Krasfur v. Uop (In Re El Paso Refinery L.P.)

196 B.R. 58 (1996)

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Nature of the Case

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Facts

D and the Debtor, El Paso Refinery, L.P. (LP) were involved in a licensing agreement. D is in the business of developing and licensing petroleum refining technology. LP owned and operated a petroleum refinery. LP filed for voluntary Chapter 11 relief. P filed this adversary proceeding, objecting to D's claim and seeking certain affirmative relief. The parties stipulated that the amount of D's claim is $4,019,028.36. The examiner concluded that the Licenses had a value of approximately $2 million. However, the LP's original schedules had not listed the Licenses as assets, but the amended schedules listed the Licenses as an asset with an approximate value of $2 million. LP's lenders foreclosed upon the assets and conveyed ownership of the refinery to RHC. RHC, in turn, entered into an operating agreement with Chevron USA. D contended that the continued operation of the refinery violated D's intellectual property rights. D got a new license with RHC/Chevron. P maintains that the money D received from RHC/Chevron represents either cure of the LP Licenses, or should be applied in mitigation of D's claim against LP. P seeks a declaratory judgment that D must apply the $3.7 million it received from RHC for the 'new' licenses in mitigation of D's claim for unpaid royalties against the estate. D's claim for unpaid royalties is essentially one for breach of contract. D argues that the RHC Licenses were 'new' licenses unrelated to the LP Licenses.