Opinion filed June 27, 2013



### In The 

# Eleventh Court of Appeals

__________ 

### No. 11

- 11

- 00236

- CV

__________ 

### KADANE CORPORATION, Appellant

V.
CHOLLA PETROLEUM, INC. , Appellee

On Appeal from the 29th District Court Palo Pinto County, Texas Trial Court Cause No. C42625

M E M O R A N D U M O P I N I O N
Kadane Corporation sued Cholla Petroleum, Inc. for trespass and
unreasonable interference

. The lawsuit was based upon Kadane’s belief that
C h olla’s use of an u pstream p ipeline to transport gas from its high

- pressure wells

on its Texas mineral lease in the Possum Kingdom L ake area unlawfully prevented Kadane from using that same upstream pipeline “ as a compressor inlet line” to transport gas extracted from Kadane’s three Brazos River Authority ( BRA ) low

pressure wells to Kadane’s compressor for compression and transport through a2 d ownstream p ipeline

. The trial court granted a final summary judgment that Cholla had not trespassed or unreasonably inter fered with Kadane’s operations. We

a ffirm.
I. Background Facts
Kadane Corporation operates gas wells on a peninsula in Possum Kingdom Lake as part of a Brazos River Authority oil and gas lease that the BRA executed in favor of Kadane Oil Company in 1976. Kadane Corporation is the successor in interest to Kadane Oil Company . W e will refer to both entities as Kadane. Kadane agreed to sell the gas production under the lease to Texas Utilities Fuel Company (TUFCO). In 1983, Kadane entered into a line use agreement with Southwestern Gas Pipeline, Inc. whereby the parties agre ed that the TUFCO gas was to be marketed and delivered through a pipeline owned by Southwest ern . Enbridge
G &P (North Texas) L.P. is the successor in interest to Southwestern Gas Pipeline,
Inc. In the line use agreement between Kadane and Southwestern, the parties agreed that Kadane was to add 1,500 feet to the existing 12,000 foot pipeline and maintain “the approximately 13,638 feet of pipeline and use the same free of charge as a compressor inlet line only until you receive written n otice from Southwestern that we intend to use this line for another service or you give written notice that you no longer need this line for gathering gas to your owned or leased compressor from wells now producing or capable of producing and additional

we ll s which you or others may complete and have connected under the terms of Gas Purchase Agreements, as amended from time to time.” The parties to the agreement also provided that either party could terminate the agreement on thirty days’ written notice.
K adane drilled multiple wells on the BRA lease prior to 1985 and has since plugged BRA Wells No s . 1 and 4

. Kadane ’s BRA Wells No s . 3, 5, and 8 tied into3 the u pstream p ipeline to transport gas to the Kadane compressor, which
, after compression, transport ed the gas to TU F CO through the d ownstream p ipeline.
Kadane’s BRA Wells No s . 2 and 6 tied directly into the d ownstream p ipeline. More than twenty years later, Kadane drilled BRA Well No. 10, which is a prolific producer
, and Kadane also tied it into the d ownstream p ipeline. In 2005, Cholla obtained a mineral lease from the State of Texas

. The lease

cover ed a portion of a riverbed channel lying under Possum Kingdom Lake. Because of surface use restrictions and disagreements, Cholla filed a condemnation
suit to secure surface rights from Kadane and BRA, but later nonsuited after entering into a Surface Use Agreement (SUA) with BRA. BRA granted Cholla “the right to use the surface estate of [BRA] lands,” subject to certain terms and conditions. One such condition was a “Reservation in Favor of [BRA]” that Cholla must “not unreasonably interfere with the existing use of such land by [BRA]’s surface and mineral lessees.” Cholla executed a gas purchase contract in 2005 with Enbridge tha t amended the gas purchase contract between Cholla and Enbridge’s predecessor s

. Later,
Cholla drilled State Mockingbird Wells No s . 3 and 6 and BRA Well No. 9 , all of which are prolific , high

- pressure wells
, and Cholla sought to transport that gas through Enbridge’s p ipeline. Enbridge wanted to transport Cholla’s gas production upstream and convert its upstream pipeline to a high

- pressure line. In 2007, Enbridge sent written notice to Kadane that it was terminating all l ine u se

a greements, including the 1983 a greement, and that Kadane was to disconnect its nominal, low

- pressure wells.
When Kadane failed to disconnect its low

- pressure wells from Enbridge’s upstream pipeline
, Enbridge sent additional letters and made telephone cal ls to Kadane about disconnecting its wells. After no response, Enbridge disconnected
Kadane’s wells , laid a new line, and converted its upstream pipeline to a high

