IN THE UNITED STATES BANKRUPTCY COURT 

FOR THE NORTHERN DISTRICT OF TEXAS 

FORT WORTH DIVISION

IN RE: § CASE NO. 22-90000 (MXM)

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ROCKALL ENERGY 

HOLDINGS, LLC, et al., 

Debtors

______________________________ 

TALCO PETROLEUM LLC and 

WHITE MARLIN OPERATING 

CO., LLC 

Plaintiffs

v. 

FORMENTERA PARTNERS 

FUND I, LP 

& 

U.S. SPECIALTY INSURANCE 

CO., 

Defendants. 

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(Chapter 11) 

Adversary No. 23-09003-mxm 

PLAINTIFFS’ RESPONSE TO DEFENDANT FORMENTERA PARTNERS 

FUND I, LP’S RULE 12(B)(6) MOTION TO DISMISS

Talco Petroleum LLC and White Marlin Operating Company LLC (“Plaintiffs”) file this 

Response to Formentera Partners Fund I LP’s (“Formentera”) Rule 12(b)(6) Motion to Dismiss 

and respectfully request this Court to deny Formentera’s Motion for the following reasons. 

I. INTRODUCTION

The alleged facts in the Complaint are more than sufficient to state a plausible claim for 

relief and provide Defendants with fair notice of the issues, and the Court must accordingly deny 

Formentera’s Motion. Formentera’s Motion, while titled as a motion to dismiss for failure to state 

a claim, does not even attempt to address the sufficiency of the facts pleaded in the Plaintiffs’ 

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Complaint. Instead, Formentera tries unsuccessfully to create an inaccurate “straw man” argument 

regarding Plaintiffs’ claims by attempting to introduce new facts, and arguing for an incorrect

interpretation in what is essentially a hybrid between a Motion to Dismiss and a Motion for 

Summary Judgment.1

 Formentera’s Motion should be denied.

II. LEGAL STANDARD

A complaint must contain a “short and plain statement of the claim showing that the pleader 

is entitled to relief.” FED. R. CIV. P. 8(a)(2). A court may grant a motion to dismiss for failure to 

state a claim if and only if the complaint fails to adequately state a plausible claim for which relief 

may be granted. FED. R. CIV. P. 12(b)(6). A court is “required to accept as true all well pleaded 

facts” and to construe the complaint “liberally in favor of the plaintiff.” Campbell v. Wells Fargo 

Bank, N.A., 781 F.2d 440, 442 (5th Cir. 1986). When evaluating a motion to dismiss, “the issue is 

not whether a plaintiff will ultimately prevail but whether the claimant is entitled to offer evidence 

to support the claims.” Jackson v. Birmingham Bd. of Educ., 644 U.S. 167, 184 (2005). “A motion 

to dismiss under rule 12(b)(6) “is viewed with disfavor and is rarely granted.” Collins v. Morgan 

Stanley Dean Witter, 244 F.3d 496, 498 (5th Cir. 2000) (internal citation omitted). 

III. ARGUMENT

The allegations and reasonable inferences of Plaintiffs’ Complaint unequivocally 

constitute a short and plain statement demonstrating Plaintiffs’ entitlement to relief against 

1 For example, Formentera attached Exhibit 2, “Formentera Indemnity Agreement,” dated May 24, 2022, to 

its filing (Doc. 14-2). Despite Formentera’s claim that the document is referenced in the Complaint (Formentera 

Motion, fn. 6), there is no such reference; the Complaint merely quotes the Bankruptcy Order for the proposition that 

“Formentera ‘agreed to execute new Payment and Indemnity Agreements with USSIC.’” Complaint para 20 (emphasis 

added). Exhibit 2 is not part of the underlying bankruptcy record nor is it a public record, and thus Plaintiffs object 

to its inclusion to prevent Formentera’s Motion from being considered as a Motion for Summary Judgment. See In re 

Stangel, 222 BR 289, 291-292 (Bankr. N.D. Tex. 1998) (limiting materials other than the pleadings that may be 

considered to “materials submitted as part of the complaint, items in the record, and public record.”); see also In re 

Kelso, 196 B.R. 363, 366 (Bankr. N.D. Tex. 1996) (holding that absent an objection to consideration of extraneous 

documents, the motion to dismiss would be considered as a motion for summary judgment). Should the Court consider 

Formentera’s Motion as a Motion for Summary Judgment, Plaintiffs request the opportunity to brief the issues in full 

under the summary judgment standard.

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Formentera, and the Court must accordingly deny Formentera’s Motion. FED. R. CIV.

