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 0594 and
2022 CW 0961

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

VERSUS

1l TEXAS BRINE COMPANY, LLC

Judgment Rendered:
JAN 2 0 2023

On Appeal from the 23rd Judicial District Court
In and for the Parish of Assumption
State of Louisiana
Trial Court Docket Number 34265, Div. B

Hon. Thomas J. Kliebert, Jr., Judge Presiding, Ad Hoc

Leopold Z. Sher Counsel for Appellant/
James M. Garner Third -Party Plaintiff/Relator,
Peter L. Hilbert, Jr. Texas Brine Company, L.L.C.
Neal J. King
Rebekka C. Veith
Martha Y. Curtis
Kevin M. McGlone

Jeffrey D. Kessler
Christopher T. Chocheles
Amanda R. Schenck
New Orleans, Louisiana
and

Ulysses Gene Thibodeaux
Lake Charles, Louisiana
and

Travis J. Turner
Gonzales, Louisiana
and

Robert Ryland Percy, III
Gonzales, Louisiana

Roy C. Cheatwood Counsel for Appellee/
Kent A. Lambert Third -Party Defendant/Respondent,
Adam B. Zuckerman Legacy Vulcan, LLC
Leopoldo J. Yanez
Colleen C. Jarrott

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W1 Na-ki S
CW09
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Lauren Brink Adams
Matthew S. Chester
Matthew C. Juneau
New Orleans, Louisiana
and

Antonio M. "Tony" Clayton
Port Allen, Louisiana

BEFORE: WELCH, HOLDRIDGE, AND PENZATO, JJ.

2

PENZATO, J.

Texas Brine Company, LLC appeals from a January 6, 2022 judgment that

granted Legacy Vulcan, LLC' s motion for partial summary judgment and

dismissed, with prejudice, Texas Brine' s fraud and concealment/ omission

contentions and causes of action against Legacy Vulcan. For the following

reasons, the January 6, 2022 judgment is affirmed. Additionally, we deny Texas

Brine' s writ application concerning the trial court' s denial of Texas Brine' s motion

for partial summary judgment regarding Legacy Vulcan' s liability as an intentional

tortfeasor for Texas Brine' s damages, which was previously referred to this panel.

FACTS AND PROCEDURAL HISTORY

On August 3, 2012, a sinkhole developed in Assumption Parish in an area

known as the Napoleonville Salt Dome. The pertinent factual and procedural

background of this case, which arises out of the sinkhole, is thoroughly set forth in

Pontchartrain Natural Gas System, k1d/s Promix, L.L.C. and Acadian Gas Pipeline

System a Texas Brine Co., LLC, 2018- 1249 ( La. App. 1 st Cir. 12130120), 317 So. 3d

715, writs denied, 2021- 00382, 2021- 00386 ( La. 6/ 8/ 21), 317 So. 3d 323. The trial

court divided the case into four trial phases, with the first to determine liability.

The Phase 1 trial was held in September and October 2017 " for the purpose of

determining what caused the sinkhole to form and which parties, if any, were at

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

Pontchartrain, 317 So. 3d at 725. Texas Brine and Legacy Vulcan, among others,

participated in the Phase 1 trial.

Pertinently, it was established at trial that the sinkhole was caused by the

collapse of the cavern surrounding a brine well known as the Oxy Geismar 3

OG3). Pontchartrain, 317 So. 3d at 745, 749. The OG3 was drilled by Texas

Brine in May 1982 on a tract of land (referred to as the " North 40") on the western

edge of the Napoleonville Salt Dome. Texas Brine drilled the OG3 pursuant to a

series of interdependent contracts with Legacy Vulcan, the lessee of the North 40

3

until 2005. In June 2005, Legacy Vulcan sold its chloralkali business to Occidental

Chemical Corporation. Pontchartrain, 317 So. 3d at 725- 27, 732. Texas Brine

served as operator of the OG3 for the life of the well and mined brine from the

OG3, which was used by Legacy Vulcan, then Occidental, in connection with the

lessees' chloralkali business. Pontchartrain, 317 So. 3d at 754, 757, 762.

After taking the matter under advisement and ruling on various motions for

new trial, the trial court signed an amended Phase 1 judgment on April 18, 2018,

and allocated fault among the entities found to be responsible for causing the

sinkhole: 40% to Occidental; 5% each to Occidental' s affiliates, Occidental

Petroleum Corporation and OXY USA, Inc.; 25% to Texas Brine; 10% to United

Brine Services Company, LLC; and 15% to Legacy Vulcan. Pontchartrain, 317

So. 3d at 739.

