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ONGVIE1V ENEROV COMP.{NY,

IN TI{E DISTRICT COURT

Plantiff,
v.

$ $
$

TFIE.HUFF ENERGY FUND, L.P,, WRI{ ENERGY FARfi{ERS, W.R. LLA,,

RTCK

$ $

OF ZAVALA COTJNTY' TEXAS

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$ $ $ $

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$ $ $

Def,endats.

6th JTIDICIAT DISTRICT

flRSNTENDED FETTION plaihtiff l,onryicw Energy

C.om,panr

bdngs is,anion againvt defendarrts The I'uff

A.sset Managemerit Co., LLC,

nergy Firnd, L'P., \ArRH Enetgy P4rtrrer.s,

L.L'c', \u,R l{uff

William R,

.igill, Huff, Rick D'Angeto, Ed Dartley, Brfn

Blootn, Rily-Huff Enrgy Group,

LLC,,and BobbY RileY.

Discovcty Confol Phn

l.

Pursuant

to Toxas. Rule of Civl

Procedw 190'3, 'tongviow interids that

discovery be conducted undor Level 2'

lntnoductior

Z,
these

This e aos b,e-cau$e two faithlebs corporatie directors hijacked pr,prate

gain. rn execrrting'this scherne, opportunities worth hundeds of m.illions of dollars,for their own
L-olgyrew's two djreptors brcached their fiducary duties to Longview, stote snd misusd

condentiel and proprietary informator and,defrauded

.t

tl

vtr-y oom'p'atry they

to protect and defend. The other defendants conspired with and/or aided and abetted the faithless
directors.

Jursdiction and Venue

3.

This Court has jurisdiction over the parties who are Texas citizens or who

maintain a principal residence or place of business in Texas. Further, this Court has jurisdiction over the parties as each has done business in Texas and/or because each of the parties has had

sufficient minimum or continuing contacts with Texas and is amenable to service by a Texas
court,

4. 5.

This Court has subject-matter jurisdiotion over this case because the amount in

controversy exceeds the Court's minimum jurisdictional limits.

Venue is mandatory and proper in this district pursuant to Tex. Clv. Pnec. &

Rnv. CooB $ 15.01 1 because this is an action to recover an interest in real property, all or part of which is located in Zavala County. See also In re Kerr, 293 S.W'3d 353, 356 (Tex.App.

Beaumont 2009, orig. proceeding). Specifically, the defendants stole Longview's opportunity to purchase tens

of thousands of acres of oil and gas

leases located

in the Eagle Ford

trend.

Longview, the true and equitable owner of these properties, f,rled this lawsuit to recovet title to the pilfered Eagle Ford leases. Further, given the common allegations of fact against these
defendants, venue is proper over all claims in this lawsuit pursuant to Tnx, Ctv. Pnnc. &
RBtr.

" Coo $ 15.004.

L 6.

The Parties

Plaintiff Longview Energy Company is a corporation organized and existing

under the laws of the State of Delaware, with its principal place of business in Dallas County,
Texas.

7,

Defendant The Huff Energy Fund, L.P. ("Huff Energy") is a Delaware limited

partnership. Huff Energy has several limited partners who are Texas citizens. As a consequence
and by operation of law,

Huff Energy is a Texas citizen and a local defendant. Huff Energy

has

previously appeared in this lawsuit and may be served through its counsel of record.

8.

Defendant WRH Energy Partners, L.L.C. ("WRH Energy") is a Delaware limited

served

liability company. WRH Energy has previously appeared in this lawsuit and may be
through its counsel ofrecord.

g,

Defendant W.R, Huff Asset Management Co., LLC ("Huff Asset Management")

is a Delaware limited liability company. Huff Asset Management has previously appeared in
this lawsuit and may be served through its counsel of record.

10. 11, 12. 13, 14,

Defendant William R. "Bill" Huff is a citizen of the State of New Jersey. Huff

has previously appeared in this lawsuit and may be served through his counsel of record.

Defendant Rick D'Angelo is acitizen of the State of New Jersey, D'Angelo has

previously appeared in this lawsuit and may be served through his counsel of record.

Defendant Ed Danley

is a citizen of the State of New Jersey, Dartley has

previously appeared in this lawsuit and may be served through his counsel of record. Defendant Bryan Bloom is a citizen of the State of New Jersey. Bloom has

previously appeared in this lawsuit and may be served through his counsel of record.

Defendant Riley-Huff Energy Group LLC ("Riley-Huff')

is a Texas limited

liabitity company and has its principal place of business in the State of Texas' BC&D Co',
which has an ownership interest in Riley-Huff is a Delaware corporation. Therefore, Riley-Huff is a citizen of Delaware and not diverse from Longview, Riley-Huff has previously appeared in this lawsuit and may be served through its counsel of record.

15,

Defendant Bobby Riley is a citizen

of the

State

of New Jersey. Riley has

previously appeared in this lawsuit and may be served through his counsel of record.

il. A.
Relationship of the Parties.

X'actual Background

16.

