Platinum Oil Properties, LLC

1:09-bk-10832Nmb12 déc. 2011

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UNITED STATES BANKRUPTCY COURT
DISTRICT OF NEW MEXICO
In re: 	PLATINUM OIL PROPERTIES, LLC, 	No. 11-09-10832 JA
Debtor.
ORDER DENYING PLATINUM OIL PROPERTIES, LLC’S
MOTION TO RECONSIDER ORDER AND MEMORANDUM OPINION
THIS MATTER is before the Court on Platinum Oil Properties, LLC’s Motion to
Reconsider Order and Memorandum Opinion (“Motion”). The Court heard oral argument on the
Motion on October 21, 2011 and took the matter under advisement. Roger Jones appeared at the
hearing on behalf of the Debtor, Platinum Oil Properties, LLC (“Platinum”). Robert Labate and
Shannon Atcitty appeared at the hearing on behalf of the Jicarilla Apache Nation (the “Nation”).
Platinum requests the Court to reconsider its Memorandum Opinion and Order Denying Cross-
Motions for Summary Judgment (“Order”) pursuant to Rule 9023 of the Federal Rules of
Bankruptcy Procedure, which incorporates Rule 59 of the Federal Rules of Civil Procedure.1
The Memorandum Opinion and Order determined, among other things, that the confirmed plan
of reorganization in the Golden Oil Company, Inc. (“Golden Oil”) bankruptcy case did not
provide for a transfer of the operating rights and working interests at issue in this bankruptcy
case (referred to herein as “Operating Rights and Working Interests”) to Platinum. For the
reasons set forth below, the Court will deny the Motion.2
1Unless otherwise defined in this Order, capitalized terms have the meanings ascribed to them in the Memorandum
Opinion and Order.
2In its Memorandum Opinion and Order, the Court applied the parol evidence rule. Platinum asserts that the Court
erred in its application of the parol evidence rule. Although the Nation made arguments in connection with the cross
motions for summary judgment based on the plain language of the Golden Oil Plan and other documents, the Nation
did not specifically invoke the parol evidence rule and its application was not briefed or argued. As a result, the
Court fixed a briefing schedule and held oral argument on Platinum’s Motion.
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RULE 59 STANDARDS
Motions for reconsideration filed within fourteen days of the entry of a judgment or order
are governed by Rule 59, Fed.R.Civ.P. See Rule 9023, Fed.R.Bankr.P. (“ . . . Rule 59 F.R.Civ.P.
applies in cases under the Code. A motion for a new trial or to alter or amend a judgment shall
be filed . . . no later than 14 days after entry of judgment.”)3 The Memorandum Opinion and
Order was entered on August 12, 2011. 	Platinum filed the Motion on August 26, 2011, on the
fourteenth day following the entry of the Memorandum Opinion and Order. 	The Court will,
therefore, consider the Motion under the standards applicable to Rule 59, Fed.R.Civ.P. 	It is
appropriate to grant a motion to reconsider pursuant to Rule 59, Fed.R.Civ.P. when there is (1)
an intervening change in the controlling law; (2) new evidence previously unavailable for the
Court to consider; or (3) a need to correct clear error or prevent manifest injustice. Servants of
the Paraclete v. Does, 204 F.3d 1005, 1012 (10 th Cir. 2000); Brumark Corp. v. Samson
Resources Corp., 57 F.3d 941, 948 (10 th Cir. 1995)(same). 	Reconsideration may also be
warranted when “the court has obviously misapprehended a party’s position on the facts or the
law, or the court has mistakenly decided issues outside of those the parties presented for
determination.” Sunflower Racing, Inc. v. Mid-Continent Racing & Gaming Co. I (In re
Sunflower Racing, Inc.), 223 B.R. 222, 223 (D.Kan. 1998)(citations omitted). However, Rule
59(e), Fed.R.Civ.P. does not afford parties seeking relief an opportunity to raise new arguments,
or to “rehash arguments previously considered and rejected by the court.” Id. 	Platinum does
not assert that there is new evidence that was previously unavailable for the Court to consider or
3See also, Buchanan v. Sherrill, 51 F.3d 227, 230 n.2 (10 th Cir. 1995) ("No matter how styled, we construe a post-
judgment motion served within ten [now fourteen] days of the entry of judgment and challenging the correctness of
the judgment as a motion under Rule 59(e).")(citation omitted). Rule 9023, Fed.R.Bankr.P. was amended effective
December 1, 2009 to increase the time from ten to fourteen days.
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that there is an intervening change in controlling law. 	Rather, Platinum contends that the
Court’s Memorandum Opinion contains errors of law that require correction. 4
APPLICATION OF THE RULE 59 STANDARDS TO PLATINUM’S ARGUMENTS
Platinum primarily argues that the Court erred by excluding evidence under the parol
evidence rule that would establish that Platinum, not the McKay-Lotspeich-Group (“MLG”), was
the intended transferee of the Operating Rights and Working Interests under the Golden Oil Plan.
Platinum also asserts that the Court erred as a matter of law in determining that the Nation can
modify the provisions of the Jicarilla Leases governing assignment and in concluding that the
Department of the Interior did not approve the transfer of Operating Rights and Working
Interests to Platinum.
