Austin Attorney Gregory D. Jordan Remarks On J.P. Morgan Oil And Gas Lease Lawsuit
Austin, TX (Law Firm Newswire) December 12, 2013 – A lawsuit accuses J.P. Morgan Chase of double-leasing oil land.
Orca Assets G.P. LLC, a small energy-investment company based in Houston, has filed suit in U.S. District Court in Dallas against J.P. Morgan, alleging fraud and negligent misrepresentation. According to the lawsuit, Orca agreed to lease over 900 acres in south Texas for $3.2 million three years ago. However, before Orca was able to drill for oil on the property, the company learned that the land had already been leased to another company. J.P. Morgan represented the seller, the Red Crest Trust, and was administrator of the trust.
“Disputes over leases are not uncommon in the oil business,” said Gregory D. Jordan, an Austin oil and gas attorney. “Parties are sometimes in such a rush to complete a deal that they do not exercise proper diligence. When that happens, it may come back to bite them.”
Orca claims lost profits of up to $400 million. J.P. Morgan filed a motion for summary judgment in September. The bank has acknowledged leasing the property to two different entities within a five-month period, but said that Orca was required to thoroughly vet the title to the property and failed to do so. J.P. Morgan also said that the damage claims were inflated.
According to J.P. Morgan, if Orca had attempted to verify that the title for the land was valid and could be leased, the company would have found a recording of the prior lease. The bank also said that Orca’s claims for lost profits were “pie-in-the-sky assumptions” that were based on the company’s “unproven ability” as an oil drilling operator.
The trustee of the Red Crest Trust at the time of the leasing was Philip Metham, a J.P. Morgan employee working in the bank’s Fort Worth office. The beneficiaries of the trust are the heirs of H.J. McMullen, who invested in Texas oil land in the 1920s. GeoSouthern Energy Corporation, the company that signed the prior lease, won a lawsuit determining that it was the rightful lessee. Orca is appealing that decision.
The case is expected to go to trial in December. J.P. Morgan, the largest bank in the country by assets, is facing numerous other financial and legal challenges and plans to commit 5,000 additional employees to address risk and compliance issues, according to a report in the Wall Street Journal.