Florida Gas Transmission Company, LLC v. Texas Brine Company, LLC ( 2022 )

STATE OF LOUISIANA
COURT OF APPEAL
FIRST CIRCUIT
2022 CA 0004
and 2021 CW 1267
FLORIDA GAS TRANSMISSION COMPANY, LLC
VERSUS
TEXAS BRINE COMPANY, LLC, ET AL.
Judgment Rendered: AUG 0 3 2022
Appealed from the
23`` d Judicial District Court
In and for the Parish of Assumption
A/,
i' f State of Louisiana
Docket Number 34, 316
Honorable Thomas J. Kliebert, Jr., Judge Presiding
Names M. earner Attorneys for " Appellant/Defendant
Leopold Z. Sher Texas Brine Company, LLC
Peter L. Hilbert, Jr.
l:) arnell Bludworth
Jeffrey D. Kessler
Stuart D. Kottle
New Orleans, Louisiana
Robert Ryland Percy, III
Gonzales, Louisiana
Royce I. Duplessis
New Orleans, Louisiana
Travis J. Turner
Gonzt3les, Louisiana
Martin A. Stern Attorneys for 2''``i Appellants/ Defendants
Leigh Ann. Schell Occidental Chemical Corporation,
Raymond P. Ward Occidental Petroleum Corporation, and
New Orleans, Louisiana OXY USA, Inc.
Kathy Patrick
Laura Kissel Cassidy
Caitlin Halpern
Samuel W. Cruse, III
Houston, Texas
Richard Hymel
Lafayette, Louisiana
Brad Brian
Bethany Kristovich
Daniel Levin
Los Angeles, California
Roy C. Cheatwood Attorneys for Appellee/ Defendant
Kent A. Lambert Legacy Vulcan, LLC
Adam B. Zuckerman
Colleen C. Jarrott
Matthew C. Juneau
Leopoldo J. Yanez
Lauren Brink Adams
New Orleans, Louisiana
BEFORE: THERIOT, WOLFE, AND HESTER, JJ.
2
THERIOT, J.
Texas Brine Company, LLC appeals a summary judgment declaring a lease,
and other interdependent contracts, extinguished by confusion. In its answer to
this appeal and related request for supervisory review, Legacy Vulcan, LLC
challenges the trial court' s findings as to the effects of those extinguished
contracts. Occidental Chemical Corporation, Occidental Petroleum Corporation,
and Oxy USA, Inc., challenge the summary judgment' s lack of a reservation of
their right to arbitrate their contractual disputes with Texas Brine Company, LLC
including confusion of the lease at issue.' For the following reasons, we affirm the
trial court' s December 9, 2020 judgment finding that four certain contracts were
extinguished due to confusion or by operation of law and dismissing all causes of
action based on claims arising from those contracts, after the date of confusion;
and we affirm the trial court' s August 13, 2021 judgment finding that causes of
action based on claims arising from the four aforementioned extinguished contracts
are still viable for litigation.
This court has previously considered and decided the arbitration issues Occidental Chemical
Corporation, Occidental Petroleum Corporation, and Oxy USA, Inc. ( collectively the Oxy
Parties) raise in their appeal. See Florida Gas Transmission Company, LLC v. Texas Brine
Company, LLC, 2018- 1391 ( La. App. 1st Cir. 5/ 3/ 21), 324 So. 3d 1090, 1094, writs denied,
2021- 00770, 2021- 00773 ( La. 10/ 19/ 21), 326 So. 3d 255 & 260, citing to Pontchartrain Natural
Gas System v. Texas Brine Company, LLC, 2018- 1249 ( La. App. 1st Cir. 12/ 30/ 20), 317
So. 3d 715, 745, writs denied, 2021- 00382, 2021- 00386 ( La. 6/ 8/ 21), 317 So. 3d 323 ( wherein this
court held that all claims between the Oxy Parties and Texas Brine be submitted for
determination by the arbitration panel); and Florida Gas Transmission Company, LLC v.
