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Total E&P United States v. Marubeni Oil & Gas (USA), Inc.

Total E&P United States v. Marubeni Oil & Gas (USA), Inc.

United States Court of Appeals for the Fifth Circuit

July 31, 2020, Filed

No. 19-20271, Consolidated with: 19-20282

Opinion

PER CURIAM:1

 [*199]  TOTAL E&P USA, INC. ("Total") appeals two district court judgments2 holding it liable for the cost of abandoning certain offshore oil and gas assets. Marubeni Oil & Gas (USA), Inc. ("MOGUS") cross-appeals one district court's denial of its motion for judgment as a matter of law on damages related to the abandonment. We AFFIRM the judgment in Case No. 19-20271 and REVERSE and RENDER judgment in Case No. 19-20282.

Background

The Assets and [**2]  Operating Agreements

These consolidated appeals involve the abandonment of assets in the "Canyon Express" oil and gas development in the Gulf of Mexico. Canyon Express contains three oil and gas fields. The fields are connected by a shared pipeline structure known as the Canyon Express Pipeline System ("CEPS"). Two Canyon Express properties are at issue here: (1) CEPS itself and (2) a connected oil and gas field known as MC 305.3

1. CEPS

In 2000, Total and several other companies entered into the CEPS Operating Agreement (the "CEPS Agreement"). The CEPS Agreement governed the parties' "respective rights, duties and obligations" in building, running, and eventually abandoning the "Common System," or CEPS. It referred to the parties as "Common  [*200]  System Owner[s]." It also listed each Common System Owner's "Equity Interest" in CEPS based on its ownership in the connected oil and gas fields.

Total was the original "Operator" of CEPS under the CEPS Agreement. As Operator, Total was required "to operate, maintain, upkeep, repair, [and] administer" CEPS. Total also received rights-of-way from the government to install CEPS.

Two provisions of the CEPS Agreement are important here. The first, Article [**3]  11.3, governs abandonment of CEPS. Article 11.3 states:

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824 Fed. Appx. 197 *; 2020 U.S. App. LEXIS 24357 **; 2020 WL 4460002

TOTAL E&P USA, INC., Plaintiff - Appellant Cross-Appellee v. MARUBENI OIL & GAS (USA), INC., Defendant - Appellee Cross-Appellant TOTAL E&P USA, INC., Plaintiff - Appellant v. MARUBENI OIL & GAS (USA), INC., Defendant - Appellee

Prior History:  [**1] Appeals from the United States District Court for the Southern District of Texas. USDC No. 4:16-CV-2674, USDC No. 4:16-CV-2671.

Total E&P USA, Inc. v. Marubeni Oil & Gas (USA), Inc., 2017 U.S. Dist. LEXIS 215784 (S.D. Tex., Sept. 11, 2017)Total E&P USA, Inc. v. Marubeni Oil & Gas (USA), Inc., 2016 U.S. Dist. LEXIS 142421 (S.D. Tex., Oct. 14, 2016)

CORE TERMS

abandonment, obligations, royalty interest, costs, district court, decommissioning, damages, parties, summary judgment, matter of law, satisfaction, Participating, assigned, argues, rights, cases, oil, assignor, setoff, properties, provisions, operating agreement, time of abandonment, bankruptcy court, rights-of-way, proceedings, judgments, quotation, proceeds, reserved

Energy & Utilities Law, Royalties, Overriding Royalties, Leases & Licenses, Royalty Clauses, Oil, Gas & Mineral Interests, Royalty Interests, Admiralty & Maritime Law, Practice & Procedure, Choice of Law, Business & Corporate Compliance, Outer Continental Shelf Lands Act, Workers' Compensation & SSDI, Outer Continental Shelf Lands Act, Pipelines & Transportation, Pipelines, Offshore Gas & Oil Pipelines, Maritime Workers' Claims, Civil Procedure, Summary Judgment, Entitlement as Matter of Law, Appropriateness, Motions for Summary Judgment, Cross Motions, Appellate Review, Standards of Review, Judgments, Entitlement as Matter of Law, Genuine Disputes, Appeals, Standards of Review, De Novo Review, Trials, Judgment as Matter of Law, Contracts Law, Contract Interpretation, Readjustments, Formation, Delegation of Performance, Third Parties, Parties, Real Party in Interest, Assignees, Contracts Law, Defenses, Novation, Federal Oil & Gas Leases, Extensions & Terminations, Abandonment & Termination, Financing, Grants & Reservations, Assignments & Subleases, Pooling & Unitization, Joint Operating Agreements, Public Contracts Law, Costs & Prices, Cost Accounting Standards, Torts, Settlements, Releases From Liability, Construction & Interpretation, Types of Contracts, Executory Contracts, Bankruptcy Law, Administrative Powers, Executory Contracts & Unexpired Leases, Assignments, Rejections, Procedural Matters, Powers to Assume & Reject, Unexpired Leases, Judgment as Matter of Law, Alternative Motions for New Trials, Preverdict Judgment, Postverdict Judgment, Contract Formation, Consideration, Sufficient Consideration, Guaranty Contracts, Evidence, Weight & Sufficiency