Pearl Energy Investment Management, LLC, Pearl Energy Investments, L.P., William Quinn, and Avad Energy Partners, LLC v. Gravitas Resources Corporation and Alan Pinto

CourtCourt of Appeals of Texas
DecidedAugust 7, 2019
Docket05-18-01012-CV
StatusPublished

This text of Pearl Energy Investment Management, LLC, Pearl Energy Investments, L.P., William Quinn, and Avad Energy Partners, LLC v. Gravitas Resources Corporation and Alan Pinto (Pearl Energy Investment Management, LLC, Pearl Energy Investments, L.P., William Quinn, and Avad Energy Partners, LLC v. Gravitas Resources Corporation and Alan Pinto) 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
Pearl Energy Investment Management, LLC, Pearl Energy Investments, L.P., William Quinn, and Avad Energy Partners, LLC v. Gravitas Resources Corporation and Alan Pinto, (Tex. Ct. App. 2019).

Opinion

AFFIRM; and Opinion Filed August 7, 2019.

In The Court of Appeals Fifth District of Texas at Dallas No. 05-18-01012-CV

PEARL ENERGY INVESTMENT MANAGEMENT, LLC, PEARL ENERGY INVESTMENTS, L.P., WILLIAM QUINN, AND AVAD ENERGY PARTNERS, LLC, Appellants V. GRAVITAS RESOURCES CORPORATION AND ALAN PINTO, Appellees

On Appeal from the 191st Judicial District Court Dallas County, Texas Trial Court Cause No. DC-18-03007

MEMORANDUM OPINION Before Justices Brown, Schenck, and Pedersen, III Opinion by Justice Brown Appellees Gravitas Resources Corporation (Gravitas) and Alan Pinto sued appellants Pearl

Energy Investment Management, LLC (Pearl Management), Pearl Energy Investments L.P. (Pearl

Fund), and William Quinn (together, the Pearl defendants), and AVAD Energy Partners, LLC

(AVAD) in this dispute concerning the purchase of oil and natural gas assets in Utah. Appellants

filed motions to dismiss appellees’ claims pursuant to the Texas Citizens Participation Act, TEX.

CIV. PRAC. & REM. CODE ANN. §§ 27.001–.011 (the TCPA), which the trial court denied. In eleven

issues,1 appellants contend the trial court erred in denying their motions and not awarding them

attorneys’ fees, costs, and sanctions because (1) appellees’ claims are based on, related to, or in

1 The Pearl defendants together filed a motion to dismiss and raise seven issues on appeal; AVAD filed a separate motion to dismiss and raises four issues on appeal. response to appellants’ TCPA rights of association and free speech, (2) appellees did not establish

the TCPA’s “commercial speech” exemption applied to its claims against Pearl Management and

Pearl Fund; (3) appellees did not provide clear and specific evidence of a prima facie case for each

element of each of its claims; and (4) AVAD proved its independent discovery defense by a

preponderance of the evidence. We conclude appellants failed to carry their burden of establishing

the TCPA applies to appellees’ claims. Accordingly, we affirm the denial of appellants’ motions

to dismiss.

BACKGROUND

Gravitas is an oil and natural gas production corporation. Pearl Management, founded by

Quinn, is a private equity firm with a focus on oil and gas investments. Pearl Fund is an investment

fund established by Pearl Management, and AVAD is a Pearl Management portfolio company.

Quinn also is the founder, partner, and/or manager of Pearl Fund and sits on AVAD’s board of

managers. The following facts are drawn from appellees’ petition.

Gravitas spent years evaluating and attempting to purchase oil and natural gas assets in

Utah’s Helper and Drunkards Wash fields (the “Property”) from Andarko Petroleum Corporation

(Andarko). Working in natural gas fields adjacent to the Property, Gravitas Chief Executive

Officer Jeffrey Clarke and Operations Vice President Douglas Endsley gained an “understanding

of the Property’s underlying natural gas field, reserve potential, operating-cost structure, and

productive capacity.” While assessing how to purchase the Property and other assets in the area,

Gravitas learned the Property sat on substantial, underutilized natural gas reserves. It pieced

together public and non-public data related to acreage abutting the Helper field and within the

Drunkards Wash field that ConocoPhillips attempted to auction and confirmed the Property had

significant additional reserves that could be extracted if approved, but undrilled, Infill Wells were

drilled. “Through geologic and engineering studies and discussions with . . . field managers,”

–2– Gravitas also gathered information about potential operational savings on the Property, learning

about a “wealth of inefficiencies” in Andarko’s operations, and estimated it could save a

substantial amount in annual operating costs by cutting unnecessary expenses.

