Mack Energy Co v. Red Stick Energy, LLC et al, No. 6:2016cv01696 - Document 280 (W.D. La. 2019)
Court Description: ORDER AND REASONS denying 199 MOTION to Dismiss For Failure to State a Claim, or alternatively MOTION for Summary Judgment (as to Mack Energy Co's Fifth Amended Complaint) denying 237 Motion for Leave to File; denying 239 Motion to Strike. Signed by Judge Susie Morgan on 9/23/2019. (crt,Williams, L)
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Mack Energy Co v. Red Stick Energy, LLC et al Doc. 280 U N ITED S TATES D ISTRICT COU RT W ESTERN D ISTRICT OF LOU ISIAN A MACK EN ERGY COMPAN Y, Plain tiff CIVIL ACTION VERSU S N O. 16 -16 9 6 RED STICK EN ERGY, LLC, ET AL., D e fe n d an ts SECTION "E" ( 1) ORD ER AN D REAS ON S Before the Court is a Rule 12(b)(6) Motion To Dism iss For Failure To State A Claim For Which Relief Can Be Granted, Or Alternatively Motion For Sum m ary J udgm ent, As To Mack Energy Co.’s Fifth Am ended And Superseding Com plaint, filed by Defendant Albert Gunther, J r. 1 Mack Energy Co. (“Mack”) opposes this m otion. 2 Gunther, J r. filed a reply. 3,4 For the following reasons, Gunther, J r.’s m otion is D EN IED . MOTION FOR SU MMARY JU D GMEN T Gunther, J r. labels the instant m otion as a m otion to dism iss for failure to state a claim , or, alternatively, m otion for sum m ary judgm ent. 5 Thus, a threshold inquiry is whether Gunther, J r.’s m otion is properly treated as a m otion to dism iss or a m otion for sum m ary judgm ent. The Court treats Main Pass’s m otion as a m otion for sum m ary judgm ent. “Rule 12(b) gives a district court com plete discretion to determ ine whether or not to accept any m aterial beyond the pleadings that is offered in conjunction with a Rule 1 R. Doc. 199. R. Doc. 211. See also R. Doc. 229 (response to Gunther, J r.’s statem ent of undisputed m aterial facts). 3 R. Doc. 234. 4 Mack also filed a m otion for leave to file a sur-reply. R. Doc. 237. Mack seeks to file a sur-reply attachin g the affidavit of Tim othy Ledet, a District Landm an em ployed by Mack, who attests Thom as Burnett m ade representations to him regarding agreem ents between Burnett and his partner, Gunther, J r. R. Doc. 237-3. In response, Gunther, J r. filed a m otion to strike the affidavit of Tim othy Ledet. R. Doc. 239. Mack opposes this m otion. R. Doc. 261. Because the affidavit of Tim othy Ledet is not relevant to the Court’s determ ination of this m otion, the Court D EN IES AS MOOT Mack’s m otion for leave to file a sur-reply, R. Doc. 237, and Gunther, J r.’s m otion to strike the affidavit of Tim othy Ledet, R. Doc. 239. 5 R. Doc. 199. 2 1 Dockets.Justia.com 12(b)(6) m otion.”6 “‘When the extra-pleading m aterial is com prehen sive and will enable a rational determ in ation of a sum m ary judgm ent m otion, the court is likely to accept it.’”7 In this case, the parties have subm itted m aterials beyond the pleadings that m ake it appropriate to consider the m otion as a m otion for sum m ary judgm ent. Gunther, J r. expressly seeks sum m ary judgm ent in the alternative, 8 and Mack does not request additional discovery prior to the determ ination of Gunther, J r.’s m otion for sum m ary judgm ent. 9 BACKGROU N D 10 This case arises out of the drilling of an oil and gas well in the Main Pass 21 Prospect (the “Prospect”). 11 Houston Energy, L.P. (“Houston Energy”) acquired the Prospect and approached Mack about acquiring an interest and acting as operator of the Prospect. 12 At the tim e, a 26.5% interest in the Prospect rem ain ed available for purchase. 