OWL AssetCo1 v. EOG Resources

FILED IN
BUSINESS COURT OF TEXAS
BEVERLY CRUMLEY, CLERK
ENTERED
8/11/2025

2025 Tex. Bus. 30

The Business Court of Texas
Eleventh Division

OWL ASSETCO 1, LLC, §
§
Plaintiff, §
§
v. § Cause No. 25–BC11B–0027
§
EOG RESOURCES, INC., §
§
Defendant. §

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MEMORANDUM OPINION
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[¶ 1] On July 25, 2025, the Court signed an order granting the Motion to Remand

(“Motion”) filed by Plaintiff OWL AssetCo1, LLC, (“OWL”) on June 9, 2025, and

submitted for consideration without oral argument on July 17, 2025. In the order, the Court

stated its written opinion explaining its ruling in further detail would be forthcoming. This

is the Court’s opinion.

I. BACKGROUND

[¶ 2] OWL and Defendant EOG Resources, Inc. (“EOG”) are businesses operating

in the oil and gas industry. EOG’s Resp. to Mot. (“Response”) ¶ 4. In this action, their

business relationship is governed by an agreement, signed on December 31, 2019,
concerning the delivery and disposal of produced water and the parties’ respective

responsibilities. Pet. ¶¶ 10–14.

A. OWL’s Petition

[¶ 3] After incurring “millions of dollars” and “significant costs” remediating three

separate spills of produced water over a three-year span (the Fruit State, Cigarillo, and Bon

Bon spills), OWL sued EOG for breach of contract in the 152nd Judicial District Court of

Harris County, Texas, on April 9, 2025. Id. ¶¶ 15–20. OWL pleads that EOG breached the

provisions of an agreement obligating EOG to deliver produced water meeting certain

specifications and to reimburse and indemnify OWL for injury caused by EOG’s failure to

deliver produced water meeting these specifications. Id. ¶¶ 23–27. OWL seeks an award of

compensatory damages exceeding the district court’s jurisdictional minimum. Id. ¶¶ 3, 27,

29. That award is, at the very least, monetary relief of more than $1 million. Id. ¶ 7.

B. EOG’s Answer and Counterclaims

[¶ 4] On May 12, 2025, EOG answered and countersued for breach of contract and

declaratory judgment, asserting that the district court has jurisdiction over this action

because the amount in controversy exceeds $10 million. 1 Counterpetition ¶ 7. The amount

in controversy, according to EOG, encompasses the indeterminate millions of

compensatory damages pleaded by OWL and the specific monetary relief sought by EOG in

its breach-of-contract claim. Id. ¶¶ 8–9. For its breach-of-contract claim, EOG pleads that

because OWL breached the contract by failing to take dedicated volumes of produced water,

1
EOG has specially excepted to the relief sought by OWL, asking that OWL be required to specify
the maximum amount claimed. Answer and Countercls. (“Counterpetition”) ¶ 4.

MEMORANDUM OPINION, Page 2
EOG is owed liquidated damages worth approximately $929,192.00 in credits. Id. ¶¶ 32–

34. Relatedly, EOG further alleges that “[o]ver the life of the [a]greement, if [OWL] does

not cure its breach, EOG is owed approximately $6,453,000 in credits….” Id. ¶ 34. For its

declaratory judgment claim, EOG does not seek a specific monetary amount of damages but

rather a declaration that Pilot is solely responsible for the spills and their remediation costs

and that EOG is neither responsible nor liable. Id. ¶¶ 26–28.

C. EOG’s Notice of Removal

[¶ 5] Later that same day, EOG removed the action to the Court without OWL’s

agreement. Notice of Removal (“Notice”) ¶ 9. EOG asserts that the Court has jurisdiction

pursuant to two statutory grounds: Sections 25A.004(d)(1) and (e) of the Texas

Government Code. Id. ¶¶ 1, 4–8. The Court has jurisdiction under subsection (d)(1)

assertedly because the action arises out of a qualified transaction. Id. ¶ 4. Relevantly, EOG

contends that the amount in controversy exceeds $10 million, citing in its Notice the same

pleaded damages cited in its Counterpetition in support of the district court’s jurisdiction:

OWL’s millions in compensatory damages and EOG’s millions in credits owed. Id. ¶¶ 5–6.

