Diamond Offshore Company et al v. Bennu Oil & Gas, LLC et al

1 / 28
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION
IN RE:
ATP OIL & GAS CORPORATION CASE NO: 12-36187
Debtor(s)
CHAPTER 11
DIAMOND OFFSHORE COMPANY
Plaintiff(s)
VS. ADVERSARY NO. 12-03425
ATP OIL & GAS CORPORATION
Defendant(s)
TM ENERGY HOLDINGS LLC, GMZ
ENERGY HOLDINGS LLC, AND CLP
ENERGY LLC
Plaintiff(s)
VS. ADVERSARY NO. 12-03429
ATP OIL & GAS CORPORATION, et al
Defendant(s)
§
§
§
§
§
§
§
§
§
§
§
§
§
§
§
§
§
§
§
§
§
§
MEMORANDUM OPINION
Diamond Offshore’s Motion for Summary Judgment, (Case No. 12-3425, ECF No. 144),
is denied. The Court’s Order concerning Diamond Offshore’s motion for a protective order,
(Case No. 12-3425, ECF No. 120), will be modified by a separate Order in accordance with this
Memorandum Opinion.
TM’s Second Motion for Summary Judgment, (Case No. 12-3429, ECF No. 150), is
denied.1 TM’s Motion to Exclude Evidence, (Case No. 12-3429, ECF No. 105), is denied.
1 The TM adversary proceeding (Case No. 12-3429) involves three separate plaintiffs: (i) TM Energy Holdings
LLC; (ii) GMZ Energy Holdings LLC; and, (iii) CLP Energy LLC. When referencing the plaintiffs generally in this
adversary proceeding, the Court will refer to “TM” for simplicity.
ENTERED
07/24/2013
Case 12-03425 Document 165 Filed in TXSB on 07/24/13 Page 1 of 28

2 / 28
Background
The motions for summary judgment considered in this Memorandum Opinion relate to
whether prepetition transactions between ATP (the debtor in the related main bankruptcy case)
and TM and Diamond constitute real property conveyances (as they are characterized in the
respective documents) or should be recharacterized as debt instruments.
The individual characteristics of these transactions differ, sometimes greatly, and
therefore the ultimate outcomes may vary.
This Court’s statements at an April 22, 2013 hearing precipitated these motions for
summary judgment. Some prior history is necessary to place these motions in their proper
context.
I. Prior Rulings in the Diamond Adversary Proceeding
Discovery had not been completed in the Diamond adversary proceeding prior to the
April 22 hearing. Motions related to discovery disputes were addressed at multiple hearings held
in March and April 2013.
a. March 21, 2013 Hearing
Diamond’s Motion for a Protective Order, (Case No. 12-3425, ECF No. 89), was
discussed at the March 21, 2013 hearing. Diamond sought to prevent ATP from discovering
extrinsic evidence related to these transactions, believing the evidence is inadmissible in this
adversary proceeding.
At the hearing, the Court made a ruling as to what extrinsic evidence may be considered
(and would be discoverable):
The Court has reviewed the various transactional documents that are at
issue in this Adversary Proceeding, and two issues must be addressed in
determining the Motion for Protection.
Case 12-03425 Document 165 Filed in TXSB on 07/24/13 Page 2 of 28

3 / 28
First issue: Are the [transaction] documents ambiguous? If the
documents are unambiguous, then parole evidence may not be used to
determine or alter the terms of the transactional documents.
Second issue is whether the Parole Evidence Rule governs statements
and documents that do not constitute terms of the documents.
I'll just repeat the second issue because I think it’s the more
complicated one.
And that is, whether the Parole Evidence Rule governs statements in
documents if the statements that are in the documents do not constitute
terms of the documents.
The Court now holds as follows: One, Terms: if you will, the capital T
terms, are provisions that identify the structure and the various rights and
obligations of the parties.
In this particular instance Terms include, but are not limited to, the
calculation of the total amount that is to be paid by ATP to Diamond.
Second, the calculation of the amount of the periodic payments due to
Diamond, including the fact that the calculation relies on the production of
hydrocarbons or the determination of the amount of the periodic
payments.
Third, the dates on which the payments are due.
Fourth, Diamond’s rights following a breach by ATP of its obligations
under the agreements.
Fifth, the choice of law provisions; although the choice of law
provisions may not bind the Court or third parties.
. . . [T]he Court holds that the Terms of the documents are not
ambiguous. . . .
But what I’m holding, in terms of finding that the Terms aren’t
ambiguous is, I can tell with precision what’s due, when it’s due, how you
measure it, what expenses are charged against it. All of the things that are
the business Terms of the document I think are unambiguous.
Number three: Discovery, therefore, is not allowed, and I will protect
Diamond against discovery if the sole purpose of the discovery is to vary
the transactional Terms.
Case 12-03425 Document 165 Filed in TXSB on 07/24/13 Page 3 of 28

4 / 28
Number four: Mere statements in the documents are not Terms, Terms
with a capital T. These statements may be warrants by one party to
another, the statements may even serve as evidence for estoppel purposes,
but the statements are not Terms that are governed by the Parole Evidence
Rule. Statements in the documents include characterizations of the
transaction’s nature, as well as implicit or explicit expressions -- implicit
or explicit expressions of subjective intent.
. . . .
. . . The Parole Evidence Rules does not govern the Court’s interpretation
or application of the characterizations in a document. That is, statements
are not Terms.
Number five: The Court must look at the economic substance of the
transaction’s Terms in order to determine its true nature. In particular, we
must determine in this case -- and the following is intended to be a
shorthand for the dispute, it’s not intended to limit it -- whether the
transactional documents implement a deferred payment arrangement --
. . .
We must determine whether the transactional documents in this case
implement a deferred payment arrangement or a transfer of hydrocarbons
under applicable non-bankruptcy law. Therefore, discovery is allowed if
the purpose of the discovery is to learn or lead to evidence having any
tendency to make the issue of whether the transactional documents
implement a deferred payment arrangement, or whether the transactional
documents implement a present transfer of hydrocarbons either more or
less likely.
(Case No. 12-3425, ECF No. 122 at 11-14). This oral ruling resulted in an order granting in part
and denying in part Diamond’s motion for a protective order. (Case No. 12-3425, ECF No.
120).
Examples were discussed to better define the contours of the ruling. Certain examples
(e.g., characterizations or statements of intent) were specifically identified as not constituting
“Terms”—and therefore not binding upon the Court. Other contract details presented more
nuanced situations. One example is the $20,000 “financing premium”2:
As to what this one is, is what I think the fight is about and the fact that
it may have – I think [the interest at issue] certainly has some of the
2 If ATP chose to pay Diamond’s day rate (originally set at $540,000) via the separate payment structure set up by
these transactions (allowing for deferred payment), ATP would pay $560,000 instead of $540,000.
Case 12-03425 Document 165 Filed in TXSB on 07/24/13 Page 4 of 28

