BP Oil Pipeline Company v. Plains Pipeline, L.P.
472 S.W.3d 296
Tex. App.2015Background
- BP (seller’s predecessor) sold a pipeline system including the Grand Terre Pumping Station to Plains in 2006 pursuant to a purchase agreement that included: (a) an Expense Provision allocating pre‑ and post‑closing utilities/accounts/rent and "similar expenses," and (b) reciprocal indemnity provisions in Article 10.1.
- G & M (co‑owner of the underlying Tract) later sued BP in federal court (the "Louisiana Claim") seeking an accounting for revenues/profits from BP’s use of the Pumping Station. The Fifth Circuit reversed dismissal and left open whether the income were civil fruits of the tract.
- BP demanded indemnity from Plains under the Agreement for the Louisiana Claim; Plains refused and BP sued Plains for breach of indemnity and declaratory relief. Plains counterclaimed for declaratory relief and attorney’s fees.
- Cross‑motions for summary judgment followed; the trial court ultimately granted Plains’s amended motion, denied BP’s, awarded Plains attorney’s fees, and rendered judgment that Plains owes no indemnity.
- The court of appeals reversed: it held the Expense Provision does not cover the Louisiana Claim as a matter of law, and that neither movant proved as a matter of law whether the indemnity’s gross‑negligence/willful‑misconduct exception applies, so summary judgment for Plains was erroneous and must be reversed and remanded.
Issues
| Issue | Plaintiff's Argument (BP) | Defendant's Argument (Plains) | Held |
|---|---|---|---|
| 1) Does the Expense Provision make the Louisiana Claim a pre‑closing "rent or similar expense" for which BP (seller) remains liable? | The Louisiana Claim is an indemnifiable liability under §10.1, not a pre‑closing expense; "revenues and profits" are not "rent." | The claim seeks payment akin to "rent payments or similar expenses," so it falls under §6.3(d)(ii) as Seller’s sole obligation. | Held: No. The court construed "rent payments" and "expenses" narrowly; the Louisiana Claim is not a "rent" or a "similar expense." Summary judgment for Plains on that basis was improper. |
| 2) Does §10.1(b) require Plains to indemnify BP for the Louisiana Claim (aside from the Expense Provision)? | §10.1(b) broadly requires Plains to indemnify BP for liabilities arising from BP’s ownership/use/operation of the Purchased Pipeline Systems (including the Pumping Station); Assumed Liabilities language also supports indemnity. | Plains contends the contract’s gross‑negligence/willful‑misconduct carve‑out (Final Clause) precludes indemnity because BP’s conduct gave rise to the claim. | Held: The indemnity language is unambiguous and would cover the Louisiana Claim absent the Final Clause. But neither movant proved as a matter of law whether the Final Clause applies (i.e., whether losses resulted from Seller Group gross negligence/willful misconduct). Summary judgment on indemnity was improper for both sides. |
| 3) Were BP’s special exceptions to Plains’s declaratory counterclaim properly denied? | BP argued Plains could not seek declaratory relief on issues already before a court. | Plains argued it may counterclaim for declaratory relief in response to BP’s declaratory claim and may seek fees under §37.009. | Held: Denial of special exceptions affirmed. A defendant may counterclaim for declaratory relief on the same subject; Plains may seek fees under §37.009. |
| 4) Was the trial court’s award of attorney’s fees and final judgment for Plains proper? | BP argued the award flowed from an erroneous summary judgment and the court erred in entering final judgment for Plains. | Plains maintained entitlement to judgment and fees. | Held: The appellate court reversed the final judgment and fee award because the trial court erred in granting Plains’s summary judgment; matter remanded for further proceedings. |
Key Cases Cited
- Gulf & Miss. River Transp. Co., Ltd. v. BP Oil Pipeline Co., 730 F.3d 484 (5th Cir. 2013) (Fifth Circuit’s ruling on the underlying Louisiana accounting claim)
- M.D. Anderson Hosp. & Tumor Inst. v. Willrich, 28 S.W.3d 22 (Tex. 2000) (summary judgment burden shifting)
- FM Props. Operating Co. v. City of Austin, 22 S.W.3d 868 (Tex. 2000) (affirmance where any independent summary‑judgment ground is meritorious)
- J.M. Davidson, Inc. v. Webster, 128 S.W.3d 223 (Tex. 2003) (contract interpretation—consider entire agreement)
- Heritage Res., Inc. v. NationsBank, 939 S.W.2d 118 (Tex. 1996) (ambiguity is question of law; plain meaning controls)
- Reeder v. Wood County Energy, LLC, 395 S.W.3d 789 (Tex. 2012) (allocation of burden and gross‑negligence standard under contract)
- Transportation Ins. Co. v. Moriel, 879 S.W.2d 10 (Tex. 1994) (definition and elements of gross negligence)
- Goodyear Tire & Rubber Co. v. Mayes, 236 S.W.3d 754 (Tex. 2007) (standard for reviewing summary‑judgment evidence)