Opinion
2018 CA 0999
11-15-2019
PONTCHARTRAIN NATURAL GAS SYSTEM, k/d/s Promix, L.L.C., and Acadian Gas Pipeline System v. TEXAS BRINE COMPANY, LLC
Leopold Z. Sher, James M. Gamer, Peter L. Hilbert, Jr., Jeffrey D. Kessler, New Orleans, Louisiana, Robert Ryland Percy, III, Gonzales, Louisiana, Travis J. Turner, Gonzales, Louisiana, Attorneys for Appellant/Defendant/Third-Party Plaintiff, Texas Brine Company, LLC Glen E. Mercer, Kourtney Twenhafel, New Orleans, Louisiana, Attorneys for Appellee/Third-Party Defendant, Steadfast Insurance Company, as alleged insurer of Adams Resources Exploration Company Mary S. Johnson, Chad J. Mollere, Mandeville, Louisiana, Attorneys for Appellees/Third-Party Defendants, 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, Christopher B. Bailey, Will Montz, Lafayette, Louisiana, Attorneys for Appellee/Defendant/Third-Party Defendant, Browning Oil Company, Inc. Martin A. Stern, Leigh Ann Schell, Raymond P. Ward, Jeffrey E. Richardson, Sara C. Valentine, New Orleans, Louisiana, Attorneys for Appellees/Defendants, Occidental Chemical Corporation Occidental Petroleum Corporation, and Oxy USA, Inc. Roy C. Cheatwood, Kent A. Lambert, Adam B. Zuckerman, Paul C. Thibodeaux, Colleen C. Jarrott, Matthew S. Chester, Matthew C. Juneau, New Orleans, Louisiana, Tony M. Clayton, Port Allen, Louisiana, Attorneys for Appellee/Third-Party Defendant/Third-Party Plaintiff, Legacy Vulcan, LLC
Leopold Z. Sher, James M. Gamer, Peter L. Hilbert, Jr., Jeffrey D. Kessler, New Orleans, Louisiana, Robert Ryland Percy, III, Gonzales, Louisiana, Travis J. Turner, Gonzales, Louisiana, Attorneys for Appellant/Defendant/Third-Party Plaintiff, Texas Brine Company, LLC
Glen E. Mercer, Kourtney Twenhafel, New Orleans, Louisiana, Attorneys for Appellee/Third-Party Defendant, Steadfast Insurance Company, as alleged insurer of Adams Resources Exploration Company
Mary S. Johnson, Chad J. Mollere, Mandeville, Louisiana, Attorneys for Appellees/Third-Party Defendants, 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, Christopher B. Bailey, Will Montz, Lafayette, Louisiana, Attorneys for Appellee/Defendant/Third-Party Defendant, Browning Oil Company, Inc.
Martin A. Stern, Leigh Ann Schell, Raymond P. Ward, Jeffrey E. Richardson, Sara C. Valentine, New Orleans, Louisiana, Attorneys for Appellees/Defendants, Occidental Chemical Corporation Occidental Petroleum Corporation, and Oxy USA, Inc.
Roy C. Cheatwood, Kent A. Lambert, Adam B. Zuckerman, Paul C. Thibodeaux, Colleen C. Jarrott, Matthew S. Chester, Matthew C. Juneau, New Orleans, Louisiana, Tony M. Clayton, Port Allen, Louisiana, Attorneys for Appellee/Third-Party Defendant/Third-Party Plaintiff, Legacy Vulcan, LLC
BEFORE: HIGGINBOTHAM, 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.
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.
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).
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. 1 well (AH1 well). In May 1986, before any actual production from the AH1 well, Adams Resources assigned its operating interest in the well to HECI Exploration Company, LLC. The AH1 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.
Hooker Chemical & Plastics Corp. was the predecessor in interest to Oxy.
Various plaintiffs filed suit against Texas Brine and other defendants for alleged damages arising from the sinkhole. Texas Brine asserted third-party 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), 281 So. 3d 1, 9, 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 AH1 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 , 281 So. 3d at 8.
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), 282 So. 3d 256, 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 , 282 So. 3d at 261.
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.
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 , 281 So. 3d 1, 9, this argument has no merit.
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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