in Re Lone Star NGL Pipeline LP and ETP Crude LLC

Opinion filed February 3, 2020
In The
Eleventh Court of Appeals
__________
No. 11-20-00010-CV
__________
IN RE LONE STAR NGL PIPELINE LP
AND ETP CRUDE LLC
Original Mandamus Proceeding
OPINION
Relators, Lone Star NGL Pipeline LP and ETP Crude LLC, filed this original
petition for writ of mandamus in which they request that we instruct the Honorable
John Smith, District Judge of the 161st District Court of Ector County, to vacate an
order entered on December 18, 2019, in Cause No. B-19-09-1223-CV. In that order,
Judge Smith denied Relators’ motion to abate injunction proceedings and to set
security.
We conditionally grant the petition for writ of mandamus as to the portion of
Judge Smith’s order in which he denied Relators’ motion to set security. We deny
the petition for writ of mandamus as to the portion of Judge Smith’s order in which
he denied Relators’ motion to abate injunction proceedings.
Background
On September 27, 2011, Loretta Williams Shumway granted Lone Star an
easement on certain real property to construct a pipeline for the transportation of
natural gas and natural gas liquids only. Payments for the easement were made to
Shumway and to Mary W. Watt, Individually and as Trustee for the Mary Williams
Watt Grandchildren’s Trust.
The pipeline that was constructed on the easement is part of a pipeline that
extends for fifty miles. Relators have the same corporate parent, and Lone Star
conveyed the entire pipeline to ETP. ETP intended to use the pipeline to transfer
crude oil, rather than natural gas and natural gas liquids.
ETP hired Chase Brawley, a landman, to obtain any necessary amendments
to the easements for the pipeline. In late 2017 or January 2018, Brawley contacted
Watt and requested that the easement at issue in this case be amended to allow for
the transportation of crude oil. Watt requested payment of $500,000 plus shares of
stock in ETP’s parent company worth $500,000 for the amendment. Brawley
declined Watt’s offer and did not make a counteroffer.
On January 23, 2018, ETP began transferring 40,000 barrels of crude oil per
day through the pipeline. In June 2019, Real Parties in Interest Richard Watt, as
Independent Executor of the Estate of Mary Williams Watt, Deceased; Ashley
Williams Watt, as Trustee of the Williams Grandchildren’s Trust; and Shumway
discovered that the pipeline was being used to transfer crude oil. Real Parties in
Interest sued Lone Star for breach of contract and Lone Star and ETP for trespass,
fraudulent inducement, common law and statutory fraud, conspiracy, unjust
enrichment, and quantum meruit. Real Parties in Interest also requested that the trial
court declare that the easement was terminated and enjoin Relators from transporting
crude oil or any product other than natural gas or natural gas liquids through the
pipeline.
2
Pursuant to Chapter 21 of the Texas Property Code, ETP filed a counterclaim
to condemn the right to transport crude oil through the pipeline. ETP alleged that it
had not asserted “an ordinary or conventional, statutory condemnation proceeding”
and that it was not subject to the “standard procedure of Sections 21.012 through
21.016 of the Texas Property Code, as ordinarily required by Section 21.011.” ETP
invoked Sections 21.003, 21.017, and 21.064(b) of the Property Code and requested
that Judge Smith fix an amount of security adequate to compensate Real Parties in
Interest for damages that might result from the condemnation. ETP provided an
appraisal that calculated that Real Parties in Interest’s damages were $1,111.
Relators also filed an amended motion to abate the injunction proceedings and
set security for the condemnation counterclaim. At the hearing on the motion,
Relators agreed to post security of one million dollars if required to do so by Judge
Smith. Real Parties in Interest responded that the trial court did not have jurisdiction
to set security until Relators followed the standard condemnation procedures and
obtained an award from a panel of special commissioners.
Judge Smith denied Relators’ motion to set security and to abate the injunctive
proceedings. Judge Smith also orally ruled that Real Parties in Interest’s request for
a temporary injunction to stop the transfer of crude oil through the pipeline was
granted, but stayed the grant of injunctive relief for a period of forty-five days. The
record does not reflect that Judge Smith has signed an order that grants Real Parties
in Interest’s request for a temporary injunction.