Texas Brine Company, LLC, 2018- 0075 ( La. App. 1st Cir. 7/ 1/ 19), 285 So. 3d 1093, 1101,
writs denied, 2019- 01124 ( La. 7/ 17/ 19), 227 So. 3d 1180, 2019- 01405 ( La. 11/ 12/ 19), 282 So. 3d
225 ( wherein this court held that the determination of the issue of confusion of contracts as
between the Oxy Parties and Texas Brine was appropriate for the arbitration panel rather than the
trial court). Both of these rulings are final and definitive judgments, as the Louisiana Supreme
Court has denied writs of certiorari; therefore, this is the law of the case and there is no need to
reexamine these arbitration issues. See Slaughter v. Louisiana State Employees' Retirement
System, 2020- 0881 ( La. App. 1st Cir. 3/ 25/ 21), 322 So. 3d 839, 845, writ denied, 2021- 00567
La. 6/ 22/ 21), 318 So. 3d 706, cert. denied, 142 S. Ct. 775 ( 2022) ( the law of the case doctrine
embodies the principle that an appellate court generally does not revisit its own ruling of law on
a subsequent appeal in the same case). For these same reasons, Texas Brine' s motion to dismiss
the Oxy Parties' appeal is denied as moot.
3
FACTS AND PROCEDURAL HISTORY
This litigation arises out of a sinkhole that developed from the collapse of a
salt mine cavern in Assumption Parish on or about August 3, 2012. The present
matter involves contractual claims between Texas Brine Company, LLC, ( Texas
Brine) which operated the brine production well, and Legacy Vulcan, LLC,
Legacy Vulcan) the previous owner of the Geismar Plant which utilized the
brine.2
The contracts involved in this matter date back to 1975 when Hooker
Chemicals & Plastics Corp., predecessor in interest to Occidental Chemical
Corporation ( Occidental), was the owner of the 40 -acre tract of land located over
the Napoleonville Salt Dome, and entered into a Salt Lease with Texas Brine for
the mining of salt. In 1976, Texas Brine and Legacy Vulcan executed a contract
entitled, " Assignment of Salt Lease," wherein Legacy Vulcan took on the role as
lessee of the original Salt Lease. Texas Brine and Legacy Vulcan also entered into
two additional contracts, the Construction Contract and Facilities Lease ( Facilities
Lease), calling for Texas Brine, as lessor, to construct improvements and a pipeline
on the salt lease premises in order to produce and transport brine from the salt lease
property to the Geismar Plant; and the Operating and Supply Agreement
Operating Agreement) stating that Texas Brine was to operate the facilities leased
to Legacy Vulcan pursuant to the Facilities Lease. The parties amended and
restated both the Operating Agreement and the Facilities Lease in their entirety in
2000. Important to this appeal, both the Amended Facilities Lease and Amended
2
Legacy Vulcan was previously known as Vulcan Materials Company, but will be referred to as
Legacy Vulcan throughout this opinion.
9
Operating Agreement contained clauses tying the term of each of these contracts to
the term of the Salt Lease.'
Through a series of transactions, culminating in 2008, Occidental acquired
Legacy Vulcan' s interest in the Salt Lease and all of the ancillary contracts reliant
thereon. As a result of those transactions, Occidental was both lessor and lessee of
the Salt Lease when the sinkhole emerged in 2012.
The sinkhole spawned numerous Iawsuits, including this one, instituted by a
company owning and operating a pipeline damaged by the sinkhole. The claims
asserted in this suit include damages, indemnification, and attorney' s fees by Texas
Brine against Legacy Vulcan based in contract.
In June 2017, Texas Brine filed motions for partial summary judgment in
this and related lawsuits, asserting the Salt Lease terminated by confusion.
Occidental opposed the summary judgment motions, arguing the parties submitted
the confusion claim to the arbitration panel and were awaiting a decision. See
Florida Gas Transmission Company, LLC, 285 So.3d at 1096. The trial court
granted the motions, and signed judgments in favor of Texas Brine and against
Occidental, decreeing the Salt .Lease " terminated as a matter of law as of March
27, 2008," and dismissing with prejudice any actions based on the Salt Lease
arising thereafter. Id. Occidental appealed and this court vacated the judgment
and remanded the matter, finding that the issue was appropriate for determination
by the arbitration panel rather than the trial court. Id. at 1101.
Shortly thereafter, Legacy Vulcan, which is not a party to the arbitration
agreement, filed a motion for partial summary judgmentt asserting the Salt Lease
3 Section 6.2 of the Amended Operating Agreement states in pertinent part, " If on the other hand,
the Salt Lease terminates prior to December 31, 2017 ( for reasons other than default by either
party) the term of this Agreement shall be adjusted accordingly."
Section 5. 1 of the Amended Facilities Lease states in pertinent part, " If on the other hand, the
Salt Lease terminates prior to December 31, 2017 ( for reasons other than default by either party)
the term of this Lease shall be adjusted to coincide with the termination of the Salt Lease."
