Cotton v. Texas Express Pipeline, LLC. et al

Filing 30

ORDER ADOPTING IN PART AND NOT ADOPTING IN PART REPORT AND RECOMMENDATIONS Re 25 Report and Recommendations, DENYING 21 Motion for Leave to File Document filed by Anthony Cotton, DENYING 23 Motion to Amend Complaint filed by Anthony Cotto n, GRANTING IN PART AND DENYING INPART 13 Motion to Dismiss, filed by Texas Express Pipeline, LLC., DCP Midstream Texas Express, LLC, Enterprise Products Operating, LLC., Enterprise Products Partners, LP, WGR Asset Holding Company, En bridge Midcoast Energy, LP. For the reasons stated above, IT IS ORDERED that Magistrate Judge Manskes report and recommendation, (Dkt. 25), is ADOPTED IN PART AND NOT ADOPTED IN PART. Specifically, the Court ADOPTS the report and recommendations fi ndings of fact and conclusions of law with respect to every cause of action in Cottons complaint except for his breach of contract claim. However, the Court REJECTS the magistrate judges analysis andrecommendation concerning the breach of contract c laim. Defendants Motion to Dismiss, (Dkt. 13), is GRANTED IN PART AND DENIED IN PART. Specifically, the Court GRANTS Defendants motion with respect to all of Cottons causes of action other than his breach of contract claim; those claims are DISMI SSED. However, the Court DENIES Defendants motion with respect to Cottons breach of contract claim. Finally, the Court DENIES Cottons Motions to Amend, (Dkts. 21, 23), without prejudice to filing a motion to amend pertaining only to Cottons remaining breach of contract claim. Signed by Judge Robert Pitman. (jgb)

IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF TEXAS
WACO DIVISION
ANTHONY COTTON,
Plaintiff,
v.
TEXAS EXPRESS PIPELINE, LLC, et al.,
Defendants.

