Preview
CAUSE NO. 2016-45652
PEREGRINE OIL & GAS LP, IN THE
Plaintiff, TH DISTRICT COURT
HARRIS COUNTY, TEXAS
HRB OIL & GAS Ltd. and
VHMP, LLC,
Defendants.
DEFENDANTS HRB OIL & GAS LTD.’S AND VHMP, LLC’S OPPOSITION TO
PLAINTIFF’S MOTION FOR NEW TRIAL
NOW COME Defendants HRB Oil & Gas, Ltd. and VHMP, LLC (together, “HRB”) and
file this their Opposition to Peregrine Oil & Gas, LP’s Motion for New Trial and as grounds
therefor would respectfully show the Court as follows:
I. Meaning of the Term “Charge.”
A. Custom and Usage
In its Motion for New Trial, Peregrine Oil & Gas, LP (“Peregrine”) correctly points out
that the 1 Court of Appeals remanded this case for a determination of the meaning of the term
“charge” as that term is used in Article 8.7 of the Offshore Operating Agreement (“ ”).
Peregrine also correctly notes that evidence of custom and usage in the industry can be considered
in determining whether the Miscellaneous Invoice for overpayments of production revenues in this
case can be considered a “charge” under Article 8.7 of the OOA. However, Peregrine then spends
a page and a half setting out, in broad, generalized terms, how its witnesses testified about their
experience with payout calculations -- something that has absolutely nothing to do with
determining the meaning of the term “charge” in Article 8.7 of the OOA. None of Peregrine’s
Plaintiff Ex. 2.
Plaintiff Ex. 8.
US_Active\118632152\V-1
witnesses provided any testimony relating to actual custom and usage in the industry with respect
to whether invoices for reimbursement of overpaid production revenues are considered “charges”
under Article 8.7 of the OOA.
On the other hand, HRB’s expert witness was Jeff Wright who has spent 40 years in the oil
and gas industry making determinations of what are, and what are not, proper charges under
operating agreements. Mr. Wright teaches classes to industry participants as to what are, and are
not, proper charges under oil and gas operating agreement. Mr. Wright provided undisputed
testimony that an invoice for overpayment of production revenues is not considered a charge, as a
matter of custom and usage or otherwise, under oil and gas operating agreements. Mr. Wright’s
testimony was based not only upon his personal experience in the oil and gas industry, but was
also based upon his 40 years of professional interactions with other participants in the oil and gas
industry that are responsible for making day-to-day decisions with respect to what are, and are not,
proper charges under operating agreements.
B. Course of Performance
In its Motion for New Trial, Peregrine also purports to rely upon an alleged course of
performance to support its claim that the Miscellaneous Invoice for overpaid revenues was
considered by the parties to be a “charge” under the OOA. However, as HRB has previously
pointed out to this Court, the only course of performance established at the trial was that prior to
the filing of this lawsuit HRB never referred the $210,883.31 it claimed was due from HRB as a
“charge.” Instead, Peregrine variously characterized its invoice to HRB for overpaid revenues as
(i) a “Miscellaneous Invoice,” (ii) a “net back”, (iii) a “cash adj.” or (iv) a “reimbursement,” but
never a charge. Contrary to what Peregrine is attempting to argue, the only evidence of a course
of dealing between the parties adduced by Peregrine during the trial establishes that the parties did
2
US_Active\118632152\V-1
not intend for an invoice for overpaid production revenues to constitute a “charge” under Article
8.7 of the OOA.
This Court’s finding that the Miscellaneous Invoice for alleged overpaid production
revenues was not a “charge” under Article 8.7 of the OOA was clearly supported by the evidence
during the trial of this case.
II. Attorneys’ Fees.
A. Peregrine’s Failure to Segregate
Peregrine argues in its Motion for New Trial that there was no evidence to justify the
“reduction” of its attorneys’ fees from $223,283.78 to $12,000.00. That argument is deliberately
misleading and untrue. The parties agreed that the issue of attorneys’ fees would be submitted to
the Court based upon Declarations of the parties. The Declaration submitted on behalf of Peregrine
(the “Peregrine Declaration”) included copies of legal invoices from the Jones Gill Porter
Crawford & Crawford LLP law firm (the “Jones Gill Law Firm”) spanning the period of time
from June 2016 through April 2021 totaling $198,283.78 in legal fees. In the Peregrine Declaration
it was estimated an additional $40,000 in attorneys’ fees would be incurred by Peregrine through
the trial of this case for a total of $238,283.78 in attorneys’ fees being claimed by Peregrine.
