Supreme Court
Samson Expl., LLC v. Bordages
- Case number: 22-0215
- Legal category: Oil and Gas
- Subtype: Contract Interpretation
- Set for oral argument: October 26, 2023
Case Summary
The central issue in this case is whether a contractual “late charge” on pastdue royalties allows for compound rather than simple interest.
As landowners, the Bordages executed multiple oilandgas leases with Samson Exploration, LLC. The leases provide for an 18% latecharge penalty on pastdue royalties to be calculated each month but do not expressly state whether the interest should be compound or simple. After fellow royalty owners with a similar latecharge provision sued Samson on various breachoflease theories, the Bordages joined suit, but their case was later severed into a separate cause. The trial court rendered judgment against Samson for just over $13 million in “late charges,” with approximately $11 million of that number based on the interest being compounded monthly. The court of appeals affirmed.
Samson petitioned the Supreme Court for review, arguing that Texas law and nationwide authority disfavors compound interest when it is not expressly provided for in a contract and that applying simple interest is supported by the leases’ plain language and a utilitarian construction. The Bordages respond that stare decisis and the leases’ plain language preclude Samson’s construction and that collateral estoppel bars this issue because it was already resolved in the fellow royalty owners’ case in favor of compounding.
The Court granted Samson’s petition for review.
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