5 / 28
characteristics of an ORRI, we know that. And it certainly has some
characteristics of a deferred financing transaction. I think we know that
because the amount that needs to be paid is more to pay it over time than if
it were paid in cash up front.
Now, as to whether that’s sufficient, I don’t know as to how that – the
pay rate, as I read it, was $20,000 a day higher if it was going to pour into
the ORRI than if it was going to be paid in cash. I don’t know where that
20,000 comes from.
And this is probably a good example of the kind of discovery that I am
anticipating. I’m not anticipating any discovery and won’t allow discovery
to say there isn’t a $20,000 premium for financing it. I think that’s an
unambiguous Term. But it’s fair game to figure out why there’s a $20,000
premium for financing.
(Case No. 12-3425, ECF No. 122 at 22-23).
ATP may not conduct discovery to support an argument that, although the contract
unambiguously sets forth a $20,000 financing premium, the parties intended the financing
premium to be $15,000. This would be an attempt to use extrinsic evidence to contradict an
unambiguous “Term.” Other evidence related to the $20,000 financing premium might be
discoverable. ATP may discover information related to the $20,000 financing premium in
support of its argument that the economic substance of this transaction differs from its
characterization.
Diamond filed an emergency motion for reconsideration the rulings. (Case No. 12-3425,
ECF No. 124). The motion was considered on April 4, 2013.
b. April 4, 2013 Hearing (p.m.)
Diamond’s motion for reconsideration argued that the distinction between “terms” and
“Terms” was not supported by Louisiana law. (Id. at 3) (“[C]ourts are required to harmonize all
language utilized in a contract to give effect to the intent of the parties without reference to
extrinsic evidence. Case law does not distinguish between ‘terms,’ ‘Terms,’ ‘phrases,’
Case 12-03425 Document 165 Filed in TXSB on 07/24/13 Page 5 of 28

6 / 28
‘provisions’ or ‘statements’ in a contract.”). Diamond argued that courts are equally bound by
unambiguous characterizations and statements/recitals of intent as they are by unambiguous
provisions such as “X is to pay Y $50 every Friday” (i.e., a “Term”). A similar question of law
was raised at a hearing in the TM adversary proceeding that same morning.
The motion for reconsideration was not ruled upon at the April 4, 2013 hearing. The
Court requested that Diamond and ATP brief two issues.
The first issue related to how Diamond’s assertion (i.e., no difference between “terms”
and “Terms” recognized under Louisiana law) could be true given that Louisiana law allows for
recharacterization in the true sale/lease cases:
[W]hether, in a true sale situation, how are the Courts ignoring, and I
don’t mean that pejoratively, but ignoring the stated characterization of the
document as a true lease, to then determine that true leases aren’t true
leases but are financing arrangements when the documents say they’re true
leases.
And at least my experience on this . . . is they normally go – there’s
like this big paragraph that says, “We don’t care what anybody says, this
is really a lease.” Right? And they sort of go on and on about how it’s
really a lease. And then the Court will come in saying, “No, it’s not.”
And I want to know how Courts get to that when they – if you’re
correct about really what the term “Terms” means as we explained at the
last hearing. So I need that brief.
(Case No. 12-3425, ECF No. 128 at 71-72). The second issue centered on what to do if certain
terms are equally consistent with a loan (i.e., a “disguised financing” transaction)3 or a
conveyance of a real property interest:
The second issue is, as I expressed this morning in the TM case, I have the
same concern here, which is if there are terms that are equally consistent
with either a loan or an ORRI, that’s going to certainly influence the way
3 This phrase, often used throughout this adversary proceeding, may not be particularly apt. Entities finance
themselves through sales of real property interests as well as with loans. In these proceedings, the Court uses the
word “disguised” to mean an interest characterized as a sale but with the economic substance of a loan.
Case 12-03425 Document 165 Filed in TXSB on 07/24/13 Page 6 of 28

7 / 28
we look at this. It just has to, as opposed to having a term that would only
be consistent with a loan.
(Case No. 12-3425, ECF No. 128 at 72).
The parties briefed these issues in connection with the April 22, 2013 hearing.
II. Prior Rulings in the TM Adversary Proceeding
In contrast to the Diamond adversary proceeding, discovery in the TM adversary
proceeding was completed prior to the April hearings. TM and ATP had previously filed
competing motions for summary judgment. (Case No. 12-3429, ECF Nos. 93-94). A dispute
exists as to whether extrinsic evidence should be considered in connection with those motions for
summary judgment.
a. April 4 Hearing (a.m.)
The April 4 hearing in the TM adversary proceeding was set on TM’s Motion to Exclude
Evidence and ATP’s Motion to Strike. (Case No. 12-3429, ECF Nos. 105, 117). The hearing
focused on TM’s Motion to Exclude Evidence. (Case No. 12-3429, ECF No. 128 at 4).
TM’s Motion to Exclude Evidence sought to preclude the consideration of evidence used
by ATP in connection with its response to TM’s first summary judgment motion. As an
example, TM sought to exclude expert reports addressing the transactions’ economic substance.
(Case No. 12-3419, ECF No. 105 at 3-4).
TM argued “that the Court can’t go outside the four corners for interpreting the contract
and determine the common intent of the parties.” (Case No. 12-3429, ECF No. 128 at 4). This is
similar to Diamond’s argument that characterizations or statements of intent (“This is a sale” or
“The parties intend for this to be sale”, i.e., “terms”) are subject to the parol evidence rule in the
same manner as provisions such as “X must pay Y $50 every Friday” (a “Term”). TM
distinguished the true sale/lease cases by arguing that the issue of intent in all of those cases was
Case 12-03425 Document 165 Filed in TXSB on 07/24/13 Page 7 of 28

