FLORIDA GAS TRANSMISSION COMPANY LLC v. TEXAS BRINE COMPANY LLC ET AL (2023)

This dispute is one of many arising out of the August 2012 sinkhole that appeared near Bayou Corne in Assumption Parish. In this appeal, Texas Brine Company, LLC (Texas Brine) challenges the January 18, 2022 judgment that granted the “Motion for Partial Summary Judgment Dismissing Texas Brine Company, LLC's Claims for Double Recovery of Insured Losses and Liabilities” filed by Legacy Vulcan, LLC (Legacy Vulcan). After review, we dismiss the appeal.

FACTUAL AND PROCEDURAL BACKGROUND

This matter has been before this court many times, and the following relevant facts and procedural history are taken from one of this court's recent opinions. See Pontchartrain Natural Gas System v. Texas Brine Company, LLC, 2022-0738 (La. App. 1 Cir. 12/29/22), ___ So.3d ___, ___-___, 2022 WL 17983139 at *1-3. In brief, the relevant history in this appeal dates back to July 18, 1975, when Texas Brine, by way of a “Salt Lease,” secured the right to produce salt from a 40-acre tract of land in Assumption Parish, commonly referred to by the parties as the “North 40.” Texas Brine then entered into a series of interdependent contracts with Legacy Vulcan, including an “Assignment of Salt Lease,” under which Texas Brine purportedly assigned all of its rights, title, and interest as the lessee in and under the Salt Lease to Legacy Vulcan, and Legacy Vulcan assumed all obligations of Texas Brine as the lessee in and under the Salt Lease, which Legacy Vulcan obligated itself or its operators to perform; a “Construction Contract and Facilities Lease” (Facilities Lease), under which Texas Brine was to site, drill, and construct certain wells, related facilities, and a pipeline on the North 40 and lease certain property to Legacy Vulcan; and, an “Operating and Supply Agreement” (Operating Agreement), under which Texas Brine would operate facilities it constructed on the North 40 in order to produce and deliver a certain quantity and quality of brine to be used by Legacy Vulcan in its chloralkali business at its facility in Geismar, Louisiana. The Operating Agreement further provided that Texas Brine would maintain, repair, and, at all times, keep the facilities leased by it to Legacy Vulcan in good and safe operating condition. In turn, Legacy Vulcan was obligated to pay Texas Brine for its services. Each of the above agreements provided certain other specific rights to and obligations owed by the parties.

Later Texas Brine and Legacy Vulcan entered into the “First Amendment to the Salt Lease,” “Amendment to Construction Contract and Facilities Lease” (Amended Facilities Lease), and “Amended and Restated Operating and Supply Agreement” (Amended Operating Agreement), each contract dependent upon the other contracts for the purpose of continuing the brine mining and exploration on the North 40. The general principles underlying the Amended Operating Agreement remained the same—Texas Brine would operate on the North 40 to produce and deliver certain quantities and qualities of brine to Legacy Vulcan. Texas Brine further obligated itself to maintain, repair, and at all times, keep these facilities in good and safe operating condition, and comply with, perform, and fulfill all obligations of Legacy Vulcan to Texas Brine under the Amended Facilities Lease between the parties with respect to the maintenance, operation, and preservation of the leased premises. Legacy Vulcan, in turn, obligated itself to pay for Texas Brine's services.

Pertinent herein, in each of these interdependent documents, Texas Brine and Legacy Vulcan agreed to various contractual provisions regarding insurance, prospective future losses, and subrogation of rights, among others. Specifically, in Section 12.4 of the Amended Operating Agreement, the parties agreed to the following:

Insurance. During the term of this Agreement, Texas [Brine] shall take out, or cause to be taken out, and shall maintain liability and other insurance with respect to its operation of the Leased Premises, insuring against such risks as are customarily insured against by businesses similarly situated and operating like properties, including, but not necessarily limited to the following insurance: ․

(d) [c]ommercial general liability insurance with limits of $5,000,000, combined single limit, including contractual liability coverage which shall specifically cover the indemnity of this Agreement, products/completed operations and XCU (explosion, collapse and underground) coverages.

