BP Oil Pipeline Company v. Plains Pipeline, L.P.

Reversed and Remanded, and Majority and Concurring and Dissenting

Opinions filed June 30, 2015.

In the

Fourteenth Court of Appeals

NO. 14-13-00352-CV

BP OIL PIPELINE COMPANY, Appellant

V.

PLAINS PIPELINE, L.P., Appellee

On Appeal from the 80th District Court

Harris County, Texas

Trial Court Cause No. 2011-39550

MAJORITY OPINION

This case arises out of a dispute between the buyer and the seller of a

pipeline system over the scope of a contractual indemnity in the purchase

agreement. The main issue is whether a claim asserted in a separate lawsuit falls

within the indemnity, thus requiring the buyer to indemnify the seller for the claim.

The trial court granted the buyer’s summary-judgment motion and denied the

seller’s summary-judgment motion. We conclude the trial court was wrong to

grant the buyer’s summary-judgment motion and right to deny the seller’s

summary-judgment motion. We reverse and remand.

I. FACTUAL AND PROCEDURAL BACKGROUND

In 1957, the Gulf and Mississippi River Transportation Company, Ltd.

(“G&M”) acquired a twenty-percent undivided fee interest in a 5.19 acre tract on

Grand Terre Island in Louisiana (the “Tract”). In 1960, G&M and the other

owners of the Tract granted a right-of-way servitude to Gulf Refining Company

(“Gulf”) for the purpose of constructing, maintaining, and operating a pumping

station to be used for a pipeline. Gulf built and operated a pumping station on the

Tract (“Pumping Station”). After the twenty-year servitude expired in 1980, Gulf

filed an expropriation suit against the owners, but the suit lapsed for lack of

prosecution. In 1986, Gulf’s corporate successor, Chevron Pipeline Company,

sold its pipeline system, including the Pumping Station, to Sohio Pipeline

Company, the corporate predecessor of appellant/plaintiff BP Oil Pipeline

Company (“BP”). In 1988, Chevron acquired an undivided 1.5% fee interest in the

Tract and transferred it to Sohio, BP’s corporate predecessor. In 2006, BP and

appellee/defendant Plains Pipeline, L.P. executed a purchase agreement (the

“Agreement”), whereby BP 1 sold the pipeline system, including the Pumping

Station, to Plains.

1

The “Seller Group” under the Agreement also included BP Pipelines (North America) Inc. and

Vastar Pipeline, LLC.

2

The Louisiana Claim

In 2009, G&M and Plains entered into an agreement whereby G&M granted

Plains a servitude for the Pumping Station. At the same time, G&M settled with

Plains regarding Plains’s alleged wrongful use of the Pumping Station from 2006

through 2009. In 2010, G&M sued BP and Chevron in Louisiana federal court,

asserting an accounting claim, among others, against BP. In its accounting claim

against BP (the “Louisiana Claim”), G&M alleged that if BP is a co-owner of a

small undivided interest in the Tract, BP’s “utilization of the [Pumping Station] for

[its] sole economic benefit . . . obligates [BP] to account to [G&M] for the

revenues and profits which [BP has] gained through the operation of the [Pumping

Station].” On appeal from the district court’s summary judgment in favor of BP,

the United States Court of Appeals for the Fifth Circuit reversed the judgment as to

the Louisiana Claim and remanded for the district court to resolve whether “the

revenues and profits that BP derived from operating the Pumping Station could be

characterized as the civil fruits of the Pumping Station, the co-owned [t]ract, or

both.” Gulf & Miss. River Transp. Co., Ltd. v. BP Oil Pipeline Co., 730 F.3d 484,

493–94 (5th Cir. 2013).

Suit for Indemnification and Counterclaim for Declaratory Judgment

Invoking Plains’s indemnity obligations under the Agreement, BP demanded

that Plains provide indemnification with regard to the Louisiana Claim. Plains

rejected the demand. BP then sued Plains for breach of Plains’s indemnity

obligations under the Agreement and for a declaratory judgment that Plains is

obligated under the Agreement to indemnify BP as to the Louisiana Claim. Plains

asserted various affirmative defenses and a counterclaim for a declaratory

judgment that Plains does not owe BP any indemnity. BP filed special exceptions,

3

arguing that Plains may not seek such a declaratory judgment because declaratory

relief is not available to settle a dispute already before a court.

Cross-Motions for Summary Judgment

Plains moved for a traditional summary judgment with regard to BP’s

claims, arguing that it was entitled to judgment as a matter of law because (1) BP

could not seek indemnity for an obligation specifically allocated to BP under the

Agreement and (2) the Agreement did not apply to losses arising from BP’s gross

negligence or willful misconduct. BP filed a cross-motion for partial summary

judgment on its claims and responded in opposition to Plains’s motion for

summary judgment. BP argued that the Agreement’s broad indemnity clause, not

any provision for “rent payments and similar expenses,” applied to the Louisiana

Claim.

The trial court granted BP’s cross-motion for partial summary judgment and

denied Plains’s summary-judgment motion. Plains then filed a motion for

reconsideration of the granting of BP’s summary-judgment motion. The trial court

granted Plains’s motion for reconsideration, vacated its prior order, and denied

BP’s motion for partial summary judgment. Plains then filed a motion requesting

the trial court to reconsider its order denying Plains’s summary-judgment motion

in light of the granting of its motion to reconsider. Plains also filed an amended

traditional summary-judgment motion, arguing it was entitled to judgment as a

matter of law as to BP’s claims and to declaratory judgment in Plains’s favor. BP

responded and filed an amended cross-motion for traditional summary judgment

seeking declaratory judgment in its favor 2 and requesting the trial court either to

2

Unlike its initial cross-motion, BP’s amended cross-motion for summary judgment did not

address its breach-of-contract claim.

4

grant BP’s special exceptions as to Plains’s declaratory-judgment claim or to grant

a summary judgment against Plains on its declaratory-judgment claim.

The Trial Court’s Rulings

The trial court granted Plains’s amended motion for summary judgment,

dismissing all of BP’s claims with prejudice. In addition, the trial court declared

that Plains has no duty to indemnify or hold BP harmless and is not responsible for

damages assessed with respect to the Louisiana Claim. The trial court denied BP’s

amended cross-motion for summary judgment and also denied BP’s special

exceptions. The trial court held an evidentiary hearing on attorney’s fees. The

trial court signed a final judgment, rendering judgment for Plains, ordering that BP

take nothing on its claims and that Plains recover from BP $431,210.50 in

attorney’s fees, plus interest on fees, court costs, and conditional fees on appeal.

Issues on Appeal

BP brings four issues on appeal: (1) the trial court erred when it granted

Plains’s amended motion for summary judgment; (2) the trial court erred when it

denied BP’s amended cross-motion for summary judgment; (3) the trial court erred

when it denied BP’s special exceptions; and (4) the trial court erred when it

granted final judgment and awarded Plains its attorney’s fees.

II. STANDARD OF REVIEW

In a traditional motion for summary judgment, if the movant’s motion and

summary-judgment evidence facially establish its right to judgment as a matter of

law, the burden shifts to the nonmovant to raise a genuine, material fact issue

sufficient to defeat summary judgment. M.D. Anderson Hosp. & Tumor Inst. v.

Willrich, 28 S.W.3d 22, 23 (Tex. 2000). In our de novo review of a trial court’s

5

summary judgment, we consider all the evidence in the light most favorable to the

nonmovant, crediting evidence favorable to the nonmovant if reasonable jurors

could, and disregarding contrary evidence unless reasonable jurors could not.

Mack Trucks, Inc. v. Tamez, 206 S.W.3d 572, 582 (Tex. 2006). The evidence

raises a genuine issue of fact if reasonable and fair-minded jurors could differ in

their conclusions in light of all of the summary-judgment evidence. Goodyear Tire

& Rubber Co. v. Mayes, 236 S.W.3d 754, 755 (Tex. 2007). When, as in this case,

the order granting summary judgment does not specify the grounds upon which the

trial court relied, we must affirm the summary judgment if any of the independent

summary-judgment grounds is meritorious. FM Props. Operating Co. v. City of

Austin, 22 S.W.3d 868, 872 (Tex. 2000). In its amended cross-motion, BP did not

seek a final judgment; nonetheless, this court may review the trial court’s denial of

this cross-motion because BP and Plains each sought summary judgment on the

same issues. See Frontier Logistics, L.P. v. National Property Holdings, L.P., 417

S.W.3d 656, 664 (Tex. App.—Houston [14th Dist.] 2013, pet. denied).

III. INTERPRETATION OF THE AGREEMENT

In construing the Agreement, our primary concern is to ascertain and give

effect to the intentions of the parties as expressed in the written instrument. See

Kelley-Coppedge, Inc. v. Highlands Ins. Co., 980 S.W.2d 462, 464 (Tex. 1998).

