next case of the morning is number seventeen one zero three seven three seismic wells versus sinclair companies and we'll hear first from m good morning your honour's morning may please the court my name is tim craddick i'm here today on behalf of seismic wells l l c i plan to mentally this case is about a pair of contracts that were designed to protect seismic from the exact actions that the evidence shown to the jury show that size that sinclair one it's unclear three along with the help of sinclair two and mr matthews as mr seismic explained a trial licensee being able to sell the operations to someone else without seismic having the right first let me ask you a question is there a no assignment clause in the i p a your honor there is not an explicit no simon clause however section twelve point three both make it extremely clear that the agreement is for the benefit of the parties only yes but the but that your client is a very sophisticated fellow as i assume with sinclair companies and a no assignment clause means no assignment and you know that's not rocket science in texas oil and gas why and also isn't there a principle in texas law that oil and gas operating party and the and the assigned of operations regardless of the transfer from one sinclair one to two and two to three alternately there was anticipatory breach and repudiation of that because they offered for sale to a third party after after your client how could you possibly maintain that claim after your client had sold his working interest to bold energy because he still had the right of first refusal to get the operation excuse me he sold that he sold it and then there's the e mail that says and the best thing is you'll get a ride telling bold you'll get a right of first refusal he sold are fundamentally these are all fantastic questions but this case this and i'm a little more than fantastic i think they're totally controlling  the fantastic answer is that fundamentally what happened here was the court granted judgment as a matter of law and so we're here on a sufficiency of the evidence review correct after you had a whole chance to present your case your honor we presented our case and we believe obviously that the district court erred in granting that judgment as a matter of law i know you well you could you could you go on with your argument but speaking for myself alone i think this is one of the most ludicrous cases i've ever seen based on the idea that the working interest was assignable they did two assignments you read the bill of the bill of sale a notice of assignment indicated that there were changes even you know leaving aside all this constructive notice and all that business functionally it's the same group no content no contention at all that the sinclair violated any provision of either agreement other than this you know your hypothetical things so what's important to remember is that in addition to contract claims there are fraud claims and in addition to assignment there are issues with the seismic data with respect to what i believe is probably your honour's probably referring to the record on pages for one to four to four one to six which is this assignment and bill of sale we presented evidence at trial presented evidence at trial that former this assignment was actually different than the form of the agreed to sign it and that the assignment and bill of sale that was presented to him to seismic along with all of the representations made in the replacement participation agreement led seismic to believe that it was dealing with the same already that it had enter into the initial participation agreement with and as a result of that seismic it's also maintained that there are fraud claims here including statutory fraud including secondary liability for statutory fraud and what's important to remember is i think that the question goes to kind of a bottom line why isn't this just some hyper technical thing where you have a corporate reorganization catherine and when i got married became katherina but it's just a reorganization of my life if you will  why isn't that just kind of hyper technical to go after them fraud or any other theory sure one reason it's absolutely not hypertechnical is because sinclair three absolutely put operations up for  sale actually entered into a memorandum of understanding with you know r o g it was actually a deal that was signed for nine hundred dollars for net acre it was ultimately an eight hundred million dollars deal but it didn't they didn't sell right they didn't sell but what happened was when when when seismic wells notice this was online for sale he wrote he wrote sinclair a letter and he said he was right he threatened to sue bold too did me but he didn't say all this in bold is not in th lawsuit i understand that but i mean that would have looked really bad since he had sold his interests out to boulder eppridge specifically representing that they would obtain the right of first refusal i can't speak to why bald is not in this lawsuit  i bet you can't i don't read i wouldn't have asked my client either with respect to any potential lawsuit against old but what did happen is when he asked when he asked them to confirm that they would on of the right  section nine point four they told seismic wells in no uncertain terms that they could transfer and sell the operation certainly without his consent and even without the less or since and that's on page well that's right because when they went on and said because you don't own it anymore well what they said was actually there are several contracts or there are several documents that