Cronus Offshore, Inc. v. Kerr-McGee Oil & Gas Corp.

United States Court of Appeals
Fifth Circuit
F I L E D
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT May 3, 2005
Charles R. Fulbruge III
Clerk
No. 04-40832
Summary Calendar
CRONUS OFFSHORE, INC.,
Plaintiff-Appellant,
versus
KERR-MCGEE OIL AND GAS CORPORATION; KERR-MCGEE CORPORATION;
KERR-MCGEE WORLDWIDE CORPORATION,
Defendants-Appellees.
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Appeal from the United States District Court
for the Eastern District of Texas
USDC No. 1:02-CV-565-MC
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Before WIENER, BENAVIDES, and STEWART, Circuit Judges.
PER CURIAM:*
Cronus Offshore, Inc. (“Cronus”) appeals the district
court’s summary judgment dismissal of its contractual claims
arising from the purchase of a mineral lease on the outer
Continental Shelf. We review the district court’s determination
de novo. See Skotak v. Tenneco Resins, Inc., 953 F.2d 909, 912
(5th Cir. 1992); Stewart v. Murphy, 174 F.3d 530, 532-33 (5th
Cir. 1999).
*
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this opinion should not be published and is not precedent except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.
No. 04-40832
-2-
We hold that the totality of the circumstances supports the
district court’s determination that the purchase agreement’s
waiver provision barred Cronus’s contractual claims arising from
the alleged failure to disclose the presence of undrillable
material in the well at issue. See Schlumberger Tech. Corp. v.
Swanson, 959 S.W.2d 171, 181 (Tex. 1997); Prudential Ins. Co. v.
Jefferson Assocs., Ltd., 896 S.W.2d 156, 162 (Tex. 1995). In so
holding, we reject Cronus’s contention that the parties did not
negotiate at arm’s length; Cronus, who was represented by counsel
during the purchase negotiations, was not unfamiliar with the
business of offshore well-recompletion, including the inability
to perform diagnostic testing prior to the lease purchase. Cf.
Schlumberger, 959 S.W.2d at 175-77, 180. Because Cronus’s
inability to inspect the well-bore was not the result of Kerr-
McGee Oil and Gas Corporation’s (“Kerr-McGee’s”) conduct, the
waiver clause also cannot be held unenforceable on that basis.
Prudential Ins. Co. v. Jefferson Assocs., Ltd., 896 S.W.2d 156,
162 (Tex. 1995).
Additionally, Cronus’s summary judgment evidence did not
establish the existence of a genuine issue of material fact
regarding whether Kerr-McGee knew about the presence of the well-
bore obstruction for purposes of establishing fraudulent
misrepresentation. Anderson v. Liberty Lobby, Inc., 477 U.S.
242, 256 (1986); Prudential, 896 S.W.2d at 162-63. Finally,
Cronus’s contention that the waiver is not binding due to the
No. 04-40832
-3-
provision’s failure to cover non-disclosures presupposes the
existence of a non-disclosure, which the summary judgment
evidence did not show to be a genuine issue for trial.
Nevertheless, insofar as the provision disclaimed Cronus’s
reliance on the representations of Kerr-McGee as to the condition
of the well, it necessarily encompassed claims of non-disclosure.
See Schlumberger, 959 S.W.2d at 181-82.
We further hold that the district court’s determination that
Cronus failed to state a claim for breach of contract was not
erroneous. See El Paso Natural Gas, Co. v. Minco Oil & Gas,
Inc., 8 S.W.3d 309, 313 (Tex. 1999). The common law does not
recognize a duty between contracting parties to act in good
faith. Id. at 312-13. Additionally, even if it is assumed
arguendo that the instant lease purchase is governed by the
Uniform Commercial Code (UCC), the alleged breach occurred during
the formation of the contract, to which the UCC’s statutory duty
of good faith does not extend. See id. at 313.
AFFIRMED.