EPL Oil & Gas, Inc. v. Tana Exploration Company, LLC
Filing
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ORDER AND REASONS: ORDERED that the Plaintiff's 20 Motion for Leave to File Amended Complaint is GRANTED. Signed by Magistrate Judge Karen Wells Roby on September 14, 2018. (mp)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
EPL OIL & GAS, INC.
CIVIL ACTION
VERSUS
NO:
TANA EXPLORATION COMPANY, LLC.
ORDER AND REASONS
SECTION: “M” (4)
18-00757
Before the Court is a Motion for Leave to File its First Amended and Supplemental
Complaint (R. Doc. 20) filed by the Plaintiff, EPL Oil & Gas, Inc. The motion is unopposed. R.
Doc. 127. The Motion was heard on the briefs on September 5, 2018.
I.
Background
This breach of contract action stemming from a failed oil well was originally filed in the
District Court pursuant to its jurisdiction under the Outer Continental Shelf Lands Act, 43 U.S.C.
1333, et eq. R. Doc. 1; January 25, 2018. The original complaint alleges that Plaintiff and
Defendant were joint operators of an oil and gas lease, serial number OCS-G 33657 (“Lease”),
located in the Outer Continental Shelf off the coast of Louisiana. Id., p. 2. Pursuant to oil
exploration on the Lease, Defendant and Plaintiff entered into an Operations Agreement, effective
March 1, 2013, and a subsequent Amendment to Participation Agreement, effective April 24, 2014
(“Agreements”). Plaintiff alleges that, pursuant to the Agreements, Defendant has not paid their
proportionate share of operating and drilling expenses incurred conducting natural resource
exploration on the Lease. Id. Plaintiff claims Defendant owes $1,997,000.00 under the lease. Id.
The Motion before the Court was filed by Plaintiff on August 16, 2018. R. Doc. 20. Plaintiff
seeks leave of the Court to amend their complaint to add an additional breach of contract claim
against Defendant pursuant to the Agreements. 20-4, p. 3. The proposed amended complaint states
that in May of 2018, four months after the original complaint was filed, Plaintiff proposed plugging
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and abandoning of the subject Lease. Id. Plaintiff contends that they have fulfilled their obligations
under the Agreements, but that Defendant has not paid its proportionate share of the plugging and
abandonment expenses according to the Agreements. Id. Defendant has filed no opposition to the
Motion.
II.
Standard of Review
Federal Rule of Civil Procedure 15(a) governs the amendment of pleadings before trial.
Rule 15(a) allows a party to amend its pleadings “only with the other party’s written consent or
the court’s leave.” Fed. R. Civ. P. 15(a)(2). Moreover, the Rule urges that the Court “should freely
give leave when justice so requires.” Id. In taking this liberal approach, the Rule “reject[s] the
approach that pleading is a game of skill in which one misstep by counsel may be decisive to the
outcome and accept the principle that the purpose of pleading is to facilitate a proper decision on
the merits.” Conley v. Gibson, 355 U.S. 41, 48 (1957).
“Rule 15(a) requires a trial court ‘to grant leave to amend freely,’ and the language of this
rule ‘evinces a bias in favor of granting leave to amend.’” Jones v. Robinson Prop. Grp., 427 F.3d
987, 994 (5th Cir. 2005) (internal quotations marks omitted) (quoting Lyn–Lea Travel Corp. v.
Am. Airlines, 283 F.3d 282, 286 (5th Cir. 2002)). When denying a motion to amend, the court must
have a “substantial reason,” considering such factors as “‘undue delay, bad faith or dilatory motive
on the part of the movant, repeated failures to cure deficiencies by amendments previously
allowed, undue prejudice to the opposing party . . . and futility of the amendment.’” Marucci
Sports, LLC v. Nat’l Collegiate Athletic Ass’n, 751 F.3d 368, 378 (5th Cir. 2014) (quoting Jones,
427 F.3d at 994). An amendment is deemed to be futile if it would be dismissed under a Rule
12(b)(6) motion. Id. (citing Briggs v. Miss., 331 F.3d 499, 508 (5th Cir 2003)).
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III.
Analysis
A.
Good Cause
“[T]he Fifth Circuit [has] clarified that when, as here, a scheduling order has been issued
by the district court, Rule 16(b) governs amendment of pleadings.” Royal Ins. Co. of America v.
Schubert Marine Sales, 02–0916, 2003 WL 21664701, at *2 (E.D. La. July 11, 2003) (Englehardt,
J.) (citing S & W Enterprises, L.L.C. v. Southtrust Bank of Ala., 315 F.3d 533, 535–36 (5th Cir.
