CAUSE NO. 1l-12667
ENERGY TRANSFER PARTNERS, L.P.,
ANd ENERGY TRANSFER FUEL, L.P,
$
IN THE DISTRICT COURT OF
$
$
Plaintiffs
$
v
$
DALLASCOUNTY,TEXAS
$
ENTERPRISE PRODUCTS PARTNERS,
LP, ET AL.
Defendants.
$
$
$
298th JUDICIAL DISTRICT
THE ENTERPRISE DEFENDANTS'
MOTION FOR SUMMARY JUDGMENT
FILED UNDER SEAL
(This motion and exhibits thereto contain CONFIDENTIAL
INFORMATION and are fïled under seal pursuant to the Agreed Protective
Order dated December 20,2011)
BECK I REDDEN LLP
David J. Beck
Texas Bar No. 00000070
Joe W. Redden, Jr.
Texas Bar No. 16660600
Jeff M. Golub
Texas Bar No. 00793823
Jas Bra¡
Texas Bar No. 24059483
l22ll:ll4cKínney Street, Suite 4500
Telephone: (7 13) 95 I -3700
Telecopier : (7 13) 951-3720
SAYLES I WERBNER, P.C.
Richard A. Sayles
Texas Bar No. 17697500
Shawn C. Long
Texas Bar No. 24047859
4400 Renaissance Tower
1201 Elm Street
Dallas, Texas 75270
Telephone: (214) 939-8700
Telecopier:
Ql\
939-87 87
COUNSEL FOR DEFENDANTS ENTERPRISE PRODUCTS
PARTNERS, L.P. AND ENTERPRISE PRODUCTS OPERATING LLC
February 15,2013
TO THE HONORABLE JUDGE TOBOLOWSKY:
Defendants Enterprise Products Partners, L.P. and Enterprise Products Operating LLC
("Enterprise") move for a summary judgment that Plaintiffs Energy Transfer Partners, L.P. and
Energy Transfer Fuel, L.P. (collectively "ETP") take nothing from this lawsuit. See Tex. R. Civ.
P.l66a.
SUMMARY OF ARGUMENT
The Chief Executive Ofhcer of ETP, Kelcy Warren, candidly admitted that "neither party
could drag the other one into a partnership." Ex. 1 at p. 130:23-24. Yet that is exactly what ETP
attempts to do in this lawsuit.
was
All of the written documents
signed by the parties establish there
no-and could not be a-joint venture or partnership absent specific conditions
precedent.
It is undisputed that those conditions precedent \ryere never satisfied. So ETP chooses to ignore
the written documents
a
it executed, and argues that the parties formed
an oral agreement to build
billion dollar pipeline. Texas law does not permit such a meritless claim.
ETP claims that Enterprise "formed a joint venture with [ETP] to build a major and
significant new pipeline connecting the major oil hub of Cushing, Oklahoma to Gulf Coast
markets." Fifth Amend. Pet. at 1. The written agreements of the parties disprove this claim.
ETP and Enterprise carefully defined their relationship in writing, and made clear that
they had not agreed to undertake the proposed joint venture. Ex.
2.
Specifically, both ETP and
Enterprise expressly agreed at the outset that there were no "binding or enforceable obligations
between the Parties."
Id.
Further, the parties agreed that "no binding or enforceable obligations
shall exist with respect to the Transaction unless ønd until the Parties have received their
respective board approvals and definitive agreements memorializing the terms and conditions
2
have been negotiated, executed and delivered by both of the
parties." Id. (emphasis added). To
drive home the nonbinding nature of the parties' relationship, and to remove any doubt about
what conditions had to be met before any binding joint venture could occur, the agreement
further provided that:
Unless and until such definitive agreements are executed and delivered by
both of the Parties, either [Enterprise] or ETP for any reason, may depart
from or terminate the negotiations with respect to the Transaction at any
time, without any liability or obligation to the other, whether arising in
contract, tort, strict liability or otherwise.
Id.
Analogous terms were included
in each of the other written
Enterprise executed at the outset of their discussions. Ex. 3
agreements that ETP and
atl9; Ex. 4 at fl 1 1.
The express written conditions precedent never occurred. After months of discovery in
this matter, it is undisputed that
(l)
Enterprise and ETP never executed any "definitive
agreements," and (2) neither Enterprise nor ETP ever obtained board approval for the proposed
joint venture.
,See TBRcuE AFF.
at
\
7; Ex. 1 at pp. 60:2-6; 65:18-66:2. Indeed, ETP
has
admitted that it was not obligated to build the proposed pipeline for which it now seeks billions
of dollars in alleged damages. Id. atpp.52:23-53:1,130:14-19, 141:1-11. The plain language of
the parties' written agreements forecloses all of ETP's claims. The Court should hold ETP to its
word, and grant summary judgment dismissing all of ETP's claims.
To avoid the terms of the written agreements that it executed, ETP resorts to arguing that
the parties entered into an oral agreement to pursue a billion dollar pipeline. ETP has admitted
that the parties did not sign any written contract or agreement establishing a joint venture or
partnership. Ex. 5 at Req. Nos. 4, 6. ("Plaintiffs admit that the [alleged] binding joint venture [or
partnership] agreement was not reduced to writing in a written contract."). V/ithout any written
agreement to rely upon, ETP attempts to manufacture a claim by arguing that the parties entered
J
into a verbal agreement to do so. But ETP's oral contract theory cannot survive the terms of the
written agreements, which require certain conditions to occur before any binding and enforceable
obli gations----oral or otherwise----could exist between the partie
s.
Further, the alleged oral agreement that ETP seeks to enforce could not be performed
within
a year (as one
would expect for a proposed project "to build a major and significant new
pipeline connecting the major oil hub of Cushing, Oklahoma to Gulf Coast markets"). Hence,
the statute of frauds applies and makes unenforceable any alleged unwritten, unsigned agreement
to build the proposed pipeline.
Therefore, the Court should grant summary judgment because:
(1)
Conclusive evidence proves that the failure
of
conditions precedent
to
the
formation of a binding joint venture or partnership is fatal to ETP's claims;
(2)
Conclusive evidence proves that the statue of frauds bars ETP's claims for breach
ofan oral contract and breach offiduciary duty;
(3)
Conclusive evidence proves that the remaining claims against ETP-an
incomprehensible "unfair competition" claim and a claim regarding an alleged
breach of a confidentiality agreement for which there can be no damages-are
without merit and should be dismissed; and
(4)
Lastly, ETP has no evidence to support the essential elements of its claims.
4
FACTUAL BACKGROUND
Many of the key facts here are undisputed. In early 20tI, Enterprise approached ETP
about a potential pipeline project. ETP owned a natural gas pipeline called Old Ocean.
Enterprise has a long-term lease that gives it the right to use capacity on Old Ocean. Enterprise
was interested in discussing with ETP the possibility of converting Old Ocean to crude service,
and constructing additional new pipeline to carry crude oil from Enterprise's storage terminal in
Cushing, Oklahoma to Enterprise's ECHO terminal in Houston, Texas.
