Crosstex Energy Services, LP, Crosstex LIG, LLC and Crosstex Processing Services, LLC v. Texas Brine Company, LLC

Opinion

STATE OF LOUISIANA COURT OF APPEAL FIRST CIRCUIT

DOCKET NUMBER 2018 CA 1425

CROSSTEX ENERGY SERVICES, LP; CROSSTEX LIG, LLC; AND, CROSSTEX PROCESSING SERVICES, LLC

VERSUS

rl Az- TEXAS BRINE COMPANY, LLC, ET AL.

Decision Rendered: APR 1 1 2022

On Appeal from the 23rd Judicial District Court Assumption Parish, Louisiana Docket Number 34, 202

Honorable Thomas J. Kliebert, Jr., Ad HocJudge Presiding

Martin A. Stern Attorneys for Appellant/ Appellee/ Defendant Leigh Ann Schell Occidental Chemical Corporation Raymond P. Ward Alexandra Roselli Jeffrey E. Richardson New Orleans, Louisiana

Kathy Patrick, pro hac vice Laura Kissel Cassidy, pro hac vice Samuel W. Cruse, III, pro hac vice Angus J. Dodson, pro hac vice Caitlin Halpern, pro hac vice Houston, Texas

Richard Hymel Lafayette, Louisiana

Brad D. Brian Bethany W. Kristovich Grant Davis -Denny Daniel B. Levin Los Angeles, California

Christopher Friend Meghan Smith New Orleans, Louisiana

IN e. S t e/ ) C o n C. v-, (' S Martin A. Stern Attorneys for Appellant/ Appellee/ Defendant Leigh Ann Schell Oxy USA Inc. Raymond P. Ward Alexandra Roselli New Orleans, Louisiana

Kathy Patrick, pro hac vice Laura Kissel Cassidy, pro hac vice Samuel W. Cruse, III, pro hac vice Caitlin Halpern, pro hac vice Houston, Texas

Martin A. Stern Attorneys for Appellant/ Appellee/ Defendant Leigh Ann Schell Occidental Petroleum Corporation Raymond P. Ward Alexandra Roselli New Orleans, Louisiana

Kathy Patrick, pro hac vice Laura Kissel Cassidy, pro hac vice Samuel W. Cruse, III, pro hac vice Caitlin Halpern, pro hac vice Houston, Texas

Roy C. Cheatwood Attorneys for Appellant/ Appellee/ Defendant Kent A. Lambert Legacy Vulcan, LLC Tyler Weidlich Adam B. Zuckerman Matthew S. Chester Colleen C. Jarrott Matthew C. Juneau Leopoldo J. Yanez Lauren Brink Adams Paul C. Thibodeaux New Orleans, Louisiana

James M. Garner Attorneys for Appellant/ Appellee/ Defendant Leopold Z. Sher Texas Brine Company, LLC Peter L. Hilbert, Jr. Martha Curtis Jeffrey D. Kessler Christopher T. Chocheles David A. Freedman Melissa R. Harris Laurie A. Dearman Rebekka C. Veith Darnell Bludworth New Orleans, Louisiana

Robert Ryland Percy, III Gonzales, Louisiana

Travis J. Turner Gonzales, Louisiana Dane S. Ciolino Metairie, Louisiana

2 Royce I. Duplessis New Orleans, Louisiana

James E. Kuhn Ponchatoula, Louisiana

Leopold Z. Sher Attorneys for Appellee/ Defendant James M. Garner United Brine Services Company, LLC Peter L. Hilbert, Jr. Christopher T. Chocheles Jeffrey D. Kessler Darnell Bludworth David A. Freedman Melissa R. Harris Laurie A. Dearman New Orleans, Louisiana

Royce I. Duplessis New Orleans, Louisiana

Travis J. Turner Gonzales, Louisiana

Dane S. Ciolino Metairie, Louisiana

Shawn Carter Counsel for Appellees/ Defendants Matthew Randazzo, III Browning Oil Company, Colorado Crude Christopher Bailey Company, LORCA Corporation Will Montz Lafayette, Louisiana

Joseph L. Shea, Jr. Counsel for Appellee/ Defendant Katherine Smith Baker Reliance Petroleum Corporation Ashley G. Gable Joshua S. Chevallier Shreveport, Louisiana

Frank H. Spruiell, Jr. Counsel for Appellee/ Defendant Reid A. Jones Sol Kirschner Seth M. Moyers Anna W. O' Neal Shreveport, Louisiana

BEFORE: McDONALD, THERIOT, and HESTER, 33.

