Plains Exploration & Prod. Co. v. Torch Energy Advisors, Inc. (Opinion)
Annotate this CaseIn a 1996 purchase and sale agreement Torch Energy Advisors Inc. sold its leasehold interests in undeveloped oil and gas fields located under federal waters. Certain interests were excluded from the conveyance. A decade later, a federal court determined that the federal government had repudiated the mineral leases because a statute enacted before the conveyance had been applied in a manner that precluded development of the leasehold interests. Consequently, the purchaser’s successor in interest, Plains Exploration & Production Company, was awarded restitution of the lease-bonus payments that Torch’s predecessor had paid to secure the leases. Torch claimed an ownership interest in approximately half of the judgment based on the terms of the excluded-assets provision in the 1996 agreement. Plains declined to pay. Torch sued, alleging contract and equitable theories of recovery. The trial court entered a take-nothing judgment in Plains’s favor. The court of appeals reversed in part and remanded the equity claim for a trial on the merits, concluding that Torch’s equitable claim hinged on the proper construction of the 1996 agreement’s terms. The Supreme Court reversed, holding that the relevant excluded-assets provisions in the 1996 agreement were unambiguous and, as a matter of law, Torch did not retain ownership of the claimed asset.
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