U.S. Enercorp, Ltd. v. SDC Montana Bakken Exploration, LLC et al
Filing
37
ORDER GRANTING IN PART #16 Motion to Dismiss. Signed by Judge David Ezra. (rf)
UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF TEXAS
SAN ANTONIO DIVISION
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Plaintiff,
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vs.
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SDC MONTANA BAKKEN
EXPLORATION, LLC; VAL VERDE §
INVESTMENTS, LLC; AND RINGO §
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SHAPIRO,
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Defendants.
U.S. ENERCORP, LTD.,
Cv. No. SA:12-CV-1231-DAE
ORDER: (1) GRANTING IN PART AND DENYING IN PART DEFENDANTS’
MOTION TO DISMISS; (2) GRANTING PLAINTIFF LEAVE TO AMEND
On July 22, 2013, the Court heard oral argument on the Motion to
Dismiss filed by Defendants SDC Montana Bakken Exploration, LLC, Val Verde
Investments, LLC, and Ringo Shapiro (collectively, “Defendants”). (Doc. # 16.)
Amy Davis, Esq., and Corey Wehmeyer, Esq., appeared on behalf of Plaintiff U.S.
Enercorp, Ltd.; Olivier Taillieu, Esq., appeared on behalf of Defendants. After
careful consideration of the Motion and the supporting and opposing memoranda,
and in light of the parties’ arguments at the hearing, the Court, for the reasons that
follow, GRANTS IN PART AND DENIES IN PART Defendants’ Motion to
Dismiss (doc. # 16) and GRANTS PLAINTIFF LEAVE TO AMEND.
1
BACKGROUND
Plaintiff U.S. Enercorp (“Enercorp”) is a Texas-based oil and gas
exploration and production company. (Doc. # 13 (“FAC”) ¶¶ 2, 9.) In 2011,
seeking to acquire oil and gas leases in Northern Montana, Enercorp contracted
with SDC Montana Consulting, LLC, and SDC Montana, LLC (collectively
referred to herein as “SDC Montana Consulting”), who had an established
presence in Montana. (Id. ¶ 10.)1
Pursuant to the contracts between Enercorp and SDC Montana
Consulting, the latter was obligated to acquire and deliver to Enercorp oil, gas, and
mineral leases in certain parts of Montana, which Enercorp planned to sell to a
third party. (FAC ¶ 11.) Soon thereafter, Southwestern Energy Production
Company (“SEPCO”) expressed interest in the Montana leases, and Enercorp
began structuring a contract to deliver them to SEPCO. (FAC ¶ 13; Resp. ¶ 6.)
Enercorp alleges that, at the same time that it was attempting to
structure a deal with SEPCO, Defendants “approached SDC Montana Consulting”
and encouraged it “not to perform under its contracts” and “to only perform on
terms that were different from and less favorable to Enercorp than the terms
1
Despite the very similar names, the SDC Montana Consulting entities are wholly
distinct from and unrelated to Defendant SDC Montana Bakken Exploration, LLC,
which is an entity controlled by Defendant Ringo Shapiro. (Resp. ¶ 3.) Shapiro
also owns Defendant Val Verde Investments, LLC, a California limited liability
company. (Doc. # 16 (“Mot.”) at 2.)
2
actually agreed to in writing.” (Id.) By “fraudulently misrepresent[ing] that a
‘credit facility’ existed that required the [Montana] leases for collateral, when in
fact no such facility ever existed,” Defendants induced SDC Montana Consulting
to make “fraudulent assignments of oil, gas, and mineral leases” to Montana
Bakken and Val Verde. (Id.) Plaintiff allege that Defendants “knew [that the
leases] had already been assigned to Enercorp pursuant to [the contracts]” and that,
“[i]n many cases,” Defendants fraudulently acquired and recorded assignments of
those same leases later in time “on top of Enercorp’s [assignments].” (Id.;
Resp. ¶ 4.)
SEPCO wanted to purchase all the leases that Enercorp had obtained
from SDC Montana Consulting and was “avers[e] to any deal that was not
completely clean.” (FAC ¶ 13.) Accordingly, Plaintiffs allege that Defendants—
now armed with fraudulent assignments of those leases—were able to “extort[]
their way into Enercorp’s deal with [SEPCO].” (Id.) Knowing that SEPCO would
back out of the deal if it learned of title disputes, Defendants allegedly “refused to
clear title to the leases Enercorp already owned and intended to deliver to
[SEPCO].” (Id.) In addition, Defendants allegedly “threatened to contact SEPCO
and interfere with Enercorp’s deal if [their] unlawful demands were not appeased.”
(Id.) Enercorp does not indicate what these “unlawful demands” were.
3
Enercorp, hoping to prevent its deal with SEPCO from falling apart,
negotiated a Collaboration Agreement with Defendants, SDC Montana Consulting,
and JL Resources, LLC (“Collaboration Agreement”). (Id. ¶ 13.) The main
objective of this agreement, which was executed on April 13, 2012, was to resolve
any title issues among the parties so that the deal with SEPCO could go forward.
(Id.) To wit, the Collaboration Agreement provides:
Given the stated purpose of [SEPCO] to deal with the Leases on simplified
terms and with a single contracting Party, and to promote the marketability
of the Leases, the Parties acknowledge and agree that the simplification of
matters of title to the Leases and the elimination of all encumbrances is
essential. To that end each of the Parties does hereby release . . . each to the
other, all . . . causes of action . . . which one party may claim against another
with regard to title of the leases.
(Collaboration Agreement ¶ 6 (emphasis added).) The next section of the
Collaboration Agreement clarifies the scope of this release, stating:
Personal Claims Retained. Notwithstanding the foregoing, each of the
Parties retains and does not release, any claims or causes of action for
damages, losses or monetary deficiencies that any Party may have against
another Party, but with all such claims being of a personal nature against a
Party, and not as a claim or encumbrance against the Leases or lands
included in the projects.
(Id. ¶ 7 (emphases added).)
The Collaboration Agreement “gave Enercorp the exclusive authority
to conduct all necessary negotiations with [SEPCO] in order to finalize and
conclude the deal,” and Enercorp insists that “Defendants specifically contracted
and agreed not to interfere with Enercorp’s negotiations with [SEPCO].” (FAC
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¶ 13.) However, on December 10, 2012, Defendants’ counsel, Olivier Taillieu,
sent a letter to SEPCO alleging defects in Enercorp’s title to the Montana leases
and requesting that SEPCO cease making payments under its contract with
Enercorp. (Resp. ¶ 7; Mot. Ex. 7.) Enercorp alleges that Defendants “have also
made and continue to make harassing phone calls to SEPCO, further slandering
Enercorp’s title and interfering with Enercorp’s contract with SEPCO.”
