Pemex Exploracion y Produccion v. BASF Corporation et al
Filing
706
MEMORANDUM OPINION AND ORDER granting 667 MOTION to Dismiss The Three Remaining Transactions, granting 681 Supplemental MOTION to Dismiss Remaining Transactions. (Signed by Judge Sim Lake) Parties notified. (aboyd, 4)
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION
PEMEX EXPLORACION Y PRODUCCION,
Plaintiff,
v.
BASF CORPORATION; BASF FINA
PETROCHEMICALS LIMITED
PARTNERSHIP; MURPHY ENERGY
CORPORATION; BIO-NU SOUTHWEST,
INC. d/b/a VALLEY FUELS; US
PETROLEUM DEPOT, INC.; ARNOLDO
MALDONADO; JONATHAN DAPPEN;
STEPHEN PECHENIK; TIMOTHY L.
BRINK; CONTINENTAL FUELS, INC.;
and HIGH SIERRA CRUDE OIL &
MARKETING, LLC, Successor to
PETRO SOURCE PARTNERS, LP,
Defendants.
PEMEX EXPLORACION Y PRODUCCION,
Plaintiff,
v.
BIG STAR GATHERING LTD L.L.P.;
F&M TRANSPORTATION, INC.;
JAMES JENSEN; JOPLIN ENERGY,
LLC f/k/a HUTCHISON HAYES
ENERGY, LLC; JEFF KIRBY;
PLAINS ALL-AMERICAN PIPELINE,
L.P.; SAINT JAMES OIL, INC.;
SUPERIOR CRUDE GATHERING, INC.;
TRANSMONTAIGNE PARTNERS, L.P.;
and WESTERN REFINING COMPANY,
L. P. ,
Defendants.
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CIVIL ACTION NO. H-IO-1997
CIVIL ACTION NO. H-11-2019
MEMORANDUM OPINION AND ORDER
On May 2,
2014,
defendants BASF Corporation
("BASF"),
BASF
FINA Petrochemicals Limited Partnership ("BFLP"), filed Defendants
BASF Corporation and BASF FINA Petrochemicals Limited Partnership's
Motion to Dismiss the Three Remaining Transactions
BFLP's Motion to Dismiss;" Docket Entry No.
667);
("BASF' sand
and on May 6,
2014, BASF and BFLP filed BASF's and BFLP's Supplemental Motion to
Dismiss Remaining Transactions
Motion
to
Dismiss;"
plaintiff,
Pemex
Docket
Exploraci6n
("BASF's and BFLP's Supplemental
Entry No.
y
On Ma y
681)
Producci6n
("PEP")
8,
2014 ,
filed
PEP's
Response to BASF's Motion and Supplemental Motion to Dismiss and/or
Motion for Summary Judgment and Request for Ruling on Pretrial
Issues Related to Proportionate Responsibility
("PEP's Response"
and "PEP's Request for Ruling;" Docket Entry No. 697).
I.
A.
BASF's and BFLP's Motions to Dismiss
Standard of Review
BASF and BFLP have not identified the procedural basis on
which
they
seek
dismissal
of
claims
arising
from
the
three
transactions in which BASF and BFLP are alleged to have purchased
condensate stolen from PEP in Mexico.
and
BFLP
pleadings,
have
and
attached
to
their
because
PEP
has
consideration of those matters,
Nevertheless, because BASF
motions
not
matters
objected
to
689),
the
for the reasons stated in
the Memorandum Opinion and Order entered on May 7,
Entry No.
outside
2014
the
court's
§
I of
(Docket
the pending motion to dismiss and supplemental
motion to dismiss are converted to motions for summary judgment.
-2-
B.
