Court Opinion

ID: 9494797
Source: CourtListenerOpinion
Date Created: 2023-08-05 15:47:11.655931+00
Date Added: 2024-06-11T17:56:37.891674
License: Public Domain

CLEVENGER, Circuit Judge,
dissenting.
I respectfully dissent. This case asks which party, Chevron or Mobil, is liable for overcharges paid to the Department of Energy (“DOE”) by Chevron, stemming from crude oil sales from production at the East Waddell Ranch in Texas. Though Mobil had a working interest in that property, it did not operate the property. Gulf, Chevron’s predecessor, operated the East Waddell Ranch property. DOE sued Chevron, and Chevron settled, paying DOE $1,647,080 due to overcharges related to Mobil’s interest during the relevant time period. Then Chevron sued Mobil, seeking an equitable remedy on the ground that Chevron had paid DOE for a liability that properly was Mobil’s.
The United States District Court for the Western District of Texas ruled in Mobil’s favor, citing an earlier 1979 Consent Order by which Mobil and DOE had settled all of DOE’s assertions of Mobil’s liability for the same pertinent time period. The 1979 Consent Order did not distinguish Mobil’s liabilities as operator from those as interest owner. As the majority notes, the 1979 Consent Order plainly states that it resolves all of DOE’s concerns with Mobil’s past crude oil sales. Chevron had been given notice of Mobil’s settlement with DOE, and Chevron’s predecessor, Gulf, itself had settled with DOE on terms that distinguished operator from interest liability. When Chevron settled with *1257DOE, paying for Mobil’s working interests in the East Waddell Ranch, Chevron did not assert, as it could have, that Mobil’s liability had already been paid off under Mobil’s 1979 Consent Order.
The district court realized, however, that notwithstanding the clear language of the 1979 Consent Order, that order could not have settled Mobil’s liability for the East Waddell Ranch, if that liability as an interest holder had been subject to earlier litigation by the industry against DOE before Judge Theis in the United States District Court for the District of Kansas. The reason for a possible bar to inclusion of the East Waddell Ranch liability in the 1979 Consent Order is an injunction entered by Judge Theis in the Kansas case that precluded DOE from enforcing the law until certain legal matters were resolved. The injunction was in force when Mobil and DOE settled in 1979.
The district court in the present case concluded that the East Waddell Ranch property was “not a part of the Mobil litigation in Kansas.” The reason for that holding is that Mobil did not pay any sums into the Kansas escrow on behalf of the East Waddell Ranch property (because Gulf made those payments on Mobil’s behalf). Escrow payments in the Kansas suit were made only by operators, except in instances where operators refused to do so, in which case the working interest holders paid the escrow sums.
For Mobil’s part in the Kansas suit, it obtained an injunction that precluded DOE from taking certain enforcement acts against it with respect to properties operated by Mobil. As noted above, GuUyChevron — not Mobil — operated the East Waddell Ranch property. The injunction on its face did not limit DOE’s authority to seek money from Mobil on account of properties not operated by Mobil, but in which Mobil owned a working interest, such as the East Waddell Ranch. Because the East Waddell Ranch property was not involved in the Kansas suit insofar as Mobil was concerned (although it clearly was involved insofar as Gulf/Chevron was concerned), the district court in the present case held that the Kansas injunction presented no bar to the 1979 Consent Order between Mobil and DOE. Because that Order is plain on its face, settling all of Mobil’s liability, the district court held that Chevron could take nothing from Mobil.
The majority appreciates the force of the 1979 Consent Order and the Kansas injunction that precluded DOE’s settlement with Mobil only as to properties operated by Mobil. The majority thus recognizes that it cannot provide relief to Chevron unless it can conclude that the district court erred in saying that Mobil’s responsibility for the East Waddell Ranch property was not involved in the Kansas litigation that produced the injunction against DOE enforcement activity.
To get over this seemingly insurmountable hurdle, the majority simply says “[hjowever, the Kansas litigation related to liability for working interests as well as operating interests.” Maj. op. at 1254. Though true as far as it goes, this does not aid the majority. For the question is not whether some working interests were involved in the Kansas litigation, but whether Mobil’s working interest in the East Waddell Ranch was involved in that litigation. Citing solid evidence to answer the question in the negative (no escrow deposit by Mobil for that property and an injunction against DOE that freed it to settle as to that property, and a subsequent settlement that eliminated all of Mobil’s liability to DOE), the district court held that the East Waddell Ranch property was not subject to the Kansas litigation. Now the majority, not finding clear error by the *1258district court in its key fact-finding, simply concludes otherwise.
I would affirm the district court for the reasons stated in its decision. Mobil’s interest in the East Waddell Ranch property was not subject to the Kansas litigation; DOE and Mobil were free to settle Mobil’s liability as to that property; DOE and Mobil did in fact settle; Chevron was aware of the settlement and could have used it in their own defense when they settled with DOE, but did not.