in Re DCP Midstream, L.P.

NUMBER 13-14-00502-CV
COURT OF APPEALS
THIRTEENTH DISTRICT OF TEXAS
CORPUS CHRISTI - EDINBURG
IN RE DCP MIDSTREAM, L.P.
On Petition for Writ of Mandamus.
MEMORANDUM OPINION
Before Justices Rodriguez, Benavides, and Perkes
Memorandum Opinion by Justice Rodriguez1
Relator, DCP Midstream, L.P. (“DCP”), filed a petition for writ of mandamus on
September 8, 2014, seeking to compel the trial court2 to allow the discovery of a
settlement agreement between the plaintiffs and real parties in interest, Leonard May and
1 See TEX. R. APP. P. 52.8(d) (“When denying relief, the court may hand down an opinion but is not
required to do so.”); TEX. R. APP. P. 47.4 (distinguishing opinions and memorandum opinions).
2 The respondent in this original proceeding is the Honorable Robert J. Vargas, the Presiding Judge
of County Court at Law No. 1 of Nueces County, Texas.
Catherine May, and settling defendant Apache Corporation (“Apache”). We conditionally
grant the petition for writ of mandamus.
I. BACKGROUND
According to the allegations in their fifth amended original petition, the Mays are
the owners of a ranch located in Jim Wells, Kleberg, and Nueces Counties. 3 The Mays
alleged that Apache, through its oil and gas operations on the ranch, breached a surface
use agreement with the Mays and that DCP breached a pipeline easement and surface
use agreement with the Mays. The Mays alleged that both Apache and DCP committed
tortious acts on the property resulting in surface, subsurface, and groundwater
contamination. The Mays’ causes of action against both Apache and DCP included
breach of contract, negligence, trespass, nuisance, statutory causes of action under the
Texas Natural Resources Code, and a request for declaratory relief. DCP filed cross-
claims against Apache regarding these same issues.
On July 15, 2013, the Mays entered into a settlement agreement with Apache.
Pursuant to that settlement agreement, on July 24, 2013, the trial court granted a joint
motion for dismissal filed by the Mays and Apache and dismissed all of the Mays’ claims
against Apache with prejudice. DCP continued to litigate its cross claims against Apache,
alleging that Apache was responsible for all or part of the damages that the Mays sought
against DCP. On November 12, 2013, Apache filed a motion for summary judgment on
both “no evidence” and traditional grounds against DCP on the basis that no defendant
has a right of contribution against any settling person. See TEX. CIV. PRAC. & REM. CODE
3 In their fifth amended original petition, the Mays alleged that Duke Energy Field Services, LP was
currently known as DCP Midstream, LLC. We refer to Duke Energy Field Services, LP as “DCP” herein.
The Mays also brought suit against TRC Companies, which is not a party to this original proceeding.
2
ANN. § 33.015(d) (West, Westlaw through 2013 3d C.S.) (“No defendant has a right of
contribution against any settling person.”). On January 15, 2014, the trial court granted
Apache’s motion for summary judgment as to DCP’s cross-claims. Accordingly, the trial
court dismissed DCP’s cross claims against Apache with prejudice and dismissed Apache
from the case.
After the Mays settled with Apache, DCP requested that the Mays and Apache
provide DCP with a copy of the settlement agreement pursuant to the requests for
disclosure that DCP had propounded on the Mays and Apache. See TEX. R. CIV. P.
194.2(h); 192.3(h). Both refused. On November 22, 2013, DCP filed a motion to compel
disclosure of the settlement agreement, and on December 5, 2013, DCP filed an
amended motion to compel. Apache filed a response to the motion to compel,
acknowledging that the amount of the settlement and the scope of the claims released
were “likely” discoverable, but contending that the remainder of the settlement agreement
was “irrelevant, not calculated to lead to the discovery of admissible evidence at trial, and
should be protected as confidential information between [the Mays] and Apache.” Apache
provided the trial court with (1) an unredacted copy of the settlement agreement; and (2)
a redacted version of the settlement agreement in which Apache had “penciled through
the portions that it claims are irrelevant to any defense of DCP” for in camera inspection.
Apache asserted that it was prohibited from “unilaterally” producing a copy of the
settlement agreement because “confidentiality of the [settlement agreement] must [be]
maintained by the parties” and because the agreement could not be produced “absent an
[o]rder compelling production.” According to Apache’s response, “[the Mays] objected to
production of the Settlement Agreement, and take the positon that its contents would not
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be relevant to any remaining claim against any remaining defendant.” Apache further
stated that “it is important to note that [the Mays] were very careful in the crafting of the
Agreement so as not to impact or impair in any respect Plaintiffs’ claims against DCP.”
The Mays did not file a response to DCP’s motion to compel or amended motion to
compel.
The trial court held a hearing on DCP’s amended motion to compel on December
12, 2013. On December 17, 2013, the trial court sent an email ruling to the parties that
stated as follows:
Counselors,
Rather than delay this matter with a writ of mandamus, I am inclined
to initially rule on the motion to compel disclosure of the settlement
agreement in hopes that it may resolve the motions for summary judgment
as alluded by [counsel for DCP].
In reading the rule, the cases, and secondary material, there is no
absolute right to disclosure of a settlement agreement. Only those portions
relevant to the controversy and overlapping issues are discoverable. I don’t
know who has the burden, but the Movant has presented a strong case,
and Apache by its own words concedes entitlement to portions.
I hereby Order the disclosure of those portions of the settlement
agreement which outline the claims released and preserved. I do not allow
discovery of the amounts of the settlement. I expect the Mays and Apache
to jointly redact those portions not relevant to the legal concerns of DCP.