Longview

is a

private Dallas-based independent

oil

and gas exploration,

development, and production company,

It was incorporated in

1999 in Delaware and operates

oil and gas wells in Fresno County,

California, LeFlore County, Oklahoma and Sebastian

County, Arkansas, and has invested significant time and resources exploring the Eagle Ford play,

including Zavala Courty, Texas. Longview has eight employees in Dallas and four in Fresno
Corurty, Califomia.

17,

Despite

its modest

number

of

employees, Longview has assembled an

experienced and talented senior management team with average oil and gas experience in excess

of 30 years each. Bob Gershen, Longview's Chairman, President, and CEO, has been actively
involved in the oil and gas investment business for 32 years (since Jimmy Carter was President)
and has advised and sat on the boards of many energy companies, including publicly traded

cornpanies. Longview's technical team includes Rick Pearce, Longview's Chief Operating
Ofhcer, who is a registered petroleum engineer in the State of Texas with more than 38 years
(since Richard Nixon was President) of hands-on operating and management experience in oil
program and gas drilling and operations, field evaluation and redevelopment, and exploration

management, including the identification, evaluation, and acquisition of trend acreage, Greg

Anderson, also a petroleum engineer, has 26 years

Governor

of

experience (since Mark liVhite was

of Texas) in drilling and operations

management and reseryoir evaluations. David

Fuller, Longview's Vice President of Land and Legal, has been an oil and gas attorney and

landman active in leasing and land management for both development and exploration programs

for more than 36 years (since Dolph Briscoe was Governor of Texas). Mark Lober, a geological
and geophysical consultant to Longview for more than eight yerirs, has developed and evaluated

exploration prospects and projects in multiple oil and gas basins across the United States fot 34
years (since John

Hill was the Attorney General of the State of Texas). Dana Spratt, Longview's

consulting Chief Financial Officer, is an MBA/CPA with more than 25 years of experience
(since phil Gramm was a freshman United States Senator) in financial modeling and accounting,

including several years as the CFO of a publicly-traded, oil and gas syndication company, But

Longview,s depth

of

expertise does not end with its internal team and carefully selected

consultants: Board member Harold Carter, the former president of a Dallas-based oil and gas company traded on the New York Stock Exchange and a past-President Association of professional Landmen, has nearly

of the American

fifty years of direct oil and gas experience

(since John Kennedy was President); Board member Thomas Vessels, who also has decades of

industry experience, is the former president of a vertically integrated oil and gas company, the
current president of a gas production company, and a present or former director of or advisor to
numerous energy companies and industry associations.

18,
invested

Longview has more than 100 shareholders. Most own less than one percent of

Longview,s shares. In 2006, Huff Energy, a New Jersey-based $500 million investment fund,

in Longview and ultimately

became Longview's largest shareholder, holding

approximately 39yo of Longview's outstanding stock. Huff Energy's strategy was to invest in
companies that could balance traditional exploration and resource type plays, and it saw an ideal

investment candidate in Longview. In connection with its original investment in Longview-

which was Huff Energy's first investment in any company-the parties executed a Shareholders

Agreement, which, among other things, entitled Huff Energy

to appoint two

members of

Longview's Board of Directors, to have a representative on every Board committee, and to

prevent unilaterally any future issuance of Longview equity securities. Huff Energy appointed

Bill Huff

and Rick

D'Angelo

as its members of the

Longview Board.

19. At the time of Huff Energy's investment, WRH Energy was Huff Energy's
general partner and therefore liable for all of

Huff Energy's debts and other liabilities, Huff

Asset Management, on information and belief, is the asset manager

of Huff Energy and the

controlling manager of WRH Energy.

20.

While serving as a Longview Director, Bill Huff has sat at the head of a nest of

investment funds bearing his name or

initials. Huff founded and controls W.R. Huff

Asset

Management, as well as all other Huff entities. His positions include Chief Investment Officer

of Huff Asset Management and WRH Energy, These funds invest billions of dollars on behalf

of

their investors and have generated a personal fortune for Huff estimated in the hundreds of
millions.

21,.

In the financial industry, Huff is known for a "my way or the highway" business

style and as "a rough-and-tumble guy, not well polished, not a great communicator," According to a former colleague, "[h]e's like a great white shark. He doesn't kill out of anger, he just can't stop himself. He's prograrnmed to do

it." Not surprisingly, then, Hufls business record is

littered with claims of inadequate disclosure and self-dealing, and a number of state and city
pension funds have replaced him as their investment manager as a result of this conduct. In
keeping with this pattern of malfeasance and neglect of his duties, Huff never visited Longview's

offices, never attended a Longview Board meeting in Dallas, and rarely bothered to participate

by telephone in Longview Board meetings, relying instead on his underlings to carry out his
schemes.

ZZ,

Although Huff is known for his self-described "abrasive" style and willingness to

.,tak[e] off the gloves and put[] on the brass knuckles," it has been said that "he is charming
compared with the people beneath him," which in this case includes D'Angelo, Dartley, and Bloom.

23.

While serving as a Longview Director, D'Angelo also served as a Principal of

WRH Energy and as a Manager of at least three Huff Energy portfolio companies that are (or

Oil & were during the relevant time) direct competitors of Longview: Riley-Huff, Marshfield
Gas,

LLC (,,Marshfield"), and Krescent Energy co., LLC ("Krescent").

