NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-3464-12T4

HESS CORPORATION,

Plaintiff-Respondent,

v.

ENI PETROLEUM US, LLC,

Defendant-Appellant,

and

ENI USA GAS MARKETING LLC,

Defendant.

___________________________________

Argued: December 18, 2013 – Decided:

Before Judges Simonelli, Fasciale and Haas.

On appeal from the Superior Court of New 

Jersey, Law Division, Middlesex County, 

Docket No. L-6149-10.

Gary M. Fellner argued the cause for 

appellant (Porzio, Bromberg & Newman, 

attorneys; Mr. Fellner, of counsel and on 

the briefs; Michael J. Naporano, on the 

briefs).

Christopher Raleigh argued the cause for 

respondent (Cozen O'Connor, attorneys; Mr. 

Raleigh, of counsel and on the brief; 

Geoffrey D. Ferrer, on the brief).

The opinion of the court is delivered by

HAAS, J.A.D.

January 9, 2014

APPROVED FOR PUBLICATION

March 26, 2014

APPELLATE DIVISION
2 A-3464-12T4

In this dispute over the application and effect of force 

majeure provisions in a natural gas supply contract, defendant 

Eni Petroleum US, LLC appeals from the March 7, 2013 amended 

final judgment of the Law Division, which required defendant to 

pay plaintiff Hess Corporation $317,000 in damages, $81,476.87 

in prejudgment interest, and $263,024.15 in legal fees. After 

reviewing the record in light of the contentions advanced on 

appeal, we affirm.

The material facts are not in dispute. Defendant is a 

Delaware corporation with its principal place of business in 

Houston, Texas. It produces natural gas from, among other 

locations, sources under the sea floor in the Gulf of Mexico. 

Plaintiff is also a Delaware corporation, but has a place of 

business in Woodbridge, New Jersey. 

On September 5, 2007, the parties reached agreement on the 

basic terms that would govern a series of natural gas sales from 

defendant to plaintiff. Those general terms were contained in a 

"Base Contract" prepared from an industry form published by the

North American Energy Standards Board (NAESB). The NAESB form 

consists of three parts: (1) the Base Contract with General 

Terms and Conditions; (2) a Transaction Confirmation form, which 

allows the parties to fill in details regarding specific 
3 A-3464-12T4

transactions; and (3) a "Special Provisions" addendum, which 

could be used to modify the General Terms and Conditions.

Under the Base Contract, defendant agreed to "sell and 

deliver" and plaintiff agreed to "receive and purchase" natural 

gas. The Base Contract contained only the basic provisions that 

would apply to any subsequent natural gas sales between the 

parties, and did not recite the details for any specific 

transaction. Instead, the details of each subsequent sale were 

to be memorialized in written "Transaction Confirmations." The 

Base Contract did not specify a particular source of the gas 

defendant would sell, nor did it state that the gas would be 

produced by defendant, rather than by another producer.

Beginning on November 20, 2007, the parties completed 

Transaction Confirmation forms for the months of December 2007, 

January, February, March, and April 2008 by filling in the 

specific details of the next month's sale/purchase of natural 

gas. Each Transaction Confirmation form specified that the 

performance obligation was "Firm,"1 as well as the quantity, 

price, delivery period, and delivery point for the following 

 

1 "Firm" as defined in the Base Contract, means that performance 

by either party may be interrupted "only to the extent that such 

performance is prevented for reasons of Force Majeure." The 

parties chose "Firm" over the option of "Interruptible," which 

allows either party to interrupt performance for any reason 

without liability. 
4 A-3464-12T4

month's transaction. The delivery point for each transaction 

was the "Tennessee Gas Pipeline on 2i - Zone L - 500 Leg" 

("Tennessee 500").2 Each form also reiterated that it was 

subject to the Base Contract dated September 5, 2007. 

Critically, the Transaction Confirmation forms did not specify

which transporter3 was to be utilized for each transaction. The 

forms also did not state that defendant would produce the 

natural gas. 

