TXO Production Corporation v. Alliance Resources Corporation

PETITIONER: TXO Production Corporation
RESPONDENT: Alliance Resources Corp. et al.
LOCATION: Austin's Auto Body Shop and mobile home

DOCKET NO.: 92-479
DECIDED BY: Rehnquist Court (1991-1993)
LOWER COURT: Supreme Court of Appeals of West Virginia

CITATION: 509 US 443 (1993)
ARGUED: Mar 31, 1993
DECIDED: Jun 25, 1993

ADVOCATES:
Carter G. Phillips - on behalf of the Petitioner
Carter Phillips - for petitioner
Laurence Tribe - for respondents
Laurence H. Tribe - on behalf of the Respondents

Facts of the case

Question

Media for TXO Production Corporation v. Alliance Resources Corporation

Audio Transcription for Oral Argument - March 31, 1993 in TXO Production Corporation v. Alliance Resources Corporation

William H. Rehnquist:

We'll hear argument first this morning in No. 92-479, TXO Production Corporation v. Alliance Resources Corporation.

Mr. Phillips.

Carter G. Phillips:

Thank you, Mr. Chief Justice, and may it please the Court:

Well, the Court may begin its opinion in this case in much the same way that it began its opinion in Haslip, that is, that this case is yet another challenge to a punitive damages award.

To be sure, this case does not involve just any old punitive damages award.

The award here of $10 million for the tort of slander of title is beyond rational explanation by reference to any legitimate interests asserted by the State of West Virginia and is the product of a procedural scheme that bore no discernable relationship to the procedural scheme that this Court reviewed and approved in Haslip.

Indeed, the West Virginia Supreme Court's judgment ultimately rests on a wholly arbitrary, really mean versus really stupid, classification of defendants that even the respondents do not defend in this Court.

Accordingly, that judgment should be reversed.

TXO was an oil and gas exploration company based in Texas that opened an office in West Virginia in the early 1980's.

In 1984, it first became interested in the Blevins tract in McDowell County, West Virginia, and sought to obtain the oil and gas development rights to that tract.

Those rights were held by Respondent Tug Fork... or excuse me.

The title to the oil and gas was held by Respondent Tug Fork, and the development rights were held by Respondent Alliance Resources.

An agreement was reached between Alliance and TXO that granted the latter the rights to the development.

TXO received a title opinion that indicated that there was question as to whether or not a 1958 deed had, in fact, conveyed Tug Fork's interest to a third party.

The question then was how to resolve that problem, and TXO obtained a quitclaim deed from the recipient of the rights in order to be in a position to ensure that if it began to drill well... drill a well on that property and, in fact, successfully uncovered oil or gas, that it would be able to take that oil and gas free of any claims by this third party.

So, TXO filed its quitclaim deed, and then filed a declaratory judgment action seeking to have the respective rights of the parties resolved.

Respondents counterclaimed in that lawsuit for slander of title based solely on TXO's action in recording the quitclaim deed and sought both compensatory damages and the punitive award.

The case was tried exclusively on respondents' claim of slander of title.

Respondents did not seek compensatory relief on any other theory of the case, and they did not submit an instruction to the jury with respect to any claim other than the straight slander of title claim.

The jury was instructed with respect to the punitive award that it could enter an award for three purposes: to punish the wrongdoer, to serve as an example to others not to engage in such conduct, and to provide unspecified, quote, additional compensation.

And then in arriving at a punitive amount, the jury should consider the nature of the wrongdoing, the extent of the harm inflicted, the intent of the defendant, the wealth of the perpetrator, as well as any mitigating factors, which were unspecified by the court.

Sandra Day O'Connor:

Mr. Phillips, the respondent has come back with a proposal that suggests that the evidence in this case meets all those standards.

Are you going to address that argument?

Carter G. Phillips:

Meets all... well, actually what they argue is that it meets the standards that the Court sort of noted in Haslip as the Green, Alabama factors.

In truth, I think if you were to look at the four factors that the jury was asked to look at, it would be very difficult to reach the conclusion that the jury could have come to a $10 million verdict based on these factors.

If you consider the nature of the wrongdoing, what we are talking about here is slander of title, nothing more.

No physical injury was a possibility.

We are talking about a pure economic tort.

The entire extent of the injury that was actually caused to the plaintiffs as a consequence of this particular economic activity was $19,000.

William H. Rehnquist:

Well, the Supreme Court of West Virginia gave the impression I thought in its opinion not that there was any physical... but that your client acted with malice in the really nasty sense of the word.