The Court has jurisdiction under subsection (e) purportedly because EOG seeks a

declaratory judgment concerning its rights under the parties’ agreement. Id. ¶ 8.

D. OWL’s Motion

[¶ 6] OWL filed its Motion on June 9, 2025. OWL argues that contrary to EOG’s

assertions, the Court lacks jurisdiction under subsections (d)(1) and (e). Motion, at 3, 6.

OWL contends that the Court lacks jurisdiction under subsection (d)(1) because the amount

in controversy is less than $10 million for two reasons. Id., at 3, 6–11. First, OWL maintains

MEMORANDUM OPINION, Page 3
that it seeks damages of approximately $8.22 million, the amount spent on remediating the

three spills. Id., at 3, 6–8. Second, OWL insists that the amount in controversy is

determined solely by its claims and, thus, that EOG’s counterclaims cannot be considered.

Id., at 3, 8–11. OWL further contends that the Court lacks jurisdiction under subsection (e)

because there is no underlying jurisdiction under subsection (d)(1), a prerequisite for

exercising jurisdiction under subsection (e). Id., at 3, 11–12.

E. The Parties’ Briefing

[¶ 7] The Court ordered the parties to discuss the effect, if any, of House Bill 40 on

the Court’s jurisdiction over this action in any additional briefing filed in support of their

respective positions. Order [6/16/2025], at 2. For an action arising out of a qualified

transaction under subsection (d)(1), H.B. 40 lowers the relevant amounts, including the

amount in controversy, from $10 million to $5 million. Act of June 1, 2025, 89th Leg.,

R.S., ch. 912, §§ 43, 45. The change in law becomes effective on September 1, 2025, and,

except for circumstances not existing here, applies to an action commenced on or after

September 1, 2024. Id. §§ 56, 72, 73.

[¶ 8] In its briefing opposing remand, EOG re-urges the argument that the amount

in controversy presently exceeds $10 million when the value of OWL’s claims and EOG’s

counterclaims, including its request for declaratory relief, are aggregated. Resp. ¶¶ 24–38;

Sur-reply ¶¶ 2–6. But EOG also raises the alternate argument that the Court, instead of

needlessly remanding this action, should stay this action until H.B. 40 takes effect and then

dismiss OWL’s Motion as moot. Resp. ¶¶ 39–43; Sur-reply ¶¶ 7–16.

MEMORANDUM OPINION, Page 4
[¶ 9] In its briefing supporting remand, OWL re-urges the argument that the amount

in controversy is presently less than $10 million because the parties’ claims, including

EOG’s unripe claim for a potential $6.5 million in future damages, cannot be aggregated

and, even if aggregated, are insufficient to meet the current jurisdictional threshold. Reply,

at 4–9; Final Reply, at 2–3. But OWL also raises the alternate argument that, because H.B.

40 would not confer jurisdiction until September 1, 2025, the Court lacks jurisdiction now

under existing law and has no choice but to remand. Reply, at 9–12; Final Reply, at 3–5.

II. JURISDICTION

[¶ 10] EOG asserts that the Court has jurisdiction over this action under Sections

25A.004(d)(1) and (e). Notice ¶¶ 1, 4–8. See TEX. GOV’T CODE ANN. §§ 25A.004(d)(1)

(establishing jurisdiction based on a qualified transaction), (e) (establishing jurisdiction

based on injunctive or declaratory relief); see also id. § 25A.001(14) (defining qualified

transaction). 2 EOG is incorrect.