On March 20, 2008, the parties negotiated the April 2008 

transaction that is the subject of this appeal. The agreement 

was memorialized in a Transaction Confirmation signed on March 

24, 2008. The parties agreed that defendant would deliver

20,000 MMBTU4 of gas per day to the Tennessee 500 Leg Pool5

#020999 from April 1 through April 30, 2008 for a contract price 

 

2 The Tennessee 500 is an off-shore pipeline that runs north from 

a platform in the Gulf of Mexico to Louisiana.

3 "Transporter" is defined in the Base Contract as "all Gas 

gathering or pipeline companies, or local distribution 

companies, acting in the capacity of a transporter, transporting 

Gas for Seller or Buyer upstream or downstream, respectively, of 

the Delivery Point pursuant to a particular transaction."

4 "MMBTU" means one million British Thermal Units. In the 

industry, it is also referred to as "Dekatherms" and "Deks."

5 "Pool" refers to an "aggregate point for gas supplies from 

various sources," which operates to balance out the fluctuation 

and uncertainty in production.
5 A-3464-12T4

"Inside FERC6 Gas Market Report First of Month Index." This gas 

would be pooled with gas from other sources and plaintiff would 

then be able to receive the gas at the Tennessee 500. Similar 

to all the prior transactions, the parties left blank the 

"transporter" information section of the Transaction 

Confirmation form. Under "Special Conditions" on the form, they 

also listed "None." The Base Contract and the Transaction 

Confirmation form for the delivery period of April 1 through 

April 30, 2008 constitute the full, integrated contract 

controlling the transaction at issue in this appeal.

Defendant produced natural gas from wells located in the 

Gulf of Mexico. Its wells were connected through underwater 

pipelines to the Independence Hub ("I-Hub"), a floating platform 

in the Gulf, approximately 185 miles off the coast of Louisiana. 

Other producers also sent gas to the I-Hub. Once in the I-Hub, 

the gas is aggregated, processed, and transported to shore 

through other underwater pipelines. The natural gas defendant 

produced at this location was transported through a single 

underwater pipeline called the Independence Trail Pipeline, 

owned and operated by a separate entity, Enterprise. The 

Independence Trail leads to another platform in the Gulf called 

 

6 "Inside FERC" refers to a public price index of the average 

natural gas price for the prior month. 
6 A-3464-12T4

the West Delta 68. From there, the gas goes to the Tennessee 

500, where it is placed into the pool.

On April 8, 2008, a leak was discovered in the Independence 

Trail Pipeline in a flexjoint that connected the Pipeline to the 

I-Hub. As a result, Enterprise stopped all gas transportation 

through the Pipeline. Because of the leak, defendant could not 

get any gas from the I-Hub to the Tennessee 500 until June 2008, 

when Enterprise repaired the Pipeline.

Upon learning of the leak, defendant notified plaintiff in 

writing that it was declaring force majeure under the terms of 

the Base Contract and that it would not be delivering any gas to 

the Tennessee 500 for plaintiff. In pertinent part, the force 

majeure terms of the contract state:

[N]either party shall be liable to the other 

for failure to perform . . . to the extent 

such failure was caused by a Force Majeure. 

The term "Force Majeure" as employed herein 

means any cause not reasonably within the 

control of the party claiming suspension[.] 

. . . . 

Force Majeure shall include, but not be 

limited to . . . interruption and/or 

curtailment of Firm transportation and/or 

storage by Transporters[.]

Plaintiff rejected defendant's declaration of force majeure

as a reason for its failure to perform under the contract. 

