Texaco vs. Pennzoil case
Samuel Goldwyn said, "An oral contract is as good as the paper it's written on," but this is not always the case. For example, In 1984 after Getty Oil was sold to Pennzoil in a handshake deal, Texaco made a higher offer, and the company was sold to Texaco. Pennzoil filed a lawsuit alleging tortious interference with this oral contract, which the court upheld and awarded $11.1 billion in damages, later reduced to $9.1 billion, but increased again by interest and penalties.
J. Hugh Liedtke, 81, Oilman Who Bested Texaco in Court
By DOUGLAS MARTIN
Published: April 01, 2003
J. Hugh Liedtke, the longtime head of the Pennzoil Company who began his career by drilling scores of consecutive successful oil wells with his partner, George H. W. Bush, and went on to win billions of dollars from Texaco in a dramatic legal battle, died on Friday in Houston. He was 81.
His son Blake said that he had suffered from several maladies for a long time.
Mr. Liedtke was a leading member of a generation of Texas oilmen who turned their jackpots from wildcat wells into large public companies. Like his fellow oilman, T. Boone Pickens, his specialty was buying assets for less than he thought they were worth and repackaging them to make them more attractive to investors.
Early in his career, he engineered one of the first major hostile takeovers when Pennzoil acquired the United Gas Pipeline Company, which was nearly eight times the size of Pennzoil. It was described at the time as a minnow swallowing a whale.
But his biggest triumph came in the courtroom where his legal team convinced a jury in 1988 that Texaco had illegally usurped his handshake deal to acquire an interest in the Getty Oil Company. He ended up with $3 billion that he used to acquire Chevron stock, only to trade that back to the company for lucrative oil and gas properties.
He had earlier turned down a $2 billion settlement offer from Texaco, causing Fortune magazine to ask him if he was the greediest man in the world or needed psychiatric help.
''Maybe both,'' he answered in the slow, gravelly voice that perhaps deliberately belied his extensive education. He then showed his famous teeth, saying he was prepared to wait for years for more money.
''Maybe now we should sit back a while and see how they like bankruptcy,'' he told Fortune. Texaco was indeed forced to seek bankruptcy protection.
When he finally got the $3 billion that he considered adequate from Texaco, Mr. Liedtke celebrated with a double cheeseburger and two bottles of beer at a Houston hamburger emporium he favored.
John Hugh Liedtke was born on Feb. 10, 1922, in Tulsa, where his father was a lawyer for the Gulf Oil Corporation. He majored in philosophy and won departmental honors at Amherst College. His thesis was titled ''Religion and the Limits of Knowledge in the Philosophies of Hume, Santayana and Dewey,'' according to the book ''Oil and Honor: The Texaco-Pennzoil Wars'' by Thomas Petzinger Jr. (Beard Books, 1999).