P. 8, 12(b)(6). As set forth below, Formentera’s Motion ignores the appropriate standard and does 

not even address the sufficiency of Plaintiffs’ Complaint, choosing instead to argue the merits of 

Plaintiff’s claim. Even then, Formentera is mistaken, as the Complaint and the underlying record 

make clear that Formentera assumed responsibility for the Disputed Bonds.

A. Formentera’s Motion Does Not Address the Sufficiency of Plaintiffs’ Complaint.

The purpose of a motion to dismiss is to attack the sufficiency of the pleadings against a 

party, specifically whether the pleadings support a plausible claim for relief against that party. 

FED. R. CIV. P. 8, 12(b)(6). Rather than fulfill this purpose, Formentera’s Motion instead provides 

its own characterization of the facts and does not once attack the actual sufficiency of the 

Complaint, aside from the occasional vague accusation of “conclusory allegations and legal 

conclusions.” (See, e.g., Br. at 1 (unsupported accusations), ¶¶ 1–17 (arguing to recharacterize 

facts)). 

This alone should doom Formentera’s motion, but Formentera attempts to salvage its 

Motion by claiming that that “even if all of the factual allegations in the Complaint were true, the 

Plaintiffs would not be entitled to relief against Formentera.” (Br. at 2). Despite this conclusory 

statement, Formentera does not actually support this argument anywhere in its briefing. (See 

generally, Br. at 10–12). This is unsurprising, as the factual allegations in the Complaint make 

clear Plaintiffs are entitled to relief against Formentera. (See Compl. ¶¶ 18, 25, 29–30 

(demonstrating a judiciable controversy between parties)). But more importantly, at this stage, 

when considering the Complaint in a light most favorable to Plaintiffs, Formentera cannot show 

that Plaintiffs failed to state a claim upon which relief can be granted. See FED. R. CIV. P. 12(b)(6).

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B. Plaintiffs’ Complaint States a Viable Claim Upon Which Relief Can Be Granted.

Contrary to Formentera’s Motion, Plaintiffs’ claim against Formentera and its supporting 

facts are easily ascertained from the Complaint: Plaintiffs allege that Formentera is responsible for 

the five Disputed Bonds (Compl. ¶ 25); that Defendant U.S. Specialty Insurance Co. (“USSIC”) 

failed to differentiate between bonds owned by Plaintiffs and by Formentera (Compl. ¶¶ 23–24); 

that USSIC wrongfully attempted to collect payment from Plaintiffs on the Disputed Bonds, rather 

than from Formentera (Compl. ¶¶ 23, 26); and that “[a]n actual legal and substantial controversy 

exists between the parties regarding responsibility for the Disputed Bonds” that entitles Plaintiffs 

to a declaratory judgment resolving the controversy (Compl. ¶¶ 27, 29–31). These allegations 

alone are sufficient for the Complaint to survive a motion to dismiss. See Emps. Mut. Cas. Co. v. 

New Horizon Prod., LLC, No. 1:09CV958, 2010 WL 11527385, at *1 (E.D. Tex. May 18, 2010)

(holding a complaint that demonstrates a court may afford relief under the Declaratory Judgment 

Act as being adequate to survive a challenge under Rule 12(b)(6)). 

Here, a declaratory judgment action is appropriate for establishing rights, status, or other 

legal relations, provided there is a justiciable controversy about the rights and status of the parties 

and the declaration will resolve the controversy. See 28 U.S.C. § 2201(a); Sherwin-Williams Co. 

v. Holmes County, 343 F.3d 383, 389 (5th Cir.2003). The Fifth Circuit has identified three 

questions to guide a district court’s ruling on a motion to dismiss a declaratory judgment action: 

“(1) whether the declaratory action is justiciable; (2) whether the court has the authority to grant 

declaratory relief; and (3) whether to exercise its discretion to decide or dismiss the action.” Id. at 

387. Notably, Formentera’s Motion provides no analysis of these questions; in fact, the words

“justiciable” and “controversy” are not even present in Formentera’s brief.

The Northern District of Texas considered the application of these three questions in Wells 

Fargo Bank Minnesota v. Wachovia Bank. No. CIV.A. 3:02-CV-1945-, 2004 WL 2826773 (N.D. 

