Court Opinion

ID: 2986203
Source: CourtListenerOpinion
Date Created: 2015-09-23 00:27:55.486277+00
Date Added: 2024-06-11T12:46:25.259031
License: Public Domain

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

              CONCURRING OPINION ON REMAND

      I join Justice Christopher’s opinion for the Court in full. I write separately
to explain that if I were writing on a clean slate, I would affirm the trial court’s
fourth declaration rejecting Wolf Hollow’s gas-quality claims. I agree with Justice
Christopher, however, that the Texas Supreme Court’s opinion requires reversal of
that declaration.
       When this case was last before this Court, we did not reach the issue whether
Article XXI of the Supply Agreement allows Wolf Hollow to recover replacement-
power damages from El Paso for delivering gas that allegedly failed to meet
quality specifications. I would hold that the trial court correctly answered this
question “no.”

       Article XXI defines when Wolf Hollow may purchase replacement gas or
replacement power at El Paso’s expense.1 Section 21.1 provides that the triggering
event for such damages is the failure to deliver “a Quantity of Gas in an amount
equal to the Scheduled Delivery Quantity.” The agreement defines a “Quantity of
Gas” as “an amount of Gas expressed in MMBtus.”2

       Given this definition, damages under Article XXI flow from the failure to
deliver a scheduled quantity of gas, not a particular quality of gas. The definition
of quantity chosen by the parties does not address the amount of liquid
hydrocarbons that may be in the gas stream—the issue about which Wolf Hollow
complains. Of course, it is possible that a gas stream including significant amounts
of liquid hydrocarbons might not contain enough MMBtus to meet the scheduled
delivery quantity. But in the trial court, Wolf Hollow stated that it was not
asserting any claim that it did not receive the scheduled number of MMBtus. See
CR 336. Accordingly, I would hold that Article XXI does not allow Wolf Hollow
to recover damages for the quality problems at issue.

       1
         The supreme court has held that Article XXI is Wolf Hollow’s sole avenue for
recovering otherwise-waived consequential damages. El Paso Mktg., L.P., 383 S.W.3d at 144–
45.
       2
         The details of how Section 21.1 works were not important to the issues addressed in
this Court’s original opinion and presented to the supreme court for review. Thus, the supreme
court did not discuss the exact language quoted above. Instead, the court summarized section
21.1 as allowing purchases upon the failure to deliver “[gas as contractually required . . .].” El
Paso Mktg., L.P., 383 S.W.3d at 140 n.8.

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      I conclude that the supreme court’s opinion forecloses my interpretation of
Article XXI, however. In the wake of this Court’s original opinion, the principal
issues before the supreme court were:            (1) whether Wolf Hollow could sue
Enterprise for negligence in failing to deliver gas and delivering poor quality gas;
and (2) whether Wolf Hollow’s damages were consequential damages waived by
its contract with El Paso.

      On the first issue, the supreme court held that Wolf Hollow could not sue
Enterprise for negligence because the duties Enterprise allegedly violated were
imposed by contract. El Paso Mktg., L.P., 383 S.W.3d at 143. Although Wolf
Hollow later assigned the contract and could no longer sue on it, the court observed
that no such suit was necessary because “Wolf Hollow . . . can look to El Paso . . .
to answer for . . . poor quality gas.” Id.

      On the second issue, the supreme court held that the damages Wolf Hollow
sought were consequential, but that Article XXI allowed for recovery of
replacement-power damages. It also held that there is evidence Wolf Hollow
complied with the steps necessary to seek such damages under Section 21.1. Id. at
144–45. The court did not specifically state that Wolf Hollow had provided
evidence of the triggering event provided in Section 21.1: a failure to deliver the
scheduled number of MMBtus of gas. In summarizing this section of its opinion,
however, the court concluded that “there is evidence Wolf Hollow is entitled to
recover replacement-power damages under Section 21.1(c) of the Supply
Agreement, precluding summary judgment against Wolf Hollow based on the
consequential damages waiver.” Id. at 145 (emphasis added).

      After the supreme court issued its opinion, El Paso filed a motion for
rehearing. In part, El Paso asked the court to amend its opinion to state that
Section 21.1 does not allow recovery of replacement-power damages on the gas-

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quality claims, but only on the delivery-failure claims. The supreme court denied
the motion without comment.

      I do not believe it was necessary for the supreme court, in deciding the
issues before it, to conclude that that Wolf Hollow offered sufficient evidence that
it is entitled to recover replacement-power damages for poor quality gas under
Section 21.1.   Yet the supreme court made—and declined to reconsider—the
statements quoted above after full consideration and to guide the future conduct of
this very litigation. As a lower court, we are bound to follow the supreme court’s
statements, leaving to that court the function of reconsidering the matter if it
wishes. See Edwards v. Kaye, 9 S.W.3d 310, 314 (Tex. App.—Houston [14th
Dist.] 1999, pet. denied). Justice Christopher’s opinion for the Court, which I join,
appropriately does so.

                                       /s/       J. Brett Busby
                                                 Justice

Panel consists of Chief Justice Hedges and Justices Christopher and Busby.
(Christopher, J., majority). (Hedges, C.J., concurring and dissenting).

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