A. Section 25A.004(d)(1)

[¶ 11] Section 25A.004(d)(1) provides that, in an action arising out of a qualified

transaction, the Court has jurisdiction if the amount in controversy exceeds $10 million,

excluding interest, statutory damages, exemplary damages, penalties, attorney’s fees, and

court costs. TEX. GOV’T CODE ANN. § 25A.004(d)(1). Because OWL has not contested

2
Whether the Court has jurisdiction over this action as asserted by EOG is ordinarily a question of
law for the Court to decide. C Ten 31 LLC ex rel. SummerMoon Holdings LLC v. Tarbox, 2025 Tex. Bus. 1, ¶
9, 708 S.W.3d 223, 230 (3rd Div.). As the party seeking removal, EOG bears the burden of establishing the
Court’s jurisdiction over this action. See TEX. GOV’T CODE ANN. §§ 25A.006(d) (requiring existence of
jurisdiction to effectuate removal), (f) (requiring party seeking removal to establish jurisdiction over action);
see also TEX. R. CIV. P. 355(b)(2)(A) (requiring party seeking removal to establish authority to hear action).

MEMORANDUM OPINION, Page 5
removal on the basis that there is no qualified transaction, the focus is on whether the

amount in controversy exceeds $10 million.

[¶ 12] In the jurisdictional context, the amount in controversy in an action is the

sum of money or the value of the thing originally sued for. Tune v. Tex. Dep’t of Pub. Safety,

23 S.W.3d 358, 361 (Tex. 2000) (quotation marks omitted); C Ten, 2025 Tex. Bus. 1, at ¶

32, 708 S.W.3d at 237 (internal citation and quotation marks omitted). The amount in

controversy is frequently determined by the damages sought. Tune, 23 S.W.3d at 361. For

purposes of determining whether jurisdiction exists under subsection (d)(1), the amount in

controversy is the amount recoverable under the pleadings when the action is filed. Atlas

IDF, LP v. NexPoint Real Est. Partners, LLC, 2025 Tex. Bus. 16, ¶¶ 33, 40–51, 715 S.W.3d

390, 395–98 (1st Div.).

1. The amount in controversy does not exceed $10 million

[¶ 13] The amount in controversy does not exceed $10 million. The evidence before

the Court at this time shows that the amount in controversy is, at the minimum,

$8,215,518.51, the amount in damages OWL seeks from EOG for remediating the three

spills as computed in the affidavit executed by a corporate representative of OWL’s parent

company and attached as Exhibit 1 to OWL’s Motion 3, and, at the maximum,

$9,144,710.51, if the $929,192.00 in liquidated damages sought by EOG in its breach-of-

3
The affiant is David Grounds, who identifies himself as the Vice President of Regulatory
Compliance for Pilot Water Solutions, LLC (“Pilot”). Mtn. Ex. 1 ¶¶ 1–2. He avers that Pilot is OWL’s parent
company through an intermediate entity and that he was involved in OWL’s efforts to remediate the Fruit
State, Cigarillo, and Bon Bon spills. Id. ¶¶ 2–3. He further avers that the costs incurred to remediate these
three spills are $2,992,093.75, $3,205,200.00, and $2,018,224.76, respectively. Id. ¶¶ 4–7.

MEMORANDUM OPINION, Page 6
contract claim is also considered. Even if the Court were to consider EOG’s claim for

$929,192.00 alongside OWL’s claim for $8,215,518.51 in determining the amount in

controversy, the aggregated claims would be insufficient to meet the current $10-million-

plus jurisdictional threshold.

[¶ 14] EOG raises several arguments in support of its position that the amount in

controversy exceeds $10 million, but none are persuasive.

[¶ 15] EOG argues that the amount in controversy has been met because pleadings

must be construed liberally in favor of jurisdiction as conferred here by subsection (d)(1).