To explore the proposal, Jim Teague, Enterprise's Chief Operating Officer, went to
Dallas in the Spring of 2011 to meet with ETP's CEO, Kelcy'Warren, at his home. According to
ETP, this meeting between Teague and Warren was the "determinative meeting about the joint
venture" and the parties "agreed on the terms
documented." See Fifth Amend. Pet.
at\21.
of a joint venture that were later formally
The key terms of the agreements that the parties
signed after this meeting refute ETP's claims, and are set forth below.
A.
The Written Agreements Executed by ETP Disclaim Any Binding or
Enforceable Obligations Unless and Until Certain Conditions Occur.
As expected with two sophisticated, publicly-traded companies, ETP and Enterprise
carefully documented the terms of their proposed relationship. The key contract at issue is the
Nonbinding Term Sheet, executed on April 21,2011. It reads, in full:
Enterprise Products Partners, L.P. and its affrliates (collectively,
"EBD") and Energy Transfer Partners, L.P. and its affiliates (collectively,
6(ETP" and, together with EPD, the "bies") are entering discussions
regarding a proposed joint venture transaction involving the construction
(or conversion, as applicable) and operation of a pipeline to move crude
oil from Cushing, Oklahoma to the Houston, Texas market (the
"bag!iqg"). The Transaction would also involve the construction and
operation of storage tanks at EPD's announced Enterprise Crude Houston
Terminal. This letter is intended only to set forth the general terms of the
Transaction between the Parties, which are contained in the term sheet
attached hereto as Exhibit A (the "JV Term Sheef').
5
Neither this letter nor the JV Term Sheet create any binding or
enforceable obligations between the Parties and, except for the
Confidentialify Agreement dated March 16,20ll between the Parties
no binding or enforceable
(the t"'),
with respect to the
Parties
the
between
exist
shall
obligations
Transaction unless and until the Parties have received their respective
board approvals and definitive agreements memorializing the terms
and conditions of the Transaction have been negotiated, executed and
delivered by both of the Parties. Unless and until such definitive
agreements are executed and delivered by both of the Parties, either
EPD or ETP, for any reason' may depart from or terminate the
negotiations with respect to the Transaction at any time without any
tiability or obligation to the other, whether arising in contract, tort,
strict liability or otherwise.
If
this letter and the attached JV Term Sheet correctly reflect
ETP's understanding of the terms of the Transaction, please execute this
letter in the space provided below and return a fully executed copy to EPD
at the address provided above.
F;x. 2 at ETP6007-08 (emphasis added).
In an attempt to downplay the nonbinding nature of the agreement, ETP alleges that the
agreement "contain[s] standard language that the agreements are nonbinding and may be
terminated by either party." See Fifth Amend. Pet. at
123. That is quite the understatement.
The
parties indisputably agreed that the proposed joint venture would not become binding unless and
until the critical steps of
(l)
approval by the board of directors
negotiation, execution and delivery
of "definitive
of each company,
and (2)
agreements" were completed. And they
indisputably agreed that each of them was free to "terminate the negotiations with respect to the
Transaction
at
contract [or]
tort."
any time, without any
liability or obligation to the other, whether arising in
These terms are clear and unambiguous.
Enterprise and ETP executed two other agreements regarding the proposed joint venture:
a March 10,2011 Confidentiality Agreement (the "Confidentiality Agreement"), and a letter
agreement regarding the funding
signed on
of work related to the proposed joint venture, which ETP
April 27,2011 (the "Reimbursement Agreement"). Each of
6
these agreements imposed
certain limited obligations on Enterprise and ETP, and each of them made clear that Enterprise
and ETP had not yet agreed to enter into the proposed
joint venture or to impose any obligations
on one another aside from the few obligations that were expressly set out in the agreements
themselves:
Reimbursement Agreement.
11 9 :
It is understood by each of the Parties that the execution of this Agreement
is intended to create and does create legally binding obligations between
Enterprise and ETP but only as set forth herein. The obligations of the
Parties shall be several and not joint and no Party shall have the right'
authority or power to bind the other Party to any agreement without
its prior written consent (other than the authority to commit and/or
expend funds under Section 1 of this Agreement). Each Party expressly
agrees to indemnify and hold the other Party harmless from liability if it
binds or attempts to bind the other Party to any other agreement without
such prior written consent. Nothing herein shall be deemed to create or
constitute a joint venture, a partnership, a corporation' or any entity
taxable as a corporation, partnership or otherwise.
Confidentiality Agreement.
I
II
:
The Parties agree that unless and until a definitive agreement between
the Parties with respect to the Potential Transaction has been executed
and delivered, and then only to the extent of the specific terms of such
definitive agreement, no Party hereto will be under any legal obligation
of any kind whatsoever with respect to any transaction by virtue of
this Agreement or any written or oral expression with respect to such a
transaction by any Party or their Representatives, except, in the case of
this Agreement, for the matters specifically agreed to herein. A Party
shall be entitled to cease disclosure of ConfÏdential Information
hereunder and any Party may depart from negotiations at any time
for any reason or no reason without liabitity to any Party hereto.
Ex. 3 at tT9; Ex. 4
In
atl l1 (emphasis added).
sum, these agreements executed by ETP and Enterprise establish the relationship
between the parties and foreclose ETP's claims as a matter of law.
7
B.
The Timeline for the Proposed Project-More than one Year.
The parties understood that constructing or converting a pipeline from Cushing to the
Gulf Coast would be a massive undertaking. For starters, the parties needed to obtain approval
from the Federal Energy Regulatory Commission ("FERC") to abandon Old Ocean's natural gas
service. Ex. 6 at ETp20405. Then, ETP and Enterprise would have to convert the "24-inch
natural gas pipeline that covers approximately 240 miles" from a natural gas pipeline to an oil
pipeline, while also expanding the pipeline to connect the Cushing hub and the Gulf Coast
markets. See Fifth Amend. pet. at nn2l-22. The project would also involve the construction of
an addition
al
354 miles
of entirely new pipeline to connect Old Ocean between Cushing and
Gulf Coast. /d.
To actually complete the project, ETP would need to fund at least $590 million. Ex.2 at
ETp60l0. In total, the parties expected that the proposed pipeline would cost in excess of $1.2
billion. Ex. 7 at 2.
Therefore, to make the project economically viable, the parties needed to
Ex.
obtain sufficient commitments from shippers to transport crude oil on the proposed pipeline.
1 at p.
7l'9-12; Ex. 6 at ETP20405.
Given these significant hurdles, ETP agreed that the timeline for completing the project
was at least 1g months. Ex. 8 at ETPI5604 (natively produced on the following page). This was
not a conservative estimate. Ex. 9 at ETP21180. Rather, ETP's lead engineer referred to this
estimate as a
,,very aggressive" fimetable.
Id.
Consistent with its internal expectations, ETP
6 at
announced publicly that the project would require more than one year to complete. Ex.
ETP20405; Ex. 10 atETP24289.
Instead
of converting Old
Ocean, the parties later considered building a new 3O-inch
pipeline from Cushing to the Gulf Coast, requiring the construction of 518 miles of entirely new
8
pipeline. Ex.7 at 4. ETP and Enterprise met on June 30, 2011 to discuss this altemative
proposal. After the meeting, ETP was unconvinced that the proposal to build a new pipeline was
a better option than converting Old Ocean.
made no commitments and decided to hold
Ex. 1 at pp. 80:19-82:14. In any event, the parties
off on making any ultimate decisions until they knew
whether the proposed pipeline would be economically viable. Id. at pp. 8l'.23-82:4. 'While the
parties were uncertain about what option to pursue, the timeline for the proposed project
remained 18 months under either scenario.
