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Holland v. Mayfield6/3/1999
DATE OF JUDGMENT: 08/09/96
TRIAL JUDGE: HON. W.O. DILLARD
COURT FROM WHICH APPEALED: JONES COUNTY CHANCERY COURT
NATURE OF THE CASE: CIVIL - TORTS - OTHER THAN PERSONAL INJURY AND PROPERTY DAMAGE
DISPOSITION: AFFIRMED
EN BANC.
. Here, investors in oil and gas properties sued the person who solicited their investments alleging fraud. The Chancellor, sitting without a jury, awarded actual and punitive damages. Finding no reversible error, we affirm.
I.
. The Appellees ("Investors") filed their Complaint in the Chancery Court of the Second Judicial District of Jones County against the Appellant ("Holland") on April 10, 1993. The lawsuit involved the Investors' investments in oil and gas properties. The Complaint alleged fraud on the part of Holland in connection with the investments in the Chandeleur Prospect, offshore Louisiana.
. The Chandeleur Prospect consisted of offshore wells, including an operating well, and the opportunity of obtaining some blocks of leases for potential drilling. The wells were located in the Chandeleur Sound area offshore Louisiana.
. The Investors testified that their understanding of the deal from Holland was that the Investors were buying the property at BT Operating Company's ("BT") cost, and that BT and Holland would get a reversionary interest on the back-end, after the Investors recovered their original investments. There were to be no front-end profits paid. The fact that there was no front-end cost built into the purchase price made the Chandeleur Prospect more attractive than other oil and gas deals.
. At some point in 1990, one of the investors did an accounting of the project from BT's books because the Investors had been unable to get information from BT on how the project was going. From the accounting, it appeared that there were some discrepancies between what the Investors had paid into Chandeleur and what had actually been paid by BT for the property. The Investor who did the accounting testified that the Investors did not know exactly what had happened until approximately a year and a half after the accounting. Eventually, the Investors learned that BT had actually paid approximately $2.3 million for Chandeleur, while the Investors had been led to believe the cost was $3.1 million.
. Around that same time, several of the Investors formed a corporation, Chandeleur Limited, for the purpose of taking over and operating the Chandeleur Prospect on behalf of the owners because the Investors felt that BT was not doing a competent job .
. The Chandeleur Prospect was the subject of a federal diversity action in the United States District Court for the Southern District of Texas. That suit was filed by three of the Investors in the case sub judice (J.D. Mayfield, Roy Ward, and Malcolm Campbell) against BT and its principals Roger Evans and Campbell Evans. In that suit against BT, the operator of the Chandeleur Prospect, fraud was also alleged. The Investors never made a claim against Holland in the Texas case.
. Also, BT had filed a lawsuit against the Investors and Holland in Louisiana state court. That case was removed to federal court by the Investors and then transferred to the Texas federal court where the two causes were consolidated. For the sake of brevity, we will refer to these two actions as simply the "Texas case." For a while, Holland was represented by the same attorneys as the Investors, and Chandeleur Limited paid for that representation.
. Holland never appeared in the Texas case. Holland was dismissed from the Texas case sua sponte. On that same d
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