Analysis
BASF and BFLP argue that the claims asserted against
them
arising from three transactions that PEP alleges occurred in August
of 2008, December of 2008, and February of 2009 are not cognizable
either
because
BASF
and
BFLP
were
not
involved
in
those
transactions, or because undisputed evidence establishes that the
product traded in these transactions was a commingled product that
included
some
condensate
allegedly
stolen
from
PEP
and
some
condensate or other hydrocarbon that was not stolen from PEP, and
that PEP has failed to cite any evidence capable of satisfying "the
tracing
requirements
[for
establishing
articulated by this Court."l
BFLP's
arguments
or
conversion]
previously
Without disputing any of BASF's or
evidence,
PEP
responds:
"PEP
has
already
presented the evidence it has in support of these transactions at
dispositive-motion briefing."2
1.
August 2008 Transaction
PEP's Third Amended Complaint alleges that in August 2008 BASF
purchased from Trammo Petroleum Corp.
stolen
condensate
$554,279.00.
at
$112
per
("Trammo")
barrel
for
a
4,932 barrels of
total
price
PEP also alleges that Trammo acquired the
of
stolen
lBASF's and BFLP's Motion to Dismiss, Docket Entry No. 667,
p. 2 (referencing Memorandum Opinion and Order, Docket Entry No.
607, pp. 44-54, 102-08, and Memorandum Opinion and Order, Docket
Entry No. 636, pp. 14-18).
2PEP's Response, Docket Entry No. 697, p. 2.
-3-
condensate
Sales. 3
sold
to
BASF
in
this
transaction
from
Without opposition or objection from PEP,
Continental
BASF and BFLP
assert that the product transacted in August 200B "undisputedly did
not go to BASF!BFLP."4
BASF and BFLP explain that
PEP neither listed the transaction in its
final
interrogatory answers nor was it identified by PEP's
experts.
(Ex. 1, PEP's First Supp. Interrog. Resps. at
3 & Ex. A, T-PEP00677B (not listing the August 200B
transaction and showing that High Sierra purchased 4,932
barrels of condensate from trammo in August 200B); see
also Ex. 2, PEP's Expert Report Exhibit H (showing that
the hydrocarbons were sold to High Sierra); Ex. 3, Pl's.
Trial Ex. 47 at T-PEP000644 (same) .)5
Because PEP has failed to cite any evidence in its Response, Docket
Entry No. 697, or in its prior summary judgment briefing from which
a
reasonable
juror
could
conclude
that
the
4,932
barrels
of
condensate transacted in August 200B was sold to BASF or BFLP, BASF
and BFLP are entitled to summary judgment on claims arising from
this August 200B transaction.
2.
December 200B and February 2009 Transactions
PEP's Third Amended Complaint alleges that in December 200B
BASF purchased from Trammo 24,021 barrels of stolen condensate at
$47 per barrel for a total price of $1,11B,671.00.
PEP's Third
3PEP's Third Amended Complaint, Docket Entry No. 220, ~ 63.
See also Joint Pretrial Order, Docket Entry No. 635, p. 17
("2. Whether BFLP purchased 4,932 barrels of stolen PEP condensate
in August of 200B.").
4BASF's and BFLP's Motion to Dismiss,
p.
Docket Entry No.
1.
SId. at 1-2
(citing exhibits attached thereto) .
-4-
667,
Amended Complaint also alleges that in February 2009 BASF purchased
from Trammo 16,813 barrels of stolen condensate at $44 per barrel
for a total price of $737,976.00.
the product
Source. 6
sold to
PEP alleges that Trammo acquired
BASF in these
two
transactions
from
Petro
Without opposition or objection from PEP, BASF and BFLP
assert that
[t] he [se]
other
two
transactions,
per
undisputed
documents, went through High Sierra.
(Ex. 4, Excerpts
from PI's. Trial Exs. 48, 51.)
Because High Sierra
blended all of the crude, naphtha, and condensate it
received from various sources, these two transactions are
not viable based on the tracing requirements previously
articulated by this Court.
(Dkt. No. 607, Memo. Op. &
Order at 51; Dkt. No. 636, Memo. Op. & Order at 18.).7
In its September 30,
2013, Memorandum Opinion and Order the
court explained that
plaintiffs in a conversion
actually converted to the
defendants liable based
principle,
unless
(1)
wrongfully commingled the
acquired the commingled
action must trace the property
defendant, and may not hold
on the confusion of goods
the
defendants
themselves
goods, or (2) the defendants
goods with notice that the
6PEP's Third Amended Complaint, Docket Entry No. 220, ~ 63.