In June 2016, Gravitas approached Anadarko about making an offer for the Property.

Anadarko provided Gravitas with data, including Anadarko’s reserve data, information about

Anadarko’s gathering and processing systems, and profit and loss statements. On July 19, 2016,

Gravitas submitted an $88 million bid to purchase the Property. Anadarko decided to test the

strength of the bid through an auction. Gravitas responded by making a preemptive $102 million

bid, but Anadarko declined. Anadarko hired the Oil and Gas Asset Clearinghouse (OGC) to run

the auction, and OGC set up a public data room for all potential bidders. The data room, however,

contained no information on either the “substantial potential of undrilled Infill Wells or the

potential for reduced operating costs.”

Its $102 million bid was the highest of multiple bids, and Gravitas began negotiating a

purchase and sale agreement for the Property. At the same time, Gravitas was seeking additional

funding for the purchase. It commissioned Ryder Scott Company, L.P. (Ryder Scott) to prepare a

reserve report on the Property. Reserve reports are typically confidential; Ryder Scott’s report

provided it “was prepared for the exclusive use and sole benefit of Gravitas and may not be put to

other use without our prior written consent for such use.” Gravitas also retained RMK Maritime

Capital, LLC (RMK) to contact prospective financers. RMK managing director Alan Pinto

“provided prospects with a basic outline of the investment opportunity in a ‘gas asset in the

Northern Rockies,’ including explanations of Gravitas’s optimistic production and cost

projections, as well as the favorable topline numbers” from Ryder Scott’s report.

In February 2017, Pinto emailed Pearl Management associate William Dace and, without

identifying the Property, provided a “high-level” description of the investment. Dace responded

–3– that the “deal looks like something we could be interested in.” Pinto asked that Pearl Management

sign a non-disclosure agreement (NDA); entering into a NDA was Gravitas’s “standard process”

before sharing its confidential and sensitive information. Dace forwarded a Pearl Management

form NDA. The terms of the NDA provided that Pearl Management agreed not to disclose

Gravitas’s “Confidential Information”2 to any third party or use such information for its own

benefit. Gravitas executed the NDA, outlining the Property and attaching a map, and returned it

to Dace. Pearl Management never countersigned the NDA upon its return.

Gravitas and Pearl Management representatives, including Quinn, met on March 6, 2017.

Pearl Management questions focused on the Property’s potential. Gravitas “elaborated on the

proprietary Ryder Scott Report’s positive reserve and financial valuations” and provided

significant information on its efforts to purchase the Property and the terms and structure of the

proposed purchase; operating information about the Property, including information about pipeline

infrastructure; Gravitas’s plans to increase production and lower operating costs from the existing

PDP Wells; Gravitas’s plan, with regulatory approval, to drill more than 129 Infill Wells;

Gravitas’s assessment of the economic life of PDP and Infill Wells; and Gravitas’s assessment of

the Property’s reserves based on its study of the Conoco assets. A few days after the meeting,

however, Pearl Management advised Gravitas that the Property did not fit its “investment

parameters.”

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Corona v. Pilgrim's Pride Corp.
245 S.W.3d 75 (Court of Appeals of Texas, 2008)
Matthew Lippincott and Creg Parks v. Warren Whisenhunt
462 S.W.3d 507 (Texas Supreme Court, 2015)
Stockyards National Bank v. Maples
95 S.W.2d 1300 (Texas Supreme Court, 1936)
Tervita, LLC v. Casey Sutterfield
482 S.W.3d 280 (Court of Appeals of Texas, 2015)
Julie Hersh v. John Tatum and Mary Ann Tatum
526 S.W.3d 462 (Texas Supreme Court, 2017)
John David Adams v. Starside Custom Builders, Llc
547 S.W.3d 890 (Texas Supreme Court, 2018)
State v. Paul Reed Harper
562 S.W.3d 1 (Texas Supreme Court, 2018)
In re Lipsky
460 S.W.3d 579 (Texas Supreme Court, 2015)
ExxonMobil Pipeline Co. v. Coleman
512 S.W.3d 895 (Texas Supreme Court, 2017)
Youngkin v. Hines
546 S.W.3d 675 (Texas Supreme Court, 2018)

Cite This Page — Counsel Stack

Bluebook (online)
Pearl Energy Investment Management, LLC, Pearl Energy Investments, L.P., William Quinn, and Avad Energy Partners, LLC v. Gravitas Resources Corporation and Alan Pinto, Counsel Stack Legal Research, https://law.counselstack.com/opinion/pearl-energy-investment-management-llc-pearl-energy-investments-lp-texapp-2019.