Cent. Petroleum Ltd. v. Geoscience Res. Recovery, LLC

CENTRAL PETROLEUM LIMITED, Appellant v. GEOSCIENCE RESOURCE RECOVERY, LLC, Appellee

NO. 14-16-00933-CV

State of Texas in the Fourteenth Court of Appeals

December 14, 2017

On Appeal from the 152nd District Court Harris County, Texas

Trial Court Cause No. 2015-42477

OPINION

In this suit for breach of contract and related claims, defendant Central Petroleum, an Australian company, appeals the denial of its special appearance. Because the evidence is sufficient to support the trial court's implied finding that a Central employee acting within the scope of his apparent authority executed a contract containing a Texas forum-selection clause with plaintiff Geoscience Resource Recovery, LLC ("GRR"), we conclude that the trial court has specific jurisdiction over GRR's breach-of-contract claim against Central. We further conclude that the operative facts of GRR's related quantum-meruit and fraudulent-misrepresentation claims have a substantial connection to Texas. Finally, we hold that the trial court's exercise of specific jurisdiction over all of GRR's claims against Central does not offend traditional notions of fair play and substantial justice. We accordingly affirm the trial court's denial of Central's special appearance.

I. BACKGROUND

Central is an Australian corporation that owns approximately 70 million acres of petroleum and mineral rights in that country. Needing a farmout partner "to develop a significant portion of that acreage with a substantial drilling and seismic program," Central's then-managing director John Heugh attended the North American Prospect Expo ("NAPE") in Houston in February 2011. There Heugh met Niraj Pande, sole owner of GRR. Later that year, Central retained GRR's services in helping Central find a suitable farmout partner.

A. The First Agreement

Central and GRR agreed in their 2011 contract that their agreement would be governed by the laws of Western Australia, and that any dispute in connection with the agreement must be settled before a sole arbitrator in Perth. GRR agreed to assist in finding a farmout partner; to assist "in negotiations relating to the documentation and the memorializing of the Transaction (i.e., an agreement);" and to "provide advice to [Central] as to strategy and attend any negotiation sessions or meetings with the intent of resolving any issues and also act as an intermediary for [Central] providing advice and direction on any Transactions contemplated." For these services, GRR was to be paid $10,000 (Australian dollars) per month, plus expenses. The agreement additionally provided that

GRR may negotiate and require the potential farm-in partner¹ to pay GRR a commission fee being up to 2% of all acquisition costs and capital development costs provided directly by such potential farm-in partner in the event a farm-in is arranged. . . . [I]t is within GRR's sole and absolute discretion whether to negotiate such payment. [Central] shall have no liability or obligation whatsoever to pay any portion of any said "commission fee" payable by the potential farmin partner . . . . GRR shall from time-to-time promptly disclose to [Central] the detail and progress of any negotiations in respect to the said "commission fee", including, but not limited to, if a Transaction was likely not to proceed with a potential farm-in partner . . . because the said "commission fee" was being required to be paid to GRR.

The agreement stated that it would expire on December 31, 2011 unless the parties otherwise agreed in writing. Because GRR postponed some of its services, the agreement was extended to February 10, 2012. Well before that, however, both parties to the contract realized that no potential partner would agree to enter into a farmout agreement that required the partner to pay GRR's commission. Pande and Heugh therefore began discussing the need to amend or replace the agreement.

B. The Second Agreement

After the First Agreement expired, Pande emailed Heugh to ask if Center wanted GRR "to continue work desc[r]ibed in our signed agreement." Heugh answered, "Yes, until otherwise advised." Heugh then advised Pande that Central's exploration manager Trevor Shortt would be representing Central at the upcoming NAPE conference. In an email copied to Central's secretary and general counsel Daniel White, Heugh wrote to Pande and Shortt that Shortt "has been given all responsibility for farmouts, pls contact him with any enquiries." Later that day, Heugh emailed Central's chairman of the board Henry Askin and Pande, "Niraj [Pande] be aware that all farmout deals discussions promotions and negotiations areto be managed exclusively on our side by Trevor Shortt." White and at least two of Central's directors were copied on the email.