Peregrine clearly knew that it would not be entitled to recover any attorneys’ fees related
to its attempts to collect the $210,883.31 Miscellaneous Invoice if this Court found that the
Miscellaneous Invoice was not a “charge” under Article 8.7 of the OOA. Nevertheless, no attempt
was made in the Peregrine Declaration to segregate the fees related to Peregrine’s attempts to
collect the Miscellaneous Invoice from Peregrine’s fees related to the collection of the uncontested
joint interest billings from HRB.
3
US_Active\118632152\V-1
All of Peregrine’s attorneys’ fees incurred prior to the remand from the 1 st Court of Appeals
related solely to Peregrine’s unsuccessful efforts to collect the Miscellaneous Invoice. Peregrine
clearly knows it is not entitled to recover these fees, yet it stubbornly refuses to segregate its non-
recoverable fees from those fees that are potentially recoverable.
Peregrine also knows that following remand from the 1 st Court of Appeals, virtually of the
legal fees it incurred related solely to its unsuccessful efforts to collect the Miscellaneous Invoice
for alleged overpaid production revenues. Peregrine knows it is not entitled to recover any of these
fees, yet it stubbornly refuses to make any attempt to segregate potentially collectible fees from
fees it know are non-collectible.
B. HRB’s Segregation of Recoverable Fees
Based upon the parties’ agreement to submit the issue of attorneys’ fees based upon
Declarations, HRB’s counsel submitted a Declaration (the “HRB Declaration”) in which the legal
invoices submitted by the Jones Gill Law Firm were reviewed and analyzed to determine (i) which
legal fees incurred by Peregrine solely related to Peregrine’s unsuccessful efforts to collect the
Miscellaneous Invoice for alleged overpaid revenues, and (i) which legal fees related to
Peregrine’s efforts to collect the uncontested outstanding Joint Interest Billings owed by HRB to
Peregrine. The results of that analysis are set out in Paragraph 11 of the HRB Declaration.
Specifically, Paragraph 11 of the HRB Declaration sets out why, based upon a proper segregation
of attorneys’ fees, $12,000.00 was an appropriate award of attorney’s fees for Peregrine’s
collection of uncontested unpaid Joint Interest Billings.
The only witness who testified as to outstanding joint interest billings owed by HRB to
Peregrine was Terrell Lanier. HRB did not dispute Mr. Lanier’s testimony as to the amount of
joint interest billings outstanding or put on any evidence to contradict Mr. Lanier’s testimony. Mr.
4
US_Active\118632152\V-1
Lanier’s testimony relating to outstanding joint interest billings was based upon Peregrine’s
business records and required no independent investigation or analysis by Mr. Lanier. As is set
out in Paragraph 11 of the HRB Declaration, itappears, based upon a review of the invoices
submitted by Peregrine, that it is possible that approximately $13,800 in attorneys’ fees could be
allocable to time spent working with Mr. Lanier regarding his involvement in this case. In HRB’s
Declaration, HRB asserted that the $13,800 in attorneys’ fees associated with Peregrine’s counsel
working with Mr. Lanier should be reduced to $12,000 because it involved two partners time which
was unnecessary for the simple task of compiling a list of unpaid joint interest billings.
Also, as can be seen from Paragraph 1(b) of Peregrine’s Motion for New Trial, Peregrine
relied upon Mr. Lanier to testify in support of Peregrine’s unsuccessful attempts to collect the
$210,883.31 Miscellaneous Invoice for alleged overpaid revenues. Attorneys’ fees incurred by
Peregrine related to preparing and presenting Mr. Lanier’s testimony in support of Peregrine’s
unsuccessful attempts to collect the $210,883.31 Miscellaneous Invoice are not recoverable.
Attorneys’ fees related to preparing and presenting Mr. Lanier for testimony should be further
reduced for this reason.
In light of (i) Peregrine’s refusal to make any attempt to segregate recoverable fees, (ii) the
segregation and analysis of legal fees related to Peregrine’s recovery of unpaid joint interest
billings in HRB’s Declaration, and (iii) a justifiable reduction in potentially allocable fees for the
reasons set out above, this Court’s award of $12,000 in attorneys’ fees in the Final Judgment is
fully supportable.
III. The Amount of the Judgment is Based Upon Peregrine’s Evidence and Testimony
Peregrine’s Exhibit 22 reflects $318,119.33 in outstanding invoices Peregrine claims were
due from HRB. That $318,119.33 included the $210,883.31 HRB was asserting was barred by
5
US_Active\118632152\V-1
limitations. When Peregrine’s expert, Mr. Lanier, was asked whether the $210,883.31 would have
to be subtracted from the $318,119.33 if this Court found that Peregrine’s recovery of the
$210,883.31 was barred by limitations, Mr. Lanier answered “Correct.” So, that is exactly what
this Court did in computing the total amount of unpaid invoices remaining after subtracting the
$210,883.31 from $318,119.93 to arrive at the $107,236.02 in unpaid invoices that were not barred
by limitations.
