Court Opinion

ID: 3076936
Source: CourtListenerOpinion
Date Created: 2015-10-16 01:22:53.372469+00
Date Added: 2024-06-11T07:38:10.580524
License: Public Domain

In The

                                Court of Appeals
                   Ninth District of Texas at Beaumont
                               _________________
                               NO. 09-12-00484-CV
                               _________________

               IN RE TEXAS RICE LAND PARTNERS, LTD.,
             JAMES E. HOLLAND, AND DAVID C. HOLLAND

________________________________________________________________________

                               Original Proceedings
________________________________________________________________________

                                    OPINION

      Relators, Texas Rice Land Partners, Ltd., James E. Holland, and David C.

Holland filed a petition for writ of mandamus asking this Court to order the trial

court to vacate a writ of possession issued to TransCanada Keystone Pipeline, L.P.

in conjunction with the pipeline owner‟s condemnation suit. We deny relators‟

request for mandamus relief.

                                 BACKGROUND

      Texas Rice Land Partners, L.P., James E. Holland, and David C. Holland

(collectively TRL), own property in Jefferson County, Texas, currently used for

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rice farming. Real party in interest, TransCanada Keystone Pipeline, L.P. is the

owner and operator of the United States‟ portion of the Keystone Pipeline System.

The Keystone Pipeline System is planned to comprise approximately 2,151 miles

of crude petroleum pipelines originating in Hardisty, Alberta and traversing to U.S.

Midwest Markets at Wood River and Patoka, Illinois, and from Steele City,

Nebraska to Cushing, Oklahoma. The Gulf Coast Project, which includes the

portion of the Keystone Pipeline System at issue in this case, consists of a 36 inch

crude petroleum line that travels from Cushing, Oklahoma to Port Arthur, Texas

(the Pipeline).

      After unsuccessful attempts to negotiate the purchase of a necessary

easement, TransCanada filed a petition for condemnation seeking to condemn an

easement across property owned by TRL in order to complete construction of the

Gulf Coast Project. The trial court entered an order appointing special

commissioners, and a hearing was held in which the special commissioners

awarded TRL $20,808 in compensation for the easements sought by TransCanada.

TransCanada deposited the full amount of the award into the registry of the court,

along with a surety bond for the amount of the award, and a cost bond in the

amount of $5,000. TRL objected to the special commissioners‟ decision and

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award on several grounds and requested a jury trial. TRL also objected, in part, on

the ground that TransCanada did not possess the power of eminent domain.

      TransCanada filed a motion to issue a writ of possession. TRL filed a

response and objections to TransCanada‟s motion for writ of possession, and fully

briefed its arguments regarding TransCanada‟s lack of common-carrier status.

TransCanada filed a reply with evidence supporting its common-carrier status.

The trial court held two hearings on the motion for writ of possession. The trial

court issued two letter rulings and ultimately issued the writ. Subsequently, TRL

filed this petition seeking mandamus relief from the trial court‟s order.

                      APPLICABLE LAW AND ANALYSIS

      Mandamus “is an „extraordinary‟ remedy that is „available only in limited

circumstances.‟” CSR Ltd. v. Link, 925 S.W.2d 591, 596 (Tex. 1996) (orig.

proceeding) (quoting Walker v. Packer, 827 S.W.2d 833, 840 (Tex. 1992)).

Mandamus will only issue to correct a clear abuse of discretion for which there is

not an adequate remedy at law. In re Prudential Ins. Co. of Am., 148 S.W.3d 124,

135-36 (Tex. 2004) (orig. proceeding). The party seeking mandamus relief must

establish both the absence of an adequate remedy by appeal and the trial court‟s

abuse of discretion. See In re Bay Area Citizens Against Lawsuit Abuse, 982
S.W.2d 371, 375 (Tex. 1998) (orig. proceeding); CSR Ltd., 925 S.W.2d at 596. A

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trial court abuses its discretion if it acts in an arbitrary or unreasonable manner

without reference to any guiding rules or principles. Cire v. Cummings, 134
S.W.3d 835, 838-39 (Tex. 2004) (quoting Downer v. Aquamarine Operators, Inc.,

701 S.W.2d 238, 241 (Tex. 1985)).

      A relator challenging a trial court‟s ruling as an abuse of discretion “labors

under a heavy burden.” Johnson v. Fourth Court of Appeals, 700 S.W.2d 916, 917

(Tex. 1985) (orig. proceeding). “The relator must establish, under the

circumstances of the case, that the facts and law permit the trial court to make but

one decision. This determination is essential because mandamus will not issue to

control the action of a lower court in a matter involving discretion.” Id. (citing Pat

