Texas Eastern Transmission LP v. Jenkins et al
Filing
76
MEMORANDUM OPINION AND ORDER sustaining in part and overruling in part 55 Objections to Summary Judgment Evidence, granting in part and denying in part 50 MOTION for Partial Summary Judgment , (Signed by Judge Sim Lake) Parties notified. (aboyd, 4)
United States District Court
Southern District of Texas
ENTERED
November 22, 2016
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION
TEXAS EASTERN TRANSMISSION,
LP f/k/a TEXAS EASTERN
TRANSMISSION CORPORATION,
David J. Bradley, Clerk
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Plaintiff,
v.
7 ACRES OF LAND, MORE OR LESS,
LOCATED IN LAVACA COUNTY, TEXAS;
2.6 ACRES OF LAND, MORE OR LESS,
LOCATED IN COLORADO COUNTY,
TEXAS ; 10 . 5 ACRES OF LAND,
MORE OR LESS, LOCATED IN
WHARTON COUNTY, TEXAS;
WILLIAM R. JENKINS and WIFE
KAREN HANCOCK JENKINS;
ESSIE LYNN LESLIE, Individually
and as Trustee of the
ESSIE HANCOCK LESLIE FAMILY
TRUST; and W5 SISTERS
PROPERTIES, LTD.,
Defendants.
§
§
§
§
§
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CIVIL ACTION NO. H-16-2498
§
MEMORANDUM OPINION AND ORDER
Pending before the court are Texas Eastern Transmission, LP's
("Texas
Eastern")
Eastern's MSJ")
Motion
for
Partial
Summary Judgment
(Docket Entry No. 50) and Property Owners' Objec-
tions to Texas Eastern's Summary Judgment Evidence
No. 55).
be
("Texas
(Docket Entry
For the reasons stated below, Texas Eastern's Motion will
granted
in
part
and
denied
in
part
and
Property
Owners'
Objections will be sustained or overruled as explained below.
I.
This
Factual and Procedural Background
condemnation action arises
from
a
failed
attempt
to
negotiate the terms of renewal of certain Easement Agreements (the
"Agreements") . 1
Plaintiff Texas Eastern entered into Agreements
with predecessors in title William and Karen Jenkins, Essie Lynn
Leslie,
individually and as Trustee of the Essie Hancock Leslie
Family Trust, and W5 Sisters Properties, Ltd.
(collectively, "the
Property Owners") or their predecessors in title for the right to
operate a pipeline running through parcels of property in the Texas
counties
of
Lavaca,
Colorado,
and
Wharton.
The
Agreements
contained an initial thirty-year term set to expire on June 14,
2016.
Each of the Agreements provided the Grantee, Texas Eastern,
with a right to renew the agreement for an additional period of
thirty years "for a consideration. " 2
All but one of the Agreements
stated that consideration was "to be arrived at between the parties
[t]hereto at or prior to the expiration of said first period." 3
In
the event that the parties to the Agreements were "unable to agree"
upon consideration, the Grantee (Texas Eastern) reserved "the right
1
The Agreements are attached to Texas Eastern's MSJ
Exhibits A-4 through A-7 and are hereinafter referred
individually as Agreements 1 through 5 in the same order
attached.
as
to
as
2
See Agreements 1-5, Docket Entry No. 50-1, pp. 41, 45-46, 56,
65, & 71.
3
65,
&
See Agreements 1,
71.
3-5,
Docket Entry No.
-2-
50-1,
pp.
41,
56,
to have such consideration fixed through the exercise of the power
of eminent domain." 4
As
the end of
the
first
period approached,
Texas Eastern
notified the Property Owners of its intent to renew the Agreements
in letters dated May 27,
2016.
Texas Eastern and the Property
Owners were unable to come to an agreement as to consideration for
the renewal term.
On August 8,
2016,
Defendants filed suit in a Texas state
court seeking to eject Texas Eastern.
Texas Eastern responded by
filing this condemnation action and by removing the state court
action.
The court consolidated the actions.
Plaintiffs
then
counterclaimed for trespass.
Texas Eastern now seeks judgment as a matter of law that it
did not trespass, that Defendants are not entitled to declaratory
or injunctive relief,
and that Defendants are not entitled to
exemplary damages.
II.
A.
Analysis
Objections to Summary Judgment Evidence
The court first addresses the Property Owners' objections to
Texas Eastern's summary judgment evidence.
The Property Owners
object to the following statements from the Affidavit of Roger C.
Russell (Docket Entry No. 50-1):
4
661
See Agreements 1-5, Docket Entry No.