8 / 28
disputed or ambiguous. Here, the contracts unambiguously state that the parties intended to enter
into a real property transaction.4
The Court found that the outcome of the motion to exclude hinged on the (disputed) legal
issue of whether (when faced with an economic substance/recharacterization scenario) courts are
in fact bound by unambiguous characterizations and statements of intent contained in a contract:
The Court: Yeah, look, I think [the admission and consideration of
extrinsic evidence] all depends, though on whether the parties’ original
characterization intent is binding or whether we can leave it, so.
Mr. Knull [ATP’s counsel]: We agree with that, but the Louisiana cases
say they’re not.
The Court: Well, except that I think you’re telling me that Louisiana
cases say you look at the economic substance of it. But he’s telling me
there’s an exception to that if you don’t dispute the original intent of the
parties from a legal point of view.
(Case No. 12-3429, ECF No. 128 at 65). TM and ATP were to brief the issue in advance of the
April 22, 2013 hearing.
This issue was at the forefront of both proceedings, although for somewhat different
reasons. The Diamond adversary presented the question of whether to allow discovery of
extrinsic evidence, while the TM adversary presented the question of whether extrinsic evidence
(once obtained) could be considered.
III. The Howard Trucking Cases
The Court’s rulings (at the April 22 hearing and the prior hearings) were based primarily
on its reading of the two Howard Trucking cases.
4 TM also argued that the evidence should be excluded because ATP has judicially admitted the intent of the parties
and cannot offer evidence to contradict its admissions. (Case No. 12-3429, ECF No. 128 at 4). The Court rejected
this argument at the April 4 hearing.
Case 12-03425 Document 165 Filed in TXSB on 07/24/13 Page 8 of 28

9 / 28
The Louisiana appellate Howard Trucking decision, affirmed the lower court’s holding
that, as a matter of law, the contracts entered into between the parties were “thinly disguised
conditional sales”, despite the fact that they were structured and characterized as leases. 474 So.
2d 955 (La. App. 5 Cir. 1985). The lower court had not held a trial. Howard Trucking (the
plaintiff) appealed the trial court’s decision to grant the defendant’s motion for summary
judgment.
The Louisiana appellate court ruled that (in a recharacterization/economic substance
scenario) courts are not bound by characterizations (e.g., “This is a lease”). The documents at
issue were both characterized and structured as leases. 474 So.2d at 959 (“The plaintiff points
out that the contract forms were entitled ‘lease’; they were structured as leases in accordance
with the request of John Stassi, who was the president of Orleans-Iberia, Inc., and the tax
attorney and a shareholder of that corporation.”). The Louisiana appellate court noted that:
It is well-established that we are not bound by the label placed on a written
agreement or the subjective intent of the contracting parties, but must look
to the substance of the transaction in determining rights and obligations.
Words will have import and can be binding only when they describe
relationships which actually exist, but not when they are merely labels
which are used to alter or disguise actual relationships.
Id. at 960 (citing Pastorek v. Lanier Sys. Co., 249 So.2d 224 (La. App. 4th Cir. 1971)).
The question of intent is less clear. Howard Trucking contended that summary judgment
should not have been granted because a genuine issue of fact remained as to the parties’ intent—
an issue Howard Trucking believed was material in a recharacterization scenario. Id. at 959
(“The material fact at issue was the intent of the parties in making the contract, whether they
intended the contract to be a lease or a sale.”). Howard Trucking submitted affidavits in support
of the argument that the parties intended to enter into a leasing arrangement. The appellate court
Case 12-03425 Document 165 Filed in TXSB on 07/24/13 Page 9 of 28

10 / 28
affirmed the trial court’s decision that the affidavits failed to establish a genuine issue of material
fact:
The affidavits submitted by the plaintiff merely allege that John Stassi
wanted to call the contracts between the plaintiff and Orleans-Iberia leases
for tax purposes and that Stassi supplied the printed lease forms which
were signed by the parties. These facts were not contested by any party to
the lawsuit and do not, in any event, bear upon the holding of the trial
court. Therefore, from the record facts, we find the trial court did not err in
determining there was no genuine issue of material fact for trial.
Id. at 959. This excerpt has two possible interpretations.
The first possible interpretation is that the affidavits did not even constitute evidence of
the parties’ intent to enter into a lease agreement, instead merely showing that one party wanted
to call the transaction a lease for tax purposes (and that the parties used printed lease forms).
This interpretation is bolstered by the phrase “[t]he affidavits submitted . . . merely allege that
John Stassi wanted to call the contracts . . . leases for tax purposes.”
The second possible interpretation is that the appellate court did not consider the parties’
intent material in a recharacterization/economic substance scenario. This interpretation is
bolstered by the phrase “[t]hese facts . . . do not . . . bear upon the holding of the trial court.”
The Louisiana Supreme Court framed the intent issue presented in the case as follows:
“Howard Trucking contends that because the parties intended the agreements to be leases they
are leases in law. It is true the intent of the parties to a contract should govern its interpretation.
Pastorek . . . on which the lower courts relied, is not to the contrary.” Howard Trucking Co. v.
Stassi, 485 So.2d 915 (La. 1986). The Supreme Court then ruled that, despite the evidence put
forth as to intent, Howard Trucking still failed to establish the existence of a genuine issue of
material fact:
The record shows that the parties treated the contracts in the present case
as leases for some purposes and as sales for other purposes. That they
Case 12-03425 Document 165 Filed in TXSB on 07/24/13 Page 10 of 28

11 / 28
were designated and treated as leases for federal tax purposes is
insufficient to defeat the motion for summary judgment. Rather, the best
evidence of the parties’ intent is what the parties agreed to do.
Id. at 918 (emphasis added). The Supreme Court then enumerated the contracts’ “Terms.” (Id.)
(“Orleans-Iberia agreed to make a down payment of $275,000 and to make forty-six monthly
payments of $3489.42, at 16.7% interest. The total of the payments equals the value of the
equipment. The parties agreed upon a $100 option to purchase at the end of the term. Orleans-
Iberia was required to pay the full value of the equipment regardless of whether it exercised that
option.”). The implication is that, notwithstanding Howard Trucking’s arguments that the parties
intended to enter into a leasing arrangement, the economic substance of the transactions (i.e.,
what the parties agreed to) evidenced a different intent.
Whether intent is immaterial in a recharacterization/economic substance situation, or
whether professed intent (even if unambiguous) may be contradicted by the economic substance
of the transaction the parties agreed to, the result is the same.
IV. The Combined April 22 Hearing
As noted above, important motions in both hearings hinged upon the issue of whether
(when faced with an economic substance/recharacterization scenario) courts are in fact bound by
unambiguous characterizations and statements of intent contained in a contract.
The Court ruled that it is not so bound in a recharacterization scenario:
I’m overruling the argument that we’re restricted to the four corners of the
document when we are in a substance over form lawsuit because we need
to determine from outside of the document what, in this case, a term ORRI
is so that we can then look at the four corners of the document to
determine if it’s consistent with the term ORRI.
(Case No. 12-3425, ECF No. 138 at 27).
Case 12-03425 Document 165 Filed in TXSB on 07/24/13 Page 11 of 28

