Singer Oil Company LLC v. Newfield Exploration Mid-Continent Inc et al
Filing
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ORDER granting in part and denying in part 39 defendant Newfield Exploration Mid-Continent, Inc.'s Motion for Partial Summary Judgment (as more fully set out). Signed by Honorable Vicki Miles-LaGrange on 10/10/2017. (ks)
IN THE UNITED STATES DISTRICT COURT FOR THE
WESTERN DISTRICT OF OKLAHOMA
SINGER OIL COMPANY, LLC, an
Oklahoma limited liability company,
Plaintiff,
vs.
NEWFIELD EXPLORATION
MID-CONTINENT, INC., a foreign
corporation domesticated to do business
in Oklahoma, and
HALLIBURTON ENERGY SERVICES,
INC., a foreign corporation domesticated
to do business in Oklahoma,
Defendants.
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Case No. CIV-16-768-M
ORDER
This case is scheduled for trial on the Court’s November 2017 trial docket.
Before the Court is defendant Newfield Exploration Mid-Continent, Inc.’s (“Newfield”)
Motion for Partial Summary Judgment, filed July 3, 2017. On July 24, 2017, plaintiff filed its
response. On July 31, 2017, Newfield filed its reply, and on August 22, 2017, Newfield filed its
supplement to its motion for partial summary judgment. On September 20, 2017, plaintiff filed its
supplemental response and objection, and on September 27, 2017, Newfield filed its reply to
plaintiff’s supplemental response and objection. Based on the parties’ submissions, the Court
makes its determination.
I.
Introduction
Effective January 1, 2015, plaintiff became the owner and operator of the Smith No. 1
Well, located in the NW/4 of Section 18-16N-6W, Kingfisher County, Oklahoma, which has
produced from the Big Lime, Skinner, and Mississippi Lime formations (the “Smith Well”). In
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early 2015, Newfield began planning to drill the Edgar 1H-18X well (the “Edgar Well”), a
horizontal well which was to be drilled laterally through the W/2 of Sections 18 and 19-16N-6W,
Kingfisher County, Oklahoma, and to be completed in the Mississippi formation. In anticipation
that Newfield’s operations could potentially, temporarily disrupt production from the Smith Well
or others during Newfield’s completion operation of the Edgar Well and others in the area,
Newfield and plaintiff entered into negotiations for an agreement in or about June 2015. On June
30, 2015, Newfield sent a proposed draft of the Consent and Release Agreement to plaintiff for
review and comment. Newfield and plaintiff entered into the Consent and Release Agreement,
effective June 29, 2015.
On June 9, 2016, plaintiff filed the instant action. Plaintiff alleges that when Newfield
engaged in hydraulic fracturing during the completion operation of the Edgar Well, the Smith Well
was damaged as a result. In its petition, plaintiff alleges various contract claims and negligence
claims against Newfield. Plaintiff also seeks punitive damages. Newfield now moves for
summary judgment on all of plaintiff’s claims except the claim for actual damages for diminution
in value of the Smith Well.
II.
Summary Judgment Standard
“Summary judgment is appropriate if the record shows that there is no genuine issue as to
any material fact and that the moving party is entitled to judgment as a matter of law. The moving
party is entitled to summary judgment where the record taken as a whole could not lead a rational
trier of fact to find for the non-moving party. When applying this standard, [the Court] examines
the record and reasonable inferences drawn therefrom in the light most favorable to the nonmoving party.” 19 Solid Waste Dep’t Mechs. v. City of Albuquerque, 156 F.3d 1068, 1071-72
(10th Cir. 1998) (internal citations and quotations omitted).
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“Only disputes over facts that might affect the outcome of the suit under the governing law
will properly preclude the entry of summary judgment. Furthermore, the non-movant has a burden
of doing more than simply showing there is some metaphysical doubt as to the material facts.
Rather, the relevant inquiry is whether the evidence presents a sufficient disagreement to require
submission to a jury or whether it is so one-sided that one party must prevail as a matter of law.”
