United States Court of Appeals
Fifth Circuit
F I L E D
IN THE UNITED STATES COURT OF APPEALS November 3, 2006
FOR THE FIFTH CIRCUIT Charles R. Fulbruge III
Clerk
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No. 06-30471
Summary Calendar
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VELOCITY ENERGY LIMITED L L C
Plaintiff - Appellant
v.
CHEVRON USA INC; RAYMOND I WILCOX; MELODY BOONE MEYER
Defendants - Appellees
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Appeal from the United States District Court
for the Western District of Louisiana, Lafayette
No. 6:05-CV-1779
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Before KING, HIGGINBOTHAM, and GARZA, Circuit Judges.
PER CURIAM:*
Plaintiff-appellant, Velocity Energy Limited LLC, appeals
the summary judgment granted by the district court in favor of
defendants-appellants, Chevron USA Inc. (“Chevron”), Raymond I.
Wilcox, and Melody Boone Meyer. The dispute arises out of a
letter of intent (entitled “Exclusivity Agreement and Non-Binding
Letter of Intent to Purchase OCS Fields Vermilion 214, Vermilion
*
Pursuant to 5TH CIR. R. 47.5, the court has determined
that this opinion should not be published and is not precedent
except under the limited circumstances set forth in 5TH CIR. R.
47.5.4.
245, South Marsh Island 66”) entered into between Velocity and
Chevron, setting forth the preliminary agreements between the
parties for the possible sale of several offshore mineral
properties by Chevron to Velocity. The letter of intent
contemplated that both parties would work toward an eventual
binding asset sale agreement (“ASA”). Except for two provisions
that are not at issue here, the letter of intent was a classic
example of a non-binding agreement, employing a belt and
suspenders approach to language addressing its non-binding
nature.
Apparently both parties did, in fact, work along toward a
binding ASA, but such an agreement was never reached. The fatal
problem occurred when Chevron’s senior management declined to
approve the sale and the related ASA. The letter of intent is
explicit: each party agreed to “timely seek approval of such
party’s senior management to enter into a legally binding ASA
(which approval, it is understood, is not assured and may not
occur).” Velocity argued to the district court, and argues here,
that Chevron’s senior management did, in fact, approve the ASA.
But the record conclusively belies that. The record makes clear
that Chevron’s senior management did not have the power to
approve the ASA without the approval of the Executive Committee
of its corporate parent. The letter of intent was amended to
delay the period for entering into the formal, binding ASA to
October 7, 2004, which (all parties understood) would permit the
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Executive Committee of Chevron’s corporate parent to consider the
sale and the ASA at its October 5 meeting. The meeting occurred,
but the Executive Committee declined to vote the ASA out as
“approved.” Hence, the senior management of Chevron declined to
approve the ASA.
The district court correctly found that Chevron tried
unsuccessfully to obtain Executive Committee approval. When it
proved to be unavailable, the objectives of the letter of intent
were no longer achievable and the deal died a natural death.
Velocity had no claim for breach of contract or for specific
performance. The letter of intent was simply that; no binding
contract (except for the two provisions not at issue here) was
ever confected. Under the circumstances, any detrimental
reliance by Velocity upon the letter of intent was presumptively
unreasonable, and Velocity’s claim for detrimental reliance was
correctly disposed of.
The judgment of the district court is AFFIRMED.
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