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

2022 CA 1001

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

VS.

TEXAS BRINE COMPANY, LLC

ry Judgment rendered: MAR 0 12023
Ti,

On Appeal from the
Twenty-Third Judicial District Court
In and for the Parish of Assumption
State of Louisiana
Docket No. 34265, Division B

The Honorable Thomas J. Kliebert, Jr., Judge Presiding, Ad Hoe

Leopold Z. Sher Attorneys for Appellant/
James M. Garner Third -Party Plaintiff
Peter L. Hilbert, Jr. Texas Brine Company, LLC
Christopher T. Chocheles
New Orleans, Louisiana
and

Travis J. Turner
Gonzales, Louisiana

Kent A. Lambert Attorneys for Appellee/
Leopoldo J. Yanez Third -Party Defendant
Lauren Brink Adams Legacy Vulcan, LLC
Colleen C. Jarrott
Matthew C. Juneau
Roy C. Cheatwood
Adam B. Zuckerman
New Orleans, Louisiana

BEFORE: WELCH, HOLDRIDGE, and WOLFE, JJ.

HOLDRIDGE, J.

This dispute is one of many arising out of the August 2012 sinkhole that

appeared near Bayou Come in Assumption Parish. In this appeal, Texas Brine

Company, LLC challenges the May 5, 2022 judgment that granted Legacy Vulcan,
LLC' s " Motion for Partial Summary Judgment Dismissing Texas Brine' s Claim

Under the Assignment of Salt Lease" and dismissed Texas Brine' s claim against

Legacy Vulcan under the assignment of the salt lease. After review, we dismiss the

appeal.

FACTUAL AND PROCEDURAL BACKGROUND

This matter has been before this court many times, and the following relevant

facts and procedural history are taken from one of this court' s recent opinions. See

Pontchartrain Natural Gas System v. Texas Brine Company, LLC, 2022- 0738

La. App. 1 Cir. 12129122), So. 3d - , 2022 WL 17983139 at * 1- 3. In

brief, the relevant history in this appeal dates back to July 18, 1975, when Texas

Brine, by way of a " Salt Lease," secured the right to produce salt from a 40 -acre

tract of land in Assumption Parish, commonly referred to by the parties as the " North

40." Texas Brine then entered into a series of interdependent contracts with Legacy

Vulcan, including an " Assignment of Salt Lease" ( Assignment of Salt Lease), under

which Texas Brine purportedly assigned all of its rights, title, and interest as lessee

in and under the Salt Lease to Legacy Vulcan, and .Legacy Vulcan assumed all

obligations of Texas Brine as lessee in and under the Salt Lease, which Legacy

Vulcan obligated itself or its operators to perform; a " Construction Contract and

Facilities Lease" ( Facilities Lease), under which Texas Brine was to site, drill, and

construct certain wells, related facilities, and a pipeline on the North 40 and lease

certain property to Legacy Vulcan; and, an " Operating and Supply Agreement"

Operating Agreement), under which Texas Brine would operate facilities it

constructed on the North 40 in order to produce and deliver a certain quantity and

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quality of brine to be used by Legacy Vulcan in its chloralkali business at its facility
in Geismar, Louisiana. The Operating Agreement further provided that Texas Brine

maintain, repair, and at all times, keep the facilities leased by it to Legacy Vulcan in

good and safe operating condition. In turn, Legacy Vulcan was obligated to pay
Texas Brine for its services. Each of the above agreements provided certain other

specific rights to and obligations owed by the parties.

Later Texas Brine and Legacy Vulcan entered into the " First Amendment to

the Salt Lease," " Amendment to Construction Contract and Facilities Lease"

Amended Facilities Lease), and "
Amended and Restated Operating and Supply

Agreement" ( Amended Operating Agreement), each contract dependent upon the

other contracts, for the purpose of continuing the brine mining and exploration on

the North 40. The general principles underlying the Amended Operating Agreement
remained the same— Texas Brine would operate on the North 40 to produce and

deliver certain quantities and qualities of brine to Legacy Vulcan. Texas Brine

further obligated itself to maintain, repair, and at all times, keep these facilities in

good and safe operating condition, and comply with, perform, and fulfill all

obligations of Legacy Vulcan to Texas Brine under the Amended Facilities Lease

between the parties, with respect to the maintenance, operation, and preservation of

the leased premises. Legacy Vulcan, in turn, obligated itself to pay for Texas Brine' s

services. Changes or additions made to the Amended Operating Agreement included

giving Legacy Vulcan the right to double the amount of salt Texas Brine produced

and delivered to Legacy Vulcan, as well as Texas Brine separately and again

obligating itself to ensure that Legacy Vulcan was compliant with its obligations

under the Amended Facilities Lease.

