## IN THE SUPREME COURT O F TEX AS

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O N P E T I T I O N F O R R E V I E W F R O M T H E C O U R T O F A P P E A L S F O R T H E F I R S T D I S T R I C T O F T E X A S

4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 J U S T I C E G U Z M A N , joined by J U S T I C E M E D I N A and J U S T I C E L E H R M A N N , dissenting. Since early in Texas’s statehood, t his Court has re co gn i z ed that specific laws prevail over conflicting g ener al laws. For over eig ht deca des, we have applied the same principle when 1 construing contra cts. I n this contra ct dispute over a due diligenc e obliga tion, two clause s require d 2
El Paso to perf

orm due diligenc e in locating fore ign crossing s while another clause stated that
MasTec assumed all risk perta ining to the wor k, notwithstanding other provisions in the contra ct. Our time-honored rules of construction require us to interpre t the specific due diligenc e provisions

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.as an exception to the g ener al all risk provision, there by g iving both meaning

. But today , the Court

depar ts from that time-honored tradition and neg ates the due diligenc e provisions in their entirety

. Whatever method an owner chooses to locate fore ign crossing s, the industry standard is to disclose 85–90% of them. El Paso disclosed only 35%. The jury was entitled to—and did—find that El Paso did not exercise due diligenc e. Be cause I cannot ag ree with the Court’s signific ant depar ture from

our long line of prec edents g overning our approa ch to c ontrac t c onstruction, I respe ctfully dissent.
I. F actual Background This c ase involves the repla ceme nt of a metal pipeline. When a pipeline crosse s a fore ign object (such as other pipelines, roads, rivers, fenc es, and other structure s), that object is ref err ed to

as a fore ign crossin g. Replacing the portion of a pipeline at a fore ign crossing often require s the i n v estment of a signific ant amount of resour ces, most notably manpower . I t is customary for pipeline owner s to compile information on fore ign crossings (known as alig nment sheets) as the fore ign crossing s to their pi pelines are buil t or m odified. As a matter of due cours e, at t h e t i me a pipeline is g oing to be repla ced, owner s make their alig nment sheets available to bidding contra ctors

so they evalua te the potential need for additional time or resour ces and fac tor that additional criter ia into the bid. I n some case s, a contra ctor will be able to inspect the pipeline ease ment befor e bidding the job, but such an inspection will not alway s detec t fiberg lass or plastic pipelines. Metal detec tors cannot detect such li n es if they have no metal t rac ers, and pipelines are not alway s marke d on the surfa ce. The most acc urate pre- bid method of id en t i fy ing fore ign crossing s is from the owner ’s alig nment sheets.

2Her e, El Paso purc hased a 68-mile pipeline built during World War I I

. El Paso decided to repla ce the line beca

use it was too shallow. El Paso had rec eived the preliminary alig nment sheets dating to befor e the pipeline was built. I t had no alig nments sheets showing fore ign crossing s built since 1940. An El Paso repr esenta tive descr ibed its a lignment sheets as “ver y inadequa te, but it is all we ha d to work with.”
Acc ording ly , El Paso hired a survey ing company to assess the route and identif y fo re i gn crossing s. The survey or testified that E l P as o d i d not ask him to detec t lines with no metal. The
survey or walked the line using metal detec tors and noting phy sical marking s of lines. At a pre- bid meeting , El Paso disclosed to pipeline contra ctors the survey or’s alig nment sheets—which showed
280 fore ign crossing s. The industry prac tice for contra ctors is to allocate a 10–15% conting ency in a bid to acc ount for, among other thing s, unexpected and unide ntified fore ign c rossing s. El Paso owned another pipeline of the same siz e in the s am e ri g ht of way . El Paso had a
survey for that ad

j ac en t pipeline t hat s howed significa ntly more foreig n crossing s than t he survey of the pipeline a t issue here