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Tex. Dec. 9, 2004). In Wells Fargo, plaintiff Wachovia filed a declaratory judgment action to 

determine whether it was required to turn over certain origination documents to defendant ORIX 

under a Mortgage Loan Purchase Agreement (“MLPA”). Id. at *2. ORIX, who had already sued 

Wachovia for breach of the MLPA and requested the origination documents after Wachovia moved 

for summary judgment in that case, moved to dismiss ORIX’s declaratory judgment action, 

arguing that ORIX was simply restating its defenses to the breach suit. Id. The court denied 

ORIX’s motion to dismiss, however, finding that “declaratory judgment would ‘provide relief 

from uncertainty about the interpretation of Wachovia's duties under the contracts,” and that the 

“uncertainty [regarding the parties’ obligations under the MLPA and another contract] is not 

merely theoretical.” Id. at *3.

So too should be the fate of Formentera’s Motion, which fails to demonstrate that Plaintiffs 

have not sufficiently pled a plausible claim for relief. The closest Formentera comes to attacking 

the Complaint’s sufficiency is its assertion that the Complaint is “devoid” of factual allegations 

that Formentera “agreed to indemnify USSIC or pay premiums to USSIC” with respect to the five 

Disputed Bonds. (Br. at 10). Yet an allegation of this nature is not required for the Complaint to 

survive Formentera’s Motion. The declaratory judgment Plaintiffs seek will resolve the question 

of whether “Formentera has sole responsibility for the Disputed Bonds” and whether “Talco, 

WMOC, or WMP have no responsibility for...the Disputed Bonds.” (Compl. at 7). Whether

Formentera did or did not make an agreement regarding the Disputed Bonds has no bearing on the 

sufficiency of the Complaint; the origin of Formentera’s obligation regarding the Disputed Bonds 

is a red herring question of fact that is not appropriately settled at this stage in the litigation. See

Cinco J., Inc. v. Pressure Trucks, 2015 WL 1957108, at *6 (W.D. Tex. Apr. 29, 2015). Instead, 

the question under the applicable legal standard is whether Plaintiffs have adequately pled their 

declaratory judgment action—a question which must be answered in the affirmative.

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The Complaint:

• Appropriately names all interested parties whose interest would be affected by the 

declaration sought. Compare 28 Wells Fargo, No. CIV.A. 3:02-CV-1945-, 2004 WL 

2826773, at *3, with Compl. ¶¶ 4–7;

• Identifies the rights and status of the parties that Plaintiffs seek to establish. Compare 

28 U.S.C. § 2201(a) (addressing purpose of declaratory judgment), with Compl. ¶¶ 25, 

27 (posing “the question of responsibility for the five Disputed Bonds”); and

• Sufficiently alleges that there is an actual and justiciable controversy over the rights of 

the parties involved. Compare Emps. Mut. Cas. Co., No. 1:09CV958, 2010 WL 

11527385, at *1 (denying motion to dismiss declaratory judgment action where 

justiciable controversy was identified and pled), with Compl. ¶¶ 29–30 (alleging 

controversy over the parties’ respective responsibilities for the Disputed Bonds), ¶ 31 

(declaratory judgment will adjudicate the parties’ responsibilities and further the plan 

under the Bankruptcy Order).

Formentera’s Motion does not offer—nor does it try to offer—anything that controverts these basic 

allegations or show why they are inadequately pled. 

Despite Formentera’s attempts to muddy the clear waters of the pleadings by bringing in a 

myriad of new facts, Plaintiffs’ requested relief and the basis thereof is sufficiently set forth in the 

Complaint such that the Court should deny Formentera’s motion. The Complaint demonstrates 

that a declaratory judgment is needed to affirm Formentera’s responsibility for the Disputed Bonds 

and its obligation to execute new Payment and Indemnity Agreements in a form satisfactory to 

USSIC. (Compl. ¶ 22–27 (setting forth basis of controversy between Plaintiffs, USSIC, and 

Formentera)). The Complaint unquestionably alleges a plausible claim for relief against 

Formentera. When scrutinized under the directive to accept as true all well pleaded facts, the 

Complaint must therefore survive Formentera’s Motion. See Campbell, 781 F.2d at 442.

Just as the Wells Fargo court found that a “declaratory judgment would serve a useful 

purpose and relieve uncertainty, insecurity, and controversy” in the lawsuit over the parties’ 

obligations under the contracts and denied ORIX’s motion, this Court should also deny 

Formentera’s Motion and proceed with resolving the question of the Disputed Bonds’ responsible 

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party. Wells Fargo, No. CIV.A. 3:02-CV-1945-, 2004 WL 2826773, at *3. Doing so would 

eliminate uncertainty in USSIC’s lawsuit against White Marlin Operating Company, LLC, and 

would further the underlying bankruptcy action by ensuring the proper parties are held responsible 

for the bonds upon which they owe funds.2

In addition to relying on the factual allegations and reasonable inferences in a complaint, 

the Court may also consider the underlying record when considering a motion to dismiss under 

Rule 12(b)(6). Meyers v. Textron, Inc., 540 F. App’x 408, 409 (5th Cir. 2013). Thus, even if the 

allegations set forth in the Complaint did not sufficiently establish a plausible claim for relief—

which Plaintiffs dispute—when taken with the underlying records in this proceeding, the 

allegations provide more than sufficient evidence that there is a legal and substantial controversy 

between the Plaintiffs and all Defendants, and Formentera’s Motion must therefore be denied.

