© 2015 The Texas Lawbook.
By Janet Elliott
AUSTIN (Feb. 3) – A series of emails and phone calls from a Canadian company to Texas concerning a hotly contested stock purchase are the focus of arguments in a $100 million contract-interference dispute under consideration by the Texas Supreme Court.
In two cases consolidated for argument in December, the court is weighing whether ERG Resources LLC, a Houston independent oil and gas operator, has the right to proceed in Texas courts with its claims against its Canadian rival for assets in Colombia.
ERG alleges that Canada’s Parex Resources Inc. and its Bermuda affiliate interfered in ERG’s $45 million agreement with Houston-based Nabors Global Holdings II Ltd. to purchase shares in Ramshorn International, a Colombian company with mineral interests in Colombia and Trinidad and Tobago.
Parex’s Bermuda affiliate ultimately acquired the Ramshorn shares for $72.6 million. ERG sued Nabors, the Parex entities and Ramshorn.
The arguments focused on the nature of the contacts between Parex and Nabors during a critical period in March 2012 after ERG says it reached its deal with Nabors.
Presenting arguments for ERG, Jeffrey Kubin told the court that Nabors informed Parex that it had sold Ramshorn’s shares to ERG. But over the next two weeks, Kubin said Parex “reached back into Texas again and again to make higher offers.”
“This was a one-time sale of a foreign asset,” said O’Neill. “There’s nothing about the ownership of a Colombian asset that invokes the protections of Texas laws or establishes any sort of meaningful contact with the state of Texas.”
The Supreme Court is reviewing a 2014 decision by Houston’s 14th Court of Appeals. The appeals court dismissed ERG’s claims against the Parex entities but ruled that ERG could pursue fraud claims against Ramshorn because Ramshorn’s president had made misrepresentations about the transaction in a Houston meeting.
Court Focuses on Michiana Case
The court of appeals relied on a 2005 Texas Supreme Court case, Michiana Easy Livin’ Country v. Holten. In that case, the court held that a Texas man’s telephoned order of a custom RV was insufficient to confer jurisdiction on the out-of-state manufacturer.
O’Neill was on the court at the time and joined a dissent, arguing that Michiana’s limited contacts with the Texas resident were sufficient.
During the Dec. 10 arguments, she told the court that her decision to dissent in the 2005 case was based on the U.S. Supreme Court’s 1983 ruling in Calder v. Jones. That case involved California actress Shirley Jones’ libel suit against the Florida writer and editor of a National Enquirer article.
O’Neill said there was some “loose language” in the Calder opinion that led many state and federal courts “to conclude that intentionally directing wrongdoing at a forum resident was sufficient to confer jurisdiction.” She said the U.S. Supreme Court has since clarified that a defendant must create a substantial connection with the forum state.
Kubin told the court that it could distinguish ERG’s suit against Parex from Michiana. He said the ubiquity of mobile phones meant that the Indiana RV company might not have known where a caller lived based on the area code that shows up on caller ID.
“In stark contrast here, what ERG proved in the trial court is that Parex Canada knew its communications were going to a Texas resident, it knew they were being received by employees of that Texas resident and those communications asked that Texas resident to act in Texas,” said Kubin, a Gibbs & Bruns partner.
The cases are ERG Resources, LCC v. Parex Resources, Inc., No. 14-0293 and ERG Resources, LCC v. Parex Resources (Bermuda), LTD., No. 14-0295.
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