Texas Brine filed an appeal with this court, resulting in the Pontchartrain,

317 So. 3d 715, decision. On appeal, the April 18, 2018 Phase 1 judgment was

reversed in part, amended in part, and affirmed in part. Specifically, this court

reduced Occidental' s fault allocation to 30% and assigned no fault to Occidental

Petroleum Corporation and OXY USA, Inc. The allocations of 15% of fault to

Legacy Vulcan and 10% to United Brine Services Company, LLC were affirmed,

and the fault allocation to Texas Brine was amended to 45%. Pontchartrain, 317

So. 3d at 763. The judgment of this court became final following the Louisiana

Supreme Court' s denial of all related writs of certiorari. See Pontchartrain, 317

So. 3d 323; La. C. C. P. art. 2166( E).

The case proceeded before the trial court on the remaining issues and trial

phases. Legacy Vulcan filed the instant motion for partial summary judgment in

August 2021. Legacy Vulcan sought to dismiss Texas Brine' s fraud and

concealment/ omission claims and causes of action that were to be tried in

connection with Phase 2. In its motion, which was premised on the issue

preclusion principle of res judicata, Legacy Vulcan asserted that the merits of

4

Texas Brine' s fraud allegations were tried during the Phase 1 trial and were

essential to the Phase 1 judgment. Legacy Vulcan maintained that issue preclusion

bars relitigation of the same factual contentions during future trial phases. See La.

R.S. 13: 4231( 3).

Specifically, Texas Brine alleged and sought to prove during the Phase 1 trial

that Legacy Vulcan fraudulently withheld assessments and reports prepared for it

by its employee, Mark Juzsli, and outside consultants, Larry Sevenker ( PB- KBB)

and RE/ SPEC, Inc. The reports set forth the consultants' analyses, observations,

and, sometimes, concerns, regarding the OG3 and, particularly, its proximity to the

edge of the salt dome. Pontchartrain, 317 So. 3d at 726- 730. In connection with

the trial court' s Phase I liability determination, Texas Brine undisputedly raised

Legacy Vulcan' s alleged fraud as an affirmative defense and urged that Legacy

Vulcan should be assessed with a greater percentage of fault for intentionally

withholding this information from Texas Brine.

In its motion for partial summary judgment, Legacy Vulcan asserted that the

trial court and this court, in Pontchartrain, 317 So. 3d 715, rejected Texas Brine' s

fraud contentions. Since the Pontchartrain ( Phase 1) judgment is now final,

Legacy Vulcan maintained that Texas Brine is barred from relitigating the same

factual contentions in support of its fraud -based incidental demands against Legacy

Vulcan.

Texas Brine opposed the motion and argued that its " contractual fraud"

incidental demand against Legacy Vulcan was not tried during the Phase 1 trial.

Although Texas Brine acknowledged that its fraud allegations were at issue in the

Phase 1 trial, it asserted that the trial court was not asked to adjudicate the merits of

its contractual fraud claim, Instead, "[ fJraud was only addressed to the extent that

Legacy Vulcan' s intentional withholding of information affected the allocation of

fault...." Texas Brine asserted that the trial court allocated 15% of fault to Legacy

Vulcan after specifically finding that Legacy Vulcan withheld the Sevenker reports

5

from Texas Brine. However, because the trial court made no specific finding as to

Legacy Vulcan' s fraud, Texas Brine maintained that the issue of Legacy Vulcan' s

fraud was not " necessarily decided" during the Phase 1 trial for purposes of res

judicata. Finally, Texas Brine argued that exceptional circumstances justify relief

from the effects of res judicata, citing the complex, multi -phase nature of the case

and a voluminous document production made by Legacy Vulcan two years after

the Phase 1 trial. See La. R.S. 13: 4232.

Following a contradictory hearing on the motion, held in December 2021,

the trial court took the matter under advisement. On January 6, 2022, the trial

court signed a judgment granting Legacy Vulcan' s motion for partial summary

judgment and dismissing, with prejudice, " any fraud and concealment/ omission

contentions and causes of action by Texas Brine against [ Legacy] Vulcan." In its

January 6, 2022 written reasons for granting Legacy Vulcan' s motion for partial

summary judgment, the trial court found that Texas Brine " put its contention of

fraud before the Court" during the Phase 1 trial " by way of an affirmative

defense." The trial court pointed out that, during the Phase 1 trial, " Texas Brine

argued that its fraud affirmative defense and contentions absolved it of fault

completely" under La. C. C. art. 2323( C). The trial court noted that it " allocated a

significant portion of fault to Texas Brine" in the Phase 1 judgment, thereby

implicitly rejecting Texas Brine' s fraud claim, and concluded that the

determination of this issue was essential to the Phase 1 judgment. The trial court

explained, " Texas Brine' s ` contract fraud' claim is based on the same facts and

implicates the same essential legal elements as its ` tortious fraud' affirmative

defense, which was fully litigated during Phase 1." Finally, the trial court

concluded, " The express factual findings made by this Court and the First Circuit

in Phase 1 counter the essential elements of Texas Brine' s fraud claims, and bar

Texas Brine from pursuing its ` contract fraud' claim in subsequent trial phases

based on issue preclusion" under La. R.S. 13: 4231( 3).