Analysis
Mandamus is an extraordinary remedy and is warranted only when the trial
court clearly abused its discretion and the relator has no other adequate remedy. In
re Murrin Bros. 1885, Ltd., No. 18-0737, 2019 WL 6971663, at *2 (Tex. Dec. 20,
2019) (orig. proceeding). The relator has the burden to prove both of these
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requirements. In re H.E.B. Grocery Co., 492 S.W.3d 300, 302 (Tex. 2016) (orig.
proceeding) (per curiam).
A trial court abuses its discretion when its ruling is arbitrary and unreasonable
or is made without regard for guiding legal principles or supporting evidence. In re
Nationwide Ins. Co. of Am., 494 S.W.3d 708, 712 (Tex. 2016) (orig. proceeding).
“Similarly, a trial court abuses its discretion when it fails to analyze or apply the law
correctly.” Id.; see also In re Prudential Ins. Co. of Am., 148 S.W.3d 124, 135 (Tex.
2004) (orig. proceeding) (“[A] trial court has no ‘discretion’ in determining what the
law is or applying the law to the facts.” (quoting Walker v. Packer, 827 S.W.2d 833,
840 (Tex. 1992) (orig. proceeding))).
We have reviewed the petition for writ of mandamus and the mandamus
record as it pertains to that portion of Judge Smith’s December 18, 2019 order in
which he denied Relators’ request to abate the injunction proceedings, and we hold
that, as to that ruling, Relators have failed to show that they are entitled to the
requested relief. Therefore, we deny Relators’ petition for writ of mandamus to the
extent that they request that we order Judge Smith “to refuse to issue any injunction
to cease use of the pipeline in place and subject to the condemnation proceeding
initiated by cross-claim in this matter.” See TEX. R. APP. P. 52.8(a).
We next consider whether Judge Smith abused his discretion when he denied
Relators’ motion to set security. Relators assert that, pursuant to “a special
procedure for the condemnation of property in district court” set out in
Sections 21.003 and 21.017 of the Property Code, they have a right to bring a
counterclaim for condemnation. Relators argue that this procedure is intended to:
“[E]xpedite” the determination of all matters in the claim, and upon
demand, a district court is required to determine adequate security as a
ministerial duty, without the condemnor having to first satisfy the
regular procedure of demonstrating good faith negotiation, special
commissioner’s hearings, initial offers, and so on.
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Real Parties in Interest respond that the “alternative procedure” to condemn the
property that Relators rely upon was repealed in 1983 when the legislature enacted
Chapter 21 of the Property Code and that Relators are not entitled to post security
and possess the property until they comply with the statutory requirements to
condemn and possess the property set out in Sections 21.012 through 21.016 of the
Property Code.
We review matters of statutory construction de novo. Creative Oil & Gas,
LLC v. Lona Hills Ranch, LLC, No. 18-0656, 2019 WL 6971659, at *3 (Tex.
Dec. 20, 2019). Our primary goal is to give effect to the legislature’s intent. Gunn v.
McCoy, 554 S.W.3d 645, 672 (Tex. 2018). The best guide to that determination is
usually the plain language of the statute. Silguero v. CSL Plasma, Inc., 579 S.W.3d
53, 59 (Tex.), petition for cert. filed, (U.S. Nov. 7, 2019) (No. 19-603). We must
enforce the statute “as written” and “refrain from rewriting text that lawmakers
chose.” Creative Oil & Gas, 2019 WL 6971659, at *4 (quoting Entergy Gulf States,
Inc. v. Summers, 282 S.W.3d 433, 443 (Tex. 2009)). We are required to give
consideration to the language in the specific statutory section at issue, as well as to
the statute as a whole, id., and must not interpret the statute in a manner that renders
any part of it meaningless or superfluous, Columbia Med. Ctr. of Las Colinas, Inc. v.
Hogue, 271 S.W.3d 238, 256 (Tex. 2008).
