FORTUNE NATURAL RESOURCES CORPORATION, Appellant v. UNITED STATES DEPARTMENT OF INTERIOR; ATP Oil & Gas Corporation, Appellees.
No. 15-20151.
United States Court of Appeals, Fifth Circuit.
Nov. 19, 2015.
363
Victor W. Zhao, Attorney, U.S. Department of Justice, Washington, DC, Charles Stephen Kelley, Mayer Brown, L.L.P., Houston, TX, for Appellees.
Before STEWART, Chief Judge, and CLEMENT and ELROD, Circuit Judges.
EDITH BROWN CLEMENT, Circuit Judge:
Fortune Natural Resources Corporation (“Fortune“) owns a percentage working interest in a lease with ATP Oil & Gas Corporation (“ATP“), who filed for bankruptcy.1 Fortune asserted a claim in ATP‘s bankruptcy proceedings for decommissioning costs related to the lease. ATP sought and received approval from the bankruptcy court—over Fortune‘s objection—to sell certain shelf and deepwater assets. The Final Sale Order was not stayed, and the sale closed. Fortune appealed the Final Sale Order to the district court. The district court dismissed the appeal, holding that Fortune lacked standing to appeal the bankruptcy court‘s ruling and that, in any event, the appeal was
I.
ATP, a former offshore oil and gas exploration and production operator on the Outer Continental Shelf in the Gulf of Mexico, filed for bankruptcy relief on August 17, 2012. Fortune owned a 12.5 percent working interest in a lease that was considered one of ATP‘s assets (the “Fortune Lease” or “Lease“). Fortune and ATP were parties to a Joint Operating Agreement, which mandated that any plugging and abandonment operations be accomplished by ATP, as operator, with the costs, risk, and net proceeds, if any, to be shared by co-lessees in proportion to their participating interests. The Fortune Lease terminated on November 11, 2010. As a result, ATP was required to conduct decommissioning operations on two wells, a platform, and a pipeline. Fortune filed its proof of claim on January 28, 2013, in the amount of $3,385,300, representing the portion of the decommissioning liability it would be forced to cover in the event that ATP did not fulfill its decommissioning obligations under the Joint Operating Agreement.
During the bankruptcy proceeding, ATP filed motions seeking bankruptcy court approval of a sale of substantially all of its assets (the “Sale“).2 The United States Department of the Interior (“Interior“) objected to the Sale because it had not consented to it, and among other reasons, the Sale would have left ATP incapable of performing its remaining decommissioning obligations under federal law. Fortune also objected to the Sale, even though the Fortune Lease was not part of the assets of the Sale.3 Interior withdrew its objection prior to the Sale following successful negotiations with Bennu Oil & Gas, LLC (“Bennu“), the ultimate purchaser, after Bennu agreed to fund a $44,255,000 trust (“Trust“) to be administered by the Bureau of Ocean Energy Management (“BOEM“), an agency under the Interior, to address ATP‘s remaining decommissioning obligations. Initially, Fortune filed a limited objection and reservation of rights with respect to the shelf sale in the event that the shelf sale would not produce sufficient funds to cover the decommissioning obligations under the Fortune Lease. Subsequently, Fortune asserted an objection at the Interim Sale Hearing—after the shelf assets and deepwater assets were combined into one Sale—when it realized that BOEM planned to use the trust funds for leases where there were no co-liable parties, i.e., not the Fortune Lease. Fortune argued that the proposed use of the sale proceeds was contrary to the language contained in the Interim Sale Order and proposed Final Sale Order, which Fortune believed required funding for the Fortune Lease‘s decommissioning costs. The bankruptcy court overruled Fortune‘s objection to the sale.
On October 17, 2013, the bankruptcy court entered a Final Sale Order approv
II.
This court reviews a district court‘s dismissal for lack of standing de novo. Joffroin v. Tufaro, 606 F.3d 235, 238 (5th Cir. 2010). “[T]he putative appellant shoulders the burden of alleging facts sufficient to demonstrate that it is a proper party to appeal.” Rohm & Hass Tex., Inc. v. Ortiz Bros. Insulation, Inc., 32 F.3d 205, 208 (5th Cir. 1994). “In ruling on a motion to dismiss for want of standing, both the trial and reviewing courts must accept as true all material allegations of the complaint, and must construe the complaint in favor of the complaining party.” Id. at 207 (quoting Warth v. Seldin, 422 U.S. 490, 501, 95 S.Ct. 2197, 45 L.Ed.2d 343 (1975)). Furthermore, to determine whether a party has standing in bankruptcy court, courts use the “person aggrieved” test. In re Coho Energy Inc., 395 F.3d 198, 202 (5th Cir. 2004). “The ‘person aggrieved’ test is an even more exacting standard than traditional constitutional standing.” Id. This test “demands a higher causal nexus between act and injury; appellant must show that he was directly and adversely affected pecuniarily by the order of the bankruptcy court in order to have standing to appeal.” Id. at 203. (internal quotation marks and citation omitted).
III.
Fortune argues that the district court erred because Fortune was directly and adversely affected by the bankruptcy court‘s Final Sale Order; therefore, it has standing to appeal as a “person aggrieved.” Fortune argues that the allocation of the Trust funds, as implemented, differs from the proposed allocation contemplated in the Interim Sale Order and in earlier versions of the proposed Final Sale Order. Fortune argues that prior versions covered decommissioning obligations such as those under the Fortune Lease, while the Final Sale Order gave Interior full discretion to allocate the use of the Trust funds. Fortune points to language in prior orders indicating that the funds would be paid by the purchaser to BOEM “for the performance of decommissioning obligations under any or all Federal Leases that do not constitute Purchased Assets....” (emphasis added). Fortune interprets this language as requiring funding for the Fortune Lease because it was not among the Purchased Assets, and as precluding Interior from allocating funds to decommission some, but not all, of the leases. Fortune‘s construction ignores the plain meaning of the words “any or.”4 Such construction is unreasonable. Even if Fortune proved that prior versions of the sale order called for a different allocation of the Trust fund proceeds, it would still fail to show how the bankruptcy court‘s Final Sale Order directly and adversely affected it pecuniarily. If Fortune could prove that absent the Final Sale Order it would have received funds from
Fortune‘s argument concerning the merits—that the allocation of the sale proceeds violated substantive bankruptcy law—is unavailing because Fortune must first have standing before the merits can be addressed. Additionally, Fortune‘s argument that it meets the “person aggrieved” standard because it has already received a letter from BOEM mandating that it decommission its Lease misses the mark. Fortune‘s payment of decommissioning costs may show an injury, but it does not show that the bankruptcy court‘s order caused this injury. This court‘s jurisprudence states that the order of the bankruptcy court must directly and adversely affect the appellant pecuniarily. See Coho, 395 F.3d at 203. Having failed to present sufficient evidence to show that Fortune was directly and adversely affected pecuniarily by the order of the bankruptcy court, Fortune does not meet the “person aggrieved” test. Therefore, the district court properly ruled that Fortune lacks standing. Because this court concludes that Fortune lacks standing to appeal, we need not address the district court‘s holding on statutory mootness. AFFIRMED.