Roy L. Stinnett v. Damson Oil Corporation

Roy L. Stinnett (Stinnett) appeals from a final judgment of the District Court for the Central District of California in this suit for breach of contract against Damson Oil Corporation (Damson). We reverse.

Background

Underlying this litigation are tide and submerged oil and gas leases in the Venice Oil Field in Los Angeles County, California, together with equipment used in operating the field (collectively, the Property). As of July, 1975, the Property included seven oil and gas wells, producing approximately 400 to 450 barrels per day. The oil was subject to price regulations established under the Federal Energy Administration (FEA).

On July 21,1975, Stinnett, doing business as the Stinnett Oil Company, entered an Acquisition Agreement, contracting to buy the Property from Mobil Oil Corporation (Mobil). In August, 1975, Stinnett paid Mobil a deposit of $100,000 toward the $1,000,-000 purchase price but, before Mobil could close the sale it had to obtain consent from the City of Los Angeles (City) to assign one of the leases. The transaction was scheduled to close after that consent was obtained.

Stinnett arranged to borrow the $900,000 balance of the purchase price from…

concurring:

I concur in the opinion of Judge Markey and add these comments.

Under the basic agreement of December 31, 1975, among Roy Stinnett, Damson, and Subsidiary, unless Subsidiary exercised its option “to rescind the acquisition of the property,” Roy Stinnett was entitled to receive consideration in form of shares of Damson stock, a 5% royalty, and expense money. This option had been set forth in the Repurchase Agreement that had been executed the same day between Mobil and Subsidiary. The essential question is whether the action taken by Subsidiary amounted to an exercise of the option “to rescind the acquisition of the property”.

I consider it highly probative that the agreement of April 9,1976, between Subsidiary and Mobil provided that the consideration for the reduced price for the property was Subsidiary’s waiver of its “right to rescind the purchase of the property”. Subsidiary then proceeded to retain the property for a reduced price. It is difficult for me to discern how the actual retention of the property by Subsidiary, coupled with the express waiver of its “right to rescind the acquisition of the property”, could possibly constitute an exercise of its option…

dissenting:

I respectfully dissent. I agree with the majority that what the contracts say and what the parties did are not in dispute. Yet, this is not a case that turns on questions of law, which are freely reviewable. This is not a case of contract interpretation in which the result depends solely on the application of legal principles to settled facts. See Libby, McNeill and Libby v. City National Bank, 592 F.2d 504, 512 (9th Cir. 1978). Rather, it depends on the characterization of the events surrounding the formation of the contracts, and what the parties intended to accomplish by their actions. Because I think these determinations necessarily dictate the legal consequences and are at the heart of this case, I agree with the position, apparently adopted by the majority, that our function on appeal is limited to determining whether the district court’s interpretation was clearly erroneous. Kittitas Reclamation District v. Sunnyside Valley Irrigation District, 626 F.2d 95, 98 (9th Cir. 1980), cert. denied, - U.S. -, 101 S.Ct. 861 , 66 L.Ed.2d 802 (1981); United States v. Ironworkers Local 86, 443 F.2d 544, 549 (9th Cir.), cert. denied, 404 U.S. 984 , 92 S.Ct. 447 , 30 L.Ed.2d…

648 F.2d 576 Roy L. STINNETT, Plaintiff-Appellant, v. DAMSON OIL CORPORATION, Defendant-Appellee. No. 78-2815. United States Court of Appeals, Ninth Circuit. Argued and Submitted June 30, 1980. Decided March 20, 1981. Rehearing Denied May 28, 1981. Mitchel J. Ezer, Los Angeles, Cal., for plaintiff-appellant. Cheryl White Mason, O'Melveny and Meyers, Los Angeles, Cal., for defendant-appellee. Appeal from the United States District Court for the Central District of California. Before MARKEY, * Chief Judge, United States Court of Customs and Patent Appeals, WALLACE and HUG, Circuit Judges. MARKEY, Chief Judge. 1 Roy L. Stinnett (Stinnett) appeals from a final judgment of the District Court for the Central District of California in this suit for breach of contract against Damson Oil Corporation (Damson). We reverse. Background 2 Underlying this litigation are tide and submerged oil and gas leases in the Venice Oil Field in Los Angeles County, California, together with equipment used in operating the field (collectively, the Property). As of July, 1975, the Property included seven oil and gas wells, producing approximately 400 to 450 barrels per day. The oil was subject to price…