Ex.7 at2. ("Delivery timeline
does not change"
with the new build option).
C.
The Proposed Pipeline Was Not Economically Viable.
Before committing
to spend more than a billion dollars, the parties agreed that the
proposed pipeline had to be economically viable. ETP would not go forward with the proposed
pipeline unless
it
achieved a minimum rate of return. Ex. 1 at p. 49:15-50:1, 52.23-53:I. To
justiff the risk of such alarge capital expenditure, ETP calculated that it needed to yield at least
a l\Yo internal rate of return ("IRR") on its capital. Ex. 11; Ex. 12 at ETP26I89.
announced publicly that
ETP
it would not go forward with the project unless it obtained suffrcient
commitments from shippers, generating a minimum rate of return. Ex. 6 atETP20405; Ex. 10 at
8TP24289. In fact, ETP was so adamant about this condition that it inserted language in the
Nonbinding Term Sheet to make clear that "any new capital projects must meet a minimum rate
of return threshold to be agreed upon by the parties." Ex.
I
at pp.49:15-50:7;F'x.2 at ETP60l2.
As ETP's CEO testified, "[t]here was not an obligation by either party to commit to a project that
it might deem not economically viable." Ex. 1 at 141:l-11.
The proposed project limped along in August 2011 without commitments from any
customers. ETP acknowledged that there were "uncertainties about the project moving forward,"
9
and even dropped the project from the financial projections that it provided to financial services
companies and rating agencies. Ex. 13; see also Ex. 14 atETP24748 ("we dropped Double E
out of the corporate model that we gave to the ratings agencies."). ETP was "approaching max
credit capacity," so it could no longer carry the proposed pipeline on its books--especially given
that it was on "life support" without any commitments from shippets. Id.
Ultimately, only one shipper, Chesapeake, commifted in writing to ship crude oil on the
proposed pipeline. Teecup
Ar¡,
at fl 6; Ex. 15 at p.
2301-9. This commitment was far short of
frlling the proposed pipeline's capacity, and failed to generate adequate return to meet ETP's
required threshold
of
l0o/o IRR,
or Enterprise's required economic threshold. Ex. L2
at
ETp26lg9. V/ithout sufficient contractual commitments from shippers, ETP and Enterprise both
agreed to terminate the proposed transaction.
On August 15,2011, Mark Hurley of Enterprise verbally informed ETP that Enterprise
would not move forward with the proposed pipeline project joint venture' Ex. 15 at pp. 230:21231:8. Enterprise's decision was fully consistent with the parties' written agreements, including
most importantly the Nonbinding Term Sheet, seeF;x.2, and their joint press releases, which
specifically stated that the proposed pipeline project was "[s]ubject to sufficient commitments
from shippers." Ex. 6 atETP20405. On August 19,2011, Enterprise sent ETP a letter formally
confirming the termination of the discussions regarding the proposed project. Ex. 16'
On the same day, ETP responded with a letter of its own to Enterprise acknowledging
that ,,[w]ithin the past week, after further negotiations, the parties verbally agreed that the
proposed project would not be viable and that the parties would not move forward with the
project due to lack of economic justification." Ex. 17 (emphasis added).
l0
Notably, ETP did not assert in this letter that the parties had a binding partnership or joint
venture to build the proposed pipeline. Contrary to its claims in this lawsuit, ETP stated that the
parties "agreed to work toward establishing a partnership
construct a crude
in order to jointly
develop and
oil pipeline from Cushing, Oklahoma to Houston." Id. (emphasis
added).
Moreover, the cover email transmitting the letter stated that "[a]ttached is a letter from Lee
Hanse regarding the proposed joint venture between ETP and
EPD." Id.
(emphasis added). As
demonstrated by these documents, ETP recognized that the parties had not formed any binding
partnership or joint venture, and agreed with Enterprise that the proposed transaction was not
economically viable and should be terminated.
D.
No Definitive Agreements Were Executed, and No Board Approval Was
Obtained by the Parties.
The parties never executed or delivered definitive agreements to memorialize
proposed transaction. Trecue
Arr.
the
at 1[ 7; Ex. 1 at pp. 65:18-66:2. The parties, however, did
exchange drafts of the definitive agreements.
In each of these drafts, the parties included
a
section entitled "No State Law Partnership," establishing that they never intended to be partners
or to establish a partnership. Ex. 18 at $ 2.8. Notably, in the draft of the definitive agreements
sent by ETP on
others to make
July 13, 2011, ETP added to
and strengthened the language
of that section and
it clear that there would be no fiduciary duties between the parties,
and that each
party was free to pursue other business pursuits without any recourse. Id. at $$ 2.8, 2.9.
Consistent with the terms of the Nonbinding Term Sheet, ETP reiterated and confirmed that it
did not intend to be partners with Enterprise, and that the parties had no fiduciary obligations to
eachother. Id.
Neither ETP nor Enterprise obtained the approval of its board of directors to pursue the
proposed project.
Ex. 1 at p. 60:2-6; Tencur Arr. at fl
ll
7.
V/ithout board approval, ETP
concedes that
it could not have "committed" to the proposed project. Ex. 1at p. 117:Il-I9'
Indeed, ETP's (and Enterprise's) management policies do not allow any officer to approve a
billion plus dollar deal without board approval. Id. atpp.28:18-30:4;79:18-25;
Against this backdrop,
it is not surprising
lI7:tl-19.
that ETP has trouble articulating the basic
elements for its claims. It cannot state exactly when the alleged partnership wasformed' Ex. 19
at pp. 15:8-17:11.
Nor does ETP know whether the parties' alleged legal relationship has ended
or if, in fact, it still exists today. Id. at pp.
know
48
:
1649:24; Ex. 1 at
if either party can ever terminate their alleged
17
5:2-5
.
ETP does not even
legal relationship. Ex. 19 at
p' 52:ll-22'
For the reasons set forth below, summary judgment is appropriate.
PROCEDURAL HISTORY
Enterprise previously filed a Motion for Summary Judgment, on October 7,2011, and a
Motion for Partial Summary Judgment, on April 25,2012. The Court has not ruled on those
motions, allowing ETP to engage in discovery to seek support for its claims. After months of
discovery, it is apparent that ETP's claims cannot survive legal scrutiny. Rather than repeat the
arguments asserted in those motions, Enterprise expressly incorporates and adopts the arguments
therein as if fully set forth in this motion.
ARGUMENT
The Court should issue a summary judgment that ETP take nothing from its claims
against Enterprise. See Tex. R. Civ.
