ACCEPTED
05-17-01421-CV
FIFTH COURT OF APPEALS
DALLAS, TEXAS
1/30/2018 5:10 PM
LISA MATZ
CLERK
NO. 05-17-01421-CV
FILED IN
5th COURT OF APPEALS
IN THE COURT OF APPEALS DALLAS, TEXAS
FOR THE FIFTH JUDICIAL DISTRICT
1/30/2018 5:10:27 PM
LISA MATZ
Clerk
In Re Enterprise Crude Oil, LLC
Original Proceeding from Cause No. DC-17-7264,
101st Judicial District Court, Dallas County
Hon. Staci Williams, Presiding
REAL PARTY IN INTEREST’S RESPONSE TO
AMENDED PETITION FOR WRIT OF MANDAMUS
AND APPENDIX
FIGARI + DAVENPORT, LLP GABLEGOTWALS
Bill E. Davidoff David L. Bryant
State Bar No. 00790565 State Bar No. 24084344
bill.davidoff@figdav.com dbryant@gablelaw.com
Amanda Sotak 113 Pleasant Valley Dr., Ste 204
State Bar No. 24037530 Boerne, Texas 78006
amanda.sotak@figdav.com Telephone: (830) 336-4810
901 Main Street, Suite 3400 Facsimile: (918) 595-4990
Dallas, Texas 75202
Telephone: (214) 939-2000 Lisa T. Silvestri
Facsimile: (214) 939-2090 State Bar No. 00797967
lsilvestri@gablelaw.com
100 W. Fifth St., Suite 1100
Tulsa, Oklahoma 74103
Telephone: (918) 595-4800
Facsimile: (918) 595-4990
Attorneys for
Real Party in Interest,
MAGELLAN CRUDE OIL
PIPELINE COMPANY, L.P.
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PARTIES AND COUNSEL
A. Relator:
Enterprise Crude Oil, LLC E. Leon Carter
lcarter@carterscholer.com
J. Robert Arnett II
barnett@carterscholer.com
Linda R. Stahl
lstahl@carterscholer.com
Joshua J. Bennett
jbennett@carterscholer.com
CARTER SCHOLER PLLC
8150 N. Central Expy., Ste. 500
Dallas, Texas 75206
B. Real Party in Interest:
Magellan Crude Oil David L. Bryant
Pipeline Co., L.P. dbryant@gablelaw.com
GableGotwals
113 Pleasant Valley Dr., Ste 204
Boerne, Texas 78006
Lisa T. Silvestri
lsilvestri@gablelaw.com
GableGotwals
100 W. Fifth St., Suite 1100
Tulsa, Oklahoma 74103
Bill E. Davidoff
bill.davidoff@figdav.com
Amanda Sotak
amanda.sotak@figdav.com
Figari + Davenport, LLP
901 Main Street, Suite 3400
Dallas, Texas 75202
C. Respondent
The Honorable Staci Williams
101st Judicial District Court
600 Commerce Street, 6th Floor West
Dallas, Texas 75202
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TABLE OF CONTENTS
PARTIES AND COUNSEL ......................................................................... i
TABLE OF CONTENTS ............................................................................ii
INDEX OF AUTHORITIES ...................................................................... iv
ISSUES PRESENTED ............................................................................... x
INTRODUCTION ....................................................................................... 1
STATEMENT OF FACTS .......................................................................... 6
I. Explosive Growth in Eagle Ford Production Leads to
Agreements Between Competitors ........................................... 8
II. In 2011, Enterprise and Enterprise Pipeline Enter Into
Additional Agreements with Magellan for Distribution of
Eagle Ford Crude Oil to Houston Area Destinations ............ 10
III. After Inducing Magellan to Invest Heavily in New
Facilities, Enterprise Refuses to Utilize Them as Agreed .... 13
IV. Enterprise Rebuffs Magellan’s Attempts to Audit
Enterprise Pursuant to Magellan’s Contract Audit Rights .. 15
V. Enterprise Attempts to Block All Magellan Discovery
in the Action ............................................................................ 21
ARGUMENT ............................................................................................. 24
I. Enterprise Has Not Shown Any Right to Mandamus Relief
On the Ground That The Trial Court Compelled Discovery
Pursuant to Overbroad Requests ........................................... 24
A. None of Magellan’s Requests to Enterprise are
Overbroad ....................................................................... 29
B. None of the Subpoenas are Overbroad.......................... 34
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II. The Trial Court Did Not Abuse Its Discretion By
Overruling Enterprise’s “Trade Secrets” Objection ............... 36
A. To Support Its Trade Secret Objections, Enterprise
Bore the Burden to Prove That the Specific
Information Sought by Magellan Qualifies as
Trade Secret ................................................................... 37
B. All Compelled Discovery is Within the Scope of
Magellan’s Contract Right to Audit Enterprise, and
Thus Cannot Constitute Trade Secrets Enterprise is
Privileged to Withhold from Magellan .......................... 38
C. In Any Event, Enterprise Presented No Prima Facie
Proof That Any Information Responsive to Magellan’s
Discovery Requests is Trade Secret, as Required ........ 44
D. Enterprise Waived Any Potential Trade Secret Privilege
as to Magellan ................................................................ 50
E. Though Not Required, Magellan Showed a Reasonable
Necessity for the Discovery ........................................... 51
F. The Protective Order Fully Protects Any Information
That May Be Trade Secret and is Not an Abuse of
Discretion ....................................................................... 55
III. The Trial Court Did Not Err, or Abuse Its Discretion, by
Compelling Discovery of Any Information Enterprise Labels
as “Parol Evidence” ................................................................. 63
CONCLUSION ......................................................................................... 72
CERTIFICATION AND VERIFICATION ............................................... 74
CERTIFICATE OF COMPLIANCE WITH RULE 9.4 ............................ 75
CERTIFICATE OF SERVICE.................................................................. 76
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INDEX OF AUTHORITIES
Cases
Arrow Chem. Corp. v. Anderson,
386 S.W.2d 309 (Tex. Civ. App.—Dallas 1965, writ ref’d n.r.e.) ......... 38
Axelson v. McIlhany,
798 S.W.2d 550 (Tex. 1990) .................................................................. 24
Babcock & Wilcox Co. v. Areva NP, Inc.,
788 S.E.2d 237 (Va. 2016) ..................................................................... 40
Bailey v. State,
469 S.W.3d 762 (Tex. App.—Houston [1st Dist.] 2015) ...................... 50
Banker v. Breaux,
133 Tex. 183, 128 S.W.2d 23 (1939) ..................................................... 65
Basic Capital Mgmt., v. Dynex Commercial, Inc.,
348 S.W.3d 894 (Tex. 2011) .................................................................. 66
Brigham Young Univ. v. Pfizer, Inc.,
861 F.Supp.2d 1320 (D. Utah 2012) ..................................................... 48
C & A Invs., Inc. v. Bonnet Res. Corp.,
959 S.W.2d 258 (Tex. App.—Dallas 1997, writ denied) ...................... 71
CSR Ltd. v. Link,
925 S.W.2d 591 (Tex. 1996) .................................................................. 26
Deloitte & Touche, LLP v. Fourteenth Court of Appeals,
951 S.W.2d 394 (Tex. 1997) .................................................................. 26
Dillard Dept. Stores, Inc. v. Hall,
909 S.W.2d 491 (Tex. 1995) ............................................................ 25, 33
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DRC Parts & Accessories, LLC v. VM Motori, S.P.A.,
112 S.W.3d 854 (Tex. App.—Houston [14th Dist.] 2003,
pet. denied) ............................................................................................ 71
First Bank v. Brumitt,
519 S.W.3d 95 (Tex. 2017) .................................................................... 65
Ford Motor Co. v. Castillo,
279 S.W.3d 656 (Tex. 2009) ............................................................ 24, 70
Gordon v. Blackmon,
675 S.W.2d 790 (Tex. App.—Corpus Christi 1984)
(orig. proceeding) ................................................................................... 26
Gordon v. Interstate Hotels & Resorts, Inc.,
250 S.W.3d 196 (Tex. App.—Dallas 2008, no pet.) .............................. 26
In re Am. Optical Corp.,
988 S.W.2d 711 (Tex. 1998) (orig. proceeding) .................................... 33
In re Bass,
113 S.W.3d 735 (Tex. 2003) (orig. proceeding) .................................... 37
In re Colonial Pipeline Co.,
968 S.W.2d 938 (Tex. 1998) (orig. proceeding) .................................... 25
In re Comm’l Metals Co.,
2017 WL 3712169 (Tex. App.—Dallas Aug. 29, 2017)
(orig. proceeding) ................................................................................... 63
In re Cont’l Gen. Tire, Inc.,
979 S.W.2d 609 (Tex. 1998) (orig. proceeding) .............................. 37, 38
In re CSX Corp.,
124 S.W.3d 149 (Tex. 2003) (orig. proceeding) ........................ 25, 26, 28
In re Deere & Co.,
299 S.W.3d 819 (Tex. 2009) (orig. proceeding) .................................... 28
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In re Exmark Mfg. Co., Inc.,
299 S.W.3d 519 (Tex. App.—Corpus Christi 2009)
(orig. proceeding) ............................................................................. 24, 25
In re Goodyear Tire & Rubber Co.,
437 S.W.3d 923 (Tex. App.—Dallas 2014) (orig. proceeding) ............. 27
In re Graco Children’ s Prods., Inc.,
210 S.W.3d 598 (Tex. 2006) (orig. proceeding) .................................... 33
In re Islamadora Fish Co. Texas, L.L.C.,
319 S.W.3d 908 (Tex. App.—Dallas 2010) (orig. proceeding) ............. 67
In re Master Flo Valve Inc.,
485 S.W.3d 207, 213 (Tex. App.—Houston [14th Dist.] 2016)
(orig. proceeding) ................................................................................... 27
In re McAllen Med. Ctr., Inc.,
275 S.W.3d 458 (Tex. 2008) (orig. proceeding) .................................... 67
In re Nat’l Lloyds Ins. Co.,
507 S.W.3d 219 (Tex. 2016) (orig. proceeding) .................................... 36
In re Nolle,
265 S.W.3d 487 (Tex. App.—Houston [1st Dist.] 2008)
(orig. proceeding) ................................................................................... 27
In re Ooida Risk Retention Grp, Inc.,
475 S.W.3d 905 (Tex. App.—Fort Worth 2015) (orig. proceeding) ..... 67
In re Rockafellow,
2013 WL 1836451 (Tex. App.—Amarillo Apr. 30, 2013)
(orig. proceeding) ................................................................................... 54
In re State Farm Lloyds,
2016 WL 902864 (Tex. App.—Corpus Christi Mar. 9, 2016)
(orig. proceeding) ................................................................................... 67
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In re Union Pac. R.R. Co.,
294 S.W.3d 589 (Tex. 2009) (orig. proceeding) .............................. 46, 52
In re Waste Mgmt. of Texas, Inc.,
392 S.W.3d 861 (Tex. App.—Texarkana 2013) (orig. proceeding) ...... 25
In re Weekly Homes, L.P.,
295 S.W.3d 309 (Tex. 2009) (orig. proceeding) .................................... 28
ISG State Operations, Inc. v. Nat’l Heritage Ins. Co.,
234 S.W.3d 711 (Tex. App.—Eastland 2007, pet. denied)................... 69
J.C. Kinley Co. v. Haynie Wire Line Serv., Inc.,
705 S.W.2d 193 (Tex. App.—Houston [1st Dist.] 1985,
writ ref’d n.r.e.) ..................................................................................... 39
Jostens, Inc. v. Nat’l Comput. Sys., Inc.,
318 N.W.2d 691 (Minn. 1982) ............................................................... 49
Lake v. Cravens,
488 S.W.3d 867 (Tex. App.—Fort Worth 2016, no pet.) ...................... 71
Life Techs. Corp. v. Biosearch Techs., Inc.,
2011 WL 1157860 (E.D. Tex. Mar. 29, 2011) ....................................... 62
Matsushita Elec. Indus. Co. v. U.S.,
929 F.2d 1577 (Fed. Cir. 1991) ............................................................. 63
Miller Glob. Props., LLC v. Marriott Int’l, Inc.,
418 S.W.3d 342 (Tex. App.—Dallas 2013, pet. denied) ....................... 71
Millet v. Crump,
687 So.2d 132 (La. App. 5 Cir. 1996) .............................................. 39, 40
Nat’l Union Fire Ins. Co. of Pittsburgh, PA v. CBI Indus., Inc.,
907 S.W.2d 517 (Tex. 1995) .................................................................. 70
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Probado Techs. Corp. v. Smartnet, Inc.,
No. CIV.A. C-09-349, 2010 WL 2232831 (S.D. Tex. June 2, 2010) ..... 69
Safe Flight Instrument Corp. v. Sundstrand Data Control Inc.,
682 F. Supp. 20 (D. Del. 1988) .............................................................. 63
Sun Oil Co. (Del.) v. Madeley,
626 S.W.2d 726 (Tex. 1981) .................................................................. 66
Texaco, Inc. v. Sanderson,
898 S.W.2d 813 (Tex. 1995) ............................................................ 25, 34
Trevino & Assocs. Mech., L.P. v. Frost Nat’l. Bank,
400 S.W.3d 139 (Tex. App.—Dallas 2013, no pet.) .............................. 69
U.S. Steel Corp. v. United States,
730 F.2d 1465 (Fed. Cir. 1984) ............................................................. 63
VFD Consulting, Inc. v. 21st Servs.,
425 F.Supp.2d 1037 (N.D. Cal. 2006) ................................................... 48
Walker v. Packer,
827 S.W.2d 833 (Tex. 1992) ...................................................... 27, 28, 71
Waste Mgmt. of Texas, Inc. v. Abbott,
406 S.W.3d 626 (Tex. App.—Eastland 2013, pet. denied)............. 38, 39
Zoecon Indus. v. Am. Stockman Tag Co.,
713 F.2d 1174 (5th Cir.1983) ................................................................ 38
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Statutes and Rules
Tex. Civ. Prac. & Rem. Code § 134A.002 ................................................. 38
Tex. R. Civ. P. 192.3 ........................................................................... 24, 54
Tex. R. Evid. 507 ................................................................................. 37, 54
Texas Rule of Evidence 511................................................................. xi, 50
Other Authorities
1 McCormick on Evidence § 93 (7th ed. 2013) ......................................... 51
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ISSUES PRESENTED
1. A discovery request is overbroad when it covers matters
beyond those at issue in the case, and a central consideration in
determining overbreadth is whether the request could have been more
narrowly tailored and still obtain pertinent information. In determining
whether a trial court clearly abused its discretion in regard to a discovery
order, a reviewing court may not substitute its judgment for the trial
court’s, and the relator must show that the trial court could reasonably
have reached only one decision. Even if that is shown, the relator must
also show that the remedy afforded by ordinary appeal is inadequate, by
showing that the discovery burdens the producing party far out of
proportion to any benefit the requesting party may obtain. Has
Enterprise shown that the trial court clearly abused its discretion by
ordering discovery pursuant to requests which are truly overbroad, and
if so, has Enterprise shown that it lacks an adequate remedy by ordinary
appeal?
2. The party asserting a trade secret privilege as to information
sought in discovery bears the burden to prove that the information is
trade secret. Information which another party may obtain by proper
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means, such as by contractually-authorized audit, cannot constitute a
trade secret as to that party. Also, under Texas Rule of Evidence 511(a),
any trade secret privilege is waived by voluntary disclosure or consent to
disclosure of any significant part of the privileged matter, unless such
disclosure itself is privileged. Even when trade secret status is shown,
discovery is appropriate when the requesting party demonstrates that
discovery is reasonably necessary for a fair adjudication of the case,
which turns on assessment of the particular circumstances. Here, where
Enterprise expressly granted Magellan a contract right to audit and
examine all records necessary to determine Enterprise’s compliance with
or breach of its contractual obligations to Magellan, and where
Enterprise disclosed to Magellan some but not all information of the
kinds it claims a privilege to withhold as trade secret, did Enterprise
meet its burden of proof, and if so, did Magellan show reasonable
necessity for the discovery? Relatedly, did the trial court clearly abuse its
discretion by overruling Enterprise’s trade secret objections to production
of the information actually encompassed by Magellan’s requests, or by
approving the form of Protective Order it entered on January 8, 2018?
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3. Magellan’s claims include, among others, breach of contract,
fraud, and promissory estoppel. A court must construe a written contract
in light of all surrounding facts and circumstances, and may consider
them as an aid in construction even when the court concludes that the
language of the contract is unambiguous. Here, the trial court has denied
motions in which Enterprise argued that the contract is unambiguous,
but has made no finding on that issue thus far. Nor has the trial court
determined the merits of any claims Magellan asserts, including breach
of contract, fraud, and promissory estoppel. Under these circumstances,
did the trial court clearly abuse its discretion by compelling Enterprise
to produce any of the information Enterprise characterizes as parol
evidence? And if so, has Enterprise also shown, as required, that such
discovery burdens Enterprise far out of proportion to any benefit
Magellan may obtain, such that Enterprise has no adequate remedy by
ordinary appeal?
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INTRODUCTION
The claims Magellan alleges against Enterprise revolve around the
parties’ Crude Oil Distribution Agreement dated October 31, 2011
(“Distribution Agreement”), two related agreements between Magellan
and Enterprise’s co-managed pipeline affiliate, Enterprise Crude
Pipeline LLC (“Enterprise Pipeline”), and representations Enterprise
made to Magellan in connection with those agreements.
In the Distribution Agreement, Enterprise committed to
“exclusively utilize” Magellan’s Houston area crude oil distribution
facilities, for ten years, with respect to crude oil Enterprise markets from
certain “Origin Point” locations in the Eagle Ford Shale to certain
“Destination Points” in the Houston area refining market. Enterprise
made that long-term commitment for the express purpose of inducing
Magellan, its competitor, to invest heavily in expansion of Magellan’s
distribution system.
In reliance on the Enterprise commitment set forth in the
Distribution Agreement, Magellan spent over $20 million to expand and
improve its distribution facilities as necessary to handle the volumes of
crude oil expected to be delivered by Enterprise. But instead of delivering
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on its commitment, Enterprise has employed various schemes designed
to circumvent and evade its obligations to Magellan, causing damages
estimated to be $50 million or more to date.
Magellan bargained for and obtained, in the Distribution
Agreement, the right to periodically audit all records necessary to
determine whether and to what extent Enterprise is in compliance with
or in breach of its contractual obligations. On two occasions prior to suit,
Magellan sought to do so, but in each instance Enterprise provided only
some of the documents and information required for a full audit.
Enterprise claimed any other information regarding its shipments of
Eagle Ford crude oil is “irrelevant” to an assessment of contract
compliance.
This is because, in Enterprise’s professed view of the Distribution
Agreement, Enterprise’s commitment to exclusively utilize the Magellan
distribution system is only triggered if and when (1) Enterprise chooses
to retain ownership of crude oil after shipping it from one of the relevant
Eagle Ford “Origin Points” specified in the Distribution Agreement, and
(2) Enterprise also chooses to deliver such crude oil to the Magellan
“Connection Point” at Genoa Junction, the location where the
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Distribution Agreement specifies that crude oil must be delivered in order
to enter into Magellan’s Houston area crude oil distribution system. See
MR082-158, Pet., p. 4. In other words, according to Enterprise, the
Distribution Agreement means that Enterprise is not committed to
exclusively utilize Magellan’s facilities at all.
What is more, as further discussed below, the operating methods
Enterprise claims it is currently using (and may have been using all
along) frustrate efforts to audit contract compliance because they make
it hard to identify which barrels of crude oil came from a relevant Origin
Point, and trace where they wound up after Enterprise moved the barrels
to its ECHO Terminal or another intermediate location downstream from
the Origin Point.
Shortly after answering Magellan’s Original Petition with a general
denial, Enterprise filed a summary judgment motion in which it urged
the trial court to enter judgment against Magellan on all claims, based
on Enterprise’s contract interpretation, which it argued is the only
reasonable construction of the contract on its face. In its opposition,
Magellan explained why Enterprise’s interpretation is not the only
reasonable one, and indeed is unreasonable since it turns Enterprise’s
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long-term “commitment” into a unilateral option for Enterprise to use its
competitor’s facilities whenever it chooses, rendering the “commitment”
illusory and worthless to Magellan. SR073-340.1 After extensive briefing
and oral argument, the trial court rejected Enterprise’s contention that
its construction of the Distribution Agreement is the only reasonable one,
and thus denied the motion for summary judgment. The trial court
contemporaneously denied Enterprise’s motion to stay all discovery
pursuant to the document production requests Magellan had already
served on Enterprise, and the document subpoenas it had issued to three
non-parties, clearing the path for discovery to proceed.
Undeterred, however, Enterprise refused to produce any documents
requested by Magellan and filed a second motion to quash Magellan’s
subpoenas. Following more rounds of briefing and oral argument on
Enterprise’s second motion to quash, and Magellan’s motion to compel
Enterprise, the trial court denied the motion to quash and granted in
major part Magellan’s motion to compel. Still undeterred, Enterprise
produced only the same information previously provided for pre-suit
1 The supplemental mandamus record is filed with this response and cited as
“SR001.”
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audits, and filed its Petition for Writ of Mandamus seeking relief
preventing the vast majority of the discovery the trial court ordered. On
January 16, 2018, Enterprise filed its Amended Petition for Writ of
Mandamus.2
Mandamus is an extraordinary remedy appropriately reserved for
exceptional cases where the relator demonstrates a clear abuse of the
trial court’s discretion and the lack of an adequate remedy by ordinary
appeal. Enterprise has made no such showing here. Enterprise grossly
exaggerates the scope of Magellan’s discovery requests to Enterprise and
the subpoenaed non-parties. In truth, all of them are carefully tailored to
obtain information relevant to the subject matter of the action as alleged
in Magellan’s Original Petition. None of the discovery now compelled or
allowed by the trial court’s discovery orders is overbroad or amounts to
impermissible discovery of parol evidence.
In the trial court, Enterprise failed to meet its burden to show that
any information actually responsive to Magellan’s discovery requests, as
written, is trade secret information Enterprise could be presumptively
2 The Amended Petition supersedes the original petition and is hereafter cited as
“Pet.”
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privileged to withhold from Magellan. It does not, because all such
information is within the scope of the audit right Enterprise granted to
Magellan, and thus cannot be kept secret from Magellan. Additionally,
though it was not required, Magellan showed a reasonable necessity for
discovery of responsive information, if any, that might qualify as trade
secret information outside the scope of Magellan’s audit right.
In this Court, Enterprise fails to demonstrate that any aspect of the
trial court’s discovery orders is a clear abuse of the trial court’s broad
discretion in matters of discovery, and also fails to show the lack of an
adequate remedy by appeal, as required to warrant mandamus in any
case.
STATEMENT OF FACTS
Magellan is an affiliate of Magellan Midstream Partners, L.P., a
publicly traded partnership that primarily transports, stores and
distributes petroleum products including crude oil. Magellan owns and
operates pipelines and related facilities for transportation and
distribution of crude oil, including facilities in the Houston, Texas area,
through which crude oil is transported and distributed to refineries or
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other destinations on the Houston ship channel, in Texas City, or at other
locations on the Texas Gulf Coast. MR001.
Enterprise is a crude oil marketing company which purchases crude
oil from third parties and generates revenues from marketing, storing
and transporting such crude oil in Texas and Oklahoma. As a crude oil
marketing company, Enterprise purchases crude oil produced by third
parties and ships it on pipelines Enterprise selects, to destinations
Enterprise selects. In Texas, Enterprise purchases and markets crude oil
produced in, among other regions, the South Texas production region
known as the Eagle Ford Shale. MR002.
Enterprise Pipeline, an affiliate of Enterprise, owns or operates
numerous pipeline facilities in Texas including an Eagle Ford-to-Houston
area pipeline system through which much of the Eagle Ford crude oil
production purchased and marketed by Enterprise is transported and
ultimately delivered to various Gulf Coast refineries and terminals
including ones located along the Houston Ship Channel or in Texas City,
Texas. MR002.
Enterprise and Enterprise Pipeline, as constituents of Enterprise
Products Partners L.P. (“EPP”)—which is one of the largest publicly
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traded midstream energy partnerships in the United States—are jointly
managed by Enterprise Crude GP LLC. MR003.
I. EXPLOSIVE GROWTH IN EAGLE FORD PRODUCTION LEADS TO
AGREEMENTS BETWEEN COMPETITORS
By 2010, midstream energy companies like Enterprise and
Magellan foresaw rapid growth in Eagle Ford Shale crude oil production,
and thus also needs and opportunities for expansions of pipelines and
other midstream distribution systems to move increasing volumes of
Eagle Ford crude oil to refining markets in or near Houston. MR007. In
2010, Magellan acquired more than 100 miles of Houston area pipeline
assets that greatly increased its capacity to deliver crude oil to Houston
Ship Channel refineries and refineries located in Texas City. MR008. At
about the same time in 2010, EPP announced plans to construct a large
new pipeline which would originate in the Eagle Ford Shale and be
capable of transporting Eagle Ford crude oil to Houston area refining
markets by connecting to Enterprise Pipeline’s existing Rancho Pipeline,
which extended directly to the Genoa Junction connection point with
Magellan’s Houston area distribution system. MR008.
In December 2010, Enterprise Pipeline and Magellan entered into
an agreement to combine, under a single transportation tariff, a 40-mile
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segment of Enterprise Pipeline’s Rancho Pipeline with the 26-mile
segment of Magellan’s Genoa Junction-to-Texas City pipeline. MR012.
EPP’s public announcement noted that this agreement “represents an
important first step towards working together on future opportunities
designed to improve market access” and “complements our Eagle Ford
Shale crude oil strategy that includes Enterprise’s recently announced
plans to construct a new crude oil storage facility and pipelines in
southeast Houston that will receive deliveries from the Rancho system
and provide the capability to deliver into the nearby Magellan pipeline.”
MR012.
The planned “new crude oil facility and pipelines,” which EPP
publicly disclosed to be part of its Eagle Ford crude oil strategy, referred
to (1) the new Enterprise terminal facility known as ECHO Terminal,
located approximately three miles southeast of Magellan’s Genoa
Junction connection point, and (2) two new pipelines that would provide
bi-directional transportation of crude oil between ECHO Terminal and
Magellan’s facilities originating at Genoa Junction. MR009-011.
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II. IN 2011, ENTERPRISE AND ENTERPRISE PIPELINE ENTER INTO
ADDITIONAL AGREEMENTS WITH MAGELLAN FOR DISTRIBUTION OF
EAGLE FORD CRUDE OIL TO HOUSTON AREA DESTINATIONS
During the first half of 2011, as EPP was proceeding to enlarge its
footprint in the Eagle Ford Shale, Magellan was also considering further
expansion and improvement of its Houston area crude oil distribution
system, subject to securing a long-term contractual commitment assuring
the commercial viability of such a capital-intensive project. MR013-014.
Around mid-year, Magellan and Enterprise began exploring a
possible agreement that would benefit both companies by utilizing their
complementary assets for marketing, transportation and distribution of
Eagle Ford crude oil to Houston area destinations. MR015. At the time,
Enterprise was rapidly growing its business of purchasing crude oil
produced in the Eagle Ford Shale play and marketing it to refineries in
the Houston area, whereas Magellan had recently acquired Houston area
pipelines and related facilities that increased its capacity to distribute,
to area refineries, crude oil entering into Magellan’s distribution system
at Genoa Junction. See illustrations at MR009, MR012. Notwithstanding
several public announcements about its strategic plans to expand its own
facilities (MR009-012), Enterprise represented to Magellan that
{1789105;} 10
Enterprise had a need and desire to use Magellan’s Houston area crude
oil distribution facilities in order to deliver burgeoning volumes of Eagle
Ford production to destinations in the Houston area refining markets.
MR015.
Following several months of contract negotiations, Magellan
entered into: (1) the Distribution Agreement with Enterprise, (2) the
Joint Tariff Agreement with Enterprise Pipeline, and (3) the Connection
Agreement with Enterprise Pipeline. MR018-022.
In the Distribution Agreement, Enterprise made a 10-year
“commitment” to “exclusively utilize” Magellan’s Houston area crude oil
transportation and distribution facilities for transportation of certain
“Product”3 Enterprise buys in the Eagle Ford Shale and markets to
Houston area refineries. MR018-019. Specifically, under Section 4.1 of
the Distribution Agreement, Enterprise committed that for all Product
Enterprise owns or controls at any defined Eagle Ford “Origin Point” and
transports on its affiliate’s Eagle Ford-to-Houston area pipeline system
for ultimate marketing (delivery) to any defined Houston area
3The Distribution Agreement defines “Product” as “crude oil and condensate meeting
the specifications provided for in the Joint Tariff, as such tariff may be supplemented,
amended or reissued from time to time.” MR042.
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“Destination Point,” Enterprise would “exclusively utilize” Magellan’s
new and improved Houston area crude oil distribution system, pursuant
to the agreed “joint tariff” (transportation fee). MR044.
The Distribution Agreement specifically referred to and
incorporated the Joint Tariff Agreement between Enterprise Pipeline
and Magellan, providing that “[t]ransportation services under this
Agreement are subject to, and the Parties are required to comply with,
the provisions of the Joint Tariff.” MR041, MR043. The Joint Tariff
Agreement expressed Enterprise’s transportation commitment as
follows: “[T]he shipper [Enterprise] agrees to ship under the Joint Tariff
all crude owned or controlled by it from an Origin Point through the
Connection Point to a Destination Point.” MR041, MR043.
To implement the transportation commitment Enterprise made to
Magellan under the Distribution Agreement, it was necessary for
Enterprise Pipeline and Magellan to construct certain new or improved
connections between their respective distribution systems. So, under the
Connection Agreement, Enterprise Pipeline agreed to construct facilities
which would enable it to deliver Product from Enterprise Pipeline’s new
ECHO-to-Genoa Junction pipelines into Magellan’s distribution system
{1789105;} 12
originating at the Genoa Junction connection point; and Magellan agreed
to construct facilities which would enable it to receive such deliveries
from Enterprise Pipeline, at either of the two Genoa Junction
interconnection points included in the definition of “Connection Point”
set forth in the Distribution Agreement and the Joint Tariff Agreement.
MR021-022.
III. AFTER INDUCING MAGELLAN TO INVEST HEAVILY IN NEW
FACILITIES, ENTERPRISE REFUSES TO UTILIZE THEM AS AGREED
The Distribution Agreement expressly stated that the purpose of
Enterprise’s long-term commitment to make “exclusive use” of
Magellan’s distribution system was to “facilitate” (i.e., induce) Magellan’s
costly expansion of its facilities as necessary for Magellan to handle the
Eagle Ford crude oil transportation business Enterprise committed to
Magellan. MR039. Following execution of the parties’ 2011 agreements,
and in reliance upon them, Magellan invested over $20 million to
construct the “New Magellan Facilities” described in the Distribution
Agreement, and did all of the connection work necessary to receive the
anticipated Enterprise deliveries of Product from Enterprise Pipeline’s
Rancho Pipeline and ECHO-to-Genoa Junction pipelines into Magellan’s
expanded Houston area distribution system originating at Magellan’s
{1789105;} 13
Genoa Junction Connection Point with those pipelines. MR023.
Magellan’s facilities were connected and capable of receiving Enterprise
Product at the specified Genoa Junction Connection Point as of July 1,
2013, the duly noticed “In-Service Date” on which Enterprise’s 10-year
commitment to “exclusively utilize” the Magellan facilities began.
MR023.
However, from the In-Service Date to the present, Enterprise has
failed and refused to “exclusively utilize” Magellan’s facilities in
accordance with the terms of the Distribution Agreement. MR024.
Although the parties disagree about the meaning of the transportation
commitment Enterprise made in the Distribution Agreement, and thus
the scope of Eagle Ford Product covered by Enterprise’s obligation to
make exclusive use of Magellan’s facilities, there is no dispute that from
the In-Service Date to present Enterprise has purchased and marketed
hundreds of millions of barrels of Eagle Ford Product which were not
transported through Magellan’s Houston area distribution system to a
specified Destination Point. MR029.
{1789105;} 14
IV. ENTERPRISE REBUFFS MAGELLAN’S ATTEMPTS TO AUDIT
ENTERPRISE PURSUANT TO MAGELLAN’S CONTRACT AUDIT RIGHTS
No rational company in Magellan’s position would invest tens of
millions of dollars to expand and improve its facilities, on the strength of
a major competitor’s long-term contractual commitment to exclusively
utilize those facilities (in lieu of, for example, similar facilities the
competitor owns or has publicly announced its intention to develop),
without obtaining a robust right to audit the competitor as necessary to
fully determine and fully verify the competitor’s compliance with or
breach of its commitment. Magellan bargained for and obtained that very
right.
In Section 4.4 of the Distribution Agreement, Enterprise agreed
that “Magellan shall have the right to audit Shipper’s records necessary
to verify Shipper’s compliance with the provisions of Section 4.1
[the transportation commitment] and 4.2 [transportation
commitment exceptions].” MR045 (emphasis added). This bargained-
for audit right is quite broad, and necessarily so. For one thing, under
Section 4.1 of the Distribution Agreement, Enterprise (the Shipper) not
only committed itself to “exclusively utilize” the Magellan Facilities but
also committed to “use best efforts to cause Shipper’s Affiliates [e.g.,
{1789105;} 15
Enterprise Pipeline] to exclusively utilize the Magellan Facilities.”
MR044. In addition, Enterprise’s transportation commitment hinges on
certain variables, such as: whether and what “Product” the Shipper, or
an “Affiliate” of the Shipper, either owns or controls, at an Eagle Ford
“Origin Point;” whether such Product is transported on the “Enterprise
Pipeline” or some other pipeline; and whether and to what extent such
Product is transported for ultimate delivery to any “Destination Point.”
MR044. Consequently, properly auditing and verifying compliance with
or breach of such a commitment is an inevitably complex process which
could and does require access to and examination of many different types
and sources of documents and data which Enterprise maintains in or
through methods and systems unknown or unfamiliar to Magellan, and
which can change over time.
Under such circumstances, it is hardly surprising that Enterprise
voluntarily granted Magellan such a broadly-worded right to audit.4 Nor
is it surprising, although it is important, that the audit right Enterprise
4 Although Section 4.4 of the Distribution Agreement is titled “Magellan’s Limited
Right to Audit and Penalty,” the stated limitations concern only the timing, location,
and costs of audits, not the scope of the information Magellan is entitled to examine
for purposes of auditing Enterprise’s compliance with its transportation commitment
to Magellan. See MR045.
{1789105;} 16
expressly granted Magellan does not exclude or exempt from audit any
particular types or categories of documents or information, such as
documents or information Enterprise may deem to be confidential or even
“trade secret.” What is surprising, and alarming, is how Enterprise
responded to Magellan’s two pre-suit attempts to audit Enterprise’s
contract compliance, and how (as discussed below) it has responded to
Magellan’s requests for discovery in this action.