Related thereto, and signed in view of the Amended Operating Agreement, Section 7.4 of the Amended Facilities Lease stated:

Mutual Waiver of Subrogation Rights. Whenever (a) any loss, cost, damage or expense resulting from fire, explosion or any other liability, casualty or occurrence is incurred by either of the parties to this Lease in connection with the Leased Premises and (b) such party is then covered in whole or in part by insurance with respect to such loss, cost, damage or expense, then the party so insured hereby releases the other party from any liability it may have on account of such loss, cost, damage or expense to the extent of any amount recovered by reason of such insurance and waives any right of subrogation which might otherwise exist in or accrue to any person on account thereof, provided that such release of liability and waiver of the right of subrogation shall not be operative in any case where the effect thereof is to invalidate such insurance coverage or increase the cost thereof (provided that in the case of increased cost the other party shall have the right, within thirty (30) days following written notice, to pay such increased cost, thereupon keeping such release and waiver in full force and effect).

Following the sinkhole's emergence, multiple plaintiffs filed numerous lawsuits against Texas Brine, all of whom suffered damages due to the sinkhole. Texas Brine, in turn, asserted numerous third party demands against Legacy Vulcan, including breach of contract claims. The Phase 1 liability trial was held in September and October 2017, for the purpose of determining what caused the sinkhole to form and which parties were at fault under any theory of law for causing the formation of the sinkhole. See Pontchartrain Natural Gas System v. Texas Brine Company, LLC, 2018-1249 (La. App. 1 Cir. 12/30/20), 317 So.3d 715, 725, writs denied, 2021-00382, 2021-00386 (La. 6/8/21), 317 So.3d 323. The district court found both Texas Brine and Legacy Vulcan at fault. Pontchartrain Natural Gas System, 317 So.3d at 739. This court affirmed that part of the judgment on appeal, finding that Legacy Vulcan failed to act as a prudent mineral lessee, and Texas Brine failed to prudently operate on the North 40. Pontchartrain Natural Gas System, 317 So.3d at 756-58.

Thereafter, the parties began the next phase of this litigation, Phase 2, which encompassed all remaining incidental demands and damage/quantum issues, but not including insurance issues or attorney's fees. Legacy Vulcan filed numerous motions for partial summary judgment asserting various arguments regarding Texas Brine's contractual claims against Legacy Vulcan. One such motion was Legacy Vulcan's motion for partial summary judgment, filed on November 16, 2021, seeking the dismissal of any of Texas Brine's claims against it for which Texas Brine had already been reimbursed. Legacy Vulcan's lead argument was that, based on Section 7.4 of the Amended Facilities Lease, and due to the obligation to procure insurance from Section 12.4 of the Amended Operating Agreement, that Texas Brine “expressly and unequivocally released [Legacy] Vulcan from any such losses or liabilities.” Therefore, as argued by Legacy Vulcan, Texas Brine's “attempt to recover against [Legacy] Vulcan for insured losses for which [Texas Brine] has already recovered under the 2012 Insurance Tower fails as a matter of law.”¹ Alternatively, Legacy Vulcan argued the collateral source rule, by operation of law, does not apply such that Texas Brine should not recover monies from Legacy Vulcan it already received from its own insurance companies in recompence for payments Texas Brine previously made in sinkhole response costs.

The district court held a hearing on Legacy Vulcan's partial summary judgment motion on December 16, 2021, at which time the district court took the matter under advisement. On January 18, 2022, the district court signed a judgment, stating, in pertinent part:

IT IS HEREBY ORDERED, ADJUDGED, AND DECREED that [Legacy] Vulcan's Motion for Partial Summary Judgment Dismissing Texas Brine's Claims for Double Recovery of Insured Losses and Liabilities is GRANTED, as this Court finds that Texas Brine cannot recover from [Legacy] Vulcan for its losses that have been paid by Texas Brine's insurers as a matter of law.

IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that this Judgment is designated as a final judgment in accordance with Louisiana Code of Civil Procedure Article 1915, as the Court finds that there is no just reason for delay.

Additionally, in its written reasons for judgment, the district court specifically noted that to permit “Texas Brine, the tortfeasor most culpable for the sinkhole, to reap the windfall of a double recovery for insured liabilities engendered by its own fault undermines the public policy of tort deterrence and is impermissible as a matter of law.” Moreover, the district court relied on Section 7.4 of the Amended Facilities Lease to support its conclusion that, “pursuant to the parties’ contract, Texas Brine cannot recover against [Legacy] Vulcan for insured losses for which Texas Brine has already recovered.” Texas Brine appeals from the judgment.²

ASSIGNMENTS OF ERROR

On appeal Texas Brine assigns the following as error:

(1) The [d]istrict [c]ourt legally erred in granting summary judgment because the collateral source rule applies to Texas Brine's monies received from its insurers. [Legacy] Vulcan should have to pay its allocated fault based on the entire amount of sinkhole response costs, not just Texas Brine's unreimbursed sinkhole response costs.