To ascertain the parties’ true intentions, we examine the entire agreement in an

effort to harmonize and give effect to all of its provisions so that none will be

rendered meaningless. MCI Telecomms. Corp. v. Tex. Utils. Elec. Co., 995 S.W.2d

647, 652 (Tex. 1999). We cannot consider any single provision, in isolation, as

controlling; rather we must consider all provisions in the context of the entire

agreement. J.M. Davidson, Inc. v. Webster, 128 S.W.3d 223, 229 (Tex. 2003).

6

Whether a contract is ambiguous is a question of law for the court. Heritage Res.,

Inc. v. NationsBank, 939 S.W.2d 118, 121 (Tex. 1996). A contract is ambiguous

when its meaning is uncertain and doubtful or is reasonably susceptible to more

than one interpretation. Id. But, when a written contract is worded such that it can

be given a certain or definite legal meaning or interpretation, it is unambiguous,

and the court construes it as a matter of law. Am. Mfrs. Mut. Ins. Co. v. Schaefer,

124 S.W.3d 154, 157 (Tex. 2003).

We cannot rewrite the contract or add to its language under the guise of

interpretation. See American Mfrs. Mut. Ins. Co., 124 S.W.3d at 162; Frontier

Logistics, L.P. 417 S.W.3d at 660. We also bear in mind Texas’s fundamental

public policy in favor of a broad freedom of contract, which allows parties to

allocate risks as they see fit. See El Paso Field Services, L.P. v. MasTec N. Am.,

Inc., 389 S.W.3d 802, 811–12 (Tex. 2012); Nafta Traders, Inc. v. Quinn, 339

S.W.3d 84, 95 (Tex.2011); Fairfield Ins. Co. v. Stephens Martin Paving, L.P., 246

S.W.3d 653, 664 (Tex.2008). Contract enforcement is an “indispensable partner”

to the freedom of contract. See El Paso Field Services, L.P., 389 S.W.3d at 812.

Both BP and Plains agree that a critical issue is the interpretation of the

Agreement and that the Agreement’s provisions are unambiguous. Yet, the parties

seek opposing interpretations. BP’s position is that the Louisiana Claim falls under

the plain language of the Agreement’s indemnity obligations as enumerated in

section 10.1, while Plains’s position is that the Louisiana Claim remains the sole

obligation of BP as a pre-closing expense under the plain language of subsection

6.3(d)(ii) of the Agreement (“Expense Provision”). We first examine whether the

summary-judgment evidence proves as a matter of law that the Louisiana Claim is

a pre-closing expense under the Expense Provision that is the sole obligation of

7

BP. We then address whether the summary-judgment evidence proves as a matter

of law that BP is entitled to indemnity under section 10.1(b) of the Agreement.

Is the Louisiana Claim the sole obligation of BP under the

Agreement’s Expense Provision?

The Expense Provision states:

Unless otherwise provided by the Parties in writing, all utility,

accounts payable for goods and services, rent payments and similar

expenses attributable to the Pipeline Assets for any period of time on

or prior to the Closing Date, regardless of when due or payable, shall

be the sole obligation of the Seller Group and the Seller Group shall

promptly pay, or if paid by [Plains], promptly reimburse [Plains] for

and hold [Plains] harmless from and against same. Subject to the

terms of this Purchase Agreement, unless otherwise provided by the

Parties in writing, all utility, accounts payable for goods and services,

rent payments and similar expenses attributable to the Pipeline Assets

for any periods of time subsequent to the Closing Date, regardless of

when due or payable, shall be the sole obligation of [Plains] and

[Plains] shall promptly pay, or if paid by the Seller Group, promptly

reimburse the Seller Group for and hold the Seller Group harmless

from and against same.

Plains asserts that this court cannot read the Agreement’s indemnity provision so

broadly as to rob the Expense Provision of its effect and render it meaningless.

Plains contends the general indemnity obligations under section 10.1 “cannot be

read to trump BP’s retention of liability for pre-closing ‘utility, accounts payable[,]

rent payments and similar expenses attributable to the Pipeline Assets’ in the

Expense Provision.” Plains argues the relief sought in the Louisiana Claim

constitutes a “rent payment or similar expense” from which BP agreed to hold

Plains harmless. We first consider whether the relief sought constitutes a “rent

payment” and then whether it constitutes a “similar expense.”

8

“Rent Payments”

BP argues the meaning of “rent” involves an explicit, contractual

arrangement between landlord and tenant, and it is uncontested that no such

agreement existed between G&M and BP. Plains, by contrast, insists that the

meaning of “rent” is not so restricted and contemplates a broader meaning of

income, return, or profits arising out of land.

Terms in an agreement are given their plain, ordinary and generally accepted

meanings unless the agreement itself shows the terms to be used in a technical or

different sense. Heritage Res., Inc., 939 S.W.2d at 121–22. The Agreement does

not define “rent payments,” nor does the Agreement show that the term is used in a

technical or different sense in the Expense Provision, so we apply the plain,

ordinary, and generally accepted meaning of the term. See id.

“Rent” is “[c]onsideration paid, usu[ally] periodically, for the use or

occupancy of property (esp. real property).” Black’s Law Dictionary 1322 (8th ed.

2004). See also id. 909 (defining “lease” as “[t]o grant the possession and use of

(land, buildings, rooms, movable property, etc.) to another in return for rent or

other consideration”). “Rent” also is defined as “a usually fixed periodical return

made by a tenant or occupant of property to the owner for the possession and use

thereof; especially: an agreed sum paid at fixed intervals by a tenant to the

landlord.” Merriam-Webster’s Collegiate Dictionary 1054 (11th ed. 2004).

“Payment” is defined as “something that is paid: something given to discharge a

debt or obligation or to fulfill a promise.” Webster’s Third New Int’l Dictionary

1659 (1993 ed.). We conclude the plain, ordinary, and generally accepted meaning

of “rent payments” is something paid to a landlord or owner in exchange for the

right to use, occupy, or possess real or personal property. See Turner v. First Nat’l

9

Bank, 234 S.W. 928, 928 (Tex. Civ. App.—Texarkana 1921, no writ) (concluding

that the word “rent” means compensation which an owner of property receives for

its use by another); cf. Franklin v. Jackson, 847 S.W.2d 306, 308 (Tex. App.—El

Paso 1992, writ denied) (interpreting “lease” to mean “a contract by which one

owning such property grants to another the right to possess, use and enjoy it for a

specified period of time in exchange for periodic payment of a stipulated price,

referred to as rent”).3

In the Louisiana Claim, G&M does not seek to recover payments owed by

BP in exchange for the right to use, occupy, or possess real or personal property;

rather, G&M seeks an accounting from BP, a co-owner with G&M of the Tract, for

a share of the revenues and profits which BP has derived from its use of the

Pumping Station. 4 Simply stated, because BP owned the Pumping Station and co-

owned the Tract, BP would not owe G&M “rent” because BP already had the right

to use and occupy the Tract, and thus would not need to pay for that right. See

Gulf & Miss. River Transp. Co., Ltd., 730 F.3d at 487, 492; Williams v. Mai, No.

01-11-00611-CV, 2012 WL 6644704, at *6 (Tex. App.—Houston [1st Dist.] Dec.

3

Plains cites Bearden v. Knight, 228 S.W.2d 837, 843–44 (Tex. 1950), for the proposition that

“rents” means more than compensation received by the landowner for the use of land by another

and also can include income, return, or profits. But, the Bearden court was interpreting a statute

rather than a contract, and that statute has long since been repealed. See id. Moreover, the

Bearden court based its holding primarily on a necessary implication from other statutes that

used the broader term “rents and revenues.” See id. at 844.

4

The Fifth Circuit Court of Appeals stated that G&M might be able to recover a share of the

revenues and profits that BP earned from its use of the Pumping Station if these revenues and

profits were “civil fruits” of the Tract under article 551 of the Louisiana Civil Code. See Gulf &

Miss. River Transp. Co., Ltd., 730 F.3d at 492–94. Plains notes that, under this statute, “[c]ivil

fruits are revenues derived from a thing by operation of law or by reason of a juridical act, such

as rentals, interest, and certain corporate distributions.” La Civ. Code Ann. art. 551 (West,

Westlaw through 2014 R.S.); Gulf & Miss. River Transp. Co., Ltd., 730 F.3d at 492. Though the

definition of “civil fruits” includes “rentals,” this does not mandate the conclusion that BP’s

revenues and profits from operating the Pumping Station are “rentals” or “rent payments.”