5
terminated by confusion on March 27, 2008, and that the ancillary contracts reliant
upon the existence of the Salt Lease, i.e. the Amended Facilities Lease, the
Amended Operating Agreement, and Assignment of Salt Lease, likewise cross -
extinguished on that same date. Legacy Vulcan asserted that the consequences of
this confusion were that the obligations arising under these contracts ceased to
exist as of March 27, 2008, and warranted the dismissal of all claims based on or
pursuant to the Salt Lease that arose after March 27, 2008. Legacy Vulcan' s
arguments in support of its motion relied heavily on those previously made by
Texas Brine, and attached as evidence the above- mentioned contracts, the transfer
documents, and previously issued judgments on the issue of confusion.
Although Texas Brine agreed that the Salt Lease extinguished on March 27,
2008 by operation of confusion, it opposed Legacy Vulcan' s interpretation of the
effects of such extinguishment. Alternatively, Texas Brine asserted that confusion
may have not occurred due to Legacy Vulcan' s potentially partial or invalid
assignment to Basic Chemicals in 2005; another alternative argument presented by
Texas Brine was that it had already accrued certain rights under the contracts prior
to confusion, and therefore Texas Brine was still able to assert those claims against
Legacy Vulcan.
On December 9, 2020, the trial court signed a judgment granting Legacy
Vulcan' s motion for partial summary judgment, finding that the Salt Lease,
Operating Agreement, Facilities Lease, as well as any amendments thereto, and
Assignment of Salt Lease " ceased to exist and have any effect as of March 27,
2008" either by operation of confusion as with the Salt Lease, or as a matter of law
as it pertains to the remaining three contracts; that all obligations arising under or
pursuant to those contracts were extinguished on March 27, 2008; and dismissing
with prejudice any contractual claims brought by Texas Brine based on those
contracts for damages arising after March 27, 2008. The judgment further noted
6
that the court did not address the legal effect of this ruling upon the claims pending
in arbitration between Occidental and Texas Brine.
Ultimately, Texas Brine sought and obtained an order for devolutive appeal
of the December 9, 2020 judgment, and Legacy Vulcan answered the appeal.
In addition to our review of the appeal of the December 9, 2020 judgment
and Legacy Vulcan' s answer to the appeal, we also review the writ filed by Legacy
Vulcan seeking supervisory review of a different, but related, ruling of the trial
court.4 Relevant to the writ, which was assigned docket number 2021 CW 1267,
Legacy Vulcan filed a subsequent motion for partial summary judgment regarding
the effect of the extinguishment of the contracts; specifically, Legacy Vulcan
sought to clarify the previous judgment and dismiss any of Texas Brine' s
remaining contractual claims against it asserting that all of Texas Brine' s
contractual claims became unenforceable when the obligations within those
contracts were extinguished on March. 27, 2008.
Texas Brine opposed this motion, arguing that the confusion ruling only
extinguished Legacy Vulcan' s obligations within the contracts prospectively from
the date of extinguishment. Texas Brine further explained that the extinguishment
of a contract necessarily results in different consequences than. a finding of nullity
and therefore, extinguishment did not erase all of Legacy Vulcan' s obligations as if
they never existed. Therefore, Texas Brine asserted that it was entitled to assert
claims on breaches of contract that accrued prior to March 27, 2008.
The trial court denied Legacy Vulcan' s motion for partial summary
judgment, which was reduced to writing and signed on August 13, 2021. Legacy
4
By order dated January 12, 2022, Legacy Vulcan' s writ was referred to the panel to which 2022
CA 0004 is assigned.
Vulcan filed a writ seeking supervisory review which was referred to this panel for
review in conjunction with the appeal of the December 9, 2020 judgment.'
ASSIGNMENTS OF ERROR
Texas Brine' s Appeal
1. The trial court legally erred in granting summary judgment in favor of
Legacy Vulcan by finding multiple contracts ceased to exist and have any
effect, as to Legacy Vulcan, as of March 27, 2008.
2. The trial court legally erred in granting summary judgment in favor of
Legacy Vulcan by extinguishing all of Legacy Vulcan' s obligations to Texas
Brine under multiple contracts.
3. The trial court legally erred by ordering that any actions by Texas Brine
against Legacy Vulcan for damages arising after March 27, 2008 that are
based on the Salt Lease, the Amended Operating Agreement, the Amended
Facilities Lease, and the Assignment of Salt Lease are dismissed with
prejudice.
Legacy Vulcan' s Answer and Writ
1. The trial court legally erred by allowing Texas Brine to pursue extinguished
contractual claims.