On January 2, 2014, counsel for the Mays sent a redacted version of the settlement
agreement to DCP. On February 18, 2014 counsel for DCP sent a letter to the trial court
requesting that it issue a signed order on the disclosure of the settlement agreement.
By order signed on February 27, 2014, the trial court granted in part and denied in
part DCP’s motion to compel. The order reads in relevant part:
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(1) Only those portions of the settlement agreement which outline the
claims released and preserved are ordered to be disclosed. The
parties to that agreement shall jointly redact those portions not
relevant to the legal concerns of Defendant DCP.
(2) Amounts of the settlement shall likewise be redacted jointly by the
parties to that agreement.
DCP alleges that it did not receive notice that the trial court had signed this order
until August 29, 2014. DCP contends that it called the court the following week to see if
the proposed order had been signed, but the court manager indicated it had not. The
settlement agreement, as redacted by the Mays and Apache and provided to DCP,
appears to comprise twenty-two pages of content, excluding signature blocks, of which
approximately twelve pages have been redacted.4
This original proceeding ensued. By one issue, DCP contends the trial court erred
in refusing to order the disclosure of (a) the settlement amount, and (b) the full contents
of the settlement agreement. In connection with this issue, DCP asserts that existing law
requires the disclosure of the settlement agreement; the settlement agreement is relevant
and necessary for DCP to receive credit for the injuries for which the Mays have already
been compensated; the settlement agreement is relevant and necessary for DCP to be
able to effectively examine the witnesses at trial; and discovery of the settlement
agreement is necessary in view of the numerous overlapping claims and alleged injuries.
4 The record before this Court does not contain the unredacted settlement agreement or the
“penciled” version that Apache provided to the trial court. As the party seeking relief, relator bears the
burden of demonstrating its entitlement to mandamus relief. See In re Ford Motor Co., 165 S.W.3d 315,
317 (Tex. 2005) (orig. proceeding) (per curiam); Walker v. Packer, 827 S.W.2d 833, 837 (Tex. 1992) (orig.
proceeding). This burden includes filing a sufficient record in support of the petition. See Walker, 827
S.W.2d at 837; In re Potts, 399 S.W.3d 685, 686 (Tex. App.—Houston [14th Dist.] 2013, orig. proceeding).
While the record before the Court is limited insofar as it fails to contain the complete settlement agreement,
it is sufficient to review the issues raised in this original proceeding.
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DCP further contends that the Mays failed to carry their burden to demonstrate that the
settlement agreement is not relevant to the issues remaining in this case.
The Court requested a response from the real parties in interest or any others
whose interest would be directly affected by the relief sought. The Mays filed a response
to the petition for writ of mandamus. They contend that DCP failed to timely seek relief
from the trial court’s order so its request for relief is barred by laches and waiver; that the
trial court did not abuse its discretion by ordering the “limited disclosure of only relevant
portions of a settlement agreement”; that DCP has an adequate remedy by appeal; and
that the trial court’s order granting summary judgment on DCP’s cross-claims against
Apache is a “dispositive ruling that there is no evidence that Apache caused or contributed
to cause any harm for which DCP is now sued,” which, according to the Mays, “clearly
shows that the settlement is not relevant to the issues between the Mays and DCP.” DCP
filed a reply to the response filed by the Mays. Apache did not file a response to the
petition for writ of mandamus.
II. STANDARD OF REVIEW
To be entitled to the extraordinary relief of a writ of mandamus, the relator must
show that the trial court abused its discretion and that there is no adequate remedy by
appeal. In re Prudential Ins. Co. of Am., 148 S.W.3d 124, 135–36 (Tex. 2004) (orig.
proceeding). The relator has the burden of establishing both prerequisites to mandamus
relief, and this burden is a heavy one. In re CSX Corp., 124 S.W.3d 149, 151 (Tex. 2003)
(orig. proceeding) (per curiam).
A trial court clearly abuses its discretion if it reaches a decision that is so arbitrary
and unreasonable that it amounts to a clear and prejudicial error of law or if it clearly fails
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to analyze the law correctly or apply the law correctly to the facts. In re Cerberus Capital
Mgmt., L.P., 164 S.W.3d 379, 382 (Tex. 2005) (orig. proceeding) (per curiam). The
adequacy of an appellate remedy must be determined by balancing the benefits of
mandamus review against the detriments. In re Team Rocket, L.P., 256 S.W.3d 257, 262
(Tex. 2008) (orig. proceeding). Because this balance depends heavily on circumstances,
it must be guided by the analysis of principles rather than the application of simple rules
that treat cases as categories. In re McAllen Med. Ctr., Inc., 275 S.W.3d 458, 464 (Tex.
2008) (orig. proceeding). We evaluate the benefits and detriments of mandamus review
and consider whether mandamus will preserve important substantive and procedural
rights from impairment or loss. In re Prudential Ins. Co. of Am., 148 S.W.3d at 136.
Mandamus relief is available when the trial court compels production beyond the
permissible bounds of discovery. In re Weekley Homes, L.P., 295 S.W.3d 309, 322 (Tex.
2009) (orig. proceeding); In re Am. Optical Corp., 988 S.W.2d 711, 713 (Tex. 1998) (orig.
proceeding). Specifically, for example, a party will not have an adequate remedy by
appeal: (1) when the appellate court would not be able to cure the trial court's discovery
error; (2) where the party's ability to present a viable claim or defense at trial is vitiated or
severely compromised by the trial court's discovery error; and (3) where the trial court
disallows discovery and the missing discovery cannot be made a part of the appellate
record or the trial court, after proper request, refuses to make it part of the record. In re
Ford Motor Co., 988 S.W.2d 714, 721 (Tex. 1998) (orig. proceeding); Walker v. Packer,
827 S.W.2d 833, 843 (Tex. 1992) (orig. proceeding).
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III. LACHES AND WAIVER
The Mays contend that DCP’s petition for writ of mandamus is barred by the
doctrines of waiver and laches. According to the Mays, DCP received notice of the trial
court’s ruling on December 17, 2013, but did not seek mandamus relief until September
9, 2014, a delay of more than eight months.