Walker & Co. v. Johnson, 623 S.W.2d 306, 308 (Tex. 1981)). In determining

whether the trial court abused its discretion, we review the entire record. In re

Clayton, No. 09-05-412-CV, 2006 WL 1045175, at *2 (Tex. App.—Beaumont

Apr. 20, 2006, orig. proceeding) (mem. op.). We may not disturb a trial court‟s

ruling based on conflicting evidence in a mandamus proceeding. Id. We will not

find an abuse of discretion when a trial court based its decision on conflicting

evidence and some evidence reasonably supports the trial court‟s decision. Id.

      In the trial court, TRL objected to TransCanada‟s right to condemn the

property, in part, on grounds that TransCanada was not a common carrier under the

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Texas Natural Resources Code, and that the Pipeline was not a common-carrier

pipeline under the Natural Resources Code.1        Section 111.002 of the Natural

Resources Code provides in pertinent part:

      A person[2] is a common carrier subject to the provisions of this
      chapter if it:

          (1) owns, operates, or manages a pipeline or any part of a pipeline
          in the State of Texas for the transportation of crude petroleum to or
          for the public for hire, or engages in the business of transporting
          crude petroleum by pipeline[.]

Tex. Nat. Res. Code Ann. § 111.002(1) (West 2011) (footnote added). Further,

section 111.019 provides as follows:

      (a) Common carriers have the right and power of eminent domain.

      1
        In the trial court, TRL also objected to the trial court‟s award of possession
on the basis that Keystone did not have the right of eminent domain for the purpose
of transporting crude into Texas that was produced outside of the State. In
Rhinoceros Ventures Grp., Inc. v. TransCanada Keystone Pipeline, L.P., 388
S.W.3d 405, 408 (Tex. App.—Beaumont 2012, pet. denied), we concluded that the
Keystone pipeline was a common carrier line. Id. In addressing Rhinoceros
Ventures‟ contention that section 111.002(1) applied only to intrastate pipelines,
we noted that the Legislature did not use the words “interstate” or “intrastate”
when describing the type of pipeline to which the subsection applies; in contrast,
the Legislature expressly included such language in other portions of the Natural
Resources Code. Id.
      2
         “„Person‟” is defined as “any individual, partnership, firm, corporation,
association, or any other business entity, a state agency or institution, county,
municipality, school district, or other governmental subdivision.” Tex. Nat. Res.
Code Ann. § 113.002(13) (West 2011).
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      (b) In the exercise of the power of eminent domain granted under the
      provisions of Subsection (a) of this section, a common carrier may
      enter on and condemn the land, rights-of-way, easements, and
      property of any person or corporation necessary for the construction,
      maintenance, or operation of the common carrier pipeline.

Id. § 111.019(a)-(b).

      Chapter 21 of the Texas Property Code governs “[e]xercise of the eminent

domain authority in all cases[.]” Tex. Prop. Code Ann. § 21.011 (West 2004).

Pursuant to the statute, courts have the authority to:

      determine all issues, including the authority to condemn property and
      the assessment of damages, in any suit: . . . . that involves a claim for
      property or for damages to property occupied by the party under the
      party‟s eminent domain authority or for an injunction to prevent the
      party from entering or using the property under the party‟s eminent
      domain authority.

Id. § 21.003(2). Once a condemnation petition is filed, the statute requires the trial

court to appoint three special commissioners to hold a hearing and assess the

damages of the owner of the property being condemned. Id. §§ 21.014, 21.015

(West Supp. 2012). If a party objects to the special commissioners‟ findings, the

trial court tries the case in the same manner as any other civil case. Id. § 21.018

(West 2004). Section 21.021 deals with “Possession Pending Litigation” and

provides in pertinent part:

      (a) After the special commissioners have made an award in a
      condemnation proceeding . . . the condemnor may take possession of

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      the condemned property pending the results of further litigation if the
      condemnor:

          (1) pays to the property owner the amount of damages and costs
          awarded by the special commissioners or deposits that amount of
          money with the court subject to the order of the property owner;

          (2) deposits with the court either the amount of money awarded by
          the special commissioners as damages or a surety bond in the same
          amount issued by a surety company qualified to do business in this
          state, conditioned to secure the payment of an award of damages
          by the court in excess of the award of the special commissioners;
          and

          (3) executes a bond that has two or more good and solvent sureties
          approved by the judge of the court in which the proceeding is
          pending and conditioned to secure the payment of additional costs
          that may be awarded to the property owner by the trial court or on
          appeal.