2. The trial court legally erred by allowing Texas Brine to pursue contract
claims that never accrued given Texas Brine' s inability to satisfy all three
elements of a breach of contract claim.
Exception of No Right of Action
During the pendency of this appeal, on February 9, 2022, Texas Brine filed
with this court a peremptory exception of no right of action. The basis of this
exception is Texas Brine' s contention that because Legacy Vulcan was not privy to
the Salt Lease, it has no right of action to assert confusion and extinguishment
thereof.
5 We grant Texas Brine Company, LLC' s motion to supplement appellate record with the
transcript of the hearing on motion for new trial, as well as the trial court' s August 13, 2021
judgment denying Legacy Vulcan' s motion for partial summary judgment, and the trial court' s
reasons for judgment.
0
Legacy Vulcan strongly opposes the exception, urging that an exception of
no right of action is an inappropriate vehicle to challenge Legacy Vulcan' s
affirmative defense to Texas Brine' s contract claims, citing Bubola v. Stutts,
2008- 0183 ( La. App. 1st Cir. 9/ 12/ 08), 2008 WL 4191020, * 5 ( unpublished),
wherein this court found that there was no procedural basis for a plaintiff or
plaintiff -in -reconvention to assert an exception of no right of action in order to
defeat a defense raised by a defendant or defendant -in -reconvention. Legacy
Vulcan further argues that should the exception be granted, it would take away
Legacy Vulcan' s right to defend itself from. Texas Brine' s contractual claims.
Finally, Legacy Vulcan asserts that Texas Brine inappropriately filed its exception
of no right of action for the first time with this court.
Filing a peremptory exception for the first time on appeal is permitted by La.
Code Civ. P. art. 2163. However, that Article makes consideration of such an
exception discretionary with the appellate court. Foundation Materials, Inc. v.
Nichols, 2014- 0139 ( La. App. 1st Cir. 9/ 17/ 14), 2014 WL 4658207, * 8,
unpublished), writ denied, 2014- 2171 ( I_,
a. 12/ 8/ 14), 153 So. 3d 445, citing
Southern States Masonry, Inc. v. J.A. Jones Construction Company, 507 So.2d
198, 207 ( La. 1987), and Capital Loans, Inc. v. Stassi, 195 So. 2d 670, 672 ( La.
App. 1st Cir. 1967), writ refused, 199 So. 2d 912 ( La. 1967). Because this
exception addresses an argument alluded to by Texas Brine, we will briefly discuss
the exception.
Extinguishment of an obligation in any manner is an affirmative defense,
and a party asserting such a defense bears the burden of proof. See Boon v. Boon,
593 So. 2d 1289, 1292 ( La. App. I st Cir. 1991); La. Code Civ. P. art. 1005. In the
matter before us, Legacy Vulcan asserted the defense of extinguishment of certain
obligations under which Texas Brine seeks to hold it liable, including those found
within the Assignment of Salt Lease and the Amended Operating Agreement. As
9
will be more fully addressed below, because of the interrelated nature of the
contracts in this case, we find Legacy Vulcan has the right to challenge the status
of the Salt Lease in order to attempt to carry its burden to prove the obligations of
which it was a party to were extinguished. Therefore, we deny this exception.
STANDARD OF REVIEW
A summary judgment is reviewed on appeal de novo, with the appellate
court using the same criteria that govern the trial court' s determination of whether
summary judgment is appropriate; i. e., whether there is any genuine issue of
material fact, and whether the movant is entitled to judgment as a matter of law.
Danos Tree Service, LLC v. Proride Trailers, LLC, 2017- 1546 ( La. App. 1st
Cir. 7/ 10/ 18), 255 So. 3d 1078, 1082.
DISCUSSION
The facts underlying this matter do not appear to be in dispute, as both
Legacy Vulcan and Texas Brine agree that over a period of time and through a
series of transactions, Occidental became the lessee of the Salt Lease of which it
was already lessor, which caused the Salt Lease' s extinguishment due to confusion.
As noted above, the issues presented to this court focus on the legal effects of such
an occurrence and what it means for the parties involved.
