Monday, June 18, 2012

Greenwood 950, L.L.C. v. Chesapeake Louisiana, L.P

Jun 12: In the U.S. Court of Appeals, Fifth Circuit, Case No. 11-30436. Appealed from the United States District Court for the Western District of Louisiana. Greenwood 950, L.L.C. (Greenwood), seeks consequential damages from Chesapeake Louisiana, L.P. (Chesapeake), under a mineral lease. Sitting in diversity and applying Louisiana law, the district court granted summary judgment for Chesapeake, finding that the lease did not give Greenwood the right to recover consequential damages. The Appeals Court said however, "We find that the relevant provision of the lease is ambiguous, so we vacate the summary judgment ruling and remand for further proceedings."
    On February 25, 2010, Greenwood filed a petition for damages in Louisiana state court, alleging that Chesapeake had damaged Greenwood's property, thereby preventing Greenwood from using it as planned. Specifically, Greenwood alleged that Chesapeake had 'greatly impacted the property to the extent of preventing further efforts for a subdivision, including taking control of the main road, placing their drill sites directly on the road, preventing the subdivision as designed, and preventing further sales of the property.' Greenwood further claimed that Chesapeake had agreed to pay for 'all damages caused by its operations,' which it contended should include the damages arising from its alleged inability to 'properly use, market, or manage its property.'"
    The Appeals Court said further, "Faced with Greenwood's internally consistent and reasonable alternative reading of the relevant contract language, we are persuaded that the lease is ambiguous with respect to consequential damages. Accordingly, we vacate the district court's summary judgment ruling and remand so that the district court may consider extrinsic evidence and, if necessary, construe the provision against its drafter."
    Access the complete opinion and concurring opinion (click here). [#Remed, #CA5]

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