In the spring of 2015, Magellan sought its first contract compliance
audit. This audit revealed that immediately after Enterprise signed the
Distribution Agreement with Magellan, Enterprise began replacing its
Eagle Ford marketing contracts—under which Enterprise controlled or
would control Product distribution and delivery from end-to-end of the
transport from Origin Point to Destination Point—with buy-sell
contracts, under which Enterprise buys volumes of crude oil at the Origin
Point, transports it to Enterprise’s ECHO Terminal, and resells the same
volumes to the same customers once the crude oil reaches ECHO
Terminal. MR026. The first audit also revealed other operating methods
Enterprise uses to complicate tracing and fully accounting for the
transportation and ultimate delivery of all Eagle Ford Product
{1789105;} 17
Enterprise owns or controls at an Origin Point. For example: (1)
Enterprise batches a common stream barrel at the Origin Point and
resells a common stream barrel at a downstream destination such as
ECHO Terminal, but says it does not tie the barrels Enterprise owns at
the Origin Point to the barrels it resells to the same customer at the
downstream location;5 and (2) Enterprise says that after reselling Eagle
Ford barrels to a customer at ECHO Terminal or another intermediate
location downstream from the Origin Point, Enterprise does not track the
customer’s subsequent transportation to a Destination Point or any other
final destination. MR090-091, MR243, SR378, SR489-533.6
For Magellan’s first audit, Enterprise provided only part of the
information needed to fully audit its compliance with or breach of the
Distribution Agreement, e.g., only three of its Eagle Ford buy-sell
5 As Enterprise puts it: “Crude is not segregated at ECHO based on the crude’s origin;
it is aggregated there based on quality with crude from various sources, and there is
no way to determine whether any particular batch of crude purchased at
ECHO was produced from an Origin Point.” SR378 (emphasis added).
6 However, Enterprise has also made assertions inconsistent with the above. For
instance, it has claimed that certain barrels were delivered through Enterprise
facilities (not Magellan facilities) based on transportation nominations made by
Enterprise’s customers, and that some Product was transported by a customer from
ECHO Terminal to a designated Destination Point, but not through the Magellan
facilities, allegedly because that was “not the most direct routing” (which, even if true,
does not exempt the barrels from Enterprise’s commitment). SR489-533.
{1789105;} 18
contracts (and only one of the related marketing contracts replaced with
the buy-sell contract), and only certain incomplete or indecipherable
transactional reports regarding Eagle Ford Product Enterprise owned or
controlled at an Origin Point and transported to its ECHO Terminal.
MR322.
In 2017, Magellan attempted a second audit, regarding Enterprise’s
contract compliance during 2016. For purposes of this audit, Magellan
requested records which, in light of what was learned through the first
audit, were plainly required in order to thoroughly and completely audit
and determine the extent of Enterprise’s compliance or breach of its
obligations under the Distribution Agreement. This included complete
transactional data regarding transportation and delivery of Eagle Ford
Product Enterprise owned or controlled at an Origin Point (not any
other Enterprise-owned crude oil) and records showing whether
Enterprise replaced its pre-Distribution Agreement Eagle Ford
marketing contracts with post-Distribution Agreement buy-sell contracts
for good faith business reasons or in a bad faith effort to evade its
obligation to make exclusive use of Magellan’s facilities. MR353-356.
{1789105;} 19
In response, Enterprise provided essentially the same kinds of
transaction data (for 2016 Product shipments) it had provided for
Magellan’s first audit, with the same limitations and gaps preventing
Magellan from identifying and tracing the transportation and delivery of
all volumes of crude oil Enterprise owned or controlled and transported
from an Eagle Ford Origin Point to a final destination beyond ECHO
Terminal or a similar intermediate location. Enterprise also refused to
provide any of its other Eagle Ford marketing agreements, buy-sell
agreements, or transportation agreements. MR322.
The reason Enterprise gave for refusing to provide Magellan with
all records “necessary to verify Shipper’s compliance” was not that any
such records constitute “trade secrets” that, despite the broad audit right
Enterprise granted in the Distribution Agreement, Enterprise is
privileged to withhold from Magellan. MR322. In fact, although
Enterprise provided information under a confidentiality agreement—one
that permits the information to be reviewed by any Magellan
representative who has “a legitimate need to review and evaluate the
Confidential Information to assist Recipient [Magellan] in connection
with the Audit” and permits Magellan to use Confidential Information
{1789105;} 20
for any “purposes related to the Audit” (MR468)—Enterprise never
claimed (and still does not claim) that any of the “Confidential
Information” it actually provided for audit is Enterprise “trade secret”
information. MR319, MR322. Instead, based on the same erroneous
interpretation of the Distribution Agreement that Enterprise’s
subsequent motion for summary judgment unsuccessfully urged the trial
court to adopt as a matter of law, Enterprise claimed that the rest of the
information Magellan sought for audit is simply irrelevant.
V. ENTERPRISE ATTEMPTS TO BLOCK ALL MAGELLAN DISCOVERY IN
THE ACTION
On June 19, 2017, Magellan filed its factually detailed 36-page
Original Petition, alleging claims for (among other things) breach of the
Distribution Agreement, promissory estoppel, and fraud. MR001-078.
Shortly after Enterprise answered with a general denial (MR079-081),
Magellan served its first document requests to Enterprise (MR271) and
issued subpoenas to the three non-parties who were counterparties to the
three Eagle Ford buy-sell contracts Enterprise disclosed during
Magellan’s first audit (MR196-236). The requests to Enterprise sought
documents relevant to the subject matter of the action, including
documents relevant to Enterprise’s liability for all claims alleged in the
{1789105;} 21
Original Petition, and to a determination of Magellan’s damages. The
non-party subpoenas sought all relevant “Eagle Ford Product” 7 contracts
with Enterprise (including those Enterprise claimed not to have),
relevant communications with Enterprise regarding those contracts, and
the non-parties’ own basic transactional data regarding the purchase,
sale, transportation and delivery of Eagle Ford Product sold to Enterprise
at an Origin Point and/or bought back from Enterprise pursuant to a buy-
sell contract. SR341-366.
Enterprise then launched, and for five months has maintained, a
withering campaign to stop Magellan’s suit in its tracks, without any
meaningful discovery from Enterprise or anyone else. Specifically,
Enterprise: (1) sought summary judgment on all of Magellan’s claims,
based on Enterprise’s faulty interpretation of the Distribution
Agreement (MR082-158) (motion denied); (2) moved to stay all discovery
pending determination of its summary judgment motion (SR001-072)
7 The non-party subpoenas clearly and carefully defined “Eagle Ford Product,” to be
limited to crude oil and/or condensate the non-party sold to Enterprise, or delivered
to Enterprise for transportation, at one of the Eagle Ford Origin Points specified in
the Distribution Agreement. Ironically, Enterprise scoffs that this and other
definitions Magellan included in its subpoenas or its requests to Enterprise—all of
which were carefully designed to avoid confusion or overbreadth—were “made-up” by
Magellan. Pet., pp. 7, 12.
{1789105;} 22
(motion denied); (3) after those two motions were denied, (a) objected to
every one of Magellan’s discovery requests and refused to produce
anything to Magellan (MR287), and (b) filed another motion to quash the
non-party subpoenas (MR160-236) (motion denied); (4) opposed
Magellan’s motion to compel Enterprise to produce documents responsive
to Magellan’s requests (MR390-473) (motion granted in major part); (5)
on the eve of the hearing on Magellan’s motion to compel, served
amended objections and responses in which Enterprise asserted new
objections and substantially altered others (SR426-516) (objections
overruled); (6) moved for entry of a protective order containing draconian
provisions that, unlike the audit-related Confidentiality Agreement
discussed above, would preclude any Magellan personnel from reviewing
any information Enterprise is compelled to produce but claims is trade
secret or “highly confidential” (MR474-575); and (7) filed its Petition for
Writ of Mandamus.
Enterprise’s relentless efforts to prevent this case from moving
forward have failed, and with good reason. The trial court’s rulings to
date—though not yet effective in breaking Enterprise’s unilateral
{1789105;} 23
embargo on discovery—have been well-considered and lawful, and by no
means an abuse of discretion in any respect.
ARGUMENT
I. ENTERPRISE HAS NOT SHOWN ANY RIGHT TO MANDAMUS RELIEF
ON THE GROUND THAT THE TRIAL COURT COMPELLED DISCOVERY
PURSUANT TO OVERBROAD REQUESTS
Texas Rule of Civil Procedure 192.3 entitles a party to obtain
discovery “regarding any matter that is not privileged and is relevant to
the subject matter of the pending action,” whether or not the information
will be admissible at trial, as long as the information sought “appears
reasonably calculated to lead to the discovery of admissible evidence.”
Tex. R. Civ. P. 192.3(a). The phrases “relevant to the subject matter” and
“reasonably calculated to lead to admissible evidence” are liberally
construed to allow litigants to obtain the fullest knowledge of the facts
and issues prior to trial. Ford Motor Co. v. Castillo, 279 S.W.3d 656, 664
(Tex. 2009); Axelson v. McIlhany, 798 S.W.2d 550, 553 (Tex. 1990); In re
Exmark Mfg. Co., Inc., 299 S.W.3d 519, 526 (Tex. App.—Corpus Christi
2009) (orig. proceeding). The scope of discovery is largely within the trial
court's discretion. In re Colonial Pipeline Co., 968 S.W.2d 938, 941 (Tex.
{1789105;} 24
1998) (orig. proceeding) (citing Dillard Dept. Stores, Inc. v. Hall, 909
S.W.2d 491, 492 (Tex. 1995)).
A discovery request is overbroad only when it covers “time periods,
products, or activities beyond those at issue in the case.” In re Waste
Mgmt. of Texas, Inc., 392 S.W.3d 861, 871 (Tex. App.—Texarkana 2013)
(orig. proceeding) (emphasis added). “A specific request for discovery
reasonably tailored to include only matters relevant to the case is not
overbroad merely because the request may call for some information of
doubtful relevance. Parties must have some latitude in fashioning proper
discovery requests.” Texaco, Inc. v. Sanderson, 898 S.W.2d 813, 815 (Tex.
1995). That is, “[a] central consideration in determining overbreadth is
whether the request could have been more narrowly tailored to avoid
including tenuous information and still obtain the necessary, pertinent
information.” In re CSX Corp., 124 S.W.3d 149, 153 (Tex. 2003) (orig.
proceeding). And “[w]hen it is not self-evident that the discovery order is
overly broad, the party resisting the discovery bears the burden of
offering evidence to prove its objections.” In re Exmark Mfg. Co., Inc., 299
S.W.3d at 524 (citations omitted)).
{1789105;} 25
Since “[m]andamus is an extraordinary proceeding, encompassing
an extraordinary remedy,” appellate courts exercise mandamus power
“sparingly and deliberately” and only where the decision is “a clear abuse
of discretion devoid of any guiding principles of law.” Deloitte & Touche,
LLP v. Fourteenth Court of Appeals, 951 S.W.2d 394, 396 (Tex. 1997). A
trial court commits an abuse of discretion when its action is “so arbitrary
and unreasonable as to amount to a clear and prejudicial error of law.”
In re CSX Corp., 124 S.W.3d at 151 (quoting CSR Ltd. v. Link, 925 S.W.2d
591, 596 (Tex. 1996)). See Gordon v. Interstate Hotels & Resorts, Inc., 250
S.W.3d 196, 199 (Tex. App.—Dallas 2008, no pet.) (same). The party
resisting discovery has the heavy burden to show an abuse of discretion
under this stringent standard. In re CSX Corp., 124 S.W.3d at 151.
Regarding discovery orders in particular, “the discretionary nature
of discovery and the amorphous notion of relevancy most often counsels
against appellate court intervention into the discovery process.” Gordon
v. Blackmon, 675 S.W.2d 790, 793 (Tex. App.—Corpus Christi 1984) (orig.
proceeding) (citation omitted) (internal quotation marks omitted).
Specifically, “[i]n considering whether a trial court has clearly abused its
discretion with regard to a discovery order, the reviewing court may not
{1789105;} 26
substitute its judgment for that of the trial court and the relator must
establish that the trial court could reasonably have reached only one
decision.” In re Goodyear Tire & Rubber Co., 437 S.W.3d 923, 927 (Tex.
App.—Dallas 2014) (orig. proceeding) (citations and internal quotation
marks omitted). See In re Master Flo Valve Inc., 485 S.W.3d 207, 213
(Tex. App.—Houston [14th Dist.] 2016) (orig. proceeding) (same). Finally,
“[i]n determining whether the trial court abused its discretion, we are
mindful that the ultimate purpose of discovery is to seek the truth, so
that disputes may be decided by what the facts reveal, not by what facts
are concealed.” In re Nolle, 265 S.W.3d 487, 491 (Tex. App.—Houston [1st
Dist.] 2008) (orig. proceeding) (citing cases).
Even when the party seeking mandamus relief meets the heavy
burden of showing a clear abuse of discretion, it must also demonstrate
that the remedy afforded by ordinary appeal is inadequate. Walker v.
Packer, 827 S.W.2d 833, 842 (Tex. 1992). And importantly, “an appellate
remedy is not inadequate merely because it may involve more expense or
delay than obtaining an extraordinary writ.” Id. To establish inadequate
remedy, the party seeking mandamus relief from a discovery order
compelling production must prove that the order “compels the production
{1789105;} 27
of patently irrelevant or duplicative documents, such that it clearly
constitutes harassment or imposes a burden on the producing party far
out of proportion to any benefit that may obtain to the requesting
party.” Id. at 843 (emphasis added). In other words, contrary to
Enterprise’s contention, even proof that a discovery order compels
production of “patently irrelevant” documents (which Enterprise has not
shown) does not automatically satisfy the inadequate remedy
requirement; the relator must also demonstrate that the order
constitutes harassment or burdens the producing party far out of
proportion to the benefit to the requesting party.8
8 Enterprise relies (Pet., p. 20) on a quotation from In re CSX Corp. that for such an
order, there is no adequate remedy on appeal “because the order ‘imposes a burden
on the party far out proportion to the benefit that may obtain to the requesting
party.’” In re CSX Corp., 124 S.W.3d at 153 (emphasis added) (citing and internally
quoting Walker). But Walker does not support the view that any order compelling
production of “patently irrelevant” documents necessarily imposes such a burden far
out of proportion to the benefit. Rather, Walker shows, and logically so, that in such
cases the assessment of adequate remedy involves a case-by-case balancing of
demonstrated burden versus benefit. In In re CSX Corp., the burden far outweighed
the benefit because the plaintiff’s interrogatories at issue sought names and
addresses of all safety personnel the defendants employed over a 30-year period,
extending 25 years beyond the plaintiff’s employment period. Id. Cf. In re Deere &
Co., 299 S.W.3d 819, 821 (Tex. 2009) (orig. proceeding) (inadequate remedy shown in
products liability case where reviewing court found discovery ordered as to 30 product
lines was overbroad and could require production of documents “going back decades”);
In re Weekly Homes, L.P., 295 S.W.3d 309, 323 (Tex. 2009) (orig. proceeding) (citing
Walker, and finding remedy by appeal would be inadequate because burden of
producing employees’ computer hard drives far outweighed benefit of discovery).
{1789105;} 28
A. NONE OF MAGELLAN’S REQUESTS TO ENTERPRISE ARE
OVERBROAD
Enterprise leads its argument by pointing to Magellan’s Request
No. 10—which it says “typifies the overbreadth” (Pet., p. 22) of Magellan’s
requests—asserting that the documents sought have “no apparent
connection” to the issues in the case. (Pet., p. 23). That is plainly wrong.
Magellan alleges that, consistent with Enterprise’s
representations, the Enterprise transportation commitment set forth in
the Distribution Agreement applies to all Product (crude oil and
condensate) which is owned by Enterprise at any of the defined Origin
Points, transported on its Eagle Ford-to-Houston pipeline system, and
delivered to any of the defined Destination Points in the Houston area
market. MR001. Based on information it discovered through pre-suit
audit, Magellan also alleges that Enterprise is deliberately skirting its
contractual commitment, in various ways (e.g., replacing pre-contract
marketing agreements with post-contract buy-sell agreements, and
idling its Rancho I pipeline and using its Rancho II pipeline to bypass the
Magellan’s Connection Point9) which not only breach the contract but
9 See SR074 for illustration.
{1789105;} 29
also indicate that Enterprise never intended to perform its obligation to
“exclusively utilize” Magellan’s Houston area distribution system
originating at the Genoa Junction Connection Point.
Request No. 10 calls for Enterprise business plans, projections,
statistics and the like regarding its marketing, transportation or delivery
of “Eagle Ford Product” only, i.e., only Product which Enterprise owns or
controls at a specified Origin Point and is subject to the transportation
commitment contained in the Distribution Agreement. Enterprise’s
complaint that Request No. 10 references items pertaining to marketing
or delivery of Eagle Ford Product to ECHO Terminal, Genoa Junction, or
other Houston Area Destinations is unfounded, and ironic, because such
specific references reasonably limit the scope of the request so that it does
not seek information pertaining to any Eagle Ford Product that does not
move to Houston on the Eagle Ford-to-Houston pipeline and, therefore,
is not subject to the Distribution Agreement. The requested information
is also reasonably limited to the time period during which Distribution
Agreement has been in effect.
Documents responsive to Request No. 10 are highly relevant to
multiple issues in the case, such as: whether Enterprise misled Magellan
{1789105;} 30
about Enterprise’s purported need, desire, and intent to make exclusive
use of Magellan’s facilities; whether Enterprise ever planned or expected
to do so; whether, at the time Enterprise induced Magellan to invest in
expanded facilities and new connections between the competitors’
respective facilities, Enterprise was already using or planning to use
operating methods designed to evade its commitment and/or frustrate
Magellan’s ability to audit compliance with that commitment; and
whether, when and why Enterprise’s needs, plans or expectations
changed after it signed the Distribution Agreement (e.g., whether
changes were made in order to evade the transportation commitment,
which the law forbids (see MR253)).
Next, Enterprise contends that Request Nos. 17-23 are overbroad
because they seek information about “every customer contract for Eagle
Ford Crude.” (Pet., p. 24). That is also incorrect. First, given the scope-
limiting definitions used, all of these requests pertain only to contracts
covering crude oil or condensate purchased, sold or transported from one
of the Origin Points identified in the Distribution Agreement. Second,
they are all reasonably limited in time, to the period from 2011 (when
{1789105;} 31
Enterprise began entering into the marketing agreements it later
replaced with buy-sell agreements) to present.
Documents responsive to Request Nos. 17-23 are relevant to the
same issues and matters discussed above, in particular whether the
contracts resulted from customer demands (as Enterprise claims, see
MR090-091, SR489-533) or from Enterprise’s own bad faith attempts to
structure deals so as to evade its commitment to make exclusive use of
Magellan’s facilities, and instead promote the use of Enterprise’s
facilities. Enterprise acknowledged the relevance of such contracts when
it provided three buy-sell agreements and one of the related marketing
agreements it replaced with a buy-sell agreement.
Last, Enterprise claims that Request Nos. 24-26 and 28-29 are
overbroad on the ground that they seek information about “Future
Destination Points” (a term defined in the Distribution Agreement) “that
Magellan has never put into service.” (Pet., p. 24). However, Enterprise
has not proved that assertion, and cannot because it is false. It is true
that Request Nos. 28-29 seek information about crude transportation
from ECHO Terminal to any Destination Point or Future Destination
Point, but do not tie that to barrels which came from an Origin Point.
{1789105;} 32
However, that is only because Enterprise states that the barrels it
transports from an Origin Point are being batched, are not tied or
matched to the barrels it resells at ECHO Terminal, and thus cannot be
specifically identified or traced from ECHO Terminal to the ultimate
delivery point. MR090-091, MR243, SR378, SR489-533. In this
circumstance, the information sought by Request Nos. 28-29 is obviously
relevant to identify and quantify, by some appropriate means, the
Product Enterprise should have delivered through Magellan’s facilities.
None of Enterprise’s arguments about overbreadth and abuse of
discretion are valid, and all of the cases Enterprise relies on are factually
distinguishable. See, e.g., In re Am. Optical Corp., 988 S.W.2d 711 (Tex.
1998) (orig. proceeding) (overbroad requests for every document ever
produced relating to asbestos, over fifty-year period); Dillard Dep't
Stores, Inc., 909 S.W.2d at 492 (overbroad requests for every incident
between 1985 and 1990 in 227 stores nationwide); In re Graco Children’
s Prods., Inc., 210 S.W.3d 598, 600 (Tex. 2006) (orig. proceeding)
(overbroad request for 20 categories of documents regarding products and
defects different from product and defect alleged in suit); Texaco, Inc.,
{1789105;} 33
898 S.W.2d at 815 (overbroad requests for documents regarding
substances to which plaintiffs never alleged exposure).
Furthermore, Enterprise has not shown that it lacks an adequate
remedy by appeal. Magellan has shown a reasonable expectation of
obtaining substantial benefit from the compelled discovery. By contrast,
Enterprise has not given this Court any specifics showing that
compliance will impose a significant burden on Enterprise, much less one
“far out of proportion” to the benefit Magellan may gain.
B. NONE OF THE SUBPOENAS ARE OVERBROAD
Enterprise’s argument about alleged overbreadth of Magellan’s
subpoenas to the three non-parties mostly just rehashes the same invalid
arguments refuted above.
Magellan’s subpoenas contain the same scope-limiting definitions
used in Magellan’s requests to Enterprise, so the subpoenas only seek
information about crude oil and condensate sold at or transported from
one of the relevant Origin Points, and only during the period relevant to
the case.
The requested contracts with Enterprise, and related
communications with Enterprise, are relevant to the issues in the case,
{1789105;} 34
for the same reasons discussed above. Each subpoena also requests the
non-party’s own transactional data, as available, showing what Eagle
Ford Product was purchased, sold or delivered under those agreements,
on what terms, and how and where the barrels were transported to a final
destination. That information is relevant to determine whether
Enterprise provided incentives aimed at steering product transportation
around Magellan’s distribution system, and to quantify the extent of
Enterprise’s breach of its commitment to exclusively utilize Magellan’s
facilities. And obtaining the non-party’s own transactional data is
necessary, especially since Enterprise claims not to know or be able to
determine how or where the barrels were delivered to a final destination
after Enterprise transported them from an Origin Point to ECHO
Terminal and then sold them back to the non-party.
Enterprise offers no proof of any significant duplication between the
documents the subpoenaed non-party must provide (if available) and
those Enterprise is compelled to provide (if available). In fact, Enterprise
has said it does not have all of the relevant contracts with the non-parties
and probably does not have much of the related inter-party
communications (MR240, MR371-372, MR376-377), and by definition,
{1789105;} 35
Enterprise does not have the non-party’s transactional records. In any
event, the possibility of some duplication, depending on what Enterprise
may eventually produce, does not render the subpoenas overbroad.
Neither are the subpoenas overbroad merely because they do not
identify the non-party custodians whose records may need to be searched.
Magellan has no way to know who the relevant custodians are. The only
case Enterprise cites as support for its assertion that the subpoenas are
“facially unreasonable and overbroad” for failure to identify custodians
and supply email search terms (Pet., p. 26), does not even address any
such issue. See In re Nat’l Lloyds Ins. Co., 507 S.W.3d 219 (Tex. 2016)
(orig. proceeding).
Moreover, neither Enterprise nor any subpoenaed non-party has
shown that Magellan’s subpoena imposes on the non-party a heavy
burden that far outweighs the benefit to Magellan.
II. THE TRIAL COURT DID NOT ABUSE ITS DISCRETION BY
OVERRULING ENTERPRISE’S “TRADE SECRETS” OBJECTION
The trial court did not abuse its discretion when it overruled
Enterprise’s trade secret objections to Magellan’s discovery requests,
because: (1) all discovery the trial court compelled Enterprise to produce
is within the scope of Magellan’s contract audit right because it is
{1789105;} 36
reasonably necessary to determine whether and to what extent
Enterprise has breached the Distribution Agreement, and thus cannot
constitute trade secret information Enterprise is privileged to withhold
from Magellan; (2) in any event, Enterprise made no prima facie showing
that any particular information responsive to Magellan’s requests is a
trade secret; (3) Enterprise waived any trade secret protection as to all
compelled discovery; and (4) though not required, Magellan established
that all compelled discovery is material and necessary for a fair
adjudication of Magellan’s claims, including its fraud claim as well as its
breach of contract claim.
A. TO SUPPORT ITS TRADE SECRET OBJECTIONS, ENTERPRISE
BORE THE BURDEN TO PROVE THAT THE SPECIFIC
INFORMATION SOUGHT BY MAGELLAN QUALIFIES AS TRADE
SECRET
A party who asserts a trade secret privilege as to information
sought in discovery bears the burden to prove that the information is
trade secret. In re Bass, 113 S.W.3d 735, 737 (Tex. 2003) (orig.
proceeding); In re Cont’l Gen. Tire, Inc., 979 S.W.2d 609, 612–13 (Tex.
1998) (orig. proceeding). See Tex. R. Evid. 507. Only if and when such
party establishes the trade secret character of the information does the
burden shift to the requesting party to show that discovery of the
{1789105;} 37
information is necessary for a fair adjudication of its claims. In re Bass,
113 S.W.3d at 738; In re Cont’l Gen. Tire, Inc., 979 S.W.2d at 610.
When a party like Enterprise challenges the trial court’s finding
that information is not a trade secret, the appellate court is “bound by
the trial court’s finding unless the evidence conclusively establishes, as a
matter of law, that the information was a trade secret.” Waste Mgmt. of
Texas, Inc. v. Abbott, 406 S.W.3d 626, 631 (Tex. App.—Eastland 2013,
pet. denied). And when the evidence is conflicting, an appellate court
must not substitute its judgment for that of the trial court, and thus may
not find that the trial court abused its discretion in finding that
information is not trade secret. Arrow Chem. Corp. v. Anderson, 386
S.W.2d 309, 313 (Tex. Civ. App.—Dallas 1965, writ ref’d n.r.e.).
B. ALL COMPELLED DISCOVERY IS WITHIN THE SCOPE OF
MAGELLAN’S CONTRACT RIGHT TO AUDIT ENTERPRISE, AND
THUS CANNOT CONSTITUTE TRADE SECRETS ENTERPRISE IS
PRIVILEGED TO WITHHOLD FROM MAGELLAN
Texas law requires that a trade secret be “secret”, i.e., that it be
neither generally known by others in the same business nor readily
ascertainable by “proper means,” such as by contractually-authorized
audit. See Tex. Civ. Prac. & Rem. Code § 134A.002(4), (6); Zoecon Indus.
v. Am. Stockman Tag Co., 713 F.2d 1174, 1179 (5th Cir. 1983); J.C. Kinley
{1789105;} 38
Co. v. Haynie Wire Line Serv., Inc., 705 S.W.2d 193, 198 (Tex. App.—
Houston [1st Dist.] 1985, writ ref’d n.r.e.).
Information which a company (Enterprise) grants its competitor
(Magellan) a contract right to review for purposes of auditing compliance
with the parties’ contract, cannot qualify as trade secret information that
the first company is privileged to withhold from the other contracting
party, even though the information may still constitute a trade secret as
to others.10 This principle is clearly illustrated by Millet v. Crump, 687
So.2d 132 (La. App. 5 Cir. 1996). In that case, the plaintiff sought to
prevent the defendant from reviewing the customer accounts of the
insurance business the plaintiff had bought from the defendant. In their
contract, the seller (defendant Crump) agreed that all information
pertaining to the customer accounts “is confidential and to be regarded
as Trade Secrets.” Id. at 135. However, the contract also provided that
the seller “shall have the right to audit all Crump Ins. accounts on a
monthly basis.” Id. Thus, the court held that since the parties’ contract
10 See Waste Mgmt. of Texas, Inc. 406 S.W.3d at 635 (holding that although Waste
Management provided pricing and volume information to Williamson County under
a contract granting the county the right to access such information for audit purposes,
Waste Management did not thereby waive trade secret protection as to a third party
who sought disclosure via open records request).
{1789105;} 39
“allowed [Crump] access to these files in order to conduct her audit,”
“these files were not treated as confidential or as trade secrets” as
between the contracting parties. Id. at 136.11
In connection with Magellan’s pre-suit audits, Enterprise provided
some of its Eagle Ford contracts with its customers; some transaction
reports identifying Eagle Ford Product purchase/sale transactions by
date, customer, location, and volume; and some information regarding
Enterprise’s operations and methods with respect to transportation and
delivery of Product Enterprise purchases and owns at a specified Eagle
Ford Origin Point. Consistent with the law discussed above, Enterprise
has never claimed that any of the selective information it provided to
Magellan for audit, pursuant to Section 4.4 of the Distribution
Agreement, constitutes a trade secret vis-a-vis Magellan. However,
11 See also Babcock & Wilcox Co. v. Areva NP, Inc., 788 S.E.2d 237, 260 (Va. 2016)
(holding that there can be no misappropriation of a trade secret where acquisition of
the information is expressly authorized by contract, because acquisition by contract
right constitutes a proper means).
{1789105;} 40
Enterprise asserted a trade secret objection to 20 out of 33 Magellan
requests. See MR287.12
The trial court did not abuse its discretion by overruling
Enterprise’s trade secrets objections, because all 20 of the requests at
issue seek information which, like the limited information Enterprise
provided during Magellan’s pre-suit audits, is also reasonably necessary
to determine whether and to what extent Enterprise has breached the
Distribution Agreement. The compelled discovery is within the scope of
Magellan’s bargained-for right to audit Enterprise and, therefore, cannot
constitute trade secret information Enterprise is privileged to withhold.
This includes requests for documents pertaining to the terms of the
contracts between Magellan and Enterprise or Enterprise Pipeline
(Request Nos. 1-3); the reasons why Enterprise and its affiliate pursued
the contracts with Magellan (Request Nos. 4-6); and Enterprise’s plans,
12 Enterprise did not assert, in its original responses (MR287) or its amended
responses (SR461), a trade secret objection to Request No. 32, the request for
documents Enterprise provided to Magellan in connection with Magellan’s audits.
The only other requests to which Enterprise did not object on trade secret grounds
were Nos. 7-9 (authorizations to enter into the agreements between Magellan and
Enterprise or Enterprise Pipeline); No. 11 (inter-party communications about those
agreements); Nos. 12-16 (Enterprise documents commenting on the meaning or effect
of, or referring to, the parties’ agreements); Nos. 30-31 (inter-party communications
and Enterprise internal communications regarding Magellan’s audits; and No. 33
(documents supporting Enterprise’s credit/offset defense).
{1789105;} 41
goals, projections, etc. regarding the marketing or transportation of its
Eagle Ford Product to its ECHO Terminal, Magellan’s Genoa Junction
connection, or other Houston area destinations (Request No. 10). The
contents of those documents reflect circumstances surrounding the
Distribution Agreement, which may properly inform as to the intent and
meaning of the contract, and thus are pertinent to evaluation of contract
compliance or breach.
Magellan’s right to audit also encompasses marketing, buy-sell, and
transportation agreements pertaining to Eagle Ford Product, between
Enterprise and an affiliate or a customer (e.g., other agreements of the
type Enterprise previously provided), related communications between
the contracting parties, and other documents showing which party
initiated the contract discussions and why (Request Nos. 17-23). All such
information is necessary to evaluate whether the agreements were made
for good faith business reasons, or in a bad faith effort to evade
Enterprise’s obligation to make exclusive use of Magellan’s facilities,
which the law forbids. See MR253.
Information within the scope of Magellan’s audit right also includes
any transactional reports and data available to Enterprise, which permit
{1789105;} 42
identification, quantification, and tracing of the ownership,
transportation, distribution and ultimate delivery of Eagle Ford Product
Enterprise owned or controlled at any designated Origin Point (Request
Nos. 24-26, 28-29). Magellan’s need for such information results, in no
small part, from the operating methods Enterprise has adopted with
respect to ownership, transportation and delivery of the Product it owns
at an Origin Point—methods like batching Product at the Origin Point,
selling it back to the producer before it reaches Magellan’s distribution
system, not tying or tracking an Origin Point barrel to a barrel sold at an
intermediate location such as ECHO Terminal, and allegedly failing to
track further transportation to any final destination including a
designated Destination Point.
In essence, Enterprise is using methods which allow it to claim that
the Product Enterprise owns at an Origin Point is not covered by the
exclusive-use commitment set forth in the Distribution Agreement
because the Product loses its identity and enters a black box once
Enterprise transports it to its ECHO Terminal and resells it to the
producer. To fully and fairly audit and evaluate contract compliance or
breach, Magellan is entitled to examine all available documents which
{1789105;} 43
may enable it not only to identify and quantify 100% of the Product
volumes Enterprise owned at an Origin Point, but also to trace how and
where all such Product was ultimately delivered. It is preposterous for
Enterprise to contend, as it does, that all Magellan really needs to know
is the volume of Product Enterprise owned at an Origin Point and the
volume Enterprise transported through Magellan’s distribution system
to a designated Destination Point.
In sum, none of the information the trial court compelled Enterprise
to produce can qualify as an Enterprise trade secret, at least not as to
Magellan, because all of it falls within the scope of Magellan’s contract
audit right and is not secret at all.
C. IN ANY EVENT, ENTERPRISE PRESENTED NO PRIMA FACIE
PROOF THAT ANY INFORMATION RESPONSIVE TO
MAGELLAN’S DISCOVERY REQUESTS IS TRADE SECRET, AS
REQUIRED
As its “proof” that the information Magellan seeks from Enterprise
and/or the subpoenaed non-parties is Enterprise trade secret
information, Enterprise relies entirely on the Affidavit of Brent Secrest,
{1789105;} 44
dated August 10, 2017 (“Secrest Aff.”).13 But that affidavit falls far short
of sufficient proof.
The Secrest Affidavit is fundamentally flawed not only because it
fails to address the impact of the audit right Enterprise expressly granted
to Magellan, but also because it fails to show that any specific
information actually responsive to Magellan’s discovery requests would
qualify as trade secret in the absence of Magellan’s audit right. Although
¶ 10 of the Secrest Affidavit recites the factors relevant to a trade secret
determination, none of the factors can be evaluated or applied in a
vacuum, without identification of the specific information in question.
That is, the specified factors presuppose that the party claiming trade
secret protection from discovery has identified “the information” actually
at issue. Indeed, Enterprise effectively concedes this burden of proof
when it states that “[o]nce Enterprise establishes that the information
13 Although the Secrest Affidavit is titled “Affidavit of Brent Secrest in Support of
Enterprise Crude Oil, LLC’s Motion for Protective Order,” is dated the same date
(August 10, 2017) that Enterprise filed its first motion for protective order/stay of
discovery, and makes assertions in language virtually identical to that motion,
Enterprise did not submit the affidavit at that time. Enterprise submitted this
affidavit in support of its October 18, 2017 Amended Motion to Quash (MR160), its
November 28, 2017 Response to Magellan’s Motion to Compel (MR390), and its
November 28, 2017 Motion for Entry of a Protective Order Governing the Production
of Confidential Information (MR474).