A. 	The Court did not improperly refuse to consider parol evidence to interpret the
Golden Oil Plan.
Platinum asserts that the Court erred in refusing to consider evidence that would
demonstrate that Platinum, not MLG, was the intended transferee of the Operating Rights and
Working Interests. In positing this argument Platinum asserts that the court erroneously failed to
apply the Texas parol evidence rule as required by the Golden Oil Plan. Further, Platinum
asserts that because the Nation did not object to the admissibility of certain evidence in
connection with the cross-motions for summary judgment, that evidence necessarily was
admitted and the Nation waived any argument that the evidence should be excluded based on the
parol evidence rule. Because the evidence was admitted, Platinum concludes that the Court was
bound to consider it. Platinum additionally asserts that the confirmed Golden Oil plan was not a
complete or integrated document; consequently the Court should have considered extrinsic
4 See Yost v. Stout, 607 F.3d 1239, 1243 (10 th Cir. 2010)(“Where the motion seeks a substantive change in the
district court’s judgment or otherwise questions its substantive correctness, the motion is a Rule 59 motion,
regardless of its label.”)(citations omitted).
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evidence to determine what the parties intended. Platinum further argues that nothing in the
parol evidence rule excludes evidence of occurrences that happened subsequent to the
agreement, and that the Court, therefore, should have considered evidence of the parties conduct
after the date the confirmation order was entered in the Golden Oil bankruptcy case to interpret
the meaning of the Golden Oil plan, the Golden Oil Confirmation Order, and the Golden Oil
Settlement Agreement. Finally, Platinum argues that parol evidence is admissible because
interpretation of the plan to mean that MLG was the intended transferee of the Operating Rights
and Working Interests would produce an absurd result. This Court disagrees.
1. 	The Court’s Decision Would Be the Same Whether the Federal or
Texas Parol Evidence Rule Applies.
At oral argument and in its Motion Platinum argued that the Court is required to apply the
Texas parol evidence rule because the confirmed Golden Oil plan so requires.5 The Court need
not decide whether it should apply the parol evidence rule under the federal common law6 or
Texas common law to interpret the Golden Oil Settlement Agreement, Golden Oil Plan and
Golden Confirmation Order, because the applicable Texas law on use of parol evidence to
interpret a contract is consistent with the Court’s ruling. Under Texas law, the Court must first
determine whether the terms in contract at issue are ambiguous before resorting to extrinsic
5 Section 17.5 of the Golden Oil plan provides:
Governing Law. Unless a rule of law or procedure is supplied by federal law (including the Bankruptcy
Code and Bankruptcy Rules), the laws of (i) the State of Texas shall govern the construction and
implementation hereof and any agreements, documents, and instruments executed in connection with this
Plan and (ii) the laws of the state of incorporation, formation, or organization, as applicable, of the Debtor
shall govern corporate governance matters with respect to the Debtor, in either case without giving effect to
the principles of conflicts of law thereof.
6Compare In re Harvey, 213 F.3d 318, 321-22 (7th Cir. 2000) (suggesting that the federal nature of bankruptcy and
the strong need for uniformity of approach suggests that an analogy could be drawn to using federal common law to
interpret confirmed bankruptcy plans the same as federal law is used to construe federal court consent decrees) with
In re The Standard Beef Co., 2011 WL 2014331, *6 (Bankr. D.Conn. May 23, 2011)(stating that “‘[c]onfirmed
plans of reorganization are judgments of the Federal court, but they are construed in accordance with State
law.’”)(quoting JMB Capital Partners, L.P. v. CRT Capital Group LLC (In re NTL, Inc.), 295 B.R. 706, 717
(Bankr.S.D.N.Y. 2003)). Cf. Harris v Allstate Ins. Co., 300 F.3d 1183, 1194 (10 th Cir. 2002)(In a federal question
case, federal law governs the applicability of the parol evidence rule.).
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evidence to interpret the contract terms. See David J. Sacks, P.C. v. Haden, 266 S.W.3d 447, 451
(Tex. 2008)(“An unambiguous contract will be enforced as written, and parol evidence will not
be received for the purpose of creating an ambiguity or to give the contract a meaning different
from that which its language imports.”)(citation omitted). “Ambiguity does not arise simply
because the parties advance conflicting interpretations of the contract; rather, for an ambiguity to
exist, both interpretations must be reasonable.” Lopez v. Munoz, Hockema & Reed, L.L.P., 22
S.W.3d 857, 861 (Tex. 2000) (citations omitted). If the language of the contract can be given a
definite legal meaning, and is not reasonably susceptible to more than one meaning, the contract
is unambiguous. Id. This Court found that the Golden Oil Settlement Agreement, Golden Oil
Plan and Golden Oil Confirmation Order each unambiguously provided that MLG was to be the
transferee of the Operating Rights and Working Interests. See Memorandum Opinion, pp. 25- 32
(Docket No. 258).
