## IN THE SUPREME COURT O F TEX AS

4 4 4 4 4 4 4 4 4 4 4 4 N O
. 13-0816

4 4 4 4 4 4 4 4 4 4 4 4 

### E L 

### P A S O 

### M A R K E T IN G 

### , L

. P

. , P E T IT IO N E R 

### ,

v . 

### W O L F 

### H O L L O W 

### I , L

. P

. , R E S P O N D E N T

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

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 O U R T E E N T H 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

P ER CURIAM

I n this case the court of appea ls rema nded a claim for trial beca use i t t h o u gh t we had compelled this result in an ea rlier a ppeal. B eca

use we did not, we re verse this portion of t he court of appe als’ judg ment. Wolf Hollow I , L .P. owns a power plant. El Paso Marke ting, L .P. provides g as for the plant under a Supply Ag ree ment with Wolf Hollow. Gas is transporte d to the plant throug h a pipeline owned by Enterpr ise T ex as Pipeline L L C. The g as is transporte d under terms of a Transpor tation Ag ree ment betwee n El Paso and Enterpr ise.
El Paso sued Wolf Hollow seeking decla ratio n s construing their contra ctual rela tionship. Wolf Hollow counter claimed ag ainst El Paso for brea ch of the Supply Ag ree ment. El Paso broug ht

a third-par

ty claim ag ainst Enterpr ise, and Wolf Hollow broug ht a cross-c laim ag ainst Enterpr ise for
neg lige nce. Wolf Hollow’s claims ag ainst El Paso and Enterpr ise conce rned two fac tual claims. Onec la im c o ncer ned four interruptions in g as delivery that require d purcha ses of repla ceme nt power
. T h e other claim was that Enterpr ise delivere d g as contaminated with liqu id s th a t d a ma g e d Wolf Hollow’s plant, require d plant upg rade s, and re quired purc hases of repla ceme nt power. The trial court g rante d summary judgme nt for El Paso and Enterpr ise. Among other holdings and dec lara tions, it held t hat the four delivery interruptions wer e excused unde r the for ce- majeure provision of t he S upply Ag ree ment, and that all damag es sought by Wolf Hollow aga i n s t El Paso

wer e conse quential damag es wa ived by the Supply

Ag ree ment. The trial court also rende red a decla ratory judgme nt holding that (1 ) the four service interruptions constituted events of forc e majeure excusing perfo rm ance , (2) El Paso g ave proper notice of forc e majeure , (3) under Section 14.1 of the Supply Ag ree ment, Wolf Hollow’s exclusive

reme dy for the g as-qua lity claim is the assig nment to Wolf Hollow of any claim El Paso has ag ainst Enterpr ise, and (4) the default and remedies provision of t he S u p p l y Ag ree ment (Article 21) does not apply to Wol f Hollow’s g as-qua lity claim.
On appea l, the court of appea ls, without rea ching all of the issues prese nted, held that Wolf Hollow’s claims ag ainst El Paso failed, ag ree ing with the trial court that all the alleg ed damag es wer e
conseque ntial damag es waived by the S upply Ag ree ment. 329 S.W .3d 628, 636–43 ( W olf Hollow
I ). Be cause the court of appea ls ag ree d with the trial court on this issue, it found the four trial court decla rations desc ribed a

bove super fluous or m oot, and modi fied the final j udg ment to remove the decla ratory judgme nt lang uag e. Id. at 645. The court of appea ls reve rsed the summary judgme nt in favor of Enter prise. Id. at 643–45.