10

20, 2012, no pet.) (“Any co-tenant who owns an interest in property has the right to

possession of the property.”) (mem. op.); Fuqua v. Fuqua, 750 S.W.2d 238, 246

(Tex. App.—Dallas 1988, writ denied) (noting that unless there exists an

understanding to the contrary, “a tenant in common may occupy all or more than

his proportionate share of the jointly owned property without liability to his co-

tenants for the rental value of his use”); Burns v. Wood, 427 S.W.2d 353, 357 (Tex.

Civ. App.—Tyler 1968, writ ref’d n.r.e.) (same). 5 We conclude the term “rent

payments” is unambiguous. Under the applicable standard of review, the

summary-judgment evidence proves as a matter of law that the relief sought in the

Louisiana Claim does not fall within the meaning of “rent payments” as used in the

Expense Provision. 6 See Gulf & Miss. River Transp. Co., Ltd., 730 F.3d at 487,

492; Williams, 2012 WL 6644704, at *6; Fuqua, 750 S.W.2d at 246; Burns, 427

S.W.2d at 357; Turner, 234 S.W. at 928; Black’s Law Dictionary 909, 1322;

Merriam-Webster’s Collegiate Dictionary 1054.

“Similar Expenses”

Plains further contends that because the Expense Provision does not limit its

reach to “rent payments” alone, and specifically states that pre-closing “similar

expenses” are also the sole obligation of the Seller Group, “expenses” that are not

“rent payments,” but are “similar” to rent payments and the other enumerated

5

Louisiana law appears to be consistent on this point. See Juneau v. Laborde, 82 So.2d 693, 696

(La. 1955) (“This right of co-owners to possession of the property being equal and coextensive,

neither becomes indebted to the other for his personal occupancy and enjoyment . . . .”).

6

We cannot agree with Plains that the meaning of “rent payments” somehow reaches to money

paid by third parties that shipped their product through the Pumping Station. While such

payments may constitute “expenses” of those third parties, they are not expenses of the pipeline

business owner. Rather, these payments would be monies paid to and received by the pipeline

business owner.

11

items, are likewise encompassed by the Expense Provision. The term “expenses”

is not defined in the Agreement, so we are to give this term its plain, ordinary, and

generally accepted meaning unless the Agreement itself shows the term to be used

in a technical or different sense. See Heritage Res., Inc., 939 S.W.2d at 121–22.

Because the Agreement does not show that “expenses” is used in a technical or

different sense in the Expense Provision, we give the term its plain, ordinary, and

generally accepted meaning. See id.

An “expense” is “[a]n expenditure of money, time, labor, or resources to

accomplish a result; esp. a business expenditure chargeable against revenue for a

specific period.” Black’s Law Dictionary 617 (8th 2004); see Endeavor Natural

Gas, L.P. v. Magnum Hunter Prod., Inc., No. 13-06-352-CV, 2007 WL 4340870,

at *6 (Tex. App.—Corpus Christi Dec. 13, 2007, no pet.) (mem. op.) (citing

Black’s definition). An “expense” also is defined as “something expended to

secure a benefit or bring about a result”; “financial burden or outlay: cost”; or “an

item of business outlay chargeable against revenue for a specific period.”

Merriam-Webster’s Collegiate Dictionary 440 (11th ed. 2004). We conclude the

plain, ordinary, and generally accepted meaning of “expense” is an expenditure of

money, time, labor, or resources that goes toward accomplishing a result or

achieving a benefit. See Endeavor Natural Gas, L.P., 2007 WL 4340870, at *6.

Each of the enumerated items within the Expense Provision fits within this

meaning of “expense.” “Utilities” are “service[s] (as light, power, or water)

provided by a public utility.” Merriam-Webster’s Collegiate Dictionary 1378

(11th ed. 2004). That is, “utilities” comprise an “expense.”7 To operate a pipeline

7

See Black’s Law Dictionary 618 (8th 2004) (including “utilities” within definition of “general

administrative expense”).

12

business, a company expends money to secure the benefit of such utility services.

Next, an “account payable” is “an account reflecting a balance owed to a creditor;

a debt owed by an enterprise in the normal course of business dealing,” Black’s

Law Dictionary 18 (8th 2004), or “the balance due to a creditor on a current

account.” Merriam-Webster’s Collegiate Dictionary 8 (11th ed. 2004). Moreover,

the “accounts payable” term within the Expense Provision is further qualified by

the phrase “for goods and services.” “Accounts payable for goods and services”

also constitutes an “expense”; to operate a pipeline business, a company secures

the benefit of goods and services by incurring debt, and the creditors providing

such items then collect on the balances. Likewise, as discussed above, a “rent

payment” reflects an “expense”8; a pipeline business may spend money to secure

the benefit of occupying or using property that someone else owns.

In the Louisiana Claim, G&M seeks an accounting from BP for a share of

the revenues and profits which BP has derived from its use of the Pumping Station.

Unlike utilities, accounts payable for goods and services, and rent payments, the

relief sought in the Louisiana Claim does not fall within the meaning of “expense”

as used in the Expense Provision. An accounting allegedly owed to a co-owner of

the land upon which the Pumping Station sits for some proportion of revenues and

profits attributable to the operation of the Pumping Station is not an expenditure

put forth by BP or the Seller Group for the purpose of securing any type of benefit.

Any apportionment out of any of BP’s revenues and profits to its co-owner does

not constitute expenditures by BP or the Seller Group to achieve a benefit or result,

but rather is a division or sharing of monies received or gained by BP. See

8

See Black’s Law Dictionary 618 (8th 2004) (including “rent” within definitions of “general

administrative expense” and “prepaid expense”).

13

Endeavor Natural Gas, 2007 WL 4340870, at *6 (considering the common

meaning of “expenses” and concluding that “[c]learly, the severance tax refunds

and credits would not constitute an expense for either [defendant] or [plaintiff] as

they were monies received rather than expended”). See also Black’s Law

Dictionary 1344 (8th 2004) (defining “revenue” as “[g]ross income or receipts”);

Merriam-Webster’s Collegiate Dictionary 1066 (11th ed. 2004) (defining

“revenue” as “the total income produced by a given source” or “the gross income

returned by an investment”); Black’s Law Dictionary 1246 (8th 2004) (defining

“profit” as “[t]he excess of revenues over expenditures in a business transaction”);

Merriam-Webster’s Collegiate Dictionary 992 (11th ed. 2004) (defining “profit”

as “a valuable return: gain” or “net income usually for a given period of time”).

We conclude the term “expenses” is unambiguous and, under the applicable

standard of review, the summary-judgment evidence proves as a matter of law that

the relief sought in the Louisiana Claim does not fall within the meaning of

“expenses” as used in the Expense Provision. 9 See Endeavor Natural Gas, L.P.,

2007 WL 4340870, at *6; Black’s Law Dictionary 617 (8th 2004); Merriam-

Webster’s Collegiate Dictionary 440 (11th ed. 2004).

Significantly, the final item specified in the Expense Provision is not

“expenses” but “similar expenses.” Even if the relief sought in the Louisiana

Claim were to fall within the meaning of “expenses” as used in the Expense

Provision, the term “similar expenses” is clear and, as a matter of law, this relief is

not an “expense” similar to utilities, accounts payable for goods and services, and

9

Plains asserts that, to the extent both section 10.1(b) and the Expense Provision may be

construed to address the relief sought in the Louisiana Claim, the specific Expense Provision

should control over the general provision in section 10.1(b). Because we conclude that, as a

matter of law, this relief does not fall within the scope of the Expense Provision, we need not

address this argument.

14

rent payments attributable to the Pipeline Assets. 10 See Endeavor Natural Gas,

L.P., 2007 WL 4340870, at *6; Black’s Law Dictionary 18, 617, 618, 1344 (8th

2004); Merriam-Webster’s Collegiate Dictionary 8, 440, 992, 1066 (11th ed.

2004).

BP and Plains both brief the ejusdem generis canon of construction.11

Under this canon, if general words follow an enumeration of specific persons or

things, the general words apply only to persons or things of the same kind or class

as those specifically mentioned.12 See City of Houston v. Bates, 406 S.W.3d 539,

545 (Tex. 2013); Barnett v. Aetna Life Ins. Co., 723 S.W.2d 663, 665–66 (Tex.

1987). See also Antonin Scalia & Bryan A. Garner, Reading Law: The

Interpretation of Legal Texts 199 (2012) (“Where general words follow an

enumeration of two or more things, they apply only to persons or things of the

same general kind or class specifically mentioned (ejusdem generis)”). The parties

urge us to apply ejusdem generis in the interpretation of the Expense Provision.