3 McDONALD, J.

Legacy Vulcan, LLC f/k/ a Legacy Vulcan Corp. and/ or Vulcan Materials

Company ( Legacy Vulcan), Occidental Chemical Corporation ( Oxy), Occidental

Petroleum Corporation ( Oxy Petro), OXY USA Inc. ( Oxy USA), and Texas Brine

Company, LLC ( Texas Brine) appeal a judgment determining causation, liability, and

apportionment of fault for the formation of a sinkhole and the damage it caused in

Assumption Parish, Louisiana. United Brine Services Company, LLC ( UBS) filed an

answer in response to the appeals filed by Legacy Vulcan, Oxy, Oxy Petro, and Oxy

USA. For the following reasons, we reverse in part, amend in part, and affirm in

part. We deny UBS' s answer to the appeals.

FACTS AND PROCEDURAL HISTORY

This appeal relates to one of several lawsuits arising from the August 3, 2012

sinkhole that developed near Bayou Come in Assumption Parish, Louisiana. The

plaintiffs in this suit, Crosstex Energy Services, LP, Crosstex LIG, LLC, and Crosstex

Processing Services, LLC, ( collectively Crosstex) operated a natural gas pipeline and

storage facility in the vicinity of the property affected by the sinkhole. In its original

petition for damages, Crosstex sought to recover damages for its unusable pipeline

and storage facility from Texas Brine, due to the alleged negligence of Texas Brine's

operation of the Oxy Geismar No. 3 Well ( OG3), which collapsed and created the

sinkhole.

Two additional suits were filed against Texas Brine by affected pipeline

companies, namely Pontchartrain Natural Gas System v. Texas Brine Company, LLC,

23rd Judicial District Court, docket no: 34, 265 and Florida Gas Transmission

Company, LLC v. Texas Brine Company, LLC, 23rd Judicial District Court, docket no:

34, 316. Although the claims asserted in these three pipeline cases are similar, the

parties resisted consolidation, except for purposes of trial.' The district court held

the liability trial for the three pipeline cases in the fall of 2017 for the purpose of

Appeals were filed in each matter following the liability trial: Pontchartrain, 18- 1249 ( La. App. 1 Cir. 12/ 30/ 20), 317 So. 3d 715; Florida Gas, 18- 1391 ( La. App. 1 Cir. 5/ 3/ 21), 324 So. 3d 1090, and the instant Crosstexappeal under our docket under 2018 CA 1425. 4 determining what caused the sinkhole and which parties, if any, were at fault under

any theory of law. All other issues were reserved for subsequent trials.

The district court signed a judgment pertaining to liability on December 21,

2017, finding Oxy, Texas Brine, and Legacy Vulcan liable for the formation of the

sinkhole. The district court apportioned fault as follows: 50% to Oxy, 35% to Texas

Brine, and 15% to Legacy Vulcan. In its written reasons, the district court concluded

that the sinkhole was caused, in various degrees, by three factors: ( 1) the cavern' s

proximity to the edge of the salt dome resulting in an unreasonably thin cavern wall

and an eventual brine leak; ( 2) the substantial depressurization of the OG3 cavern

caused by brine leaking from the cavern into the AH -1 reservoir ( associated with a

neighboring oil and gas well); and ( 3) the timing of the plugging and abandoning of

the OG3.

