Opinion ID: 567657
Heading Depth: 1
Heading Rank: 1

Heading: facts

Text: 2 Frey owns royalty interests under a mineral lease (the Lease) that covers part of the Morganza natural gas field in Louisiana. Amoco Production Co. (Amoco) prepared the Lease from a Bath Louisiana form and executed it in 1975 with Frey's predecessor-in-interest, F & L Planters (F & L). Amoco has produced and sold gas pursuant to the Lease since 1982. 3 The Lease provides Frey a royalty on gas sold by Lessee [at] one-fifth ( 1/5) of the amount realized at the well from such sales. In 1981, Amoco agreed to sell the gas that it would produce under the Lease to Columbia Gas Transmission Corporation (Columbia). The contract between Amoco and Columbia (the Morganza Contract) contains a take-or-pay provision that requires Columbia to pay Amoco for a minimum amount of gas each year regardless of whether Columbia takes the minimum amount. 4 By July 1985, Amoco and Columbia were embroiled in litigation over approximately $265 million in take-or-pay liabilities that Amoco claimed under the Morganza Contract. Amoco and Columbia resolved their take-or-pay dispute in their Settlement Agreement. Under the Settlement Agreement, Columbia paid Amoco approximately $45.6 million as a recoupable take-or-pay payment, meaning that over a five-year period, Columbia could take $45.6 million worth of gas over its minimum required annual purchase. Columbia also agreed to pay Amoco approximately $20.9 million as what Columbia and Amoco call a nonrecoupable take-or-pay payment. Columbia cannot recoup this sum by taking extra gas. Finally, Columbia paid Amoco approximately $280.2 million under the Settlement Agreement for past and future price deficiencies in gas that Amoco delivered to Columbia under the Morganza Contract. 5 Amoco shared the $280.2 million with Frey under the Lease's gas royalty provision, but it did not similarly share the $66.5 million in take-or-pay settlement proceeds. Frey sued Amoco in April 1988, alleging that the Lease subjected Amoco's receipts of take-or-pay settlement payments to Frey's royalty interest and that Amoco made accounting mistakes which caused it to underpay Frey's royalty on the gas delivered to Columbia. 6 The district court granted Amoco partial summary judgment that the Lease does not entitle Frey to a royalty share of the take-or-pay amounts received by Amoco under the Settlement Agreement. Frey v. Amoco Production Co., 708 F.Supp. 783, 787 (E.D.La.1989). At the close of Frey's case-in-chief during a bench trial, the district court ruled that Frey's royalty miscalculation claims pertaining to the period before April 18, 1985 are barred by Louisiana's three-year prescription statute. Frey and Amoco then settled all of their post-April 1985 accounting disputes. After trial, the court denied Frey's request for a declaratory judgment that Amoco is subject to Louisiana's Public Records Act. Frey v. Amoco Production Co., 741 F.Supp. 601, 603 (E.D.La.1990). Frey challenges these three rulings.