A district court and a county court at law have concurrent jurisdiction in an
eminent domain case. TEX. PROP. CODE ANN. § 21.001 (West 2014). A district court
also has jurisdiction to:
[D]etermine all issues, including the authority to condemn property and
the assessment of damages, in any suit:
(1) in which this state, a political subdivision of this
state, a person, an association of persons, or a corporation
is a party; and
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(2) that involves a claim for property or for damages
to property occupied by the party under the party’s
eminent domain authority or for an injunction to prevent
the party from entering or using the property under the
party’s eminent domain authority.
Id. § 21.003.
Section 21.011 of the Property Code is titled “Standard Procedure” and states
that the “[e]xercise of the eminent domain authority in all cases is governed by
Sections 21.012 through 21.016” of the Property Code. Id. § 21.011. The Standard
Procedure generally requires that a condemnor disclose certain information and
make a bona fide offer to the property owner. Id. §§ 21.0111–.0113. If the
condemnor and the property owner are unable to agree, the condemnor may begin a
condemnation proceeding by filing a petition that contains specific information in
the proper court. Id. § 21.012(a)–(b). The judge of the court must appoint three
special commissioners to hold a hearing and assess the damages of the property
owner. Id. §§ 21.014–.015, .041–.042, .048. If a party timely objects to the findings
of the special commissioners, the court is required to try the case in the same manner
as other civil cases. Id. § 21.018. If no party files timely objections to the findings
of the special commissioners, the judge of the court is required to adopt the
commissioners’ findings as the judgment of the court. Id. § 21.061.
The Standard Procedure is a two-part process that begins with an
administrative proceeding followed, if necessary, by a judicial one. Hubenak v. San
Jancinto Gas Transmission Co., 141 S.W.3d 172, 179 (Tex. 2004); Amason v.
Natural Gas Pipeline Co., 682 S.W.2d 240, 241 (Tex. 1984). Upon the filing of
objections to the commissioners’ award, the case converts into a “normal pending
cause in the court with the condemnor as plaintiff and the condemnee as defendant.”
Amason, 682 S.W.2d at 242; see also PROP. § 21.018(b); Hubenak, 141 S.W.3d at
179. A court does not have “judicial jurisdiction” over a condemnation claim until
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an objection to the commissioners’ award is filed. Seals v. Upper Trinity Reg’l
Water Dist., 145 S.W.3d 291, 296 (Tex. App.—Fort Worth 2004, pet. dism’d).
Section 21.017 of the Property Code, which is titled “Alternative Pleadings,”
immediately follows the Standard Procedure in the statute and provides that the state,
a political subdivision of the state, a person, an association of persons, or a
corporation that is a party to a suit covered by Section 21.003 may “by petition,
cross-bill, or plea of intervention” “assert a claim to the property or, alternatively,
seek to condemn the property.” PROP. § 21.017(a). A district court that is hearing a
suit that is covered by Section 21.003 may grant injunctive relief or, alternatively,
“require a condemnor to provide security adequate to compensate the property
owner for damages that might result from the condemnation.” Id. § 21.064.
Relators assert that they have a right to file a counterclaim for condemnation
pursuant to Sections 21.003 and 21.017 and to take possession of the pipeline after
they post adequate security. Real Parties in Interest respond that Relators rely on
cases that interpreted Section 21.003 and 21.017’s predecessor statute, that those
cases are no longer authoritative after the legislature enacted the Property Code, and
that Relators were required to follow the Standard Procedure before they filed a
counterclaim for condemnation.
We agree with Real Parties in Interest that there is little authority that
addresses whether Chapter 21 requires a condemnor to follow the Standard
Procedure before it can file an Alternative Pleading under Section 21.017.1
1
The available authority suggests, without any substantive discussion, that a condemnor is not
required to follow the Standard Procedure before filing a counterclaim for condemnation under
Section 21.017. See Roberson v. City of Austin, 157 S.W.3d 130, 134–35 (Tex. App.—Austin 2005, pet.
denied) (noting that, following a jury trial, the trial court awarded the condemnor title to a sanitary sewer
system based on its counterclaim for condemnation); City of Houston v. Texan Land & Cattle Co., 138
S.W.3d 382, 386 (Tex. App.—Houston [14th Dist.] 2004, no pet.) (noting that the condemnor filed a
counterclaim under section 21.017 on the day of trial of the condemnee’s claims and that trial proceeded
on all claims); Harris Cty. Flood Control Dist. v. Glenbrook Patiohome Owners Ass’n, 933 S.W.2d 570,
574 (Tex. App.—Houston [1st Dist.] 1996, writ denied) (noting that condemnor filed a trial amendment
pursuant to Section 21.017 to condemn the property).