Resp. ¶¶ 16–18, 21. EOG points out that its pleadings, the Counterpetition and Notice,

allege that the amount in controversy exceeds $10 million and that OWL’s petition, while

silent on the amount in controversy, does not affirmatively establish an amount in

controversy outside the Court’s jurisdiction. Id. ¶¶ 16, 21, 31. In apparent support of the

point that OWL’s petition does not negate jurisdiction, EOG remarks several times in its

jurisdictional briefing that OWL’s petition does not contain the damages averred in the

affidavit. Resp. ¶¶ 8–10, 15, 21; Sur-reply ¶ 14. EOG is correct that OWL’s petition

identifies indeterminate damages in excess of $1 million rather a specific damages amount. 4

Pet. ¶¶ 3, 7, 27, 29.

4
The allegation that actual damages exceed $1 million pursuant to Rule 47’s requirement to specify
the range of damages does not establish that the amount in controversy exceeds $10 million. See C Ten, 2025
Tex. Bus. 1, at ¶¶ 35, 53, n.68, n.108, 708 S.W.3d at 238, 244, n.68, n.108; TEX. R. CIV. P. 47(c). Equally,
the allegation that actual damages exceed $1 million does not establish that the amount in controversy is
outside the Court’s jurisdictional limits either because the amount is incalculable based on the information
in the petition.

MEMORANDUM OPINION, Page 7
[¶ 16] But the absence from OWL’s petition of a specific damages amount

affirmatively demonstrating an amount in controversy outside the Court’s jurisdiction does

not mean that jurisdiction exists despite EOG’s allegation that the amount in controversy

exceeds $10 million. This is because, as permitted by the burden-shifting standard

governing amount-in-controversy disputes discussed by the Court in C Ten, OWL has

provided evidence, i.e., the affidavit attached to the Motion, establishing that the amount

in controversy is outside the Court’s jurisdictional threshold. 5 See C Ten, 2025 Tex. Bus.

1, at ¶ 51, 708 S.W.3d at 243 (internal citations omitted). Under this standard, the burden

shifted to EOG to present controverting evidence raising a fact issue on the amount in

controversy to avoid remand. EOG has not presented such evidence. See id. There are no

affidavits or exhibits attached to the response to the Motion or to the sur-reply in support

of removal, and the exhibits attached to EOG’s Notice do not controvert the damages

5
The C Ten burden-shifting standard encompasses the following procedure:

First, when the plaintiff’s petition alleges the amount in controversy, that pleading
controls unless (a) a party presents evidence that the amount pleaded is falsely
asserted to wrongly obtain or avoid jurisdiction, or (b) a different amount in
controversy is readily established, such as by statutorily set fees.

Second, when the plaintiff's pleadings are silent as to whether the amount in
controversy falls within this Court’s jurisdiction, but a removing party’s notice of
removal properly pleads that the amount is within the Court’s jurisdiction, those
pleadings will be given the same deference in the remand analysis: they will control
absent the circumstances described in (a) or (b) above.

Third, in either case, if a party presents evidence demonstrating that the amount in
controversy is outside the Court’s jurisdiction, the Court will remand the case
unless another party presents controverting evidence that, at a minimum, raises a
fact issue. And if there is a fact issue, the party asserting jurisdiction will bear the
burden of proof on the issue at trial.

C Ten, 2025 Tex. Bus. 1, at ¶¶ 49–51, 708 S.W.3d at 243 (internal citations omitted).

MEMORANDUM OPINION, Page 8
sought by OWL as calculated in the affidavit. These exhibits consist of a docket sheet;

OWL’s Petition, to which the parties’ agreement is attached; an affidavit of service; and

EOG’s Counterpetition. Notice Exs. A, C–1, C–2, C–3.

[¶ 17] EOG also argues that the amount in controversy requirement can be

determined by the amount at stake in the action as a whole and, thus, includes the damages

claimed and relief demanded in its counterclaims in the aggregate. Resp. ¶¶ 24–27, 30–38;

Sur-reply ¶¶ 2–6. EOG points out that subsection (d)(1) grants jurisdiction for an “action”

and that, in C Ten, this Court, recognizing that the statutory term refers to a lawsuit, held

that subsection (b)’s $5 million amount-in-controversy requirement applies at the “action”

level and is satisfied when the claims, collectively, meet the jurisdictional threshold. Resp.