P. I66a. This motion
asserts both no-evidence and
traditional arguments for summary judgment, distinguishing the two as necessary. See Binur
Jacobo,l35 S.W.3d 646,650-51 (Tex. 2004) ("The fact that evidence may be attached to
v.
a
motion that proceeds under subsection (a) or (b) does not foreclose a party from also asserting
that there is no evidence with regard to a particular element."). For each decisive element of a
I2
claim or defense, the Court should grant the motion
if
ETP bears the burden of proof and is
unable to submit evidence of the element, Tex. R. Civ. P. 166a(i), or, regardless of where the
burden lies,
if
conclusive evidence shows no genuine issue
of fact exists. Tex. R. Civ.
P.
166a(c). In either case, an issue should go to trial only if, in full context, the evidence lets fairminded people draw different conclusions about what occurred. 8.g., City of Keller v. llilson,
168 S.W.3d 802 (Tex.2005).
L
TRADITIONAL SUMMARY JUDGMENT IS APPROPRIATE BECAUSE
CONCLUSIVE EVIDENCE PROVES THAT ETP'S CLAIMS FAIL AS A
MATTER OF LA\il.
A.
The Written Agreements Defeat ETP's Claims for Breach of Joint Venture
Agreement, Partnership Agreement, and Joint Enterprise'
ETp pleads various claims for breach of an agreement to build the proposed pipeline.
ETP calls these claims breach of a "joint venture agreement," a"pattrtership agreement," and a
,Joint enterprise." S¿e Fifth Amend. Pet. at
fln77-90. All of these claims assert that "ETP had a
binding joint venture agreement with Enterprise to pursue development
of the Double
pipeline," and that "Enterprise breached its joint venture obligations to ETP by failing to
E
go
forward with the Double E pipeline, and by instead deciding to build the new pipeline for its own
benefit." Id. at77-8L As the parties' written agreements establish, ETP is wrong.
The parties' written agreements confirm that no such relationships existed between ETP
and Enterprise. The written agreements establish that no binding or enforceable obligations
would exist unless and until (1) the parties obtained their respective board approvals, and (2) the
parties executed definitive agreements memorializing the terms and conditions of the proposed
deal. It is undisputed that neither of these conditions precedent was satisfied. Therefore, all of
joint
ETp's agreement-based claims-whether pleaded as breach of partnership, joint venture, or
enterprise-fail
as a matter
of law.
13
1.
ETP agreed that there was no binding or enforceable agreement
between ETP and Enterprise.
To sustain a breach of contract action, ETP must prove "the existence of a valid contract
between plaintiff and defendant." Gaspar v. Lawnpro, lnc.,372 S.W.3d 754,757 (Tex.
App.-
Dallas 2012, no pet.). This is true whether ETP claims there was a breach of joint venture
agreement, partnership agreement, or joint enterprise. See Ingram v. Deere,288 S.W.3d 886,
893-94 (Tex. 2009) þartnership and joint venture claims require an agreement); Tex. Dep't
of
Transp. v. Able,35 S.V/.3d 608, 613 (Tex. 2000) (same for joint enterprise).
In three separate written
agreements, ETP and Enterprise expressly agreed that no
binding or enforceable obligations existed between the parties:
o
Nonbinding Term Sheet - "Neither this letter nor the JV Term Sheet create any binding
or enforceable obligations between the Parties . . ." Ex. 2 atETP6007.
o
Confidentiality Agreement - "no Party hereto will be under any legal obligation of any
kind whatsoever with respect to any transaction by virtue of this Agreement or any
written or oral expression with respect to such a transaction by any Party or their
respective Representatives . . ." Ex. 4 at fl 1 1.
o
Reimbursement Agreement - "Nothing herein shall be deemed to create or constitute a
joint venture, a partnership, a corporation, or any entity taxable as a corporation,
partnership, or otherwise." Ex. 3 at fl 9.
Not only did ETP agree that there were no existing binding or enforceable obligations between
the parties while discussions were ongoing, but ETP also agreed that, while they were evaluating
the viability of the proposed transaction, such actions would not create any legally enforceable
obligations between the parties.
Id. Indeed,
the Reimbursement Agreement establishes that ETP
and Enterprise each own a l0O% undivided interest in any work performed in connection with
the proposed transaction, and that such work did not create a joint venture or partnership' Id. at
1[1[
6,
9. In these agreements,
the parties carefully defined the nonbinding nature of their
relationship, and deliberately disclaimed all binding and enforceable obligations.
t4
ETP's breach of contract claims fail as a matter of law because the intent not to be bound
is "clear and unambiguous on the face of the agreement." John Wood Group USA, Inc. v. ICO,
Inc.,26 S.W.3d !2,16 (Tex. App.-Houston [1st Dist.] 2000, pet. denied). Summary judgment
is therefore appropriate on all of ETP's breach of contract claims.
2.
The conditions precedent to any partnership or joint venture failed.
These same written agreements do more than just disclaim the formation of any contract'
They also impose non-waiveable conditions precedent on the formation of any joint venture or
partnership. And since it is undisputed that those conditions precedent were never satisfied, the
parties remained unbound by any such obligations'
In the Nonbinding Term Sheet, ETP and Enterprise expressly agreed that no binding or
enforceable obligations shall exist between the parties "unless and until" the occurrence of two
preconditions: (1) "board approval" for the creation of "any binding or enforceable obligations
between the Parties," and (2) "definitive agreements memorializing the terms and conditions of
the Transaction [that are] negotiated, executed and delivered by both of the Parties." Ex.2 af
ETP6007. These conditions precedent were further agreed to by ETP in the Confidentiality
Agreement. Ex. 4 at
fl
11 ("The Parties agree that unless and until a definitive agreement
between the Parties with respect to the Potential Transaction has been executed and delivered,
and then only to the extent of the specific terms of such definitive agreement, no Party hereto
will
be under any legal obligation of any kind whatsoever with respect to any transaction'..").
Each of these conditions precedent operates
in classic fashion as "a condition to the
formation of a contracf." Hohenberg Bros. Co, v. George E. Gibbons & Co.,537 S.V/.2d 1,3
(Tex. 1976). ETP "bears the burden of proving that all conditions precedent have been
satisfied." Associated Indem. Corp. v. CAT Contracting, únc.,964 S.V/.2d 276,283 (Tex. 1998).
15
It is undisputed that these conditions
precedent were not satisfied. The parties never
executed or delivered definitive agreements memorializing the proposed transaction. TeA'cu¡
A¡¡. at fl 7; Ex. I at p. 65:18-66:2. And the boards of directors of ETP and Enterprise
approved the proposed transaction.
approval, ETP agrees that
Id. at p. 60:2-6; Te¡,cue Arr. at fl
7.
never
Without board
it could not build the proposed pipeline. Ex. 1 at p. ll7 II-19. In
contrast to its claims here that the parties had a binding agreement, ETP acknowledges that
unless these conditions were satisfied
it was not "committed" to build the proposed pipeline'
1d.
at 130:14-19. The contingent nature of ETP's obligation reduces the alleged agreement to an
agreement to pursue the possibility of building the proposed
had committed to do
so.
Steinberg,638 S.W.2d
pipeline-even though neither party
Such claims are unenforceable as a matter of
l7l,
law.
See Ií/eitzman v'
175 (Tex. App.-Dallas 1982, no writ) ("Courts cannot make
contracts for the parties and an agreement to enter into negotiations in the future cannot be
enforced because the court has no means to determine what sort of contract the negotiations
would have produced.").
