Enhanced Industrial Technologies, LLC (“EIT”) and its founder John Ettere have filed a lawsuit in Harris County District Court against National Oilwell Varco, L.P., NOW Oilfield Services, LLC, and NOV, Inc. (NYSE:NOV) (collectively, “NOV”). The lawsuit, Cause No. 2021-12076, asserts that NOV defrauded the plaintiffs and breached a consulting and commission agreement that was intended to compensate EIT for helping NOV enter the multi-billion oil & gas separations business.
According to the Second Amended Petition filed in the 125th Judicial District Court, NOV allegedly induced Ettere to come out of retirement in 2014 by representing that it had no interest in acquiring an existing business with the relevant separation technologies and instead wanted to develop the capabilities internally. Plaintiffs allege that, based on these representations, they entered into a consulting agreement under which they transferred valuable intellectual property, technical know-how, and business development services to NOV.
The lawsuit further alleges that NOV’s representations were knowingly false and that internal documents and witness testimony show NOV executives were actively pursuing acquisition targets before and after the contract was executed. Plaintiffs contend that NOV accepted and relied on EIT’s technology and services to build a profitable new business segment, and then ceased providing required sales reports and failed to pay commissions as the business grew through internal expansion and the subsequent acquisition of Fjords Processing, a Norwegian company operating in the same field.
“Plaintiffs allege that NOV used false pretenses to obtain our clients’ proprietary technology and market expertise, and then quietly moved to exclude them from the business they were brought in to help build,” said C. Thomas Schmidt, counsel for EIT and Ettere. “We believe the evidence will show that NOV’s promises were not made in good faith.”
In addition to the misrepresentations about NOV’s intent to circumvent the agreement, the lawsuit alleges that NOV fraudulently reported its sales and underpaid commissions. NOV witnesses have confirmed that NOV reported its “costs” as the “sales price,” and thereby underpaid commissions to EIT. Despite the fact that its former executives admit that the sales reports understated sales and resulted in underpayments of commissions, NOV has still not compensated EIT for those misrepresentations and underpaid commissions—eleven years after the contract was executed.
The petition includes causes of action for fraud, fraudulent inducement, breach of contract, and misappropriation of intellectual property, and seeks monetary damages for unpaid commissions and the alleged misuse of confidential and proprietary technology.
The lawsuit remains pending in Harris County, and no findings have yet been made by the Court.
Contact:
C. Thomas Schmidt
Schmidt Law Firm, PLLC
7880 San Felipe, Suite 210
Houston, TX 77063
(713) 568-4898
firm@schmidtfirm.com