While explorers traditionally use treasure maps to find a pirate’s hidden bounty, San Antonio’s 4th Court of Appeals recently used one to preserve a victory for Joe Cohen’s clients in a trade secret dispute in an oil and gas case.
The background to the 4th Court’s Sept. 18 decision in Thomas A. Lamont, et al. v. Vaquillas Energy Lopeno LTD, et al. is as follows, according to the opinion.
In 1996, Jerry Hamblin and Thomas Lamont formed Ricochet Energy, an oil and gas development company. Years later, Ricochet entered into an agreement with Vaquillas Energy Lopeno LTD and JOB Energy Partners to generate oil and gas prospects.
In 2004, a geologist for Ricochet identified a gas reserve in South Texas containing between $40 and $60 million worth of gas. The map the geologist developed was commonly referred to as the “Treasure Map,” according to the opinion.
Hamblin and Lamont met with Vaquillas and JOB to discuss the Treasure Map. Vaquillas and JOB agreed to participate as percentage working-interest owners in a drilling project, while Ricochet maintained a majority of that working interest. While the project was being developed, all parties agreed to keep the project and the Treasure Map secret, according to the opinion.
Later, Lamont notified Hamblin that he wanted to separate from Ricochet. As part of his separation agreement, Lamont was allowed to keep a 29 percent interest in the drilling project.
Lamont later met with Rosendo Carranco, another oil and gas developer. Lamont notified Carranco that he had an interest in the drilling project. One of Carranco’s companies later purchased a portion of Lamont’s interest in the drilling site.
Eventually, Lamont and Carranco negotiated against Ricochet for a lease detailed on the Treasure Map that had previously been in litigation and won that lease by offering an upfront bonus exceeding $1 million. Lamont and Carranco’s company partnered with another company and began drilling on the site, depleting its reserves.
Vaquillas and JOB sued Lamont, Carranco and their associated companies for misappropriation of trade secrets and tortious interference, among other things. A jury found that the defendants had misappropriated the Treasure Map, among other things, and returned a verdict in favor of Vaquillas and JOB. The defendants appealed the verdict to the 4th Court.
On appeal, the defendants’ arguments included that they did not rely on the Treasure Map to drill on the site, instead relying on other information obtained through proper means.
The Treasure Map, and how it was obtained, was a significant part of the 4th Court’s analysis. A color copy of the map appears in the opinion. Justice Patricia Alvarez, wrote the opinion, which was joined by Justices Sandee Bryan Marion and Luz Elena Chapa. The court rejected the defendants’ argument.
“While claiming they did not use the map, or any additional seismic data, Carranco and Lamont offered over $1 million to lease the El Milagro property, drilled wells on it, and drained the reservoir within six months,” Alvarez wrote. Although they found Lamont used proper means to review the Treasure Map, “the evidence shows Appellants used the map to the detriment of Ricochet, Lamont’s former employer.”
“Based on a review of the entire record, we conclude that the evidence is legally and factually sufficient to support the jury’s determination that the Appellants procured the Treasure Map by improper means,” Alvarez wrote.
The Treasure Map helped illustrate what was a fairly complicated oil and gas trade secret dispute, says Cohen, a partner in Houston’s Beirne, Maynard & Parsons who represents Vaquillas and JOB on appeal.
“We tried to keep it as simple for the jury and for the court of appeals as we could,” Cohen says. “A picture is worth a thousand words.”
“At the end, it’s the easiest thing in the world to understand that these maps are very important,” Cohen says. “This is what’s going to convince an investor whether to invest in a property. And it’s why the map is critical.”
Byron Keeling, a partner in Houston’s Keeling & Downes who represents the defendants in the case, declines to comment on the decision.