Moreover, because the conditions precedent agreed to by the parties were never satisfied,
ETP,s breach of contract claims fail as a matter of law. See, e.g., Massey v' ^Sw' Petroleum Co.,
*4 (Tex. App.-Dallas July 29,2008, no pet.) ("4
No.05-07-00650-CV,2008 V/L 2896613, at
valid contract does not exist
if a condition precedent to its formation does not occur.").
Alternatively, the Court should grant a take-nothing judgment on these claims because there is
no evidence that the parties satisfied those conditions precedent.
Texas law holds that,
,Se¿
Tex' R. Civ. P. 166a(i)'
to create binding partnership obligations
between the parties,
conditions precedent set by the parties must be satisfied. Thanl<sgiving Tower Partners v. Anros
t6
Thanlcsgiving Partners, 64 F.3d 227
(sthCir.
1995) (applying Texas
law). This is because
courts
have long enforced conditions precedent to partnership formation:
An executory contract to form a partnership does not create the relation of
partners between the parties until it is consummated ot executed and
where the agreement provides a condition precedent to the þrmation of
the partnership, then it will not come into existence until the condition has
been met.
lliltis v. Harvey, 349 S.W.2d 323, 326 (Tex. Civ. App.-Houston
(emphasis added) (quoting
1961,
writ refd
n.r.e.)
Millers' Indemn. (Inderwriters v. Patten,238 S.W.240, 244 (Tex'
Civ. App.-Amarillo lg22), aff'd,Tex. Com. App., 250 S.W. 154). In other words, "[a]s long
as the agreement for a partnership remains inchoate or unperformed, the partnership is not
consummated. In order to transform an executory partnership agreement into an executed one, l/
is necessary that the parties do the things that they agreed to do." Arnold v. Caprielian, 437
S.W.2d 620, 625 (Tex. Civ. App.-Tyl er 1969, writ ref d n.r.e.) (emphasis added). Because the
conditions precedent were not satisfied here, summary judgment should be granted on ETP's
claims that Enterprise breached a joint venture agreement, partnership agreement, or joint
enterprise.
B.
The Statute of Frauds Bars ETP's Claims.
To avoid the terms of the written agreements, ETP argues that the parties entered into an
oral agreement to build a pipeline costing over a billion dollars. See Ex.5 at Req. Nos. 4,
6'
As
one would expect, there are several problems-both factually and legally-with this
extraordinary claim.
Factually, ETP cannot identiff exactly when thís alleged oral agreement occurred, or
even the terms of the agreement. Ex. 19 at pp. 15:8-17:11. Furthermore, ETP acknowledges
that its own management policies require its board of directors to approve a potential transaction
l7
of this magnitude, but it never received such approval. Ex. 1 at pp. 28:18-30:4:60:2-6;79:1825;
lI7:ll-19.
Recognizingfhat oral agreements are ripe for fraudulent practices, Texas courts have
long required strict compliance with the statute of frauds, refusing to enforce agreements that do
not satisfy
it.
See Zabel
v. Schroeder, 35 Tex. 308, 312 (Tex. lS72). The statute of frauds
defeats ETP's oral contract claims.
Agreements subject to the statute
writing,
and
of frauds are unenforceable unless they are (1) in
(2) signed by the person to be charged with the agreement (or by an authorized
agent). Tex. Bus. & Comm. Code $ 26.0I(a). The statute of frauds applies to the alleged oral
agreement that ETP seeks to enforce because
it constitutes "an agreement which is not to be
performed within one year from the date of making the agreement."
Id. ç26.01(b)(8); see
Lathem v. Kruse,290 S.W.3 d 922, 926 (Tex. App.-Dallas 2009, no pet.) ("Whether a contract
falls within the statute of frauds is a question of law.")'
ETP does not specify the duration of the parties' alleged oral agreement. But that does
not prevent the statute of frauds from applying. The rule for such cases-those where no express
duration term exists-is that "where the agreement, either by its terms or by the nature of the
required octs, canîot be completed within one year, it falls within the statute and must therefore
be in writing." Niday v. Niday,643 S.W.2d 919, 920 (Tex. 1982) (emphasis in original); accord
Case Corp. v. Hi-Class Bus. Sys. of Am.,
Inc.,l84 S.W.3d 760,777 (Tex. App.-Dallas 2005,
pet. denied); Gano v. Jamail,678 S.W.2d 152,154 (Tex. App.-Houston [l4th Dist.] 1984, no
writ).
To determine whether the alleged oral agreement cannot be performed within one year,
Texas courts look to both extrinsic evidence and the nature of the acts required under the alleged
18
agreement. Niday,643 S.W.2 d al 920; Gano,673 S.W.2 d at 154 ("Both the extrinsic evidence
and the very nature of the required acts compel us to conclude that
full
performance of this
alleged oral partnership agreement could not be completed within one year."). Hete, both the
evidence and nature of the required acts establish that this alleged oral agreement could not have
been performed
within ayear.
1.
Extrinsic evidence establishes conclusively that the alleged oral
agreement could not be performed within a year.
ETP's current petition alleges an extraordinary oral agreement. In ETP's own words, the
parties have an alleged oral agreement to "build a major and significant new pipeline connecting
the major oil hub of Cushing, Oklahoma to Gulf Coast markets." See Fifth Amend' Pet' at
1.
But before any of that could occur, ETP recognizes that the parties would have to set up the
financial groundwork for the deal by "soliciting major companies in the energy industry for
business" and "develop[ing] a detailed engineering design package for the new pipeline." Id' at
nn26-27,29. Then and only then could the parties begin to build a new 30-inch pipeline or
convert the "24-inch natural gas pipeline that covers approximately 240 miles . . . from a natural
gas pipeline
to an oil pipeline, while also expanding the pipeline to connect the Cushing hub and
the Gulf Coast markets." Id.
atll14,
17
.
As expected with a proposed billion-dollar project to build a multi-state pipeline,
the
evidence establishes conclusively that such an agreement was not to be performed within one
year. From the outset, ETP acknowledged that it would take longer than a year to complete the
proposed pipeline. In the joint press release announcing the proposed pipeline on April 26,201I,
ETP stated the targeted completion date was the "Fourth Quarter of 2012"-more than a year
and a half
later. Ex. 6 atETP20405. Shortly thereafter, on ETP's quarterly earnings conference
t9
call on May 5, 2011, ETP's Chief Financial Officer confirmed the 18-month timeline by stating
"a new pipeline is expected to be in service by the fourth quarter of 2012." Ex. 10 atETP24289.
Even following these announcements, ETP repeatedly acknowledged that the proposed
pipeline could not be completed in less than l8 months. ETP repeatedly recognizedthat it would
take over a yeü to accomplish the enormity of the tasks needed to complete the proposed
pipeline.
Under one option, the parties proposed converting Old Ocean and constructing
additional 354 miles of new pipe. Ex. 7 at
4. ETP acknowledged
an
that it would take longer than
one year just to convert the Old Ocean portion of the project from natural gas to crude oil
service. To convert Old Ocean from natural gas to crude oil service, ETP would have to find
altemative transportation arrangements to accommodate Old Ocean's current customers. Ex. 20.