. 3
After soliciting bids, El Paso selec ted MasTec , which submitt ed the lowest bid. I mportantly , the contra ct they ag ree d to twice specifie d that “[ E l P as o ] will have exercised due diligenc e in locating fore ign pipe lines and utility line crossing s.” The c ontrac t also provided “tha t any thing in this Contract or in any repr esenta tions, statements or information made or furnished by [El Paso] or
any of i ts repr esenta tives notwithstanding, [ MasTec ] assumes full and complete responsibility for

V a l e r o a l s o o w n e d a p i p e l i n e i n t h e s a m e r i g h t o f w a y . A V a l e r o r e p r e s e n t a t i v e w a s o n s i t e w h i l e M a s T e c w a s 3
r e p l a c i n g E l P a s o ’ s p i p e l i n e , a n d V a l e r o ’ s a l i g n m e n t s h e e t s s h o w e d s i g n i f i c a n t l y m o r e f

o r e i g n c r o s s i n g s t h a n E l P a s o d i s c l o s e d

. E l P a s o n e v e r c o n t a c t e d V a l e r o r e g a r d i n g t h i s i n f o r m a t i o n . 3any such conditions perta ining to the Work, the site of the Work or its surrounding s and all risks in

connec tion therewith.”
Once the pipeline repla ceme nt construction commence d, MasTec hired Steve Edwar ds, who specia liz ed in detec ting fore ign crossing s, to work ahea d of the construction cre w to confirm the location of fore ign crossing s. Edwar ds used a meta l detector , ref err ed to as an M-scope , to locate metal lines as well as fiberg lass and PVC lines with me tal trac ers. But the device could not de tect lines containing no metal. Edwar ds testified that the only method to identify such lines is to speak with landowner s to g ener ally deter mine wher e pipeli n es ar e situated and then pressure wash and

remove the soil to locate the lines.
I n a ty pical job, Edwar ds testified he would discover 5–10% more fore ign crossing s than an

owner had disclosed. Her e, Edwar ds located approximately 794 total fore ign crossing s —284% 4

more than El Paso di s cl o s ed

. T h e jury found that El Paso failed to comply with the contra ct. At trial, the jury was asked whether El Paso exercised due diligenc e in locating fore ign crossing s. The jury found that El Paso brea ched the contra ct. II. Discussion The p ri mary g oal when construing a written contra ct is to asce rtain the true intent of the parties as expressed in the writing

. Valence Operating Co. v. Dorsett , 164 S.W .3d 656, 662 (Tex. 2005). We acc omplish this by examining t he entire writing so as t o harmonize all provisions and rende r none meaning less. Id .; King v. Dallas Fire Ins. Co. , 85 S.W .3d 185, 193 (Tex. 2002). “No

A s t h e C o u r t n o t e s , o t h e r e v i d e n c e i n t h e r e c o r d i n d i c a t e s t h e r e c o u l d h a v e b e e n e v e n m o r e t h a n 7 9 4 f o r e i g n 4
c r o s s i n g s , b u t M a s T e c o n l y c l a i m s t h e r e w e r e 7 9 4 f o r e i g n c r o s s i n g s i n t h i s a p p e a l

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. 4single provision taken alone will be g iven controlling eff ect; rathe r, all the provisions must be considere d with ref

ere nce to the whole instru m ent.” Coker v. Coker , 650 S.W .2d 391, 393 (Tex. 1983). To harmonize conflicting provisions, we trea t n ar ro w provisions as exceptions to g ener al provisions. Forbau v. Aetna Life Ins. Co. , 876 S.W .2d 132, 133–34 (Tex. 1994) ; see also Jack son

v. State Office of

Admin. Hearings , 351 S.W .3d 290, 297 (Tex. 2011); Kuntz v. Spence , 67 S.W .2d 254, 257 (Tex. 1934); Great S. Life Ins. Co. v. Cherry , 2 4 S

