Anglo-Dutch Petroleum Intern. v. Haskell
| Decision Date | 09 March 2006 |
| Docket Number | No. 01-05-00179-CV.,01-05-00179-CV. |
| Parties | ANGLO-DUTCH PETROLEUM INTERNATIONAL, INC. and Anglo-Dutch (Tenge) LLC, Appellants, v. John HASKELL, Chris Scully, Chris O'Sullivan, Charles McCord III, the Sheriff Family LLC, and Law Funds, LLC f/k/a Amicus Legal Funding, LLC, Appellees. |
| Court | Texas Court of Appeals |
Bradley Wayne Hoover, Virginia Mixon Swindell, Jack C. Nickens, Jr., Nickens, Keeton, Lawless, Farrell & Flack, LLP, Bryon C. Keeling, Keeling & Downes, P.C., Sanford L. Dow, Dow Golub Berg & Beverly, LLP, Houston, for Appellants.
Cynthia Hollingsworth, Gardere & Wynee, L.L.P., Dallas, Geoffrey H. Bracken, Gardere Wynne Sewell, L.L.P., Houston, for Appellees.
Panel consists of Chief Justice RADACK and Justices JENNINGS and ALCALA.
Appellants, Anglo-Dutch Petroleum International, Inc. and Anglo-Dutch (Tenge) LLC (collectively, "Anglo-Dutch"), challenge the trial court's rendition of summary judgment1 in favor of appellees, John Haskell, Chris Scully, Chris O'Sullivan, Charles McCord III, the Sheriff Family LLC, and Law Funds, LLC f/k/a Amicus Legal Funding, LLC, in appellees' breach of contract suit arising out of multiple litigation funding agreements executed by Anglo Dutch and appellees. In its first and second issues, Anglo-Dutch contends that the trial court erred in granting summary judgment in favor of appellees because the evidence raises a genuine issue of material fact as to whether appellees charged Anglo-Dutch a usurious rate of interest in the agreements and whether the agreements were illegal, unregistered securities. In its third issue, Anglo-Dutch contends that the trial court erred in granting summary judgment in favor of appellees because the agreements violated Texas public policy. In its fourth issue, Anglo-Dutch contends that the trial court erred in awarding appellees their attorneys' fees and costs because appellees were not entitled to summary judgment. We affirm.
In 2000, Anglo-Dutch filed suit against "Halliburton" and "Ramco" (the "Halliburton lawsuit") alleging that Halliburton and Ramco misappropriated Anglo-Dutch's trade secrets and breached their confidentiality agreements with Anglo-Dutch, which were executed by the parties during the course of developing an oil and gas field.2 Anglo-Dutch sought damages in the amount of $650 million allegedly "for the profits it would have earned" if Halliburton and Ramco had not breached their confidentiality agreements and misappropriated Anglo-Dutch's trade secrets. Anglo-Dutch retained attorneys John O'Quinn, John L. McConn Jr., and Jett Williams III to represent it in the Halliburton lawsuit.
Due to the expense associated with prosecuting the Halliburton lawsuit, and in order "to operate its business, to retain its employees, and to avoid bankruptcy until it could recover a judgment from Halliburton and Ramco," Anglo-Dutch needed to raise money. Anglo-Dutch initially, but unsuccessfully, sought to borrow money from commercial banks, using the Halliburton lawsuit as collateral. As appellees allege in their petition, Anglo-Dutch then contacted multiple parties, including appellees, and solicited investments in the Halliburton lawsuit. Based upon Anglo-Dutch's express written and oral representations concerning the possible returns on their investments, appellees agreed to invest monies, at least in part, to fund the Halliburton lawsuit. Pursuant to the terms of multiple Claims Investment Agreements, appellees invested a total of approximately $560,000. These agreements defined the terms of the parties' relationships and set forth the formulas for calculating any returns appellees would be entitled to receive in the event that Anglo-Dutch obtained a cash recovery in the Halliburton lawsuit. Appellees assert that, by executing these agreements, they obtained a preferential right of recovery in Anglo-Dutch's settlement proceeds in the Halliburton lawsuit.
After the Halliburton lawsuit was tried to a jury, the trial court entered a judgment in the amount of approximately $81 million, including approximately $10 million in attorneys' fees, against Halliburton and Ramco. Anglo-Dutch and Halliburton subsequently entered into a settlement agreement, the terms of which are undisclosed.3 Following Anglo-Dutch's and Halliburton's settlement, Anglo-Dutch sent each appellee a letter in which it disputed the validity of the litigation funding agreements and asserted that the agreements were "contrary to Texas public policy" and "unenforceable under Texas law." Consequently, Anglo-Dutch requested that appellees accept a reduced payment contrary to the terms of the agreements.