-4 pressure line. Later, Kadane shut in BRA Wells No s . 3, 5, and 8
, but BRA Wells
No s . 2 and 6 continued to produ ce

. Kadane did not sue Enbridge and concede d that Enbridge had the right to terminate the line use agreement. Kadane instead sued Cholla and moved for partial summary judgment on its trespass and interference claims

. To prevail on its trespass claims, Kadane must prove wrongful interference with its right of possession of real property. Cargal v. Cargal , 750 S.W.2d 382, 385 (Tex. App.

— Fort Worth 1988, no writ). To succeed
on its breach of contract claim as an alleged in tended beneficiary of the SUA
, Kadane must prove that Cholla “unreasonably interfered” with Kadane’s “existing
use” of the surface estate. Cholla also moved for a final summary judgment and
, in
its motion
, a sserted that it had not trespassed or interfered. The trial court
concluded that termination of the l ine u se a greement was within Enbridge’s legal right and not caused by any unlawful act by Cholla
, that neither Enbridge nor Cholla trespassed
, and that Cholla did not unlawfully or unreasonabl y interfere with any existing use of the surfac e by Kadane.
II. Issues Presented
Kadane claims that Cholla is liable for trespass because it assented to , adopted, and ratified Enbridge ’s unlawful disconnect ion of Kadane’s wells and compressor, which w ere done for Cholla’s benefit and interest. Kadane argues in
its second issue that
, “[b]y tying its wells into Upstream Enbridge Pipeline rather
than downstream of the Kadane C ompressor thereby knocking the Kadane Upstream Wells off production, Cholla unreas onably interfered with Kadane’s
lawful use of the surface as a matter of law.”
II

I

. Standard of Review
We review a trial court’s ruling on a traditional motion for summary judgment de novo. Valence O perating Co. v. Dorsett , 164 S.W.3d 656, 661 (Tex. 2005). W e must determine whether the movant established that no genuine i ssue5 of material fact existed and that the movant was entitled to judgment as a matter of
law. T EX

. R. C IV

. P. 166a(c); Nixon v. Mr. Prop

. Mgmt. Co. , 690 S.W.2d 546,
548

– 49 (Tex. 1985); Apcar Inv. Partners VI, Ltd. v. Gaus , 161 S.W.3d 137, 139 (Tex. App.

— Eastland 2005, no pet.). To be entitled to summary judgment, a defendant must either disprove an element of each of the plaintiff’s cause s of
action or establish an affirma tive defense as a matter of law. Am. Tobacco Co. v.
Grinnell , 951 S.W.2d 420, 425 (Tex. 1997).
We consider the summary judgment evidence in the light most f avorable to
the non

- movant and indulge all reasonable inferences and resolve all doubts in
favor of the non

- movant. Am. Tobacco , 951 S.W.2d at 425; Nixon , 690 S.W.2d at
54 8

– 49

. When the trial court’s order specifies the grounds it relied upon for its ruling, as is the case here, we will only consider the propriety of the ground s specified

. S tate Farm Fire & Cas. Co. v. S.S. , 858 S.W.2d 374, 380

– 81 (Tex. 1993). If granting judgment on the specified grounds was improper , “ we must remand the cause to allow the trial court to rule on the remaining grounds.”
State v. Flag

- Redfern Oil Co. , 852 S .W.2d 480
, 484 n.6 (Tex. 1993).
IV . Scope of Summary Judgment Review Cholla argues that our review is limited to the evidence offered in support of

or in opposition to Cholla’s motion for summary judgment. Cholla a grees that reviewing courts may consider all of the summary judgment evidence when reviewing cross

- motions but argues that is not the case here since Kadane’s motion sought only partial summary judgment. Cholla’s argument inadvertently merges three distinct summary judgment principles of review : reviewability, relief upon reversal, and evidence to be considered on appeal. First, reviewability of a ruling on a motion for summary judgment depends on finality. An order denying summary judgment is not final and appea lable; such
a denial means that there is a fact issue or that the elements have not been proven6 as a matter of law. Cincinnati Life Ins. Co. v. Cates , 927 S.W.2d 623, 625 (Tex. 1996). But an order that denies summary judgment to one party and grants

summ ary judgment to another party produces a final judgment; the denial is reviewable as part of the appeal from the granted motion. Jones v. Strauss , 745 S.W.2d 898, 900 (Tex. 1988). “Absent an exception or statutory mandate, the parties must have both soug ht a final judgment for this rule to apply.” Apcar , 161
S.W.3d at 139 (denying review of the denial of a partial summary judgment motion while reviewing if trial court properly granted final summary judgment in favor of the opposing party). Second, t he relief we grant upon reversal depends on whether a final judgment or partial judgment was requested. Reviewing courts can reverse a summary judgment in favor of one party and render judgment for the other only when both parties moved for a final summar y judgment in their cross

