Bankruptcy: Security Interest Gas Purchase Agreement: Security Interest

摘要

The underlying dispute in this case arises out of the sale of natural gas by Upstream Energy Services ("UES") to Enron North America Corp. ("ENA"). UES is allegedly acting on behalf of undisclosed principles (the 'Texas Gas Producers"). ENA and UES entered into a series of agreements (the "Spot Confirmations") for the delivery of gas to ENA in November 2001. The transactions are completed through ENA's internet-based energy trading system, known as Enron Online, and are subject to Enron's general terms and conditions ("GT&C"). The GT&C provide in pertinent part that title to gas scheduled under the Spot Confirmations will pass from the seller (UES) to the buyer (ENA) at the delivery point(s). In early December 2001, after ENA receives the gas, it files for Chapter 11 bankruptcy and is unable to pay for the shipments when they become due. UES files a Proof of Claim in the ENA bankruptcy as an agent for the Texas Gas Producers, which are said to be undisclosed principals holding title to the gas delivered under the ENA/UES contracts. UES asserts mat the claim is secured under a non-uniform provision of the Texas Uniform Commercial Code that provides a security interest in favor of interest owners, as secured parties, to secure the obligations of the first purchaser of oil and gas production, as debtor, to pay the purchase price. Tex. Bus. & Com. Code 9.343(a). The court is presented with the question of whether, under Texas Business and Commerce Code 9.343(a), UES, on behalf of the Texas Gas Producers, could assert a secured claim against ENA's Chapter 11 estate for the proceeds from the sale of the gas. The primary argument of ENA is that UES was acting as an agent for undisclosed principals and thus ENA allegedly had no way of knowing that it was taking title to the oil and gas as a first purchaser from an interest owner and is thereby subject to the security interest of the Texas Gas Producers. The Bankruptcy Court rules that, as a matter of law, UES does not have a secured claim, and it grants summary judgment in ENA's favor. In so ruling, the Bankruptcy Court finds that the ENA/UES contracts do not create a secured claim because there is no indication that ENA assented to or adopted the security agreement as required under the Texas law. Held: reversed. UES's interpretation of the statutory language is correct. The statute provides a security interest for interest owners where: (1) there is an authenticated record giving the interest owner a right under real property law, and (2) the first purchaser acts by signing a purchase agreement for oil or gas production, issuing a division order or making any other voluntary communication to the interest owner or any government agency recognizing the interest owner's right. The court notes that, to the extent that oil and gas transactions involve ready-made or industry-standard contracts with little independent negotiation, an approach of requiring express recognition of the interest owner's right could undermine the purpose of using the standard instruments to protect oil and gas interest owners in the ordinary course of business. The district court reverses the Bankruptcy Court's order granting summary judgment to ENA.