(FAC ¶ 15; Resp. ¶ 7.) As a result of Defendants’ actions, SEPCO “has declared a
‘Title Defect’” and “is refusing to purchase certain Montana Leases it would
otherwise be obligated to purchase . . . .” (FAC ¶¶ 18, 21.)
Enercorp further alleges that, “[b]y Paragraph 12 of the Collaboration
Agreement, Defendants were also obligated to return to Enercorp an instrument
referred to as the March 9, 2012 Bakken Assignment (the ‘Bakken Assignment’),
covering certain Montana Leases.” (FAC ¶ 16.) However, Defendants did not
return the Bakken Assignment to Enercorp. Instead, claiming that they held title to
the Bakken Assignment, Defendants delivered it directly to SEPCO. (Id.) “The
value lost under Enercorp’s contract with [SEPCO] as a result of Defendants’
breaches of the Collaboration Agreement exceeds $8,000,000.00,” claims
Enercorp. (Id. ¶ 16.)
On November 19, 2012, Enercorp filed this lawsuit in the 166th
Judicial District Court of Bexar County, Texas, bringing causes of action for
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tortious interference with a contract, tortious interference with prospective business
relations, and slander of title. (Doc. # 1-2 ¶ 8.) On December 31, 2012,
Defendants removed the case to this Court. (Doc. # 1.) On January 28, 2013,
Enercorp filed an Amended Complaint. (Doc. # 13.) On February 11, 2013,
Defendants filed the Motion to Dismiss that is now before the Court. (Doc. # 16.)
On February 22, 2013, Enercorp filed a Response in opposition to Defendants’
Motion. (Doc. # 24.) On March 1, 2013, Defendants filed a Reply. (Doc. # 25.)
STANDARD OF REVIEW
Federal Rule of Civil Procedure 12(b)(6) authorizes dismissal of a
complaint for “failure to state a claim upon which relief can be granted.” Review
is limited to the contents of the complaint and matters properly subject to judicial
notice. See Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308, 322
(2007). In cases where “the contracts [are attached to the Defendants’] motions to
dismiss, the contracts were referred to in the complaints, and the contracts are
central to the plaintiffs’ claims, [a court] may consider the terms of the contracts in
assessing the motions to dismiss.” In re Katrina Canal Breaches Litig., 495 F.3d
191, 205 (5th Cir. 2007).
In analyzing a motion to dismiss for failure to state a claim, “[t]he
court accepts ‘all well-pleaded facts as true, viewing them in the light most
favorable to the plaintiff.’” In re Katrina Canal Breaches Litig., 495 F.3d at 205
6
(quoting Martin K. Eby Constr. Co. v. Dallas Area Rapid Transit, 369 F.3d 464,
467 (5th Cir. 2004)). To survive a Rule 12(b)(6) motion to dismiss, the plaintiff
must plead “enough facts to state a claim to relief that is plausible on its face.” Bell
Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). “A claim has facial plausibility
when the plaintiff pleads factual content that allows the court to draw the
reasonable inference that the defendant is liable for the misconduct alleged.”
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).
A complaint need not include detailed facts to survive a Rule 12(b)(6)
motion to dismiss. See Twombly, 550 U.S. at 555–56. In providing grounds for
relief, however, a plaintiff must do more than recite the formulaic elements of a
cause of action. See id. at 556–57. “The tenet that a court must accept as true all
of the allegations contained in a complaint is inapplicable to legal conclusions,”
and courts “are not bound to accept as true a legal conclusion couched as a factual
allegation.” Iqbal, 556 U.S. at 678 (internal quotations and citations omitted).
Thus, although all reasonable inferences will be resolved in favor of the plaintiff,
the plaintiff must plead “specific facts, not mere conclusory allegations.”
Tuchman v. DSC Commc’ns Corp., 14 F.3d 1061, 1067 (5th Cir. 1994); see also
Plotkin v. IP Axess Inc., 407 F.3d 690, 696 (5th Cir. 2005) (“We do not accept as
true conclusory allegations, unwarranted factual inferences, or legal conclusions.”).
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When a complaint fails to adequately state a claim, such deficiency
should be “exposed at the point of minimum expenditure of time and money by the
parties and the court.” Twombly, 550 U.S. at 558 (citation omitted). However, the
plaintiff should generally be given at least one chance to amend the complaint
under Rule 15(a) before dismissing the action with prejudice. Great Plains Trust
Co. v. Morgan Stanley Dean Witter & Co., 313 F.3d 305, 329 (5th Cir. 2002).
DISCUSSION
Defendants insist that “[m]ost of the claims here are governed by a
release” and that the others “fail because Plaintiff has failed to plead essential
elements to sustain the causes of action.” (Mot. at 1.) The Court addresses
Enercorp’s causes of action in the order in which Defendants’ Motion addresses
them.
I.
Slander of Title
“Slander of title is a tort action with stringent pleading and proof
requirements.” Pampell Interests, Inc. v. Wolle, 797 S.W.2d 392, 395 (Tex. App.
1990). A plaintiff must prove “that the defendant made a false and malicious
statement, disparaging property in which the plaintiff holds an interest, and causing
special damages.” Id. (citing Clark v. Lewis, 684 S.W.2d 161 (Tex. App. 1984)).
Moreover, “[t]he Texas Supreme Court has consistently held that a plaintiff who
sues for slander of title must plead and prove the loss of a specific sale.” Id. (citing
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Ellis v. Waldrop, 656 S.W.2d 902, 905 (Tex. 1983); A.H. Belo Corp. v. Sanders,
632 S.W.2d 145 (Tex. 1982); Shell Oil Co. v. Howth, 159 S.W.2d 483, 490 (Tex.
1942)); see also Sw. Guar. Trust Co., 981 S.W.2d 951, 954 (1998) (“Barring such
proof [of loss of a specific sale], the plaintiff may not recover any damages,
whether litigation expenses, interest, taxes, or otherwise.”).
Enercorp alleges that it “possessed an interest in property through the
oil and gas leases in . . . Montana” and that “Defendants uttered and published
false and disparaging statements about Enercorp’s title, including recording
instruments purporting to have acquired the oil and gas leases, when Defendants
knew Enercorp had already acquired title from SDC Montana Consulting, LLC.”
(FAC ¶ 30.) “These statements cast doubt on the quality of Enercorp’s title in the
Montana Leases,” insists Enercorp, “and were uttered and published with malice
and without privilege, thereby causing damage to Enercorp.” (Id.) “At a
minimum,” says Enercorp, “these damages include the sums Enercorp would have
received in the sale of those leases to [SEPCO] and the development of those
leases, but for Defendants’ slanderous actions.” (Id.)
