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Enerquest Oil & Gas, L.L.C. v. Antero Resources Corporation

Court of Appeals of Texas, Second District, Fort Worth

April 11, 2019

EnerQuest Oil & Gas, L.L.C., Appellant
Antero Resources Corporation, Appellee

          On Appeal from the 141st District Court Tarrant County, Texas Trial Court No. 141-290089-17

          Before Sudderth, C.J.; Gabriel and Birdwell, JJ.



         Appellee Antero Resources Corporation filed a motion for rehearing and a motion for rehearing en banc of our January 31, 2019 memorandum opinion. The court's prior memorandum opinion and judgment are withdrawn, and this memorandum opinion and judgment are substituted. Thus, the motions for rehearing and for rehearing en banc are denied as moot.

         I. Introduction

         Antero intervened in a lawsuit and brought a trade secret misappropriation claim against Appellant EnerQuest Oil & Gas, L.L.C. EnerQuest filed a special appearance challenging the trial court's personal jurisdiction. After the trial court overruled EnerQuest's special appearance, EnerQuest filed this accelerated, interlocutory appeal. See Tex. Civ. Prac. & Rem. Code Ann. § 51.014(a)(7). We reverse and render.

         II. Background

         A. The Parties

         Antero is a corporation headquartered in Colorado and is engaged in the business of oil and gas exploration and production in West Virginia. EnerQuest is a limited liability company, organized under the laws of Oklahoma. EnerQuest is also in the oil and gas exploration and production business, operating oil and gas wells in Oklahoma, Texas, Louisiana, Utah, and Arkansas, and owning nonoperating oil and gas interests in numerous other states. Although it is registered and conducts some business in Texas, EnerQuest maintains no offices or employees in Texas and is headquartered in Oklahoma.

         In November 2015, EnerQuest entered into a "Limited Liability Company Agreement" (Formation Agreement) with Braxton Minerals-Appalachia, LLC (BMA)[1]to form Braxton Minerals III, LLC (BMIII)-a limited liability company organized under and to be governed by the laws of Delaware with its principal place of business in Texas-in order to "acquire, own, hold, and maintain Oil and Gas Interests in the Buy Area . . . ." The Formation Agreement defines "Buy Area" as "the States of West Virginia, Pennsylvania, and Ohio." The Formation Agreement, which was signed by EnerQuest's president Gregory Olson and by BMA's president at the time Brad Ashburn, [2] provided that EnerQuest and BMA would be the sole members of BMIII with EnerQuest providing up to $10 million in investment capital and owning a 75% interest and BMA owning a 25% interest. The parties also agreed that BMA would be BMIII's manager and that any action or proceeding relating to the Formation Agreement "shall be exclusively brought in any state or federal court located in Oklahoma City, Oklahoma and . . . waive[d] any objection . . . to the laying of venue of any action or proceeding arising out of or in connection with this Agreement brought in such courts . . . ."

         For convenience and clarity, we have diagrammed the relationship between these entities:

         (Image Omitted)

         B. The Dispute and Lawsuit

         Penn Investment Funds, LLC filed a lawsuit in the 141st District Court in Tarrant County against seven defendants, including Braxton Energy, LLC; Braxton Acquisitions, LLC; BMII; Bauer; and Ashburn, alleging fraud and other causes of action and seeking disgorgement of approximately $225, 000 in illegal profits.[3] Antero, believing that profits sought by Penn Investment had been generated in connection with the misappropriation of Antero's trade secrets, intervened and added, inter alia, EnerQuest as a party. Antero sought injunctive relief and damages based on trade secret misappropriation, conspiracy, and aiding and abetting from various parties in the lawsuit. The only claim Antero's "amended petition in intervention" asserts against EnerQuest is trade secret misappropriation.[4]

         At the crux of its lawsuit, Antero alleges that Bauer and Ashburn participated in an unlawful scheme to obtain Antero's confidential documents[5] and trade secrets concerning Antero's oil-and-gas business opportunities in West Virginia. According to Antero's allegations, Bauer and Ashburn then disclosed the confidential information to additional parties, including EnerQuest.

         Antero contends that EnerQuest both actively participated in and passively benefited from the misappropriation of the trade secrets. First, Antero alleges that EnerQuest, through an e-mail from its president Gregory Olson, "reached out" to Bauer in order to acquire and thereby misappropriate Antero's trade secrets. Second, Antero alleges that the trade secrets were utilized by BMII to purchase assets, adverse to Antero, which were then sold to BMIII and funded by EnerQuest as contemplated by the Formation Agreement. So when EnerQuest later removed BMA and appointed itself as manager of BMIII, EnerQuest, by virtue of its ownership and management of BMIII, improperly benefited from the misappropriation of Antero's trade secrets.

         EnerQuest admits that it did receive the alleged trade secrets in February 2017 "in Oklahoma" but denies wrongdoing or unlawful activity as alleged by Antero. Rather, EnerQuest disavows any knowledge that Bauer, the individual who approached EnerQuest with an opportunity to invest new capital in a mineral acquisition program in West Virginia, had obtained any trade secrets. According to EnerQuest, it did not learn about the misappropriation accusations until February 2018, at which point EnerQuest turned over the alleged trade secrets to Antero. According to Olson, EnerQuest neither discussed the information with anyone outside of EnerQuest (other than Bauer and Ashburn), nor disclosed the information to anyone outside of EnerQuest.

         C. The Special Appearance Proceedings

         EnerQuest filed a special appearance, see Tex. R. Civ. P. 120a, contending that the trial court had neither general nor specific personal jurisdiction over it. In its special appearance, EnerQuest argued that the trial court had no general jurisdiction over it because EnerQuest was organized under the laws of Oklahoma and maintained its principal place of business in Oklahoma. EnerQuest argued that there was no specific jurisdiction over it because none of the actions alleged by Antero arose from any activity by EnerQuest that was intentionally or purposefully directed at the State of Texas. EnerQuest further argued that any damages sustained by Antero from such disclosure or use would be realized in West Virginia, where the subject properties were located, or in Colorado, where Antero's corporate headquarters were located, and not in Texas. EnerQuest supported its special appearance by attaching, among other documents, an affidavit from Olson and the Formation Agreement.

         As part of its response to EnerQuest's special appearance, Antero sought a continuance to conduct discovery limited to the issue of personal jurisdiction. Antero also argued that the special appearance should be denied because EnerQuest had a 75% ownership interest in BMIII, a Texas entity run by Texans Bauer and Ashburn, and because BMIII had its principal place of business in Texas. According to Antero, Bauer and Ashburn improperly acquired Antero's trade secrets and provided them to EnerQuest at EnerQuest's request. Antero also argued that when, at EnerQuest's request, Bauer and Ashburn improperly provided the alleged trade secrets to EnerQuest, EnerQuest received that information from Texas and sent money to Texas for investment. Antero further asserted that EnerQuest-via an e-mail from Olson to Bauer-had "reached out" to Bauer who was allegedly in Texas in order to obtain and thereby misappropriate Antero's trade secrets. However, Antero did not raise general jurisdiction as a basis for jurisdiction over EnerQuest but instead argued only for specific jurisdiction over EnerQuest.

         The trial court did not rule on Antero's motion for continuance to conduct discovery, [6] and after a hearing, it overruled the special appearance. This interlocutory appeal followed.

         III. ...

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