Under Texas law the parol evidence rule permits the Court to resort to extrinsic evidence
to reform an unambiguous contract based on mutual mistake.7 However, the contractual doctrine
of reformation of a contract based on mutual mistake does not apply to a confirmed chapter 11
plan. As this Court has observed,
A confirmed chapter 11 plan “has some indicia of a contract .…Yet, it is also clear a
confirmed plan is much more than a contract. For example, once confirmed, a plan is
enforceable as a court order against parties who did not even agree to its terms.” United
States Trustee v. CF & I Fabricators of Utah, Inc. (In re CF & I Fabricators of Utah,
Inc.), 150 F.3d 1233, 1239 (10th Cir.1998). A confirmation order is an order of the court
with the binding effect of a final judgment. Rule 9024, Fed.R.Bankr.P., makes Rule 60,
Fed.R.Civ.P., applicable to cases under the Bankruptcy Code, including chapter 11 cases.
Rule 60 provides the mechanism for seeking relief from an order, including an order
7See, Williams v. State Farm Mut. Auto. Ins. Co., 2010 WL 415408, *4 (Tex.App.-Texarkana Feb. 5,
2010)(recognizing that parol evidence can be used to show mutual mistake for the purpose of seeking reformation of
a contract); Ochoa v. City of Galveston, 2009 WL 618694, *3 (Tex.App.-Houston [1 Dist.] Mar. 12, 2009)(stating
that the party seeking reformation of a contract must demonstrate that the agreement contains a term by mutual
mistake of the parties to the agreement, and that to prove a mutual mistake, “a party may use parol
evidence.”)(citations omitted).
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confirming a plan. 	In order to obtain relief from the designation of MLG as the
transferee of the Operating Rights and Working Interests under the Golden Oil Plan and
Golden Confirmation Order based on mistake, Platinum must proceed under Rule 60,
Fed.R.Civ.P. (footnotes omitted)
See Memorandum Opinion, pp. 32-33 (Docket No. 258).
2. 	Extrinsic Evidence is Not Considered in Violation of the Parol
Evidence Rule Even if No Objection is Made to Its Admissibility.
Platinum argues that the Court inappropriately failed to consider for the purpose of
interpreting the Golden Oil Settlement Agreement, Golden Oil Plan, and Golden Oil
Confirmation Order, certain evidence admitted without objection by the Nation. Platinum
further argues that the Court inappropriately failed to consider the following three documents in
connection with the cross-motions for summary judgment to which objection was made by the
Nation: 1) a draft Memorandum of Understanding; 2) a Resolution by the Nation; and 3) e-mail
correspondence from the Nation’s attorney, Ms. Shannon Atcitty. The Nation objected to
admission of those documents Federal Rule of Evidence 408(a) as communications made in the
course of compromise or settlement negotiations. Platinum reasons that because the Nation did
not present evidence that those documents in fact were made in made in the course of
compromise or settlement negotiations, and because the Court found that the evidence was
insufficient to determine whether the evidence at issue fell within Rule 408(a), the Court was
required to overrule the objection, admit the evidence, and consider the evidence in reaching its
decision
Platinum cites several authorities for the proposition that a party who fails to object to the
admission of evidence at the time it is offered has waived the objection.8 This statement of the
law is correct insofar as it prohibits a party who fails to object to the admission of extrinsic
8See, e.g., ABC Elec., Inc. v. Nebraska Beef, Ltd. 249 F.3d 762, 767 (8 th Cir. 2001); McClaran v. Plastic Indus., Inc.
97 F.3d 347, 357 n. 9 (9 th Cir. 1996).
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evidence at the time it is offered from later objecting to the Court’s consideration of the extrinsic
evidence to interpret an agreement on grounds that it violates the parol evidence rule.9 However,
because extrinsic evidence is only relevant upon an initial finding that an agreement is
ambiguous, the Court is not required to consider extrinsic evidence admitted without objection to
construe an agreement if the Court concludes that under the parol evidence rule evidence
extrinsic to the contract should not be considered.10
“The parol evidence rule is not a rule of evidence at all, but a rule of substantive law.”11
Consequently, regardless of whether the extrinsic evidence is admitted over objection or without
objection, the question still remains for decision by the Court whether, under the parol evidence
rule, the extrinsic evidence should be considered to interpret a contract.12 This general rule is
consistent with Texas law:
The parol evidence rule is not a rule of evidence, but a rule of substantive law that
bars the court from consideration of evidence violative of the rule even though it
is admitted without objection.”
9 In ABC Elec., the Eighth Circuit Court of appeals declined to review the question of whether the district court erred
in admitting parol evidence, finding that by not objecting to the admission of parol evidence at trial, the parties
affirmatively waived that argument. ABC Elec., 249 F.3d at 767. Extrinsic evidence was admitted at trial, but the
district court nevertheless found that the contract at issue was unambiguous. Id. at 766-767.
10See Tackett v. Cunningham, 91 S.W.2d 965, 968 (Tex.Civ.App.–San Antonio 1936)(acknowledging that “under
familiar rules of established law, parol evidence, even though admitted without objection, cannot be given effect to
vary or destroy . . . the plain provisions of written obligation.”).
11Hubacek v. Ennis State Bank, 159 Tex. 166, 169, 317 S.W.2d 30, 31 (Tex. 1958)(citing McCormick and Ray,
Texas Law of Evidence, 2 nd Ed., § 1601)(remaining citations omitted). See also, Ophthalmic Surgeons, Ltd. v.