Although mandamus is not an equitable remedy, its issuance is controlled largely
by equitable principles. See In re Int’l Profit Assocs., Inc., 274 S.W.3d 672, 676 (Tex.
2009) (orig. proceeding); In re Users Sys. Servs., Inc., 22 S.W.3d 331, 337 (Tex. 1999)
(orig. proceeding); Rivercenter Assocs. v. Rivera, 858 S.W.2d 366, 367 (Tex. 1993) (orig.
proceeding); In re Key Equip. Fin. Inc., 371 S.W.3d 296, 300 (Tex. App.—Houston [1st
Dist.] 2012, orig. proceeding). One such principle is that equity aids the diligent and not
those who slumber on their rights. See In re Int’l Profit Assocs., Inc., 274 S.W.3d at 676.
Thus, delaying the filing of a petition for mandamus relief may waive the right to
mandamus unless the relator can justify the delay. Id.; In re SCI Tex. Funeral Servs.,
Inc., 236 S.W.3d 759, 761 (Tex. 2007) (orig. proceeding); In re Pendragon Transp. LLC,
423 S.W.3d 537, 540 (Tex. App.—Dallas 2014, orig. proceeding); In re Higby, 414 S.W.3d
771, 783 (Tex. App.—Houston [1st Dist.] 2013, orig. proceeding [mand. denied]). To
invoke the equitable doctrine of laches, a real party in interest ordinarily must show an
unreasonable delay by the relator in asserting its rights and a good faith and detrimental
change in position because of the delay. In re Laibe Corp., 307 S.W.3d 314, 318 (Tex.
2010) (orig. proceeding); Rogers v. Ricane Enters., Inc., 772 S.W.2d 76, 80 (Tex. 1989).
We note that laches “is akin to, but distinct from, waiver.” See 30A C.J.S. Equity
§ 139 (1992). As stated previously, to invoke the equitable doctrine of laches, the moving
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party ordinarily must show an unreasonable delay by the opposing party in asserting its
rights and also the moving party's good faith and detrimental change in position because
of the delay. In re Laibe Corp., 307 S.W.3d at 318; Rogers, 772 S.W.2d at 80. In contrast,
waiver occurs when a party substantially invokes the judicial process to the other party's
detriment or prejudice. See Kennedy Hodges, L.L.P. v. Gobellan, 433 S.W.3d 542, 545
(Tex. 2014); Perry Homes v. Cull, 258 S.W.3d 580, 589–90 (Tex. 2008); In re ADM
Investor Servs., Inc., 304 S.W.3d 371, 374 (Tex. 2010) (orig. proceeding). Waiver is
primarily a function of intent and requires either the intentional relinquishment of a known
right or intentional conduct inconsistent with claiming that right. Crosstex Energy Servs.,
L.P. v. Pro Plus, Inc., 430 S.W.3d 384, 393–94 (Tex. 2014); Perry Homes, 258 S.W.3d at
602–03; In re Gen. Elec. Capital Corp., 203 S.W.3d 314, 316 (Tex. 2006) (per curiam)
(orig. proceeding); Jernigan v. Langley, 111 S.W.3d 153, 156 (Tex. 2003) (per curiam).
In this case, the trial court’s email limiting DCP’s discovery of the settlement
agreement was sent on December 17, 2013, the order denying discovery was signed on
February 27, 2014, and DCP did not learn that the order had been signed until August
29, 2014. The petition for writ of mandamus was filed on September 9, 2014. DCP
argues that any delay in filing the petition for writ of mandamus was “inadvertent” given
that it did not receive notice or a copy of the trial court’s order until August, that the signed
order never appeared in the “dispositions” section of the trial court’s on-line docket, and
that DCP moved quickly to file this original proceeding upon learning that the order had
been signed. Accordingly, DCP has offered some justification for the delay. See In re
Int’l Profit Assocs., Inc., 274 S.W.3d at 676; In re SCI Tex. Funeral Servs., Inc., 236
S.W.3d at 761. Moreover, there is no indication in the record or offered by the Mays that
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the delay was intentional. See Crosstex Energy Servs., L.P., 430 S.W.3d at 393–94;
Perry Homes, 258 S.W.3d at 602–03. The Mays have offered no argument or evidence
alleging that they were harmed by DCP’s delay in filing the petition for writ of mandamus.
See In re Laibe Corp., 307 S.W.3d at 318; Rogers, 772 S.W.2d at 80. Accordingly, we
conclude that the Mays have failed to establish that DCP has lost its right to seek
mandamus relief through laches or waiver. We proceed to address the merits of the
petition for writ of mandamus.
IV. SCOPE OF DISCOVERY
The scope of discovery includes any unprivileged information that is relevant to the
subject of the action, even if it would be inadmissible at trial, as long as the information is
reasonably calculated to lead to the discovery of admissible evidence. TEX. R. CIV. P.
192.3; In re CSX Corp., 124 S.W.3d at 152. Information is relevant if it tends to make the
existence of a fact that is of consequence to the determination of the action more or less
probable than it would be without the information. TEX. R. EVID. 401. The phrase “relevant
to the subject matter” is to be “liberally construed to allow the litigants to obtain the fullest
knowledge of the facts and issues prior to trial.” Ford Motor Co. v. Castillo, 279 S.W.3d
656, 664 (Tex. 2009); see In re HEB Grocery Co., L.P., 375 S.W.3d 497, 500 (Tex. App.—
Corpus Christi 2012, orig. proceeding). Generally, the scope of discovery is within the
trial court's discretion. In re Graco Children's Prods., Inc., 210 S.W.3d 598, 600 (Tex.