0

The trial court certified the January 6, 2022 judgment as final pursuant to La.

C. C. P. art. 1915, finding no just reason for delay. Texas Brine filed the instant

appeal.'

DISCUSSION

La. C.C.P. art. 1915(B) Certification

The January 6, 2022 judgment is not a final judgment for purposes of an

immediate appeal under La. C. C. P. arts. 1841 or 1915( A).2 Therefore, this court' s

appellate jurisdiction depends upon whether the judgment was properly designated

and certified as a final judgment pursuant to Article 1915( B)( 1). See La. C. C. P.

arts. 1911( B) and 2083. The trial court' s Article 1915( B) designation is not

binding on this court. When, as here, no reasons for the certification are given, but

some justification is apparent from the record, the appellate court should make a de

novo determination of whether the certification was proper. See R.J. Messinger,

Inc. a Rosenblum, 2004- 1664 ( La. 3/ 2105), 894 So. 2d 1113, 1122; Kosak v.

Louisiana Farm Bureau Casualty Ins. Co., 2020- 0222 ( La. App. 1st Cir. 12110120),

316 So. 3d 522, 529.

When making this determination, the overriding inquiry is whether there is

no just reason for delay. Additionally, consideration is given to the relationship

between the adjudicated and unadjudicated claims; the possibility that the need for

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

possibility the reviewing court might be obliged to consider the same issue a

second time; and miscellaneous factors such as delay, economic and solvency

Texas Brine also filed a writ application with this court ( 2022 CW 096 1) relating to a July 19,
2022 judgment that denied Texas Brine' s motion for partial summary judgment regarding
Legacy Vulcan' s alleged liability as an intentional tortfeasor as purportedly determined by this
court in Pontchartrain, 317 So. 3d 715. The writ application was referred to the panel handling
the merits of this appeal. Pontchartrain Natural Gas System, k/d/s Promix, LLC, and Acadian
Gas Pipeline System v. Texas Brine Company, LLC, 20220961 ( La. App. 1st Cir. 10111122)
unpublished writ action). On review, we decline to exercise supervisory jurisdiction and deny

the writ.

2 The January 6, 2022, judgment dismissed only one of many claims and/ or causes of action
pending between the parties.

7

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

and the like. R.J. Messinger; Inc., 894 So. 2d at 1122- 23; Kosak, 316 So.3d at 529.3

Upon our de novo review, we find that the January 6, 2022 judgment was

properly certified under La. C. C. P. art. 1915( B). Most significantly, the

unadjudicated claims and factual contentions at issue in the present appeal are

related to the adjudicated claims and factual contentions litigated to final judgment

in Pontchartrain, 317 So. 3d 715. For this reason, we also find it unlikely that the

need for review will be mooted by future developments in the trial court or that this

court will be obligated to consider this issue a second time. The Pontchartrain,

317 So. 3d 715, decision is determinative and must be given preclusive effect. See

La. C. C. P. art. 2166( E); Bailey a Clark, 2020- 0257 ( La. App. 1st Cir. 5112121), 326

So. 3d 900, 902 (" A final judgment from which there can be no appeal acquires the

authority of a thing adjudged, and no court has jurisdiction to change the

judgment.") Under the specific facts and procedural posture of this appeal, we find

no just reason for delay and conclude that this court has jurisdiction to consider the

merits of this appeal.

Standard ofReview and Applicable Law

A motion for summary judgment shall be granted if the motion,

memorandum, and supporting documents show there is no genuine issue as to

material fact and the mover is entitled to judgment as a matter of law. La. C. C. P.

art. 966( A)(3). Because the applicable substantive law determines materiality,

whether a particular fact in dispute is material can be seen only in light of the

substantive law applicable to the case. Russell v. City of Baton Rouge/Parish of

East Baton Rouge, 2018- 0600 ( La. App. 1st Cir. 1117119), 271 So.3d 231, 234.

Any doubt as to a dispute regarding a genuine issue of material fact must be

resolved against granting the motion and in favor of a trial on the merits. Chevis v.

3 While our courts have historically had a policy against multiple appeals and piecemeal
litigation, this case and the related sinkhole litigation has been splintered since inception. See
Kosak, 316 So. 3d at 529.

8

Rivera, 2021- 0124 ( La. App. 1st Cir. 9124121), 329 So. 3d 831, 834- 35, writ denied,

2021- 01546 ( La. 12/ 21/ 21), 330 So. 3d 317. Using these considerations and

criteria, appellate courts review evidence de novo to determine whether summary

judgment is appropriate. Ellis v. Circle L Trucking, L.L.C., 2021- 0457 ( La. App.

1st Cir. 12/ 30121), 340 So. 3d 985, 988.