2I n this posture the case rea ched us. We held that the neg lige nce claim ag ainst Ent er prise

failed as a matter of law. 383 S

. W

. 3 d 1 3 8 , 142–44 ( W olf Hollow II

). We then turned to Wolf Hollow’s contra ct claims ag ainst El Paso. We rea soned that, questions of conseque ntial versus direc t damag es aside, and questions of “cove r” under the Uniform Commercial Code aside, the Supply Ag ree ment expressly p ro v i ded for a form of repla ceme nt-power damag es in Article 21. Id. at 144–45. We briefly addre ssed contra ct provisions rela ting to the purcha se of repla ceme nt power and conclude d there was some evidenc e that Wolf Hollow had complied with the proce dures set out in Article 21. Id. at 145. Finally , we briefly addre ssed the court of appea ls’ decision to vacate the trial court’s declar atory judgme n t

. We reve rsed this part of the court of appeals’ judgment because we conclude d that the court of appea ls had vacated the d eclaratory judgme nt as moot; the court of
appea ls had conclude d t h at t here was no rea son to issue the decla ratory judgme nt in light of its holding that a ll of Wol f Hollow’s claims wer e bar red by the waive r of c onsequential da mag es. Id. Since we held that further proce eding s were war

rante d on claims for replac ement-pow er damag es that wer e not barr ed by the contra ctual waiver of conseque ntial damag es, we reve rsed this part of the court of a ppeals’ judg ment and re manded the c ase to the c ourt of appe als. Id. at 145–46.
On re mand the cour

t of appe als held that the ser vice- interruption claim fa iled beca use that claim was barr ed by the forc e-ma jeure provision of the Supply Ag ree ment. 409 S.W .3d 879, 885–88 ( W o l f Hollow III

). This holding marke d the first time an appellate court had rea ched the forc emajeure defe nse, the subject of the first two decla rations of the trial court’s judgme nt. Wolf Hollow does not cha lleng e this ruling.

3Wit h the claims aga inst Enterprise g one af ter our W olf Hollow II

decision and the service

interruption claim barr ed by forc e majeure , the court of appea ls w as left to a ddress Wolf Hollow’s
g as-qua lity claim ag ainst El Paso. The trial court had g rante d summary judgme nt for El Paso on this claim and had issued tw o d ec l ar at i ons reg arding it. The third decla ration held that Wolf Hollow could not rec over on this claim beca use Wolf Hollow’s exclusive reme dy was an assig nment of any
g as-qua lity claim El Paso may have ag ainst Enterpr ise under Section 14.1 of the Supply Ag ree ment. The court of appea ls conclude d that we had expressly overr uled this decla

ration in W

olf Hollow II

, when we s tated th at “n o t h i n g in Section 14.1 sug g ests that [W olf Hollow] cannot sue El Paso for brea ch of the Supply

Ag ree ment in allowing poor quality g as to be de livered.” W

olf Hollow III

, at 889 (quoting W

olf Hollow II

, at 144). The trial court separ ately reje cted Wolf Hollow’s g as-qua lity claim in its fourth decla ration, which declare d that Article 21, providing for replace ment-powe r damag es, “does not apply to g as quality claims for g as delivere d to Wolf Hollow on the [Enterprise] pipeline.” The court of appea ls
in W olf Hollow III conclude d that we had also reje cted this decla ration in W

olf Hollow II

. The court of appea ls quoted our decision in W olf Hollow II

, including our statement that “ther e is evidenc e Wolf Hollow is entitled to rec over repla ceme nt- p o w e r d a ma g es under Section 21.1(c) .” W olf Hollow
III , at 889 (quoting W

olf Hollow II , at 145). Concluding that “[t] he Texas Supreme Court eff ectively

reve rsed t he trial court’s third and fourth decla rations,” the court of appea ls “re mand[ed] the case for trial on Wolf Hollow’s claims for repla ceme nt-power damag es for the failure to deliver quality
g as.” W olf Hollow III

, at 892.