12 / 28
The Court made a separate ruling at the hearing that might render consideration of such
evidence unnecessary—by giving TM and Diamond the opportunity to show that Louisiana law
would clearly not allow recharacterization. At the beginning of the hearing, the Court stated:
I want to divide the discovery dispute into two parts. One is whether
the agreements in either the Diamond or the TM cases are consistent in all
ways with Louisiana law as surrogate federal law on the transfer of a real
property interest, which is the declared intent within the documents, or if
there are any inconsistences between the documents and applicable law,
being Louisiana law is a surrogate for Federal law unless it is inconsistent
with Federal law. And if – at the point when that discovery ends, that we
then do a Summary judgment on that question.
I have a difficult time believing, having read your briefing and having
read the cases, that if the documents are always consistent with an ORRI
or an NPI – and I must say also within themselves because I know there’s
one argument that says the documents have internal inconsistency because
this really is a farmout agreement and so how could it possibly be
consistent with Louisiana law on that? But I have a hard time believe that
if everything is consistent, the Louisiana law would allow any re-
characterization.
And so to allow discovery solely on that question and then do a
Summary Judgment solely on that question, one way or the other, if it
turns out that we rule on Summary Judgment that everything is consistent
with the stated intent. I think that’ll be game, set and match for the
Plaintiffs.
On the other hand, if we were to rule that there are provisions that are
not always consistent with a term ORRI under the applicable law, then we
would go ahead and open discovery into what I’ll call the second issue,
which would be accounting discovery issues.5
(Case No. 12-3425, ECF No. 138 at 5-6). The ruling implicit in the road map was later restated
in the following manner:
I’m going to go back to the beginning, which is I’m not getting an
ambiguous statement to me as to what Louisiana law is and I am therefore
determining that under Louisiana law that if you have a document that
5 Accounting records were one of the items ATP sought to discover. This ruling is not limited to the accounting
records
Case 12-03425 Document 165 Filed in TXSB on 07/24/13 Page 12 of 28

13 / 28
isn’t [in]consistent with what it purports to be, that we don’t then look
behind it. Putting the burden on [ATP] to find inconsistency.
And I know you think that shouldn’t be what the law is, but I think that
is what the law is in Louisiana. I don’t think there’s another way to read it.
Because I’m not finding a single recharacterization case where in the end
they didn’t say there was some inconsistency with the self-
characterization.
That inconsistency can be economic; that inconsistency can be legal; it
can take a lot of forms. But unless you produce something that shows me
an actual or potential inconsistency, in other words, disputed
inconsistency, from a factual point of view, then I think they win.
(Case No. 12-3425, ECF No. 138 at 34).
The $20,000 financing premium from the Diamond transactions provides a good example
to illustrate this point.
In accordance with this Court’s ruling that it is not bound by characterizations or
statements of intent, extrinsic evidence is discoverable and admissible—as long as it does not
seek to alter an unambiguous contract “Term.” Assuming the economic substance of this
transaction is disputed, certain extrinsic evidence related to the $20,000.00 financing premium
might be relevant to a recharacterization analysis. ATP would be allowed to discover emails or
accounting records, in an attempt to show how the parties derived this $20,000.00 figure.
Yet, if recharacterization were not an available theory for ATP, then consideration of this
evidence would be unnecessary.
If Louisiana law recognizes interests with these characteristics as real property, then so
must this Court—notwithstanding expert testimony that these interests are economically
inconsistent with real property.6 If transactions with these characteristics are unquestionably
consistent with real property interests under Louisiana law, in addition to being characterized as
6 This assumes no inconsistency between Louisiana and federal law.
Case 12-03425 Document 165 Filed in TXSB on 07/24/13 Page 13 of 28

14 / 28
such by parties whose unambiguously stated intent was to enter into real property transactions,
recharacterization under Louisiana law would not be a viable theory.
Both TM and Diamond filed motions for summary judgment as a result of this ruling.
At the hearing, the Court indicated that the burden of demonstrating inconsistency
belonged to ATP. ATP has the ultimate burden as to its recharacterization argument. ATP’s
theory is that these transactions are, in terms of economic substance, inconsistent with
conveyances of real property interests and should be recharacterized as a debt instrument. ATP
need not prove this at summary judgment stage.
ATP must demonstrate at this summary judgment stage, that recharacterization is a viable
theory.7 The transaction documents unambiguously characterize the transactions as conveyances
of real property interests. The transaction documents unambiguously state that the parties’ intent
is to convey real property interests. TM and Diamond moved for summary judgment in their
respective adversary proceedings, arguing that these interests are in all ways consistent with
ORRIs and NPIs under applicable law (here, Louisiana as surrogate federal law). If TM and
Diamond are correct, recharacterization under Louisiana law would not be allowed. In that
situation, TM and Diamond would be entitled to summary judgment, and the extrinsic evidence
at issue in these disputes (while relevant and admissible to support a recharacterization theory,
would not be considered).8
7 TM and Diamond put forth other arguments as to why recharacterization theory is not a viable theory, which must
eventually be addressed. The question here is, even assuming recharacterization would be an otherwise viable
argument, whether these interests are so clearly consistent with Louisiana real property law that allowing ATP to
conduct discovery on this issue (in the Diamond adversary) or present extrinsic evidence only admissible under a
recharacterization theory (in the TM adversary) would be inappropriate.
8 This would still be subject to the argument that Louisiana law (by defining interests with such characteristics as
real property interests) would be inconsistent with federal law. If so, federal law would apply and recharacterization
might again be applicable.
Case 12-03425 Document 165 Filed in TXSB on 07/24/13 Page 14 of 28

