An Ector County District Court judge Thursday imposed sanctions against two auctioneer companies involved in a dispute over the storage of a drilling rig and other oilfield equipment.
According to Ector County court records, New Hope Equipment Sales purchased a N46 1000 HP drilling rig and related mud pumps for $250,000 at an auction held by Kruse Energy and Equipment Auctioneers in August 2015. Other equipment was purchased at auctions in subsequent years by Rosebud Equipment and Power Drive Supply.
Each company agreed to lease land owned by Kruse and/or Ritchie Bros. Auctioneers so they could store their purchased equipment.
In July 2021, New Hope, Rosebud and Power Drive Supply filed a lawsuit against Kruse and Ritchie Bros. alleging their equipment was removed and scrapped at the defendants’ request in late 2020. According to the lawsuit, the defendants had only sporadically sent out lease invoices and stopped entirely in 2020, but the lease agreement was still in force.
The plaintiffs have expert witnesses who will testify the drilling rig’s fair market value is $2 million to $4 million, New Hope attorney Derek Cook told Judge Justin Low of the 161st Ector County District Court Thursday.
Cook and the defendants’ attorney Brian Vanderwoude were in Low’s courtroom Thursday because last month Cook filed a motion asking to impose nearly $200,000 in sanctions against Kruse and Ritchie Bros. The motion was filed after the plaintiffs discovered some or all of the components of the HP Drilling Rig were in a storage yard in Windthorst, Texas.
Cook alleged in court documents and in court that the defendants knew where the rig was and defense witnesses lied during depositions and withheld nearly 1,000 pages of “highly relevant emails” for almost a year.
“Much of the work done by Plaintiffs, particularly as to damages, is moot or must be largely reconsidered,” Cook said.
Cook asked the judge to order the defendants to pay for attorneys’ and expert witness fees and the cost to transport to Odessa. He also suggested the judge could go so far as to render a default judgment in his clients’ favor.
Vanderwoude argued against the sanctions stating his clients were just as surprised as the plaintiffs to discover the rig hadn’t been scrapped. He said the equipment had been taken by a third party to a storage yard and he flatly refuted Cook’s suggestion that the plaintiffs intentionally concealed the information or had their employees provide false testimony during the depositions.
Vanderwoude also told the judge that during the trial they’ll present evidence Ritchie Bros. informed the plaintiffs they were shutting down the storage yard and gave them an opportunity to remove all of the equipment, but they never replied.
Kruse and Ritchie Bros. assumed the equipment had been abandoned, Vanderwoude said.
The judge ordered the defendants to pay for the cost of bringing the rig back to Odessa and he also ordered them to pay the plaintiffs the $5,000 it cost Cook to prepare for Thursday’s hearing.
The case’s original trial date of April 3 has been pushed back indefinitely.
