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Texas Court Issues Opinion in “Business Divorce” Case Involving Non-Compete Agreement

Business relationships can quickly turn sour when one of the parties no longer shares common goals. These disputes often come about when business ownership interests transfer hands. As a recent example, the Court of Appeals for the Fifth District of Texas issued an opinion in a case involving a business dispute between a co-founder of a business and the other co-founder’s son, who took over his father’s interest.

The Facts of the Case

In 2002, Mr. Bihner and Mr. Chen formed a limited partnership called Bihner Chen. Bihner Chen provided structural engineering services to clients in and around Houston. Bihner and Chen were both equal partners.

The two men executed several formation documents, including a non-compete agreement. The agreement explained that Chen was to pay Bihner $38,800 for his agreement not to compete against Chen or the partnership as long as Bihner was a partner and for five years after he departed the company. The agreement also prohibited “use in any competition, solicitation, or marketing effort any confidential Information, any proprietary list, or any information concerning customers of Bihner Chen.” The agreement also contained a clause that made it binding to any permitted successors in interest for either party.

Seven years later, Bihner decided to retire. He wanted to transfer his interest in Bihner Chen to his son, Brett, who was also a licensed engineer and worked for Bihner Chen for several years. Although Chen had the right to object to Brett assuming his father’s interest, he did not do so. Once Brett took formal ownership of his father’s interest, Chen provided him with all of the agreements between Bihner and Chen. A few months later, Chen and Brett entered into a subsequent agreement under which Brett would be “bound by all of the governing documents, bylaws, and regulations of the Bihner Chen entities, as is, without limitation.” However, unlike the agreement with Bihner, Chen did not offer Brett any compensation.

About eight years later, Brett triggered the buy-sell provision of the limited partnership agreement. Under the terms of the buy-sell agreement, Chen had to either buy out Brett’s interest for $600,000 or sell his interest to Brett for $600,000. The two men met the next month, where Chen informed Brett that he wanted to buy Brett out. He also went over Brett’s obligations and responsibilities to the partnership if the transaction closed. Brett became angry, announced his immediate resignation, and announced his intent to start a competing business.

Chen responded by sending Brett a letter explaining the non-compete agreement and his intention to sue if Brett went through with opening a competing business. Brett ignored the letter and opened Bihner Engineering, PLLC. He also purchased a web domain with a very similar URL to the one used by Bihner Chen. In December 2020, the buy-sell transaction closed, and Brett received $600,000 from Chen.

Chen later learned that Brett took the “Christmas Card” list from Bihner Chen and sent a letter to all Bihner Chen customers announcing his new company. Chen then sent Brett a letter, asking him to stop using the name Bihner Engineering, PLLC.

Brett filed a petition against Chen, seeking permission to use his last name in his new business. He also claimed that the non-compete agreement was not enforceable against him. The trial court found in favor of Chen and issued a temporary injunction preventing Brett from using the Bihner Engineering name. The court also found that Brett misappropriated trade secrets by taking the “Christmas card” list of clients.

The Appeal

On appeal, Brett raised several issues. First, he argued that the trial court was wrong to issue a temporary injunction. Brett claimed that the “Christmas card” list was not a “trade secret” or confidential. Thus, he asserted that there was no basis for any relief. However, the court rejected Brett’s claims, finding that there was at least some evidence justifying the lower court’s decision to issue the temporary injunction. Among other things, the court noted the efforts Chen went through to maintain the secrecy of his client list.

The court did not weigh in on Brett’s challenge to the non-compete clause. Because there had been no decision below on this issue, the court required Brett to wait until there was a final decision on the merits before an appellate court would hear the issue.

Are you Involved in a Texas Business Dispute?

When success matters, every decision you make for yourself or your business is essential. Choosing which Austin business dispute attorney to represent you or your business is no exception. Attorney Gregory D. Jordan has over 30 years of experience helping businesses and their owners deal with a wide range of legal issues they confront, including breach of contract claims, fraud allegations, and more. We can confidently help you face the problems your business may be facing. To learn more about how we can help you efficiently resolve disputes, call 512-419-0684 to schedule a consultation today.

Texas Court Issues Opinion in Business Dispute Case Involving E-Signed Arbitration Agreement

Recently, a state appellate court issued an opinion in a Texas business dispute case involving one party’s claim that it never signed an arbitration agreement. The case Aerotek v. Boyd illustrates the challenges companies may face when using electronic signatures. However, the court ultimately held that an electronically signed document is valid, even in the face of the signing party’s claim they never signed the document, provided the party attempting to enforce the contract can show that the program contained sufficient security procedures.

The Facts of the Case

Aerotek is a company that hires workers for its client companies. Aerotek employs hundreds of thousands of workers across the country. To make the hiring process more efficient, it has developed an online-only hiring platform. The platform works much like any other online account; users create a username and password, answer security questions, and use their login information to complete the hiring process.

