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Click here for the full text of this decision FACTS:Scott Van Dyke is the majority shareholder in Anglo-Dutch Petroleum and Anglo-Dutch (Tenge) (collectively, Anglo-Dutch). Van Dyke formed Anglo-Dutch for the purpose of developing the Tenge oil and gas field in Kazakhastan. In 1997, Halliburton considered joining Anglo-Dutch in the exploration of the Tenge field and entered into a letter of intent with Anglo-Dutch. However, in 2000, Anglo-Dutch filed suit against Halliburton over their dealings on this project. To finance the Halliburton suit and operate its business, Anglo-Dutch entered into several claims investment agreements in which investors put up funds in return for a portion of Anglo-Dutch’s recovery, if any, from the Halliburton suit. Forest Hunter Smith was one of these investors. The trial of the Halliburton suit resulted in an award of $106 million to Anglo-Dutch, and Anglo-Dutch and Halliburton subsequently entered into a confidential settlement agreement. However, before the settlement, Anglo-Dutch contacted its litigation investors, seeking to negotiate a reduced payment on the agreements. Although some of the investors agreed, others, including Smith, refused, and Smith filed this suit against Anglo-Dutch. After a bench trial, the trial court: 1. entered judgment awarding Smith actual damages of $151,876, exemplary damages of $303,752, and attorney’s fees of $60,000; and 2. issued findings of fact and conclusions of law, finding Anglo-Dutch and Van Dyke liable on Smith’s claims for fraud, breach of fiduciary duty, conversion and breach of contract. HOLDING:Affirmed as modified. The trial court’s findings and conclusions state that Anglo-Dutch solicited an investment from Smith and that the agreements were not loans or usurious loans, apparently based on the finding that the agreements contain no absolute obligation on the part of Anglo-Dutch to repay any amount of money. Therefore, any representation that the transaction was an investment was not false and could not support a finding of fraud. There is no evidence that Van Dyke made any promise in the agreements with an intent not to perform. Moreover, even if he believed at the time of entering the agreements that they would not be enforceable as loans due to usury laws, he did not structure them as loans, and there is no evidence that he did not intend to pay the specified amounts as returns on the investments. Therefore, the trial court’s finding of liability for fraud is not supported by the evidence. The assignment agreements on which Smith relies do not purport to convey an outright ownership interest but merely assign the interests in the recovery as collateral security for payment of the obligations that are due under the agreements. The trial court’s judgment does not award Smith’s conversion recovery out of any specific or identifiable proceeds of the Halliburton settlement or otherwise but simply awards a single actual damage amount against appellants for all of the claims Smith asserted. Therefore, there is no basis to affirm an award for conversion. Appellants challenge the finding of liability for breach of contract. The court concludes that the agreements did not meet the definition of a “loan” and were thus not usurious transactions; even if the investment agreements could be considered securities, appellants, as sellers rather than purchasers of the securities, have no standing to bring a claim based on the securities being unregistered; and the agreements did not violate public policy, because they did not vest control over the litigation in uninterested third parties. Smith contends that an informal fiduciary relationship was created by the parties’ execution of a confidentiality agreement that prohibited disclosure of information regarding the agreements and required Smith to trust and rely upon appellants to protect the property interests assigned to him because he could not disclose his interest to Halliburton’s counsel, and any settlement proceeds would be paid to Anglo-Dutch or their attorneys. To the extent Smith’s position equates a confidentiality agreement to a relationship of trust and confidence giving rise to a fiduciary duty, there is no authority supporting the notion that confidentiality agreements can create fiduciary relationships. OPINION:Edelman, J.; Hedges, C.J., Fowler and Edelman, J.J.

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