In Re Zenergy, Inc.

968 S.W.2d 1, 1997 Tex. App. LEXIS 6422, 1997 WL 762120
CourtCourt of Appeals of Texas
DecidedDecember 11, 1997
Docket13-97-310-CV
StatusPublished
Cited by35 cases

This text of 968 S.W.2d 1 (In Re Zenergy, Inc.) 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
In Re Zenergy, Inc., 968 S.W.2d 1, 1997 Tex. App. LEXIS 6422, 1997 WL 762120 (Tex. Ct. App. 1997).

Opinion

OPINION

FEDERICO G. HINOJOSA, Jr., Justice.

Relators, Zenergy, Inc., Joe Pool, Aaron Hees, William Davidson, John Stover, and Minter, Joseph & Thornhill, P.C., ask this Court to issue a writ of mandamus ordering respondent, the Honorable Joe B. Evins, Judge of the 206th District Court of Hidalgo County, to withdraw a discovery sanctions order, dated June 3, 1994, and a contempt order, dated May 27, 1997. The real parties in interest are V.F. Neuhaus Properties, Inc. and the V.F. Neuhaus M.D. Trust (collectively “Neuhaus”). We deny relators’ request for a writ of mandamus.

1. BACKGROUND

Neuhaus owns an interest in land known as the Schaleben Lease, located in Hidalgo County. Zenergy, Inc., a Texas corporation, was formed by Aaron Hees and Joe Pool for the purpose of drilling test wells. In June 1991, Zenergy and Neuhaus agreed that Zen-ergy would drill a test well on the property. The terms of the agreement were inscribed in a letter from Neuhaus, dated June 10, 1991, and accepted and executed by Zenergy on June 30, 1991. Under the terms of the letter agreement, Zenergy was to drill a test well on specified acreage by October 1, 1991, in exchange for a 75% working interest in land known as the “Neuhaus acreage.” Neu-haus was to transfer the interest to Zenergy within fifteen days after Zenergy signed the letter agreement. In addition, Neuhaus agreed to provide Zenergy with (1) all drilling and division order title opinions and (2) all surveys and regulatory requirements. The test well was not drilled, however, and Zenergy, Pool, and Hees (collectively “Plaintiffs”) sued Neuhaus for breach of contract as well as violations of the Texas Deceptive Trade Practices — Consumer Protection Act (“DTPA”). 1

Plaintiffs’ petition alleged that Neuhaus breached the contract by falling to assign to Zenergy the 75% working interest in the Neuhaus acreage within fifteen days of the execution of the letter agreement. The petition also alleged that Neuhaus had not provided the required drilling and division order title opinions, surveys, and regulatory approvals. Zenergy claimed that drilling could not commence on the test well because Neu-haus had not abided by the agreement.

Neuhaus responded that under the terms of the letter agreement, it was not required to perform. Specifically, Neuhaus claimed that its duty to transfer the working interest was discharged by impossibility and impracticability of performance because Zenergy had not returned the executed letter agreement to Neuhaus until early August 1991, more than fifteen days after the execution date of June 30,1991. Neuhaus also claimed anticipatory breach because Zenergy had not been able to obtain the investors and financing necessary to drill the well. In addition, Neuhaus counterclaimed for DTPA violations, civil conspiracy, negligent misrepresentation, fraud, and breach of contract. The counterclaim further alleged that Zenergy was the alter ego of Hees and Pool.

2. The DiscoveRy Process

On January 8,1993, Neuhaus filed a notice of intent to take the oral depositions of the plaintiffs. Attached to the notice was a subpoena duces tecum which sought the production of thirty-one categories of documents. Plaintiffs objected to several of the requests. On January 15, 1993, Neuhaus filed a motion to compel, and a hearing was held January 30, 1993. The parties then agreed that certain documents would be produced. Pool’s *5 deposition began on January 20, 1993, and continued periodically over the course of the next several months. During the depositions, Pool repeatedly agreed to produce Zenergjfs records and documentation to support the plaintiffs’ claims. Although some documents were produced, Pool failed to produce Zenergjfs franchise tax reports and evidence supporting the damage claims. On February 3,1993, Neuhaus supplemented its request by letter, seeking among other things, records reflecting the financial condition and net worth of Hees and Pool from August 1989 to February 1993. Neuhaus explained that such documentation was relevant to its amended counterclaim, which included the alter ego allegation. The financial information was not produced.

On March 30,1993, Neuhaus filed a second motion to compel. In this motion, Neuhaus sought production of the financial records of Hees and Pool. After a hearing, the trial court ordered 2 the plaintiffs to produce (1) corporate and individual income tax records for 1989, 1990, 1991, and 1992, and (2) complete bank statements for every month since the date of Zenergy’s incorporation. Production was to occur in Austin, Texas at the offices of Minter, Joseph & Thornhill, P.C. The record contains no evidence that Neu-haus ever availed itself of such production or that the records were actually available.

Neuhaus served its First Set of Interrogatories on the plaintiffs on April 4, 1993. Neuhaus received answers on May 17, 1993, and supplemental answers on June 29, July 7, and July 14,1993. Hees objected to interrogatories 11, 12, and 13, and Pool and Zen-ergy objected to interrogatories 9,10, and 11. On June 8, 1993, Neuhaus filed a third motion to compel claiming that the plaintiffs’ answers were incomplete, evasive, and deceptive. In response, the plaintiffs filed a motion for protective order (1) asserting that the motion to compel was without merit because all interrogatories had been fully answered, (2) contending that Neuhaus had filed the motion to compel solely for the purposes of harassment and annoyance, and (3) asking $2,000.00 as sanctions. During the hearing on the motion to compel, held on July 15,1993, John Stover represented to the trial court that, with the supplemental answers filed on July 14th, all of Neuhaus’s discovery requests had been satisfied. Neu-haus was provided a copy of the supplemental answers at the hearing and later learned from a private investigator that Stover’s representations that all discovery requests had been satisfied were false. After the hearing, the trial court signed an order compelling plaintiffs:

1) to exercise reasonable diligence and good faith to provide the addresses and phone numbers for Bob Ellis, Bob Bur-zack, Rod McCullough, Gail Wood, Doug Anderson, and Reynell Ewald;
2) to exercise reasonable diligence and good faith to provide the identity of all legal proceedings in which they had been involved during the last ten years, or in which they were currently involved, including the cause number, the parties involved, and the court;
3) to provide complete answers for specified interrogatories (those for which there were objections);
4) to itemize all damages, noting the specific dollar amount next to each category of damages; and
5) to provide a preliminary breakdown and calculations for each element of damage claimed.

On June 30, 1993, the plaintiffs filed a motion for partial summary judgment on Neuhaus’s counterclaim. The motion asserted that summary judgment was proper because Neuhaus was not a “consumer” as defined by the DTPA. The motion also alleged that Neuhaus had no actionable claim for negligent representation and no proof of the elements of common law fraud or alter ego.

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Cite This Page — Counsel Stack

Bluebook (online)
968 S.W.2d 1, 1997 Tex. App. LEXIS 6422, 1997 WL 762120, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-zenergy-inc-texapp-1997.