The Salt Lease
Texas Brine initially argues that the trial court erred in finding that the Salt
Lease ceased to exist and have any effect as to Legacy Vulcan. Texas Brine
asserts, and this court agrees, that confusion extinguishes obligations rather than
contracts. Specifically, La. Civ. Code art. 1903 states that when the qualities of
obligee and obligor are united in the same person, the obligation is extinguished by
confusion. An obligation is a legal relationship, La. Civ. Code art. 1756, and a
source of obligations is a contract. La. Civ. Code art. 1906 & see Comments —
1984, comment ( c). With these principles in mind, we find that the Salt Lease was
10
a source of numerous obligations which included: the obligation to lease a 40 -acre
tract of land for the purpose of brine exploration; the obligation to pay royalties for
minerals extracted; the obligation to mine in a prudent manner; etc. When
Occidental became both lessee and lessor of the Salt Lease, it essentially became
obligor and obligee of all the obligations contained within the lease, and therefore,
confusion extinguished all obligations and the entire legal relationship set forth in
the Salt Lease such that the Salt Lease no longer served as a source of obligations.
We find no merit in Texas Brine' s argument that there are obligations within the
Salt Lease that survived as to Legacy Vulcan alone.
We likewise find Texas Brine' s reliance on Worldwide Remediation, Inc.
v. Onebane, Bernard, Torian, Diaz, McNamara & Abell Law Firm, 211 F. 3d
948 ( 5th Cir. 2000), to be misplaced. In Worldwide' s brief discussion of
confusion, the court found that the doctrine of confusion was inapplicable when
parties were both obligors and obligees of multiple obligations, but neither was
ever both obligor and obligee of the same obligation. We find this case to be
inapplicable. Although Worldwide correctly states that in order for confusion to
occur, one party must be both obligor and obligee to an obligation, that is precisely
what occurred here when Occidental became both lessor and lessee of the Salt
Lease.
We are further unpersuaded by Texas Brine' s argument that the Salt Lease
obligations were not extinguished as to Legacy Vulcan alone because of solidarity.
Texas Brine cites to La. Civ. Code art. 1905 which provides, " If a solidary obligor
becomes an obligee, confusion extinguishes the obligation only for the portion of
that obligor:" Likewise, the same article provides, " If a solidary obligee becomes
an obligor, confusion extinguished the obligation only for the portion of that
obligee." In the scenario before this court, Occidental was not a solidary obligor
that became an obligee, nor a solidary obligee that also became an obligor, but the
1
sole obligee that became an obligor. We find, based on the undisputed material
facts before us, that the trial court correctly ruled that the obligations contained
within the Salt Lease were extinguished based on confusion as of March 27, 2008.
The Amended Operatinp-Agreement and Amended Facilities Lease
Texas Brine next argues that the trial court erred in finding that the
Amended Operating Agreement and Amended Facilities Lease terminated or cross -
extinguished simultaneously with the Salt Lease. We find no merit in this
assignment of error. Generally, legal agreements have the effect of law upon the
parties, and, as they bind themselves, they shall be held to a full performance of the
obligations flowing therefrom. La. Civ. Code art. 1983; Waterworks District No.
1 of DeSoto Parish v. Louisiana Department of Public Safety & Corrections,
2016- 0744 ( La. App. 1st Cir. 2/ 17/ 17), 214 So. 3d 1, 5, writ denied, 2017- 0470 ( La.
5/ 12/ 17), 219 So. 3d 1103. Interpretation of a contract is the determination of the
common intent of the parties. La. Civ. Code art. 2045. In other words, a contract
between the parties is the law between them, and the courts are obligated to give
legal effect to such contracts according to the true intent of the parties.
Waterworks, 214 So. 3d at 5.
The reasonable intention of the parties to a contract is to be sought by
examining the words of the contract itself, and not assumed. Waterworks, 214
So. 3d at 5. When the words of a contract are clear and explicit and lead to no
absurd consequences, no further interpretation may be made in search of the
parties' intent. La. Civ. Code art. 2046. Common intent is determined, therefore,
in accordance with the general, ordinary, plain and popular meaning of the words
used in the contract. Accordingly, when a clause in a contract is clear and
unambiguous, the letter of that clause should not be disregarded under the pretext
of pursuing its spirit, as it is not the duty of the courts to bend the meaning of the
words of a contract into harmony with a supposed reasonable intention of the
12
parties. Most importantly, a contract must be interpreted in a common- sense
fashion, according to the words of the contract their common and usual
significance. Waterworks, 214 So. 3d at 5; see also La. Civ. Code art. 2047.
Section 6. 2 of the Amended Operating Agreement and Section 5. 1 of the
Amended Facilities Lease, clearly and unambiguously demonstrate the intent of the
parties that should the Salt Lease terminate prior to the set date of December 31,
2017, both agreements would be adjusted to coincide with the termination of the
Salt Lease; or to put it more plainly, terminate on that same date. Therefore, we
find no error in the trial court' s ruling that both the Amended Facilities Lease and
Amended Operating Agreement terminated on the same date the Salt Lease was
extinguished on March 27, 2008.
