IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT United States Court of Appeals
Fifth Circuit
FILED
December 19, 2008
No. 07-31043 Charles R. Fulbruge III
Clerk
CHIEFTAIN INTERNATIONAL (U.S.), INC.; HUNT CHIEFTAIN
DEVELOPMENT, L.P.; HUNT OIL CO.,
Plaintiffs–Appellees,
v.
SOUTHEAST OFFSHORE, INC.,
Defendant–Appellant.
Appeal from the United States District Court
for the Eastern District of Louisiana
Before GARWOOD, GARZA, and OWEN Circuit Judges.
PRISCILLA R. OWEN, Circuit Judge:
Appellant Southeast Offshore, Inc. (Southeast) appeals the district court’s
grant of partial summary judgment to Chieftain International (U.S.), Inc., Hunt
Chieftain Development, L.P., and Hunt Oil Company (collectively, Hunt) and the
court’s holding that Southeast remains solidarily liable to Hunt for the operating
expenses of Southeast’s assignee, South Pass Properties, Inc. (South Pass
Properties). Southeast also appeals the district court’s denial of its motion to
reopen the summary judgment record. We affirm.
No. 07-31043
I
Southeast became an owner of fractional working interests in two federal
oil and gas leases covering submerged lands in the Gulf of Mexico (the Leases).
Joint operations on the Leases among the co-owners were governed by two
separate but substantially identical joint operating agreements (JOAs), one
covering the north half of South Pass Block 37 (North JOA) and the second
covering the south half of South Pass Block 37 (South JOA).
When Southeast acquired its fractional interests in the Leases, it became
a party to and assumed the rights and obligations under the JOAs. Hunt also
owned fractional working interests in the Leases and, in its capacity as operator,
advanced 100% of the costs of operations. Hunt periodically billed the other
co-owners for their proportionate share of such costs in accordance with the
JOAs.
After several years, Southeast stopped paying Hunt’s invoices for its share
of joint account expenses. Southeast subsequently entered into a written
assignment with a newly formed, wholly owned subsidiary, South Pass
Properties, and at that time Southeast owed Hunt approximately $450,000.
Pursuant to the assignment, South Pass Properties assumed all of Southeast’s
rights and obligations under the Leases and JOAs. However, South Pass
Properties did not pay any bills associated with the joint operations on the leases
either before or after the assignment.
Approximately six months after the assignment, Hunt proposed and the
co-owners unanimously approved abandonment of the leases. Hunt undertook
steps to abandon the Leases in compliance with applicable federal regulations,
including paying the associated costs. South Pass Properties failed to pay cash
calls to cover its share of the associated costs.
Hunt filed suit alleging breach of contract. Hunt sued both Southeast and
South Pass Properties, asserting that Southeast’s assignment did not release
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No. 07-31043
Southeast from its obligations under the applicable JOAs. The district court
agreed with Hunt, denying Southeast’s summary judgment motion and granting
a partial summary judgment in Hunt’s favor. The court ruled that the language
in the JOAs was not sufficiently clear to effect a release of Southeast and,
therefore, Southeast was solidarily liable.
Southeast and South Pass Properties then instituted bankruptcy
proceedings under Chapter 7.1 The automatic stay was lifted as to Southeast
and the district court entered a final judgment holding Southeast solidarily
liable to Hunt for $5,841,950.18 plus interest, costs, and attorney’s fees. The
district court also denied Southeast’s motion to reopen the summary judgment
record. Southeast has appealed.
II
This court reviews a grant or denial of summary judgment de novo,
applying the same standard as the district court.2 Summary judgment is
appropriate if “the pleadings, the discovery and disclosure materials on file, and
any affidavits show that there is no genuine issue as to any material fact and
that the movant is entitled to judgment as a matter of law.”3 “Any reasonable
inferences are to be drawn in favor of the non-moving party.”4
Louisiana law provides that an assignee and assignor remain solidarily
liable with regard to the assignor’s obligations to a third party unless the third
party releases the assignor. Louisiana Civil Code article 1821 states:
An obligor and a third person may agree to an assumption by the
latter of an obligation of the former. To be enforceable by the
1
See 11 U.S.C. § 301.
2
Robinson v. Orient Marine Co. Ltd., 505 F.3d 364, 365 (5th Cir. 2007) (citing Gowesky
v. Singing River Hosp. Sys., 321 F.3d 503, 507 (5th Cir. 2003)).
3
FED. R. CIV. P. 56(c).
4
Robinson, 505 F.3d at 366 (citing Gowesky, 321 F.3d at 507).
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No. 07-31043
obligee against the third person, the agreement must be made in
writing.
The obligee’s consent to the agreement does not effect a release of
the obligor.
The unreleased obligor remains solidarily bound with the third
person.5
Accordingly, Southeast’s assignment to South Pass Properties, by itself,
did not release Southeast from its obligations to Hunt.6 Hunt must have
affirmatively released Southeast. The record is devoid of any affirmative release
from Hunt.
Southeast argues that the JOAs expressly provide that there will be no
joint or several liability between Southeast and South Pass Properties.