Defendants insist that Enercorp’s slander-of-title claim fails because it
was released by the Collaboration Agreement; because Enercorp failed to plead the
loss of a specific sale; and because, “to the extent that Enercorp relies on
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post-closing conduct to support its Slander of Title claim, . . . [it] fails to plead that
any of Defendants’ statements were ‘false.’” (Mot. at 8, 10–11.)
A.
The Release
Defendants first insist that this claim must be dismissed because it is
subject to the release contained in the Collaboration Agreement. (Mot. at 8.) “The
release specifically refers to ‘causes of action . . . which one party may claim
against another with regard to title of the leases,’” note Defendants. (Id. (quoting
Collaboration Agreement ¶ 6).) “This language,” they insist, “is clearly meant to
bring ‘slander of title’ within the scope of the release.” (Id.)
Enercorp responds that “‘release’ is an affirmative defense that
Defendants bear the burden of proving and is not properly the subject of a motion
to dismiss.” (Resp. at 10.) Enercorp is correct: Texas law makes clear that
“[r]elease is an affirmative defense, Tex. R. Civ. P. 94, where the defendant bears
the burden to plead and prove the existence of an effective and valid release.”
Barras v. Barras, 396 S.W.3d 154, 170 n.5 (Tex. App. 2013) (citing Williams v.
Glash, 789 S.W.2d 261, 264 (Tex. 1990)).
In certain limited circumstances, a court may dismiss a claim under
Rule 12(b)(6) “if a successful affirmative defense appears clearly on the face of the
pleadings.” Clark v. Amoco Prod. Co., 794 F.2d 967, 970 (5th Cir. 1986)
(emphasis added). In order to dismiss a claim on this basis, however, the validity
10
of the affirmative defense must essentially be unquestionable: A defendant is “not
entitled to dismissal under Rule 12(b)(6) . . . unless the [plaintiffs] have ‘pleaded
[themselves] out of court by admitting to all of the elements of the defense.’”
Smallwood v. Bank of Am., 2012 WL 32654, at *2 (N.D. Tex. Jan. 6, 2012)
(quoting Siverston v. Clinton, 2011 WL 4100958, at *2 (N.D. Tex. Sept. 14,
2011)). In Smallwood, for example, the court dismissed the plaintiffs’ claims
because the facts alleged in the complaint indicated that the action was barred by
the statute of limitations. Id. By contrast, in Clark, the Fifth Circuit reversed the
district court’s dismissal of an action to establish mineral rights because the
affirmative defense of presumed lost deed “[could not] be established solely on the
basis of appellants’ pleadings.” 794 F.2d at 971.
Defendants are not entitled to dismissal of Enercorp’s slander-of-title
claim based on the affirmative defense of release, because the release does not
clearly and incontrovertibly cover Enercorp’s claim. The release states that the
parties agreed to:
release, relinquish, grant, transfer, assign and convey, each to the other, all
liens, deeds, of trust, mortgages, assignments or production, security
agreements, financing statements, claims, causes of action, notices of lis
pendens, judgments, abstracts of judgment and any and all other
encumbrances which one Party may claim against another with regard to
title to the Leases.
(Collaboration Agreement ¶ 6 (emphasis added).) Defendants insist that “[t]his
language is clearly meant to bring ‘slander of title’ within the scope of the release,”
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since a plaintiff “must prove that it ‘possessed an estate or interest in the property
disparaged’” in order to prevail on a claim for slander of title. (Mot. at 8–9.)
However, it is not clear that Defendants’ interpretation of the release is correct.
Enercorp, in its Response, argues that the release “prevents a party to the
Collaboration Agreement from clouding another party’s title to the Montana
Leases subject to the Collaboration Agreement.” (Resp. ¶ 9 (emphasis added).)
“This was not a release of claims against a party for its torts,” argues Enercorp,
“but rather was a release of claims and other encumbrances to the leases, in order
to convey clean title to Enercorp.” (Id.) At the hearing, Enercorp’s counsel
insisted that title to the Montana leases is not in dispute, because title to those
leases has already been vested in SEPCO. (See also Resp. ¶ 19 (“Enercorp has not
pled any cause of action of trespass to try title and does not seek recovery of real
property, which would have been released by Paragraph 6.”).) Rather than title to
the leases, Enercorp seeks monetary damages for its personal claims against
Defendants, which it argues were specifically reserved by Paragraph 7 of the
Collaboration Agreement. (Resp. ¶¶ 18–19.)
Paragraph 7 of the Collaboration Agreement states:
Personal Claims Retained: Notwithstanding the foregoing, each of the
Parties retains and does not release, any claims or causes of action for
damages, losses or monetary deficiencies that any Party may have against
another Party, but with all such claims being of a personal nature against a
Party, and not as a claim or encumbrance against the Leases or the lands
included in the projects.
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(Collaboration Agreement ¶ 7.) The language of Paragraph 7 supports Enercorp’s
argument that its slander-of-title claim is not covered by the Release. First,
Paragraphs 6 and 7 set up a clear distinction between “encumbrances which one
Party may claim against another with regard to title to the Leases” (id. ¶ 6
(emphasis added)) and any claims that are “of a personal nature against a Party,
and not as a claim or encumbrance against the Leases or the lands included in the
projects” (id. ¶ 7 (emphases added)). In other words, the release distinguishes
between (1) actions affecting title (released) and (2) personal actions against a
Party for damages (retained).
Slander of title is an action at law for which damages are recoverable;
it should not be confused with an equitable action to quiet title. See CA Partners v.
Spears, 274 S.W.3d 51, 83 (Tex. App. 2008) (recognizing distinction between suit
to remove cloud on title, which is “an equitable action for which damages are not
available,” and a suit for slander of title, which is “a tort action for which damages
are recoverable”) (citing Pampell Interests, Inc. v. Wolle, 797 S.W.2d 392, 395
(Tex. App. 1990)); 67 Tex. Jur. 3d Slander of Title § 1 (“A slander-of-title action is
to recover damages for failure to release a purported, though not actual, property
interest. A quiet-title action is a specific, equitable remedy to remove a cloud from
a title, and damages are not recoverable.”). Under the distinction created by
Paragraphs 6 and 7, therefore, the release would not bar Enercorp’s slander-of-title
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claim, which seeks damages rather than to remove an encumbrance against the
leases. While Defendants are at liberty to argue as part of a Motion for Summary
Judgment that the Court’s interpretation of the release is incorrect in light of other
considerations, the fact remains that “a successful affirmative defense”—release—
does not “appear[] clearly on the face of the pleadings.” Clark, 794 F.2d at 970.
Accordingly, the Court will not dismiss Enercorp’s slander-of-title claim on this
basis.
B.
