Trustee's suit claims bank error led to companies' bankruptcy

By Kelly Holleran | Jan 27, 2009

The trustee of two companies that filed Chapter 11 bankruptcy claims it was a bank's mistake that forced the companies into insolvency.

The trustee of two companies that filed Chapter 11 bankruptcy claims it was a bank's mistake that forced the companies into insolvency.

Two companies �- Longleaf Production and L-Texx Petroleum �- filed for bankruptcy on April 11, 2007, to prevent Wells Fargo from foreclosing on oil and gas leases they owned, according to the complaint their trustee, Daniel J. Goldberg, filed Jan. 22 in Jefferson County District Court.

Wells Fargo had intended to foreclose on the businesses' leases after notifying the companies by letter on April 10, 2007, that a $700,000 and $300,000 promissory note had matured and were due in full, the suit states.

"The letter also stated that Wells Fargo was proceeding to foreclosure of the property covered by the deed of trust, which included oil and gas leases owned by L-Texx," the suit states. "Mr. Zeiger and Wells Fargo also demanded that all Hydrocarbons and Proceeds as defined in the Longleaf security documents to be delivered and paid to the Bank. Although L-Texx had not pledged any of its property to Wells Fargo as security for the Notes, Wells Fargo also threatened to foreclose on L-Texx's oil and gas leases as a consequence of defaults under the Longleaf Notes."

When Wells Fargo prepared Longleaf's deed of trust, it included leases owned by L-Texx with those owned by Longleaf, Goldberg alleges.

L-Texx informed Wells Fargo that any foreclosure would be improper because it was not a debtor of the bank and had not pledged its property to secure repayment of Longleaf's loans, according to the complaint.

"Wells Fargo would not agree, however, to withdraw its notice of foreclosure of the L-Texx Properties," the suit states.

On Aug. 1, 2007, Wells Fargo filed a proof of claim in the L-Texx bankruptcy case purporting to be a second creditor of L-Texx because of the Longleaf notes, Goldberg alleges.

The bank claimed a lien on and security interest in L-Texx's oil and gas interests, according to the complaint.

But L-Texx objected to Wells Fargo's claim, and the objection was sustained on March 12 in bankruptcy court, the suit states.

"For more than one year, however, Wells Fargo wrongfully claimed to be a secured creditor of L-Texx possessing against L-Texx's assets to secure repayment of Longleaf's indebtedness," the suit states.

Because of Wells Fargo's claims against L-Texx's assets, L-Texx was unable to continue both the operations of its properties and Longleaf's and filed bankruptcy in an attempt to preserve its assets, Goldberg claims.

The bank's actions have caused L-Texx and Longleaf a loss in value of performance, a loss of pecuniary benefits and the costs of bankruptcy proceedings, according to the complaint.

It has also caused both companies a loss of credit, a loss of good will, a loss of profits, a loss of oil and gas leases and costs of mitigation, the suit states.

Goldberg is seeking unspecified actual and exemplary damages, plus pre- and post-judgment interest, costs and other relief to which he is entitled.

Ernest W. Boyd and Susan H. Jacks of MeHaffy Weber in Houston will be representing them.

The case has been assigned to Judge Gary Sanderson of the 60th District Court.

Case No. B183-094

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