Following the sinkhole' s emergence, multiple plaintiffs filed numerous

lawsuits against Texas Brine, all of whom suffered damages due to the sinkhole.

Texas Brine, in turn, asserted numerous third party demands against Legacy Vulcan,

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including breach of contract claims. Specifically, regarding the Assignment of Salt

Lease, Texas Brine asserted that in Section 4. 01, Legacy Vulcan assumed all of the

obligations of Texas Brine, the lessee under the Salt Lease, and that one of those

obligations was to operate the salt mine in a prudent manner and to comply with all

applicable government regulations ( Section 14 of the Salt Lease). Texas Brine

alleged that pursuant to Section 6.01( d) of the Assignment of Salt Lease, Legacy

Vulcan was in default if it failed to comply with its obligations under the Assignment

of Salt Lease.

The Phase l liability trial was held in September and October 201.7, for the

purpose of determining what caused the sinkhole to form and which parties were at

fault under any theory of law for causing the formation of the sinkhole. See

Pontchartrain Natural Gas System v. Texas Brine Company, LLC, 2018- 1249

La. App. 1 Cir. 12/ 30120), 317 So. 3d 715, 725, writs denied, 2021- 00382, 2021-

00386 ( La. 618121), 317 So. 3d 323. The district court found both Texas Brine and

Legacy Vulcan at fault. Pontchartrain Natural Gas System, 317 So. 3d at 739.

This court affirmed that part of the judgment on appeal, finding that Legacy Vulcan

failed to act as a prudent mineral lessee, and Texas Brine failed to prudently operate

on the North 40. Pontchartrain Natural Gas System, 317 So. 3d at 756- 58.

Thereafter, the parties began the next phase of this litigation, which

encompassed all remaining incidental demands and damage/ quantum issues, but not

including insurance issues or attorney' s fees. Legacy Vulcan filed numerous

motions for partial summary judgment asserting various arguments regarding Texas

Brine' s contractual claims against Legacy Vulcan. One such motion was Legacy

Vulcan' s motion for partial summary judgment seeking to dismiss Texas Brine' s

claim under the Assignment of Salt Lease. Texas Brine had alleged that Legacy

Vulcan was in default of the Assignment of Salt Lease under Section 6. 01 based on

its alleged failure " to ` operate' on the [ land] in a ` prudent manner' and to conduct

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its operations in compliance with the regulations of all governmental agencies." In

its motion for partial summary judgment, Legacy Vulcan argued that Texas Brine

breached its duty to prudently operate the Oxy Geismar No. 3 Well and that Texas

Brine' s breach barred it from recovering under the Assignment of Salt Lease' s

default provisions under La. C. C. art. 1993.' Legacy Vulcan also contended that

Texas Brine failed to give written notice of its purported default as it was

contractually required to do. Legacy Vulcan argued that Texas Brine assumed the

obligations of operating on the Salt Lease premises and complying with all

governmental standards, such that Texas Brine could not assert a cause of action for

breach of a duty that it had assumed.

Texas Brine opposed the motion, asserting numerous arguments, including:

Texas Brine satisfied the notice requirement of the Assignment of Salt Lease by
filing suit or the Assignment of Salt Lease did not mandate written notice prior to

suit being filed; Legacy Vulcan did not assign all of the lessee' s obligations under

the Salt Lease to Texas Brine; the Amended Operating Agreement charged Texas

Brine with Legacy Vulcan' s obligations only with respect to the Facilities Lease, not

the Salt Lease; and there were no reciprocal obligations under the Assignment of

Salt Lease, so Legacy Vulcan could not invoke Texas Brine' s purported operational

breaches under the Amended Operating Agreement.