24.

While attending Longview board meetings as a Huff factotum, Dartley

also

a Manager served as Counsel and Chief Compliance officer for Huff Asset Management and as

of at least two Huff Energy portfolio companies that are (or were during the relevant time) direct
competitors of Longview: Riley-Huff and Marshfield'

25,

While serving as counsel to WRH Energy, Bloom also served as a Manager of

at

direct least two Huff Energy portfolio companies that are (or were during the relevant time)

competitors of Longview: Riley-Huff and Marshfield'

26.
of Riley-Huff.

Riley-Huff is a direct competitor of Longview; on information and belief, one or

investor more of the Huff Energy companies is directly or indirectly the majority and controlling

27.

Bobby Ritey is the President and a Manager of Riley-Huff.

Zg,

Wyldfire Energy, Inc. ("Wyldfire") is engaged in obtaining oil, gas, and mineral

interests for oil and gas exploration, development and production companies. Tamara Ford is the President of Wyldfire.

B.

The Scheme and Its Roots.

29.

Longview diligently educated its Directors conceming their duties of loyalty to

an extra the company. These duties demand absolute frdelity to Longview's interests and require n.easure of diligence when a director may have divided interests by, for instance, simultaneously

serving as a director, officer, partner, investor or manager

of entities in competition

with
its

Longview. Accordingly, in 2007, Longview distributed a guidance letter prepared by

corporate counsel, the nationally-acclaimed WilmerHale law
cautioned that

firm (www.wilmerhale.com). It

,,[i]f an investor

opposes or favors, out

of its own economic self-interest and not

should

necessarily that

of the corporation, an action being considered by the corporation, it

a director." express that position in its capacity as a stockholder of the corporation , . . and not as

It also warned that ,,[a] director of a corporation has a fiduciary duty to the corporation

and all

of

its stockholders, regardless of other interests or duties that director may have to other

parties

(including aperrty that appointed him or her)." In an ironic foreshadowing, D'Angelo responded to wilmerHale,s letter and its inclusion as a Board-meeting agenda item by saying, "[d]on't we
that impact have much more important operational and financial issues to discuss with our time
shareholders much more critically?" The answer turned out to be "No"'

30.
then-emerging

Beginning around August 2009, Huff, D'Angelo, and Dartley charged Longview

management with the task

of finding growth opportunities on Longview's properties and the

,,resource plays" (i,e., emerging geographical aeas that were prospective for

unconventional

oil and gas reserves made economically viable through recent advances

in

technology and, therefore, iikely to attract significant oil and gas exploration and development).

Accordingly, throughout late August and early September, Longview gathered publically
available information on resource plays to allow

it to assess the economic viability of the

Bakken, the Marcellus, and the newly emergent Eagle Ford plays.

31.

Resource plays were one of the key subjects

of a meeting held in Huffs New witten materials prepared for it,

Jersey offices in September 2009. At that meeting and in the

Longview identihed the Bakken, Marcellus, and Eagle Ford resource plays as having what
appeared to be good economics at the then-current

oil and

gas

prices. D'Angelo stated that he

had done a preliminary investigation of the Eagle Ford play, and was interested in

it.

Huff

and

D'Angelo then specifically directed Longview management to investigate the Eagle Ford, and

Huff offered that Huff Energy would fund any attractive resource play investment Longview
could identify. This squared with Huff Energy's publicly-stated position that "[w]e have to be
ready to back up the original investment with further capital'"

32.

The Eagle Ford trend occupies an area cutting a large swath across numerous

south Texas counties, and stretches from Zavala County near the Mexican border northeastward

for several hundred miles. It is one of the newest trends to be developed and is perhaps

the

largest of the "shale" oil and gas formations in the United States. For decades, these formations

were thought to be virtually valueless because-although they were known to contain large
quantities of oil and gas-no technology was available to unlock their oil and gas economically.

This changed with technological advances in horizontal drilling and hydraulic fracturing
(,,fracking"), which were successfully deployed and perfected first in the Barnett shale play near

Fort Worth and later in the Bakken shale play in North Dakota, among others. Using
techniques, the first successful horizontal well was drilled in the Eagle Ford late in 2008.

these

33.

The Eagle Ford play rapidly attracted attention during 2009-2010: drilling

permits on record jumped ftom26 in 2008 to more than a thousand in 2010. Lease prices made a corresponding upward move in late 2009 and2010, from mere hundreds of dollars per acre to many thousands of dollars per acre. The magnitude of the Eagle Ford is hard to overestimate: according

to Texas Railroad Commissioner David Porter, "[t]he Eagle Ford

shale has the

potential to be the single most significant economic development in our state's history." Today, the Eagle Ford is renowned in oil and gas circles, both in Texas and beyond. During most of

2g,however, it was just beginning to develop-in the parlance of oil and gas investors, it was
"early in the play)'

34,

Not long after Huff, D'Angelo and their associates directed Longview to pursue

the Eagle Ford, Riley-Huff was formed (on October 28, 2009). Huff operatives Dartley,
D,Angelo, and Bloom were listed as Riley-Huffls Managers. Bobby Riley was listed as its
President as well as a Manager.