15 / 28
The question is whether the Court can determine, at this point, whether the interests in
these adversary proceedings are undoubtedly consistent with Louisiana real property law.
Summary Judgment Standard
“The court shall grant summary judgment if the movant shows that there is no genuine
dispute as to any material fact and that the movant is entitled to judgment as a matter of law.”
Fed. R. Civ. P. 56(a). Fed. R. Bankr. P. 7056 incorporates Rule 56 in adversary proceedings.
A party seeking summary judgment must demonstrate: (i) an absence of evidence to
support the non-moving party’s claims or (ii) an absence of a genuine dispute of material fact.
Sossamon v. Lone Star State of Tex., 560 F.3d 316, 326 (5th Cir. 2009); Warfield v. Byron, 436
F.3d 551, 557 (5th Cir. 2006). A genuine dispute of material fact is one that could affect the
outcome of the action or allow a reasonable fact finder to find in favor of the non-moving party.
Brumfield v. Hollins, 551 F.3d 322, 326 (5th Cir. 2008).
A court views the facts and evidence in the light most favorable to the non-moving party
at all times. Campo v. Allstate Ins. Co., 562 F.3d 751, 754 (5th Cir. 2009). Nevertheless, the
Court is not obligated to search the record for the non-moving party’s evidence. Malacara v.
Garber, 353 F.3d 393, 405 (5th Cir. 2003). A party asserting that a fact cannot be or is
genuinely disputed must support the assertion by citing to particular parts of materials in the
record, showing that the materials cited do not establish the absence or presence of a genuine
dispute, or showing that an adverse party cannot produce admissible evidence to support the
fact.9 Fed. R. Civ. P. 56(c)(1). The Court need consider only the cited materials, but it may
consider other materials in the record. Fed. R. Civ. P. 56(c)(3). The Court should not weigh the
9 If a party fails to support an assertion or to address another party’s assertion as required by Rule 56(c), the Court
may (1) give an opportunity to properly support or address the fact; (2) consider the fact undisputed for purposes of
the motion; (3) grant summary judgment if, taking the undisputed facts into account, the movant is entitled to it; or
(4) issue any other appropriate order. Fed. R. Civ. P. 56(e).
Case 12-03425 Document 165 Filed in TXSB on 07/24/13 Page 15 of 28

16 / 28
evidence. A credibility determination may not be part of the summary judgment analysis. Turner
v. Baylor Richardson Med. Ctr., 476 F.3d 337, 343 (5th Cir. 2007). However, a party may object
that the material cited to support or dispute a fact cannot be presented in a form that would be
admissible in evidence. Fed. R. Civ. P. 56(c)(2).
“The moving party bears the burden of establishing that there are no genuine issues of
material fact.” Norwegian Bulk Transp. A/S v. Int’l Marine Terminals P’ship, 520 F.3d 409, 412
(5th Cir. 2008). The evidentiary support needed to meet the initial summary judgment burden
depends on whether the movant bears the ultimate burden of proof at trial.
If the movant bears the burden of proof on an issue, a successful motion must present
evidence that would entitle the movant to judgment at trial. Malacara, 353 F.3d at 403. Upon
an adequate showing, the burden shifts to the non-moving party to establish a genuine dispute of
material fact. Sossamon, 560 F.3d at 326. The non-moving party must cite to specific evidence
demonstrating a genuine dispute. Fed. R. Civ. P. 56(c)(1); Celotex Corp. v. Cattrett, 477 U.S.
317, 324 (1986). The non-moving party must also “articulate the manner in which that evidence
supports that party’s claim.” Johnson v. Deep E. Tex. Reg’l Narcotics Trafficking Task Force,
379 F.3d 293, 301 (5th Cir. 2004). Even if the movant meets the initial burden, the motion
should be granted only if the non-movant cannot show a genuine dispute of material fact.
If the non-movant bears the burden of proof of an issue, the movant must show the
absence of sufficient evidence to support an essential element of the non-movant’s claim.
Norwegian Bulk Transp. A/S, 520 F.3d at 412. Upon an adequate showing of insufficient
evidence, the non-movant must respond with sufficient evidence to support the challenged
element of its case. Celotex, 477 U.S. at 324. The motion should be granted only if the non-
Case 12-03425 Document 165 Filed in TXSB on 07/24/13 Page 16 of 28

17 / 28
movant cannot produce evidence to support an essential element of its claim. Condrey v.
Suntrust Bank of Ga., 431 F.3d 191, 197 (5th Cir. 2005).
Analysis
I. The TM Adversary Proceeding
a. TM’s Second Motion for Summary Judgment
TM’s Second Motion for Summary Judgment does not supersede its previously filed
motion for summary judgment. It addresses the issue of inconsistency, as the Court requested.
ATP responded to TM’s motion but did not file its own summary judgment motion.
b. Economic Substance
The Court finds there is a genuine issue of fact as to the economic substance of these
transactions.
ATP submitted a report produced by its expert, Dr. Scott T. Jones. (Case No. 12-3429,
ECF No. 102-8 at 1). Dr. Jones concluded the transactions at issue in the TM adversary
proceeding were, in terms of economic substance and form, inconsistent with conveyances of
real property interests. (Case No. 12-3429, ECF No. 102-8 at 9) (“It is my professional opinion
based on the applicable economics and my professional experience that the conveyances to
Plaintiffs of the term ORRIs and the term NPI in [these transactions] represented a form of [debt]
financing rather than the conveyance of real property.”).10
10 TM pointed out that “financing” is not limited to loans or other debt instruments and that an entity may choose to
finance itself by the sale of real property interests. This is true. However, it is clear from the report that Dr. Jones is
examining whether these interests are more akin to real property interest or a debt instrument. (Case No. 12-3429,
ECF No. 102-8 at 7) (“I have been asked to assess . . . whether the term ORRIs and NPIs . . . assigned to
Plaintiffs . . . were in economic form and substance a conveyance of real property from ATP to Plaintiffs or
represented a financing transaction (i.e., a loan).”).
Case 12-03425 Document 165 Filed in TXSB on 07/24/13 Page 17 of 28