C. Evidence Confirms the Five Disputed Bonds are Formentera’s Responsibility.

Formentera’s Motion focuses not on the sufficiency of the factual allegations in the 

Complaint, but rather on an attempt to argue that the five Disputed Bonds are not Formentera’s 

responsibility: an argument not supported by the facts, the record, or the law. Regardless, factual 

assertions that go to the merits of a claim require determinations not appropriate for a motion to 

dismiss. See, e.g., White v. U.S. Corr., L.L.C., 996 F.3d 302, 310 (5th Cir. 2021) (reversing lower 

court dismissal of complaint when dismissal was based on factual determinations). At the very 

least, Formentera’s attempts to re- or mischaracterize the facts at issue establishes both that 

Plaintiffs have stated a plausible claim for a declaratory judgment, and that Formentera 

understands the nature of that claim. While Plaintiffs believe that Formentera’s Motion should be 

2 At the time Plaintiffs filed the Complaint, the Southern District of Texas had not yet ruled on Plaintiffs’ 

Motion to Stay USSIC’s lawsuit. (See Compl. ¶ 27). The USSIC lawsuit has since been stayed.

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considered solely under the FED.R.CIV. P. 12(b)(6) standard, in an abundance of caution, Plaintiffs 

will also address the misinterpretations of fact that Formentera claims supports its Motion. 

1. The Disputed Bonds are “Identified Surety Bonds.”

Formentera attempts to argue that the Disputed Bonds at the center of the controversy 

between parties is not Formentera’s responsibility, since it is only responsible for “certain” surety 

bonds. (Br. at 11). Yet Formentera itself concedes that it “agreed to execute New Indemnity 

Agreements with USSIC with regard to the ‘Identified Surety Bonds.’” (Br. at 11). Formentera 

asserts that “Identified Surety Bonds” is a defined term in the Sale Order that it does not include 

the five Disputed Bonds, Br. at 11, but this assertion is only half right: “Identified Surety Bonds” 

is a defined term, but it specifically includes the five Disputed Bonds. The Sale Order defines 

“Identified Surety Bonds” as those surety bonds that “are identified on Schedule 4.13 of the PSA 

(the “Identified Surety Bonds”).” (Doc. 14-3, Appx. p. 1064 (emphasis in original)). All five of 

the Disputed Bonds are specifically identified in Schedule 4.13. (Doc. 14-3, Appx. pp. 726-732).

3

 

As such, the Sale Order makes the Disputed Bonds Formentera’s responsibility by requiring 

Formentera to execute new Payment and Indemnity Agreements with USSIC. At a minimum, the 

intended meaning of the Identified Surety Bonds is ambiguous, and at this stage in the litigation 

Plaintiffs’ interpretation must be given deference. Jackson, 644 U.S. at 184; Campbell, 781 F.2d 

at 442. 

2. The Disputed Bonds are Required to Own and Operate the Acquired Assets.

Formentera also repeatedly argues that it was only required to execute new indemnity 

agreements with USSIC for bonds that are “required to own and operate the assets following 

closing.” (See, e.g., Br. ¶¶ 8, 17). In doing so, Formentera disregards the fact that the five Disputed 

3 Bond B011583 is listed on Appx. p.0728; Bonds B012260, B012262, and B102263 are listed on Appx. 

p.0729, and Bond B012265 is listed on Appx. p.0730. 

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Bonds are identified in the PSA as being required for ownership or operation of the acquired assets, 

and that the PSA represents that the bonds listed on Schedule 4.13—including the “Identified 

Surety Bonds”—are a “complete and accurate list of all Credit Support provided by or on behalf 

of any Seller in support of the obligations of such Seller to any Governmental Authority, contract 

counterparty or other Person related to the ownership or operation of the Assets.” (Doc. 14-1, 

Appx. p.0062 (emphasis added)). Moreover, co-defendant USSIC represented to the Court that 

because the Debtors were in the oil and gas industry, the Debtors acquired the USSIC bonds “in 

order to perform such operations and comply with certain legal and regulatory obligations.” 

