Thursday, September 13, 2012

Dallas oil company Longview wins big judgment against its investment backer ... - Dallas Morning News (blog)

The Dallas oil company that accused its private equity investor of stealing an investment idea won a big judgment in court this month.

A district court judge in Zavala County ordered New Jersey’s Huff Energy Fund to hand over leases in the booming Eagle Ford Shale to Longview Energy. In the final judgment, Judge Amado Abascal ordered Huff and associated companies to transfer the leases to Longview within 30 days, and to pay Longview $95.5 million for past production revenue, as well as court costs.

“This case reaffirms the importance of corporate fidelity and the consequences of straying from your responsibilities. As the court has affirmed, once you commit to a board and to its shareholders, your loyalty cannot be compromised,” said Longview attorney Craig Florence in a statement.

At issue in the case was whether Huff officials took advantage of their seats on Longview’s board to steal an opportunity to lease land for drilling in the now-booming Eagle Ford Shale. Huff officials say that didn’t happen.

“The evidence shows that Riley-Huff Energy Group was leasing acreage in the Eagle Ford before Longview ever discussed the Eagle Ford, and that the idea of investing in the Eagle Ford was brought to Longview by Huff and D’Angelo, not vice versa,” said Huff Companies in-house counsel Bryan Bloom in an email.

Dean Fleming, a Fulbright & Jaworski lawyer representing Huff, said the company will appeal the judgment.

Longview had sued its investment backer, Huff Energy, accusing two leaders of the fund, William Huff and Rick D’Angelo, of using Longview’s proprietary research to lease mineral rights on their own, leaving Longview out. A jury in a civil district court in Zavala County earlier this year said D’Angelo and Huff breached their fiduciary duty as Longview Energy board members. The jury also said a related company, Riley-Huff Energy Group LLC, wrongfully obtained assets in the oil and gas field.

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