Pontchartrain Natural Gas System, k/d/s Promix, L.L.C., and Acadian Gas Pipeline System v. Texas Brine Company, LLC

STATE OF LOUISIANA

COURT OF APPEAL

FIRST CIRCUIT

2018 CA 0999

PONTCHARTRAIN NATURAL GAS SYSTEM,
K/D/ S PROMIX, L.L.C., AND ACADIAN GAS PIPELINE SYSTEM

VERSUS

TEXAS BRINE COMPANY, LLC

Judgment Rendered: OV 1 5 2019

On Appeal from the
Twenty -Third Judicial District Court
In and for the Parish of Assumption
State of Louisiana
Docket No. 34, 265

Honorable Thomas J. Kliebert, Jr., Judge Presiding

Leopold Z. Sher Attorneys for Appellant/Defendant/
James M. Garner Third -Party Plaintiff,
Peter L. Hilbert, Jr. Texas Brine Company, LLC
Jeffrey D. Kessler
New Orleans, Louisiana

Robert Ryland Percy, III
Gonzales, Louisiana

Travis J. Turner
Gonzales, Louisiana

Glen E. Mercer Attorneys for Appellee/Third-Party
Kourtney Twenhafel Defendant,
New Orleans, Louisiana Steadfast Insurance Company, as
alleged insurer of Adams Resources
Exploration Company

Mary S. Johnson Attorneys for Appellees/ Third-Party
Chad J. Mollere Defendants,
Mandeville, Louisiana AIG Specialty Insurance Company,
Lexington Insurance Company, and

National Union Fire Insurance
Company of Pittsburgh, PA, as
alleged insurers of Adams Resources
Exploration Company

Matthew J. Randazzo, III Attorneys for Appellee/ Defendant/
Christopher B. Bailey Third -Party Defendant,
Will Montz Browning Oil Company, Inc.
Lafayette, Louisiana

Martin A. Stern Attorneys for Appellees/ Defendants,
Leigh Ann Schell Occidental Chemical Corporation
Raymond P. Ward Occidental Petroleum Corporation,
Jeffrey E. Richardson and Oxy USA, Inc.
Sara C. Valentine
New Orleans, Louisiana

Roy C. Cheatwood Attorneys for Appellee/ Third-Party
Kent A. Lambert Defendant/Third-Party Plaintiff,
Adam B. Zuckerman Legacy Vulcan, LLC
Paul C. Thibodeaux
Colleen C. Jarrott
Matthew S. Chester
Matthew C. Juneau
New Orleans, Louisiana

Tony M. Clayton
Port Allen, Louisiana

BEFORE: HIGGINBOTHAW PENZATO, AND LANIER, JJ.

Judge Toni Manning Higginbotham was not present at the oral argument of this case; however,
she participated in deliberations via a recording of the hearing.

2

PENZATO, J.

Texas Brine Company, LLC, appeals a judgment dismissing its claims

against Steadfast Insurance Company, AIG Specialty Insurance Company,

Lexington Insurance Company, and National Union Fire Insurance Company of
Pittsburgh, Pa., in their respective capacities as insurers of Adams Resources

Exploration Company' ( collectively " Adams Resources' insurers"), on a motion

for involuntary dismissal. For the reasons that follow, we affirm.

FACTS AND PROCEDURAL HISTORY

The underlying litigation in this matter involves the sinkhole in Assumption

Parish that resulted when the site of a former brine cavern, known as the Oxy

Geismar No. 3 well ( OG3) collapsed. Numerous plaintiffs filed suit against

several defendants, including Texas Brine, for damages to their property. Texas

Brine drilled a brine well known as OG3 on land owned by Occidental Chemical

Corporation ( Oxy) in 1982. In 1983, Oxy leased a portion of the land to Colorado

Crude Company ( Colorado Crude Lease) for the purpose of drilling an oil well

thereon. In 1986, Adams Resources, an assignee of the Colorado Crude Lease,

drilled an oil and gas well on the property that became known as Adams -Hooker

No. I well (AHI well).3 In May 1986, before any actual production from the AHI

well,
Adams Resources assigned its operating interest in the well to HECI

Exploration Company, LLC. The AHl well produced until it was permanently

shut- in in 2001, approximately 11 years before the development of the sinkhole on

or about August 3, 2012.

