Apache Corporation and APA Corporation v. Apollo Exploration, LLC Cogent Exploration, Ltd., Co. And Sellmoco, LLC

CourtCourt of Appeals of Texas
DecidedMay 18, 2023
Docket11-21-00295-CV
StatusPublished

This text of Apache Corporation and APA Corporation v. Apollo Exploration, LLC Cogent Exploration, Ltd., Co. And Sellmoco, LLC (Apache Corporation and APA Corporation v. Apollo Exploration, LLC Cogent Exploration, Ltd., Co. And Sellmoco, LLC) is published on Counsel Stack Legal Research, covering Court of Appeals of Texas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Apache Corporation and APA Corporation v. Apollo Exploration, LLC Cogent Exploration, Ltd., Co. And Sellmoco, LLC, (Tex. Ct. App. 2023).

Opinion

Opinion filed May 18, 2023

In The

Eleventh Court of Appeals __________

No. 11-21-00295-CV __________

APACHE CORPORATION AND APA CORPORATION, Appellants V. APOLLO EXPLORATION, LLC; COGENT EXPLORATION, LTD., CO.; AND SELLMOCO, LLC, Appellees

On Appeal from the 385th District Court Midland County, Texas Trial Court Cause No. CV57872

MEMORANDUM OPINION This is an interlocutory appeal from the denial of a motion to dismiss brought under the Texas Citizens Participation Act (TCPA). See TEX. CIV. PRAC. & REM. CODE ANN. §§ 27.001–.011 (West 2020). In this case, we consider whether a fraudulent transfer claim is “based on, or in response to” Appellants’ exercise of free speech, when the facts supporting the claim were disclosed in a press release that was issued by Appellants. See id. §§ 27.003(a), .005(b). We hold that the claim is based on and in response to the conduct of Appellants in transferring assets, rather than any exercise of free speech in the press release. On that basis, we affirm the trial court’s denial of Appellants’ motion to dismiss under the TCPA. Background Facts This appeal is the latest development in litigation that spans nearly a decade. In 2014, Apollo Exploration, LLC; Cogent Exploration, Ltd., Co.; and SellmoCo, LLC (collectively, Appellees) sued Apache Corporation for breach of a purchase and sale agreement that involved 109 oil and gas leases. As trial approached, the trial court struck all of Appellees’ expert witnesses on damages and rendered a take- nothing judgment in favor of Apache. The trial court also awarded $4,800,000 in attorneys’ fees to Apache. An appeal to this court followed. See Apollo Expl., LLC v. Apache Corp., 631 S.W.3d 502, 514 (Tex. App.—Eastland 2021), rev’d in part, No. 21-0587, 2023 WL 3134243 (Tex. Apr. 28, 2023). We will refer to our prior opinion and the appeal from which it arose as “Apollo I.” As reflected in our case citation to Apollo I, the Texas Supreme Court recently reversed in part our opinion in Apollo I and remanded the case back to us for further proceedings. 2023 WL 3134243, at *18. The press release at the center of the TCPA claim was issued on January 4, 2021, while the appeal of Apollo I was pending in this court. In the press release, Apache announced a reorganization. The reorganization included a transfer of Apache’s assets in Suriname and the Dominican Republic to Appellant APA Corporation. The press release also included a statement from John J. Christmann IV, Apache’s chief executive officer and president. Christmann indicated that the reorganization would “modernize our operating and legal structure” and that the use

2 of a holding company “offers advantages in risk management.” Apache later issued a second press release on March 1, 2021, announcing that the reorganization had been completed. We issued our opinion in Apollo I in June 2021, reversing in part and remanding to the trial court for the determination of several causes of action. 631 S.W.3d at 545. Soon thereafter, on August 17, 2021, Appellees filed the lawsuit against Apache and APA that is the subject of this appeal. The lawsuit, which repeatedly references the January 4 press release in its statement of facts, asserts a cause of action under the Texas Uniform Fraudulent Transfer Act (TUFTA), alleging that the reorganization made it impossible, or at least more difficult, to reach the Suriname and Dominican Republic assets in order to satisfy a judgment against Apache. See TEX. BUS. & COM. CODE ANN. §§ 24.001–.013 (West 2023). Apache and APA answered and filed a motion to dismiss. Although most of the motion to dismiss was focused on a request for dismissal under Rule 91a of the Texas Rules of Civil Procedure, the motion also, in a single paragraph, generally sought relief under the TCPA, indicating that “in attempting to impose liability on Apache for its communications with its shareholders, Plaintiffs are infringing upon Apache’s right to speak freely with its shareholders and the investing public.” See TEX. R. CIV. P. 91a. The trial court heard the motion to dismiss on December 3, 2021. The parties directed the bulk of their attention at the hearing on Appellants’ request for relief under Rule 91a. The trial court denied the motion to dismiss, and this appeal from the TCPA denial followed. See TEX. CIV. PRAC. & REM. CODE ANN. § 51.014(a)(12) (West Supp. 2022).