2006) (per curiam); In re CSX Corp., 124 S.W.3d at 152. However, a party's discovery
requests must show a reasonable expectation of obtaining information that will aid in the
resolution of the dispute. In re CSX Corp., 124 S.W.3d at 152. Therefore, discovery
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requests must be reasonably tailored to include only matters relevant to the case. In re
Am. Optical Corp., 988 S.W.2d at 713.
V. SETTLEMENT AGREEMENTS
The discovery of settlement agreements is specifically addressed by the Texas
Rules of Civil Procedure. See TEX. R. CIV. P. 192.3(g); see also In re Univar USA, Inc.,
311 S.W.3d 175, 179 (Tex. App.—Beaumont 2010, orig. proceeding). Rule 192.3(g)
provides: “A party may obtain discovery of the existence and contents of any relevant
portions of a settlement agreement. Information concerning a settlement agreement is
not by reason of disclosure admissible in evidence at trial.” TEX. R. CIV. P. 192.3(g). The
rules also specifically address the discovery of settlement agreements through requests
for disclosure. See id. R. 194.2(h) (allowing a request for disclosure for “any discoverable
settlement agreements”). The rules require that a party, within thirty days after being
served with a request, file a response to the request of another party for “any settlement
agreements described in Rule 192.3(g)[.]” Id.; see TEX. R. CIV. P. 194.3.
Courts “routinely” order production of settlement agreements that are relevant to a
claim or defense of a party. In re Enron Corp. Sec., Derivative & ERISA Litig., 623
F. Supp. 2d 798, 836–39 (S.D. Tex. 2009). Settlement agreements are relevant and
necessary to determine the amount of settlement credits to which a defendant is entitled
under the common law’s “one satisfaction” rule that a plaintiff should not be compensated
twice for the same injury. See In re Enron Corp. Sec., Derivative & ERISA Litig., 623 F.
Supp. 2d at 836–39; In re Frank A. Smith Sales, 32 S.W.3d 871, 874–76 (Tex. App.—
Corpus Christi 2000, orig. proceeding). Settlement agreements are also relevant under
the Texas Civil Practice and Remedies Code in determining settlement credits. See TEX.
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CIV. PRAC. & REM. CODE ANN. § 33.012(b) (“the court shall [ ] reduce the amount of
damages to be recovered by the claimant with respect to a cause of action by the sum of
the dollar amounts of all settlements”); In re Enron Corp. Sec., Derivative & ERISA Litig.,
623 F. Supp. 2d at 836–39; In re Univar USA, Inc., 311 S.W.3d at 179. Further, settlement
agreements and offers may be discoverable to demonstrate bias or prejudice of a party
or witness or to establish the existence of a promise or agreement made by nonparties to
the settled lawsuit. In re Enron Corp. Sec., Derivative & ERISA Litig., 623 F. Supp. 2d at
836–39; Bristol–Myers Co. v. Gonzales, 561 S.W.2d 801, 805 (Tex. 1978); In re Univar
USA, Inc., 311 S.W.3d at 182; In re Frank A. Smith Sales, 32 S.W.3d at 874–76.
However, where settlement agreements are not shown to be relevant, they are not
discoverable. See In re BDPJ Houston, LLC, 420 S.W.3d 309, 313 (Tex. App.—Houston
[14th Dist.] 2013, orig. proceeding).
VI. CONFIDENTIALITY PROVISION
The Mays contend that the settlement agreement at issue is subject to a
confidentiality provision which precludes them from producing the agreement to DCP.
The settlement agreement, as redacted, contains two provisions pertaining to
confidentiality. Under the heading “Confidentiality,” the agreement provides that the
“[c]onfidentiality provisions of the agreement will govern any meeting or mediation and all
filings, submissions, and statements undertaken pursuant to this paragraph.” In Section
IV, titled “Confidentiality and Non-Interference,” the agreement provides:
The terms of settlement, amounts[,] and allocation of the cash
payments made pursuant to this Agreement shall be held strictly
confidential by the Parties and their attorneys and shall not be disclosed to
third parties or otherwise used to their economic advantage or the economic
disadvantage of the Released Parties. Disclosure is strictly prohibited
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without the express written consent of all Parties, other than professional
consultants or advisors under confidential relationships. To the extent any
of the Parties or their attorneys are or may be legally compelled to disclose
any of the terms of this Agreement, that party shall provide prompt notice of
such to the other Parties, so that they may, in their discretion, timely object
to the disclosure of any or all of such information, seek a protective order
(or take other protective measures) to prohibit or restrict the disclosure of
any or all such information, or waive the other Parties’ duty of nondisclosure.
The Parties shall fully cooperate with each other to the extent that any party
seeks a protective order or take[s] other protective measures.
The agreement is redacted immediately following this paragraph, so it is unclear whether
any other provisions pertinent to confidentiality have been redacted.
Texas has a public policy of encouraging the peaceful resolution of disputes
through voluntary settlement and orderly dispute resolution. See TEX. CIV. PRAC. & REM.
CODE ANN. § 154.002 (West, Westlaw through 2013 3d C.S.); Brooks v. Brooks, 257
S.W.3d 418, 421 (Tex. App.—Fort Worth 2008, pet. denied); Wright v. Sydow, 173
S.W.3d 534, 551 (Tex. App.—Houston [14th Dist.] 2004, pet. denied). “Proponents of
mediation stress that confidentiality is critical to the success of the process.” Avary v.
Bank of Am., N.A., 72 S.W.3d 779, 797 (Tex. App.—Dallas 2002, pet. denied). However,
the fact that a settlement agreement contains a confidentiality provision does not render
the agreement or its contents undiscoverable as a matter of law. In re Enron Corp.
