News

Garza Joins Firm

Mon, 21 May 2012 09:32:00 GMT

Hornberger Sheehan Fuller Beiter Wittenberg & Garza Incorporated is proud to announce the addition of Rudy A. Garza as a shareholder and director of the firm, and our name has changed to reflect this addition.

Mr. Garza, formerly President of Garza & Lazor, P.C., has been actively engaged in the civil litigation practice for 35 years. He is Board Certified by the Texas Board of Legal Specialization in Civil Trial Law and Personal Injury Trial Law. Mr. Garza has been consistently named as a Texas Super Lawyer by Texas Monthly Magazine and as one of San Antonio’s Best Lawyers by San Antonio Scene Magazine. He concentrates his practice in the areas of fiduciary litigation, business litigation, and personal injury litigation. He can be reached at (210) 271-1700 or by email at rugar@hsfblaw.com.

Court Reverses Jury Decision on Oil Lease Fraud Case

Mon, 09 Jan 2012 11:58:00 GMT

The Texas Supreme Court, in December 16, 2011, reversed a lower court ruling in favor of Shell Oil Company et al, as Petitioners, in an interesting case where the plaintiff sued Shell Oil claiming that the oil company had underpaid on lease royalties using a scheme which was purposely designed to prevent the lessor, a trust of the Ross family, from discovering the underpayment until the statute of limitations had run out. The court, in essence, held that the lessor had had ample opportunity to discover and realize the error, and demand remedy.

The plaintiffs in the trial case, which was held in Harris County, had sued Shell Oil claiming that they had been underpaid royalties on oil and gas leases originally signed in 1961. For years, Shell Oil had sent royalty checks along with the required stub showing the amount Shell Oil had been paid for the retrieved resources. However, as Shell did reveal in the trial, the basis amount was, in fact, not the actual price Shell Oil was paid for the oil and gas, but instead was based on "a weighted-average method calculation." Shell could not explain why this method was used, suggesting that the "arbitrary price" may have been a computer glitch or an accounting error.

The Rosses had argued that they had no reason to suspect a calculation error until after the statute of limitations for discovery had expired, and therefore were allowed an exception to the limitations period because of Shell's "elaborate scheme to allow it to [underpay] royalties, then made multiple misrepresentations to cover up this scheme." The trial jury and the appeals court both ruled in favor of the Rosses, awarding the family trust $72,532.09 plus prejudgment interest, attorney's fees and court costs.

However, the Supreme Court ruled that since gas and oil prices are generally available to the Rosses, and that additional discovery during the period in question could have uncovered the discrepancy, the court held that "as a matter of law, the doctrine of fraudulent concealment cannot apply to toll the statute of limitations." In its conclusion, the court held that "evidence conclusively established that Shell's alleged fraud could have been discovered by the Rosses through the exercise of reasonable diligence."

The ruling should give notice to all oil and gas lessors to carefully review royalty statements paid by lessees, and to do their own research to verify the basis on which the royalties are paid.

Texas Supreme Court Reverses Appellate Court Ruling on Noncompete Enforcement

Mon, 09 Jan 2012 11:58:00 GMT

On December 16, 2011, the Texas Supreme Court ruled on an appeal of Marsh USA Inc., and Marsh & McLennan Companies v. Rex Cook, reversing the ruling of the Court of Appeals for the Fifth District of Texas. In this case, the petitioners, Marsh USA Inc. et al, argued that a covenant not to compete that was signed by Mr. Cook was in fact enforceable, as the stock options which were provided to Mr. Cook reasonably related to the company's interest in protecting its business interests.

The court concluded that "the covenant not to compete is 'ancillary to or part of' an otherwise enforceable agreement because of the business interest being protected" – in this case, the goodwill of the company – "is reasonably related to the consideration given." The court referred to Section 15.50 of the Texas Business and Commercial Code, which requires that there be a connection between the noncompete covenant and the interest being protected. Since the court felt that this requirement was satisfied by the relationship between the covenant and the respondent's stock options, the court reversed the judgment of the court of appeals and remanded the case back to the trial court for further proceedings.