18 / 28
TM’s expert, C. John Thompson, also submitted a report.11 Thompson disagrees with Dr.
Jones on the question of economic substance. (Case No. 12-3429, ECF No. 130-30 at 3) (“I have
concluded each and every characteristic of [these transactions], identified by [ATP] as those of a
financing transaction and not a true sale of a property interest, are customary and consistent
within the Industry with the characteristics of a sale of a property interest or ORRI.”) (emphasis
omitted).
The competing expert reports address economic substance and industry custom, not
whether Louisiana law would nevertheless recognize interests with these characteristics as real
property interests.
Louisiana may choose to recognize interests of any kind as real property interests—even
interests which, under the laws of any other state, would not be considered real property. If
Louisiana law recognizes these interests as real property interests, so will this Court.12 If TM or
Diamond can demonstrate that Louisiana law would consider the ORRIs and NPIs as real
property interests, then they are entitled to summary judgment—notwithstanding Dr. Jones’s
opinion as to the economic substance of these transactions.13
11 The Court has not considered the rebuttal reports.
12 Louisiana law only applies to the extent not inconsistent with federal law, so there is the additional issue of
whether it would be inconsistent with federal law for Louisiana law to recognize certain interests as real property
interests. 43 U.S.C. § 1333(a)(2)(A); Cutting Underwater Techs. USA, Inc. v. Eni U.S. Operating Co., 671 F.3d 512
(5th Cir. 2012) (per curiam).
13 To be clear, TM and Diamond would be entitled to summary judgment as to whether Louisiana law would allow
for these interests to be recharacterized. If it were determined that Louisiana law, by recognizing these interests as
real property, is inconsistent with federal law, this would present the issue of whether federal law would allow
recharacterization.
Case 12-03425 Document 165 Filed in TXSB on 07/24/13 Page 18 of 28

19 / 28
c. Allegedly Inconsistent Characteristics
ATP’s response to TM’s Motion for Summary Judgment highlighted the characteristics it
believes renders these interests inconsistent with what Louisiana law recognizes as real property
interests.
Several aspects were combined under the heading of “effective recourse”: (i) conditional
increases in distribution and royalty percentages;14 (ii) use of a Designated IRR and cash-on-cash
hurdles;15 (iii) “cross-collateralization”; and, (iv) certain aspects of the payment structure16 in the
GMZ transactions. (Case No. 12-3429, ECF No. 167 at 20-26).
ATP separately categorized three additional aspects: (i) accrual of “interest” during a
period between when production payment sold and when hydrocarbon production began at
14 For some of the transactions, royalty percentages increased if ATP failed to reach certain milestones by a given
date. (See, e.g., Case No. 12-3429, ECF No. 93-3 at 21).
15 Designated IRR means a designated internal rate of return. In connection with these transactions, a Designated
IRR (of 15%, for example) meant that the interests transferred do not terminate until the purchaser receives
production payments equaling at least the purchase price paid plus a 15% rate of return on the purchase price. (See,
e.g., Case No. 12-3429, ECF No. 93-3 at 11). In connection with these transactions, a cash-on-cash hurdle (say of
1.2x) means that an interest would not terminate until the purchaser received in production payments an amount
totaling at least 120% of the interest’s purchase price.
16 ATP’s objection is that the payment mechanism might result in ATP paying cash out of pocket to make up a
shortfall:
In the GMZ transactions, the payment mechanism in the Collateral Agency Agreement and Covenant
Agreement further puts ATP’s own funds at risk, because ATP must direct the purchasers of hydrocarbons
produced by the property subject to GMZ Energy’s interests to pay to the Collateral and Payment Agent
34% of the total proceeds payable to ATP. This 34% figures exceeds the Applicable Royalty Percentage
payable to GMZ Energy out of the Subject Interests (in the case of some wells, by a considerable
percentage) and thus includes some money of ATP. The Collateral Agent then calculates the amount that is
payable to the Royalty Owners based on the Applicable Royalty Percentages. If the Applicable Royalty
Percentage increases as described above, the amount payable to the Collateral and Payment Agent also
increases. If insufficient funds have been paid into the collateral account in order to make the full Royalty
Payment due to GMZ Energy, then ATP is required to make up the shortfall between the Royalty Payment
due and the balance of the collateral account from its own funds.
(Case No. 12-3429, ECF No. 167 at 25-26).
Case 12-03425 Document 165 Filed in TXSB on 07/24/13 Page 19 of 28

20 / 28
related property; (ii) the GMZ Transactions had a protective mortgage;17 and, (iii) “minimal risk
of ownership.”18
d. TM’s Response
TM’s motions addressed ATP’s contentions.
TM cited Louisiana cases discussing an overriding royalty interest for which the amount
of the interest varied according to production. See Esso Std. Oil Co. v. Nesbit, 63 So.2d 417 (La.
1953) (overriding royalty interest reduced from 3/16 to 1/8 depending on whether target of 100
barrels per month was achieved). This arguably refutes ATP’s allegation that conditional
increases of royalty and distribution percentages renders these interests inconsistent with what
Louisiana law would recognize as real property interests. Unlike the present case, the alteration
in production in Esso did not shift the production to an additional field.
Not all of ATP’s contentions were rebutted. Three key issues are: (i) the Designated
IRR; (ii) the cash-on-cash hurdle; and, (iii) the cross-collateralization or diversification issue.
TM’s expert’s addressed the issue of the Designated IRR issue:
The use of an internal rate of return (“IRR”) is usual and customary in the
Industry for the calculation of the Purchase Price or stated amount to be
paid for any given Term ORRI or NPI ORRI. This is the rate of return the
capital projects they need to earn, based on the perceived risk for any
given transaction. The higher the perceived risk, the higher the IRR used to
calculate the Purchase Price for the ORRI. This Industry practice would
be consistent with these GMZ Term ORRI Conveyances, CLP Term ORRI
Conveyance, and the TM Term Conveyance, where the stated amount or
Purchase Price is calculated by projecting the cash flow stream for the
ORRI from the production and sale of the hydrocarbons from the
17 The GMZ Transactions contained a security agreement granting a security interest (to secure a portion of the
amount owed by ATP) that would take effect in the event a court found the interests did not constitute real property
interests. (Case No. 12-3429, ECF No. 93-7 at 4).
18 ATP argued that the structure of these transactions insulated TM from risks associated with ownership (e.g., a
precipitous drop in the price of oil). (Case No. 12-3429, ECF No. 167 at 23-27). As noted above, TM’s interest
continued until the Designated IRR and cash-on-cash hurdle were achieved. If the price of oil dropped, it would
simply take a greater amount of production to terminate TM’s interest.
Case 12-03425 Document 165 Filed in TXSB on 07/24/13 Page 20 of 28

