Settlement Agreements: Release Bankruptcy: Constructive Trust

摘要

John W. Dahlberg, Marilyn D. Dahlberg, The John and Marilyn Dahlberg Community Property Trust, and Donald R. McClure (Plaintiffs) purchase undivided working interests in several oil and gas leases and wells from Reichmann Petroleum Corp. (Reichmann) prior to Reichmann filing a petition under Title 11 of the Bankruptcy Code. Plaintiffs file their Reichmann adversary petition on July 16, 2007, and elect the litigation option. Pursuant to the Reorganization Plan confirmed by the Court on May 8, 2008, Plaintiffs litigate their right to written partial oil and gas lease assignments of the working interests in question and on March 3, 2009, the bankruptcy court approves a Mutual Release and Settlement Agreement between Plaintiffs and Reichmann (Reichmann Settlement) in which Reichmann agrees to execute written, partial oil and gas lease assignments for ninety percent of the undivided working interests previously sold to the plaintiffs, which include the oil and gas leases in question. ConocoPhillips Company (Conoco) objects to the Reichmann Settlement on the grounds that the bankruptcy Court's approval on July 28,2008, of a settlement among Reichmann, Burlington, and the Bamco Entities (Bamco Settlement) previously released to Conoco the Plaintiffs' right to revenue attributable to their undivided working interests. Under the terms of the Bamco Settlement, approved over a year after the Reichmann Adversary is filed, the Bamco entities transfer their working interests in certain Reichmann operated wells and also make a cash payment to Conoco. Although Reichmann releases Reichmann's claims against Conoco for certain revenues, it is clear from the terms of the Bamco Settlement that those revenues only relate to Reichmann's working interest in oil and gas leases and the wells, and do not relate to the working interests of unassigned working interest owners like the Plaintiffs. A settlement agreement cannot, as a matter of law, release the claims of persons that are not a party or in privity with a party to that agreement at the time of the agreement. It is undisputed that Plaintiffs are not parties to the Bamco Settlement nor are they in privity with Reichmann at that time. A trustee or debtor-in-possession is not in privity with a creditor when the trustee or debtor-in-possession does not have the right to assert the claim on behalf of the creditor.