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Baker Botts Secures Summary Judgment in $5.6 Million Contract Dispute Against Venezuelan Oil Companies

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On November 9, 2021, the Honorable Andrew Hanen of the U.S. District Court of the Southern District of Texas granted summary judgment in favor of firm client Impact Fluid Solutions (“IFS”) in a breach of contract dispute valued at over $5.6 million.  The defendants in the case, PDVSA Services, B.V. and Bariven, S.A., subsidiaries of Venezuela’s state-owned oil company, Petróleos de Venezuela, S.A. (“PDVSA”), had cited Venezuela’s political situation in hopes of delaying resolution of the case, an argument that proved unsuccessful in the face of IFS’s evidence on the merits.

Baker Botts filed the suit on behalf of IFS in Texas state court in 2018, bringing claims based the defendants’ failure to pay for drilling fluids delivered in 2015.  In 2019, the defendants removed to federal court under the Foreign Sovereign Immunities Act (“FSIA”).  Shortly after removal, however, a dispute between Venezuela’s de facto Maduro regime and the Guaidó presidency recognized by the U.S. State Department resulted in an opposed motion to substitute counsel.  In May 2020, after briefing between the two law firms competing to represent the defendants, the court permitted the substitution of the attorneys representing the Presidency of Juan Guaidó.

IFS moved for summary judgment in April 2021, pointing to uncontroverted evidence that the defendants had accepted delivery of the drilling fluids in 2015 but failed to pay for them.  The defendants argued that the court should defer ruling on summary judgment based on: 1) the political situation in Venezuela, and 2) the possible existence of an arbitration clause governing the dispute.

After full briefing and a live hearing where the above arguments were addressed, the court ruled in favor of IFS, finding that IFS had proven breach of contract as a matter of law.  The court held that it could not “tether the adjudication of Plaintiff’s claims to the resolution of an international crisis that even Defendants’ counsel admits has no end in sight.” As for arbitration, the court found that “the mere ‘possibility’ of an arbitration clause fails to create a genuine issue of material fact bearing on Plaintiff’s claims.”

The court ultimately awarded IFS its full damages sought—over $5.6 million—plus pre-judgment and post-judgment interest.

The Baker Botts Team included Partner Russell Lewis, Senior Associate Nick Brown, Associate Laura Shoemaker, paralegal assistance from Evelyn Lazear and Kendall Black, and secretarial support from Jacquie Curtis, all members of the Houston office.

 

ABOUT BAKER BOTTS L.L.P.
Baker Botts is an international law firm of approximately 700 lawyers practicing throughout a network of 12 offices around the globe. Based on our experience and knowledge of our clients' industries, we are recognized as a leading firm in the energy, technology, and life sciences sectors. Since 1840, we have provided creative and effective legal solutions for our clients while demonstrating an unrelenting commitment to excellence. For more information, please visit bakerbotts.com.

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