Several parties then filed motions for new trial, primarily challenging the

apportionment of fault and the language of the judgment. After a contradictory

hearing on the motions and taking the matter under advisement, the district court

granted the motions in part and denied them in part. In a judgment signed on April

18, 2018, the district court reapportioned fault as follows: 40% to Oxy, 5% to Oxy

Petro, 5% to OXY USA, 25% to Texas Brine, 10% to UBS, and 15% to Legacy

Vulcan. From this judgment, Legacy Vulcan, Oxy, Oxy Petro, Oxy USA, and Texas

Brine appeal. UBS answered the appeals filed by all but Texas Brine.

Additional Issues in the Crosstex Appeal

Unlike in Pontchartrain and Florida Gas, after the instant appeal was lodged,

the Louisiana Supreme Court ordered Texas Brine and Oxy to participate in a

separate trial regarding Texas Brine' s fraud claims against Oxy, which had been

dismissed via summary judgment prior to the liability trial. Crosstex Energy Services,

LP v. Texas Brine Company, LLC, 18- 1128 ( La. 10/ 29/ 18), 255 So. 3d 587 ( per

curiam). Because of the procedural posture of the case at the time Texas Brine

sought to set a date for the fraud trial, a panel of this court found that the district

court had been divested of jurisdiction over liability issues, which included fraud

claims, by virtue of the order of appeal entered by the district court. Accordingly, 5 this court vacated the order setting the trial on the fraud claims until this appeal was

final. Crosstex Energy Services, LP v, Texas Brine Company, LLC, 19- 0089 ( La. App.

1 Cir. 6/ 13/ 19), 2019 WL 2487494 ( unpublished). The Louisiana Supreme Court

once again granted writs in part as follows:

Granted in part. Considering our order in Crosstex Energy Services, LP v. Texas Brine, Co., LLC, 2018- 1128 ( La. 10/ 29/ 18), 255 So. 3d 587, the judgment of the court of appeal is vacated insofar as it finds the district court is divested of jurisdiction to consider Texas Brine' s fraud -based claims in the Crosstex matter. We hereby grant a limited remand of the Crosstex appeal in order to permit the district court to conduct the trial, as scheduled, of Texas Brine' s fraud -based claims in the Crosstex matter only. In all other respects, the writs are denied.

Florida Gas Transmission Company v. Texas Brine Company, LLC, 19- 0978 ( La. 6/ 18/ 19), 275 So. 3d 266 ( per curiam).

It is undisputed that after the above Supreme Court actions, the district court

conducted a fraud trial in the summer of 2019, and that trial remains unconcluded as

the parties have spent over two years in a post -trial discovery debacle.

Although Texas Brine asserts that this post -liability trial activity affects this

appeal immensely, we disagree. As this court has noted previously, the Louisiana

Supreme Court made no mention regarding the arbitrability of claims in either per

curiam opinion, nor did it order a stay of the appeal of the liability trial judgment

pending the fraud trial, or otherwise divest this court's jurisdiction from acting on the

liability trial appeal. Rather, it is this court's view that the second per curiam opinion

split the issue of fraud from the appeal of the liability trial judgment in order for the

district court to complete a separate and distinct trial on the fraud claims, while

jurisdiction regarding the liability trial judgment remained with this court.

Accordingly, we deny Texas Brine' s exception of res judicata regarding the

arbitrability of tort claims; Texas Brine and UBS' s motions to stay this appeal pending

the outcome of the fraud trial; Oxy, Oxy Petro, and Oxy USA' s motion to set a

deadline to file an opposition to Texas Brine' s motion to stay; and, Texas Brine' s

motion to remand this appeal due to the fraud trial.

2 ANALYSIS

Another panel of this court decided a nearly identical appeal in Pontchartrain

Natural Gas System v. Texas Brine Company, LLC, 18- 1249 ( La. App. 1 Cir.