{1789105;} 45
Magellan is demanding is trade secret, such information cannot be
produced until Magellan establishes that such information is necessary
for a fair trial.” Pet., p. 27-28 (emphasis added). But Enterprise made no
such showing. This is why Enterprise’s argument—that the Secrest
Affidavit proves its trade secret claim—finds no support in the lone case
Enterprise cites on this point, In re Union Pac. R.R. Co., 294 S.W.3d 589,
592 (Tex. 2009) (orig. proceeding) (per curiam).14
Instead of identifying any specific information sought by Magellan,
and presenting evidence detailing the reasons why that information is
trade secret, Enterprise has taken a fundamentally different (and fatally
14In re Union Pac. R. R. Co. was a train wreck case where the plaintiff claimed injury
from inhaling chlorine gas released when Union Pacific’s train failed to stop at a
signal, collided with another train, and derailed, releasing toxic chlorine gas. The
plaintiff alleged that the railroad should have positioned the chlorine car farther
toward the rear of the train. In discovery, the plaintiff sought disclosure of three years
of specific rates Union Pacific charged for handling the shipping customer’s chlorine
chemicals as compared to the rates it charged for handling non-hazardous materials.
The Supreme Court noted that a trial court must first determine “whether the
requested production constitutes a trade secret,” and that the issue for decision was
whether the trial court abused its discretion by ordering Union Pacific to produce
“confidential ‘rate structures’ which include formulas to determine shipping rates
charged to customers.” 294 S.W.2d at 590, 591 (emphasis added). Unlike Enterprise,
Union Pacific provided two affidavits specifically “explaining why this rate
information” constituted a trade secret. Id. at 592. For that reason, and because the
plaintiff did not dispute that the requested rate structures were trade secrets, the
Supreme Court concluded that Union Pacific had established its trade secrets claim.
Id. On its facts and its face, In re Union Pac. R. R. Co. does not support Enterprise’s
argument that “parties with as (or less) detailed affidavits have obtained relief to
protect their trade secrets.” Pet., p. 32.
{1789105;} 46
flawed) approach in its quest to block discovery on trade secret grounds.
First, before the trial court, and even here, Enterprise makes sweeping
assertions to the effect that virtually all of its business information is
trade secret, except to the extent Enterprise decided to disclose it in
Magellan’s audits.15 Second, Enterprise falsely claims that Magellan’s
discovery requests to Enterprise and the subpoenaed non-parties must
invade Enterprise’s trade secret information because they encompass
virtually all such confidential business information—e.g., that
Magellan’s requests seek “detailed information about the entirety of
Enterprise’s crude oil business in Eagle Ford and South Texas” (MR478,
emphasis added), its “business plans, proposals, goals, projections,
budgets, estimates, statistics, and histories for its entire Gulf Coast
operations” (Pet., p. 9, emphasis added), “Enterprise’s full playbook of
trade secrets for the Gulf Coast region” (Pet., p. 16, emphasis added); and
“nearly every document concerning Enterprise’s Gulf Coast operations”
(Pet., p. 29, emphasis added). Third, bootstrapping on such false claims,
15For example, in its Petition Enterprise asserts that all of its “confidential business
information” constitutes “Enterprise’s trade secrets ... which Enterprise has spent
many years developing... .” Pet., p. 13. This can also be seen in Enterprise’s trade
secret objection to the great majority of Magellan’s requests.
{1789105;} 47
Enterprise asserts that the Secrest Affidavit proved that “the breadth of
Magellan’s requests and customer subpoenas necessarily seek discovery
of Enterprise’s trade secrets.” Pet., pp. 28-30. In reality, the Secrest
Affidavit contains four short paragraphs that merely parrot Enterprise’s
gross mischaracterizations of the scope of Magellan’s requests, never
specifically identifying a single request, much less explaining how the
information actually sought by that request is trade secret. MR407.16
This explains why Enterprise’s fallback argument is that all the
information it seeks to withhold qualifies as trade secret in combination
or compilation. See Pet., p. 29. However, that argument fails for the same
reasons discussed above. See Brigham Young Univ. v. Pfizer, Inc., 861
F.Supp.2d 1320, 1323–24 (D. Utah 2012) (to prove trade secret by
compilation of elements, “[s]imply pointing to a large amount of
information and claiming it is secret will not do”); VFD Consulting, Inc.
v. 21st Servs., 425 F.Supp.2d 1037, 1049 (N.D. Cal. 2006) (denying a
16 The closest Enterprise ever comes to identifying a particular request claimed to
invade its trade secrets is when it says the trial court compelled production of trade
secret documents “such as those responsive to Request for Production No. 10.” Pet.,
p. 31. But the Secrest Affidavit never identifies any specific Enterprise documents
which are actually responsive to that scope-limited request. See discussion above.
Furthermore, any such responsive documents that may exist are within the scope of
Magellan’s audit right and, therefore, cannot be “trade secret” as to Magellan.
{1789105;} 48
compilation trade secret claim because plaintiff had failed to show “with
any particularity, how [plaintiff] organized or combined the materials in
a manner that rises to the level of a legally protectable trade secret”);
Jostens, Inc. v. Nat’l Comput. Sys., Inc., 318 N.W.2d 691, 699 (Minn.
1982) (denying compilation trade secret claim, noting: “[W]e are plagued
with the elasticity of plaintiff's claim. Simply to assert a trade secret
resides in some combination of otherwise known data is not sufficient, as
the combination itself must be delineated with some particularity in
establishing its trade secret status.”)
The problem with all of that—aside from the fact that Enterprise
has made contradictory representations to the trial court and this
Court17—is that Enterprise’s mischaracterization of the breadth of
Magellan’s discovery requests is far beyond mere hyperbole; in fact, it is
patently false. As shown in the preceding section of Magellan’s argument,
Magellan’s discovery requests are nowhere near that broad but are, in
17Here, Enterprise represents that “[t]he trial court compelled Enterprise to respond
to requests that would encompass volumes of proven trade secrets.” Pet., p. 27
(emphasis added). But in the trial court, to support its request to hamstring Magellan
with a protective order allowing Enterprise to designate all of its “trade secret”
information for “Outside Attorney’s Eyes Only,” Enterprise represented that its trade
secret documents comprise only a “select group of highly sensitive information.”
MR474 (emphasis added), SR403.
{1789105;} 49
fact, carefully tailored and reasonably limited in scope to information
directly relevant to Magellan’s claims and damages.
D. ENTERPRISE WAIVED ANY POTENTIAL TRADE SECRET
PRIVILEGE AS TO MAGELLAN
To reiterate, during Magellan’s audits Enterprise never claimed
that any of the information it disclosed was trade secret, nor did it assert
a trade secret objection to Magellan’s subsequent discovery request for
the same information. Yet when it has suited Enterprise, Enterprise has
implied that the data it provided for audit is (or was) trade secret:
“disclosure of some trade-secret information subject to a confidentiality
agreement does not mean that Magellan is entitled to disclosure of all
such information.” MR397 (italics original). But in fact, it does mean that.
Texas Rule of Evidence 511(a) provides that “[a] person upon whom
these rules confer a privilege against disclosure waives the privilege if …
the person … voluntarily discloses or consents to disclosure of any
significant part of the privileged matter unless such disclosure itself is
privileged.” Tex. R. Evid. 511(a). In other words, “a privilege may not be
waived selectively to disclose only such evidence as may be beneficial to
the party holding the privilege.” Bailey v. State, 469 S.W.3d 762, 774
(Tex. App.—Houston [1st Dist.] 2015)). See 1 McCormick on Evidence §
{1789105;} 50
93 (7th ed. 2013) (“Waiver may be found ... from conduct such as partial
disclosure which would make it unfair for the client to invoke the
privilege thereafter.”).
There is no doubt that the information Enterprise provided for
audit was a significant (albeit incomplete) part of the universe of
compelled discovery Enterprise claims is trade secret, and that the prior
disclosure, pursuant to Section 4.4 of the Distribution Agreement, was
not itself privileged as to Magellan. Enterprise cannot have it both ways.
If the data disclosed during audit was not trade secret vis-a-vis the
contracting party holding a voluntarily granted contract right to audit,
then neither is the data Enterprise was ordered to produce. On the other
hand, if Enterprise disclosed trade secret information, then it waived any
potential trade secret privilege as to the rest of the information the trial
court compelled Enterprise to produce.
E. THOUGH NOT REQUIRED, MAGELLAN SHOWED A
REASONABLE NECESSITY FOR THE DISCOVERY
When the party asserting trade secret protection meets its burden
of proof, which Enterprise failed to do, the requesting party’s burden is
merely to show a “reasonable necessity” for the information, which
“depends on whether the trade secret’s production is material and
{1789105;} 51
necessary to the litigation.” In re Bass, 113 S.W.3d at 738, 743 (citation
and internal quotation marks omitted). “We have not stated conclusively
what would or would not be considered necessary for a fair adjudication,
indicating instead that the application of the test would depend on the
circumstances presented. The degree to which information is necessary
in a case depends on the nature of the information and the context of the
case.” In re Union Pac. R. R. Co., 294 S.W.3d at 592 (per curiam) (citation
omitted) (alterations omitted) (internal quotation marks omitted).18
Though it was not required, Magellan showed reasonable necessity
through testimony of its lead auditor, who explained that to fully and
fairly verify the extent of Enterprise’s breach of its commitment to make
exclusive use of Magellan’s facilities—especially in light of the black box
operating methods Enterprise revealed in audits—Magellan needs to
18 In In re Union Pac. R. R. Co., the Court found a failure to show reasonable
necessity, but the case is clearly distinguishable on its facts. There, the plaintiff
claimed she needed discovery of certain Union Pacific rate structures, to rebut the
railroad’s claim that placing hazmat rail cars in the back of the train would be cost-
prohibitive, and to argue that higher rates for hazardous materials handling were an
acknowledgment of a greater duty to take precautions. But two considerations led the
Court to conclude that the plaintiff had failed to show reasonable necessity. First,
Union Pacific admitted that it was financially able to reposition the railcars, so
discovery of specific rates was unnecessary to rebut the railroad’s “cost-prohibitive”
argument. Second, Union Pacific admitted that it charged higher rates to ship
hazardous materials versus non-hazardous materials. Therefore, said the Court, “it
is unclear to us, and [plaintiff] has not explained, why she needs the specific rate
structures to advance this negligence theory.” Id. at 593 (emphasis in original).
{1789105;} 52
discover information Enterprise refused to provide for audit, including
information showing where all of the Eagle Ford Product Enterprise
owned at an Origin Point was ultimately delivered, how it was
transported to those destinations, and why Enterprise did not utilize
Magellan’s facilities. MR322-327.
In addition, Magellan showed that the other information
Enterprise was compelled to produce is material and necessary (1) to
debunk the contract interpretation Enterprise asserts and has previously
used as an excuse to refuse Magellan’s requests for the all of the
transactional data needed for a full and fair audit, (2) to corroborate that
Enterprise deceived Magellan when it represented that Enterprise
wanted and needed to utilize Magellan’s facilities (as opposed to the ones
Enterprise owned or was planning to develop), and when it represented
that Enterprise intended to make exclusive use of Magellan’s facilities
for delivery all of Enterprise’s marketing volumes of Eagle Ford Product
from an Origin Point to a Destination Point (without revealing any
Enterprise plans to circumvent that use in the ways Enterprise is now
known to have done); (3) to corroborate that Enterprise never intended
to perform the 10-year exclusive use commitment it made to induce
{1789105;} 53
Magellan’s expenditure of tens of millions of dollars on expansion and
improvement of its distribution facilities; and (4) to corroborate that
Enterprise’s complete failure to utilize Magellan’s facilities is due not to
good faith business reasons but to bad faith efforts to evade Enterprise’s
transportation commitment to its competitor, Magellan. And none of that
material information is available from another source.19
Due to extensive motion practice, briefing, and arguments on the
merits of the case as well as the discovery issues, the trial court is steeped
in the context of the case and the nature of the information material and
necessary to the litigation. Thus, the trial court was in the best position
to weigh the conflicting evidence and determine whether Enterprise
sufficiently proved any valid trade secret privilege—including whether,
under Tex. R. Evid. 507(a), no such privilege exists because “non-
disclosure will tend to conceal fraud or otherwise work injustice”)—and
even if so, whether Magellan also showed reasonable necessity for the
discovery. And there is simply nothing to support Enterprise’s argument
19Cf. In re Rockafellow, 2013 WL 1836451, at *10 (Tex. App.—Amarillo Apr. 30, 2013)
(orig. proceeding) (balancing claimed need for defendant’s customer list against
potential harm of disclosure, and finding inadequate showing of need where evidence
indicated requester could obtain the information from other sources).
{1789105;} 54
that the trial court abused its discretion when it overruled Enterprise’s
trade secret objections and compelled production.
F. THE PROTECTIVE ORDER FULLY PROTECTS ANY
INFORMATION THAT MAY BE TRADE SECRET AND IS NOT AN
ABUSE OF DISCRETION
Nothing in Enterprise’s Amended Petition supports its argument
that the trial court’s approval of the Protective Order (SR534-543)
amounts to a clear abuse of discretion warranting mandamus relief. The
Protective Order strikes an appropriate balance between the parties’
competing interests in discovery of any trade secret information,
providing more than adequate protection for any real trade secret
information that Enterprise, Magellan, or any non-party may produce.
Enterprise’s objections to the Protective Order concern its
restrictions on review of Enterprise-produced “Attorneys Eyes Only”
(“AEO”) information by Magellan’s in-house counsel, or by Enterprise’s
own current or former employees, and the purported risk associated with
such review. None of those objections have merit.
The Protective Order strictly limits access to any confidential or
trade secret information. As Enterprise requested, the trial court ordered
two-tiered protection allowing any producing party or non-party to
{1789105;} 55
designate any “Classified Information” as either “Confidential” or AEO.
SR534-535. The only Magellan representatives authorized to see any
AEO information produced by Enterprise or a non-party are: (1)
Magellan’s outside counsel in this case; (2) Magellan in-house counsel
who (a) manage litigation, (b) are actively involved in assisting
Magellan’s outside counsel in this action, and (c) do not make or
participate in competitive business decisions; (3) Magellan auditors who
(a) are actively involved in assisting Magellan’s outside counsel in this
action, and (b) do not make or participate in competitive business
decisions; and (4) independent experts or consultants. Id. Before they can
see any AEO information, any qualified in-house counsel, auditors, and
experts/consultants must also sign a document agreeing to be bound by
the Protective Order, which also provides that recipient’s use of AEO or
any other “Classified Information” produced by another party or non-
party must be “solely for” this litigation and “for no other purpose.”
SR538. Thus, the Protective Order is far more restrictive than the
parties’ audit-related confidentiality agreement which, as noted above,
allowed the same kinds of information to be reviewed by any Magellan
representative with a “legitimate need.” MR468.
{1789105;} 56
It is true that for eligible in-house counsel who may review another
party’s AEO information, the Protective Order does not disqualify them
from participating in business decisions for a specified period after this
litigation is concluded. See Pet., p. 39. However, Enterprise conveniently
fails to mention that it never sought such a limitation on in-house
counsel. To the contrary, in fact, Enterprise forcefully advocated against
it. MR837. Enterprise is in no position to reverse course and claim, before
this Court, that the trial court abused its discretion by “failing” to require
that in-house counsel avoid participation in any business decisions for a
specified time following this litigation.
In any event, Enterprise provides no support for its argument that
access by Magellan’s in-house litigation counsel carries a significant risk
that Magellan will inadvertently disclose or deliberately misuse AEO
information, in violation of the Protective Order. Brent Secrest’s latest
affidavit, dated December 21, 2017, contains certain general assertions
about “flat” organizational structures and associated risks that
information learned by an in-house attorney will be disclosed or used in
violation of a court’s protective order. See MR728-729. As it relates to
Magellan, however, Mr. Secrest’s assertions and conclusions are sheer
{1789105;} 57
speculation; he does not even claim to have any personal knowledge
about Magellan’s in-house litigation counsel or Magellan’s internal
structures and processes. Id. Mr. Secrest’s affidavit also mischaracterizes
the pending proceedings before the Federal Energy Regulatory
Commission (“FERC”), and speculates that information Magellan’s in-
house counsel learn through discovery in this unrelated case will
inevitably “bleed over” into the FERC proceeding. MR729. That
assertion, which impugns the integrity and professional ethics of
Magellan’s in-house counsel, is baseless and false.
Equally specious is Enterprise’s claim that the Protective Order
lacks adequate protection with respect to Enterprise-produced AEO
information that may be shown to Enterprise’s own current or former
employees. See Pet., pp. 39-40. The Protective Order permits AEO
information to be disclosed only to certain of Enterprise’s current or
former employees, and only under certain conditions. Specifically, under
paragraph 2(a)(iv), only those current or former Enterprise employees
who are “reasonably believed to have knowledge or information relevant
to the litigation” may see Enterprise-produced AEO information; for
former employees, the person must have been employed by Enterprise
{1789105;} 58
when the information was generated; and all current and former
employees must sign a document agreeing to be bound by the Protective
Order. SR535.
In all probability, the only Enterprise employees who have relevant
knowledge, and thus will be eligible to see Enterprise-produced AEO
information, are or were senior executives or managerial-level personnel
in Enterprise’s crude oil marketing business. By Enterprise’s admission,
all of those people have or had access to the kinds of business information
Enterprise is compelled to produce pursuant to Magellan’s requests. In
his affidavit dated August 10, 2017, Brent Secrest testified that “[n]o one
outside of Enterprise’s senior executives and the crude marketing
group have access to comprehensive business and strategic information”
of the type Magellan seeks to discover. MR178 (emphasis added).
Tellingly, none of Mr. Secrest’s affidavits identify a single current or
former employee who is knowledgeable about the case and is someone
who does not or did not have access to Enterprise’s “comprehensive
business and strategic information.” In other words, all of Enterprise’s
assertions about its internal compartmentalization of sensitive business
information are misleading diversions. Enterprise has never asserted
{1789105;} 59
(much less proved) that any sensitive business information sought by
Magellan is or ever was off-limits to any current or former employee who
may be a witness in this case.
Enterprise also mischaracterizes the competing interests that must
be appropriately balanced in a protective order. First, Enterprise
understates Magellan’s interest in discovery of Enterprise’s business
plans, methods and practices regarding marketing and delivery of
Product Enterprise purchases and moves from an Eagle Ford Origin
Point. Magellan’s interest is not merely a “highly generalized” (Pet., p.
39) interest in prosecuting its claims. Rather, for all the reasons
discussed above, the discovery at issue goes to the heart of Magellan’s
claims for breach of contract and fraud, and quantification of damages
despite Enterprise’s attempts to camouflage relevant Product
movements to the point they become untraceable and unauditable.
Second, Enterprise greatly overstates any “competitive harm” it
could conceivably suffer in the highly unlikely event any of the few
Magellan attorneys or Enterprise employees who may review its so-called
“trade secret” information—none of which is actually trade secret vis-a-
vis Magellan—were to use or disclose it in direct violation of the
{1789105;} 60
Protective Order they will have committed (in writing) to follow. The
truth is that before this suit was filed, Enterprise provided to Magellan,
without the strict protections contained in the Protective Order, much of
what Enterprise now claims to be trade secret information regarding its
crude oil marketing and transportation agreements, methods and
practices. See SR493-511. In addition, Enterprise’s public filings in this
action describe those agreements, methods and practices in substantial
detail. See MR082-158. Given all of the allegedly confidential information
Enterprise has publicly disclosed, or provided for review by any Magellan
employee with a “legitimate need,” its claims about the “competitive
harm” that could result from unauthorized use or disclosure of any other
information Enterprise must produce—which, of course, the Protective
Order strictly prohibits—is not credible and provides no basis to conclude
that the trial court committed an abuse of discretion.
Finally, none of the cases Enterprise cites support its position that
the Protective Order constitutes a clear abuse of the trial court’s
discretion in light of the facts of this case and the competing interests to
be balanced. Every case Enterprise relies on turned on its own peculiar
facts, and involved discovery of highly sensitive if not ultra-sensitive
{1789105;} 61
information where the potential harm was different in kind and more
serious in nature than any present here, and where the risk of improper
disclosure was not purely speculative (as it is here).20 Enterprise’s cases
do not, either individually or collectively, establish any immutable rule
that a protective order must include any protections more stringent than
those contained in the Protective Order the trial court entered in this
case.
Indeed, many courts have approved protective orders containing
the same or lesser protections than those found in this Protective Order.
See, e.g., Life Techs. Corp. v. Biosearch Techs., Inc., 2011 WL 1157860 at
*2-3 (E.D. Tex. Mar. 29, 2011) (permitting two of plaintiff’s in-house
counsel to review materials designated “highly confidential—outside
counsel’s eyes only, noting that denying such access would impair the
plaintiff’s ability to prosecute its claims); U.S. Steel Corp. v. United
States, 730 F.2d 1465, 1469 (Fed. Cir. 1984) (permitting review by in-
house counsel despite the possibility in-house counsel might move into
20 Several of the cases Enterprise cites (Pet., pp. 35-38) are intellectual property cases
involving ultra-sensitive information, or employment-related cases where Texas
courts have understandably enjoined or placed strict limits on an employee’s use or
disclosure of trade secrets obtained from a former employer. Again, Enterprise has
acknowledged that none of the “trade secret” information it is compelled to produce
is “ultra-sensitive.” MR538.
{1789105;} 62
other positions); Safe Flight Instrument Corp. v. Sundstrand Data
Control Inc., 682 F. Supp. 20, 22-23 (D. Del. 1988) (permitting defendant’s
in-house counsel to review plaintiff’s confidential materials, noting that
“defendant has represented to this Court that its in-house counsel
involved in this litigation neither conduct scientific research nor
prosecute patents”); Matsushita Elec. Indus. Co. v. U.S., 929 F.2d 1577,
1580 (Fed. Cir. 1991) (reversing injunction preventing company’s
General Counsel, Senior Vice President and Secretary from accessing
competitor’s confidential information—“[T]he standard” is not ‘regular
contact’ with other corporate officials who make ‘policy,’ or even
competitive decisions, but ‘advice and participation’ in ‘competitive
decisionmaking.’”); In re Comm’l Metals Co., 2017 WL 3712169 (Tex.
App.—Dallas Aug. 29, 2017) (orig. proceeding) (finding no abuse of
discretion where protective order authorized review by opposing party’s
president as a surrogate for in-house counsel).
III. THE TRIAL COURT DID NOT ERR, OR ABUSE ITS DISCRETION, BY
COMPELLING DISCOVERY OF ANY INFORMATION ENTERPRISE
LABELS AS “PAROL EVIDENCE”
Enterprise’s “parol evidence” assault on the trial court’s order
compelling production responsive to Magellan Request Nos. 1-6 and 12-
{1789105;} 63
16 hinges entirely on its argument that the Distribution Agreement is
“facially unambiguous.” Pet., p. 41. This is the very same argument,
practically verbatim, that Enterprise made in its unsuccessful motion for
summary judgment. See MR082-158.
In that motion, Enterprise argued that there is only one reasonable
interpretation of the 10-year commitment it made in the Distribution
Agreement—that Enterprise is obligated to make exclusive use of
Magellan’s distribution facilities only if Enterprise chooses to retain
ownership of its Eagle Ford crude oil at all times and places along its
transport from an Origin Point to a Destination Point and Enterprise also
chooses to deliver the crude to Magellan’s Connection Point on its
way to a Destination Point. See MR082. But as Magellan explained to the
trial court in its opposition to Enterprise’s summary judgment motion,
Enterprise’s interpretation renders illusory the commitment it made for
the express purpose of inducing Magellan to invest heavily in expansion
and improvement of its distribution system, is inconsistent with the
overall purpose of the contract, and certainly is not the only reasonable
interpretation of the contract language when read in context and as a
whole. See SR073.
{1789105;} 64
Although the trial court denied Enterprise’s summary judgment
motion following extensive briefing and oral argument (MR159), nothing
in the record supports Enterprise’s assertion (Pet., p. 42) that the trial
court has finally determined whether the Distribution Agreement is or is
not ambiguous as it relates to Enterprise’s commitment. What is clear is
that the trial court rejected Enterprise’s argument that the only
reasonable interpretation of the Distribution Agreement, on its face, is
the one Enterprise advocates.
Given the applicable rules of contract construction, it is clearly
within a trial court’s discretion to permit discovery into the facts and
circumstances surrounding a contract before the court decides whether
the contract is ambiguous, or what it must or may mean. A court must
construe a written agreement in light of all the surrounding facts and
circumstances. See First Bank v. Brumitt, 519 S.W. 3d 95, 109-10 (Tex.
2017); Banker v. Breaux, 133 Tex. 183, 128 S.W.2d 23, 24 (1939) (stating
that the contracting parties’ intention, which is of controlling importance,
must be ascertained from their agreement “in the light of the attending
circumstances”). This includes consideration of “the undisputed evidence
regarding [the contract’s] negotiation and purpose.” Basic Capital Mgmt.,
{1789105;} 65
Ind. v. Dynex Commercial, Inc., 348 S.W.3d 894, 901 (Tex. 2011). Indeed,
even when a court concludes that the contract is unambiguous, it may
still consider the surrounding facts and circumstances to “aid in the
construction of the contract’s language.” Sun Oil Co. (Del.) v. Madeley,
626 S.W.2d 726, 731 (Tex. 1981). “In other words, the parol-evidence rule
does not prohibit consideration of surrounding circumstances that
inform, rather than vary from or contradict, the contract text.” First
Bank, 519 S.W.3d at 110 (internal quotation marks omitted).
Despite this settled law, Enterprise is on a mission to put the cart
before the horse, to force the trial court to construe the Distribution
Agreement in Enterprise’s favor without knowing the surrounding facts
and circumstances and without their benefit as an aid in construction of
the contract language, at the very least. Enterprise’s attack on this aspect
of the trial court’s discovery order must be seen for what it is: a thinly-
disguised and improper request for mandamus relief from the trial
court’s denial of Enterprise’s unmeritorious summary judgment motion.
“Mandamus is generally unavailable when a trial court denies summary
judgment, no matter how meritorious the motion.” In re Ooida Risk
Retention Grp., Inc., 475 S.W.3d 905, 913 (Tex. App.—Fort Worth 2015)
{1789105;} 66
(orig. proceeding) (denying mandamus relief on denial of motion for
summary judgment); In re McAllen Med. Ctr., Inc., 275 S.W.3d 458, 465
(Tex. 2008) (orig. proceeding) (noting that “parties are not ‘entitled’ to
summary judgment” and therefore mandamus is generally unavailable).
Only “extraordinary circumstances will justify mandamus review of
orders denying summary judgment,” and even “[t]he fact that there could
potentially be a waste in time and money in proceeding to trial without
correction of the alleged error” is insufficient to warrant mandamus
relief. In re State Farm Lloyds, 2016 WL 902864, at *3 (Tex. App.—
Corpus Christi Mar. 9, 2016) (orig. proceeding).
Moreover, despite what Enterprise contends, this is not a case like
In re Islamadora Fish Co. Texas, L.L.C., 319 S.W.3d 908 (Tex. App.—
Dallas 2010) (orig. proceeding), where after denying summary judgment
the trial court ordered discovery that was not relevant under any theory
asserted in the case. Id. at 912 (finding that by statute, punitive damages
were not recoverable in the case, and concluding that “when punitive
damages clearly are not recoverable, information about net worth is not
relevant and, as a result, not discoverable”).
{1789105;} 67
The information Enterprise claims is wholly undiscoverable “parol
evidence” concerns the representations Enterprise made about why it
was interested in pursuing a contract committing it to exclusively use a
competitor’s facilities for ten years, what its actual plans and intentions
were in respect of that commitment, and other facts and circumstances
surrounding the Distribution Agreement. This includes: (1) drafts of the
Distribution Agreement and related agreements, and internal or party-
to-party communications about the agreements (Request Nos. 1-3), and
(2) other documents referencing the agreements, such as ones discussing
Enterprise’s motivation for entering into the agreements or its view of
what the agreements required of Enterprise (Request Nos. 4-6 and 12-
16).
While such information is relevant to Magellan’s breach of contract
claim, it is also relevant and discoverable as to other alleged claims. Take
the fraud claim. Enterprise argues that the Distribution Agreement’s
merger clause bars discovery of anything and everything Enterprise
labels as “parol evidence.” But it does not. “A merger clause can be
disregarded upon pleading and proof of ambiguity, fraud, or accident.”
ISG State Operations, Inc. v. Nat’l Heritage Ins. Co., 234 S.W.3d 711,
{1789105;} 68
719–20 (Tex. App.—Eastland 2007, pet. denied) (emphasis added); see
also Probado Techs. Corp. v. Smartnet, Inc., No. CIV.A. C-09-349, 2010
WL 2232831, at *6 (S.D. Tex. June 2, 2010) (“A court may disregard an
integration clause and look to prior agreements if there is evidence of
ambiguity, fraud, or accident in the written contract.”). Here, too,
Enterprise stands the law on its head by arguing that the merger clause
bars discovery of the very evidence showing why the merger clause
should be disregarded.
Or consider Magellan’s promissory estoppel claim, another claim on
which Enterprise sought summary judgment but lost. If, as Enterprise
contends (but Magellan disputes), the Distribution Agreement does not
embody the promise Magellan alleges Enterprise actually made
regarding exclusive use of Magellan’s facilities, Magellan has a claim for
promissory estoppel. See Trevino & Assocs. Mech., L.P. v. Frost Nat’l.
Bank, 400 S.W.3d 139, 146 (Tex. App.—Dallas 2013, no pet.) (“promissory
estoppel will apply to a promise outside a contract”). Information
corroborating the promise Enterprise made, which may well be found in
documents responsive to these requests, is also relevant to the
promissory fraud claim.
{1789105;} 69
None of the cases Enterprise cites support the argument that the
trial court abused its discretion by compelling production responsive to
these requests. For example, Enterprise’s heavy reliance on Nat’l Union
Fire Ins. Co. of Pittsburgh, PA v. CBI Indus., Inc., 907 S.W.2d 517 (Tex.
1995) is misplaced. The court in CBI Indus. specifically held that
“[e]xtrinsic evidence may, indeed, be admissible to give the words of a
contract a meaning consistent with that to which they are reasonably
susceptible, i.e., to ‘interpret’ contractual terms.” Id. at 521. Based on the
unique facts of that case, the trial court simply concluded that the record
was sufficiently developed to warrant summary judgment, and the
appellate court affirmed. Id. at 522. See Ford Motor Co., 279 S.W.3d at
664 (Tex. 2009) (noting that discovery was unnecessary in CBI Industries
because “the facts in [that case] were sufficiently developed and all the
relevant information was at hand” (alterations omitted) (internal
quotation marks omitted)). Here, though, the trial court was within its
discretion to find the contrary and permit discovery to proceed.
None of the other cases Enterprise relies on were decided in a
discovery context, and all of them involved actual consideration of
evidence similar to what Magellan seeks to discover. See Lake v. Cravens,
{1789105;} 70
488 S.W.3d 867, 896 (Tex. App.—Fort Worth 2016, no pet.) (reviewing a
jury verdict, discussing evidence of agreements exchanged before
execution of the contract at issue); Miller Glob. Props., LLC v. Marriott
Int’l, Inc., 418 S.W.3d 342, 348-49 (Tex. App.—Dallas 2013, pet. denied)
(reviewing summary judgment, discussing evidence of pre-contract
communications and representations by defendant); DRC Parts &
Accessories, L.L.C. v. VM Motori, S.P.A., 112 S.W.3d 854, 858-59 (Tex.
App.—Houston [14th Dist.] 2003, pet. denied) (considering evidence in
the context of summary judgment review); C & A Invs., Inc. v. Bonnet
Res. Corp., 959 S.W.2d 258, 260 (Tex. App.—Dallas 1997, writ denied)
(considering pre-closing communications between the parties, in the
context of summary judgment review).
Finally, but importantly, Enterprise has not shown, as it must for
mandamus relief, that discovery of the information it characterizes as
parol evidence will burden Enterprise far out of proportion to the benefit
Magellan may gain. See Walker, 827 S.W.2d at 843.
{1789105;} 71
CONCLUSION
For the reasons stated above, the Amended Petition for Writ of
Mandamus should be denied. Based on the Amended Petition and this
Response, Magellan does not believe that oral argument is necessary.
{1789105;} 72
DATED: January 30, 2018 Respectfully submitted,
GABLEGOTWALS
s/David L. Bryant
David L. Bryant
State Bar No. 24084344
dbryant@gablelaw.com
113 Pleasant Valley Dr., Ste 204
Boerne, Texas 78006
Telephone: (830) 336-4810
Facsimile: (918) 595-4990
Lisa T. Silvestri
State Bar No. 00797967
lsilvestri@gablelaw.com
100 W. Fifth St., Suite 1100
Tulsa, Oklahoma 74103
Telephone: (918) 595-4800
Facsimile: (918) 595-4990
And
FIGARI + DAVENPORT, LLP
Bill E. Davidoff
State Bar No. 00790565
bill.davidoff@figdav.com
Amanda Sotak
State Bar No. 24037530
amanda.sotak@figdav.com
901 Main Street, Suite 3400
Dallas, Texas 75202
Telephone: (214) 939-2000
Facsimile: (214) 939-2090
Attorneys for
Real Party in Interest,
MAGELLAN CRUDE OIL
PIPELINE COMPANY, L.P.
{1789105;} 73
CERTIFICATION AND VERIFICATION
STATE OF TEXAS §
§
KENDALL COUNTY §
BEFORE ME, the undersigned authority, on this day personally
appeared David L. Bryant, who, being known to me and duly sworn,
stated on his oath the following:
"My name is David L. Bryant. I am over twenty-one years of age,
am of sound mind, and am competent to make this verification and to
testify to the facts stated here. I am one of the lawyers assisting in the
representation of the Real Party in Interest."
"I hereby certify under Texas Rule of Appellate Procedure 52.3(j)
that I have reviewed the Response and concluded that every factual
statement in the Response is supported by competent evidence, which is
included either in the Mandamus Record or in the Supplemental
Mandamus Record."
SWORN TO AND SUBSCRIBED before me on January 30, 2018,
to certify which, witness my hand and s of office.
~"""~'="""
...
~ ~~ ~~~
STEPHANIE M. CARRANZA
~ ~{•.l;,..:t..
%Notary Public. State of Texas
\ ...••••'Pi{•.~~i Comm . Expires 12·03· 2019
~!~~t.~~"'oI' Notary 10 130457101
{1789105;} 74
CERTIFICATE OF COMPLIANCE WITH RULE 9.4
Certificate of Compliance with the Type-Volume Limitation,|
Typeface Requirements, and Type-Style Requirements
1. This brief complies with the type-volume limitation of Texas
Rule of Appellate Procedure 9.4(e)(i)(2)(B). According to the word count
function available through Microsoft Word 2016, the Response to Petition
for Writ of Mandamus contains 14,238 words on pages, excluding the
parts exempted by Texas Rule of Appellate Procedure 9.4(e)(i)(1).
2. This brief complies with the typeface requirements of Texas
Rule of Appellate Procedure 9.4(e). The Response was prepared in
Century Schoolbook, a proportionally spaced typeface, using Microsoft
Word 2016 in 14-point font for the text, and 12-point font in footnotes.
