IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 17-50217

In the Matter of: WBH Energy, L.P., WBH Energy Partners, L.L.C., WBH 

Energy GP, L.L.C.

 Debtors

U.S. ENERGY DEVELOPMENT CORPORATION, 

 Appellant

v.

CL III FUNDING HOLDING COMPANY, L.L.C., 

 Appellee

Appeal from the United States District Court

for the Western District of Texas

USDC No. 1:16-CV-884

Before HIGGINBOTHAM, JONES, and GRAVES, Circuit Judges.

PER CURIAM:*

U.S. Energy Development Corporation (“USED”) argues that it is 

entitled to attorneys’ fees for previous legal disputes under a Joint Operating 

 

* 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.

United States Court of Appeals

Fifth Circuit

FILED

January 10, 2018

Lyle W. Cayce

Clerk

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No. 17-50217

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Agreement (“JOA”) among USED, WBH Energy Partners, LLC (“Debtor 

LLC”), and WBH Energy, LP (“Debtor LP”). The bankruptcy and district 

courts held that USED was not entitled to attorneys’ fees. Having considered 

the briefs, oral argument, and pertinent portions of the record, we AFFIRM.

In September 2011, Debtor LLC entered into the JOA with Debtor LP 

and USED wherein Debtor LLC would act as the operator of various oil and 

gas leases and wells and Debtor LP and USED took working interests. The 

JOA included the following provision regarding attorneys’ fees for disputes 

between the parties:

Costs and Attorneys’ Fees: In the event any party is required to 

bring legal proceedings to enforce any financial obligation of a 

party hereunder, the prevailing party in such action shall be 

entitled to recover all court costs, costs of collection, and a 

reasonable attorney’s fee, which the lien provided for herein shall 

also secure.

WBH Energy GP, LLC (“Debtor GP”) was not a party to the JOA. The JOA 

choice of law provision states that Texas law applies. 

USED contends it is entitled to attorneys’ fees under the JOA. USED 

bases this contention on four legal proceedings involving the parties:

1. The State Court Proceeding: 

In December 2014, before the bankruptcy cases commenced, USED filed 

suit against Debtor LLC, Debtor LP, and Debtor GP in order to remove Debtor 

LLC as the operator under the JOA and replace it with USED. USED obtained 

a temporary restraining order barring Debtor LLC from acting as the operator 

and replaced it with USED. This action was dismissed by USED after the 

debtors declared bankruptcy in January 2015. 

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2. The Operator Adversary Proceeding

In January 2015, USED filed a complaint in the bankruptcy court again 

seeking to remove Debtor LLC as the operator under the JOA and to replace it 

with USED. USED won a preliminary injunction that granted this relief 

pending trial. During bankruptcy proceedings, Castlelake (also known as “CL 

III”) and USED filed an agreement providing that if Castlelake acquired the 

oil and gas properties, USED would become the operator. The suit was 

dismissed by agreement of the parties in December 2015. 

3. The Interpleader Adversary Proceeding

In February 2015, USED filed an interpleader action in the bankruptcy 

court. USED “sought to interplead approximately $1.9 million representing 

joint interest billings that USED admitted that it owed to Debtor LLC (as 

operator) into the registry of the Court.” In this action, USED sought 

attorneys’ fees and to be discharged “from all liability including the mineral 

subcontractor liens asserted against USED’s interest in the Oil and Gas 

Properties.” The parties settled during mediation and the suit was resolved by 

an agreed final judgment. The final judgment “discharged USED and its 

interest in the Leases and the Wells (as defined in USED’s complaint) from all 

claims asserted by all Defendants” in the Interpleader Adversary Proceeding. 

4. The Bankruptcy Case

The bankruptcy court approved a sale of substantially all of the Debtors’ 

oil and gas assets to CL III, which now owns Debtor LP’s working interest. In 

September 2015, the court approved the debtors’ plan of reorganization, which 

allowed USED to remain the operator of the Oil and Gas Properties. 

The bankruptcy court held that USED was not entitled to fees for any of 

the four proceedings discussed above because USED was not a “prevailing 

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party” in a legal proceeding brought to enforce a “financial obligation,” under 

the JOA. The district court affirmed. 

“This court applies ‘the same standard of review to the decisions of a 

bankruptcy court as does the district court.’” In re Dorsey, 870 F.3d 359, 364 

(5th Cir. 2017) (citation omitted). Therefore, “we review questions of fact for 

clear error and conclusions of law de novo.” In re Cowin, 864 F.3d 344, 349 

(5th Cir. 2017) (citation omitted). Texas contract law requires that courts “give 

meaning, effect, and purpose to every word in the contract.” Tennessee Gas 

Pipeline Co. v. F.E.R.C., 17 F.3d 98, 102-03 (5th Cir. 1994) (emphasis in 

original) (citation omitted).

The State Court Proceeding and Operator Adversary Proceeding were 

brought to remove Debtor LLC as the operator and replace it with USED. In 

each proceeding, USED obtained temporary injunctive relief that granted this 

remedy. The attorneys’ fees section of the JOA requires that the legal 

proceeding in question be brought to enforce a “financial obligation.” The lower 

courts did not err when they held that these proceedings fail to meet the 

“financial obligation” requirement. 

The Interpleader Adversary Proceeding and Bankruptcy Case also fail 

to meet the requirements of the JOA. The Interpleader Adversary Proceeding 

was brought by USED in order to settle USED’s financial obligations. 

Therefore it fails to meet the requirement that USED bring an action to enforce 

the financial obligations of another party. The Bankruptcy Case was brought 

by the debtors, not USED. On that elementary level, USED was not a party 

“required to bring legal proceedings to enforce [a] financial obligation” in the 

Bankruptcy Case. But equally significant is that USED’s filings and 

agreements in connection with the debtors’ reorganization were all designed 

principally to maintain USED’s position as the operator, a position that entails 

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numerous duties apart from USED’s “enforcing a financial obligation” against 

the JOA parties. 

For these reasons, we conclude that USED is not entitled to attorneys’ 

fees under the JOA. The judgment of the district court is AFFIRMED.

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