- motions. See
Bowman v. Lumberton I ndep. Sch. Dist. , 801 S.W.2d 883, 889 (Tex. 1990); Runyan v. Mullins , 864 S.W.2d 785, 788 (Tex. App.

— Fort Worth 1993, writ denied). If both parties did not seek final judgment, and we reverse a trial court’s summary judgment, then we must remand for a trial and determination of a fact issue or for the party to prove its case

. Jone s , 745 S.W.2d at 900. Finally, t he evidence we can consider on appeal is not limited by the type of relief sought , as Cholla contends

. Instead, we consider the evidence that was

“ properly before the court at the time judgment was rendered.” DeBord v. Muller
, 446 S.W.2d 299, 301 (Tex. 1969). At the time of judgment
, cross

- motions and accompanying summary judgment e vidence that have been properly and timely
filed under R ule 166a (c) are “properly before the court” and may be considered by the trial court when ruling on the motions

. Id. Further, the evidence is not limited to what was offered in reply to a motion for summary judgment. Futch v. Greer
, 353 S.W.2d 896, 898 (Tex. Civ. App.

— Amarillo 1962, writ ref’d n.r.e.). “In our7 opinion appellees’ own motion for summary judgment supported by affidavits and
exhibits attached thereto, together with the deposition of appellee . . . , constituted sufficient opposition to appellants’ motion.” Id. at 898

– 99

. Kadane moved for partial summary judgment on its claims ; Cholla moved for a final summary judgment on traditional and no

- evidence grounds

. In its summary judgment response, Kadane incorporated by reference the evidence it had already offered in its motion for partial summary judgment. Both parties filed objections and responses , and the trial court heard the motions and noted that it had
considered them and the parties’ responses. Therefore, the arties’ motions and their attached evidence were properly before the trial court

. Because Kadane only moved for a partia l judgment, while Cholla moved for final judgment, we review
whether the trial court erred in granting summary judgment in favor of Cholla

. See Apcar , 161 S.W.3d at 139.
V. Discussion and Analysis
A. Issue One : Trespass
Kadane contends that the interference or physical trespass occurred when Enbridge disconnected Kadane’s upstream w ells from the upstream pipeline and that, b ecause Cholla “assented, adopted and ratified the acts and entry by Enbridge
done for Cholla’s benefit and interest,” Cholla is equally liable for the trespass

. See Schievink v. Wendylou Ranch, Inc. , 227 S.W.3d 862, 864 (Tex. App.

— Eastland 2007, pet. denied). “If, by any act of his, the actor intentionally causes a third person to enter land, he is as fully liable as though he himself enters. Th u s, i f the actor has commanded or requested a third person to enter land in the possession of another, the actor is responsible for the third person’s entry, if it be a trespass.”
R ESTATEMENT (S ECOND ) OF T ORTS § 158 cmt. j (19 65 ); see also City of Mineral
Wells v. McDonald , 170 S.W.2d 466, 469 (Tex. 1943).8 The summary judgment evidence established that
, w hen Enbridge decided to convert its upstream pipeline to a high

- pressure line, it sent written notice to Kadane on September 5, 2007, terminating all line u se a greements between the parties
, including the 1983 l ine u se a greement

. When Kadane failed to disconnect its wells, Enbridge again sent written notice on February 18, 2008. In t he second letter, Enbridge advised Kadane to “make immediate efforts to disconnect your wells from these line agreements so that you will no longer be trespassing upon property belonging to Enbridge.” When Kadane again failed to disconnect its wells, Enbridge called and advised Kadane that it would disconn ect the wells the following day. T he following day, Enbridge disconnected Kadane’s wells and