35.

Acting on Huff and D'Angelo's exhortations to pursue Eagle Ford opportunities,

Longview's management evaluated publicly available reports, and, in early November 2009,
engaged its consultant, Mark Lober, to study the Eagle Ford

play. Lober was already familiar

with the Eagle Ford and, throughout November, he further analyzed it for Longview. He also
knew oil and gas lease brokers with acreage available for leasing within the Eagle Ford and
introduced Longview to two of them, Pat Gooden and Tamara Ford (and her land company,

Wyldfrre). As Longview later learned, much of the acreage Ford and Wyldfire presented to
Longview was obtained through assignments from Bubba Riggs and Riggs Energy, Inc.

36.

Ford was a critical element in converting an idea into an investment. She had

previous expelience in shale plays, having worked in the Barnett play, and recognized that the

10

Eagle Ford might be as significant as or even eclipse the Barnett

play, Ford was especially

important because she was an early mover in the Eagle Ford trend ea, and had by late 2009 already established a network of local, personal connections (including Bubba Riggs and Riggs Energy, Inc.) needed to secure large tracts of acreage in prime areas on short notice.

37,
the Eagle

On December 2, 2009, Ford, Gooden, Lober, and members of Longview's

in management team met at Longview's offices to discuss a potential acquisition of trend acreage

Ford. In this

meeting, Ford presented Longview with acreage available through

Wyldfire-via Riggs and others

the much touted

-in

the Eag\e Ford trend, some of which was contiguous with

,,Hoff' well recently drilled by EOG. Ford explained that Eagle Ford acreage

would move fast, although

it

was still early in the play's development. This squared with

Longview management's recognition that the Eagle Ford play was moving rapidly and that,
consequently, the opportunities for investment at reasonable prices would enjoy only a narrow

window. Longview's

management also recognized immediately the immense value of

had been "on associating with Ford, who told Longview that Wyldfire and its team of landmen

in the ground,'developing contacts and building relationships with landowners and their advisors
the Eagle Ford prospective counties since the spring of 2009'

3g.

Shortly after the December 2 meeting, Ford requested additional information from

Lober, including Eagle Ford maps, which Lober had prepared at Longview's request and which
she acknowledged as confidential and proprietary,

39.

Around the first of December, Dartley summoned Longview's CEO, Gershen, to

Jersey.

a December 4 meeting with Bloom, D'Angelo, and Dartley in Huffls office in New

D'Angelo began the meeting by expressing dissatisfaction that Longview had not yet sent Huff
Energy any deals as a result of the September meeting. He then asked why Longview had not

11

responded

to him on several deals that he had brought to Longview management's attention. In to act in the best

a characteristic display of hubris and disregard of his fiduciary responsibilities

interest of all Longview shareholders, D'Angelo asked Gershen, "[a]fter all, who's working for

who here?" Gershen informed the assembled Huff Energy group that Longview had in fact
already hired consultants

to

analyze the Bakken and Eagle Ford trends, and that Longview

should have their reports shortly. D'Angelo asked for and received Lober's report on the Eagle

Ford. And because D'Angelo was also serving as a Manager of Riley-Huff at that time (afact
that he failed to disclose to Longview), Riley-Huff also received Lober's report.

40,

After being advised that Wyldfire had significant acreage available in the Eagle

Ford trend, D'Angelo's interest

in the Eagle Ford

grew,

ffid he

encouraged Longview's

management to work quickly on this opportunity, He was particularly interested

in the

area

around EOG's Hoff well,

area

in which Ford told Longview that Wyldhre could deliver by Longview

substantial leaseholds, He also requested proprietary information developed

concerning the Eagle Ford, including Mark Lober's work and maps prepared by Ford showing
acreage being brokered

or offered for lease by Wyldfire. Longview employees spent most of

December further analyzingthe Eagle Ford and related economics. This work included technical

analysis performed by Longview's two petroleum engineers, Rick Pearce and Greg Anderson.
Pearce was especially

well suited for work of this nature based in part on his previous experience

in regularly buying trend acreage for a previous employer. During this timeframe, Longview's
management continually warned D'Angelo that the play was on

a short fuse, a fact that

D'Angelo, a geophysicist, well understood.

41.

On December 16, 2009,D'Angelo and Dartley flew over several counties in south

Texas with Bobby Riley to review the state of Eagle Ford

drilling. Later that day, they told

l2

Longview management that they had witnessed multiple locations being prepared for drilling.
They expressed particular interest in EOG's exploration in the area, which adjoined some of the
acreage that Ford had identified at Longview's December 2 meeting. Without question, this

activity had whetted their collective appetite for investing in the Eagle Ford.

42.

The next day, D'Angelo and Dartley attended a meeting in Longview's Dallas

office to discuss the Eagle Ford with Longview management and Mark Lober. Their enthusiasm

for the Eagle Ford was matched only by their desire to accumulate as much information
possible regarding

as

it.

