Judge Ezra Decides Cross-Motions for Partial Summary Judgment in Oil and Gas Lease Dispute

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EnerQuest Oil & Gas, LLC v. Plains Exploration & Production Co., No. SA-12-CV-542-DAE, slip op. (W.D. Tex. Nov. 7, 2013)(Ezra, M.J.)

A month after hearing oral argument on four cross-motions for partial summary judgment, Judge Ezra issued a 94-page opinion that narrowed the claims to be tried in this oil and gas lease dispute. 

The primary issue was whether the leases had terminated or remained extant by operation of their shut-in royalty clauses.  The pertinent clause in each lease provided that wells “capable of producing oil and gas . . . in paying quantities” were shut-in the lessee could maintain the lease by paying a shut-in royalty of a dollar an acre within 90 days of being shut-in.  Slip op. at 13-14.  The District Court determined that there were genuine issues of material fact regarding the “Well’s capability of production in paying quantities.”  Id. at 40.   But the District Court concluded that (a) no shut-in royalties were paid during the primary term of the leases, (b) the only well was shut-in on June 2, 2010, making the shut-in royalties due on August 31, 2010, and (c) EnerQuest failed to tender payment beforehand, meaning the leases terminated according to their terms.  Id. at 72. 

In an amended complaint, EnerQuest claimed trespass and other causes of action related to EOG Resources’ unauthorized three-dimensional seismic program on a portion of the leased property.  Slip op. at 73-74.  EOG Resources moved for summary judgment on the grounds that they claim was barred by the two-year statute of limitations for trespass to real property.  Id. at 74.   The District Court rejected EnerQuest’s argument that these claims relate back to the filing of its original complaint, as well as its efforts to invoke tolling doctrines to the claim. Id. at 75-92.  The District Court therefore dismissed these claims.  Id. at 92-94.

Judge Cardone Denies Remand in Unusual Case

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Perez v. Bank of America, No. EP-13-CV-285-KC, slip op. (W.D. Tex. Nov. 7, 2013)(Cardone, J.)

This opinion highlights one of the few circumstances in which proper service is pivotal. The property owners in this foreclosure litigation sued the bank, Freddie Mac, and an individual, but they acknowledged that Freddie Mac and the individual were merely nominal parties. Id. at 1-2.  Process was forwarded to the bank’s North Carolina headquarters by certified mail, but the property owners did not serve the bank’s registered agent in Texas.  Id. at 2.  The bank filed an answer in state court in which it made no objection to service, id. at 4 n.3, but later removed to federal court.  The owners argued that the case should be remanded because more than thirty days had elapsed since process was delivered to the bank’s headquarters.  Id. at 4.  But the District Court concluded that only “formal service of process” triggers the 30-day removal period.  Id. at 5 (quoting City of Clarksdale v. Bell-South Telecomms., Inc., 428 F.3d 206, 210 (5th Cir. 2005)).  The District Court also concluded that (a) Freddie Mac properly joined in the removal even though it had been formally served more than 30 days beforehand, and (b) the individual defendant’s joinder in removal was not required because he was improperly joined.  Id. at 8-10.

Judge Cardone Remands Case After Second Removal

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JP Morgan Chase Bank, N.A. v. Innes, No. EP-13-CV-322-KC, slip op. (W.D. Tex. Nov. 7, 2013)(Cardone, J.)

The District Court remanded this debt collection case sua sponte after the defendants’ first removal.  Slip op. at 2.  They removed again under 28 U.S.C. § 1443, contending that the bank and state district court were violating their due process and equal protection rights.  Id. at 2-3.  The District Court determined that most of the defendants’ claims did not implicate denial of a right arising under federal law for specific civil rights based on racial equality; thus, those claims failed to satisfy the first prong of section 1443’s two-prong test.  Id. at 5-7.  The District Court then determined that all of the defendants’ claims failed to satisfy the second prong—an inability to enforce the federal right in state court “due to some formal expression of state law.”  Id. at 7-8 (quoting City of Houston v. Club Fetish, No. H-13-0944, 2013 WL 1767777, at *4 (S.D. Tex. April 24, 2013).  The District Court also found that the defendants’ removal was frivolous and imposed restrictions on their ability to remove a case in the future.  Id. at 8-10.