

On appeal, the Assignor asserts, among other things, that the trial court erred in granting the Operator’s motion for summary judgment and in denying the Assign- or’s motion for partial summary judgment. The Assignor argues that the trial court erred by holding it hable under the operating agreements for costs incurred by the Operator after the Assignor assigned the Working Interests to the Assignee. The *125 Assignor asserts that, under the unambiguous language of the operating agreements, it owed no such contractual obligation to the Operator.

III. Standard of Review

The Assignor asks this court to review the trial court’s denial of its motion for partial summary judgment; however, because this motion did not seek a final judgment, we cannot review the trial court’s denial of the motion. See CU Lloyd’s of Texas v. Feldman, 977 S.W.2d 568, 569 (Tex.1998); General Res. Org., Inc. v. Deadman, 907 S.W.2d 22, 28 (Tex.App.-Corpus Christi 1995, writ denied) (holding appellate court cannot review trial court’s denial of motion for summary judgment after trial on the merits). In reviewing the trial court’s summary judgment that holds the Assignor hable as a matter of law under the operating agreements, we must determine whether the Operator showed there is no genuine issue of material fact and that it is entitled to judgment as a matter of law. See KPMG Peat Marwick v. Harrison County Housing Fin.Corp, 988 S.W.2d 746, 748 (Tex.1999). In conducting our review, we take as true all evidence favorable to the non-movant (Assignor), and we make all reasonable inferences in its favor.

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Bluebook (online)
135 S.W.3d 122, 2004 WL 306006, Counsel Stack Legal Research, https://law.counselstack.com/opinion/eland-energy-inc-v-seagull-energy-e-p-inc-texapp-2004.