Harrison v. Aztec Well Servicing Co.
| Decision Date | 23 December 2021 |
| Docket Number | 1:20-CV-038-H |
| Parties | STACEY HARRISON, et al., Plaintiffs, v. AZTEC WELL SERVICING CO., INC., et al., Defendants. |
| Court | U.S. District Court — Northern District of Texas |
This defamation case stems from debts owed to one of the defendants by someone other than the plaintiff. Having reviewed the five motions for summary judgment, responses and replies thereto, and appendices in support thereof, the Court concludes that genuine issues of material fact remain.
A jury must determine whether the advertisements at issue are false. A jury will also determine whether the Aztec Well Family is a joint enterprise. Should the jury conclude that it is, any alleged noncompliance with the Defamation Mitigation Act would be harmless, as a retraction demand was served on the individual who placed the offending advertisements.
The Court can resolve certain issues without a jury's help though: Harrison's slander claim may not proceed due to a lack of evidence; no defendant may invoke the litigation privilege; the defendants may not argue that Harrison is libel proof; and Jason Sandel may not hide behind his corporate role to avoid liability.
Harrison's motion for summary judgment is denied. The defendants' motions are granted only as to the slander claim; they are denied in all other respects.
Stacey Harrison is an oilman. He has numerous concerns spread across the state. Harrison created a company-Harrison Lease Acquisition & Development Corporation- through which he operated. HLA&D is a subchapter S corporation with two employees, Stacey and his wife, Wanda Harrison. Dkt. No. 164 at 13, 51. Stacey handles the operational side of the business-providing consulting services to oil and gas projects, sourcing opportunities and aggregating investors and overseeing HLA&D's ownership interests in various wells-while Wanda manages the back office. Dkt. No. 164 at 49, 9. The Harrisons own HLA&D outright. Id. at 49.
The Aztec Well Family is a family enterprise. Owned and operated by the Sandel family, “the Aztec Well Family” is a moniker for a group of five companies-all of them defendants-that operate in the oil and gas industry: Aztec Well Servicing Co., Triple S Trucking Inc., Double M Mud Co Totah Rental & Equipment Co., and Roadrunner Fuels, Inc. Dkt. No. 117 at 76-77, 214, 405. It also includes Aztec Drilling, a trade name for Aztec Well Servicing's drilling operations, and Double M & Filter Service, the trade name of Double M Mud, which no longer deals in mud. Id. at 219-21. Aztec Well Servicing (AWS) is the 100% owner of the other four companies. Id. at 213-14. Jerry Sandel founded AWS many years ago and still serves as President of all five companies. Id. at 189, 192. His son, defendant Jason Sandel, serves as the Executive Vice President of all five companies. Dkt. Nos. 164 at 381; 117 at 189, 192. Michelle Sandel-Jerry's daughter and Jason's - sister-is the third and final officer, but she is not active in the businesses. Id. at 189-190. Jerry and Jason run the businesses' day-to-day operations. Id. at 190.
The companies share an operations office, addresses, phone numbers, payroll department, and accounting department. Id. at 225. The shared services are overseen by one business manager-Kimberly Luay. Id. at 48-49. The five companies all have separate bank accounts. Id. at 227. But the companies can seek loans from one another if necessary. Id. at 39-41, 114, 130. They have done so in the past. Id. at 41. Jason draws a salary from AWS for his services. Id. at 32. He also draws a salary from Roadrunner Fuels for his services for Roadrunner, but that salary is not paid by Roadrunner; instead, AWS pays Jason and Roadrunner then reimburses AWS. Id. at 68. A similar model is used for the funding of the pooled services: AWS pays for the shared services, then each subsidiary pays AWS for its share of the expenses. Id.
All of the companies market themselves under the “Aztec Well Family” name. Id. at 405. Letterhead features “The Aztec Well Family” in large font above each of the companies' names. Dkt. No. 101-1 at 33. Brochures advertising the services of all of the companies introduce the companies as “The Aztec Well Family.” Dkt. No. 117 at 403-22. Employees-including Jason and Luay-use “The Aztec Well Family” on LinkedIn, which makes sense given that “The Aztec Well Family” has its own LinkedIn employer profile. Id. at 423-26. Jason's business cards use “The Aztec Well Family.” Id. at 215. His e-mail signature says “Jason Sandel[, ] Executive Vice President/CVO[, ] The Aztec Well Family.” Dkt. No. 164 at 359. And the contract that gave rise to this suit has “The Aztec Well Family” as its header. Dkt. No. 101-1 at 54. Despite all of this, Sandel insists that “The Aztec Well Family” “is not real.” Dkt. No. 117 at 51.