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6:16-CV-453-RP-JCM

ORDER
Before the Court is the report and recommendation of United States Magistrate Judge
Jeffrey C. Manske, (Dkt. 25), concerning the Motion to Dismiss filed by Defendants Texas Express
Pipeline LLC, Enterprise Products Operating LLC, WGR Asset Holding Company, Enbridge
Midcoast Energy, LP, DCP Midstream Texas Express LLC, and Enterprise Products Partners
(together, “Defendants”), (Dkt. 13); and the Motions for Leave to File an Amended Complaint filed
by Plaintiff Anthony Cotton (“Cotton”), (Dkts. 21, 23). Also before the Court are Cotton’s timely
filed objections. (Dkt. 27).
This case was referred to Magistrate Judge Manske for a report and recommendation on the
merits pursuant to 28 U.S.C. § 636(b), Rule 72 of the Federal Rules of Civil Procedure, and Rule 1(d)
of Appendix C of the Local Rules of the United States District Court for the Western District of
Texas.
In his report and recommendation, Magistrate Judge Manske recommends that Defendants’
motion be granted and that Cotton’s motions be denied. (R. & R., Dkt. 25, at 28). Having
considered the parties’ submissions, the record, and the applicable law, the Court will adopt the
report and recommendation in part and reject it in part.
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I. BACKGROUND
This case concerns the terms of a pipeline easement. (Am. Compl., Dkt. 9, at 2–3). Through
a quitclaim deed, Cotton acquired a parcel of land subject to an easement owned by Defendants. (Id.
at 3). Cotton argues that the easement contract provides that “no radioactive products or materials
are to be transported through the pipeline” and that Defendants have breached that provision by
conveying a number of radioactive materials—including radon gas, polonium-210, and lead-210—
through the pipeline. (Id. at 2–3). Defendants argue that their express contractual right to transport
“natural gas” and “gas liquids” entails a cabined construction of the “radioactive materials” clause.
(Mot. Dismiss, Dkt. 13, at 3). They filed a motion to dismiss under Federal Rule of Civil Procedure
12(b)(6), in which they each argue that none of Cotton’s many causes of action state a claim for
relief. (Id. at 12). Magistrate Judge Manske agreed and recommended that the Court dismiss Cotton’s
complaint in its entirety. (R. & R., Dkt. 25, at 28). Cotton then timely filed objections to every part
of the report and recommendation. (Obj., Dkt. 7).
II. LEGAL STANDARDS
A. Federal Magistrates Act
Under federal statute and the Federal Rules of Civil Procedure, magistrate judges may make
findings and recommendations on dispositive motions. 28 U.S.C. § 636(b)(1)(B); Fed. R. Civ. P.
72(b)(1). Motions to dismiss under Federal Rule of Civil Procedure 12(b)(6) are dispositive motions
under the Federal Magistrates Act. Davidson v. Georgia-Pac., L.L.C., 819 F.3d 758, 763 (5th Cir. 2016)
(citing 28 U.S.C. § 636(b)(1)(A)). For dispositive motions, parties are entitled to de novo review of any
part of the magistrate judge’s disposition that has been properly objected to. Fed. R. Civ. P. 72(b)(3).
B. Federal Rule of Civil Procedure 12(b)(6)
Pursuant to Rule 12(b)(6), a court may dismiss a complaint for “failure to state a claim upon
which relief can be granted.” Fed. R. Civ. P. 12(b)(6). In deciding a motion to dismiss, the Court
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“accepts all well-pleaded facts as true, viewing them in the light most favorable to the plaintiff.” In re
Katrina Canal Breaches Litig., 495 F.3d 191, 205 (5th Cir. 2007) (citation and internal quotation marks
omitted). “To survive a Rule 12(b)(6) motion to dismiss, a complaint ‘does not need detailed factual
allegations,’ but must provide the [plaintiff’s] grounds for entitlement to relief—including factual
allegations that when assumed to be true ‘raise a right to relief above the speculative level.’” Cuvillier
v. Taylor, 503 F.3d 397, 401 (5th Cir. 2007) (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)).
That is, “a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to
relief that is plausible on its face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Twombly, 550
U.S. at 570); see also In re Katrina Canal Breaches Litig., 495 F.3d at 205 (“Factual allegations must be
enough to raise a right to relief above the speculative level, on the assumption that all the allegations
in the complaint are true (even if doubtful in fact).”) (citation and internal quotation marks omitted).
However, “[t]he tenet that a court must accept as true all of the allegations contained in a complaint
is inapplicable to legal conclusions. Threadbare recitals of the elements of a cause of action,
supported by mere conclusory statements, do not suffice.” Iqbal, 556 U.S. at 678. “[A] motion to
dismiss under 12(b)(6) ‘is viewed with disfavor and is rarely granted.’” Turner v. Pleasant, 663 F.3d
770, 775 (5th Cir. 2011) (quoting Harrington v. State Farm Fire & Cas. Co., 563 F.3d 141, 147 (5th Cir.
2009)).
III. DISCUSSION
Because Cotton timely objected to every part of the magistrate judge’s report and
recommendation, he is entitled to de novo review of the entire report and recommendation. Having
conducted a de novo review of the record and applicable law, the Court agrees with the magistrate
judge’s factual findings and legal conclusions in most of the report and recommendation and adopts
the report and recommendation with the exception of the analysis and recommendation pertaining
to Cotton’s breach of contract claim. (R. & R., Dkt. 25, at 13–16). Because the Court reaches a
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different conclusion with respect to Cotton’s breach of contract claim, it declines to adopt that
portion of the report and recommendation.
At the heart of the magistrate judge’s analysis of Cotton’s breach of contract claim are two
premises. The first premise is that Cotton’s construction of the contract would “completely
eliminate” Defendants’ contractual right to convey natural gas and gas liquids through the pipeline.
(Id. at 16). Finding that premise to be unreasonable, the magistrate judge recommended interpreting
the “radioactive products” clause to include only “ultra-hazardous products like uranium.” (Id.). The
second premise is that Cotton has failed to plead that Defendants are conveying such ultrahazardous products through the pipeline. (Id. at 17). On the basis of that premise, the magistrate
judge concluded Cotton failed to plausibly allege that Defendants have breached their contract and
therefore failed to state a claim for which relief may be granted. (Id.). The Court declines to adopt
the magistrate’s analysis or conclusion because it cannot adopt either premise at this stage in the
litigation.
With respect to the first premise, there is no evidence before the Court at this early stage to
support the conclusion that all natural gas or gas liquids contain radioactive elements. Indeed,
Defendants dispute the premise that “all natural gas liquids contain radioactive products.” (Mot.
Dismiss, Dkt. 13, at 3). In Cotton’s objection, he disputes the premise that all natural gas liquids are
radioactive. (Obj., Dkt. 27, at 3). Rather than alleging that all natural gas or gas liquids would run
afoul of the “radioactive products” clause, Cotton’s complaint alleges only that certain natural gas
liquids being conveyed through the pipeline—“such as propane, ethane, and propylene”—contain
radioactive elements or isotopes. (Am. Compl., Dkt. 9, at 3). The truth of that allegation must be
assumed at this stage and the dispute concerning that allegation must be resolved after the parties
have had an opportunity to conduct discovery and marshal evidence to support their positions.