13 Mack allegedly was unwilling to agree to act as operator “until the rem ainin g 26.5% interest was purchased an d Mack was satisfied that the purchasing party would have sufficient funds to pay their 26.5% share of the costs associated with the initial test well.”14 Houston Energy identified Thom as Burnett and Albert W. Gunther, J r., as investm ent partners and interested buyers of the rem aining interest in the prospect. 15 Burnett is a m em ber of Red Stick and Gunther, J r. is a m em ber of Natrona Resources LLC (“Natrona”). 16 “Houston 6 Isquith for and on Behalf of Isquith v. Middle South Utilities, Inc., 847 F.2d 18 6, 193 n.3 (5th Cir. 198 8). Id. (quotin g 5 C. Wright & A. Miller, Federal Practice and Procedure § 1366 (1969)). 8 R. Doc. 199. 9 See R. Doc. 211. 10 This section is based on the allegations of Mack. R. Doc. 191. 11 R. Doc. 191 at ¶ 4. 12 Id. at ¶¶ 4, 7. 13 Id. at ¶ 7. 14 Id. at ¶ 8. 15 Id. at ¶ 9. 16 Id. at ¶ 1. 7 2 Energy had participated in a previous prospect with Burnett and Gunther, J r., nam ed the Barber’s Hill Prospect.”17 According to Mack, “Houston Energy and/ or Burnett represented to Mack that Burnett and Gunther, J r. tim ely paid their share of costs associated with the Barber’s Hill Prospect.”18 Further, “Houston Energy and/ or Burnett inform ed Mack that Burnett and Gunther, J r. had agreed to buy the outstanding 26.5% interest through an entity to be form ed in the future by Gunther, J r., and that future entity (eventually form ed as Defendant, Main Pass), would be funded 90 % by Gunther, J r. and 10 % by Burnett through his com pany, Red Stick.”19 Mack alleges that due to tim e constraints, Mack agreed to allow Red Stick to execute the [Participation Agreem ent (“PA”)] and [J oint Operating Agreem ent (“J OA”)] as buyer of the 26.5% interest with the understanding by Houston Energy and Mack that, pursuant to the agreem ent between Red Stick and Gunther, J r., the 26.5% interest would be assigned to Main Pass, the form ation of which had not yet been com pleted by Gunther, J r.”20 On Decem ber 16, 20 15, “Gunther, J r. formed Main Pass,” and six days later, Burnett, as President of Red Stick, executed the PA and J OA. 21 Main Pass’s m em bers include Natrona and Red Stick. 22 Pursuant to the PA and J OA, Mack drilled the well, which turned out to be a dry hole. 23 The well ultim ately was plugged and abandoned. 24 Mack paid the costs incurred for drilling, testing, plugging and abandoning the well, and issued joint interest billing statem ents to Red Stick for its respective share of the costs. 25 17 Id. Id. at ¶ 10 . 19 Id. at ¶ 13. 20 Id. at ¶ 14. 21 Id. at ¶ 30 . 22 Id. at ¶ 1. 23 Id. at ¶ 22. 24 Id. 25 Id. at ¶ 24. 18 3 A portion of the joint interest billing statem ents representing Red Stick’s 26.5% share of the costs incurred by Mack rem ains unpaid. 26 On Decem ber 8, 20 16, Mack filed the instant lawsuit to recover the costs of drilling, testing, plugging, and abandon ing the dry hole. On J une 18, 20 19, Mack filed its fifth am ended and superseding com plaint, in which it brings a detrim ental reliance claim against Gunther, J r. 27 Mack alleges Gunther, J r. entered into a partn ership agreem ent with Red Stick whereby Gunther, J r.: a. authorized Red Stick to execute the PA and J OA; b. agreed to form Main Pass; c. agreed to accept an assignm ent to Main Pass of Red Stick’s 26.5% interest in the Main Pass 21 Prospect; an d, d. agreed to fund through Main Pass 90 % of the obligations to which Red Stick agreed in the PA and J OA. 28 Mack alleges Gunther J r. entered this partnership agreem ent “with the intent to not accept an assignm ent from Red Stick to Main Pass if the Subject Well proved to be a dry hole”; Mack “justifiably relied upon the representations of the identity and nature of the partnership agreem ent between Red Stick and Gunther, J r. to its detrim ent by agreeing to act as operator with Red Stick, which had insufficient funds to bear 26.5%” of the well; and therefore Gunther, J r. is liable to Mack for dam ages as a result of Mack’s detrim ental reliance. 