12/ 30/ 20), 317 So. 3d 715, writs denied, 21- 00382, 21- 00386 ( La. 6/ 8/ 21), 317 So. 3d

323. Although that case involved different plaintiffs, the same April 2018 liability

judgment, evidence, assignments of error, and factual and legal considerations at

issue here were at issue in Pontchartrain. This court thoroughly discussed the

procedural history of the case, the evidence presented at trial, and analyzed the

applicable legal principles - all of which we adopt by reference here. Id. The

Pontchartrain court affirmed the district court's conclusion that the sinkhole was

caused by a combination of the closeness of the cavern to the edge of the salt dome,

which resulted in an unreasonably thin cavern wall and eventual brine leak, and the

plugging and abandoning of the OG3. Id, at 749- 50. However, this court concluded

that the district court manifestly erred by finding that the presence of the AH -1

reservoir was a cause -in -fact of the collapse of the OG3 cavern. Id. at 748. Finally,

this court determined that the milling procedure and pressurization of the OG3 in

2010, performed in anticipation of a mechanical integrity test ( MIT), exacerbated any

damage or leak already present within the cavern. Id, at 757- 58.

The only basis to allocate fault to Oxy Petro and Oxy USA was their

relationship to the AH -1 well and reservoir. Id, at 748- 49, 760. Similarly, a portion

of fault allocated to Oxy also stemmed from the AH -1. Id. at 760. Upon finding the

AH -1 reservoir was not a causative factor, the Pontchartrain court concluded that

Oxy Petro and Oxy USA were not liable and that Oxy' s percentage of fault should be

reduced. Id.

The Pontchartrain court gave in depth consideration to the remaining parties'

duties and their relationships with each other and the OG3, all of which we adopt by

reference here. After its analysis, the Pontchartrain court affirmed the district court' s

remaining duty/ breach determinations but also concluded that the district court

manifestly erred to the extent it failed to find that Texas Brine breached its duty to

act as a prudent operator when it milled and pressurized the OG3. Id. at 759. The Pontchartrain court then reversed and amended the April 2018 judgment to

reallocate fault, reducing Oxy's fault to 30% and increasing Texas Brine' s fault to

45%. Id. at 762, 763. The Pontchartrain court also affirmed the district court's

allocation of 15% fault to Legacy Vulcan. Id. at 761. Finally, because UBS's answer,

wherein it sought a modification of the judgment, was untimely, the Pontchartrain

court affirmed the judgment against UBS without discussion of the merits of the

arguments raised in the answer. Id. at 759.

Thereafter, in Florida Gas Transmission Company, LLC v. Texas Brine

Company, LLC, 18- 1391 ( La. App. 1 Cir. 5/ 3/ 21), 324 So. 3d 1090, writs denied, 21-

00770, 21- 00773 ( La. 10/ 19/ 21), 326 So. 3d 255, 260, while considering a nearly

identical appeal, this court adopted the aforementioned Pontchartrain decision, and

thoroughly reviewed the merits of UBS' s answer which was found to be timely. Id.

at 1094. After careful consideration, the Florida Gas court found that the record

supported the conclusion that UBS was at fault for causing the sinkhole and affirmed

the allocation of 10% fault for its actions. Id, at 1097.

Due to the indistinguishable nature of the appeals taken in the present matter,

Pontchartrain, and Florida Gas, we adopt the Pontchartrain and Florida Gas courts'

factual findings, legal conclusions and holdings concerning arbitration, causation,

duty, and breach, as well as the liability determinations and fault allocations as to

Legacy Vulcan, Oxy, Oxy Petro, Oxy USA, Texas Brine and UBS. 2 See Pontchartrain

Natural Gas System v. Texas Brine Company, LLC, 18- 0001 ( La. App. 1 Cir. 6/ 4/ 18),

253 So. 3d 156, 156, writ denied, 18- 1124 ( La. 9/ 28/ 18), 253 So. 3d 147 ( recognizing

that, where a subsequent appeal involves the same background, issues, and

assignments of error that this court has already thoroughly discussed, we are bound

by the " law of the circuit doctrine" to follow the prior opinion.)