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The second premise is improper on the same grounds. Cotton alleges that Defendants are
conveying (among other things) radon gas and polonium-210 through the pipeline. (Am. Compl.,
Dkt. 9, at 3). Even if the “radioactive products” clause, properly interpreted, were to include only
“ultra-hazardous products,” there is no evidence before the Court at this stage about how hazardous
(or not) these elements and isotopes are. Viewing Cotton’s allegations in the light most favorable to
him and assuming them to be true, the Court finds that he has plausibly alleged that Defendants
have breached a clause of their easement contract. The truth of Cotton’s allegations with respect to
this claim can be tested at a later stage in this litigation.
Finally, the Court agrees with the magistrate judge’s recommendation that Cotton’s motions
to amend his complaint be denied on the grounds of futility, (R. & R., Dkt. 25, at 26), because the
Court agrees that Cotton’s proposed amended complaints demonstrate that it would be futile for
him to amend his pleading with respect to any cause of action other than breach of contract.
However, because Federal Rule of Civil Procedure 15(a) states that a court “should freely give leave
when justice so requires,” the Court will consider a motion from Cotton to amend his complaint
pertaining only to his breach of contract claim. Fed. R. Civ. P. 15 (a)(2); see also Stripling v. Jordan Prod.
Co., LLC, 234 F.3d 863, 872 (5th Cir. 2000) (stating that Rule 15 “evinces a bias in favor of granting
leave to amend” such that a district court’s discretion to deny a motion to amend “is not broad
enough to permit denial” unless there is a “substantial reason” to deny leave to amend) (citation and
quotation marks omitted).
IV. CONCLUSION
For the reasons stated above, IT IS ORDERED that Magistrate Judge Manske’s report and
recommendation, (Dkt. 25), is ADOPTED IN PART AND NOT ADOPTED IN PART.
Specifically, the Court ADOPTS the report and recommendation’s findings of fact and
conclusions of law with respect to every cause of action in Cotton’s complaint except for his breach
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of contract claim. However, the Court REJECTS the magistrate judge’s analysis and
recommendation concerning the breach of contract claim.
Defendants’ Motion to Dismiss, (Dkt. 13), is GRANTED IN PART AND DENIED IN
PART. Specifically, the Court GRANTS Defendants’ motion with respect to all of Cotton’s causes
of action other than his breach of contract claim; those claims are DISMISSED. However, the
Court DENIES Defendants’ motion with respect to Cotton’s breach of contract claim.
Finally, the Court DENIES Cotton’s Motions to Amend, (Dkts. 21, 23), without prejudice
to filing a motion to amend pertaining only to Cotton’s remaining breach of contract claim.
SIGNED on March 22, 2018.
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ROBERT PITMAN
UNITED STATES DISTRICT JUDGE

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