Business Litigation | The Law Offices of Gregory D. Jordan - Part 2

Co-owner dispute at Spider House in Austin, Texas gets serious

The Spider House Cafe and Ballroom has been a famous Austin college hang-out since it opened its doors in 1995. Most customers, however, probably do not know of the legal battle between the two co-owners of the business, John Dorgan and Conrad Bejarano. In October of 2018, Dorgan filed a lawsuit against Bejarano and an employee of Spider House, Jeremy Rogers. The lawsuit accuses both men of libel and slander against Dorgan and Spider House. The lawsuit has brought to light many instances of alleged impropriety in the business and on the premises.

The lawsuit stems from a social media post by Rogers and his wife asserting that Dorgan sexually assaulted his wife in 2014. A day after the post, Bejarano stated that he was banning Dorgan from the property, of which he is still a co-owner. In the lawsuit, Dorgan is seeking monetary damages as well as a declaratory judgment that Bejarano has no legal authority to ban Dorgan or constrain his ownership. There is no record of Bejarano filing any kind of legal document restricting Dorgan from the property.

Motion to Dismiss
On December 21, 2018, Bejarano filed a motion to dismiss Dorgan’s lawsuit, arguing that the lawsuit is inhibiting Bejarano’s free speech. The motion relies on the Texas Citizens Participation Act, which specifically protects free speech made in connection with a “matter of public concern.” Bejarano also filed an answer to the lawsuit denying the substantive claims.

Attorney Gregory D. Jordan is a business litigation and corporate law attorney with offices in Austin who has handled matters under the Texas Citizens Participation Act. To learn more, visit

Texas lawsuit filed claiming waste management firm engaged in tortious interference with contracts

A Texas waste management company filed a lawsuit in a state court claiming that a competitor engaged in tortious interference with contracts.

Waste Connections of Texas alleges in the complaint that Rubicon Global repeatedly hired local car-towing companies to “unlawfully remove” waste storage containers owned by Waste Connections. The lawsuit claims that Rubicon did this at least 35 times, when it acquired former customers of Waste Connections. Rubicon said that the lawsuit was part of a “pattern of anti-competitive behavior” by Waste Connections, and that Rubicon intended to disrupt the waste management industry.

Waste Connections claims that Rubicon’s methods of taking over accounts are problematic in part because Waste Connections’ contracts include the right to match offers from competitors, but the towing of waste containers is the primary issue in the lawsuit. The complaint alleges that Waste Connections sometimes only receives a few days’ notice that a customer is switching to Rubicon and waste containers need to be removed. If this deadline is not met, then Rubicon hires towing companies to move the containers, sometimes dropping them off full at the nearest Waste Connections yard. Other containers have gone missing for days, the lawsuit claims.

The lawsuit accused Rubicon of conversion, negligence and tortious interference with contracts. Waste Connections is seeking a declaratory judgment that the towing of waste containers violates contracts between Waste Connections and its customers, and an injunction preventing Rubicon from moving waste containers owned by Waste Connections, as well as damages, attorneys’ fees and other relief.

Texas telecommunications company sues Comcast claiming tortious interference

A small Texas telecommunications company has filed a lawsuit against cable giant Comcast, alleging tortious interference with contract.

In the lawsuit, Anthony Luna claims Comcast dug up and destroyed cables owned by his company, Telecom Cable. Luna alleges that Comcast workers cut cables and disrupted service to his customers in the Houston area. The complaint filed June 14 claims that Telecom Cable had to fold after a six-week effort of trying to restore service as customers deserted the company.

According to Luna’s attorney, he had been doing business in the Houston area since 2007, and Comcast offered to buy out his small cable operation in 2013. Luna declined. Comcast then began installing its own cables in shared utility easements, a normal industry practice. Telecom sent Comcast a map of its infrastructure and marked its cables with orange paint and flags, so that Comcast workers would not accidentally damage the cables. However, Luna soon began receiving shortage outages and finding that his cables had been cut. Luna claims that Telecom Cable’s lines were cut repeatedly and he was forced to close the business as customers terminated their service and switched to Comcast.

Luna is seeking damages in excess of $1 million, including punitive damages, for tortious interference with contract, negligence, conspiracy, and aiding and abetting.