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. 2 d 512, 513 (Tex. Civ. App.—Eastland 1930, wr it ref’ d). Construing the contra ct here require s that we examine the term due diligenc e. Be cause the
contra ct did not define due diligenc e, we must ascr ibe the term its ordinary meaning

. Heritage Res.,
Inc. v. NationsBank , 939 S.W .2d 118, 121 (Tex. 1996). As the Court notes, Bla ck’s L aw Dictionary define s due dil ige nce as “[t] he dil i g ence rea sonably expected from, and ordinarily exercised by , a
person who seeks to satisfy a leg al require ment or t o d i s ch ar g e an obliga tion.” B L A C K ’ S L A W D I C T I O N A R Y 523 (9th ed. 2009). We have stated that “‘dilig ence ’ is rela tive and incapa ble of exact definition. I ts meaning must be deter mined by the circ umstances of eac h case . Reasonable diligenc e has b ee n d ef

i ned as such diligenc e that an ordinarily prudent and diligent person would exercise under simil ar circ umstances.” Strickland v. Lake , 357 S.W .2d 383, 384 (Tex. 1962). Due diligenc e “is usually

a question of f

act.” Id

. I n construing the term as requiring MasTec to shoulder the risk for El Paso’s lack of diligenc e, the Court ign o re s well settled rules of construction that no clause should be rende red meaning less and that a narr ow provi s i o n i s construed as an exception to a conflicting g ener al

5provision. And beca use there was some evidenc e that El Paso failed to use due diligenc e, we should not disturb the jury ’s finding

.

A. The Court Ne gates t he Due Diligence Re qui rem ents The Court maintains that its rea ding of the contra ct does not neg ate t h e d u e d iligenc e require ments but instead contemplates a joint eff ort with El Paso conducting a survey and MasTec assuming the risk for the inacc urac ies in the survey . But substantively , this rea ding neg ates the due diligenc e clause s. What if El Paso hired a survey or that found zero fore ign crossing s? I s it plausible that the parties wo uld intend that such a finding constitutes due diligenc e? Under the Court’s rationale , such an illogica l approa ch would have been the intended outcome mere ly beca use El Paso hired a survey or. The Court is in eff ec t re wr i t i n g the contra ct to neg ate the due diligenc e require ments and, in so doing, violate s our long -standing rules of inter preta tion.
We deter mine the intent of the parties by assessing the entire writing and g iving eff ect to all provisions. Valence Operating , 164 S.W .3d at 662. I n order to assure that no one provision controls all others, we have long trea ted specific provisions as exceptions to g ener al provisions. Forbau , 876
S.W .2d at 133–34; Kuntz , 67 S.W .2d at 257; Cherry , 24 S.W .2d at 513. The clause the Court relies

on is unquestionably g ener al (that MasTec assumes all risk, notwithstanding other provisions). The clause s stating that El Paso must use due diligenc e in locating fore ign cr o s s i ng s are specific

. But rathe r than g iving both provisions meaning (as we must) by trea ting the diligen ce p rovi sions as a limit ed exception to the risk provision, the Court neg ates the diligenc e provisions in their entirety

. To do so forc es MasTec to shoulder the due diligenc e burden the contra ct square ly place s on El Paso.
Her e, the contra ct require s that we g ive meaning to both provisions and all ow the jury to decide

6whether

El Paso’s disclosure satisfied its due dilig ence obliga tion. The Court ignor es well settled rules and, in e rror , disreg ards the jur y ’s ver dict.
To illust rate the importance of ascr ibing some meaning to a due diligenc e clause , an example is helpful. The parties’ contra ct contains a forc e majeure clause that relieve s eac h party of liability for failure to perf

orm due to a force majeur e ev en t

. This forc e majeure clause would presumably include hurrica

nes. Hurric anes are risk. Under the Court’s view, MasTec would assume the risk of

a hurrica ne in the all risk clause , despite the fac t that it specific ally barg ained to not assume the risk of a hurrica