(2) The [d]istrict [c]ourt legally erred in granting summary judgment because the existence of disputed issues of material fact should have precluded the [district [c]ourt's finding that, under the Amended Facilities Lease, Texas Brine released claims against [Legacy] Vulcan for losses, costs, damages, or expenses covered by insurance.

APPEALABILITY OF PARTIAL SUMMARY JUDGMENT

Appellate courts have a duty to examine subject matter jurisdiction sua sponte, even when the parties do not raise the issue. Advanced Leveling & Concrete Solutions v. Lathan Company, Inc., 2017-1250 (La. App. 1 Cir. 12/20/18), 268 So.3d 1044, 1046 (en banc). This court's appellate jurisdiction extends only to “final judgments.” See La. C.C.P. art. 2083(A).

A partial summary judgment rendered dispositive of a particular issue, theory of recovery, cause of action, or defense, may be granted in favor of one or more parties, pursuant to La. C.C.P. art. 966(E), even though the granting of the summary judgment does not dispose of the entire case as to that party or those parties. A partial summary judgment granted pursuant to La. C.C.P. art. 966(E) may be immediately appealed during ongoing litigation only if it has been designated as a final judgment by the district court after an express determination that there is no just reason for delay. See La. C.C.P. art. 1915(A)(3) & (B); OAT Trustee, LLC as Trustee for Girod Titling Trust v. Elite Investment Group, LLC, 2021-1402 (La. App. 1 Cir. 7/29/22), 347 So.3d 938, 946. Although the district court herein designated the partial summary judgment as a final one pursuant to La. C.C.P. art. 1915(B)(1), that designation is not determinative of this court's jurisdiction. Rather, this court's jurisdiction to decide this appeal hinges on whether the certification was appropriate. See OAT Trustee, LLC, 347 So.3d at 946. Because the district court herein did not give reasons for the certification, this court must make a de novo determination of whether the certification was proper. R. J. Messinger, Inc. v. Rosenblum, 2004-1664 (La. 3/2/05), 894 So.2d 1113, 1122.

Historically, our courts have adopted and followed a policy against multiple appeals and piecemeal litigation. Messinger, 894 So.2d at 1122. Louisiana Code of Civil Procedure article 1915 attempts to strike a balance between the undesirability of piecemeal appeals and the need for making review available at a time that best serves the needs of the parties. Thus, in considering whether a judgment is properly designated as final pursuant to La. C.C.P. art. 1915(B)(1), a court must take into consideration judicial administrative interests as well as the equities involved. See Messinger, 894 So.2d at 1122. Under Messinger, the following list of non-exclusive factors are to be considered in determining whether a partial judgment should be certified as final: (1) the relationship between the adjudicated and the unadjudicated claims; (2) the possibility that the need for review might or might not be mooted by future developments in the district court; (3) the possibility that the reviewing court might be obliged to consider the same issue a second time; and (4) miscellaneous factors such as delay, economic and solvency considerations, shortening the time of trial, frivolity of competing claims, expense, and the like. However, the overriding inquiry is whether there is no just reason for delay. Messinger, 894 So.2d at 1122-23.

Applying these precepts on de novo review, we conclude the January 18, 2022 partial summary judgment does not meet the requirements of an appealable final judgment under La. C.C.P. art. 1915(B). The underlying motion and judgment concern multiple contractual clauses and provisions, which, according to the parties, were the subject of the Phase 2 trial. A judgment for the Phase 2 trial has purportedly been signed by the district court, and the parties have taken appropriate steps for appellate review. Nevertheless, the parties ask the court to review certain, limited provisions of the Amended Facilities Lease and Amended Operating Agreement, without a full review of these agreements, as well as the Amended Salt Lease. This court also does not have the entire record for the Phase 2 trial for its review. Therefore, any decision by this court on this limited claim, “without consideration of the remaining interdependent contracts and claims thereupon, would merely result in inefficient, piecemeal, and possibly conflicting resolution of only a minor part of the parties’ related contract claims.” Pontchartrain Natural Gas System, ___ So.3d at ___, 2022 WL 17983139 at *4. See also La. C.C. art. 2053 (“A doubtful provision [in a contract] must be interpreted in light of the nature of the contract, equity, usages, the conduct of the parties before and after the formation of the contract, and of other contracts of a like nature between the same parties.” (Emphasis added.))

