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Florida Gas Transmission Co., LLC v. Texas Brine Co., LLC

Court of Appeals of Louisiana, First Circuit

July 1, 2019

FLORIDA GAS TRANSMISSION COMPANY, LLC
v.
TEXAS BRINE COMPANY, LLC, ET AL. POTCHARTRAIN NATURAL GAS SYSTEM, K/D/S PROMIX, L.L.C., AND ACADIAN GAS PIPELINE SYSTEM
v.
TEXAS BRINE COMPANY, LLCC ROSSTEX ENERGY SERVICES, LP; CROSSTEX LIG, LLC; AND CROSSTEX PROCESSING SERVICES, LLC
v.
TEXAS BRINE COMPANY, LLC; ZURICH AMERICAN INSURANCE COMPANY; AND AMERICAN GUARANTEE AND LIABILITY INSURANCE COMPANY

          On Appeal from The 23 rd Judicial District Court, Parish of Assumption, State of Louisiana Trial Court Nos. 34, 316, 34, 265, and 34, 202 The Honorable Thomas J. Kliebert Jr., Judge Presiding

          Martin A. Stern Leigh Ann Schell Raymond P. Ward Sara Valentine New Orleans, Louisiana Brad D. Brian (Pro Hac Vice) Bethany W. Kristovich (Pro Hac Vice) Los Angeles, California Frank L. Maraist Baton Rouge, Louisiana Attorneys for Appellant/Third-Party Defendant, Occidental Chemical Corporation

          Leopold Z. Sher James M. Garner Peter L. Hilbert Jr. Jeffrey D. Kessler New Orleans, Louisiana Robert Ryland Percy III Gonzales, Louisiana Eric J. Mayer Houston, Texas Travis J. Turner Gonzales, Louisiana Attorneys for Defendant/Appellee, Texas Brine Company, LLC

          BEFORE: McDONALD, HIGGINBOTHAM, AND CRAIN, JJ.

          CRAIN, J.

         In these consolidated appeals, Occidental Chemical Corporation appeals summary judgments declaring a lease terminated by confusion. We vacate the summary judgments and remand.

         FACTS AND PROCEDURAL HISTORY

         This litigation arises out of a sinkhole that developed from the collapse of a salt mine cavern in Assumption Parish on or about August 3, 2012. The present matter involves claims between Texas Brine Company, LLC, which operated the brine production well, and Occidental, the owner of the land where the sinkhole occurred. The relationship between these parties dates back to 1975 when Occidental's predecessor-in-interest, "Hooker Chemicals and Plastics Corp.," leased to Texas Brine the right to produce salt from the subject property. In 1976, Texas Brine assigned or sub-leased-the precise nature of the transaction is disputed-the salt lease to Vulcan Materials Company, but Texas Brine remained operator of the brine well and related facilities pursuant to an operating agreement with Vulcan. The parties amended and restated the operating agreement in its entirety on January 1, 2000.

         Through a series of transactions culminating in 2008, Occidental acquired Vulcan's interest in the salt lease and the amended operating agreement. As a result of those transactions, Texas Brine and Occidental were parties to the salt lease and the amended operating agreement when the sinkhole occurred. Notably, the amended operating agreement contains an arbitration clause whereby the parties agreed, "Any dispute, controversy or claim arising out of or relating to this Agreement or the breach, validity or termination thereof shall be finally settled by arbitration."

         The sinkhole spawned numerous suits, three by companies owning or operating pipelines damaged by the sinkhole, including (1) Florida Gas Transmission Company, LLC (2) Pontchartrain Natural Gas System, K/D/S Promix, L.L.C. and Acadian Gas Pipeline (collectively, "Pontchartrain"), and (3) Crosstex Energy Services, LP.[1] The claims asserted in these pipeline suits include incidental demands between Texas Brine and Occidental based in tort and contract.

         On August 1, 2013, at Texas Brine's request, an arbitration proceeding was initiated to resolve the claims between Texas Brine and Occidental. In conjunction with that proceeding, the trial court stayed all "contractual, non-tort claims" between Occidental and Texas Brine in the pipeline suits "until such time as the arbitration has ended." One issue submitted to arbitration was whether the salt lease terminated by confusion in 2008, when Occidental allegedly became both the lessor and lessee under the lease.

         In June, 2017, with the arbitration proceeding still pending, Texas Brine filed motions for partial summary judgment in each of the pipeline suits, asserting the salt lease terminated by confusion for the same reasons urged in arbitration. To avoid further arbitration, Texas Brine argued Occidental presented the salt lease claims to the trial court for adjudication by filing an amended incidental demand against Texas Brine purportedly asserting claims based on the salt lease. Occidental opposed the summary judgment motions, arguing the parties submitted the confusion claim to the arbitration panel and were "awaiting a decision any day now," and Texas Brine's motions violated the trial court's stay order. The trial court granted the motions, then signed judgments in favor of Texas Brine and against Occidental, decreeing the salt lease "terminated as a matter of law as of March 27, 2008," and dismissing with prejudice any actions based on the salt lease arising thereafter. Occidental appeals.[2]

         DISCUSSION

         Because the relevant facts are not in dispute, this appeal presents questions of law subject to de novo review. See FIA Card Services, N.A. v. Weaver, 10-1372 (La. 3/15/11), 62 So.3d 709, 712; Arkel Constructors, Inc. v. Duplantier & Meric, Architects, L.L.C., 06-1950 (La.App. 1 Cir. 7/25/07), 965 So.2d 455, 461.

         Arbitration is a matter of contract. AT&T Mobility LLC v. Concepcion,563 U.S. 333, 339, 131 S.Ct. 1740, 1745, 179 L.Ed.2d 742 (2011). Therefore, we begin our analysis with the language of the amended ...


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