Judge Narrows Chevron Suit Against Pennzoil : Energy: Only one claim remains in a legal battle that challenges the intentions behind the purchase of $2.1 billion worth of stock.

A federal judge on Friday dismissed all but one claim in Chevron Corp.’s lawsuit that accused Pennzoil Co. of lying about its intentions when it spent $2.1 billion to buy an 8.8% stake in the San Francisco-based energy giant last month.

The decision, contained in a 13-page opinion, was a significant victory for Houston-based Pennzoil, which has said it bought the Chevron stock only for investment purposes and to defer federal taxes.

U.S. District Judge Thelton Henderson in San Francisco dismissed most of the claims in a lawsuit filed Dec. 7.

The suit claimed that Pennzoil violated the Hart-Scott-Rodino Antitrust Act and securities laws in buying Chevron stock. Chevron, alleging that Pennzoil sought to force Chevron to restructure, had asked that Pennzoil be forced to sell its stake and be prevented from buying more Chevron stock.

The judge allowed Chevron to pursue a portion of a claim that Pennzoil committed fraud by not truthfully stating its intentions in a Securities and Exchange Commission 13-D filing disclosing the stock purchase.

Even so, Henderson wrote: “Chevron’s factual support is unquestionably weak and certainly does not lead ineluctably to the conclusion or even demonstrate a probability that Pennzoil has filed a misleading Schedule 13-D; at best, it creates a suspicion.”

“Pennzoil is extraordinarily happy with this decision,” said Stephen V. Bomse, Pennzoil’s lawyer in San Francisco. “The lawsuit has been materially narrowed, and we are that much closer to putting the matter to rest--something we hope to do finally in due course.”

Chevron saw the decision differently, arguing that it sustained Chevron’s right to pursue the matter. “The portion of the lawsuit dismissed by the court will have no significant effect upon Chevron’s continued prosecution of its complaint and its ongoing discovery,” the company said in a statement.

Chevron added that the judge’s ruling reaffirmed Chevron’s right to certain Pennzoil documents relating to Pennzoil’s decision to buy Chevron stock. Chevron has already received some documents and will go into U.S. District Court in San Francisco next Wednesday to argue for more. Attorney Bomse called Chevron’s pursuit “a fishing expedition.”

Chevron filed its lawsuit on the evening of Dec. 7--only hours after Pennzoil disclosed that it had bought the Chevron stock with most of its $2.6-billion settlement with Texaco Inc. in Pennzoil’s dispute over Getty Oil Co.

Pennzoil’s disclosure, contained in a 13-D filing, confirmed weeks of rumors that an investor was buying up Chevron shares. There was speculation at the time that an outsider intended to mount a hostile takeover or force a restructuring of Chevron.

But in its filing, Pennzoil said it had bought the stake only as a passive investor and to avoid paying an estimated $800 million in federal taxes on its Texaco settlement.

“Pennzoil believes that its investment in the shares may provide Pennzoil the opportunity to defer for an indefinite period a portion of the federal income taxes that would otherwise be payable currently on the litigation settlement proceeds,” Pennzoil said in the filing. The swiftness with which Chevron filed its challenge, however, suggested that Chevron executives, led by Chairman Kenneth T. Derr, were suspicious of Pennzoil and its colorful chairman, J. Hugh Liedtke. Chevron lawyers reportedly went to the house of a judge at 6:45 p.m. to get him to sign a temporary restraining order to prevent Pennzoil from filing suit anywhere but San Francisco.

“Pennzoil has failed to reveal its true intent, which is to influence Chevron management decisions and/or force an extraordinary restructuring of Chevron,” Chevron argued in its original complaint.

The lawsuit was only part of an elaborate anti-takeover defense mounted by Chevron, including strengthening a shareholder’s rights plan and lining up $5 billion in credit. Friday’s decision was only the latest loss in the rapidly moving suit. On Dec. 27, the temporary restraining order was lifted, though Pennzoil gave no indication it would file suit.

In his decision, Henderson dismissed Chevron’s claim that Pennzoil violated antitrust laws, a portion of its claim that Pennzoil lied on its 13-D filing and its request for declaratory judgment that Chevron’s shareholder’s rights plan were valid and enforceable.