relate to the replacement participation agreement you have the replacement participation agreement and any of the bill of assignment and the replacement participation agreement explicitly reserves the right that he should have the right of first refusal to regain the operations and what their attorney said is that in the same breath he must have both retained that right and assigned that right in the same deal which frankly simply doesn't make sense and is not supported by some bill of sale that was their bases for claiming that he had no ability to  prohibit them from transfer in those operations the benefit of the bargain one benefit of the bargain here was this right to the return of operations and so i mean fundamentally that's why it matters now we believe that the transfer trade in it is also how does that exist after he has sold his underlying interest in the leaks how does that how does how does he get any benefit of an operating of a participation agreement among working interest owners on the lease when he sold out presumably for fair market value or because he could still be made operat will address this question i will address this question on on reply i'm going to have to go back and look at some my notes are over there yeah well i would appreciate a case citation or two also because it seems to me that if you have an agreement you know you have some kind of working interest agreement between yourself and a fellow working interest phone or and it may reserve whatever it reserves m i reserve the right to audit the books of the operator but once you have sold your interest in that working interest you know you not privilege it privy to that contract anymore unless you've retained something which i didn't i didn't see any indication it's not your contention that boat had an obligation to give you a first choice before assigning the rights son is that right i do not know what size mix contentions are with respect to fold in this case or that same central i mean if you're if you have no claim against boat and boat it's one that permeates out of the tenth circuit it's not out of this circuit but you had a very similar situation where you had a family of companies and their contention was that we are a family of companies why should it matter if we share the data among the family of companies there the tenth circuit agreed with the plaintiffs that it was a violation of the license agreement to that seismic data and actually affirms damages on that because what they found was that they should received an additional license so so i'm trying to answer your question there are two issues there's the seismic  if it were remanded for a new trial we would present our case to the jury on two breaches of contract on our fraud claims and our conspiracy claims and our damnedest would include first on the fraud claims even under statutory fraud you can get actual damages and if you can show actual the underlying damages include that seismic should be paid for a license or from sinclair to and from sinclair three for the use of it seismic data which they never paid for because it was transferred from two  what is your actual damages that actual damages include licensing fees for the seismic data from sinclair two and from sinclair three which is very closely aligned with the facts in the that's correct that that kind of an analogy here that is absolutely that is absolutely analogous to what's happening here you know just like buy started a company and then i started a second company i couldn't share my copy of microsoft office with with the second company they would absolutely tell me that that's a breach the license agreement so that is one measure of damage when you sell data you've got to be sure people are incentivized to buy it and if you can't because they share data w somebody else and get the cost of what that would have cost then everybody will just buy one copy and send it to the world that that's correct your honor you're already sold but we didn't sell it we only license sized sinclair write software and give your honor a license not software in your honor license not software and your honor a license that software the fact that i can license it to multiple people or does it mean tell me you are not aware of their r that's before the sound of gold so right so at the right a sale and those breaches were actually fraudulent we concealed by the replacement participation agreement which as we discussed in our briefing contains numerous misrepresentations regarding the identity of the party is it your position that he and if you sold the rights to the data to pull that you would still have the right to sue for the pre sale breach absolutely absolutely  this court should reverse the district court because we presented sufficient evidence on each element of the claims that are here today we presented sufficient evidence that the initial participation agreement was breached we presented sufficient evidence the jury that sinclair one and sinclair three committed statutory fraud under section twenty seven point zero one we presented sufficient evidence that sinclair to and that mr matthews committed or should be non disclosure and conspiracy so my point is we have a very we have an order here from the district court and the district courts or you'll read let him finish you can finish  the two thousand and fourteen claims and to talk about the core of porter the court mr walter will handle backgrounder judge change i had the same reaction when i first got assigned to this case which is what difference would it make if this was a corporate restructuring the