LLOG Exploration Offshore, LLC v. Samson Contour Energy E & P LLC

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF LOUISIANA

LLOG EXPLORATION OFFSHORE, CIVIL ACTION

LLC

VERSUS NO: 22-667

SAMSON CONTOUR ENERGY SECTION: “H”

E&P, LLC ET AL.

ORDER AND REASONS

Before the Court is the Motion to Compel Arbitration and to Dismiss

(Doc. 15) from Defendants Samson Contour Energy E&P, LLC; Samson

Resources II, LLC; and Samson Resources Company, LLC. For the following

reasons, the Motion is GRANTED IN PART AND DENIED IN PART.

BACKGROUND

This case arises out of a contract dispute. On November 15, 2007,

Plaintiff LLOG Exploration Offshore, Inc. (“LLOG”) and Defendant Samson

Contour Energy E&P, LLC (“Samson Contour”) entered into a Purchase and

Sale Agreement (“PSA”). Under the PSA, Samson Contour acquired from

LLOG four oil and gas leases of land located on the Outer Continental Shelf in

the Gulf of Mexico off Louisiana’s coast. LLOG alleges that by the terms of the

PSA, Samson Contour also agreed to assume all costs and liabilities associated

with plugging, abandoning, and decommissioning certain wells and other

structures on the four leases.

In 2010, Samson Contour assigned the leases to Dynamic Offshore

Resources, LLC, a corporate predecessor in interest to Fieldwood Energy

Offshore, LLC (“Fieldwood”). In 2020, Fieldwood filed for Chapter 11

bankruptcy and indicated its intent to abandon the leases and have prior

lessees perform any necessary plugging, abandoning, and decommissioning

activities. The bankruptcy court confirmed Fieldwood’s plan, including the

abandonment of the leases.

In March of 2022, the United States Department of the Interior’s Bureau

of Safety and Environmental Enforcement (“BSEE”) issued orders to Samson

Contour and LLOG to decommission the wells associated with the four leases

within one year and the platforms and pipelines by October 31, 2023. BSEE

also commanded the organizations to identify which one would begin

immediate maintenance and monitoring of the wells and facilities in the

meantime.

In response to these orders, LLOG sent a letter to Samson Contour

demanding it begin performing the maintenance and monitoring and notify

BSEE of as much. Samson Contour allegedly failed to respond to this letter or

comply with BSEE’s orders. On March 15, 2022, LLOG initiated this action for

breach of contract and declaratory judgment against Samson Contour and two

alleged alter egos of same, namely, Samson Resources, II, LLC and Samson

Resources Company, LLC.

Now before the Court is Defendants’ Motion to Compel Arbitration and

to Dismiss. LLOG agrees that the parties must submit to arbitration but

opposes dismissal, preferring a stay of this matter.

LEGAL STANDARD

The question of arbitrability is governed by the Federal Arbitration Act

(“FAA”), 9 U.S.C. § 1 et seq., which broadly applies to any written provision in

“a contract evidencing a transaction involving commerce to settle by

arbitration a controversy thereafter arising out of such contract or

transaction.”1 A two-step analysis governs whether parties should be

compelled to arbitrate a dispute.2 The Court must first determine whether the

parties agreed to arbitrate the dispute.3 This determination involves two

separate inquiries: (1) whether there is a valid agreement to arbitrate between

the parties, and, if so, (2) whether the dispute in question falls within the scope