Among the documents provided to applicants is an Electronic Disclosure Agreement (EDA). When a prospective employee signs the EDA, they agree to be bound by the hiring documents, “as though they were in writing.” One of these documents is an arbitration agreement.

The plaintiffs in the case are several employees, all of whom completed the online onboarding process. Each plaintiff electronically signed the arbitration agreement; however, they all denied ever being presented with the agreement. For various reasons, the employees challenged the arbitration agreement, claiming the agreement could not legally bind them.

In support of enforcing the arbitration agreement, Aerotek presented two witnesses. One witness was a 20-year employee of Aerotek who helped the software developer come up with the online platform. She testified to the hiring process and explained that there had only been one glitch with the system that prevented applicants from responding to the emails they were sent and had nothing to do with the delivery of the arbitration agreement.

The other Aerotek witness was an administrative assistant who helped one of the plaintiffs complete the online application. She explained that she had helped hundreds of employees and, although she did not specifically recall assisting the plaintiff, she followed the same routine every time. Essentially, she would ensure that the applicant completed each form before continuing and would regularly get the applicant’s consent to continue the process.

In response, the plaintiffs presented signed affidavits that they did not receive a copy of the arbitration agreement.

The trial court denied Aerotek’s motion to compel arbitration. The trial court indicated that Aerotek needed to present the software developer to establish that the system was operational and contained the necessary security features. Aerotek appealed to the state’s high court.

The Appellate Opinion

The Texas Supreme Court began its analysis by noting that, to compel arbitration, a party must prove that the agreement exists. This requires the party attempting to compel arbitration to show that the other party consented to the contract.

The court then went on to review the lower court’s findings, which were that the employees’ actual signatures were not on the signed agreement (because they were electronically signed). The supreme court noted that it was required to credit the trial court’s finding. However, that did not end the inquiry, as if the parties agree to complete a document electronically, “an “electronic signature is attributable to a person if it was the act of the person.” The court noted that this could be shown “in any manner, including a showing of the efficacy of any security procedure applied to determine the person to which the electronic record or electronic signature was attributable.”

Here, the court held that Aerotek’s witnesses presented sufficient testimony regarding the security features of the online hiring platform. The court explained that the witnesses’ testimony conclusively established that it would be impossible for the employees to have bypassed the arbitration agreement without signing it. Thus, the court found that the electronic signatures were attributable to the employees and reversed the lower court’s denial of Aerotek’s motion to compel arbitration.

Are You Dealing with a Texas Business Law Dispute?

When success matters, every decision you make for yourself or your business is essential. Choosing which Austin business dispute attorney to handle your case is no exception. Attorney Gregory D. Jordan has over 30 years of experience helping businesses of all types deal with the full range of legal issues they confront, including arbitration disputes, breach of contract claims, allegations of fraud, and more. Attorney Jordan can confidently help you face any problem your business is facing head-on. To learn more about how we can help your business effectively overcome its legal issues, call 512-419-0684 to schedule a consultation today.

Texas Court Issues Recent Oil and Gas Opinion Discussing the Ratification of a Pooling Agreement

Recently, a state appellate court issued an opinion in a Texas oil and gas case discussing whether an owner of a mineral interest can withhold her agreement to pool her interests after accepting royalty payments calculated on a pooled basis.

The Facts of the Case

Strickhausen owned a one-half interest in a mineral tract found in La Salle County, TX. An oil and gas company, BPX, leased the right to drill on Strickhausen’s land. Under the terms of Strickhausen’s agreement with BPX, her interests could not be pooled without her “express consent.” The lease also contained a prohibition on commingling. However, the owner of the other half of Strickhausen’s land did not include such a restriction on pooling.

BPX filed a pooled unit designation and drilled a well located partly under Strickhausen’s tract. BPX then asked Strickhausen to ratify the pooled unit. At this point, Strickhausen asked BPX how she would be compensated under the pooling agreement and what would happen if she refused to consent. BPX told her that she would end up receiving a greater royalty payment under the pooled agreement and that if she disagreed, “the royalties will require being placed in suspense.”

Two months later, BPX issued Strickhausen a check for about $250,000. In response, Strickhausen told BPX that she would agree if BPX paid her $300,00 and allowed her to deposit the check they had just issued her. A few days later, Strickhausen deposited the check, despite not having heard back from BPX about her counteroffer. Strickhausen continued to deposit the checks for a few months until she eventually filed a breach-of-contract claim, arguing that BPX violated the comingling clause and that Strickhausen was owed royalty payments based on all oil drilled from the well.

BPX responded that, by depositing the checks, Strickhausen ratified the pooled unit and should not be able to claim now that BPX broke the lease. The trial court agreed with BPX; however, on appeal, the case was reversed. The appellate court found a material issue of fact regarding whether Strickhausen’s depositing of the checks constituted her express consent to the pooled unit.

The court explained that a mineral owner’s conduct must be viewed in whole to determine if they ratify such an agreement. Specifically, the court noted that “depositing the checks–may in some cases be enough to overcome express indications of an objective intent not to ratify, but only if the facts and circumstances as a whole ‘clearly evidence an intention to ratify.”

