Ambiguity found, summary judgment reversed

In Greenwood 950 LLC v. Chesapeake Louisiana LP, the Court found an ambiguity in a Louisiana mineral lease, seeing two reasonable ways to harmonize clauses about obligations to “repair all surface damages” and “pay . . . all damages.”  No. 11-30436 (June 12, 2012) at 5-7 (emphasis added).  On the threshold Erie issue, the Court reminded: “[W]e look first and foremost ‘to the final decisions of Louisiana’s highest court’ rather than this Court’s prior applications of Louisiana law.”  Op. at 4 n.11 (quoting Holt v. State Farm, 627 F.3d 188, 191 (5th Cir. 2010)).

Role of “commercial context” in construing unambiguous contract

The parties in Ballard v. Devon Energy disputed when a provision in an oil field joint operating agreement, about the effect of “surrendering” certain leases, would apply.  No. 10-20497 (April 19, 2012)  The Court affirmed the denial of leave to amend the plaintiff’s contract claims to add a fiduciary duty count, based on a lengthy delay in raising the issue.  Op. at 6.  The Court then, applying Montana law, concluded that while the parties had both advanced “facially plausible” readings of the provision in isolation, the defendant’s reading was more persuasive in the overall context of the entire development project.  Id. at 12-15.  The Court affirmed summary judgment for the defendant, although it criticized the trial court for considering “extrinsic evidence” before attempting to construe the document on its face.  Id. at 9-10.

Statute of frauds proof differs from proof of contract terms

The dispute in Preston Exploration v. GSF, LLC was whether a contract to sell certain oil and gas leases satisfied the Texas Statute of Frauds (“SOF”).  (No. 10-20599, Feb. 1, 2012)  Acknowledging that the parties’ documents envisioned future title work, the Court reversed the district court’s conclusion that this remaining work barred the contracts’ enforcement under the SOF, stating: “Such analysis reflects the conflating of two distinct principles — whether parties come to a meeting of the minds as to the subject matter of a contract with whether a writing’s legal description is sufficient to meet the statute of frauds.”  Op. at 7.

FERC regulation vacated

The case of Texas Pipeline v. FERC involved a challenge to natural gas regulations as beyond FERC’s statutory authority.   The Court found that the regulations were beyond that authority, and accordingly, did not reach any issues where agency deference under Chevron could be appropriate.   See Op. at 5 (“[A]gencies cannot manufacture statutory ambiguity with semantics to enlarge their congressionally mandated border.”)  The Fifth Circuit has taken a conservative view of agency opinions about statutory authority in other thoughtful opinions, see, e.g., Mississippi Poultry v. Madigan, 31 F.3d 293 (5th Cir. 1994) (en banc) (construing the term “same” in statute governing regulation of poultry processing).