Paychex, Inc., 632 F.3d 31, 38 n.8 (1 st Cir. 2011)(applying New York law); Micrel, Inc. v. TRW, Inc., 486 F.3d 866,
874 (6 th Cir. 2007)(applying Ohio law); Stockton East Water Dist. v. U.S., 70 Fed.Cl. 515, 532 (Fed.Cl.
2006)(applying federal common law); Baum v. Great Western Cities, Inc., of New Mexico, 703 F.2d 1197, 1205
(10 th Cir. 1983) (“The parol evidence rule is, of course, fundamentally rule of substantive law, not the law of
evidence.” - applying New Mexico law); In re Arlington Hospitality, Inc. 368 B.R. 702, 715 n.12 (Bankr. N.D. Ill.
2007), vacated on other grounds and remanded by Arlington LF, LLC v. Arlington Hospitality, Inc., 2007 WL
3334499 (N.D.Ill. 2007)(“Despite its name, however, the parol evidence rule is a rule of substantive contract law,
not a rule of evidence. Failure to object to the admission of parol evidence at trial therefore does not waive the rule's
applicability.”)(internal citation omitted); 9A Charles Alan Wright & Arthur R. Miller, Federal Practices and
Procedure § 2405 (3 rd ed. 2008)(“The misnamed ‘parol evidence rule’ is not a rule of evidence at all but is one of
substantive law . . .”).
12See Capp Indus., Inc. v. Schoenberg, 104 Conn.App. 101, 110 n.6, 932 A.2d 453, 460 (Conn.App. 2007)(“‘if the
[extrinsic] evidence is admitted over objection or without objection, the question still remains for decision by the
court whether under the circumstances of the particular case, any agreement extrinsic to the writing, even if proved,
can in law be effective to add to, subtract from or vary the terms of the writing.’”)(quoting Nagel v. Modern
Investment Corp, 132 Conn. 698, 700, 46 A.2d 605 (1946)(remaining citations omitted)).
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Johnson v. Driver, 198 S.W.3d 359, 364 (Tex.App.-Tyler 2006)(citing Hubacek
v. Ennis State Bank, 159 Tex. 166, 317 S.W.2d 30, 32 (1958)(emphasis
added)(remaining citation omitted)).13
Under the parol evidence rule, “‘[e]xtrinsic evidence is excluded because it cannot serve to prove
what the agreement was, this being determined as a matter of law to be the writing itself.’” 14 In
other words, even if extrinsic evidence is admitted without objection, the extrinsic evidence is
not considered if consideration of the evidence would violate the parol evidence rule because the
extrinsic evidence has no probative value.15
In sum, because the Court based its ruling on the language of the Golden Oil Settlement
Agreement, Golden Oil Plan, and Golden Oil Confirmation Order, and determined that the parol
evidence rule barred consideration of evidence extrinsic to those documents, it did not need to
consider the evidence to which the Nation objected under Rule 408, or certain other evidence
proffered in support of or in opposition to the cross motions for summary judgment, regardless of
whether that evidence was admitted with or without objection. Although the Court did not admit
in evidence certain evidence Platinum contends the Court was required to admit, the Court did
not need to consider that evidence because the Court found that the language in question in the
Golden Oil Settlement Agreement, Golden Oil Plan and Golden Oil Confirmation Order was
13Martin v. Xarin Real Estate, Inc., 703 F.2d 883, 891 n.13 (5 th Cir.1983) (“In Texas, the Parol Evidence Rule is not
a rule of evidence, but one of substantive law.”)(citation omitted).
14Micrel, Inc. v. TRW, Inc., 486 F.3d at 874 (quoting Galmish v. Cicchini, 90 Ohio St.3d 22, 734 N.E.2d 782, 789
(2000)). See also Ross v. Stinnett, 540 S.W.2d 493, 495 (Tex.Civ.App.-Tyler 1976)(citing Miami Petroleum Co. v.
Neal, 333 S.W.2d 876 (Tex.Civ.App.– El Paso 1960, writ ref’d, n.r.e.).(remaining citation omitted))(“Evidence
admitted in violation of the rule is incompetent and without probative force, and it cannot properly be given legal
effect.”); Helterbrand v. Five Star Mobile Home Sales, Inc., 48 S.W.3d 649, 658 (Mo.App. W.D. 2001)(“The trial
court cannot consider inadmissible parol evidence in interpreting a contract even if the evidence was admitted
without objection.”)(citation omitted).
15See Herbert v. Polly Ranch Homeowners Ass’n, 943 S.W.2d 906, 910 (Tex.App.-Houston 1996)(extrinsic
testimony to be excluded under the parol evidence rule, “objected to or not, is without probative force and will not
support any finding” regarding the meaning of a contract)(citation omitted).
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unambiguous. The proffered extrinsic evidence had no probative value because its consideration
would violate the parol evidence rule.
3. 	The agreements contained within the Golden Oil Plan and related
writings are integrated for purposes of application of the parol
evidence rule.