21 / 28
associated assets or leases and discounting such cash flow stream to
Present Value based on the associated IRR.
(Case No. 12-3429, ECF No. 150-30 at 5). This does not describe what occurred here.
The parties agree that IRR calculations are a common methodology used for both loans
and real property conveyances. However, in a typical purchase, a purchaser would calculate its
internal rate of return to determine how much it would pay. The purchaser would then take the
risk of performance. In these transactions, the putative seller (ATP) took the risk of
performance. As noted by Dr. Jones, these transactions made ATP responsible for19 assuring
that TM achieved its Designated IRR:
There is no analytical difference between a financing agreement that
calls for a 21% rate of interest to be paid on some principal amount (e.g.,
$10) and an agreement, such as the term transactions at issue in this
proceeding, that calls for future cash flows to be discounted at a rate of
21% such that present value of those future cash flows equals the same
principal amount (i.e., $10). The discount factor – what [TM’s expert C.
John Thompson] refers to as the IRR and what the term transactions define
as the “Designated IRR” – is analytically equivalent to a rate of interest
paid by the borrower. . . .
Rather a fundamental economic difference concerns the obligations of
the parties as related to the IRR. While a buyer of an asset may employ a
discount factor, such as an IRR, in its determination of the value of the
asset – and, hence, the price it is willing to pay for the asset – the seller
has no obligation to ensure that the buyer achieves the expected rate of
return. . . .
The IRR as employed in the term transaction at issue in this
proceeding is, in contrast, a specified rate of return. ATP is, as seller of the
term transactions, obligated to remit to Plaintiffs,as buyer of the term
transactions, future cash flows encompassing a defined return and
principal repayments in exchange for the principal amounts of capital
Plaintiffs provided to ATP.
(Case No. 12-3429, ECF No. 102-8 at 76-77).
19 By “responsible for,” the Court means that as long as ATP retained rights in any lease burdened by this interest
(and oil was still being produced), TM’s interest would not terminate until ATP had paid TM an amount sufficient
to cover the interest’s purchase price plus the Designated IRR (an amount constantly increasing with time).
Case 12-03425 Document 165 Filed in TXSB on 07/24/13 Page 21 of 28

22 / 28
TM’s reply to ATP’s response did not address the cash-on-cash hurdle issue except to
argue that ATP failed to provide support for their argument that a cash-on-cash hurdle would be
inconsistent with term overriding royalty interests under Louisiana law. (Case No. 12-3429,
ECF No. 168 at 9).
As to the cross-collateralization issue, TM discussed Louisiana cases where an overriding
royalty interest entitled the holder to production from any well on a given property. Esso Std.
Oil Co., 63 So.2d at 417. This is, again, different from the present situation.
In these adversary proceedings, interests were sold that burdened various OCS leases,
sometimes at multiple hubs (e.g., an interest burdening not only various OCS leases, but also
burdening both the Gomez and Telemark hubs). If ATP lost rights in any of the OCS leases, the
amount owed to the purchaser would not be proportionately reduced. ATP would still be
required to pay the same amount before the interests would terminate, although production
payments from a reduced number of leases would be left to reach this amount. In other words,
TM’s rights to specific production payments (e.g., 21% royalty percentage as to MC 754) relates
only to particular piece of real property (MC 754), but the right to receive a stream of production
payments totaling the purchase price (plus the Designated IRR, etc.) burdened multiple leases.
This arrangement can be properly described as a joint and several obligation linked to various
leases.
The TM adversary proceeding presents an additional variant of the “cross-
collateralization” issue. At least one transaction created a production payment that began to
provide material returns only if other planned production payments failed to materialize within a
specified time. (Case No. 12-3429, ECF No. 93-17 at 27-28) (interests in certain Telemark
Case 12-03425 Document 165 Filed in TXSB on 07/24/13 Page 22 of 28

23 / 28
Wells increased from a 0.0005% distribution percentage to a 100% distribution percentage until
Clipper qualifies as a successful well, if such had not occurred prior to a specified date).
This, again, is quite a different situation from the cases cited by TM.
e. Result
The evidence before the Court indicates a genuine issue of material fact as to the
economic substance of these transactions. Although some of the Terms in the TM documents are
consistent with Louisiana law, there is no Louisiana authority that supports the proposition that a
transaction that contains all of the Terms in the TM documents are consistent with a transfer of a
Louisiana real property interest.
The Court will not examine each Term in isolation. Rather, to determine whether there
should be recharacterization, the Court will examine the transactions as whole and integrated.
The Court is unable to determine that the TM transactions are real property
transactions as a matter of law. TM’s Second Motion for Summary Judgment must be denied.
TM’s Motion to Exclude Evidence must similarly be denied.20
II. The Diamond Adversary Proceeding
a. Diamond’s Motion for Summary Judgment
Diamond’s Motion for Summary Judgment: (i) argues that the parol evidence rule
applies to characterizations and statements of intent when a contract is unambiguous; (ii) argues
that its transactions documents (the conveyance and the farmout agreement) are consistent with
the creation of an incorporeal immovable under Louisiana law; (iii) discusses how these interests
are inconsistent with a loan secured by receivables. (Case No. 12-3425, ECF No. 144).
20 If the Court ultimately determines that Louisiana law would not allow recharacterization, and that Louisiana law
is not inconsistent with federal law, then the extrinsic evidence will not be considered.
Case 12-03425 Document 165 Filed in TXSB on 07/24/13 Page 23 of 28

24 / 28
At this stage, the issue is is whether, even assuming the Court’s Howard Trucking rulings
are correct, recharacterization under Louisiana law is clearly not a viable theory for ATP (and the
Court should not allow discovery on, or consider, extrinsic evidence in connection with a
recharacterization argument).
b. Economic Substance
ATP submitted an export report, also prepared by Dr. Jones, addressing the economic
substance of the Diamond transactions. As with the TM transactions, Dr. Jones concluded that
the Diamond transactions are economically inconsistent with a real property transfer. (Case No.
12-3425, ECF No. 153-20 at 8) (“It is my professional opinion based on the evidence presented
in this proceeding, the applicable economics, and my professional experience that the
transaction, i.e., the conveyance to Diamond of the term-limited ORRI/NPI in the Subject
Interests, represented a form of financing rather than the conveyance of real property.”).
The Court finds there is a genuine issue of fact as to the economic substance of these
transactions.
As noted above, Louisiana may choose to recognize interests of any kind as real property
interests—even interests which, under the laws of any other state, would not be considered real
property. If Louisiana law recognizes these interests as real property interests, so will this
Court.21 If Diamond can demonstrate that Louisiana law would consider as real property
interests with these characteristics, then they are entitled to summary judgment—
notwithstanding Dr. Jones’s opinion as to the economic substance of these transactions.
21 Louisiana law only applies to the extent not inconsistent with federal law, so there is the additional issue of
whether it would be inconsistent with federal law for Louisiana law to recognize certain interests as real property
interests. 43 U.S.C. § 1333(a)(2)(A); Cutting Underwater Techs. USA, Inc. v. Eni U.S. Operating Co., 671 F.3d 512
(5th Cir. 2012) (per curiam).
Case 12-03425 Document 165 Filed in TXSB on 07/24/13 Page 24 of 28

