Exxon Corp. v. Burgli

4 F.3d 1294 (5th Cir. 1993)

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Nature of the Case

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Facts

Exxon(D) became a general partner in a lease for oil and gas. The lease proved unproductive for the prior general partner, but D put more money up and drilled more wells. The third well showed a capacity of 3,700 barrels of oil per day. D informed the limited partners that it was encouraged but did not disclose the well's productivity or the estimate of reserves. One of the limited partners Burglin (P) indicated that he might sell his interest in the leases. D offered $1.21 million to P and proportional amounts for each of the other limited partners' interests. D informed them that this offer was without knowing the results of the Well 4, then in progress and also granted the limited partners the option to select a consultant to make an independent assessment of D's offer, the cost of which would be shared by P and D. The limited partners accepted the offer without the independent evaluation and without waiting for the results of Well 4. Well 4 came in big time and significantly increased the expected value of the leases. Ps sued D for breach of fiduciary duty. D sued for a declaratory judgment. The case was removed to federal court, and summary judgment was given D. P appealed.