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
2018 CA 0999
PONTCHARTRAIN NATURAL GAS SYSTEM,
K/D/ S PROMIX, L.L.C., AND ACADIAN GAS PIPELINE SYSTEM
VERSUS
TEXAS BRINE COMPANY, LLC
Judgment Rendered: OV 1 5 2019
On Appeal from the
Twenty -Third Judicial District Court
In and for the Parish of Assumption
State of Louisiana
Docket No. 34, 265
Honorable Thomas J. Kliebert, Jr., Judge Presiding
Leopold Z. Sher Attorneys for Appellant/Defendant/
James M. Garner Third -Party Plaintiff,
Peter L. Hilbert, Jr. Texas Brine Company, LLC
Jeffrey D. Kessler
New Orleans, Louisiana
Robert Ryland Percy, III
Gonzales, Louisiana
Travis J. Turner
Gonzales, Louisiana
Glen E. Mercer Attorneys for Appellee/Third-Party
Kourtney Twenhafel Defendant,
New Orleans, Louisiana Steadfast Insurance Company, as
alleged insurer of Adams Resources
Exploration Company
Mary S. Johnson Attorneys for Appellees/ Third-Party
Chad J. Mollere Defendants,
Mandeville, Louisiana AIG Specialty Insurance Company,
Lexington Insurance Company, and
National Union Fire Insurance
Company of Pittsburgh, PA, as
alleged insurers of Adams Resources
Exploration Company
Matthew J. Randazzo, III Attorneys for Appellee/ Defendant/
Christopher B. Bailey Third -Party Defendant,
Will Montz Browning Oil Company, Inc.
Lafayette, Louisiana
Martin A. Stern Attorneys for Appellees/ Defendants,
Leigh Ann Schell Occidental Chemical Corporation
Raymond P. Ward Occidental Petroleum Corporation,
Jeffrey E. Richardson and Oxy USA, Inc.
Sara C. Valentine
New Orleans, Louisiana
Roy C. Cheatwood Attorneys for Appellee/ Third-Party
Kent A. Lambert Defendant/Third-Party Plaintiff,
Adam B. Zuckerman Legacy Vulcan, LLC
Paul C. Thibodeaux
Colleen C. Jarrott
Matthew S. Chester
Matthew C. Juneau
New Orleans, Louisiana
Tony M. Clayton
Port Allen, Louisiana
BEFORE: HIGGINBOTHAW PENZATO, AND LANIER, JJ.
Judge Toni Manning Higginbotham was not present at the oral argument of this case; however,
she participated in deliberations via a recording of the hearing.
2
PENZATO, J.
Texas Brine Company, LLC, appeals a judgment dismissing its claims
against Steadfast Insurance Company, AIG Specialty Insurance Company,
Lexington Insurance Company, and National Union Fire Insurance Company of
Pittsburgh, Pa., in their respective capacities as insurers of Adams Resources
Exploration Company' ( collectively " Adams Resources' insurers"), on a motion
for involuntary dismissal. For the reasons that follow, we affirm.
FACTS AND PROCEDURAL HISTORY
The underlying litigation in this matter involves the sinkhole in Assumption
Parish that resulted when the site of a former brine cavern, known as the Oxy
Geismar No. 3 well ( OG3) collapsed. Numerous plaintiffs filed suit against
several defendants, including Texas Brine, for damages to their property. Texas
Brine drilled a brine well known as OG3 on land owned by Occidental Chemical
Corporation ( Oxy) in 1982. In 1983, Oxy leased a portion of the land to Colorado
Crude Company ( Colorado Crude Lease) for the purpose of drilling an oil well
thereon. In 1986, Adams Resources, an assignee of the Colorado Crude Lease,
drilled an oil and gas well on the property that became known as Adams -Hooker
No. I well (AHI well).3 In May 1986, before any actual production from the AHI
well,
Adams Resources assigned its operating interest in the well to HECI
Exploration Company, LLC. The AHl well produced until it was permanently
shut- in in 2001, approximately 11 years before the development of the sinkhole on
or about August 3, 2012.