& 71.
-3-
50-1, pp. 41, 46,
56,
•
The Easement Agreements provide for a thirty (30) year
term ending June 14, 2016, with an absolute right for
Texas Eastern to renew the Easement Agreements for "an
additional period of thirty years upon the same terms and
conditions.
"
( ~ 13)
•
. When termed easements are requested by landowners,
Texas Eastern's custom and practice is to negotiate
absolute renewal rights because the
infrastructure
involved often has an expected in service life greater
than the proposed term.
Rights of renewal are important
to Texas Eastern and the continued operation of the
Pipeline System, and are an important part of the original
bargain where a term may be agreed upon. The language
included in the Easement Agreements is consistent with
Texas Eastern's custom and practice and was viewed by me
as an absolute right to renew so that Texas Eastern could
continue operations of its Pipeline System without any
"gap" in the possession of the Property for its Pipeline
operations thereon.
(~ 14)
•
From June 14, 2016 through August 18, 2016, Texas Eastern
continued to operate and maintain its Pipeline on the
Property, because Texas Eastern was under the honest and
good faith belief that it had continued legal rights to
the Property under colorable title to operate its Pipeline
pursuant to the Easement Agreements.
(~ 18) 5
The
Property Owners
object
impermissible legal conclusion.
to
the
first
statement
The court agrees.
as
an
To the extent
that the Agreements unambiguously reflect the parties' intent, it
is the court's role to construe and interpret those Agreements.
Mr.
Russell's statement also lacks the requisite
serve
as
Agreements
evidence
at
of
issue.
the
parties'
The
intent
Property
when
Owners'
foundation to
executing
the
objection
to
Mr. Russell's first statement is therefore SUSTAINED.
5
Affidavit of Roger C. Russell, Exhibit A to Texas Eastern's
MSJ, Docket Entry No. 50-1, pp. 4-5.
-4-
The Property Owners object
to
the
second statement as
an
attempt to gain an inference of the routine business practices of
Texas
Eastern without
object
that
" [t] o
proper
obtain a
foundation.
Rule
4 06
The
Property Owners
inference of
the
routine
practice of a business, a plaintiff must show a sufficient number
of specific instances of conduct to support that inference."
Mobil Exploration and Producing U.S.,
See
Inc. v. Cajun Construction
Services, Inc., 45 F.3d 96, 99 (5th Cir. 1995)
Owners' authority contradicts their objection.
But the Property
See id.
(reversing
and remanding upon concluding that the district court failed to
consider evidence of routine practice) .
Although the statement
alone cannot establish Texas Eastern's routine business practice,
the
statement
is
admissible
evidence.
The
Property
Owners'
objection to this evidence is OVERRULED.
Finally,
the Property Owners object to Russell's statement
regarding Texas Eastern's "honest and good faith belief" about its
legal rights on the basis that legal conclusions and conclusory
statements
are
inadmissible.
The
court
agrees.
trespasser's belief goes to the issue of damages.
v.
Aspenwood Apartment Corp.,
(" [0]
417
S. W. 3d 909,
An
alleged
Coinmach Corp.
921
(Tex.
2013)
ne who invades or trespasses upon the property rights of
another, while acting in the good faith and honest belief that he
had the lawful and legal right to do so is regarded as an innocent
trespasser and liable only for the actual damages sustained.").
-5-
Whether an alleged trespasser acted in good faith is a question for
the fact-finder.
219,
224
(Tex.
Brannon v. Gulf States Energy Corp., 562 S.W.2d
1977)
(" [0] ne can be completely mistaken in his
claim of superior title and yet be a trespasser in good faith. The
question is usually one of fact.")
(citations omitted).
Russell's
statement that Texas Eastern held an "honest and good faith belief
that
it
had
continued
legal
rights"
inadmissible legal conclusion.
therefore
amounts
to
an
The Property Owners' objection to
this statement is therefore SUSTAINED.
B.
Motion for Partial Summary Judgment
1.
Standard of Review
Summary judgment is appropriate if the movant establishes that
there is no genuine dispute about any material fact and the law
entitles it to judgment.
Fed. R. Civ. P. 56(c).
Summary judgment
may be granted not only as to an entire case but also as to a
particular claim, or part of a claim.
See Fed. R. Civ. P. 56(a);
see also 2010 Notes of Advisory Committee to FRCP 56 at ~ 3.
standard
of
review
for
a
district
judgment is reviewed de novo.
court's
ruling
on
The
summary
Abbott v. Equity Group, Inc., 2 F.3d
613 (5th Cir. 1993).