/s/David L. Bryant
David L. Bryant
{1789105;} 75
CERTIFICATE OF SERVICE
This is to certify that on January 30, 2018, a true, correct and
complete copy of this filing has been served on all counsel of record via a
court-approved electronic filing system or by certified mail, return receipt
requested. A copy of the filing was also mailed to Respondent by certified
mail, return receipt requested to 600 Commerce Street, 6th Floor West,
Dallas, Texas 75202.
/s/ David L. Bryant
David L. Bryant
{1789105;} 76
NO. 05-17-01421-CV
IN THE COURT OF APPEALS
FOR THE FIFTH JUDICIAL DISTRICT
In Re Enterprise Crude Oil, LLC
Original Proceeding from Cause No. DC-17-7264,
101st Judicial District Court, Dallas County
Hon. Staci Williams, Presiding
INDEX OF SUPPLEMENTAL MANDAMUS RECORD
FILED BY REAL PARTY IN INTEREST
Page No. Document Description
SR1-72 2017-08-10 Defendant’s Motion for Protection
and to Stay Discovery Pending Resolution of
Defendant’s Dispositive Motion
SR73-340 2017-09-18 Plaintiff’s Response in Opposition to
Defendant’s Motion for Summary Judgment
(w/exhibits)
SR341-366 2017-09-20 Plaintiff’s Response in Opposition to
Motion for Protection and to Stay Discovery
Pending Resolution of Defendant’s Dispositive
Motion (w/exhibits)
{1775032;2}
Page No. Document Description
SR367-397 2017-09-20 Defendant’s Reply in Support of
Motion for Summary Judgment
SR398-488 2017-12-27 Plaintiff’s Supplement to Response
to Defendant’s Motion for Entry of Protective
Order Governing the Production of Confidential
Information (w/exhibits)
SR489-533 2018-01-02 Plaintiff’s Second Supplement to
Response to Defendant’s Motion for Entry of
Protective Order, Filing Exhibit 5 in Redacted
Form (w/exhibits)
SR534-543 2018-01-08 Protective Order
{1775032;2}
2
DATED: January 9, 2018 Respectfully submitted,
GABLEGOTWALS
s/David L. Bryant
David L. Bryant
State Bar No. 24084344
dbryant@gablelaw.com
113 Pleasant Valley Dr., Ste 204
Boerne, Texas 78006
Telephone: (830) 336-4810
Facsimile: (918) 595-4990
Lisa T. Silvestri
State Bar No. 00797967
lsilvestri@gablelaw.com
100 W. Fifth St., Suite 1100
Tulsa, Oklahoma 74103
Telephone: (918) 595-4800
Facsimile: (918) 595-4990
And
FIGARI + DAVENPORT, LLP
Bill E. Davidoff
State Bar No. 00790565
bill.davidoff@figdav.com
Amanda Sotak
State Bar No. 24037530
amanda.sotak@figdav.com
901 Main Street, Suite 3400
Dallas, Texas 75202
Telephone: (214) 939-2000
Facsimile: (214) 939-2090
Attorneys for
Real Party in Interest,
MAGELLAN CRUDE OIL
PIPELINE COMPANY, L.P.
{1775032;2}
3
CERTIFICATE OF SERVICE
This is to certify that on January 9, 2018, a true, correct and
complete copy of this filing has been served on all counsel of record via a
court-approved electronic filing system or by certified mail, return receipt
requested. A copy of the filing was also mailed to Respondent by certified
mail, return receipt requested to 600 Commerce Street, 6th Floor West,
Dallas, Texas 75202.
/s/ David L. Bryant
David L. Bryant
{1775032;2}
5
NO. DC-17-07264
MAGELLAN CRUDE OIL PIPELINE § IN THE DISTRICT COURT
COMPANY, L.P., §
§
Plaintiff, §
§
vs. § 101st JUDICIAL DISTRICT
§
ENTERPRISE CRUDE OIL LLC, §
§
Defendant. § DALLAS COUNTY, TEXAS
MOTION FOR PROTECTION AND TO STAY DISCOVERY PENDING RESOLUTION
OF DEFENDANT’S DISPOSITIVE MOTION
Defendant Enterprise Crude Oil LLC (“Enterprise”) moves for an order protecting it
against abusive and harassing discovery during the pendency of Enterprise’s case-ending motion
for summary judgment. This motion is brought pursuant to Rule 192.6 of the Texas Rules of
Civil Procedure, and to give effect to Rule 1 which provides that the objective of the rules is to
obtain a just, fair, equitable and impartial adjudication of the rights of the parties with as great
expedition and dispatch and the least expense to the parties.
I. SUMMARY OF ARGUMENT
This Court should issue an Order staying discovery pending resolution of the threshold
legal issues raised in Enterprise’s Traditional Motion for Summary Judgment filed on August 4,
2017. Enterprise’s summary judgment motion argues that the plain and unambiguous language
of the parties’ agreement precludes all of Magellan’s claims a matter of law. Because the Court
need not and indeed cannot consider any extraneous evidence in determining the threshold legal
issue raised in Enterprise’s motion for summary judgment, discovery at this juncture is
unnecessary, premature and would only serve to increase the burden and expense of litigation.
DEF.’S MOT. FOR PROTECTIVE ORDER AND TO STAY DISCOVERY PAGE 1
1
SR1
Not only is the discovery Magellan seeks from Enterprise and its customers unnecessary
to resolve Enterprise’s summary judgment motion, the requests are abusive in that they far
exceed the scope of issues raised in the four corners of Magellan’s Petition and Enterprise’s
Answer. Indeed, the sensitive business information Magellan seeks from both Enterprise in its
Requests for Production and from Enterprise’s customers in Magellan’s third-party subpoenas
show that Magellan’s discovery requests are not meant to discover relevant facts, but rather to
harass and impose undue burdens on Enterprise and its customers in an attempt to improve
Magellan’s bargaining position in the case. The Court should therefore enter an order protecting
Enterprise from having to respond to Magellan’s requests and quash the non-party subpoenas.
II. FACTUAL AND PROCEDURAL BACKGROUND
Enterprise and Magellan are parties to a Crude Oil Distribution Agreement1 that provides
as follows:
1
The Distribution Agreement is Exhibit A to Plaintiff’s Original Petition.
DEF.’S MOT. FOR PROTECTIVE ORDER AND TO STAY DISCOVERY PAGE 2
2
SR2
The Distribution Agreement defines each of the capitalized terms within Section 4.1 of
the Distribution Agreement, including “Owned”, “Controlled”, “Origin Point”, “Destination
Point”, and “Connection Point.”
Applying the plain language of the Distribution Agreement, the transportation
commitment applies only to crude oil volumes that do all of the following:
(a) begin at an Origin Point;
(b) flow through one of two Magellan-owned flanges located at Genoa Junction,
which connect Magellan’s pipeline facilities to either Enterprise’s Eagle Ford
pipeline facilities or to ECHO Terminal;
(c) arrive at a Destination Point; and
(d) have not been sold to an unaffiliated third-party at any time prior to reaching a
Destination Point.
The Distribution Agreement imposes no restrictions on Enterprise’s expansion of its
crude oil storage and distribution system, nor does it prohibit the sale of crude to third parties at
any point along the distribution system. Consistent with the plain language of the Distribution
Agreement, Enterprise has spent hundreds of millions of dollars building its own crude oil
distribution assets.
Beginning in 2015, Magellan commenced a series of audits seeking to force Enterprise to
divulge its customer information and other data unnecessary to confirm payment of the agreed
tariffs for crude meeting the criteria set out in the Distribution Agreement. Magellan’s rights to
audit under the Distribution Agreement are limited to documents necessary to determine whether
barrels subject to the agreement have been treated properly. Thus, the only information
Enterprise was required to provide Magellan was documentation sufficient to show the
disposition of crude that came from an Origin Point up to the time when it ceased to be Owned
or Controlled by Enterprise. As to any crude that Enterprise Owned or Controlled from Origin
DEF.’S MOT. FOR PROTECTIVE ORDER AND TO STAY DISCOVERY PAGE 3
3
SR3
Point to a Destination Point, and that also went through the Connection Point, Enterprise was
required to demonstrate that the tariff was paid.2
Nevertheless, Magellan claimed that it was entitled to see data for all volumes coming
from the Origin Points regardless whether the crude went through the Connection Point or
whether the point of sale was a Destination Point as defined by the Distribution Agreement. As
the audit progressed, it became apparent that although the Distribution Agreement specified
precise criteria for what crude was subject to the Distribution Agreement, Magellan’s position
was that the criteria set out in Section 4.1 should be disregarded in favor of a supposed “intent”
expressed nowhere within the four corners of the contract. To that end, Magellan demanded that
Enterprise provide every contract or title transfer document for all product Enterprise owned at
any Origin Point, and that Enterprise include all details about the transferee, the date and place of
transfer, and volumes. Magellan then demanded that Enterprise identify all volumes shipped
from any Origin Point on systems other than the Eagle Ford pipeline, as well as detailed
explanations of other systems Enterprise used to transport crude, as well as the reasons those
systems were used.3
The parties continued with the audit of years 2014 and 2015 for several months, and on
June 6, 2017, Magellan commenced an audit for year 2016. By this time, Magellan had already
instituted the dispute resolution procedure set out in the Distribution Agreement. Thereafter, on
June 19, 2017, Magellan filed the instant lawsuit alleging breach of contract, reformation,
declaratory judgment, promissory estoppel, and fraud.4
Enterprise maintains that the Distribution Agreement means only what the parties agreed
it says: that crude starting at an Origin Point that goes through the Connection Point must travel
2
See Def.’s Mot. for S. J., at 12 & Ex. 2-C (filed August 4, 2017).
3
Id. at Ex. 2-C.
4
See generally, Pl’s Orig. Pet.
DEF.’S MOT. FOR PROTECTIVE ORDER AND TO STAY DISCOVERY PAGE 4
4
SR4
on Magellan pipelines if it is Owned or Controlled by Enterprise and going to a Destination
Point. If, however, crude oil never gets to the Connection Point under Enterprise’s ownership or
control—whether because it is sold to a third party or is transported on a different pipeline—the
Distribution Agreement’s conditions are not met, and such transmissions are outside the
agreement’s scope.
Because the unambiguous language of the Distribution Agreement bars Magellan’s
claims as a matter of law, on August 4, 2017, Enterprise filed its motion for summary judgment.
The hearing on Enterprise’s motion is set for August 29, 2017.
Nevertheless, Magellan seeks through discovery in this suit detailed information about
the entirety of Enterprise’s crude oil business in Eagle Ford and South Texas, without limitation
to crude subject to the Distribution Agreement. It seeks communications and drafts of
agreements between Enterprise and its customers, revealing Enterprise’s negotiating strategies
with respect to the same customers Magellan seeks. It seeks market analyses and data that would
reveal Enterprise’s entire business plans and strategies for these regions, and details about its
operations outside the routes that are the subject of the Distribution Agreement. Its requests
encompass attorney work-product and attorney-client communications, as well as parol evidence
that the Court cannot consider in interpreting the unambiguous terms of the Distribution
Agreement. And it seeks this information from both Enterprise and from non-parties with whom
Enterprise is currently doing business.5
5
Magellan’s First Request for Production of Documents by Defendant Enterprise Crude Oil LLC is attached as
Exhibit A. Magellan’s third-party subpoenas are attached as Exhibits B through D.
DEF.’S MOT. FOR PROTECTIVE ORDER AND TO STAY DISCOVERY PAGE 5
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III. ARGUMENT
A. The Court Should Stay all Discovery Until it Resolves the Threshold Issue of
Whether the Parties’ Agreements Are Unambiguous.
Because the resolution of a pending, threshold issue of contractual interpretation stands to
dispose of the entire case and moot any need for factual discovery, the Court should enter an
order staying all discovery until that threshold issue is resolved. Indeed, this case turns on a
purely legal issue of contract interpretation and the discovery Magellan seeks is unnecessary to
resolve this question. Trial courts have been given “broad discretion to schedule and define the
scope of discovery,” and should “limit discovery when ‘the burden or expense of the proposed
discovery outweighs its likely benefit, taking into account the needs of the case, the amount in
controversy, the parties’ resources, the importance of the issues at stake in the litigation, and the
importance of the proposed discovery in resolving the issues.’” Id. (quoting Tex. R. Civ. P.
192.4(b)). Such discovery limitations are especially appropriate pending resolution of important
threshold issues that may moot the need for further discovery, such as jurisdictional issues, id.; or
issues of contract interpretation, see, e.g., Nat’l Union Fire Ins. Co. of Pittsburgh, PA v. CBI
Indus., Inc., 907 S.W.2d 517, 520 (Tex. 1995).
In CBI Industries, the Texas Supreme Court affirmed a trial court’s judgment awarding
summary judgment to the defendant-insurers on the plaintiff’s declaratory judgment and breach
of contract claims, even though the trial court granted the motion before allowing the plaintiff
any discovery. Id. at 520–21. The plaintiff in CBI Industries sued various insurance companies
for declaratory relief and breach of contract after the insurers denied plaintiff coverage for claims
arising out of a toxic spill. Id. at 519. Before plaintiff had conducted any discovery, the insurers
moved for summary judgment against the plaintiff’s claims, arguing that they were entitled to
judgment as a matter of law because an unambiguous policy exclusion exempted plaintiff’s
DEF.’S MOT. FOR PROTECTIVE ORDER AND TO STAY DISCOVERY PAGE 6
6
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insurance claims from coverage. Id. The trial court agreed and granted the insurers’ motion. Id.
On appeal, the court of appeals reversed the trial court’s judgment because, in the court of
appeals’ view, the trial court could not decide the insurers’ summary judgment motion without
first giving the plaintiff “‘sufficient time to make reasonable attempts to discover evidence on the
issue of applying the contract to the subject matter with which it deals, and thereby raise a fact
issue on latent ambiguity.’” Id. at 520 (quoting CBI Indus., 860 S.W.2d 662, 666 (Tex. App.—
Houston [1st Dist.] 1993)). The Texas Supreme Court disagreed with the court of appeals’
reasoning, however, and reversed its decision. Id. at 520–21.
The Texas Supreme Court examined the language of the insurance agreement at issue and
agreed with the trial court that such language unambiguously excluded the plaintiff’s insurance
claims from coverage. Id. The Court therefore held that there were no factual issues meriting
discovery, and that the court of appeals erred in requiring the trial court to give the plaintiff a
chance to obtain discovery from the insurers in the hopes of manufacturing contractual
ambiguity with inadmissible parol evidence. Id. at 522; see also In re Am. Home Assur. Co., 88
S.W.3d 370, 376–77 (Tex. App.—Texarkana 2002, no pet.) (holding that, on remand, the trial
court should not permit plaintiff to obtain discovery of either the insurers’ deliberations in
drafting plaintiffs’ insurance policy, or the insurers’ communications with state insurance
regulators regarding the policy, without first deciding whether the contract was ambiguous and
therefore susceptible to the use of such parol evidence).
Like the defendants in CBI Industries, Enterprise has argued in its summary judgment
motion that the plain and unambiguous language of the parties’ agreements precludes Magellan
from obtaining any of the relief it seeks.6 If Enterprise’s arguments are correct (and they are),
then, as in CBI Industries, there are no factual issues meriting discovery, and therefore no reason
6
Def.’s Mot. for S. J. at 14-31.
DEF.’S MOT. FOR PROTECTIVE ORDER AND TO STAY DISCOVERY PAGE 7
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either to give Magellan a chance to manufacture an ambiguity based on inadmissible parol
evidence through discovery, or to impose upon Enterprise the heavy burden of responding to
Magellan’s very broad discovery requests. The Court should therefore enter an order protecting
Enterprise from the burden of having to respond to Magellan’s discovery requests until the Court
decides this threshold issue.
B. The Court Should Protect Enterprise from Magellan’s Requests Seeking
Inadmissible Parol Evidence Because the Information Sought is Not Relevant.
Several of Magellan’s requests seek parol evidence that has no legitimate bearing on the
parties’ dispute in light of the legal arguments raised in Enterprise’s summary judgment motion.
Discovery requests that seek production of patently irrelevant information are overbroad because
such requests “impose[] a burden on the producing party far out of proportion to any benefit that
may obtain to the requesting party.” In re CSX Corp., 124 S.W.3d 149, 153 (Tex. 2003).
Moreover, because overbroad requests for irrelevant information are improper whether they are
burdensome or not, a responding party is not required to detail what burdens such requests might
encompass. In re Allstate County Mut. Ins. Co., 227 S.W.3d 667, 670 (Tex. 2007). Nor is a
responding party required to assert claims of privilege in response to overbroad discovery
requests; assertions of privilege are required only after a party has served proper discovery
requests and overbroad requests are improper by definition. See Texaco, Inc. v. Sanderson, 898
S.W.2d 813, 815 (Tex. 1995).
Parol evidence is inadmissible to alter the meaning of an unambiguous contract. Texas
law prohibits “fishing expeditions” like those attempted by Magellan in the absence of a finding
by the court that a contract is ambiguous. CBI Industries, Inc., 907 S.W.2d at 520, 522 (Tex.
1995) (awarding summary judgment prior to any discovery because insurance contract was not
ambiguous). Where, as here, a contract is ambiguous, discovery into prior drafts and other parol
DEF.’S MOT. FOR PROTECTIVE ORDER AND TO STAY DISCOVERY PAGE 8
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evidence is improper. See Tenneco Inc. v. Enter. Prod. Co., 925 S.W.2d 640, 647 (Tex. 1996)
(holding trial court acted properly in denying additional discovery regarding unambiguous
contract and granting summary judgment); Executive Risk Indemnity, Inc. v. Integral Equity,
L.P., No. 3:03-CV-0269, 2004 WL 438936, at *9 (N.D. Tex. March 10, 2004) (Appendix
(“App.”) at 12) (denying discovery into interpretation of “Related Claims” provision in insurance
policy, because provision not ambiguous).
Despite these well-settled principles, Magellan has requested prior drafts,
communications between itself and Enterprise, and Enterprise’s internal communications leading
up to three contracts between the parties.7 Similarly, it seeks “all documents” that “contain an
actual reference (in any form)” to the three contracts,8 as well as “all documents” identifying
“business or commercial considerations” contributing to Enterprise’s interest in the three
contracts and “any similar agreement.”9 It also requests Enterprise’s internal evaluations of the
Distribution Agreement’s meaning (including by Enterprise’s attorneys).10 Because all of the
information Magellan seeks in these requests constitute parole evidence which the Court may not
consider in interpreting an unambiguous contract, it is patently irrelevant. The Court should not
permit such discovery unless and until the Court has determined that the parties’ agreement is
ambiguous and requires extraneous evidence to determine its meaning and the parties’ intent.
C. The Court Should Protect Enterprise from Magellan’s Blatant Attempt to Invade
Enterprise’s Trade Secrets in Order to Gain a Competitive Advantage
Courts are expressly empowered to issue protective orders to “‘protect the [replying
party] from undue burden, unnecessary expense, harassment, annoyance, or invasion of personal,
constitutional, or property rights.’” In re Alford Chevrolet-Geo, 997 S.W.2d at 180. A
7
Exhibit A (Magellan RFP Nos. 1-3).
8
Id., Nos. 14-16.
9
Id., Nos. 4-6.
10
Id., Nos. 12-13.
DEF.’S MOT. FOR PROTECTIVE ORDER AND TO STAY DISCOVERY PAGE 9
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protective order is particularly appropriate here, where the requests are overly broad and invasive
of Enterprise’s proprietary business information and trade secrets. See id. at 181 (quoting Tex.
R. Civ. P. 192.6(b)).
The vast majority of Magellan’s requests seek information about Enterprise’s business
operations and strategies in the Gulf Coast region. This information constitutes trade secrets
belonging to Enterprise. For example, the requests seek information about transportation and
distribution of crude oil to any “Future Destination Point” – facilities it is undisputed that
Magellan never constructed.11 In their totality, the requests would require Enterprise to disclose
its entire distribution network and pricing structure, 12 and lay open all of its customer
arrangements in the region.13
The particulars of Enterprise’s business plans and strategies, the terms of its contracts,
and the routing of product through its distribution system are not known outside the business,
except for the individual participants in a transaction. No one outside of Enterprise has a 360-
degree view of the company’s operations, which is what Magellan seeks here. Enterprise does
not even make such information generally available to its employees. Only Enterprise’s senior
executives and the individuals within Enterprise participating in the transaction have access to
customer contract terms, which also include confidentiality provisions. Only senior executives
and the crude marketing group at Enterprise are privy to the company’s business plans, and only
executives charged with developing strategy and those employees executing them have access to
such comprehensive information about the operations of Enterprise’s crude oil business in this
11
E.g., Exhibit A (RFP Nos. 28-29).
12
Id., No. 10 (seeking “plans, proposals, goals, projections, budgets, estimates, statistics or histories” of marketing,
transportation or delivery of crude); 24 (seeking “all existing Enterprise reports or analyses” relating to Eagle Ford
crude, regardless of destination point), 25-26 (seeking information providing Magellan with same assessment and
tracing capabilities as Enterprise maintains for its own internal use); 17-23 (documents relating to contracts between
Enterprise and its customers, including Enterprise’s own negotiating strategies; 27 (charges for crude transported out
of ECHO terminal).
13
Id., Nos. 17-23, 27.
DEF.’S MOT. FOR PROTECTIVE ORDER AND TO STAY DISCOVERY PAGE 10
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region. Enterprise has invested substantial man-hours and capital in developing its contractual
relations and operational systems, knowledge of which would give a competitor as substantial
advantage in the Eagle Ford market. For this reason, Enterprise secures its information by
maintaining tight security and visitor controls in its buildings, password protecting its computer
system, including confidentiality clauses in its contracts, conditioning any joint venture on a
nondisclosure agreement, and sharing information internally on a need-to-know basis.
Enterprise’s competitors are not able to recreate this information from public sources. See In re
Union Pac. R.R., 294 S.W.3d 589, 592 (Tex.2009) (orig. proceeding) (per curiam) (citing In re
Bass, 113 S.W.3d 735, 739 (Tex.2003) (orig. proceeding)).
Because the information sought are trade secrets of Enterprise, Magellan bears the burden
of establishing that the information is necessary for a fair adjudication of its claims. In re
Bridgestone/Firestone, Inc., 106 S.W.3d 730, 732–34 (Tex. 2003) (orig. proceeding); In re
Cont'l Gen. Tire, 979 S.W.2d 609, 610, 613 (Tex. 1998). General assertions of unfairness or
relevance are insufficient to demonstrate necessity. See In re Union Pac. R.R., 294 S.W.3d at
592–93; In re Bridgestone/Firestone, 106 S.W.3d at 732–33 (unfairness); In re Cont'l Gen. Tire,
979 S.W.2d at 613–14 (relevance). The requesting party “must demonstrate with specificity
exactly how the lack of the information will impair the presentation of the case on the merits to
the point that an unjust result is a real, rather than a merely possible, threat.” In re Goodyear Tire
& Rubber, 392 S.W.3d 687, 696 (Tex. App.—Dallas 2010, orig. proceeding) (quoting In re
Bridgestone/Firestone, 106 S.W.3d at 732–33). A trial court abuses its discretion if it orders
disclosure of trade secrets when the requesting party has not carried its burden to show the
information is necessary for a fair adjudication of its claim. In re Bridgestone/Firestone, 106
S.W.3d at 734; In re Cont'l Gen. Tire, 979 S.W.2d at 615.
DEF.’S MOT. FOR PROTECTIVE ORDER AND TO STAY DISCOVERY PAGE 11
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None of the information sought by Magellan is necessary to the resolution of this case,
and its disclosure would invade the property rights of Enterprise over its trade secrets. “Intrusive
discovery measures . . . require, at a minimum, that the benefits of the discovery measure
outweigh the burden imposed upon the discovered party.” See In re Weekley Homes, L.P., 295
S.W.3d 309, 322 (Tex. 2009) (orig. proceeding); In re CSX Corp., 124 S.W.3d at 153 (holding
relator lacked adequate remedy by appeal where discovery order compelled production of
“patently irrelevant” documents); Tilton v. Marshall, 925 S.W.2d 672, 683 (Tex. 1996) (orig.
proceeding) (mandamus relief may be justified when burden on producing party is far out of
proportion to any benefit to requesting party). Enterprise should not be required to lay open its
entire operations and strategies within the Eagle Ford region in response to Magellan’s fishing
expedition.
D. The Court Should Protect Enterprise from Magellan’s Subpoenas to Enterprise
Customers Containing Unduly Burdensome and Duplicative Requests.
While the discovery rules are intended to make litigation fair, the pragmatic reality is that
discovery is often used as “a weapon capable of imposing large and unjustifiable costs on one’s
adversary.” In re Alford Chevrolet-Geo, 997 S.W.2d 173, 180 (Tex. 1999) (internal quotation
marks omitted). Indeed, “[b]ecause costs of compliance [with a requesting party’s discovery
requests] are usually borne solely by the replying party, a requesting party improves its
bargaining position by maximizing those costs.” Id. Thus it is often the case that “[l]itigants
with weak cases . . . heap costs on the adverse party,” in the hopes that “these higher costs lead[]
the other side to settle on favorable terms.” Id. (internal quotation marks omitted).
Consistent with its efforts to increase litigation costs and thus its bargaining position,
Magellan served substantively identical subpoenas on three of Enterprise’s customers.14 The
14
See generally Exhibits B-D.
DEF.’S MOT. FOR PROTECTIVE ORDER AND TO STAY DISCOVERY PAGE 12
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subpoenas seek all drafts and correspondence relating to agreements with Enterprise involving
Eagle Ford crude; granular information about volumes and sales under those agreements; and
negotiations leading up to those agreements—the same irrelevant, improper, and trade secret
information Magellan has sought from Enterprise. For all the reasons stated above, a protective
order is warranted.
Protection is additionally warranted as to the subpoenas because Enterprise’s customers
are strangers to this litigation. A party causing a subpoena to be served is required to take
reasonable steps to avoid imposing undue burden or expense on the entity served. TEX. R. CIV. P.
176.7. The Texas rule, like its federal counterpart, “afford[s] nonparties special protection
against the time and expense of complying with subpoenas.” Exxon Shipping Co. v. U.S. Dept. of
Interior, 34 F.3d 774, 780 (9th Cir. 1994). Indeed, the Texas rules require subpoenas to be
curtailed if the discovery sought is: (i) unreasonably cumulative or duplicative; (ii) obtainable
from some other source that is more convenient, less burdensome, or less expensive; or (iii) the
burden or expense of the proposed discovery outweighs its likely benefit. See TEX. R. CIV. P.
192.4. “[T]he word ‘should’ in Rule 192.4 is a directive to the trial court to limit discovery when
either subsection is satisfied.” See In re Arras, 24 S.W.3d 862, 864 (Tex. App.--El Paso 2000,
orig. proceeding). Magellan’s third-party subpoenas suffer from at least three of the infirmities
listed in Rule 192.4.
What is more, the requests are duplicative and seek information obtainable from another
source – i.e., Enterprise. A responding party is entitled to a protective order if a party’s
discovery requests require “the production of patently irrelevant or duplicative documents, such
that it clearly constitutes harassment or imposes a burden on the producing party far out of
proportion to any benefit that may obtain to the requesting party.” Walker v. Packer, 827
DEF.’S MOT. FOR PROTECTIVE ORDER AND TO STAY DISCOVERY PAGE 13
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S.W.2d 833, 843 (Tex. 1992). Instead of first attempting to obtain the information from
Enterprise, Magellan’s served subpoenas containing identical request for production to
Enterprise’s non-party customers. The fact that Magellan seeks the very same information from
Enterprise as it does from these non-parties demonstrates that the information may be obtained
from a less burdensome source. Accordingly, the Court should issue an order quashing the non-
party subpoenas until Enterprise has been given a full opportunity to object and respond to the
same requests for production, which in any event should be after the Court has resolved
Enterprise’s pending motion for summary judgment.
IV. CONCLUSION
Because the Court need not consider any extraneous evidence apart from the parties’
unambiguous agreement in resolving this dispute, all discovery should be stayed until the Court
has resolved the threshold issue raised in Enterprise’s Motion for Summary Judgment.
Moreover, despite the requirements that discovery requests be reasonably tailored to include only
relevant matters and not used to fish for information, Magellan served facially overbroad and
otherwise improper discovery requests on Enterprise and its customers that seek far more
information than is relevant and fits the needs of this case. The Court should therefore enter a
protective order absolving Enterprise of its burden to respond to Magellan’s improper requests,
and quash the non-party subpoenas.
DEF.’S MOT. FOR PROTECTIVE ORDER AND TO STAY DISCOVERY PAGE 14
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Date: August 10, 2017 Respectfully submitted,
/s/ Courtney Barksdale Perez
E. Leon Carter
Texas Bar No. 03914300
lcarter@carterscholer.com
J. Robert Arnett II
Texas Bar No. 01332900
barnett@carterscholer.com
Joshua J. Bennett
Texas Bar No. 24059444
jbennett@carterscholer.com
Courtney Barksdale Perez
Texas Bar No. 24061135
cperez@carterscholer.com
CARTER SCHOLER PLLC
8150 N. Central Expressway
Suite 500
Dallas, Texas 75206
Telephone: 214-550-8188
Facsimile: 214-550-8185
ATTORNEYS FOR DEFENDANT
ENTERPRISE CRUDE OIL LLC
CERTIFICATE OF CONFERENCE
I certify that on August 7, 2017, counsel for defendants conferred telephonically with
David Bryant, counsel for plaintiff, regarding the relief sought in this motion. No agreement on
the relief sought could be reached.
/s/ E. Leon Carter
DEF.’S MOT. FOR PROTECTIVE ORDER AND TO STAY DISCOVERY PAGE 15
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CERTIFICATE OF SERVICE
This is to certify that on August 10, 2017, a true, correct and complete copy of the
foregoing document has been served on all counsel of record electronically via a court-approved
electronic filing system, in accordance with Rule 21a of the Texas Rules of Civil Procedure.
/s/ Courtney Barksdale Perez
DEF.’S MOT. FOR PROTECTIVE ORDER AND TO STAY DISCOVERY PAGE 16
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CAUSE NO. DC-17-07264
MAGELLAN CRUDE OIL PIPELINE
COMPANY, L.P., a Delaware limited
)
)
A
partnership, )
)
IN THE DISTRICT COURT OF
Plaintiff, )
)
DALLAS COUNTY, TEXAS
vs. )
)
101st JUDICIAL DISTRICT
ENTERPRISE CRUDE OIL LLC, )
a Texas limited liability company, )
)
)
Defendant. )
PLAINTIFF’S FIRST REQUEST FOR PRODUCTION OF DOCUMENTS
BY DEFENDANT ENTERPRISE CRUDE OIL LLC
TO: Defendant Enterprise Crude Oil LLC, by and through its counsel, E. Leon Carter,
CARTER SCHOLER, 8150 N. Central Expressway, Suite 500, Dallas, Texas 75206.
Plaintiff, Magellan Crude Oil Pipeline Company, L.P. (“Plaintiff” or “Magellan”),
pursuant to Rule 196 of the Texas Rules of Civil Procedure, serves the following requests to be
answered in accordance with the Texas Rules of Civil Procedure.
Definitions
The following definitions apply to all discovery requests stated below.
1. “COD Agreement” means the Crude Oil Distribution Agreement, dated October 31, 2011,
by and between Enterprise Crude Oil LLC and Magellan Pipeline Company, L.P., a copy
of which is attached to the Original Petition as Exhibit A.
2. “Communication” means a conveyance, in any form and by any means, of information
between two or more persons.
3. “Connection Agreement” means the Connection Agreement, dated December 16, 2011,
by and between Enterprise Crude Pipeline, LLC and Magellan Pipeline Company, L.P., a
copy of which is attached to the Original Petition as Exhibit C.
4. “Connection Point” means the point of interconnection, at Genoa Junction, between any
Magellan Facilities and any Enterprise crude oil transportation or distribution facilities.
{1718212;}
17
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5. “Defendant,” “You” and “Your” mean and refer to Enterprise Crude Oil LLC.
6. “Destination Point” means one or more of the following points:
A. Valero’s Houston Refinery;
B. BP’s Texas City Refinery;
C. Enterprise Pipeline’s Anahuac Junction;
D. Shell’s Deer Park Refinery
7. “Document” is intended to be as broad and inclusive as permitted by the Texas Rules of
Civil Procedure, and includes without limitation printed and electronically stored data and
information, writings, drawings, graphs, charts, photographs, sound recordings, images,
spreadsheets, correspondence, emails, voicemails, text messages, and other data or data
compilations stored in any medium from which information can be obtained. However, for
purposes of the requests made below, “Document” does not include any item filed with the
U.S. Securities and Exchange Commission.
8. “Eagle Ford Expansion Pipeline” means all or any portion of the crude oil pipeline
system extending from Gardendale (LaSalle County, Texas) to a connection point with
other Enterprise pipeline facilities at Sealy Station (Austin County, Texas).
9. “Eagle Ford Product” means crude oil and/or condensate which You owned, controlled,
purchased, sold, delivered, or took delivery of, at any Origin Point, at any time during the
Relevant Period.
10. “Eagle Ford Crude Oil Purchase Agreement” means a written agreement providing for
Enterprise to purchase Eagle Ford Product.
11. “Eagle Ford Crude Oil Sale Agreement” means a written agreement providing for
Enterprise to sell Eagle Ford Product.
12. “Eagle Ford Crude Oil Buy/Sell Agreement” means a written agreement providing for
Enterprise to purchase Eagle Ford Product from another party and to sell crude oil to the
same party or an affiliate of that party.
13. “Eagle Ford Crude Oil Transportation Agreement” means a written agreement
providing for Enterprise to transport Eagle Ford Product on the Eagle Ford Expansion
Pipeline.
14. “ECHO Terminal” means the Enterprise-owned terminal facility by the same name,
located in the Houston, Texas area.
15. “Enterprise” means Enterprise Crude Oil LLC and except when expressly stated
otherwise includes any and all of its affiliates, including without limitation Enterprise
Crude Pipeline LLC, Enterprise Products Operating LLC, and Enterprise Products Partners
L.P.
{1718212;} 2
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16. “Future Destination Point” means any one or more of the following points, as known in
2011 and regardless of any change in name or ownership occurring after 2011:
A. Marathon’s Texas City Refinery;
B. Valero’s Texas City Refinery;
C. Seaway Crude Pipeline Company’s Texas City Terminal;
D. Seaway Crude Pipeline Company’s Galena Park Terminal;
E. Houston Fuel Oil Terminal Company’s Houston Terminal;
F. Oil Tanking’s Houston Terminal;
G. Houston Refining LP’s Houston Refinery;
H. Pasadena Refining, Inc.’s Houston Refinery;
I. Pasadena Refining, Inc.’s Red Bluff Tank Farm;
J. Magellan Terminal Holdings, L.P.’s Galena Park Terminal
17. “Genoa Junction” means the pipeline junction/hub by that name, located in the Houston,
Texas area.