n e i n the forc e majeure clause

. But such an interpre tation rende rs the forc e majeure 5
clause meaning less—an outcome we seek to avoid. Valence Operating , 164 S.W .3d at 662; Coker , 650 S.W .2d at 393. The rules of construction are in place to deter mine the intent of the parties when harmonizing conflicting provisions. Valence Operating , 164 S.W .3d at 662. They do prec isely that here by specific ally allocating narr ow risks (such as forc e maj eure events and due diligenc e for locating fore ign c rossing s) and then shoulde ring MasTec with all other risk. There are circ umstances in which an all risk provision may trump a due diligenc e provision.
For example, the due diligenc e clause could: (1) state the information provided was a courte sy but due diligenc e was within the contra ctor’s scope of work; (2 ) disclaim any acc urac y of the due 6

G r a n t e d , t h e a l l r i s k c l a u s e r e l a t e s t o “ c o n d i t i o n s p e r t a i n i n g t o t h e W o r k

. ” B u t M a s T e c e n c o u n t e r e d o n e 5 h u r r i c a n e a n d t w o t r o p i c a l s t o r m s d u r i n g t h e w o r k , w h i c h d r o p p e d 6 6 ” o f r a i n o n t h e w o r k s i t e . N o o n e d i s p u t e s t h a t t h i s r a i n h a d a s i g n i f

i c a n t i m p a c t o n t h e w o r k s i t e . S e e , e
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7diligenc e; or (3) have the o t h er p ar t y d i sclaim any relianc e on the due diligenc e. This contra ct 7
contained no suc h disclaimers. The descr iption of El Paso’s alig nment sheets as due diligenc e along with the lack of disclaimers bring s this case outside the a mbit of our holdings in Lonergan v. San Antonio Loan &
Trust Co. , 104 S.W

. 1061 (Tex. 1907), and City of Dallas v. Shortall , 114 S.W .2d 536 (Tex. 1938). Lonergan involved an owner supply ing an arc hitect’ s d ef ec tive specific ations to a contra ctor. Lonergan , 104 S.W

. at 1065. We based our holding that the owner was not liable to the contra ctor for the defe ctive specifications on two principles. Id . First, the c ontrac tor in all probability knew better than the owner that the arc hitect’s specific ations wer e defe ctive. Id

. Her e, El P aso had superior knowledg e of the fore ign crossing s as it owned the pipeline and owned another pipeline in the same ease ment with alig nment sheets showing signific antly more fore ign crossing s. Second, in Lonergan , the contra ct in no way made the owner the g uara ntor of the acc urac y of the specific ations. Id

. at 1066. Her e, the cont ract stated that the owner ’s investiga tion and disclosure of the fore ign crossing s was “due diligenc e.” Lonergan does not support El Paso.
L ikewise, Shortall does not support El Paso. There , t h e o wn er stated: “I n case these specific ations or plans are not thor o u g hly understood, parties making bids shall apply to the Eng ineer for fu rt h er information befor e bids are submitt ed, as no claims on any such g rounds will be
enter tained .

. . .” 114 S.W .2d at 538. El Paso made no such d i s claimer advising that the foreig n crossing s “ar e not thoroug hly understood” but instead stated that its alig nment sheets constituted due

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. 8diligenc e. El Paso’s use of the term due diligenc e and the lack of any disclaimers eff ectively vitiate its reliance on Lonergan or Shorthall

. B. Th ere Is Some Evid ence El P aso Did Not Use Due D iligence Construing the c ontrac t to mean that t he due diligenc e clauses required El Paso to use due diligenc e (as they must), we must deter mine if there is some evidenc e supporting the jury ’s finding that El Paso brea ched its oblig ation. We ha ve define d due dilige nce a s what an ordinarily prudent

an d d i lige nt person would do in simil ar circumstanc es. Strickland , 357 S.W .2d at 384. W e h av e also discussed due diligenc e in the oil and g as context in terms of industry prac tice. See Exx on Corp.
v. Eme rald Oil & Gas Co., L.C