conclusion that i reach is this was a more than eight year after the fact attempt to take advantage of a corporate restructuring and the reason that's obvious is there  very dubious allegations on which the fraud claims are based one is that seismic says it was duped into thinking that it had entered the replacement participation agreement with sinclair one instead of sinclair three even though it says sinclair oil and gas company expressly as the contract i wasn't at a d b a sinclair won it was through two thousand and three your honor it was not ok i mean i just it's a little shocking to me that it's the duty of your the other side to a transaction to go around looking up the texas secretary of state every other day when you know something's a d b a and assume that they're going to run around changing that and it just  i'm just as struggling with that a little bit the idea that this was somehow on seismic to know all this stuff when ya'll are the ones using the same guy to sign the agreement seizing the same names it does seem like which put him on notice that these were completely distinct entities including one that you have in your binder your honor which is an assignment made it perfectly clear that these were distinct and these but then you're kind of trying to have it both ways you started judge change you're right this is just a restructuring but now you're saying it's clear they're distinct entities with their distinct entities then you have this problem of the data transfer the sort of copyright analogy that i perhaps imperfectly claims then they lose on this claim also your honor mr trunk you know admitted at trial this is page ten six eighty of the record that he had no proof that more than a single employee access the doubt so what you have your which is very different than kermit is you have one employee of sinclair one accessing the data you have a corporate restructuring that person mr white became an employee of sinclair three and they're saying just by virtue of him changing  by virtue of and that was your analogy your honor of your last name changing that this is now a breach of the agreement and that somehow sinclair was taking advantage of this seismic data dish later on or there's no evidence of any harm from that what they would have had to establish is that sinclair would have paid for both of these energies to have access to that data there was no evidence of that they did but that's not the question the question is whether seismic would have wanted to be charged would have charged for that said you can't sinclair three can't use it unless you pay me then whether they would accept that's a different question but then you wouldn't have a contract or honor the point is they have the bribe and they're saying i had a contract as you lied to well but that they have no evidence of even intent to defraud in fact counsel admitted if i could just finish this your answer this is your honor at page ten fifty five of the transcript plaintiff's counsel told the trial judge and  i can't rest until i call her and he was referring to miss me hand the company employee who supposedly was the mastermind behind this fraud counsel said i can't rest and on the issue of intent your honor and then he didn't call her before rested so what would a trial judge do when they're told on a claim i have to call a particular witness don't call that would i would never sit through a five day trial and not submit it to the jury so that's what  judge would do which is that two year old is the plaintiff about twenty two times during cross examination so i appreciate trying to gauge the jury and so forth but the point is was it appropriate to grant j m oh well sure there please the court my name is bingeing walther i represent the police like mr hanks said i'm going to be addressing the two thousand and six claims for the statue of limitations and i'll also be addressing why this court should affirm the trial court's j m l well as it relates  to two thousand and four how can you address statute of limitations which is an affirmative defense position your honor is that that was one of the lead arguments in our rule fifty motion the court expressly stated it was for having considered our motion both the oral arguments and the written motion that it was granting our will fifty motion so our position i that it's your burden of proof in your mind then gone well the point is say it was friday lincoln actually euclid statute of limitations that may appear to be all right but then they can rebut that with fraudulent concealment and so you're saying that as a matter of law there's no evidence of fraud dealing concealment is what you're saying yes your honor in the in their i right absolutely and thought at the trial court we presented evidence that one of the early drafts of the initial participation agreement explicitly had no assignment clause in it mr trink you know himself asked us to remove that cause to this licensing issue with respect to the seismic data and the initial participation agreement that the licensing agreement at issue and carom agree explicitly said you can't license this to your subsidiary that's not what our contract had our contracts that you could use the seismic data you couldn't sell trade or license it so and the reason for that is because seismic wells and sinclair were co working interest owners appointed the seismic data sync seismic wells actually gave sinclair one of the free license to the data it didn't assess any value to that data at all as part of the initial agreement and the same thing with boat energy it gave that data to build