We further find no error in the trial court' s finding that the obligations
within the Amended Facilities Lease and Amended Operating Agreement cross -
extinguished on March 27, 2008 due to the extinguishment of the obligations
within the Salt Lease. An obligation cannot exist without a lawful cause. La. Civ.
Code art. 1966. The cause is the reason why a party obligates himself. La. Civ.
Code art. 1967. From the language of the documents themselves, it is clear that the
reason why both Texas Brine and Legacy Vulcan obligated themselves in both the
Amended Operating Agreement and the Amended Facilities Lease was because of
the continued brine mining on the salt lease property which was permitted by the
Salt Lease.6 Thus, when the obligations and rights which allowed for prudent brine
6 See, " Recitals" in Amended and Restated Operating and Supply Agreement which provide in
pertinent part:
WHEREAS, [ Occidental], as lessor, and Texas [ Brine], as lessee, entered into a certain
Salt Lease ( Amended and Restated) dated as of July 18, 1975 ( the " Salt Lease") ... with
respect to the following described premises (the " Salt Lease Premises")...
WHEREAS, pursuant to the Salt Lease, Texas [ Brine] received the rights, inter alia, to
explore, prospect, drill and produce salt brine, and to transport salt brine from and across
the Salt Lease Premises, and to construct wells and other structures thereon for purposes
incidental to the production and transportation of salt brine, all as more specifically
described in the Salt Lease; and
13
mining on the Salt Lease property were extinguished, the reason for entering into
the obligations found within the Amended Operating Agreement and Amended
Facilities Lease likewise cross -extinguished on March 27, 2008. See 5 La. Civ. L.
Treatise, Law of Obligations, 16. 61 ( 2d ed.) ( In bilateral and commutative
contracts, performance of the obligation of one party is the cause of the obligation
of the other and an obligation cannot exist without a cause.), citing La. Civ. Code
art. 1966; 1 Litvinoff, Obligations 399 ( 1969).
Assignment of Salt Lease
With regards to the Assignment of Salt Lease, we recognize that the
obligations found within this contract were not extinguished due to confusion nor
does it contain a cross -terminating clause. However, we find the obligations
within the Assignment of Salt Lease cross -extinguished on the date of confusion
because it too lost its cause. A reading of the Assignment of Salt Lease makes
clear that it exists for the sole purpose of transferring the rights and obligations of
WHEREAS, pursuant to that certain Construction Contract and Facilities Lease between
Texas [ Brine],as lessor, and [ Legacy] Vulcan, as lessee ... Texas [ Brine] constructed and
leased to [ Legacy] Vulcan... certain improvements located on the Salt Lease Premises
and also a pipeline to deliver brine from the Salt Lease Premises to [ Legacy] Vulcan' s
plant site at Geismar...
WHEREAS, Texas [ Brine] and [ Legacy] Vulcan also entered into an Operating and
Supply Agreement... pursuant to which Texas [ Brine] operates the facilities leased to
Legacy] Vulcan pursuant to the Original Facilities Lease ... for the purpose of producing
and delivering salt brine to [ Legacy] Vulcan' s plant at Geismar, Louisiana[.]
See, " Recitals" in Amended and Restated Facilities Lease Agreement which provide in
pertinent part:
WHEREAS, [ Occidental], as lessor, and Texas [ Brine], as lessee, entered into a certain
Salt Lease ( Amended and Restated) dated as of July 18, 1975 ( the " Salt Lease") ... with
respect to the following described premises ( the " Salt Lease Premises")...
WHEREAS, pursuant to the Salt Lease, Texas [ Brine] received the rights, inter alia, to
explore, prospect, drill and produce salt brine, and to transport salt brine from and across
the Salt Lease Premises, and to construct wells and other structures thereon for purposes
incidental to the production and transportation of salt brine, all as more specifically
described in the Salt Lease; and
WHEREAS, pursuant to the Original Facilities Lease ... Texas [ Brine] has constructed
and leased to [ Legacy] Vulcan for the consideration and on the terms and conditions set
forth in said Original Facilities Lease, certain improvements located on the Salt Lease
Premises and also a pipeline to deliver brine from the Salt Lease Premises to Vulcan' s
plant site at Geismar[.]
