Pontchartrain Natural Gas System, k/d/s Promix, L.L.C., and Acadian Gas Pipeline System v. Texas Brine Company, LLC

STATE OF LOUISIANA
COURT OF APPEAL
FIRST CIRCUIT
DOCKET NUMBER
2022 CA 0738
PONTCHARTRAIN NATURAL GAS SYSTEM, K/ D/ S PROMIX, L. L. C.,
AND ACADIAN GAS PIPELINE SYSTEM
VERSUS
TEXAS BRINE COMPANY, LLC
Judgment Rendered:
DEC 2 9 2022
J":
On Appeal from
the 23rd Judicial District Court, Division 5
Assumption Parish, Louisiana
Docket Number 34, 265
Honorable Thomas J. Kliebert, Jr., Presiding Ad Hoc Judge
James M. Garner Attorneys for Appellant
Leopold Z. Sher Texas Brine Company, LLC
Peter L. Hilbert, Jr.
Christopher T. Chocheles
New Orleans, Louisiana
Travis J. Turner
Gonzales, Louisiana
Ulysses Gene Thibodeaux
Lake Charles, Louisiana
Roy C. Cheatwood Attorneys for Appellee
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: MCDONALD, WELCH, and HOLDRIDGE, 33.
concuvs ras, s
w1
McDONALD, J.
This dispute is one of many arising out of the August 3, 2012 sinkhole that
appeared near Bayou Corne in Assumption Parish, Louisiana. In this appeal, Texas
Brine Company, LLC challenges a partial summary judgment dismissing its contractual
claims against Legacy Vulcan, LLCi under an Amended Operating Agreement between
the parties. After review, we dismiss the appeal.
FACTUAL AND PROCEDURAL BACKGROUND
In brief, the relevant history between Texas Brine and Legacy Vulcan dates back
to 1975, when Texas Brine, by way of a " Salt Lease," secured the right to produce salt
from a 40 -acre tract of land in Assumption Parish, commonly referenced by the parties
as the " North 40." Within a year of obtaining this right, Texas Brine entered into a
series of interdependent contracts with Legacy Vulcan, including an " Assignment of Salt
Lease" ( Assignment of Salt Lease), under which Texas Brine purportedly assigned all of
its rights, title, and interest as lessee in and under the Salt Lease to Legacy Vulcan, and
Legacy Vulcan assumed all obligations of Texas Brine as lessee in and under the Salt
Lease; a " Construction Contract and Facilities Lease" ( Facilities Lease), under which
Texas Brine was to site, drill, and construct certain wells, related facilities, and a
pipeline on the North 40 and lease certain property to Legacy Vulcan; and, an
Operating and Supply Agreement" ( Operating Agreement), under which Texas Brine
would operate facilities it constructed on the North 40 in order to produce and deliver a
certain quantity and quality of brine to be used by Legacy Vulcan in its chloralkali
business at its facility in Geismar, Louisiana. The Operating Agreement further provided
that Texas Brine maintain, repair, and at all times, keep the facilities leased by it to
Legacy Vulcan in good and safe operating condition. In turn, Legacy Vulcan was
obligated to pay Texas Brine for its services. Each of the above agreements provided
certain other specific rights to and obligations owed by the parties.
Around 2000, Texas Brine and Legacy Vulcan entered into the " First Amendment
to the Salt Lease," " Amendment to Construction Contract and Facilities Lease"
1 Legacy Vulcan, LLC was previously known as Vulcan Materials Company; we will reference it as Legacy
Vulcan in this opinion.
