Added Party Can’t Avoid Amended Master Service Agreement

Gray Reed

Gray Reed

Let’s begin with a question: Master service agreements (“MSA’s” in the trade), once agreed upon, often remain in force for years. As time passes and circumstances change, the parties amend, sometimes losing sight of the original details. Was Stingray Pressure Pumping, LLC v. In re Gulfport Energy Corporation the result of forgetfulness or merely a Hail-Mary to avoid liability?

The MSA and amendments

Stingray Pressure Pumping and Gulfport Energy entered into an MSA for oilfield fracing services in 2013. The parties amended the MSA in January and July 2016, adding Gulfport Buckeye (now Gulfport Appalachia) as a party in the July amendment. The MSA was amended for the third time in 2018 to extend the term until the end of 2021.  That amendment was only signed by the original parties, not Gulfport Appalachia.

The litigation

In December 2019, Gulfport Energy sued Stingray in Delaware state court for breach of contract. Stingray countersued. In November 2020 Gulfport Energy and its wholly owned subsidiarie Gulfport Appalachia filed for bankruptcy in the Southern District of Texas. A dispute arose about whether Gulfport Appalachia remained a party to the MSA after the 2018 amendment. After reviewing the original agreement and the three amendments, the bankruptcy court held that Gulfport Appalachia was not liable under the MSA after September 30, 2018, the day the agreement would have ended without the 2018 amendment. Stingray appealed to the district court.

Gulfport Energy argued that Gulfport Appalachia was not liable after September 2018 because it was not a party to the July 2018 amendment that extended the MSA. Among other facts, it pointed out that the amendment did not explicitly include Gulfport Appalachia in the identification of the parties, and there was no signature block for Gulfport Appalachia.

The district court reverses

The district court disagreed. There was only one MSA – one that incorporated all of its amendments. The July 2016 amendment explicitly added Gulfport Appalachia to the definition of “Company” – as was required by the agreement in order to amend. Beyond that date, Gulfport Energy and Gulfport Appalachia both represented the “Company” as a party to the agreement. Without an explicit amendment in the 2018 amendment removing Gulfport Appalachia from the definition of the “Company”, it remained as a party to the agreement and was bound by the 2018 amendment. Additionally, the MSA did not require that all entities sign—just a signature for the “Company” and a signature for the “Contractor”. The 2018 amendment was signed by a “Company” representative and a “Contractor” representative, so it bound all.

Practice tip: Was the amendment flawed or was the challenge made on 4th and 25?

It’s a trick question. The answer can’t be discerned with certainty from the two-page opinion. The point for scriveners: Don’t forget the original terms when amending an old agreement.

Your musical interlude

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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