10

Plains relies on Sonerra Resources Corp. v. Helmerich & Payne International Drilling Co.,

No. 01-11-00459-CV, 2012 WL 3776428 (Tex. App.—Houston [1st Dist.] Aug. 30, 2012, pet.

denied) (mem. op.). In Sonerra, the parties entered into a drilling contract containing various

indemnity provisions. Considering the contract as a whole and seeking to harmonize all the

provisions, our sister court concluded that one provision regarding inspection of materials

granted a more specific indemnity “carve-out” for claims related to furnished materials than the

more general reciprocal indemnity provisions covering a “broad class of persons and a broad

class of losses.” Id. at *7. Because the dispute at issue indeed fell within the scope of the

“carve-out” clause, indemnity was precluded; thus, the Sonerra court affirmed the judgment in

which the trial court found no breach of indemnity as a matter of law. Id. at *7, *9. However,

Sonerra is distinguishable from today’s case, in which the relief sought in the Louisiana Claim

does not fall within the scope of the Expense Provision.

11

The Latin phrase ejusdem generis means “of the same kind or class.” Black’s Law Dictionary

556 (8th 2004).

12

According to BP, while ejusdem generis would recognize “unlisted, analogous contractual

obligations” as “similar expenses,” it would not include unliquidated claims for revenues and

profits. According to Plains, however, the meaning of “similar” is not so limited, and this court

cannot insert terms such as “liquidated,” “contractual,” or “vendors” into section 6.3(d)(ii).

15

But, in light of the contractual language the parties chose, we find it unnecessary to

do so. The general phrase “and other expenses,” following a specific enumeration

of things, would apply only to expenses similar to the particular items named. See

Bates, 406 S.W.3d at 545; Barnett, 723 S.W.2d at 665–66. There is no need to

apply the ejusdem generis canon to the construction of the Expense Provision

because the parties expressly agreed that the final item is “similar expenses.” 13 See

Barnett, 723 S.W.2d at 665–66 (concluding that there is no need to apply the

ejusdem generis canon of construction if the parties expressly agree that the final

item is limited to things similar to those previously enumerated). Thus, the parties

built ejusdem generis into the Agreement by expressly limiting “expenses” to only

expenses that are similar to those listed in the text of the Expense Provision. The

relief sought in the Louisiana Claim (if it were an expense) is not like the other

things in the list.14

We conclude the Expense Provision of the Agreement is unambiguous.15

Under the applicable standard of review, the summary-judgment evidence proves,

as a matter of law, that the relief sought in the Louisiana Claim is not a pre-closing

expense that is the sole obligation of the Seller Group under the Expense

13

In any event, our interpretation of the Expense Provision is consistent with the ejusdem generis

canon.

14

Plains asserts that a conclusion that the relief sought in the Louisiana Claim does not fall

within the scope of the Expense Provision would make that provision meaningless. But, such a

conclusion does not deprive the Expense Provision of its meaning. That provision still applies to

matters that fall within the scope of the provision’s unambiguous language.

15

BP argues in the alternative that if this court determines that section 6.3(d)(ii) is susceptible to

more than one reasonable interpretation, then the Agreement is ambiguous and a fact question

exists precluding summary judgment. We do not reach this alternative argument because we

conclude the provisions of the Agreement at issue are unambiguous.

16

Provision. 16 See Gulf & Miss. River Transp. Co., Ltd., 730 F.3d at 487, 492;

Williams, 2012 WL 6644704, at *6; Endeavor Natural Gas, L.P., 2007 WL

4340870, at *6; Fuqua, 750 S.W.2d at 246; Burns, 427 S.W.2d at 357; Turner, 234

S.W. at 928; Black’s Law Dictionary 18, 617, 618, 909, 1322, 1344 (8th 2004);

Merriam-Webster’s Collegiate Dictionary 8, 440, 992, 1054, 1066 (11th ed. 2004).

Does the Louisiana Claim fall within the scope of Plains’s indemnity

under section 10.1(b) of the Agreement?

We first examine the language of the Agreement regarding Plains’s

indemnity under section 10.1(b) of the Agreement, and then we address whether

the summary-judgment evidence proves as a matter of law that the Louisiana

Claim falls within the scope of this indemnity.

Relevant Language of the Agreement

The Agreement contains an indemnity provision that outlines the general

indemnification obligations of the parties:

10.1 General Indemnification.

(a) Subject to the provisions of this ARTICLE X . . . , from and

after the Closing,[ 17] [BP 18] agrees to indemnify and hold harmless

[Plains]. . . from and against any and all of [Plains’s] Losses[19]. . .

claims, actions, suits and other proceedings . . . which [Plains]

16

We need not address whether Plains’s written agreement to indemnify BP under section

10.1(b) of the Agreement falls within the phrase “[u]nless otherwise provided by the Parties in

writing” and thus takes that indemnity obligation outside the scope of the Expense Provision.

17

“Closing” is defined in section 9.1 of the Agreement as “[t]he consummation of the

transactions contemplated by this Purchase Agreement.”

18

BP Pipelines (North America) Inc. and Vastar Pipeline, LLC, the other members of the “Seller

Group” under the Agreement, are also indemnitors in section 10.1(a) of the Agreement.

19

As defined in the Agreement, “Losses” means “damages, fines, penalties, judgments, losses,

liabilities, costs and reasonable expenses (including without limitation, reasonable attorneys’ fees

and expenses).”

17

demonstrates resulted from, relate to or arise out of the following: . . .

...

(iv) [BP’s] gross negligence or willful misconduct (whether

sole, passive, active or concurrent) in the construction, operation,

maintenance, repair, expansion or management of the Purchased

Pipeline Systems; or

(v) [BP’s] gross negligence or willful misconduct (whether

sole, passive, active or concurrent) in the ownership or use of the

Purchased Pipeline Systems other than with respect to the

construction, operation, maintenance, repair, expansion or

management of the Purchased Pipeline Systems . . .

except, in each case, to the extent that [BP] demonstrates such Losses

resulted from, relate to or arise out of the gross negligence or willful

misconduct of [Plains or Plains’s Affiliated Companies] or its or their

officers, directors, agents and employees.

(b) Subject to the provisions of this ARTICLE X, from and

after the Closing, [Plains] agrees to indemnify and hold harmless

[BP]. . . from and against any and all Losses . . . , claims, actions, suits

and other proceedings . . . which result from, relate to or arise out of

the following:

...

(iii) [BP’S] NEGLIGENCE (WHETHER SOLE, PASSIVE,

ACTIVE OR CONCURRENT) OR OTHER LEGAL FAULT

(INCLUDING BUT NOT LIMITED TO STRICT LIABILITY) IN

THE CONSTRUCTION, OPERATION, MAINTENANCE, REPAIR,

EXPANSION OR MANAGEMENT OF THE PURCHASED

PIPELINE SYSTEMS;

(iv) [BP’S] NEGLIGENCE (WHETHER SOLE, PASSIVE,

ACTIVE OR CONCURRENT) OR OTHER LEGAL FAULT

(INCLUDING BUT NOT LIMITED TO STRICT LIABILITY) IN

THE OWNERSHIP OR USE OF THE PURCHASED PIPELINE

SYSTEMS OTHER THAN WITH RESPECT TO THE

CONSTRUCTION, OPERATION, MAINTENANCE, REPAIR,

EXPANSION OR MANAGEMENT OF THE PURCHASED

PIPELINE SYSTEMS (WHICH MATTERS SHALL BE

18

GOVERNED BY SECTION 10.1(b)(iii) ABOVE); or

(v) any Assumed Liability not governed by Section 10.1(b)(iii)

or Section 10.1(b)(iv) above;

except, in each case, to the extent that [Plains] demonstrates such

Losses resulted from, relate to or arise out of the gross negligence or

willful misconduct of the Seller Group[20] or its officers, directors,

agents and employees.

BP contends that section 10.1 requires Plains to indemnify BP for claims

resulting from BP’s negligence or other legal fault in connection with the

construction, operation, maintenance, repair, expansion, management, use, or

ownership of the pipeline, while BP must indemnify Plains only for claims that

Plains demonstrates resulted from BP’s gross negligence or willful misconduct in

connection with the same.

In addition, according to BP, under subsection 10.1(b)(v), Plains broadly

must indemnify BP for all “Assumed Liabilities” not otherwise governed by

section 10.1(b)(iii) or section 10.1(b)(iv). The Agreement defines “Assumed

Liabilities” to mean “all Pipeline Liabilities other than (i) the Excluded

Liabilities[21] (which are retained by the Seller Group) and (ii) any obligations or

liabilities of the Seller Group arising under section 10.1(a) . . . of this Purchase

Agreement.” BP further notes that under section 2.1 of the Agreement, entitled

20

As defined in the Agreement, the “Seller Group” collectively refers to BP, BP Pipelines (North

America) Inc., and Vastar Pipeline, LLC.