See also Joint Pretrial Order, Docket Entry No. 635, p. 17
("3. Whether BFLP purchased 24,021 barrels of stolen PEP condensate
in December of 2008.
4. Whether BFLP purchased 16,038 barrels of
stolen PEP condensate in February of 2009."). BASF and BFLP state
in their pending motions that Trammo acquired the product traded in
these two transactions from High Sierra.
In ~ 19 of PEP's Third
Amended Complaint, Docket Entry No. 220, PEP asserts that "High
Sierra Crude Oil & Marketing, LLC [was the] successor to Petro
Source Partners, LP ('Petro Source')."
7BASF's and BFLP's Motion to Dismiss,
p. 2.
-5-
Docket Entry No.
667,
sellers from whom they purchased did not own all of the
goods. 8
Therefore, in order to hold BASF or BFLP liable for conversion, PEP
must trace condensate that was actually stolen from it in Mexico to
BASF or BFLP.
PEP must also present evidence from which the jury
could form a reasonably certain estimate of the amount of stolen
condensate, if any, that BASF or BFLP purchased.
v. Lutes, 141 S.W.2d 1050, 1055
writ dism'd by agr.).
(Tex. Civ. App. -
See Ortiz Oil Co.
Texarkana 1940,
As evidence that High Sierra blended all of
the hydrocarbons that it received from various sources,
BASF and
BFLP cite the following excerpts from the deposition testimony of
High Sierra's designated representative,
David Kehoe:
Q.
As I understand it, High Sierra is an aggregator of
hydrocarbons.
They take hydrocarbons from various
sources, blend them together, and then resell them.
Is that an accurate description?
A.
Yes.
Q.
All right.
And if I understood your testimony
earlier, High Sierra began operating or took over
operation of the Rio Hondo facility in 2006?
A.
Yes.
Q.
Okay.
And since that point in time, has that
always been the case that High Sierra blended
products at the Rio Hondo facility in tanks and
then sold them?
Yes.
A.
Q.
All right. And so, from the beginning did Rio Hondo
-- the -- Rio Hondo facility have domestic con--
8Docket Entry No. 607, pp. 51-52 (citing Kenyon v. Bender, 174
S.W.2d 110, 112 (Tex. Civ. App.
Beaumont 1943, writ ref'd
w.o.m.) .
-6-
condensates,
condensates from
crude oil from various sources?
Yes.
A.
various
sources,
Q.
And did you mix those hydrocarbons, crude oils and
condensates together in -- in -- tanks together?
A.
Yes. Sometimes two kinds of condensates, sometimes
all three, yes.
Q.
All right. And so, if you, then sold hydrocarbons
from Rio Hondo facility to a buyer, you don't have
the ability to know what percent of what source of
hydrocarbon is contained in that sale.
Is that
correct?
A.
That's correct. 9
In order to hold BASF or BFLP liable for conversion PEP must
present
evidence
capable
of
establishing
that
BASF
or
BFLP
purchased a reasonably certain amount of stolen condensate. 10
has failed to cite any evidence either in its Response,
Entry No.
which
a
697,
condensate
Docket
or in its prior summary judgment briefing,
reasonable
juror
transacted
in
could
conclude
December
stolen Mexican condensate. l l
2008
that
and
Since, moreover,
the
PEP
from
barrels
February
2009
of
were
PEP has failed to
submit any evidence contradicting BASF's and BFLP's evidence that
the
product
that
condensate
transacted
in
December
9Exhibi t 5 to BASF's and BFLP's Motion to
Entry No. 668, pp. 257:7 - 258:8.
2008
Dismiss,
and
Docket
lOSee Kenyon, 174 S.W.2d at 112. See also Memorandum Opinion
and Order, Docket Entry No. 607, pp. 44-54, 102-08, and Memorandum
Opinion and Order, Docket Entry No. 636, pp. 14-18.