energy again for free the only value for both of those contracts related to the working interest and not to the seismic data how do we know that that is in our in the record your honor that i actually i don't have the site in front of me right now but i could if you would like i could submit a twenty eight k ever after court thank you ok i want to ask about the court reporter and i will say i was chair of the texas co occasion board for three years was a state court judge which doesn't they don't govern federal court reporters i get that but to me this is shocking and wrong and i'm surprised that charlie even make an issue of this instead of trying to work it out on what came in because if your position is there really isn't any evidence out there then just stipulate to the depositions they said they put on and be done with it why are we even fighting about this the reason that we had an issue  trial we twice had in iraq them because they weren't playing our are counted as the nation's so then we finally got that issue resolved got the clip report and then we reviewed it the next day they played the video turns out they can play the wrong video so we don't find that out in the actually tell us ok but the cool reporter is not recording evidence in the trial i mean if this had happened in a state court that would be something that would subject the court reporter potentially sanctions including potentially losing their license to be a corp order i can tell you that's a very serious thing because there's really nothing else for a court to be doing then reporting what happens in court so regardless of whether you think they were fair to you or you're fair to the fought over the whatever was played was play is there something they could have played that would have made the difference and now there would have been a fact issue but they forgot to play it is that your position our position is that we don't know what was this issue then we would be ok with the court allowing that evidence and the point is that size that was only cited i think it was like five minutes of testimony that it claims is ok so then i don't even know why we're having this debate you should have agreed to the motion to s nt instead of just being angry that there's some mistake in how they played it i don't even i just don't even understand it because to me it's not an answer for the district court just broke their hands and say i don't know always played just say nothing because we know something was pla in terms of the two thousand and six lines for the statute of limitations like i said our position is that size as well as was required to actually present sufficient evidence to support both its fraudulent concealment argument too and the discovery rule to defer the accrue of its client's fraud and breach of contract the two which are the two thousand and six crimes those generally accrue on the day that the alleged fraud or breach is committed so that the only way for those not to have expired in two thousand and ten was if seismic wells could establish that the discovery rule or fraudulent concealment would apply for the discovery rule when it reached this court the size of wells only argued that the discovery rule should apply breach of contract claim and the only claim the only case it cited in support of that was actually judge jones as opinion in the beavers vs metropolitan life case in that case the court actually said the opposite the court said that no texas court has ever applied the discovery rule to a breach of contract client so i think we can set that argument aside that leaves fraudulent concealment seismic wells took the position in its reply brief to this court for the first time that sinclair bears the burden to actually disprove fraudulent concealment the only case that side in support of that wasn't well you well you have to prove that there is no issue as a matter of law so don't worry about it but you still have a heavy burden i'm sorry are they are able to rebut statute of limitations with with by saying there was fraud dealing concealment for purposes of a j m o l don't you have to sinclair actually did fraudulently conceal these claims and to do that and so well they did do that i mean you know well i'm not sure they did it sufficiently but they certainly made those arguments in their br i certainly agree that they did make arguments but i agree that also it was not sufficient if you look at the document that we provided you on the notebooks that's the assignment and bill of sale that corresponded to the replacement agreement that document put seismic wells on notice of its claims early as october twenty fifth two thousand and six the day it signed this is signed and the same date signed the replacement because the patient agreement on the first page of the assignment right at the very top it says that the a side is between seismic wells as the us ignore and sinclair oil and gas company that sinclair three has the sickening then on the second page the last paragraph it has what the parties have been referring to is the clarification provision the first sentence of that provision says for purposes of clarification an acknowledgement reference is made to this certain simon assignment and build sale by him between us ignore that seismic wells and sinclair oil corporation the first day of june two thousand and five that's referencing the initial participation agreement between seismic wells and sinclair one then on the third page at the very top it says sinclair oil corporation on  about march first two thousand and six assigned to sinclair oil and gas company