Id. § 21.021(a).

      In this mandamus proceeding, TRL argues that the trial court abused its

discretion by refusing to resolve its challenge to TransCanada‟s common-carrier

status prior to granting TransCanada a writ of possession. TRL relies on a letter

ruling issued by the trial court following the first hearing on TransCanada‟s writ of

possession. Regarding TRL‟s challenge to TransCanada‟s common-carrier status,

the trial court stated the following:

      [C]ommon carrier status and therefore the ultimate right to condemn
      under the statutory scheme will ultimately require resolution through
      the judicial process. It is sufficiently clear in the statute that the
      ultimate resolution of that issue is not determinative of the issue of
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      possessory rights that clearly exist by statute independent of the
      ultimate resolution of disputed facts. Thus the various bonding
      requirements to protect the owner should the ultimate fact issue
      resolution preclude the taking. Nothing in Denbury . . . suggests to
      this court that a pre-possession determination of common carrier
      status is required or allowed under the statutory scheme.

Based on the Texas Supreme Court‟s holding in Texas Rice Land Partners, Ltd. v.

Denbury Green Pipeline-Texas, LLC, 363 S.W.3d 192 (Tex. 2012), TRL argues

that the issue of a pipeline owner‟s power to condemn must be fully resolved

before the pipeline owner can take possession of private property in conjunction

with its condemnation suit.

      In Denbury, the Texas Supreme Court concluded that the carbon-dioxide

pipeline owner had not established, as a matter of law, that it was a common carrier

under section 111.002(6) of the Natural Resources Code. Denbury, 363 S.W.3d at

202. In the summary judgment proceedings, the pipeline owner submitted evidence

that it obtained a common-carrier permit, filed a tariff, and agreed to make the

pipeline available for public use. Id. But there was also evidence in the record that

the pipeline owner intended to transport carbon dioxide for its own consumption,

and no evidence in the record of any potential customers unaffiliated with the

pipeline owner. Id. at 203. The Court explained that were this evidence sufficient,

as a matter of law, to establish common-carrier status under section 111.002(6),

pipeline owners could obtain the power of eminent domain merely by obtaining a
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permit “and offering the use of the pipeline to non-existent takers.” Id. at 202.

The Court reasoned that “„[a sine qua non] of lawful taking . . . for or on account

of public use . . . is that the professed use be a public one in truth.‟” Id. The Court

then held that

      for a person intending to build a CO2 pipeline to qualify as a common
      carrier under Section 111.002(6), a reasonable probability must exist
      that the pipeline will at some point after construction serve the public
      by transporting gas for one or more customers who will either retain
      ownership of their gas or sell it to parties other than the carrier.

Id.

      The Denbury Court recognized that a permit by the Railroad Commission

“granting common-carrier status is prima facie valid.” Id. But the Court explained

that “once a landowner challenges that status, the burden falls upon the pipeline

company to establish its common-carrier bona fides if it wishes to exercise the

power of eminent domain.” Id. Under its stated test, the court held that the

pipeline owner had not established its common-carrier status as a matter of law.

Id. The court concluded that pipeline owners could not acquire “unchallengable

condemnation power” under section 111.002(6) merely be self-declaring their

common-carrier status. Id. at 204. “Merely holding oneself out [as a common-

carrier] is insufficient under Texas law to thwart judicial review.” Id. The court

                                          9
reversed our prior judgment and remanded the case to the district court for further

proceedings. Id.

      The Texas Supreme Court expressly limited its opinion in Denbury to

“persons seeking common-carrier pipeline status under Section 111.002(6)[,]”

which is not applicable in this case. See id. at 202 n.28. The Court stated that it

was not expressing an opinion on “pipelines where common-carrier status is at

issue under other provisions of the Natural Resources Code or elsewhere.” Id.

Significantly, the Court in Denbury did not address the right of possession under

Chapter 21 of the Texas Property Code. See Tex. Prop. Code Ann. § 21.021.