Here, the court held that by depositing the checks, Strickhausen did not accept the pooled unit agreement. The court explained that BPX received Strickhausen’s counteroffer and knew that the issue was not settled. The court also pointed out that Strickhausen may have thought the checks were part of her royalty interest and that she may be entitled to additional royalties once the parties agreed on the issue of her consent.

Cases such as these are highly fact-dependent. Two factors that likely weighed heavily in the court’s resolution in this case are, 1.) Strickhausen testified that she did not know the checks were calculated on a pooled basis and, 2.) Strickhausen’s lease only allows pooling with her express interest. Those involved in a Texas oil and gas dispute should reach out to an experienced attorney for assistance understanding the particular claim and how to protect and pursue their rights effectively.

Reach Out to a Dedicated Austin Oil and Gas Lawyer

Disputes over oil and gas rights can be, and often are, very complicated. These high-stakes situations are too often approached in a casual manner, which puts your interests at risk. Oil and gas companies usually have experienced lawyers working on their side, capable of making convincing arguments for their desired interpretation of a lease. At the Law Offices of Attorney Gregory D. Jordan, we have extensive experience representing clients in all types of oil and gas disputes. We have been handling Texas oil and gas issues for over 30 years, giving us a broad understanding of this complex industry. To learn more and to schedule an initial consultation, call 512-419-0684. You can also contact me through my online form.

Court Issues Opinion in Texas Employment Case Involving Non-Compete Agreements

A non-compete clause is a contractual term limiting an employee’s ability to compete with an employer for a certain period of time after their employment ends. Non-compete clauses are often valid in Texas; however, there are bounds to their enforceability. Generally, a non-compete clause must be supported by valid consideration and be reasonable in time, geographic area and the scope of prohibited activities.

Businesses use non-compete clauses to ensure that the time and money they put into employee training does not benefit a competitor. Earlier this year, a state appellate court issued an opinion in a Texas employment dispute case requiring the court to determine the validity of a non-compete clause.

The Facts of the Case

The case involved two companies, both of which arranged to provide large retail stores with “in-store consumer experiences,” such as product demonstrations. Product Connections was a newer company founded by a former employee of Crossmark. Crossmark sued Produce Connections, its founder, and several employees who formerly were employed with Crossmark. 

In this case, the matters at issue were Crossmark’s request for a preliminary injunction, ordering Product Connections to “produce company and personal digital storage devices for forensic review by Crossmark’s expert. Essentially, Crossmark wanted the court to order Product Connections’ employees to provide access to their phones and emails so that Crossmark’s experts could review all communication leading up to the employees’ departure.

In support of its claim, Crossmark presented the court with signed non-compete agreements. The non-compete agreements were valid for six months after the termination of employment. Crossmark alleged that several of the employees concealed the fact that they planned to leave Crossmark to join Product Connections. 

The Standard Applied by the Court

A preliminary injunction is an order by the court commanding or prohibiting a party from taking certain actions. Preliminary injunctions essentially hold the status quo as the lawsuit progresses through the system. 

In its opinion, the court explained that standard to obtain a preliminary injunction. More specifically, a party must meet each of the four elements:

  1. A cause of action against the defendant;
  2. A probable right to the relief sought; and
  3. A probable, imminent, and irreparable injury in the interim.

Essentially, a party must show that they have a good chance of success on their underlying claim and that monetary damages would not be a good substitute for the relief sought. 

The Court’s Opinion

Product Connections challenged the second and third elements of the preliminary injunction. Specifically, Product Connections argued that Crossmark did not have a probable right to seeking relief. The court disagreed. 

The court explained that one of the claims Crossmark brought was the theft of trade secrets. Specifically, Crossmark claimed that Product Connections misappropriated its “playbook,” which enabled them to compete more effectively. The court found it relevant that several of the Product Connection employees worked with the same clients when they were employed with Crossmark and that these same employees concealed their intentions to join Product Connections. The court also noted that the timing of Product Connection’s new digital demo product was close in time to when the employees joined Product Connections and was “eerily similar” to a similar product released by Crossmark. 

The court then went on to discuss whether Crossmark could potentially suffer probable, imminent, and irreparable injury absent a preliminary injunction. Again, the court found for Crossmark. Here, the court found it important that “the use of confidential information in cases such as this has been described as the epitome of irreparable injury.”

While this is a brief summary of a complex employment law case, it illustrates how a non-compete agreement can protect a business’s interests. 

Are You Dealing With an Employment Dispute?

If you are dealing with an employment dispute or fear that one may be on the horizon, reach out to Austin employment lawyer Gregory D. Jordan. The Law Offices of Gregory D. Jordan has represented the interests of businesses and employees for more than three decades. Attorney Jordan commands an impressive knowledge of employment laws. He uses this familiarity to draft effective and legally sound agreements on behalf of employers, ensuring their interests are protected in the future. To learn more and to schedule a consultation with Attorney Jordan, call 512-419-0684. You can also reach the firm through its online contact form.