Various plaintiffs filed suit against Texas Brine and other defendants for

alleged damages arising from the sinkhole. Texas Brine asserted third -party

2 Adams Resources filed bankruptcy in 2017 and did not participate in the trial. See In Re
Adams Resources Exploration Corporation, 17- 10866 ( Bankr. D. Del. 5/ 24/ 17), 2017 WL
5479425. The bankruptcy stay was lifted to allow the claims against Adams Resources' insurers,
which were not released by the bankruptcy, to proceed. See La. R.S. 22: 1269( A) and ( B).

3 Hooker Chemical & Plastics Corp. was the predecessor in interest to Oxy.

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demands against Adams Resources and its insurers, pursuant to the Louisiana

Direct Action Statute, La R.S. 22: 1269. On October 9, 2017, at the close of Texas

Brine' s case on the bifurcated liability trial, the Adams Resources' insurers moved

for an involuntary dismissal, which the district court originally deferred. On

November 11, 2017, the district court granted the involuntary dismissal and signed

a judgment in accordance therewith. It is from this judgment that Texas Brine

appeals.

LAW AND DISCUSSION

The issue before this court has been addressed previously by different

panels. In Pontchartrain Natural Gas System v. Texas Brine Company, LLC,

2018- 0631 ( La. App. 1st Cir. 7/ 3/ 19), So. 3d , 2019 WL 2865136, P.

6, this court recently affirmed the district court' s involuntary dismissal of Texas

Brine' s claims against Browning Oil Company, Inc. Similar to the present case,

Texas Brine argued that the depressurization of the AHI well contributed to the

collapse of the OG3 cavern and the formation of the sinkhole. This court

concluded that based on the totality of the evidence, ` Browning' s operations

played absolutely no role in any of the causative factors for the development of the

sinkhole and the damage that resulted." Pontchartrain Natural Gas System,

So. 3d at , 2019 WL 2865136, p. 5.

The same issue currently before this court was also heard in Florida Gas

Transmission Company, LLC v. Texas Brine Company, LLC, 2018- 0907 ( La. App.

1st Cir. 8/ 29/ 19), So. 3d , 2019 WL 4073383, concerning whether the

record reasonably supported that Adams Resources' operations were not a

causative factor for the development of the sinkhole and the resulting damages.

The court in Florida Gas affirmed the November 11, 2017 district court judgment

dismissing Texas Brine' s claims against Adams Resources' insurers. Florida Gas,

So. 3d at , 2019 WL 4073383, p. 4.

Is

Furthermore, the same arguments made in the present case, were presented

by Texas Brine in Crosstex Energy Services, LP v. Texas Brine Company, LLC,
2018- 1122 ( 9/ 16/ 19), 2019 WL 4409140. Given that the evidence in Crosstex

Energy Services was based on the same evidence considered in Florida Gas,

supra, this court affirmed the November 11, 2017 district court judgment

dismissing the Adams Resources' insurers.

The judgment in this case is based on the same evidence considered in the

above -referenced Florida Gas and Crosstex Energy Services decisions, and we

affirm the November 11, 2017 district court judgment involuntarily dismissing

Steadfast Insurance Company, AIG Specialty Insurance Company, Lexington

Insurance Company, and National Union Fire Insurance Company of Pittsburgh,

Pa., in their respective capacities as insurers of Adams Resources Exploration

Company with prejudice for the reasons stated therein.' This memorandum

opinion is issued in accordance with Uniform Rules— Courts of Appeal, Rule 2-

16. 1( B). All costs of this appeal are assessed against Texas Brine Company, LLC.

AFFIRMEW

4 Texas Brine also maintains that the district court erred in its dismissal of Texas Brine' s claims
against the Adams Resources' insurers based on Louisiana law in effect before 1996. ( Appellant
Brief at pp. 16- 17). For the reasons provided in Pontchartrain Natural Gas System, So. 3d
2019 WL 2865136, p. 6, this argument has no merit.

5 Occidental Chemical Corporation, Occidental Petroleum Corporation, and Oxy USA, Inc. filed
a motion to consolidate this appeal with eight other appeals arising out of the liability trial. As to
this appeal, that motion is denied.

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