Dispute over interests in a foreign oil field

Texas Case Law

RAMCO v. ANGLO-DUTCH, 14-04-00433-CV (Tex.App. [14th Dist.]
10-19-2006) RAMCO OIL & GAS LTD. AND RAMCO ENERGY PLC,
Appellants/Cross-Appellees v. ANGLO-DUTCH (TENGE) L.L.C.
AND ANGLO-DUTCH PETROLEUM INTERNATIONAL, INC.,
Appellees/Cross-Appellants. No. 14-04-00433-CV Court of
Appeals of Texas, Fourteenth District, Houston. Opinion of
June 6, 2006. Substitute Opinion filed October 19, 2006.

On Appeal from the 61st District Court, Harris County,
Texas, Trial Court Cause No. 00-22588.

Appellees’ Motion for Rehearing Overruled; Reversed and
Rendered.

Panel consists of Chief Justice HEDGES and Justices FOWLER
and FROST.

SUBSTITUTE OPINION

[fn1] We overrule the motion for rehearing filed by
appellees/cross-appellants Anglo-Dutch (Tenge) L.L.C. and
Anglo-Dutch Petroleum International, Inc. We withdraw the
opinion issued in this case on June 6, 2006, and we issue
this opinion in its place.

KEM THOMPSON FROST, Justice.

This case arises out of a business dispute over interests
in a foreign oil and gas field. After a lengthy trial
involving complicated facts and extensive expert testimony,
the trial court rendered judgment on the jury’s verdict,
awarding plaintiffs/appellees/cross-appellants $6.4 million
in lost profits, plus attorney’s fees and interest, based
on their breach-of-contract claims against
defendants/appellants/cross-appellees. The main issue on
appeal is whether the evidence proves with reasonable
certainty the profits appellees claim to have lost as a
result of appellants’ breaches of contract. We conclude
that it does not. We also conclude that the trial court
correctly granted summary judgment as to appellees’ claims
for breach of fiduciary duty, misappropriation, and
misappropriation of trade secrets. Accordingly, we reverse
the trial court’s judgment and render judgment that
appellees take nothing against appellants.

I. OVERVIEW

Scott Van Dyke repeatedly tried without success to realize
his “dream and business plan” by purchasing the equity of a
company with development rights in a potentially lucrative
oil and gas field in Kazakhstan so that he could try to
profitably develop this field. After learning that another
company had acquired these development rights, Van Dyke
concluded that the purchaser acquired these rights by using
confidential information obtained in violation of
confidentiality agreements. Van Dyke’s companies filed suit
against the companies he believed had breached these
agreements and misappropriated confidential information and
trade secrets.

II. FACTUAL AND PROCEDURAL BACKGROUND

In 1992, Van Dyke and appellee/cross-appellant Anglo-Dutch
Petroleum International, Inc. (hereinafter “AD
International”), a Texas corporation in which he was a
principal, became involved in a group of companies that
sought to identify, evaluate, and determine the feasibility
of oil and gas opportunities in the former Soviet Union.
Sugarland Oil Company, a Delaware corporation, was also a
member of this group. The group purchased geological and
geophysical data on a field in Kazakhstan known as the
Tenge Field. The Soviet Union had produced gas from shallow
horizons in the Tenge Field, and this data showed potential
oil horizons beneath the gas.

After deciding that the possibilities in the Tenge Field
were worth pursuing, appellee/cross-appellant Anglo-Dutch
(Tenge) L.L.C. (hereinafter “AD Tenge”), a company in which
Van Dyke owned a ninety-percent interest, formed a Delaware
limited liability company named Tenge Development L.L.C.
(hereinafter “Tenge Development”). Sugarland (Kazakhtenge)
L.L.C. (hereinafter “Sugarland”), a Delaware company, also
owned an interest in Tenge Development.[fn2] Tenge
Development, in turn, was a member[fn3] of Anglo-Dutch
(Kazakhtenge) L.L.C. (hereinafter “Kazakhtenge”), a Texas
limited liability company. Later, N.I.R. Tenge L.P.
(hereinafter the “Israeli Company”), an Israeli limited
partnership, and Overseas Petroleum and Investment
Corporation (hereinafter the “Taiwanese Company”), a
Panamanian corporation affiliated with the government of
Taiwan, both provided capital and became members of
Kazakhtenge. At all material times, Tenge Development
served as the administrative member of Kazakhtenge.
Although Van Dyke’s company AD Tenge was the administrative
member of Tenge Development and thus effectively the
administrative member of Kazakhtenge until May 1996,
neither Van Dyke nor any of his companies owned or
controlled a majority interest in Tenge Development or
Kazakhtenge at any material time. Lacking this ownership
and control, Van Dyke and his companies, on various
occasions, attempted unsuccessfully to acquire all of the
interests in Tenge Development and Kazakhtenge.