Then, ETP would take Old Ocean out of service and begin conversion.
Id.
The conversion of
Old Ocean alone would take longer than a year. Id. (statíng the anticipated timeline for
converting Old Ocean is from
5llllI
to
l0llll2).
Under the alternate proposal to build a new 30-inch pipeline, the parties would have to
build 518 miles of new pipeline. Ex. 7 at 4. This option would also require purchasing right of
way, engineering designs, and construction of pump stations.
Id. It too would take at least 18
months. Id. at2.
Accordingly, ETP's engineers tasked with studying the proposed pipeline recognized the
time from full funding of the project to commissioning of the proposed pipeline would be no less
than 18 months. Ex. 8 at ETPI5604 (natively produced on following page). This timeline is
confirmed by numerous internal emails at ETP. Ex.
2l
("Wanted to make sure that you are
aware that the integrated project team for the Double E Pipeline is agreeing upon an 18 month
20
schedule
from commissioning from full funding approval."); see also B;x. 22 ("Unified
completion date...18-months...START-July 1, 20ll...FINISH-DeI 21, 2012") (emphasis in
original).
The l8-month timeline was considered to be "very aggressive." Ex.9 at ETP21180.
Even when ETP "beat [the proposed schedule] up very hard", it nevertheless "ended up with an
l8 month completion timeframe." Ex. 23. No matter how hard it tried, ETP could not envision
a scenario where the proposed pipeline could be completed in less time than
l8 months.
This evidence establishes as a matter of law that the alleged oral agreement could not be
performed in a year.
Z.
The nature of the required acts-building a pipeline from Cushing,
oklahoma to the Gulf coast-could not be performed within a year.
The nature of the required act-building a pipeline from Cushing, Oklahoma to the Gulf
Coast-is impossible to perform within ayear. Texas courts are familiar with the acts required
to build a multi-state pipeline, and hold that the
statute
of frauds applies to preclude
enforceability of an oral promise to do so. Krueger v. Young,406 S.W.2d 751 (Tex. Civ.
the
App.-
Eastland 1966, writ ref d n.r.e.).
In Krueger, the court held that the statute of frauds barred an alleged oral joint venture
that involved "planning, organizing, incorporating, financing and constructing an integrated
natural gas pipeline system" from the Rio Grande Valley to Florida. Id. at752,756. As amatter
of law, Krueger held that the statute of frauds applied to that pipeline project
because "the
infinitesimal requisites of such a tremendous undertaking" would necessarily take more than
year to complete. Id.
at755. The
a
same is true here.
The proposed pipeline between ETP and Enterprise would require, among other things,
approval from FERC, commitments from customers, engineering design plans, funding, and
2l
construction. These prerequisites could not be performed within one year. This is fatal to ETP's
claims.
See
Niday,643
S.W.2
d at 920 (holding the statute of frauds barred a claim because the
nature of the acts required could not be performed within one year); Gano,678 S.W.2 d at 154
(same).
This Court should hold, as
did.
Krueger,thatthe nature of the required acts for the alleged
oral agreement between ETP and Enterprise could not be performed within a year. Therefore,
the statute of frauds applies, baning ETP's contract claims as a matter of law'
3.
The statute of frauds bars all of ETP's contract and fÏduciary duty
claims.
ETP has admitted the parties never signed any written partnership or joint venture
agreement. Ex. 5 at Req. Nos. 4,
6. Accordingly, the statute of frauds
negates ETP's resulting
claims that Enterprise breached an oral partnership, joint venture, or joint enterprise' By taking
away the predicate agreement, the statute of frauds prevents ETP from enforcing any alleged
partnership or joint venture, Ingram,288 S.W.3d at 893-94 ("a partnership or joint enterprise
'presupposes an agreement to that end."'), as well as a joint enterprise, Able,35 S.W'3d at 613
(the essential elements of
members of the
a
joint enterprise require "an
group"). In all three
agreement, express or implied, among the
cases, the statute
of frauds makes the alleged
keystone
of
agreement unenforceable. This is because, once triggered, the statute of frauds defeats claims
any origin that are either directly or indirectly based on an unenforceable oral agreement'
Trammell Crow Co. No. 60 v. Harkinson, 944 S.W.2d 631, 634 (Tex. 1997); see Haase
Glazner,62 S.W.3d 795, 7gg (Tex. 2001) (statute bars fraud claim seeking benefit of
v.
the
bargain); Lathemv. Kruse,290 S.W.3d922,925 (Tex. App.-Dallas 2009, no pet') (statute bars
fraud, conspiracy, deceit, quantum meruit, and breach of contract claims); llalker v. TRB
Bancorp,,Inc., No. 05-07-00901-CV, 2008 WL 2738013 (Tex. App.-Dallas July 15, 2008, pet'
22
denied) (statute bars fraudulent inducement into the unenforceable contract). In other words,
ETP "cannot do indirectly what the law says
[it]
cannot do
directly." Trammell Crow,944
S.V/.2d aI 634. Accordingly, the statute of frauds also negates ETP's breach of fiduciary duty
claim, which arises from the alleged partnership, joint venture, or joint enterprise.
C.
ETP's Throw-Away Claims Are Equally \ilithout Merit.
1.
Enterprise owed no fiduciary duties to ETP.
ETP pleads an action against Enterprise for breach of a fiduciary duty "not to usurp an
opportunity within the scope of the joint venture." See Fifth Amend. Pet. at IT 96,
98.
The
Court should grant summary judgment on this claim because there is no evidence that Enterprise
had such a fiduciary duty, see Tex. R. Civ. P. 166a(i), and because the evidence conclusively
disproves the existence of this duty, see Tex. R. Civ. P. 166a(b). ETP names two possible
sources for it, both of which are invalid.
First, ETP pleads that the duty arises from the alleged joint venture membership.
See
Fifth Amend. Pet. at flfl 96, 98. But since no such joint venture was ever formed, see supraPart
LA-3., there is no basis for a fiduciary duty. See Teleresource Corp. v. Frontier Computer
Corp.,2000 WL 799074 (Tex. App.-Dallas June 22,2000, pet. denied)
("4
fiduciary duty
arises from the relationship of the parties and not just from the contract."). The statute of frauds,
moreover, bars ETP's fiduciary duty claim. See supra, Part I.8.3'
Second, ETP alleges that the fiduciary duty arose when the parties were
allegedly prospective joint venture." See Fifth Amend. Pet. at flfl 96,
as a matter
of law
because no
in "pursuit of
an
98' This theory is invalid
joint venture agreement was ever created, and in fact was
disclaimed. To impose heightened duties on two competitors in an arms-length transaction, the
law requires that those duties must arise out of a special relationship of trust and confidence,
23
separate and apart from the alleged agreement at issue. Associated Indem. Corp. v. CAT Contr.,
964 S.W.2d276,288 (Tex. 1998) ("We do not create this duty lightly, however. To impose an
informal fiduciary duty in a business transaction, the special relationship of trust and confidence
must exist prior to, and apart from, the agreement made the basis of the suit.").
relationship never ripened
to a joint
venture, then there
is no
basis
to
If the parties'
impose fiduciary
obligations on the parties-particularly as prospective joint venturers. Tsai v, Joseph Blake &
Associates, Inc.,2002WL 1792212 (Tex. App.-Dallas Aug. 6,2002, no pet.) (mem. op.) ("To
determine whether this theory is applicable in this case, we must first determine whether the
parties ever agreed
to enter into a joint venture.").