2003)).
The Scheduling Order states: “Amendments to pleadings, third-party actions, cross-claims
and counter-claims shall be filed no later than MAY 14, 2018.” R. Doc. 12, p. 5. The Scheduling
Order also states that (1) depositions for use at trial shall and all discovery shall be completed no
later than November 29, 2018; (2) the Final Pre-Trial Conference will take place on January 7,
2019; and (3) trial by jury will commence on January 28, 2019. Id., p. 5-6. The Motion before the
Court was filed three months past the Scheduling Order’s amended pleadings deadline. Therefore,
the Plaintiff must show good cause for the proposed amendment under Rule 16(b)(4).
Rule 16(b) limits changes in the deadlines set by a scheduling order “only for good cause
and with the judge's consent.” Fed. R. Civ. P. 16(b)(4). To determine if good cause exists as to
untimely motions to amend pleadings, the Court should consider: “(1) the movant's explanation
for its failure to timely move for leave to amend; (2) the importance of the amendment; (3) the
potential prejudice in allowing the amendment; and (4) the availability of a continuance to cure
that prejudice.” Schubert Marine Sales, 2003 WL 21664701, at *2 (citing S & W Enterprises, 315
F.3d at 536). If the movant can show good cause, the Court will then apply the liberal standards
of Rule 15(a). S&W Enterprises, 315 F.3d at 536.
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The Plaintiff explains that their untimely submission of the amended complaint is due to
the breach of contract claim not arising until May of 2018, which is when they allege that they first
proposed plugging and abandoning the Lease. The instant Motion is similar to several cases where
this Court found good cause where the movant seeking leave to amend was not aware of the facts
supporting their amendment until after the deadline to amend had passed. See Bosarge v. Cheramie
Marine, LLC, Civ. Action 14-2153, 2015 WL 13229569 (E.D. La. July 27, 2015); see also Minias
v. ASI Lloyds, Civ. Action 14-2102, 2015 WL 3824393, at *2-3 (E.D. La. June 19, 2015) (holding
that Defendant showed good cause to amend because it did not know of facts supporting its fraud
claim until after the amendment deadline had passed); cf. Fairley v. Art Catering, Inc., Civ. Action
16-3488, 2017 WL 6994538, at *3 (E.D. La. Sep. 20, 2017) (holding that Plaintiff had failed show
to good cause because she was aware of facts supporting her new proposed claims before the
amendment deadline and failed to seek leave to amend at that time).
Bosarge, factually similar to this Motion, involved a defendant who sought the Court’s
leave to file its first amended answer to assert an affirmative defense. 1 The Defendant in Bosarge
filed its motion five months after the Scheduling Order’s amendment deadline. Id., at *2.
Defendant argued that good cause existed because it had only learned of facts supporting the
affirmative defense three months after the amendment deadline. Id. The Court held that Defendant
had shown good cause because it would have been unreasonable for Defendant to timely allege
the defense before it was aware of the facts supporting it. Id., at *3.
1
Defendant employer was defending against a seaman’s personal injury claims, and facts arose during the
Plaintiff’s deposition that he had prior lower back injuries. In response to this testimony, Defendant sought to assert
the McCorpen defense, which allows for a Jones Act employer to deny maintenance and cure benefits to an injured
seaman who “knowingly failed to disclose a pre-existing physical examination.” McCorpen v. Central Gulf
Steamship Corp., 396 F.2d 547 (5th Cir. 1968).
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Similarly, it would be unreasonable here for Plaintiff to have alleged breach of contract
claims stemming from plugging and abandonment expenses before those expenses existed. It is
unclear from the proposed amended complaint on what date Defendant allegedly breached its
responsibilities, but the Court notes that Plaintiff argues and the amended complaint reflects that
plugging and abandonment of the Lease was not proposed by Plaintiff to Defendant until May of
2018. R. Doc. 20-4, p. 3. From the pleadings, this appears to be the earliest time that Defendant
could have breached their alleged responsibility to share a portion of the plugging and
abandonment expenses.
Additionally, Plaintiff’s approximate two-month delay to file since they learned of the
alleged plugging and abandonment breach by Defendant is equivalent to the Defendant’s threemonth delay in Bosarge, which the Court found acceptable. Id. (seeking leave to amend on June
23, 2015, after learning of facts to support a McCorpen defense on March 19, 2015). Therefore,
the Plaintiff has articulated a valid explanation for its untimely proposed amended complaint, and
the first factor weighs in favor of good cause. Additionally, there has been no suggestion that the
plugging and abandonment claim is unimportant. Therefore, the second factor also weighs in favor
of good cause.