21

As defined in the Agreement, “Excluded Liabilities” means “those Pipeline Liabilities listed

on the Excluded Liabilities Schedule attached hereto and all liabilities related to the Excluded

Assets.” In the Agreement, “Excluded Assets” is defined as “those assets listed on the Excluded

Assets Schedule attached hereto; provided that, for the avoidance of doubt and as set forth on the

Excluded Assets Schedule, the Excluded Assets shall not include any asset listed specifically,

and not merely described generically, on the Pipelines Schedule, the Pipeline Equipment

Schedule or the Assigned Contracts Schedule.”

19

“Purchase and Sale of the Pipeline Assets,” Plains expressly agreed to “assume the

‘Assumed Liabilities.’”

BP emphasizes the broad scope of the term “Pipeline Liabilities,” defined in

the Agreement to mean:

all liabilities, obligations, responsibilities, costs and expenses of

whatever kind and nature, primary or secondary, direct or indirect,

absolute or contingent, whether based in common law or statute or

arising under written contract or otherwise (including strict liability),

known or unknown, liquidated or unliquidated, real or potential,

tangible or intangible, whether or not accrued, caused by, arising out

of, incurred in connection with or relating in any way to the

ownership or use of the Pipeline Assets or the construction, operation,

maintenance, repair, expansion or management of the Purchased

Pipeline Systems now existing or arising at any time prior to, on or

after the Closing Date,[ 22] as heretofore, currently or hereafter

conducted.

According to BP, because the Louisiana Claim is not an “Excluded Liability” 23 and

does not present circumstances demonstrating BP’s gross negligence or willful

misconduct, Plains expressly agreed to assume it. BP argues the broad definition

of “Pipeline Liabilities” and, in turn, “Assumed Liabilities” covers the Louisiana

Claim.

To ascertain the parties’ true intentions, we examine the entire Agreement in

an effort to harmonize and give effect to all of its provisions. See J.M. Davidson,

128 S.W.3d at 229; MCI Telecomms., 995 S.W.2d at 652. We note that, in

22

As defined in the Agreement, “Closing Date” means “11:59 p.m. CPT on the last Business

Day of the month in which the closing conditions set forth in ARTICLE VII and ARTICLE VIII

have been satisfied or waived . . . .”

23

The Excluded Liabilities Schedule does not include the Louisiana Claim. Nor does the

Louisiana Claim relate to any “Excluded Asset.”

20

addition to the definitions upon which BP relies, the Agreement contains other

defined terms referenced within the indemnity provision. The definition of

“Pipeline Assets” includes “the Purchased Pipeline Systems.” As defined in the

Agreement, “Purchased Pipeline Systems” means “the Pipeline Systems, the

Pipeline Equipment and Pipeline Real Property, excluding the Excluded Assets.”

The term “Pipeline Systems” is defined as the following items, collectively:

(i) a crude petroleum pipeline running from Bay Marchand and

Empire, Louisiana, to the Alliance Refinery in Belle Chasse,

Louisiana (“BOA Pipeline”), and (ii) . . . an interest in crude

petroleum pipelines running from the High Island area of the Western

Gulf of Mexico to Texas City, Texas (“HIPS Pipeline”), all as shown

on the map in the Pipelines Schedule attached hereto (which pipelines

in (i) and (ii) include, for the avoidance of doubt, each pipeline

expressly identified in the Pipelines Schedule whether or not currently

in service).

The term “Pipeline Equipment” is defined as “certain pipeline equipment

expressly listed on the [attached] Pipeline Equipment Schedule.” The term

“Pipeline Real Property” is defined as the following items, collectively:

one or more parcels of land which the Seller Group owns in fee

simple (collectively, the “Fee Property”) and parcels of land which

the Seller Group has the right to use and occupy under certain leases,

easements, rights-of-way, permits, licenses and other rights to, or

interests in, real property, relating to the installation, construction,

ownership, maintenance, repair and operation of the Pipeline Systems

and the Pipeline Equipment (said leases, easements, rights-of-way,

permits, licenses and other rights and interests being collectively

referred to as the “Non-Fee Property” . . . a listing of such Fee

Property and Non Fee Property being set forth on the [attached] Fee

Property Schedule and Non-Fee Property Schedule . . . ).

We cannot ignore pertinent portions of schedules to the Agreement. See Frost

Nat’l Bank v. L & F Distribs., Ltd., 165 S.W.3d 310, 313 (Tex. 2005) (per curiam).

21

The Pipeline Equipment Schedule expressly includes and describes the “Grand

Terre Pump Station.” Additionally, the Fee Property Schedule expressly lists and

provides recording information for the 1.5% fee interest transferred by Chevron to

Sohio (BP’s corporate predecessor) in 1988.

Application of the Agreement’s Language, other than the Final Clause, to

the Louisiana Claim

We conclude the language of the Agreement regarding the parties’

indemnity obligations is unambiguous. See Frontier Logistics, L.P., 417 S.W.3d at

661–63 (concluding that indemnity language in an agreement was unambiguous).

Section 10.1(b) is a single, long sentence, the final clause of which (hereinafter the

“Final Clause”) contains an exclusion of certain matters from the scope of Plains’s

indemnity under section 10.1(b). 24 Interpreting this clear text, we conclude Plains

is not obligated to indemnify BP under section 10.1(b) to the extent that Plains

demonstrates that the losses for which indemnity is sought resulted from, relate to,

or arise out of, the gross negligence or willful misconduct of the Seller Group or its

officers, directors, agents and employees. 25

Unless the Final Clause applies, under the contract’s clear language, Plains

agrees to indemnify and hold harmless BP from and against any and all Losses,

claims, actions, suits, and other proceedings, which result from, relate to or arise

out of BP’s negligence or other legal fault, including strict liability in the

construction, operation, maintenance, repair, expansion or management of the

24

This clause reads as follows: “except, in each case, to the extent that [Plains] demonstrates

such Losses resulted from, relate to or arise out of the gross negligence or willful misconduct of

the Seller Group or its officers, directors, agents and employees.”

25

Environmental Losses, claims, actions, suits, and other proceedings also are excluded from the

scope of the indemnity under Section 10.1(b), but that exclusion is not relevant in today’s case.

22

Purchased Pipeline Systems or in the ownership or use of the Purchased Pipeline

Systems, which includes the Pumping Station and the Tract that are the subject of

the Louisiana Claim. Without addressing whether the Final Clause applies, we

conclude as an initial matter that the summary-judgment evidence proves, as a

matter of law, that the Louisiana Claim otherwise falls within the scope of the

foregoing indemnity. 26

Application of the Final Clause to the Louisiana Claim

In Plains’s amended motion for traditional summary judgment, Plains

asserted that it did not owe any indemnity under section 10.1(b) because the facts

and circumstances on which the Louisiana Claim is based resulted from, relate to,

or arise out of BP’s gross negligence or willful misconduct. In BP’s amended

cross-motion for traditional summary judgment, BP asserted that, as a matter of

law, Plains must indemnify BP as to the Louisiana Claim, and the Final Clause

does not apply because BP did not engage in gross negligence or willful

misconduct.27 Under the unambiguous language of the Final Clause, Plains does

not owe BP indemnity under section 10.1(b) if Plains demonstrates that the losses

for which BP seeks indemnity resulted from, relate to, or arise out of the gross

negligence or willful misconduct of the Seller Group or its officers, directors,

26

Without addressing whether the Final Clause applies, we conclude that even if the Louisiana

Claim did not fall within the scope of the foregoing indemnity, the summary-judgment evidence

would prove, as a matter of law, that the Louisiana Claim otherwise falls within the scope of

Plains’s indemnity from and against any and all Losses, claims, actions, suits, and other

proceedings, which result from, relate to or arise out of any Assumed Liability not governed by

section 10.1(b)(iii) or section 10.1(b)(iv) of the Agreement.

27

Our dissenting colleague concludes that this motion was a no-evidence summary-judgment

motion. We address this issue in more detail in the next section of this opinion.

23

agents, and employees (collectively “Gross Negligence”).28 Thus, in Plains’s

motion for traditional summary judgment, Plains had the burden of proving as a

matter of law that the losses for which BP seeks indemnity resulted from, relate to,

or arise out of the gross negligence or willful misconduct of the Seller Group or its

officers, directors, agents, and employees. See Willrich, 28 S.W.3d at 23. In BP’s

motion for traditional summary judgment, BP had the burden of proving as a

matter of law that the losses for which BP seeks indemnity did not result from,

relate to, or arise out of the gross negligence or willful misconduct of the Seller

Group or its officers, directors, agents, and employees. See Willrich, 28 S.W.3d at

23.