Texas law does not support ETP's
extraordinary imposition of a fiduciary relationship between prospective joint venturers.
In previous
Enterprise owed
responses, ETP has cited only one case
in support of its argument that
it fiduciary duties as a prospective joint venture partner, Mayhls v. First City
Realty & Fin. Corp.,5l8 S.W.2d 887 (Tex. Civ. App.-Dallas 1975, no writ). ETP, however, is
misreading the court's holding in Maykus, which actually supports the argument that the parties
did not owe any fiduciary duties. Specifically, the court emphasized that "the obligation of the
parties are matters of law to be determined from the language of the document." Id. at 893.
Unlike the parties in Maykus, which executed a document creating a "partnership" between the
plaintiff and defendant, the parties in this case expressly agreed that there were no binding or
enforceable obligations between the parties. Accordingly, based on the "language
of the
document," Enterprise did not owe any fiduciary duties to ETP as prospective joint venturers.
24
2,
ETP's unfair competition claim is legally defïcient.
Next, ETP asserts a claim of "unfair competition." See Fifth Amend. Pet. at nn 92-94.
The petition alleges that Enterprise engaged in unfair competition by "misrepresenting the
viability of the proposed new pipeline; interfering with the existing joint venture, partnership or
joint enterprise agreement between Enterprise
and ETP; and improperly using Enterprise's long-
term lease of the Old Ocean Pipeline to eliminate competition for the new pipeline." 1d. The
Court should enter a take-nothing summary judgment on this claim because there is no evidence
of two required elements. See Tex. R. Civ. P. 166a(i).
First, "unfair competition" claims require an independent tort or other illegal conduct.
RTLC AG Products, Inc. v. Treatment Equip. Co., 195 S.W.3d 824,833 (Tex. App.-Dallas
2006, no
pet.). Here, there is no evidence of an underlying tort or illegal act. "'Without some
finding of an independent substantive tort or other illegal conduct, liability cannot be premised
on the tort of 'unfair competitioÍt."'
Id.
ETP can submit no evidence to support the underlying
conduct necessary to sustain an unfair competition claim'
Second, there is no evidence
of damages. "The measure of damages in an action for
unfair competition is lost profits." Associated Tel. Directory Publishers, Inc. v. Five D's Pub.
Co., 1nc.,849 S.W.2d894,898 (Tex.
App.-Austin
1993, no
writ). ETP has no valid proof that
any of these particular acts (as distinguished from the main causes of action) are the proximate
cause of lost
profits. See id. (lost profits must be proven with "reasonable certainty").
The only case that ETP has cited to support its unfair competition claim, United States
Sporting Products, Inc. v. Johnny Stewart Game Calls, hnc.,865 S.V/.2d 2I4 (Tex. Civ.
App.-
Waco 1993, writ denied) proves that ETP cannot sustain an unfair competition claim. In that
case, the court identifies some examples
of unfair competition "such as trade-secret law,
25
'palming
off
or passing off, and misappropriation." Id. at 217. ETP's bare-bones unfair
competition claim does not
mentioned
in
fit into the tort of misappropriation or any of the other examples
United States Sporting Products, or
in any other
statutory or non-statutory
examples of "unfair competition." The alleged conduct ETP is complaining about simply does
not give rise to an unfair competition claim as matter of law.
claim for any alleged breach of
the
ETP asserts a separate contract claim for breach of the Confidentiality Agreement.
See
3.
ETP cannot sustain
Confidentiality
^
Agreement.
Fifth Amend. Pet. at tlfl 104-107. The petition alleges that the Confidentiality Agreement
"required that both parties consent to any press release relating to the joint venture," and that
"Enterprise breached the conf,rdentiality agreement by unilaterally issuing a misleading press
release announcing the purported termination of the joint venture." Id. at T1[ 105-106. As all
contract claims do, this cause of action requires proof of legally cognizable damages. See, e.g,,
Intercontinental Group P'shipv. KB Home Lone Star L.P.,295 S.V/.3d 650,656 (Tex.2009).
As explained in detail in Enterprise's Motion for Partial Summary Judgment, ETP's
claims must fail because the Confidentiality Agreement precludes non-direct damages. All of the
damages that ETP pleads are consequential damages-those that "result naturally, but not
necessarily, from the defendant's wrongful acts." Arthur Andersen & Co. v. Peny Equip. Corp.,
945 S.W.2d812,816 (Tex. 1997) (emphasis added). Further, ETP does not have standing to
assert any alleged breach of the
Confidentiality Agreement. Accordingly, the Court should enter
summary judgment on ETP's claims. See Tex. R. Civ. P. 166a(b).
The Court should enter a take-nothing summary judgment on this claim because ETP has
no evidence of legally cognizable damages. See Tex. R. Civ. P. 166a(i). Indeed, ETP's deadline
to designate expert witnesses has already passed, and ETP did not designate any expert witnesses
26
to testifu regarding the damages, if any, that
resulted from any alleged breach
of
the
Confidentiality Agreement. Without expert testimony or other credible evidence to support
ETP's alleged damages, this claim should be dismissed.
IL
ETP HAS NO EVIDENCE TO SUPPORT ANY OF ITS CLAIMS.
The Court should issue a take-nothing summary judgment on all of ETP's claims because
"there is no evidence of one or more specified elements of a claim or defense on which [ETP]
would have the burden of proof at
2006); see Tex. R. Civ. P.
as
trial.'
LMB, Ltd. v. Moreno, 201 S.W'3d 686, 688 (Tex.
l66a(i). "When the evidence offered to prove a vital fact is so weak
to do no more than create a mere surmise or suspicion of its existence, the evidence is no more
than a scintilla and, in legal effect, is no evidence." Kindred v. Con/Chem, Lnc.,650 S.W.2d 61,
63 (Tex. 1933). In addition to the no-evidence points raised above, Enterprise moves for a noevidence summary judgment on the following claims.
ETP Has No Evidence to Support the Formation of a Partnership, Joint
Venture or Joint EnterPrise.
A.
ETP pleads breach-of-contract claims regarding the alleged "joint
"partnership," and'Joint enterprise." See Fifth Amend. Pet.
presupposes that the parties formed a partnership,
atl\77-90.
joint venture,
or
venture,"
Each of those claims
joint enterprise. But there is
no evidence to support ETP's claims.
To establish a "joint venture," ETP must have evidence to support the following
elements:
"(l)
a community of interest in the venture, (2) an agreement to share profits, (3) an
agreement to share losses, and (a) a mutual right of control or management of the enterprise."
Smithv. Deneve,285 S.W.3 d904,913 (Tex. App.-Dallas 2009, no pet.).