¶¶ 24, 26, 28–29; Sur-reply ¶¶ 2–6. See C Ten, 2025 Tex. Bus. 1, at ¶¶ 25–30, 708 S.W.3d

at 234–36 (internal citations omitted). But C Ten does not hold that an action necessarily

includes aggregated counterclaims for the purpose of calculating the amount in

controversy, and EOG has not cited any Texas authority in support of its position, relying

instead on federal authority. Resp. ¶ 30. See, e.g., Liberty Mut. Ins. Co v. Horton, 275 F.2d

148, 152 (5th Cir. 1960), aff’d, 367 U.S. 348, 81 S. Ct. 1570, 6 L.Ed.2d 890 (1961)

(holding that, in an original action, not a removal action, involving a Texas workers’

compensation case, the amount in controversy may be satisfied by aggregating plaintiff’s

claim and defendant’s counterclaim where neither claim alone satisfies the jurisdictional

amount but the combination of the two does); but see United Servs. Auto. Ass’n v. Brite, 215

S.W.3d 400, 401 (Tex. 2007) (indicating that “the ‘matter in controversy’ includes all of

the damages the plaintiff seeks to recover at the time suit is filed.”).

MEMORANDUM OPINION, Page 9
[¶ 18] As intimated previously, the Court does not need to determine whether

EOG’s counterclaims should be aggregated with OWL’s claim for purposes of satisfying

the amount in controversy. This is because the only counterclaim that could theoretically

be considered is the ripe breach-of-contract claim seeking liquidated damages worth

approximately $929,192.00, and this counterclaim would not push the amount in

controversy over the jurisdictional line.

[¶ 19] There is no other ripe counterclaim that could theoretically be considered.

EOG does not have a present claim for future damages in the amount of $6,453,000.00

due to OWL’s anticipatory breach. Instead, EOG has a potential, contingent claim of

$6,453,000.00 if OWL does not perform in the future. Such a claim is unripe, and unripe

claims, which do not confer jurisdiction, should not be counted in calculating the amount-

in-controversy requirement. See, e.g., Republic Vanguard Ins. Co. v. Russell, 2021 WL

794464, at *3–4 and n.2 (N.D. Ala. Mar. 2, 2021) (explaining that because unripe claims

deprive courts of jurisdiction, courts may not consider damages from unripe claims in

calculating the amount in controversy); Veloz v. Allstate Fire & Cas. Ins. Co., 2022 WL

903259, at *3 (W.D. Tex. Mar. 28, 2022) (same). And EOG’s counterclaim for a

declaratory judgment is not part of the analysis for determining the amount in controversy

under subsection (d)(1) notwithstanding EOG’s assertion that it is relevant to the analysis

because it directly relates to OWL’s “claim” for indemnity subsumed under OWL’s breach-

of-contract claim. Resp. ¶¶ 12, 27, 34–38. In support of its assertion, EOG maintains that

the relief sought by OWL and disputed by EOG is actually the value of the indemnity

obligation in the agreement, which, according to EOG, is more than $10 million based on

MEMORANDUM OPINION, Page 10
the provisions in the agreement requiring the parties to obtain various insurance policies

with limits that in the aggregate exceed this amount. Id. But OWL’s pleaded cause of action

is a breach-of-contract claim seeking $8,215,518.51 as established by jurisdictional

evidence, and EOG’s recharacterization of OWL’s claim in an effort to meet subsection

(d)(1)’s $10-million-dollar-plus jurisdictional threshold does not change this fact.