25 / 28
c. Allegedly Inconsistent Characteristics
ATP’s response to Diamond’s motion identified those aspects of the interest that make it
such that Louisiana law would not recognize it as a real property interest. (Case No. 12-3245,
ECF No. 152 at 27). The Court analyzes two of those issues.
ATP argues that the Court should read the Farmout Agreement and the ORRI/NPI
interests together in order to determine the true nature of the transaction. Under the amended22
Farmout Agreement, ATP was required to pay a 7.5% return to Diamond calculated against the
outstanding remaining balance in the ORRI account. ATP’s obligation to pay the 7.5%
additional return was not limited by or payable from production. Rather, it was an unconditional
cash obligation measured against the ORRI.
In its reply, Diamond alleges that it was permissible for the Farmout Agreement to have
terms as contracted by the parties. That misses the point. The issue for the Court is twofold:
• Should the Farmout Agreement and the ORRI be read together?
• If so, is it consistent with a real property transfer to impose an unconditional payment
obligation on the seller that is measured by the outstanding balance of the ORRI?
Without more, if the unconditional payment obligation and the purported real property
transfers are read together, there may be an inconsistency with Louisiana law.
An additional possible inconsistency concerns the indeterminate nature of the interest
ATP granted to Diamond:
Here, however, Diamond’s putative mineral interest is indeterminate, as it
gives ATP the option of paying the excess over the Base Dayrate Charges
for Shortfall Days in cash based on the discounted rate of $540,000 per
Shortfall Day or of deferring payment and adding the obligation to the
Contribution Amount at the rate of $560,000 per Shortfall Day. These
provisions leave the scope of the purported mineral interest within the
22 The amended Farmout Agreement that contained this provision was executed after the original transactions. This
timing difference may ultimately be legally significant.
Case 12-03425 Document 165 Filed in TXSB on 07/24/13 Page 25 of 28

26 / 28
control of the grantor. The option of payment of cash by the grantor that
is unrelated to proceeds of production is also inconsistent with the basic
definition of a mineral royalty interest under the Louisiana Mineral Code.
Instead, it is squarely consistent with a loan.
(Case No. 12-3425, ECF No. 152 at 27) (internal citations omitted).
d. Diamond’s Response
Diamond’s Motion for Summary Judgment set forth its argument that these interests have
the necessary characteristics of overriding royalty interests (or net profit interests) under
Louisiana law. (Case No. 12-3425, ECF No. 143 at 35-40) (describing, for example, the interest
as passive, free of drilling and production costs, and a share in hydrocarbons produced at the
surface).23 Diamond similarly listed reasons why this interest is inconsistent with a loan secured
by receivables. (Case No. 12-3425, ECF No. 143 at 41-43) (noting the lack of a promissory note
as well as a lack of a right to force payment in the event of a default).
Diamond might be correct that Louisiana law will recognize almost anything as an ORRI
as long as it has the characteristics it outlined in its summary judgment motion. It may also be
correct that recharacterization should not occur where the interest has aspects that are
inconsistent with how the interest is sought to be recharacterized.
However, neither the fact that this interest has characteristics inconsistent with a loan
secured by receivables, nor the fact that this interests has characteristics consistent with an ORRI
interest (as recognized by Louisiana law), is dispositive as to the narrow issue listed above.
In its reply, Diamond addressed ATP’s argument:
ATP advances a logically flawed argument that the option to pay for
Shortfall Days in cash conflicts with the definition in the Louisiana
Minerals Code of an overriding royalty interest because overriding royalty
interests are payable only out of the proceeds of production. As a purely
23 Diamond set forth a similar argument as to the related Farmout Agreement. (Case No. 12-3429, ECF No. 143 at
40-42).
Case 12-03425 Document 165 Filed in TXSB on 07/24/13 Page 26 of 28

27 / 28
factual matter, even if the grantor could not bargain with the grantee of an
overriding royalty interest to extinguish all or part of that interest with a
cash payment—a conclusion that ATP does not support—the election to
pay Shortfall Days in cash would not affect Diamond’s interest. It is only
if ATP elects to add these Shortfall Day charges to the amount collectable
under the ORRI, that those amounts affect the ORRI. At that point,
Diamond’s only right to payment is through production. On the other
hand, if ATP pays in cash, the dayrates owed for Shortfall Days are not
added to the amount collectable under the ORRI.
(Case No. 12-3425, ECF No. 157 at 5). The parties do not cite to applicable Louisiana law that
determines whether the structure of this transaction—that gives the putative Seller the right to
determine the amount that pours into the ORRI—creates a sufficient lack of certainty to be
inconsistent with a Louisiana real property interest.
Diamond does, for the purposes of summary judgment, establish that the Diamond
transaction has inconsistencies with a secured debt instrument. However, that merely leaves the
Court in a conundrum not answered by Louisiana law. Assuming that ATP prevails on its
argument that certain provisions of the transactional documents are inconsistent with a real
property transfer,24 the Court will be confronted with a transaction that is neither fish nor foul. It
is premature to grant summary judgment until the issue is resolved.
e. Result
There is a genuine issue of material as to the economic substance of these transactions.
Notwithstanding that, had Diamond shown these interests are unquestionably consistent with
what Louisiana law recognizes as real property interests, it would be entitled to summary
judgment on the issue of whether Louisiana law would allow recharacterization.
24 In this opinion, we only hold that there is a material fact issue on inconsistency.
Case 12-03425 Document 165 Filed in TXSB on 07/24/13 Page 27 of 28

28 / 28
The Court is unable to determine that Louisiana law recognizes (as real property)
interests with these characteristics. Diamond’s Motion for Summary Judgment must be denied.
Diamond’s Motion for Protective Order must also be denied.
Conclusion
The Court will enter separate orders in accordance with this Memorandum Opinion.
SIGNED July 24, 2013.
___________________________________
Marvin Isgur
UNITED STATES BANKRUPTCY JUDGE
Case 12-03425 Document 165 Filed in TXSB on 07/24/13 Page 28 of 28