Scotty Wales, Adam Stout and CAS Enterprise-Venture, VI, LLC v. Paul Ruppert, Innovative Resources Enterprises, LLC and Innovative Resources, Inc.

CourtCourt of Appeals of Texas
DecidedFebruary 8, 2018
Docket09-17-00080-CV
StatusPublished

This text of Scotty Wales, Adam Stout and CAS Enterprise-Venture, VI, LLC v. Paul Ruppert, Innovative Resources Enterprises, LLC and Innovative Resources, Inc. (Scotty Wales, Adam Stout and CAS Enterprise-Venture, VI, LLC v. Paul Ruppert, Innovative Resources Enterprises, LLC and Innovative Resources, 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.

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Scotty Wales, Adam Stout and CAS Enterprise-Venture, VI, LLC v. Paul Ruppert, Innovative Resources Enterprises, LLC and Innovative Resources, Inc., (Tex. Ct. App. 2018).

Opinion

In The

Court of Appeals Ninth District of Texas at Beaumont _________________

NO. 09-17-00080-CV _________________

SCOTTY WALES, ADAM STOUT AND CAS ENTERPRISE-VENTURE, VI, LLC, Appellants

V.

PAUL RUPPERT, INNOVATIVE RESOURCES ENTERPRISES, LLC AND INNOVATIVE RESOURCES, INC., Appellees __________________________________________________________________

On Appeal from the 260th District Court Orange County, Texas Trial Cause No. D160237-C __________________________________________________________________

MEMORANDUM OPINION

Appellants Scotty Wales, Adam Stout, and CAS Enterprise-Venture, VI, LLC

filed this interlocutory appeal from the trial court’s order granting the special

appearance of Appellees, Paul Ruppert, Innovative Resources Enterprises, LLC, and

Innovative Resources, Inc. and dismissing the claims against them. We affirm.

1 I. Factual Background

Paul Ruppert is a Louisiana oil operator and economic development

consultant. Ruppert’s two companies, Innovative Resources, Inc. and Innovative

Resources Enterprises, LLC1 were both formed to do business in Louisiana

regarding oil and economic development. Garold Thibodeaux is a participant in

some of the Ruppert Defendants’ oil wells. Scotty Wales, Adam Stout, and CAS

Enterprise-Venture, VI, LLC2 each claim to have invested in one or more wells on

Ruppert family land in Acadia Parish, Louisiana.

Although consistent in some respects, the parties present largely conflicting

accounts of the operative facts underlying the suit. Wales alleges that Thibodeaux

approached him in 2007, seeking to serve as a financial advisor. Wales asserts that

Thibodeaux then approached him in 2008 regarding certain investments with

“Thibodeaux and his partner, [Ruppert.]” Wales further alleged that the Ruppert

Defendants “had a business or partnership relationship with [Thibodeaux], to solicit

investment opportunities and sell working interests in various oil wells and saltwater

1 Except when helpful to distinguish the acts of Ruppert as an individual, we generally refer to Ruppert and his two companies collectively as the “Ruppert Defendants.” 2 Except when helpful to distinguish the acts of any of the appellants individually, we generally refer to Wales, Stout, and CAS Enterprise Venture, VI, LLC collectively as “Wales.” 2 wells” and that Thibodeaux and the Ruppert Defendants met with Wales in Orange,

Texas, and “jointly marketed to [him] the investment of re-entering at least two (2)

wells . . . for the purpose of reestablishing paying quantities.” Wales entered into a

Participation Agreement in September, 2009, which required Wales to front costs

for re-entering wells in exchange for thirty percent of the royalty. Wales advanced

the estimated costs for the first well, Well No. 1, which worked as anticipated and

resulted in Wales’s receipt of substantial royalty payments. Wales contends that in

2012, he “was asked to and did advance” the costs to re-work another oil well, Well

No. 2. He further asserts that, around the same time, the Ruppert Defendants and

Thibodeaux approached him with an opportunity to invest in a third well, this one

being a saltwater well, and that he advanced money for that well also.