At that meeting, Longview provided D'Angelo with the results of

its

review of information on activity in the Eagle Ford and its proprietary reserve and economic
evaluations of the new wells being drilled by others, Lober provided maps showing "fairways"

(i,e., the most potentially fruitful prospects) and described proprietary log research he was performing, which indicated that some areas outside those pubtished fairways might be
prospective. These maps also reflected acreage proposed by Ford as available through Wyldfire, D'Angelo,s interest in Lober's maps was palpable, and they were later sent to him at his request.

And because D,Angelo and Dartley were Managers of Riley-Huff (a fact neither of them
disclosed to Longview), Riley-Huff also received this proprietary information.

43.

D'Angelo also represented that he wanted to move the process forward quickly

and that he intended to pitch the project to Huff the next

day. In

response

to D'Angelo's

encouragement and direction, Longview's managoment moved quickly with the Eagle Ford

project and impressed upon Ford and Gooden that they would also need to move quickly and to
deliver as promised.

44.
to
assess the

On December 2I,2009, Longview hosted another meeting with Ford and Gooden

inventory of acreage that Wyldhre could deliver. D'Angelo participated by phone.

l3

At this meeting, Ford showed

availabl

aoreage next

to the recently-drilled and much-discussed

EOG wells. She also identified trend acreage located in multiple locations across the Eagle Ford,

including areas identified by Lober in his work for Longview as prime prospects for drilling.

Ford made

it clear, however, that this opportunity would not be available

for long and

encouraged Longview to act quickly and decisively.

45.

The next day, Longview provided its updated proprietary internal economic

analyses for the Eagle Ford play to D'Angelo and Dartley. Dartley then requested and received

from Longview the updated Wyldfire maps that Ford had presented at the December

2l

meeting.

While D,Angelo and Dartley were plainly interested, they again requested further analysis by
Longview,

46.

On Christmas Eve, Longview had a follow-up meeting with D'Angelo to discuss

play economics and their preparations for a meeting with

Huff. At

that meeting, D'Angelo

stated that Huff would require well logs in and around any acreage that Longview proposed to

buy and any supporting2-D seismic information.

47.

On January !2,2070, after Longview reported that Lober would be in its offices

to review his most recent proprietary subsurface work, including logs and cross sections through
the Eagle Ford fairway, D'Angelo responded that he wanted to listen in to Lober's presentation because he might have presentation included

his own information about certain Eagle Ford property. Lober's

that

a review of the proprietary temperature survey of existing wells

Longview had commissioned him to prepare; this survey resulted in new maps showing revised fairways indicating that Frio and Atascosa Counties were likely good drilling prospects. At this time, D,Angelo offered that "a collbortive effort would be more beneftcia'l to all Longview shareholdels , . .."

t4

48.

Throughout early-to-mid January 2010, Longview worked towds pulling

together all the materials necessary to present this opportunity to Huff and, latet, to Longview's

Board. Working with D'Angelo and Dartley, Longview repeatedly attempted to set up a meeting

with Huff to gain his confidence in an Eagle Ford investment prior to the Board meeting
scheduled for January 28,2010. D'Angelo continued to express enthusiasm for the project and suggested that plenty of time be reserved for a discussion of the Eagle Ford at the Longview

Board meeting. But despite this continued expression of interest, the Huff operatives continued

to delay the proposed pre-Board meeting with Huff.

49.

Unable to meet with Huff, Longview went forward and on January 25,2010

circulated Director Pre-Reading Materials, which included

approximately $40 million in the Eagle

a recommendation to

invest to

Ford. But on this

same

day-and unbeknownst

Longview-Riley-Huff signed a contract with Ford's company, Wyldfire, to purchase Eagle

Ford leases.

50.
of WRH

On the eve of the January 28,2010 Board meeting, Dartley sent a letter on behalf

Energy

to Longview

expressing

its

displeasure

with Longview's

management,

especially with regard to asset acquisitions. The letter also stated that, as an example of good
management, "the Eagle Ford play doesn't count, as \rr'e told you months ago that Longview

should be looking in that

ateal

The letter did not disclose that the Huff parties had decided to

pu,.sue Eagle Ford opportunities through

Riley-Huff and its other portfolio companies rather than

Longview, nor that

it

already had negotiated

a

contract with Ford's company, Wyldfire.

Accordingly, the letter is plainly

pretext designed to obscure the decision to hijack Longview's

valuaSle Eagle Ford opportunity. Moreover, the inherent conflict ignored by Huff and his

minions was that-although their control of multiple portfolio companies in the energy sector

15

in one allowed them the luxury of covering losses in many of these companies with a bonanza company-Longview rises and falls according to its individual perforrnance. In other words,
Longview had duties to all its shareholders, not just to Huff Energy; it made a gteat difference to
rather than those Longview shareholders whether an Eagle Ford payday wound up in Longview inside another Huff ponfolio company.

51.