Plaintiff pointed out that the Tennessee 500 pool is fed by a 
7 A-3464-12T4

number of different sources.7 Therefore, the leak in the 

Independence Trail Pipeline did not affect the availability of 

natural gas at the Tennessee 500 delivery point. Plaintiff 

noted that the Transaction Confirmation form also did not 

identify Enterprise or the Independence Trail Pipeline as the 

specific transporter. After defendant failed to provide gas to 

plaintiff at the Tennessee 500 pool, plaintiff was forced to 

purchase gas on the "spot market"8 to fulfill its own 

obligations. This gas cost over $300,000 more than plaintiff 

would have had to pay defendant for the gas under the March 24, 

2008 Transaction Confirmation.

Plaintiff filed a breach of contract action against 

defendant. Judge Richard Rebeck conducted a three-day bench 

trial and issued a written decision finding defendant liable for 

plaintiff's damages. The judge reviewed the pertinent 

provisions of the Base Contract and the Transaction Confirmation 

form, and noted that, in the March 24, 2008 form, the parties 

 

7 Defendant conceded that it had other production points in the 

Gulf that tied into the Tennessee 500 through pipelines not 

affected by the leak on the Independence Trail Pipeline. 

However, it argued that all of the gas was committed to other 

customers and that, without the gas from the Independence Trail 

Pipeline, it could not fulfill its contractual obligation to 

plaintiff.

8 The "spot market" refers to the Intercontinental Exchange Spot 

Market, an electronic system used to trade gas.
8 A-3464-12T4

identified only "the contract price, the delivery period, the 

performance obligation (quantity/Firm) and delivery point 

(Tennessee 500 Leg). No base contract number is listed nor a 

transporter and transporter contract number identified. No 

special conditions are set forth." 

The judge found that "[t]he absence of a listed transporter 

or special conditions is critical to the disposition of this 

matter." Defendant had agreed to provide a specific quantity of 

gas at a specific location, the Tennessee 500, during the month 

of April 2008. Nothing in the contract stated that defendant 

would only be able to provide the gas through a specific 

transporter, Enterprise, using a specific route, the 

Independence Trail Pipeline. Gas remained available from other 

sources at the delivery point. Thus, the judge ruled that the 

leak in the Independence Trail Pipeline did not constitute a 

force majeure event under the contract and was not grounds for 

excusing defendant's failure to perform the clear terms of its 

agreement with plaintiff. 

After the judge denied defendant's motion for 

reconsideration, the parties stipulated to the amount of 

damages, interest, and fees due to plaintiff and the judge 

entered an amended final judgment on March 7, 2013. This appeal 

followed.
9 A-3464-12T4

On appeal, defendant argues that the judge erred in 

rejecting its force majeure defense. An appellate court must 

accord deference to a trial court's factual findings when such 

findings are "supported by adequate, substantial and credible 

evidence." Rova Farms Resort, Inc. v. Investors Ins. Co. of 

Am., 65 N.J. 474, 484 (1974). But "[a] trial court's 

interpretation of the law and the legal consequences that flow 

from established facts are not entitled to any special 

deference." Manalapan Realty, L.P. v. Twp. Comm. of Manalapan, 

140 N.J. 366, 378 (1995). Contract interpretation is a question 

of law. Selective Ins. Co. of Am. v. Hudson E. Pain Mgmt. 

Osteopathic Med. & Physical Therapy, 210 N.J. 597, 605 (2012). 

Accordingly, no special deference is given to the trial court's 

interpretation; rather, this court "look[s] at the contract with 

fresh eyes." Kieffer v. Best Buy, 205 N.J. 213, 222-23 (2011); 

see Manalapan Realty, supra, 140 N.J. at 378. Applying this 

standard, we conclude that there was no error.

The parties agree that the Base Contract and Transaction 

Confirmation are governed by the laws of New York. Applying New 

York contract law, we must first determine whether the terms of 

the contract are ambiguous. Int'l Multifoods Corp. v. 

Commercial Union Ins. Co., 309 F.3d 76, 83 (2d Cir. 2002). 

Ambiguity is found if the terms in the contract are susceptible 
10 A-3464-12T4

to more than one meaning. Chimart Assocs. v. Paul, 498 N.Y.S.2d 

344, 346 (1986). The parties' differing subjective 

interpretations, however, will not rise to the level of 

ambiguity if the contract is otherwise clear. See, e.g., 

Bethlehem Steel Co. v. Turner Constr. Co., 161 N.Y.S.2d 90, 93 

(1957); Moore v. Kopel, 653 N.Y.S.2d 927, 929 (App. Div. 1997). 

