Torch Energy Advisors Incorporated v. Plains Exploration & Production Company, 409 S.W.3d 46

Background

Ogle Petroleum held offshore oil-and-gas leases (1968–1982) and paid up-front bonuses to the federal government; those leases could be suspended.
Ogle conveyed its leases to Torch Energy (July 1994); Torch then conveyed 50% to Plains (Dec. 1994) and the remaining 50% to Plains by a 1996 contract effective Oct. 1, 1995. The 1996 contract defined conveyed "Properties" and separate "Excluded Assets."
A 1990 CZMA amendment led California to challenge MMS lease suspensions; federal courts later held consistency determinations were required (Norton). Lessees, including Plains, sued the federal government and Plains ultimately recovered >$83 million (restitution of bonuses) in the Amber litigation.
Torch claimed it retained rights to ~half of Plains’s Amber recovery under the 1996 contract and sued Plains (breach of contract; money had and received; other claims). The trial court granted summary judgment for Plains on Torch’s breach claim, and dismissed non-contract claims under the economic-loss rule; it denied other relief and struck some defenses.
On appeal the court affirmed dismissal of the breach claim (because if the right was excluded it was not a contractual breach; if included Plains had legal title), reversed dismissal of the money-had-and-received claim, and found the 1996 contract patently ambiguous about whether the right to recover bonuses was conveyed or excluded.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether Plains breached the 1996 contract by keeping Amber recovery	Torch: the 1996 conveyance excluded the right to recover bonuses; Plains violated the contract by keeping recovery	Plains: the 1996 contract conveyed the remaining right to recover bonuses to Plains	Affirmed for Plains as to breach: appellant failed to show reversible error because (1) if right was excluded there was nothing to breach; (2) if conveyed, Plains had legal title and no breach
Whether money-had-and-received claim is barred by the economic-loss rule	Torch: equitable claim permitted because right to recovery was excluded from the contract and thus not an economic-loss-only contract remedy	Plains: economic-loss rule bars non-contract claims arising from the same transaction	Reversed: economic-loss rule does not bar equitable money-had-and-received claims here because the asserted right (if any) was excluded from the contract or otherwise not a contract remedy
Whether the 1996 contract unambiguously conveys or excludes the right to recover bonuses	Torch: contract excludes contingent/right-to-recover bonuses and proceeds attributable to pre-effective-date periods	Plains: contract conveys lease-related contracts and therefore conveyed the right to recover bonuses; "claim" excludes contingent rights	Contract is patently ambiguous on whether (and to what extent) contingent claims and proceeds attributable to periods before and after Oct. 1, 1995 were conveyed or excluded; remand required for equitable claim proceedings
Whether the trial court erred by precluding review of contract interpretation on remand	Torch: contract interpretation is necessary to resolve equitable claim; trial court’s prior ruling cannot stand for money-had-and-received	Plains: prior ruling on contract supported summary judgment on breach and should control	Court considered contract interpretation in interest of judicial economy and held ambiguity precludes summary judgment as a matter of law on the conveyance/exclusion issue

Key Cases Cited

MMP, Ltd. v. Jones, 710 S.W.2d 59 (Tex. 1986) (movant must conclusively establish right to summary judgment)
Jim Walter Homes, Inc. v. Reed, 711 S.W.2d 617 (Tex. 1986) (economic-loss rule: pure economic loss tied to contract sounds in contract only)
Sharyland Water Supply Corp. v. City of Alton, 354 S.W.3d 407 (Tex. 2011) (limited application of economic-loss rule)
City of Keller v. Wilson, 168 S.W.3d 802 (Tex. 2005) (standards for reviewing summary judgment evidence)
Amber Res. Co. v. United States, 538 F.3d 1358 (Fed. Cir.) (federal appellate decision on when leases were breached and recovery timing)
Italian Cowboy Partners, Ltd. v. Prudential Ins. Co. of Am., 341 S.W.3d 323 (Tex. 2011) (contract-construction principles: ascertain intent from writing)
Frost Nat’l Bank v. L & F Distribs., Ltd., 165 S.W.3d 310 (Tex. 2005) (unambiguous contracts construed as a matter of law)