Co-author Brooke Sizer
In Olympia Minerals et al v. HS Resources, et al, the Louisiana Supreme Court addressed a decision we discussed in a February entry by affirming in part, reversing in part, amending in part and remanding (because why do one thing when you can do four). The case involved the “North Starks Project Agreement” covering 42,000 acres in Beauregard and Calcasieu Parishes.
HS/Aspect breached its obligation to complete a seismic survey over all of the lands covered by the agreement. The Supreme Court agreed with the lower courts that HS/Aspect was required to survey all the lands. HS/Aspect focused on limiting language, “shall not be obligated …” The court considered this as a customary phrase recognizing that there may be obstacles that preclude undertaking seismic surveying in certain areas, eg., towns and cemeteries. the court ruled that a complete survey of both the northern half and the southern half was a benefit of the bargain and that El Paso was entitled to foreseeable damages.
HS/Aspect was not obligated to sublease a minimum of 15% of El Paso’s mineral rights; instead, HS/Aspect had a non-binding option to sublease. Only after the company exercised the opinion was it obligated to sublease at least 15% of the leaseholder’s rights. Aspect never exercised that option, thus the damage award for breach of contract for failing to sublease at least 15% was reversed.
Reversal was based on Civil Code Art. 1933. The Court must interpret the word “option” according to civil law tradition, by beginning with legislative direction. Civil Code Art. 2047 requires that the words of a contract be given their generally prevailing meaning. According to Art. 1933: “[a]n option is a contract whereby the parties agree that the offeror is bound by his offer for a specified period of time and that the offeree may accept within that time.”
The damage award for HS/Aspect’s failure to conduct a complete survey was proper. The judgment had typos and was amended to reflect the correct amount: $4,125,00.00.
The question was whether HS/Aspect’s use and sharing of its seismic data was proper. The lower courts reasoned that because HS/Aspect failed to fulfill the terms of the agreement, the agreement was dissolved and there was no restriction as to the use of seismic data by El Paso/Olympia. Because the Supreme Court found that the agreement did not require the sublease, the agreement was still active. Findings on the merits as to the use of the data must now be determined by the court of appeal.
There was a question about the kind or type of data HS/Aspect was required to deliver to El Paso/Olympia. The Supreme Court agreed that HS/Aspect should have turned over the raw data to El Paso/Olympia upon request, but because it was evident that El Paso/Olympia did not fulfill its agreement to keep the data confidential, there could be no malice by HS/Aspect.
This being a Louisiana case, and our purpose being to educate about meaningful topics, we bring to your attention two classic (and deceased, unfortunately) New Orleans musicians you might not be familiar with: a guitar player and a singer.