Petro Mex, LLC v. United States
23-1848
Fed. Cir.Sep 12, 2024Background
- In 1965, the U.S. Department of the Interior granted an oil and gas lease (the Garfield Lease) to Celeste C. Grynberg, which Petro Mex, LLC assumed in 2004.
- In 2008, the Bureau of Land Management (BLM) issued Incidents of Noncompliance (INCs) and a Shut-In Order due to safety and compliance issues at Petro Mex's wells, stopping production.
- Later in 2008, BLM increased Petro Mex's bond and issued a civil penalty for unpaid royalties; in 2009, BLM determined the wells were incapable of production, culminating in lease termination on August 26, 2009.
- Petro Mex successfully appealed BLM’s termination to the Interior Board of Land Appeals (IBLA), which found that BLM wrongfully terminated the lease without allowing Petro Mex a reasonable opportunity to resume production.
- Petro Mex then sued in the Court of Federal Claims for breach of contract, which held the claim time-barred under the statute of limitations and denied issue preclusion based on the IBLA’s decision; Petro Mex appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Statute of Limitations (accrual) | Claim accrued on Aug. 26, 2009 (date of termination) | Claim accrued earlier, in 2008, after Shut-In | Reversed: Claim accrued Aug. 26, 2009; suit filed timely |
| Applicability of Continuing Claims Doctrine | Wrongful termination is an independent, later breach | Only one event, termination, tied to earlier | Did not address; resolved on accrual grounds |
| Issue Preclusion from IBLA Decision | IBLA findings should preclude relitigation of merits | IBLA addressed statutory, not contract, rights | Vacated: Lower court did not properly analyze preclusion; remanded to decide |
| Lease Breach by BLM | Lease was wrongfully terminated, breaching contract | No breach, or breach excused by prior default | Not addressed; remanded for further consideration post-preclusion analysis |
Key Cases Cited
- Bowen v. United States, 292 F.3d 1383 (Fed. Cir. 2002) (claim accrues when all events fixing liability have occurred)
- Bianchi v. United States, 475 F.3d 1268 (Fed. Cir. 2007) (six-year limitation for claims against the U.S. under Court of Federal Claims is jurisdictional)
- Boling v. United States, 220 F.3d 1365 (Fed. Cir. 2000) (continuing claims doctrine applies to repeated breaches of a continuing duty)
- Hair v. United States, 350 F.3d 1253 (Fed. Cir. 2003) (addresses claim accrual for purposes of timeliness under the Tucker Act)
- Levi Strauss & Co. v. Abercrombie & Fitch Trading Co., 719 F.3d 1367 (Fed. Cir. 2013) (sets out elements for issue preclusion)
- SynQor, Inc. v. Vicor Corp., 988 F.3d 1341 (Fed. Cir. 2021) (standard for review and application of issue preclusion)
- United States v. Utah Constr. & Mining Co., 384 U.S. 394 (1966) (agency adjudications can have issue preclusion effect)