Appellees refused Anglo-Dutch's offer of reduced payments and filed the instant suit against Anglo-Dutch, asserting claims for breach of contract, fraud, breach of fiduciary duty, conspiracy, and conversion.4 Appellees then filed a summary judgment motion on their breach of contract claim, in which they asserted that they were entitled to judgment as a matter of law because, per the terms of the litigation funding agreements, following receipt of the settlement proceeds from Halliburton, Anglo-Dutch's "disbursement of such funds to [appellees] . . . per their secured, preferential right to first recovery of their investments was to be made by [Anglo-Dutch] as a ministerial act." In support of their motion, appellees attached their own affidavit testimony and documentary evidence, including a solicitation letter sent from Anglo-Dutch to appellee John Sheriff. Appellees testified that, after filing the Halliburton lawsuit, Anglo-Dutch began soliciting investments in the Halliburton lawsuit and that the proposed investments were structured as preferential partial assignments of Anglo-Dutch's recovery in the Halliburton lawsuit. Appellees further testified that Anglo-Dutch induced appellees to invest in the Halliburton lawsuit by providing them with written and/or oral representations and warranties concerning the nature of the allegations in the lawsuit, the experience of the plaintiff's counsel and their accomplishments in prior litigation, and the return of the investment offered to investors. In its letter to Sheriff, Anglo-Dutch outlined its need to raise "plaintiff funding" and recognized that such funding "is expensive financing but affordable if the anticipated recovery is large enough." Anglo-Dutch detailed the history of its dispute with Halliburton, stated that it was suing for $680 million plus punitive damages, noted that Texas law "is favorable" to the types of claims it was asserting, and described the qualifications of its trial counsel. Anglo-Dutch also attached to its letter to Sheriff a copy of a Claims Investment Agreement. Appellees asserted that Anglo-Dutch made similar solicitations to all appellees.
Appellees also attached to their summary judgment motion copies of the Claims Investment Agreements and the Assignments of Cash Recovery executed by each appellee and by Anglo-Dutch. While the agreements differed in some respects, including the amount of the investment and the amount of any return, all of the agreements were similarly structured. The agreements generally referred to each appellee as an "Investor" and characterized each investor as being a first, second, third, or fourth tier investor, depending on certain variables, such as the date of investment. The appellees' "investor's rights" were determined by their assigned tier and a payment schedule included in the agreements.
The agreements uniformly provided that Anglo-Dutch was "selling interests in any Cash Recovery . . . that it may receive from the [Halliburton] lawsuit." The agreements also stated:
Payments by Anglo-Dutch to Investor. If and only if, a final disposition or settlement of the Lawsuit results in a Cash Recovery to Anglo-Dutch, Anglo-Dutch shall pay (or cause to be paid) to Investor the sum total of:
(a) its Investment, plus,
(b) an amount equal to its Investment, plus
(c) a return on its Investment (hereinafter referred to as the "Investor's Return")5. . . .
. . . .
If a final disposition or settlement of the Lawsuit fails to result (for whatever reason) in a Cash Recovery, then Anglo-Dutch shall have no obligation to make any payment to Investor for any portion of the Investor's Total Return. If the Cash Recovery received by Anglo-Dutch is insufficient to pay all of the Investor's Total Return, Anglo-Dutch shall pay (or cause to be paid) to Investor from the Cash Recovery, only the portion of Investor's Total Return as is possible by applying all of Anglo-Dutch's portion of the Cash Recovery in accordance with the Order of Payments Schedule . . . after which Anglo-Dutch shall have no further liability or obligation to Investor for any portion of its Investor's Total Return remaining unpaid.
. . . . Order of Payments Schedule. . . . It is further understood that Investor shall have no claim or right to any portion of the Cash Recovery due or payable to any attorneys retained at any time by Anglo-Dutch.
. . . .
Time of Payment. If and when a final disposition or settlement of the Lawsuit results in a Cash Recovery, Anglo-Dutch shall pay (or cause to be paid) to Investor all (or the proportionate share, as the case may be) of its Investor's Total Return in accordance with the Order of Payments Schedule within ten (10) days following Anglo-Dutch's receipt of such Cash Recovery. If such Cash Recovery is received by Anglo-Dutch in installments over time, then Anglo-Dutch (if necessary, because the amounts of such installments are insufficient to pay all the Investor's Total Returns) shall pay Investor its respective Investor's Total Returns in installments (over the same period of time) in accordance with the Order of Payments Schedule, until such time as the Investor's Total Returns ...
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