Austin, TX (Law Firm Newswire) October 24, 2014 — The Texas Supreme Court has heard arguments in Hooks v. Samson Lone Star, a case of alleged fraud in mineral royalties. The lawsuit concerns an issue of major importance in the Texas oil and gas industry.
In the case, plaintiff and landowner Charles Hooks accuses Samson Lone Star, an oil and gas partnership, of withholding royalties. Hooks claims that Samson violated the terms of a lease of his land by drilling another well on adjacent property without paying Hooks additional royalties. Samson argues that the statute of limitations has passed for Hooks to file a case against the company over the issue. But Hooks has said that Samson provided him with false information about the well, and he only discovered the discrepancy years later.
“This is a fascinating case,” noted Austin oil and gas lawyer Gregory D. Jordan. “It pits arguable deception and fraud against a duty to check public records. A number of cases in recent years have tended to emphasize a plaintiff’s obligation to inspect public records. It will be very interesting to see if this tendency continues in the face of specific allegations of fraud and deception.”
Hooks claims that when Samson leased his land along the Pine Island Bayou, which straddles Hardin and Jefferson counties, the company agreed not to drill any other well within 1,320 feet of Hooks’ property line. If such a well was drilled on the land of adjacent property owners, then Samson agreed to pay compensatory royalties or drill an offset well to prevent drainage.
Hooks claims that in 2000, Samson drilled a well that came within 1,080 feet of his property, but the company sent him a map showing that the well was 1,400 feet from his property. Hooks claims he accepted Samson’s representation and did not discover the alleged fraud until 2006.
A Jefferson County jury decided in Hooks’ favor, saying that Samson owed him $21 million in royalties. But the ruling was reversed by the First Court of Appeals in Houston, which ruled that the statute of limitations had passed and that Hooks had a responsibility to exercise due diligence and check public records to discover the discrepancy earlier.
Now the Texas Supreme Court should put the question to rest.
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