$60M oil and gas case on appeal, defense seeks home court venue

Next month, justices seated on Texas' Ninth Court of appeals will entertain oral arguments in a $60 million oil and gas lawsuit � which the defendants argue belongs in Harris County.

In December 2007, Etoco LP, a Houston oil and gas discovery business, filed a suit in Jefferson County against Thorp Petroleum and several other defendants for allegedly defrauding the company on mineral interests obtained from a couple of Harris County wells.

A month later, defendants Robinson Kerr, James E. Thorp, Thorp Petroleum, Cobra Operating Co. and Hal Energy, all of which are located in Harris County, sought a change in venue. The defendants argued that since ownership of the mineral rights was in question, venue should be transferred out of Jefferson County to Harris County where the properties are located.

On Jan. 16 Judge Donald Floyd, 172nd Judicial District, denied the defendants' motion to transfer venue, ruling that the motion was without merit, court papers say.

The defendants appealed the judge's ruling March 2. The case has been set for submission with oral arguments slated for May 7.

According to the suit, Etoco hired Thorp as its CEO and president in 1984. After several years of employment, Thorp allegedly began to "surreptitiously and fraudulently" attempt to locate gas and oil reserves behind Etoco's back and while in its employment.

"Thorp even used plaintiff's Houston office to conduct � clandestine � business on reserves he located for himself," the suit states.

"At no time did Thorp disclose to plaintiff that he located and obtained for himself � reserves along with leases to the mineral rights � despite the fact that he owed a fiduciary duty to Etoco as president and CEO."

In order to tap the oil and gas deposits, Thorp cemented a partnership with Kerr, an investor, and the two subsequently formed Thorp Petroleum, Cobra Operating Co. and Hal Energy to extract the minerals.

Court documents show that Thorp resigned from Etoco in 1996.
Etoco alleges Thorp breached his fiduciary duty, is guilty of fraud and owes the company $60 million in lost profit.

During oral arguments, the defendants will argue that "the mandatory venue statute governing real property disputes requires that an action for an interest in real property � must be brought in the county in which the property is located," states the defendants' appellate brief.

"(Defendants) promptly moved to transfer venue because Etoco was seeking ownership and possession of the Harris County properties," the brief states.

Conversely, Etoco's appeals brief argues that Judge Floyd "did not abuse (his) discretion in denying a venue transfer because this suit is not an action for land but a suit for fraud in an employment relationship."

Etoco is represented in part by attorney Mitchell Toups of the Weller, Green, Toups & Terrell law firm.

The defendants are represented in part by attorneys Russell S. Post, Douglas Pritchett Jr., Barnet B. Skelton Jr., and John T. McDowell.

Trial case No. E180-940
Appeals case No. 09-09-00079-CV.