Only if the contract is ambiguous will the court allow extrinsic 

evidence of the meaning of the terms. However, if the contract 

terms are unambiguous, the court will not permit extrinsic 

evidence; rather, it will look only at the contract itself to 

determine the intent of the parties. W.W.W. Assocs. v. 

Giancontieri, 565 N.Y.S.2d 440, 443 (1990); R/S Assocs. v. N.Y.

Job Dev. Auth., 744 N.Y.S.2d 358, 360, rearg. denied, 747 

N.Y.S.2d 411 (2002); Mercury Bay Boating Club, Inc. v. San Diego 

Yacht Club, 557 N.Y.S.2d 851, 857 (1990). 

In the present case, the parties agree that the contract is 

unambiguous. The parties do not dispute the terms in the 

contract, nor do they dispute the existence of the force majeure

provisions. They do, however, dispute the availability of the 

force majeure defense in these specific circumstances. Thus, we 

turn to a consideration of those provisions.

Force majeure clauses are narrowly construed. See, e.g., 

Kel Kim Corp. v. Cent. Markets, Inc., 524 N.Y.S.2d 384, 385 
11 A-3464-12T4

(1987). "Ordinarily, only if the force majeure clause 

specifically includes the event that actually prevents a party's 

performance will that party be excused." Ibid.

Here, neither the Base Contract nor the Transaction 

Confirmation specified the source of the natural gas defendant 

would sell to plaintiff. The contract documents do not identify 

a specific transporter which would deliver the gas or a specific 

pipeline that would be used. No special conditions were placed 

on defendant's obligation to provide the gas at the specified 

date at the Tennessee 500. The contract documents merely fix 

the price to be paid, the amount of gas to be delivered, and the 

delivery point (the Tennessee 500) where the gas would be made 

available to plaintiff.

Because there was nothing limiting defendant's performance 

to only gas it produced through the I-Hub, an interruption in 

the Independence Trail Pipeline bringing that gas to the 

Tennessee 500 was irrelevant to defendant's obligation. 

Defendant was required to have gas available in the Tennessee 

500 pool for plaintiff, regardless of how it got there. 

Defendant was free to use its other sources of gas to fill part 

of the contract or to purchase gas from the pool or the spotmarket to meet its contractual obligation to plaintiff. 
12 A-3464-12T4

Therefore, defendant could not invoke force majeure as a defense 

to plaintiff's breach of contract claim. 

As Judge Rebeck observed, the decision of the Texas Court 

of Appeals in Virginia Power Energy Mktg., Inc. v. Apache Corp., 

297 S.W.3d 397 (Tex. App. 2009), is instructive. In that case, 

the seller claimed force majeure under a NAESB contract, which 

was identical to the Base Contract in this case. The seller, 

Apache, had agreed to deliver natural gas to the buyer, Virginia 

Power, at a delivery point called the Transco-65. Id. at 400. 

Because of damages caused by hurricanes, Apache stated it lost 

its gas supply and could not deliver the gas. Id. at 405. The 

Transco-65, however, was unaffected by the storms and remained 

open for business. Ibid. 

As here, neither the Base Contract nor the subsequent 

Transaction Confirmations revealed any intent by Apache to limit 

its "gas supply" to any specific supply source. Id. at 406. 

Instead, Apache argued that the term "gas supply" was commonly 

understood in the industry "to refer only to those sources 

internally designated by the seller." Id. at 405-06. On the 

other hand, Virginia Power asserted that, "if a seller wishes to 

limit its 'supply' to a specific source, it must expressly state 

that intent in the contract." Id. at 406. The court rejected 

Apache's argument, finding that, if the parties had intended to 
13 A-3464-12T4

limit Apache's obligation to providing gas from a particular 

source, this term should have been included in the Transaction 

Confirmation. Id. at 406-07.9

Relying upon Virginia Power, Judge Rebeck stated:

The Texas court in Virginia Power, supra, 

makes clear the significance and 

requirements of delimiting terms that are to 

control a contract such as that between 

[defendant] and [plaintiff]. There was 

testimony that [defendant's] sole source of 

gas in the Gulf in quantities to meet the . 