Southeast cites a provision in the South JOA entitled “Relationship of the
Parties,” which states, in relevant part:
The parties expressly agree that no party hereto shall be responsible
for the obligations of any other party, each party being severally
responsible only for its obligations arising hereunder and liable only
for its allocated share of the costs and expenses incurred hereunder.
It is not the purpose or intention of this Agreement to create, and
this Agreement should never be construed as creating, a
relationship whereby any of the parties shall be held liable for acts,
either of omission or commission, of any other party hereto.
However, contrary to Southeast’s reading, this provision does not relieve a
co-owner from continuing obligations if it assigns its interest in the lease to a
third party.
Southeast also argues that the JOAs provide that an assignor is not
solidarily liable after an assignment. Southeast cites Article VIII of the South
5
LA. CIV. CODE ANN. art. 1821.
6
See Bradford v. Onshore Pipeline Constr. Co., Inc., 03-37,421 (La. App. 2 Cir. 8/22/03);
853 So. 2d 756, 760 n.10 (noting that “[Defendant] is not relieved from its obligations under
the gas purchase contract with Plaintiffs just because it made an assignment to [a third
party]”).
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No. 07-31043
JOA concerning the assignment of rights in a platform proposed to be abandoned
by less than all of the co-owners. Under that provision, a party who assigns its
interest to another co-owner “will have no further rights, obligations or liabilities
thereafter accruing with respect to such platform.” Similarly, Article IX,
involving the abandonment of a well by less than all the parties to the JOA,
provides:
[T]he party or parties desiring that the well be retained . . . shall
pay to the party or parties desiring abandonment the proportionate
share of such latter party or parties’ interest . . . . Upon receipt or
the making of such payment, the party or parties desiring to
abandon the well shall . . . assign . . . to the party or parties desiring
to retain the well all right, title and interest of the assigning party
or parties in and to the well . . . . After making such assignment,
the assigning party or parties shall be under no further obligation
(except for obligations already accrued) with respect to such well or
such production therefrom.
These provisions do not pertain to an assignment of a co-owner’s working
interest to a third party. Further, since the assignment in this case did not occur
due to an abandonment of a platform or well, none of these provisions are
applicable.
No other provisions in the JOAs release Southeast from the obligations to
pay its proportionate share of its operating costs under the JOAs. Nor has
Southeast shown, or sufficiently alleged, a specific defense arising from the
nature of the obligation.7 Because Southeast has not shown that Hunt released
it, Southeast remains solidarily liable to Hunt.
III
Southeast contends that the district court erred by refusing to reopen the
summary judgment record to consider the deposition of Bruce Cope, a Hunt
corporate representative. We review a district court’s ruling on a party’s motion
7
See LA. CIV. CODE ANN. art. 1801 (“[a] solidary obligor may raise against the obligee
defenses that arise from the nature of the obligation”).
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No. 07-31043
to reopen the record for abuse of discretion.8 “The court’s decision ‘will not be
disturbed in the absence of a showing that it has worked an injustice in the
cause.’”9 In deciding whether to allow a reopening, we have directed trial courts
to weigh “the importance and probative value of the evidence, the reason for the
moving party’s failure to introduce the evidence earlier, and the possibility of
prejudice to the non-moving party.”10
During his deposition, Cope was asked about one of the billing records
Hunt had produced earlier in the case. Under the column entitled “Bill,” Cope
testified that “Y” means that a party is billable and “N” indicates that a party is
no longer billable. In the billing record, Cope affirmed that Southeast had an
“N” in the “Bill” column and South Pass Properties had a “Y” in the “Bill”
column. Southeast claims that the Cope testimony provided new evidence that
Hunt released Southeast from any liability for expenses incurred after the
effective date of the assignment to South Pass Properties. But, in its summary
judgment motion, Southeast acknowledged that Hunt changed its billing records
to make South Pass Properties the billable party. The Cope deposition
testimony merely confirmed evidence that was already available. More
importantly, changing the notation for the billable party in internal company
records does not effectuate a release of an interest owner that has assigned its
rights and obligations to a third party.11 The district court correctly determined
8
See Zenith Radio Corp. v. Hazeltine Research, Inc., 401 U.S. 321, 331 (1971) (“[A]
motion to reopen to submit additional proof is addressed to [the trial judge’s] sound
discretion.”); Garcia v. Woman’s Hosp. of Tex., 97 F.3d 810, 814 (5th Cir. 1996) (“We review for
abuse of discretion a district court’s ruling on a party’s motion to reopen its case for the
presentation of additional evidence.”).
9
Garcia, 97 F.3d at 814 (quoting Gas Ridge, Inc. v. Suburban Agric. Props., Inc., 150
F.2d 363, 366 (5th Cir. 1945)).
10
Id.
11
See LA. CIV. CODE ANN. art. 1821 (“The obligee’s consent to the agreement does not
effect a release of the obligor.”).
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No. 07-31043
that the Cope deposition testimony had a low level of importance and probative
value and that introduction of the Cope deposition would not have changed the
outcome of this case.
Because the district court had ample support for its denial of Southeast’s
motion to reopen the record, we conclude that it did not abuse its discretion.
* * *
For the foregoing reasons, we AFFIRM the judgment of the district court.
7