Various plaintiffs filed suit against Texas Brine and other defendants for
alleged damages arising from the sinkhole. Texas Brine asserted third -party
2 Adams Resources filed bankruptcy in 2017 and did not participate in the trial. See In Re
Adams Resources Exploration Corporation, 17- 10866 ( Bankr. D. Del. 5/ 24/ 17), 2017 WL
5479425. The bankruptcy stay was lifted to allow the claims against Adams Resources' insurers,
which were not released by the bankruptcy, to proceed. See La. R.S. 22: 1269( A) and ( B).
3 Hooker Chemical & Plastics Corp. was the predecessor in interest to Oxy.
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demands against Adams Resources and its insurers, pursuant to the Louisiana
Direct Action Statute, La R.S. 22: 1269. On October 9, 2017, at the close of Texas
Brine' s case on the bifurcated liability trial, the Adams Resources' insurers moved
for an involuntary dismissal, which the district court originally deferred. On
November 11, 2017, the district court granted the involuntary dismissal and signed
a judgment in accordance therewith. It is from this judgment that Texas Brine
appeals.
LAW AND DISCUSSION
The issue before this court has been addressed previously by different
panels. In Pontchartrain Natural Gas System v. Texas Brine Company, LLC,
2018- 0631 ( La. App. 1st Cir. 7/ 3/ 19), So. 3d , 2019 WL 2865136, P.
6, this court recently affirmed the district court' s involuntary dismissal of Texas
Brine' s claims against Browning Oil Company, Inc. Similar to the present case,
Texas Brine argued that the depressurization of the AHI well contributed to the
collapse of the OG3 cavern and the formation of the sinkhole. This court
concluded that based on the totality of the evidence, `` Browning' s operations
played absolutely no role in any of the causative factors for the development of the
sinkhole and the damage that resulted." Pontchartrain Natural Gas System,
So. 3d at , 2019 WL 2865136, p. 5.
The same issue currently before this court was also heard in Florida Gas
Transmission Company, LLC v. Texas Brine Company, LLC, 2018- 0907 ( La. App.
1st Cir. 8/ 29/ 19), So. 3d , 2019 WL 4073383, concerning whether the
record reasonably supported that Adams Resources' operations were not a
causative factor for the development of the sinkhole and the resulting damages.
The court in Florida Gas affirmed the November 11, 2017 district court judgment
dismissing Texas Brine' s claims against Adams Resources' insurers. Florida Gas,
So. 3d at , 2019 WL 4073383, p. 4.
Is
Furthermore, the same arguments made in the present case, were presented
by Texas Brine in Crosstex Energy Services, LP v. Texas Brine Company, LLC,
2018- 1122 ( 9/ 16/ 19), 2019 WL 4409140. Given that the evidence in Crosstex
Energy Services was based on the same evidence considered in Florida Gas,
supra, this court affirmed the November 11, 2017 district court judgment
dismissing the Adams Resources' insurers.
The judgment in this case is based on the same evidence considered in the
above -referenced Florida Gas and Crosstex Energy Services decisions, and we
affirm the November 11, 2017 district court judgment involuntarily dismissing
Steadfast Insurance Company, AIG Specialty Insurance Company, Lexington
Insurance Company, and National Union Fire Insurance Company of Pittsburgh,
Pa., in their respective capacities as insurers of Adams Resources Exploration
Company with prejudice for the reasons stated therein.' This memorandum
opinion is issued in accordance with Uniform Rules— Courts of Appeal, Rule 2-
16. 1( B). All costs of this appeal are assessed against Texas Brine Company, LLC.
AFFIRMEW
4 Texas Brine also maintains that the district court erred in its dismissal of Texas Brine' s claims
against the Adams Resources' insurers based on Louisiana law in effect before 1996. ( Appellant
Brief at pp. 16- 17). For the reasons provided in Pontchartrain Natural Gas System, So. 3d
2019 WL 2865136, p. 6, this argument has no merit.
5 Occidental Chemical Corporation, Occidental Petroleum Corporation, and Oxy USA, Inc. filed
a motion to consolidate this appeal with eight other appeals arising out of the liability trial. As to
this appeal, that motion is denied.
5