El Paso Marketing, L.P. v. Wolf Hollow I, L.P.
450 S.W.3d 121
Tex.2014Background
- Wolf Hollow I, L.P. owns a power plant; El Paso Marketing, L.P. supplies gas under a Supply Agreement; Enterprise Texas Pipeline transports the gas under a separate Transportation Agreement.
- Wolf Hollow alleged two injury theories: (1) four interruptions in gas delivery requiring replacement-power purchases, and (2) delivery of gas contaminated with liquids that damaged the plant, required upgrades, and required replacement-power purchases (the “gas-quality” claim).
- Trial court granted summary judgment for El Paso and Enterprise, declaring the four interruptions excused by the Supply Agreement’s force-majeure clause and that Wolf Hollow’s claimed damages against El Paso were barred as consequential damages waived by the Supply Agreement; it also declared that Section 14.1 limited Wolf Hollow’s remedy for gas-quality claims to an assignment of El Paso’s claim against Enterprise and that Article 21 did not apply to gas-quality claims.
- On first appeal (Wolf Hollow I), the court of appeals affirmed dismissal of claims as barred by the consequential-damages waiver and vacated the trial court’s declaratory judgment as moot; the court of appeals reversed dismissal against Enterprise.
- The Texas Supreme Court (Wolf Hollow II) held Enterprise’s negligence claim failed, held replacement-power damages exist under Article 21 (and may not be barred by the consequential-damages waiver), and reversed the court of appeals’ deletion of the trial-court declarations as moot, remanding for further proceedings.
- On remand the court of appeals (Wolf Hollow III) held the four interruptions were excused by force majeure (Wolf Hollow does not contest this) and concluded Wolf Hollow may proceed to trial on replacement-power damages for the gas-quality claim — reasoning the Supreme Court’s Wolf Hollow II decision precluded the trial-court declarations that Article 21 did not apply to gas-quality claims; Supreme Court now disagrees with that constraint and reverses that portion.
Issues
| Issue | Plaintiff's Argument (Wolf Hollow) | Defendant's Argument (El Paso) | Held |
|---|---|---|---|
| Whether Article 21’s replacement-power remedy applies to gas-quality claims | Article 21 authorizes replacement-power damages for gas-quality breaches | Article 21 applies only to gas-quantity/transportation failures, not gas-quality claims | Court: Unresolved on the merits; remands. Court of appeals erred to treat Wolf Hollow II as foreclosing reconsideration of this question |
| Whether Section 14.1 makes assignment of El Paso’s claim against Enterprise Wolf Hollow’s exclusive remedy for gas-quality claims | Section 14.1 does not bar Wolf Hollow from suing El Paso for breach | El Paso: Section 14.1 limits Wolf Hollow to an assignment of El Paso’s claim against Enterprise | Court: Wolf Hollow II already held nothing in Section 14.1 prevents Wolf Hollow suing El Paso; that remains so |
| Whether the trial court’s declaratory judgments were moot after Wolf Hollow II | Wolf Hollow: Some declarations remain necessary because replacement-power claims may proceed | El Paso: Wolf Hollow II eliminated need for those declarations by resolving damages waiver issue | Court: Wolf Hollow II did not decide all issues; the court of appeals erred to treat those declarations as necessarily foreclosed |
| Whether the court of appeals was bound by Wolf Hollow II from reexamining applicability of Article 21 | Wolf Hollow: Article 21 applicability remains open for appellate review | El Paso: Wolf Hollow II did not resolve this; court of appeals should decide | Court: Agrees with El Paso — Wolf Hollow II did not preclude appellate review; remands for further proceedings |
Key Cases Cited
- Wolf Hollow I v. El Paso Marketing, 329 S.W.3d 628 (Tex. App. 2010) (court of appeals decision addressing consequential-damages waiver and vacating trial-court declarations as moot)
- Wolf Hollow II v. El Paso Marketing, 383 S.W.3d 138 (Tex. 2012) (Texas Supreme Court: Enterprise negligence claim failed; recognized replacement-power damages under Article 21 may survive waiver of consequential damages and reversed deletion of trial-court declarations)
- Wolf Hollow III v. El Paso Marketing, 409 S.W.3d 879 (Tex. App. 2013) (court of appeals held force majeure barred delivery-interruption claims and concluded Article 21 applied to gas-quality replacement-power damages based on interpretation of Wolf Hollow II)