Platinum further asserts that the Golden Settlement Agreement, Golden Oil Plan and
Golden Oil Confirmation Order did not together constitute a complete or integrated agreement;
consequently the Court should have considered extrinsic evidence to determine what the parties
intended. If an agreement is not integrated, the Court may consider evidence extrinsic to the
agreement to determine the terms of the complete agreement reached by the parties.16 “Whether
there is an integrated agreement is to be determined by the court as a question preliminary to
determination of a question of interpretation or to application of the parol evidence rule.”17
When the parties intend the writing or writings to constitute the final expression of the
terms of their agreement contained in the writings, the agreement is integrated.18 An agreement
is fully integrated when the parties intend that the writing or writings contain the complete and
final expression of their agreement.19 An agreement is partially integrated when the parties
16See Starter Corp. v. Converse, Inc. 170 F.3d 286, 295 (2 nd Cir. 1999)(“When an agreement is not integrated, the
parol evidence rule does not apply and extrinsic evidence of a separate oral agreement can be considered.”)(citation
omitted); Jack H. Brown & Co., Inc. v. Toys “R” Us, Inc., 906 F.2d 169, 174 (5 th Cir. 1990)(upon a finding that a
document is incomplete, the court may admit parol evidence); Walley v. Bay Petroleum Corp., 312 F.2d 540, 544
(5 th Cir. 1963)(“if the writings are but a partial integration of the agreement, the rest of the agreement, or collateral
agreements, may be shown through parol [evidence].”); Morgan Buildings and Spas, Inc. v. Humane Society of
Southeast Tex., 249 S.W.3d 480, 488 (Tex.App.-Beaumont 2008)(acknowledging that the trial court could consider
extrinsic evidence of consistent additional terms to explain or supplement the terms of a partially integrated
agreement).
17Restatement (Second) of Contracts, § 209(2) (1981). See also Jack H. Brown & Co., Inc. v. Toys “R” Us, Inc.,
906 F.2d at 174 (stating that “the trial court must make some threshold determination as to the incompleteness of the
document before admitting parol evidence.”).
18 See Restatement (Second) of Contracts, § 209(1) (1981) (“An integrated agreement is a writing or writings
constituting a final expression of one or more terms of an agreement.”).
19Starter Corp. v. Converse, Inc., 170 F.3d 286 at 295 (“A written contract is considered integrated when the parties
intend it to constitute the complete and final expression of their agreement.”)(citing E. Allen Farnsworth, Contracts
§ 7.3 (2nd ed. 1990)); Rosero v. Fuentes, 2011 WL 4017871, *5 (S.D.Tex. Sept. 8, 2011)(same - applying Texas
law).
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intend that a writing or writings contain the final expression of their agreement on the terms
contained in the writings but the writings are not a complete expression of all terms upon which
the parties have agreed. 20 If an agreement is partially integrated, the Court should consider
evidence of consistent additional terms 21 but not terms that vary or contradict the terms of the
partially integrated agreement. 22 A court should not consider parol evidence that conflicts with
the part of the agreement that has been integrated in writing. Security Bank v. Willett, __ N.W.2d
___, 2011 WL 4916922 (Wis.App. Oct. 18, 2011).
Neither the Golden Oil Plan nor the Golden Oil Settlement Agreement contains an
integration clause. Accordingly, the Court must determine whether the parties intended those
writings to constitute the final expression of their agreement on the terms therein contained. The
Court determines that the Golden Oil Plan, the Golden Oil Settlement Agreement, and the
Golden Confirmation Order together constitute a final expression of the agreements among the
parties reflected in those documents. This determination is made taking into account the special
20Rosero v. Fuentes, 2011 WL 4017871 at *5 (“A partially integrated agreement is a final and complete expression
of all the terms addressed in that written agreement, but is no t a final and complete expression of all the terms the
parties have agreed upon.”)(quoting Adams v. McFadden, 296 S.W.3d 742, 752 (Tex.App.-El Paso 2009)(internal
citations omitted)(citing Morgan Buildings and Spas, Inc. v. Humane Society of Southeast Tex., 249 S.W.3d at
486)).
Starter Corp., 170 F.3d at 295 (2 nd Cir. 1999); Rosero, 2011 WL 4017871 at *5)(applying Texas law).
21John T. Jones Const. Co. v. Hoot General Const. Co., Inc., 613 F.3d 778, 784-85 (8th Cir. 2010)(applying North
Dakota law); LIAC, Inc. v. Founders Ins. Co., 222 Fed.Appx. 488, 496 (6 th Cir. 2007)(applying Illinois law); Gemini
Electronics, Inc. v. U.S., 65 Fed.Cl. 55, 63 (Fed. Cl. 2005), aff’d, 182 Fed.Appx. 990 (Fed.Cir. 2006)(unpublished)(
“If the agreement is partially integrated, parol evidence may be introduced only to add consistent additional terms.”
(applying federal law)(citation omitted). See also Restatement (Second) of Contracts § 216(2) (1981)(“An
agreement is not completely integrated if the writing omits a consistent additional agreed term . . .”).