Disputes about material facts are genuine "if the evidence is
such
that
a
reasonable
jury
could
return
a
Liberty Lobby,
verdict
the
106 S.
Ct.
nonmoving party."
Anderson v.
2505, 2510 (1986).
The moving party is entitled to judgment as a
-6-
Inc.,
for
matter
of
law
if
"the
nonmoving
party
has
failed
to
make
a
sufficient showing on an essential element of her case with respect
to which she has the burden of proof."
Celotex Corp. v. Catrett,
106 S. Ct. 2548, 2552 (1986).
A party moving for summary judgment "must
'demonstrate the
absence of a genuine issue of material fact,' but need not negate
the elements of the nonmovant' s case."
37 F.3d 1069, 1075 (5th Cir. 1994)
Celotex, 106 S. Ct. at 2553).
Little v. Liquid Air Corp.,
(en bane)
(per curiam)
(quoting
"If the moving party fails to meet
this initial burden, the motion must be denied, regardless of the
nonmovant's response."
this burden,
Id.
If, however, the moving party meets
"the nonmovant must go beyond the pleadings"
and
produce evidence that specific facts exist over which there is a
genuine
2553-54)
issue
for
trial.
Id.
(citing Celotex,
106 S.
Ct.
at
"In order to avoid summary judgment, the nonmovant must
identify specific facts within the record that demonstrate the
existence of a genuine issue of material fact."
CQ,
Inc. v. TXU
Mining Co., L.P., 565 F.3d 268, 273 (5th Cir. 2009).
In reviewing the evidence "the court must draw all reasonable
inferences in favor of the nonmoving party,
credibility determinations
Sanderson Plumbing Products,
or weigh the
and it may not make
evidence."
Reeves
Inc., 120 S. Ct. 2097, 2110
v.
(2000).
The court resolves factual controversies in favor of the nonmovant,
"but only when there is an actual controversy, that is, when both
-7-
parties have submitted evidence of contradictory facts."
Little,
37 F.3d at 1075.
2.
Application
a.
Trespass
The Texas Supreme Court uhas consistently defined a trespass
as encompassing three elements:
(1) entry (2) onto the property of
another (3) without the property owner's consent or authorization.
Environmental Processing Systems,
L.C.
v.
FPL Farming Ltd.,
S.W.3d 414, 419 (Tex.), reh'g denied (May 1, 2015).
authorization
to
enter
The parties do
Defendants argue that Texas
not dispute the first two elements.
Eastern's
457
the
property
terminated
June 14, 2016, along with the expiration of the Agreements. 6
on
But
Texas Eastern maintains that it exercised its uabsolute right" to
renew the Agreements. 7
Because
the Agreements
are
the
source of
Texas
Eastern's
authorization to enter the property, the trespass claim turns on
whether Texas Eastern successfully renewed the Agreements.
In
order to determine the rights of the parties under the Agreements,
the court must attempt to interpret them.
Under Texas law, whether a contract is ambiguous is a
question of law for the court subject to de novo review.
Texas Commerce Bank N.A. v. National Royalty Corp., 799
F.2d 1081, 1083 (5th Cir. 1986). If a contract is found
6
See
Defendants'
Original
Answer
and
Counterclaim
("Defendants' Counterclaim"), Docket Entry No. 31, p. 9 ,, 39-40.
7
Texas Eastern's MSJ, Docket Entry No. 50, p. 9.
-8-
to be unambiguous, its interpretation is a part of the
court's law obligation. Chapman & Cole v. Itel Container
Int'l B.V., 865 F.2d 676, 681 (5th Cir.), cert. denied,
4 9 3 u. s . 8 7 2 110 s . Ct . 2 01, 10 7 L. Ed. 2 d 15 5 ( 19 8 9) . A
Texas court will deem a contract unambiguous when it is
reasonably open to just one interpretation given the
rules
of
interpretation
and
the
surrounding
circumstances.
Technical Consultant Servs. , Inc. v.
Lakewood Pipe of Texas, Inc., 861 F.2d 1357, 1362 (5th
Cir. 1988).
I
Hanssen v. Qantas Airways Ltd., 904 F.2d 267, 269 (5th Cir. 1990).
In
a
contract
interpretation
dispute,
summary
judgment
appropriate where the language of the contract is unambiguous.
is
See
Texas Eastern argues that
[t]here is no genuine dispute as to any material fact
that (1) with a valid Certificate authorizing Texas
Eastern to operate and maintain the Pipeline, Texas
Eastern is authorized by the Natural Gas Act to condemn
the easements needed for the Pipeline; and ( 2) the
Easement Agreements grant Texas Eastern the absolute
right to renew for a period of an additional thirty
years.