18. “Houston Area Destination” means and includes:
A. Any crude oil terminal or tank farm located in or near Houston, Texas, including
without limitation: Enterprise ECHO Terminal; Magellan Galena Park
Terminal; Seaway Galena Park Terminal; Seaway Texas City Terminal;
Houston Fuel Oil Houston Terminal; Oil Tanking Houston Terminal; Pasadena
Refining Red Bluff Tank Farm;
B. Any crude oil pipeline distribution system located in or near Houston, Texas,
including any Enterprise pipeline extending between ECHO Terminal and
Genoa Junction, any facilities located at Genoa Junction, and any facilities
located at Anahuac Junction; and
C. Any of the following refineries: Valero Houston Refinery; Valero Texas City
Refinery; BP Texas City Refinery; Shell Deer Park Refinery; Marathon Texas
City Refinery; Houston Refining LP Houston Refinery; Pasadena Refining
Houston Refinery.
19. “In-Service Date” has the meaning set forth in Section 2.1 of the COD Agreement.
20. “Joint Tariff Agreement” means the letter agreement, dated November 1, 2011, by and
between Enterprise Crude Pipeline, LLC and Magellan Pipeline Company, L.P., a copy of
which is attached to the Original Petition as Exhibit B.
21. “Lawyer Employee” means an employee who, at the time of any relevant act, omission
or statement, was a licensed attorney employed within the legal department of a corporate
employer.
{1718212;} 3
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22. “Magellan” means Magellan Crude Oil Pipeline Company, L.P., and except when
expressly stated otherwise, includes any and all of its affiliates or predecessors in interest
including Magellan Pipeline Company, L.P.
23. “Magellan Audit” means any audit process or procedure Magellan undertook or sought
to undertake regarding the COD Agreement, including those described in paragraphs 54,
57, and 61 of the Original Petition.
24. “Magellan Facilities” has the meaning set forth in the second paragraph of the recitals
contained in the COD Agreement.
25. “New Magellan Facilities” has the meaning set forth in the second paragraph of the
recitals contained in the COD Agreement.
26. “Non-Lawyer Employee” means an employee who, at the time of any relevant act,
omission or statement, was not a licensed attorney employed within the legal department
of a corporate employer.
27. “Original Answer” means Defendant’s Original Answer filed in the action on July 17,
2017.
28. “Original Petition” means Plaintiff’s Original Petition filed in this action on June 19,
2017.
29. “Origin Point” means one or more of the following points on the Eagle Ford Expansion
Pipeline: Gardendale (LaSalle County, Texas); Lyssy (Wilson County, Texas); Marshall
(Gonzales County, Texas); Milton (Karnes County, Texas).
30. “Plaintiff” means Magellan Crude Oil Pipeline Company, L.P. and its predecessor in
interest Magellan Pipeline Company, L.P.
31. “Regarding” means concerning, pertaining to, or relating to in any way.
32. “Relevant Period” means the period from January 1, 2011 to present.
REQUESTS FOR PRODUCTION OF DOCUMENTS
You are requested to produce, within the time prescribed by Rule 196.2 of the Texas Rules
of Civil Procedure and at any one of the offices of Plaintiff’s attorneys as shown below, all non-
identical copies of all of the following Documents within the possession, custody or control of
“Enterprise” as defined above.
{1718212;} 4
20
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These requests seek responsive data existing in any electronic form, such as emails, text
files, instant messages, word processing files, spreadsheet files (e.g., Microsoft Excel), and
database files. Plaintiff requests that all responsive electronic data be produced in its native format,
including all associated metadata, if and to the extent reasonably available.
Unless otherwise noted in a particular request, these requests seek Documents which were
created during the Relevant Period or contain information regarding the Relevant Period.
Unless otherwise noted in a particular request, these requests do not seek any inter-party
Communications sent by, to, or between, any outside counsel for Plaintiff or Defendant.
Plaintiff has expended considerable effort to exceed the Rule 196.1(b) requirement that
requested documents be described with “reasonable particularity.” In fact, Plaintiff has sought to
describe the requested documents with exceptional clarity and precision under the circumstances.
This includes, in some instances, concrete examples of responsive information or other specifics
about the intended meaning or scope of a particular request. Such examples or comments are
provided to foster clear communication and understanding, to promote good faith cooperation, and
to avoid strained interpretations or unwarranted objections which delay discovery and drive up
costs.
REQUEST FOR PRODUCTION NO. 1. Regarding the COD Agreement, the
following Documents created or generated on or before October 31, 2011: (a) all drafts of said
agreement; (b) all Documents constituting or reflecting Communications between Magellan and
Enterprise, regarding said agreement; and (c) all Documents constituting or reflecting Enterprise
internal Communications regarding said agreement.
REQUEST FOR PRODUCTION NO. 2. Regarding the Joint Tariff Agreement, the
following Documents created or generated on or before November 1, 2011: (a) all drafts of said
{1718212;} 5
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agreement; (b) all Documents constituting or reflecting Communications between Magellan and
Enterprise, regarding said agreement; and (c) all Documents constituting or reflecting Enterprise
internal Communications regarding said agreement.
REQUEST FOR PRODUCTION NO. 3. Regarding the Connection Agreement, the
following Documents created or generated on or before December 16, 2011: (a) all drafts of said
agreement; (b) all Documents constituting or reflecting Communications between Magellan and
Enterprise, regarding said agreement; and (c) all Documents constituting or reflecting Enterprise
internal Communications regarding said agreement.
REQUEST FOR PRODUCTION NO. 4. All Documents, whether created before or
after the COD Agreement, identifying any business or commercial considerations which led
Enterprise Crude Oil LLC to enter into the COD Agreement or caused or contributed to its interest
in pursuing that or any similar agreement with Magellan.
REQUEST FOR PRODUCTION NO. 5. All Documents, whether created before or
after the Joint Tariff Agreement, identifying any business or commercial considerations which led
Enterprise Crude Pipeline LLC to enter into the Joint Tariff Agreement or caused or contributed
to its interest in pursuing that or any similar agreement with Magellan.
REQUEST FOR PRODUCTION NO. 6. All Documents, whether created before or
after the Connection Agreement, identifying any business or commercial considerations which led
Enterprise Crude Pipeline LLC to enter into the Connection Agreement or caused or contributed
to its interest in pursuing that or any similar agreement with Magellan.
{1718212;} 6
22
SR22
REQUEST FOR PRODUCTION NO. 7. All Documents regarding authorization for
Enterprise Crude Oil LLC to enter into the COD Agreement.
REQUEST FOR PRODUCTION NO. 8. All Documents regarding authorization for
Enterprise Crude Pipeline LLC to enter into the Joint Tariff Agreement.
REQUEST FOR PRODUCTION NO. 9. All Documents regarding authorization for
Enterprise Crude Pipeline LLC to enter into the Connection Agreement.
REQUEST FOR PRODUCTION NO. 10. Regarding the marketing, transportation
and/or delivery of Eagle Ford Product to ECHO Terminal, to Genoa Junction, or to any other
Houston Area Destination(s), all Documents containing or reporting upon any Enterprise plans,
proposals, goals, projections, budgets, estimates, statistics, or histories thereof. This request is not
limited to Documents which focus exclusively on Eagle Ford Product as defined above; any
Document containing information applicable in whole or part to Eagle Ford Product, is included.
For example, this request includes memos, reports or analyses regarding the intended, expected or
actual utilization of the Rancho pipeline system and/or the Rancho II pipeline system for such
purposes.
REQUEST FOR PRODUCTION NO. 11. All Documents which constitute, or reflect,
Communications between Magellan and Enterprise, regarding (i) the construction of any New
Magellan Facilities, (ii) the In-Service Date, (iii) the use or non-use of the Magellan Facilities by
Enterprise following the In-Service Date, (iv) the disconnection of Enterprise facilities from
Magellan facilities at Anahuac Junction, (v) the meaning, effect, or impact of the COD Agreement,
the Joint Tariff Agreement or the Connection Agreement, and/or (vi) any dispute between
Magellan and Enterprise arising from the COD Agreement, the Joint Tariff Agreement or the
{1718212;} 7
23
SR23
Connection Agreement. For clarity, recordings and notes of any phone calls or meetings between
Magellan and Enterprise, regarding any of the above matters, are included. However, this request
is not intended to include inter-party Communications specifically regarding any Magellan Audit,
as those are the subject of a separate request.
REQUEST FOR PRODUCTION NO. 12. All Documents which were authored by any
Non-Lawyer Employee(s) of Enterprise, at any time during the Relevant Period, and which
analyze, discuss, comment on, question, or refer to (i) the enforceability of the COD Agreement
or any of its provisions, (ii) the meaning or effect of the COD Agreement or any of its provisions,
(iii) the understanding or intention of any person or party with respect to the COD Agreement or
any of its provisions, and/or (iv) the rights or obligations of either party with respect to the COD
Agreement or any of its provisions. This includes, for example, all Documents which raise any
question, or discuss or mention any view or opinion of any Non-Lawyer Employee of Enterprise,
about whether or how the COD Agreement may affect Your purchase, sale, marketing or
transportation of Eagle Ford Product or any other crude oil.
REQUEST FOR PRODUCTION NO. 13. All Documents which were authored by any
Lawyer Employee of Enterprise, at any time prior to February 16, 2017, and which analyze,
discuss, comment on, question, or refer to (i) the enforceability of the COD Agreement or any of
its provisions, (ii) the meaning or effect of the COD Agreement or any of its provisions, (iii) the
understanding or intention of any person or party with respect to the COD Agreement or any of its
provisions, and/or (iv) the rights or obligations of either party with respect to the COD Agreement
or any of its provisions. This includes, for example, all Documents which raise any question, or
discuss or mention any view or opinion of any Lawyer Employee of Enterprise, about whether or
{1718212;} 8
24
SR24
how the COD Agreement may affect Your purchase, sale, marketing or transportation of Eagle
Ford Product or any other crude oil.
REQUEST FOR PRODUCTION NO. 14. All other Documents which contain any
reference (whether specific or general) to the COD Agreement or to any party’s rights or
obligations under the COD Agreement. For clarity, this request does not broadly request or require
You to search for each and every Document that might arguably “relate” to the COD Agreement
in some way. Rather, this request narrower: its object is to discover any Documents (not
duplicative of Documents produced in response to one of the preceding requests) that contain an
actual reference (in any form) to the COD Agreement or to a party’s rights or obligations
thereunder.
REQUEST FOR PRODUCTION NO. 15. All other Documents which contain any
reference (whether specific or general) to the Joint Tariff Agreement. For clarity, please see
comments on Request for Production No. 14, also applicable here.
REQUEST FOR PRODUCTION NO. 16. All other Documents which contain any
reference (whether specific or general) to the Connection Agreement. For clarity, please see
comments on Request for Production No. 14, also applicable here.
REQUEST FOR PRODUCTION NO. 17. All Eagle Ford Crude Oil Purchase
Agreements, and all modifications, amendments or replacements of such agreements. This
includes any and all such agreements ever in existence during the Relevant Period, even if no Eagle
Ford Product was actually purchased or sold pursuant thereto and regardless of whether such
agreement was subsequently amended, restated, terminated, rescinded, repealed, replaced or
abandoned. So, for example, this request includes the following agreements as well as all similar
{1718212;} 9
25
SR25
agreements: Crude Oil Purchase Agreement between Enterprise and Petrohawk Energy
Corporation, dated March 11, 2011; Crude Oil Purchase Agreement between Enterprise and
GeoSouthern Energy Corporation, dated March 11, 2011; Crude Oil Purchase Agreement between
Enterprise and Chesapeake Energy Corporation, dated April 28, 2011.
REQUEST FOR PRODUCTION NO. 18. All Eagle Ford Crude Oil Sale Agreements,
and all modifications, amendments or replacements of such agreements. This includes any and all
such agreements ever in existence during the Relevant Period, even if no Eagle Ford Product was
actually purchased or sold pursuant thereto and regardless of whether such agreement was
subsequently amended, restated, terminated, rescinded, repealed, replaced or abandoned.
REQUEST FOR PRODUCTION NO. 19. All Eagle Ford Crude Oil Buy/Sell
Agreements, and all modifications, amendments or replacements of such agreements. This request
includes any and all such agreements ever in existence during the Relevant Period, even if no Eagle
Ford Product was actually purchased or sold pursuant thereto and regardless of whether the
agreement was subsequently amended, restated, terminated, rescinded, repealed, replaced or
abandoned. So, for example, this request includes the following agreements as well as all similar
agreements: First Amended and Restated Crude Oil Purchase and Sale Agreement between
Enterprise and Chesapeake Energy Corporation, dated January 31, 2012; First Amended and
Restated Crude Oil Purchase and Sale Agreement between Enterprise and Petrohawk Energy
Corporation, dated June 29, 2012; First Amended and Restated Crude Oil Purchase and Sale
Agreement between Enterprise and GeoSouthern Energy Corporation, dated June 29, 2012.
{1718212;} 10
26
SR26
REQUEST FOR PRODUCTION NO. 20. All Documents which discuss or mention the
business or commercial motivation(s) that led Enterprise Crude Oil LLC to enter into any Eagle
Ford Buy/Sell Agreement.
REQUEST FOR PRODUCTION NO. 21. All Documents reflecting internal Enterprise
Communications, or Communications between Enterprise and the other contracting party(ies),
regarding any Eagle Ford Crude Oil Purchase Agreement, any Eagle Ford Crude Oil Sale
Agreement, or any Eagle Ford Crude Oil Buy/Sell Agreement, which occurred on or before the
date of execution of such agreement. This includes, for example, emails or letters which shed light
on which party initiated the contract discussions, the reasons for either party’s interest in such
contract, and/or negotiation of the terms of the contract.
REQUEST FOR PRODUCTION NO. 22. All Eagle Ford Crude Oil Transportation
Agreements, including but not limited to any such agreements between or among Enterprise
entities.
REQUEST FOR PRODUCTION NO. 23. All Documents reflecting internal Enterprise
Communications, or Communications between Enterprise and the other contracting party(ies),
regarding any Eagle Ford Crude Oil Transportation Agreement, which occurred on or before the
date of execution of such agreement. This includes, for example, emails or letters which shed light
on which party initiated the contract discussions, the reasons for either party’s interest in such
contract, and/or negotiation of the terms of the contract.
REQUEST FOR PRODUCTION NO. 24. All existing Enterprise reports or analyses
which, for all or any part of the Relevant Period, identify, determine, quantify and/or summarize
Eagle Ford Product volumes, ownership, transportation and distribution routing, and/or final
{1718212;} 11
27
SR27
destination or delivery points. For clarity, this request seeks production of reports or analyses
already in existence; it does not purport to require Enterprise to create any new reports or analyses
for purposes of responding to the request.
REQUEST FOR PRODUCTION NO. 25. All Documents which Enterprise utilizes or
could utilize, with respect to all or any part of the Relevant Period, to identify, determine, quantify
and/or summarize Eagle Ford Product volumes, ownership, transportation and distribution routing,
and/or final destination or delivery points. For clarity, this request seeks Documents sufficient to
give Magellan the same assessment and reporting capability Enterprise has with respect to Eagle
Ford Product.
REQUEST FOR PRODUCTION NO. 26. All Documents which Enterprise utilizes or
could utilize, with respect to all or any part of the Relevant Period, to trace the transportation and
distribution of Eagle Ford Product from any Origin Point to its final destination or delivery point,
including by date, volume, shipper, transportation or distribution routing, and final destination or
delivery point. For clarity, this request seeks Documents sufficient to give Magellan the same
tracing capability Enterprise has with respect to Eagle Ford Product.
REQUEST FOR PRODUCTION NO. 27. All Documents showing any Enterprise
tariffs, fees, charges or incentives for transportation and distribution of crude oil from ECHO
Terminal to any Destination Point or any Future Destination Point.
REQUEST FOR PRODUCTION NO. 28. All existing Enterprise reports or analyses
which, for all or any part of the Relevant Period, identify, determine, quantify and/or summarize
actual transportation and distribution of crude oil from ECHO Terminal to any Destination Point
or any Future Destination Point. For clarity, this request seeks production of reports or analyses
{1718212;} 12
28
SR28
already in existence; it does not purport to require Enterprise to create any new reports or analyses
for purposes of responding to the request.
REQUEST FOR PRODUCTION NO. 29. All Documents which Enterprise utilizes or
could utilize, with respect to all or any part of the Relevant Period, to trace the transportation and
distribution of crude oil from ECHO Terminal to any Destination Point or any Future Destination
Point, including by date, volume, shipper, transportation or distribution routing, and/or final
destination or delivery point. For clarity, this request seeks Documents sufficient to give Magellan
the same tracing capability Enterprise has with respect to deliveries of crude oil from ECHO
Terminal to any Destination Point or Future Destination Point.
REQUEST FOR PRODUCTION NO. 30. All Documents which constitute, or reflect,
Communications between any Non-Lawyer Employee(s) of Magellan and any Non-Lawyer
Employee(s) of Enterprise, regarding any Magellan Audit.
REQUEST FOR PRODUCTION NO. 31. All Documents which constitute, or reflect,
Communications between Non-Lawyer Employees of Enterprise, regarding any Magellan Audit.
REQUEST FOR PRODUCTION NO. 32. All Documents Enterprise provided to
Magellan in connection with any Magellan Audit.
REQUEST FOR PRODUCTION NO. 33. All Documents You do or may use or rely on
to support the following affirmative defense alleged in ¶ 3 of Your Original Answer: “3. ECO is
entitled to a credit or offset for any monies Plaintiff has received for the transport of crude that
Plaintiff contends is subject to the Distribution Agreement, to the extent tariffs were paid by any
third-party purchaser of such crude for transportation through the Magellan distribution system.”
{1718212;} 13
29
SR29
This includes all Enterprise Documents purporting to show that Magellan received any such
monies.
Dated July 21, 2017.
Respectfully submitted,
GABLEGOTWALS
By: /s/ David L. Bryant
David L. Bryant
State Bar No. 24084344
dbryant@gablelaw.com
113 Pleasant Valley Drive, Suite 204
Boerne, Texas 78006
Telephone: (830) 336-4810
Facsimile: (918) 595-4990
Lisa T. Silvestri
State Bar No. 00797967
lsilvestri@gablelaw.com
100 W. Fifth St., Suite 1100
Tulsa, Oklahoma 74103
Telephone: (918) 595-4800
Facsimile: (918) 595-4990
And
FIGARI + DAVENPORT, LLP
Bill E. Davidoff
State Bar No. 00790565
bill.davidoff@figdav.com
Amanda Sotak
State Bar No. 24037530
amanda.sotak@figdav.com
901 Main Street, Suite 3400
Dallas, Texas 75202
Telephone: (214) 939-2000
Facsimile: (214) 939-2090
Attorneys for Plaintiff,
Magellan Crude Oil Pipeline Company, L.P.
{1718212;} 14
30
SR30
CERTIFICATE OF SERVICE
I certify that on July 21, 2017, the foregoing document was served upon the following
counsel of record by email, pursuant to Texas Rule of Civil Procedure 21a(a)(2):
E. Leon Carter
lcarter@carterscholer.com
J. Robert Arnett II
barnett@carterscholer.com
Joshua J. Bennett
jbennett@carterscholer.com
Courtney Barksdale Perez
cperez@carterscholer.com
CARTER SCHOLER PLLC
8150 N. Central Expressway
Suite 500
Dallas, Texas 75206
Attorneys for Defendant
/s/ David L. Bryant
David L. Bryant
{1718212;} 15
31
SR31
FILED
DALLAS COUNTY
7/31/2017 11:14 AM
FELICIA PITRE
DISTRICT CLERK
/s/ Carla Gilkey
THE STATE OF TEXAS
SUBPOENA DUCES TECUM
B
PURSUANT TO TEXAS RULES OF CIVIL PROCEDURE 176 AND 205
CAUSE NO. DC-17-07264 THE 1015" JUDICIAL DISTRICT COURT OF
IN
DALLAS COUNTY, TEXAS
MAGELLAN CRUDE OIL PIPELINE COMPANY, L.P., Plaintiff vs. ENTERPRISE CRUDE
OIL LLC, Defendant
TO WITNESS: Justin Stuhldreher
Associate General Counsel
BHP Billiton Petroleum
1360 Post Oak Blvd., Suite 150
Houston, TX 77056-3030
THE ABOVE NAMED WITNESS IS HEREBY COMMANDEDto produce, at 9:30 a.m. on
August 31, 2017, at the offices of the above named Plaintiff, I111 Bagby Street, Suite 2330,
Houston, TX 77002, the following books, papers, documents, or other tangible things:
SEE EXHIBIT A, ATTACHED
RULE 176.8(3) OF THE TEXAS RULES OF CIVIL PROCEDURE:
(a) Contempt. Failure by any person without adequate excuse to obey a subpoena served
upon that person may be deemed a contempt of the court from which the subpoena is
issued or a district court in the county in which the subpoena is served, and may be
punished by fine or confinement, or both.
11709127.} 1
32
SR32
ISSUED July 31, 2017, by the undersigned attorney, as an officer of the Court, on behalf of
Plaintiff, Magellan Crude Oil Pipeline Company, L.P.
Respectfully submitted,
GABLEGOTWALS
/s/David L. Bryant
David L. Bryant
State Bar No. 24084344
dbryant@gab1e1aw.com
113 Pleasant Valley Drive, Suite 204
Boerne, Texas 78006
Telephone: (830) 336-4810
Facsimile: (918) 595-4990
Lisa T. Silvestri
State Bar No. 00797967
1silvestri@gablelaw.com
100 W. Fifth St, Suite 1100
Tulsa, Oklahoma 74103
Telephone: (918) 595-4800
Facsimile: (918) 595-4990
And
F1GARI+ DAVENPORT, LLP
Davidoff
Bill E.
StateBar No. 00790565
bill.davidoff@figdav.com
Amanda Sotak
State Bar No. 24037530
amanda.sotak@figdav.com
901 Main Street, Suite 3400
Dallas, Texas 75202
Telephone: (214) 939-2000
Facsimile: (214) 939-2090
Attorneys for Plaintiff,
Magellan Crude Oil Pipeline Company, L.P.
(l709127;}
33
SR33
SUBPOENA DUCES TECUM RETURN
This Subpoena Duces Tecum was served upon the above named Witness by U.S. certified mail,
return receipt requested, addressed to its registered agent for service of process,
, on , 2017, with Witness Fee of
pursuant to TEXAS CIVIL PRACTICE & REMEDIES CODE § 22.004.
By:
Person who is not a party to the suit, and is not less
than 18 years of age.
OR
ACCEPTANCE OF SERVICE BY WITNESS PER TEX.R.CIV.P. 176.5(b)(1)
I,the undersigned Custodian of Records of the Witness named in the Subpoena acknowledge
receipt of a copy thereof, and hereby accept service of said Subpoena on behalf of said Witness.
Printed Name:
DATE SIGNED:
(1709122) 3
34
SR34
CERTIFICATE OF SERVICE
I certify that on July 31, 2017, the foregoing document was served upon the following
counsel of record via EFile:
E. Leon Carter
lcarter@carterscholer.com
J. Robert Arnett II
barnett@carterscholer.com
Joshua J. Bennett
jbennett@carterscholer.com
Courtney Barksdale Perez
cperez@carterscholer.com
CARTER SCHOLER PLLC
8150 N. Central Expressway
Suite 500
Dallas, Texas 75206
Attorneys for Defendant
/s/David L. Bryant
David L. Bryant
{1709'.27,) 4
35
SR35
EXHIBIT A
PLAINTIFF’S SUBPOENA DUCES TECUM
Definitions
For purposes ofthis Subpoena Duces Tecum, the following terms have the following meanings
“Crude Oil Sales Agreement” means an agreement providing for the sale to Enterprise of crude
oil and/or condensate owned or controlled by You.
“Crude Oil Buy/Sell Agreement” means an agreement providing for Your sale of crude oil
and/or condensate to Enterprise at one location, and Your purchase or repurchase from Enterprise
ofthe same product or the same volume of product at another location.
“Crude Oil Transportation Agreement” means an agreement providing for transportation, on
any Enterprise pipeline system, ofcrude oil and/or condensate You own or control.
“Eagle Ford Product” means crude oil and/or condensate which, at any time during the
Relevant Period, You either:
(a) sold to Enterprise, pursuant to any Crude Oil Sales Agreement or any Crude Oil
Buy/Sell Agreement, at any of the following locations within the Eagle Ford Shale
production area: Gardendale (LaSalle County, Texas), Lyssy (Wilson County,
Texas), Marshall (Gonzales County, Texas), or Milton (Karnes County, Texas); o_r
(b) delivered to Enterprise for transportation, pursuant to any Crude Oil Transportation
Agreement, at any of the following locations within the Eagle Ford Shale production
area: Gardendale (LaSalle County, Texas), Lyssy (Wilson County, Texas), Marshall
(Gonzales County, Texas), or Milton (Karnes County, Texas).
“ECHO Terminal” means the Enterprise~owned terminal facility by the same name, located in
the Houston, Texas area.
“Enterprise” means Enterprise Crude Oil LLC and any and all of its affiliates, including without
limitation Enterprise Crude Pipeline LLC, Enterprise Products Operating LLC, and Enterprise
Products Partners L.P.
“Document” means and includes printed and electronically stored data and information,
including writings, drawings, graphs, charts, photographs, sound recordings, images,
spreadsheets, correspondence, emails, voicemails, text messages, and other data or data
compilations stored in any medium from which information can be obtained.
“Houston Area Destination” means and includes:
(i) any crude oil terminal or tank farm located in or near Houston, Texas, including
without limitation: Enterprise ECHO Terminal; Magellan Galena Park Terminal;
Seaway Galena Park Terminal; Seaway Texas City Terminal; Houston Fuel Oil
Houston Terminal; Oil Tanking Houston Terminal; Pasadena Refining Red Bluff
Tank Farm;
(ii) any crude oil pipeline distribution system located in or near Houston, Texas,
including any Enterprise pipeline extending between the Enterprise ECHO
(l709l4l,3) I
36
SR36
EXHIBIT A
PLAlNTIFF’S SUBPOENA DUCES TECUM
Terminal and Genoa Junction, any facilities located at Genoa Junction, and any
facilities located at Anahuac Junction; and
(iii) any of the following refineries: Valero Houston Refinery: Valero Texas City
Refinery; BP Texas City Refinery; Shell Deer Park Refinery; Marathon Texas
City Refinery; Houston Refining LP Houston Refinery; Pasadena Refining
Houston Refinery.
“Magellan" means Magellan Crude Oil Pipeline Company, L.P. and any and all ofits affiliates.
“Relevant Period” means the period from January l, 2011 to present.
“You” and “Your” mean and refer to the company to which this subpoena is directed and any
and all of its affiliates and predecessors in interest.
DOCUMENTS TO BE PRODUCED
I. All drafts and all final signed versions of any Crude Oil Sales Agreement, Crude Oil
Buy/Sell
Agreement, or Crude Oil Transportation Agreement, between You and Enterprise, proposed or
entered into during the Relevant Period, regarding Eagle Ford Product, and all amendments,
supplements, assignments, terminations or cancellations thereof. For clarity, this request is not
limited to contracts currently in effect but includes all contracts which were proposed or in
effect
at any time during the Relevant Period, whether or not any Eagle Ford Product
was actually
purchased, sold, exchanged, transported or delivered pursuant thereto.
2. All correspondence (in any form, including email) between You and Enterprise, regarding
(a) a
proposal to enter any contract of a kind described in the preceding request No, 1,
(b) the tenns or
conditions of any such contract, or (c) any amendment, supplement, assignment, termination or
cancellation of any such contract.
3. With respect to Eagle Ford Product You sold to Enterprise during the Relevant Period, pursuant
to a Crude Oil Sales Agreement, all Documents necessary to identify or determine the following
for each such sale: date, volume, product type, price, and point of sale.
4. With respect to Eagle Ford Product You sold to Enterprise during the Relevant Period, pursuant
to a Crude Oil Buy/Sell Agreement, all Documents necessary to identify or determine the
following:
(a) For each sale by You: date, volume, product type, price, and point of sale.
(b) For each purchase or repurchase by You: date, volume, product type, price, point of
purchase or repurchase, final destination or delivery point, and transportation system(s)
utilized for delivery to final destination. (For clarity, this request includes but is not limited
to any such purchase or repurchase You made at ECHO Terminal, and
any purchased or
repurchased product You transported or caused to be transported from ECHO
Terminal to any other Houston Area Destination.)
5. With respect to Eagle Ford Product You delivered to Enterprise for transportation during the
Relevant Period, all Documents necessary to identify or determine the following for each such
delivery: date, volume, product type, point of delivery, transportation cost, and final destination.
{!709l4i;3) 2
37
SR37
FILED
DALLAS COUNTY
7/21/2017 2:58 PM
FELICIA PITRE
DISTRICT CLERK
Carmen Moorer
CAUSE NO. DC-17-07264
MAGELLAN CRUDE OIL PIPELINE
COMPANY, L.P., a Delaware limited partnership,
P"“‘“‘i“’
IN THE DISTRICT COURT OF
"S'
DALLAS COUNTY, TEXAS
ENTERPRISE CRUDE OIL LLC,
\/\y\/\/\.4\a\/\J\y~J~y\4’~a
a Texas limited liability company, 10’ 5‘ JUDICIAL NSTRICT
Defendant.
PLAINTlFF’S NOTICE OF SUBPOENA DUCES TECUM
TO BHP BILLITON PETROLEUM
TO: Custodian of Records
BHP Billitou Petroleum
1360 Post Oak Blvd., Suite 150
Houston, TX 77056-3030
PLEASE TAKE NOTICE that pursuant to Texas Rule of Civil Procedure 205.1(d), 10
days afier service of this Notice the above named Plaintiff will serve the attached Subpoena
Duces Tecum to BHP Billiton Petroleum, compelling it to produce to Plaintiff‘ the items
described in the Subpoena Duces Tecum, at 9:30 am. on August 31, 2017, at the offices of
Plaintiff, 1 l 1 1 Bagby Street, Suite 2330, Houston, TX 77002.
Exhibit B
ll7l7539'.l
38
SR38
Respectfully submitted,
GABLEGOTWALS
By: /s/David L. Bgant
David L. Bryant
State Bar No. 24084344
dbryant@gablelaw.com
ll3 Pleasant Valley Drive, Suite 204
Boeme, Texas 78006
Telephone: (830) 336-4810
Facsimile: (918) 595-4990
Lisa T. Silvestri
State Bar No. 00797967
lsilvestn'@gablelaw.com
100 W. Fifih St., Suite 1100
Tulsa, Oklahoma 74103
Telephone: (918) 595-4800
Facsimile: (918) 595-4990
And
FIGARI + DAVENPORT, LLP
Bill E.Davidoff
State Bar No. 00790565
bill.davidoff@figdav.com
Amanda Sotak
State Bar No. 24037530
amanda.sotak@figdav.com
901 Main Street, Suite 3400
Dallas, Texas 75202
Telephone: (214) 939-2000
Facsimile: (214) 939-2090
Attorneys for Plaintiff,
Magellan Crude Oil Pipeline Company, LP.
(m7s39;}
39
SR39
CERTIFICATE OF SERVICE
I certify that on July 21, 2017, the foregoing document was served upon the following
counsel of record via EFile:
E. Leon Carter
lcarter@carterscholer.com
J. Robert Arnett II
barnett@carterscholer.com
Joshua J. Bennett
jbennett@carterscho1er.com
Courtney Barksdale Perez
cperez@carterscholer.com
CARTER SCHOLER PLLC
8150 N. Central Expressway
Suite 500
Dallas, Texas 75206
Attorneys for Defendant
/s/David L. Brvant
David L. Bryant
(I7l7539;) 3
40
SR40
THE STATE OF TEXAS
SUBPOENA DUCES TECUM
PURSUANT TO TEXAS RULES OF CIVIL PROCEDURE 176 AND 205
CAUSE NO. DC-17-07264 IN THE IOIST JUDICIAL DISTRICT COURT OF
DALLAS COUNTY, TEXAS
MAGELLAN CRUDE OIL PIPELINE COMPANY, L.P., Plaintiff vs. ENTERPRISE CRUDE
OIL LLC, Defendant
TO WITNESS: Custodian of Records
BHP Billiton Petroleum
1360 Post Oak Blvd., Suite 150
Houston, TX 77056-3030
THE ABOVE NAMED WITNESS IS HEREBY COMMANDED to produce, at 9:30 am. on
August 31, 2017, at the offices of the above named Plaintiff, llll Bagby Street, Suite 2330,
Houston, TX
77002, the following books, papers, documents, or other tangible things:
SEE EXHIBIT A, ATTACHED
RULE I76.8(a) OF TI-IE TEXAS RULES OF CIVIL PROCEDURE:
(a) Contempt. Failure by any person without adequate excuse to obey a subpoena served
upon that person may be deemed a contempt of the court from which the subpoena is
issued or a district court in the county in which the subpoena is sewed, and may be
punished by fine or confinement, or both.
n7o9x27;) 1
41
SR41
ISSUED , 2017, by the undersigned attorney, as an officer of the Court, on
behalf of Plaintiff, Magellan Crude Oil Pipeline Company, LP.
Respectfully submitted,
GABLEGOTWALS
By:
David L. Bryant
State Bar No. 24084344
dbryant@gablelaw.com
113 Pleasant Valley Drive, Suite 204
Boeme, Texas 78006
Telephone: (830) 336-4810
Facsimile: (918) 595-4990
Lisa T. Silvestri
State Bar No. 00797967
lsi1vestri@gablelaw.com
100 W. Fifth St., Suite 1100
Tulsa, Oklahoma 74103
Telephone: (918) 595-4800
Facsimile: (918) 595-4990
And
FIGARI + DAVENPORT, LLP
Bill E. Davidofi"
State Bar No. 00790565
bil1.davidof’f@figdav.eom
Amanda Sotak
State Bar No. 24037530
a.ma.nda.sotak@figdav.com
901 Main Street, Suite 3400
Dallas, Texas 75202
Telephone: (214) 939-2000
Facsimile: (214) 939-2090
Attorneys for Plaintiff,
Magellan Crude Oil Pipeline Company, L.P.
{l709l27;) 2
42
SR42
SUBPOENA DUCES TECUM RETURN
This Subpoena Duces Tecum was sewed upon the above named Witness by US. certified mail,
return receipt requested, addressed to its registered agent for service of process,
,on , 2017, with Witness Fee of
pursuant to TEXAS CIVIL PRACTICE & REMEDIES CODE § 22.004.
By:
Person who is not a party to the suit, and is not less
than 18 years of age.
OR
ACCEPTANCE OF SERVICE BY WITNESS PER TEX.R.CIV.P. l76.5(b)(l)
I, the undersigned Custodian of Records of the Witness named in the Subpoena acknowledge
receipt of a copy thereof, and hereby accept service of said Subpoena on behalf of said Witness.
