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

Court of Appeals of Texas·Decided February 8, 2018·No. 09-17-00080-CV·Published

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.

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.”

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

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.

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.

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 filed this interlocutory appeal, asserting that the trial court erred in granting the special appearance. See Tex. Civ. Prac. & Rem. Code Ann. § 51.014(a)(7) (West Supp. 2016).

II. Standard of Review

Whether a trial court has personal jurisdiction over a nonresident defendant is a question of law that we review de novo. BMC Software Belg., N.V. v. Marchand, 83 S.W.3d 789, 794 (Tex. 2002). The burden of proof in a jurisdictional challenge is a shifting one:

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

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).

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.) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

Related

Hanson v. Denckla
357 U.S. 235 (Supreme Court, 1958)
Rush v. Savchuk
444 U.S. 320 (Supreme Court, 1980)
Goodyear Dunlop Tires Operations, S. A. v. Brown
131 S. Ct. 2846 (Supreme Court, 2011)
Moki Mac River Expeditions v. Drugg
221 S.W.3d 569 (Texas Supreme Court, 2007)
PHC-Minden, L.P. v. Kimberly-Clark Corp.
235 S.W.3d 163 (Texas Supreme Court, 2007)
Kelly v. General Interior Construction, Inc.
301 S.W.3d 653 (Texas Supreme Court, 2010)
Peredo v. M. Holland Co.
310 S.W.3d 468 (Court of Appeals of Texas, 2010)
Greenfield Energy, Inc. v. Duprey
252 S.W.3d 721 (Court of Appeals of Texas, 2008)
BMC Software Belgium, NV v. Marchand
83 S.W.3d 789 (Texas Supreme Court, 2002)
Weldon-Francke v. Fisher
237 S.W.3d 789 (Court of Appeals of Texas, 2007)
Anderson v. City of Seven Points
806 S.W.2d 791 (Texas Supreme Court, 1991)
TeleVentures, Inc. v. International Game Technology
12 S.W.3d 900 (Court of Appeals of Texas, 2000)
Schultz v. Rural/Metro Corp.
956 S.W.2d 757 (Court of Appeals of Texas, 1997)
Schlobohm v. Schapiro
784 S.W.2d 355 (Texas Supreme Court, 1990)
CSR LTD. v. Link
925 S.W.2d 591 (Texas Supreme Court, 1996)
City of Keller v. Wilson
168 S.W.3d 802 (Texas Supreme Court, 2005)
GJP, INC. v. Ghosh
251 S.W.3d 854 (Court of Appeals of Texas, 2008)
Double Eagle Resorts, Inc. v. Mott
216 S.W.3d 890 (Court of Appeals of Texas, 2007)
McGalliard v. Kuhlmann
722 S.W.2d 694 (Texas Supreme Court, 1986)