Enbridge Pipelines (East Texas) L.P. v. Central Crude, Inc.
4:11-cv-00335
| S.D. Tex. | Jul 10, 2012Background
- Enbridge and Central Crude dispute payment of a gas-gathering fee under a 2009–2010 agreement.
- First gas-gathering/transportation agreement ran Aug 15, 2007–Dec 31, 2008; fee was $0.25/MMBtu.
- Second agreement ran Jan 1, 2009–Dec 31, 2010; Exhibit C provided a $0.25/MMBtu gathering fee.
- Enbridge assigned its gathering system to Enbridge G&P in July 2009; Enbridge G&P invoiced for gathering fees in addition to transportation fees.
- Central Crude objected; invoicing retroactively began Aug 1, 2009; after expiration in 2010, Enbridge refused service and filed breach claim for gathering fees.
- Court denied Central Crude’s motion for summary judgment, treating the gathering-fee provision as enforceable despite questions about typographical errors.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the gathering fee provision is valid despite typographical errors | Enbridge argues Buyer/Seller errors are typographical and §4 Gatherer/Shipper define obligations. | Central Crude argues no express authorization for gathering fee; errors negate enforceability. | Genuine issue exists; but court construes four-corners to find obligation. |
| Whether the contract should be interpreted to reflect the parties’ intent when ambiguous | Enbridge claims four-corners interpretation supports fee; course of dealing supports gathering fee. | Central Crude contends ambiguity should preclude enforcement. | Court favors interpretation consistent with gathering-fee obligation. |
| Who bears the burden to prove mutual mistake of fact regarding typographical errors | Enbridge argues no mutual mistake burden on plaintiff. | Central Crude must prove mutual mistake and lack of intent to pay gathering fee. | Central Crude failed to prove mutual mistake; fee obligation remains viable. |
Key Cases Cited
- Paragon Res., Inc. v. Nat’l Fuel Gas Distrib. Corp., 695 F.2d 991 (5th Cir. 1983) (consider course of dealing and usage in unclear contracts)
- Estes v. Republic Nat’l Bank of Dallas, 462 S.W.2d 273 (Tex. 1970) (mutual mistake proof elements; intent from writing)
- Chisos Joint Venture I v. North E. Tex. Nat. Gas Co., 142 S.W.3d 447 (Tex. App.-El Paso 2004) (mutual mistake of fact required to reform contract)
- Ussery Invs. v. Canon & Carpenter, Inc., 663 S.W.2d 591 (Tex. App.-Houston (1st Dist.) 1983) (mutual mistake and intent in contract interpretation)
- Myrad Properties, Inc. v. LaSalle Bank Nat. Ass’n, 300 S.W.3d 746 (Tex. 2009) (objective consideration of contract execution and intent)