Affirmed in Part, Reversed in Part, Remanded, and Majority, Concurring, 

and Concurring and Dissenting Opinions on Remand filed August 15, 2013.

In The

Fourteenth Court of Appeals

NO. 14-09-00118-CV

WOLF HOLLOW I, L.P., Appellant

V.

EL PASO MARKETING, L.P. AND ENTERPRISE TEXAS PIPELINE, 

LLC, Appellees

On Appeal from the 165th District Court

Harris County, Texas

Trial Court Cause No. 2006-70615

C O N C U R R I N G A N D D I S S E N T I N G O P I N I O N O N R E M A N D

I respectfully disagree with the majority’s treatment of Wolf Hollow’s gas 

quality claim. The majority concludes that this claim must be remanded because 

the Texas Supreme Court reversed two of the trial court’s declarations. In my view, 

the supreme court did not address the merits of any declaration in the trial court’s 

final judgment; the court held only that the declarations were not moot. Addressing 
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the merits for the first time on appeal, I would uphold each of the trial court’s 

declarations and affirm the trial court’s judgment that Wolf Hollow takes nothing.

The question on remand is whether Wolf Hollow may recover replacement 

power damages in its claims against El Paso. Insofar as Wolf Hollow’s gas quality 

claim is concerned, our review requires that we determine the correctness of the 

trial court’s third and fourth declarations. Those declarations provide as follows:

3. Wolf Hollow’s exclusive remedy regarding gas quality claims 

for gas delivered by Enterprise Texas Pipeline is to receive an 

assignment as set forth in Article XIV, Section 14.1 of any 

claims that El Paso Marketing, L.P. may have against such 

transporter.

4. Article XXI of the Agreement does not apply to gas quality 

claims for gas delivered to Wolf Hollow on the Enterprise 

Texas Pipeline (referenced as “EPGT” or E.P.G.T. Texas 

Pipeline in the Agreement).

The majority concludes that the supreme court disposed of these 

declarations. I, however, cannot find any such holding in the supreme court’s 

opinion. The supreme court ended its opinion with a final holding paragraph that

only briefly addressed the trial court’s declaratory relief. The court held: “Because 

Wolf Hollow’s replacement-power claim survives, the trial court’s declaratory 

judgment is not moot.” El Paso Mktg., L.P. v. Wolf Hollow I, L.P., 383 S.W.3d 

138, 146 (Tex. 2012). There was no additional holding specifically rejecting the 

trial court’s individual declarations.

The majority nevertheless construes the supreme court’s opinion as having 

reached the merits on the trial court’s declaratory judgment. I do not believe that 

the posture of this case permits such a construction. When we decided this case on 

original submission, we made a limited holding vacating the trial court’s 

declarations as moot. Our holding was guided by a determination that Wolf 
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Hollow’s damages were consequential in nature, and therefore barred by 

contractual waiver. This reasoning made a merits-based decision on the 

declarations unnecessary. See Wolf Hollow I, L.P. v. El Paso Mktg., L.P., 329 

S.W.3d 628, 639, 642 (Tex. App.—Houston [14th Dist.] 2010). Based on our

narrow holding, the supreme court had no occasion to address the merits of the trial 

court’s declaratory judgment. The court simply rejected our waiver analysis and 

remanded for additional proceedings. Our court must now address the merits for 

the first time on remand.

When read together, the declarations describe the types of relief that are 

unavailable to Wolf Hollow when nonconforming gas is delivered on the 

Enterprise pipeline. Specifically, the declarations hold that Wolf Hollow is 

precluded from bringing gas quality claims against El Paso (Declaration 3) and

from seeking the remedies provided by Article XXI (Declaration 4). In my 

opinion, this correctly states the rights of the parties under the contract.

I begin my analysis with a review of Article XIV, which the parties have

entitled “Quality.” As the caption appropriately suggests, Article XIV of the 

contract describes El Paso’s general obligation to supply Wolf Hollow with natural 

gas that meets or exceeds certain quality specifications. This section also 

prescribes two distinct remedies available to Wolf Hollow when nonconforming 

gas is delivered to its facility. The applicable remedy is determined according to 

the pipeline that carried the nonconforming gas. The first remedy applies to the 

main pipeline, which is owned and operated by Enterprise. This remedy states as 

follows:

[I]f [Enterprise] fails to deliver Gas at the [Enterprise] Point of 

Delivery that meets such quality specifications, then [El Paso] shall 

assign to [Wolf Hollow], or otherwise cause [Wolf Hollow] to be 

subrogated to, any claim that [El Paso] may have against [Enterprise] 
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as a result of such delivery failure under the Gas Transportation 

Agreements to which [Enterprise] is a party, as assigned by [Wolf 

Hollow] to [El Paso] . . . .

