Co-author Gunner West
The growling and barking presented by a claim for tortious interference is often far worse than the bite. Consider Segundo Navarro Drilling, Ltd. v. Chilton , which is a good example of that phenomenon in an oil and gas transaction. The Dallas Court of Appeals affirmed summary judgment for defendants, holding that:
- a letter of intent with an at-will termination clause is not “subject to interference” in a claim for interference with an existing contract because the contract was not legally binding and obligatory; and
- breach of contract does not constitute an “independently tortious or unlawful act” necessary for interference with prospective business relationships. There must be an independently tortious or unlawful act—which breach of contract is not.
The Relationship and Failed Assignment
In 2018, San Roman Ranch Mineral Partners entered into an oil and gas lease in favor of Arkoma Drilling. When Arkoma couldn’t meet drilling requirements it attempted to assign the lease to Segundo. The assignment required San Roman’s prior written consent—not to be “unreasonably withheld or delayed.”
Arkoma and Segundo signed a letter of intent (LOI) that contained a termination clause allowing either party to terminate at-will without further obligations. When Arkoma sought San Roman’s consent, Chilton (San Roman’s president) declined, citing prior litigation with Segundo. Arkoma terminated the LOI.
Segundo sued San Roman and Chilton for tortious interference with an existing contract, tortious interference with a prospective business relationship and civil conspiracy. The trial court granted summary judgment for the defendants on all three claims. Segundo appealed.
No Interference of a Non-Obligatory LOI
Segundo’s tortious interference with existing contract claim failed because the LOI wasn’t subject to the alleged interference. The critical aspect of the LOI: Neither party was obligated to perform. Either party could terminate the LOI at will, at which point the LOI would “have no force and effect” and the parties would “have no further obligations”.
Non-obligatory contract provisions are not subject to interference. Because no provision required either side to proceed with the assignment, it could not be “subject to interference” as a matter of law.
This conclusion negated this essential element of the claim, making judgment appropriate without analysis of the remaining elements.
Contract Breach is Not an “Unlawful” Act
Segundo contended that San Roman’s withholding of consent was a breach of contract that constituted an “unlawful” act, satisfying the dispositive element of the prospective business relationships claim.
Rejecting this argument, the court held that tortious interference with prospective business relationships is limited to a violation of tort or statutory duty. Said the court, “breach of contract is not illegal” and “not necessarily blameworthy.”
The court cited extensive authority establishing that breaching a contract is neither wrongful nor unlawful. A contractual promise simply creates a right to either performance or damages—not a guarantee the promised performance will occur. This distinction delineates the boundary between contract law (where breach of contractual obligations gives rise to remedies in law or equity) and tort law (where breach of legal duties gives rise to liability for damages).
Thus, even if San Roman breached the lease by unreasonably withholding consent—an issue the court did not need to decide—such breach alone could not establish the “independently tortious or unlawful” element required for Segundo’s second claim.
Lastly, Segundo’s civil conspiracy claim necessarily failed when the court dismissed the two underlying claims, as “there can be no independent liability for civil conspiracy” without an underlying tort.
Your musical interlude: Big band C&W? Or a fiddle?