The district court held a hearing on this motion, along with several other

motions, on April 5, 2022. Following the parties' arguments, the district court took

the matter under advisement. On May 5, 2022, the district court issued reasons for

judgment and signed a judgment, stating:

IT IS HEREBY ORDERED, ADJUDGED, AND DECREED that
Legacy] Vulcan' s Motion for Partial Summary Judgment Dismissing
Texas Brine Company, LLC' s Claim Under the Assignment of Salt
Lease is GRANTED.

1 Louisiana Civil Code article 1993 states, " In case of reciprocal obligations, the obligor of one
may not be put in default unless the obligor of the other has performed or is ready to perform his
own obligation."

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IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that
this Judgment is designated as a final judgment in accordance with
Louisiana Civil Code Article 1915, as the Court finds that there is no
just reason for delay.

ASSIGNMENTS OF ERROR

Texas Brine appeals from the adverse judgment, contending the district court

erred in ignoring this court' s findings in the liability ruling in Pontchartrain

Natural Gas System, 317 So. 3d at 761, that Legacy Vulcan breached its duty to act

as a prudent lessee of the Salt Lease, as those breaches were defaults of Legacy
Vulcan' s obligations under the Assignment of Salt Lease. Texas Brine also contends

that the district court erred in " confusing Texas Brine' s operational obligations under

the Amended Operating Agreement with [ Legacy] Vulcan' s duties as the lessee

under the Salt Lease." Lastly, Texas Brine contends that the district court erred in

granting summary judgment because genuine issues of material fact exist as to the

scope of the obligations assigned to Legacy Vulcan by Texas Brine in the

Assignment of Salt Lease and Texas Brine' s " corresponding contractual duties."

APPEALABILITY OF PARTIAL SUMMARY JUDGMENT

Appellate courts have a duty to examine subject matter jurisdiction sua

sponte, even when the parties do not raise the issue. Advanced Leveling &

Concrete Solutions v. Lathan Company, Inc., 2017- 1250 ( La. App. 1 Cir.

12120118), 268 So. 3d 1044, 1046 ( en bane). This court' s appellate jurisdiction

extends only to " final judgments." See La. C. C. P. art. 2083( A).

A partial summary judgment rendered dispositive of a particular issue, theory

of recovery, cause of action, or defense, may be granted in favor of one or more

parties, even though the granting of the summary judgment does not dispose of the

entire case as to that party or parties pursuant to La. C. C. P. art. 966( E). A judgment

granted pursuant to La. C. C. P. art. 966( E) may be immediately appealed during

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ongoing litigation only if it has been designated as a final judgment by the district

court after an express determination that there is no just reason for delay. See La.

C. C. P. art. 1915( A)( 3) & ( B);
OAT Trustee, LLC as Trustee for Girod Titling

Trust v. Elite Investment Group, LLC, 2021- 1402 ( La. App. 1 Cir. 7129122), 347

So. 3d 938, 946.
Although the district court designated the partial summary
judgment as a final one pursuant to La. C. C. P. art. 1915( B)( 1), that designation is

not determinative of this court' s jurisdiction. Rather, this court' s jurisdiction to

decide this appeal hinges on whether the certification was appropriate. See OAT

Trustee, LLC, 347 So. 3d at 946. Because the district court herein did not give

reasons for the certification, this court must make a de novo determination of

whether the certification was proper. R. J. Messinger, Inc. v. Rosenblum, 2004-

1664 ( La. 3/ 2/ 05), 894 So. 2d 1113, 1122.

Historically, our courts have adopted and followed a policy against multiple

appeals and piecemeal litigation. Messinger, 894 So. 2d at 1122. Louisiana Code

of Civil Procedure article 1915 attempts to strike a balance between the

undesirability of piecemeal appeals and the need for making review available at a

time that best serves the needs of the parties. Thus, in considering whether a

judgment is properly designated as final pursuant to La. C. C. P. art. 1915( B)( 1), a

court must take into consideration judicial administrative interests as well as the

equities involved. See Messinger, 894 So. 2d at 1122. Under Messinger, the

following list of non- exclusive factors are to be considered in determining whether

a partial judgment should be certified as final include: ( 1) the relationship between

the adjudicated and the unadjudicated claims; ( 2) the possibility that the need for

review might or might not be mooted by future developments in the district court;

3) the possibility that the reviewing court might be obliged to consider the same

issue a second time; and ( 4) miscellaneous factors such as delay, economic and

solvency considerations, shortening the time of trial, frivolity of competing claims,

expense, and the like. However, the overriding inquiry is whether there is no just

reason for delay. Messinger, 894 So. 2d at 1122- 23.