The January 28,2010 Board meeting was contentious, and Dartley and D'Angelo

rejected the proposed $40 million Eagle-Ford investment recommended

by

Longview's

acteage in management. They made it clear that Huff Energy had no interest in acquiring "trend

otherwise the Eagle Ford,,, and would neither finance such a venture nor permit Longview to

Board members were finance one, The Longview management team and the other Longview

to "bare stunned. What they didn,t rcalize, however, was why the Huff operatives had decided
Ford opportunity their knuckles;,, they needed to conceal that they already had stolen the Eagle
that the best defense is and given it to Riley-Huff. This perfidious conduct aside, they also knew and its analysis of a good offense, and so they spared no criticism of Longview's management the Eagle Ford.

52.

In December 2009 and January 2010, Longview was poised to capitalize on the

Eagle Ford, Lober's competitive advantage that it had forged from its intemal analysis of the

with Ford and Wyldfire' technical work and foresight concerning the trend, and its relationship At that time, it had Longview,s plan was to invest approximately $40 million in the Eagle Ford'
under its at least $1 million per month in free cash flow, a line of credit (with availability
properties in Oklahoma borrowing base), substantiil assets that could be quickly sold (including

worth $i6-20 million or more), and the potential to sell or issue stock to raise capital.
fully the Collectively, these sources of capital were sufficient to permit Longview to exercise

t6

Eagle Ford opportunity. Furthermore, Longview had the industry connections and experience
needed

to engage in joint ventures and other affangements required to develop an investment in

the Eagle Ford,

53,

Soon after execution

of its

January 25, 2070 agreement with Wyldfire, Huff

Energy's majority-owned portfolio companies embarked on an ambitious investment program in

the Eagle Ford acres previously presented to Longview, ultimately pouring millions of dollars

into lease acquisitions and drilling wells on these very properties. Riley-Huff ultimately
acquired through Wyldfire thousands of acres first identified and targeted by Longview and it obtained tens of thousands of acres from other sources. Contrary to their fiduciary duties to

Longview, neither Huff nor D'Angelo ever presented these opportunities to Longview or its
Board.

54.

By as early as April 2010, Huff Energy had dumped almost $40 million into
had

Riley-Huffs Eagle Ford play, which-by no coincidence--was exactly what Longview

proposed to do only weeks earlier to its Board (and to Huff and D'Angelo as Directors). Huff

Energy took this investment tack for its own benefit because

it would

reap nearly 100% of the

value from investments made tluough its majority owned and controlled companies, whereas it

would gain only a fraction of any profits from an investment made through independently owned
and managed Longview. This, of course, flatly contravened Huff and D'Angelo's strict duty

of

loyalty to Longview, which prohibited them from exploiting business opportunities that fairly
belonged

to Longview and required them to present such opportunities to Longview

before

exploiting them for their own self-interests, Their usurpation is all the more egregious because

Huff and D'Angelo (aided by their cohorts) acted under the cloak of their directorships and acted

not only surreptitiously but implemented their scheme through the misuse of confidential,

t7

proprietary corporate information supplied by Longview. The duty of

loya,

described well by

WilmerHale

in

2007, required more, even

if

D'Angelo thought other matters deserved more

attention. In fact, the WilmerHale letter proved uncannily prescient when it wamed Huff and
D'Angelo that
t

A director of a corporation has a fiduciary duty to the corporation and all of its
stockholders, regardless of other interests or duties that directot rnay have to other parties (including aparty that appointed him or her);

The use of confidential corporate information by a director to his own advantage would be a breach of the duty of loyalty;

There may be an inherent conflict of interest engendered by appointed director's fiduciary duties to two entities; and

shareholder-

When an investor becomes or designates its representative as a director, that director assumes a primary duty to the corporation and all of its stockholders.

Huff and D'Angelo heeded none of this and thereby failed their duties at every turn.

III. A. 55. 56. 57. 58. 59. 60.

Claims

Breach of Fiduciary Duty/Usurpation of corporate opportunity (Against Huff and D'Angelo)

D'Angelo and Huff owe Longview

duty of loyalty.

Longview was frnancially able to exploit the Eagle Ford opportunity.

The Eagle Ford opportunity was within Longview's line of business.

Longview had an interest or expectancy in the Eagle Ford opportunity. By diverting the Eagle Ford opportunity to themselves, D'Angelo and Huff placed

themselves in a position of conflict or competition with Longview.

D'Angelo and Huff breached their fiduciary duties to Longview by usurping the

Eagle Ford opportunity and misusing proprietary information supplied by Longview in regard to the Eagle Ford.

18

61, 62.

D'Angelo and Huff acted with malice'

D'Angelo and Huff s breaches of duty and usurpation of Longview's opportunity

proximately caused Longview injury and damages'

B. 63.

Fraud - (Against all Defendants)

D,Angelo and Huff concealed from Longview their intentions to appropriate the

that Huff intended to Eagle Ford opportunity for themselves and affirmatively misrepresented
fund an Eagle Ford investment through Longview'

64.

As Longview directors, D'Angelo and Huff had a fiduciary duty to fully

and

from making aff,rrmative unequivocally disclose such information to Longview and to refrain
misrepresentations to Longview,

65, 66.

D,Angelo and Huffs secret intention to divert the Eagle Ford opportunity for

themselves was material information.

