HOUSTON – A dispute over the aborted sale of oil and gas assets was considered by a Texas appeals court as it affirmed a lower court's summary judgment against an energy and mining company.
The sale of the assets in Utah involved three companies - Pacific Energy and Mining, Fidelity Exploration and Production Co. and Norman Oil and Gas LLC.
The Court of Appeals of the 1st District of Texas affirmed July 24 the summary judgment against Pacific, though slightly modified one issue raised over attorney fees.
This dispute began with an asset purchase agreement (APA) between Pacific and Fidelity in 2015 in which the former agreed to buy the assets for $11.5 million with a deposit of 10 percent.
But Pacific did not have the money to buy the assets or pay the deposit, so it went looking for an investor for a loan. Norman Oil, run by father and son Don Roger Norman and Roger William Norman, did not want to loan the money but agreed to pay the entire purchase price.
Under an agreement, Pacific would operate the assets, including wells and pipelines, in return for 30 percent of net profits.
After negotiations involving all three companies, assurances by Pacific that due diligence had been carried out, and the payment by Norman of the 10 percent deposit, the deal began to unravel, the opinion states.
"On Oct. 21, 2015, Norman sued Fidelity and Pacific alleging that it had not been provided with the information necessary for the completion of its due diligence," the opinion states.
Fidelity and Norman settled and then the two companies signed a new asset purchase agreement, effectively cutting Pacific out of the deal. A second deal was never realized.
Pacific sued, alleging "breach of contract, civil conspiracy and commercial bribery against Fidelity and Norman, and breach of fiduciary duty of loyalty and disclosure and tortious interference against Norman," the opinion states.
There were counter-claims over attorney's fees.
But the trial court found, and the appeals court agreed, that Pacific assigned "all its rights, title, and interest as the buyer in the APA to Norman Oil & Gas." The summary judgment was affirmed.
The two courts also found against the claims by Pacific that Norman breached its fiduciary duty when it “deliberately proceeded to renege on its agreement to finalize the terms of their joint venture on the properties.”
"There is no evidence reflecting a mutual right to control the business," Justice Russell Lloyd wrote in the opinion.
The appeals court also largely upheld claims by Fidelity and Norman for attorney's fees.