The burden of proof on a motion for summary judgment rests with the

mover. La. C. C. P. art. 966( D)( 1). Additionally, the burden of proving the facts

essential to a claim of res judicata is on the party pleading the objection. Global

Marketing Solutions, L.L.C. v Chevron U.S.A. Inc., 2018- 1765 ( La. App. 1st Cir.

9127119), 286 So. 3d 1054, 1061, writ denied, 2019- 01886 ( La. 2110120), 347 So. 3d

741. When, as here, the moving party will bear the burden of proof at trial on the

issue raised in the motion for summary judgment, the motion must be supported

with credible evidence that would entitle the mover to a directed verdict if not

controverted at trial. Aucoin a Larpenter, 2020- 0792 ( La. App. 1st Cir. 4/ 16/ 21),

324 So. 3d 626, 632, writ denied, 2021- 00688 ( La. 9127/ 21), 324 So. 3d 87, citing

Dines a Garrett, 2004- 0806 ( La. 6125104), 876 So. 2d 764, 766 ( per curiam). 4

Such an affirmative showing shifts the burden of production to the party opposing

the motion and requires the opposing party to produce evidence to demonstrate the

existence of a genuine issue for trial. Aucoin, 324 So. 3d at 632, citing Hines, 876

So. 2d at 766- 67.

Assignment ofError No. I

In its first assignment of error, Texas Brine asserts that the trial court erred

by applying res judicata, because the doctrine does not apply if any doubt exists as

to its application. Specifically, Texas Brine maintains that the parties and the trial

4 A motion for directed verdict is appropriately granted when, after considering all evidentiary
inferences in the light most favorable to the party opposing the motion, it is clear the facts and
inferences are so overwhelmingly in favor of the moving party that reasonable men could not
arrive at a contrary verdict. Wachovia Mortgage Corp. v. Hoover, 2021- 1035 ( La. App. 1st Cir.
4/ 8/ 22), 342 So. 3d 1, 4, writ denied, 2022- 00860 ( La. 9/ 27/ 22), 347 So. 3d 156.

6E

court agreed on the limited purpose of the Phase 1 trial — to determine liability —

and further agreed that all incidental demands between the parties, including Texas

Brine' s contract -based fraud claim against Legacy Vulcan, would not be

adjudicated in the Phase 1 trial.

Louisiana' s issue preclusion principle is codified in La. R.S. 13: 4231, which

pertinently states:

Except as otherwise provided by law, a valid and final judgment is
conclusive between the same parties, except on appeal or other direct
review, to the following extent:

3) A judgment in favor of either the plaintiff or the defendant is

conclusive, in any subsequent action between them, with respect to
any issue actually litigated and determined if its determination was
essential to that j udgment.

Emphasis added.]

Under issue preclusion, once a court decides an issue of fact or law

necessary to its judgment, that decision precludes relitigation of the same issue in a

different cause of action between the same parties. La. R.S. 13: 4231, 1990 Official

Comment ( b); Quatrevingt a State of Louisiana through Landry, 2017-0884 ( La.

App. 1st Cir. 218118), 242 So. 3d 625, 639, writ denied, 2018- 0391 ( La. 4127118),

239 So. 3d 837. Issue preclusion forecloses the relitigation of matters that have

been previously litigated and decided. Quatrevingt, 242 So. 3d at 639.

The jurisprudence has construed La. R.S. 13: 4231( 3) to require the

satisfaction of three elements for issue preclusion to apply: ( 1) a valid and final

judgment, ( 2) identity of the parties, and ( 3) an issue that has been actually

litigated and determined and its determination was essential to the prior judgment.

Issue preclusion only can be invoked when all essential elements are present, and

each necessary element must be established beyond all question. . Tones a Daimler

Trucks ! North America, Inc., 2021- 0504, 2021- 0505 ( La. App. 4th Cir. 2123122),

336 So. 3d 622, 627, writ denied, 2022-00516 ( La. 5124122), 338 So. 3d 45. The

doctrine of res judicata is not discretionary and mandates the effect to be given

10

final judgments. However, if any doubt exists as to its application, the objection of

res judicata must be overruled and the second lawsuit maintained. Global

Marketing Solutions, L.L. C., 286 So. 3d at 1061.

Valid and Final Judgment and Identical Parties: These elements are

undisputedly satisfied. As noted, the Phase 1 judgment, which is now final, is the

pertinent judgment for purposes of Legacy Vulcan' s motion. See Pontchartrain,

317 So. 3d 715; La. C. C. P. art. 2166( E). Additionally, both Texas Brine and Legacy

Vulcan were parties to the Phase 1 trial, are bound by this court' s judgment in

Pontchartrain, 317 So. 3d 715, and are parties to Legacy Vulcan' s motion for

partial summary judgment.

Actually Litigated and Determination Was Essential: Texas Brine' s cause of

action for contract -based fraud will be barred if the factual contentions that form

the basis of that claim were actually litigated and determined in the Phase 1

judgment and the determination was essential to that judgment. The dispositive

issues that were actually litigated to judgment during the Phase 1 trial are the focus

of this element of the issue preclusion doctrine, not the particular cause of action.

