Companies hit with $1.9 million verdict

An Ector County District Court jury determined two auctioneer companies unlawfully appropriated and “converted” a drilling rig and other oilfield equipment and rendered a $1.9 million verdict against them last week.

According to Ector County court records, New Hope Equipment Sales purchased an 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.

Last April, the plaintiffs discovered some or all of the components of the HP Drilling Rig were in a storage yard in Windthorst, Texas, and New Hope attorney Derek Cook asked Judge Justin Low of the 161st Ector County District Court to impose nearly $200,000 in sanctions against Kruse and Ritchie Bros. because he alleged 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.

At that time, the defendants’ attorney, Brian Vanderwoude denied the allegation. He also said that during the trial they’d 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 the sanctions hearing.

According to the 44-page jury verdict form, the jury found the plaintiffs did not abandon the equipment.

They awarded Rosebud and New Hope $500,000 each in punitive damages, $800,000 in actual damages to New Hope and $100,000 in actual damages to Rosebud.

Power Drive Supply settled prior to trial.

The plaintiffs must now submit a proposal of judgment for Low to consider.

“In his final closing argument before the punitive damage issues were submitted to the jury, Ritchie Brothers’ counsel said the company lives its corporate motto to not just say right, but do right. Well, Ector County is watching to see whether Ritchie Brothers finally does the next right thing as to New Hope and Rosebud,” Cook said following the trial.