4I n W olf Hol l o w II

I , J ustice Busby concur

red, ag ree ing with the majority opinion that our decision in W

olf Hollow II eff

ectively reve rsed the trial court’s decla ratory judgme nt, including the trial court’s fourth decla

ration that Article 21 did not apply to g as-qua lity claims. Id

. at 8 9 2–93 (B usby , J ., concur

ring ). Howeve r, he opined that if he wer e writing on a clea n slate he would aff

irm the trial court’s fourth decla ration that Article 21 does not apply to Wolf Hollow’s g as- quality claim
ag ainst El Paso. Wit hout repe ating here J ustice Busby ’s analy sis, he rea d Article 21 as only apply ing
to cer tain g as- quantity claims. Chief J ustice Hedg es concur red in part and dissented in part in W olf Hollow III

. Id. at 893–97 (He dg es, C . J ., concur

ring in part and dissenting in part). She a g ree d that the trial court’s first and second decla

rations should be aff

irmed, and thus ag ree d that El Paso should preva il on the delivery

interruption claim. Howeve r, she also believed that (1) the trial court’s s ummary judgme nt on the
g as-qua lity claim, as ref

lected in the third and fourth decla rations, was corr ect, and (2) the Supreme
Court had n o t p re cl u ded the court of appea ls from aff irming the summary judgme nt on both the delivery -i n t er ru ption claim and the g as-qua lity claim. L ike J ustice Busby , Chief J ustice Hedg es focuse d in part on whether repla ceme nt-power damag es under Article 21 could be awa rded on Wolf Hollow’s g as-qua lity

claim.
I n its second appea l to us, El Paso now arg ues that Wolf Hollow’s g as-qua lity claim should fail bec ause A rticle 21 doe s not apply to that c laim, a s the trial court held in its four th declar ation.
El Paso arg ues that we did not decide this question in W olf Hollow II

. Wit hout rea ching the ultimate merits of this arg ument and deciding whether summary judgme nt was war rante d on the g as-qua lity

5claim, we ag ree with El Paso that our decision in W olf Hollow II did not prec lude the court o f
appea ls from dec iding this question.
We believe the court of appea ls felt itself too constraine d by our decision in W olf Hollow II

. I n holding that the Supply Ag ree ment provided for repla ceme nt-power damag es that wer e available notwithstanding a separ ate waiver of conseque ntial damage s , and that “Wolf Hollow may pursue repla ceme nt-power damag es under the contra ct,” W olf Hollow II , at 145, we did not hold that Wolf Hollow would nece ssarily preva il in obtaining repla ceme nt-power damag es on its g as-qua lity claim.
We reve rsed the court of appea ls’ judgme nt insofar as it deleted the trial court ’s “d ec l ar ations as
moot on the g round that all of Wolf Hollow’s claims wer e barr ed by the waiver of conseque ntial damag es.” Id. Read in context, vaca ting this portion of the court of appea ls’ judgme nt was war rante d beca use we held that the Supply Ag ree ment’s waiver of conseque ntial damag es did not nece ssarily
prec lude an awa

rd of repla ceme nt-power damag es. We did not hold, on the merits, that Wolf Hollow

was entitled to rec over on its claim for repla ceme nt-power damag es resulting from poor-qua lity g as. Whil e we held that repla ceme nt-power d am age s wer e available under the terms of the Supply Ag ree ment in cer

tain circ umstances, and thus disag ree d with the court of appea ls’ conclusion in W olf Hollow I that the wai v er o f co n sequential damag es entitled El Paso to summary judgme nt on all claims ag ainst it, we did not rule on all the issues, including those discussed in the court of appea ls’

concur ring and dissenting opinions in W olf Hollow III

, reg arding the availabili t y of repla ceme ntpower damag es on Wolf Hollow’s g as-qua lity claim. No appellate court has decide d the merits of 1

W e n o t e , h o w e v e r , t h a t i n s o f a r a s C h i e f J u s t i c e H e d g e s r e l i e d o n S e c t i o n 1 4

. 1 o f t h e S u p p l y A g r e e m e n t , w e 1 h e l d i n W

o l f H o l l o w I

I , a n d c o n t i n u e t o h o l d , i n r e s p o n s e t o E l P a s o ’ s a r g u m e n t t h a t W o l f H o l l o w ’ s e x c l u s i v e r e m e d y o n g a s - q u a l i t y c l a i m s i s a n a s s i g n m e n t o f E l P a s o ’ s c l a i m a g a i n s t E n t e r p r i s e u n d e r S e c t i o n 1 4