Loss of a “Specific Sale”
Defendants’ second argument is that this cause of action must be
dismissed because Enercorp “failed to adequately plead slander of title.” (Mot. at
10.) Noting that a plaintiff “must prove the loss of a specific sale, i.e., that a
pending sale was defeated by the slander” (id. (quoting Williams, 755 S.W.2d at
844)), Defendants insist that Enercorp has not done so. The reason Enercorp has
not pleaded this element, argue Defendants, is that “the sale at issue”—the sale of
the Montana Leases to SEPCO—“did go through[,] and US Enercorp has greatly
benefited from said sale.” (Id.)
Enercorp responds (1) that “loss of a specific sale is not a required
element of a claim for slander of title[;] all that is required is special damages”;
and, in the alternative, (2) that it did plead loss of a specific sale, which is “the sale
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of the Montana Leases to SEPCO that it would have made without Defendants’
slanderous actions.” (Resp. ¶ 34.)
Enercorp’s first argument—that “loss of a specific sale is not a
required element”—is flatly contradicted by every Texas state-court case the Court
has found. See, e.g., Ellis, 656 S.W.2d at 905 (“We hold that [plaintiffs] were
required to prove the loss of a specific sale or sales in order to recover on their
slander of title action.”); A.H. Belo Corp., 632 S.W.2d at 146 (“We hold that
[plaintiff] was required to prove the loss of a specific sale or sales in order to
recover on his slander of title action.”); Marrs and Smith Partnership v. D.K. Boyd
Oil and Gas Co., Inc., 223 S.W.3d 1, 21 (Tex. App. 2005) (“Because there is no
evidence in the record proving the loss of a specific sale, the evidence is legally
insufficient to support an award of damages for slander of title.”); Taub v. Houston
Pipeline Co., 75 S.W.3d 606, 616 (Tex. App. 2002); Pampell Interests, Inc., 797
S.W.2d at 395; Coppock & Teltschik v. Mayor, Day & Caldwell, 857 S.W.2d 631,
639 (Tex. App. 1993). Indeed, under Texas law, a claim for slander of title does
not even accrue “until there has been a loss of a specific sale.” Hill v. Heritage
Resources, Inc., 964 S.W.2d 89, 116 (Tex. App. 1997) (citing Ellis, 656 S.W.2d at
904–05).
In the face of this sea of contrary precedent, Enercorp points to the
concurrence in Ellis v. Waldrop, 656 S.W.2d 902 (1983), in which two justices
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argued that the holding of A.H. Belo Corporation v. Sanders was merely that
“proof showing only impairment of vendibility does not establish a right to
damages.” Id. at 906. “In future cases,” the concurrence stated, “this Court should
allow recovery when the plaintiff can prove with reasonable certainty his pecuniary
losses proximately caused by the lender’s refusal to provide the loan at the time the
plaintiff was seeking it.” Id. In other words, Enercorp reads A.H. Belo as holding
that a plaintiff can satisfy the “special damages” element in many ways, one of
which is by alleging the loss of a specific sale. (Resp. ¶ 34.)
However, even assuming that the Ellis concurrence (rather than the
Ellis majority) properly interpreted the Texas Supreme Court’s holding in A.H.
Belo,2 the fact remains that every other Texas court to interpret and apply the rule
promulgated in A.H. Belo—at least all those the Court has found, and Enercorp
points to no counter-examples—has held that a plaintiff pleading slander of title is
required to allege loss of a specific sale. Thus, while many other jurisdictions do
not have the same rule,3 there is simply no question that, under Texas law, “the
2
This is by no means clear. The court stated in A.H. Belo that “[t]he only issue
before [it was] whether [the plaintiff] was required to prove a specific lost sale or
sales in order to recover on his slander of title action.” 632 S.W.2d at 145
(emphasis added). The court then stated: “We hold that Sanders was required to
prove the loss of a specific sale or sales in order to recover on his slander of title
action.” Id. at 146.
3
In some jurisdictions, a plaintiff need only allege a specific pecuniary loss that he
suffered as a direct and immediate result of the defendant’s disparagement. See,
e.g., Solley v. Navy Fed. Credit Union, Inc., 723 S.E.2d 597 (S.C. Ct. App. 2012)
16
pleading and proof of loss of a specific sale are essential elements to a slander of
title cause of action.” Tex. Am. Corp. v. Woodbridge Joint Venture, 809 S.W.2d
299, 304 (Tex. App. 1991) (emphasis added); accord Jeanes v. Henderson, 703
F.2d 855, 860 (5th Cir. 1983) (applying Texas law to affirm the district court’s
directed verdict for the defendant where plaintiff “presented no proof of a pending
sale of his interest” that was “defeated by the slander”); 67 Tex. Jur. 3d Slander of
Title § 6 (“In a slander-of-title cause of action, the pleading and proof of loss of a
specific sale is an essential element.”). A federal court cannot rewrite state law,
and the Court will not do so here.
The relevant question, therefore, is whether Enercorp has pleaded loss
of a specific sale. In the FAC, Enercorp alleges that:
Defendants uttered and published false and disparaging statements about
Enercorp’s title [to the oil and gas leases in Montana], . . . causing damage to
Enercorp. At a minimum, these damages include the sums Enercorp would
have received in the sale of those leases to Purchaser and the development of
those leases, but for Defendants’ slanderous actions.
(holding that special damages include impairment of vendibility or value caused by
disparagement and the expense of measures reasonably necessary to counteract the
publication, including litigation); Skyland Metro. Dist. v. Mountain W. Enter.,
LLC, 184 P.3d 106 (Colo. Ct. App. 2007) (“At a minimum, the property must be
on the market for sale, and the tort must create a cloud upon the title; then the
expense of legal proceedings to remove the cloud on title satisfies the damages
requirement.”). This is consistent with the Restatement. See Rest. 2d Torts
§ 623A.
17
FAC ¶ 30. Read alone, these sentences could be interpreted to mean that
Defendants’ disparaging statements prevented Enercorp from selling some or all of
the Montana Leases to SEPCO. However, in the context of the rest of the FAC,
and in light of Enercorp’s Response to Defendants’ Motion, it is clear that this is
not the case. Instead, Enercorp is alleging that, while it did consummate a contract
to sell all of the Montana Leases to SEPCO, the contract provided for a lower sale
price than Enercorp would have obtained in the absence of Defendants’ alleged
slander. (See FAC ¶ 17 (“As a result of Defendants’ unlawful slander of
Enercorp’s title . . . Enercorp realized substantially less in its deals with [SEPCO]
. . . .”); Resp. ¶ 34 (“As a result of [Defendants’ slander], Enercorp lost the sale of
the Montana Leases to SEPCO that it would have made without Defendants’
slanderous actions, and had to settle on a deal that [was] financially less
advantageous to Enercorp.”).)
Defendants argue that, because Enercorp did consummate a sale to
SEPCO, it cannot possibly prove that it lost a “specific sale.” (Mot. at 10.)
