Businesses of all types and sizes throughout the United States, Mexico and beyond bring their disputes to Gardere's litigation team and receive practical, responsive, boutique-style attention in return. Our clients have access to the firepower and value of a well-known and highly-regarded Firm's capabilities and interdisciplinary strengths.
Gardere has a national and international energy practice formed around our Energy Industry Team, which is a multidisciplinary group of approximately 60 attorneys with diverse backgrounds, experience and skills specific to the energy industry. Our team includes attorneys who have served as in-house counsel for major energy companies, providing a depth of insight into our clients' needs, issues and concerns. We understand and regularly practice in virtually every sector of the energy, and we represent a wide variety of industry participants from multinational corporations to individuals.
From our offices in the United States and Mexico, our International Practice helps clients operate in today’s global economy. We have more than 30 professionals operating as a boutique within an Am Law 200 law firm and are able to provide focused service with the resources of a large firm. We understand that clients who are engaged in the global marketplace need lawyers who can operate seamlessly across multiple jurisdictions. Our international experts are multi-lingual, are culturally fluent and intimately familiar with various legal systems across the world, especially those in Latin America. Whether you need help with commercial transactions, regulatory matters, customs and import regulations, immigration matters, M&A and joint ventures, international disputes, or international tax planning, Gardere’s international team is here to assist you.
We represent domestic and foreign private funds in all aspects of fund formation, fund operations, platform and add-on acquisitions, and portfolio company operations. Our team has a reputation for being the go-to-lawyers for private equity funds, hedge funds, venture capital funds and family offices. We are known for our vast deal experience, the efficient way we staff and manage our work, and the way we maintain our relationships. We get deals done with sophisticated, strategic, and practical advice tailored to the needs of our clients.
*Not admitted to practice law.
The Texas Supreme Court recently reaffirmed the longstanding principle that an executive rights holder owes a duty of utmost good faith and fair dealing to a non-executive and is prohibited from engaging in self-dealing in connection with the formation of a mineral-lease agreement. KCM Financial LLC v. Bradshaw, No. 13-0199, 2015 Tex. LEXIS 220, __ S.W.3d __ (Tex. Mar. 6, 2015). The Court, however, also explained that the executive is not required to wholly subordinate its interests in favor of the non-executive, and that the executive has autonomy and considerable latitude in negotiating the terms of a mineral lease (just not unbridled discretion). Given the relative rights and interests at play, the Court declined to issue any bright line rules regarding the scope of the duty of utmost good faith and fair dealing. Rather, the Court stated that “in determining whether an executive has fulfilled its duty of utmost good faith and fair dealing in executing a mineral lease, the lease and the circumstances of its execution must be considered as a whole.” The controlling inquiry is whether the executive engaged in acts of self-dealing that unfairly diminished the value of the non-executive interest.
In KCM Financial, the non-executive complained that the executive breached its duty by executing a mineral lease on terms that included a sub-market royalty rate, which the executive and non-executive would share equally, in exchange for an above-market bonus payable only to the executive. The non-executive also alleged that the lessee acted in concert with the executive in facilitating the breach. The executive and lessee won on summary judgment at trial.
The Supreme Court, however, held that, given the totality of the circumstances in this case, the lessor’s negotiation of an above-market bonus (for itself) and below-market royalty (shared with the non-executive) may give rise to liability to the non-executive. In other words, the executive’s failure to obtain a market-rate royalty does not conclusively establish a breach of duty, nor is it totally irrelevant – it is simply one factor to be considered. Thus, the Court determined that fact issues precluded summary judgment for the executive and remanded that portion of the case back to the trial court to be tried.
As to the lessee, the Court determined that it was entitled to summary judgment because the lessor’s alleged breach of its duty to the non-executive could not be imputed to the lessee as a matter of law under any conspiracy and aiding-and-abetting theories, noting the considerable burdens that a contrary holding would impose on the energy industry in Texas.
This client alert was authored by Gardere Partner James C. (Jim) Scott. For additional information regarding the Texas Supreme Court's opinion, please contact Mr. Scott (firstname.lastname@example.org or 214.999.4598) or another member of Gardere's Energy Industry Team.
The publications contained in this site do not constitute legal advice. Legal advice can only be given with knowledge of the client's specific facts. By putting these publications on our website we do not intend to create a lawyer-client relationship with the user. Materials may not reflect the most current legal developments, verdicts or settlements. This information should in no way be taken as an indication of future results.
You may use the wildcard symbol (*) as a root expander. A search for "anti*" will find not only "anti", but also "anti-trust", "antique", etc.
Entering two terms together in a search field will behave as though an "OR" is being used. For example, entering "Antique Motorcars" as a Client Name search will find results with either word in the Client Name.
AND and OR may be used in a search. Note: they must be capitalized, e.g., "Project AND Finance."
The + and - sign operators may be used. The + sign indicates that the term immediately following is required, while the - sign indicates to omit results that contain that term. E.g., "+real -estate" says results must have "real" but not "estate".
To perform an exact phrase search, surround your search phrase with quotation marks. For example, "Project Finance".
Searches are not case sensitive.