Texas appellate court rules against owner of royalty interest in fraudulent inducement lawsuit

A Texas appellate court held that the owner of a royalty interest could not claim fraudulent inducement with regard to its settlement with a Shell Oil affiliate that operated the oil and gas property. In 2014, a Texas state court jury found that the Syrian American Oil Corp. (Samoco) was fraudulently induced into entering a settlement agreement in 1989 with Pecten Orient Co., a Shell affiliate that owned the property in Syria. However, the jury also found that Samoco should have discovered the issue before making the agreement.

On appeal, Samoco argued that it did not discover the fraud until 2006, when Pecten made an offer to buy the royalty interest. However, the First Court of Appeals agreed with the trial court, finding that Samoco’s 2007 lawsuit was time-barred.

The Texas appellate court also held that Pecten should have been awarded a portion of the $3.5 million in attorneys’ fees and costs that it claimed to have incurred, because the jury found that Samoco breached the agreement by filing the lawsuit. The jury awarded zero dollars in damages, but Pecten argued that it was contrary to the weight of the evidence. The court said that the evidence regarding fees was undisputed, and Samoco did not substantively challenge the attorneys’ fees evidence on appeal.

Texas appeals court’s decision shows importance of wording in noncompete agreements

A recent decision by a Texas appeals court demonstrates that the wording of a noncompete agreement must be precise.

In the case, East Texas Copy Systems, Inc. v. Player, the Court of Appeals in Texarkana ruled that a noncompete agreement was nonbinding due to the language used in the agreement.

As part of the sale of a business, the buyer agreed to employ the seller for four years, and the seller agreed not to compete with the buyer in a certain geographic area for a two year period. The noncompete clause stated that if the seller’s employment was terminated “for any reason other than a for cause termination” within two years, then the noncompete clause would no longer be binding. The parties also signed a separate noncompete agreement with identical language regarding the agreement being nonbinding if the seller was terminated for any reason other than for cause.

The seller voluntarily resigned his employment within two years of entering into the agreement and entered into competition with the buyer.

The seller filed a lawsuit seeking a declaration that the noncompete clauses were nonbinding, and the buyer asked the court to enforce the clauses. The trial court found that the seller was not bound by the noncompete agreement. The buyer appealed, arguing that to allow the seller to voluntarily end his employment and begin competing would thwart the purpose of the agreement. The court disagreed, noting that the agreements between the parties covered other issues besides the agreement not to compete. The court held that the plain language of the clause allowed the seller to compete, because both parties agreed that the employment had terminated without cause.

The case illustrates the importance of making sure that a noncompete agreement actually protects the interests that the parties intend to protect.

Texas drill pipe supplier files lawsuit against company alleging breach of contract

A breach of contract lawsuit was filed by a Houston, Texas drill pipe supplier against a North Dakota company.

The lawsuit was filed in the U.S. District Court for the Southern District of Texas Aug. 31 by Vallourec Drilling Products USA Inc. (Vallourec) against B.J.’s Drill Stem Testing, Inc. d/b/a Drill Tech LLC (Drill Tech).

According to the lawsuit, Drill Tech purchased 60 joints of 4-inch heavyweight drill pipe and 620 joints of 4-inch drill pipe from Vallourec. The complaint alleges that the drill pipe was delivered, but Vallourec has not received the full payment of $1,282,748.40.

Vallourec claims that Drill Tech paid a deposit of $384,824.52, but failed to pay the remaining balance. According to the complaint, the parties had agreed that the pipe would be delivered “Ex-Works,” meaning that it would be considered delivered once the seller made the goods available for pickup by the buyer. Vallourec claims that it made the pipe available for pickup, but Drill Tech failed to take physical possession after delivery, and Vallourec has therefore incurred storage and other expenses. The plaintiff further alleges that it has been unable to resell the goods, despite commercially reasonable attempts.

The plaintiff is seeking payment for past-due amounts, pre- and post-judgment interest, court costs, attorney fees and other relief to which it may be entitled. A jury trial has been requested.

Austin company files lawsuit alleging unfair competition

An unfair competition lawsuit has been filed in U.S. District Court in Austin, Texas.

Yeti Coolers, an Austin company, accuses a Missouri company, Mammoth Coolers, of selling products that infringe on Yeti’s rights. Yeti alleges unfair competition, unjust enrichment, trade dress infringement and trade dress dilution. The company seeks money damages and the recall and destruction of the offending products.

The products at issue are similar to Yeti’s Roadie and Tundra coolers and high-end Rambler tumblers. The company reports that it has sold more than 1 million Tundra coolers, which sell for $300 to $1,400, and more than 400,000 Roadie coolers, which sell for $250. The Rambler tumblers sell for between $30 and $40.

