DeJoria v. Maghreb Petroleum Exploration S.A.

38 F. Supp. 3d 805, 2014 WL 4065614, 2014 U.S. Dist. LEXIS 116293
CourtDistrict Court, W.D. Texas
DecidedAugust 13, 2014
DocketCivil Action No. 1:13-CV-654-JRN
StatusPublished

This text of 38 F. Supp. 3d 805 (DeJoria v. Maghreb Petroleum Exploration S.A.) is published on Counsel Stack Legal Research, covering District Court, W.D. Texas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
DeJoria v. Maghreb Petroleum Exploration S.A., 38 F. Supp. 3d 805, 2014 WL 4065614, 2014 U.S. Dist. LEXIS 116293 (W.D. Tex. 2014).

Opinion

ORDER

JAMES R. NOWLIN, District Judge.

Before the Court are John Paul DeJoria’s (“DeJoria”) Motion for Nonrecognition of Foreign Judgment (Dkt. No. 25); DeJoria’s Memorandum in Support of his Motion for Non-Recognition (Dkt. No. 30); Maghreb Petroleum Exploration, S.A., Mideast Fund for Morocco Limited’s (“MPE/MFM”) Response in Opposition to DeJoria’s Motion for Non-Recognition (Dkt. No. 37); and MPE/MFM’s Sur-Reply in Opposition to Motion and in further support of Recognition and Enforcement of the Morocco Court Judgment. (Dkt. No. 43).

The parties in this case are former partners in a Moroccan oil venture. In 2002, MPE/MFM filed suit in Morocco against seven of its former partners, including De-Joria, alleging that DeJoria and his fellow defendants fraudulently represented the value of their company to induce MPE/ MFM to invest in it, as well as alleging that DeJoria and the other named defendants mismanaged the company. On December 31, 2009, a court in Morocco entered judgment in favor of Defendant/ Counterclaim Plaintiffs MPE/MFM and against DeJoria and one other person for an amount approximately equaling approximately $122.9 million.

In the instant case, the parties have, in essence, filed dueling motions for declaratory judgment. DeJoria argues that Texas law mandates non-enforcement of the Moroccan court judgment and requests that the Court therefore grant its motion for non-recognition of the Moroccan Court’s judgment. MPE/MFM counters that Texas law supports enforcement of the Moroccan court’s judgment and correspondingly requests that the Court enter judgment in favor of MPE/MFM.

For reasons set out in detail below, the Court finds that the Texas Uniform Foreign Country Money Judgments Recognition Act proscribes the Court from enforcing the Moroccan Court’s December 2009 judgment against DeJoria. As such, the Court GRANTS DeJoria’s Motion for Non-Recognition. (Dkt. No. 25).

I. OVERVIEW/ PROCEDURAL HISTORY

Plaintiff and Counterclaim Defendant is John Paul DeJoria (“DeJoria”). A resident of Austin, DeJoria is an extremely successful entrepreneur who co-founded John Paul Mitchell hair products, the Patron Spirit Company, and the House of Blues nightclub chain. His involvement in this case, however, stems from his relationship with a company called Skidmore Energy, Between 1998 and 2001, DeJoria invested in an American company called Skidmore Energy, Inc. (“Skidmore”) in order to fund an oil exploration and technology project that Skidmore was pursuing in Morocco. (Dkt. No. 30, Ex. G).

In order to carry on its business in Morocco, Skidmore formed and capitalized a Moroccan corporation called Lone Star Energy Corporation (“Lone Star”) in order to develop energy resources in Moroc[808]*808co.1 (Dkt. No. 37, Ex. X-10). The new entity would focus on developing energy resources in Morocco. Under Moroccan law, Moroccan corporations require a “local” partner/shareholder. In Lone Star’s case, the local partner/shareholder was Mediholding, S.A., which is owned by Prince Moulay Abdallah Aloaoui of Morocco (King Mohammed Vi’s first cousin). (Dkt. No. 30, Ex. J-A).