However, the Court is not convinced that the consummation of a sale to SEPCO
automatically precludes a finding that another sale—a sale that was separate and
distinct from the one that was later consummated—was frustrated. It seems clear,
for example, that the following allegations would satisfy the specific-sale
requirement: (1) that Defendants had made disparaging statements that clouded
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Enercorp’s title to the Montana Leases; (2) that this disparagement and the
uncertainty surrounding title to the Leases caused SEPCO to reject a contract it
was otherwise ready to sign; and (3) that Enercorp later sold the Montana Leases to
Company X at a lower price that reflected the cloud on Enercorp’s title that
Defendants had created. In other words, even though—in this hypothetical—
Enercorp did manage to sell the Montana Leases to Company X, a “specific sale”
was frustrated (the sale to SEPCO), and Enercorp suffered special damages (the
difference in sale price). The Court cannot see why the same should not be true
where the buyer who refuses to proceed with the sale and the buyer that later
agrees to purchase the property at a lower price are one and the same—at least
where the plaintiff can demonstrate that the sale the defendant frustrated was truly
separate and distinct from the one that was later consummated (as, for example, by
demonstrating that the contract nearly executed was abandoned and negotiations
began anew).
This, however, is not what Enercorp has alleged. The Court has
searched the FAC in vain for any indication that SEPCO knew of the false and
disparaging statements that Defendants allegedly made prior to SEPCO’s purchase
of the Montana Leases—or, accordingly, that these disparaging statements caused
SEPCO to reject a contract that it was otherwise ready to sign. Enercorp does not
plead, for example, that SEPCO withdrew from contract negotiations, citing
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concerns about who held title to the leases. Instead, the FAC suggests that
Enercorp entered into the Collaboration Agreement precisely because it wanted to
hide the title dispute from SEPCO so that the deal could go forward. (See FAC
¶ 13 (stating that “Defendants unlawfully threatened to contact [SEPCO] and
interfere with Enercorp’s deal” and that Enercorp “[took] the actions necessary to
consummate its agreement with [SEPCO] . . . [by] enter[ing] into [the]
Collaboration Agreement”).)4 Because Enercorp has given the Court no reason to
conclude that SEPCO walked away from the negotiating table after it discovered
that Defendants had clouded Enercorp’s title, there is no reason to conclude that
Defendants’ alleged pre-sale actions directly frustrated any specific sale.
To the extent that Enercorp attempts to base its slander-of-title claim
on any damages resulting from Defendants’ alleged post-sale statements (see
FAC ¶ 31 (“Defendants continue to intentionally and maliciously slander
Enercorp’s title . . . [by making statements that] have cast and continue to cause
doubt about the quality of Enercorp’s title in the Montana leases . . . .”)), that claim
fails for the same reason: Even assuming that Defendants’ post-sale statements
were false, Enercorp does not allege that these statements frustrated a specific sale;
4
In light of the stated purpose of the Collaboration Agreement (i.e., to prevent
SEPCO from discovering that title to some of the Leases was in dispute), it is
difficult to discern why, exactly, Enercorp would have had to settle for a less
advantageous deal with SEPCO. However, the Court will not speculate as to
potential reasons; it was Enercorp’s duty to include the relevant facts in its
Complaint.
20
it merely makes the vague allegation that these statements “caus[ed] damage to
Enercorp.” (Id.)
In the absence of any allegations suggesting that Defendants’
disparaging statements frustrated a specific, pending sale, Enercorp fails to state a
slander-of-title claim. However, because Enercorp may be able to state a claim for
slander of title if given an opportunity to amend and to clarify the factual basis for
this claim, this claim is DISMISSED WITHOUT PREJUDICE.
II.
Tortious Interference with a Prospective Contract – Prospective
Enercorp/SEPCO Contract
To state a claim for tortious interference with prospective contractual
relations, a plaintiff must establish the following elements:
(1) a reasonable probability that the parties would have entered into a
business relationship; (2) an intentional, malicious intervention or an
independently tortious or unlawful act performed by the defendant with a
conscious desire to prevent the relationship from occurring or with
knowledge that the interference was certain or substantially likely to occur
as a result of its conduct; (3) a lack of privilege or justification for the
defendant’s actions; and (4) actual harm or damages suffered by the plaintiff
as a result of the defendant’s interference, i.e., that the defendant’s actions
prevented the relationship from occurring.
Tex. Disposal Sys. Landfill, Inc. v. Waste Mgmt. Holdings, Inc., 219 S.W.3d 563,
590–91 (Tex. App. 2007) (citing Bradford v. Vento, 48 S.W.3d 749, 757 (Tex.
2001)).
21
Enercorp asserts that, “[b]efore contract formation and at a time when
Enercorp had not yet consummated a contract with [SEPCO], but at a time when
the formation of a contract was reasonably probable, Defendants with knowledge
of the probable contract conducted intentional, independently tortious actions in
interfering with that prospective contract.” (FAC ¶ 28.) Enercorp alleges that
Defendants’ actions caused it damages equal to “the difference in value between
the amounts Enercorp would have realized under the contract . . . that would have
been formed without the Defendants’ tortious interference and the amounts
Enercorp actually realized under the contract that was eventually formed . . . .”
(Id.)
Defendants insist that Enercorp has failed to plead two crucial
elements. (Mot. at 11.) First, “[t]o prevail on a claim for tortious interference with
a prospective business relationship, the plaintiff must establish that the defendant
intentionally prevented the formation of a business relationship.” Baty v. ProTech
Ins. Agency, 63 S.W.3d 841, 860–61 (Tex. App. 2001) (emphasis added). In this
case, argue Defendants, “[n]o contract was actually prevented,” because Enercorp
consummated its contract with SEPCO. (Mot. at 11.) Second, Defendants insist
that Enercorp has failed to plead independently tortious conduct. (Id. at 12.)
Defendants are correct.
22
A.
Prevention of a Business Relationship
As explained above, because Enercorp acknowledges that it did
consummate a contract with SEPCO, it must, at a minimum, plead facts that would
indicate that Defendants prevented the formation of another contract—one that was
separate and distinct from the one eventually consummated. It has not done so.
Instead, the closest Enercorp comes to pleading that there were two distinct
contracts—or even two distinct periods of contract negotiation—is its allegation
that it
sustained damages measured by the difference in value between the amounts
Enercorp would have realized under the contract with [SEPCO] that would
have been formed without the Defendants’ tortious interference and the
amounts Enercorp actually realized under the contract that was eventually
formed between Enercorp and [SEPCO] with Defendants’ tortious
interference.
(FAC ¶ 28.)5 However, even this allegation does not clearly state that any
particular contract was prevented from forming. Instead, the most that can be
gleaned from this allegation is that “the contract that was eventually formed” was
not as beneficial to Enercorp as were earlier versions of that document—something
that is undoubtedly common in contract negotiations.
