In EOG. v  CNH Enterprise Holdings, Ltd. the Court denied a Texas Citizens Participation Act motion to dismiss a plaintiff’s claim.

CNH sued EOG for termination of the Hundley lease covering 3,500 acres in McMullen County. The claim that drew EOG’s TCPA ire was CNH’s cause of action (in the alternative and among several others, including terminaton of the lease) for breach of the implied covenant to protect the lease from drainage. CNH alleged that EOG permitted and drilled a well on adjoining acreage in violation of field rules and Rule 37 without notice or consent from CNH or its predecessor lessor, fracked the well causing fractures and injecting proppant into the Hundley lease resulting in damage by draining hydrocarbons from the lease, and then failed to drill an offset well.

EOG’s motion to dismiss alleged that the claim that should be dismissed was based on EOG’s communications with the Railroad Commission in its application for a drilling permit.

The lofty purposes of the TCPA are “to encourage and safeguard the constitutional rights of persons to petition, speak freely, associate freely, and otherwise participate in government to the maximum extent permitted by law and, at the same time, protect the right of person to file meritorious lawsuits for demonstrable injury.”  

 To prevail on such a motion the movant must first demonstrate that the TCPA applies. This is the only step in the analysis that the Court needed to address (there are two others). The statute requires a connection between the legal action andexercise of the protected right, and the claim must be “based on or in response to exercise of a protected right”.

CNH’s petition referred to EOG’s communications with governmental bodies (The right to petition includes such communications). Was the failure-to-protect claim based on or in response to EOG’s communicztions to the Commission? The Court went to case law and the dictionary in search of the meaning of “based on” or “in response to”, and other words and phrases such as “the gravamen of”, “factually predicated on”, and “main ingredient” (the fundamental part of something, in case you were wondering). That is what the courts do when having to evaluate the meaning of words not defined in the statute (or contract in some cases) under consideration.

The Court’s conclusion

Not surprisingly, the Court deemed the gravamen of CNH’s failure-to-protect claim to be that EOG breached its obligation to protect the Hundley lease by failing to drill an offset well to prevent drainage. There was no connection between the legal action and exercise of a protected right, and the claim was not based on or in response to exercise of a protected right.

The lesson?

Whether or not EOG’s goal was to subject CNH to costly and time-consuming satellite litigation, that seems to be the effect of its motion. (This is to NOT to say that was the goal). Regardless, now the parties will be able to address the underlying claims and defenses. 

Raul Malo (think the Mavericks) RIP. And, this being Advent, let’s not forget Joseph.