J.P. Morgan has been sued over the alleged double-leasing of oil property in south Texas. The lawsuit was filed by Orca Assets G.P. LLC in U.S. District Court in Dallas, alleging negligent misrepresentation and fraud. Orca, a small, Houston-based energy company, is suing the country’s largest bank by assets, claiming that J.P. Morgan leased property that had already been leased to another entity.
Orca claims that it agreed to pay $3.2 million for the lease to over 900 acres. J.P. Morgan represented the seller, the Red Crest Trust, and also served as trustee and administrator of the trust. Orca is claiming lost profits of up to $400 million.
J.P. Morgan filed a motion for summary judgment, in which it acknowledged that it had leased the property both to Orca and to another entity within a time period of five months. However, the bank claimed that Orca failed in its responsibility to thoroughly vet the title to the property. According to J.P. Morgan, if Orca had attempted to verify the validity of the title and the ability of the land to be leased, it would have discovered the prior lease.
J.P. Morgan also said that Orca’s damages claims were inflated. The bank said that the company’s claims were based on “pie-in-the-sky assumptions” and that Orca’s ability as an oil operator was unproven.
The case, unusual because of the size of the damages claim and the fact that J.P. Morgan admitted its error, is expected to go to trial in December.