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However, Chapter 21 was not enacted in a vacuum; rather, it was enacted effective
January 1, 1984, as part of a “nonsubstantive revision of the statutes relating to
property.” See Act of May 26, 1983, 68th Leg. R.S., ch. 576, § 1, 1983 Tex. Gen.
Laws 3475, 3497–3508. Indeed, the legislature specifically stated that the Property
Code, including Chapter 21, was “intended as a recodification only, and no
substantive change in the law is intended by this Act.” Id. at 3730, § 7.
When the legislature recodifies an existing statute without substantive change,
we presume that it did so “with full knowledge of the existing condition of the law
and with reference to it.” JCB, Inc. v. Horsburgh & Scott Co., No. 18-1099, 2019
WL 2406971, at *4 (Tex. June 7, 2019) (quoting In re Pirelli Tire, L.L.C., 247
S.W.3d 670, 677 (Tex. 2007) (orig. proceeding)). Therefore, we may consider the
law prior to the codification of Chapter 21 in our analysis of the procedure that a
condemnor is required to follow when it files a counterclaim for condemnation.2
Sections 21.003, 21.017, and 21.064 were derived from Article 3269 of the
Texas Revised Civil Statutes. See 1983 Tex. Gen. Laws at 3498, 3501, 3508.
Article 3269 provided:
When the State of Texas, or any county, incorporated city, or other
political subdivision, having the right of eminent domain, or any
person, corporation or association of persons, having such right, is a
party, as plaintiff, defendant or intervenor, to any suit in a District
Court, in this State, for property or for damages to property occupied
by them or it for the purposes of which they or it have the right to
exercise such power of eminent domain, or when a suit is brought for
an injunction to prevent them or it from going upon such property or
making use thereof for such purposes, the Court in which such suit is
pending may determine the matters in dispute between the parties,
including the condemnation of the property and assessment of damages
2
Following the enactment of Chapter 21, the supreme court has relied on cases that interpreted
Chapter 21’s predecessor statute with no indication that the recodification in 1984 made any substantive
change to the law. See In re Lazy W Dist. No. 1, 493 S.W.3d 538, 542–43 nn. 39, 31, 36 (Tex. 2016); FKM
P’ship, Ltd. v. Bd of Regents of Univ. of Houston Sys., 255 S.W.3d 619, 626–28 (Tex. 2008); City of Tyler v.
Beck, 196 S.W.3d 784, 785–86 (Tex. 2006) (per curiam).
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therefor, upon petition of the plaintiff, cross-bill of the defendant or plea
of intervention by the intervenor asking such remedy or relief; and such
petition, cross-bill or plea of intervention asking such relief shall not be
an admission of any adverse party’s title to such property; and in such
event the condemnor may assert his or its claim to such property and
ask in the alternative to condemn the same if he or it fails to establish
such claim; and provided that, if injunctive relief be sought, the Court
may grant such relief under the Statutes and Rules of Equity, or may,
as a prerequisite for denying such relief, require the party seeking
condemnation to give such security as the Court may deem proper for
the payment of any damages that may be assessed on such party’s
pleading for condemnation.
City of Houston v. Adams, 279 S.W.2d 308, 311–12 (Tex. 1955) (orig. proceeding).
As does Section 21.003, Article 3269 covered suits (1) for property, (2) for damages
to property occupied by one having the right of eminent domain, and (3) for an
injunction to prevent one claiming the right of eminent domain from going upon the
property or making use of it. Coastal States Gas Producing Co. v. Miller, 329
S.W.2d 853, 858 (Tex. 1959) (orig. proceeding).
We considered the application of Article 3269 in Brazos River
Conservation & Reclamation District v. Costello, 142 S.W.2d 414, 416 (Tex.