3 Analysis In their sole issue, Appellants assert that the trial court erred in denying their motion to dismiss under the TCPA. One purpose of the TCPA is to protect citizens from retaliatory lawsuits meant to intimidate or silence them on matters of public concern. Dallas Morning News, Inc. v. Hall, 579 S.W.3d 370, 376 (Tex. 2019); In re Lipsky, 460 S.W.3d 579, 584 (Tex. 2015) (orig. proceeding). The Legislature enacted the TCPA “to safeguard ‘the constitutional rights of persons to petition, speak freely, associate freely, and otherwise participate in government to the maximum extent permitted by law’” while, at the same time, protecting a person’s right “to file meritorious lawsuits for demonstrable injury.” Kinder Morgan SACROC, LP v. Scurry Cnty., 622 S.W.3d 835, 847 (Tex. 2021) (quoting CIV. PRAC. & REM. § 27.002). To effectuate this dual purpose, the TCPA employs a three-step process to determine whether a lawsuit or claim is subject to dismissal. Montelongo v. Abrea, 622 S.W.3d 290, 296 (Tex. 2021). First, the movant must demonstrate by a preponderance of the evidence that a legal action is based on, or in response to, the movant’s exercise of one of three protected rights: the right of free speech, the right to petition, or the right of association. CIV. PRAC. & REM. §§ 27.003(a), .005(b); see also Montelongo, 622 S.W.3d at 296. If the movant makes this showing, the burden shifts to the nonmovant to establish by “clear and specific evidence” a prima facie case for each essential element of the claim in question. CIV. PRAC. & REM. § 27.005(c); Montelongo, 622 S.W.3d at 296. Finally, even if the nonmovant meets that burden, the trial court is required to dismiss the legal action if the movant establishes “an affirmative defense or other grounds on which the moving party is entitled to judgment as a matter of law.” CIV. PRAC. & REM. § 27.005(d).

4 We review de novo the denial of a TCPA motion to dismiss. Rossa v. Mahaffey, 594 S.W.3d 618, 624 (Tex. App.—Eastland 2019, no pet.). Whether the TCPA applies to a particular claim is a question of statutory construction and is also reviewed de novo. Youngkin v. Hines, 546 S.W.3d 675, 680 (Tex. 2018). Did Appellants Preserve the Issue? Appellees contend that Appellants failed to preserve their TCPA issue for appeal because they never mentioned “the issue of whether the fraudulent transfer action was based on or in response to an exercise of the right to free speech” in the trial court.1 A party may not claim that the TCPA applies to a protected right on appeal if they did not also rely upon the same protected right in the trial court. Caliber Oil & Gas, LLC v. Midland Visions 2000, 591 S.W.3d 226, 238 (Tex. App.—Eastland 2019, no pet.); Rossa, 594 S.W.3d at 626. In this case, Appellants devoted only a single paragraph of their motion to dismiss to the TCPA. However, that paragraph alleges, among other things, that Appellees “are infringing upon Apache’s right to speak freely with its shareholders and the investing public.” While this allegation does not track the statutory language word-for-word, it is sufficient to raise the issue of whether Appellants’ protected right to free speech has been affected by the fraudulent transfer claim. See Adams v.

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Apache Corporation and APA Corporation v. Apollo Exploration, LLC Cogent Exploration, Ltd., Co. And Sellmoco, LLC, Counsel Stack Legal Research, https://law.counselstack.com/opinion/apache-corporation-and-apa-corporation-v-apollo-exploration-llc-cogent-texapp-2023.