For instance, see Jones, 336 So.3d 622, wherein the Jones plaintiffs filed suit in

May 2013 against Daimler Trucks North America, LLC ( DTNA), among others,

seeking loss of consortium damages in connection with serious injuries sustained

by their mother in a 2012 accident. The trial court granted DTNA's motion for

summary judgment in January 2014, finding DTNA was not liable to the Jones

plaintiffs, as a matter of law, and the claims against DTNA were dismissed with

prejudice. The Jones plaintiffs did not appeal, and the judgment became final.

Jones, 336 So. 3d at 626. After their mother' s death in March 2018, the Jones

plaintiffs filed a wrongful death suit against DTNA, among others, concerning the

same 2012 accident. In response, DTNA filed an exception of res judicata based

on issue preclusion, relying on the prior judgment granting its motion for summary

judgment. Jones, 336 So. 3d at 627. The trial court granted the exception, and the

11

court of appeal affirmed. Although the Jones plaintiffs' wrongful death cause of

action was not litigated in connection with DTNA's January 2014 summary

judgment ( in fact, the cause of action did not exist until 20185), the Jones plaintiffs

were, nevertheless,
barred from relitigating the issue of DTNA's liability for

causing the 2012 accident that injured their mother. Jones, 336 So. 3d at 626, 628-

29.

Similarly, see Webb a Morella, 2016- 1153 ( La. App. 1st Cir. 6/21/ 17), 224

So.3d 406, 409, applying federal issue preclusion, which mirrors Louisiana' s issue

preclusion requirements in all pertinent respects. In the Webbs' first suit, the

federal district court found that the complaint failed to state a plausible claim for

relief and dismissed the Webbs' federal law causes of action. The federal court

declined to exercise supplemental jurisdiction over the Webbs' state law claims and

dismissed those causes of action without prejudice. 28 U.S. C. § 1367; Webb, 224

So. 3d at 409. After the Webbs filed suit in state court, asserting their state law

causes of action, the defendants filed exceptions of res judicata, arguing that issue

preclusion barred relitigation of the factual issues pertinent to both the federal and

state law causes of action. On appeal, this court found that the federal court ruled

on factual issues necessary to its ruling on the Webbs' federal law claims, and these

factual issues were also necessary to the Webbs' state law claims. Webb, 224 So. 3d

at 411. Because the facts supporting the state law claims were the same as those

actually litigated in the prior federal action and the determination of the issues in

the prior action was a necessary part of the federal court' s judgment, this court

concluded that the doctrine of issue preclusion barred the Webbs from relitigating

5 See Walls v. American Optical Corp., 98- 0455 ( La. 91$ 199), 740 So. 2d 1262, 1274 ( observing
that " the plaintiffs' injury in a wrongful death action occurs when the victim dies" and " the
wrongful death action could not arise until the date of the victim' s death").

e Louisiana Revised Statutes 13: 4231 is modeled on federal preclusion doctrine. Jones, 336
So. 3d at 627. The federal issue preclusion doctrine requires three elements: ( 1) the issue at stake
in the present litigation must be identical to the one involved in the prior action, ( 2) the issue
must have been actually litigated in the prior action, and ( 3) the determination of the issue in the
prior action must have been a necessary part of the judgment in that action. Webb, 224 So. 3d at
410.

12

the same factual contentions in state court and affirmed the judgment granting the
exceptions of res judicata. Webb, 224 So. 3d at 411.

Here, Legacy Vulcan does not assert that Texas Brine' s contract -based fraud

incidental demand was tried during the Phase 1 trial. As Texas Brine points out, all

parties and the trial court agreed that Phase 1 was limited to the issue of liability.

Instead, Legacy Vulcan contends that the factual allegations at issue in Texas

Brine' s contractual fraud claim were conclusively determined during the Phase 1

trial in connection with Texas Brine' s affirmative defense asserted against Legacy

Vulcan. The evidence attached to Legacy Vulcan' s motion for partial summary

judgment, in addition to Texas Brine' s opposition evidence, supports this

contention.

First, during a pre- trial status conference on April 24, 2017, the trial court

stated that fraud was a valid defense that Texas Brine was entitled to " put forward"

at the upcoming Phase 1 trial. In the August 2017 amended Phase 1 pre- trial order,

Texas Brine alleged that Legacy Vulcan intentionally withheld various reports

prepared by internal and external consultants and identified Legacy Vulcan' s

purported fraud as a contested issue of fact to be resolved at trial.

Next, during the Phase 1 trial, Texas Brine offered testimony and

documentary evidence, including the consultant reports at issue, to establish that

Legacy Vulcan intentionally withheld those reports and evaluations from Texas

Brine. Texas Brine' s corporate witnesses testified concerning the impact of Legacy

Vulcan' s actions on the company' s operational and contractual decisions.'