therefore the interest conveyed the first assignment of interest seismic wells the crux of its fraud claims and its way to get around the statute of limitations signed explicitly told seismic wells in reminded seismic wells that sinclair one was the party to the first agreement it informed seismic wells that sinclair one had assigned its interest to sinclair three and it said in the very first paragraph that sinclair three was the contracting party to the replacement agreement that's seismic wells entire case now seismic wells way to dispute this this didn't is it claims it didn't read it it's that i actually read a draft version of this that it never signed and it bought that sinclair one was assigning its interest to itself and then it said when confronted with the clear language of this is simon it said well i didn't bother reading the version that i actually signed well that's not texas law every first year law student learns that you are respond that you are deemed to have read and understood the context of a cause of a contract and that's expression true for a business deal with a deal for more than a million dollars for almost a million dollars so the idea of the date is a matter of seismic wells actually read this isn't that or not what matters is that it could have read it and that it should have read it and had it read it would have known that that the inaccurate recycles that were contained in the replacement agreement were inaccurate and that sinclair three was an actually the contract and party to the replacement agreement its claims that point  seismic wells conceded that it had sold one hundred percent of its interest in that portion of the lease the boat energy and that the correspondence leading up to that sale it clearly stated time and time again that it was including the subsequent right to operate to bold well even if they hadn't explicitly talked about that if you assign your whole interest you assign your whole interest right absolutely i mean you don't because to do otherwise would be splicing up the  judgment before judge cummings yes your honor we did oh i forgot on what basis did he deny it the judge's order was only one sentence long i believe or maybe it was two sentences that it found that there were fact issues at trial seismic wells made several concessions that we believe are dispositive and that was the basis for the rule fifty order specific reserve in their claims as to the data well for the for the data your honor the important thing there is the replacement agreement specifically gave sinclair three the right to use that data ok let me ask you because you quoted that line to us from your notebook and he said their argument is that they didn't read it but actually they also argued that ms me hand statements to them made them think that it was just assigning katherina double naida katherina hands maiden name and that made them think it's the same person as opposed to a new entity which is understandable given that oil and gas was the d b a sinclair one so for was her third day on the job ok but this is all factual i mean this is credibility that this isn't this isn't a game all i'm just saying you you said the argument was we don't read the contract you have to read your contract not actually their argument was ms man made us think it was just katherine a double a you know fixed in her name because she's now married again so the texas case law is clear that you have plaintiffs have a duty to investigate if they have actual knowledge of something that a question but you had a red line thank you very much and for is what did you or did you not say that the reason we didn't know what was in the contract was the degree that is that is incorrect your honor did you say that miss me hand told u should have been i'm not sure the point is they made when he signed the assignment he signed the document they had prior to that made repeated representations that led mr tranquilo to believe that hawkish have an obligation to read it before the the one he read the copy that was the agreed form that would be and in any event he believed as he explained on the record that it was a corrective assignment about and you answer is what i'm hearing you say is he said he didn't read it he didn't read it and that is why he didn't know and it was a million dollar deal as i understand it and he's a sophisticated man in a business that change for sinclair one rather than an actual chance to transfer from sinclair one to three that's based on what me hand had told him that's correct ok he believed it was a cell so it's not a matter of whether you read it it's a matter of what he had his point is if this were an insurance case and he were the policy holder and he said that the insurance agent misrepresented him about what the policy contains he would lose as a matter of law i mean there would be s judgment we'd have no oral argument he could claim fraud as far as the cows come home but he would lose this matter of law so so the difference here is what they're arguing i'm sorry i said that i'm running on time  ok the difference here is they're relying on this particular provision to claim that we had notice right and notice is what's the question of fact they're claiming that we had noticed and that's why the statute of limitation should not be told it's not about any particular obligation under the contract or perform its obligations and a contract is not trying to get out of those obligations what the difference is about notice and additionally will supplement the record with the assignment which was for a non operated working interest in exclude the