HuffLongview did not know and had no way of knowing that D'Angelo and

companieswith the participation of Dartley and Bloom, who acted for Huff and the Huff
and induced Longview to would appropriate the very business opportunity they had encouraged that pursue. Rather, Longview reasonably relied on the defendants' affirmative representations

Huff intended to fund an Eagle Ford investment through Longview'

67.

D,Angelo and Huff were deliberately silent when they had a duty to speak and

Indeed, they went to great they made affirmative representations that they knew to be untrue. the Eagle Ford opportunity lengths to fraudulently conceal their ultimate design to appropriate for themselves.

6g, By concealing and facilitating the scheme to appropriate the Eagle Ford
Management, WRH opportunity, D'Angelo, Dartley, Bloom, Huff, Huff Energy, Huff Asset

t9

Energy, Riley, and Riley-Huff intended to cause Longview to: (a) use its own resources to
develop the information necessary to make an investment in the Eagle Ford; and (b) refrain from

pursuing alternative means for exploiting the Eagle Ford opportunity.

69,

Longview reasonably relied on D'Angelo and Huff s good-faith and reasonably

believed that: (a) D'Angelo and Huff did not intend to appropriate the Eagle Ford opportunity for themselves; and (b) Huff intended to fund an Eagle Ford investment through Longview.

70, TL
profits.

In carrying out their fraudulent scheme, the defendants acted with malice.

Longview suffered injury as a result of the defendants' omission of material

information, false pretenses, and affirmative misrepresentations, including but not limited to, lost

C. 72, 73.

Tortious Interference with Prospective Business Relationships (Against all Defendants) There

is a reasonable probability that Longview would have

entered into a

business relationship

with Ford, Gooden, and/or Wyldfire to acquire acreage in the Eagle Ford.

The defendants intentionally interfered with this prospective relationship by

appropriating the Eagle Ford opportunity for themselves.

74, This intentional interference \ryas malicious and independently tortious,

constituting fraud, misappropriation of Longview's trade seorets, and a breach of their f,rduciary
duties to Longview,

15.

Longview suffered damages as a result of the defendants' intentional interference,

including, but not limited to, lost profits.

20

D. 76.

Misappropriation of Trade Secrets - (Against all Defendants)

Longview owned multiple trade secrets, including but not limited to: (a) Lober's

analysis of seismic and geological data and well logs; (b) commissioned maps; and (c) economic
analyses and projections regarding the Eagle Ford opportunity.

77,
permission

D'Angelo rd Huff used Longview's trade secrets without Longview's

the

in order to further their own-self interests, Such use constituted a breach of

fiduciary duties owed by D'Angelo and Huff to Longview.

78.

D'Angelo, Huff, Dartley, Bloom, Riley, Riley-Huff, Huff Energy, WRH Energy,

and Huff Asset Management all used Longview's trade secrets without Longview's permission

and for their own commercial gain, after acquiring such trade secrets through improper means committed with malice.

79.

Longview suffered damages as a result of the defendants' use of its trade secrets,

including, but not limited to, lost profits and the value of a reasonable royalty.

E. 80. 81. 82,

torts.

Aiding and Abetting

(Against all Defendants)

D'Angelo and Huff breached their duties of loyalty to Longview, rnisappropriated

Longview's trade secrets, and defrauded Longview.

All of the defendants knew that Huff and/or D'Angelo's conduct

was tortious.
these

All of the defendants intended to assist Huff and/or D'Angelo in committing

83. All of the defendantb provided assistance to Huff and/or D'Angelo in the
commission of these torts and all acted with malice.

84,

All of the defendants' assistance was a substantial factor in causing these torts.

2l

85.

Longview suffered damages as a result of the defendants' wrongful conduct.

F.

Conspiracy - (Against all Defendants) combined

86. All of the defendants

for the purpose of: (a) misappropriating

Longview's trade secrets; (b) defrauding Longview; and (c) breaching (or aiding and abetting the
breach) of Huff and D'Angelo's fiduciary duty to Longview'

87.

All of the defendants

had knowledge of and agreed to participate in a scheme to

misappropriate Longview's trade secrets, defraud Longview, and steal Longview's corporate opportunity and each of them acted with malice.

88.
Longview.

D,Angelo and Huff misappropriated Longview's trade secrets and defrauded

89. 90. gl.

of

Bloom, Riley, Riley-Huff, Huff Energy, wRH Energy, and Huff Asset

Management also misappropriated Longview's trade secrets'

Longview suffered substantial damages as a result of the defendants' tortious acts.

G.

Constructve Trust

The defendants wongfrrlly usurped the Eagle Ford opportunity, and they were

unjustly enriched by their wrongful conduct. Specifrcally, the defendants unjustly obtained
thousands acres

of leases in the Eagle Ford that fairly belong to Longview. Accordingly,

Longview is entitled to a constructive trust over all of the subject leases in the defendants'
possession or on any assets that the defendants obtained by virtue of the usurpation.

H. 91.

Punitive Damages (Against all Defendants)

defendants

In committing each of the wrongs identified above, the individual

acted with gross negligence and malice, as defined in Section 41 of the Texas Civil Practice and

22

Remedies Code, and for the purpose

of increasing their own pecuniary gain. As

such, the

individual defendants are liable for punitive damages, for which recovery is hereby sought.