(Bankr. Doc. 352, ¶ 4; Bankr. Doc. 440, ¶ 5; and Bankr. Doc. 522, ¶ 4). USSIC specifically 

noted that the bonds “include plugging and abandonment bonds and certain utility bonds.” (Id.).

As an active participant in the underlying bankruptcy proceedings in the lawsuit and holder 

of certain USSIC bonds, Formentera was aware of the Disputed Bond’s necessity to the ownership 

and/or operation of the Assets in question. Presumably, Formentera was equally aware it has no 

authority to unilaterally decide whether the bonds are required for operation of the acquired assets. 

For example, the State of Louisiana has a formal protocol that must be followed to release such 

bonds, and the bankruptcy record indicates that at least three of the bonds, B011583, B012262, 

and B012263 are for Louisiana based wells. (Bankr. Doc. 523-16; Bankr. Doc. 523-33; and Bankr. 

Doc. 523-34).4 As the Disputed Bonds are required to own and operate the acquired assets, the 

Sale Order obligates Formentera to be responsible for the bonds upon purchasing the underlying 

assets. 

4 A fourth bond, B012265, also includes Louisiana properties, but proof requires referencing documents 

outside of the bankruptcy record. 

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3. The Disputed Bonds are Assumed Obligations.

Formentera also asserts that it is not responsible for the Disputed Bonds because the Sale 

Order states it “shall have no obligations with respect to any liabilities of the Debtors (other than

permitted encumbrances and assumed obligations.)” (Br. ¶ 11 (emphasis added)). Plaintiffs allege 

the Disputed Bonds are assumed obligations, however.5 (Compl. ¶ 18, 20 (listing bonds assumed 

by Formentera, including the Disputed Bonds)). Thus Formentera’s suggestion that Plaintiffs have 

no claim against it because the Sale Order states Formentera has no obligations other than 

permitted encumbrances and assumed obligations likewise falls flat.

IV. CONCLUSION

Formentera was served with a clear, well-pled Complaint for a Declaratory Judgment and 

now attempts to obfuscate the record and argue its defenses under the guise of a motion to dismiss. 

Yet Formentera’s attempts to argue against its responsibility for the Disputed Bonds only 

emphasize Plaintiffs’ argument that a judiciable controversy between the Parties exists. Plaintiffs 

met the requirements of Rule 12(b)(6) of the Federal Rules of Civil Procedure and stated a 

plausible claim upon which relief can be granted. The Court should deny Formentera’s Motion to 

Dismiss and allow the parties to proceed with this declaratory judgment action promptly and 

efficiently.

5 And for good reason. Section 12.1 of the Order identifies the liabilities Formentera agreed to assume. (Doc. 

14.3, Appx. p. 1163). In addition to assuming liabilities “arising out of, based on or related to” ownership or 

operation of the acquired assets, Section 12.1(f) documents that Formentera agreed to assume obligations for “all 

Environmental Liabilities,” and Section 12(1)(g) documents the assumption of obligations for the “Plugging and 

Abandonment of the Assets.” (Id.). Four of the five Disputed Bonds are identified as “reclamation” bonds on 

Schedule 4.13. (Doc. 14-3, Appx. pp. 726-732). Additionally, all four of the reclamation bonds specifically 

address plugging and abandonment of the subject wells. (Bankr. Doc. 523-16; Bankr. Doc. 523-33; Bankr. Doc. 

523-34; and Bankr. Doc. 523-36). Finally, in Section 12(1)(i) of the Order, Formentera assumed responsibility 

for obligations that “are attached to, run with or otherwise binding” the acquired properties. While not appropriate 

for inclusion in this Response to a Motion to Dismiss, Plaintiffs will be able to demonstrate that all five of the 

Disputed Bonds meet these criteria and are thus the responsibility of Formentera. 

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Respectfully submitted this 5th day of July, 2023,

Jordan, Lynch & Cancienne PLLC

/s/ Michael A. Cancienne

Michael A. Cancienne

State Bar No. 24055256

Federal ID No. 964201

1980 Post Oak Blvd., Suite 2300

Houston, Texas 77056

mcancienne@jlcfirm.com

713.955.4020

713.955.9644 (Facsimile)

Attorney-in-Charge for Talco Petroleum LLC and 

White Marlin Operating Co., LLC

CERTIFICATE OF SERVICE

I certify that on July 5, 2023, a true and correct copy of the foregoing motion was served 

on all counsel of record via the Court’s CM/ECF system.

/s/ Michael A. Cancienne

Michael A. Cancienne

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