Greenwood 950, L.L.C. v. Chesapeake Louisiana, L.P.
683 F.3d 666
5th Cir.2012Background
- Greenwood and Chesapeake executed a mineral lease on January 31, 2008 adjacent to Greenwood's subdivision development.
- Greenwood filed a damages petition in Louisiana state court (February 25, 2010) claiming Chesapeake damaged the property and jeopardized subdivision plans.
- Chesapeake removed the action to federal court and moved for summary judgment arguing the lease only covers liquidated damages plus actual surface damages capped at FMV; no consequential damages.
- The district court held the lease unambiguous and limited liability to surface damages and the specified cap, excluding consequential damages.
- On appeal, the court reviews de novo whether the lease language is ambiguous and whether extrinsic evidence may interpret the contract.
- The court vacates the summary judgment and remands to consider extrinsic evidence due to the alleged ambiguity in paragraph 1 of Exhibit C.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Is the lease language ambiguous on consequential damages? | Greenwood argues 'pay all damages' broadens beyond surface damages to include consequential losses. | Chesapeake contends the clause limits liability to surface damages with a defined cap, not to consequential damages. | Lease is ambiguous; extrinsic evidence may interpret. |
| May extrinsic evidence be considered to interpret the ambiguous clause? | Greenwood supports using extrinsic context to determine intent of broad damages language. | Chesapeake urges reliance on the four corners if unambiguous; extrinsic evidence not necessary. | Extrinsic evidence may be admitted on remand to resolve ambiguity. |
| Should the district court have vacated summary judgment given potential ambiguity? | Greenwood contends summary judgment was premature without clarifying ambiguity. | Chesapeake argues no ambiguity existed and summary judgment was proper. | Vacate and remand for further proceedings. |
Key Cases Cited
- Am. Electric Power Co. v. Affiliated FM Ins. Co., 556 F.3d 282 (5th Cir. 2009) (ambiguous contracts and interpretation framework)
- Sims v. Mulhearn Funeral Home, Inc., 956 So.2d 583 (La. 2007) (contract clarity and ambiguity; use of extrinsic evidence)
- Corbello v. Iowa Prod., 850 So.2d 686 (La. 2003) (contract interpretation when terms are explicit)
- Lamar v. Cascio? [placeholder], 48 So.3d 341 (La. Ct. App. 2010) (La. appellate interpretation of damages provisions)