Oil Firm Seeks to Block Texaco : Pennzoil to Appeal to High Court
Reversing itself, Pennzoil said Thursday that it will ask the U.S. Supreme Court no later than today to review a month-old federal court ruling prohibiting Pennzoil from seizing any assets of Texaco until all appeals are exhausted in their multibillion-dollar battle over Texaco’s 1984 acquisition of Getty Oil.
The Houston oil company said it also will ask the U.S. 2nd Circuit Court of Appeals in New York to modify its Feb. 20 ruling.
Pennzoil said it needs the modification before it can seek an extension of a Texas court order preventing Texaco from disposing of any assets while the appeals process continues.
If the New York ruling stands, Pennzoil said, Texaco could move valuable properties outside Pennzoil’s reach as of March 25, when the fight moves out of Texas Judge Solomon Casseb Jr.’s jurisdiction and the Texas order expires.
Pennzoil said the decision to appeal has no connection to a letter Chairman J. Hugh Liedtke received this week from Texaco Chairman John McKinley. The letter reviews earlier efforts by Texaco toward settlement of its $11-billion dispute with Pennzoil and invites discussions between the two chief executives.
Spokesmen for both companies declined to discuss the matter, citing a confidentiality agreement.
But Joseph D. Jamail Jr., Pennzoil’s chief trial lawyer during the Texaco fight and a close friend of Liedtke, characterized the letter as “a clumsy attempt to cover their tracks and protect themselves from shareholder suits” over the disputed purchase of Getty.
Calls It Misleading
The one-page letter, Jamail said, is “self-serving, misleading and full of inaccuracies. It isn’t a serious attempt to negotiate. They’re just trying to show their shareholders that Texaco has dealt in good faith in these negotiations. I don’t think they have.”
Jamail said he has advised Liedtke to respond to the letter to “set the record straight” and to reiterate that he is willing to meet with McKinley any time.
But “at some point, McKinley has to say Texaco will pay so many dollars,” said Jamail, who asserts that Texaco never has cited the amount it is prepared to pay.
Liedtke couldn’t be reached. But Pennzoil director and former President Baine P. Kerr confirmed that Liedtke’s reply will be to that effect.
A Texaco spokesman called Jamail’s assertions “preposterous statements.” He also took issue with the reasons Pennzoil cites for appealing the Feb. 20 appeals court ruling to the U.S. Supreme Court: plunging oil prices and reports that Texaco is trying to arrange a large sale of oil-production loans.
Both factors, Kerr said, have “created more concern about possible actions Texaco might take” that would hurt its creditors, of which Pennzoil is the largest.
Liedtke had said immediately after the ruling that he didn’t expect to appeal.
Kerr said the appeals court ruling seems to prevent Pennzoil from asking for an extension of Judge Casseb’s order, which is part of his Dec. 10 ruling upholding an $11-billion jury verdict against Texaco.