In the course of these dealings, Wales sold a portion of his participation

interest in Well No. 1 to Adam Stout, as an assignee. Wales contends that Stout also

purchased an assigned interest in Well No. 2 after being approached by Thibodeaux.

Wales likewise provided the production information he had received about the wells

to Craig Stickfort, who also purchased a portion of Wales’s interest in Wells No. 1

and No. 2.3

3 Wales’s Original Petition alleges that Stickfort purchased a portion of Wales’s interest in the wells; however, the documents produced in the trial court 3 Well No. 1 went offline in 2015 and required substantial repair. It was

determined that Well No. 2 was not viable, and no income was earned on the

saltwater well. On August 5, 2016, Wales filed suit against Thibodeaux and the

Ruppert Defendants for various causes of action relating to the wells.

The Ruppert Defendants, through their pleadings and testimony from Ruppert

and Thibodeaux, provide a significantly different account of the relationship among

the parties and how the events underlying the suit unfolded. Ruppert asserts that

Thibodeaux was a long-time personal friend and a participant in some of Ruppert’s

oil wells in Louisiana, but he was never his employee or agent, and Ruppert never

directed Thibodeaux to solicit or conduct any business for him in Texas.

Thibodeaux testified that he and Wales were friends before any of these events

and that he also provided Wales with financial advice. He testified that he and Wales

were having a friendly lunch one day in Vidor, Texas, when Wales mentioned that

he needed to make more money and asked if Thibodeaux knew of any business

opportunities. Thibodeaux replied by disclosing his own intent to participate in a

business owned by a friend of his who re-enters abandoned wells in an effort to bring

them back into production. Thibodeaux testified that Wales expressed interest in

indicate that the legal purchaser was CAS Enterprise Venture VI, LLC, with Craig Stickfort executing the documents on the entity’s behalf. 4 becoming involved himself and requested that Thibodeaux contact Ruppert in order

for Wales to discuss the business further with him and be able to participate in the

well. Thibodeaux testified that Wales knew Thibodeaux’s relationship with Ruppert

was one of friendship and that he never held himself out as a representative of the

Ruppert Defendants. Thibodeaux also testified that he made clear to Wales that his

mention of the oil wells as a business opportunity was separate from his financial

investment advice. Similarly, Ruppert testified that Thibodeaux had no authority to

enroll others in any well on Ruppert’s behalf, and Thibodeaux received no payment

or commission regarding the wells.

The Ruppert Defendants further allege that Ruppert met Stout only once,

when Stout visited the wells in Louisiana with Wales and Thibodeaux, and that it

was Wales who solicited Stout and provided Stout with production reports. Ruppert

testified that he never met Stickfort at all, although he did speak to Stickfort by

telephone. Ruppert testified that he never expressly authorized Wales to transfer any

interest in his Participation Agreement, and the terms of the agreement do not permit

such a transfer. Ruppert acknowledged that he accepted expense payments from

Stout because it ultimately did not matter to him who made payments; however, he

maintains that he never had any contract with Stickfort or Stout.

5 The Ruppert Defendants allege that Wales ultimately refused to pay certain

expenses owed under the Participation Agreement, and that it was Wales’s failure to

advance the required costs that adversely impacted the wells’ ability to operate.

After Wales filed suit in a district court in Texas, the Ruppert Defendants filed

a joint Special Appearance, arguing they did not have sufficient minimum contacts

with the state to justify a Texas court’s assertion of jurisdiction over them. Following

an evidentiary hearing, the court sustained the special appearance and dismissed the

suit against the Ruppert Defendants for lack of personal jurisdiction. Wales then

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Scotty Wales, Adam Stout and CAS Enterprise-Venture, VI, LLC v. Paul Ruppert, Innovative Resources Enterprises, LLC and Innovative Resources, Inc., Counsel Stack Legal Research, https://law.counselstack.com/opinion/scotty-wales-adam-stout-and-cas-enterprise-venture-vi-llc-v-paul-texapp-2018.