Securities, Derivative & ERISA Litig., 623 F. Supp. 2d at 838; In re BDPJ Houston, LLC,
420 S.W.3d at 314; In re Cont'l Ins. Co., 994 S.W.2d 423, 423 (Tex. App.—Waco, orig.
proceeding), mand. conditionally granted on other grounds sub nom. In re Union Pac.
Res. Co., 22 S.W.3d 338 (Tex. 1999) (orig. proceeding) (per curiam); cf. Scott v.
McIlhany, 798 S.W.2d 556, 559–60 (Tex. 1990) (discussing the inability of litigants to use
private agreements to block discovery of information and testimony sought by third
13
parties). Accordingly, the confidentiality provisions of the agreement do not insulate the
settlement agreement from discovery if the discovery is otherwise warranted.
VII. BURDEN
DCP contends that the real parties in interest had the burden to plead and prove
the basis for any objections to disclosure of the settlement agreement and they failed to
meet that burden. It is undisputed that DCP served the Mays and Apache with a proper
request for disclosure for the settlement agreement. In this regard, DCP alleges that,
although Apache filed a response to DCP’s motion to compel, the Mays did not.
This Court and others have placed the burden of proof regarding relevance, or lack
thereof, on the party seeking to avoid discovery. See, e.g., In re Frank A. Smith Sales,
Inc., 32 S.W.3d at 874 (“Generally, the party resisting discovery has the burden to plead
and prove the basis of its objection.”); Valley Forge Ins. Co. v. Jones, 733 S.W.2d 319,
321 (Tex. App.—Texarkana 1987, orig. proceeding) (holding that, as a general rule, the
burden of pleading and proving the requested evidence is not relevant falls upon the party
seeking to prevent discovery). Evidence may not be necessary to sustain this burden.
See In re Union Pac. Res. Co., 22 S.W.3d 338, 341 (Tex. 1999) (per curiam) (orig.
proceeding).
The Texas Rules of Civil Procedure expressly prohibit objections to requests for
disclosure. See TEX. R. CIV. P. 194.5; In re Univar USA, Inc., 311 S.W.3d at 180. Instead,
in “those extremely rare cases when information ordinarily discoverable should be
protected,” a party is allowed to file a motion for a protective order pursuant to Rule 192.6.
See TEX. R. CIV. P. 194 cmt. 1; see also id. R. 192.6 (explaining the procedure to obtain
“an order protecting that person from the discovery sought”). Neither the Mays nor
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Apache filed a motion for protection in this case. Through its response, Apache objected
to the request to supplement its disclosures. Apache’s objections to DCP’s motion to
compel were insufficient to establish that the settlement agreement, that is “information
ordinarily discoverable,” should be protected in this cause. See id. R. 194, 194.5.
Moreover, insofar as the Mays failed to file any response to DCP’s motion to compel in
the trial court, the Mays also failed to establish that the settlement agreement was not
relevant and thus discoverable. Based on the foregoing, we examine whether the trial
court acted within its discretion in denying discovery of the full contents of the settlement
agreement.
VIII. ANALYSIS
The order at issue in this case contained two disparate provisions regarding
discovery of the settlement agreement. First, as stated previously, the trial court’s order
required the redaction of the amount of the settlement that Apache paid the Mays.
Second, the trial court’s order required the parties to disclose “[o]nly those portions of the
settlement agreement which outline the claims released and preserved” and directed the
parties to that agreement to “jointly redact those portions not relevant to the legal
concerns of Defendant DCP.” We initially address the aspect of the trial court’s order
prohibiting disclosure of the amount of the settlement between Apache and the Mays.
DCP contends that the amount of the settlement between Apache and the Mays
is relevant regarding the application of the “one satisfaction” rule. “The one satisfaction
rule applies to prevent a plaintiff from obtaining more than one recovery for the same
injury.” Stewart Title Guar. Co. v. Sterling, 822 S.W.2d 1, 7 (Tex. 1991); see also Crown
Life Ins. Co. v. Casteel, 22 S.W.3d 378, 390 (Tex. 2000). Under this rule, a plaintiff is
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entitled to one recovery for damages suffered when multiple defendants commit the same
act as well as when multiple defendants commit technically different acts resulting in a
single injury. Casteel, 22 S.W.3d at 390. The application of the rule is not limited to tort
claims, and whether the rule may be applied depends not on the cause of action asserted,
but rather the injury sustained. Osborne v. Jauregui, Inc., 252 S.W.3d 70, 75 (Tex. App.—
Austin 2008, pet. denied).
DCP also contends that the settlement amount is relevant to any potential
settlement credit that it might receive as a result of the settlement. Chapter 33 of the
Texas Civil Practice and Remedies Code applies to “any cause of action based on tort in
which a defendant, settling person, or responsible third party is found responsible for a
percentage of the harm for which relief is sought.” TEX. CIV. PRAC. & REM. CODE ANN. §
33.002(a)(1) (West, Westlaw through 2013 3d C.S.); see Dalworth Restoration, Inc. v.
Rife-Marshall, 433 S.W.3d 773, 780–81 (Tex. App.—Fort Worth 2014, pet. dism’d w.o.j.).
A “defendant” in the chapter is any party (like appellant) from “whom, at the time of the
submission of the case to the trier of fact, a claimant seeks recovery of damages.” See
TEX. CIV. PRAC. & REM. CODE ANN. § 33.011(2). A “settling person” is someone “who has,
at any time, paid or promised to pay money or anything of monetary value to a claimant
in consideration of potential liability with respect to the . . . harm for which recovery of
damages is sought.” Id. § 33.011(5). Section 33.012 contemplates that a credit should
be given when a plaintiff has benefited from a settlement that covers the same harm from
which the plaintiff seeks recovery against a nonsettling defendant. Dalworth Restoration,
Inc., 433 S.W.3d at 780–81; Galle, Inc. v. Pool, 262 S.W.3d 564, 571 (Tex. App.—Austin
2008, pet. denied); see also Mobil Oil Corp. v. Ellender, 968 S.W.2d 917, 926 (Tex. 1998)
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(“When there is a settlement covering some or all of the damages awarded in the
judgment, section 33.012 requires the trial court to reduce the judgment accordingly.”).