Court Issues Opinion Addressing Accommodation Doctrine in Recent Texas Oil and Gas Case

Earlier this year, a state appellate court issued an opinion in a Texas oil and gas case, discussing the interplay of property rights between large-scale solar power facilities and the owners of the mineral rights to the land on which the solar panels rest.

The Facts of the Case

According to the court’s opinion, the case involves a 315-acre parcel of land in Bezos County, Texas. As is common in Texas, one party owns the mineral estate, and another owns the surface estate. As is relevant to this case, the Lyles own a significant portion of the mineral estate, and Drgac owns the surface estate.

In October 2015, Drgac leased his surface estate to Midway Solar, a company that uses solar panels to generate power. The lease provided Midway with the right “to free and unobstructed use and development of solar energy resources” for up to 55 years. The lease also allowed Midway to place transmission lines, electrical lines, and cable lines, provided they seek his approval first. However, the lease noted that Drgac was not the owner of the mineral rights to the property and that Drgac would work with Midway to obtain surface waivers, if necessary.

Midway developed the land, placing solar panels on 70 percent of the surface. Midway left 17 acres on the south end and 80 acres on the north end for “Designated Drill Sites.” While Midway obtained surface waivers from other parties who owned the mineral rights to portions of the land, they never sought to obtain a surface waiver from the Lyles.

The Lyles later sued Midway for breach of contract, claiming that Midway’s use of the property prevented the Lyles from using their land underneath the solar panels. However, when the Lyles filed suit, they had made no efforts to develop any of the land or extract oil or gas from their estate. They also testified that they had no immediate intention of doing so. Instead, they presented testimony from an expert who explained that Midway’s use of the surface prevents the Lyles from developing the minerals, denying them reasonable access.

Midway responded by claiming that, until the Lyles attempt to develop the land, their claim is not ripe. Midway also explained that, when the Lyles eventually decide to do so, it can accommodate the Lyles’ use.

The Court’s Opinion

In resolving the parties’ dispute, the court had to address several issues. First, whether the accommodation doctrine could apply to the facts of the case.

The accommodation doctrine holds that the owners of mineral and surface rights must generally accommodate each other’s use of the property. Under Texas oil and gas law, the mineral estate the “dominant estate,” meaning that the owners of mineral rights must be afforded a way to access their property by the surface owner. While the lease can negate the application of the accommodation doctrine, or add to the surface owner’s obligations, to do so, the lease must make clear that is the parties’ intention.

Here, the court reviewed the relevant leases, finding that there was nothing in the documents that otherwise limited Midway’s ability to develop the land other than requiring they accommodate the Lyles’ use of the property. In other words, the mere fact that Midway developed the land with solar panels does not, by itself, result in a breach of the contract between the parties.

Next, the court addressed whether the Lyles could bring their case without having attempted to develop the land. The Lyles argued that at the moment Midway constructed the solar panels, they suffered damage to their property rights. The Lyles rely on the fact that Midway placed panels over 70 percent of their land.

However, the court agreed with Midway that, until the Lyles attempt to develop the land and encounter a problem, their claim is not ripe. The court reasoned that, when the Lyles attempt to develop the land, Midway may be able to accommodate their use. Thus, until that is determined not to be the case, Lyles’ case is not ripe for review.

The case illustrates the complex interplay between a surface estate owner and the owner of a mineral estate. Parties facing a dispute regarding these often-competing rights should consult with a dedicated Texas oil and gas lawyer for assistance.

Contact a Dedicated Austin Oil and Gas Lawyer for Immediate Assistance

Oil and gas disputes can be complicated. Not only that, but these disputes often involve very high stakes. Choosing an attorney to represent you or your business is a crucial decision that can save months or even years of litigation and many thousands of dollars. At the Law Offices of Gregory D. Jordan, we have been effectively handling Texas oil and gas cases for over 30 years. To learn more and to schedule an initial consultation, call 512-419-0684. You can also contact me through my online form.

Texas Court Issues Opinion in Case Involving Fraudulent Business Venture

Earlier this month, a state appellate court issued an opinion in a Texas business law case involving allegations that the founders of a business committed fraud when soliciting new investments. The case was brought by former Houston-Oilers cornerback, Tomur Barnes.

The Facts of the Case

According to the court’s opinion, since retirement, Barnes began a career as a personal trainer. While at the gym, Barnes met a woman named Patoka, who told him about an investment opportunity. Evidently, Patoka, one of the defendants in the case, was opening a physical rehabilitation center with former Houston-Rockets star, Robert Horry. She explained to Barnes that she was looking for other athletes to make an investment, hoping this would bring credibility and notoriety to the newly opened facility, the Robert Horry Center.

Barnes agreed to invest $100,000, which he borrowed from another party. Barnes believed that he was investing in the Robert Horry Foundation. However, in reality, his investment was for a percentage of a separate company called K&K Holdings. As it turns out, K&K holdings was formed by Patoka and her then-boyfriend, Smith, to protect them from any liability arising out of the Robert Horry Center.