Texas Eastern's MSJ, Docket Entry
No.
50, p. 12.
The Property
Owners do not contest Texas Eastern's right to exercise the power
of eminent domain under the Natural Gas Act, 15 U.S.C.
§
717f(h) . 8
But the Property Owners contend that Texas Eastern failed to renew
the Agreements.
Because the parties do not dispute that Texas
Eastern expressed an intent to renew the Agreements, the deciding
issue is whether reaching agreement on consideration before the
See Defendants' Counterclaim, Docket Entry No. 31, p. 7 ~ 29
("Defendants admit that Plaintiff is authorized to exercise the
power of eminent domain to condemn the Property").
8
-9-
expiration
of
the
initial
term
was
a
condition
precedent
to
renewal.
The Property Owners point to the language in the agreement
stating that:
additional
period
conditions,
parties
"'Grantee shall have the right to renew same for an
for
hereto
period.'" 9
a
at
of
thirty
years
consideration
to
or
the
prior
to
upon
be
the
arrived
expiration
same
at
of
terms
and
between
the
said
first
They assert that "Texas Eastern's option to renew was
clearly conditioned upon an agreement being reached on or before
June 14, 2016, regarding consideration for renewal." 10
Texas Eastern counters that the Property Owners ignore the
facts that:
( 1) not all of the easement agreements at issue even
contain the quoted language; (2) none of the agreements
conditions
the
renewal
itself
on the
successful
completion of negotiations for compensation "at or prior
to the expiration" of the agreements; and (3) all of the
agreements grant Texas Eastern the right to have the
consideration fixed via eminent domain without any time
limitation for achieving same in event that the parties
cannot reach voluntary agreement prior to the expiration
of the agreements' terms.
Texas Eastern Transmission,
Partial Summary Judgment
LP's Reply in Support of Motion for
("Texas Eastern's Reply"), Docket Entry
No. 57, p. 6.
9
Defendant Property Owners' Response to Texas Eastern's Motion
for Partial Summary Judgment ("Property Owners' Response"), Docket
Entry No. 54, pp. 9-10 ~ 18.
10
Id.
at 10.
-10-
Texas Eastern correctly points out that one out of the five
Agreements does not contain the language that consideration is "to
be
arrived at
expiration
of
between
said
the
first
parties
hereto
period. " 11
This
at
or prior
distinct
to
the
Agreement,
attached to Texas Eastern's Motion for Partial Summary Judgment as
Exhibit A-5, only states that Grantee shall have the right to renew
"for a consideration. " 12
Summary judgment as to the trespass claim
will be granted with respect to that Agreement.
The
remaining
interpretation
that
Agreements
are
renewal
conditioned
is
open
to
the
on
reasonable
either
(1)
the
agreement of consideration or (2) the election of eminent domain as
a
means
for
fixing
consideration prior
Eastern argues that the Property Owners'
to
expiration.
Texas
interpretation leads to
the "absurd" result that Texas Eastern would be required to "start
the renewal process in time for an eminent domain proceeding to be
commenced,
if
necessary,
and
finally
expiration of the easement terms. " 13
completed
prior
to
the
This does not necessarily
follow from the Property Owners' interpretation.
A jury could find
that Texas Eastern need only elect, before the expiration of the
first term, to have consideration fixed by exercising the power of
eminent domain.
11
Texas Eastern's Reply, Docket Entry No. 57, p. 6.
12
See Agreement 2, Docket Entry No. 50-1, pp. 45-46.
13
Texas Eastern's Reply, Docket Entry No. 57, pp. 6-7.
-11-
Moreover,
absurd
Texas Eastern's
result.
Texas
interpretation leads
Eastern
argues
that
to its own
the
language
"establish[es] only a period, prior to expiration, for the parties
to negotiate for the renewal consideration. " 14
Assuming arguendo
that its interpretation is correct, once Texas Eastern elected to
renew, its rights could continue indefinitely regardless of when or
whether consideration was
fixed.
If
the
time constraints
for
agreeing to consideration merely establish a negotiation period,
the Property Owners could be left without consideration or recourse
because only the Grantee is given the right to exercise the power
of eminent domain.
Because the renewal language is susceptible to two reasonable
interpretations,
it
is
ambiguous;
and summary
judgment
is
not
appropriate because there is a genuine issue of material fact as to
whether
Texas
Eastern
successfully
renewed
the
Agreements
and
whether, as a result, it had authorization to continue to operate
the pipeline on the property.
b.