92,

The corporate, limited-partnership, and timited-liability-company defendants are

also liable for punitive damages because: (1) the individual defendants were employed as viceprincipals of these entities and acted within the scope of their employment; and (2) the individual defendants' grossly negligent and malicious acts were previously authorized or subsequently ratified by these entities.

93.

The defendants are liable for punitive damages

in excess of the limitations

prescribed by Section 41.00S(b) of the Texas Civil Practice and Remedies Code because they

knowingly and intentionally misused Longview's proprietary information in violation of section

32.45 of the Texas Penal

Code. SeeTYx.CIv. Pn.c. &RBrr. Coor

Demand for Jury Trial

$ 41.008(cX10).

Longview hereby demands trial by jury upon all issues raised herein,

PRAYER
Longview PraYs that:
the Court impose a constructive trust over the proceeds, including all leaseholds and the enhanced value oi past production revenues, obtained by defendants through their misappropriation and utilization oi Longview's confidential and proprietary information, their b."aes f fiduciary duty, their tortious interferences ot any other tortious conduct;

(a)

an injunction be entered against the corporate, limited partnership, and limited liability company dfendants prohibiting further transfer of the subject properties in the Eagle Ford;

(b) (c)

an order be entered directing the corporate, limited partnership, and limited liability company defendants to transfer title to the subject properties in the Eagle Ford to
Longview;
defendants be required to make an accounting to Longview for all money received connection with investmerrts in the Eagle Ford or otherwise resulting from their
23

in

(d)

misappropriation and utilization of Longview's confidential and proprietary information, their breaches of fiduciary duty, their tortious interference or any other tortious conduct; Longview have judgment against defendants, jointly and severally, for its actual, consequential, and special damages, including lost profits;
the defendants be ordered to disgorge all property, interests, proceeds, and profits realizedin connection with their investments in the Eagle Ford;

(e) (

(g)
claims;
(h)
(

Longview have judgment for punitive damages against all defendants for all
Longview be awarded its attorneys' fees and costs; and Longview recovers such additional relief, at law or in equity, to which it may be

justly entitled.

24

Respectfully submitted,

Mikal C. Watts
Texas State Bar No. 10981820

WATTS GUERRA CRAX'T, LLP

Four Dominion Drive, Bldg. Three, Suite 100 San Antonio, Texas 78257 Phone: 210-447-0500 Fax:210-447-0501 Email : mcwatts @wgclawfirm. com Brian P. Berryman Texas State Bar No. 02254300 300 Convent, Suite 100 San Antonio, Texas 78205 Phone: 210-527-0500 Fax: 210-527-0501 Email : bberryman @w gclawftrm. com Rolando Jasso Texas State Bar No. 10591500 Claudio Heredia Texas State Bar No. 09505300

KNICKERBOCKER, HEREDIA, JASSO

& srEwART, P.C.

468 Main Street Eagle Pass, Texas 78852 Phone: 830-773-9228

B. Florence 0 State Bar No. Randy D. Gordon Texas State Bar No. 00797838 Lucas C, Wohlford Texas State Bar No, 24070871

GARDERE WYNNE SEWELL LLP 1601 Elm Street, Suite 3000 Dallas, Texas 75201-4761 (21 4) 999-3 000 (telePhone) (21 4) 999 -4667 (facsimile)
cfl orence(E eardere. com

rsordonlAsardere.com
25

CERTIFICATE OF SERVICE
hereby certify that a true and correct copy of foregoing was seryed on the following counsel by the method indicated, on this the2nd day of March,2l2t

Dean V. Fleming Michael V/. O'Donnell Jeffrey A. Webb FuLsRrcHr & Jnwonsrl, L.L.P. 300 Convent Street, Suite 2100 San Antonio, Texas 78205 Facsimile: 210,270.7205

Via Electronic and Certi/ed

Mail

RRR

Alfredo Z,Padilla Lnw Or''lce Or ALnRBDoZ, PRolLt-R 104 North 5th Street P.O. Drawer 355 Canizo Springs, TX 78834 Facsimile: 830.876,9531
Louis M. Solomon Hal S. Shaftel Solomon B. Shinerock CeowRLnoER'WIcKERSHAM & Tnrr LLP One World Financial Center New York, NY 10281 Facsimile: 212,504.6666

Via Certified

Mail

RRR

Via Electronic and Certified

Mail

RRR

Attorneys For Defendants Huff Energy Fund, L.P., WRH Energy Partners, L.L.C., W.R. Huff Asset Management Co., LLC, William R. Huff, Rick D'Angelo, Ed Dartley, Esq., Bryan Bloom, Esq,, and Riley-Huff Energy GrouP, LLC
Craig A. C. Mark Stratton SgelwoN,GRACEY, RrlI'n & 301 Congress Ave., Suite 1500 Austin, TX 78701 Facsimile: 512.499.8559

Duewall

Via Electronic and Certifi'ed Mal,RRR

Mtllrn, LLP

Attorneys for Bobby Riley

C. Wohlford

26