Carlton Energy Group, LLC v. Gene E. Phillips, Individually and D/B/A Phillips Oil Interests, LLC, Eurenergy Resources Corporation, Syntek West, Inc., and Cabeltel International Corporation

Procedural entryThis page is a short order in Carlton Energy Group, LLC v. Gene E. Phillips, Individually and D/B/A Phillips Oil Interests, LLC, Eurenergy Resources Corporation, Syntek West, Inc., and Cabeltel International Corporation. Read the opinion of the Court — 535 S.W.3d 542 →

Court of Appeals of Texas·Decided December 23, 2015·No. 01-09-00997-CV·Published

Opinion

ACCEPTED 01-09-00997-CV FIRST COURT OF APPEALS HOUSTON, TEXAS 12/23/2015 5:26:47 PM CHRISTOPHER PRINE CLERK

NO. 01-09-00997-CV ______________________________________________________________ FILED IN IN THE COURT OF APPEALS 1st COURT OF APPEALS HOUSTON, TEXAS FOR THE FIRST JUDICIAL DISTRICT OF TEXAS 12/23/2015 5:26:47 PM AT HOUSTON CHRISTOPHER A. PRINE ______________________________________________________________ Clerk

Carlton Energy Group, LLC,

Appellant/Cross-Appellee, v.

Gene E. Phillips, Individually and d/b/a Phillips Oil Interests, LLC, et al.,

Appellees/Cross-Appellants. ______________________________________________________________ ON REMAND FROM THE SUPREME COURT OF TEXAS CAUSE NUMBER 12-0255

OPPOSED MOTION FOR LEAVE TO FILE SUPPLEMENTAL BRIEFING

Appellants, Gene E. Phillips, individually and d/b/a Phillips Oil

Interests, LLC; EurEnergy Resources Corporation, f/k/a EurEnergy

Resources, LLC; Syntek West, Inc.; and CabelTel International Corporation

n/k/a New Concept Energy, Inc. herein collectively referred to herein as

“Movants” or “Phillips”), respectfully request leave to file supplemental

briefing following remand of the cause to this Court by the Texas Supreme

Court. In support of their motion, Movants show as follows:

-1- I. Background Movants acknowledge the Court’s familiarity with the parties’

arguments and authorities as set forth in briefs filed with this Court both

before and after oral argument on February 11, 2011. Although both parties

had appealed the trial court’s judgment to this Court, only Movants sought

review in the Supreme Court of Texas. The Supreme Court accepted review

and issued a unanimous opinion on May 8, 2015. Among other holdings, the

Supreme Court held that “[n]othing in the evidence supports the jury's $66.5

million finding” or Carlton’s alternative “gas-in-the-ground” valuation of $38

million. Slip Op. at 23, 2015 WL 2148591, at *11. The Supreme Court went

on to conclude, however, that evidence of what Phillips and other investors

paid or were “willing to pay” for “the very interest at issue” was “some

evidence to support the verdict.” Slip Op. at 25; 2015 WL 2148591, at *11.

The Court thus remanded the case to this Court “for further proceedings in

accordance with this Court’s opinion.” Mandate of Supreme Court,

December 22, 2015, at 1.

II. Argument and Authorities A brief may be amended or supplemented whenever justice requires, on

whatever reasonable terms the court may prescribe. Tex. R. App. P. 38.7.

This motion for leave is not sought for the purpose of delay, but to allow the

-2- Movants an opportunity to address fully and completely the issues remanded

to this Court for further consideration in light of the Supreme Court’s

decision. On this record, justice requires that supplemental briefing on

remand be permitted.

A. The Supreme Court contemplated supplemental briefing on remand. In remanding this case for further proceedings, the Supreme Court

stated that “Phillips is entitled to argue that the jury’s verdict was against the

great weight and preponderance of the evidence,” Slip Op. at 25, 2015 WL

2148951, at *11, and that Movants’ “argu[ment] that the evidence is factually

insufficient to support the judgment . . . may be raised on remand,” Slip Op.

at 26, 2015 WL 2148951, at *12. The Supreme Court’s pronouncement that

Movants are entitled to raise certain issues and argue them to this Court

certainly contemplates more than a cold reliance on merits briefs filed more

than five years ago. Indeed, further briefing is essential to allow the parties to

provide their arguments about the effect of the Supreme Court’s decision.

B. This Court may lack the constitutional authority to conduct a factual sufficiency review. Further briefing is also needed because the disposition by the Supreme

Court raises concerns about the constitutionality of a factual sufficiency re-

view by this Court. The Supreme Court rejected Carlton’s gas-in-the-ground

-3- evidence, the only theory that would support the jury’s $66.5 million verdict,

as “completely conjectural.” Slip Op. at 22, 2015 WL 2148951, at *11.

Nothing in the jury’s verdict indicated that it even considered, much less cred-

ited, the market valuation evidence which the Supreme Court held to be

“some evidence.” Thus, it is logically impossible for this Court, on this rec-

ord, to perform its constitutional obligation to “examine all the evidence in

the record to determine whether sufficient evidence supports the damage

award, remitting only if some portion is so factually insufficient or against the

great weight and preponderance of the evidence as to be manifestly unjust,”

Pope v. Moore, 711 S.W.2d 622, 624 (Tex. 1986) (emphasis added). If all the

evidence supporting the jury’s verdict as rendered is disregarded, as the Su-

preme Court has directed, the only way for this Court to devise a judgment is

to act as the “sole judges of the credibility of the witnesses and the weight to

be given their testimony.” See Tex. R. Civ. P. 226a.

The Supreme Court has frequently reminded the bench and bar that

“[i]n conducting its factual sufficiency review an appellate court is not to sub-

stitute its judgment for that of the jury.” Barker v. Eckman, 213 S.W.3d 306,

314 (Tex. 2006). As Justice W. St. John Garwood observed long ago, “a

court of civil appeals has no power to find facts. It may only ‘unfind’ facts

which a jury or trial judge has improperly found.” W. St. John Garwood, The

-4- Question of Insufficient Evidence on Appeal, 30 TEX. L. REV. 803, 813-14

(1952). Whether this Court were to pick one of the numbers suggested by the

Supreme Court—$31,160,000, $5,193,333.33, or $60,000, Slip Op. at 25,

2015 WL 2148951, at *6—or some other number that might find support in

the record, it would be making a factual determination in the first instance,

which is beyond the Court’s authority.

These concerns did not arise until the Supreme Court rendered its

judgment and issued its opinion, and hence this issue was not briefed by

either party in any court prior to that date.1 Although the Court ultimately

denied the motion one day before it lost constitutional jurisdiction over the

case, see TEX. CONST. art. V, § 31(d), it made no ruling on the constitutional

question. This Court must therefore, in the first instance, make its own

determination about its constitutional power to proceed. After all, this Court

retains its own independent discretion, either before or after conducting a

factual sufficiency review, to remand to the trial court for a new trial. See ERI

Consulting Eng’rs v. Swinnea, 318 S.W.3d 867, 880 (Tex. 2010).

1 Before the Supreme Court rendered its judgment, asserting any error based on an assumption that the Court would reach the result that it did would have been premature, if not presumptuous. As the Court explained in Bunton v. Bentley, 153 S.W.3d 50, 53 (Tex. 2004), “[a] complaint that arises from the court of appeals’ judgment . . . may be raised either in a motion for rehearing in the court of appeals or in a petition for review in this Court.” (citing Larsen v.

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