Neustrom v. Union Pac. R.R. Co., 156 F.3d 1057, 1066 (10th Cir. 1998) (internal citations and
quotations omitted).
III.
Discussion
In its motion for partial summary judgment, Newfield asserts that plaintiff knowingly and
intentionally waived all claims for damages except a claim for actual damages for diminution in
value of the Mississippi formation in the Smith Well in the Consent and Release Agreement.
Newfield further asserts that it cannot be held to be negligent per se since it drilled and completed
the Edgar Well in accordance with all rules and regulations of the Oklahoma Corporation
Commission. Finally, Newfield asserts that plaintiff cannot prove any facts which might otherwise
entitle it to punitive damages.
A.
Consent and Release Agreement
Newfield asserts that under the Consent and Release Agreement, plaintiff has waived all
claims for damages in this case except a claim for actual damages for diminution in value of the
Mississippi formation in the Smith Well. The Consent and Release Agreement provides, in
pertinent part:
Irrespective of whether Singer has consented to the drilling
of a Newfield Horizontal, if Singer believes that its ultimate
recovery of hydrocarbons from the currently producing interval of
any Affected Existing Vertical Well that is attributable to such
Newfield Horizontal has been permanently decreased (or said well
is otherwise adversely affected) as a result of a Newfield Horizontal,
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then Singer shall within ninety (90) days after the conclusion of the
completion operations on the applicable Newfield Horizontal (such
date with respect to each Newfield Horizontal, the “Claim
Deadline”) provide Newfield with written notice of any claims that
Singer has that such Newfield Horizontal has caused any such
adverse effect or decrease in production along with supporting
information reasonably necessary for Newfield to verify the
existence and accuracy of such claim (each such notice a “Claim
Notice”). To the extent that prior to the Claim Deadline for each
Newfield Horizontal Singer does not provide Newfield with a Claim
Notice with respect to Affected Existing Vertical Wells attributable
to such Newfield Horizontal, Singer shall be deemed to have waived
any and all rights, claims or causes of action to recovery of damages
or otherwise with respect to any such Affected Existing Vertical
Wells (including, without limitation, any rights to indemnification
pursuant to this Agreement that are attributable to such Newfield
Horizontal.) From and after receipt of a Claim Notice by Newfield,
the Parties will thereafter enter into good faith negotiations to
resolve the amount of compensation, if any, to which Singer owns
an interest in the applicable Affected Existing Vertical Well(s) that
are the subject of such Claim Notice may be entitled and which are
determined to have been caused by the applicable Newfield
Horizontal. Such good faith negotiations shall give preference to
(but shall not mandate) the selection of a mutually satisfactory third
party engineer for purposes of providing a binding determination as
to the amount of compensation, if any, to Singer which owns an
interest in the applicable Affected Existing Vertical Well(s) shall be
entitled to receive. If after such negotiations, the Parties are unable
to agree regarding selection of a third party engineer and/or the
amount of compensation which may be due to Singer which owns
an interest in the applicable Affected Existing Vertical Well(s) at
issue, then, without limitation to the waivers provided in this
Agreement, Singer may seek such relief as it deems reasonable and
appropriate without regard to the existence of the other Sections of
this Agreement.
Without limiting the foregoing, the Parties represent,
acknowledge and agree that Newfield shall indemnify and
reimburse Singer for the diminution in value to the interests of
Singer in any Affected Existing Vertical Well to the extent
determined to have been caused by the drilling, operation and/or
production of a Newfield Horizontal attributable to such Affected
Existing Vertical Well(s) and such indemnity (subject to the terms
of this Agreement shall be the sole and exclusive remedy that Singer
shall have against Newfield with respect to such Affected Existing
Vertical Wells. Notwithstanding anything in this Agreement to the
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contrary, the “diminution in value” with respect to any Affected
Existing Vertical Well noted in this Agreement shall be limited to
the decrease in the new present value of the remaining hydrocarbon
reserves ultimately recoverable from the Mississippian formation
from the Affected Existing Vertical Well that was caused by the
drilling, operation and/or production from the applicable Newfield
Horizontal.