In Reeder v. Wood County Energy, LLC, under a joint operating agreement,

the operator had no liability for losses sustained or liabilities incurred by the other

parties except for those resulting from the operator’s “gross negligence or willful

misconduct.” See Reeder v. Wood County Energy, LLC, 395 S.W.3d 789, 793–95

(Tex. 2012), supplemental opinion on reh’g and new judgment issued on other

grounds, 395 S.W.3d 797, 797–98 (Tex. 2013) (per curiam). The jury found that

the operator’s conduct amounted to “gross negligence or willful misconduct.” See

28

Under the unambiguous language of section 10.1(a), the Seller Group indemnifies Plains

against losses that resulted from, relate to, or arise out of the Seller Group’s gross negligence or

willful misconduct in the construction, operation, maintenance, repair, expansion, management,

ownership, or use of the Purchased Pipeline Systems, except to the extent that the Seller Group

demonstrates that such losses resulted from, relate to, or arise out of Plains’s gross negligence or

willful misconduct. Under the unambiguous language of the Final Clause of section 10.1(b),

Plains has the burden of proving at trial that the losses for which BP seeks indemnity resulted

from, relate to, or arise out of the Seller Group’s Gross Negligence. If the Final Clause simply

said “except, in each case, to the extent that such Losses resulted from, relate to or arise out of

[the Seller Group’s Gross Negligence],” then BP would have had the burden of proving at trial

that any losses did not result from, relate to, or arise out of BP’s Gross Negligence. See Genesis

Tax Loan Servs. v. Kothmann, 339 S.W.3d 104, 107–08 (Tex. 2011).

24

id. at 795–96. The Supreme Court of Texas held that there was no evidence that

the operator acted with gross negligence or willful misconduct, based solely on the

court’s conclusion that there was no evidence to support a finding of gross

negligence, without any additional inquiry, necessarily equating “willful

misconduct” with “gross negligence.” See id. at 795–97.

Thus, under binding precedent, in Plains’s motion for traditional summary

judgment, Plains had the burden of proving as a matter of law that the losses for

which BP seeks indemnity resulted from, relate to, or arise out of the gross

negligence of the Seller Group or its officers, directors, agents, and employees, and

in BP’s motion for traditional summary judgment, BP had the burden of proving as

a matter of law that the losses for which BP seeks indemnity did not result from,

relate to, or arise out of the gross negligence of the Seller Group or its officers,

directors, agents, and employees. 29 See Reeder, 395 S.W.3d at 795–97; Willrich,

28 S.W.3d at 23; Burk Royalty Co. v. Walls, 616 S.W.2d 911, 916–20 (Tex.

1981) (equating willful negligence with gross negligence); Faith v. CSFB 19990C1

Rockhaven Place Ltd. P’ship, 303 S.W.3d 1, 6–7 (Tex. App.—Dallas 2009, pet.

denied) (equating willful misconduct with gross negligence); Chrismon v. Brown,

246 S.W.3d 102, 106–07 (Tex. App.—Houston [14th Dist.] 2007, no pet.)

(concluding that, under binding precedent, willful negligence is the same as gross

negligence); Morrone v. Prestonwood Christian Academy, 215 S.W.3d 575, 582

(Tex. App.—Eastland 2007, pet. denied) (equating willful misconduct with gross

negligence); Wheeler v. Yettie Kersting Mem. Hosp., 866 S.W.2d 32, 50 & n. 25

(Tex. App.—Houston [1st Dist.] 1993, no writ) (equating willful negligence with

29

We recognize that under this construction, two contractual terms have the same meaning, yet

binding precedent commands this result.

25

gross negligence).

Gross negligence means an act or omission: (1) which, when viewed

objectively from the standpoint of the actor at the time of occurrence, involves an

extreme degree of risk, considering the probability and magnitude of the potential

harm to others; and (2) of which the actor has actual, subjective awareness of the

risk involved, but nevertheless proceeds with conscious indifference to the rights,

safety, or welfare of others. See Tex. Civ. Prac. & Rem. Code Ann. § 41.001(11)

(West, Westlaw through 2013 3d C.S.); Transportation Ins. Co. v. Moriel, 879

S.W.2d 10, 23 (Tex. 1994). An extreme degree of risk is not “a remote possibility

of injury or even a high probability of minor harm, but rather the likelihood of

serious injury.” Lee Lewis Constr., Inc. v. Harrison, 70 S.W.3d 778, 785 (Tex.

2001). In examining proof of the subjective component of gross negligence, courts

focus on the actor’s state of mind, examining whether the actor knew about the

peril caused by the actor’s conduct but acted in a way that demonstrates the actor

did not care about the consequences to others. Reeder, 395 S.W.3d at 796. “An

act or omission that is merely ineffective, thoughtless, careless, or not inordinately

risky is not grossly negligent.” Id. at 797. Only if the actor’s conduct is

unjustifiable and likely to cause serious harm can it be grossly negligent. Id.

In its live pleading, Plains alleges that the conduct of BP that gave rise to the

Louisiana Claim constituted gross negligence or willful misconduct. In its

amended summary-judgment motion, Plains asserted that G&S alleged willful

misconduct in its complaint in Louisiana federal court. But, in the complaints

attached to Plains’s summary-judgment motion, G&S does not allege that BP

engaged in conduct constituting either gross negligence or willful misconduct.30 In

30

Plains attached to its amended motion pleadings G&M filed in Louisiana federal district court;

26

these complaints, G&S alleges BP used and operated the Pumping Station without

any legal right to do so and without any authorization or permission from G&S and

that this use and operation was wrongful and constituted a trespass. Other

documents attached to Plains’s summary-judgment motion reflect that, in the

Louisiana litigation, BP denied that its use of the Pumping Station was without any

authorization and that G&S asserted that BP possessed the Pumping Station in bad

faith. The summary-judgment evidence31 does not show that G&S has ever alleged

or asserted that BP engaged in conduct that constituted either gross negligence or

willful misconduct. 32

In its amended summary-judgment motion, Plains asserted the following:

• BP knew about the 1980 servitude’s expiration.

• BP did not disclose the expiration of the servitude to Plains.

• BP never paid G&M.

• BP did not acquire an ownership interest in the Tract until 1988

and did not have rights to use and operate the Pumping Station

on the Tract until late 1988.

• Plains asked for relevant information regarding rights to the

Tract during the due diligence process.

• BP failed to provide the information requested or disclose

issues regarding the Pumping Station.

BP’s memorandum in opposition to G&M’s partial motion for summary judgment in the

Louisiana lawsuit; an affidavit from Plains’s vice president and general counsel, which included

the Agreement as an exhibit and a redacted excerpt from a “Buyer Q&A session” with BP; and

the federal district court’s April 7, 2011 summary-judgment ruling.

31

BP attached to its amended cross-motion for summary judgment its special exceptions to

Plains’s answer and counterclaims and the federal district court’s July 11, 2012 summary-

judgment ruling in the Louisiana lawsuit.

32

Therefore, we need not and do not address the significance, if any, of any such allegation or

assertion.

27

• BP disclosed issues regarding the Pumping Station to another

potential buyer, but not to Plains.

• BP knew that it had never paid anything to the other

landowners for the right to operate the Pumping Station.

Plains, however, did not support all of these statements with citations to the

summary-judgment record. In any event, even if BP knew in 1986 that the

servitude had expired and nonetheless operated the Pumping Station until it

became a co-owner of the Tract in 1988, without paying G&M, the summary-

judgment evidence does not address whether BP’s acts or omissions, when viewed

objectively from BP’s standpoint at the time, involved an extreme degree of risk,

considering the probability and magnitude of the potential harm to others. 33 See

Moriel, 879 S.W.2d at 23; Chrismon, 246 S.W.3d at 106–07. Nor does this

evidence address whether BP was subjectively aware of an extreme degree of risk,

but nevertheless proceeded with conscious indifference to the rights, safety, or

welfare of others. See Moriel, 879 S.W.2d at 23; Chrismon, 246 S.W.3d at 107.

33

Our dissenting colleague asserts that the differences between the burden for a movant seeking

a no-evidence summary judgment and the burden for a movant seeking a traditional summary

judgment are not relevant to this court’s analysis because BP and Plains submitted “extensive

summary judgment evidence.” See post at pp. 4–5. But, neither the quantity nor the quality of

evidence attached to cross-motions seeking only a traditional summary judgment alters the

burden shouldered by each movant seeking a summary judgment. See Frontier Logistics, L.P.,

417 S.W.3d at 659 (noting in case involving cross-motions for traditional summary judgment

that “[w]hen both parties move for summary judgment, each party must carry its own burden,

and neither can prevail because of the failure of the other to discharge its burden”). And, the

cases cited by our colleague do not support this proposition. See Neely v. Wilson, 418 S.W.3d

52, 59 (Tex. 2013) (stating that the different burdens for a traditional motion and a no-evidence

motion were immaterial in case in which movant filed hybrid motion asserting both traditional

and no-evidence grounds); Cohen v. Landry’s Inc., 442 S.W.3d 818, 824–26 (Tex. App.—

Houston [14th Dist.] 2014, pet. denied) (analyzing case under both traditional and no-evidence

standards as to essential element challenged in both a traditional and no-evidence ground).

