Reaping What You Sow – City Of Dallas Sued By Trinity East Energy

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Suppose I own a large tract of land in the region of the Barnett Shale, the exclusive right to allow (or prevent) drilling on the aforesaid land, and a desparate need for funds. You have $19 million and the desire to exploit the minerals. I take your $19 million, and when you ask for permission to drill I refuse, and I don’t even offer to return your $19 million. What would you do?

As expected, we learned what Trinity East Energy, LLC would do. They’ve sued the City of Dallas for breach of contract (the lease), inverse condemnation (for taking their leasehold interest without compensation), and fraud (for representing that special use permits would come, knowing they wouldn’t) in connection with a 2008 oil and gas lease over 3,600 acres of City of Dallas land. After collecting the $19 million bonus, the city prevented Trinity from developing the lease by denying special use permits necessary to drill wells, both on the property and on land near enough to the property to exploit the minerals. The damages sought are far greater than the $19 milliion bonus.

Someone who expected this result was Mayor Rawlings, who warned the council of potential litigation in the meeting at which Trinity’s permits were denied. So would anybody who believes that, upon paying $19 million for something and then being denied the right to do anything with it by the party who took your money in the first place, most self-respecting businesses would demand to be made whole.

When trying to understand this situation, the notion of sowing and reaping comes immediately to mind. You have the sowers – the City Council and the City Plan Commission members who denied the special use permits. Then you have the reapers – that would be the same as the sowers. Usually overlooked in these discussions are the unwilling reapers, otherwise known as the losers. As in all cases of governmental chicanery, that would be the citizens of Dallas, who will foot a large legal bill and then, potentially, a large judgment or settlement, not to mention lost revenues from production, should the wells have been successful.

Who’s responsible for this statutory, legal, constitutional and moral failure? Here are the votes by council and plan commission members. Ask them why they voted against. Note: The council measure didn’t “pass”. A three fourth’s vote was required because it failed at the CPC.

Maybe it happened this way: Intimidated by the anti-fracking troglodytes (mentioned previously in this blog and other places) the commission and council members followed the politically expedient course: Deny the permits, thereby escaping the proximate wrath of the anti’s.  When the repercussions come home to roost, hope the fallout will be dispersed and the voters won’t notice. 

All is not lost.  Here, revealed to me by insiders at city hall, is the trial strategy of the City and its lawyers.