Regardless, AWS was contacted by representatives of Copper Ridge Resources. Dkt. No. 164 at 27. Copper Ridge was-it has since filed for Chapter 7 dissolution, Id. at 44-a company owned by Mark Burkett. Id. 49, 22, 28. Burkett is a petroleum engineer who worked as Copper Ridge's sole employee. Id. at 46, 51. Copper Ridge was what is known in the oil industry as an “operator.” Id. at 17. Operators oversee the operations of an oil or gas well. Id. at 47. They are responsible for retaining, either directly or as a contractor, a “company man, ” who is the on-site supervisor or foreman. Id. at 27, 246. Operators are generally required to be licensed by the state and carry insurance. Id. at 47. And operators are ultimately accountable to the well's owners and vice versa: The owners of a well share pro rata in the well's expenses and revenues. Id. at 47-48. “Owners” may be a misnomer here because the “owners” may only have a leasehold interest in the right to drill for oil on land owned by another, but for simplicity's sake, “owner.” Id. at 47. Each well is unique, as the liabilities of a well's owners for the operator's expenses can be fixed by contract. Id.
Copper Ridge was also what many might colloquially call an “operator”: Burkett, through Copper Ridge and other entities owned or controlled by him, racked up millions of dollars in unpaid debt. E.g., id. at 25-26. But this case is not about Mark Burkett.
Copper Ridge operated three wells in Gaines County, Texas-the Butler well, the Warren well, and the Maria 1X well. Id. at 17. All three wells were owned by various interests. Id. HLA&D owned an interest in two of the three-the Butler and Warren wells-though HLA&D's interest in the Warren well was minimal. Id. at 17. On all three, Copper Ridge hired HLA&D to provide independent consulting services-through Harrison-to supervise drilling operations, subcontractors, and equipment delivery. Id. at 16, 18-19, 26. HLA&D was paid weekly; Harrison received a 1099 rather than a W-2. Id. at 49. Harrison has never held a position in a company owned by Mark Burkett. Id. at 18. Burkett-with his engineering degree-handled the technical and geological aspects of the project, id. at 49, while Harrison took responsibility for hiring subcontractors and general operational management, id. at 26, 34. Gary Brockman acted as the company man on those sites-like Harrison, he was an independent contractor hired by Copper Ridge. Id. at 2627. In his capacity as a consultant, Harrison reached out to AWS to determine whether Copper Ridge should retain AWS for services at the three well sites. Dkt. No. 164 at 27. Harrison spoke with Graham McMullen, AWS's drilling superintendent, id. at 267, over the phone and in person to determine whether AWS and Copper Ridge would be a good match. Id. at 27, 28. Harrison testified that he, Brockman, and Burkett shared responsibility for negotiating the contract that resulted. Id. at 27.
That contract was what is known as a “daywork” drilling contract-it specified a daily rate for work performed rather than a “turnkey” contract, which specifies a fixed cost for project completion, or a footage contract, which is self-explanatory. Id. at 26. Copper Ridge retained AWS-and perhaps Triple S, though the record is unclear, id. at 29-to provide services at the Warren, Butler, and Maria 1X wells. Id. at 27. That contract was signed by Burkett on behalf of Copper Ridge and Sandel on behalf of AWS. Dkt. No. 117 at 302. As Sandel conceded, the contract did not name HLA&D or Harrison, and neither AWS nor any of its affiliates or subsidiaries has ever had a contract with HLA&D. Id. at 303.
Because past is prologue, Copper Ridge failed to pay AWS for services rendered. Id. at 247. The details of why are irrelevant; AWS claims it was owed $605, 525 for the work it performed on the Butler well-which for present purposes is the one that matters-but that the total owing on the contract between Copper Ridge and AWS was $1.4 million. Dkt. Nos. 117 at 358-59; 101-1 at 33. AWS, through Sandel and McMullen, negotiated with Burkett, Harrison, and Brockman in an effort to reach a mutually agreeable payment plan. Dkt. Nos. 157 at 30; 164 at 356-59; 168 at 310-311. When those efforts failed, AWS began the process of foreclosing on the wells. See Dkt. No. 101-5 at 6-27 (Gaines County petition). In essence, AWS had a mechanic's lien on the well by virtue of the operator's unpaid debt. Id. at 13-16. To foreclose on their liens and liquidate the interest in satisfaction of the debt, AWS had to provide notice to the well's owners. Id. The owners could then elect to make AWS whole and seek recovery from the operator, thus removing the threat of foreclosure. Id.
Sandel testified that he was advised by a Texas attorney, Randyl Meigs, that Texas law required personal service on a well's...
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