5
Perhaps recognizing this pleading deficiency, Enercorp argued in its Response
that it had pleaded that “Enercorp had to form a different contract under different,
less favorable terms to Enercorp because Defendants intentionally prevented the
formation of the original contract.” (Resp. ¶ 28 (emphases added).) However, the
paragraphs Enercorp cites (FAC ¶¶ 13, 28) do not contain the kind of factual
allegations that would support this characterization of the FAC.
23
The Court is unaware of—and Enercorp has not cited (see
Resp. ¶¶ 28–29)—any Texas case in which a contract was consummated but the
plaintiff was nevertheless successful on a claim for tortious interference with a
prospective business relationship. Moreover, a decision of the Fourth Circuit,
BCD LLC v. BMW Mfg. Co., LLC, 360 F. App’x 428, 436 (4th Cir. 2010),
provides persuasive precedent rejecting Enercorp’s argument. In that case, the
Fourth Circuit discussed the elements of a tortious interference claim under South
Carolina law:
To assert a claim of tortious interference with prospective contractual
relations, the plaintiff must prove that the defendant: (1) intentionally
interfered with the plaintiff’s potential contractual relations; (2) for an
improper purpose or by improper methods; (3) causing injury to the plaintiff.
Id. This framework is very similar to the one before the Court. Then, the Fourth
Circuit noted that “[a] claim for prospective interference cannot stand where the
plaintiff is able to consummate a contract with another party.” Id. (citing Egrets
Pointe Townhouses Prop. Owners Ass’n, Inc. v. Fairfield Cmts., Inc., 870 F. Supp.
110, 116 (D.S.C. 1994)). This appears to mirror the requirement under Texas law
that the business relationship be prevented. “Under South Carolina law,” the court
continued,
it is irrelevant that the plaintiff could have realized a better deal “but for” the
actions of the defendant because the term “potential” contractual relations
does not mean “full” contractual relations. At the core, a cause of action for
interference with prospective contractual relations will thus lie only where
24
“the aggrieved party [was] . . . unsuccessful in acquiring an expected
contract due to a third party’s intentional and wrongful actions.”
Id. (quoting Egrets Pointe, 870 F. Supp. at 116). Applying this standard to the case
before it, the Fourth Circuit found that the plaintiff could not assert a viable claim
for interference with prospective contractual relations “because [the plaintiff’s]
execution of the 2003 Agreement, which expressly terminated the 2002 Agreement
for all purposes, precluded any claim he otherwise would have had.” Id.
“Similarly,” the court continued, “[the plaintiff] cannot recover on a theory that the
2003 Agreement was less profitable to him than it would have been without
[defendant’s] interference.” Id.
The Court finds this case persuasive, particularly in light of
Enercorp’s failure to cite any contrary precedent. Merely claiming that the
contract would have been more advantageous to Enercorp in the absence of
Defendants’ interference—pleading, in other words, that a contract did not end up
being as beneficial as the plaintiff had hoped—does not satisfy the requirement
that a business relationship be prevented. As currently pled, therefore, Enercorp’s
claim for tortious interference with a prospective contract fails.
B.
Independently Tortious Conduct
Enercorp’s cause of action for tortious interference with a prospective
contract fails for a second reason: It fails to allege the commission of
independently tortious conduct. “[T]o recover for tortious interference with a
25
prospective business relation a plaintiff must prove that the defendant’s conduct
was independently tortious or wrongful.” Sturges, 52 S.W.3d at 726. To meet the
independently tortious requirement, “the plaintiff must prove that the defendant’s
conduct would be actionable under a recognized tort.” Id.
Enercorp merely alleges that
[b]efore contract formation and at a time when Enercorp had not yet
consummated a contract with [SEPCO], but at a time when the formation of
a contract was reasonably probable, Defendants with knowledge of the
probable contract conducted intentional, independently tortious actions in
interfering with that prospective contract.
(FAC ¶ 28 (emphasis added).) This is precisely the kind of bare, conclusory
allegation that is insufficient under Twombly and Iqbal. In its Response, Enercorp
attempts to clarify that the independently tortious conduct it alleged was “that
Defendants intentionally interfered with [a] prospective business relationship by
slandering Enercorp’s title in the Montana Leases . . . .” (Resp. ¶ 29 (emphasis
added).) For the reasons given above (see supra Part I.B.), Enercorp has failed to
state a claim for slander of title; accordingly, Enercorp cannot rely on its
slander-of-title claim—at least as currently pled—to satisfy the
independently-tortious-conduct element.
For the reasons given, Enercorp’s claim for tortious interference with
a prospective contract fails. However, because Enercorp may be able to cure the
26
pleading deficiencies if granted leave to amend, this claim is DISMISSED
WITHOUT PREJUDICE.
III.
Tortious Interference with an Existing Contract – Enercorp/SDC Montana
Consulting Contract
A party seeking to establish tortious interference with a contract must
prove four elements: “(1) that a contract subject to interference exists; (2) that the
alleged act of interference was willful and intentional; (3) that the willful and
intentional act proximately caused damage; and (4) that actual damage or loss
occurred.” Lazer Spot, Inc. v. Hiring Partners, Inc., 387 S.W.3d 40, 52 (Tex. App.
2012). Although at one time the Supreme Court of Texas stated that a plaintiff
also had to establish that the defendant’s act of interference was unjustified, see
Sakowitz, Inc. v. Steck, 669 S.W.2d 105, 107 (Tex. 1984), overruled in part as
stated in Buck v. Century 21 Beezley Real Estate, Inc., 907 S.W.2d 660, 663–64
(Tex. App. 1995), subsequent authority has made clear that justification for any
interference is an affirmative defense. See Sterner v. Marathon Oil Co., 767
S.W.2d 686, 690 (Tex. 1989) (overruling that portion of Sakowitz putting burden
of proof with respect to justification on plaintiff). Thus, once a plaintiff makes out
a prima facie case of tortious interference, a defendant can avoid liability by
establishing some type of privilege or justification for its actions, such as the
exercise of its own rights or its good-faith assertion of rights it believes it has, even
27
if that belief is mistaken. See Prudential Ins. Co. of Am. v. Fin. Review Servs.,
Inc., 29 S.W.3d 74, 77–78 (Tex. 2000); Baty v. Protech Ins. Agency, 63 S.W.3d
841 (Tex. App. 2001).
Enercorp alleges that it had a valid contract with SDC Montana
Consulting and that Defendants “intentionally, willfully and maliciously interfered
with Enercorp’s contractual rights by slandering Enercorp’s title and causing SDC
Montana Consulting, LLC not to perform its contractual obligations to Enercorp.”