      Section 21.021 allows a party with eminent domain authority to take

possession of the condemned property, “pending the results of further litigation” if

that party pays the property owner the amount of damages and costs awarded by

the special commissioners or deposits the amount of the award into the registry of

the court. Id.; see also Hooks v. Fourth Court of Appeals, 808 S.W.2d 56, 60-61

(Tex. 1991) (orig. proceeding) (“A condemnor takes constructive possession of

[the] property when it deposits the commissioners‟ award into the registry of the

court.”); Harris Cnty. v. Gordon, 616 S.W.2d 167, 169 (Tex. 1981) (discussing

former article 3268 and holding no injunction to possession should issue where

condemnor complied with statutory requirement to deposit award money into the

                                        10
court registry). The primary purpose of the provisions of section 21.021 is to allow

a party with eminent domain authority to possess the condemned property pending

the determination of fact issues through the judicial process. See State v. First

Interstate Bank of Tex., N.A., 880 S.W.2d 427, 430 (Tex. App.—Austin 1994, writ

denied) (discussing the purpose behind enactment of Section 21.021).

      Nevertheless, we recognize that there must be evidence in the record that

reasonably supports TransCanada‟s assertion that it is an entity with “eminent

domain authority,” and it was error for the trial court to refrain from making such a

preliminary finding. See Tex. Prop. Code Ann. § 21.012 (West Supp. 2012).

TransCanada submitted evidence in the trial court that established its compliance

with section 21.021. In addition to its T-4 permit, as well as other permit

applications, TransCanada presented the trial court with an affidavit from Louis

Fenyvesi, the director of markets and supply for the TransCanada Keystone

Pipeline. Fenyvesi stated that he is familiar with the Gulf Coast Project. He

explained that the Gulf Coast Project would “commence at the crude petroleum

supply hub at Cushing, Oklahoma, and terminate at existing crude storage terminal

facilities near Nederland and Houston, Texas[.]” Fenyvesi further stated:

      The Gulf Coast Project will transport crude petroleum owned by third
      party shippers unaffiliated with Keystone or Keystone‟s parent
      companies or affiliates. Upon completion of the Gulf Coast Project,
      Keystone will be able to deliver crude petroleum from Cushing,
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      Oklahoma (which includes crude produced from various fields in
      Oklahoma, Texas [and] other jurisdictions including, crude
      transported in the Keystone Pipeline System from Hardisty) to the
      United States Gulf Coast . . . .

             An open season was held for the Cushing, Oklahoma,
      connection point and various third party shippers have committed to
      binding Transportation Service and Throughput Agreements
      (“TSAs”). At this time, there are several binding TSAs with third
      party shippers for transportation of crude petroleum on the Gulf Coast
      Project for an aggregate daily volume of approximately 200,000
      barrels of crude petroleum per day in the Pipeline. Under the TSAs,
      the third-party shippers will own the crude petroleum that is being
      transported in the Pipeline, they will not transfer title to the crude
      petroleum that is being shipped and the crude petroleum will be
      shipped for a fee, which fee will be set forth in the tariff to be filed by
      Keystone with the Federal Energy Regulatory Agency. . . .

             The Gulf Coast Project pipeline will be operated as a common
      carrier pipeline. Any shipper wishing to transport crude petroleum
      meeting the specifications set forth in the tariff to be filed by
      Keystone . . . will have access to ship its crude petroleum on the
      pipeline for a fee[.]

Fenyvesi explained that most of the companies that will ship petroleum on the Gulf

Coast Project will be refiners, producers and marketers. Fenyvesi stated that

“Keystone does not own any refineries nor does it produce any crude petroleum, so

third party shippers . . . will use the crude petroleum shipped on the Gulf Coast

Project.” TRL submitted no evidence to the trial court to contradict or otherwise

challenge the evidence of TransCanada as a common carrier.

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      TransCanada produced undisputed evidence through the sworn affidavit of

Fenyvesi, together with supporting documentation, to support TransCanada‟s

contention that the Keystone Pipeline is a common carrier line. See Tex. Nat. Res.

Code Ann. § 111.002(1). Therefore, any error by the trial court in this instance

was harmless error. See Tex. R. App. P. 44.1(a). We conclude the trial court did

not abuse its discretion in granting TransCanada‟s motion for writ of possession.

See Tex. Prop. Code Ann. §§ 21.012, 21.021. We deny the petition for writ of

mandamus.

      PETITION DENIED.

                                              ___________________________
                                                   CHARLES KREGER
                                                       Justice

Submitted on March 7, 2013
Opinion Delivered May 23, 2013

Before Gaultney, Kreger, and Horton, JJ.

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