Oil and Gas Fraud in Texas
On January 30, 2015 the Texas Supreme Court revisited the “reasonable diligence” standard applicable to Texas‘s fraudulent concealment tolling doctrine. This means that an investor in an oil and gas company needs to engage in “reasonable diligence” to discover if he or she is the victim of a fraud.
If the company conceals its fraudulent acts, the investor’s time to sue may be tolled (extended). There are time limits to file a lawsuit based on oil and gas fraud…that is until the investor discovers or should have discovered the deceitful conduct or facts giving rise to a lawsuit.
Texas Supreme Court
The Court’s new decision puts pressures on the oil and gas operators to make sure that their publicly filed documents are completely accurate, as if they are not, that may be used to toll the statute of limitations….give the victims of an oil and gas fraud more time to sue.
For years companies who engage in oil and gas fraud have argued that if the investor took the time to look at the public records filed regarding their investments they would have been alerted to any fraudulent acts, and hence the investor’s time to sue should not be extended. The Court’s recent ruling appears to relax that argument that potential plaintiff’s fact-check public records.
We would not be surprised that certain parties in oil and gas scams will take the position that any misstatement in the public records, arguably giving rise to a claim of fraud, will keep the time frame to sue them from being extended.
As a result of the low oil prices, we think that fraudulent oil and gas companies will try to convince the public to invest with them now, and reap huge rewards in the near future. Should this occur there will be an increase in oil and gas fraud litigation and this recent Court decision likely will play an important role in determining which claims are time-barred and which move forward to trial.
One of the tasks we engage in is to have an expert in oil and gas fraud scrutinize the relevant public records. Based on this decision, this task is even more important than before.
