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Parker v. MSB Energy, Inc. (In re MSB Energy, Inc.)

United States Bankruptcy Court for the Southern District of Texas, Houston Division

September 14, 2010, Decided; September 14, 2010, Filed

CASE NO. 09-36638, CHAPTER 11, ADVERSARY NO. 10-03246

Opinion

 [*575]  AMENDED MEMORANDUM OPINION ON PLAINTIFFS' MOTION FOR SUMMARY JUDGMENT AND DEFENDANT'S MOTION FOR SUMMARY JUDGMENT1

[Adv. Doc. Nos. 5 & 13]

I. Introduction

The dispute at bar involves the propriety and timeliness of shut-in royalty payments pertaining to two Paid Up Oil and Gas  [**2] leases (collectively the Leases) between Richard K. Parker, Karen E. Parker, Alvin E. Betzel, and Shelia C. Betzel (collectively the Plaintiffs) and MSB Energy, Inc. (MSB).2 The Leases were entered into by the Parkers and the Betzels, as lessors, each with an undivided 50% mineral interest, and Reichmann Petroleum Corporation (Reichmann), as lessee. In June 2008, MSB purchased the Leases from Reichmann and became the operator of the sole well located thereon, the Parker-Betzel Unit No. 1-H (the Well). The Plaintiffs allege that the Leases terminated due to cessation of production because MSB improperly shut-in the Well when there was an "available pipeline" pursuant to the Leases. The Plaintiffs further assert that MSB's disclosure statement serves as a judicial admission that estops MSB from denying that it breached the Leases. Even assuming that there was no cessation of production, the Plaintiffs alternatively contend that the Leases terminated because MSB untimely tendered the shut-in royalty payments. MSB, however, disagrees with the Plaintiffs' assertions—claiming that it did timely and accurately pay shut-in royalties to the Plaintiffs—and, therefore, refuses to relinquish its  [**3] rights to the Leases. Thus, the Plaintiffs have filed a trespass to try title action and a suit to quiet title to gain possession of both the surface and mineral estates. The Plaintiffs also seek a declaratory judgment that the Leases are terminated, null and void, and of no force and effect or, alternatively, that they are entitled to be paid royalties, interest, and attorneys' fees in accordance with the Leases and commensurate with actual production from the Well.

The Court makes the following findings of fact and conclusions of law pursuant to Federal Rule of Bankruptcy Procedure 7052. To the extent that any finding of fact is construed as a conclusion of law, it is adopted as such. Moreover, to the extent that any conclusion of law is construed as a finding of fact, it is adopted as such. The Court reserves its right to make additional findings of fact and conclusions of law as it deems appropriate or as may be requested by any of the parties.

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438 B.R. 571 *; 2010 Bankr. LEXIS 3422 **; 53 Bankr. Ct. Dec. 183

IN RE: MSB ENERGY, INC., Debtor. RICHARD K. PARKER, KAREN E. PARKER, ALVIN E. BETZEL AND SHELIA C. BETZEL, Plaintiffs, VS. MSB ENERGY, INC., Defendant.

Prior History: Parker v. MSB Energy, Inc. (In re MSB Energy, Inc.), 2010 Bankr. LEXIS 3052 (Bankr. S.D. Tex., Sept. 3, 2010)

CORE TERMS

Leases, shut-in, pipeline, fact finding, terminated, royalties, Confirmation, royalty payment, adversary proceedings, transport, summary judgment motion, attorney's fees, summary judgment, lessee, disclosure statement, pre-confirmation, oil and gas lease, post-confirmation, proceeds, tendered, parties, automatic stay, counterclaims, asserting, bankruptcy court, checks, terms, mineral interest, Oil, allowed claim

Bankruptcy Law, Plans, Postconfirmation Effects, Effects of Confirmation, Procedural Matters, Jurisdiction, General Overview, Core Proceedings, Plan Implementation, Contracts Law, Types of Contracts, Lease Agreements, Contract Interpretation, Energy & Utilities Law, Oil, Gas & Mineral Interests, Royalty Interests, Leases & Licenses, Shut In Royalty Clauses, Business & Corporate Compliance, Contracts Law, Standards of Performance, Creditors & Debtors, Evidence, Types of Evidence, Judicial Admissions, Effects, Civil Procedure, Preclusion of Judgments, Estoppel, Judicial Estoppel, Personalty & Realty Interests, Attorney Fees & Expenses, Basis of Recovery, Statutory Awards