Hanover Petroleum Corp. v. Tenneco Inc.

521 So. 2d 1234, 99 Oil & Gas Rep. 42, 1988 La. App. LEXIS 703, 1988 WL 16544
CourtLouisiana Court of Appeal
DecidedMarch 2, 1988
Docket87-5
StatusPublished
Cited by27 cases

This text of 521 So. 2d 1234 (Hanover Petroleum Corp. v. Tenneco Inc.) is published on Counsel Stack Legal Research, covering Louisiana Court of Appeal primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Hanover Petroleum Corp. v. Tenneco Inc., 521 So. 2d 1234, 99 Oil & Gas Rep. 42, 1988 La. App. LEXIS 703, 1988 WL 16544 (La. Ct. App. 1988).

Opinion

521 So.2d 1234 (1988)

HANOVER PETROLEUM CORPORATION, Plaintiff-Appellee,
v.
TENNECO INC., Defendant-Appellant.

No. 87-5.

Court of Appeal of Louisiana, Third Circuit.

March 2, 1988.
Rehearing Denied April 11, 1988.
Writ Denied June 2, 1988.

*1235 B.J. Duplantis, Benjamin B. Blanchet, Lafayette, Gordon, Arata, McCollam, Stuart & Duplantis, John M. McCollam, Philip N. Asprodites, Thomas Usdin, New Orleans, for plaintiff-appellee.

Onebane, Donohoe, Bernard, Torian, Diaz, McNamara & Abell, Edward C. Abell, Jr., Douglas Longman, Lafayette, for defendant-appellant.

Before GUIDRY, YELVERTON and KNOLL, JJ.

GUIDRY, Judge.

In this suit, Hanover Petroleum Corporation (hereafter Hanover) seeks relief from Tenneco Inc.'s alleged breach of a Gas Purchase Contract (hereafter the "Kaplan Contract") relating to Hanover's interest in the production from three gas wells located in the Kaplan Field, Vermilion Parish, Louisiana. The trial court granted summary judgment in favor of Hanover finding that the Kaplan Contract is a valid and enforceable contract; the defenses raised by Tenneco in opposition to the motion for summary judgment are issues of law which have no merit; Tenneco breached its "take or pay" obligations under the contract; and, a separate evidentiary hearing should be held to determine the quantum of Hanover's damages and the availability of the remedy of specific performance. Tenneco suspensively appealed seeking a reversal of the trial court's judgment. On appeal, Tenneco *1236 also questions the trial court's rulings on certain discovery motions and other incidental matters.

FACTS

The Kaplan Contract is dated June 8, 1981. The terms of the contract, as amended, obligate Hanover to sell and Tenneco to buy a quantity of "deep gas" produced from three wells in the Kaplan Field equal to 85% of the delivery capacity of the wells.[1] Under the terms of the contract, Tenneco agreed to annually take, or pay for if not taken, the aforementioned quantity of gas. Where gas is paid for but not taken, Tenneco is given the right, under the contract, to make up such volumes, during the term of the contract, by taking volumes of gas, at a later date, above the minimum contract volume without charge. The obligation assumed by Tenneco under the Kaplan Contract is commonly referred to in the industry as a "take or pay" obligation.

The record establishes that, for a considerable period of time prior to the institution of this suit, and continuing thereafter, Tenneco has not taken nor has it paid for the volume of gas which it is required to take or pay for annually under the terms of the Kaplan Contract. In fact, in the spring of 1983, Tenneco notified its producer-suppliers, including Hanover, in a document styled "Emergency Gas Purchase Policy" (EGPP), of its inability to, in substantial part, comply with its "take or pay" obligations under existing gas contracts because of events occurring subsequent to the contracts allegedly constituting force majeure. Hanover repudiated the EGPP announced by Tenneco as a unilateral breach of the Kaplan Contract and this suit followed.

On appeal Tenneco contends, as a basic proposition, that the trial court erred in granting summary judgment despite the presence of genuine issues of material fact with regard to the applicability of the affirmative defenses of Force Majeure, Commercial Impracticability, Imprevision, Mistake and Error, Failure of Cause or Consideration etc., all of which were urged by it at the trial level and all or any one of which, it suggests, would excuse its failure to perform under the Kaplan Contract. Stated another way, Tenneco urges that the trial court erred in striking the affirmative defenses urged by Tenneco without regard to the presence of genuine issues of material fact regarding their applicability. Tenneco corollarily contends that the trial court erred when it struck affidavits filed by it opposing the motion for summary judgment, two in their entirety and four in part. Finally, Tenneco urges that the trial court should have granted its motion to compel answer to certain interrogatories and documents requests and erred when it failed to grant Tenneco's application for a protective order.

At the outset, we address a threshold issue before consideration of this appeal on its merits.

CHOICE OF LAW

Tenneco suggests in brief that Texas law may apply in the instant case and, in that connection, urges that Tenneco's noncompliance with the Kaplan Contract is excused because of the affirmative defenses of Commercial Impracticability (Texas Business and Commercial Code Sec. 2.615) and Imprevision. Hanover argues to the contrary. The trial judge did not specifically decide this issue but presumably, in deciding the instant matter, applied the laws of Louisiana.

The record reflects that negotiations preceding execution of the contract took place both in Texas and Louisiana. Although the contract was signed in Texas and the parties are not residents of Louisiana, performance of the contract, i.e., production of the wells, and delivery to Tenneco's pipeline takes place in Louisiana. Also significant is the fact that the immovable property which is the subject of the contract is located in Louisiana.

*1237 La.C.C. art. 10 (1870), in effect at the time, provided in pertinent part, as follows:

"Art. 10. Choice of law
The form and effect of public and private written instruments are governed by the laws and usages of the places where they are passed or executed.
But the effect of acts passed in one country to have effect in another country, is regulated by the laws of the country where such acts are to have effect."

It cannot be gainsaid that the Kaplan Contract, although executed in Texas, has its effect in Louisiana. Under the circumstances present, the cited article statutorily mandates the application of Louisiana law and it is unnecessary that we conduct a modern interest analysis. Shaw v. Ferguson, 437 So.2d 319 (La.App. 2d Cir.1983); Schueler v. Schueler, 460 So.2d 1120 (La. App. 2d Cir.1984), writ denied, 464 So.2d 318 (La.1985), but see Ark-La-Tex Timber Co., Inc. v. Georgia Casualty & Surety Co., 516 So.2d 1217 (La.App. 3rd Cir.1987). In passing, we observe that if the interest analysis approach were used, we would reach the same conclusion. See The Superior Oil Company v. Transco Energy Company, 616 F.Supp. 98 (W.D.La.1985).

FORCE MAJEURE

The Kaplan Contract contains a force majeure provision which reads in pertinent part as follows:

"In the event of either party being rendered unable, wholly or in part, by force majeure to carry out its obligations under this Contract, other than to make payments due for gas delivered prior to such force majeure, it is agreed that on such party giving notice and reasonably full particulars of such force majeure in writing or by telegraph to the other party within a reasonable time after the occurrence of the cause relied on, then the obligations of the party giving such notice, so far as they are affected by such force majeure, shall be suspended during the continuance of any inability so caused, but for no longer period, and such cause shall so far as possible be remedied with all reasonable dispatch.

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521 So. 2d 1234, 99 Oil & Gas Rep. 42, 1988 La. App. LEXIS 703, 1988 WL 16544, Counsel Stack Legal Research, https://law.counselstack.com/opinion/hanover-petroleum-corp-v-tenneco-inc-lactapp-1988.