Tellingly, in its opposition to Legacy Vulcan' s motion for partial summary

judgment, Texas Brine asserted that " ample evidence" exists in the Phase 1 trial

record to establish the factual and legal basis for its fraud claims against Legacy

Vulcan. Texas Brine then cited Phase 1 trial evidence and testimony that

7 The relevant portions of the transcript from the Phase 1 trial, as it pertains to the facts at issue
in this appeal, were attached as exhibits to Legacy Vulcan' s motion for partial summary
judgment.

13

purportedly established that Legacy Vulcan " systematically" and " fraudulently"

withheld " nearly 400 pages of reports" from Texas Brine.

In its written reasons supporting the Phase 1 judgment, the trial court

identified various consultant reports provided to Legacy Vulcan and Texas Brine,

including a report prepared by Mr. Sevenker for Legacy Vulcan in the 1980s,

which warned Legacy Vulcan that the proximity to the edge of the salt dome was

the major concern. The trial court noted, " Importantly, the Sevenker reports were

not shared with Texas Brine." Nevertheless, the trial court concluded that Legacy

Vulcan and Texas Brine, along with Occidental and its affiliates, shared

responsibility for causing the sinkhole, citing La. C. C. arts. 2315 and 2317. 1.

Finally, on appeal in Pontchartrain, 317 So. 3d at 740, Texas Brine argued,

among other things, that the trial court manifestly erred in failing to assess more

fault against Legacy Vulcan based on its fraudulent withholding of information

from Texas Brine. To support this assignment of error and its fraud contentions,

Texas Brine cited evidence introduced during the Phase 1 trial, which established

that Legacy Vulcan withheld consultant reports from Texas Brine. Texas Brine

argued that this evidence established Legacy Vulcan' s intent to defraud Texas

Brine and satisfied the legal elements of fraud, i.e., a misrepresentation of material

fact made with intent to deceive, which causes justifiable reliance with resulting

injury. Although the Pontchartrain, 317 So. 3d 715, opinion does not expressly

address Texas Brine' s fraud assertion, this court did not increase Legacy Vulcan' s

percentage of fault, only Texas Brine' s.

Texas Brine argues that, because the Phase 1 trial did not address its

contract -based fraud claims, those claims could not have been conclusively

established during that trial. However, this argument ignores the function of issue

preclusion — to preclude religiation of issues actually adjudicated. Issue preclusion

is not concerned with whether a particular cause of action was litigated; instead,

that is the function of claim preclusion. See Quatrevingt, 242 So. 3d at 639.

14

Texas Brine does not dispute that the same factual contentions at issue in its

affirmative defense of fraud against Legacy Vulcan, i.e., whether Legacy Vulcan

fraudulently withheld information and consultant reports, are the same facts at

issue in its contract -based fraud cause of action. Nevertheless, we examine two

incidental demands filed by Texas Brine in 2016, which set forth the factual basis

for its contractual fraud claims against Legacy Vulcan.

In these demands, Texas Brine alleged that, before, during, and after the

OG3 was drilled, Legacy Vulcan' s consultants produced numerous studies,

analyses, and reports, which included evaluations and concerns regarding various

aspects of the OG3 and the proximity of edge of the salt dome. Texas Brine

asserted that Legacy Vulcan did not provide it with all of these reports and

conclusions.
As a result of Legacy Vulcan' s purportedly " deliberate" withholding

of material information and " intentional misrepresentation"
concerning the

condition of the OG3 and the cavern, Texas Brine alleged that it was prejudiced in

its contract negotiations with Legacy Vulcan. Texas Brine further asserted that

Legacy Vulcan' s " deliberate and systematic failure" to share all material

information and analyses " vitiated Texas Brine' s consent" to enter into several

contracts with Legacy Vulcan from " their inception." Based on Legacy Vulcan' s

allegedly intentional withholding, Texas Brine sought damages and further sought

to nullify its contracts with Legacy Vulcan, asserting that its consent was vitiated

by fraud, error, and/ or duress.

Thus, it is evident that the same factual allegations and issues that form the

basis of Texas Brine' s contract -based fraud cause of action against Legacy Vulcan

are the same issues that were tried during the Phase 1 trial in connection with

Texas Brine' s fraud -based affirmative defense and its effort to avoid or reduce its

liability for causing the sinkhole.