Next, the Court does not discern any potential prejudice to the Defendant in granting the
Plaintiff leave to amend. Defendant, who has not filed an opposition to the proposed amendment,
has also not argued any prejudice. The Court notes that the discovery deadline is not until
November 29, 2018, and that trial is not set until January 29, 2019. Ample opportunity remains
for Defendant to prepare its defense against the plugging and abandonment claim, which arises
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from the same oil exploration, on the same Lease, and pursuant to the same Agreements stated in
Plaintiff’s original complaint. Therefore, the third factor weighs in favor of good cause. 2
With all factors weighing in favor, the Court finds that Plaintiff has shown good cause. The
liberal amendment standards under Rule 15(a) are now discussed.
B.
Undue Delay, Bad Faith, Dilatory Motive
The first factor the court considers when determining whether or not to grant leave to
amend pursuant to Rule 15(a) is whether the amendment will cause any undue delay, is in bad
faith, or that the movant has some dilatory motive in filing the motion.
The cause of Plaintiff’s delay in bringing its breach of contract action is that the plugging
and abandonment of the Lease that forms the basis of the new contract breach claim was not
proposed until May 2018. Additionally, the Court does not find any suggestion of dilatory motive
or bad faith, and the Defendant has not suggested otherwise. Therefore, this factor weighs in favor
of granting leave to amend.
C.
Repeated Amendments, Deficiencies
The second factor the court considers when determining whether or not to grant leave to
amend pursuant to Rule 15(a) is whether the party has previously filed repeated amendments to
cure deficiencies before filing the instant motion. Courts in the Fifth Circuit have found that where
a party has been given multiple opportunities to cure a defect, denial of a Rule 15(a) motion is
proper. See, e.g., Price v. Pinnacle Brands, Inc., 138 F.3d 602, 607–08 (5th Cir. 1998) (upholding
district court's denial of 15(a) motion where plaintiffs had three prior opportunities to amend their
complaint).
2
The fourth factor is not raised because the Court has found no potential prejudice to the Defendant that a
continuance would be required to cure.
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The record shows that this is Plaintiff’s first proposed amended complaint.
Therefore, this factors weighs in favor of granting leave to amend.
D.
Undue Prejudice
The third factor the court considers when determining whether or not to grant leave to
amend pursuant to Rule 15(a) is whether the amendment will cause any undue prejudice to the
opposing party. The Fifth Circuit has cautioned that amendments should not be permitted where
they would “fundamentally alter the nature of the case.” In re American International Refinery,
Inc., 676 F.3d 455, 467 (5th Cir. 2012) (noting that new allegations of fraud in bankruptcy
proceeding would have “fundamentally altered” the nature of a case which had previously been
limited to determination of whether one party possessed a conflict of interest warranting
disgorgement of monies paid), Mayeaux v. Louisiana Health Service and Indem. Co., 376 F.3d,
420, 427–28 (5th Cir. 2004) (finding that complaint would be “fundamentally altered” where
proposed amendment would destroy jurisdiction and “effectively reconstruct[ed] the case anew.”).
Further, the Fifth Circuit has noted that a defendant is prejudiced if an added claim would require
that the defendant, “reopen discovery and prepare a defense for a claim different from the
[one]…that was before the court.” Smith v. EMC Corp., 393 F.3d 590, 596 (5th Cir. 2004) (quoting
Duggins v. Steak’N Shake, Inc., 195 F.3d 828, 834 (6th Cir. 1999)).
As discussed in the Court’s section on good cause, the Court does not perceive any
prejudice to the Defendant. Ample opportunity remains to Defendant to defend the new plugging
and abandonment breach of contract claim. The Court notes that the claim arises from the same
oil exploration, on the same Lease, and pursuant to the same Agreements that formed the basis of
Plaintiff’s original complaint. Therefore, this factor weighs in favor of amendment.
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E.
Futility
The Fifth Circuit has further held that an amendment is futile “when the justification for
the denial is ‘readily apparent’” and the “record reflects ample and obvious grounds for denying
leave to amend.” Marucci Sports, L.L.C. v. Nat’l Collegiate Athletic Ass’n, 751 F.3d 368, 378 (5th
Cir. 2014).
It is not “readily apparent” to the Court that the proposed amended complaint is futile.
Therefore, this factor weighs in favor of granting leave to amend.
Accordingly,
IT IS ORDERED that the Plaintiff's Motion for Leave to File Amended Complaint (R.
Doc. 20) is GRANTED.
New Orleans, Louisiana, this 14th day of September 2018.
KAREN WELLS ROBY
CHIEF UNITED STATES MAGISTRATE JUDGE
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