Noncompete agreements between an employer and employee, therefore, could be deemed enforceable where an employee is given an ownership in the employing company. By exercising his stock options, Mr. Cook became an owner in the company. By violating the terms of the noncompete covenant, Mr. Cook would, in effect, be harming the goodwill of the company for which he is now an owner. This "nexus," or connection, between the covenant and the interests of the company became the primary basis for the majority ruling of the court.

In the ruling's dissent, Justices Green, Jefferson and Lehrmann argue that the intent of the Legislature was being thwarted. Furthermore, the dissenting justices expressed their concern about noncompete covenants that are "not tied specifically to trade secrets, confidential information or special training," but are instead are only to protect the less specific "goodwill" of the company.

T Drew Cauthorn Named San Antonio "Best Lawyers" Corporate Law Lawyer of the Year

Wed, 12 Oct 2011 00:34:00 GMT

Best Lawyers, the oldest and most respected peer-review publication in the legal profession, has named T. Drew Cauthorn as the “San Antonio Best Lawyers Corporate Law Lawyer of the Year” for 2012.

After more than a quarter of a century in publication, Best Lawyers is designating “Lawyers of the Year” in high-profile legal specialties in large legal communities. Only a single lawyer in each specialty in each community is being honored as the “Lawyer of the Year.”

Best Lawyers compiles its lists of outstanding attorneys by conducting exhaustive peer-review surveys in which thousands of leading lawyers confidentially evaluate their professional peers. The current, 18th edition of The Best Lawyers in America (2012) is based on more than 3.9 million detailed evaluations of lawyers by other lawyers.

The lawyers being honored as “Lawyers of the Year” have received particularly high ratings in our surveys by earning a high level of respect among their peers for their abilities, professionalism, and integrity.

Steven Naifeh, President of Best Lawyers, says, “We continue to believe – as we have believed for more than 25 years – that recognition by one’s peers is the most meaningful form of praise in the legal profession. We would like to congratulate T. Drew Cauthorn on being selected as the ‘San Antonio Best Lawyers Corporate Law Lawyer of the Year’ for 2012.”

Duties of Executive Rights Holders to Owners of Non-Executive Mineral Interests

Tue, 20 Sep 2011 17:13:00 GMT

The Texas Supreme Court recently decided Lesley v. Veterans Land Board, an important case regarding the duties of executive rights holders to owners of non-executive mineral interests. The case involves development in the highly productive Barnett Shale in North Texas. Bluegreen, a land developer, obtained 4,100 acres of land southwest of Fort Worth for a housing subdivision. The sellers retained their mineral interests in the property, but conveyed to Bluegreen the “executive rights,” referred to in the deed as “the full, complete and sole right to execute oil, gas and mineral leases” covering the property.

When Bluegreen developed the subdivision, it did not want to allow oil and gas development to take place in a residential development, so Bluegreen included restrictive covenants that prohibited commercial oil drilling operations. Later, almost all of the surrounding area came under lease for Barnett Shale development, and there was evidence that the Bluegreen subdivision held $610 million worth of minerals.

The mineral owners sued Bluegreen and owners of the lots in the subdivisions alleging that Bluegreen was breaching its duties as holder of the executive rights by prohibiting oil and gas development in the subdivision. In its opinion, the court examines in detail the history of the law regarding duties owed by executive right holders to the non-executive mineral owners. The court states that executive rights owners may breach their duties if they refuse to lease minerals, particularly if the refusal is seen as arbitrary or motivated by self-interest to the detriment of the non-executive. The court then concluded in its holding that Bluegreen breached its duty when it filed the restrictive covenant that forever prohibiting drilling in the subdivision and that the appropriate remedy was to cancel the restrictive covenant.