. , 348 S.W .3d 194, 206 (Tex. 2011).
Her e, the testimony indicates that the industry standard is for contra ctors to allot a 10–15% conting ency for such things as fore ign cro s s i n gs an o wner did not disclose. I n other words, the industry standard is for owner s to disclose 85–90% of fore ign crossing s. El Paso disclosed 35% of the foreig n crossing s. The gross dis p arity betwee n the i ndustry standard and El Paso’s disclosure evince s that El Paso failed to use due diligenc e and the jury ’s finding must not be disturbed. The Court attempts to distinguish this undisputed testimony in two way s: (1) t hat i ndustry standards are not nece ssarily sy nony mous with industry prac tices; and (2) that the standard for due diligenc e for older pipelines is the same as for newe r pipelines. The rec ord is devoid of support for either positi o n . Fi rs t , t h e Court is unable to cite any authority for trea ting industry standards and
prac tices d i ff

er en t ly in the due diligenc e context. I f an owner used a novel method of locating pipelines and found 100% of them, it would be difficult to claim that it failed to use due diligenc e.

9Reg ardle ss of the prac tice El Paso employ ed (hiring a survey or and not instructing it to locate nonmetal lines), it g rossly failed to meet the industry standard (identify ing 85–90% of pipelines). The failure in the Court’s interpre tation is that El Paso war rante d the work in locating fore ign crossing s

as due diligenc e: “[El Paso] will have exercised due diligenc e in locating fore ign pipelines and utilit y line crossing s.” Under the g uise of industry prac tice, the Court chang es the focus of due diligenc e to the hiring of a sur

vey or—not the loca ting of fore ign c rossing s. Neither is the re support for the Court’s asser tion that the standar d for older pipelines is the

same. The Court a g ain confla tes cate g ories to r ewr ite the contra ct. Due diligenc e looks at simil ar situations. Strickland , 357 S.W .2d at 384. Older pipelines can have non-metal fore ign crossing s that

wer e place d befor e laws require d metal trac ers in non-metal lines. El Paso’s method of using a metal detec to r an d v i sual inspection may well be suitable for locating fore ign crossing s for a newe r pipeline (which involves few unidentified, non-metal fore ign crossing s). But El Paso’s method was unsuitable for an older pipeline with a signific ant number of non-metal lines, as evince d by El Paso’s
1940s survey of an adjac ent pipeline identify ing signific antly more fore ign crossing s than the rec ent
survey of the pipeline at issue. Due diligenc e, as it is commonly understood, require s that El Paso

use g rea ter eff

orts in locating fore ign crossing s in an older pipeline, such as instructing the survey or
to locate non-metal lines. El Paso could have avoided its obliga tion, assuming it considered i t onerous, by

simply disclaiming due diligenc e. I t did not do so here.
I n any event, El Paso’s methodology was so defic ient that it identified only 35% of fore ign crossing s, far less than t he indus try standard of 85–90% and e ven less than El Paso’s survey from

1 0its adjac ent pipeline in the 1940s. There is some evidenc e to support the jury ’s finding that El Paso

brea ched its oblig ation.
III. Conclusi on Wel l s et t l ed rules of contract construction require us to construe the due dil ige nce clauses in this contra ct as a limit ed exception to the all risk clause

. I gn o ri n g t hese well settled rules, the
Court rende rs meaning less a more specific provision. The industry standard is for owner s to disclose 85–90% of fore ign crossing s. Her e, E l P aso di sclosed a mere 35%. I n sum, the j ury was entitl ed to find that El Paso breac hed its due dil ige nce obligation, and we should not set aside it s finding

. I respe ctfully

dissent.

___________________________ Eva M. Guzman J ustice
OPI NI ON DEL I VERED: Dec ember 21, 2012

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