14
the Salt Lease from Texas Brine to Legacy Vulcan. Without a Salt Lease, there
can be no assignment thereof. Therefore, this contract likewise cross -extinguished
on March 27, 2008. See 5 La. Civ. L. Treatise, Law of Obligations, 16. 61 ( 2d ed.),
citing La. Civ. Code art. 1966; 1 Litvinoff, Obligations 399 ( 1969).
Effects of Confusion and Cross- Extiniuishment
Lastly, Texas Brine appeals the trial court' s dismissal of all of its claims for
damages based on the Salt Lease, the Amended Operating Agreement, the
Amended Facilities Lease, and the Assignment of Salt Lease, against Legacy
Vulcan arising after March 27, 2008. Legacy Vulcan in turn seeks review of Texas
Brine' s ability to assert claims based on these contracts that " accrued" prior to that
date.
As this court previously noted, an obligation may be extinguished due to
confusion. Confusion is not only one of the manners in which obligations are
extinguished, but also a legal obstacle that makes an obligation ineffective. " Union
of qualities of obligee and obligor," 5 La. Civ. L. Treatise, Law of Obligations 20. 1
2d ed.). The fundamental concept is that an obligation ceases to exist when
confusion occurs. Comment, " Extinguishment of Obligations by Confusion," 36
Tul. L. Rev. 521 ( 1. 962). Therefore, we find the trial court correctly found that
upon extinguishment of the Salt Lease and cross -extinguishment of the
Assignment of Salt Lease, Amended Operating Agreement, and Amended
Facilities Lease on March 27, 2008, the obligations found therein ceased to exist
and therefore cannot be the basis of a cause of action for any damages arising
thereafter. However, a question remains regarding the effects of extinguishment
on obligations while the contracts were still in effect.
Legacy Vulcan argues that as a matter of law, extinguishment of an
obligation bars any action based on that obligation, even if the action fully accrued
based on a breach and damages arising prior to extinguishment. Put another way,
15
Legacy Vulcan asserts that extinguishment of an obligation precludes subsequent
enforcement of that obligation, even if enforcement is sought based on a prior
actionable failure to perform.
In support of its argument, Legacy Vulcan cites Black River Crawfish
Farms, LLC v. King, 2017- 672 ( La. App. 3rd Cir. 2/ 7/ 18), 246 So. 3d 1. In Black
River Crawfish, a landowner filed suit against several alleged mineral servitude
owners, asserting restoration claims for the contamination of its property resulting
from historical oil and gas exploration activities. The named defendants filed an
exception of prescription of nonuse. The court noted that prescription due to
nonuse is a mode of extinction, and in this particular case, by operation of law, the
real right of the mineral servitude at issue was extinguished by " prescription
resulting from nonuse for ten years" at the latest, in January 2000, at which time,
the real right along with any correlative obligations arising therefrom, no longer
existed. Id. at 6- 7. The Third Circuit went on to explain that when the mineral
servitude was extinguished in January 2000, the dismembered portions of
ownership reverted to the landowner. Pursuant to the rule of confusion, as both the
owner of the land and the minerals, the landowner could not be bound to render a
performance to itself (restore the land from contamination), and therefore, the real
obligations set forth in the mineral code, specifically the duty to restore, were
extinguished in 2000 when the ownership of the surface estate was reunited with
the ownership of the minerals. Consequently, when plaintiff acquired the property
in 2003, it never acquired the right to enforce the real obligation to restore the
surface, even though it had been contaminated when the duty existed, due to the
confusion of the obligation three years prior to the sale. Id. at 7.
Legacy Vulcan further cites to Dumas v. U.S. Fidelity & Guaranty Co.,
134 So. 2d 45 ( La. 1961) and Addison et al. v. Employers Mut. Liability Ins. Co.
of Wisconsin, 64 So.2d 484 ( La. App. 1st Cir. 1953), for the proposition that
16
extinguishment eliminates any right to pursue a claim, even if it is actionable at the
time of extinguishment. In these cases, spouses were involved in car accidents
with one spouse being injured through the negligence of the other, resulting in the
injured spouse bringing suit against the negligent spouse, and the negligent
spouse' s insurer. In both cases, prior to the conclusion of the suit, the injured
spouse died. Both the Dumas and Addison courts found that the remaining right
of action vested in the surviving spouse as surviving beneficiary, and resulted in
the extinction of the injured spouse' s cause of action due to confusion which acted
as a bar to recovery. Therefore, the combining of the rights of obligor and obligee
in one spouse triggered confusion and resulted in the release of the insurance
companies from all liabilities under the negligent spouse' s insurance contracts.