Hornberger Presents Paper to Planners Council

Thu, 15 Sep 2011 17:12:00 GMT

Boxy Hornberger presented a key paper at a recent meeting of the San Antonio Estate Planners Council. The purpose was to educate attorneys and trust officers as to the expected legal fees in trust and estate litigation, as well as how those fees may be allocated among the parties.

"It's critical that before engaging in a trust and estate fight that the parties have a complete idea as to the potential cost," explained Mr. Hornberger, "The parties need to factor that in deciding whether to go forward and whether and at what point to settle."

Mr. Hornberger, a Partner with Hornberger Sheehan Fuller & Beiter, Incorporated, credits the additional assistance of HSFB associates Elizabeth H Fry and David Jed Williams.

Download Attorney's Fees in Trust and Estate Litigation.

Arbitration Provision in Your Estate Planning Documents

Tue, 20 Sep 2011 17:03:00 GMT

In the case of Rachal v. Reitz, 2011 WL 2937442, Case No. 05-09-01422-CV, July 22, 2011, the Settlor of a trust provided in the trust document for mandatory arbitration of any disputes involving the trust. A beneficiary sued the trustee and the trustee moved to compel arbitration under the arbitration provision in the trust instrument. The trial court refused to compel arbitration and that decision was upheld on appeal to the Dallas Court of Appeals.

Arbitration is a creature of contract law. However, this type of trust is not a contract. Accordingly, the arbitration provision in the trust document at issue in this case is not enforceable as an agreement to arbitrate. It is for the Texas Legislature to decide whether and to what extent the settlor of this type of a trust should have the power to bind the beneficiaries of the trust to arbitrate any future dispute arising from the trust. We conclude that, on this record, the trial court could have denied the motion to compel and to stay because Rachal did not establish the existence of an agreement to arbitrate pursuant to the TAA.

– Court of Appeals of Texas, Dallas

The Court held that (1) arbitration is a matter of contract; and (2) the trust was not a contract but was a transfer of property. Therefore, the beneficiary of the trust (who did not enter into any contract) was not required to submit to arbitration his claims against the trustee. This appears to be a case of first impression in Texas.

HSFB Attorneys Named as "Super Lawyers"

Mon, 05 Sep 2011 09:42:00 GMT

Super Lawyers, a publication of Thomson Reuters, has named five Hornberger Sheehan Fuller & Beiter, Incorporated attorneys as "Super Lawyers" on its website, www.SuperLawyers.com. According to the site, "Super Lawyers is a rating service of outstanding lawyers from more than 70 practice areas who have attained a high-degree of peer recognition and professional achievement. The selection process is multi-phased and includes independent research, peer nominations and peer evaluations."

"We're very pleased that Super Lawyers, through its rigorous, multiphase rating process, approved the nominations of some of our most distinguished team," said Charles M "Boxy" Hornberger. "It's not our habit to solicit public accolades, so it's especially rewarding when a designation of this caliber is bestowed on our attorneys."

Current HSFB attorneys listed as Super Lawyers are:

Please visit the Super Lawyer website for more information.

HSFB Unveils New Online Presence

Wed, 28 Sep 2011 23:45:00 GMT

Since Hornberger, Sheehan, Fuller & Beiter, Incorporated first launched a website in 1999, the online world has dramatically evolved. People are exploring new and intriguing ways of communicating considered almost impossible only a decade ago. The business world – including the legal component – has experienced considerable change. Once regarded as innovative, the fax machine serves far less purpose than email; the cell phone keeps everyone in touch, through both voice and text.

Today, many of our clients and potential clients seek to learn more about our firm, our capabilities and our attorneys by researching online. Furthermore, those seeking answers to legal issues are using the Internet for answers and to identify professionals who are skilled in those matters of interest.

The new HSFB website undertakes to communicate the firm's areas of concentration, profile its attorneys, and provide timely, relevant information about legal matters related to the firm's practice areas. The site employs current web technologies and is optimized by design and content to deliver the information sought by visitors.