11See BASF's and BFLP's Supplemental Motion to Dismiss, Docket
Entry No. 681, pp. 1-2 (citing Memorandum Opinion and Order, Docket
Entry No. 607, pp. 102-08).
-7-
February 2009 was a blended product that included both Mexican and
domestic
condensate,
BASF
and
BFLP
cannot
be
held
liable
for
conversion absent evidence capable of establishing that BASF or
BFLP either wrongfully commingled stolen condensate with nonstolen
condensate or acquired the commingled condensate with notice that
the sellers from whom they purchased the condensate did not own all
of the condensate.
Because PEP's Third Amended Complaint expressly
states that BASF and BFLP purchased allegedly stolen condensate
"without knowing it was stolen,"12 and also states that "PEP does
not allege that BASF acted with intent or knowledge or that it was
a part of any conspiracy,
"13
BASF and BFLP cannot be held liable for
conversion based on purchase of the commingled product transacted
in
December
2008
and
February
2009.
Accordingly,
the
court
concludes that BASF and BFLP are entitled to summary judgment on
claims arising from the transactions alleged to have occurred in
December 2008 and February 2009.
II. PEP's Request for Ruling
on Pretrial Issues Related to Proportionate Responsibility
Asserting that the comparative-responsibility provisions in
Chapter 33 of the Texas Civil Practices and Remedies Code did not
create new defenses
or impose new duties,
PEP argues
that
the
12PEP's Third Amended Complaint, Docket Entry No. 220, ~ 60.
13Id. at ~ 61. See also id. at ~ 78 (" PEP does not allege that
Defendant BASF knew that the condensate in question was stolen.").
-8-
submission of PEP's responsibility to the jury is improper because
under Texas law,
a property owner's negligence has never been a
defense to conversion. 14
Traditionally, negligence by a plaintiff
has not been recognized as an affirmative defense to a defendant's
liability for conversion. See Southwest Bank v. Information Support
Concepts, Inc., 149 S.W.3d 104, 108 n. 9 (Tex. 2004)
(recognizing
that articles 3 and 4 of the Uniform Commercial Code have been
Here,
amended to permit some such defenses by banks).
however,
defendants have not cited any authority that would allow them to
assert the defense of contributory negligence under the facts of
this
case.
Dallas,
See
498
Dallas
S.W.2d 396,
ref'd n.r.e.)
438
DoAll
402
of
v.
Trinity National
(Tex.Civ.App.-Texarkana
(citing Ligon v. E.F. Hutton
(Tex.Civ.App.-Dallas
principle
Co.
Texas
law
liability
1968,
that
for
writ
defense
to
conversion).
Wilson,
2 Willson 188, 1884 WL 8120,
*1
1973,
writ
Co., 428 S.W.2d 434,
&
ref'd
Contributory
Bank of
n.r.e.)
(for
negligence
See
(Tex.
also
1884)
is
the
not
Sandford
a
v.
(a party who
purchases and then sells stolen property is subject to a cause of
action for conversion).
At the hearing held on April 29, 2014, the court informed the
parties
that
the
jury
charge
should
submit
liability on a transaction-by-transaction basis.
14PEP's Request
p.
for
Pretrial Ruling,
3.
-9-
the
defendants'
Any submission
Docket Entry No.
697,
regarding proportionate responsibility of other parties must also
be submitted on a transaction-by-transaction basis.
Prac.
&
Rem.
Code
§
33.003
(explaining that
the
See Tex. Civ.
submission of
responsibility must relate to the harm for which recovery is sought
and
that
any
such
submission must
be
supported
by
sufficient
evidence) .
III.
Conclusions and Order
For the reasons stated above, Defendants BASF Corporation and
BASF FINA Petrochemicals Limited Partnership's Motion to Dismiss
the Three Remaining Transactions, Docket Entry No. 667, is GRANTED,
and BASF's and BFLP's Supplemental Motion to Dismiss Remaining
Transactions, Docket Entry No. 681, is GRANTED.
SIGNED at Houston, Texas, on this the 8th day of May, 2014.
7
SIM LAKE
UNITED STATES DISTRICT JUDGE
-10-
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