compressor

. Enbridge then laid a new line and converted the upstream pipe line to a high

- pressure line.
The line use a greement gave both Kadane and Enbridge the right to terminate the agreement upon written notice, and Enbridge gave written notice on two
occasions that it was terminating the l ine use a greement. Kadane did not sue Enbridge but
, instead
, conced ed that Enbridge had the right to terminate the agreement. Enbridge did not commit a trespass when it disconnected Kadane’s
wells and compressor because Kadane had failed to timely disconnect the m after Enbridge terminat ed the l ine u se a greement. Cholla was never involved in this agreement or action and cannot be held liable for Enbridge’s actions. In addition,
Cholla was not involved with Enbridge’s actions and
, as a mineral lessee with a surface use agreement, had a legal right to drill its wells and to tie into the Enbridge pipeline when and where it did so. Therefore
, neither Enbridge nor Cholla trespassed
, and Kadane’s first issue is overruled.
B. Issue 2 : Unreasonable Interference
Kadane claims that it “used the surface of the [land] for the entire length of the Upstream Enbridge Pipeline to gather and market the gas produced from the9 Kadane Upstream Wells” and that Cholla’s acts to tie wells into that upstream pipeline were an unreasonable interferen ce with Kadane’s rights. Kadane argues
that Mid

- Texas Petroleum Co. v. Colcord controls because that court held that
Mid

- Texas was entitled to exclusive and full use of the “ north 20 acres ” and “ south
20 acres ” along the C lear F ork of the Brazos R iver for its oil and gas development.
Mid

- Tex

. Petroleum Co. v. Colcord , 235 S.W. 710, 715 (Tex. Civ. App.

— Fort Worth 1921, no writ). Kadane asserts that
, like Mid

- Texas , it should be allowed to continue to exclusively use the entire upstream pipeline “ as a comp ress or inlet
line. ” We disagree. In Mid

- Texas , the court held that Mid

- Texas was entitled to
the south twenty acres for oil and gas development because of the original lease grant and the lease it held with Seaboard Oil, who could not execute a surface use lease with a third party that contravened its lease with Mid

- Texas. Mid

- Tex

. , 235
S.W. at 715. But in this case, the issue is whether Kadane can compel Enbridge to maintain the upstream pipeline “ as a compress or inlet line” for Kadane’s sole benefit and force Cholla to tie its wells into the downstream pipeline. The only existing use Kadane alleges is of the surface of the land over the length of Enbridge’s pipeline. Kadane used the surface when it installed the 1,500 feet of pipeline as req uired by the l ine use a greement. S ee Cole v. An a darko Petroleum Corp. , 331 S.W.3d 30, 37 (Tex. App.

— Eastland 2010, pet. denied ) (explaining that a mineral lessee uses the surface during installation and that, once installed, the use becomes a pipeline easement ); Exxon Pipeline Co. v. Zwahr , 88 S.W.3d 623, 626 (Tex. 2002) (“Like the Koch [Pipeline Company] easement, the
Exxon easement does not affect the [surface owner’s] continued use of the surface for farming cotton.”). While Kadane argues that losing its wells “as a result of Cholla’s entry under the auspices of the SUA as a matter of law constitutes an
unreasonable interference with Kadane’s rights as contemplated under the terms of10 the SUA,” the question is whether Cholla interfered with an “existing use ” of the
surface. Cholla argues that
, while a mineral lessee “has dominant rights precluding
interference with it s existing uses,” the obligations of “due regard” and the duty to “accommodate” prevent Kadane “from claiming that it is using all lands along a gas purchaser’s pipeline and that, as a result, no other oil and gas operator can connect its wells to such pip eline without interfering.” We agree. The summary judgment evidence is undisputed that Enbridge gave Kadane the right to use its pipeline as a compressor inlet line
, but Enbridge reserved the right to terminate
Kadane’s exclusive use by providing notice of its intent “ to use [ the ] line for
another service ” or to terminate the agreement by giving thirty day s’ written
notice. The evidence was undisputed that terminating the l ine u se a greement did not prevent Kadane from marketing or se lling the oil and gas it produced but
, rather

. terminated Kad ane’s exclusive use of the upstream pipeline

. Furthermore,
Cholla’s wells connect ed to the upstream pipeline at a separate location from
Ka dane’s connection. Therefore, the summary judgment evidence established and support ed as a matter of law the trial court’s judgment that Cholla did not unreasonably interfere with an existing use of the surface by any surface or mineral
lessees . Kadane’s second issue is overruled.
T

his Court’s Ruling
We affirm the judgment of the trial court

.

JIM R. WRIGHT
CHIEF JUSTICE June 27, 2013
Panel co nsists of : Wright, C.J., McCall, J., and Willson, J.