Printed Name:
DATE SIGNED:
(|709l27;} 3
43
SR43
CERTIFICATE OF SERVICE
I certify that on , 2017, the foregoing document was served upon the
following counsel of record via EFile:
E. Leon Carter
lcaner@carterscholer.com
J. Robert Arnett II
bamet1@carterschoIer.com
Joshua J. Bennett
jbennett@carterschoIer.com
Courtney Barksdale Perez
cperez@carterscholer.com
CARTER SCHOLER PLLC
8150 N. Central Expressway
Suite 500
Dallas, Texas 75206
Attorneys for Defendant
David L. Bryant
(|709I27‘,)
44
SR44
EXHIBIT A
I-'LAlNTlFF’S SUBPOENA DUCES TECUM
Definitions
For purposes ofthis Subpoena Duces Tecum, the following terms have the following meanings
“Crude Oil Sales Agreement" means an agreement providing for the sale to Enterprise of crude
and/or condensate owned or controlled by You.
oil
“Crude Oil Buy/Sell Agreement" means an agreement providing for Your sale of crude oil
and/or condensate to Enterprise at one location, and Your purchase or repurchase from Enterprise
of the same product or the same volume of product at another location.
“Crude Oil Transportation Agreement" means an agreement providing for transportation, on
any Enterprise pipeline system. of crude oil and/or condensate You own or control.
“Eagle Ford Product” means crude oil and/or condensate which, at any time during the
Relevant Period, You either:
(a) sold to Enterprise, pursuant to any Crude Oil Sales Agreement or any Crude Oil
Buy/Sell Agreement, at any of the following locations within the Eagle Ford Shale
production area: Gardendale (LaSalle County, Texas), Lyssy (Wilson County,
Texas), Marshall (Gonzales County, Texas), or Milton (Kames County, Texas);
3
(b) delivered to Enterprise for transportation, pursuant to any Crude Oil Transportation
Agreement, at any of the following locations within the Eagle Ford Shale production
area: Gardendale (Lasalle County, Texas), Lyssy (Wilson County, Texas), Marshall
(Gonzales County, Texas), or Milton (Karnes County, Texas).
“ECHO Terminal” means the Enterprise-owned tenninal facility by the same name, located in
the Houston, Texas area.
“Enterprise” means Enterprise Crude Oil LLC and any and all ofits affiliates, including
without
limitation Enterprise Crude Pipeline LLC, Enterprise Products Operating LLC,
and Enterprise
Products Partners L.P.
“Document” means and includes printed and electronically stored data and information,
including writings, drawings, graphs. charts, photographs, sound recordings,
images,
spreadsheets, correspondence, emails, voicemails, text messages, and other data or
data
compilations stored in any medium from which information can be obtained.
“Houston Area Destination" means and includes:
(i) any crude oil terminal or tank farm located in or near Houston, Texm,
including
without limitation: Enterprise ECHO Tenninal; Magellan Galena Park Terminal;
Seaway Galena Park Terminal; Seaway Texas City Terminal; Houston Fuel Oil
Houston Terminal; Oil Tanking Houston Terminal; Pasadena Refining Red Bluff
Tank Farm;
(ii) any crude oil pipeline distribution system located in or near Houston,
Texas,
including any Enterprise pipeline extending between the Enterprise ECHO
(l705l4l;]) I
45
SR45
EXHIBIT A
PL.AlNTlFF'S SUBPOENA DUCES TECUM
Terminal and Genoa Junction, any facilities located at Genoa Junction, and any
facilities located at Anahuac Junction; and
(iii) any of the following refineries: Valero Houston Refinery; Valero Texas City
Refinery; BP Texas City Refinery; Shell Deer Park Refinery; Marathon Texas
City Refinery; Houston Refining LP Houston Refinery; Pasadena Refining
Houston Refinery.
"Magellan" means Magellan Crude Oil Pipeline Company, LP. and any and all ofits affiliates.
“Relevant Period” means the period from January 1, mil to present.
“You” and “Your" mean and refer to the company to which subpoena directed and
this is any
and all of its affiliates and predecessors in interest.
DOCUM ENTS TO BE PRODUCED
I. All drafls and all final signed versions of any Crude Oil Sales Agreement, Crude Oil
Buy/Sell
Agreement, or Crude Oil Transportation Agreement, between You and Enterprise, proposed or
entered into during the Relevant Period, regarding Eagle Ford Product, and all amendments,
supplements, assignments, terminations or cancellations thereof. For clarity, this request is not
limited to contracts currently in effect but includes all contracts which were proposed or in effect
at any time during the Relevant Period, whether or not any Eagle Ford Product was
actually
purchased, sold, exchanged, transported or delivered pursuant thereto.
2. All correspondence (in any form, including email) between You and Enterprise, regarding
(a) a
proposal to enter any contract of a kind described in the preceding request No. l,
(b) the terms or
conditions of any such contract, or (c) any amendment, supplement, assignment, termination or
cancellation of any such contract.
3. With respect to Eagle Ford Product You sold to Enterprise during the Relevant Period, pursuant
to a Crude Oil Sales Agreement, all Documents necessary to identify or detennine the following
for each such sale: date, volume, product type, price, and point of sale.
4. With respect to Eagle Ford Product You sold to Enterprise during the Relevant Period, pursuant
to a Crude Oil Buy/Sell Agreement, all Documents necessary to identify or determine the
following:
(a) For each sale by You: date, volume, product type, price, and point of sale.
(b) For each purchase or repurchase by You: date, volume, product type, price, point of
purchase or repurchase, final destination or delivery point, and transportation system(s)
utilized for delivery to final destination. (For clarity, this request includes but is not limited
to any such purchase or repurchase You made at ECHO Terminal, and any purchased
or
repurchased product You transported or caused to be transported from ECHO
Terminal to any other Houston Area Destination.)
5. With respect to Eagle Ford Product You delivered to Enterprise for transportation during the
Relevant Period, all Documents necessary to identify or determine the following for each such
delivery: date, volume, product type, point of delivery, transportation cost, and final destination.
(l709I4l:3l 2
46
SR46
FILED
DALLAS COUNTY
7/31/2017 11:14 AM
FELICIA PITRE
DISTRICT CLERK
/s/ Carla Gilkey
IN THE DISTRICT COURT OF OKLAHOMA COUNTY
STATE OF OKLAHOMA
MAGELLAN CRUDE OIL PIPELINE
COMPANY. L.P.. a Delaware limited partnership,
C
Plaintiff,
Cause No. DC-17-07264
vs.
In the District Coun of Dallas County.
ENTERPRISE CRUDE OIL LLC,
wvvvvwwvvwggz
Texas. 101*‘ Judicial District
a Texas limited liability company,
Defendant.
PLAINTIFF’S SUBPOENA DUCES TECUM
TO: JimWebb
EVP an General Counsel
Chesapeake Energy Corporation
6100 N. Western Ave.
Oklahoma City, OK 73118
GREETINGS:
On behalf of the above named Plaintiff, in the above referenced action pending in the
District Court of Dallas County, Texas, 1015‘ Judicial District, You are commanded to produce
and permit inspection and copying of the documents described in the attached Exhibit A, at 9:30
a.m. on August 31, 2017, at the offices of GableGotwals, One Leadership Square, 15”‘ Floor,
211 N. Robinson, Oklahoma City, Oklahoma 73102-7101, attorneys for the above named
Plaintiff.
In order to allow objections to the production of the documents and things to be filed, you
should not produce them until the date specified in this subpoena, and if an objection is filed,
until the court rules on the obj ection.
( 1709266;)
47
SR47
This Subpoena is authorized and issued pursuant to 12 OS. § 2004.1(A)(2)(b). Pursuant
to Texas law, advance notice of service hereof has been provided to You and to the above named
Defendant, as set forth on the attached Exhibit B.
Issued July 31,2017.
Respectfully submitted,
GABLEGOTWALS
/s/David L. Bryant
David L. Bryant
OBA No. 1262
Texas Bar No. 24084344
dbryant@gab1elaw.com
1 13 Pleasant Valley Drive, Suite 204
Boerne, Texas 78006
Telephone: (830) 336-4810
Facsimile: (918) 595-4990
Lisa T. Silvestri
OBA No. 19239
Texas Bar No. 00797967
lsilvestri@gab1elaw.com
100 W. Fifth St., Suite 1100
Tulsa, Oklahoma 74103
Telephone: (918) 595-4800
Facsimile: (918) 595-4990
Attorneys for Plaintiff,
Magellan Crude Oil Pipeline Company, LP.
( 1 709266.)
48
SR48
CERTIFICATE OF SERVICE
I certify that on July 31, 2017, the foregoing document was served upon the following
counsel of record via EFile:
E. Leon Carter
lcarter@carterscholer.com
J. Robert Arnett II
barnett@carterscholer.com
Joshua J. Bennett
jbennett@carterscholer.com
Courtney Barksdale Perez
cperez@carterscholer.com
CARTER SCHOLER PLLC
8150 N. Central Expressway
Suite 500
Dallas, Texas 75206
Attorneys for Defendant
David L. Bryant
/s/
David L. Bryant
(‘.709266;} 3
49
SR49
EXHIBIT A
PLAINTIFF’S SUBPOENA DUCES TECUM
Definitions
For purposes ofthis Subpoena Duces Tccum, the following terms have the following meanings
“Crude Oil Sales Agreement” means an agreement providing for the sale to Enterprise of crude
oil and/or condensate owned or controlled by You.
“Crude Oil Buy/Sell Agreement” means an agreement providing for Your sale of crude oil
and/or condensate to Enterprise at one location, and Your purchase or repurchase from Enterprise
ofthe same product or the same volume ofproduct at another location.
“Crude Oil Transportation Agreement” means an agreement providing for transportation, on
any Enterprise pipeline system, of crude oil and/or condensate You own or control.
“Eagle Ford Product” means crude oil and/or condensate which, at any time during the
Relevant Period, You either:
(a) sold to Enterprise, pursuant to any Crude Oil Sales Agreement or any Crude Oil
Buy/Sell Agreement, at any of the following locations within the Eagle Ford Shale
production area: Gardendale (LaSalle County, Texas), Lyssy (Wilson County,
Texas), Marshall (Gonzales County, Texas), or Milton (Karnes County, Texas); o_r
(b) delivered to Enterprise for transportation, pursuant to any Crude Oil Transportation
Agreement, at any of the following locations within the Eagle Ford Shale production
area: Gardendale (LaSalle County, Texas), Lyssy (Wilson County, Texas), Marshall
(Gonzales County, Texas), or Milton (Karnes County, Texas).
“ECHO Terminal” means the Enterprise—owned terminal facility by the same name, located in
the Houston, Texas area.
“Enterprise” means Enterprise Crude Oil LLC and any and all ofits affiliates, including without
Crude Pipeline LLC, Enterprise Products Operating LLC, and Enterprise
limitation Enterprise
Products Partners LP.
“Document" means and includes printed and electronically stored data and information,
including writings, drawings, graphs, charts, photographs, sound recordings, images,
spreadsheets, correspondence, emails, voicemails, text messages, and other data or data
compilations stored in any medium from which information can be obtained.
“Houston Area Destination” means and includes:
(i) any crude oil terminal or tank farm located in or near Houston, Texas, including
without limitation: Enterprise ECHO Terminal; Magellan Galena Park Terminal;
Seaway Galena Park Terminal; Seaway Texas City Terminal; Houston Fuel Oil
Houston Terminal; Oil Tanking Houston Terminal; Pasadena Refining Red Bluff
Tank Farm;
(ii) any crude oil pipeline distribution system located in or near Houston, Texas,
including any Enterprise pipeline extending between the Enterprise ECHO
(l709l4l,3) l
50
SR50
EXHIBIT A
PLAINTIFF’S SUBPOENA DUCES TECUM
Terminal and Genoa Junction, any facilities located at Genoa Junction, and any
facilities located at Anahuac Junction; and
(iii) any of the following refineries: Valero Houston Refinery; Valero Texas City
Refinery; BP Texas City Refinery; Shell Deer Park Refinery; Marathon Texas
City Refinery; Houston Refining LP Houston Refinery; Pasadena Refining
Houston Refinery.
“Magellan” means Magellan Crude Oil Pipeline Company, LP. and any and all ofits affiliates.
“Relevant Period” means the period from January 1, 201 1 to present.
“You” and “Your” mean and refer to the company to which this subpoena is directed and any
and all of its affiliates and predecessors in interest.
DOCUMENTS TO BE PRODUCED
1. All drafts and all final signed versions of any Crude Oil Sales Agreement, Crude Oil Buy/Sell
Agreement, or Crude Oil Transportation Agreement, between You and Enterprise, proposed or
entered into during the Relevant Period, regarding Eagle Ford Product, and all amendments,
supplements, assignments, terminations or cancellations thereof. For clarity, this request is not
limited to contracts currently in effect but includes all contracts which were proposed or in effect
at any time during the Relevant Period, whether or not any Eagle Ford Product was
actually
purchased, sold, exchanged, transported or delivered pursuant thereto.
2. All correspondence (in any form, including email) between You and Enterprise, regarding
(a) a
proposal to enter any contract of a kind described in the preceding request No. 1, (b) the terms or
conditions of any such contract, or (c) any amendment, supplement, assignment, tennination or
cancellation of any such contract.
3. With respect to Eagle Ford Product You sold to Enterprise during the Relevant Period, pursuant
to a Crude Oil Sales Agreement, all Documents necessary to identify or determine the following
for each such sale: date, volume, product type, price, and point of sale.
4. With respect to Eagle Ford Product You sold to Enterprise during the Relevant Period, pursuant
to a Crude Oil Buy/Sell Agreement, all Documents necessary to identify or determine the
following:
(a) For each sale by You: date, volume, product type, price, and point of sale.
(b) For each purchase or repurchase by You: date, volume, product type, price, point of
purchase or repurchase, final destination or delivery point, and transportation system(s)
utilized for delivery to final destination. (For clarity, this request includes but is not limited
to any such purchase or repurchase You made at ECHO Terminal, and any purchased or
repurchased product You transported or caused to be transported from ECHO
Terminal to any other Houston Area Destination.)
5. With respect to Eagle Ford Product You
delivered to Enterprise for transportation during the
Relevant Period, all Documents necessary
to identify or determine the following for each such
delivery: date, volume, product type, point of delivery, transportation cost, and final destination.
(:.7o9:4:;3) 2
51
SR51
FILED
DALLAS COUNTY
7/21/2017 2:55 PM
FELICIA PITRE
DISTRICT CLERK
Carmen Moorer
CAUSE NO. DC-17-07264
MAGELLAN CRUDE OIL PIPELINE
COMPANY, L.P., a Delaware limited partnership,
Plalnfiff’
IN THE DISTRICT COURT or
"S"
DALLAS COUNTY, TEXAS
ENTERPRISE CRUDE OIL LLC, \J\y\y\z\J~y\/xax/\/\/xgxg
a Texas limited liability company, lolsl JUDICIAL DISTRICT
Defendant.
PLAINTIFF’S NOTICE OF SUBPOENA DUCES TECUM
T0 CHESAPEAKE ENERGY CORPORATION
TO: Custodian of Records
Chesapeake Energy Corporation
6100 N. Western Ave.
Oklahoma City, OK 73118
PLEASE TAKE NOTICE that pursuant to Texas Rule of Civil Procedure 2OS.1(d), 10
days after service of this Notice the above named Plaintiff will serve the attached Subpoena
Duces Tecum to Chesapeake Energy Corporation, compelling it to produce to Plaintiff the items
described in the Subpoena Duces Tecum, at 9:30 am. on August 31, 2017, at the offices of
GableGotwaIs, One Leadership Square, 15th Floor, 211 N. Robinson, Oklahoma City, OK
73102.
Exhibit B
(17:75:32)
52
SR52
Respectfixlly submitted,
GABLEGOTWALS
/s/David L. Bgxant
David L. Bryant
State Bar No. 24084344
dbryant@gablelaw.com
113 Pleasant Valley Drive, Suite 204
Boeme, Texas 78006
Telephone: (830) 336-4810
Facsimile: (918) 595-4990
Lisa T. Silvestri
State Bax No. 00797967
lsilvestri@gablelaw.com
100 W. Fifih St., Suite 1100
Tulsa, Okla.homa 74103
Telephone: (918) 595-4800
Facsimile: (918) 595-4990
And
F1GARl+ DAVENPORT, LLP
Bill E. Davidoff
State Bar No. 00790565
bill.davidoff@figdav.com
Amanda Sotak
State Bar No. 24037530
ama.nda.sotak@figdav.com
901 Main Street, Suite 3400
Dallas, Texas 75202
Telephone: (214) 939-2000
Facsimile: (214) 939-2090
Attorneys for Plaintiff,
Magellan Crude Oil Pipeline Company, L.P.
(l'll7533:l
53
SR53
CERTIFICATE OF SERVICE
I certify that on July 21, 2017, the foregoing document was served upon the following
counsel of record via EFile:
E. Leon Carter
lcarter@carterscholer.com
J.Robert Arnett II
bamett@carterscholer.com
Joshua J. Bennett
jbennett@carterscholer.com
Courtney Barksdale Perez
cperez@cax1erscholer.com
CARTER SCHOLER PLLC
8150 N. Central Expressway
Suite 500
Dallas, Texas 75206
Attorneys for Defendant
/s/David L. Bflam
David L. Bryant
(1717531) 3
54
SR54
IN THE DISTRICT COURT OF‘ OKLAHOMA COUNTY
STATE OF OKLAHOMA
MAGELLAN CRUDE OIL PIPELINE
COMPANY, L.P., a Delaware limited partnership,
Plaintiff,
Cause No. DC-17-07264
vs.
\4\.z~J\./\./~/\./\4~Jx¢s/\/
In the District Court of Dallas County,
ENTERPRISE CRUDE OIL LLC, Texas, 1015' Judicial District
a Texas limited liability company,
Defendant.
PLAINTIFF’S SUBPOENA DUCES TECUM
TO: Custodian of Records
Chesapeake Energy Corporation
6100 N. Western Ave.
Oklahoma City, OK 73118
GREETINGS:
On behalf of the above named Plaintiff, in the above referenced action pending in the
District Court of Dallas County, Texas, 1015‘ Judicial District, You are commanded to produce
and pennit inspection and copying of the documents described in the attached Exhibit A, at 9:30
am. on August 31, 2017, at the offices of GableGotwals, One Leadership Square, 15"‘ Floor,
211 N. Robinson, Oklahoma City, Oklahoma 73102~7l01, attorneys for the above named
Plaintiff.
In order to allow objections to the production of the documents and things to be filed, you
should not produce them until the date specified in this subpoena, and if an objection is filed,
until the court rules on the objection.
{l709266;)
55
SR55
This Subpoena is authorized and issued pursuant to 12 0.S. § 2004.1(A)(2)(b). Pursuant
to Texas law, advance notice of service hereof has been provided to You and to the above named
Defendant, as set forth on the attached Exhibit B.
Issued 2017.
Respectfiilly submitted,
GABLEGOTWALS
David L. Bryant
OBA N0. 1262
Texas Bar No. 24084344
dbryant@gab1e1aw.com
113 Pleasant Valley Drive, Suite 204
Boeme, Texas 78006
Telephone: (830) 336-4810
Facsimile: (918) 595-4990
Lisa T. Silvestri
OBA No. 19239
Texas Bar No. 00797967
lsilvestri@gablelaw.com
100 W. Fifth St., Suite 1100
Tulsa, Oklahoma 74103
Telephone: (918) 595-4800
Facsimile: (918) 595-4990
Attorneys for Plaintiff,
Magellan Crude Oil Pipeline Company, L.P.
( I 709266;}
56
SR56
CERTIFICATE OF SERVICE
I certify that on , 2017, the foregoing document was served upon the
following counsel of record via EFile:
E. Leon Carter
lcarter@carterscholer.com
J. Robert Arnett II
bamett@carterscholer.com
Joshua J. Bennett
jbennett@carterscholer.com
Courtney Barksdale Perez
cperez@ca.rterscholer.com
CARTER SCHOLBR PLLC
8150 N. Central Expressway
Suite 500
Dallas, Texas 75206
Anarneysfor Defendant
David L. Bryant
(N09266:) 3
57
SR57
EXHIBIT A
PLAlNTlFF’S SUBPOENA DUCES TECUM
Definitions
For purposes of this Subpoena Duces Tecum, the following terms have the following meanings
“Crude Oil Sales Agreement" means an agreement providing for the sale to Enterprise of crude
oil and/or condensate owned or controlled by You.
“Crude Oil Buy/Sell Agreement” means an agreement providing for Your sale of crude oil
and/or condensate to Enterprise at one location, and Your purchase or repurchase from Enterprise
of the same product or the same volume of product at another location.
“Crude Oil Transportation Agreement" means an agreement providing for transportation, on
any Enterprise pipeline system, of crude oil and/or condensate You own or control.
“Eagle Ford Product" means crude oil and/or condensate which, at any time during the
Relevant Period, You either:
(a) sold to Enterprise, pursuant to any Crude Oil Sales Agreement or any Crude Oil
Buy/Sell Agreement, at any of the following locations within the Eagle Ford Shale
production area: Gardendale (LaSalle County, Texas), Lyssy (Wilson County,
Texas), Marshall (Gonzales County, Texas), or Milton (Karnes County, Texas); g
(b) delivered to Enterprise for transportation, pursuant to any Crude Oil Transportation
Agreement, at any of the following locations within the Eagle Ford Shale production
area: Gardendale (LaSalle County, Texas), Lyssy (Wilson County. Texas), Marshall
(Gonzales County, Texas), or Milton (Karnes County, Texas).
“ECHO Terminal” means the Enterprise-owned tenninal facility by the same name, located in
the Houston, Texas area.
“Enterprise” means Enterprise Crude Oil LLC and any and all of its affiliates, including without
limitation Enterprise Crude Pipeline LLC, Enterprise Products Operating LLC, and Enterprise
Products Partners LP.
“Document” means and includes printed and electronically stored data and information,
including writings, dmwings, graphs, charts, photographs, sound recordings, images,
spreadsheets, correspondence, emails, voicemails, text messages, and other data or data
compilations stored in any medium from which information can be obtained.
“Houston Area Destination" means and includes:
(i) any crude oil tenninal or tank farm located in or near Houston, Texas, including
without limitation: Enterprise ECHO Terminal; Magellan Galena Park Terminal;
Seaway Galena Park Terminal; Seaway Texas City Terminal; Houston Fuel Oil
Houston Terminal; Oil Tanking Houston Terminal; Pasadena Refining Red Bluff
Tank Farm;
(ii) any crude oil pipeline distribution system located in or near Houston, Texas,
including any Enterprise pipeline extending between the Enterprise ECHO
(l709l4l:3l 1
58
SR58
EXHIBIT A
PLAlNTlFF’S SUBPOENA DUCES TECUM
Tenninal and Genoa Junction, any facilities located at Genoa Junction, and any
facilities located at Anahuac Junction; and
(iii) any of the following refineries: Valero Houston Refinery; Valero Texas City
Refinery; BP Texas City Refinery; Shell Deer Park Refinery; Marathon Texas
City Refinery; Houston Refining LP Houston Refinery; Pasadena Refining
Houston Refinery.
“Magellan” means Magellan Crude Oil Pipeline Company, L.P. and any and all of its affiliates.
“Relevant Period” means the period from January 1, 20l l to present.
“You” and “Your" mean and refer to the company to which this subpoena is directed and any
and all of its affiliates and predecessors in interest.
DOCUMENTS TO BE PRODUCED
1, All drafis and all final signed versions of any Crude Oil Sales Agreement, Crude Oil Buy/Sell
Agreement, or Crude Oil Transportation Agreement, between You and Enterprise, proposed or
entered into during the Relevant Period, regarding Eagle Ford Product, and all amendments,
supplements, assignments, terminations or cancellations thereof. For clarity, this request is not
limited to contracts currently in effect but includes all contracts which were proposed or in effect
at any time during the Relevant Period, whether or not any Eagle Ford Product was actually
purchased, sold, exchanged, transported or delivered pursuant thereto.
2. All correspondence (in any form, including email) between You and Enterprise, regarding (a) a
proposal to enter any contract of a kind described in the preceding request No. l, (b) the terms or
conditions of any such contract, or (c) any amendment, supplement, assignment, termination or
cancellation of any such contract.
3. With respect to Eagle Ford Product You sold to Enterprise during the Relevant Period, pursuant
to a Crude Oil Sales Agreement, all Documents necessary to identify or determine the following
for each such sale: date, volume, product type, price, and point ofsale.
4. With respect to Eagle Ford Product You sold to Enterprise during the Relevant Period, pursuant
to a Crude Oil Buy/Sell Agreement, all Documents necessary to identify or determine the
following:
(a) For each sale by You: date, volume, product type, price, and point of sale.
(b) For each purchase or repurchase by You: date, volume, product type, price, point of
purchase or repurchase, final destination or delivery point, and transportation system(s)
utilized for delivery to final destination. (For clarity, this request includes but is not limited
to any such purchase or repurchase You made at ECHO Terminal, and any purchased or
repurchased product You transported or caused to be transported from ECHO
Terminal to any other Houston Area Destination.)
5. With respect to Eagle Ford Product You delivered to Enterprise for transportation during the
Relevant Period, all Documents necessary to identify or determine the following for each such
delivery: date, volume, product type, point of delivery, transportation cost, and final destination.
u7o9m;3) 2
59
SR59
FILED
DALLAS COUNTY
7/31/2017 11:14 AM
FELICIA PITRE
DISTRICT CLERK
/s/ Carla Gilkey
THE DISTRICT COURT OF OKLAHOMA COUNTY
IN
STATE OF OKLAHOMA
MAGELLAN CRUDE OIL PIPELINE
COMPANY. l..P.. a Delaware limited partnership. D
Plaintiff,
Cause No. DC-l7-07264
vs.
In the District Court of Dallas County,
ENTERPRISE CRUDE OIL LLC,
wwwvvwxvvvgvrg
Texas, 101'“ Judicial District
a Texas limited liability company,
Defendant.
PLAINTIFF’S SUBPOENA DUCES TECUM
TO: Custodian ofReeords
Devon Energy Corporation
333 West Sheridan Avenue
Oklahoma City, OK 73102-5015
GREETINGS:
On behalf of the above named Plaintiff, in the above referenced action pending in the
District Court of Dallas County, Texas, 1015‘ Judicial District, You are commanded to produce
and permit inspection and copying of the documents described in the attached Exhibit A, at 9:30
am. on August 31, 2017, at the offices of GableGotwa1s, One Leadership Square, 15"‘ Floor,
211 N. Robinson, Oklahoma City, Oklahoma 73102-7101, attorneys for the above named
Plaintiff.
In order to allow objections to the production of the documents and things to be filed, you
should not produce them until the date specified in this subpoena, and if an objection is filed,
until the court rules on the objection.
( 17092893
60
SR60
This Subpoena is authorized and issued pursuant to 12 O.S. § 2004. l(A)(2)(b). Pursuant
to Texas law, advance notice of service hereof has been provided to You and to the above named
Defendant, as set forth on the attached Exhibit B.
Issued July 31, 2017.
Respectfully submitted,
GABLEGOTWALS
/s/David L. Bryant
David L. Bryant
OBA No. 1262
Texas Bar No. 24084344
dbryant@gab1elaw.com
113 Pleasant Valley Drive, Suite 204
Boerne, Texas 78006
Telephone: (830) 336-4810
Facsimile: (918) 595-4990
Lisa T. Silvestri
OBA No. 19239
Texas Bar No. 00797967
1silvestri@gab1e1aw.com
100 W. Fifth St., Suite 1100
Tulsa, Oklahoma 74103
Telephone: (918) 595-4800
Facsimile: (918) 595-4990
Attorneys for Plaintiff,
Magellan Crude Oil Pipeline Company, L.P.
( 1 709289;)
61
SR61
CERTIFICATE OF SERVICE
I certify that on July 31, 2017, the foregoing document was served upon the following
counsel of record via EFile:
E. Leon Carter
lcarter@car1erscholer.com
J. Robert Arnett II
barnett@cartersch0ler.com
Joshua J. Bennett
jbermett@carterscholer.com
Courtney Barksdale Perez
cperez@carlerscholer.com
CARTER SCHOLER PLLC
8150 N. Central Expressway
Suite 500
Dallas, Texas 75206
Attorneys for Defendant
/s/David L. Bryant
David L. Bryant
<:7o92x9;) 3
62
SR62
EXHIBIT A
l’LAINTIFF’S SUBPOENA DUCES TECUM
Definitions
For purposes ofthis Subpoena Duces Tecum, the following terms have the following meanings
“Crude Oil Sales Agreement” means an agreement providing for the sale to Enterprise of crude
oil and/or condensate owned or controlled by You.
“Crude Oil Buy/Sell Agreement" means an agreement providing for Your sale of crude oil
and/or condensate to Enterprise at one location, and Your purchase or repurchase from Enterprise
of the same product or the same volume ofproduct at another location.
“Crude Oil Transportation Agreement” means an agreement providing for transportation, on
any Enterprise pipeline system, of crude oil and/or condensate You own or control.
“Eagle Ford Product” means crude oil and/or condensate which, at any time during the
Relevant Period, You either:
(a) sold to Enterprise, pursuant to any Crude Oil Sales Agreement or any Crude Oil
Buy/Sell Agreement, at any of the following locations within the Eagle Ford Shale
production area: Gardendale (LaSalle County, Texas), Lyssy (Wilson County,
Texas), Marshall (Gonzales County, Texas), or Milton (Karnes County, Texas); Q1;
(b) delivered to Enterprise for transportation, pursuant to any Crude Oil Transportation
Agreement, at any ofthe following locations within the Eagle Ford Shale production
area: Gardendale (LaSalle County, Texas), Lyssy (Wilson County, Texas), Marshall
(Gonzales County, Texas), or Milton (Karnes County, Texas).
“ECHO Terminal” means the Enterprise—owned terminal facility by the same name, located in
the Houston, Texas area.
“Enterprise” means Enterprise Crude Oil LLC and any and all ofits affiliates, including without
limitation Enterprise Crude Pipeline LLC, Enterprise Products Operating LLC, and Enterprise
Products Partners L.P.
“Document” means and includes printed and electronically stored data and information,
including writings, drawings, graphs, charts, photographs, sound recordings, images,
spreadsheets, correspondence, emails, voicemails, text messages, and other data or data
compilations stored in any medium from which information can be obtained.
“Houston Area Destination” means and includes:
(i) any crude oil terminal or tank farm located in or near Houston, Texas, including
without limitation: Enterprise ECHO Terminal; Magellan Galena Park Terminal;
Seaway Galena Park Terminal; Seaway Texas City Terminal; Houston Fuel Oil
Houston Terminal; Oil Tanking Houston Terminal; Pasadena Refining Red Bluff
Tank Farm;
(ii) any crude oil pipeline distribution system located in or near Houston, Texas,
including any Enterprise pipeline extending between the Enterprise ECHO
{17o9i4:,3} 1
63
SR63
EXHIBIT A
PLAIN’l‘lFF’S SUBPOENA DUCES TECUM
Terminal and Genoa Junction, any facilities located at Genoa Junction, and any
facilities located at Anahuac Junction; and
(iii) any of the following refineries: Valero Houston Refinery; Valero Texas City
Refinery; BP Texas City Refinery; Shell Deer Park Refinery; Marathon Texas
City Refinery; Houston Refining LP Houston Refinery; Pasadena Refining
Houston Refinery.
“Magellan” means Magellan Crude Oil Pipeline Company, LP. and any and all ofits affiliates.
“Relevant Period” means the period from January l, 201 l to present.
“You” and “Your” mean and refer to the company to which this subpoena is directed and any
and all of its affiliatcs and predecessors in interest.
DOCUMENTS TO BE PRODUCED
1. All drafts and all final signed versions of any Crude Oil Sales Agreement, Crude Oil Buy/Sell
Agreement, or Crude Oil Transportation Agreement, between You and Enterprise, proposed or
entered into during the Relevant Period, regarding Eagle Ford Product, and a1] amendments,
supplements, assignments, terminations or cancellations thereof. For clarity, this request is not
limited to contracts currently in effect but includes all contracts which were proposed or in effect
at any time during the Relevant Period, whether or not any Eagle Ford Product was actually
purchased, sold, exchanged, transported or delivered pursuant thereto.
2. All correspondence (in any form, including email) between You and Enterprise, regarding
(a) a
proposal to enter any contract ofa kind described in the preceding request No. l, (b) the l.Cl'mS or
conditions of any such contract, or (c) any amendment, supplement, assignment, termination or
cancellation ofany such contract.
3. With respect to Eagle Ford Product You sold to Enterprise during the Relevant Period, pursuant
to aCrude Oil Sales Agreement, all Documents necessary to identify or determine the following
for each such sale: date, volume, product type, price, and point ofsale.
4. With respect to Eagle Ford Product You sold to Enterprise during the Relevant Period, pursuant
to a Crude Oil Buy/Sell Agreement, all Documents necessary to identify or determine the
following:
(a) For each sale by You: date, volumc, product type, price, and point of sale.
(b) For each purchase or repurchase by You: date, volume, product type, price, point of
purchase or repurchase, final destination or delivery point, and transportation system(s)
utilized for delivery to final destination. (For clarity, this request includes but is not limited
to any such purchase or repurchase You made at ECHO Terminal, and any purchased or
repurchased product You transported or caused to be transported from ECHO
Terminal to any other Houston Area Destination.)
5. With respect to Eagle Ford Product You delivered to Enterprise for transportation during the
Relevant Period, all Documents necessary to identify or determine the following for each such
delivery: date, volume, product type, point ofdelivery, transportation cost, and final destination.
ll709‘;4l,3} 2
64
SR64
FILED
DALLAS COUNTY
7/21/2017 2:58 PM
FELICIA PITRE
DISTRICT CLERK
Carmen Mourer
CAUSE NO. DC-17-07264
MAGELLAN CRUDE OIL PIPELINE
COMPANY, L.P., a Delaware limited partnership,
P"‘i““ffi
IN THE DISTRICT COURT or
VS‘
DALLAS COUNTY, TEXAS
ENTERPRISE CRUDE OIL LLC,
\/\/\/vxzsay/».J\/xgsgx/xa
a Texas limited liability company,
lolst JUDICIAL DISTRICT
Defendant.
PLAINTIF F ’S NOTICE OF SUBPOENA DUCES TECUM
TO DEVON ENERGY CORPORATION
TO: Custodian of Records
Devon Energy Corporation
333 West Sheridan Avenue
Oklahoma City, OK
73102-5015
PLEASE TAKE NOTICE that pursuant to Texas Rule of Civil Procedure 205.l(d), 10
days after service of this Notice the above named Plaintiff will serve the attached Subpoena
Duces Tecum to Devon Energy Corporation, compelling it to produce to Plaintiff the items
described in the Subpoena Duces Tecum, at 9:30 a.m. on August 31, 2017, at the offices of
GabIeGotwals, One Leadership Square, l5t.h Floor, 211 N. Robinson, Oklahoma City, OK
73102.
