Opinion ID: 151845
Heading Depth: 2
Heading Rank: 2

Heading: Contractual Bar to Recovery

Text: Tawes contends that even if Barnes is a third-party creditor beneficiary, she cannot enforce her rights against Tawes because Dominion, Barnes' lessee, could not have enforced the Royalty Provision against Tawes. As Moose O&G was the party liable to Dominion on behalf of Tawes, Tawes claims the above-quoted Provision V [4] of the WIUA insulated him from liability. Tawes' contention implies that Dominion would only be able to recover from Moose O&G for a breach of the WIUA so the same is true for Barnes. Barnes can have no greater rights to reach Tawes than did Dominion, Tawes contends. As an initial matter, the Royalty Provision on which Barnes relies is contained in the JOA, while Provision V on which Tawes relies is contained in the WIUA. If Barnes is a third-party creditor beneficiary of the JOA, she arguably has individual standing to assert her rights thereunder. Her third-party beneficiary status relies on her lease to Dominion, however, so Dominion's rights under the contracts are relevant. In short, if Dominion could hold Tawes liable for breach of the JOA's Royalty Provision, and Barnes is a third-party beneficiary of the JOA, then she too, arguably could hold Tawes liable for breach of the JOA's Royalty Provision. The question then would appear to be whether Dominion could have held Tawes liableseparately from Moosefor a breach of the Royalty Provision. Tawes was both a named party and a Moose Assignee under the terms of the WIUA. Provision V of the WIUA appears to have shielded Tawes from liability to the WIUA Operator, Dominion. Consequently, if a Moose Assignee, such as Tawes, breached the WIUA, Dominion's recourse would appear to have been against Moose O&G. This may not necessarily be true for the JOA, however. The language of Provision V of the WIUA seems to make Moose O&G liable on behalf of the Moose Lessees to the Operator. The WIUA and the JOA named Dominion as the Operator, but Dominion was not the Operator of the Baker-Barnes Nos. 1 and 2 wells. Dominion went Non-Consent on the development of those two wells, and the Consenting Parties selected Moose as the Operator. As a result, Provision V of the WIUA may be less relevant, and the JOA's Royalty Provision may become the operative language. Further, the WIUA states, the Working Interest Unit ... will be governed by the Operating Agreement attached hereto. The JOA's Royalty Provision assigns liability as between Consenting Parties and Non-Consenting Parties, rather than as between operator and non-operators. The issue seems to turn on the relationship between the WIUA and the JOA, and which is given priority. Tawes contends that greater weight must be placed on the WIUA; Barnes argues the JOA controls. [5]