Amended Facilities Lease), and " Amended and Restated Operating and Supply
Agreement" ( Amended Operating Agreement), each contract dependent upon the other
contracts, for the purpose of continuing the brine mining and exploration on the North
40. The general principles underlying the Amended Operating Agreement remained the
same - Texas Brine would operate on the North 40 to produce and deliver certain
quantities and qualities of brine to Legacy Vulcan. Texas Brine further obligated itself
to maintain, repair, and at all times, keep these facilities in good and safe operating
condition, and comply with, perform, and fulfill all obligations of Legacy Vulcan to Texas
Brine under the Amended Facilities Lease between the parties, with respect to the
maintenance, operation, and preservation of the leased premises. Legacy Vulcan, in
turn, obligated itself to pay for Texas Brine' s services. Changes or additions made to
the Amended Operating Agreement included giving Legacy Vulcan the right to double
the amount of salt Texas Brine produced and delivered to Legacy Vulcan, as well as
Texas Brine separately and again obligating itself to ensure that Legacy Vulcan was
compliant with its obligations under the Amended Facilities Lease. Pertinent to this
appeal, the Amended Operating Agreement also contained an indemnification clause,
which provided, in part:
Texas [ Brine] and [ Legacy] Vulcan shall each pay one- half of all
losses and all claims, demands, payments, suits, actions, recoveries, and
judgments ... of every nature and description, brought, recovered or
arising out of the joint and concurring negligence of the parties.
Following the sinkhole' s emergence, multiple plaintiffs filed numerous lawsuits
against Texas Brine, all of whom suffered damages due to the sinkhole. Texas Brine, in
turn, asserted numerous third parry demands against Legacy Vulcan, including breach
of contract claims. Specifically, regarding the Amended Operating Agreement, Texas
Brine asserted that Legacy Vulcan failed to perform this contract in good faith. In its
Third Amended Incidental Demands, Texas Brine alleged that the Amended Operating
Agreement contained an indemnification clause, and therefore, to the extent that the
acts and omissions of Legacy Vulcan contributed to the formation of the sinkhole,
Legacy Vulcan was obligated to indemnify Texas Brine.
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The Phase 1 liability trial was held in September and October 2017, for the
purpose of determining what caused the sinkhole to form and which parties were at
fault under any theory of law for causing the formation of the sinkhole. See
Pontchartrain, 317 So. 3d at 724. The trial court found both Texas Brine and Legacy
Vulcan at fault. This court affirmed the judgment on appeal, finding that Legacy Vulcan
failed to act as a prudent mineral lessee, and Texas Brine failed to prudently operate on
the North 40. Pontchartrain Natural Gas System v. Texas Brine Company, LLC, 18- 1249
La. App. 1 Cir. 12/ 30/ 20), 317 So. 3d 715, 757- 58, writs denied, 21- 00382, 21- 00386
La. 6/ 8/ 21), 317 So. 3d 323.
Thereafter, the parties began the next phase of this litigation, which
encompassed all remaining incidental demands and damage/ quantum issues, but not
including insurance issues or attorney's fees. To that end, Legacy Vulcan filed
numerous partial motions for summary judgment asserting various arguments regarding
Texas Brine' s contractual claims against Legacy Vulcan. One such motion was Legacy
Vulcan' s motion for partial summary judgment seeking to dismiss Texas Brine' s claims
under the Amended Operating Agreement. First, Legacy Vulcan argued that Texas
Brine could not prove Legacy Vulcan breached the Amended Operating Agreement.
Alternatively, Legacy Vulcan argued that, because Texas Brine breached the Amended
Operating Agreement by failing to act as a prudent operator, citing Pontchartrain, 317
So. 3d at 758- 59, it was barred, under Louisiana Civil Code article 1993, from
demanding performance from Legacy Vulcan under the Amended Operating Agreement.
Texas Brine opposed the motion, asserting numerous arguments, including:
Legacy Vulcan did breach the Amended Operating Agreement by its negligence in
thinning the walls of the salt cavern, citing Pontchartrain, 317 So. 3d at 756- 57; Legacy
Vulcan breached its duty to perform the Amended Operating Agreement in good faith;
La. C. C. art. 1993 was inapplicable; and, the Amended Operating Agreement's
indemnification clause was an independent clause that could survive, despite any
breach of the Amended Operating Agreement.