In March of 2000, Lone Star entered into an “Investment Agreement” with the Kingdom of Morocco in which Lone Star agreed to invest in hydrocarbon exploration in Morocco in return for obtaining mineral rights concessions and other benefits from Morocco. In that agreement, Lone Star agreed to drill at least three exploration wells in Morocco and invest roughly $150 million to explore hydrocarbons in Morocco. (Dkt. No. 6, Ex. 1).

On June 20, 2000, DeJoria and his business partner, Michael Gustin, attended a White House dinner honoring King Mohammed VI. Less than a month later, on July 8, 2000, DeJoria traveled to Morocco and personally met with King Mohammed VI, Prince Moulay Alaoui, and Mohammed Benslimane (brother-in-law of Prince Moulay Hicham). (Dkt. No. 30, Ex. J-A). At the meeting, the men discussed the need for Lone Star to secure more funding to support its rapidly expanding drilling projects. (Id., Ex. G at ¶ 3). At that meeting, DeJoria claims that the King assured him that he would line up investors for Lone Star and that funding would not be an issue for the company going forward. (Id.).

Sure enough, in early August of 2000, a Lichtenstein based company called Armadillo Holdings2 approached Lone Star and expressed an interest in investing in the company. During the negotiations the followed, Skidmore represented to the potential investors that it had (up until that point) invested roughly $27.5 million in Lone Star. (Dkt. No. 6, Ex. 1). Skidmore also estimated that Lone Star’s conservative market value was around $175.75 million. (Id.). Based on these representations, Armadillo/MFM agreed to invest $13.5 million in Lone Star in exchange for 50% of Skidmore shares and 50% of “all assets, including exploration licenses, technology licenses, SBK# 1 well and lease, all inventories and supplies, etc.” (Id.).

On August 20, 2000, King Mohammed gave a nationally televised speech during which he announced the discovery of what he described as “copious and high quality oil” in Morocco. (Dkt. No. 30, Ex. I. 3). Three days later, on August 23, 2000, the then Moroccan energy minister, Yousesef Tahiri, traveled to the site of the “discovery” and—with DeJoria and Gustin at his side—held a press conference during which he exclaimed that the oil discovery was such that it was expected to yield enough oil to supply the Kingdom for roughly 30 years. (Id.).

The King’s announcement was huge news in Morocco. Located on the northwestern tip of the African continent, the . Kingdom of Morocco sits next to some of Africa’s largest oil and gas producing nations. Yet while its neighbors on the African coast have emerged as major producers of energy, Morocco has not discovered a reliable domestic source of oil and gas. As a result, the country imports about 95 percent of its energy needs, leaving the nation vulnerable to the ebbs and flows of [809]*809the international energy markets. The King’s remarks seemed to presage the end of Morocco’s longstanding energy insecurity, a prospect that so excited Moroccan traders that the Moroccan stock market jumped 5% following the King’s announcement. (Id).

There was only one problem. There was no oil—or not very much of it, anyway. In the end, Morocco’s natural resources proved to be less plentiful than the King suggested, a reality which adversely affected both the King’s credibility and Lone Star’s long term business prospects. (Id, Ex. 1-8). By the summer of 2001, it had become clear that Lone Star would require an infusion of additional capital in order to stay afloat.

This turn of events led the partnership between MFM and Skidmore to break down. MFM and its partners became convinced that Gustin and DeJoria were culpable for the problems at Lone Star. Meanwhile, both DeJoria and Gustin fled Morocco for good. DeJoria claims that he and Gustin’s lives would have been in danger had either stayed in or traveled to Morocco. (Id, Ex. G at ¶¶6-7). MFM attributes DeJoria and Gustin’s absence to a conscious decision to flee the jurisdiction in order to avoid having to answer for Skidmore’s fraudulent representations.

Whatever actually motivated the men to get out of Dodge, .neither Dejoria nor Gustin attended the May 2001 meeting of Lone Star’s Board of Directors in Morocco. (Id, Ex. J).

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Bluebook (online)
38 F. Supp. 3d 805, 2014 WL 4065614, 2014 U.S. Dist. LEXIS 116293, Counsel Stack Legal Research, https://law.counselstack.com/opinion/dejoria-v-maghreb-petroleum-exploration-sa-txwd-2014.