In considering DCP’s contentions regarding the potential relevance of the
settlement amount, we examine whether or not the Mays essentially suffered a single
injury or the same harm as a result of Apache and DCP’s conduct. The Mays deny any
relevance and contend that the “claims and injuries are different.”
The Mays argue that the settlement agreement is irrelevant because the trial court
made a “dispositive ruling that is no evidence that Apache caused or contributed to any
harm for which DCP is now sued.” The trial court granted Apache’s motion for summary
judgment on DCP’s cross claims as a matter of law based on section 33.015(d) of the
Texas Civil Practice and Remedies Code, which provides that no defendant has a right
of contribution against any settling party. See TEX. CIV. PRAC. & REM. CODE ANN. §
33.015(d). The trial court concluded that DCP did not have a right of contribution against
Apache, but this conclusion does not implicate whether or not any of Apache’s actions
resulted in the same injuries for which DCP is now being sued. That issue was not
litigated. Moreover, the Mays’ argument conflates contribution with the application of the
one satisfaction rule and the issue of potential settlement credits. While these issues are
related, they are distinct concepts and apply in different circumstances.
The Mays’ fifth amended original petition includes numerous causes of action and
factual allegations that are virtually identical as against both DCP and Apache. The
petition alleges that both Apache and DCP “committed tortious acts on the property which
[have] resulted in contamination to the [Mays’ property]” and that both were “responsible
for contamination of the Ranch while the Plaintiffs were owners of the property.” The
17
petition alleges identical causes of action for negligence against Apache, which they
alleged failed to act as a reasonable and prudent operator, and DCP, which they alleged
failed to act as a reasonable and prudent gatherer of oil and gas:
[Apache/DCP] has a duty to Plaintiffs not to negligently or
intentionally damage the surface soils, the subsurface strata, surface
waters and the underlying groundwater incident to oil and gas production,
storage and transportation operations on and under the Ranch.
Reasonable use of the property does not include [Apache’s/DCP’s] right to
negligently or intentionally allow leaks, discharges, spills or releases of
hydrocarbons, produced fluids and other substances or failure to take
reasonable steps to prevent such leaks, discharges, spills or releases.
Likewise, reasonable use of the property does not include an intentional or
negligent refusal to clean up or restore the areas impacted by hydrocarbon,
heavy metal, chloride, NORM and other contamination at the Ranch. Such
breaches were and are a legal or contributing cause of injuries to and
threaten to cause additional irreparable injuries and damage to Plaintiffs’
real property.
[Apache/DCP] had a duty to exercise ordinary care to prevent and
protect injuries to Plaintiffs’ real property, especially from the threat of
contamination to groundwater resources resulting from releases of
hydrocarbons, produced fluids and other substances. [Apache/DCP] also
had the duty to exercise ordinary care to perform reasonable and necessary
response actions required in the event of such releases.
[Apache/DCP] breached these duties and created conditions that
have caused and now continue to cause irreparable injuries to portions of
the surface, subsurface and groundwater at the Ranch. [Apache/DCP] was
negligent in exercising these duties, proximately causing significant
damages.
The Mays’ causes of action for trespass, nuisance, and violations of the Texas Natural
Resources Code against both Apache and DCP are also identical to each other.
The petition also alleges breach of contract causes of action against Apache,
regarding its surface use agreement, and against DCP, regarding its pipeline easement
and surface use agreement. While some of the allegations regarding breach of contract
are specific to each defendant, most of the breach of contract allegations against Apache
18
and DCP are remarkably similar. For instance, the Mays allege that Apache breached its
contract because it failed to restore the surface of the property to its original condition and
failed to remove caliche, debris, foreign material, waste materials, junk materials used
with respect to development of the property, and abandoned equipment from the property.
The Mays alleged that DCP breached its contract because it failed to remove all pipelines,
equipment and facilities, property, and other debris from the property. In further
connection with the Mays’ causes of action against these parties for breach of the
respective contracts, the Mays alleged that both Apache and DCP failed to perform
remedial work in connection with the contamination.
The Mays’ petition further seeks declaratory relief collectively as against both
Apache and DCP, including declarations that they “are liable for all of the costs, plus
interest, of past, present and future remedial and response costs incurred by
Plaintiffs . . . reasonably necessary to address the releases or threatened releases of
hazardous substances and solid and hazardous wastes proximately in connection with
[their] activities on the property.” The Mays petition further seeks damages against all
defendants collectively.
Based on the foregoing analysis, we conclude that the claims and injuries alleged
against both DCP and Apache were similar, if not largely identical, and thus the amount
of the settlement is relevant and necessary to determine the amount of settlement credits
to which DCP may potentially be entitled under the “one satisfaction” rule that a plaintiff
should not be compensated twice for the same injury. 5 See In re Enron Corp. Sec.,
5 We note that several cases that deny the discovery of settlement amounts are distinguishable
from the instant case, either insofar as they pertained to settlement amounts in separate lawsuits, the
asserted arguments regarding relevance were different, or the cases were decided prior to the amendments
19
Derivative & ERISA Litig., 623 F. Supp. 2d at 836–39; In re Frank A. Smith Sales, 32
S.W.3d at 874–76. In this regard, the amount of the settlement is also relevant under the
Texas Civil Practice and Remedies Code to determine whether DCP is entitled to a
potential settlement credit. See TEX. CIV. PRAC. & REM. CODE ANN. § 33.012(b); In re
Enron Corp. Sec., Derivative & ERISA Litig., 623 F. Supp. 2d at 836–39; In re Univar
USA, Inc., 311 S.W.3d at 179. We conclude that the trial court abused its discretion in
denying discovery of the settlement amount and, accordingly, sustain that part of DCP’s
sole issue regarding discovery of the settlement amount.