App.—Eastland) (Costello I), rev’d, 143 S.W.2d 577 (Tex. 1940), in which property
owners obtained an injunction that prevented the BRCRD from flooding their land
by closing openings in a dam. The BRCRD filed a cross-action for condemnation
of the property under Article 3269. Id. at 418.
We noted that Article 3264 of the Revised Civil Statutes (which is now part
of the Standard Procedure set out in Chapter 21) “provide[d] the familiar procedure
for condemnation, consisting of an application for, and appointment of,
commissioners, notices, hearing, award, etc.” Id. at 417. Article 3269, however,
“provide[d] a procedure for condemnation complete in itself, and alternative to that
provided in the preceding Articles 3264 to 3268, inclusive.” Id. at 418. We held
that, if Article 3269 permitted the BRCRD to condemn by cross-action, the law was
9
unconstitutional because it would leave to the trial court’s discretion whether any
security should be deposited. Id. at 421.
The supreme court reversed our conclusion that Article 3269 was
unconstitutional and noted that “[t]he legislature, in the exercise of its power, has
authorized in Article 3269 condemnation proceedings in the District Court on cross
actions.” Brazos River Conservation & Reclamation Dist. v. Costello, 143 S.W.2d
577, 580 (Tex. 1940) (Costello II). The supreme court held that “[c]learly the object
of Article 3269 is to expedite the determination of all matters to which it relates.”
Id. Further, a fair and reasonable construction of Article 3269:
[M]eans that under same the District Court is vested with jurisdiction
to determine the questions in dispute and to require the party instituting
such condemnation proceedings to give adequate security for the
property sought to be condemned.
Id. The supreme court summarized that all that the property owners could demand
under Article 3269 was that the BRCRD comply with any orders that the district
court made. Id. Once the BRCRD had done so, it would be entitled to take
possession of the property “pending the final hearing of the condemnation
proceedings on the merits of the case.” Id.
In Costello II, the supreme court did not disturb our conclusion in Costello I
that Article 3269 was a procedure “complete in itself” and alternative to the standard
condemnation procedure. The Beaumont, Waco, and Houston First Courts of
Appeals also concluded that the requirements of the standard condemnation
procedure did not apply to condemnations sought by counterclaim or cross-action
under Article 3269. See Root Co. v. Montgomery Cty. Drainage Dist. No. 6, 584
S.W.2d 500, 502–03 (Tex. App.—Beaumont 1979, no writ) (noting that bona fide
effort to negotiate was “not a prerequisite of a suit that comes within” Article 3269);
Gardner v. City of Hamilton, 536 S.W.2d 422, 424–25 (Tex. App.—Waco 1976,
writ ref’d n.r.e.) (Article 3269 “does not contain a requirement that the condemnor,
10
before filing its condemnation proceeding in District Court follow the requirements
it would be required to follow if it were filing an initial conventional condemnation
suit.”); S. Pac. Transp. Co. v. Cty. of Harris, 508 S.W.2d 484, 485–86 (Tex. App.—
Houston [1st Dist.] 1974, writ ref’d) (“Article 3269 does not contain a requirement
that the condemnor, before filing its condemnation proceeding in the district court,
shall have failed to agree with the landowner on the amount of damages nor a
requirement that the district judge appoint special commissioners to assess those
damages.”). Clearly, when the legislature enacted Chapter 21 in 1984, the existing
state of the law allowed a condemnor to bring a counterclaim for condemnation in a
suit brought by the property owner for damages or injunctive relief without
following the standard condemnation proceeding.
Chapter 21 did not change this law. In Chapter 21, the legislature gave
jurisdiction over a condemnation proceeding (1) to a district court or a county court
at law after the Standard Procedure is followed and a party has filed objections to
the special commissioners’ award and (2) to the district court by “petition, cross-bill,
or plea of intervention” in a case in which the condemnor is a party and that involves
a claim for damages based on the condemnor’s possession of the property or for
injunctive relief to prevent the condemnor from entering or using the property
pursuant to its eminent domain authority. If a condemnor was required to follow the
Standard Procedure before it filed an alternative pleading for condemnation in a suit
governed by Section 21.003, a district court would acquire jurisdiction over the
claim when objections were filed to the special commissioners’ award. That is, the
district court would acquire jurisdiction over the counterclaim for condemnation
pursuant to the Standard Procedure, not pursuant to Section 21.003. Therefore,
Section 21.003 has meaning only if it confers jurisdiction on the district court to
consider a condemnation counterclaim that has not followed the Standard
11
Procedure.3 See Smith v. Gulf States Utils. Co., 616 S.W.2d 300, 305 (Tex. App.—
Houston [14th Dist.] 1981, writ ref’d n.r.e.) (concluding that Article 3269 did not
confer original jurisdiction on a district court that had already acquired jurisdiction
following a condemnation conducted pursuant to the Standard Procedure).