Peregrine’s description of its Exhibit 21 is “Peregrine Oil & Gas LP Revenue Payable to
HRB as of May 23, 2021.” Peregrine’s Exhibit 21 shows that as of May 23, 2021 the revenue
payable to HRB is $50,069.43. Based upon Peregrine’s own Exhibit (and admission) setting out
the amount of revenue payable to HRB as of May 23, 2021, this Court offset the $50,069.43 against
the $107,236.02 in outstanding invoices payable by HRB to Peregrine to arrive at the net amount
of unpaid invoices due from HRB to Peregrine in the amount of $57,166.59.
This Court’s calculation of the net amount due from HRB to Peregrine is based upon
Peregrine’s own Exhibits and testimony. What Peregrine is arguing in its Motion for New Trial is
that its own Exhibit showing $50,069.43 in revenues “Payable to HRB” as of 5/23/2021 should be
disregarded and HRB denied any relief with respect to amounts Peregrine admitted at trial were
due and owing to HRB. That argument is unsupportable.
WHEREFORE PREMISES CONSIDERED, HRB prays that this Court deny Peregrine’s
Motion for New Trial and that HRB be awarded such other and further relief to which it may show
itself to be justly entitled.
[Signature Page Follows]
6
US_Active\118632152\V-1
/s/ Barry F. Cannaday
Barry F. Cannaday
Dentons US LLP
2000 McKinney Ave.
Suite 1900
Dallas, Texas 75201
(214) 259-0900 (telephone)
(214) 259-0910 (facsimile)
barry.cannaday@dentons.com
ATTORNEY FOR DEFENDANTS
CERTIFICATE OF SERVICE
I hereby certify that a true and correct copy of the above and foregoing document was
served by hand delivery, facsimile, electronic mail or Certified Mail/Return Receipt Requested in
accordance with the Texas Rules of Civil Procedure on July 27, 2021 to the following counsel of
record:
Michael D. Jones
mjoines@jonesgill.com
Joseph D. Porter
jporter@jonesgill.com
Jones Gill Porter Crawford & Crawford LLP
6363 Woodway, Suite 100
Houston, Texas 77057
/s/ Barry F. Cannaday
Barry F. Cannaday
7
US_Active\118632152\V-1
Preview
CAUSE NO. 2016-45652 PEREGRINE OIL & GAS LP, IN THE Plaintiff, TH DISTRICT COURT HARRIS COUNTY, TEXAS HRB OIL & GAS Ltd. and VHMP, LLC, Defendants. DEFENDANTS HRB OIL & GAS LTD.’S AND VHMP, LLC’S OPPOSITION TO PLAINTIFF’S MOTION FOR NEW TRIAL NOW COME Defendants HRB Oil & Gas, Ltd. and VHMP, LLC (together, “HRB”) and file this their Opposition to Peregrine Oil & Gas, LP’s Motion for New Trial and as grounds therefor would respectfully show the Court as follows: I. Meaning of the Term “Charge.” A. Custom and Usage In its Motion for New Trial, Peregrine Oil & Gas, LP (“Peregrine”) correctly points out that the 1 Court of Appeals remanded this case for a determination of the meaning of the term “charge” as that term is used in Article 8.7 of the Offshore Operating Agreement (“ ”). Peregrine also correctly notes that evidence of custom and usage in the industry can be considered in determining whether the Miscellaneous Invoice for overpayments of production revenues in this case can be considered a “charge” under Article 8.7 of the OOA. However, Peregrine then spends a page and a half setting out, in broad, generalized terms, how its witnesses testified about their experience with payout calculations -- something that has absolutely nothing to do with determining the meaning of the term “charge” in Article 8.7 of the OOA. None of Peregrine’s Plaintiff Ex. 2. Plaintiff Ex. 8. US_Active\118632152\V-1 witnesses provided any testimony relating to actual custom and usage in the industry with respect to whether invoices for reimbursement of overpaid production revenues are considered “charges” under Article 8.7 of the OOA. On the other hand, HRB’s expert witness was Jeff Wright who has spent 40 years in the oil and gas industry making determinations of what are, and what are not, proper charges under operating agreements. Mr. Wright teaches classes to industry participants as to what are, and are not, proper charges under oil and gas operating agreement. Mr. Wright provided undisputed testimony that an invoice for overpayment of production revenues is not considered a charge, as a matter of custom and usage or otherwise, under oil and gas operating agreements. Mr. Wright’s testimony was based not only upon his personal experience in the oil and gas industry, but was also based upon his 40 years of professional interactions with other participants in the oil and gas industry that are responsible for making day-to-day decisions with respect to what are, and are not, proper charges under operating agreements. B. Course of Performance In its Motion for New Trial, Peregrine