22See, e.g., Robb Evans & Associates, LLC v. Holibaugh, 609 F.3d 359, 365 (4 th Cir.2010)(acknowledging that
“extrinsic evidence ‘is inadmissible to vary or contradict the terms of a valid, and plain and unambiguous written
contract.’” - applying District of Columbia law)(quoting Affordable Elegance Travel, Inc. v. Worldspan, L.P., 774
A.2d 320, 327 (D.C. 2001)(quoting 17A Am.Jur.2d Contracts §402 (1991)(additional internal quotation marks
omitted)); In re Inofin, Inc., 455 B.R. 19, 42 (Bankr. D.Mass. 2011)(applying Massachusetts law); Pate v. Quick
Solutions, Inc., 2011 WL 3449619, *8 (Ohio App. 10 Dist. Aug. 9, 2011)(“A party may introduce extrinsic evidence
to supplement, but not vary or contradict, the written terms of a partially integrated contract.” - applying Ohio
law)(citations omitted).
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nature of an agreement contained in a chapter 11 plan and an order confirming the plan, and the
information contained in the court approved Golden Oil Disclosure Statement. 23
a. 	The Golden Oil Plan
The confirmed Golden Oil Plan contains a provision that entry of a final order confirming
the Plan constitutes approval of a compromise between the Golden Oil and MLG. The Plan
purports to give a general summary of the compromise, and refers creditors and other parties in
interest to the Golden Oil Settlement Agreement. Plan, ¶ 7.1. Although the confirmed Golden
Oil Plan has indicia of a contract, a chapter 11 plan is much more than a contract. 24 Pursuant to
11 U.S.C. § 1141(a), the provisions of a confirmed chapter 11 plan “bind the debtor, … any
entity acquiring property under the plan, and any creditor, … whether or not the creditor's claim
or interest of such creditor … is impaired under the plan and whether such creditor … has
accepted the plan.” 11 U.S.C. § 1141(a). The plan is binding not only on creditors reaching
agreements with the plan proponent that are contained in the confirmed plan, but also on affected
creditors that did not participate in any plan negotiations or who oppose the plan. Further, an
order confirming the plan is treated as a final judgment with res judicata effect. 25 A plan
proponent is required to file and obtain court approval of a disclosure statement containing
adequate information to permit creditors and other parties in interest to make an informed
23 A bankruptcy court may consider the disclosure statement in connection with its interpretation of the plan . See In
re Captain Blythers, Inc., 311 B.R. 530, 537 (9th Cir.BAP 2004)(unpublished), aff’d 182 Fed.Appx. 708 (9 th Cir.
2006)(interpreting the plan in light of the court approved disclosure statement). Accord In re Thickstun Bros.
Equipment Co., Inc. 344 B.R. 515, 521-22 (6th Cir.BAP 2006). Although if a conflict exists between the plan and
disclosure statement the terms the plan control. See In re Futter Lumber Corp., 2011 WL 5417094, *5 (Bankr.
E.D.N.Y. Nov. 8, 2011)(“If there is some ambiguity in the Plan and the terms of a disclosure statement are
considered, where a conflict exists between the plan and disclosure statement, it is the terms of the plan that controls
. . . ”)(citations omitted).
24 See United States Trustee v. CF & I Fabricators of Utah, Inc. (In re CF & I Fabricators of Utah, Inc.), 150 F.3d
1233, 1239 (10th Cir.1998)(“a reorganization plan has some indicia of a contract . . . . Yet it is also clear a
confirmed plan is much more than a contract.”).
25 See In re K.D.Co., Inc., 254 B.R. 480, 490 (10 th Cir. BAP 2000)(“A confirmation order is a final judgment in the
case, and neither it nor the plan that it confirms may be attacked other than by filing a timely appeal.”)(citing Stoll v.
Gottlieb, 305 U.S. 165, 170-72, 59 S.Ct. 134, 83 L.Ed. 104 (1938)(remaining citation omitted)).
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judgment about the plan. 11 U.S.C. § 1125(a)(1) and (b). Accordingly, a plan should not
contain undisclosed terms. 26 The Court finds that agreements contained within the Golden Oil
Plan and Golden Oil Confirmation Order, considered together with other writings made effective
or that remain effective pursuant to the plan, including the Golden Oil Settlement Agreement, for
purposes of applying the parol evidence rule are integrated agreements. Accordingly, the parol
evidence rule applies.
b. 	The Golden Oil Settlement Agreement
The Golden Oil Court, after notice to creditors and other parties in interest, entered an
order approving the Golden Oil Settlement Agreement pursuant to Rule 9019, Fed.R.Bankr.P.
That order provides that the compromise attached to the Motion for Approval of Compromise
(i.e. the Golden Oil Settlement Agreement) is approved. A movant seeking approval of a
compromise under Bankruptcy Rule 9019 is required to provide full disclosure to the Court of all
terms of the proposed settlement, and full disclosure of those terms to parties in interest entitled
to object unless the Court orders otherwise.27 “A proposed settlement must be ‘fair and
equitable’ and in the best interests of the [bankruptcy] estate.” 28 Such a determination cannot be
made by the Court without disclosure of all of the terms of the settlement. The Golden Oil
Settlement Agreement was presented to the Golden Oil Court as containing the terms of the
settlement set forth in the agreement. The Court finds that the Golden Oil Settlement Agreement
was an integrated agreement. 29
26 The Court is not suggesting that there can never be circumstances in which certain plan terms remain confidential,
such as parts of a settlement agreement approved by a plan which remain confidential with approval of the court.