. 1 , t h a t “ n o t h i n g i n S e c t i o n 6these questions, nor has any appellate court passed on whateve r err or-pr eser vation issues might

acc ompany them. The court of appea ls err ed in W olf Hollow III insofar as it held that our W olf Hollow II decision pre cluded it from r eviewing these que stions.
Acc ording ly , without hear ing oral arg ument, see T E X
. R. A P P
. P. 59.1, we reve rse the court of appea ls’ judgme nt rela ting to Wolf Hollow’s g as-qua lity claim for repla ceme nt-power damag es, and otherwise aff

irm the judgme nt. We rema nd the case to the court of appea ls for further 2
proce eding s consistent with this opi nion.

OP INION DELIVERED: November 21, 2014

1 4

. 1 s u g g e s t s t h a t [ W o l f H o l l o w ] c a n n o t s u e E l P a s o f o r b r e a c h o f t h e S u p p l y A g r e e m e n t i n a l l o w i n g p o o r q u a l i t y g a s t o b e d e l i v e r e d

. ” W

o l f H o l l o w I

I , a t 1 4 4

. I n W

o l f H o l l o w I

I , E l P a s o m o v e d f

o r r e h e a r i n g , a r g u i n g t h a t “ [ t ] h e C o u r t i n c o r r e c t l y c o n s t r u e s E l P a s o ’ s o b l i g a t i o n u n d e r S e c t i o n 1 4

. 1 o f t h e S u p p l y A g r e e m e n t a s t o g a s q u a l i t y , ” b u t w e d e n i e d t h e m o t i o n
.

I n W o l f H o l l o w I

I I , t h e c o u r t o f a p p e a l s s e p a r a t e l y h e l d t h a t W o l f H o l l o w ’ s c l a i m s f o r b r e a c h o f t h e S u p p l y 2 A g r e e m e n t ’ s A r t i c l e 5 p r o v i s i o n s s u r v i v e d s u m m a r y j u d g m e n t i n s o f a r a s W o l f H o l l o w s u f f e r e d r e p l a c e m e n t

- p o w e r d a m a g e s
. W e a g r e e w i t h t h e c o u r t o f a p p e a l s t h a t “ [ t ] h e f

u e l

- m a n a g e m e n t d u t i e s u n d e r [ A r t i c l e 5 o f ] t h e a g r e e m e n t a r e v e r y b r o a d , r e q u i r i n g E l P a s o t o m a n a g e t h e g a s t r a n s p o r t a t i o n a n d t o u s e p r u d e n t f u e l

- m a n a g e m e n t p r a c t i c e s t o m i n i m i z e c o s t s t o W o l f H o l l o w . ” W o l f H o l l o w I

I I , a t 8 9 0

. T h e c o u r t o f a p p e a l s c o r r e c t l y h e l d t h a t i t s e a r l i e r r u l i n g

— t h a t a n y b r e a c h o f

A r t i c l e 5 w a s b a r r e d b y t h e w a i v e r o f c o n s e q u e n t i a l d a m a g e s

— c o u l d n o l o n g e r s t a n d i n l i g h t o f o u r r u l i n g i n W o l f H o l l o w I I t h a t W o l f H o l l o w c a n r e c o v e r f o r b r e a c h e s o f t h e S u p p l y A g r e e m e n t i f i t c a n e s t a b l i s h r e p l a c e m e n t

- p o w e r d a m a g e s
. H o w e v e r , a s e x p l a i n e d a b o v e , n e i t h e r t h i s C o u r t n o r t h e c o u r t o f a p p e a l s h a s r u l e d o n w h e t h e r A r t i c l e 2 1 , w h i c h p r o v i d e s f

o r r e p l a c e m e n t

- p o w e r d a m a g e s , a p p l i e s o n l y t o g a s - q u a n t i t y c l a i m s , a s E l P a s o c o n t e n d s , o r a p p l i e s t o W o l f H o l l o w ’ s g a s - q u a l i t y c l a i m a s w e l l , a s W o l f H o l l o w c o n t e n d s
. 7