This court has dismissed prior appeals in this litigation for lack of subject matter jurisdiction after finding that the partial summary judgments which were designated as final judgments pursuant to La. C.C.P. art. 1915(B)(1) did not meet the Messinger requirements. In Crosstex Energy Services, LP v. Texas Brine Company, LLC, 2022-0832 (La. App. 1 Cir. 3/16/23), ___ So.3d ___, ___, 2023 WL 2531238 at *4, a different panel of this court dismissed Texas Brine's appeal of the district court's judgment granting Legacy Vulcan's motion for partial summary judgment dismissing Texas Brine's claims for double recovery of insured losses and liabilities. The judgment in the prior appeal was a substantially similar judgment to the one at issue herein, rendered by the same district court on the same day in a different district court docket number. Crosstex Energy Services, LP, ___ So.3d at ___, 2023 WL 2531238 at *3. This court noted that it was aware that the parties had chosen this particular multi-phase method of litigation to dispose of their remaining claims and that the district court was attempting to proceed in as efficiently as possible at this juncture. Crosstex Energy Services, LP, ___ So.3d at ___, 2023 WL 2531238 at *4. This court then commented that interpreting the parties’ multiple interrelated contracts in a disjointed manner, after their interdependence had been established, was not efficient or equitable, especially considering the parties’ representations to this court that an appeal on the Phase 2 judgment is forthcoming. As this writer noted in his concurrence to Pontchartrain Natural Gas System, ___ So.3d at ___, 2022 WL 17983139 at *4, and in support of his belief that the certification of judgment on a motion for partial summary judgment did not satisfy the Messinger factors, “[t]his matter has evolved into a lengthy and time-consuming litigation in which millions of dollars of litigation expenses have been expended, as well as countless hours of judicial time and effort, in both the trial and appellate courts.”³

Given the unresolved and remaining issues from Phase 2 of this litigation, as well as related findings from this court regarding the lack of subject matter jurisdiction concerning a limited review of the Amended Operating Agreement, we find that addressing the district court's granting of Legacy Vulcan's motion at this juncture is judicially inefficient and results in piecemeal appellate review. After a thorough review of the record in this appeal, we find no material distinctions between the judgment and issues presented in this appeal and those presented in Crosstex Energy Services, LP, ___ So.3d ___, 2022 WL 17983139. Accordingly, on our de novo review of the record, we cannot conclude that there is no just reason for delay, and the district court's La. C.C.P. art. 1915(B) designation of the January 18, 2022 judgment does not meet the requirements of Messinger, supra. We therefore lack subject matter jurisdiction herein and dismiss the appeal.

CONCLUSION

For the above reasons, we dismiss this appeal of the January 18, 2022 judgment and remand this matter to the district court for further proceedings consistent with this opinion. All costs of this appeal are assessed equally between Texas Brine Company, LLC and Legacy Vulcan, LLC.

APPEAL DISMISSED; CASE REMANDED.

FOOTNOTES

1.   In its memorandum supporting its partial summary judgment motion, Texas Brine referred to the 2012 Insurance Tower, which it described as the multiple commercial general liability insurance policies in effect at the time of the sinkhole covering it and other designated co-insureds which contributed to the payment or reimbursement of any of its expenses in its claims against Vulcan.

2.   Texas Brine filed a motion for new trial as to the judgment, which was denied by the district court on February 22, 2022.

3.   This court dismissed the appeals of judgments granting motions for partial summary judgment after finding a lack of subject matter jurisdiction in the following cases. Pontchartrain Natural Gas System, ___ So.3d at ___, 2022 WL 17983139 at *4; Pontchartrain Natural Gas System v. Texas Brine Company, LLC, 2022-1001 (La. App. 1 Cir. 3/1/23), 2023 WL 2291514 at *4; Crosstex Energy Services, LP v. Texas Brine Company, 2022-0782 (La. App. 1 Cir. 2/17/23), ___ So.3d ___, ___, 2023 WL 2055190 at *1.

HOLDRIDGE, J.