The second remedy refers to an alternative pipeline, the LSP pipeline. When 

nonconforming gas is delivered in this context, the parties bargained for the 

following remedy:

In the event that . . . [El Paso] delivers Quantities of Gas on the LSP 

pipeline at the LSP Point of Delivery that fail to meet the quality 

specifications set forth herein, [Wolf Hollow] may refuse to accept 

any such Quantities of Gas. Any Quantity of Gas that [El Paso] 

delivers to the LSP point of Delivery and that [Wolf Hollow] rejects 

in accordance with this Section 14.1 shall be deemed a failure of [El 

Paso] to deliver such Quantity of Gas in accordance with the terms of 

this Agreement, with [El Paso’s] liability for such failure determined 

in accordance with Article XXI hereof.

Thus, for quality disputes arising on the Enterprise pipeline, Article XIV 

requires that El Paso assign any claim to Wolf Hollow that El Paso might have 

against Enterprise. For disputes on the LSP pipeline, Article XIV allows Wolf 

Hollow to sue El Paso directly, with El Paso’s liability determined by Article XXI.

Article XXI is the “Default and Remedies” provision of the contract. The 

parties drafted this article in three parts. The first part, Section 21.1, outlines the 

procedures for obtaining and calculating replacement power damages. Unless 

excused by events of force majeure, this part comes into play whenever El Paso 

fails to deliver a necessary quantity of gas. The final two parts concern “Events of 

Default.” Section 21.2 is a definition section. Without referencing any gas quality 

issues, this section defines the term as either a failure to meet certain payment 

obligations or, as in Section 21.1, a failure to deliver a “Quantity of Gas” at the 

appropriate point of delivery. Section 21.3 prescribes several remedies available in 

the event of a default. The final remedy is broadly written in a form similar to a 
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Mother Hubbard clause, stating that the non-defaulting party may “pursue any 

other remedy provided under this Agreement, or now or hereafter existing at law or 

in equity or otherwise.”

Wolf Hollow alleged that the nonconforming gas was delivered on the 

Enterprise pipeline, not the LSP pipeline. In light of this fact, I believe that Wolf 

Hollow is unable to recover replacement power damages in a quality claim against 

El Paso. The parties bargained for two separate remedies under Article XIV, and 

the contract classified these remedies based on the individual pipeline involved: an 

assignment when the nonconforming gas is delivered on the Enterprise pipeline, 

and the Article XXI remedies when the gas is delivered on the LSP pipeline. This 

distinction manifests the parties’ intent that Article XXI remedies should not be 

available in quality disputes involving gas delivered on the Enterprise pipeline. 

The trial court’s declarations are corollaries of this distinction. If I am 

correct that Article XXI is excluded from the pool of available remedies, then Wolf 

Hollow must be precluded from “pursu[ing] any other remedy provided under this 

Agreement, or now or hereafter existing at law or in equity,” as provided under 

Section 21.3. Accordingly, Wolf Hollow’s assignment remedy must be exclusive. 

And not only is Section 21.1 unavailable because of the exclusivity of the 

assignment remedy, Section 21.1 treats only remedies for quantity issues, not 

quality.

The majority claims that the supreme court overruled the trial court’s third 

declaration when it stated that “nothing in [Article XIV] suggests that [Wolf 

Hollow] cannot sue El Paso for breach of the Supply Agreement in allowing poor 

quality gas to be delivered.” See ante, at Part IV.B (quoting El Paso Mktg., L.P., 

383 S.W.3d at 144). It is true, generally, that Wolf Hollow may look to El Paso for 

damages resulting from nonconforming gas, but the supreme court never stated 
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that this remedy is available in every context. The court did not acknowledge that 

two pipelines were connected to Wolf Hollow’s plant or that there were separate 

remedies afforded under Article XIV. I would uphold the trial court’s third 

declaration and conclude, consistent with the supreme court’s opinion, that Wolf 

Hollow can sue El Paso for quality issues under Article XIV, but only when the 

quality dispute arises on the LSP pipeline.

