REXX » Topics » Litigation and Legal Proceedings

This excerpt taken from the REXX 10-Q filed Nov 7, 2008.

Litigation and Legal Proceedings

On June 27, 2008, the United States District Court for the Southern District of Texas, Houston Division, issued a Memorandum and Order confirming the commercial arbitration award of the arbitration panel conveyed by the American Arbitration Association in Houston, Texas in the commercial arbitration proceeding commenced on June 21, 2006 by PennTex Resources and Lance T. Shaner against ERG Illinois Holdings, Inc. (“ERG Holdings”) and Scott Y. Wood (“Wood”). The August 20, 2007 commercial arbitration award required, among other matters, that Wood provide PennTex Resources with a signed release or dismissal of his individual claims filed against Tsar Energy II, LLC and Richard A. Cheatham in the 334th Judicial District Court of Harris County, Texas (the “Tsar Case”). In addition, the commercial arbitration award required Wood to pay PennTex Resources a total of $141,003 (after deducting amounts payable by PennTex Resources to Wood relating to Wood’s legal fees and expenses incurred in the Tsar Case) and required ERG Holdings to pay PennTex Resources a total of $165,835. In its Memorandum and Order, the United States District Court granted PennTex Resource’s motion to confirm the commercial arbitration award and denied Wood’s motion to vacate the award, granted PennTex Resource’s request to offset monetary judgments of the opposing parties set forth in the award, and denied PennTex Resource’s motion for sanctions against Wood’s attorney. On September 8, 2008, Wood filed an appeal with the United States Court of Appeals for the Fifth Circuit requesting the appellate court to reverse the district court’s decision compelling Wood to participate in the arbitration proceeding and its order confirming the arbitration award. ERG Holdings did not join in Wood’s appeal and a judgment was entered against ERG Holdings in favor PennTex Resources. On October 10, 2008, PennTex Resources filed its response brief opposing Wood’s appeal and requesting the appellate court to affirm the district court’s final judgment. We intend to vigorously oppose Wood in his appeal and we believe that the likelihood of an unfavorable outcome of this matter is remote.

This excerpt taken from the REXX 10-Q filed Aug 6, 2008.

Litigation and Legal Proceedings

On June 27, 2008, the United States District Court for the Southern District of Texas, Houston Division, issued a Memorandum and Order confirming the commercial arbitration award of the arbitration panel conveyed by the American Arbitration Association in Houston, Texas in the commercial arbitration proceeding commenced on June 21, 2006 by PennTex Resources and Lance T. Shaner against ERG Illinois Holdings, Inc. (“ERG Holdings”) and Scott Y. Wood (“Wood”). The August 20, 2007 commercial arbitration award required, among other matters, that Wood provide PennTex Resources with a signed release or dismissal of his individual claims filed against Tsar Energy II, LLC and Richard A. Cheatham in the 334th Judicial District Court of Harris County, Texas (the “Tsar Case”). In addition, the commercial arbitration award required Wood to pay PennTex Resources a total of $141,003 (after deducting amounts payable by PennTex Resources to Wood relating to Wood’s legal fees and expenses incurred in the Tsar Case) and required ERG Holdings to pay PennTex Resources a total of $165,835. In its Memorandum and Order, the United States District Court granted PennTex Resource’s motion to confirm the commercial arbitration award and denied Wood’s motion to vacate the award, granted PennTex Resource’s request to offset monetary judgments of the opposing parties set forth in the award, and denied PennTex Resource’s motion for sanctions against Wood’s attorney. On July 16, 2008, Wood filed a notice of appeal with the district court appealing all final judgments previously issued by such court to the United States Court of Appeals for the Fifth Circuit. We intend to vigorously oppose Wood in his appeal and we believe that the likelihood of an unfavorable outcome of this matter is remote.

This excerpt taken from the REXX 10-Q filed May 9, 2008.

Litigation and Legal Proceedings

In the putative class action lawsuit that has been filed against PennTex Illinois and Rex Operating in the United States District Court for the Southern District of Illinois, the plaintiffs filed an amended motion for class certification with the court on January 22, 2008. PennTex Illinois and Rex Operating filed a joint motion opposing class certification on February 22, 2008 and the plaintiffs filed a reply brief on March 20, 2008. The current scheduling and discovery order issued by the court provides that the court may schedule a hearing on class certification if it deems that one is necessary; however, such a hearing has not been scheduled. The final pretrial conference for the putative class action lawsuit is scheduled for August 7, 2008. The case is scheduled for jury trial on August 18, 2008, in the United States District Court for the Southern District of Illinois located in Benton, Illinois. We intend to vigorously oppose the plaintiffs’ amended motion for certification of the case as a class action, and if certification of the case as a class action is approved by the court, we intend to vigorously defend against the claims that have been asserted against PennTex Illinois and Rex Operating in this lawsuit. Because this lawsuit is in its initial stages regarding the issue of class certification, however, and because it is usually difficult to predict the outcome of litigation, we are unable to express an opinion with respect to the likelihood or an unfavorable outcome or to estimate the amount or the range of potential loss should the outcome be unfavorable to us.

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