HOUSTON (CN) – A federal judge refused to kill the settlement a Saudi Arabian drilling company accepted before learning in an online Houston Chronicle news article that the Texas supplier it had settled with had sued it in a short-lived 24-hour case.
Saudi Arabian company Al Rushaid Parker Drilling Limited (ARPD) and its owner Al Rushaid Petroleum Investment Corp., collectively referred to as “Al Rushaid,” filed a 14-page federal complaint on Nov. 22, 2010 against supplier Texas International Oilfield Tools for breach of a confidential settlement agreement.
Al Rushaid claimed former ARPD employee James Wight, accepted “secret ‘commission’ payments” from the Texas supplier from 2006 to 2008.
Wight, in turn, saw to it that his employer paid the supplier $10 million for oilfield tools and equipment that Al Rushaid describes as overpriced and often “substandard, defective, and late in delivery,” according to the complaint.
The federal complaint claims the supplier settled with Al Rushaid on Oct. 19, 2010, and that Texas International agreed to pay Al Rushaid $1.5 million upfront, to pay another $5.5 million through a joint venture, and “‘refrain from expressing or causing others to express to any person or entity any derogatory or negative opinions or statements concerning the other party or its affiliates … or concerning the other party’s business or management …'”
Two days later, the Houston Chronicle posted an article on Chron.com, reporting that Texas International had filed a complaint in state court against ARPD, James Wight and Joy Drilling and Engineering on Oct. 19, the very day of the settlement, Al Rushaid says.
Al Rushaid claims the Houston Chronicle article alerted it to the action filed in Harris County, Texas, and that it had no knowledge of the complaint during the settlement negotiations.
While it understood that the Texas supplier intended to pursue claims against Wight, Al Rushaid says it had reason to believe the supplier would not sue it.
Texas International dismissed its lawsuit within one day, but the damage was done, Al Rushaid says.
The claims in the supplier’s state complaint constitute “derogatory and negative statements,” disseminated through the court’s public record and through “worldwide publication” in the online article, in violation of the settlement agreement, according to Al Rushaid.
As an alternative to its claim for breach of settlement, Al Rushaid sued Texas International for rescission, fraud, aiding and abetting breach of fiduciary duty, and civil conspiracy.
Texas International filed a motion for summary judgment, which U.S. District Judge Lynn Hughes granted on Friday.
Hughes found that a release in the settlement agreement cleared Texas International of liability for the lawsuit.
“The scope of release is clear – a full, general pardon of events before the agreement,” the judge wrote.
“Rushaid wishes it had negotiated different terms,” Hughes wrote. “It wishes, perhaps, that it had narrowed the scope of the release, or requested disclosure of pending lawsuits. Rushaid’s remorse is not [Texas International] Oilfield’s breach. Oilfield has abided by the contract, and so must Rushaid.”
Hughes ordered Al Rushaid to pay Texas International’s attorney’s fees and costs.