We hold that, because ETP filed a counterclaim for condemnation in a suit
that falls under Section 21.003, Relators were not required to complete the Standard
Procedure for condemnation before they requested that Judge Smith set security to
protect Real Parties in Interest from damages due to the condemnation. Accordingly,
Judge Smith had jurisdiction to determine the counterclaim. See PROP. § 21.003;
Costello II, 143 S.W.2d at 480. Further, Judge Smith had a ministerial duty to fix
the amount of security to protect Real Parties in Interest during the proceedings. See
Adams, 279 S.W.2d at 314; see also Jefferson Cty. Drainage Dist. No. 6 v. Gary,
362 S.W.2d 305, 307 (Tex. 1962) (orig. proceeding) (noting that, because the
condemnor’s request that the trial court set security complied literally with statute,
it was “the ministerial duty of the District Court to comply therewith”). Judge Smith
abused his discretion when he failed to do so.
The second question is whether Relators have an adequate remedy by appeal.
The adequacy of an appellate remedy depends heavily on the circumstances and
requires a balancing of the benefits of mandamus review against the detriments. In
re Coppola 535 S.W.3d 506, 509 (Tex. 2017) (orig. proceeding) (per curiam); In re
Prudential, 148 S.W.3d at 136. The supreme court has held that a condemnor is
entitled to relief by mandamus from the refusal of a trial court to set security pursuant
3
Real Parties in Interest contend that such an interpretation of the statute allows a condemnor to
“avoid the time and expense associated with the Section 21 procedure and just trespass, wait for the owner
to file suit, post arbitrary security, and take possession.” However, the legislature has determined that,
when a suit falls under Section 21.003, the district court should be allowed to expeditiously consider all
issues before it, including a counterclaim for condemnation. PROP. § 21.003; Costello II, 143 S.W.2d at
580. We interpret the statute as written and do not choose between these competing policies. Creative
Oil & Gas, 2019 WL 6971659, *4.
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to Article 3269. Adams, 279 S.W.2d at 314; see also Gary, 362 S.W.2d at 207;
Coastal States, 329 S.W.2d at 860. We hold that the same reasoning applies to a
counterclaim for condemnation brought pursuant to Sections 21.003 and 21.017.
Real Parties in Interest sued Relators and requested damages and injunctive
relief based on ETP’s use of the pipeline to transfer crude oil. Relators brought a
counterclaim in which they asserted the power of eminent domain to condemn the
right to transfer crude oil through the pipeline and requested that Judge Smith set
security in accordance with Sections 21.003, 21.017, and 21.064(b) of the Property
Code. Relators are entitled to relief by mandamus from Judge Smith’s refusal to do
so.
This Court’s Ruling
We deny Relators’ petition for writ of mandamus to the extent that they
request that we order Judge Smith “to refuse to issue any injunction to cease use of
the pipeline in place and subject to the condemnation proceeding initiated by cross-
claim in this matter.” We conditionally grant the petition for writ of mandamus as
to the portion of the December 18, 2019 order in which Judge Smith denied Relators’
motion to set security. A writ of mandamus will issue only if Judge Smith does not
vacate that portion of the order and set adequate security by February 13, 2020.
JOHN M. BAILEY
February 3, 2020 CHIEF JUSTICE
Panel consists of: Bailey, C.J.,
Stretcher, J., and Wright, S.C.J.4
Willson, J., not participating.
4
Jim R. Wright, Senior Chief Justice (Retired), Court of Appeals, 11th District of Texas at Eastland,
sitting by assignment.
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