In order to demonstrate that no ancillary obligations could survive
extinguishment of the principle obligation, Legacy Vulcan also notes the federal
fifth circuit' s case, HDRE Business Partners Limited Group, LLC v. RARE
Hospitality International, Incorporated, 834 F. 3d 537, 540 ( 5th Cir. 2016). The
HDRE court found that a novation had extinguished the parties' rights under an
agreement which included a provision that the prevailing party' s attorney' s fees
were paid. The court further noted that it had found no Louisiana case enforcing
an attorney' s fees provision — or, any individual provision — of a subsequently
novated agreement. Id. at 541 n.2.
Therefore, Legacy Vulcan concludes, that extinguishment of an obligation is
the extinguishment of the entire legal relationship between the parties, including all
correlative rights and duties which precludes their enforcement forevermore,
whether performed or unperformed, matured or unmatured, liquidated or
unliquidated.
In contrast, Texas Brine argues that Legacy Vulcan remains liable for the
consequences of its pre -2008 conduct, all of which occurred under the framework
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of the contracts prior to any termination of those contracts. In its brief to the trial
court, Texas Brine cited in support, Millennium Petrochemicals, Inc. v. Brown
Root Holdings, Inc., 390 F. 3d 336 ( 5th Cir. 2004).
In Millennium, plaintiff and defendant entered into a contract in 1961 under
which defendant would perform maintenance services at one of plaintiff' s plants.
The parties amended their contract, specifically the indemnity provision several
times. By letter dated April 5, 1995, plaintiff terminated the contract. In 1998,
defendant' s employees filed suit in Texas claiming injuries from exposure to
asbestos in plaintiff' s workplaces and named plaintiff as defendant. Citing the
indemnity provisions of the contract, plaintiff notified defendant of the claims and
requested indemnity which defendant refused to provide. The district court found
that the indemnity clause terminated along with the contract in 1995, or
alternatively, the indemnity clause was eliminated in the 1994 amendment to the
contract. The district court therefore dismissed plaintiff' s claims and plaintiff
appealed. The U.S. Fifth Circuit reversed, citing a Texas statute which states that
upon the termination of a contract, rights based on prior breaches of performance
survive the termination. The court further noted that the federal Fourth and Ninth
Circuits have recognized that rights that have vested or accrued under a contract
prior to the termination of the contract are not automatically extinguished upon
termination. Id. at 340- 41.
In its brief filed with this court, Texas Brine cites to Sewerage & Water
Board of New Orleans v. Bertucci, 65 So.2d 377, 384 ( La. 1953) in support of its
argument that contractual claims may be asserted when damage is discovered after
the termination of a contract. Texas Brine also asserts that the jurisprudence relied
on by Legacy Vulcan, specifically the Dumas and Addison opinions, are
distinguishable as the confusion that occurred here was not a result of Legacy
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Vulcan becoming both obligor and obligee of any of the obligations at issue,
whereas that was the factual scenario in the other two cases.
The crux of this matter is the determination of the legal effect of
extinguishment of an obligation. This court has not found, and Legacy Vulcan has
not provided, any support for the argument that an actionable obligation cannot be
enforced once extinguishment occurs, when the parties to the obligations were not
the cause of the extinguishment. Therefore, this court finds that Legacy Vulcan
failed to carry its burden that it is entitled to judgment as a matter of law. La. Code
Civ. P. art. 966( A)(3).
CONCLUSION
For the foregoing reasons, we affirm the trial court judgment dated
December 9, 2020, finding that the obligations in the Salt Lease were extinguished
as a result of confusion on March 27, 2008; that the Amended Operating
Agreement and Amended Facilities Lease, along with the Assignment of Salt
Lease were cross -extinguished on that same date; and dismissing with prejudice
any actions brought by Texas Brine Company, LLC against Legacy Vulcan, LLC
for damages arising after March 27, 2008, based on the aforementioned contracts.
For the foregoing reasons, we affirm the trial court judgment dated August
13, 2021, denying Legacy Vulcan' s motion for partial summary judgment
regarding any claims by Texas Brine Company, LLC against Legacy Vulcan, LLC
for damages arising before March 27, 2008, based on the aforementioned
contracts.
The parties to this appeal are to bear its own costs of this appeal.
JUDGMENT AFFIRMED; MOTION TO SUPPLEMENT GRANTED;
WRIT DENIED; EXCEPTION OF NO RIGHT OF ACTION DENIED.
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