Energy Law

Texas Court Upholds Temporary Injunction, Finds Cash in Lieu of Bond Meets Statutory Requirements

By Robert Theriot

By Marie Carlisle: 

           The principle issue addressed in Adobe Oilfield Services v. Trilogy Operating, Inc., No. 11-09-00162-CV (Tex. App.—Eastland January 29, 2010), involves the granting of a temporary injunction to prevent the filing of liens against oil wells. Trilogy entered into contracts with Adobe to drill six wells. Trilogy paid Adobe's invoices for the first five wells, but was subsequently contacted by PNC Bank claiming a security interest in Adobe's accounts receivables and a right to the amounts owed to Adobe for the sixth well. Trilogy held the amount still owed to Adobe in suspense, eventually depositing the funds into the registry of the Court. Adobe then threatened to file liens against all six wells for the unpaid amounts owed, causing Trilogy to file suit seeking injunctive relief to protect the wells from the threatened liens. Trilogy offered proof that it had a contractual obligation to protect the wells from liens, that the placement of liens on the wells would have a negative impact on Trilogy and its ability to serve as operator for the wells, and that it had paid all amounts owed to Adobe either directly via check or by depositing such sums with the Court. Trilogy also offered proof that Adobe had a contractual obligation to pay its subcontractors to prevent the filing of liens against the property. The trial court granted the temporary injunction, and the Court of Appeals upheld the injunction because Trilogy was able to show that it had a cause of action against Adobe, it had a probable right to the relief sought, and that there would be probable imminent and irreparable injury if the liens were filed.

            A secondary issue in the case involves whether or not the deposit of a sum of cash into the trial court's registry is sufficient to satisfy the requirement of filing a bond with the court. Pursuant to the trial court's order, Trilogy deposited $1000 cash as security for a temporary injunction field against it, as well as $300,000 cash into the registry of the court. The court's order, however, was not conditioned as required by TRCP 684, and appellants asserted that this failure voids the temporary injunction. The Appellate Court, however, followed the decision of the Dallas Court of Appeals in finding that Rule 14c, which allows for the deposit of cash in lieu of a bond, automatically incorporates with a cash deposit the conditions for a proper statutory bond. See Seib v. American Savings & Loan Ass'n of Brazoria County, No. 05-89-01231-CV, 1991 WL 218642 (Tex.App.—Dallas 1991). 

Full post as published by The Energy Law Blog on April 06, 2010 (boomark / email).