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Thomas v. Oklahoma Land Holdings LLC

United States District Court, W.D. Oklahoma

April 10, 2018

BILL D. THOMAS, Plaintiff,
OKLAHOMA LAND HOLDINGS, LLC, et al., Defendants.



         Before the Court is Defendants' Motion to Dismiss [Doc. No. 11], to which Plaintiff has filed his response in opposition [Doc. No. 13]. The matter is fully briefed and at issue.


         Defendants Danick Resources, Inc. (“Danick”) and Schlachter Operating Co. (“Schlachter”) engaged in oil and gas exploration in Oklahoma, including but not limited to the “STACK” play in the Anadarko Basin, with Canadian and Kingfisher Counties as core counties. The geographic area of the STACK play was not limited to Canadian and Kingfisher Counties, but included mineral acres in Blaine, Major, Garfield, Ellis, Dewey, Logan, and Woodward Counties (the “Expanded STACK Area”). Defendants formed Oklahoma Land Holdings, LLC (“OLH”) as a joint venture to establish a pool of money to acquire leases in the Expanded STACK Area and sell these leases collectively to the highest bidder.

         In furtherance of their endeavor, Defendants created a sales and marketing document-the “Prospectus”-describing opportunities in the Expanded STACK Area to attract investors for its lease fund. OLH publicly marketed the Prospectus to numerous potential investors without requiring them to sign a confidentiality agreement. During the same time OLH was offering the Prospectus to potential investors, Plaintiff and another individual, Andy Ashby (“Ashby”), formed a partnership (“the Partnership”) to acquire and explore mineral leases for investment. The Partnership evaluated numerous prospects and eventually decided to focus its activities in the Expanded STACK Area.

         Defendants asked whether Plaintiff would be interested in evaluating certain properties in the Expanded STACK Area. Plaintiff expressed interest, and Defendants offered to share the Prospectus with Plaintiff, provided he sign a Confidentiality and Non-Circumvention Agreement (the “Agreement”). When Plaintiff stated he could not sign the Agreement on behalf of the Partnership or a new company which Plaintiff and Ashby intended to form, Defendants suggested he sign it individually, to which Plaintiff agreed.

         After reviewing the Prospectus, Plaintiff discovered the Area of Mutual Interest (AMI) (which, according to the Agreement, consisted of 120, 000 acres in Ellis, Dewey, and Woodward Counties) had not been specifically identified by property descriptions. Defendants insisted the AMI included 100% of Ellis, Dewey, and Woodward Counties, an area of approximately 2.2 million acres. Plaintiff told Defendants the Prospectus was not useful to a company engaged in oil and gas exploration because the information therein was primarily a collection of publicly available information designed to target individual investors to contribute to a pool of money to lease properties.

         Defendants stated they wanted to be the leasing agent for Plaintiff and Ashby's new company. Plaintiff told Defendants the new company had not yet been formed and the Partnership already had a leasing agent. The Partnership's leasing agent began evaluating and acquiring options for mineral leases in the Expanded STACK Area, including leases in Ellis County, which were included in schematics in the Prospectus. The Partnership offered the options to OLH at cost. OLH rejected the offer, threatened to sue Plaintiff, and reiterated Defendants' desire to be the leasing agent for Plaintiff's new company.

         On July 16, 2017, BMR II, LLC, a Colorado limited liability company (“BMR II” or the “Company”), was organized to replace the Partnership. Its business purpose was to acquire options, explore, and operate mineral leases in the Expanded STACK Area. Plaintiff and Ashby had an opportunity to borrow money from BMR II to purchase an ownership stake in the Company; they also expected to profit proportionately to their respective ownership interests if the value of the Company went up. Plaintiff was offered the position of Vice President with BMR II and agreed to borrow $1.85 million dollars from BMR II with the expectation his investment would substantially grow because of the anticipated appreciation in the value of mineral interests in the Expanded STACK Area. However, Defendants continued to assert their rights under the Agreement against Plaintiff and threatened to sue. In response, BMR II withdrew its offers to make Plaintiff Vice President, loan Plaintiff money for investment purposes, and disassociated itself from Plaintiff.

         On October 26, 2017, Plaintiff filed the instant suit. He contends he was induced by Defendants into signing the Agreement in that: (1) Defendants falsely represented the Prospectus contained certain, valuable proprietary information which was not publicly available concerning the Expanded STACK Area and information for an oil and gas exploration company wanting to acquire mineral leases in the Expanded Stack Area; (2) Defendants represented that the Partnership and BMR II would not be bound by the Agreement and Plaintiff's relationship with BMR II would not be adversely affected; and (3) Defendants concealed their position that the Agreement applied to 100% of Ellis, Dewey, and Woodward Counties.

         Plaintiff also contends the Non-Compete and Non-Circumvention provisions of the Agreement fail for lack of consideration because information contained in the Prospectus was non-proprietary and publicly available, and that the parties never had a meeting of the minds because Defendants intentionally or negligently misled him concerning the geographic scope of the AMI and the nature of the information in the Prospectus. Lastly, Plaintiff contends Defendants unlawfully interfered with his prospective economic opportunities with BMR II. He requests a declaratory judgment that the non-compete and confidentiality portions of the Agreement are void and unenforceable under Oklahoma law in that such provisions are vague, overly broad, OLH failed to take reasonable steps to protect the information, and such information is publically available. Plaintiff also seeks a declaration that, under Texas law, the Agreement is unenforceable for failure to provide an adequate property description for the AMI. Plaintiff also asserts claims for intentional interference with prospective economic advantage, [2] and fraudulent inducement.

         Defendants move to dismiss the Complaint on two grounds. First, they contend Plaintiff has failed to plead facts sufficient to invoke diversity jurisdiction[3]and the Complaint fails to state a claim upon which relief can be granted.


         Subject matter jurisdiction is a threshold issue the Court considers first. Farmer v. Banco Popular of N. Am., 791 F.3d 1246, 1254 (10th Cir. 2015). A Rule 12(b)(1) motion to dismiss for lack of subject matter jurisdiction takes one of two forms: a facial attack or a factual attack. Pueblo of Jemez v. United States, 790 F.3d 1143, 1148 n. 4 (10th Cir. 2015). A facial attack questions the sufficiency of the complaint's allegations. Id. In reviewing a facial attack, a district court must accept the allegations in the complaint as true. Id. In a factual attack, the moving party may go beyond allegations contained in the complaint and challenge the facts upon which subject matter jurisdiction depends. Id. When reviewing a factual attack on subject matter jurisdiction, a district court may not presume the ...

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