28

Presuming without deciding that BP failed to disclose to Plains relevant

information regarding the operation of the Pumping Station and rights to the Tract,

any such failure to disclose would not show Gross Negligence by BP in its conduct

that gave rise to the Louisiana Claim.

We conclude that under the applicable standard of review, the summary-

judgment evidence does not address whether the losses for which BP seeks

indemnity resulted from, relate to, or arise out of the Seller Group’s Gross

Negligence. 34 See Buffington v. Sharp, 440 S.W.3d 677, 683–84 (Tex. App.—

Houston [14th Dist.] 2012, pet. denied). Plains did not satisfy its burden of

proving as a matter of law that the losses for which BP seeks indemnity resulted

from, relate to, or arise out of the gross negligence or willful misconduct of the

Seller Group or its officers, directors, agents, and employees. See id. Nor did BP

satisfy its burden of proving as a matter of law that these losses did not result from,

relate to, or arise out of the gross negligence or willful misconduct of the Seller

Group or its officers, directors, agents, and employees. See id. Thus, Plains did

not show it was entitled to a traditional summary judgment as to BP’s claims and

BP did not show that it was entitled to a traditional summary judgment as to its

declaratory-judgment claim regarding the indemnity. See id.

BP’s Motion for Summary Judgment

Our dissenting colleague concludes that BP was entitled to summary

34

Our dissenting colleague suggests that this court should render judgment granting summary

judgment in BP’s favor “in the interest of judicial economy.” Post at p. 5. In the interest of

judicial economy, an appellate court may consider summary-judgment grounds that the movant

preserved for appellate review but that the trial court did not make a basis of its summary

judgment. See Neely, 418 S.W.3d at 60. But, in reviewing whether the trial court should have

granted summary judgment on the grounds in question, the reviewing court does not consider

judicial economy as a factor in determining whether a party is entitled to summary judgment in

its favor. See id. at 59–60.

29

judgment on its declaratory-judgment claim regarding indemnity based in part on

the incorrect premise that BP asserted a no-evidence summary-judgment ground on

this issue.

If a summary-judgment movant clearly sets forth in its motion a no-evidence

ground and otherwise meets Rule 166a(i)’s requirements, then the movant has

asserted a no-evidence ground. See Merriman v. XTO Energy, Inc., 407 S.W.3d

244, 248 (Tex. 2013); Binur v. Jacobo, 135 S.W.3d 646, 650–51 (Tex. 2004);

Chrismon v. Brown, 246 S.W.3d 102, 120 (Tex. App.—Houston [14th Dist.] 2008,

no pet.) (supp. op. on reh’g). To state a no-evidence ground the movant must

assert clearly that there is no evidence of one or more essential elements of a claim

or defense on which the adverse party would have the burden of proof at trial. See

Tex. R. Civ. P. 166a(i) (stating that a no-evidence movant seeks “summary

judgment on the ground that there is no evidence of one or more essential elements

of a claim or defense on which an adverse party would have the burden of proof at

trial” and that “[t]he motion must state the elements as to which there is no

evidence”); Chrismon, 246 S.W.3d at 114, n. 12, 120. A statement in a summary-

judgment motion that there is no evidence of a matter that is not an essential

element of a claim or defense does not indicate that the movant is asserting a no-

evidence ground for summary judgment. See Lawrence Marshall Dealerships v.

Meltzer, No. 14-07-00920-CV, 2009 WL 136908, at *2, n.1 (Tex. App.—Houston

[14th Dist.] Jan. 20, 2009, no pet.) (mem. op.).

In its amended cross-motion, BP did not seek summary judgment as to its

breach-of-contract claim; instead, the only relief BP requested as to its claims was

that the trial court “grant BP’s amended cross-motion for summary judgment on its

declaratory-judgment action because the Agreement unambiguously requires

30

Plains to indemnify BP against [the Louisiana Claim].” To meet the rule’s

requirements, a no-evidence motion must contain a clear statement that there is no

evidence of one or more essential elements of a claim or defense on which the

adverse party would have the burden of proof at trial. See Tex. R. Civ. P. 166a(i);

Kirkpatrick v. Cusick, No. 13-13-00149-CV, 2013 WL 6730049, at *4 (Tex.

App.—Corpus Christi Dec. 19, 2013, pet. denied) (mem. op.). BP’s amended

cross-motion was contained in a single instrument that was both an amended cross-

motion for summary judgment and a response in opposition to Plains’s amended

motion for traditional summary judgment. BP did not distinguish between the

portions of the instrument that are part of BP’s amended cross-motion and the

portions of the instrument that are part of BP’s response to Plains’s amended

motion for traditional summary judgment. We presume for the sake of argument

that proving the losses for which BP seeks indemnity resulted from, relate to, or

arise out of BP’s Gross Negligence is an essential element of a claim or defense on

which Plains would have the burden of proof at trial, and thus would be the proper

subject of a no-evidence ground. The only place in BP’s amended cross-motion in

which BP arguably asserts that there is no evidence of BP’s Gross Negligence is at

the end of the following paragraph:

BP will show, as a matter of law, that the indemnity provision

controls in this dispute, and that it requires Plains to indemnify BP for

[the Louisiana claim.] While Plains asserts that the rent provision,

which obligates BP to pay for pre-closing rent and similar expenses,

governs this dispute, and thus seeks declaratory judgment that it is not

required to assume responsibility for [the Louisiana Claim], Plains’

position is insupportable. The evidence demonstrates the following:

• The Agreement requires Plains to indemnify BP

for obligations relating to the BOA Pipeline,

regardless of when they occurred, unless said

obligation was listed in a[n] Excluded Liabilities

31

Schedule or was the result of gross negligence or

willful misconduct;

• It is impossible to accept Plains’ alleged

interpretation of the rent provision without

mooting the plain language of the indemnity

provision;

• G&M seeks an accounting for revenue and profits

in the Louisiana Litigation and has never sought

any relief amounting to “rent,” nor is “rent”

synonymous with “revenues and profits” in

common usage under Texas law; and

• Plains has no evidence that BP engaged in any

gross negligence or willful misconduct.35

Later in the motion, BP asserts as follows:

The Court should not only deny Plains’ Amended MSJ, but also

grant BP’s cross-motion for summary judgment on its request for

declaratory judgment. To prevail on its motion for summary judgment,

a party must show that no genuine issue of material fact exists and

that it is entitled to summary judgment as a matter of law. Tex. R.

Civ. P. 166a. As discussed above, Plains unambiguously agreed to

indemnify BP for the [Louisiana Claim] as a matter of law.

Accordingly, the Court should grant BP’s request for declaratory

judgment that . . . . 36

Though it is not clear what BP meant when it asserted that the summary-

judgment evidence demonstrated that Plains has no evidence that BP engaged in

Gross Negligence, BP may have meant that the summary-judgment evidence

demonstrated that BP did not engage in Gross Negligence. Or, BP may have

meant that, in support of Plains’s motion for traditional summary judgment, Plains

had failed to prove as a matter of law that BP had engaged in Gross Negligence. A

35

The emphasis has been added. In the motion, the four bullet-point items were in bold.

36

The emphasis has been added.

32

moving party is not required to cite the legal standard for a no-evidence motion to

assert a no-evidence ground, yet it is relevant and revealing that BP recited the

legal standard for a traditional motion but not the legal standard for a no-evidence

motion. Context controls meaning. In context, the recitation of the traditional

standard and the omission of the no-evidence standard suggests that BP was

seeking the former and not the latter.

In the motion, BP sought summary judgment on its declaratory-judgment

claim. BP did not assert that proof of its Gross Negligence or proof that the losses

for which BP seeks indemnity resulted from, relate to, or arise out of BP’s Gross

Negligence was an essential element of a claim or defense on which Plains would

have the burden of proof at trial. BP argued that it was entitled to summary

judgment based on a showing it had made as a matter of law. BP did not clearly

state that there was no evidence of an essential element of a claim or defense on

which Plains would have the burden of proof at trial. We conclude that BP did not

seek summary judgment on any no-evidence grounds; rather, BP, like Plains,

sought a traditional summary judgment on the indemnity issue. See Tex. R. Civ. P.

166a; Kirkpatrick, 2013 WL 6730049, at *4; Lawrence Marshall Dealerships,

2009 WL 136908, at *2, n.1. Thus, even if Plains had the burden at trial to prove

Gross Negligence, as a movant for a traditional summary judgment, BP had the

burden of proving as a matter of law that the losses for which BP seeks indemnity

did not result from, relate to, or arise out of the gross negligence or willful

misconduct of the Seller Group or its officers, directors, agents, and employees.