The history leading up to the filing of the case is complex. However, in short, Patoka and Smith, the sole members of K&K Holdings, had a profit-sharing agreement with the Robert Horry Center. Under the agreement, K&K Holdings was to receive 15 percent of the profits from the Robert Horry Center, with the remaining income to stay within the company.

Barnes eventually filed a Texas fraud lawsuit. Barnes explained that he was told by Patoka that he was investing in the Robert Horry Center and that all discussions he had with Patoka before he made his investment were centered around the Center. He testified that Patoka never mentioned the existence of K&K Holdings. It was not until a year later, when he received a letter indicating he owned a 12 percent ownership in K&K Holdings. At that time, Barnes was told that K&K Holdings was a holding company that owned all of the Robert Horry Center. It was not until later that he learned that was not the case, and that he did not have any direct ownership interest in the Robert Horry Center.

Patoka also testified. She testified that she made it clear to Barnes that he was investing in K&K Holdings, and that the company only held a 12 percent stake in the Robert Horry Center. However, Patoka could not produce any documentation of this. She also explained that she and Smith, who has since gotten married, opened Robert Horry Sports Medicine, LLC, in 2015. This business was an entirely separate legal entity from the Robert Horry Center, and that Barnes had no legal interest in the new company.

When asked about specifics regarding Barnes’ interest in the Robert Horry Center, Patoka knew little, and could not provide the court with documentation supporting her version of the events. She alluded to “informal meetings” where she explained everything to Barnes. However, she could not recall if there was any document that was ever given to Barnes clearly indicating his ownership interests.

Ultimately, the jury returned a verdict in favor of Barnes, awarding him $850,000. The award consisted of $500,000 in actual damages and $350,000 in punitive damages. Patoka and Smith appealed on several grounds.

Statute of Limitations

The appellants’ first issue on appeal was that Barnes’ claims of fraud were time-barred because he waited too long to file them. They argued that Barnes’ case arose when Barnes signed the document indicating he owned 12 percent of K&K Holdings. However, the court rejected the appellants’ argument, finding that the ongoing misrepresentations made by Smith and Patoka meant that Barnes’ cause of action accrued much later. The court explained, according to Barnes, he was not provided with any documentation of his interest, and that he was not given the full picture when asked to sign that document. The jury credited Barnes’ testimony, thus, his cause of action did not accrue upon the signing of the document.

Sufficiency of the Evidence

The appellants also challenged the sufficiency of the evidence on appeal. However, after reviewing the elements of Barnes’ specific allegations, the court affirmed the jury’s verdict. The court explained that there was ample evidence suggesting that Patoka and Smith were not acting in good faith when they solicited an investment from Barnes, and that the jury was free to accept Barnes’ testimony, as it did.

To be sure, this case is a complex one. However, in essence, it illustrates the importance of having an experienced attorney at your side throughout business negotiations. Had either party been working with an attorney, this case could likely have been avoided. Of course, some disputes are unavoidable, in which case having an attorney is also crucial.

Reach Out to a Dedicated Austin Business Lawyer

When success matters, every decision you make for yourself or your business is essential. Choosing which Austin business dispute attorney to handle your case is no exception. Attorney Gregory D. Jordan has over 30 years of experience helping businesses of all types deal with the full range of legal issues they confront, including breach of contract claims, fraud allegations, and more. To learn more about how we can help your business through the issues it faces, call 512-419-0684 to schedule a consultation today.

Court Issues Opinion in Texas Wrongful Termination Case

Last month, a state appellate court issued an opinion in a Texas wrongful termination case discussing whether an employee presented sufficient evidence to survive his employer’s motion for summary judgment. Ultimately, the court found that the plaintiff was an “at-will” employee, and no evidence he presented indicated that he was terminated for an impermissible reason.

The Facts of the Case

The plaintiff worked as a licensed vocational nurse at a skilled rehabilitation center. The plaintiff was fired based on his interactions with one of the residents. However, the plaintiff’s story was vastly different from the story presented by the facility.

According to the plaintiff, one of the residents in the facility attacked another resident. The facility consulted with doctors, and it was decided that the facility would give the unruly resident a shot to calm him down. The plaintiff was asked to administer the shot. As the plaintiff entered the resident’s room, the resident threw a table at the plaintiff. Although the resident was screaming, the plaintiff successfully administered the shot. However, as the plaintiff was giving the resident the shot, the resident struck him in the head.

The facility offered a very different version of the events leading up to the plaintiff’s termination. The facility agreed that the plaintiff was asked to administer a shot to an unruly resident. However, according to the facility, it was the plaintiff who struck the resident in the head. In fact, as a result of the incident, the plaintiff was later charged with a felony.

The facility immediately suspended the plaintiff, pending an investigation. Once the investigation wrapped up, the facility fired the plaintiff. The plaintiff then filed a wrongful termination claim. In response, the facility filed a motion for summary judgment, arguing that the plaintiff’s claim could not succeed under the law and should be dismissed by the judge.

