BEAUMONT – An Orange County district court does not have jurisdiction over parties in a soured oil-well agreement between plaintiffs and a group of defendants in a 2016 lawsuit, a state appeals court ruled earlier this month.
The group of businessmen, Scotty Wales, Adam Stout, Paul Ruppert and Garold Thibodeaux, had for years participated in an investment in several wells on Ruppert family land located Acadia Parish, Louisiana, according to the memorandum opinion handed down Feb. 8 by the Texas 9th District Court of Appeals at Beaumont. Wales, Stout and their companies ended up in 260th Orange County District Court with Ruppert and his companies, collectively referred to in court documents as "the Ruppert defendants" after the oil-well agreement collapsed, according to the appeals court's opinion. However, the district court dismissed the case, in part for jurisdiction issues, according to the opinion.
The appeals court affirmed the district court's ruling, Justice Charles Kreger said in the 21-page opinion he wrote for the court.
"We conclude that Ruppert's live testimony in support of the Ruppert defendants' special appearance did not violate the due-order-of-hearing requirement or otherwise waive their objection to personal jurisdiction," Kreger wrote in the appeals court's opinion. "We further hold that there is sufficient evidence to support the trial court's implied finding that Thibodeaux was not acting as an agent of the Ruppert defendants, and that Thibodeaux's contacts cannot be imputed to the Ruppert defendants for jurisdictional purposes. Finally, we conclude that the Ruppert defendants’ contacts with Texas are insufficient to support the trial court’s exercise of personal jurisdiction over them."
Kreger made up a three-judge panel with Chief Justice Steve McKeithen and Justice Leanne Johnson.
Thibodeaux was described as "a participant in some of the Ruppert defendants' oil wells," while Wales and Stout "each claim to have invested in one or more wells on Ruppert family land in Acadia Parish, Louisiana," the opinion said.
The parties in the lawsuit don't all agree about what happened to prompt the litigation, according to the background portion of the opinion.
"Although consistent in some respects, the parties present largely conflicting accounts of the operative facts underlying the suit," the opinion said.
Wales claimed that Thibodeaux approached him in 2007 when Thibodeaux was looking for a financial adviser and in 2008 "regarding certain investments" between "Thibodeaux and his partner, Ruppert," the opinion said. Wales also alleges "that the Ruppert defendants 'had a business or partnership relationship with [Thibodeaux], to solicit investment opportunities and sell working interests in various oil wells and saltwater wells,'" the opinion said.
Thibodeaux and the Ruppert defendants reached a participation agreement in September 2009 to invest in "at least two wells" with Wales fronting the costs in exchange for 30 percent of the royalties, the opinion said. Wales claims that in 2012 and later, he "was asked to and did advance" costs related to two other and that, "in the course of these dealings," he sold a portion of his interest in the first well to Stout, the opinion said.
Wales also claimed that Stout also purchased an assigned interest in the second well, after Wales was approached by Thibodeaux, and that Wales provided production information to another businessman, Craig Stickfort, who purchased a portion of Wales' interest in the first two wells, according to the opinion.
However, the side of the story from the Ruppert defendants and Thibodeaux about the arrangement was "significantly different," the opinion said. Ruppert claimed that Thibodeaux, was "a long-time personal friend and a participant in some of Ruppert's oil wells in Louisiana, but he was never his employee or agent, and Ruppert never directed Thibodeaux to solicit or conduct any business for him in Texas," the opinion said.
Thibodeaux claimed he and Wales also were friends "and that he also provided Wales with financial advice" but that he made clear to Wales that his mention of the oil wells as a business opportunity was separate from his financial investment advice," the opinion said. "Similarly, Ruppert testified that Thibodeaux had no authority to enroll others in any well on Ruppert’s behalf, and Thibodeaux received no payment or commission regarding the wells," the opinion said.
Ruppert claimed to have never met Stickfort, though he did speak with Stickfort over the phone, and that he "he never expressly authorized Wales to transfer any interest in his participation agreement," the opinion said.
The Ruppert defendants allege Wales "ultimately refused to pay certain expenses owed under the Participation Agreement, and that it was Wales’s failure to advance the required costs that adversely impacted the wells' ability to operate," the opinion said.
The first well went offline in 2015 for repairs, the second well was found "not viable" and no income was earned from the third well, according to the opinion.
In August 2016, Wales sued Thibodeaux and the Ruppert defendants in 260th District Court in Orange County "for various causes" over the wells and the Ruppert defendants filed a motion for joint special appearance, the opinion said. The Ruppert defendants, in their motion, argued "they did not have sufficient minimum contacts with the state to justify a Texas court's assertion of jurisdiction over them," the opinion said.
The district court sustained the special appearance motion and dismissed the case against the Ruppert defendants "for lack of personal jurisdiction," the opinion said.
"Wales then filed this interlocutory appeal, asserting that the trial court erred in granting the special appearance."