29 In the instant m otion, Gunther, J r. argues “Mack’s detrim ental reliance claim fails because Mack has not alleged any com m unication between Mack and Albert W. Gunther, 26 Id. at ¶ 26. R. Doc. 191. 28 Id. at ¶ 38 . 29 Id. at ¶¶ 39-37. The paragraph following ¶ 40 is num bered ¶ 37. 27 4 J r. upon which Mack relied to its detrim ent. Instead, Mack clearly states that it relied upon representations of ‘Houston Energy and/ or (Thom as) Burnett.’”30 Mack responds: “Gunther, J r.’s m otion should be denied because Gunther, J r. was bound by the representations m ade by his partner, Thom as Burnett. It is im m aterial to Mack’s claim for detrim ental reliance that Mack and Gunther, J r. did not have direct com m unications.”31 LEGAL STAN D ARD Sum m ary judgm ent is appropriate only “if the m ovant shows that there is no genuine dispute as to any m aterial fact and the m ovant is entitled to judgm ent as a m atter of law.”32 “An issue is m aterial if its resolution could affect the outcom e of the action.”33 When assessing whether a m aterial factual dispute exists, the Court considers “all of the eviden ce in the record but refrains from m aking credibility determ inations or weighing the evidence.”34 All reasonable inferen ces are drawn in favor of the nonm oving party. 35 There is no genuine issue of m aterial fact if, even viewing the evidence in the light m ost favorable to the nonm oving party, no reasonable trier of fact could find for the nonm oving party, thus entitling the m oving party to judgm ent as a m atter of law. 36 If the dispositive issue is on e on which the m oving party will bear the burden of persuasion at trial, the m oving party “m ust com e forward with evidence which would ‘entitle it to a directed verdict if the evidence went uncontroverted at trial.’”37 If the 30 R. Doc. 199-1 at 4. Doc. 211 at 1. 32 Fed. R. Civ. P. 56; see also Celotex Corp. v. Catrett, 477 U.S. 317, 322– 23 (1986). 33 DIRECTV Inc. v. Robson, 420 F.3d 532, 536 (5th Cir. 20 0 5). 34 Delta & Pine Land Co. v. N ationw ide Agribusiness Ins. Co., 530 F.3d 395, 398 (5th Cir. 20 0 8 ); see also Reeves v . Sanderson Plum bing Prods., Inc., 530 U.S. 133, 150 – 51 (20 0 0 ). 35 Little v. Liquid Air Corp., 37 F.3d 10 69, 10 75 (5th Cir. 1994). 36 Sm ith v. Am edisy s, Inc., 298 F.3d 434, 440 (5th Cir. 20 0 2). 37 Int’l Shortstop, Inc. v . Rally ’s, Inc., 939 F.2d 1257, 1263– 64 (5th Cir. 1991) (quoting Golden Rule Ins. Co. v. Lease, 755 F. Supp. 948, 951 (D. Colo. 1991)). 31 R. 5 m oving party fails to carry this burden, the m otion m ust be denied. If the m oving party successfully carries this burden, the burden of production then shifts to the nonm oving party to direct the Court’s attention to som ething in the pleadings or other evidence in the record setting forth specific facts sufficient to establish that a genuine issue of m aterial fact does indeed exist. 38 If the dispositive issue is one on which the nonm oving party will bear the burden of persuasion at trial, the m oving party m ay satisfy its burden of production by either (1) subm itting affirm ative eviden ce that negates an essential elem ent of the nonm ovant’s claim , or (2) dem onstrating there is no evidence in the record to establish an essential elem ent of the nonm ovant’s claim . 