Yeti claims in the lawsuit that Mammoth Coolers’ Titan and Discovery coolers and its Rover tumblers are confusingly similar to Yeti’s products. Yeti alleges that Mammoth is using Yeti’s trade dress or colorable imitations, which are likely to create the misleading and false impression that the allegedly infringing products are associated with or authorized by Yeti. Yeti claims that the company used its trade dress continuously and extensively, and it became famous and acquired secondary meaning, before Mammoth entered the market.

Mammoth advertises its products as less expensive than their competitors.

Yeti has requested a jury trial.

Texas appeals court rules in lawsuit over gas well blowout costs

A Texas appeals court issued a ruling in a lawsuit over costs associated with the blowout of a gas well.

The Eleventh Court of Appeals issued its opinion Aug. 31, 2015 in the case of St. Paul Fire & Marine Insurance Company and St. Paul Surplus Lines Insurance Company, Appellants v. Petroplex Energy, Inc, Appellee, on appeal from the 142nd District Court, Midland County, Texas.

The case involved a gas well, the Quinn 1-6H Well in Reeves County, Texas, that was operated by Petroplex Energy and insured by the appellant insurance companies. The Quinn Well was intended to be operated as a partnership between Petroplex and Endeavor Energy Resources, LP, but the two companies disagreed over certain matters including blowout insurance, and a joint operating agreement was never signed. A partial assignment of the Quinn Well to Endeavor was executed, but the 80 percent interest was subsequently reassigned to Petroplex.

On Sept. 14, 2007, a buildup of gas caused the Quinn Well to blow out, and Petroplex lost control of the well. As a result, equipment owned by third parties was damaged, and Endeavor advanced blowout expenses to Petroplex. A well-control policy and commercial liability policy were held by Petroplex, but the insurance companies claimed that Petroplex did not own 100 percent of the working interest in the Quinn Well, that it was not an insured well, and Petroplex could not recover under the policies.

The appeals court affirmed the trial court’s judgment in favor of Petroplex on all issues presented.

Texas jury awards over 60 million dollars in oil and gas lease breach of fiduciary duty case

A Texas jury awarded over $60 million to investors in an oil and gas breach of fiduciary duty case.

The plaintiff investors claimed that their business partners gave themselves credit for financial contributions that were not actually made and excluded the investors from a lease acquisition project when the defendants learned that it would be extremely profitable.

The case is Tiburon Land and Cattle LP and Trek Resources on behalf of The Three Finger/Black Shale Prospect Partnership v. Sarah Kate Jones, as Independent Executrix of the Estate of Thomas J. Taylor, deceased, et al.

The plaintiffs presented evidence that although they shared in the first 30,000 acres of leases that the project acquired, they were excluded from a later acquisition of 16,000 acres. According to the plaintiffs, the defendants, including Abilene oil man Thomas J. Taylor, Kerwin Stephens and Chester Carroll, used a second set of accounting books to hide profits and make it appear as if they had made contributions that were not actually made by them.

The jury awarded $24 million in actual damages and $9 million in exemplary damages to one set of plaintiffs, and $28 million to another group of investors who intervened in the case.

The jury found that the fiduciary breaches by Stephens constituted theft, strengthening the total verdict amount.

Texas Supreme Court hears gas royalties case

The Texas Supreme Court heard arguments in a lawsuit by property owners against Chesapeake Energy, claiming that the energy giant improperly withheld millions of dollars in natural gas royalty payments.

Chesapeake is appealing a 2014 ruling by a San Antonio appeals court that upheld a decision by a state district court awarding at least $1 million to a Fort Worth family. The Hyder family argued that its lease with Chesapeake was heavily negotiated and specifically tailored to be “cost-free,” but Chesapeake has altered its interpretation of its obligations, attempting to deduct post-production costs.

The case is being closely watched by the oil and gas industry in Texas. The National Association of Royalty Owners-Texas and the Texas Land and Mineral Owners Association are backing the Hyders, saying that this case is one of many in which Chesapeake has sought to improperly deduct costs from royalty payments.

Observers say that the impact of the case will depend on whether the high court addresses its previous ruling in Heritage Resources v. NationsBank, which permitted the deduction of post-production costs even when contracts appear to disallow it. The Hyder lease included a provision stating that the findings in the Heritage case do not apply. The Fourth Court of Appeals in San Antonio agreed that the contract provision served to modify the general rule set forth in the Heritage case.

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