IN THE SUPREME COURT OF TEXAS

No. 97-0182

Northern Natural Gas Company, Petitioner

v.

Conoco, Inc., Respondent

On Application for Writ of Error to the

Court of Appeals for the Eighth District of Texas

Argued December 4, 1997

Justice Enoch delivered the supplemental opinion of the Court on rehearing, in which Chief Justice Phillips, Justice Hecht, Justice Owen, Justice Baker, and Justice Abbott join.

Justice Hankinson, Justice O'Neill, and Justice Gonzales not sitting.

Northern asks on rehearing that we render judgment in its favor because it contends there is no evidence that it ceased to have requirements without a valid business reason and in bad faith. We express no opinion on this contention, as this is the first time it has been raised. See Tex. R. App. P. 33.1(a). Nothing in our opinions in this cause precludes Northern from seeking relief by dispositive motion on this or any other ground on remand.

Northern also argued at the court of appeals that even if it breached the Agreement with Conoco, there is no evidence that Conoco sustained any damages. However, the court of appeals did not consider Northern's no-evidence points of error. Because these points could be dispositive, we consider them here. See Lone Star Gas Co. v. Railroad Comm'n of Texas , 767 S.W.2d 709, 710 (Tex. 1989); Tex. R. App. P. 53.4.

The jury separately awarded past damages and future damages. Northern's only challenge to the calculation of past damages is its contention that Conoco profited more than it would have if Northern had continued to have requirements under the Agreement. The record does not support this position.

After Northern ceased to have transportation or processing requirements, Conoco acquired gas reserves that were formerly dedicated to its Agreement with Northern and then dedicated those reserves to a contract under which Conoco sold gas to Lone Star Gas Company. The profits on sales to Lone Star were greater than the profits Conoco would have made under the Agreement. However, Conoco presented undisputed evidence that at all times except for one month (for which Northern was given credit in the damage calculations), Conoco had other sources of supply dedicated to the Lone Star contract from which it could have satisfied Lone Star's demands. Conoco sold all gas produced above and beyond Lone Star's demand on the spot market. Spot market prices were far less than the prices Lone Star paid.

Northern contends that the damage calculations should reflect the prices paid by Lone Star, not the lower spot market prices. Northern relies heavily on the fact that Conoco allocated the actual sales to Lone Star back to properties that had been dedicated to the Agreement. But, as already noted, Conoco put forth evidence that it could have simply interchanged the gas formerly dedicated to the Agreement with Conoco's other sources of supply to meet Lone Star's demand. The volume of gas sold by Conoco to Lone Star would have been unchanged, and the volume sold on the spot market would have been unchanged. If Conoco had not bought any of the gas formerly dedicated to the Agreement, it would have sold a lower net volume on the spot market, but the volume of gas it sold to Lone Star would have been the same. Thus, there was some evidence to support Conoco's position that it was not inappropriate to utilize spot market prices to calculate its past damages.

Because there is some evidence to support the jury's award of past damages, we cannot render judgment for Northern. And because we cannot render judgment, it is unnecessary to consider Northern's complaints regarding the future damages awarded by the jury.

Northern's motion for rehearing is overruled.

___________________________

Craig T. Enoch

Justice

Opinion Delivered: April 1, 1999