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Grynberg v. Eni S.p.A.

August 13, 2009

JACK J. GRYNBERG, GRYNBERG PRODUCTION CORPORATION (TEXAS), INC., GRYNBERG PRODUCTION CORPORATION : (COLORADO), INC., AND PRICASPIAN DEVELOPMENT CORPORATION (TEXAS) PLAINTIFFS,
v.
ENI S.P.A., F/K/A AGIP, AN ITALIAN CORPORATION DEFENDANT.



The opinion of the court was delivered by: Robert L. Carter, District Judge

OPINION

INTRODUCTION

On November 16, 2007, Defendant Eni S.p.A ("Eni") filed a motion for summary judgment against Plaintiffs Jack J. Grynberg, Grynberg Production Corporation (Texas), Inc., Grynberg Production Corporation (Colorado), Inc., and Pricaspian Development Corporation (Texas) (all together "Plaintiffs," or "Grynberg") on the grounds that Plaintiffs released Eni and the claim is barred by the statute of limitations. Plaintiffs cross move for summary judgment to strike any affirmative defense of the statute of limitations. Defendant's motion is granted in part and denied in part. Plaintiffs' motion is denied in its entirety.

BACKGROUND*fn1

In 1991, Agip S.p.A (now known as Eni S.p.A ("Eni")) entered into a joint venture with British Gas p.l.c ("BG"). The joint venture sought the rights to explore, develop and produce the Karachaganak and Kashagan fields in the Republic of Kazakhstan.

In 1995, Eni, BG, the Republic of Kazakhstan, along with other parties, entered into a Production Sharing Principles Agreement with respect to the Karachaganak field (the "1995 Karachaganak PSPA"). The PSPA provided that Eni and BG would engage in remedial and maintenance operations in the Karachaganak field to enhance the recovery and production of petroleum from the Karachaganak field pending the negotiation and execution of a final production sharing agreement.

In December 1995, Agip Karachaganak B.V. ("AKBV"), a company wholly owned by Eni, purchased all the rights and obligations that Eni had in the 1995 Karachaganak PSPA and the Karachaganak field for US$106.1 million. This sales price represented Eni's cost incurred related to the Karachaganak field. AKBV began receiving revenues from the Karachaganak field in 1995.

In June 1993, Eni, British Petroleum Exploration Operating Company ("BP"), BG, Total Exploration and Production Kazakhstan, and the Republic of Kazakhstan executed a Preliminary Consortium Agreement with respect to the exploration and development of the Kashagan field. The final Consortium Agreement gave Eni, along with other signatories, the exclusive right to negotiate for a production of sharing agreement with respect to the Kashagan field.

In December 1995, Agip Caspian Sea B.V. ("Agip Caspian Sea"), which is wholly owned by Eni, purchased Eni's interest in the Consortium Agreement for US$29.5 million. This sales price represented Eni's costs related to the Kashagan field.

In 1992, Grynberg filed a lawsuit against BG for breaching an agreement to share exploration and development opportunities within the northwestern portion of the onshore and offshore Republic of Kazakhstan with Grynberg. In 1995, pursuant to a settlement agreement ("Settlement Agreement"), Grynberg released BG and its "affiliates" from all claims arising out of BG's activities in Kazakhstan.

WAIVER OF AFFIRMATIVE DEFENSE

The court begins its analysis of the Parties' cross motion for summary judgment with the threshold question of whether Defendant may assert a statute of limitations defense against Plaintiffs' claim of unjust enrichment.

In Defendant's Answer to Plaintiffs' Original Complaint, Defendant asserted a statute of limitations defense against Plaintiffs' claim of unjust enrichment. Defendant then moved for summary judgment on numerous grounds, including statute of limitations, and Plaintiffs subsequently moved to amend their complaint. The court determined that further discovery was necessary to determine whether Plaintiffs' claim was outside the statute of limitations and also granted Plaintiffs' motion to amend their complaint. Grynberg et al. v. Eni S.p.A., 06 Civ. 6495 (RLC), 2007 WL 2584727, at *6 (S.D.N.Y. Sept. 5, 2007). The court ordered that discovery be limited to the alleged gains Defendant acquired in relation to Plaintiffs' unjust enrichment claim. Id. In response to Plaintiffs' First Amended Complaint, Defendant filed an Answer to Amended Complaint ("Amended Answer") which did not assert statute of limitations as a defense. (See Answer to Am. Compl.)

Plaintiffs now assert that Defendant has waived its right to assert a statute of limitations defense by failing to plead it in its Amended Answer, as required by Federal Rules of Civil Procedure 8(c) ("Fed. R. Civ. P."). (Pls.' Br. Opp'n Mot. Summ. J. 17.) Fed. R. Civ. P. 8(c) requires an answering party to "set forth affirmatively . . . any . . . matter constituting an avoidance or affirmative defense." Failure to comply with the requirements of Rule 8(c) may result in waiver of affirmative defenses.

Defendant argues that its affirmative defense should not be deemed waived because Plaintiffs cannot demonstrate prejudice. (Def.'s Mot. Summ. J. 3.); see, e.g., Steinberg v. Columbia Pictures Indus., Inc., 663 F.Supp. 706, 715 (S.D.N.Y. 1987) ("[A]bsent prejudice to the Plaintiff, a Defendant may use an affirmative defense in a motion for summary judgment for the first time.") (quoting Rivera v. Anaya, 726 F.2d 564, 566 (9th Cir. 1984)). Moreover, Defendant argues that it implicitly raised the statute of limitations defense by reference in its Amended Answer to cases which address statute of limitations defenses. (Def.'s Mot. Summ. J. 2.)

Plaintiffs have not alleged prejudice by Defendant's failure to properly plead a statute of limitations defense. (See Pls.' Br. Opp'n Mot. Summ. J. 17-18.); U.S. v. Krieger, 773 F.Supp. 580, 583 (S.D.N.Y. 1991) (Carter, J.). Plaintiffs have had an adequate opportunity to respond to this challenge and have fully briefed the issue. Krieger, 773 F.Supp. at 583; see also Astor Holdings, Inc. v. Roski, 325 F.Supp.2d 251, 260-61 (S.D.N.Y. 2003). Further, because discovery was limited to determining whether the Plaintiffs' claim was outside the statute of limitations, the court finds it unlikely that Plaintiffs were surprised by Defendant's reliance on this affirmative defense.

Because Plaintiffs have had an opportunity to respond, and have in fact responded, to Defendant's assertion of a statute of limitations defense, and in the interest of avoiding further delay in the adjudication of this case, ...


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