In November 1993, Kazakhtenge and Mangistaumunaygaz
Production Association (hereinafter the “Gas Production
Association”), a Kazakhstani association affiliated with
the Kazakhstan government, entered into a Foundation
Agreement regarding the creation of the Tenge Joint
Enterprise (the “Joint Enterprise”), a Kazakhstani joint
enterprise. Under this Foundation Agreement, which had a
term of twenty-five years, each party owned a fifty-percent
interest. The following diagram shows the ownership
interests in the Joint Enterprise as well as Kazakhtenge’s
relationship to the various entities vis-?•-vis the matters
in dispute:[fn4]

The purpose of the Joint Enterprise was to develop the
Tenge Field. The Foundation Agreement and the Charter
creating the Joint Enterprise allowed the Joint Enterprise
to develop and sell hydrocarbons produced from the Tenge
Field.

In May 1997, appellant/cross-appellee Ramco Energy PLC
(hereinafter “Ramco Energy”), a Scottish company, signed a
confidentiality agreement with Anglo-Dutch (Neftenge)
L.L.C. (hereinafter “AD Neftenge”) and examined the
possibility of becoming involved in the development of the
Tenge Field. In June 1997, Ramco Energy decided not to
pursue this matter.

Three months later, in August 1997,
appellant/cross-appellee Ramco Oil & Gas, Ltd. (hereinafter
“Ramco Oil”), a Scottish company, learned that Halliburton
Energy Services, Inc. (hereinafter “Halliburton”) was
reviewing the Tenge Field prospect. Having worked with
Halliburton in developing other opportunities in Central
Asia, Ramco Oil decided to examine the possibility of
becoming involved in the development of the Tenge Field
with Halliburton. Ramco Oil and Halliburton signed an
agreement delineating the terms of their relationship.

On November 26, 1997, Ramco Oil and Halliburton entered
into a Letter of Intent with AD Tenge and Anglo-Dutch
(Jersey) Limited (hereinafter “AD Jersey”),[fn5] a Channel
Islands company, detailing, among other things, an approach
to purchasing interests in Tenge Development and
Kazakhtenge. The Letter of Intent was subject to many
conditions, including approvals of executive management
and, if necessary, Ramco Oil’s and Halliburton’s boards of
directors. The Letter of Intent incorporated the terms of
the May 1997 confidentiality agreement signed by Ramco
Energy and stated that the terms of this agreement shall
apply mutatis mutandis (“all necessary changes having been
made”), as if Ramco Oil had entered into the same agreement
with AD Tenge.

Pursuing development of the Tenge Field necessarily would
require interface and dealings with the government of
Kazakhstan. To obtain expertise and assistance in this
regard, Ramco Oil and Halliburton retained as a consultant
Golden Eagle Partners (“Golden Eagle”), which had
experience in communications and relations with the
Kazakhstan government. For business reasons unrelated to
the Tenge Field, Halliburton formally withdrew from the
Letter of Intent in July 1998. Ramco Oil withdrew as well
in November 1998.

AD Tenge and AD International (hereinafter collectively
referred to as “Plaintiffs”) and Van Dyke continued to seek
to purchase the interests of the Tenge Development and
Kazakhtenge members not affiliated with Plaintiffs. Golden
Eagle and Central Asia Industrial Investments, N.V.
(hereinafter “Central Asia”),[fn6] a Netherlands Antilles
company, also negotiated with the Tenge Development and
Kazakhtenge members. On March 8, 2000, Kazakhtenge entered
into a purchase agreement with Central Asia, under which it
agreed to sell Central Asia all of the shares in a company
to which Kazakhtenge would transfer all of its interest in
the Joint Enterprise. Central Asia paid $2 million in cash
at the closing of this purchase and agreed to future
payments conditioned on future production.