See Willrich, 28 S.W.3d at 23. Because BP did not make this showing, the burden

did not shift to Plains to raise a genuine fact issue in response to BP’s motion, and

the trial court did not err in denying BP’s summary-judgment motion. See id.;

33

Buffington, 440 S.W.3d at 683–84.

Our dissenting colleague concludes that BP asserted a no-evidence ground—

that there was no evidence that BP engaged in Gross Negligence—based in part on

the following language from BP’s summary-judgment response and amended

cross-motion:

2. BP’s Conduct vis-à-vis G&M Did Not Constitute Gross

Negligence

Plains argues that the claims asserted by G&M in the Louisiana

Litigation demonstrate that BP engaged in “willful misconduct” in

trespassing and/or failing to pay G&M its profits. See Plains’

Amended MSJ at 19. Under the IP Petroleum Co. standard, Plains

must demonstrate a “specific intent” on the part of BP to cause

“substantial injury.” Of course, no such evidence exists. Plains

repeatedly asserts that BP’s alleged failures were “intentional” and

“deliberate” without any evidence whatsoever of BP’s intent. See id.

In this part of the instrument, BP cites Plains’s motion for traditional

summary judgment twice and argues that, although Plains seeks a summary

judgment based on its assertion that BP engaged in willful misconduct, Plains has

not proved its entitlement to a traditional summary judgment because there is no

summary-judgment evidence regarding BP’s intent. The substance of this

language is BP’s response to Plains’s summary-judgment motion rather than the

assertion of a no-evidence ground. BP did not state that a no-evidence summary

judgment should be granted based on the absence of any evidence that BP engaged

in willful misconduct. Even if BP had stated such a ground, it would not be a

proper no-evidence ground because BP’s willful misconduct is not an essential

element of a claim or defense on which Plains would have the burden of proof at

34

trial.37 See Tex. R. Civ. P. 166a; Lawrence Marshall Dealerships, 2009 WL

136908, at *2, n.1. At most, the essential element would be that the losses for

which BP seeks indemnity resulted from, relate to, or arise out of BP’s Gross

Negligence, which includes both BP’s gross negligence and willful misconduct. In

the language upon which our dissenting colleague relies, BP did not clearly state

that there was no evidence of an essential element of a claim or defense on which

Plains would have the burden of proof at trial.

The Proper Ruling on each Traditional Summary-Judgment Motion

For the reasons outlined above, Plains did not show it was entitled to

summary judgment as to BP’s claims, and BP did not show that it was entitled to

summary judgment as to its declaratory-judgment claim regarding the indemnity.

See Buffington, 440 S.W.3d at 683–84. Therefore, the trial court erred in granting

Plains’s motion for traditional summary judgment, but the trial court did not err in

denying BP’s motion for traditional summary judgment. 38 Accordingly, we sustain

BP’s first and fourth issues and overrule BP’s second issue.

IV. SPECIAL EXCEPTIONS

In its third issue, BP asserts the trial court erred in denying BP’s special

exceptions to Plains’s Third Amended and Restated Answer, Defenses and

37

Our dissenting colleague also concludes that BP’s reference to an alleged “specific intent” on

the part of BP to cause “substantial injury” is a reference to the legal standard for gross

negligence. See post at p. 2. Instead, it is a reference to the legal standard for “malice.” See

Tex. Civ. Prac. & Rem. Code Ann. § 41.001(7) (stating that “‘[m]alice’ means a specific intent

by the defendant to cause substantial injury or harm to the claimant”) (West, Westlaw through

2013 3d C.S.); Owens v. Mason, No. 14-12-00207-CV, 2013 WL 2382836, at *7 (Tex. App.—

Houston [14th Dist.] May 30, 2013, no pet.) (mem. op.).

38

Plains argues that the trial court properly denied BP’s summary-judgment motion because of

various defenses asserted by Plains. We need not address this argument.

35

Counterclaims (“Special Exceptions”). In its counterclaim, Plains sought a

declaratory judgment that it has no duty to indemnify BP with respect to the

Louisiana Claim and that Plains is not responsible for any damages assessed

against BP in the Louisiana litigation or for BP’s attorney’s fees and costs in that

litigation. Plains also sought reasonable and necessary attorney’s fees under the

Texas Declaratory Judgments Act. Plains filed this counterclaim in response to

BP’s claims against Plains for breach of contract and for a declaratory judgment

that Plains is obligated under the Agreement to indemnify BP as to the Louisiana

Claim.

Specially excepting to Plains’s live pleading, BP asserted that Plains may

not seek a declaratory judgment that it is not liable for breach of its indemnity

obligations under the Agreement because declaratory relief is not available to settle

a dispute already before a court. BP relied on the Supreme Court of Texas’s

opinion in BHP Petroleum Co. v. Millard and related cases from our sister courts

of appeals. See 800 S.W.2d 838, 841 (Tex. 1990). In BHP Petroleum, the plaintiff

asserted breach-of-contract and tort claims, but did not assert any declaratory-

judgment claim. See id. at 839 & n.3. The BHP Petroleum court held that the

defendant in that case stated a claim for affirmative relief under the Texas

Declaratory Judgments Act that survived the plaintiff’s nonsuit. See id. at 840–42.

The high court did not hold that a defendant may not counterclaim for a

declaratory judgment that it is not liable for breach of a contract in response to the

plaintiff’s request for a declaratory judgment that the defendant breached the

contract. See id.

Today’s case does not involve a nonsuit by the plaintiff, and this court has

held that, if a plaintiff asserts a claim for declaratory relief, a defendant may

36

counterclaim for declaratory relief in its favor on the same subject, even though the

counterclaim addresses issues already before the court. See Elder v. Bro, 809

S.W.2d 799, 800–801 (Tex. App.—Houston [14th Dist.] 1991, writ denied). See

also Washington Square Financial, LLC v. RSL Funding, LLC, 418 S.W.3d 761,

775–76 (Tex. App.—Houston [14th Dist.] 2013, pet. denied) (noting continued

validity of Elder precedent but concluding that it did not apply in that case because

the plaintiff did not assert any declaratory-judgment claim). Because BP sought

declaratory relief regarding Plains’s indemnity obligations under the Agreement,

Plains properly could counterclaim for declaratory relief and seek attorney’s fees

under section 37.009 of the Texas Civil Practice and Remedies Code. 39 See Tex.

Civ. Prac. & Rem. Code Ann. § 37.009 (West, Westlaw through 2013 3d C.S.);

Wells Fargo Bank v. Murphy, 458 S.W.3d 912, 916 (Tex. 2015) (concluding

defendant could properly request and obtain attorney’s fees under section 37.009

of the Texas Civil Practice and Remedies Code in response to plaintiff’s claim for

declaratory relief); U.S. Fidelity & Guar. Co. v. Coastal Refining and Marketing,

Inc., 369 S.W.3d 559, 571–72 (Tex. App.—Houston [14th Dist.] 2012, no pet.)

(same as Wells Fargo Bank); Elder, 809 S.W.2d at 800–801. Because the trial

court did not err in denying the Special Exceptions, we overrule BP’s third issue.

39

The facts of MBM Financial Corporation v. Woodlands Operating Company are materially

different because in that case the plaintiff unsuccessfully sought to recover for breach of contract

and sought to obtain declaratory relief and attorney’s fees under section 37.009. See 292

S.W.3.d 660, 663, 668–71 (Tex. 2009). The high court in MBM Financial concluded that the

plaintiff could obtain declaratory relief but could not recover attorney’s fees under section

37.009. See id. at 668–71. Neither the holding of MBM Financial nor any judicial dicta in the

opinion support the proposition that Plains may not recover attorney’s fees under section 37.009.

See id. Even if they did, the high court’s more recent decision in Wells Fargo Bank is to the

contrary. Wells Fargo Bank v. Murphy, 2015 WL 500636, at *3.

37

V. CONCLUSION

Plains did not show it was entitled to summary judgment as to BP’s claims,

and BP did not show that it was entitled to summary judgment as to its declaratory-

judgment claim regarding the indemnity. Therefore, the trial court erred in

granting Plains’s motion for traditional summary judgment and granting

declaratory relief in Plains’s favor, but the trial court did not err in denying BP’s

motion for traditional summary judgment. Nor did the trial court err in denying the

Special Exceptions. The trial court’s final judgment ordering that BP take nothing

and awarding Plains attorney’s fees is based on the trial court’s erroneous granting

of summary judgment in Plains’s favor. Accordingly, we reverse the trial court’s

judgment and remand for further proceedings consistent with this opinion.

/s/ Kem Thompson Frost

Chief Justice

Panel consists of Chief Justice Frost, and Justices Donovan and Brown (Brown, J.,

concurring and dissenting).

38