also purports to rely upon an alleged course of performance to support its claim that the Miscellaneous Invoice for overpaid revenues was considered by the parties to be a “charge” under the OOA. However, as HRB has previously pointed out to this Court, the only course of performance established at the trial was that prior to the filing of this lawsuit HRB never referred the $210,883.31 it claimed was due from HRB as a “charge.” Instead, Peregrine variously characterized its invoice to HRB for overpaid revenues as (i) a “Miscellaneous Invoice,” (ii) a “net back”, (iii) a “cash adj.” or (iv) a “reimbursement,” but never a charge. Contrary to what Peregrine is attempting to argue, the only evidence of a course of dealing between the parties adduced by Peregrine during the trial establishes that the parties did 2 US_Active\118632152\V-1 not intend for an invoice for overpaid production revenues to constitute a “charge” under Article 8.7 of the OOA. This Court’s finding that the Miscellaneous Invoice for alleged overpaid production revenues was not a “charge” under Article 8.7 of the OOA was clearly supported by the evidence during the trial of this case. II. Attorneys’ Fees. A. Peregrine’s Failure to Segregate Peregrine argues in its Motion for New Trial that there was no evidence to justify the “reduction” of its attorneys’ fees from $223,283.78 to $12,000.00. That argument is deliberately misleading and untrue. The parties agreed that the issue of attorneys’ fees would be submitted to the Court based upon Declarations of the parties. The Declaration submitted on behalf of Peregrine (the “Peregrine Declaration”) included copies of legal invoices from the Jones Gill Porter Crawford & Crawford LLP law firm (the “Jones Gill Law Firm”) spanning the period of time from June 2016 through April 2021 totaling $198,283.78 in legal fees. In the Peregrine Declaration it was estimated an additional $40,000 in attorneys’ fees would be incurred by Peregrine through the trial of this case for a total of $238,283.78 in attorneys’ fees being claimed by Peregrine. Peregrine clearly knew that it would not be entitled to recover any attorneys’ fees related to its attempts to collect the $210,883.31 Miscellaneous Invoice if this Court found that the Miscellaneous Invoice was not a “charge” under Article 8.7 of the OOA. Nevertheless, no attempt was made in the Peregrine Declaration to segregate the fees related to Peregrine’s attempts to collect the Miscellaneous Invoice from Peregrine’s fees related to the collection of the uncontested joint interest billings from HRB. 3 US_Active\118632152\V-1 All of Peregrine’s attorneys’ fees incurred prior to the remand from the 1 st Court of Appeals related solely to Peregrine’s unsuccessful efforts to collect the Miscellaneous Invoice. Peregrine clearly knows it is not entitled to recover these fees, yet it stubbornly refuses to segregate its non- recoverable fees from those fees that are potentially recoverable. Peregrine also knows that following remand from the 1 st Court of Appeals, virtually of the legal fees it incurred related solely to its unsuccessful efforts to collect the Miscellaneous Invoice for alleged overpaid production revenues. Peregrine knows it is not entitled to recover any of these fees, yet it stubbornly refuses to make any attempt to segregate potentially collectible fees from fees it know are non-collectible. B. HRB’s Segregation of Recoverable Fees Based upon the parties’ agreement to submit the issue of attorneys’ fees based upon Declarations, HRB’s counsel submitted a Declaration (the “HRB Declaration”) in which the legal invoices submitted by the Jones Gill Law Firm were reviewed and analyzed to determine (i) which legal fees incurred by Peregrine solely related to Peregrine’s unsuccessful efforts to collect the Miscellaneous Invoice for alleged overpaid revenues, and (i) which legal fees related to Peregrine’s efforts to collect the uncontested outstanding Joint Interest Billings owed by HRB to Peregrine. The results of that analysis are set out in Paragraph 11 of the HRB Declaration. Specifically, Paragraph 11 of the HRB Declaration sets out why, based upon a proper segregation of attorneys’ fees, $12,000.00 was an appropriate award of attorney’s fees for Peregrine’s collection of uncontested unpaid Joint Interest Billings. The only witness who testified as to outstanding joint interest billings owed by HRB to Peregrine was Terrell Lanier. HRB did not dispute Mr. Lanier’s testimony as to the amount of joint interest billings outstanding or put on