The Employer’s Motion for Summary Judgment

In its motion, the employer claimed that the plaintiff was an at-will employee. Because of this, the facility argued it could fire the plaintiff for any reason or no reason at all. The plaintiff’s position was that a contract was formed when the employer gave him an employee handbook. He also claimed that, because the allegations leading to his termination were false, and that because he was fired based on incorrect information, he was wrongfully terminated.

The court began its analysis by explaining the general rule that “absent a specific agreement to the contrary, employment may be terminated by the employer or employee at will, for good cause, bad cause, or no cause at all.” Here, the court found that the employee handbook did not change the nature of the employee-employer relationship, and that the plaintiff was an at-will employee. The court noted that the manual specifically stated that “the relationship between employees and [the facility] is an at-will employment relationship” and that either party can end the relationship at any time without reason or prior notice.

That being the case, the court went on to determine if the facility fired the employee for an impermissible reason. While an employer can generally fire an at-will employee for “any reason, or no reason at all,” there are exceptions. For example, an employer cannot base their decision to fire an employee on the employee’s race, color, disability, religion, filing of a worker’s compensation claim, union membership or non-membership, active duty in State military forces, jury service, or the employee’s refusal to perform an illegal act.

Here, however, the court noted that the plaintiff did not raise any of these claims. Instead, the plaintiff argued that he was wrongfully terminated because the facility relied on false information when it fired him. However, because he was an at-will employee, even if the information was false, it would not have rendered the employer’s decision an illegal one.

Contact a Travis County Employment Attorney

If you are an employee or employer involved in a Texas employment dispute, contact the Law Offices of Gregory D. Jordan. Attorney Jordan is a skilled Texas employment attorney with extensive hands-on experience representing both employees and employers in a wide range of employment matters. Since 1989, Greg Jordan has been helping clients obtain the results they desire through his effective representation. He commands an in-depth understanding of the various state and federal employment laws that govern employment claims and is ready to put this advanced knowledge to use in your case. To learn more, and to schedule a consultation, call 512-419-0684 today.

Appellate Court Resolves Texas Oil and Gas Dispute by Looking to a Deed Written Nearly 100 Years Ago

Earlier this year, a state appellate court issued an opinion in a Texas oil and gas case, requiring the court to interpret a 1927 deed. The deed purported to convey a “royalty interest” as well as an “equivalent reversionary interest in and to all oil, gas, casinghead gas and other minerals” pertaining to certain land. Ultimately, the court affirmed the lower court’s ruling.

In this case, Five Star claimed it was the successor in interest to the original grantee, and that it was entitled to a “floating” royalty interest, providing the company a 3/8 interest in any leased royalty. Ultimately, the court found that Five Star owns an undivided 3/8 interest in the minerals. However, the court clarified that the interest consists only of the “right to receive a proportionate share of royalties and does not include any executive right or right to develop the land.”

The Facts of the Case

According to the court’s opinion, Five Star sought to establish that it was the successor in interest to an earlier grantee. Five Star tried to prove that it owned a 3/8 interest in the mineral interests. In response, the defendants argued that Five Star was only entitled to 3/8 of a 1/8 interest, or a 3/64 interest.

In support of its claim, Five Star presented the court with a quit-claim deed that purported to convey a “ROYALTY ONLY” interest. The question for the court was whether the quit-claim deed conveyed a 3/8 interest or a 3/64 interest to Five Star. In resolving this question, the court had to wrestle with the fact that the Texas oil and gas industry’s customs and terms have changed significantly since the original deed was created in 1927.

The court began its analysis by noting that there are two types of royalty interests.

  1. a “mineral interest” that includes a right to receive a proportionate share of reserved royalties; and
  2. a free “royalty interest” granting a right to a fixed fraction of gross production.

The court then went on to explain that a mineral estate consists of five separate interests:

  1. The right to develop,
  2. The right to lease,
  3. The right to receive bonus payments,
  4. The right to receive delayed rentals, and
  5. The right to receive royalty payments.

Under state law, a party can convey any of the above interests while reserving others. If any of the above interests are conveyed, they are generally referred to as “mineral interests.” The court explained that when a deed conveys a royalty interest, through a fractional share, “what is conveyed is a fraction of royalty, not a fixed fraction of total production royalty.”

Here, the court noted that the original deed conveyed a “royalty interest of three-eighths of all . . . minerals.” The court acknowledged this alone may indicate that the conveyance only consisted of a 3/8 fixed royalty. However, later in the document, the same interest is referred to as “a three-eighths part of the royalty provided by the then-operative lease” and again as a “three-eighths of one-eighth interest.” The court also noted that the deed did not address production costs. This led the court to find that the “royalty interest” mentioned in the deed was not a fixed royalty, but a right to receive royalties proportionate to a held mineral interest. Ultimately, the court concluded that Five Star was entitled to a full 3/8 interest, but that its interest was limited to receive a proportionate share of royalties and does not enable Five Star to develop or lease the land.