We next address the trial court’s order insofar as it allowed discovery of “the claims
released and preserved” but denied the discovery of all other provisions of the settlement
agreement. DCP contends that the settlement agreement may be relevant and necessary
to issues pertaining to bias or credibility of the witnesses, its ability to effectively examine
the witnesses at trial, and to receive a fair trial. The Mays contend, in contrast, that the
settlement agreement is irrelevant because Texas Rule of Evidence 408, allowing for the
admission of evidence to show bias or prejudice, is a narrow exception to the general rule
regarding the exclusion of evidence, and DCP has failed to establish that this case falls
within that “narrow” exception. See TEX. R. EVID. 408.
to the rules of civil procedure incorporating requests for disclosure. See, e.g., Ford Motor Co. v. Leggat,
904 S.W.2d 643, 649 (Tex. 1995) (orig. proceeding) (refusing discovery of amounts paid to settle claims in
other lawsuits where the discovery was requested for the purpose of assisting “a party in evaluating a case,
for trial, or facilitating settlement”); Burlington N., Inc. v. Hyde, 799 S.W.2d 477, 481 (Tex. App.—El Paso
1990, orig. proceeding) (denying discovery of a settlement amount where there was “no discernible
relationship or relevancy to the causes of action or defenses asserted” by the requesting party); Nermyr v.
Hyde, 799 S.W.2d 472, 475 (Tex. App.—El Paso 1990, orig. proceeding) (same and holding that the
amount was not discoverable where there was no relevance other than as a “comparative bargaining tool”);
Palo Duro Pipeline Co. v. Cochran, 785 S.W.2d 455, 457 (Tex. App.—Houston [14th Dist.] 1990, orig.
proceeding) (denying discovery of cash amounts contained settlement agreements but allowing discovery
of the remaining portions of the settlement agreements). The changes to the Texas Rules of Civil
Procedure—incorporating requests for disclosures—became effective January 1, 1999. TEX. R. CIV. P.
192.3(g) (amended Jan. 1, 1999); TEX. R. CIV. P. 194 (amended Jan. 1, 1999).
20
Texas Rule of Evidence 408 concerns the admissibility, not discoverability, of
settlement agreements. See id. The scope of discovery is much broader than the scope
of admissible evidence. In re Exmark Mfg. Co., 299 S.W.3d 519, 528 (Tex. App.—Corpus
Christi 2009, orig. proceeding [mand. dism’d]) (discussing Nissan Motor Co. Ltd. v.
Armstrong, 145 S.W.3d 131, 138–39 (Tex. 2004)). The “relevant to the subject matter”
and “reasonably calculated to lead to admissible evidence” tests are “liberally construed”
to allow the litigants to obtain the fullest knowledge of the facts and issues prior to trial,
and “it does not matter that the information sought may be inadmissible at trial if it appears
reasonably calculated to lead to the discovery of admissible evidence.” Axelson, Inc. v.
McIlhany, 798 S.W.2d 550, 553 (Tex. 1990) (orig. proceeding); see also Eli Lilly & Co. v.
Marshall, 850 S.W.2d 155, 160 (Tex. 1993). Fundamentally, the scope of discovery is
obviously much broader than the scope of admissible evidence. See In re Exmark Mfg.
Co., Inc., 299 S.W.3d at 528. In this case, the Mays have conflated the standards for the
discovery of information and the admissibility of evidence. Accordingly, Texas Rule of
Evidence 408 does not control our analysis.
The rules of civil procedure allow discovery of the “existence and contents of any
relevant portions of a settlement agreement.” See TEX. R. CIV. P. 192.3(g). We conclude
that those portions of the settlement agreement that are relevant to the existence or
nonexistence of potential witness bias, such as those portions that reflect agreements to
provide testimony, to provide cooperation, or to not cooperate with the nonsettling
defendant, as a consideration for the settlement are relevant and are reasonably
calculated to lead to the discovery of relevant impeachment or bias evidence. See In re
Enron Corp. Sec., Derivative & ERISA Litig., 623 F. Supp. 2d at 836–39; Bristol–Myers
21
Co., 561 S.W.2d at 805; In re Univar USA, Inc., 311 S.W.3d at 182; In re Frank A. Smith
Sales, 32 S.W.3d at 874–76.
In so holding, we are cognizant that the Mays have contended that we are required
to imply all necessary findings of fact to support the trial court’s decision denying
discovery because the trial court reviewed the full settlement agreement, and a redacted
copy, and ordered the production of the redacted settlement agreement “which it
determined to be the relevant portions of the agreement.” We do not agree. According
to the record filed in this case, the trial court directed the disclosure of “[o]nly those
portions of the settlement agreement which outline the claims released and preserved,”
and directed the “parties to that agreement” to “jointly redact those portions not relevant
to the legal concerns of Defendant DCP.” The trial court did not exercise its discretion in
redacting the settlement agreement; rather it instructed the Mays and Apache to
determine the “relevant” portions of the settlement agreement. This is akin to putting the
fox in charge of the henhouse. The parties to the settlement have incentives to minimize
the settlement’s effects on the non-settling defendant. See In re Univar USA, Inc., 311
S.W.3d at 181.
