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Chevron U.S.A., Inc. v. Atmos Pipeline and Storage, LLC

United States District Court, W.D. Louisiana, Lafayette Division

June 11, 2019

CHEVRON U.S.A., INC.
v.
ATMOS PIPELINE AND STORAGE, LLC

          KAREN L. HAYES, JUDGE

          RULING

          TERRY A. DOUGHTY, UNITED STATES DISTRICT JUDGE

         This action was brought by Plaintiff Chevron U.S.A., Inc. (“Chevron”) against Defendant Atmos Pipeline and Storage, LLC (“Atmos”) regarding the conveyance of certain property from Chevron to Atmos. The Court previously granted in part and denied in part cross motions for summary judgment. Now Atmos has filed a Motion for Default Judgment against Third Party Defendant Salt Fault, L.L.C. (“Salt Fault”) [Doc. No. 42].

         For the following reasons, the Motion for Default Judgment is GRANTED IN PART and DENIED IN PART.

         I. FACTS AND PROCEDURAL HISTORY

         In 2002, Chevron became the owner of two tracts of land located on the Anse La Butte Salt Dome, which overlie a hydrocarbon storage cavern (“the Cavern”), and contain a storage well named the Chevron-Propane Storage Well No. 1 and bearing serial number 971205 (“the Well”). The Well was formerly used to inject propane into the Cavern. In August 2004, Chevron plugged and abandoned the Well.

         Approximately one year later, by Special Warranty Deed dated effective August 1, 2005, Chevron conveyed to Atmos the two tracts, totaling approximately 10.77 acres of “land and property, together with all the buildings, facilities, fixtures, equipment, improvements and appurtenances thereunto belonging or in any wise appertaining and not reserved herein to Grantor” located in Section 117, Township 9 South, Range 5 East in St. Martin Parish (“the Property”).

         Under the deed to Atmos, Chevron made “no representations or warranties concerning the present condition of the Property, including without limitation, the current fitness or suitability of the subterranean cavern or void which underlays the Property and of which in the past has been used for the subsurface storage of hydrocarbons.” [Doc. No. 10-3');">3, p. 2]. Chevron further “advised” Atmos “that the Property may have been used for the exploration, production and/or transportation of oil, gas or other minerals.” Id.

         Atmos, as grantee, likewise certified “that said Property has been carefully inspected and that Grantee is familiar with its condition, and the improvements . . . located on the Property, inclusive of any . . . hydrocarbons . . .” [Doc. No. 10-3');">3, p. 2]. Atmos “expressly assume[ed] all risks and liabilities associated therewith” and acknowledged

that the Property has been or may have been used in connection with the support of oil, gas and other mineral exploration, development and operations . . . and, as such, equipment, appurtenances, processing and other facilities, plants, buildings, structures, improvements, abandoned and other tanks and piping (including above ground and underground tanks and piping), storage facilities, gathering and distribution lines, wells and other petroleum production facilities and other appurtenances which have not been excepted and excluded from this conveyance may be located thereon.

[Doc. No. 10-3');">3, p. 2 (emphasis added)].

         Exhibit A to the Special Warranty Deed reserves from the sale only the following expressly described property:

LESS AND EXCEPT and reserving unto Grantor any and all unplatted or unrecorded pipelines which may traverse across the above described land and of which are currently in service or that may be used to transport oil, gas, saltwater or refined products from points originating and ending off of the above described premises; provided, however, it is the intention of Grantor herein to convey to Grantee any and all pipelines on the above described land which may have been previously used in connection with the operation of the now plugged and abandoned Chevron-Propane Storage Well No. 1.

[Doc. No. 10-3');">3, Exhibit A to Special Warranty Deed (emphasis added)].

         As part of their agreement, the Grantee, Atmos, agreed to

fully defend, protect, indemnify, hold harmless, and render whole Grantor from and against every claim, demand or cause of action, and any liability, cost, expense (including, but not limited to, reasonable attorneys&#3');">39; fees), damage or loss in connection therewith, which may be made or asserted by . . . any third party or parties (including, but not limited to, governmental agencies) with respect to the Property, including without limitation, . . . or any claims . . . caused by, or arising out of, or incidental to the past, present or future condition or state of repair of the Property, or any claims resulting from or attributable to the ownership and use thereof, or this conveyance of the Property, howsoever occurring, including without limitation, whether such claims, injuries, damages, losses and liabilities, with or without fault, were caused by Grantee&#3');">39;s sole negligence or contributory negligence, Grantor&#3');">39;s contributory negligence, or imposed on said parties or others under any theory of strict liability by operation of law, or any other theory law prior to, at the time of, or subsequent to effective date hereof.

[Doc. No. 10-3');">3, p. 3');">3].

         “Without limiting the generality” of the first indemnification clause, Atmos ...


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