Keeping Lawsuits “Friendly”
The oil boom is back, so it stands to reason that other affectations of Oil Patch abundance wouldn’t be far behind. Like the “friendly lawsuit.”
The oil boom is back, so it stands to reason that other affectations of Oil Patch abundance wouldn’t be far behind. Like the “friendly lawsuit.” Recently, the city of Fort Worth sued Cheasapeake Energy, the Oklahoma City-based natural gas producer that owns about 500 mineral leases on city property. The city claims Chesapeake has been shortchanging it on royalties. It’s the type of dispute that’s almost as old as oil itself. In fact, the neighboring city of Arlington sued Chesapeake in August, seeking $1 million in royalty-related claims, and the company last year settled a royalty dispute with the Dallas/Fort Worth International Airport by agreeing to a $5 million payment.
Chesapeake and Fort Worth have had a close relationship for years, and since 2006, the company has paid the city tens of millions of dollars in royalties. Now, the city claims Chesapeake hasn’t been using the right formulas to calculate those payments. The dispute, though, hasn’t soured the relationship. The city says it has no intention of severing ties with Chesapeake.
While they stopped short of using the term “friendly lawsuit,” it reminded me the wildcatters of old, who could be signing legal documents with one hand, and shaking on a new deal with the other. I first encountered the notion of a friendly lawsuit when I interviewed Cloyce Box, the legendary Dallas wildcatter and former pro football star known for his litigious ways.
In the fifties, Box was a standout receiver for the Detroit Lions. His record of fifteen touchdown receptions in the 1952 season stood until Calvin Johnson broke it in 2011. After he retired from football, Box returned to Texas and started Box Energy in Dallas, living the life of a wheeling, dealing oilman. His mansion in Frisco was used as the original Southfork in the television series Dallas, but Cloyce didn’t like how the show portrayed the oil business and booted film crews off of his land after a few episodes.
His business dealings were often more cantankerous. He had a habit of running his public company as if it were his private plaything, which led to a years-long legal battle with one of his biggest investors, J.R. Simplot, the billionaire Idaho potato magnate who made his fortune from landing the French fry concession for McDonald’s.
Simplot’s suit was anything but friendly, but Box saw the legal system as just another business tool. In 1992, real estate developer Trammell Crow sued Box over a cement company they jointly owned in Midlothian. Box had used notes in a limited partnership as collateral for loans from Crow. Later the partnership was rolled into Box Energy, but Box never sent Crow the new shares of stock. Left holding worthless paper, Crow sued.
Back in the nineties, I called Box on his car phone, and he assured me the lawsuit was nothing. He said he didn’t dispute the debt, and that he and Crow already had a verbal understanding on the matter. The lawsuit, he said, was filed for tax purposes, although he didn’t elaborate.
“That’s just a friendly lawsuit,” he said. “Trammell and I are still friends. We have lunch all the time.”
Crow eventually prevailed, collecting a “friendly” judgment of $15 million, which he had to get from Box’s estate after the oilman died in 1994.
The dispute between Fort Worth and Chesapeake may not be quite as nonchalant as Box made his lawsuit with Crow sound, but both sides seem to be taking a page from the wildcatters of yore: If you have to sue, keep it friendly.