© 2013 The Texas Lawbook.
By Natalie Posgate
Staff Writer for The Texas Lawbook
An Irving company is suing two K&L Gates attorneys on claims that it was duped into investing millions of dollars in a joint representation for a partnership investment in an oil and gas deal that left the company’s best interests sacrificed.
The lawsuit, filed by Hazen NG LLC Thursday in Dallas County, is against Julie Lennon and John Hardin. Lennon, who at the time of the incident was a partner in K&L Gates’ Dallas office, is now the general counsel of the real estate firm Gaedeke Group. Hardin is currently a partner in the K&L Gates Dallas office, where he practices an array of complex commercial litigation matters.
According to the complaint, Hazen’s managing partner Dean Hazen met Lennon and her neighbor Marc Lott for dinner in April 2009 where they discussed a partnership between Hazen and Lott’s company, Daugherty Petroleum Inc. (DPI), in which Hazen would invest in an oil and gas deal involving Chesapeake Appalachia, LLC. Hazen, who had a long-term relationship with K&L Gates, was “duped” into initially investing more than $3.1 million in the deal, and Lott promised to put in $1.5 million, which he did not uphold, the complaint says.
The lawsuit claims that the defendants failed to put any provision into the agreement about the amount each party agreed to invest, and Hazen eventually was forced to pitch in more than $5 million into the deal while the other side continued to invest no money.
In addition, the deal closed in less than two weeks without any due diligence on behalf of Hazen and his company, according to the lawsuit. Hazen claims in the complaint that Lennon was able to persuade him to put so much money into the deal by taking advantage of his lack of sophistication and knowledge of the oil and gas industry.
“The conflict is [K&L Gates] represented two parties to do a partnership together and put one guy’s interest ahead of my guy’s interest about protecting his rights and his claims,” said Lance Kassab, a legal malpractice attorney who is representing Hazen in the case with his nephew, David Kassab.
According to Kassab, the firm did not notify Hazen about a conflict of interest until 12 days after the deal had already closed. Kassab, who has his own firm in Houston, said he’s never seen something like this happen before in his practice.
Kassab said he wasn’t sure yet how big of a role Hardin plays in the lawsuit. However, his client sent an e-mail to Hardin asking whether there was a conflict of interest to begin with, which to Kassab’s understanding, Hazen received no response.
“Had the appropriate disclosures been made and had the appropriate due diligence been provided to Hazen, Hazen would have never agreed to the joint representation and never agreed to consummate the agreement regarding the participation matter,” the lawsuit said.
Hazen is suing K&L Gates on negligence, negligence per se, gross negligence, breach of duty and violation of the Texas Deceptive Trade Practices Act.
K&L Gates declined to comment on the issue.
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