The trial court held a hearing on this motion, along with several others, on
December 16, 2021. Following the parties' arguments and submission of evidence, the
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trial court took the matter under advisement. On January 18, 2022, the trial court
signed a judgment, stating:
IT IS HEREBY ORDERED, ADJUDGED, AND DECREED that
Legacy] Vulcan' s Motion for Partial Summary Judgment Dismissing Texas
Brine' s Claims Under the Amended Operating Agreement is GRANTED,
and Texas Brine' s claims against [ Legacy] Vulcan under the Amended
Operating Agreement are DISMISSED WITH PREJUDICE.
IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that
this Judgment is designated as a final judgment in accordance with
Louisiana Civil Code Article 1915, as the Court finds that there is no just
reason for delay.
ASSIGNMENTS OF ERROR
Texas Brine appeals from the adverse judgment, contending the trial court erred
in essentially rewriting the Amended Operating Agreement by disregarding the parties'
contractual indemnity provision that allocated tort liability in the event of joint and
concurring negligence. Texas Brine further contends the trial court erred in granting
summary judgment, because genuine issues of material fact exist regarding whether
Legacy Vulcan agreed to reimburse Texas Brine under the Amended Operating
Agreement for Texas Brine's costs and expenses incurred in connection with Texas
Brine' s operation of the Oxy Geismar No. 3 well.
APPEALABILITY OF PARTIAL SUMMARY 3UDGMENT
Appellate courts have a duty to examine subject matter jurisdiction sua sponte,
even when the parties do not raise the issue. See Advanced Leveling & Concrete
Solutions v Lathan Company, Inc., 17- 1250 ( La. App. 1 Cir. 12/ 20/ 18), 268 So. 3d
1044, 1046 ( en Banc). This court's appellate jurisdiction extends only to " final
judgments." See La. C. C. P. art. 2083( A).
A trial court may render a partial summary judgment dispositive of a particular
issue, theory of recovery, cause of action, or defense, in favor or one or more parties,
even though the grant of summary judgment does not dispose of the entire case as to
that party or parties. La. C. C. P. art. 966( E); Elee v. White, 19- 1633 ( La. App. 1 Cir.
7J24J20), So. 3d ,, 2020 WL 4251974, at * 2, writ denied, 20- 01048 ( La.
11/ 10320), 303 So. 3d 1038. A partial summary judgment rendered under La. C. C. P.
art. 966( E) may be immediately appealed during ongoing litigation only if the trial court
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has properly designated it as a final judgment. See La. C. C. P. art. 1915( 6)( 1).
However, this court's jurisdiction is not determined by a trial court's certification of a
partial summary judgment as final under La. C. C. P. art. 1915( 6). Hernandez v. Excel
Contractors, Inc., 18- 1091 ( La. App. 1 Or. 3/ 13/ 19), 275 So. 3d 278, 285. If the trial
court gives no reasons for the certification, but some justification is apparent from the
record, the appellate court should make a de novo determination of whether the
certification was proper. R.]. Messinger, Inc. v. Rosenblum, 04- 1664 ( La. 3/ 2/ 05), 894
So. 2d 1113, 1122; Asay v. Safeco Ins. Co. of Oregon, 20- 0852 ( La. App. 1 Cir.
4/ 16/ 21), 323 So. 3d 395, 398. Under Messinger, the following list of non- exclusive
factors are to be considered in determining whether a partial judgment should be
certified as final: ( 1) the relationship between the adjudicated and unadjudicated
claims; ( 2) the possibility that the need for review might or might not be mooted by
future developments in the trial court; ( 3) the possibility that the reviewing court might
be obliged to consider the same issue a second time; and ( 4) miscellaneous factors
such as delay, economic and solvency considerations, shortening the time of trial,
frivolity of competing claims, expense, and the like. Messinger, 894 So. 2d at 1122;
Asay, 323 So. 3d at 399. f= urther, in determining whether a partial judgment is final for
purposes of an immediate appeal, a court must always keep in mind the historic policy
against piecemeal appeals. Messinger, 894 So. 2d at 1122; Crown Oilfield Services, Inc.
v La. Oilfield Contractors Assn Ins Fund, 13- 0394 ( La. App. 1 Cir. 2/ 19/ 14), 2014 WL
3533482, at * 3 ( unpublished).
