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Richey v. Chestnut Exploration & Production Inc.

United States District Court, W.D. Louisiana, Lake Charles Division

March 23, 2015



KATHLEEN KAY, Magistrate Judge.

Before the court is a Motion to Transfer Venue filed on October 6, 2014, by the defendants, Chestnut Exploration & Production, Inc. and its president Mark Plummer (hereinafter "Chestnut, " "Plummer, " or collectively "defendants"). The motion is opposed by the plaintiff Earl E. Richey, Jr. (hereinafter "Richey" or "plaintiff"). For the reasons provided below, the defendants' motion is hereby DENIED.



A. Facts and Procedural History

In early 2003 the plaintiff was contacted by Mark Plummer, President of Chestnut Petroleum Inc. about investing in a Joint Venture for the development and production of, among others, the "Layne #20" oil and gas well in Calcasieu Parish, Louisiana.[1] Doc. 25, att. 2, p. 3; Doc. 17, att. 2, p. 2. In August of that year, the plaintiff agreed to invest and to that end executed a Preformation Subscription Agreement and a Joint Venture Agreement[2] encompassing the terms agreed to by the parties, namely that the plaintiff would share in the proceeds obtained from the sale of any oil and gas produced from the Layne#20 Well. Doc. 25, att. 2, p. 4. The Joint Venture Agreement contained a provision stating that it would "be governed by... the laws of the State of Texas" and included a forum selection clause stating that "venue with respect to any legal action with respect to this Agreement shall be in Collin County, Texas." Doc. 25, att. 1, p. 8.

This initial 2003 agreement (Preformation Subscription Agreement), which was the only agreement that the plaintiff ever actually signed prior to 2005 (see discussion infra ), was between the plaintiff and an entity named Plummer Exploration, Inc. Under the terms of both 2003 contracts Chestnut was to be hired by Plummer Exploration Inc. as "operator" of the well to be drilled but was not a party to either agreement. Mark Plummer is the president of both Chestnut, Inc. and Plummer Exploration Inc. Doc. 25, att. 2.

Despite some initial success well operations on the Layne #20 Well were ultimately unsuccessful and on August 3, 2004, the plaintiff was sent a letter requesting approval of and a contribution for an "Additional Assessment" in order to facilitate the costs of a proposed fracture stimulation in an attempt to bring the Layne #20 Well "on line." Id. The plaintiff agreed by letter dated August 4, 2004. Id. at p. 44. The fracture stimulation was performed but failed to produce the desired results.

Thereafter, on August 26, 2005, the plaintiff received another solicitation from Mark Plummer, acting on behalf of Chestnut. It is this letter that formed the basis of this lawsuit and is referred to hereafter as "the 2005 letter agreement." Attempting again to obtain further contribution and approval for a recompletion of the Layne #20 Well, the letter read in relevant part:

Dear Earl,
This letter is to confirm our conversation and agreement which we made today. Our records indicate that you can purchase 5 units in the Layne #20 Recompletion Additional Assessment for a purchase price of $1, 900 per unit ($9, 500 total). I will also sell an additional 5 units to you out of my inventory at $950 per unit. This will make your total purchase in the Layne #20 Recompletion of 10 units at a total price of $14, 250. This will give you the rights to 10 units (which equals 10% working interest) in all zones that we will attempt to produce in the Layne #20 in the future. Please return to [ sic ] this letter agreement and your check in the return envelope for your participation.

Id. at p. 47. As requested Richey signified his approval, signed the 2005 letter agreement, and returned it with a check for the requisite amount ($14, 250) enclosed. Doc. 1, att. 1, pp. 8-9.

After the 2005 letter agreement was executed, the defendants sent the plaintiff two additional letters, one on January 10, 2007, and another on February 12, 2007. The inside salutations were directed to "Layne #20 Partner" and also requested that the plaintiff again approve and provide yet more contributions for another "Additional Assessment" this time for the implementation of a "sidetrack" operation to facilitate production of the well. Neither of these subsequent letters appears to reflect the plaintiff's 10 units purportedly acquired through the 2005 letter agreement and instead only reference the 3 units he had initially purchased. The plaintiff did not respond to either of these two letters. Doc. 25, att. 2, p. 5. Nevertheless, the sidetrack was authorized by a majority of the investors and later proved to be successful. The well began producing but the plaintiff never received payments for any production.

On August 14, 2013, counsel for Richey made demand on Chestnut for an accounting of all production from all zones found in the Layne #20 Well since the 2005 letter agreement. By letter dated August 27, 2013, counsel for Chestnut responded that Richey was not entitled to any of the proceeds of Layne #20's production because he had not approved or provided a contribution for the "Additional ...

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