ETC TEXAS PIPELINE, LTD.; OASIS PIPE LINE COMPANY; WESTEX ENERGY, LLC; AND ENERGY TRANSFER, LP F/K/A ENERGY TRANSFER PARTNERS, Appellants
ADDISON EXPLORATION & DEVELOPMENT, LLC, Appellee
Appeal from the 441st District Court Midland County, Texas
Trial Court Cause No. CV52986
consists of: Bailey, C.J., Stretcher, J., and Judge Trotter
Exploration & Development, LLC sued ETC Texas Pipeline,
Ltd., Oasis Pipe Line Company, and WesTex Energy, LLC,
alleging that they had wrongfully deprived Addison of certain
oil and gas interests. Almost a year later, Addison filed an
amended petition in which it asserted new claims against ETC,
Oasis, and WesTex; added Energy Transfer, LP f/k/a Energy
Transfer Partners as a defendant; and alleged that Energy
Transfer was vicariously liable for the conduct of its
officers, ETC, and WesTex. Appellants filed a motion to
dismiss under the Texas Citizens Participation Act, Tex. Civ.
Prac. & Rem. Code Ann. §§ 27.001- .011 (West
2015) (the TCPA) within sixty days after Energy Transfer was
served with the amended petition. Following a hearing, the
trial court denied the motion to dismiss.
their first three issues, Appellants contend that the trial
court erred by denying the motion to dismiss because, based
on the newly asserted vicarious liability claim, the motion
was timely as to all claims against Appellants; the TCPA
applies because Addison's claims are based on
communications made while Appellants were exercising their
right of free speech or right of association under the
statute; and Addison failed to produce clear and specific
evidence of a prima facie case for each element of its
claims. In a fourth issue, Appellants assert that, even if
Addison met its burden, the trial court was required to
dismiss Addison's claims because Appellants proved their
affirmative defenses by a preponderance of the evidence.
affirm the trial court's order denying the motion to
dismiss as to Addison's breach of contract and fraud
claims against ETC and remand those claims to the trial court
for further proceedings. We reverse the trial court's
order denying the motion to dismiss as to Addison's
vicarious liability claim against Energy Transfer, breach of
fiduciary duty claim against ETC, and knowing participation
in breach of fiduciary duty claim against Oasis and WesTex
and remand those claims to the trial court for entry of a
judgment of dismissal and a determination of costs and fees
to be awarded under the TCPA. See Civ. Prac. &
Rem. § 27.009.
2012, Permian Basin Resources, LLC (PBR), an oil company
owned by Ken Moore and Bill Crow, determined that new
technologies could be used to extract oil and gas from the
land under the City of Big Spring in Howard County, Texas. To
capitalize on this opportunity, PBR needed an investor to
provide the financial resources to obtain oil and gas leases
in approximately 132 sections of generally contiguous land
mostly located within the city limits of Big Spring (the
Settles Prospect). PBR and Addison agreed that Addison,
through its principal officer Karl Richter, would attempt to
locate an investor.
primary experience was in the midstream sector of the oil and
gas industry. Before approaching investors about the Settles
Prospect, Richter discussed with PBR the possibility of
reserving the right for PBR and Addison to develop a
midstream system to deliver and market the oil and gas
produced from the Settles Prospect. PBR agreed to attempt to
reserve the midstream rights for PBR and Addison.
Transfer is a large, publicly traded company with an
extensive pipeline system and other midstream infrastructure
in the area of the Settles Prospect. ETC is a subsidiary of
Energy Transfer. Richter approached individuals he knew at
Energy Transfer about the opportunity in the Settles
Prospect. Richter's proposal was referred to
Marshall McCrea, III, the president and chief operating
officer of both Energy Transfer and LG PL, LLC, the general
partner of ETC. McCrea directed Brian Beebe, an officer of
both Energy Transfer and LG PL, to meet with Richter to
discuss the acquisition of oil and gas leases in the Settles
Prospect. Addison asserts that, at a meeting in December
2012, Beebe agreed that PBR and Addison could acquire the
midstream rights from the wellhead to central delivery points
(CDPs), while Energy Transfer would have the midstream rights
beyond the CDPs (the Beebe Agreement).
