Richard Coe v. Chesapeake Exploration, L.L.
695 F.3d 311
| 5th Cir. | 2012Background
- Chesapeake offered to purchase Peak Energy's deep rights in Harrison County, TX at $15,000 per net acre for about 5,404.75 acres.
- The July 2, 2008 offer was reduced to a formal letter contract with Exhibit A map identifying target parcels and depth scope.
- Gas prices fell sharply starting August 2008, decreasing the value of the leases; Chesapeake later refused to close.
- Peak sued to enforce the agreement; Chesapeake argued the agreement was not enforceable under Texas statute of frauds or due to indefiniteness.
- The district court found the July Agreement enforceable and awarded Peak approximately $19.75 million in damages plus fees and costs.
- On appeal, the Fifth Circuit applied Texas law and affirmed, rejecting defenses based on statute-of-frauds and indefiniteness.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Was the July Agreement enforceable under Texas statute of frauds? | Peak contends the nucleus of description suffices. | Chesapeake argues the property description is too indefinite. | Yes; adequate nucleus of description existing under Texas law. |
| Is the July Agreement sufficiently definite or an unenforceable agreement to negotiate? | The writing includes price, property, dates, and title review terms. | Additional terms would be in a final PSA; not binding otherwise. | Enforceable despite absence of a final lease schedule or PSA terms. |
| Did the parties intend to be bound by the July Agreement? | Contractual language and contemporaneous assurances show intent to bind. | Some officials later claimed no binding intent. | Yes, the agreement was valid and binding when signed. |
| Did Peak tender performance or render sufficient performance to enforce the contract? | Peak could tender 1,645.917 net acres meeting terms. | Discrepancy between listed and delivered acres threatens performance. | Yes; the sale-by-acre framework with adjustments supported tender. |
| Are Peak's damages properly proven and calculated? | Damages computed from acres delivered times price differential. | Chesapeake disputes acreage tally and measurement. | Damages supported by trial record and adjustment clause; affirmed. |
Key Cases Cited
- Kmiec v. Reagan, 556 S.W.2d 567 (Tex. 1977) (recital of ownership can identify property with reasonable certainty)
- Morrow v. Shotwell, 477 S.W.2d 538 (Tex. 1972) (statute of frauds form and writing sufficiency guidance)
- Long Trusts v. South Texas Sports, 720 S.W.2d 551 (Tex. App.—San Antonio 1986) (extrinsic evidence allowed to identify property when nucleus exists)
- Texas Builders v. Keller, 928 S.W.2d 479 (Tex. 1996) (writing need not be metes-and-bounds but must identify property with certainty)
- Fort Worth ISD v. City of Fort Worth, 22 S.W.3d 831 (Tex. 2000) (contracts must have reasonably certain terms; some terms may be open)
- WTG Gas Processing, L.P. v. ConocoPhillips Co., 309 S.W.3d 635 (Tex. App.—Houston [14 Dist.] 2010) (reasonableness standard for uncertainty and conditional approvals)