Therefore, we find the district court was manifestly erroneous in its fault

allocation to Oxy, Oxy Petro, Oxy USA, and Texas Brine. We reallocate fault such

that Oxy shall bear 30% fault, Texas Brine shall bear 45% fault, and Oxy USA and

z We likewise adopt the Pontchartrain court's conclusion that the district court was not manifestly erroneous in declining to allocate fault to Dr. Joseph Ratigan, a geological engineer who frequently provided opinions and analysis concerning the OG3. Pontchartrain, 317 So. 3d at 763, n. 34.

0 Oxy Petro shall bear no fault. Finally, we find no error in the district court's

allocation of 15% fault to Legacy Vulcan and 10% fault to UBS. 3

We further dispose of all pending motions and exceptions filed with this court

by adopting the rulings made in Pontchartrain, 317 So. 3d 715, and Florida Gas, 324

So. 3d 1090, as the motions and exceptions filed in this appeal are materially

indistinguishable from those considered in those appeals.4

CONCLUSION

For the reasons fully set forth in this opinion, in Pontchartrain, 317 So. 3d 715,

and in Florida Gas, 324 So. 3d 1090, we reverse in part, amend in part, and affirm in

part the district court's April 18, 2018 judgment. We reverse that portion of the

judgment allocating 5% fault to Occidental Petroleum Corporation. We reverse that

portion of the judgment allocating 5% fault to Oxy USA Inc.

We amend that portion of the judgment that allocated 40% fault to Occidental

Chemical Corporation to reflect the allocation of 30% fault to Occidental Chemical

Corporation. We further amend that portion of the judgment that allocated 25%

fault to Texas Brine Company, LLC to reflect the allocation of 45% fault to Texas

Brine Company, LLC.

We affirm the remainder of the district court's judgment, allocating 15% fault

to Legacy Vulcan, LLC f/k/ a Legacy Vulcan Corp. and/ or Vulcan Materials Company

3 We therefore deny as moot, Oxy, Oxy Petro and Oxy USA' s exception of res judicata regarding UBS's answer; Oxy's exception of res judicata regarding the issue of arbitration; Legacy Vulcan' s exception of res judicata, Legacy Vulcan' s motion to supplement the appellate record in connection with its exception of res judicata, and Legacy Vulcan' s motion to set deadline to file opposition to its exception of res judicata.

4 Specifically, we adopt the disposition set forth in Florida Gas, 324 So. 3d at 1098, n. 7, denying, as moot, Texas Brine's February 12, 2021 and March 22, 2021 motions to strike the letters filed by the three Oxy entities pursuant to Uniform Rules of Louisiana Courts of Appeal, Rule 2- 12. 6. 1.

We further adopt the dispositions set forth in Pontchartrain, 317 So. 3d 715, denying the following: 1) Oxy, Oxy Petro, Oxy USA, and Legacy Vulcan' s motion to consolidate the three liability appeals appearing in docket numbers 2018 CA 1249, 2018 CA 1391 and 2018 CA 1425. Id. at 724, n. 3. 2) Oxy, Oxy Petro, and Oxy USA' s motion to consolidate the Phase I liability appeals. Id. 3) Texas Brine' s motion to strike Oxy's response to per curiam. Id. at 744, n. 28. 4) Texas Brine's motion to stay Phase I appeal considering supplemental production of documents by Legacy Vulcan. Id. at 763, n. 35. 5) Texas Brine' s motion for limited remand regarding reallocation of fault due to newly produced documents by Legacy Vulcan. Id.

We likewise adopt the disposition in Pontchartrain, 317 So. 3d at 763, n. 35, granting Oxy's motion to supplement illustrations for its original brief. 9 and 10% fault to United Brine Services Company, LLC. We deny United Brine

Services Company, LLC' s answer to the appeals.

We issue this memorandum opinion in accordance with Uniform Rules of

Louisiana Courts of Appeal, Rule 2- 16. 1B. Each party shall bear its own costs on

appeal.

REVERSED IN PART; AMENDED IN PART; AFFIRMED IN PART; ANSWER TO APPEALS DENIED.