any evidence to contradict Mr. Lanier’s testimony. Mr. 4 US_Active\118632152\V-1 Lanier’s testimony relating to outstanding joint interest billings was based upon Peregrine’s business records and required no independent investigation or analysis by Mr. Lanier. As is set out in Paragraph 11 of the HRB Declaration, itappears, based upon a review of the invoices submitted by Peregrine, that it is possible that approximately $13,800 in attorneys’ fees could be allocable to time spent working with Mr. Lanier regarding his involvement in this case. In HRB’s Declaration, HRB asserted that the $13,800 in attorneys’ fees associated with Peregrine’s counsel working with Mr. Lanier should be reduced to $12,000 because it involved two partners time which was unnecessary for the simple task of compiling a list of unpaid joint interest billings. Also, as can be seen from Paragraph 1(b) of Peregrine’s Motion for New Trial, Peregrine relied upon Mr. Lanier to testify in support of Peregrine’s unsuccessful attempts to collect the $210,883.31 Miscellaneous Invoice for alleged overpaid revenues. Attorneys’ fees incurred by Peregrine related to preparing and presenting Mr. Lanier’s testimony in support of Peregrine’s unsuccessful attempts to collect the $210,883.31 Miscellaneous Invoice are not recoverable. Attorneys’ fees related to preparing and presenting Mr. Lanier for testimony should be further reduced for this reason. In light of (i) Peregrine’s refusal to make any attempt to segregate recoverable fees, (ii) the segregation and analysis of legal fees related to Peregrine’s recovery of unpaid joint interest billings in HRB’s Declaration, and (iii) a justifiable reduction in potentially allocable fees for the reasons set out above, this Court’s award of $12,000 in attorneys’ fees in the Final Judgment is fully supportable. III. The Amount of the Judgment is Based Upon Peregrine’s Evidence and Testimony Peregrine’s Exhibit 22 reflects $318,119.33 in outstanding invoices Peregrine claims were due from HRB. That $318,119.33 included the $210,883.31 HRB was asserting was barred by 5 US_Active\118632152\V-1 limitations. When Peregrine’s expert, Mr. Lanier, was asked whether the $210,883.31 would have to be subtracted from the $318,119.33 if this Court found that Peregrine’s recovery of the $210,883.31 was barred by limitations, Mr. Lanier answered “Correct.” So, that is exactly what this Court did in computing the total amount of unpaid invoices remaining after subtracting the $210,883.31 from $318,119.93 to arrive at the $107,236.02 in unpaid invoices that were not barred by limitations. Peregrine’s description of its Exhibit 21 is “Peregrine Oil & Gas LP Revenue Payable to HRB as of May 23, 2021.” Peregrine’s Exhibit 21 shows that as of May 23, 2021 the revenue payable to HRB is $50,069.43. Based upon Peregrine’s own Exhibit (and admission) setting out the amount of revenue payable to HRB as of May 23, 2021, this Court offset the $50,069.43 against the $107,236.02 in outstanding invoices payable by HRB to Peregrine to arrive at the net amount of unpaid invoices due from HRB to Peregrine in the amount of $57,166.59. This Court’s calculation of the net amount due from HRB to Peregrine is based upon Peregrine’s own Exhibits and testimony. What Peregrine is arguing in its Motion for New Trial is that its own Exhibit showing $50,069.43 in revenues “Payable to HRB” as of 5/23/2021 should be disregarded and HRB denied any relief with respect to amounts Peregrine admitted at trial were due and owing to HRB. That argument is unsupportable. WHEREFORE PREMISES CONSIDERED, HRB prays that this Court deny Peregrine’s Motion for New Trial and that HRB be awarded such other and further relief to which it may show itself to be justly entitled. [Signature Page Follows] 6 US_Active\118632152\V-1 /s/ Barry F. Cannaday Barry F. Cannaday Dentons US LLP 2000 McKinney Ave. Suite 1900 Dallas, Texas 75201 (214) 259-0900 (telephone) (214) 259-0910 (facsimile) barry.cannaday@dentons.com ATTORNEY FOR DEFENDANTS CERTIFICATE OF SERVICE I hereby certify that a true and correct copy of the above and foregoing document was served by hand delivery, facsimile, electronic mail or Certified Mail/Return Receipt Requested in accordance with the Texas Rules of Civil Procedure on July 27, 2021 to the following counsel of record: Michael D. Jones mjoines@jonesgill.com Joseph D. Porter jporter@jonesgill.com Jones Gill Porter Crawford & Crawford LLP 6363 Woodway, Suite 100 Houston, Texas 77057 /s/ Barry F. Cannaday Barry F. Cannaday 7 US_Active\118632152\V-1