Applying these precepts on de novo review, we conclude the May 5, 2022

partial summary judgment does not meet the requirements of an appealable final

judgment under La. C. C. P. art. 1915( B). Although Texas Brine and Legacy Vulcan

entered into several interdependent contracts, the issue on appeal is limited to Texas

Brine' s claim against Legacy Vulcan for breach of the parties' Assignment of Salt

Lease. Therefore, any decision by this court on this limited claim, " without

consideration of the remaining interdependent contracts and claims thereupon,

would merely result in inefficient, piecemeal, and possibly conflicting resolution of

only a minor part of the parties' related contract claims." Pontchartrain Natural

Gas System, So. 3d at , 2022 WL 17983139 at * 4. See also La. C. C. art.

2053 (" A doubtful provision [ in a contract] must be interpreted in light of the nature

of the contract, equity, usages, the conduct of the parties before and after the

formation of the contract, and of other contracts of a like nature between the

same parties." ( Emphasis added.))

This court has dismissed prior similar appeals in this litigation for lack of

subject matter jurisdiction after finding that the partial summary judgments which

were designated as final judgments pursuant to La. C. C. P. art. 1915( B)( 1) did not

meet the Messinger requirements. In Pontchartrain Natural Gas System,

So. 3d at , 2022 WL 17983139 at * 3- 4, this court dismissed. Texas Brine' s appeal

of the dismissal of its contract claims against Legacy Vulcan under the parties'

Amended Operating Agreement pursuant to Legacy Vulcan' s motion for partial

summary judgment. This court noted that it was aware that the parties had chosen

this particular method of litigation to dispose of their remaining claims and that the

district court was attempting to proceed in as efficiently as possible at this juncture.

Pontchartrain Natural Gas System, So. 3d at , 2022 WL 17983139 at * 4.

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This court then commented that interpreting the parties' interrelated contracts in a

disjointed manner, after their interdependence was established, was not efficient or

equitable. Pontchartrain Natural Gas System, So. 3d at , 2022 WL

17983139 at * 4. In the concurrence in Pontchartrain Natural Gas System,

So. 3d at , 2022 WL 17983139 at * 4, Judge Holdridge noted that the Louisiana

Supreme Court case of R.J. Messinger mandates a policy against the piecemeal

litigation and multiple appeals that have been taken from partial judgments involving
the 2012 Assumption Parish sinkhole litigation over the past ten years. It is

important for this court and the district court to operate under the principle of sound

judicial administration to promote judicial efficiency and economy, neither of which

have been present in the sinkhole litigation. Pontchartrain Natural Gas System,

So. 3d at , 2022 WL 17983139 at * 4 ( Holdridge, J., concurring). Likewise,

in Crosstex Energy Services, LP v. Texas Brine Company, 2022- 0782 ( La. App.
1 Cir. 02/ 17/ 23), 2023 WL 2055190 at * 1, this court dismissed Texas Brine' s appeal

of a partial summary judgment rendered in favor of Legacy Vulcan that dismissed

Texas Brine' s claims under the Amended Operating Agreement.

Accordingly, having found the May 5, 2022 judgment does not meet the

requirements of a final appealable judgment under La. C. C. P. art. 1915( B) and

Messinger, we lack subject matter jurisdiction herein and dismiss the appeal.

CONCLUSION

For the above reasons, we dismiss this appeal of the May 5, 2022 judgment

and remand this matter to the district court for further proceedings consistent with

this opinion. All costs of this appeal are assessed equally between Texas Brine

Company, LLC and Legacy Vulcan, LLC.

APPEAL DISMISSED; CASE REMANDED.

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