15

As the trial court correctly noted in its January 6, 2022, written reasons for

granting Legacy Vulcan' s motion on issue preclusion, La. C. C. art. 1953 defines

fraud as " a misrepresentation or a suppression of the truth made with the intention

either to obtain an unjust advantage for one party or to cause a loss or

inconvenience to the other. Fraud may also result from silence or inaction." This

definition applies whether the fraud cause of action is based in tort or contract. See

Riedel v Fenasci, 2018- 0539 ( La. App. 1st Cr. 12/ 28/ 19), 270 So. 3d 795, 901

recognizing that a claim of fraud under Article 1953 generally applies in cases

where a contract exists and that both contract and tort -based fraud claims require a

misrepresentation, suppression, or omission of true information, an intent to

deceive or obtain an unjust advantage, and justifiable reliance by the plaintiff and

resulting injury.) "[ Tlhe error induced by a fraudulent act must relate to a

circumstance substantially influencing the victim' s consent to ( a cause of) the

contract." Shelton v Standard/ 700 Associates, 2001- 0587 ( La. 10/ 16/ 01), 798

So. 2d 60, 64. We agree with the trial court' s conclusion that, whether framed as

contract fraud" or " tortious fraud," the merits of Texas Brine' s fraud contentions

have been fully litigated.

We also conclude that the determination of the merits of Texas Brine' s fraud

allegations against Legacy Vulcan was essential to the Phase 1 judgment. Texas

Brine concedes that fraud was addressed during the Phase 1 trial " to the extent that

Legacy] Vulcan' s intentional withholding of information affected the allocation of

fault...." The trial court allocated fault in the Phase 1 judgment now at issue. This

allocation included 15% of fault to Legacy Vulcan, which Texas Brine asserts was

based, at least in part, on Legacy Vulcan' s intentional withholding of reports.

Thus, Legacy Vulcan satisfied its burden of proving all elements of issue

preclusion as to Texas Brine' s factual fraud allegations. See La. C. C. P. art.

966( D)( 1).

16

To avoid the effects of res judicata, Texas Brine argues that the " exceptional

circumstances" exception applies. Louisiana Revised Statutes 13: 4232( A)( 1)

provides that a judgment does not bar another action by the plaintiff when

exceptional circumstances justify relief from the res judicata effect of the

judgment. Texas Brine relies on Kevin Associates, LLC a Crawford, 2004- 2227

La. App. 1st Cir. 11/ 4/ 05), 917 So. 2d 544, 549, writ denied, 2006- 0220 ( La.

5/ 5/ 06), 927 So. 2d 311, wherein this court recognized that the " exceptional

circumstances"
exception generally applies to " complex procedural situations in

which litigants are deprived of the opportunity to present their claims due to

unanticipated quirks in the system, to factual situations that could not be

anticipated by the parties, or to decisions that are totally beyond the control of the

parties." Citing only the " complex procedural situations" language from Kevin,

Texas Brine asserts that the exception applies here merely because the sinkhole

litigation has spanned decades and is divided into multiple phases. We disagree

and find that, in this instance, the nature of the litigation alone is not an exceptional

circumstance, nor has Texas Brine demonstrated satisfaction of any of the

remaining " exceptional circumstance" considerations articulated in Kevin.s

We are likewise unpersuaded by Texas Brine' s argument that the exceptional

circumstances articulated in Terrebonne Fuel & Lube, Inc. a Placid Refining Co.,

95- 0654, 95- 0671 ( La. 1/ 16/ 96), 666 So. 2d 624, 632, are present. There, the

Louisiana Supreme Court recognized that exceptional circumstances to the

application of res judicata include instances where the parties have agreed that the

plaintiff may split his claim, or the defendant has acquiesced therein, and the court

s There is no indication or assertion that Texas Brine was deprived of the opportunity to present
its fraud allegations during the Phase 1 trial, either " due to unanticipated quirks in the system" or
otherwise. To the contrary, the record before us, in addition to the evidence presented during the
Phase 1 trial, as discussed in Pontchartrain, 317 So -3d 715, demonstrates that Texas Brine
actively and thoroughly litigated its fraud allegations against Legacy Vulcan. Finally, Legacy
Vulcan' s claim of res judicata does not arise out of an unanticipated factual situation or as a
result of decisions that were totally beyond the control of the parties. Instead, the parties agreed
to try Texas Brine' s fraud allegations during the Phase I trial.

17

in the first action has expressly reserved the plaintiff' s right to maintain the second

action. Terrebonne Fuel chic Lube, 666 So. 2d at 632. Texas Brine asserts that the

parties and the trial court agreed that Phase 1 would impose only delictual fault,

while contract claims between the parties would be reserved for a later phase.

Again, this argument ignores the distinction between issue preclusion and claim

preclusion.

If the issue before us was whether Texas Brine' s contract -based fraud cause

of action was barred by res judicata, the considerations set forth in Terrebonne

Fuel & Lube, would be persuasive. However, as we have explained, Legacy

Vulcan' s motion for partial summary judgment was premised on issue prelusion,

which examines whether particular factual issues have been litigated, not whether

the plaintiff has or should have litigated a particular cause of action. The latter

consideration is the focus of the claim preclusion principle of res judicata, which is

not at issue here. See La. R.S. 13: 4231( l) and ( 2); Quatrevingt, 242 So. 3 d at 639.