The court acknowledged that the original deed used confusing, and at times, conflicting language. The court attributed some of this confusion to the fact that the deed was nearly 100 years old, and that the customs and common terms used in the oil and gas industry have changed.

If nothing else, this case illustrates the complexity of oil and gas litigation in Texas. These cases often involve old documents that may not comport with the current state of the law. Thus, anyone dealing with a dispute surrounding Texas mineral interests should work with an experienced attorney to ensure that their rights are adequately protected.

Reach Out to a Dedicated Austin Oil and Gas Lawyer

Oil and gas disputes can be extremely complicated. Choosing an attorney to represent you or your business is a crucial decision that can save months or even years of litigation, and many thousands of dollars. At the Law Offices of Gregory D. Jordan, we have been effectively handling Texas oil and gas cases for over 30 years. This experience provides us with a detailed understanding of this unique practice area, which we put into each of our clients’ cases. We genuinely value your business and time and strive for quick and effective resolutions to whatever legal issues you face. To learn more, and to schedule an initial consultation, call 512-419-0684. You can also contact me online.

Court Issues Opinion in Texas Business Law Case Involving “Imploding Partnership”

Earlier this month, a state appellate court issued an opinion in a Texas business law case discussing a partner’s claims against a former partner. The case is a good illustration of how business relationships can sour and what can be done to minimize the chances of a dramatic ending.

The Facts of the Case

According to the court’s opinion, four architects formed a partnership in 2000. Years later, two of the founding members retired and, in 2005, the firm was reorganized into a professional limited liability corporation (PLLC).

By 2014, the relationship between the remaining two partners, Boucher and Thacker, began to sour. The firm was heavily in debt and Thacker accused Boucher of “not pulling his weight.” Boucher refused to inject additional capital into the company and, in late 2014 or early 2015, the two began talking about dissolving the company.

In early February 2010, the two went over the firm’s debts and discussed how to dissolve the firm. Boucher explained that he intended to retire and, under the terms of the agreement, would receive $300,000 upon his retirement. Thatcher responded that the firm did not have the money to pay this lump-sum amount, and the two should focus on shutting down the firm instead.

By February 16, the two had agreed to dissolve the firm, with both partners splitting the firm’s debt evenly. However, later that day, Boucher sent Thatcher a notice of his intent to retire on February 20. In response, Thatcher immediately withdrew from the firm. Both parties continued to conduct business individually after the dissolution of the firm.

Thacker subsequently sued Boucher for breach of contract, arguing that he had abandoned “the firm at the time of dissolution and fail[ed] to pay all obligations, losses and debts of the firm.” Thacker claimed that Boucher’s actions resulted in the unnecessary accrual of interest and also sought attorney’s fees. Boucher filed a counterclaim, seeking the $300,000 in retirement compensation.

The trial court determined that Boucher breached the agreement, by not paying his share of the debts and by not participating in the winding down of the business. The court also found that Boucher violated his fiduciary duty to the firm. Finally, the court ruled against Boucher in his counterclaim for retirement compensation. The court awarded Thacker the full amount of attorney’s fees he requested.

The Court’s Opinion

The court reviewed the evidence presented below and largely affirmed the lower court’s decision. The appellate court explained that the evidence suggested that the firm had been dissolved upon Thacker’s withdrawal. Thus, because the firm was no longer in existence at the time Boucher retired, the court explained that Thacker did not breach any duty owed to the firm or Boucher, and that Boucher was not entitled to the retirement compensation.

However, the court disagreed with the lower court regarding the award of attorney’s fees. The court explained that to obtain attorney’s fees, “a party must 1.) prevail on a cause of action for which attorney’s fees are recoverable, and 2.) recover damages.”

Here, the court held that because Thacker did not recover any economic damages as a result of Boucher’s conduct, he was not entitled to an award of attorney’s fees. The court acknowledged that there were exceptions to this general rule but found that neither applied in this case. One exception is when the agreement between the parties provides for an award of attorney’s fees absent an award of damages. However, the partnership agreement between the parties did not provide for such an award. Thus, the court reversed the award of attorney’s fees to Thacker.

Are You Dealing With a Texas Business Dispute?

When success matters, every decision you make for your business is essential. Choosing which Austin partnership dissolution attorney or contract dispute attorney to handle the unique issues your business faces is no exception. At the Law Offices of Gregory D. Jordan, we have over three decades of experience helping all types of businesses deal with the full range of legal issues they confront, including breach of contract claims and business fraud cases. We also routinely assist businesses through the dissolution process, reducing the chances of costly and time-consuming litigation. To learn more about how we can help your business through the issues it faces, call 512-419-0684 to schedule a consultation today.