January 9, 2013, PBR, Addison, and ETC signed a
Confidentiality and Noncompete Agreement (the Confidentiality
Agreement). PBR agreed to disclose its confidential and
proprietary information pertaining to the Settles Prospect to
ETC, and the parties agreed to engage in confidential
negotiations regarding the purchase of oil and gas interests
in the Settles Prospect. The Confidentiality Agreement
required ETC to keep any data disclosed by PBR confidential.
It also prohibited ETC from acquiring, either directly or
indirectly, any oil and gas leases or other interests in the
Settles Prospect for a period of eighteen months without the
written consent of "PBR/Addison" and provided that
any such interest acquired by ETC would, at
"PBR/Addison's" option, "be deemed to be
held in trust" by ETC for the benefit of
Addison signed a Fee for Services Agreement effective January
17, 2013 (the FFS Agreement). In the FFS Agreement, Addison
identified ETC and another company as potential funding
sources for the Settles Prospect. The FFS Agreement provided
that, if: (1) PBR proceeded with a funding entity identified
by Addison, (2) PBR and that entity successfully acquired oil
and gas leases in the Settles Prospect, and (3) the leases
were sold to a third-party operator, then PBR would pay
Addison 1.5% of the cash it received for the leases and 1.5%
of any undivided, carried, and/or working interest PBR
retained in the leases. The FFS Agreement also provided that
PBR would convey to Addison one-half of any midstream rights
retained by PBR "to the extent that those rights could
be reasonably negotiated for and reserved through a
sale" of the oil and gas leases in the Settles Prospect.
Transfer formed WesTex, a wholly owned subsidiary, to acquire
the oil and gas leases in the Settles Prospect. On March 7, 2013,
PBR and WesTex signed a Joint Acquisition and Development
Agreement (the JADA), pursuant to which WesTex agreed to
contribute $15, 000, 000 for the acquisition of oil and gas
leases in the Settles Prospect. PBR and WesTex agreed that,
on the sale of the oil and gas leases to a third-party
operator, WesTex would be repaid the money it contributed and
that PBR and WesTex would split any profits. The JADA
provided that, with respect to oil and gas produced from the
Settles Prospect, WesTex would retain the right to provide
transportation, processing, marketing, and other services
downstream of the CDPs. Although PBR attempted to negotiate
the retention of the right to collect and transport oil and
gas from the wellhead to the CDPs, the JADA was silent as to
to the JADA, PBR and WesTex began acquiring oil and gas
leases in the Settles Prospect. Addison, however, never gave
written consent for the acquisitions.
December 2013 or January 2014, PBR told Addison that a
"critical mass" of leases had been acquired and
that PBR and WesTex intended to sell the leases to a
third-party operator. PBR instructed Addison to begin putting
together the wellhead-to-CDPs midstream plan. Richter met
with potential partners to develop this plan, but was
subsequently told by PBR that WesTex demanded that Addison
"cease and desist" all attempts to organize the
WesTex sold the oil and gas leases to Rock Oil Holdings, LLC
on September 26, 2014. The Purchase and Sale Agreement with
Rock Oil (the PSA) gave WesTex the option to purchase or
gather, transport, and/or process for a fee all natural gas
and natural gas liquids from the Settles Prospect until
December 31, 2025, and all crude oil and condensate from the
Settles Prospect until December 31, 2020. PBR and WesTex also
retained overriding royalty interests (ORRIs) on the leases
it sold to Rock Oil. The ORRIs were later assigned to Oasis,
an affiliate of Energy Transfer, and Castle Rock Royalty,
LLC, an entity owned by Moore and Crow. Although WesTex
subsequently assigned to Richter the wellhead-to-CDP rights
for the Settles Prospect leases that WesTex owned, Addison
contends that these rights were less valuable than the rights
that it had been promised.
sued ETC, Oasis, and WesTex. In a second amended petition
filed on June 26, 2017,  Addison asserted claims against ETC for
breach of the Confidentiality Agreement, breach of the Beebe
Agreement, and fraud; against ETC and WesTex for tortious
interference with the FFS Agreement; and against ETC, WesTex,
and Oasis for unjust enrichment.
