Equitable Petroleum v. Cent. Transmission

431 So. 2d 1084
CourtLouisiana Court of Appeal
DecidedMay 6, 1983
Docket15267-CA
StatusPublished
Cited by15 cases

This text of 431 So. 2d 1084 (Equitable Petroleum v. Cent. Transmission) is published on Counsel Stack Legal Research, covering Louisiana Court of Appeal primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Equitable Petroleum v. Cent. Transmission, 431 So. 2d 1084 (La. Ct. App. 1983).

Opinion

431 So.2d 1084 (1983)

EQUITABLE PETROLEUM CORPORATION, Plaintiff-Appellant-Appellee,
v.
CENTRAL TRANSMISSION, INC., Defendant-Appellant-Appellee.

No. 15267-CA.

Court of Appeal of Louisiana, Second Circuit.

May 6, 1983.

*1085 Schudmak & Cusimano by P. Keith Daigle, Metairie, for plaintiff-appellant-appellee.

Beard & Sutherland by Fred H. Sutherland, Shreveport, for defendant-appellant-appellee.

Before HALL, JASPER E. JONES, FRED W. JONES, SEXTON and NORRIS, JJ.

FRED W. JONES, Judge.

This appeal focuses on the correctness of a trial court judgment signed on August 2, 1982, ordering the issuance of a preliminary injunction to remain in effect for two months from July 21, 1982.

In 1974 Equitable Petroleum Corporation ("Equitable") and Central Transmission, Inc. ("CTI") executed a number of "Gas Sale and Purchase" agreements under *1086 which Equitable agreed to sell and CTI to buy gas produced from some 40 shallow natural gas wells located in the Monroe Field. That gas was to flow through transmission lines owned by CTI to the latter's industrial customers. The contracts were to expire in 1977.

In 1977 new contracts (referred to hereinafter collectively as "the contract"), containing essentially the same provisions as the previous contracts, were executed. At that time CTI's precarious financial condition made bankruptcy a real possibility. Aware of this, and fearing the damage that would issue from an abrupt termination of its access to a gas gathering system, Equitable required that the 1977 contract contain the following clause:

"3.3 On termination of this contract, Seller shall have the exclusive right to use all Buyer's facilities necessary for Seller to market its gas and Buyer agrees to do nothing to disturb or interfere with Seller's use thereof. During such use, Buyer agrees to inspect, maintain, operate and repair such facilities and Buyer shall be compensated for the use, maintenance, inspection, operation and repair thereof at the rate of twenty cents (20¢) per each one thousand cubic feet of gas which Seller transports through Buyer's facilities, payment to be made to Buyer monthly by the end of the month following the month during which Seller's gas was transported. In the event Buyer in any way fails to inspect, maintain, operate and repair such facilities, Seller may do so and deduct the cost of doing same from the twenty cents (20¢) per MCF transportation fee herein provided."

The primary term of the 1977 contract was to terminate on December 31, 1981. Provision was made for a three year extension if the parties could agree upon a renegotiated gas price at least 90 days prior to expiration of the primary term. Despite their failure to agree on a new price structure for the gas, on December 24, 1981 the parties agreed "to extend the agreement on a month to month basis until either party notifies the other of its intention to discontinue the arrangement." It was further understood that CTI would continue dividing equally with Equitable any increase in price received from CTI's sale of gas to its industrial users.

By letter dated March 3, 1982 Equitable advised CTI that it planned to terminate all sales of gas to CTI on April 1, 1982 and would also invoke its right under Paragraph 3.3 of the 1977 contract to require CTI's transportation of Equitable's gas through the CTI transmission system at the rate of twenty cents per MCF.

On March 9, 1982 CTI informed Equitable of its position that par. 3.3 was invalid and unenforceable.

Equitable filed this suit on April 12, 1982 to permanently enjoin CTI from interfering with Equitable's use of CTI's natural gas transportation facilities and, in connection therewith, requested a temporary restraining order and a preliminary injunction. A temporary restraining order was issued conditioned upon Equitable's furnishing security in the sum of $2500—in response to which Equitable deposited a cash bond which has apparently not been returned.[1]

A hearing on the rule for a preliminary injunction was held on July 2 and 8, 1982. In a written opinion filed on July 21, 1982 the trial judge ruled that: (1) Par. 3.3 of the 1977 contract was an agreement for an indefinite period which could be terminated at the will of either party upon the giving of reasonable notice and (2) since Equitable might lose production if its wells were "shut-in", the length of time required by it to secure alternative transport facilities would be the critical factor in determining what constituted "reasonable notice." The definite time Equitable would need to construct its own pipeline system was to be established at a later hearing (which was never held).

*1087 The trial court's judgment, signed on August 2, 1982, stipulates in pertinent part:

"IT IS FURTHER ORDERED, ADJUDGED AND DECREED that a preliminary writ of injunction issue herein enjoining and prohibiting Central Transmission, Inc. from terminating its obligation to receive and transport Equitable Petroleum Corporation's gas under the provisions of Paragraph 3.3 of the 1977 contract, for a reasonable period of time, said reasonable period of time to be definitely established at the next hearing to be conducted herein, which hearing may be scheduled by either party as soon as practical under the rules of this Court, in accordance with law and in accordance with the statements set forth in the written Opinion dated July 21, 1982. This preliminary injunction shall remain in effect for a period of two months from July 21, 1982 unless extended or shortened by further order of this Court."

The record contains no order extending the two month time limit for the preliminary injunction, which presumably expired as provided in the judgment.

CTI appealed, contending the trial judge erred in granting the preliminary injunction for any period of time because: (1) However classified, Par. 3.3 was invalid since it was a contract without a definite term and, alternatively, (2) CTI had given Equitable reasonable notice of its intent to terminate the contract.

Equitable answered the appeal, asserting that the trial judge committed error in failing to rule it was entitled to a preliminary injunction to remain in effect until there was a determination of Equitable's right to a permanent injunction.

As a general rule the petitioner in a suit for a permanent injunction must prove that irreparable injury, loss or damage may otherwise result. La.C.C.P. Art. 3601. Irreparable injury has been defined as a loss which cannot be adequately compensated in money damages or for which such damages are not susceptible of measurement by a pecuniary standard. Daigre Engineers, Inc. v. City of Winnfield, 385 So.2d 866 (La.App. 2d Cir.1980).

A preliminary injunction is a procedural device interlocutory in nature designed to preserve the existing status pending a trial of the issues on the merits of the case. The applicant for a preliminary injunction has the burden of making a prima facie showing that he will prevail on the merits of the case—i.e., that he will obtain a permanent injunction based upon proof of irreparable injury. GMAC v. Daniels, 377 So.2d 346 (La.1979); Daigre Engineers, Inc. v. City of Winnfield, supra.

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431 So. 2d 1084, Counsel Stack Legal Research, https://law.counselstack.com/opinion/equitable-petroleum-v-cent-transmission-lactapp-1983.