The majority also claims that the trial court’s fourth declaration was rejected 

based on the following sentence in the supreme court’s opinion: “We thus 

conclude that there is evidence Wolf Hollow is entitled to recover replacementpower damages under Section 21.1(c) of the Supply Agreement, precluding 

summary judgment against Wolf Hollow based on the consequential damages 

waiver.” See ante, at Part IV.C (quoting El Paso Mktg., L.P., 383 S.W.3d at 145). I 

do not believe that this pronouncement even relates to the trial court’s fourth 

declaration. The fourth declaration pertains specifically to “gas quality claims,” but 

the word “quality” never appears in Section 21.1(c). That section deals strictly with 

gas quantity failures.

The majority overstates the supreme court’s opinion when it relies on the 

statement quoted above. This statement is the concluding sentence to Part III of the 

supreme court’s opinion, and contrary to the majority’s suggestions, the focus of 

Part III is not whether Wolf Hollow should recover replacement power damages, 

but whether those damages survive the waiver of consequential damages. The 

court’s holding was that replacement power damages are consequential damages, 

but they are excepted from the contract’s waiver provision because the parties 

specifically bargained for them in their cover standard. 

In Part III, the supreme court also considered whether Wolf Hollow had 

followed the procedures for applying the contract’s cover standard. On original 
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submission, our court held that Wolf Hollow had failed to abide by the procedures. 

See Wolf Hollow I, L.P., 329 S.W.3d at 639 (“Wolf Hollow does not contend that 

all of the predicates to its recovery of replacement power costs under Section 21.1 

occurred in this case. In short, section 21.1 provides very specific remedies for 

very specific circumstances that Wolf Hollow does not alleged occurred in this 

case.”). The supreme court disagreed with our judgment and held that there was 

evidence that Wolf Hollow had complied with the procedures. See El Paso Mktg., 

L.P., 383 S.W.3d at 145 (“The court of appeals held that Wolf Hollow did not 

comply with the first two steps, which are prerequisites to the third. But there is 

evidence that it did.”). The court then remanded to us for further proceedings.

The majority treats Part III as a definitive holding that Wolf Hollow “is 

entitled” to replacement power damages. As I read the opinion, the supreme court 

was simply deciding that our reasons for denying relief were incorrect. The ball is 

now in our court to consider whether the provisions cited in the trial court’s 

declarations preclude Wolf Hollow’s recovery of replacement power damages.

The majority finally decides that Article XXI is applicable to both quantity 

and quality disputes. See ante, at Part IV.C. The majority arrives at this conclusion 

because the supreme court substituted the term “Quantity of Gas,” which is a 

specially defined term under the contract, for “gas as contractually required.” See 

El Paso Mktg., L.P., 383 S.W.3d at 140 n.8. The substitution appears to have been 

done for ease of the reader, and not for some larger purpose.

The contract defines a “Quantity of Gas” in terms of MMBtus, which are 

thermal units rather than units of volume. Wolf Hollow argues that a certain

volume of conforming gas will yield a certain amount of thermal units, whereas the 

same volume of nonconforming gas will yield a different amount. This makes 

sense in the abstract; a fuel laden with contaminants will not burn as efficiently as 
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a fuel that is pure. But even if the term includes an implicit quality component, 

neither Wolf Hollow nor the supreme court has explained how this is enough to 

bring gas quality disputes within the scope of Article XXI. The contract already 

provides a mechanism for dealing with gas quality disputes. It’s Article XIV. The 

parties clearly intended for Articles XIV and XXI to work together; the former 

even cross-references the latter. This court should strive to find an interpretation of 

the contract that gives effect to both provisions. Under the majority’s view, 

however, Wolf Hollow may bypass Article XIV altogether.

I agree with the majority that Wolf Hollow cannot recover replacement 

power damages on its gas delivery claim. The majority correctly upholds the trial 

court’s first and second declarations on this point. See ante, at Part IV.A. For the 

reasons stated above, I would also uphold the third and fourth declarations, and 

conclude that replacement power damages are unavailable on Wolf Hollow’s gas 

quality claim. Because the majority holds otherwise, I respectfully dissent.

/s/ Adele Hedges

Chief Justice

Panel consists of Chief Justice Hedges and Justices Christopher and Busby.

(Christopher, J., majority). (Busby, J., concurring).