Coates v. EC&R Development, L.L.C.
5:13-cv-00255
| W.D. Tex. | Oct 31, 2014Background
- Plaintiff Hugh Coates is a long‑time rancher who leased the Mitchell Ranch; Defendants (EC&R/Anacacho and Tetra Tech) developed a wind farm on or adjacent to the property and contracted for construction and related materials/services.
- Coates alleges Defendants cut and failed to repair interior and perimeter fences, left gates open, and damaged water infrastructure during construction, causing livestock loss and helicopter recovery expenses.
- Coates asserts breach of multiple verbal/oral contracts (exclusive water purchase at $0.42/barrel; payment for a generator and pump; sale of limestone at $1/ton) and claims negligence for unreasonable use of the surface (primarily fence cuts).
- Defendants moved for summary judgment arguing (inter alia) no enforceable exclusive water contract, no limestone contract with Coates (or barred by Statute of Frauds), performance prevented for pump/generator, full lease payment made, and no tort duty or breach given a subordination agreement.
- The court granted summary judgment for Defendants on the claim for an exclusive water‑purchase contract and on the land‑lease rental claim, but denied summary judgment as to: (1) breach for failure to pay for the pump/generator, (2) breach relating to limestone (Coates as third‑party beneficiary; PO satisfies Statute of Frauds), and (3) negligence for unreasonable fence cutting and related livestock loss.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Existence/enforceability of an exclusive oral water‑purchase contract | Coates: parties agreed Tetra Tech would buy all project water from him at $0.42/barrel | Tetra: no exclusive contract; purchase order was conditional ("if financially feasible") and Tetra only bought some water | Granted to Defendants — no evidence of an exclusive obligation to buy all water from Coates |
| Obligation to pay for generator and pump | Coates: provided working pump and generator pursuant to contract; Tetra agreed to pay but then did not | Tetra: obligation was contingent on Coates making equipment operational for project use; he failed to timely provide functioning equipment | Denied — factual dispute exists about whether Coates performed and whether payment was due |
| Limestone sale / third‑party beneficiary & Statute of Frauds | Coates: purchase order and testimony show he was to receive $1/ton as royalty; PO confirms verbal agreement and satisfies writing requirement | Tetra: Coates did not negotiate or contract directly; any benefit was incidental; statute of frauds bars oral deal | Denied — court found PO constitutes sufficient writing under Tex. Bus. & Comm. Code § 2.201 and Coates is an intended third‑party beneficiary |
| Negligence / duty and effect of Subordination and Nondisturbance Agreement | Coates: as servient estate tenant he had rights and Defendants owed a common‑law duty to act reasonably; defendants acted unreasonably in cutting/abandoning fences causing livestock losses | Tetra: Subordination agreement made Coates’ lease subordinate and eliminated duties; any use was reasonable and contractually permitted | Denied — court held a common‑law duty to act reasonably remained despite subordination; factual disputes exist whether fence cutting/abandonment was unreasonable and caused damages |
Key Cases Cited
- Anderson v. Liberty Lobby, 477 U.S. 242 (summary judgment standard) (discusses burden on summary judgment).
- Celotex Corp. v. Catrett, 477 U.S. 317 (summary judgment procedure) (movant’s initial burden and nonmovant’s response).
- Reeves v. Sanderson Plumbing Prods., 530 U.S. 133 (credibility and inferences at summary judgment).
- Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574 (summary judgment; rational jury standard).
- ACE Am. Ins. Co. v. Freeport Welding & Fabricating, 699 F.3d 832 (5th Cir.) (nonmoving party must produce specific facts to create a genuine dispute).
- Lee Lewis Constr., Inc. v. Harrison, 70 S.W.3d 778 (Tex.) (elements for negligence).
- Moser v. U.S. Steel Corp., 676 S.W.2d 99 (Tex.) (mineral lessee’s liability for negligent damages to surface estate).
- Texaco, Inc. v. Spires, 435 S.W.2d 550 (Tex. App.) (lessee liable for injury to livestock caused by negligent use of surface).
- Robinson Drilling Co. v. Moses, 256 S.W.2d 650 (Tex. App.) (surface lessee subject to mineral lease still may recover for negligence or use beyond reasonably necessary).