39 When proceeding under the first option, if the nonm oving party cannot m uster sufficient eviden ce to dispute the m ovant’s contention that there are no disputed facts, a trial would be useless, and the m oving party is entitled to sum m ary judgm ent as a m atter of law. 40 When, however, the m ovant is proceeding under the second option and is seeking sum m ary judgm ent on the ground that the nonm ovant has no evidence to establish an essential elem ent of the claim , the nonm oving party m ay defeat a m otion for sum m ary judgm ent by “calling the Court’s attention to supporting eviden ce already in the record that was overlooked or ignored by the m oving 38 Celotex, 477 U.S. at 322– 24. Id. at 331– 32 (Brennan, J ., dissenting); see also St. Am ant v. Benoit, 80 6 F.2d 1294, 1297 (5th Cir. 1987) (citing J ustice Brennan’s statem ent of the sum m ary judgm ent standard in Celotex, 477 U.S. at 322– 24, and requirin g the Movers to subm it affirm ative evidence to negate an essential elem ent of the nonm ovant’s claim or, alternatively, dem onstrate the non m ovant’s evidence is insufficient to establish an essential elem ent); Fano v. O’N eill, 80 6 F.2d 1262, 1266 (citing J ustice Brennan’s dissent in Celotex, and requirin g the m ovant to m ake an affirm ative presentation to negate the nonm ovant’s claim s on sum m ary judgm ent); 10 A CHARLES ALAN W RIGHT, ARTHUR R. M ILLER & M ARY KAY KANE , F EDERAL P RACTICE AND P ROCEDURE §2727.1 (20 16) (“Although the Court issued a five-to-four decision, the m ajority an d dissent both agreed as to how the sum m ary-judgm ent burden of proof operates; they disagreed as to how the standard was applied to the facts of the case.” (internal citations om itted)). 40 First N ational Bank of Arizona v. Cities Service Co., 391 U.S. 253, 28 8 – 8 9 (1980 ); Anderson v . Liberty Lobby , Inc., 477 U.S. 242, 249– 50 (1986). 39 6 party.”41 Under either scenario, the burden then shifts back to the m ovant to dem onstrate the inadequacy of the evidence relied upon by the nonm ovant. 42 If the m ovant m eets this burden, “the burden of production shifts [back again] to the nonm oving party, who m ust either (1) rehabilitate the evidence attacked in the m oving party’s papers, (2) produce additional eviden ce showing the existence of a genuin e issue for trial as provided in Rule 56(e), or (3) subm it an affidavit explaining why further discovery is necessary as provided in Rule 56(f).”43 “Sum m ary judgm ent should be granted if the nonm oving party fails to respond in one or m ore of these ways, or if, after the nonm oving party responds, the court determ ines that the m oving party has m et its ultim ate burden of persuading the court that there is no genuine issue of m aterial fact for trial.”44 “[U]nsubstantiated assertions are not com petent sum m ary judgm ent evidence. The party opposing sum m ary judgm ent is required to identify specific evidence in the record and to articulate the precise m anner in which that evidence supports the claim . ‘Rule 56 does not im pose upon the district court a duty to sift through the record in search of evidence to support a party’s opposition to sum m ary judgm ent.’”45 LAW AN D AN ALYSIS To be entitled to sum m ary judgm ent, a m ovant m ust first “identif[y] undisputed m aterial facts that would entitle it to judgm ent as a m atter of law.”46 Only once the m ovant 41 Celotex, 477 U.S. at 332– 33. Id. 43 Celotex, 477 U.S. at 332– 33, 333 n.3. 44 Id.; see also First N ational Bank of Arizona, 391 U.S. at 289. 