Exhibit B
(l7l753l;)
65
SR65
Respectfully submitted,
GABLEGOTWALS
/s/David L. Bgant
David L. Bryant
State Bar No. 24084344
dbrya.nt@gablelaw.com
113 Pleasant Valley Drive, Suite 204
Boeme, Texas 78006
Telephone: (830) 336-4810
Facsimile: (918) 595-4990
Lisa T. Silvestri
State Bar No. 00797967
lsilvestri@gablelaw.com
100 W. Fifih St., Suite 1100
Tulsa, Oklahoma 74103
Telephone: (918) 595-4800
Facsimile: (918) 595-4990
And
FIGARI + DAVENPORT, LLP
Bill E.Davidoff
State Bar No. 00790565
bil1.davidoff@figdav.com
Amanda Sotak
State Bar No. 24037530
amanda.sotak@figdav.com
901 Main Street, Suite 3400
Dallas, Texas 75202
Telephone: (214) 939-2000
Facsimile: (214) 939-2090
Attorneys for Plaintiff,
Magellan Crude Oil Pipeline Company, L.P.
(l7l753l;l
66
SR66
CERTIFICATE OF SERVICE
I certify that on July 21, 2017, the foregoing document was sewed upon the following
counsel of record via EFile:
E. Leon Carter
Icartcr@carterscholer.com
J. Robert Arnett II
barnett@carterscholer.com
Joshua J. Bennett
jbennett@carterscholer.com
Courtney Barksdale Perez
cperez@carterscholer.com
CARTER SCHOLER PLLC
8150 N. Central Expressway
Suite 500
Dallas, Texas 75206
Attorneys for Defendant
IslDavid L. Brvant
David L. Bryant
(i7i7s3I:l 3
67
SR67
IN THE DISTRICT COURT OF OKLAHOMA COUNTY
STATE OF OKLAHOMA
MAGELLAN CRUDE OIL PIPELINE
COMPANY, L.P., a Delaware limited partnership,
Plaintiff,
Cause No. DC-I7-07264
vs.
~4xJ~a\.z»z\J\/\J~.r».a\/C/
In the District Court of Dallas County,
ENTERPRISE CRUDE OIL LLC, Texas, 101“ Judicial District
a Texas limited liability company,
Defendant.
PLAIN'I‘lFF’S SUBPOENA DUCES TECUM
TO: Custodian of Records
Devon Energy Corporation
333 West Sheridan Avenue
Oklahoma City, OK 73102-5015
GREETINGS:
On behalf of the above named Plaintiff, in the above referenced action pending in the
District Court of Dallas County, Texas, I015‘ Judicial District, You are commanded to produce
and permit inspection and copying of the documents described in the attached Exhibit A, at 9:30
am. on August 31, 2017, at the oflices of GableGotwals, One Leadership Square, 15”‘ Floor,
211 N. Robinson, Oklahoma City, Oklahoma 73102-7101, attorneys for the above named
Plaintiff.
In order to allow objections to the production of the documents and things to be filed, you
should not produce them until the date specified in this subpoena, and if an objection is filed,
until the court rules on the objection.
(N09289:)
68
SR68
This Subpoena is authorized and issued pursuant to 12 O.S. § 2004.l(A)(2)(b). Pursuant
to Texas law, advance notice of service hereof has been provided to You and to the above named
Defendant, as set forth on the attached Exhibit B.
Issued , 2017.
Respectfully submitted,
GABLEGOTWALS
By:
David L. Bryant
OBA No. 1262
Texas Bar No. 24084344
dbryant@gablelaw.com
113 Pleasant Valley Drive, Suite 204
Boeme, Texas 78006
Telephone: (830) 336-4810
Facsimile: (918) 595-4990
Lisa T. Silvestri
OBA No. 19239
Texas Bar No. 00797967
Isilvestri@gablelaw.com
100 W. Fifth St., Suite 1100
Tulsa, Oklahoma 74103
Telephone: (918) 595-4800
Facsimile: (918) 595-4990
Attorneys for Plaintiff,
Magellan Crude Oil Pipeline Company, L.P.
(1709289;) 2
69
SR69
CERTIFICATE OF SERVICE
l certify that on , 2017, the foregoing document was served upon
the following counsel of record via EFile:
E. Leon Carter
lcaner@carterscholer.com
J.Robert Arnett II
bamett@canerscholer.com
Joshua J. Bennett
jbennett@carterscholer.com
Courtney Barksdale Perez
cperez@ca.rterscholer.com
CARTER SCHOLER PLLC
8150 N. Central Expressway
Suite 500
Dallas, Texas 75206
Attorneys for Defendant
David L. Bryant
u7o92s9;) 3
70
SR70
EXHIBIT A
PLAINTIFPS SUBPOENA DUCES TECIJM
Definitions
For purposes of this Subpoena Duces Tecum, the following terms have the following meanings
“Crude Oil Sales Agreement" means an agreement providing for the sale to Enterprise of crude
oil and/or condensate owned or controlled by You.
“Crude Oil Buy/Sell Agreement” means an agreement providing for Your sale of crude oil
and/or condensate to Enterprise at one location, and Your purchase or repurchase from Enterprise
of the same product or the same volume of product at another location.
"Crude Oil Transportation Agreement” means an agreement providing for transportation, on
any Enterprise pipeline system, of crude oil and/or condensate You own or control.
“Eagle Ford Product” means crude oil and/or condensate which, at any time during the
Relevant Period, You either:
(a) sold to Enterprise, pursuant to any Crude Oil Sales Agreement or any Crude Oil
Buy/Sell Agreement, at any of the following locations within the Eagle Ford Shale
production area: Gardendale (Lasalle County, Texas), Lyssy (Wilson County,
Texas), Marshall (Gonzales County, Texas), or Milton (Kames County, Texas); g
(b) delivered to Enterprise for transportation, pursuant to any Crude Oil Transportation
Agreement, at any of the following locations within the Eagle Ford Shale production
area: Gardendale (LaSalle County, Texas), Lyssy (Wilson County, Texas), Marshall
(Gonzales County, Texas), or Milton (Karnes County, Texas).
“ECHO Terminal” means the Enterprise-owned ten-ninal facility by the same name, located in
the Houston, Texas area.
“Enterprise” means Enterprise Crude Oil LLC and any and all of its affiliates, including without
limitation Enterprise Crude Pipeline LLC, Enterprise Products Operating LLC, and Enterprise
Products Farmers L.P.
“Document” means and includes printed and electronically stored data and infonnation,
including writings, drawings, graphs, charts, photographs, sound recordings, images,
spreadsheets, correspondence, emails, voicemails, text messages, and other data or data
compilations stored in any medium from which information can be obtained.
“Houston Area Destination” means and includes:
(i) any crude oil tenninal or tank farm located in or near Houston, Texas, including
without limitation: Enterprise ECHO Temtinal; Magellan Galena Park Terminal;
Seaway Galena Park Terminal; Seaway Texas City Terminal; Houston Fuel Oil
Houston Terminal; Oil Tanking Houston Terminal; Pasadena Refining Red Bluff
Tank Fa.rrn;
(ii) any crude oil pipeline distribution system located in or near Houston, Texas,
including any Enterprise pipeline extending between the Enterprise ECHO
H7091-ms) l
71
SR71
EXHIBIT A
PLAlNTlFF’S SUBPOENA DUCES TECUM
Terminal and Genoa Junction, any facilities located at Genoa Junction, and any
facilities located at Anahuac Junction; and
(iii) any of the following refineries: Valero Houston Refinery; Valero Texas City
Refinery; BP Texas City Refinery; Shell Deer Park Refinery; Marathon Texas
City Refinery; Houston Refining LP Houston Refinery; Pasadena Refining
Houston Refinery.
“Magellan” means Magellan Crude Oil Pipeline Company, LP. and any and all of its affiliates.
“Relevant Period” means the period from January l, 20l l to present.
“You" and “Your” mean and refer to the company to which this subpoena is directed and any
and all of its affiliates and predecessors in interest.
DOCUMENTS TO BE PRODQQED
I. All drafts and all final signed versions of any Crude Oil Sales Agreement. Crude Oil Buy/Sell
Agreement, or Crude Oil Transportation Agreement, between You and Enterprise, proposed or
entered into during the Relevant Period, regarding Eagle Ford Product, and all amendments,
supplements, assignments, tenninations or cancellations thereof. For clarity, this request is not
limited to contracts currently in effect but includes all contracts which were proposed or in effect
at any time during the Relevant Period, whether or not any Eagle Ford Product was actually
purchased, sold, exchanged, transported or delivered pursuant thereto.
2. All correspondence (in any fon-n, including email) between You and Enterprise, regarding (a) a
proposal to enter any contract of a kind described in the preceding request No. I, (b) the tenns or
conditions of any such contract, or (c) any amendment, supplement, assignment, termination or
cancellation of any such contract.
3. With respect to Eagle Ford Product You sold to Enterprise during the Relevant Period, pursuant
to a Crude Oil Sales Agreement, all Documents necessary to identify or determine the following
for each such sale: date, volume, product type, price, and point of sale.
4. With respect to Eagle Ford Product You sold to Enterprise during the Relevant Period, pursuant
to a Crude Oil Buy/Sell Agreement, all Documents necessary to identify or deten-nine the
following:
(a) For each sale by You: date, volume, product type, price, and point of sale.
(b) For each purchase or repurchase by You: date, volume, product type, price, point of
purchase or repurchase, final destination or delivery point, and transportation system(s)
utilized for delivery to final destination. (For clarity, this request includes but is not limited
to any such purchase or repurchase You made at ECHO Terminal, and any purchased or
repurchased product You transported or caused to be transported from ECHO
Terminal to any other Houston Area Destination.)
5. With respect to Eagle Ford Product You delivered to Enterprise for transportation during the
Relevant Period, all Documents necessary to identify or determine the following for each such
delivery: date, volume, product type, point ofdellvery, transportation cost, and final destination.
(r1u9m-,3) 2
72
SR72
FILED
DALLAS COUNTY
9/18/2017 4:29 PM
FELICIA PITRE
DISTRICT CLERK
CAUSE NO. 2017-07264
MAGELLAN CRUDE OIL PIPELINE COMPANY, )
L.P., a Delaware limited partnership, )
)
Plaintiff, ) IN THE DISTRICT COURT OF
)
vs. ) DALLAS COUNTY, TEXAS
)
ENTERPRISE CRUDE OIL LLC, a Texas limited ) 101st JUDICIAL DISTRICT
liability company, )
)
Defendant. )
PLAINTIFF’S RESPONSE IN OPPOSITION TO
DEFENDANT’S MOTION FOR SUMMARY JUDGMENT
Plaintiff Magellan Crude Oil Pipeline Company, L.P. (“Magellan”) submits this response
in opposition to the no-evidence Motion for Summary Judgment (“Motion”) filed by Defendant
Enterprise Crude Oil LLC (“Enterprise”) on August 4, 2017. This case arises from the parties’
Crude Oil Distribution Agreement dated October 31, 2011 (“COD Agreement”), in which
Enterprise made a 10-year “commitment” to “exclusively utilize” Magellan’s Houston-area
distribution facilities in connection with the transportation of crude oil from the south Texas
Eagle Ford Shale play to certain destinations in Houston and the Texas gulf area. However
Enterprise has purposely refused to honor that commitment. As a result, Magellan alleges breach
of contract, fraud, and other related claims against Enterprise, and seeks an estimated $50 million
or more in damages suffered to date.
Based primarily on a faulty, unreasonable interpretation of the COD Agreement,
Enterprise asks this Court to determine all claims, on the merits, against Magellan, barely three
months after the suit was filed and before Magellan has had any discovery whatsoever. The
Motion should be denied, because Enterprise’s arguments are meritless, and its no-evidence
Motion is premature and improper in any event.
PLAINTIFF’S RESPONSE IN OPPOSITION TO DEFENDANT’S MOTION FOR SUMMARY JUDGMENT – Page 1
{1741037;}
SR73
I. SUMMARY OF ARGUMENT
The COD Agreement at the center of the case contains Enterprise’s express 10-year
“commitment” to exclusively utilize Magellan’s Houston-area crude oil transportation and
distribution facilities for transportation of crude oil Enterprise that buys in the Eagle Ford Shale
and markets to Houston-area refineries. The COD Agreement expressly states that Enterprise
made its long-term exclusive-use commitment to induce Magellan’s costly expansion of its
facilities, including (among other things) installation of new connections between the two
companies’ respective pipelines, as necessary for Magellan to handle the Eagle Ford crude oil
transportation business Enterprise committed to Magellan.
Enterprise admits that it has not exclusively utilized Magellan’s facilities since they were
completed and placed in operation four years ago, and admits that it has attempted to avoid its
contractual obligation by purposely circumventing the Magellan facilities in the very ways
alleged in Magellan’s Original Petition,1 such as by:
(i) moving Enterprise-owned Eagle Ford crude oil on a new segment of the Eagle
Ford-to-Houston pipeline, which no longer extends directly to Magellan’s
facilities (Rancho I) but skirts around the Magellan connection (Rancho II) and
runs straight to Enterprise’s ECHO Terminal just beyond the Magellan connection
(as depicted below):
1
See Original Petition ¶¶ 52-60. Until it has discovery, Magellan will not know whether Enterprise has
circumvented Magellan in other ways, too.
PLAINTIFF’S RESPONSE IN OPPOSITION TO DEFENDANT’S MOTION FOR SUMMARY JUDGMENT – Page 2
{1741037;}
SR74
and
(ii) at Enterprise’s ECHO Terminal, selling the crude oil back to the same customer
who sold the crude oil to Enterprise at one of the Eagle Ford Origin Points—
pursuant to a buy-sell agreement which was made after the COD Agreement and
which replaced an Enterprise crude oil purchase-only agreement (i.e., a
marketing agreement) in place before the COD Agreement.
Specifically, Enterprise argues that under Section 4.1 of the COD Agreement, its
“commitment” to “exclusively utilize” Magellan’s facilities is “conditioned” upon certain
circumstances or events that have never occurred, namely (i) Enterprise’s continuous ownership
or control of crude oil from end-to-end of the transport from an “Origin Point” (as defined) to a
“Destination Point” (as defined), and (ii) Enterprise’s delivery of the crude oil to Magellan’s
Genoa Junction “Connection Point” (as defined). Of course, those matters are within Enterprise’s
exclusive control. Nevertheless, Enterprise claims that the “plain language” of the COD
Agreement permits Enterprise to guarantee that the purported “conditions” never occur, and
thereby avoid the commitment it made to Magellan. That is not what Section 4.1 says or may
reasonably be interpreted to mean. Furthermore, under the well-established law discussed below,
Enterprise is prohibited from avoiding its commitment in this manner..
For the Motion to succeed, as to Magellan’s claim for breach of contract, Enterprise must
demonstrate that its interpretation of the COD Agreement is correct as a matter of law—that the
contract is unambiguous and subject to no other reasonable interpretation. It cannot do so. By
law, the contract language at issue must be read and construed in light of the surrounding
circumstances and purposes of the contract, taking into account the whole agreement, and
avoiding if possible any construction that would make other provisions meaningless or make a
party’s promise illusory. Also, for summary judgment purposes, all reasonable inferences must
be drawn in favor of the non-movant (Magellan). When the COD Agreement is construed
PLAINTIFF’S RESPONSE IN OPPOSITION TO DEFENDANT’S MOTION FOR SUMMARY JUDGMENT – Page 3
{1741037;}
SR75
according to these well-settled rules, Enterprise’s view of the meaning and intent of the language
used in the “transportation commitment” section (Section 4.1) of the COD Agreement is not
reasonable, and certainly is not the only reasonable interpretation.
First, the language in Section 4.1 which Enterprise characterizes as a “condition” upon its
obligation to make exclusive use of the Magellan Facilities—the words “provided, that such
deliveries … are … transported to the Connection Point”—do not constitute a “condition” upon
Enterprise’s transportation commitment to make exclusive use of the Magellan facilities. Rather,
those words merely identify the specific location (the Magellan “Connection Point” at Genoa
Junction) where Enterprise agrees to deliver crude into Magellan’s distribution system in
fulfillment of the commitment to make exclusive use of the “Magellan Facilities” as defined. In
other words, that language constitutes an Enterprise covenant, not a condition precedent to
Enterprise’s obligation to make exclusive use of the Magellan Facilities.
Second, the COD Agreement contains no express requirement that Enterprise must
continuously own or control the crude oil, from end-to-end of the transport from an Eagle Ford
“Origin Point” (as defined) to a Houston-area “Destination Point” (as defined), for Enterprise’s
transportation commitment to apply. Viewing the agreement in its entirety, as required, strongly
supports Magellan’s position that Enterprise’s ownership or control of the crude at any Eagle
Ford Origin Point is sufficient to satisfy the ownership/control requirement.
Third, even if Enterprise’s interpretation of Section 4.1 were correct, the Motion would
fail. Under settled contract law, Enterprise cannot avoid its transportation commitment by
purposely causing any “conditions” within its control not to occur, whether by deliberately
bypassing the Magellan Connection Point, by manipulating crude ownership/control downstream
from an Origin Point where the crude was owned or controlled by Enterprise, or by other means.
PLAINTIFF’S RESPONSE IN OPPOSITION TO DEFENDANT’S MOTION FOR SUMMARY JUDGMENT – Page 4
{1741037;}
SR76
This is true regardless of whether, as Enterprise contends, the COD Agreement is similar to an
“output/requirements” contract; the applicable contract law is the same.
Similarly, Enterprise is not entitled, at this early stage, to summary judgment on any of
the four other claims alleged in Magellan’s Original Petition. Enterprise’s attack on those claims
is largely founded on its erroneous interpretation of the COD Agreement and thus fails for the
reasons noted above. In any event, all of those claims are viable, justiciable, and supported by
currently available evidence and reasonable inferences sufficient to withstand the Motion.
Finally, but importantly, the Enterprise Motion is a no-evidence motion for summary
judgment that is premature and improper, because Magellan has had no discovery, let alone the
“adequate time for discovery” that Rule 166a(i) requires. Tex. R. Civ. P. 166a(i). All of
Enterprise’s arguments are misguided and wrong on the merits, so denial of the Motion here and
now is appropriate. However, if the Court were inclined to believe that there could be some
merit in an argument made in the Motion, then pursuant to Rule 166a(g) the Court should defer
any ruling and continue the Motion as needed to give Magellan adequate time and opportunity to
conduct discovery essential to resolution of the Motion—discovery Enterprise has thus far
blocked.
II. RESPONSE TO MOVANT’S STATEMENT OF UNDISPUTED FACTS
Many of the assertions in Enterprise’s statement of undisputed “facts” are legal
arguments, contentions or conclusions, not facts. Magellan responds to such legal contentions
and conclusions in its argument below. To the extent the Enterprise statement asserts actual facts
not specifically disputed below, Magellan reserves all rights to dispute at trial (after adequate
discovery) the truth, relevance and/or admissibility of such facts.
PLAINTIFF’S RESPONSE IN OPPOSITION TO DEFENDANT’S MOTION FOR SUMMARY JUDGMENT – Page 5
{1741037;}
SR77
1. Paragraph 5: Magellan disputes Enterprise’s legal conclusion as to what the “plain
language” of the COD Agreement means.
2. Paragraphs 6-10: To the extent these paragraphs accurately reflect the express
terms of the COD Agreement, Magellan does not dispute them. However, Magellan disputes all
Enterprise characterizations of the contract’s express terms and their meaning or effect.
3. Paragraph 14: This is a statement of law, not fact. To the extent facts are stated,
Magellan disputes Enterprise’s assertion that the consideration for Magellan’s work and services
consisted of a mere commitment by Enterprise to make exclusive use of the Magellan Facilities
in lieu of using the facilities owned by other non-Enterprise parties and originating at or near the
location known as Genoa Junction. As shown on the face of the COD Agreement, the material
consideration Magellan bargained for (and got) was Enterprise’s promise to exclusively use
facilities owned by Magellan, not those owned by anyone else including Enterprise or its
affiliates, to move Eagle Ford crude oil from any Origin Point to any Destination Point as those
terms are defined in the COD Agreement.
4. Paragraph 15: This statement is misleading. At the time Enterprise and Magellan
entered into the COD Agreement, Magellan was considering whether to build the New Magellan
Facilities. To the extent Enterprise’s statement suggests that even without Enterprise’s long-term
exclusive use commitment, Magellan would have invested the many millions of dollars it did
invest to expand its Houston-area crude oil distribution system as described in the COD
Agreement, the statement is false.
5. Paragraph 16: Magellan disputes this statement. Enterprise has not “performed as
required.” To the extent any Eagle Ford crude that Enterprise owned at an Origin Point has ever
moved on the Magellan Facilities, it was not transported on the Magellan Facilities “pursuant to”
PLAINTIFF’S RESPONSE IN OPPOSITION TO DEFENDANT’S MOTION FOR SUMMARY JUDGMENT – Page 6
{1741037;}
SR78
the COD Agreement. Since September 2013, Enterprise has purchased and marketed an
estimated 175,000,000 barrels (or more) of Eagle Ford crude oil to Houston-area destinations,
yet none of those barrels were transported to or through the Magellan Facilities pursuant to and
as required by the COD Agreement. Enterprise has not gone out of business, nor has it ceased
shipping crude oil from the Origin Points to the Destination Points. Rather, it has merely decided
to use other facilities—especially its own facilities—to move its Eagle Ford crude oil between
Origin Points and Destination Points. This is a clear breach of Enterprise’s exclusive-use
commitment to Magellan.
6. Paragraph 19: Magellan disputes all legal conclusions and factual
characterizations in paragraph 19. Magellan agrees with Enterprise’s assessment of the utility of
ECHO Terminal. The utility of this facility was not lost on Magellan. Indeed, that is precisely
why Magellan insisted on Enterprise’s firm commitment that it would use the Magellan
Facilities, not its own, for all crude oil deliveries from any Origin Point to any Destination Point.
7. Paragraph 20: Magellan disputes this statement. Although this statement may
have some truthful elements, without the benefit of the discovery to which it is entitled,
Magellan cannot adequately assess the truth or otherwise respond to Enterprise’s assertions.
8. Paragraph 21: This is a conclusion of law, not a statement of fact. To the extent
facts are stated, Magellan disputes Enterprise’s assertion that the COD Agreement permits
Enterprise to defeat its performance obligation either by refusing to deliver crude to the Magellan
Connection Point or by manipulating ownership of crude downstream from an Origin Point
where Enterprise owned it. Not only does the COD Agreement, construed as a whole, prohibit
such conduct, but well-settled law prohibits Enterprise from engaging in such conduct. At the
PLAINTIFF’S RESPONSE IN OPPOSITION TO DEFENDANT’S MOTION FOR SUMMARY JUDGMENT – Page 7
{1741037;}
SR79
very least, Enterprise’s own statements raise issues that would require discovery before its
assertions could be validly tested and addressed, thus precluding summary judgment.
9. Paragraph 22: Magellan does not dispute that Enterprise publicly disclosed its
construction of the Rancho II pipeline, and Magellan does not claim to have “objected.”
However, the inference drawn by Enterprise is false. Magellan had no reason to object because
Magellan had already secured Enterprise’s firm commitment that it would “exclusively utilize the
Magellan Facilities” to deliver its crude oil from any Origin Point to any Destination Point,
regardless. As the non-movant, Magellan is entitled to have all inferences drawn in its favor. All
other statements in paragraph 22 are disputed. In addition, Enterprise asserts facts outside the
four corners of the COD Agreement that it claims are material to its Motion, yet seeks to prohibit
Magellan from conducting discovery as to those very factual allegations. Without the benefit of
the discovery to which it is entitled, Magellan cannot adequately assess the truth or otherwise
respond to Enterprise’s assertions.
10. Paragraph 23: Magellan does not dispute that Enterprise acquired Oiltanking
Partners, L.P. in 2014, nor does Magellan claim that it sought to “enjoin” that acquisition.
However, the inference drawn by Enterprise is false. Magellan had no reason to seek any such
injunction because Magellan had already secured Enterprise’s firm commitment that it would
“exclusively utilize the Magellan Facilities” to deliver its crude oil from any Origin Point to any
Destination Point, regardless. As the non-movant, Magellan is entitled to have all inferences
drawn in its favor. All other statements in paragraph 22 are disputed. Again, to support its
Motion, Enterprise relies on its own factual allegations about matters outside the four corners of
the COD Agreement, but seeks to deny Magellan discovery as to facts Enterprise apparently
believes to be essential to a decision on the issues presented in its Motion. Without the benefit of
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the discovery to which it is entitled, Magellan cannot adequately assess the truth or otherwise
respond to Enterprise’s assertions.
11. Paragraphs 25–26: Magellan does not dispute the authenticity the document
identified as Exhibit 2-C to Enterprise’s Motion. Magellan does, however, dispute Enterprise’s
slanted characterization of the email exchange reflected therein. The document speaks for itself.
Moreover, Enterprise’s reliance on the statements contained in Exhibit 2-C contradicts its
contention that the Court must construe the COD Agreement by examining only the four corners
of the contract and nothing else (which is not the law in any event).
III. PLAINTIFF’S STATEMENT OF ADDITIONAL FACTS AND SUMMARY JUDGMENT EVIDENCE
In opposition to the Motion, Magellan submits the following evidence supporting the
facts set forth below:
Exhibit 1: Affidavit of Mark E. Daggett (“Daggett Aff.”)
Exhibit 1-A: Jake Everett Email to Mark Daggett, Oct. 18, 2011
Exhibit 1-B: Crude Oil Distribution Agreement, Oct. 31, 2011
Exhibit 1-C: Joint Tariff Agreement, Nov. 1, 2011
Exhibit 1-D: Connection Agreement, Dec. 16, 2011
Exhibit 1-E: Crude Oil Purchase Agreement, April 29, 2011 (redacted), and
First Amended and Restated Crude Oil Purchase and Sale
Agreement, Jan. 31, 2011 (redacted)
Exhibit 1-F: Enterprise Pipeline Local Tariff, July 1, 2017
Exhibit 2: Affidavit of David L. Bryant (“Bryant Aff.”)
Exhibit 2-A: Plaintiff’s Request for Disclosure, June 21, 2017
Exhibit 2-B: Plaintiff’s First Request for Production of Documents,
July 21, 2017
Exhibit 2-C: Plaintiff’s Subpoena Duces Tecum to Chesapeake, July 31, 2017
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Exhibit 2-D: Plaintiff’s Subpoena Duces Tecum to Devon, July 31, 2017
Exhibit 2-E: Plaintiff’s Subpoena Duces Tecum to BHP Billiton, July 31, 2017
Exhibit 2-F: Enterprise Motion for Protection and to Stay Discovery Pending
Resolution of Defendant’s Dispositive Motion, Aug. 10, 2017
Exhibit 2-G: Rule 11 agreement, Aug. 11, 2017
1. Magellan owns and operates pipelines and related facilities for the transportation
and distribution of crude oil. Magellan’s facilities in and around the Houston area distribute
crude oil to refineries and other locations across the Texas Gulf Coast. Those facilities can be
accessed through a point of connection Magellan maintains at a southeast Houston location
known as Genoa Junction. Daggett Aff. ¶ 2.
2. Enterprise is a crude oil marketing company. It purchases crude oil from third
parties and generates revenues by marketing, storing, and transporting the same. In Texas,
Enterprise purchases and markets crude oil produced in, among other regions, a south Texas
production area known as the Eagle Ford Shale. Daggett Aff. ¶ 3.
3. Enterprise Crude Pipeline LLC (“Enterprise Pipeline”) is an affiliate of
Enterprise. Enterprise Pipeline owns or operates numerous pipeline facilities in Texas. Those
facilities include a 24-inch diameter crude oil pipeline extending from locations in the Eagle
Ford Shale, to Enterprise Pipeline’s facilities in Sealy, Texas, to destinations in the Houston,
Texas area, and the facility known as ECHO Terminal, which is located a few miles southeast of
Genoa Junction. Daggett Aff. ¶¶ 2, 4.
4. In 2011, Magellan’s existing facilities in the Houston area included (i) a 26-inch
diameter pipeline extending from Genoa Junction to BP’s Texas City Refinery in Galveston
County and (ii) a 24-inch diameter pipeline extending from Speed Junction to Valero’s Houston
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Refinery. In the COD Agreement, those were referred to collectively as the “Existing Magellan
Facilities.” Daggett Aff. ¶ 5.
5. In the spring of 2011, Magellan was considering whether to construct new
pipeline facilities in the Houston area in order to expand and improve its facilities for distribution
of crude oil from the Eagle Ford Shale to refineries and other destinations in the Houston area. In
the COD Agreement, those were collectively described as the “New Magellan Facilities,” and
together with the Existing Magellan Facilities, were described as the “Magellan Facilities.”
Daggett Aff. ¶ 6.
6. The anticipated cost of construction for the New Magellan Facilities was
significant. For that reason, Magellan determined that it would not proceed with the project
without first obtaining a long-term contract that would provide revenues sufficient to assure the
project’s commercial and financial viability. Daggett Aff. ¶ 7.
7. In mid-2011, Magellan entered into discussions with Enterprise to determine
Enterprise’s interest in utilizing the Magellan Facilities. Specifically, Magellan explored
Enterprise’s willingness to provide, in consideration of incentive tariff rates to be charged by
Magellan, a binding commitment to exclusively utilize the Magellan Facilities with respect to
transportation of Eagle Ford crude oil that Enterprise or its affiliates owned or controlled at
points of origin along Enterprise Pipeline’s Eagle Ford-to-Houston pipeline system, and for
distribution and delivery to various Houston-area refineries or other destinations served or to be
served by the Magellan Facilities. In the parties’ discussions, Enterprise expressed both a need
and a desire to utilize the Magellan Facilities for such purposes. Daggett Aff. ¶ 8.
8. Based on Enterprise’s expression of interest, Magellan and Enterprise proceeded
to negotiate—over a period of approximately four months, from July 2011 through October
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2011—the terms of an agreement providing for Enterprise’s long-term commitment to
exclusively utilize the Magellan Facilities. Through such negotiations, the parties reached an
agreement that for 10 years after the New Magellan Facilities were completed and operational,
and for all crude oil that Enterprise or its affiliates owned or controlled at any of four agreed-
upon Eagle Ford “Origin Points” and transported on Enterprise Pipeline’s Eagle Ford-to-Houston
pipeline system, Enterprise would exclusively utilize (and use “best efforts” to cause its affiliates
to exclusively utilize) the Magellan Facilities in order to deliver such crude oil to any of several
agreed-upon “Destination Points.” That is, the parties agreed that such crude oil could not be
delivered to any such Destination Point without utilizing Magellan’s Houston-area crude oil
distribution system, accessible at Genoa Junction. Daggett Aff. ¶ 9.
9. On October 18, 2011, near the end of the parties’ documentation of their
agreement, Magellan’s principal contract negotiator, Mark Daggett, received an email from one
of the Enterprise negotiators, Jake Everett, proposing to modify the COD Agreement’s definition
of the term “Controlled.” In his message, Mr. Everett explained Enterprise’s understanding of the
parties’ agreement, and its reason for requesting the modification. In relevant part, Mr. Everett’s
email stated:
We would like to revise the definition of “Control” to eliminate the clause
on legal authorization to transport. Our affiliate, Enterprise Crude Oil
Pipeline will be transporting crude for 3rd parties under transportation
agreement rather than a marketing agreement so only the 3rd party will
have authority to determine the ultimate destination.
I believe the intent of the agreement was for all of the marketing
volume to move through these [Magellan] connections and that is our
intent, but as soon as a 3rd party requests a delivery outside of this
agreement, we don’t want to be in default. Please let me know if you
disagree with our interpretation.
Daggett Aff. ¶ 10, Ex. 1-A (emphasis added).
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10. On the same date, October 18, 2011, Mr. Everett and Mr. Daggett discussed
Enterprise’s proposed modification by phone. In that conversation, Mr. Everett reaffirmed
Enterprise’s agreement that all crude oil Enterprise owned or controlled at any time at any
specified Origin Point (i.e., all Enterprise “marketing volume”) and transported via Enterprise
Pipeline’s Eagle Ford-to-Houston pipeline system would be delivered into Magellan’s Houston-
area distribution system if such crude oil was to be distributed and delivered to any specified
Destination Point. Mr. Everett also reaffirmed that the sole reason for Enterprise’s request to
modify the definition of “Control” was to distinguish between (i) on the one hand, Enterprise’s
“marketing volumes” of crude oil—i.e., crude oil Enterprise (the marketing company) purchased
from third parties and owned or controlled at an Eagle Ford origin point—all of which would be
transported exclusively to and through the Magellan Facilities if destined for any of the
Destination Points, and (ii) on the other hand, Enterprise Pipeline’s “transportation volumes”—
i.e., crude oil owned by third parties (not by Enterprise) that Enterprise Pipeline would be
transporting on its Eagle Ford-to-Houston pipeline system in the name and for the account of a
third party and delivering to a destination point according to the third party’s independent
direction—which volumes would not be subject to Enterprise’s commitment to exclusively
utilize the Magellan Facilities. Mr. Everett did not state or imply that those “transportation
volumes” excluded from Enterprise’s commitment to “exclusively utilize” Magellan’s facilities
could, would, or might also include crude oil that Enterprise had previously owned or controlled.
Further, he did not state or imply that Enterprise desired or intended to have an agreement which
provided Enterprise a mere option, as opposed to a binding commitment, to transport its
“marketing volumes” of Eagle Ford crude oil to and through the Magellan Facilities prior to
being delivered to a specified Destination Point. Finally, Mr. Everett did not state or imply that
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after Enterprise entered into the agreement with Magellan, Enterprise or Enterprise Pipeline
could, would, or might modify the existing Eagle Ford-to-Houston pipeline system in order to
bypass the Genoa Junction connection point into Magellan’s Houston-area distribution system.
Daggett Aff. ¶ 11.
11. The next day, October 19, 2011, Enterprise presented to Magellan a modified
draft of the parties’ written agreement, in which Enterprise had altered the prior definitions of
“Controlled” and “Owned” by adding the provisos underscored below:
1.6 “Controlled” shall mean, when referring to Product, Product that
Shipper or its Affiliates, as the case may be, has the legal right to
transport; provided, however, the custody of Product by an Affiliate of
Shipper that is transporting such Product for the account of a party or
parties other than Shipper or its Affiliates does not constitute Control.
1.32 “Owned” shall mean Product to which Shipper or its Affiliate holds
title; provided, however, the custody of Product by an Affiliate of Shipper
that is transporting such Product for the account of a party or parties other
than Shipper or its Affiliates does not constitute being Owned.
Daggett Aff. ¶ 12.
12. Magellan accepted as true, and relied upon, Enterprise’s representations that by
suggesting such alterations, Enterprise was not attempting to change the substance or effect of
the parties’ agreement, i.e., that Enterprise was committing to move through the Magellan
Facilities all of the Enterprise “marketing volume” of crude oil, consisting of all crude oil which
Enterprise (the marketing company) owned or controlled at any time. Magellan also accepted as
true, and relied upon, Enterprise’s representation that the “transportation volumes” being
excluded from the scope of the parties’ agreement referred only to third-party-owned crude oil
that Enterprise Pipeline would be transporting from Eagle Ford origins under bona fide
transportation agreements which gave such third parties (not Enterprise) the sole legal right to
determine where and how their crude oil would be delivered. Unaware of the buy-sell scheme
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Enterprise began to employ soon after it signed the COD Agreement (as discussed below),
Magellan also relied upon the absence of any disclosure by Enterprise that such excluded
“transportation volumes” could, would, or might include crude oil that Enterprise (the marketing
company) ever owned or controlled. Accordingly, Magellan accepted and agreed to Enterprise’s
proposed modifications of the contract definitions of “Controlled” and “Owned” as described
above. Daggett Aff. ¶ 13.
