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Firms Ask Texas Appeals Court to Overturn $595M Award in Eagle Ford Case

Two energy firms and their affiliates have asked a Texas appeals court to reverse a lower court ruling in an aiding-and-abetting case over assets in the Eagle Ford Shale that ultimately awarded Longview Energy Co. about $595 million.

Attorneys for Huff Energy Fund LP (HEF) and WRH Energy Partners LLC filed briefs with Texas' Fourth Court of Appeals in San Antonio on Monday, requesting that oral arguments be heard in the case Huff Energy Fund LP v. Longview Energy Co. [No. 04-12-00630-CV].

At issue is a decision by a Zavala County judge in 2012 to award Longview $95.5 million and the rights to more than 46,000 net acres in the Eagle Ford worth more than $500 million, after a jury found two HEF executives -- William Huff and Rick D'Angelo -- had breached their fiduciary duties.

According to court documents, attorneys for HEF and WRH called the $95.5 million judgment "a windfall to Longview" and argued that the lower court's ruling should be overturned for several reasons, including a lack of evidence, and that the jury did not come to a unanimous agreement on the punitive damages.

"The trial court's imposition of a constructive trust and award of future production revenues was not for compensatory purposes, but rather to punish," the attorneys said. "As a result, Longview has enjoyed the tremendous windfall of a cost-free, risk-free, monetary-damage and property award."

The lower court issued its ruling in Longview's favor in September 2012, but it was amended the following December to include all future oil and gas production revenues from more than 46,000 net acres, which were converted into a constructive trust. The acreage is spread across eight Texas counties: DeWitt, Dimmit, Frio, Gonzales, Karnes, La Salle, Wilson and Zavala.

"It is hard to imagine that Longview, which alleged no actual harm and sought no actual damages, could receive a $95.5 million monetary award," the HEF and WRH attorneys said. "And it is hard to imagine that Longview, who had a hypothetical plan to be 50% owner of 21,000 acres in the Eagle Ford, could then receive 100% ownership of oil and gas leases in more than 46,000 acres through the imposition of a constructive trust. But that is precisely what happened here."

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