45 Ragas v. Tenn . Gas Pipeline Co., 136 F.3d 455, 458 (5th Cir. 1998 ) (citing Celotex, 477 U.S. at 324; Forsy th v. Barr, 19 F.3d 1527, 1537 (5th Cir. 1994) an d quoting Skotak v. Tenneco Resins, Inc., 953 F.2d 90 9, 915– 16 & n .7 (5th Cir. 1992)). 46 See, e.g., W estern Alliance Ins. Co. v. N orthern Ins. Co. of N ew York, 176 F.3d 8 25, 8 27 (5th Cir. 1999). See also Lindsey v. Sears Roebuck and Co., 16 F.3d 616, 618 (5th Cir. 1994) (“When seeking sum m ary judgm ent, the m ovant bears the initial responsibility of dem onstrating the absence of an issue of m aterial fact with respect to those issues on which the m ovant bears the burden of proof at trial.” (em phasis added) (citation om itted)). 42 7 identifies un disputed m aterial facts entitling it to judgm ent as a m atter of law does the burden shift to the non-m ovant to show a genuine issue of m aterial fact exists that precludes sum m ary judgm ent. 47 In Gunther, J r.’s statem ent of undisputed m aterial facts, Gunther, J r. states it is undisputed that “Mack has never com m unicated with Defendant, Albert W. Gunther, J r.”48 Gunther, J r. argues, “Mack’s detrim ental reliance claim fails because Mack has not alleged any com m unication between Mack and Albert W. Gunther, J r. upon which Mack relied to its detrim ent.”49 In response to Gunther, J r.’s statem ent of undisputed m aterial facts, Mack adm its it never com m unicated with Gunther, J r. but argues Gunther, J r. is bound by the com m un ications of his partner, Thom as Burnett. 50 Gunther, J r. does not state it is an undisputed m aterial facts that Burnett was not his agent, partner, or representative. 51 The closest Gunther, J r. com es to discussing the m ateriality of whether Burnett’s representations m ay be attributed to him is when he argues: “The Fifth Am ended and Superseding Com plaint is devoid of any allegations that ‘Houston Energy and/ or (Thom as) Burnett’ were the agents of Defendants or authorized to speak on behalf of the Defendants.”52 This statem ent is factually inaccurate, as Mack alleged: Gunther, J r. entered into a partnership agreem ent with Red Stick whereby Gunther, J r.: a. authorized Red Stick to execute the PA and J OA; b. agreed to form Main Pass; 47 See, e.g., Forsy th v . Barr, 19 F.3d 1527, 1533 (5th Cir. 1994). R. Doc. 199-2 at ¶ 2. 49 R. Doc. 199-1 at 4. 50 R. Doc. 229 at ¶ 2. 51 See R. Doc 199-2. 52 R. Doc. 199-1 at 4. 48 8 c. agreed to accept an assignm ent to Main Pass of Red Stick’s 26.5% interest in the Main Pass 21 Prospect; an d d. agreed to fund through Main Pass 90 % of the obligations to which Red Stick agreed in the PA and J OA. 53 The undisputed fact that Gunther, J r. never com m unicated directly with Mack does not entitle Gunther, J r. to judgm ent as a m atter of law on the detrim ental relian ce claim . Gunther, J r. cites no authority, and the Court is aware of none, supporting the position that a principal cannot be held liable for the representations m ade by his agent, or a partner held liable for the representations m ade by his partner, under a theory of detrim ental reliance. Accordingly, whether Burnett had actual or apparent authority to speak on behalf of Gunther, J r. is a m aterial fact that rem ain s in dispute. CON CLU SION IT IS ORD ERED that Gunther, J r.’s m otion for sum m ary judgm ent is D EN IED . N e w Orle a n s , Lo u is ian a, th is 2 3 rd d ay o f Se p te m be r, 2 0 19 . _____________________________ SU SIE MORGAN U N ITED S TATES D ISTRICT J U D GE 53 R. Doc. 191 at 11, ¶ 38 . 9
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