Based on the foregoing, we conclude that the trial court abused its discretion in
denying discovery of the relevant portions of the settlement agreement and, accordingly,
sustain the remainder of relator’s sole issue in this original proceeding.
IX. ADEQUACY OF REMEDY BY APPEAL
The Mays contend that DCP possesses an adequate remedy by appeal, and thus
mandamus should be denied. Appeal is an inadequate remedy when the appellate court
would not be able to cure the trial court's discovery error. In re Dana Corp., 138 S.W.3d
22
298, 301 (Tex. 2004) (per curiam) (orig. proceeding); In re Kuntz, 124 S.W.3d 179, 181
(Tex. 2003) (orig. proceeding); In re Platinum Energy Solutions, Inc., 420 S.W.3d 342,
349 (Tex. App.—Houston [14th Dist.] 2014, orig. proceeding). “Appeal from a trial court's
discovery order is not adequate if: (1) the appellate court would not be able to cure the
trial court's error on appeal; (2) the party's ability to present a viable claim or defense is
vitiated or severely compromised; or (3) missing discovery cannot be made a part of the
appellate record.” In re Ford Motor Co., 988 S.W.2d at 721; see In re Eurecat US, Inc.,
425 S.W.3d 577, 583 (Tex. App.—Houston [14th Dist.] 2014, orig. proceeding).
In the instant case, DCP lacks an adequate remedy by appeal. See In re Univar
USA, Inc., 311 S.W.3d at 181; In re Frank A. Smith Sales, Inc., 32 S.W.3d at 875. DCP
cannot present its “one satisfaction” argument to the trial court, evaluate whether it is
entitled to a settlement credit, or evaluate the likely effect of any settlement on its potential
liability in the forthcoming trial without discovery of the settlement agreements. See In re
Univar USA, Inc., 311 S.W.3d at 181; In re Frank A. Smith Sales, Inc., 32 S.W.3d at 875.
Moreover, allowing the trial to proceed without DCP’s knowledge regarding whether the
settlement agreement potentially affects the prospective testimony at trial, or otherwise
affects its substantive rights at trial, could result in a fundamentally skewed trial. See id.
Thus, mandamus in this matter will preserve important substantive and procedural rights
from impairment or loss. In re Prudential Ins. Co. of Am., 148 S.W.3d at 136. Moreover,
a remedy by appeal is inadequate when the trial court disallows discovery and the missing
discovery cannot be made part of the appellate record. In re Frank A. Smith Sales, Inc.,
32 S.W.3d at 875. Accordingly, we hold that DCP lacks an adequate remedy by appeal,
thus mandamus review is appropriate.
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X. CONCLUSION
The purpose of discovery is to allow the parties to obtain “the fullest knowledge of
issues and facts prior to trial.” West v. Solito, 563 S.W.2d 240, 243 (Tex. 1978). We
interpret the discovery rules “so that parties can make realistic assessments of their
respective positions in order to facilitate settlements and prevent trial by ambush.” Gee
v. Liberty Mut. Fire Ins. Co., 765 S.W.2d 394, 396 (Tex. 1989); Lopez v. La Madeleine of
Tex., Inc., 200 S.W.3d 854, 860 (Tex. App.—Dallas 2006, no pet.). “Only in certain
narrow circumstances is it appropriate to obstruct the search for truth by denying
discovery.” State v. Lowry, 802 S.W.2d 669, 671 (Tex. 1991); see In re Exmark Mfg. Co.,
Inc., 299 S.W.3d at 533. This is particularly true with regard to settlement agreements:
“a settlement, procured in darkness is neither just, fair, equitable, or impartial, and
appears to be inconsistent with the objective of the Texas Rules of Civil Procedure.” In
re Univar USA, Inc., 311 S.W.3d at 181.
The Court, having examined and fully considered the petition for writ of mandamus,
the response, the reply, and the applicable law, is of the opinion that DCP has met its
burden to obtain mandamus relief. Based on the facts and arguments presented in this
case, where the settlement agreement is not privileged and where it is relevant to the
subject of the lawsuit, and where the real parties in interest have failed to file a motion for
protective order, we conclude that DCP, as the non-settling defendant, should have the
opportunity to examine the agreement. See In re Univar USA, Inc., 311 S.W.3d at 180–
81; Burlington N., Inc. v. Hyde, 799 S.W.2d 477, 481 (Tex. App.—El Paso 1990, orig.
proceeding); Nermyr v. Hyde, 799 S.W.2d 472, 475 (Tex. App.—El Paso 1990, orig.
24
proceeding). In so holding, we do not address the merits of the “one satisfaction rule,”
any potential settlement credit, or the admissibility of the settlement agreement at trial.
The petition for writ of mandamus is conditionally granted. We direct the trial court
to withdraw its order of February 27, 2014, granting in part and denying in part DCP’s
motion to compel and to enter an appropriate order allowing DCP discovery of the
settlement agreement in good and sufficient time for DCP to examine the settlement
agreement prior to the trial of this case. The trial court shall take appropriate measures
to ensure that the settling parties’ right to confidentiality is protected, through protective
order or otherwise, while allowing DCP the relevant discovery.6 We are confident that the
trial court will comply and the writ will issue only in the event that it does not. See TEX. R.
APP. P. 52.8(d).
NELDA V. RODRIGUEZ
Justice
Justice Benavides, dissenting without separate opinion, would deny relief. See TEX. R.
APP. P. 52.8(d).
Delivered and filed the 7th
day of October, 2014.
6 “In those extremely rare cases when information ordinarily discoverable should be protected, such
as when revealing a person’s residence might result in harm to the person, a party may move for protection.”
TEX. R. CIV. P. 194 cmt.1. In this case, the real parties did not assert that any portion of the settlement
agreements were protected by any specific privileges or move for protective order, so it is unlikely that there
will be any issues raised in this regard.
25