Landfinders v. Energy Investment ( 2004 )

IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
____________________
No. 97-30170
_____________________
In The Matter Of: LANDFINDERS, INC;
EDWARD P. BENJAMIN, JR;
FIRST NATIONAL BANK OF COMMERCE OF
NEW ORLEANS; LANDOWNER’S INTEREST, INC.,
Debtors.
LANDFINDERS, INC.; LANDOWNER’S
INTEREST, INC.; EDWARD B. BENJAMIN, JR.;
FIRST NATIONAL BANK OF COMMERCE OF
NEW ORLEANS; CATHERINE CARMEN COLE PETTY,
Appellants,
versus
ENERGY INVESTMENT COMPANY; MICHAEL T.
HALBOUTY ENERGY COMPANY; ROWAN
PETROLEUM, INC.; TEXACO, INC.; LEA
EXPLORATION INC.,
Appellees.
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EDWARD B. BENJAMIN, JR., Co-Trustee for
the Class Trust of the children of
Harris P. Dawson, Jr., under the will of
Jennie P. Dawson; FIRST NATIONAL BANK OF
COMMERCE OF NEW ORLEANS, Co-Trustee for
the Class Trust of the children of
Harris P. Dawson, Jr., under the will of
Jennie P. Dawson,
Appellants,
versus
ENERGY INVESTMENT CO.; MICHAEL T.
HALBOUTY ENERGY COMPANY; ROWAN PETROLEUM,
INC.; TEXACO, INC.; LEA EXPLORATION, INC.,
Appellees.
******************************************************************
EDWARD B. BENJAMIN, JR.; FIRST NATIONAL
BANK OF COMMERCE OF NEW ORLEANS,
Co-Trustee for the Class Trust of the
children of Harris P. Dawson, Jr.,
under the will of Jennie P. Dawson;
LANDFINDERS, INC.,
Appellants,
versus
TEXACO, INC.; MICHAEL T. HALBOUTY
ENERGY CO.; LEA EXPLORATION, INC.;
ENERGY INVESTMENT CO.; ROWAN PETROLEUM,
INC.,
Appellees.
_________________________________________________________________
Appeal from the United States District Court for the
Middle District of Louisiana
(96-CV-257, 96-CV-256 & 96-CV-255-B-M1)
_________________________________________________________________
November 14, 1997
Before JOLLY, DAVIS, and BARKSDALE, Circuit Judges.
PER CURIAM:*
This appeal involves the interpretation of certain mineral
leases. While we accord the leases an interpretation different
from that of the trial court, we reach the same end result.
Because the trial court committed no reversible error, we affirm.
*
Pursuant to 5TH CIR. R. 47.5, the court has determined that
this opinion should not be published and is not precedent except
under the limited circumstances set forth in 5TH CIR. R. 47.5.4.
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I
A
As did the trial court, we hold that the leases at issue in
this case are unambiguous and we will thus accord the language used
in the leases its commonly prevailing meaning. Principal Health
Care of Louisiana, Inc. v. Lewer Agency, Inc., 38 F.3d 240, 243
(5th Cir. 1994) (construing Louisiana law); Breland v. Schilling,
550 So. 2d 609, 610 (La. 1989). The bankruptcy court found that
Lea breached its obligation under Paragraph 47 of the leases to
interrupt the prescription of nonuse running against SSA and that
Paragraphs 48 and 52 were stipulated damages provisions that set
out Landfinders’ sole remedy against Lea for such breach. This
interpretation was in error.
Paragraph 47 does not impose an unconditional obligation upon
Lea to interrupt prescription. Indeed, the contract itself
recognized that Lea might not accomplish the goal of prescription
interruption. Paragraph 48 specifically provided that “[i]f, on or
before November 24, 1986, Lessee has determined that it is not
possible for him to comply with the performance obligations [of
Paragraph 47],” then the lessee could elect between executing a
total release or continuing the lease under the different
circumstances set out in Paragraph 52. When the leases are
construed as a whole, it is clear that Paragraphs 48 and 52 set out
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alternatives to performance under Paragraph 47. Lea thus did not
“breach” Paragraph 47 when it failed to drill a Commitment Well on
SSA before November 24, 1986.
B
Our holding that Lea did not breach Paragraph 47 when it
failed to interrupt prescription and elected to continue the leases
under Paragraphs 48 and 52 moots Landfinders’ argument that the
bankruptcy court erred in construing Paragraphs 48 and 52 as
stipulated damages provisions. The performance duties set out in
the leases are not severable. Paragraphs 48 and 52 are not
stipulated damages provisions; they merely set out alternatives to
performance under Paragraph 47.
C
Landfinders also maintains that the bankruptcy court erred
when it concluded that Lea did not breach its performance
obligation under Paragraph 52 because the court found it was
unfeasible to drill a well with the requisite geological
specifications. The contract effectively forgave the failure to
drill the Commitment Well if “prevailing circumstances [made] a
bottom hole location under the leased premises unfeasible.” The
substance of Landfinders’ argument is that the trial court
erroneously defined “unfeasible” to mean “cost prohibitive” instead
of according the term a more narrow meaning closer akin to
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“impossible.”1 We disagree. In everyday parlance, unfeasibility
does not connote impossibility. Webster’s Third New International
Dictionary 2495 (1993) (defining unfeasible as “not feasible” or
“impracticable”). There is no suggestion that the word was a term
of art contradicting its usual meaning.
Although Lea drilled a well only 200 feet away from the leased
premises, the trial court found that it would have been unfeasible
to attempt to sidetrack the well so that it would have a bottom
hole location under the leased premises. The evidence indicated
and the trial court found that Lea drilled at the optimum
geological location and still drilled a dry hole. It would have
been senseless to continue the operation in the face of the
information gleaned from that well. The trial court did not
clearly err by finding that it was unfeasible to drill a well with
a bottom hole location under the leased premises.
II
In conclusion, we hold that the bankruptcy court erroneously
construed the leases, but that such error does not mandate reversal
1
Contained within this argument is the companion contention
that the court erroneously utilized parol evidence to broadly
define “unfeasible.” As set out in the opinion, we hold the term
to be unambiguous. Further, even if the term were ambiguous, the
evidence is clear that the parties did not contemplate a narrow
construction. That the parties redacted the term “impossible” and
instead employed “unfeasible,” even though the change was at Lea’s
urging, evidences an intent consistent with the definition
enunciated by the trial court and adopted by this court.
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in this instance. Reading the leases as a whole, which we must
under Louisiana law, we hold that Lea was not under an
unconditional obligation to interrupt the prescription of nonuse
running against SSA. Paragraphs 48 and 52 provided alternative
performance obligations to those set out in Paragraph 47, thus, Lea
effected no breach of the leases by failing to meet the
interruption requirement in Paragraph 47. Furthermore, the
bankruptcy court did not commit clear error when it found that Lea
fulfilled its drilling obligations under the alternative provisions
because it was unfeasible to drill a well with a bottom hole
location under the leased premises.2
For the reasons set out in this opinion, the ruling of the
district court is
A F F I R M E D.
2
Appellant Petty’s claim for attorneys’ fees and costs of the
litigation is mooted because she did not “prevail” in this action
on the contract.
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