March 15, 2018, Addison filed a fourth amended petition in
which it named Energy Transfer as a defendant, dropped its
claims for tortious interference and unjust enrichment, and
added claims against ETC, Oasis, and WesTex based on breach
of a fiduciary duty. Addison alleged causes of action against
ETC for breach of the Confidentiality Agreement, breach of
the Beebe Agreement, breach of fiduciary duty, and fraud and
against Oasis and WesTex for knowing participation in
ETC's breach of fiduciary duty. Addison did not assert
any direct claims against Energy Transfer but alleged:
At the outset, Energy Transfer has been added as a party
because it is liable for the acts of its officers named
herein, who are also officers of WesTex and ETC and through
them controlled these entities, and because Energy Transfer
formed WesTex solely for the purpose of acquiring oil and gas
leases in the Settles Prospect and intended to retain the
midstream rights in those leases once the leases were sold.
7, 2018, Appellants filed a TCPA motion to dismiss all of
Addison's claims against Appellants. Addison responded to
the motion on May 24, 2018, the day of the scheduled hearing.
The trial court denied the motion to dismiss.
TCPA protects citizens from retaliatory lawsuits meant to
intimidate or silence them on matters of public concern.
Dallas Morning News, Inc. v. Hall, No. 17-0637, 2019
WL 2063576, at *4 (Tex. May 10, 2019); In re Lipsky,
460 S.W.3d 579, 584 (Tex. 2015) (orig. proceeding). The
stated purpose of the TCPA is to "encourage and
safeguard the constitutional rights of persons to petition,
speak freely, associate freely, and otherwise participate in
government to the maximum extent permitted by law and, at the
same time, protect the rights of a person to file meritorious
lawsuits for demonstrable injury." Civ. Prac. & Rem.
§ 27.002; see also ExxonMobil Pipeline Co. v.
Coleman, 512 S.W.3d 895, 898 (Tex. 2017) (per curiam).
We construe the TCPA "liberally to effectuate its
purpose and intent fully." Civ. Prac. & Rem. §
27.011(b); see also State ex rel. Best v. Harper,
562 S.W.3d 1, 11 (Tex. 2018).
TCPA provides a procedure to expedite the dismissal of a
"legal action" that appears to stifle the
defendant's exercise of the rights protected by the
statute. Youngkin v. Hines, 546 S.W.3d 675, 679
(Tex. 2018); see also Civ. Prac. & Rem.
§§ 27.003(a), .005(b). The movant bears the initial
burden of showing by a preponderance of the evidence that the
legal action is based on, related to, or in response to the
movant's exercise of the right of free speech, the right
of association, or the right to petition. Civ. Prac. &
Rem. §§ 27.003(a), .005(b); see also S&S
Emergency Training Sols., Inc. v. Elliott, 564 S.W.3d
843, 847 (Tex. 2018). If the movant makes this showing, the
burden shifts to the nonmovant to establish by clear and
specific evidence a prima facie case for each essential
element of the claim in question. Civ. Prac. & Rem.
§ 27.005(c); Elliott, 564 S.W.3d at 847.
Additionally, a trial court is required to dismiss a legal
action if "the moving party establishes by a
preponderance of the evidence each essential element of a
valid defense to the nonmovant's claim." Civ. Prac.
& Rem. § 27.005(d).
review de novo the trial court's denial of a TCPA motion
to dismiss and the question of whether the parties satisfied
their respective burdens as set out in the TCPA.
Hall, 2019 WL 2063576, at *5. In conducting this
review, we consider the pleadings and the supporting evidence
in the light most favorable to the nonmovant. Robert B.
James, DDS, Inc. v. Elkins, 553 S.W.3d 596, 603 (Tex.
App.- San Antonio 2018, pet. denied); see also Civ.
Prac. & Rem. § 27.006(a). The plaintiff's
pleadings are generally "the best and all-sufficient
evidence of the nature of the action." West v.
Quintanilla, 573 S.W.3d 237, 242 n.8 (Tex. 2019)
(quoting Hersh v. Tatum, 526 S.W.3d 462, 467 (Tex.