A Harris County jury determined Tuesday that neither Citgo Petroleum Corporation nor Rothwell Energy Services were entitled to any damages in a lawsuit over a soured deal to construct and install 10 desalination plants on the coast of Venezuela.
Rothwell filed suit in March 2019 and was seeking $2 million in damages from Citgo that included unpaid invoices and unrealized profits from the project. Citgo, which lodged counterclaims in the dispute, had asked jurors to punish Rothwell with $5 million in damages for its alleged fraud.
Rothwell spent considerable time in closing arguments trying to dispel the idea that the contract was procured through some type of impropriety or nepotism after jurors heard throughout the case that Rothwell’s president, Juan Hurtado, is the nephew of the former head of Citgo, Nelson Martinez, who later served as Venezuela’s oil minister and died in prison after being swept up in the PDVSA corruption probe. PDVSA is Venezuela’s state-owned oil company.
Rothwell maintained that while Hurtado called Martinez “uncle,” it was a term of endearment and the two were not related.
During closing arguments Tuesday Citgo’s attorney, John Zavitsanos of Ahmad Zavitsanos & Mensing, told jurors that the alleged conduct by Rothwell in this case was “worse, a lot worse” than what had been uncovered in scandals such as WorldCom, Enron, the Bernie Madoff Ponzi scheme and the Theranos case.
Zavitsanos said the jury had an opportunity to “set a moral and ethical standard” for how companies operate.
“You light ‘em up,” Zavitsanos said in wrapping up closing statements.
It took the panel about four hours of deliberations before determining no damages would be awarded in the case. The jury found that Rothwell breached the agreement between the parties and that Martinez, who at the time was the president of Citgo, had breached his fiduciary duties to the company by approving the Rothwell contract.
Brian Abramson of Williams Hart Boundas, who represents Rothwell, told jurors during closing arguments Tuesday morning that Citgo was relying on “a pyramid of circumstantial evidence” to build its case against Rothwell but said it amounts to “nothing but suspicion.”
The crux of the case is simple, Abramson said, a deal is a deal and Citgo should have to be held accountable to the terms of the contract.
“Creating doubt does not create an out for Citgo,” he said.
He reminded the jury they hadn’t seen “a shred of evidence” that Hurtado and Martinez ever spoke about the contract, trying to dispel the idea nepotism played a role in the deal.
During rebuttal, Walt Cubberly of Williams Hart Boundas, told jurors not to buy Citgo’s theory of an “international conspiracy” in the case and argued his client was “being bullied and pushed around by a billion-dollar company.”
“The idea that Rothwell must be dirty because it did business with Citgo… that’s a far stretch to me,” he said.
Rey Flores, also on the AZA team representing Citgo, argued Tuesday that Rothwell had done 20% of the work, completing just two of the 10 plants, and Citgo had already paid 68% of the contract price for the project.
“Citgo refuses to be complicit in the corruption of the past,” he said, arguing that Citgo had already overpaid Rothwell more than $100,000 and when it refused to give more this lawsuit arose.
Citgo’s position was that it owes Rothwell nothing because it already had paid the company $5.5 million, “more than the amount to which Rothwell was lawfully entitled,” according to court filings.
As Citgo told the court, Rothwell entered an $6.5 million agreement to commission and transfer 10 desalination plants on the coast of Venezuela by Jan. 1, 2018. When none of the plants were ready by deadline, the parties agreed to extend the deadline to Dec. 31, 2018.
But by Nov. 7, Citgo alleges, Rothwell had only completed two of the 10 plants but Citgo had paid Rothwell $5.5 million of the agreed-upon $6.5 million price.
On Nov. 9, 2018, Citgo suspended all work on the project after Rothwell allegedly “repeatedly violated the agreement’s deadlines, oversight and change order provisions.”
Rothwell had never before “procured, shipped or installed desalination plants,” Citgo told the court in filings, but got the deal because of a close relationship “familial or otherwise,” between Hurtado and Martinez, who directed that Citgo would give Rothwell the contract.
Harris County District Judge Robert Schaeffer presided over the case.
Citgo is represented by John Zavitsanos, Rey Flores, Nathan Campbell and Colin Phillips of Ahmad Zavitsanos & Mensing.
Rothwell is represented by Brian Abramsom and Walt Cubberly of Williams Hart Boundas.
The cause number is 2019-20949.