IN THE SUPREME COURT OF TEXAS
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No. 03-1066
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Arkoma Basin Exploration Company,
Inc., et al., Petitioners,
v.
FMF Associates 1990-A, Ltd.,
et al., Respondents
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On Petition for Review from the
Court of Appeals for the fifth District of Texas
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Argued December 1,
2005
Justice O’Neill,
concurring and dissenting.
I
agree that Arkoma’s reserve estimates cannot all be treated alike, as estimates
for the relatively unexplored South Panola
field were much more speculative. But the mere fact that estimating the South Panola field’s reserves was more difficult did not
provide Arkoma a license to deliberately falsify data to drive up the mineral
rights’ acquisition price, of which it received a sizeable percentage, and then
cry “opinion” to avoid liability once it pocketed the commission. According to
evidence presented at trial, Arkoma did not estimate reserves by working
through the necessary data; instead, the desired reserve number was identified,
then the calculations were worked backward to determine what the data should be
to support that number. While good-faith opinions are shielded from fraud
claims under Virginia
law, opinions that are deliberately based on information known to be false are
not. Yuzefovsky v. St. John’s Wood Apartments, 540 S.E.2d 134, 142 (Va. 2001); Horner v. Ahern, 153 S.E.2d 216, 220 (Va. 1967). I
agree with the court of appeals that, even if the represented gas reserves were
opinions, they are actionable because those opinions were represented to be
based on a particular data-driven process that was not used:
[Arkoma] told the
partnerships they had determined the reserves using a particular process, and
the partnerships presented some clear and convincing evidence that [Arkoma] did
not use that process but falsified the results through manipulation and
falsification of the data and calculations. When estimates and opinions are
based on deliberate, intentional falsification of the data and calculations,
they are the product of falsified facts and part of the fraudulent
misrepresentation. When those estimates are made to a person without the
maker’s special knowledge of the subject matter, those estimates, if intentionally
misrepresenting the facts, are actionable.
118 S.W.3d 445, 455 (citing Horner, 153 S.E.2d at 220–21).
According
to the evidence presented at trial, Arkoma held itself out as having special
expertise in the Arkoma
Basin by its possession
of a unique database that allowed it to more accurately estimate reserves and
potential cash flows. FMF relied on Arkoma’s purported expertise in acquiring
the mineral rights that it marketed to investors, and paid a premium for those
rights that directly benefitted Arkoma. Under these circumstances, I disagree
with the Court’s conclusion that Arkoma is exempt from liability for
misrepresentations concerning the South Panola
field, and to this extent I respectfully dissent. I join the remainder of the Court’s
opinion.
___________________________________
Harriet O’Neill
Justice
OPINION DELIVERED: January
25, 2008