There is no evidence that Texas Brine reserved its right, with the acquiescence of

the trial court and Legacy Vulcan, to relitigate the issue of Legacy Vulcan' s fraud,

L e., the same factual contentions, during future trial phases.

Finally, Texas Brine asserts that an exceptional circumstance exists because

Legacy Vulcan produced " thousands of pages" of documents following the Phase 1

trial, some of which purportedly bear directly on Texas Brine' s fraud contentions.

Notably, in Pontchartrain, 317 So.3d at 763 n.35, this court denied Texas Brine' s

motion to stay the Phase 1 appeal due to this post -trial production by Legacy

Vulcan and denied Texas Brine' s motion for limited remand " regarding

reallocation of fault due to newly produced documents by Legacy Vulcan...." We

again reject Texas Brine' s argument that this production warrants relief from the

Phase 1 judgment.

18

Assignment of Error No. 2:

In its second assignment of error, Texas Brine asserts that the trial court

misapplied La. C. C. art. 2323( C) as it relates to multiple tortfeasors and invoked

this article in granting Legacy Vulcan' s motion for partial summary judgment. We

disagree with Texas Brine' s characterization of the trial court' s reliance on Article

2323. It is evident that the trial court, in its consideration of the requirements of

issue preclusion, noted that fault was previously allocated pursuant to Article 2323

as further support for its conclusion that it considered and implicitly rejected Texas

Brine' s fraud contentions against Legacy Vulcan in the Phase 1 judgment.

Additionally, on our de novo review and with no reliance on Article

2323( C), we find that Legacy Vulcan carried its summary judgment burden of

proof.
Upon this successful showing by Legacy Vulcan, the burden shifted to

Texas Brine to produce evidence to demonstrate the existence of a genuine issue

for trial. See Aucoin, 324 So. 3d at 632, citing Hines, 876 So. 2d at 766- 67. Texas

Brine failed to satisfy this burden. Therefore, Legacy Vulcan' s motion for partial

summary judgment was properly granted.

CONCLUSION

For the above reasons, we affirm the January 6, 2022 judgment granting

Legacy Vulcan, LLC' s motion for partial summary judgment and rendering

judgment in favor of Legacy Vulcan and against Texas Brine Company, LLC,

dismissing, with prejudice, Texas Brine' s fraud and concealment/ omission

contentions and causes of action against Legacy Vulcan. We deny Texas Brine' s

writ application. All costs of this appeal are assessed against Texas Brine

Company, LLC.

JUDGMENT AFFIRMED; WRIT DENIED.

19

PONTCHARTRAIN NATURAL STATE OF LOUISIANA
GAS SYSTEM, KID/ S PROMIX, L.L.C.
ACADIAN GAS PIPELINE SYSTEM COURT OF APPEAL

VERSUS FIRST CIRCUIT

TEXAS BRINE COMPANY, LLC 2022 CA 0594

HOLDRIDGE, J., concurring.

I respectfully concur with the opinion. I find in this case it is appropriate for

this court to decide this appeal of a partial summary judgment in accordance with

La. C. C. P. art. 1915( B). In a recent appeal, I wrote a concurring opinion to

emphasize that the Louisiana Supreme Court case of R.J. Messinger, Inc. v.

Rosenblum, 2004- 1664 ( La. 3/ 2105), 894 So. 2d 1113, 1122, mandates a policy

against the piecemeal litigation and multiple appeals that have been taken from

partial judgments involving the 2012 Assumption Parish sinkhole litigation.

Pontchartrain Natural Gas System v. Texas Brine Co., LLC, 2022- 0738 ( La.

App. 1 Cir. 12129122), So. 3d , ( 2022 WL 17983139 at ** 1) ( Holdridge,

J., concurring). By following Messinger, this court found that the trial court

improperly certified a La. C. C. P. art. 1915( B) judgment and had no jurisdiction to

consider the appeal from a partial judgment. Pontchartrain Natural Gas System,

So. 3d at ( 2022 WL 17983139 at ** 6- 7). It is important for this court and

the trial 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 ** 1).

In contrast, this matter involves the question of whether the issue preclusion

principle of res judicata should apply. Normally, the issue involved in this appeal

as to whether a matter has already been tried would not arise since all parties would

clearly know what issues were to be tried at the trial on the merits. Unfortunately,

the parties in this case cannot agree as to whether Texas Brine' s fraud and

concealmenVomission contentions were totally tried in the Phase I trial and can no

longer be tried in any other phase of the trial based on the issue preclusion principle

of res judicata. The parties cannot now complain to this court since they failed to

reach a clear and concise stipulation as to exactly what issues would be tried in the

four phase system they created. The trial court, and not this court, is the best forum

to decide whether issue preclusion would prohibit Texas Brine from raising its fraud

and cone ealment/ omis s ion contentions due to the parties' different legal

relationships in each phase of this four trial system agreed upon by the parties.

Therefore, I concur in the result reached by the majority.