27See In re Nationwide Warehouse & Storage, LLC, 2005 WL 6487199, *11 (Bankr. N.D.Ga. July 14, 2005)( “the
integrity of the bankruptcy system depends on counsel providing full disclosure and proper notice of all proposed
settlements.”).
28In re Moore, 608 F.3d 253, 263 (5 th Cir. 2010)(citation omitted).
29 Platinum also argues that because the Golden Oil Plan defines the Golden Oil Settlement Agreement to include
“any successor agreement,” the agreements contained within the Golden Oil Plan are not integrated. The Court
disagrees. The Golden Oil Plan should not be construed to bind third parties, including the DOI and Nation, to any
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4. 	The Court did not err by failing to consider evidence of
occurrences that happened subsequent to confirmation of the
Golden Oil Plan to interpret the terms of the Golden Oil Settlement
Agreement, Golden Oil Plan and Golden Oil Confirmation Order.
Platinum argues that nothing in the parol evidence rule excludes evidence of occurrences
that happened subsequent to the agreement to be interpreted, and that the Court, therefore, should
have considered evidence of the parties’ conduct after the date the confirmation order was
entered in the Golden Oil bankruptcy case. The Court disagrees.
Evidence of oral promises or conduct subsequent to an agreement may be considered to
determine whether the parties modified the agreement.30 However, subsequent conduct cannot
be considered to determine the intended meaning of the agreement in the absence of an
ambiguity.31 Platinum seeks use of parol evidence of subsequent conduct to interpret terms of an
agreement the Court has found to be unambiguous. The parol evidence rule bars consideration
of such evidence for that purpose.
5. 	It is not clear whether CFR 211.53 prohibits individuals from
owning operating rights and working interests.
Platinum also contends that the parol evidence rule does not exclude consideration of
evidence of the parties intent that Platinum, not MLG, was the intended transferee of the
agreements Golden Oil and MLG may reach in the future or to constitute the Golden Oil Court’s preapproval of any
such agreements. Further, the Golden Oil Confirmation Order specifically identifies MLG as the transferee of the
Operating Rights and Working Interests pursuant to the Golden Oil Settlement Agreement and Golden Oil Plan.
30See, e.g., Sokol & Associates, Inc. v. Techsonic Indus., Inc., 495 F.3d 605, 610 (8 th Cir 2007)(applying Minnesota
law); Volvo Const. Equip. North America, Inc. v. CLM Equip. Co., Inc., 386 F.3d 581, 598 (4 th Cir. 2004)(applying
South Carolina law). Accord Digby v. Texas Bank, 943 S.W.2d 914, 928 (Tex.App.–El Paso 1997)(“ In the absence
of an integrated written agreement, the rule serves only to exclude evidence of agreements made prior to or
contemporaneously with a writing, not subsequent modifications.”)(citation omitted).
31See, e.g., Tremont LLC v. Halliburton Energy Services, Inc., 696 F.Supp.2d 741, 849 (S.D.Tex. 2010)(“ Extrinsic
evidence of subsequent conduct to determine the meaning of a contract generally cannot be considered in the
absence of an ambiguity”)(citations omitted); Homac, Inc. v. DSA Fin. Corp., 661 F.Supp. 776, 786 (E.D.Mich.
1987)(stating that “in the absence of an ambiguity, judicial inquiries into parol evidence or subsequent conduct of
the parties to determine their contractual intent should not be undertaken by the Court.”)(citations omitted); Doran v.
Clubcorp USA, Inc., 2008 WL 451879, *2 (Tex.App.-Dallas Feb. 21, 2008)(unreported)(“Because the contract is
unambiguous, we must derive its meaning from its language alone, without considering extrinsic evidence such as
the parties' subsequent conduct.”)(citing Sun Oil, Co. (Del.) v. Madeley, 626 S.W.2d 726, 732 (Tex., 1981)).
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Operating Rights and Working Interests under the Golden Oil Plan because exclusion of that
evidence would lead to an absurd result.32 Platinum argues that an interpretation of the Golden
Settlement Agreement, Golden Oil Plan and Golden Oil Confirmation Order to mean that only
MLG, and not an entity to be formed by MLG, could be the transferee of the Operating Rights
and Working Interests would lead to a patently absurd result because under applicable federal
regulations MLG was not legally capable of taking title to the Operating Rights and Working
Interests.
MLG consists of a group of 36 individuals. Platinum asserts that under 25 C.F.R. §
211.53 more than one individual may not own the Operating Rights and Working Interests. 25
C.F.R. § 211.53(a) provides:
Approved leases or any interest therein may be assigned or transferred only with
the approval of the Secretary.
The definition section Part 211 of Title 25 provides:
Lessee means a natural person, proprietorship, partnership, corporation, or other entity
that has entered into a lease with an Indian mineral owner, or who has been assigned an
obligation to make royalty or other payments required by the lease.