of that agreement.4 Both inquiries are generally guided by ordinary principles

of state contract law.5 The strong federal policy favoring arbitration applies

“when addressing ambiguities regarding whether a question falls within an

arbitration agreement’s scope,” but it does not apply “when determining

whether a valid agreement exists.”6 If the Court finds the parties agreed to

1 Moses H. Cone Memorial Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24 (1983).

2 JP Morgan Chase & Co. v. Conegie ex rel. Lee, 492 F.3d 596, 598 (5th Cir. 2007).

3 Banc One Acceptance Corp. v. Hill, 367 F.3d 426, 429 (5th Cir. 2004).

4 Sherer v. Green Tree Servicing LLC, 548 F.3d 379, 381 (5th Cir. 2008).

5 See First Options of Chi., Inc. v. Kaplan, 514 U.S. 938, 944 (1995).

6 Sherer, 548 F.3d at 381.

arbitrate, it must then proceed to the second step of the analysis and consider

whether any federal statute or policy renders the claims non-arbitrable.7

LAW AND ANALYSIS

The parties agree that the PSA contains a valid agreement to arbitrate

and that the dispute in question falls within the scope of that agreement.8 They

further agree that no federal statute or policy renders LLOG’s claims non-

arbitrable.9 Thus, the only issue before the Court is whether to dismiss the

action, as Defendants ask, or to stay it, as LLOG wishes. The FAA provides

that “upon being satisfied that the issue involved in [a] suit or proceeding is

referable to arbitration under such an agreement, [the court] shall on

application of one of the parties stay the trial of the action until such

arbitration has been had in accordance with the terms of the agreement.”10

While this provision clearly contemplates a stay, in Alford v. Dean Witter

Reynolds, Inc., the Fifth Circuit clarified that “[t]his rule, however, was not

intended to limit dismissal of a case in the proper circumstances.”11 “The

weight of authority clearly supports dismissal of the case when all of the issues

raised in the district court must be submitted to arbitration.”12

Citing Alford, Defendants argue that because all issues in the instant

case must be submitted to arbitration, dismissal is appropriate.13 Alford,

7 Primerica Life Ins. Co. v. Brown, 304 F.3d 469, 471 (5th Cir. 2002).

8 See Doc. 16 at 5, 7–8.

9 See id. at 7–8.

10 9 U.S.C. § 3.

11 975 F.2d 1161, 1164 (5th Cir. 1992).

12 Id.

13 See Doc. 15-2 at 8.

however, does not support the proposition that dismissal is required when all

issues are bound for arbitration. In fact, the Fifth Circuit has since explained

that “Alford held merely that dismissal was not an abuse of discretion,” not

that “dismissal was required under the circumstances.”14 District courts have

discretion to dismiss or stay a case in favor of arbitration.15

Whereas Defendants have provided no reason for this Court to exercise

its discretion in favor of dismissal, LLOG provides multiple reasons to stay the

case. The parties’ arbitration clause envisions a judge of this Court selecting

one of the arbitrators under certain circumstances.16 In the event such

circumstances come to pass, a stay has the advantage over a dismissal of

avoiding the time and expense of opening a new case to petition the Court for

its selection. Additionally, as LLOG points out, a stay allows the Court to

reopen and restore this case to its trial docket upon a motion from any party

should circumstances change, such as the arbitrators deeming a claim or party

non-arbitrable.17 Accordingly, this Court grants Defendants’ Motion insofar as

it seeks to compel arbitration but denies the request for dismissal.

14 Apache Bohai Corp., LDC v. Texaco China, B.V., 330 F.3d 307, 311 n.9 (5th Cir. 2003).

15 See Fedmet Corp. v. M/V Buyalyk, 194 F.3d 674, 676 (5th Cir. 1999) (holding that “district

courts have discretion to dismiss cases in favor of arbitration,” but not implying any

obligation to do so); Priebe v. Advanced Structural Techs., Inc., CIVIL ACTION NO. 21-

12474, 2021 WL 4893614, at *3 (E.D. La. Oct. 20, 2021); Hanberry v. First Premier Bank,

CIVIL ACTION NO. 19-10235, 2019 WL 4415267, at *7 (E.D. La. Sept. 16, 2019).

16 See Doc. 15-1 at 45.

17 See, e.g., Murray v. Waitr Holdings Inc., CIVIL ACTION NO. 19-cv-01143, 2019 WL

7944814, at *6 (W.D. La. Nov. 14, 2019).

CONCLUSION

For the foregoing reasons, Defendants’ Motion is GRANTED IN PART

AND DENIED IN PART. IT IS ORDERED that the parties engage in

arbitration in the manner prescribed by the PSA.

IT IS FURTHER ORDERED that this case is hereby STAYED and

ADMINISTRATIVELY CLOSED pending arbitration of the claims asserted

herein.

IT IS FURTHER ORDERED that the oral argument scheduled for

July 21, 2022 is CANCELED.

New Orleans, Louisiana this 15th day of July, 2022.

Gg, TRICHE

UNITED STATES DISTRICT JUDGE