(FAC ¶ 24.) Defendants’ interference with the contract, asserts Enercorp, was the
proximate cause of damages to Enercorp, including “the difference in value
Enercorp would have realized under the deal with SDC Montana Consulting, LLC
and [SEPCO] without Defendants’ interference and the actual amount realized
with Defendants’ interference.” (Id.)
Defendants insist that this claim must be dismissed because Enercorp
has failed to plead independently tortious conduct. (Mot. at 13.) Pointing to Allied
Capital Corp v. Cravens, 67 S.W.3d 486, 491 (Tex. App. 2002), Defendants argue
that a plaintiff must plead factual allegations that would be actionable under a
recognized tort to state a claim for tortious interference with an existing contract.
(Mot. at 12.) However, Allied Capital involved claims for tortious interference
with prospective business relations, not with an existing contract. See id. at 490.
Contrary to Defendants’ assertion, Texas law—perhaps reflecting a desire to afford
28
existing contracts more protection than prospective ones, as well as to distinguish
between actionable interference and desirable competition during that period
before a contract is formed—appears to require only that the alleged interference
with an existing contract be “willful and intentional.” See AKB Hendrick, LP v.
Musgrave Enter., Inc., 380 S.W.3d 221, 236 (Tex. App. 2012); see also Tex.
Integrated Conveyor Sys., Inc. v. Innovative Conveyor Concepts, Inc., 300 S.W.3d
348, 379 (Tex. App. 2009) (contrasting the requirements for tortious interference
with existing and prospective contracts and stating that the former requires a
showing of willful and intentional interference while the latter requires an
independently tortious act); Faucette v. Chantos, 322 S.W.3d 901, 915–16 (Tex.
App. 2010) (holding that plaintiff’s claim should have been characterized as one
for interference with prospective rather than existing contractual relations and that
plaintiff was therefore required to demonstrate that defendants engaged in
independently tortious acts). Thus, in Wal-Mart, the Supreme Court of Texas
noted “the importance of decoupling interference with contract from interference
with prospective relations, and of grounding liability for the latter in conduct that is
independently tortious by nature or otherwise unlawful.” 52 S.W.3d at 721
(emphasis added).
Under this standard, Enercorp has stated a claim for tortious
interference with an existing contract. It has alleged (1) that there was a valid
29
contract between it and SDC Montana Consulting (FAC ¶ 24); (2) that Defendants
willfully and intentionally interfered with that contract by “inducing SDC Montana
Consulting, LLC to make fraudulent assignments” of leases that “Defendants knew
had already been assigned to Enercorp” pursuant to the Enercorp-SDC Montana
Consulting contract (id. ¶ 12); and (3)–(4) that this willful and intentional act of
interference proximately caused Enercorp actual damage, because Enercorp was
forced to enter into the Collaboration Agreement in order to establish title in
Enercorp long enough to consummate the deal with SEPCO, and because the title
dispute created by Defendants the value of the contract that was eventually signed.6
See Lazer Spot, 387 S.W.3d at 52.
While Defendants argue that they were acting to protect their own
legitimate financial interests and that the Collaboration Agreement specifically
references the credit facility (Mot. at 14), the Court reiterates that justification for
any interference is an affirmative defense. See Sterner, 767 S.W.2d at 690; Hill,
964 S.W.2d at 129. Because Enercorp has stated a claim for tortious interference
with an existing contract, Defendants’ Motion is DENIED as to this claim.
6
Again, it is not clear why—in light of the stated purpose of the Collaboration
Agreement—Enercorp’s deal with SEPCO suffered. However, Enercorp has
pleaded actual loss with sufficient particularity to prevent dismissal of this claim.
30
IV.
Tortious Interference with an Existing Contract – Enercorp/SEPCO Contract
The elements of a claim for tortious interference with a contract are
listed in the preceding section. Enercorp alleges that Defendants
intentionally, willfully and maliciously interfered and are still interfering
with Enercorp’s contractual rights under [the contract between Enercorp and
SEPCO] (1) by sending correspondence to [SEPCO] . . . disputing
Enercorp’s title and demanding that Enercorp not be paid as required by
[the] contract”; (2) by sending correspondence to [SEPCO] . . . including the
Bakken Assignment and claiming title where Defendants know they own
none, and (3) by calling and harassing [SEPCO] . . . and slandering
Enercorp’s title through those calls.
(FAC ¶ 26.) Defendants’ interference with the contract with SEPCO, insists
Enercorp, “has caused Enercorp damages,” including, “[a]t a minimum . . . the
difference in value Enercorp would have realized under the contract with [SEPCO]
without Defendants’ interference and the actual amount realized under the contract
. . . .” (Id.)
Defendants’ first argument is that this claim fails because Enercorp
has not pleaded any independently tortious conduct. (Mot. at 15.) However, for
the reasons given in the preceding section, Enercorp need not plead any
independently tortious conduct: This claim is for interference with an existing
contract, not with prospective business relations; Enercorp need only allege that
Defendants willfully and intentionally interfered with the Enercorp-SEPCO
contract and that this interference caused actual damage. Enercorp has properly
alleged this cause of action, because it has pleaded: (1) that it has a valid contract
31
with SEPCO (FAC ¶ 26); (2) that Defendants willfully and intentionally interfered
with that contract by (a) sending correspondence to SEPCO disputing Enercorp’s
title and demanding that SEPCO not pay Enercorp as required by the terms of the
contract, and (b) sending correspondence to SEPCO and claiming title to the
Bakken Assignment (id.); and (3)–(4) that Defendants’ actions have caused actual
damage, because they led SEPCO to declare a “Title Defect” under the contract
and to refuse to purchase certain of the Montana Leases that it was otherwise
obligated to purchase (id. ¶ 18).
Next, Defendants argue that their actions cannot support a
tortious-interference claim because they were acting to protect their own legitimate
financial interests. (Mot. at 15.) It is true that “an interfering party is justified in
his or her interference if the interference is done in a bona fide exercise of his or
her own rights and if he or she has an equal or superior right in the subject matter
to that of the other party.” Victoria Bank & Trust Co. v. Brady, 811 S.W.2d 931,
939 (Tex. 1991). Again, however, justification is an affirmative defense that
Defendants bear the burden of proving; it is not a proper basis for a motion to
dismiss. See Sterner, 767 S.W.2d at 690; Hill, 964 S.W.2d at 129.
Finally, Defendants insist that the letter to SEPCO falls under the
litigation privilege. (Mot. at 15.) “Any communication, oral or written, uttered or
published in the due course of a judicial proceeding is absolutely privileged and
32
cannot constitute the basis of a civil action in damages for slander or libel.”