Moreover, EOG brings its counterclaim for declaratory judgment pursuant to subsection

(e), not subsection (d)(1), as EOG itself acknowledges in its Notice: “As EOG seeks a

declaratory judgment concerning its rights under the Agreement, jurisdiction exists here

under TEX. GOV’T CODE ANN. § 25A.004(e).” Notice ¶ 8. Consequently, EOG bears the

burden to establish the Court’s jurisdiction over its declaratory judgment under subsection

(e), not subsection (d)(1). As explained below, EOG has not borne its burden.

2. H.B. 40 does not affect the Court’s current jurisdiction over this action

[¶ 20] As mentioned previously, the Court ordered the parties to discuss the effect,

if any, of H.B. 40 on the Court’s jurisdiction over this action. Order [6/16/2025], at 2. The

parties complied, providing reasoned analysis in support of their respective positions. EOG

argues that, in light of H.B. 40, OWL’s challenge to the amount in controversy will be moot

on September 1, 2025, and that, therefore, the Court should defer its ruling until after then,

to promote judicial efficiency and avoid a second removal. Resp. ¶¶ 39–43; Sur-reply ¶¶ 7–

16. OWL contends that the Court should not be swayed by EOG’s argument to defer for

economic and efficiency reasons because H.B. 40 does not confer jurisdiction now and the

propriety of a second removal is a different legal issue not ripe for consideration. Reply, at

9–12; Final Reply, at 3–5. After considering the parties’ arguments, the Court concludes

MEMORANDUM OPINION, Page 11
that H.B. 40 does not affect the disposition of this motion. The Court presently lacks

jurisdiction over this action under subsection (d)(1), and H.B. 40 does not change this

current reality. Consequently, because there is no other statutory basis for the Court to

exercise jurisdiction over this action, as explained below, the Court is required to remand

this case to the district court as soon as practicable. See TEX. GOV’T CODE ANN. §

25A.006(d) (requiring the business court to remand in the absence of jurisdiction); TEX. R.

CIV. P. 355(f)(1) (same); Tex. Dep’t of Parks & Wildlife v. Miranda, 133 S.W.3d 217, 227

(Tex. 2004) (instructing that determining jurisdiction should be made “as soon as

practicable”). In the absence of jurisdiction, the Court must remand because it has no

power to do anything else, like defer its ruling or stay the proceeding as urged by EOG. See

Kelley v. Homminga, 706 S.W.3d 829, 833 (Tex. 2025) (holding that, when a court lacks

jurisdiction, the court lacks power to do anything but dismiss).

B. Section 25A.004(e)

[¶ 21] EOG contends that the Court has jurisdiction over this action because EOG

seeks a declaratory judgment. Notice ¶¶ 1, 8. Section 25A.004(e) confers jurisdiction “in

an action seeking injunctive relief or a declaratory judgment under Chapter 37, Civil

Practice and Remedies Code, involving a dispute based on a claim within the court’s

jurisdiction under subsection (b), (c), or (d).” TEX. GOV’T CODE ANN. § 25A.004(e). But

EOG has not established that the Court has jurisdiction over this action pursuant to

subsection (e). EOG’s briefing is devoid of any discussion relating to subsection (e). More

fundamentally, however, the Court does not have jurisdiction pursuant to subsection (e)

because there is no claim within the Court’s jurisdiction under subsection (d)(1), a

MEMORANDUM OPINION, Page 12
prerequisite for establishing jurisdiction under subsection (e). See C Ten 31 LLC, 2025 Tex.

Bus. 1, at ¶¶ 18–24, 708 S.W.3d at 232–34 (concluding that the Court does not have

jurisdiction pursuant to subsection (e) unless the party satisfies subsection (b), (c), or (d)’s

jurisdictional prerequisites).

III. CONCLUSION

[¶ 22] For these reasons, the Court entered its July 25, 2025 order granting OWL’s

Motion.

JERRY D. BULLARD
Judge of the Texas Business Court,
sitting by assignment

SIGNED ON: August 11, 2025

MEMORANDUM OPINION, Page 13