Declaratory and Injunctive Relief
Texas Eastern argues that the Property Owners are not entitled
to declaratory or injunctive relief as
a
matter of
law.
The
Property Owners do not respond to these arguments, but the court
does not find it appropriate to take up the issue of remedies at
this stage of the proceedings.
14
Id. at 7.
-12-
c.
Actual Damages
The Property Owners seek damages "from Texas Eastern for all
revenues and/or profits received as a result of Texas Eastern's bad
faith
use
trespass. 15
of
the
pipeline"
during
the
period
of
the
alleged
Texas Eastern seeks judgment as a matter of law that
the Property Owners are not entitled to "disgorgement" relief.
The
Property Owners
can
argue
that
" [a] ctual
damages
for
trespass
include the loss of any expected profits from the unauthorized use
of the property," citing Coinmach,
417 S.W.3d at 921. 16
But as
Texas Eastern points out, the actual damages in that case were for
the owner's loss of expected profits.
"[T]he measure of damages in
a trespass case is the sum necessary to make the victim whole, no
more,
no less."
Coinmach,
417 S.W.3d at
921
(citing Meridien
Hotels, Inc. v. LHO Financing P'ship I, L.P., 255 S.W.3d 807, 821
(Tex. App.-Dallas 2008,
no pet.).
The Property Owners offer no
authority, and the court can find none,
for the proposition that
they are entitled to disgorgement relief.
d.
Exemplary Damages
Texas Eastern argues that the Property Owners are not entitled
to exemplary damages as a matter of law.
The court agrees.
Texas
law limits exemplary damages to cases in which "the harm
15
Defendants' Counterclaim, Docket Entry No. 31, pp. 10-11
16
~
44.
Property Owners' Response to Texas Eastern Transmission's
Motion for Protective Order and Property Owners' Cross-Motion to
Compel, Docket Entry No. 56, p. 9 ~ 24.
-13-
results from:
Tex.
Ci v.
( 1)
Prac .
fraud;
Rem.
&
( 2) malice; or
Code
§
( 3)
41 . 0 0 3 (a) .
gross negligence."
The Property Owners
failed to plead any basis for exemplary damages and only raise the
issue of malice in their Response.
The Property Owners offer only
a conclusory assertion that Texas Eastern acted with malice and
argue
that
Texas
Eastern
was
aware
of
the
Property
contentions during the time of the alleged trespass.
Property Owners'
own cited authority states:
definition of malice raised the
Owners'
But as the
"'The
standard of proof
statutory
required to
attain exemplary damages; the statutory definition requires proof
of the defendant's specific intent 'to cause substantial injury to
the claimant.'"
Wilen v. Falkenstein, 191 S.W.3d 791, 800
App.-Fort Worth 2006, pet. denied).
fails
to
raise
a
genuine
issue
(Tex.
The Property Owners' evidence
of material
fact
as
to
Texas
Eastern's specific intent to cause them substantial injury.
e.
Attorney's Fees
Texas Eastern also argues that the Property Owners are not
entitled to attorney's fees.
"For more than a century, Texas law
has not allowed recovery of attorney's fees unless authorized by
statute or contract."
Tony Gullo Motors
S.W.3d 299, 310 (Tex. 2006).
claims
Civ.
for
Prac.
which
& Rem.
fees
are
L.P.
v.
Chapa,
212
Texas statutorily limits recovery of
attorney's fees to specified actions,
See Tex.
I,
Code
§
none of which apply here.
38.001
recoverable) .
-14-
(listing the types of
The
Property Owners
provide no contractual or statutory basis
attorney's fees
in this action,
Texas Eastern's arguments.
for
the awarding of
and they offer no response to
The court finds that, as a matter of
law, attorney's fees are not appropriate in this case.
III.
Conclusions and Order
For the reasons stated above, Property Owners' Objections to
Texas Eastern's Summary Judgment Evidence (Docket Entry No. 55) are
SUSTAINED
Motion
GRANTED
IN
for
Partial
IN PART
Agreement
and OVERRULED IN PART.
PART
2
Summary Judgment
Texas Eastern,
(Docket
Entry No.
LP's
5o)
is
regarding the trespass claim as it pertains to
(Docket
Entry
No.
50-1,
pp.
45-54)
and
as
to
Defendants' claims for disgorgement relief, exemplary damages, and
attorney's fees.
The remainder of Texas Eastern's MSJ is DENIED.
SIGNED at Houston, Texas, on this 22nd day of November,
2016.
UNITED STATES DISTRICT JUDGE
-15-
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