NO. 04-12-00630- CV

T HE H UFF E NERGY F UND

, L.P., WRH E NERGY P ARTNERS

, L.L.C.,

W ILLIAM R. “B ILL ” H UFF

, R ICK D’A NGELO

, AND

R ILEY -H UFF E NERGY G ROUP

, LLC,

A PPELLANTS

,

vs.

L ONGVIEW E NERGY C OMPANY

,

A PPELLEE

.

APPELLANTS’ JOINT ORAL ARGUMENT BENCH BOOK

FOR EN BANC ARGUMENT JUNE 3, 2015

C ROFTS & C ALLAWAY

, P.C.

Sharon E. Callaway

sharonc@ccjappellate.com

State Bar No. 05900200

613 N.W. Loop 410 , Suite 800

San Antonio, Texas 78216 -5509

B ROCK P ERSON G UERRA R EYNA

, P.C.

Ricardo R. Reyna

rreyna@bpgrlaw.com

State Bar No. 16794845

17339 Redland Road

San Antonio, Texas 78247 -2302

P AMELA S TANTON B ARON

psbaron@baroncounsel.com

State Bar No. 01797100

Post Office Box 5573

Austin, Texas 78763

D ARYL L. M OORE

, P.C.

Daryl L. Moore

daryl@heightslaw.com

State Bar No. 14324720

1005 Heights Boulevard

Houston, Texas 77008 B AKER B OTTS L

. L

. P

. Thomas R. Phillips

tom.phillips@bakerbotts.com

State Bar No. 00000102

98 San Jacinto Boulevard, Suite 1500

Austin, Texas 78701 -4078

F ULBRIGHT & J AWORSKI L.L.P.

Dean V. Fleming

dean.fleming@nortonro sefulbright.com

State Bar No. 07122100

Michael W. O’Donnell

mike.odonnell@nortonrosefulbright.com

State Bar No. 24002705

Jeffrey A. Webb

jeff.webb@nortonrosefulbright.com

State Bar No. 24053544

300 Convent Street, Suite 2100

San Antonio, Texas 78205 ACCEPTED

04-12-00630-CV

FOURTH COURT OF APPEALS

SAN ANTONIO, TEXAS

6/1/2015 3:48:01 PM

KEITH HOTTLE

CLERK1 T ABLE OF C ONTENTS

Tab 1 Longview’s “Hypothetical” Plan

Tab 2 Riley Already Knew and Planned to Buy From Ford and Wyldfire

Tab 3 Longview’s CEO: Ford Selling to Anyone

Tab 4 Longview’s Pearce: Plenty of Acreage

Tab 5 Lober Line drawn in red onto Fly Like an Eagle public map

Tab 6 Longview Failed to Plead a Separate Competition Claim

Tab 6 Maximum Award Under the Jury Verdict is $10.5 Million

Tab 8 The Judgment Ignores the Jury Verdict

Tab 9 Longview’s Counsel: Jury Charge re Production Costs

Tab 10 Long view’s Counsel: Closing Argument re Production Costs

Tab 11 Restatement (Third) of Restitution and Unjust Enrichment § 55

Tab 12 Texas Rule of Civil Procedure 279

Tab 13 Defendants’ Objection to Question 52 C ERTIFICATE OF S ERVICE

I hereby certify tha t, on June 1, 201 5 , a true and correct copy of the Joint

Oral Argument Bench Book has been served upon the following counsel of record

by e

- service :

G ARDERE W YNNE S EWELL LLP

Craig B. Florence

Randy D. Gordon

Stacy R. Obenhaus

Rachel Kingrey

1601 Elm Street , Suite 3000

Dallas, Texas 75201 W ATTS G UERRA LLP

Mikal C. Watts

Francisco Guerra IV

Four Dominion Drive

Building 3, Suite 100

San Antonio, Texas 78257

/ s / Thomas R. Phillips

Thomas Phillips

### Longview’s “Hypothetical” Plan

(36 RR PX

- 369)

• Acquire 21

, 000 acres in 7 prospects ( 3

, 000 acres each) for

$ 42 million

• 5 prospects to be in the gas

- condensate window and 2 in

the dry

- gas window

• Joint venture with industry partner reducing interest by

50 % (yielding 10

, 500 net acres)

• Drill one well per prospect at a rate of 2 wells per quarter

at cost of $ 5

. 5 million per well

### Riley Already Knew and Planned to Buy From

Ford and Wyldfire (35 RR PX

- 65)

In a December 18, 2009 email, D’Angelo asked Riley:

Have you heard of a broker out of Ft

. Worth called Wildfire

... .. or a Pat

Goodin

... ?



### Riley immediately responded:

Pat Goodin is in Houston

. Worked on Edwards play in Bastrop

and Caldwell County Texas

. Don’t think he is associated with

Wildfire

. Wildfire is Tamara Ford out of Pala Pinto County

. Two

counties west of Tarrant County

. She has buyers on the ground is

spending some of her own money she is the real deal

. Wildfire is

the group we would use to buy acreage when we get to that point

.

### Longview’s CEO: Ford Selling to Anyone

(29 RR 140)

Q Based on your understanding in late 2009

,

was Ms

. Ford trying to broker this land to anyone who was

willing to pay for it?