U.S. Supreme Court Issues Opinion in Landmark Sex Discrimination Lawsuit

Earlier this year, the United States Supreme Court issued a written opinion in an employment discrimination case that will have significant implications in Texas, as well as throughout the county. The opinion involved the interpretation of Title VII of the Civil Rights Act of 1964. Specifically, whether the Act’s prohibition against discrimination on the basis of an employee’s “sex” precludes an employer from firing an employee for being gay or transgender. The Court answered the question in the affirmative, finding that employers cannot discharge an employee for being gay or transgender, even if other motivations supported the employer’s decision.

Background Into the Civil Rights Act

The Civil Rights Act of 1964 (CRA) was the country’s first civil rights legislation, protecting against discrimination based on an employee’s race, color, religion, sex, or national origin. However, initially, the protections under the CRA were weak and under-inclusive. So, while the CRA was an important step toward seeking a more equal workplace, it was not a complete solution. For example, the Act did not apply to discrimination based on a worker’s age or disability status. Additionally, although the Act purported to protect against sex discrimination, it was subsequently interpreted by the courts not to protect against pregnancy discrimination and, until recently, an employee’s status as gay or transgender.

Of course, subsequent legislation filled in some of the holes left by the CRA. The Age Discrimination in Employment Act of 1967 provides protection for employees and job applicants over the age of 40. The Americans with Disabilities Act, passed in 1990, protects workers who are experiencing disability. And the Pregnancy Discrimination Act of 1978 amended the CRA to “prohibit sex discrimination on the basis of pregnancy.”

The Supreme Court’s Recent Opinion

The Court’s opinion in Bostock v. Clayton County, is a consolidation of three similar cases, all arising from different states. Gerald Bostock was a child welfare advocate in Clayton County, Georgia. After he began playing in a gay softball league, he was fired for engaging in conduct “unbecoming” of an employee. Donald Zarda was a skydiving instructor who was fired days after mentioning that he was gay. And Aimee Stephens, who presented as a male when she was hired, was fired after telling her employer that she intended to “live and work full-time as a woman.”

In each of these three cases, the employee was fired at least in part for either being gay or transgender. All three employees filed employment discrimination claims against their employers under Title VII of the CRA. Oversimplifying the procedural background of each individual case; two of the cases were allowed to proceed toward trial while one was dismissed as a matter of law. The question that was eventually presented to the United States Supreme Court was whether Title VII to the CRA prevents an employer from making an employment decision because an employee is gay or transgender. In other words, does the CRA’s language precluding discrimination based on “sex” extend to an employee’s sexual orientation or status as a transgender person.

The Court’s Analysis

The Court began its analysis by noting that the CRA precludes employees from making an employment decision “because of” an employee’s sex. In its preliminary discussion of the applicable law, the Court reviewed several other opinions to glean a general rule regarding what is covered under the CRA.

First, the Court noted that it is “irrelevant what an employer might call its discriminatory practice, how others might label it, or what else might motivate it.” In making this statement, the Court was pointing out that it does not matter if the employer does not believe that they are engaging in sex discrimination. The Court explained “when an employer fires an employee for being homosexual or transgender, it necessarily and intentionally discriminates against that individual in part because of sex.”

Next, the Court went on to explain that the plaintiff’s sex does not need to be the only criteria leading to an employer’s decision. In other words, an employer cannot reframe their reason or firing an employee to be based on some non-protected trait.

Finally, the Court held that an employer cannot avoid the requirements of Title VII by showing that it treats men and women equally. The Court noted, “an employer who intentionally fires an individual homosexual or transgender employee in part because of that individual’s sex violates the law even if the employer is willing to subject all male and female homosexual or transgender employees to the same rule.”

In coming to its conclusion, the Court rejected each of the employers’ arguments. For example, the employers argued that firing an employee for being gay or transgender was not “sex” discrimination because it had nothing to do with an employee’s sex. In support of their argument, the employers noted that each of the employees, if asked, would likely have explained that they were fired for being gay or transgender (rather than for being male or female). However, the court reiterated that an employment discrimination charge does not require an employee to prove that the employer intended to discriminate, only that the employer acted in a discriminatory manner.

The Court also rejected the employers’ argument that public policy supported their actions. Specifically, the employers argued that, when enacted, few would have thought the CRA covered gay and transgender employees. The Court noted that “people are entitled to rely on the law as written, without fearing that courts might disregard its plain terms based on some extratextual consideration.” And the Court even acknowledged that these cases fell outside the “principal evil” at which the CRA was directed. However, rather than use that as a reason to minimize the protections afforded by the CRA, the Court explained that it “demonstrates the breadth of the legislative command.”

In the end, the Court’s holding was simple; employers cannot base an employment decision on an employee’s status as gay or transgender.

Contact an Experienced Austin Employment Law Attorney for Immediate Assistance

Whether you are an employer trying to navigate the new changes in the law, or an employee who believes that your employer illegally fired you, contact the Law Offices of Gregory D. Jordan for help. For over 30 years, we have been helping individuals and businesses with complex employment law issues, including claims of employment discrimination, wrongful termination, retaliation, wage and hour violations and more. To learn more about how we can help you with your situation, call 512-419-0684 to schedule a consultation today.

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