. . contract came from the Independence Hub 

to the agreed upon deliver[y] point. 

Likewise, as stated above, [defendant] had 

other wellheads in the Gulf tied to the 

delivery point that, according to the 

testimony, were insufficient to supply 

[plaintiff] or whose production was 

committed. Since the source of its gas 

supply was not set forth in the Base 

Contract or as [a] special condition of the 

Transaction Confirmation, [defendant] cannot 

rely upon force majeure in this context to 

excuse performance.

Likewise, absent the designation of the 

Independence Trail Pipeline as the 

transporter in the Base Contract or 

Transaction Confirmation, [defendant] cannot 

rely upon force majeure in this context to 

excuse performance.

We discern no basis for disturbing the judge's reasoned 

determination.

 

9 The court found there were questions of fact as to the 

definition of Apache's "gas supply" and, accordingly, it 

remanded the matter for further proceedings. Virginia Power, 

supra, 297 S.W.3d at 409.
14 A-3464-12T4

Defendant argues that its performance should be excused 

under the portion of the force majeure clause that states that a 

force majeure event "shall include, but not be limited to . . . 

interruption and/or curtailment of Firm transportation and/or 

storage by Transporters." Because the transporter defendant 

used, Enterprise, could not make its deliveries using the 

Independence Trail Pipeline, defendant argues that its own 

performance should have been excused. However, defendant's 

argument ignores the fact that the parties did not identify 

Enterprise as a transporter or the Independence Trail Pipeline 

as the sole source of the gas needed to meet defendant's 

obligation. This provision also plainly refers to 

"transporters", thus indicating that the gas could come from 

more than one point to the Tennessee 500. Thus, this provision 

does not excuse defendant's performance.

Defendant cites Loomis v. N.Y. Cent. & Hudson River R.R. 

Co., 96 N.E. 748, 751 (N.Y. 1911), in support of its contention 

that "[t]he fact that the parties did not identify the 

Transporter in the March 24 Transaction Confirmation was 

insignificant, as the specific route the gas was to take to get 

to the agreed Delivery Point was not essential." However, this 

case is factually inapposite to the matter at hand. The issue 

in Loomis was whether parol evidence could be admitted to show 
15 A-3464-12T4

that the parties intended that a "carload of potatoes" be 

delivered using a particular train route when the contract did 

not so specify. Id. at 748. The court held that such parol 

evidence was inadmissible. Id. at 751. Thus, this case has no 

relevance to the circumstances presented here, where the parties 

both agree that the contract is unambiguous and that parole 

evidence cannot be admitted to alter the terms they agreed upon. 

Significantly, however, in Loomis, the court stated that 

"[t]he effect of not specifying the route was simply to leave 

that subject open to the choice of the carrier, which could 

select any route that it chose." Ibid. This principle plainly 

supports the trial judge's determination. The source of the gas 

and the route it would follow to the Tennessee 500 were plainly 

"incidental" to the parties. The contract is clear: defendant 

was required to provide plaintiff with a specific amount of gas 

at the Tennessee 500 during April 2008, regardless of how it got 

the gas to the delivery point. Thus, the leak in the 

Independence Trail Pipeline did not excuse defendant's 

performance.

Finally, defendant argues that the judge's interpretation 

of the contract "negates the force majeure provision" and that 

the judge erred in finding that defendant "waived" that 

provision. We disagree. Had the contract documents set forth 
16 A-3464-12T4

the source of the gas defendant proposed to sell and the 

transporter it intended to use to deliver that gas, force 

majeure could have been invoked. However, because the contract, 

by its express and unambiguous terms, did not limit defendant's 

obligation in that fashion, the judge correctly rejected 

defendant's argument.

Affirmed.