Sundance Energy, Inc. v. NRP Oil & Gas LLP, 2019 Tex. App. LEXIS 7223 (Tex. App.—Houston [1st Dist.] Aug. 15, 2019, pet. filed)
This case out of the Houston First Court of Appeals involves a breach of retained liabilities provisions in a purchase and sale agreement, focusing on the legal and factual sufficiency of the jury’s damages award in light of its alleged failure to account for the seller’s evidence of an offset, whether the attorneys’ fees awarded by the trial court were reasonable and necessary, and whether it was an error for the court to admit evidence of attorneys’ fees in light of untimely disclosures.
Sundance and NRP entered into a purchase and sale agreement (PSA), under which Sundance agreed to sell to NRP all of Sundance’s interests in oil and gas lease and wells in three counties in North Dakota. The parties agreed to a purchase price of approximately $35 Million, and Sundance agreed to retain certain pre-sale liabilities, including joint interest billings (JIBs) attributable to periods of time prior to the effective date of the sale. Before and after the sale, NRP received JIBs totaling $146,000 from operators. Sundance agreed those costs were retained liabilities under the PSA, and reimbursed NRP the full amount. NRP subsequently received additional JIBs totaling approximately $900,000 attributable to ownership before the effective date of the sale. Sundance refused to reimburse NRP for those additional JIBs, and this lawsuit followed.
Following a trial, the jury found that Sundance failed to comply with the PSA and awarded NRP nearly $1 Million in economic damages. The jury also answered a question in the jury indicating it determined Sundance was not entitled to any offsets. The parties agreed to try attorney’s fees to the bench. Sundance filed objections claiming NRP failed to properly disclose its witnesses and evidence for attorney’s fees. The court granted two resets to allow NRP time to remedy the issue, and the attorney’s fees issues were tried to the bench nearly six months after the initial trial had begun. The court awarded NRP attorney’s fees in the amount of $396,007, $50,000 for appeal to an intermediate appellate court, and $50,000 for appeal to the Texas Supreme Court.
On appeal, Sundance challenged only the jury’s damages award in light of its alleged failure to “account for uncontroverted evidence” of an offset, and the trial court’s award of reasonable attorney’s fees in light of untimely disclosed evidence and Sundance’s arguments that the evidence was legally and factually insufficient to support the award.