Consent and Release Agreement at 2-3.
Newfield relies upon the second paragraph set forth above to support its assertion that
plaintiff has waived all claims for damages except a claim for actual damages for diminution in
value of the Mississippi formation in the Smith Well and that Newfield, therefore, is entitled to
summary judgment as to plaintiff’s negligence claims. Plaintiff, on the other hand, relies upon the
last sentence of the first paragraph set forth above to support its contention that it is not restricted
in the claims it can make.
Upon review of the two paragraphs of the Consent and Release Agreement set forth above,
the Court finds that those paragraphs are clearly contradictory and inconsistent. The end of the
first paragraph purports to allow plaintiff, “without limitation to the waivers provided in this
Agreement”, to seek such relief, i.e., bring such claims, as it deems reasonable and appropriate
“without regard to the existence of the other Sections of this Agreement.” The second paragraph
purports to provide that Newfield’s indemnity “shall be the sole and exclusive remedy that Singer
shall have against Newfield with respect to such Affected Existing Vertical Wells.” The Court
further finds such inconsistency and contradiction makes the Consent and Release Agreement
ambiguous.
“If terms in the contract are ambiguous, it must be construed against the drafter of the
contract.” McMinn v. City of Okla. City, 952 P.2d 517, 522 (Okla. 1997) (internal citations
omitted). In the case at bar, it is undisputed that Newfield drafted the contract. The Court,
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therefore, finds that the terms at issue should be construed against Newfield. Accordingly,
construing the above terms against Newfield, the Court finds that plaintiff is not limited in its
remedies to only a claim for actual damages for diminution in value of the Mississippi formation
in the Smith Well but that plaintiff can bring any claim that it deems reasonable and appropriate.
B.
Plaintiff’s claim for negligence per se
Newfield asserts that it cannot be held to be negligent per se since it drilled and completed
the Edgar Well in accordance with all rules and regulations of the Oklahoma Corporation
Commission.
In its response, plaintiff does not specifically address Newfield’s arguments
regarding plaintiff’s claim for negligence per se. The Court, accordingly, finds that plaintiff has
confessed this portion of Newfield’s motion for partial summary judgment. Therefore, the Court
finds that Newfield is entitled to summary judgment as to plaintiff’s claim for negligence per se.
C.
Plaintiff’s request for punitive damages
Newfield contends that plaintiff cannot prove any facts which might otherwise entitle it to
punitive damages. In order for a plaintiff to be awarded punitive damages, a jury must find by
clear and convincing evidence that the defendant has been guilty of reckless disregard for the rights
of others or that the defendant has acted intentionally and with malice towards others. See Okla.
Stat. tit. 23, § 9.1.
The Court has carefully reviewed the parties’ briefs and evidentiary
submissions. Viewing the evidence in the light most favorable to plaintiff and viewing all
reasonable inferences in plaintiff’s favor, the Court finds that Newfield is entitled to summary
judgment as to plaintiff’s request for punitive damages. Specifically, the Court finds that plaintiff
has not set forth sufficient evidence to create a genuine issue of material fact as to whether
Newfield was guilty of reckless disregard for the rights of others or acted intentionally and with
malice towards others. In fact, the Court finds plaintiff has submitted no evidence which would
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tend to show that Newfield was guilty of reckless disregard for the rights of others or acted
intentionally and with malice towards others.
IV.
Conclusion
Accordingly, for the reasons set forth above, the Court GRANTS IN PART and DENIES
IN PART Newfield’s Motion for Partial Summary Judgment [docket no. 39] as follows:
(A)
The Court GRANTS the motion for partial summary judgment as to plaintiff’s
claim for negligence per se and plaintiff’s request for punitive damages, and
(B)
The Court DENIES the motion for partial summary judgment in all other respects.
IT IS SO ORDERED this 10th day of October, 2017.
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