Applying these precepts on de novo review, we conclude the January 18, 2022
partial summary judgment does not meet the requirements of an appealable final
judgment under La. C. C. P. art. 1915( B). Any decision by this court on the limited
claims at issue on appeal, i.e., Texas Brine' s breach of the Amended Operating
Agreement claims against Legacy Vulcan, without consideration of the remaining
interdependent contracts and claims thereupon, would merely result in inefficient,
piecemeal, and possibly conflicting resolution of only a minor part of the parties' related
contract claims. See La. C. C. P. art. 2053 (" A doubtful provision [ in a contract] must be
interpreted in light of the nature of the contract, equity, usages, the conduct of the
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parties before and after the formation of the contract, and of other contracts of a like
nature between the same parties ") ( Emphasis added.)
This court is aware that the parties have chosen this particular method of
litigation to dispose of their remaining claims, and the trial court is attempting to
proceed in this case as efficiently as possible at this juncture. However, this court does
not believe that interpreting the parties' interrelated contracts in a disjointed manner,
after their interdependence has been established, is efficient or equitable, despite the
parties' contentions. See Pontchartrain Natural Gas System, 317 So. 3d at 725- 26; cf.
Florida Gas Transmission Company, LLC v. Texas Brine Company, LLC, 21- 1267, 22-
0004 ( La. App. 1 Cir. 8/ 3/ 22), 348 So. 3d 93 ( addressing how the sole issue of confusion
affected four interdependent contracts).
Accordingly, having found the January 18, 2022 judgment does not meet the
requirements of a final appealable judgment under Messinger, we lack subject matter
jurisdiction herein and dismiss the appeal.
CONCLUSION
For the above reasons, we dismiss this appeal and remand this matter to the trial
court for further proceedings consistent with this opinion. We assess appeal costs
equally between Texas Brine Company, LLC and Legacy Vulcan, LLC.
APPEAL DISMISSED; CASE REMANDEW
2 This court also: ( 1) grants Legacy Vulcan' s motion for oral argument; and, ( 2) grants Texas Brine' s
motion to withdraw James E. Kuhn as its counsel of record.
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PONTCHARTRAIN NATURAL STATE OF LOUISIANA
GAS SYSTEM, K/ D/ S PROMIX,
L.L.C., AND ACADIAN GAS COURT OF APPEAL
PIPELINE SYSTEM
VERSUS FIRST CIRCUIT
TEXAS BRINE COMPANY, LLC NO. 2022 CA 0738
HOLDRIDGE, J., eoncurs.
I respectfully concur with the report. I further write to emphasize that the basis
of the current appeal arises out of an August 2012 sinkhole in Assumption Parish. A
large number of writs and appeals have been filed with this court many times arguing
that the procedure used by the trial court and agreed upon by the parties was the most
cost-efficient and expedient method of disposing of the many claims and lawsuits
that are based on the 2012 sinkhole. Over ten years have passed since the sinkhole
occurred. It is clear that the parties and the trial court were not correct. This matter
has evolved into a lengthy and time- consuming litigation in which millions of dollars
of litigation expenses have been expended, as well as countless hours ofjudicial time
and effort, in both the trial and appellate courts. The Louisiana Supreme Court case
R.J. Messinger, Inc. v. Rosenblum, 2004- 1664 ( La. 312105), 894 So.2d 1113, 1122,
would allow this court to enforce the policy against multiple appeals and piecemeal
litigation that have been the hallmark of the 2012 Assumption Parish sinkhole
litigation. It also would ensure that this court, as well as the trial court, would operate
under the principle of sound judicial administration to promote judicial efficiency
and economy, neither of which have been present in this litigation.