25 C.F.R. § 211.3
Because “lessee” includes “a natural person” the regulation contemplates that an individual can
be a lessee of tribal owned oil and gas interests. 	Platinum asserts that because this definition
uses the phrase “a natural person” rather than “natural persons” the regulations provide that only
one individual, not a group of thirty-six individuals can be a lessee.
32 There is case authority to support the proposition that parol evidence may be used to interpret a contract if
interpretation of the contract according to its literal terms would lead to an absurd consequence. See, e.g., Seacor
Holdings, Inc. v. Commonwealth Ins. Co., 635 F.3d 675, 680 (5 th Cir. 2011)(observing that when the words of the
contract “are clear, explicit, and lead to no absurd consequences, the contract must be interpreted within its four
corners . . .” - applying Louisiana law). See also Charter Asset Corp. v. Victory Markets, Inc. (In re Victory
Markets, Inc.), 221 B.R. 298, 310 (2 nd Cir. BAP 1998)(“An ‘extrinsic’ ambiguity exists ‘when although the contract
is clear at the semantic or literal level, anyone who knew something about the subject matter would realize that the
contract probably did not mean what it said.’”)(quoting U.S. v. Nat’l Steel Corp., 75 F.3d 1146, 1149 (7 th Cir.
1996)(remaining citations omitted)).
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Platinum has offered no case law or agency interpretation of this regulation in support of
its position. The Court has not found any case law or agency interpretation of this regulation that
addresses whether the regulation prohibits or permits a group of individuals (as opposed to one
natural person) from being the lessee of an oil and gas lease under which the lessor is an Indian
mineral owner, or from owning other interests such as operating rights acquired by the lessee
under the lease. The most natural reading of 25 C.F.R. §§ 211.3 and 211.53 is that the reference
in 25 C.F.R. § 211.3 to “a natural person, proprietorship, partnership, corporation, or other
entity” is descriptive of the type of person that may be a lessee and does not limit a lessee to a
single natural person, proprietorship, partnership, corporation, or other entity. One consequence
of Platinum’s suggested interpretation of the regulation would be that more than one corporation
or other entity could not be a lessee of tribal owned oil and gas interests. Further, the interest at
issue here is not the leasehold interest but operating rights acquired by a lessee under a lease and
working interests derived from the rights of the lessee. 	Absent evidence that the Bureau of
Indian Affairs in its administration of 25 C.F.R. § 211.53 interprets the regulation in the manner
Platinum urges the Court to adopt, no grounds exist to change this portion of the Court’s ruling
denying summary judgment through a motion for reconsideration under Rule 59, Fed.R.Civ.P.
B. Platinum’s remaining alleged errors of law are not appropriate grounds for
reconsideration
Platinum asserts that the Court erred in determining that the Nation can, by ordinance,
require its approval of any transfer of operating rights. 	The Memorandum Opinion did not make
such a determination. 	Instead, the Court observed that uncertainties in the operation of 25
C.F.R. § 211.53 make it such that the Court could not determine what approvals are required.
Consequently, there is nothing for the Court to reconsider as to this issue.
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Finally, Platinum argues that the Court erred in determining that the Department of
Interior (“DOI”) did not approve a transfer of the Operating Rights and Working Interests to
Platinum because the DOI, by failing to respond to Platinum’s Motion for Summary Judgment, is
deemed to have admitted all facts contained within Platinum’s statement of uncontested facts
filed in support of its motion. New Mexico Local Bankruptcy Rule 7056-1(c) provides that, in
connection with motions for summary judgment, “[a]ll material facts set forth in movant's
statement that are properly supported shall be deemed admitted unless specifically controverted.”
NM LBR 7056-1(c). Platinum’s motion for summary judgment did not request judgment against
any particular party, only that a judgment be entered in favor of Platinum determining that
Platinum owns the Operating Rights and Working Interests. The DOI did not participate in the
contested matter in which Platinum and the Nation filed their cross-motions for summary
judgment. Although the DOI, as a party in interest in the bankruptcy case with an opportunity to
participate in the contested matter, is bound by any grant or denial of summary judgment in the
contested matter, the DOI was not required to participate in the contest matter. The DOI could
rely on the Nation to controvert facts to avoid those facts being established for purposes of
summary judgment and for other purposes. It is not appropriate to alter the Court’s ruling based
on alleged deemed admissions under NM LBR 7056-1(c) by a party choosing not to participate
in the contested matter.
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CONCLUSION
Because none of the arguments raised by Platinum in its Motion are proper grounds to
alter or amend the Court’s Memorandum Opinion and Order,
IT IS HEREBY ORDERED that the Motion is DENIED.
__________________________________________
ROBERT H. JACOBVITZ
United States Bankruptcy Judge
Date entered on docket: December 12, 2011
COPY TO:
Roger Jones 	Robert J. Labate
Austin L. McMullen 	Holland & Knight LLP
Bradley Arant Boult Cummings LLP 	Attorney for Jicarilla Apache Nation
Attorneys for Debtor 	131 S. Dearborn
1600 Division St, STE 700 	Chicago, ILL 60603
Nashville, TN 37203
Jennie D Behles
Local Counsel for Debtor
PO Box 7070
Albuquerque, NM 87194-7070
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