While Shortt was in Houston for the NAPE conference later that month, he and Pande allegedly negotiated the Second Agreement between Central and GRR. At Shortt's suggestion, the Second Agreement stated, "The parties agree to keep this agreement confidential and not to transmit, email, fax or discuss the contents of this agreement, particularly with John Heugh or any other parties." They agreed that GRR would continue its work and continue to draw a retainer, but because no major company would pay GRR's "success" fee, Central would pay it. The agreement required Central to present a formal agreement through its board of directors by April 15, 2012, concerning the percentage of the farmout partner's investment that would be paid to GRR as a success fee, but that if Central failed to present a formal agreement by that date, then GRR would be entitled to the success fees and retainer "that are usual and customary in the energy industry that investment banking firms and petroleum engineering firms charge for the services that GRR is providing on a gross basis." They agreed that if the farmout partner was a company that GRR had contacted independently, GRR would receive 100% of the success fee, and that if the farmout partner instead was a company that had stopped by Central's NAPE booth, GRR would receive only half of that amount. The Second Agreement stated that it would be governed by Texas law and that "any dispute will be resolved by suit either in Texas or California." After Shortt and Pande signed the Second Agreement, Shortt left with the document.

The next day, Shortt went with Pande to a meeting Pande had arranged with Total E&P New Ventures, Inc. The meeting led to a joint venture between Central and Total E&P Activités Pétrolièrs in which, according to GRR's live pleading, Total agreed to the expenditure of $190 million (Australian dollars). In themeantime, however, Central required GRR to cease performing services for it. Central has not paid GRR in accordance with the Second Agreement.

GRR sued Central Petroleum, pleading claims alternatively for breach of contract, quantum meruit, and fraudulent misrepresentation. Central filed a special appearance, which the trial court denied. In four issues, Central challenges the trial court's denial of its special appearance.

II. ISSUES PRESENTED

Central states the following four issues for review:

1. Did Central purposefully avail itself of Texas by twice attending NAPE, a global convention for companies seeking global partners for global exploration?

2. Did Central purposefully avail itself of Texas by allegedly signing a contract in Texas with a Nevada company for services to be performed anywhere needed in the world?

3. Can a trial court base specific jurisdiction on a contract allegedly signed in Texas that is lost, unsigned, unauthorized, incomplete, and bears signs of fabrication—all issues that must be resolved by a jury?

4. Would traditional notions of fair play and substantial justice be offended by Texas courts deciding a dispute between an Australian company (doing business solely in Australia) and a Nevada entity (doing business wherever its sole employee happens to be) where (a) the parties' original contract chose Australian law and arbitration in Australia, (b) most witnesses reside in Australia and some can be compelled to attend only in Australia; (c) any judgment must be collected in Australia; and (d) trial or judgment could hamper development of millions of acres of oil and gas resources in Australia?

Much of Central's briefing, however, does not track its stated issues. We therefore will address the arguments we identify in Central's brief without attempting to link them to specific issues.

III. STANDARD OF REVIEW

The existence of personal jurisdiction is a question of law, which we review de novo. See Am. Type Culture Collection, Inc. v. Coleman, 83 S.W.3d 801, 805-06 (Tex. 2002). In determining whether personal jurisdiction exists, however, the trial court may have to resolve factual disputes. See id. at 806 (citing BMC Software Belg., N.V. v. Marchand, 83 S.W.3d 789, 794 (Tex. 2002)). Where, as here, the trial court issues no factual findings, we presume that the trial court resolved all factual disputes in favor of the judgment. See id. (citing BMC Software, 83 S.W.3d at 795). If the record includes the clerk's and reporter's records, a litigant may challenge the trial court's implied factual findings for legal and factual sufficiency. See BMC Software, 83 S.W.3d at 795. But, because the factfinder is the sole judge of the witnesses' credibility and the weight to be given to their testimony, we will not substitute our judgment for that of the trial court, even if we might reach a different answer in similar circumstances. See Thu Thuy Huynh v. Thuy Duong Nguyen, 180 S.W.3d 608, 615 (Tex. App.—Houston [14th Dist.] 2005, no pet.).

IV. GOVERNING LAW

The state long-arm statute "extends Texas courts' personal jurisdiction 'as far as the federal constitutional requirements of due process will permit.'" M & F Worldwide Corp. v. Pepsi-Cola Metro. Bottling Co., 512 S.W.3d 878, 885 (Tex. 2017) (quoting BMC Software, 83 S.W.3d at 795). Federal due-process requirements are satisfied if (a) the nonresident de...