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Pontchartrain Natural Gas System v. Texas Brine Co. LLC

Court of Appeals of Louisiana, First Circuit

July 3, 2019

PONTCHARTRAIN NATURAL GAS SYSTEM, K/D/S PROMIX, L.L.C., AND ACADIAN GAS PIPELINE SYSTEM
v.
TEXAS BRINE COMPANY, LLC

          On Appeal from the 23rd Judicial District Court In and for the Parish of Assumption State of Louisiana Trial Court No. 34, 265, Honorable Thomas J. Kliebert, Jr., Judge Presiding

          Leopold Z. Sher James M. Garner Peter L. Hilbert, Jr. Jeffrey D. Kessler New Orleans, LA, Attorneys for Appellant/Defendant, Third -Party Plaintiff, Texas Brine Company, LLC.

          Travis J. Turner Gonzales, LA Robert Ryland Percy, III Gonzales, LA Eric J. Mayer Houston, TX, Matthew J. Randazzo, III, Christopher B. Bailey, Will Montz Lafayette, LA, Attorneys for Appellee/Third-Party Defendant, Browning Oil Company, Inc.

          BEFORE: GUIDRY, HIGGINBOTHAM, AND THERIOT, JJ.

          HIGGINBOTHAM, J.

         This is an appeal from a district court judgment dismissing a third-party defendant on a motion for involuntary dismissal during a bench trial.

         FACTS AND PROCEDURAL HISTORY

         The pertinent background in this complex litigation has been repeated multiple times in several appeals. This particular appeal relates to the Phase 1 liability trial in one of the numerous lawsuits surrounding the August 3, 2012 Bayou Corne sinkhole that developed near the Napoleonville Salt Dome in Assumption Parish.[1] The plaintiffs, Pontchartrain Natural Gas System, K/D/S Promix, L.L.C., and Acadian Gas Pipeline (collectively "Pontchartrain"), own and operate natural gas pipelines and storage facilities in the vicinity of the property affected by the sinkhole. After the sinkhole emerged, Pontchartrain and other pipeline companies, Florida Gas Transmission Company, LLC ("Florida Gas"), and Crosstex Energy Services ("Crosstex"), brought separate lawsuits against Texas Brine. In each of the main demands, the pipeline companies sought recovery for damages to their respective inoperable pipelines due to the alleged negligence of Texas Brine Company, LLC's ("Texas Brine") operation of a brine production well known as the Oxy Geismer #3 Well ("OG3").

         Texas Brine responded to each lawsuit by filing identical incidental demands asserting tort and contract claims against various parties, including Browning Oil Company, Inc., which was one of the operators of an adjacent oil and gas well known as the Adams-Hooker #1 Well ("AH1"). Texas Brine sought recovery for its own damages in the form of reimbursement expenses for environmental- response costs that it paid out after the sinkhole appeared, litigation expenses, and lost profits, along with claims for indemnity and/or contribution for the damages allegedly sustained by the pipeline companies. The Phase 1 liability trial was held for the purpose of determining what caused the sinkhole to form and which parties, if any, were at fault under any theory of law for causing the formation of the sinkhole. All other issues were reserved for trial in phases 2 through 4.

         Texas Brine began drilling and operating the OG3 brine well on property owned by Occidental Chemical Corporation ("Oxy") in 1982. Texas Brine was the sole operator of the OG3 brine well, which was solution-mined for almost thirty years, including the timeframe when the sinkhole developed in August 2012. Texas Brine's operation of the OG3 well provided brine to a plant owned by Legacy Vulcan Corporation, f/k/a Vulcan Materials Company ("Vulcan").[2] In 1983, Oxy leased the land adjacent to the OG3 brine well to the Colorado Crude Company, so that Colorado Crude could drill the AH1 well for the commercial production of hydrocarbons. The AH1 well was drilled at the approved location by the initial operator, Adams Resources Exploration Corporation ("Adams"), without incident. It is undisputed that Adams did not drill into the salt dome or the AG3 cavern created by the solution-mining of the AG3 brine well.

         Adams began producing hydrocarbons from the AH1 well in 1986, which in turn created the AH1 depletion-drive reservoir. Browning eventually became the operator of the AH1 well in 1991, operating the AH1 well without incident for a decade between 1991 and 2001, when Browning ceased its operations. AH1 was ultimately plugged and abandoned in 2010 by another operator, Energy Self-Service Oils, Inc.[3] The Colorado Crude lease required the operators of the AH1 well to refrain from damaging any salt formations on Oxy's property. The western wall of the Napoleonville salt dome was located between the OG3 brine well cavern and the AH1 oil well reservoir. Texas Brine contends that Browning's operations caused the pressure in the AH1 reservoir to drop dramatically, which in turn damaged the salt dome's wall and triggered the collapse of the highly pressurized OG3 cavern, thereby contributing to the eventual development of the August 2012 sinkhole.

         Numerous motions for summary judgment were decided by the district court before the Phase 1 liability trial was held on September 18, 2017, through October 11, 2017. Among the many summary judgments rendered by the district court, two are pertinent to this particular appeal: the dismissal of all of Pontchartrain's claims against Browning and the dismissal of all of Texas Brine's pre-1996 tort claims against Browning. Two days before the end of the Phase 1 liability trial, and after the pipeline companies and Texas Brine had rested their cases in chief, Browning moved for an involuntary dismissal of all of Texas Brine's incidental demands against Browning. Asserting that Texas Brine had failed to produce any evidence of negligent conduct or wrongdoing by Browning during its ten years of operating the AH1 well or any evidence that the operations of the AH1 well caused the OG3 cavern to leak or collapse, Browning maintained that no liability could be attributed to it. The district court ruled in favor of Browning, dismissing all of Texas Brine's claims against Browning with prejudice. A judgment was signed in accord with that ruling on October 31, 2017.

         Texas Brine appealed, urging two assignments of error: (1) the district court manifestly erred in determining that Browning had no liability; and (2) the district court erred in the pretrial summary judgment ruling where it concluded that pre-1996 law did not govern Texas Brine's tort claims against Browning. Browning counters that because there was no evidence introduced of any wrongdoing on the part of Browning during the limited ten-year period that Browning operated the AH1 well, the district court's dismissal of Browning on its motion for involuntary dismissal was reasonable, clearly not manifestly erroneous, and should be affirmed. Additionally, Browning contends that consideration of the summary judgment ruling is mooted by their dismissal at trial.

         LAW ...


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