Reagan v. Guardian Life Ins. Co., 166 S.W.2d 909, 912 (Tex. 1942) (citations
omitted). “[T]he privilege can extend to statements made out of court so long as
they bear some relation to the proceeding.” Russell v. Clark, 620 S.W.2d 865, 868
(Tex. Civ. App. 1981). However, while these communications may well fall under
the litigation privilege, “[p]rivilege . . . is an affirmative defense to be proved and
is in the nature of confession and avoidance.” IBP, Inc. v. Klumpe, 101 S.W.3d
461, 471 (Tex. App. 2001) (citing Denton Pub. Co. v. Boyd, 460 S.W.2d 881, 884
(Tex. 1971)); accord French v. French, 385 S.W.3d 61, 73 (Tex. App. 2012).
“Except where the plaintiff’s petition shows on its face that the alleged wrongful
action is protected by a privilege, the defendant has the burden of proving that the
act in question is privileged.” IBP, Inc., 101 S.W.3d at 471 (citing Denton, 460
S.W.2d at 884). Because the FAC does not show on its face that all of Defendants’
alleged wrongful actions are protected by the litigation privilege, Defendants’
Motion to Dismiss is DENIED as to this claim.
V.
Breach of Contract
Enercorp’s final cause of action is one for breach of contract. To
prevail on a breach-of-contract claim, a party must establish the following
elements: (1) a valid contract existed between the plaintiff and the defendant, (2)
the plaintiff tendered performance or was excused from doing so, (3) the defendant
33
breached the terms of the contract, and (4) the plaintiff sustained damages as a
result of the defendant’s breach. West v. Triple B Servs., LLP, 264 S.W.3d 440,
446 (Tex. App. 2008).
Defendants insist that Enercorp has failed to properly plead breach of
contract because it “does not quote from the contract, it does not include the
contract as an attachment, and it does not summarize the contract’s purported legal
effect in any way.” (Mot. at 17.) “Rather, Plaintiff simply makes vague,
conclusory references to Defendants’ allegedly breaching the contract by sending a
letter and apparently making a few phone calls.” (Id.) Defendants assert that
Enercorp failed to plead this cause of action with any detail because “[n]one of the
conduct alleged actually breaches the contract.” (Id.) The Collaboration
Agreement does not prohibit Defendants from communicating with SEPCO, insist
Defendants, and “there is no requirement to deliver unconditional assignments to
anyone, only conditional ones.” (Id. (citing Collaboration Agreement ¶ 12).)
The Court disagrees; Enercorp has satisfied the liberal federal
pleading standards. First, Enercorp has alleged that a valid contract—the
Collaboration Agreement—existed between it and Defendants. (FAC ¶¶ 13–14,
20.) Enercorp alleges that, pursuant to the Collaboration Agreement, Defendants
assigned their interests in the Montana leases to Enercorp so that Enercorp could
negotiate its contract with SEPCO. (Id. ¶ 20.) Enercorp further alleges that the
34
Collaboration Agreement forbade Defendants from communicating with SEPCO
and obligated Defendants to return the Bakken Assignment to Enercorp. (Id.
¶¶ 16, 20.)
Enercorp has satisfied the second element of a breach-of-contract
claim by alleging that it “has performed its obligations and continues to perform its
obligations under the Collaboration Agreement” and that Paragraph 10 excused it
from paying Defendants if Defendants were not “in full compliance with this
[Collaboration] Agreement.” (Id. ¶ 14, 22.)
Third, Enercorp has alleged that Defendants breached the terms of the
Collaboration Agreement. Defendants allegedly breached that portion of the
Agreement preventing them from contacting SEPCO when they (1) sent the
December 21, 2012 Letter to SEPCO’s office alleging a defect in Enercorp’s title
and requesting that SEPCO not pay the funds otherwise owed to Enercorp under
their contract and (2) repeatedly called SEPCO and questioned Enercorp’s title.
(Id. ¶ 20.) In addition, Defendants allegedly breached Paragraph 12 of the
Agreement when they refused to return the Bakken Assignment to Enercorp and
instead sent it directly to SEPCO. (Id.) Finally, although Enercorp does not
mention it under the “Breach of Contract” heading, elsewhere in the FAC Enercorp
alleges that Defendants also breached Paragraph 15(d) of the Collaboration
35
Agreement when they assigned a right under the Agreement to a third party
without obtaining the prior written consent of the other parties. (Id. ¶ 14.)
Enercorp satisfies the fourth and final element of a breach-of-contract
claim by alleging that, as a direct result of Defendants’ actions, SEPCO has
claimed a “Title Defect” and has refused to purchase acreage it was otherwise
contractually obligated to purchase. (Id. ¶ 21.) Enercorp insists that SEPCO has
even named the “Title Defect” the “Taillieu Defect” after Defendants’ counsel,
Olivier Taillieu. (Id.) In addition to the damages resulting from SEPCO’s refusal
to pay for certain of the Montana leases, Enercorp has expended money to send
counsel to Houston in an attempt to resolve the “Taillieu Defect” in a meeting with
SEPCO and to attempt to resolve the claimed Title Defect by presenting the issue
to a third-party arbitrator. (Id.) Enercorp estimates that “[t]he value lost under
Enercorp’s contract with Purchaser as a result of Defendants’ breaches of the
Collaboration Agreement exceeds $8,000,000.00.” (Id. ¶ 18.)
While Defendants insist that the Court may dismiss Enercorp’s
breach-of-contract claims based on the clear language of the Collaboration
Agreement (Reply ¶ 9), the language of that Agreement does not clearly and
unambiguously defeat Enercorp’s claims. For example, Paragraphs 3 and 8 could
be read to prohibit Defendants from communicating with SEPCO: “[SEPCO] has
communicated its willingness to contract with only one Party in connection with
36
the Project, that being [Enercorp]”; “Each of the Parties authorize[s] [Enercorp] to
conduct all further and necessary negotiations with [SEPCO].” (Collaboration
Agreement ¶¶ 3, 8 (emphasis added).) Neither can the Court definitively
determine whether the Bakken Assignment was conditional or unconditional. At
this early point in the litigation—and especially in light of the complex and
disputed facts underlying these claims—the Court simply cannot say with certainty
that Enercorp’s breach-of-contract claims are defeated by the plain language of the
Collaboration Agreement. Accordingly, Defendants’ Motion to Dismiss is
DENIED as to this claim.
CONCLUSION
For the reasons given, the Court GRANTS IN PART AND DENIES
IN PART Defendants’ Motion to Dismiss (doc. # 16) and GRANTS PLAINTIFF
LEAVE TO AMEND its complaint within thirty (30) days of the entry of this
Order. Failure to submit an amended complaint within that time will result in the
dismissal with prejudice of those claims dismissed without prejudice by this Order.
IT IS SO ORDERED.
DATED: San Antonio, Texas, August 14, 2013.
_____________________________
David Alan Ezra
Senior United States District Judge
37
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