Wolf Hollow I, L.P. v. El Paso Marketing, L.P. and Enterprise Texas Pipeline, LLC
409 S.W.3d 879
Tex. App.2013Background
- Wolf Hollow owns a gas‑fired power plant; El Paso managed/purchased the gas and delivered it via Enterprise’s pipeline under a Gas Supply and Fuel Management Agreement (Supply Agreement) and an underlying Transportation Agreement.
- In 2006–2007 there were four interruptions in gas delivery (pipeline equipment failures and an operator error) and episodes of allegedly poor‑quality gas (heavy liquid hydrocarbons).
- Wolf Hollow sued El Paso for breach (seeking replacement‑power costs, plant repairs, turbine work, and fuel‑treatment costs); El Paso sought declaratory relief and third‑partied Enterprise.
- The trial court granted El Paso and Enterprise summary judgment, declaring the delivery interruptions were force majeure, holding consequential damages were waived, and that for Enterprise‑pipeline quality issues Wolf Hollow’s exclusive remedy was an assignment of El Paso’s claims.
- This Court originally affirmed waiver of consequential damages, but the Texas Supreme Court reversed in part: it held plant damages were consequential and waived, but replacement‑power damages were excepted by Article XXI and could survive; it also held Wolf Hollow could not sue Enterprise in tort but could pursue replacement‑power claims against El Paso for quality failures and remanded.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the four delivery interruptions were contractual events of force majeure excusing El Paso | Interruptions resulted from pipeline and operator errors but El Paso retained control of gas and cannot claim events were beyond its control | Supply Agreement’s force‑majeure definition (including interruption/curtailment of firm transportation on connected pipelines) excuses El Paso | Affirmed: interruptions were force majeure as to El Paso; delivery‑failure replacement damages for those interruptions barred |
| Whether Section 14.1 makes assignment the exclusive remedy for quality problems on Enterprise pipeline | Wolf Hollow: Section 14.1 does not preclude suing El Paso for breach based on poor quality gas | El Paso: Section 14.1 limits Wolf Hollow to an assignment of El Paso’s claims against Enterprise for Enterprise‑pipeline quality failures | Reversed trial court’s exclusivity declaration: Supreme Court held nothing in §14.1 precludes suing El Paso for breach; remand for proceedings on quality claims against El Paso |
| Whether Article XXI (replacement‑power remedy) applies to gas‑quality failures | Wolf Hollow: Article XXI’s replacement‑power remedy applies to quality failures and is an agreed exception to the consequential‑damages waiver | El Paso: Article XXI applies only to quantity/delivery failures; quality disputes on Enterprise are governed by assignment in §14.1 | Court: Supreme Court held replacement‑power damages are available under §21.1 for quality and quantity failures; this Court follows and remands for trial on replacement‑power damages for quality failures (but affirms on delivery failures because of force majeure) |
| Whether El Paso established entitlement to no‑evidence summary judgment on breach of its fuel‑management obligations and whether Wolf Hollow released or waived quality claims | Wolf Hollow: fuel‑management duties include monitoring and ensuring gas quality; the First Amendment release and §16.1 do not bar later quality claims | El Paso: no evidence of breach of fuel‑management duties; First Amendment release and §16.1 indemnity/release language bar claims | This Court: reversed no‑evidence summary judgment on fuel‑management breach (evidence that duties covered quality and were breached); rejected First Amendment and §16.1 as releases for the asserted 2006–2007 quality claims; remand for trial limited to replacement‑power damages |
Key Cases Cited
- El Paso Mktg., L.P. v. Wolf Hollow I, L.P., 383 S.W.3d 138 (Tex. 2012) (Texas Supreme Court decision holding replacement‑power damages excepted from consequential‑damages waiver and that Wolf Hollow may seek remedy from El Paso for poor quality gas)
- Wolf Hollow I, L.P. v. El Paso Mktg., L.P., 329 S.W.3d 628 (Tex.App.-Houston [14th Dist.] 2010) (appellate opinion vacating trial court declarations as moot under consequential‑damages waiver)
- City of Keller v. Wilson, 168 S.W.3d 802 (Tex. 2005) (summary judgment evidentiary standards and sufficiency of evidence review)
- Valence Operating Co. v. Dorsett, 164 S.W.3d 656 (Tex. 2005) (contract construction principles; objective intent governs)
- Hourani v. Katzen, 305 S.W.3d 239 (Tex.App.-Houston [1st Dist.] 2009) (declaratory judgments rendered by summary judgment reviewed like other summary judgments)