A Yes

.

### Longview’s Pearce: Plenty of Acreage

(19 RR 21)

Q Okay

. So if you could

-- is it fair to say

that there’s plenty of acreage out there for Longview’s plan ?

A Yes

.

Q And even if we assume for the moment, for the

sake of argument, that not all that acreage was there because

of Riley

- Huff or some other entity bought it

, there’s plenty of

acres to purchase ?

A But it was changing daily, but at that point in

time

, Tamara Ford suggested that there was plenty of acreage

to be purchased in those counties

.Longview Failed to Plead a Separate Competition Claim

(5 CR 1865)

III.**~lailils**

A. Breach of Fiduci

_ ary Duty/Usurpation of Corporate Opportunity

(Against Huff and D' Angelo)

55

. D'Angelo and Huff owe Longview a duty of loyalty

.

56

. Longview was financially able to**~xploit** the Eagle Ford opportunity.

57

. The Eagle Ford**opportunity~ wi~n.i** **n** Longview's li_ne ofbw;

_ i1_1ess.

58

. Longview had an interest or**~xpectancy** in the Eagle Ford opportunity.

59. By diverting the Eagle Ford opportunity to themselves, D' Angelo and Huff place

. d

themselves in a position of conflict ot competition with Longview.

60. D' Angelo and HUff**br~ached** their fidueiary dut

_ ies to Longview by usurping the

Eagle Ford opportunity and

. misu.sing**proprie~** i

_ nfonnation supplied by Longview i

. n re

· gard t(l

the Eagle Ford

.

61

. D' Angelo a;nd Huff**act~** with m

_ alice

_.

62. D' An:gel() and Huff's breaches of duty and usurpation of Longview's opportunity**proxi m~tely**  caused L.Qngvi

_ ew injucy and 4amages

.

### Maximum Award Under The Jury Verdict

is $10.5 Million

$42,000,000

Property Value

$24,500,000

Property Cost $127,000,000

Past

- Production Costs $120,000,000

Past

- Production

Revenues

$17,500,000 (

- $7,o00,000)

$10,500,000 Net Profit

### The Judgment Ignores The Jury Verdict

$42,000,000

Property Value

$24,500,000

Property Cost $127,000,000

Past

- Production Costs $120,000,000

Past

- Production

Revenues

(

- $24,500,000) $120,o00,000

$95,500,000 Award X



# X

### Longview’s Counsel: Jury Charge re Production Costs

( 32 RR67)

MS

. CALLAWAY : The Huff Defendants object to

Question Number 8 for the following reasons : First

, the

valuation should be based on the net of production cost and

expenses, including taxes

. . . .

MR

. WOHLFORD : I point out that that is taken into

account by Question 9

.

### Longview’s Counsel: Closing Argument re

Production Costs ( 33 RR 42

- 43)

MR

. WATTS : What did Riley

- Huff Energy Group pay to

develop the assets it acquired? We've got that answer as well

.

Basically, you would add the drilling and completion, add it to

the operating expenses for the leases

, and that would be

$ 261

, 850

, 000

. So you would write in 261

. 8

.Restatement (Third ) of Restitution and Unjust Enrichment § 55

If a defendant is unjustly enriched by the acquisition of title to identifiable property at the

expense of the claimant or in violation of the claimant's rights, the defendant may be declared

a constructive trustee, for the benefit of the claimant, of the property in question and its

traceable product

.

The obligation of a constructive trustee is to surrender the constructive trust property to the

claimant, on such conditions as the court may direct

.

_____________________________________________________________ Comments

g

. Requirements of constructive trust : identification and tracing

.

Constructive trust permits the claimant to assert ownership of (i) specifically identifiable

property for which the defendant is liable in restitution or (ii) its traceable product by the

rules of §§ 58

- 59

.

A claimant who can show unjust enrichment, but who cannot identify such

property in the hands of the defendant, is not entitled to the remedy of

constructive trust

.

This fundamental limitation

, commonly referred to as the “tracing requirement,”

applies in one form or another to all the principal means of specific relief in restitution

(constructive trust, equitable lien, subrogation)

.

### Texas Rules of Civil Procedure Rule 279

Omissions From the Charge

Upon appeal all independent grounds of recovery or of defense not conclusively established under the evidence and no element of which is submitted or requested are waived.

When a ground of recovery or defense consists of more than one element, if one or more of such elements necessary to sustain such ground of recovery or defense, and necessarily referable thereto, are submitted to and found by the jury, and one or more of such elements

are omitted from the charge, without request or objection

, and

there is factually sufficient evidence to support a finding thereon,

the trial court, at the request of either party, may after notice and hearing and at any time before the judgment is rendered, make and file

written findings on such omitted element or elements in support of the judgment

.

If no such written findings are made, such omitted element or elements

shall be deemed found by the court in such manner as to support the judgment

.

## Defendants ’ Objection to Question 5

(32 RR 62

- 63)

There is no identifiable X property here that belonged

to Longview and which was taken from Longview by

Huff or D’Angelo and placed under the control of Riley

Huff

. . . .

Longview’s claim for a constructive trust fails because

it cannot trace by strict proof or otherwise something

misappropriated from it to an identifiable res

.