NEW ORLEANS - A federal court has sided with bond brokers in their claim that an oil and gas exploration company breached its obligations to pay Petro-Marine Underwriters for its services.
U.S. District Judge Greg Gerard Guidry granted summary judgment for Petro-Marine Underwriters and Delta Energy Management Consultants, but denied their bad faith claim against the defendants, Cox Operating and Cox Oil Offshore. Judge Guidry denied the Cox Entities' motion for summary judgment.
Petro-Marine Underwriters and Delta Energy Management Consultants filed a claim in U.S. District Court for Louisiana Eastern District. They claimed the Cox Entities broke the agreement to pay for bond commissions for the plaintiffs' help in acquiring assets from Chevron USA Inc.
The plaintiffs accused the defendants of not acknowledging Petro-Marine as a co-broker on the bonds in question. This would have caused the plaintiffs to be compensated for the payments in question. The defendants countersued, saying the plaintiffs' performance was unsatisfactory. Both sides filed motions for summary judgment, and the defendants were denied theirs, while the court granted in part and denied in part the plaintiffs’ motion.
The main dispute in this case was a letter agreement, which the court said didn’t require plaintiffs to be the only brokers for the bonds in question. It said that the plaintiffs should be paid for what the plaintiffs “have already provided and may continue to provide.”
Additionally, the ruling says payment should be made upon the initial placement and for any subsequent renewals of any surety bonding placed on behalf of any Cox entity, regardless of the brokers involved.
Judge Guidry said in his order that the defendants had the responsibility of acknowledging Petro-Marine as the co-broker, noting that the letter agreement literally said that Petro-Marine would be the co-broker on all bonds concerning Chevron, and is owed an agreed upon commission.
Since the defendants didn’t recognize Petro-Marine as the co-broker, the plaintiffs weren’t paid what they should have been paid under the letter agreement.
The defendants said they made a mistake on who would actually pay the plaintiffs’ commission, and who would select Petro-Marine as a co-broker; Judge Guidry said that the defendants were supposed to choose Petro-Marine as a co-broker for the surety bonds.
The plaintiffs’ motion for summary judgment on bad faith was denied because they failed to prove that defendants’ actions were founded on bad faith.
U.S. District Court for Louisiana Eastern District case number 2:17-cv-09955