Plaintiffs filed this suit against Halliburton, Ramco
Energy, Ramco Oil, and others, alleging breach of contract
and various torts. Plaintiffs claimed that, in breach of
their obligations to keep the information about the Tenge
Field confidential, Halliburton, Ramco Energy, and Ramco
Oil disclosed confidential information concerning the Tenge
Field to Golden Eagle, which Golden Eagle and Central Asia
then used for their own benefit. Plaintiffs later nonsuited
some of their tort claims, and the trial court granted two
motions for summary judgment filed by Ramco Energy and
Ramco Oil (hereinafter the “Ramco Parties”), dismissing all
Plaintiffs’ remaining tort claims against the Ramco
Parties. Plaintiffs went to trial on their
breach-of-contract claims against Halliburton, Ramco Energy,
and Ramco Oil. Plaintiffs asserted that these defendants
breached their contractual confidentiality obligations,
allegedly resulting in Central Asia’s acquisition of
Kazakhtenge’s interest in the Joint Enterprise. Plaintiffs
claimed that, but for theses breaches, they would have
purchased the Kazakhtenge members’ interest, developed the
Tenge Field, and earned $640 million in profits by 2018,
the end of their agreement with the Gas Production
Association.

After a trial lasting more than six weeks,[fn7] the jury
rendered its verdict, awarding Plaintiffs $64 million in
lost profits for Halliburton’s breach of its
confidentiality agreement and $6.4 million in lost profits
for the Ramco Parties’ breaches of their confidentiality
agreements. The jury also determined that Halliburton and
Ramco[fn8] were partners regarding the Tenge Field project.
The Ramco Parties filed a motion for judgment
notwithstanding the verdict, and the trial court denied
their motion except as to the jury’s partnership finding,
which it set aside. Otherwise, the trial court rendered
judgment on the jury’s verdict, awarding Plaintiffs $6.4
million in lost profits on their contract claims against
the Ramco Parties, as well as attorney’s fees, prejudgment
and postjudgment interest, and court costs.[fn9] The Ramco
Parties subsequently filed this appeal. Plaintiffs filed a
cross-appeal, challenging, among other things, the trial
court’s summary judgment in favor of the Ramco Parties as
to Plaintiffs’ claims for breach of fiduciary duty,
misappropriation, and misappropriation of trade secrets.

III. ISSUES PRESENTED

The Ramco Parties assert the following issues on appeal:

(1) Did the trial court err in admitting the testimony of
Plaintiffs’ experts George Schaefer and John Brickhill?

(2) Is there evidence proving with reasonable certainty
Plaintiffs’ lost profits?

(3) As to Ramco Energy’s liability, can Plaintiffs
enforce the May 1997 confidentiality agreement between
Ramco Energy and AD Neftenge?

(4) Did the trial court reversibly err in charging the
jury on the Ramco Parties’ liability?

(5) Is the evidence legally and factually sufficient to
support the jury’s liability findings against the Ramco
Parties?

(6) Are the Ramco Parties liable for attorney’s fees?

In their cross-appeal, Plaintiffs assert the following
issues:

(1) Did the trial court err in granting judgment
notwithstanding the verdict on the partnership issue?

(2) Did the trial court err in granting summary judgment
on the Plaintiffs’ claims for breach of fiduciary duty,
misappropriation, and misappropriation of trade secrets?

(3) Did the trial court err in denying postjudgment
interest on attorney’s fees?

(4) Did the trial court err in denying prejudgment
interest on future damages?

(5) Was the trial court’s use of a five percent
prejudgment and postjudgment interest rate based on an
invalid statute?

IV. ANALYSIS

A. Plaintiffs’ Proof of Lost Profits as Damages on Their
Contract Claims

The main issue on appeal arises out of Plaintiffs’
contract claims. In construing contracts, our primary
concern is to ascertain and give effect to the intentions
of the parties as expressed in the contract.
Kelley-Coppedge, Inc. v. Highlands Ins. Co., 980 S.W.2d
462, 464 (Tex. 1998). To ascertain the parties’ true
intentions, we examine the entire agreement in an effort to
harmonize and give effect to all provisions of the contract
so that none will be rendered meaningless. MCI Telecomms.
Corp. v. Tex. Utils. Elec. Co., 995 S.W.2d 647, 652 (Tex.
1999). Whether a contract is ambiguous is a question of law
for the court. Heritage Res., Inc. v. NationsBank, 939
S.W.2d 118, 121 (Tex. 1996). A contract is ambiguous when
its meaning is uncertain and doubtful or is reasonably
susceptible to more than one interpretation. Id. However,
when a written contract is worded so that it can be given a
certain or definite legal meaning or interpretation, it is
unambiguous, and the court construes it as a matter of law.
Am. Mfrs. Mut. Ins. Co. v. Schaefer, 124 S.W.3d 154, 157
(Tex. 2003).