Anadarko Petroleum Corp. v. Williams Alaska Petroleum, Inc.
737 F.3d 966
5th Cir.2013Background
- Anadarko (seller) and Williams Alaska (buyer/refiner) entered oil purchase agreements (2000–2002) tying price to index and TAPS Quality Bank adjustments; parties estimated Quality Bank amounts and conducted monthly "true-up" adjustments the following month.
- FERC retroactively changed the Quality Bank methodology to February 1, 2000, resulting in a >$9 million credit to Williams Alaska based on oil previously sold by Anadarko.
- Anadarko sought the Quality Bank credits (arguing contracts required pass-through), while Williams Alaska retained the credits and argued payment timing/termination and statute-of-limitations defenses.
- The district court granted summary judgment for Williams Alaska, reasoning contracts required contemporaneous payment and that receipt of Quality Bank adjustments was a condition precedent not satisfied before termination.
- On appeal, the Fifth Circuit reviewed de novo, considered contract language and course of performance under the U.C.C., and reversed, holding Williams Alaska must remit the credits; remanded to calculate interest and attorney’s fees.
Issues
| Issue | Plaintiff's Argument (Anadarko) | Defendant's Argument (Williams Alaska) | Held |
|---|---|---|---|
| Whether Quality Bank credits must be passed through to Anadarko | Contract price ties to Quality Bank; credits increase Price and must be paid | Payments were "contemporaneous" monthly; later credits need not be remitted | Held for Anadarko; contract and course of performance require remittance |
| Whether course-of-performance evidence may be considered absent ambiguity | N/A (Anadarko relied on course of performance to interpret timing) | Court must find contract ambiguous before admitting course-of-performance | Rejected; U.C.C. permits course-of-performance to explain terms without prior judicial ambiguity finding |
| Whether obligation to remit credits expired on contract termination | Credits relate to prior tendered oil; obligation survives termination | Obligation was executory and expired with contract termination | Held for Anadarko; obligation tied to prior performance survived termination |
| Whether claim is time-barred by statute of limitations | Breach occurred when Williams received credits and failed to remit (2007), suit filed within 4 years | Breach occurred earlier or was barred by termination | Held for Anadarko; cause of action accrued on receipt/failure to remit in 2007, within 4-year period |
Key Cases Cited
- Moss v. BMC Software, Inc., 610 F.3d 917 (5th Cir. 2010) (standard for de novo review of summary judgment)
- Instone Travel Tech. Marine & Offshore v. Int’l Shipping Partners, Inc., 334 F.3d 423 (5th Cir. 2003) (contract interpretation is a question of law)
- Fletcher v. Ricks Exploration, 905 F.2d 890 (5th Cir. 1990) (sale of oil is sale of goods under U.C.C.)
- Lenape Res. Corp. v. Tenn. Gas Pipeline Co., 925 S.W.2d 565 (Tex. 1996) (U.C.C. principles applicable to oil contracts)
- Frost Nat’l Bank v. L & F Distribs., Ltd., 165 S.W.3d 310 (Tex. 2005) (noting court need not consider course-of-performance where contract language is plain)
- Centex Corp. v. Dalton, 840 S.W.2d 952 (Tex. 1992) (distinguishing condition precedent concept)