Texas Court of Appeals Affirms Expert Exclusion and No-Evidence Summary Judgment in $4.8 Million Texas Panhandle Working Interest Dispute
Following remand from the Texas Supreme Court, the Eastland Court of Appeals was tasked with determining whether the trial court abused its discretion in excluding Apollo's damages expert Peter Huddleston and whether the no-evidence summary judgment was proper in a dispute over 75% of working interests in 109 Texas Panhandle leases covering 120,000 acres. The case arose from March 2011 purchase and sale agreements between Apollo, Gunn Oil Company, and Apache Corporation, ultimately resulting in a final judgment awarding Apache $4,800,000 in attorneys' fees.
Background and Transaction Structure
Apollo Exploration, LLC, Cogent Exploration, Ltd., Co., and Sellmoco, LLC (collectively "Appellants"), along with Gunn Oil Company (Gunn), owned 98% of the working interest in 109 oil and gas leases covering over 120,000 acres in the Texas Panhandle. On March 22, 2011, Appellants and Gunn sold 75% of their combined working interests in the 109 leases to Apache Corporation. To consummate this transaction, Appellants and Gunn each executed a separate purchase and sale agreement (PSA) with Apache.
Appellants subsequently sued Apache alleging that Apache breached the PSAs, asserting various tort claims and requesting declaratory relief. As the case progressed, Apache filed motions to exclude Appellants' designated expert witnesses and several motions for partial summary judgment. Over time, the trial court granted Apache's motions to exclude—which necessarily included the exclusion of Peter Huddleston's testimony and opinions as to Appellants' claimed damages—and motions for partial summary judgment.
Procedural History and Supreme Court Remand
Following the expert exclusions, Apache filed a no-evidence motion for partial summary judgment under Texas Rule of Civil Procedure 166a(i), challenging Appellants' asserted causes of action on the ground that Appellants could produce no evidence to support their claims for damages. The trial court granted Apache's no-evidence motion and thereafter signed a final judgment incorporating its previous summary judgment rulings and expert exclusion orders in favor of Apache, ordering that Appellants take nothing against Apache, and awarding Apache $4,800,000 in attorneys' fees pursuant to the Uniform Declaratory Judgments Act.
On original submission, the Eastland Court of Appeals affirmed the trial court's final judgment in part and reversed in part, remanding the cause for further proceedings. After granting and disposing of Apache's petition for review, the Texas Supreme Court remanded the cause to the Court of Appeals to determine whether: (1) the trial court abused its discretion when it struck and excluded the opinions of Peter Huddleston concerning the damages sought by Appellants; (2) Appellants preserved this complaint for appellate review; and (3) the trial court erred when it granted Apache's no-evidence motion for partial summary judgment as to Appellants' claimed damages.
Issues on Remand
The Court of Appeals noted that it had outlined the factual and procedural background in detail in its previous opinion, as did the supreme court in its opinion. On remand, the court stated it would address the three specific issues identified by the Texas Supreme Court regarding Huddleston's exclusion, preservation of the complaint, and the propriety of the no-evidence summary judgment. The court ultimately affirmed the trial court's rulings.