Syrian-American Oil Corporation, S.A. v. Pecten Orient Company F/K/A Pecten Ash Sham F/K/A Pecten Syria Petroleum Company, 01-15-00424-CV

Background

SAMOCO held a retained 4% overriding royalty interest from a 1982 assignment; Pecten operated Syrian oil fields and obtained multiple annexes (notably the 1987 Fourth Annex) altering exploration periods and fiscal terms.
SAMOCO sued Pecten in 1988 alleging Pecten concealed annexes and withheld royalties; the parties settled in September 1989. The 1989 settlement: cash payment to SAMOCO, preserved a 6% combined overriding royalty for production during the Service Contract, First and Third Annexes, and released all claims known or unknown as of the settlement date; it disclaimed concessions as to whether annexes were independent or part of the original contract.
From 1989–2006 Pecten paid royalties per the settlement. In 2006 SAMOCO retained an expert who opined the Fourth Annex extended the Service Contract and that SAMOCO was entitled to additional royalties; SAMOCO sued in 2007 for fraud (fraudulent inducement), breach, and related claims.
Pecten later counterclaimed for breach of the 1989 settlement (seeking attorney’s fees incurred defending SAMOCO’s litigation). Trial submitted SAMOCO’s fraud claim (with three alternative fraud theories) and Pecten’s breach counterclaim to the jury.
Jury found Pecten fraudulently induced SAMOCO only by language in the Fourth Annex (that it was independent), but also found SAMOCO should have discovered the fraud by Sept. 15, 1989 (statute of limitations/discovery rule) and awarded Pecten $0 for attorney’s fees. Trial court rendered mutual take-nothing judgment.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether SAMOCO's fraud claim was time‑barred under the discovery rule	SAMOCO: could not reasonably discover fraud until 2006 when expert Foley raised the issue	Pecten: SAMOCO was on notice by 1989 and, with reasonable diligence, should have discovered any misrepresentation	Court: Jury finding that SAMOCO should have discovered fraud by 9/15/1989 is supported; fraud claim time‑barred
Whether misstatements in the Fourth Annex constituted inducement excusing SAMOCO’s breach of the 1989 settlement	SAMOCO: Fourth Annex language fraudulently induced settlement and thus excuses nonperformance	Pecten: Annex language pre‑dated lawsuit and settlement; misstatements weren’t made in contemplation of that settlement	Court: No evidence Annex recitals were intended to induce settlement; fraud finding does not excuse breach
Whether the deep & lateral (2003) annex gave SAMOCO rights foreclosing summary judgment	SAMOCO: settlement and assignment entitle it to Section 6 payments for deep & lateral production	Pecten: Syrian government determinations and undisputed evidence show any right terminated; no payment obligation	Court: Summary judgment for Pecten affirmed — governmental allocation terminated rights, defeating SAMOCO’s claim
Whether Pecten’s late‑filed breach counterclaim related back and whether damages evidence supports award	Pecten: counterclaim relates back to timely affirmative defense of release; proffered uncontroverted attorney’s fee evidence	SAMOCO: counterclaim time‑barred; fee evidence not fully attributable to Pecten	Court: Counterclaim relates back under Tex. Civ. Prac. & Rem. Code §16.068; attorney’s fee evidence was undisputed and jury’s $0 award is against the weight of the evidence — remand for new trial on damages

Key Cases Cited

Hooks v. Samson Lone Star, Ltd., 457 S.W.3d 52 (Tex. 2015) (discovery rule governs accrual of fraud claims)
Shell Oil Co. v. Ross, 356 S.W.3d 924 (Tex. 2011) (reasonable diligence standard under discovery rule)
Ernst & Young, L.L.P. v. Pac. Mut. Life Ins. Co., 51 S.W.3d 573 (Tex. 2001) (misrepresentation liability to foreseeable third‑party relies on same‑transaction requirement)
City of Keller v. Wilson, 168 S.W.3d 802 (Tex. 2005) (legal and factual sufficiency review standards)
Via Net v. TIG Ins. Co., 211 S.W.3d 310 (Tex. 2006) (narrow application of discovery rule)
Markovsky v. Kirby Tower, L.P., No official reporter citation reproduced in opinion (discussed re relation‑back to affirmative defenses) (referenced for relation‑back analysis)