A Texas judge has ruled that W.R. Huff, founder of private equity and high-yield investment manager W.R. Huff Asset Management Co., along with the Huff Energy Fund, a Huff executive and a Huff portfolio company, must place leases on 46,130 acres into a constructive trust as well as pay $95.5 million in cash to another portfolio company, Longview Energy Co.
In a ruling on Monday, Judge Amado J. Abascal III also awarded Longview the value of all production revenue derived from the leases that will be in the constructive trust from June 2 until the date the leases are transferred to Longview.
In June, a jury in the Texas District Court in Zavala County, Crystal City, found, among other things, that Mr. Huff and Rick D'Angelo, an analyst with the Huff Energy Fund, breached their fiduciary duty of loyalty toward Longview by engaging in a competing business. The jury found another portfolio company, Riley-Huff Energy Group, invested in a potentially lucrative shale oil deal that Messrs. Huff and D'Angelo learned about while sitting on Longview's board.
Bryan Bloom, Huff's in-house counsel and portfolio manager, said the defendants would appeal.
“Not surprisingly, but nevertheless incredibly, he (the judge) ignored all legal principles as well as the jury's binding conclusions and ruled that plaintiff should get a judgment for $95.5 million and other relief for the plaintiff,” Mr. Bloom said in an e-mail. “This may be a blessing in disguise. This over-the-top ruling by this judge … is so far afield that it increases our chances of winning.”
“We are prepared to go the distance. We think the appellate court will uphold what we have been awarded,” said Robert D. Gershen, president of Longview Energy.