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Disputed Facts Prevent Movant from Recovering Lien Proceeds on Summary Judgment in SemCrude Proceeding

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On March 1, 2012, Judge Brendan Shannon entered proposed findings of fact and conclusions of law recommending that the United States District Court for the District of Delaware enter an order granting in part and denying in part the partial motion for summary judgment filed by New Dominion, LLC (“Movant”) against BP Oil Supply Company (“BP”) and J. Aron & Company (together with BP, “Respondents”) in two related non-core adversary proceedings. New Dominion, LLC v. BP Oil Supply Company (In re SemCrude, L.P. et al.), Adv. No. 09-50978 (Bank.D.Del. Mar. 1, 2012); New Dominion, LLC v. J. Aron & Company (In re SemCrude, L.P. et al.), Adv. No. 09-51774 (Bank.D.Del. Mar. 1, 2012).

Prior to its bankruptcy filing, the Debtors’ business involved purchasing oil and gas from upstream producers, such as Movant, and selling it to downstream purchasers, such as Respondents. In its summary judgment motion, Movant alleges that it is entitled to partial summary judgment on the basis that (i) it has a perfected lien on the oil sold to the Debtors or the proceeds thereof; (ii) that Respondents hold such proceeds to which Movant’s liens attach; and (iii) Movant’s rights to the proceeds trump any rights to such proceeds held by Respondents.

As a preliminary matter, the Court referenced the express language of Federal Rule 56 pursuant to the 2010 amendments of the Federal Rules of Civil Procedure, as well as advisory committee’s notes and applicable case law in denying BP’s contention that summary judgment is only appropriate for entire claims. Next, in evaluating Movant’s motion and the requirements to perfect its lien pursuant to the applicable lien statute under the Oklahoma Oil & Gas Lien Act, the Court concluded that Movant had satisfied the statutory lien perfection requirements and thus recommended summary judgment on this point. However, genuine issues of material fact remained with respect to whether Respondents had received Movant’s oil which was a threshold inquiry before the Court could address which party has superior rights to the oil proceeds. Due to the existence of these disputed facts, the Court recommended denial of summary judgment with respect to Movant’s summary judgment requests (ii) and (iii) above.

A copy of the bankruptcy court’s proposed findings of fact and conclusions of law are available below:

New Dominion, LLC, v. J. Aron Company
New Dominion, LLC, v. BP Oil Supply Company

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