To establish a partnership, ETP must have evidence of "an association of two or more
persons to carry on a business for
profit." Ingram,288 S.V/.3d at 895. This is usually done with
27
evidence about "(1) receipt or right to receive a share ofprofits ofthe business; (2) expression of
an intent to be partners in the business; (3) participation or right to participate in control of the
business; (4) sharing or agreeing to share: (A) losses of the business; or (B) liability for claims
by third parties against the business; and (5) contributing or agreeing to contribute money or
property to the business." Id. at 895 '
To establish a "joint enterprise," ETP must have evidence to show that there was "(1) an
agreement, express or implied, among the members of the group; (2) a common purpose to be
carried out by the group; (3) a community of pecuniary interest in that pulpose, among the
members; and (a) an equal right to a voice in the direction of the enterprise, which gives an equal
right of control." Able,35 S.V/.3d at613 (quotingR¡sr. (2D) Tonrs $ 491, cmt' c (1965)'
ETP has no evidence to support any of the elements required to form a joint venture,
partnership, or
joint enterprise. The best ETP can muster is a reference to
statements in
marketing materials that the parties claimed to be a "50/50 JY." See Fifth Amend. Pet. aI"\25.
This is legally insufficient evidence because, as the Texas Supreme Court noted in Ingram, "[t]he
terms used by the parties in referring to the arrangement do not control, and merely referring to
another person as 'partner' in a situation where the recipient of the message would not expect the
declarant to make a statement of legal significance is not enough. The term 'partner' is regularly
used in common vernacular and may be used in a variety of
ways...." Ingram, 288 S.W'3d
at
900; see also Coastal Plains Development Corp. v. Micrea, Inc., 572 S.W.2d 285 (Tex. 1978)
(',We are not persuaded by the description of the relationship in the advertising material. Just
as
the words used by the parties in a contract do not necessarily control the substance of the
relationship, the terms used by the parties in refening to the arrangement do not control.").
28
Second, the statement was inconect, as ETP itself conceded.
Code $ I52.054(a)
("4
Ex. 24; see Tex. Bus. Orgs.
false representation or other conduct falsely indicating that a person is a
partner with another person does not of itself create a partnership."). In fact, ETP recognized
that "we state a partnership has been formed
- rwe may tone that a bit - I don't want to be in a
meeting and get a point blank question as to an LLC already being formed
- they could
conclude
we are committed to build regardless and I don't want to send that message." Id. atBx.24.
Further, there is no evidence to show that ETP and Enterprise agreed to share any profits
or losses. The right to receive a share of gross revenue is not the same thing as a right to receive
a share of profits, and thus is not proof of the existence of a partnership. See Ingram, 288
S.W.3d at 899; see qlso Tex. Bus. Orgs. Code $ 152.052(b)(3). Moreover, shated responsibility
for
expenses is not the same as sharing losses and thus does not meet the requirement
factor. Ingram,288
S.W.3 d
of this
at902; see also W'estside l|lrecker Service, Inc. v. Skafi, No. 01-10-
00668-CV, 2011 WL 5617748, at *15 (Tex. App.-Houston (lst Dist.) Nov. 17,
20lI) ("While
the parties shared certain expenses, sharing specific expenses is not evidence ofsharing losses or
liabilities.").
Here, ETP executed a Reimbursement Agreement to reimburse Enterprise for certain
expenses, but this agreement shows that the parties were independently making expenditures on
their own behalf, not as alleged partners. See Ex.
3 at fl 9. Most importantly,
the
Reimbursement Agreement provides that although the parties would make some expenditure for
the proposed project, "[n]othing herein shall be deemed to create or constitute a joint venture, a
partnership, a corporation, or any entity taxable as a corporation, partnership or otherwise." Id.
ETP's CEO, Kelcy
'Warren,
admitted that ETP never agreed to or committed to expend any
funds on the project outside the scope of the Reimbursement Agreement. Ex. 1 at 82:15-83:10.
29
There is also no evidence supporting participation or a right to participate in the control
of the business. "The right to control a business is the right to make executive decisions,"
including, for example, "exercising authority over the business's operations" and having "the
right to write checks on the business's checking account." Ingram, Zgb S.W.¡d at 901. Here,
the alleged business was never formed, and thus there was no independent "business" or
"operations" to run, and certainly no separate checking account or finances for the supposed
"partnership."
B.
ETP Has No Evidence to Support Causation on All of its Claims.
For all of ETP's claims, ETP must establish that the wrong proximately caused the
claimed damages. Read v. Scott Fetzer Co.,990 S.W.2d 732,737 (Tex. 1998). "The cause-infact element of proximate cause is met when there is some evidence that the defendant's "act or
omission was a substantial factor in bringing about injury' without which the harm would not
have occurred."'
Id.
"The other element of proximate cause is foreseeability," which "asks
whether an injury might reasonably have been contemplated because of the defendant's conduct"
and "does not permit simply viewing the facts in retrospect and theorizing an extraordinary
sequence
of events by which the defendant's conduct caused the injury."
Id. The Court should
grant summary judgment because there is no evidence that any of ETP's alleged causes of action
proximately caused the claimed damages.
In particular, there is no causation evidence linking the Seaway or the Wrangler pipelines
to ETP's alleged damages. This issue is briefed in detail in Enterprise's Motion for Partial
Summary Judgment, so we
will not belabor those points in this motion. However,
since that
motion was filed, we note that ETP has not provided any evidence linking Seaway or Vy'rangler
to its claims for damages. Further, Enbridge's decision to purchase its interest in Seaway had
30
nothing to do with whether Enterprise had any commitments from shippers, and was based on
strategic reasons completely independent from that consideration. Ex. 25 at pp. 103:24-104:8;
162:4-164:9.
CONCLUSION
The Court should grant summary judgment ordering ETP to take nothing on all of its
claims.
Respectfully submitted,
BECK I REDDEN LLP
By: /s/ David J. Beck
David J. Beck
Texas Bar No. 00000070
Joe V/. Redden, Jr.
Texas Bar No. 16660600
Jeff M. Golub
Texas Bar No. 00793823
Jas Brar
Texas Bar No. 24059483
l22l McKinney Street, Suite 4500
Houston, Texas 77 010-2010
Telephone: (713) 951-3700
Telecopier (713)951-3720
SAYLES IIVERBNER, P.C.
Richard A. Sayles
Texas Bar No. 17697500
Shawn C. Long
Texas Bar No. 24047859
4400 Renaissance Tower
1201 Elm Street
Dallas, Texas 75270
Telephone: (214) 939-8700
Telecopier: QI$ 939-87 87
COUNSEL FOR DEFENDANTS
ENTERPRISE PRODUCTS PARTNERS, L.P.
AND ENTERPRISE PRODUCTS OPERATING
LLC
31
CERTIF'ICATE OF SERVICE
This pteading was served in compliance with the Rules
Civil Procedure on the 15th day of February, 2013, by e-mail.
2l
and2la of the Texas Rules of
Jeffrey S. Levinger, Esq.
LnvrxceR, PC
1445 Ross Avenue, Suite 2500
Dallas, Texas 75202
Michael H. Steinberg, Esq.
Sullivan & Cromwell LLP
1888 Century Park East
Los Angeles, California 90067
-17 25
Michael P. Lynn, Esq.
Lynn Tillotson Pinker & Cox, L.L.P.
2100 Ross Avenue, Suite 2700
Dallas, Texas 75201
By: /.ç/ David.I. Beck
David J. Beck
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