13. Enterprise and Magellan executed the COD Agreement, effective October 31,
2011. Daggett Aff. ¶ 14; Ex. 1-B.
14. On November 1, 2011, Enterprise Pipeline and Magellan executed a letter
agreement (the “Joint Tariff Agreement”) concerning the joint tariff for transportation of crude
oil as contemplated by the COD Agreement. Daggett Aff. ¶ 15, Ex. 1-C. The COD Agreement
specifically refers to and incorporates the Joint Tariff Agreement. See COD Agreement, Ex. 1-B,
Section 3.1 at 5. The Joint Tariff Agreement expresses Enterprise’s commitment as follows:
[T]he shipper agrees to ship under the Joint Tariff all crude owned or
controlled by it from an Origin Point through the Connection Point to a
Destination Point.
Ex. 1-C (emphasis added).
15. To facilitate and implement the delivery of crude oil to and through the Magellan
Facilities, in accordance with the commitment Enterprise made under the COD Agreement,
Magellan and Enterprise Pipeline also negotiated and entered into a new pipeline connection
agreement effective December 16, 2011 (the “Connection Agreement”). Daggett Aff. ¶ 16.
16. In reliance upon the representations and commitments Enterprise made to
Magellan, and the parties’ resulting agreements, as described above, Magellan proceeded to
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construct the New Magellan Facilities. Construction of the New Magellan Facilities took
approximately 18 months, at a cost of $20 million or more. Daggett Aff. ¶ 17.
17. At no time during this construction did Enterprise inform Magellan that
Enterprise desired to amend its contractual commitment to exclusively utilize the Magellan
Facilities, or that Enterprise viewed the COD Agreement as giving Enterprise an option, but no
obligation, to exclusively utilize the Magellan Facilities. Daggett Aff. ¶ 18.
18. On June 3, 2013, Magellan provided written notice to Enterprise that the New
Magellan Facilities would be operational and ready for service on July 1, 2013. Pursuant to
Section 2.1 of the COD Agreement, the “In-Service Date” occurred on July 1, 2013. Pursuant to
Section 2.1 of the COD Agreement, Enterprise’s 10-year commitment to exclusively utilize the
Magellan Facilities began on July 1, 2013 and extends to July 1, 2023. Daggett Aff. ¶ 19.
19. Following the In-Service Date, Enterprise failed and refused to make crude oil
shipments to or through the Magellan Facilities, pursuant to the terms of the COD Agreement.
The limited data Enterprise has provided to date in response to Magellan’s audit requests
indicates that since September 2013, Enterprise has purchased and marketed over 175,000,000
barrels of Eagle Ford crude oil that did not move through the Magellan Facilities. Daggett Aff. ¶
20.
20. When the parties entered into the COD Agreement in 2011, and when the In-
Service Date occurred in 2013, Enterprise Pipeline’s Eagle Ford-to-Houston pipeline system
extended, via Enterprise Pipeline’s Rancho pipeline, directly to the Genoa Junction connection
point with Magellan’s Houston-area distribution system. After signing the COD Agreement,
however, Enterprise Pipeline constructed a new crude oil pipeline dubbed the “Rancho II,”
consisting of approximately 88 miles of 36-inch diameter pipeline extending from Sealy directly
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to ECHO Terminal. Unlike the preexisting Rancho pipeline from Sealy to Houston, which
Enterprise Pipeline renamed as “Rancho I,” the Rancho II pipeline completely bypasses the
Genoa Junction connection point with Magellan’s Houston-area crude oil distribution system.
Daggett Aff. ¶ 21.
21. In April 2015, Magellan invoked it rights, pursuant to Section 4.4 of the COD
Agreement, to conduct an audit of Enterprise’s compliance with the COD Agreement. During the
course of that audit, Magellan uncovered evidence that, shortly after signing the COD
Agreement, Enterprise began using third-party buy-sell contracts to circumvent its obligations
under the COD Agreement. Specifically, Magellan discovered that Enterprise had, for at least
three different third-party producers, replaced its preexisting third-party marketing contract,
which provided only for Enterprise’s purchase of the third-party’s Eagle Ford crude oil
production, with new buy-sell contracts which allowed Enterprise to buy the third-party’s Eagle
Ford crude oil production and then resell the same volume of crude oil back to the third-party
producer downstream of the Eagle Ford Origin Point but before the crude oil reached the
Magellan Connection Point at Genoa Junction. Daggett Aff. ¶ 22; Ex. 1-E.
22. Enterprise began utilizing that buy-sell scheme no later than January 2012. During
this time, Enterprise never told Magellan that it was replacing its Eagle Ford crude oil purchase
agreements with buy-sell agreements. Daggett Aff. ¶ 23.
23. In December 2015, while Magellan’s audit was pending, Enterprise Pipeline
physically disconnected its facilities at Anahuac Junction from Magellan’s Genoa Junction-to-
Texas City pipeline. Daggett Aff. ¶ 24. The severance of the connection at Anahuac Junction
between Magellan’s facilities and Enterprise Pipeline’s facilities occurred over Magellan’s
objection and made it impossible for Magellan to deliver crude oil into Enterprise Pipeline’s
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pipeline at Anahuac Junction, which is one of the four initial Destination Points specified in the
COD Agreement. Id. The severance of that connection was in breach of Enterprise Pipeline’s
obligations under the Connection Agreement.
24. In or about May 2017, Enterprise Pipeline posted a new tariff for transportation of
crude oil moving from ECHO Terminal to Magellan’s facilities at Genoa Junction. Under the
new tariff, effective as of July 1, 2017, Enterprise Pipeline has essentially doubled the local tariff
an Enterprise customer must pay in order to transport crude oil (including crude oil the customer
sold to Enterprise at an Eagle Ford Origin Point and bought back from Enterprise at ECHO
Terminal) from ECHO Terminal to Magellan’s facilities at Genoa Junction, on Enterprise
Pipeline’s ECHO-to-Genoa Junction pipeline. By that means, Enterprise or its affiliates have
dramatically increased the cost, and correspondingly decreased the economic incentive, for
shippers to transport crude oil via Magellan’s Houston-area distribution system (instead of the
Enterprise system) to any of the Destination Points specified in the COD Agreement. Daggett
Aff. ¶ 25.
25. Magellan has served discovery requests to Enterprise and subpoenas duces tecum
to three non-parties. Bryant Aff. ¶¶ 3, 5-6. The evidence Magellan has sought to discover
through the above-described discovery requests is relevant to the claims Magellan asserts in this
action, material to the resolution of the Motion, and potentially essential to the resolution of
issues presented by the Motion. Id., ¶¶ 10-13. However, as a result of the Enterprise Motion for
Protection and to Stay Discovery Pending Resolution of Defendant’s Dispositive Motion, and the
parties’ subsequent Rule 11 agreement, Magellan has not had any discovery in this action and
has not had adequate time or opportunity to obtain any discovery. Id. ¶¶ 8-9, 14. The Rule 11
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agreement is “without prejudice to any argument of any party in connection with the motion for
summary judgment and/or the Stay Motion.” Ex. 2-G.
IV. SUMMARY JUDGMENT STANDARDS
Rule 166a provides for two different types of summary judgment motions by a
defendant—a “traditional” motion and a “no-evidence” motion—each with its own rules,
requirements, and procedures. Tex. R. Civ. P. 166a(c), (i). Whether a summary judgment motion
is a traditional motion or a no-evidence motion depends on “its substance, not its title or
caption.” Cohen v. Landry’s Inc., 442 S.W.3d 818, 823 (Tex. App.—Houston [14th Dist] 2014,
pet. denied); Texas Integrated Conveyor Sys., Inc. v. Innovative Conveyor Concepts, Inc., 300
S.W.3d 348, 375 (Tex. App.—Dallas 2009, pet. denied). The reviewing court must determine the
nature of a movant’s summary judgment motion as a threshold matter. Davis v. Canyon Creek
Estates Homeowners Ass’n, 350 S.W.3d 301, 307 (Tex. App.—San Antonio 2011, pet. denied).
A motion seeking relief on the ground that the plaintiff cannot produce any evidence to establish
an essential element of one or more of its claims is properly viewed as a no-evidence motion
under Rule 166a(i). See Marts ex rel. Marts v. Transportation Ins. Co., 111 S.W.3d 699, 702
(Tex. App.—Fort Worth 2003, pet. denied).
A no-evidence summary judgment motion “is essentially a motion for a pretrial directed
verdict.” Timpte Indus., Inc. v. Gish, 286 S.W.3d 306, 310 (Tex. 2009). A no-evidence motion
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.
The motion must state the elements as to which there is no evidence.” Tex R. Civ. P. 166a(i).
“To defeat a no-evidence motion, the non-movant must produce at least a scintilla of evidence
raising a genuine issue of material fact as to the challenged elements.” Lightning Oil Co. v.
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Anadarko E&P Onshore, LLC, 520 S.W.3d 39, 45 (Tex. 2017). The court must review such
evidence “in the light most favorable to the non-movant,” and indulge “every reasonable
inference … in that party’s favor.” Id. A party may move for no-evidence summary judgment
only “[a]fter adequate time for discovery.” Tex R. Civ. P. 166a(i).
“With a traditional motion for summary judgment, the movant has the initial burden of
showing that there is no genuine issue as to any material fact and that the movant is entitled to
judgment as a matter of law.” City of Anahuac v. Morris, 484 S.W.3d 176, 179–80 (Tex. App.—
Houston [14th Dist.] 2015, pet. denied). When the defendant moves for traditional summary
judgment on a plaintiff’s claims, the defendant must “conclusively negate[] at least one of the
essential elements of each of the plaintiff’s causes of action.” Cathey v. Booth, 900 S.W.2d 339,
341 (Tex. 1995). A matter is conclusively established “only if reasonable people could not differ
in their conclusions.” City of Keller v. Wilson, 168 S.W.3d 802, 816 (Tex. 2005). If the defendant
makes this showing, “the burden shifts to the plaintiff to present evidence raising a genuine issue
of material fact.” Kaplan v. City of Sugar Land, No. 14-15-00381-CV, 2017 WL 1287994, at *2
(Tex. App.—Houston [14th Dist.] Apr. 6, 2017, no pet.). Evidence raises a genuine issue of fact
if “reasonable and fair-minded jurors could differ in their conclusions in light of all of the
evidence presented.” Goodyear Tire & Rubber Co. v. Mayes, 236 S.W.3d 754, 755 (Tex. 2007).
“When reviewing a traditional motion for summary judgment, [the court must] review the
evidence in the light most favorable to the non-movant, indulge every reasonable inference in
favor of the non-movant, and resolve any doubts against the motion.” Lightning Oil Co., 520
S.W.3d at 45.
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V. ARGUMENT AND AUTHORITIES
A. ENTERPRISE IS NOT ENTITLED TO SUMMARY JUDGMENT ON MAGELLAN’S BREACH OF
CONTRACT CLAIM
1) Applicable Rules of Contract Interpretation
The parties agree that well-settled rules of contract interpretation must guide the Court’s
analysis of the issues presented by the Motion. However, contrary to Enterprise’s assertion,
construing the COD Agreement in accordance with the applicable rules of contract interpretation
does not support the interpretation Enterprise urges the Court to adopt as a matter of law, and
thus does not support its Motion for summary judgment as to any of Magellan’s claims.
“When construing a contract, the court’s primary concern is to give effect to the written
expression of the parties’ intent.” Forbau v. Aetna Life Ins. Co., 876 S.W.2d 132, 133 (Tex.
1994). “In discerning the parties’ intent, [the court] must examine and consider the entire writing
in an effort to harmonize and give effect to all the provisions of the contract so that none will be
rendered meaningless.” El Paso Field Servs., L.P. v. MasTec N. Am., Inc., 389 S.W.3d 802, 805
(Tex. 2012) (internal quotation marks omitted). That is, “[n]o single provision taken alone is
given controlling effect; rather, each must be considered in the context of the instrument as a
whole.” Plains Expl. & Prod. Co. v. Torch Energy Advisors Inc., 473 S.W.3d 296, 305 (Tex.
2015). An important corollary rule dictates that a court “construe [the] contract[] from a
utilitarian standpoint bearing in mind the particular business activity sought to be served, and
avoiding unreasonable constructions when possible and proper.” Id. (internal quotation marks
omitted).
To that end, the circumstances surrounding a written agreement must be considered by
the court, because they may assist the court in construing the language the parties used. See First
Bank v. Brumitt, No. 15-0844, 2017 WL 1968830, at *10 (Tex. May 12, 2017); Banker v.
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Breaux, 128 S.W.2d 23, 24 (Tex. 1939) (stating that the contracting parties’ intention, which is
of controlling importance, must be ascertained from their agreement “in the light of the attending
circumstances”). This includes consideration of “the undisputed evidence regarding [the
contract’s] negotiation and purpose.” Basic Capital Management v. Dynex Commercial, 348
S.W.3d 894, 899 (Tex. 2011). Indeed, even when a court concludes that the parties’ contract is
unambiguous, it may still consider the surrounding “facts and circumstances” as an “aid in the
construction of the contract’s language.” Sun Oil Co. (Del.) v. Madeley, 626 S.W.2d 726, 731
(Tex. 1981). “In other words, the parol-evidence rule does not prohibit consideration of
surrounding circumstances that inform, rather than vary from or contradict, the contract text.”
First Bank, 2017 WL 1968830, at *10 (internal quotation marks omitted).2
Determining whether a contract is ambiguous is a legal question for the court. Kachina
Pipeline Co., Inc. v. Lillis, 471 S.W.3d 445, 449 (Tex. 2015). A contract is ambiguous if it “is
subject to two or more reasonable interpretations after applying the pertinent rules of
construction.” J.M. Davidson, Inc. v. Webster, 128 S.W.3d 223, 229 (Tex. 2003) (emphasis
added). For example, the question of “[w]hether a contract is ambiguous … must be decided by
examining the contract as a whole in light of the circumstances present when the contract was
entered.” Anglo-Dutch Petroleum Int’l, Inc. v. Greenberg Peden, P.C., 352 S.W.3d 445, 449–50
(Tex. 2011) (internal quotation marks omitted). Conversely, a contract is unambiguous only if,
2
Relatedly, Enterprise is incorrect when it asserts that the parol evidence rule “precludes enforcement of
prior or contemporaneous agreements” (Motion at 15) and “preclude[s] [Magellan] from asserting fraud
on this basis” (Motion, n. 38 at 27), based on the fact that the COD Agreement contains a “merger” or
“integration” clause. The parol evidence rule has no such effect when, as here, there is evidence of
ambiguity, fraud, or accident in the written contract. See ISG State Operations, Inc. v. Nat’l Heritage Ins.
Co., 234 S.W.3d 711, 719–20 (Tex. App.—Eastland 2007, pet. denied) (“A merger clause can be
disregarded upon pleading and proof of ambiguity, fraud, or accident.”); Probado Techs. Corp. v.
Smartnet, Inc., No. CIV.A. C-09-349, 2010 WL 2232831, at *6 (S.D. Tex. June 2, 2010) (“A court may
disregard an integration clause and look to prior agreements if there is evidence of ambiguity, fraud, or
accident in the written contract.”). See also 49 Tex. Prac., Contract Law § 8.9 (“Even a merger clause will
not bar parol evidence, however, if the agreement is incomplete or ambiguous on its face.”).
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after applying such rules of construction, it is susceptible to “only one reasonable interpretation.”
N. PlaiShore Energy, L.L.C. v. Harkins, 501 S.W.3d 598, 604 (Tex. 2016).
When the court concludes that the agreement as written is ambiguous, the parties’ intent
becomes a fact issue. Kachina, 471 S.W.3d at 449. At that point, the court may “consider the
parties’ interpretation and admit extraneous evidence to determine the true meaning of the
instrument.” Italian Cowboy Partners, Ltd. v. Prudential Ins. Co. of Am., 341 S.W.3d 323, 333–
34 (Tex. 2011) (quoting David J. Sacks, P.C. v. Haden, 266 S.W.3d 447, 450–51 (Tex. 2008)).
2) The Pertinent Surrounding Circumstances and Four Corners of the Contract
The COD Agreement is a fairly lawyerly contract, full of key definitions and the like,
between two big competitors who know the midstream energy business inside and out. For
anyone less familiar with the territory, understanding what the transportation commitment set
forth in Section 4.1 really means requires examination of the whole agreement (the full four
corners), and interpretation of the contract language “in light of the circumstances present when
the contract was entered,”3 viewed from a “utilitarian” (practical, common sense) standpoint
“bearing in mind the particular business activity sought to be served, and avoiding unreasonable
constructions.”4
— The Context of the Contract —
As shown by the parties’ respective fact statements, at least some of the material
circumstances surrounding the COD Agreement are not in dispute. For example, Enterprise is a
crude oil marketing company which purchases its customers’ crude oil on location in a producing
region (e.g., Eagle Ford Shale) and then transports or “markets” it, via pipelines and distribution
3
Anglo-Dutch Petroleum Int’l, Inc., 352 S.W.3d at 449–50.
4
Plains, 473 S.W.3d at 305.
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systems owned by Enterprise Pipeline, to refineries or other final destinations (e.g., Houston-area
refineries).
There is no dispute that when the parties entered into the COD Agreement, crude oil
production in the Eagle Ford Shale was growing rapidly, creating a need for expanded
transportation and distribution facilities to move Eagle Ford crude oil to Houston-area
destinations. Magellan already had a substantial crude oil transportation and distribution system
that was directly connected and capable of delivering crude oil to multiple refineries in or near
Houston, but was considering expansion of its Houston-area transportation and distribution
facilities. Enterprise Pipeline was also in the process of developing its Houston-area crude oil
terminal facility known as ECHO Terminal, that could eventually compete with Magellan’s
Houston-area crude oil distribution system. However, at the time, Enterprise Pipeline had a
pipeline system that originated in the Eagle Ford Shale and extended (via Rancho I pipeline) to a
point of connection into Magellan’s Houston-area distribution system at Genoa Junction.
Thus, Enterprise expressed to Magellan an immediate need and desire to utilize
Magellan’s Houston-area systems, if and when Magellan completed an expansion that would
accommodate the volume of Eagle Ford crude oil Enterprise anticipated marketing and
delivering to the Houston area. Enterprise and Magellan proceeded to negotiate the terms of the
COD Agreement over a period of about four months.
In the final stages of the parties’ documentation of their agreement, one of the Enterprise
negotiators represented to Magellan’s representative, in writing, that “I believe the intent of the
agreement was for all of the marketing volume to move through these [Magellan]
connections and that is our [Enterprise’s] intent. . . .”5 And as reflected in COD Agreement,
5
Ex. 1-A (emphasis added).
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the parties contemplated that Enterprise would deliver all such crude oil into the Magellan
distribution system at Genoa Junction, by one of two possible routes between an Origin Point
and the Magellan connection point at Genoa Junction, i.e., either (i) directly from the existing
Eagle Ford-to-Houston pipeline (via Rancho I), or (ii) if Enterprise first moved the crude oil past
Magellan’s Genoa Junction connection point to Enterprise’s nearby ECHO Terminal, then back
to the Magellan connection point on an ECHO-to-Genoa Junction pipeline being constructed by
Enterprise Pipeline.
— The Four Corners of the Contract —
The COD Agreement begins with a series of recitals. Regarding the existing Enterprise
facilities, one of the recitals states:
Enterprise Pipeline owns the 24-inch diameter crude oil pipeline facility
(“Eagle Ford Pipeline System”) that extends from the Origin Points (as
hereafter defined) in south Texas to the Connection Point (as hereafter
defined) with Magellan’s Genoa Junction and owns the Webster-area
terminal located south of Genoa Junction (the “Echo Terminal”);6
The final recital in the COD Agreement states the essential purpose of the contract, as
follows:
WHEREAS, Shipper, to facilitate Magellan’s construction of the New
Magellan Facilities, is willing to provide the commitment described in this
Agreement.7
That is, Enterprise made its long-term exclusive-use commitment for the express purpose of
inducing Magellan’s costly construction of the New Magellan Facilities.
Then, the preamble states the parties’ mutual intention to be legally bound to perform
their respective promises:
6
Ex. 1-B at 1(bold original, underscore added).
7
Ex. 1-B at 1(underscore added).
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NOW, THEREFORE, in consideration of the promises and of the mutual
covenants and agreements contained herein, and of other good and
valuable consideration the receipt, adequacy and sufficiency of which are
acknowledged, and intending to be legally bound hereby, Magellan and
Shipper agree as follows:8
The 10-year term of contract is set forth in Section 2.1, which states in relevant part:
2.1 Term. The term of this Agreement (“Term”) shall commence on the
Effective Date and shall continue until the tenth (10th) anniversary of the
In-Service Date (as hereinafter defined).9
The Shipper’s (Enterprise’s) transportation commitment is set forth in Section 4.1.
Capitalized terms are defined elsewhere in the contract (as discussed more fully below):
4.1 Transportation Commitment. Following the In-Service Date,
Shipper agrees:
A. to exclusively utilize the Magellan Facilities for all deliveries of
Product that are Owned or Controlled by Shipper; and
B. to use best efforts to cause Shipper’s Affiliates to exclusively use the
Magellan Facilities for all deliveries of Product that are Owned or
Controlled by any of its Affiliates;
provided, that such deliveries are made from an Origin Point and are
either:
(i) transported on the Eagle Ford Pipeline System through Echo
Terminal to the Connection Point and delivered to any of the
Destination Points, or
(ii) transported on the Eagle Ford Pipeline System to the Connection
Point and delivered to any of the Destination Points.10
— The Crux of the Summary Judgment Dispute —
Again, the issue before the Court is not whether Enterprise is deliberately bypassing
Magellan altogether—it admittedly IS. Rather, the crux of the summary judgment issue is
8
Ex. 1-B at 1 (underscore added).
9
Ex.1-B at 4 (bold original).
10
Ex. 1-B at 6 (bold original, underscore added).
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whether (as Enterprise contends) the only reasonable interpretation of Section 4.1 is one that
permits Enterprise to manipulate events solely within its control and thereby render the
“commitment” set forth in Section 4.1 inapplicable.
As support for its position, Enterprise asserts that certain “requirements” (i.e., conditions)
must be met or must occur to trigger its commitment to exclusively utilize Magellan’s facilities.
The Motion puts it this way:
Enterprise is bound to exclusively utilize Magellan’s distribution system
under the Distribution Agreement provided that all of the following
requirements are met: (1) the crude is either owned or controlled by
Enterprise (or its Affiliates); (2) the crude originates from one of the four
specifically identified Origin Points on the Eagle Ford pipeline; (3) the crude
flows to Magellan’s connection valve at Genoa Junction, and (4) the crude
reaches four specifically identified Destination Points.11
Magellan does not dispute that the exclusive-use commitment only applies to Product
being transported from any one of the specified Origin Points to any one of the specified
Destination Points. However, Enterprise is flatly wrong when it says that under the “plain
language” of the contract, Enterprise can wash its hands of the commitment simply by (i)
choosing to bypass the Magellan Connection Point instead of delivering Product to that
Connection Point, or (ii) taking Product Enterprise purchases from a marketing customer and
owns at an Origin Point, transporting the Product (in Enterprise’s own name and for its own
account) directly to Enterprise’s ECHO Terminal, and then choosing to sell the crude back to the
same customer at ECHO Terminal.
Indeed, the Enterprise interpretation of its “commitment” to “exclusively utilize”
Magellan’s facilities could be restated as follows:
“Shipper has the option, but not the obligation, to utilize the Magellan
Facilities for transportation and delivery, to a Destination Point, of any
11
Motion at 17 (all emphasis in original).
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Product that Shipper owns or controls at an Origin Point; provided, that
Shipper reserves the right, in its sole discretion, to exclusively utilize its
own facilities for all such deliveries.”
What Enterprise actually gave in Section 4.1, however, was a “commitment,” which
means a “promise or pledge to do something,” not an option.12 To “exclusively utilize” also has
specific meaning, and does not suggest “optional” use of the Magellan Facilities. Had Enterprise
so intended, it could have negotiated for an option to utilize Magellan’s facilities or not, at its
whim. However, the COD Agreement contains no such “option” language. The Joint Tariff also
confirms Enterprise’s commitment “to ship under the Joint Tariff all crude owned or controlled
by it from an Origin Point through the Connection Point to a Destination Point.”13 And not
surprisingly, Enterprise offers no explanation or logical reason why Magellan or any other
rational business in its position would have invested tens of millions of dollars based on they
type of hollow and worthless “commitment” Enterprise claims it made. In any case, the Motion
must fail because Enterprise’s currently professed view of Section 4.1’s “plain language” is not a
reasonable interpretation, let alone the only reasonable interpretation.
3) Section 4.1 Cannot be Construed, As a Matter of Law, to Either:
(i) “Condition” the Enterprise Commitment on delivery of crude to a
Designated Magellan Connection Point, or
(ii) Permit Enterprise to Avoid Its Commitment By Causing Product Not to
Be Delivered to the Magellan Connection Point
Enterprise argues that, as a matter of law, it has not breached the COD Agreement
because the Section 4.1 language—“provided, that such deliveries … are … transported to the
Connection Point” with the Magellan Facilities—creates a “condition” precedent to Enterprise’s
12
Webster’s New International Dictionary 539 (2d ed. 1945).
13
Ex. 1-C (emphasis added).
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obligation to make exclusive use of the Magellan Facilities, and that “condition” has never
occurred.14 Properly construed, however, the language introduced by the words “provided, that”
does not make Enterprise’s delivery of Product to the designated Magellan Connection Point a
“condition” of the Enterprise commitment to use the Magellan Facilities originating there.
Further, if Enterprise’s commitment was truly conditioned on its delivery of Product to the
designated Magellan Connection Point, by law Enterprise could not avoid the commitment to use
the Magellan Facilities by causing the delivery condition not to occur, such as by choosing to
deliver Product to its own facilities instead.
a) The language Enterprise relies on does not create a condition precedent to
Enterprise’s obligation to make exclusive use of the Magellan Facilities
“A condition precedent is an act or event that must take place before performance of a
contractual obligation is due.” Cedyco Corp. v. PetroQuest Energy, LLC, 497 F.3d 485, 488 (5th
Cir. 2007). Under Texas law, conditions precedent are strongly disfavored. Indeed, Texas
Supreme Court authority teaches that:
In construing a contract, forfeiture by finding a condition precedent is to
be avoided when another reasonable reading of the contract is possible.
When the intent of the parties is doubtful or when a condition would
impose an absurd or impossible result, the agreement will be interpreted as
creating a covenant rather than a condition. Because of their harshness in
operation, conditions are not favorites of the law.
Criswell v. European Crossroads Shopping Ctr., Ltd., 792 S.W.2d 945, 948 (Tex. 1990) (internal
citations omitted); accord Hohenberg Bros. Co. v. George E. Gibbons & Co., 537 S.W.2d 1, 3
(Tex. 1976) (“[W]here the intent of the parties is doubtful or where a condition would impose an
absurd or impossible result then the agreement will be interpreted as creating a covenant rather
14
See Motion at 17-18.
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than a condition.” (emphasis added)); Amir v. Int’l Bank of Commerce, 419 S.W.3d 687, 692
(Tex. App.—Houston [1st Dist.] 2013, no. pet.) (same).
Texas courts “resolve whether a contractual provision is a covenant or a condition
precedent by examining the entire contract to determine the parties’ intent.” Arbor Windsor
Court, Ltd. v. Weekley Homes, LP, 463 S.W.3d 131, 136 (Tex. App.—Houston (14th Dist.] 2015,
pet. denied) (emphasis added). That principle bears directly here, partly because the “entire
contract” includes the Joint Tariff Agreement incorporated into the COD Agreement.15 Notably,
unlike Section 4.1 of the COD Agreement, in describing Enterprise’s exclusive-use commitment
the Joint Tariff Agreement does not use any “provided that” language and does not refer to
Product deliveries “transported … to the Connection Point.” Instead, the Joint Tariff expresses
that commitment as follows:
[T]he shipper agrees to ship under the Joint Tariff all crude owned or
controlled by it from an Origin Point through the Connection Point to a
Destination Point.16
Further, the word “provided,” as used in Section 4.1 of the COD Agreement, is not a
magic word that invariably introduces or creates a condition precedent. Rather, such language’s
“true office and its general purpose is” merely “make clear the meaning of that which has gone
before.” Knight v. Chicago Corp., 188 S.W.2d 564, 567 (Tex. 1945). In short, it introduces a
clarification.17 So then, if the words “provided, that” do not introduce conditions upon
15
Under Texas law, all writings that pertain to the same transaction must be interpreted together and, to
the extent possible, consistently. City of Keller v. Wilson, 168 S.W.3d 802, 811 (Tex. 2005).
16
Ex. 1-C (emphasis added).
17
See id.; see also Stanley v. Colt, 72 U.S. 119, 166 (1866) (“It is true that the word ‘proviso’ is an
appropriate one to constitute a common law condition in a deed or will, but this is not the fixed and
invariable meaning attached to it by the law in these instruments. On the contrary, it gives way to the
intent of the parties as gathered from an examination of the whole instrument, and has frequently been
thus explained and applied as expressing simply a covenant or limitation in trust.”).
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Enterprise’s obligation to make exclusive use of the Magellan Facilities (as Enterprise contends),
what do they accomplish? The answer is simple.
First, the words following “provided, that” define and clarify the scope of the Eagle Ford
transportation business both parties intended to be included in the Enterprise transportation
commitment, which subparts A and B of Section 4.1 very broadly state but do not specifically
define. The Court will note that neither subparts A and B, nor the defined terms embedded
therein, specifically tie the exclusive-use commitment to Eagle Ford crude, or to the specified
Origin Points, or to the Destination Points. Those gaps are filled—the intended scope of the
commitment is defined and clarified—by the words following “provided, that.”
Second, the words “transported … to the Connection Point” simply identify the specific
location where Enterprise must deliver crude into Magellan’s distribution system in order to
fulfill its commitment as defined. As the contract’s definition of “Connection Point” makes
clear,18 delivery into Magellan’s system must occur at one of two points of connection with the
Magellan valve located at Genoa Junction, as distinguished from any other location within the
vast complex of the “Magellan Facilities” as defined in the agreement. Thus, the words
“transported … to the Connection Point” constitute a covenant that in fulfilling its commitment
Enterprise will deliver crude to the specified location (not somewhere else), not a “condition” on
the Enterprise commitment to make exclusive use of the Magellan Facilities. That is why
“transported ... to the Connection Point” is included, and that is all it means.
In other words, the phrase “transported … to the Connection Point” is not surplus and
does have meaning, but not the meaning Enterprise puts on it. In fact, Enterprise’s spin on that
language makes circular nonsense out of Section 4.1, as though it meant: “Shipper agrees to
18
See Ex. 1-B at 2, Section 1.5.
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exclusively utilize the Magellan Facilities only IF Shipper delivers Product to the Magellan
Facilities,” as it must (at some location) in order to utilize the Magellan Facilities at all.
Enterprise’s take on Section 4.1’s “transported … to the Connection Point” language also
violates another canon of construction, to harmonize and give effect to all provisions of the
contract so that none will be rendered meaningless or superfluous.19 The first “Commitment
Exception” set forth in Section 4.2 of the COD Agreement states that if Enterprise “requires
more capacity than Magellan has available,” then Enterprise “may utilize third party facilities to
transport such excess Product until such time that Magellan has capacity available.”20 If, as
Enterprise claims, it had no binding obligation to deliver any crude to the Magellan Connection
Point, what would be the point of including such an exception? None.
Additionally, Magellan’s interpretation of the “to the Connection Point” language
preserves the reality of Enterprise’s exclusive use commitment, whereas Enterprise’s
interpretation makes the commitment illusory, in violation of another time-honored rule of
construction. See El Paso Field Servs. L.P., 389 S.W.3d at 805; Texas Gas Utilities Co. v.
Barrett, 460 S.W.2d 409, 412 (Tex. 1970) (“A contract will be construed in favor of
mutuality.”). Enterprise tries to paper over that problem, arguing that its interpretation of Section
4.1 does not make its commitment illusory because Enterprise gave consideration by forfeiting a
right to use third party facilities which, like Magellan’s, have connection points at or near Genoa
Junction. That is hogwash.
While it is true that Enterprise committed not to use such third parties’ facilities unless
the volume of Product in transport exceeded Magellan’s capacity to handle, that was not the
19
El Paso Field Servs., L.P., 389 S.W.3d at 805.
20
Ex. 1-B at 6, Section 4.2.
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material consideration for the deal. The material consideration Magellan bargained for (and got)
was Enterprise’s promise to exclusively use facilities owned by Magellan, instead of
Enterprise’s own competing facilities at ECHO Terminal or elsewhere. That fundamental aspect
of the bargain is plainly reflected in Section 4.2, which (in the exceptional circumstances
described) expressly allows Enterprise to use “third party” facilities but not its own. Enterprise
committed Eagle Ford crude transportation business to Magellan, free from any interference by
Enterprise or its affiliates, including any interference that might come from the ongoing
expansion of their facilities at the nearby ECHO Terminal.
In sum, Enterprise’s contention that Section 4.1 must be construed to “condition” its
commitment upon delivery of Product to the Magellan Connection Point—to mean, in effect,
that Enterprise will make exclusive use of Magellan’s distribution facilities only IF Enterprise
decides to deliver Product to the Connection Point with Magellan’s system—is clearly wrong
and should be rejected.
b) In any event, Enterprise cannot escape its transportation “commitment” by
choosing not to transport Product “to the Connection Point”
It is hornbook contract law that a party whose obligation is conditioned upon the
occurrence of an event within that party’s control cannot escape its obligation by purposely
causing the event not to occur. See, e.g., Clear Lake City Water Auth. v. Friendswood Dev. Co.,
344 S.W.3d 514, 519 (Tex. App.—Houston [14th Dist.] 2011, pet. denied) (“Generally, a party
who prevents or makes impossible the occurrence of a condition precedent upon which its
liability under a contract depends cannot rely on the nonoccurrence to escape liability.” (internal
quotation marks omitted)); II Deerfield Ltd. P’ship v. Henry Bldg., Inc., 41 S.W.3d 259, 265
(Tex. App.—San Antonio 2001, pet. denied) (“It is elementary that one who prevents or makes
impossible the performance of a condition precedent upon which his liability under a contract is
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made to depend cannot avail himself of its nonperformance.”); SLT Dealer Grp., Ltd. v.
AmeriCredit Fin. Servs., Inc., 336 S.W.3d 822, 831 (Tex. App.—Houston [1st Dist.] 2011, no
pet.) (“While Alliance seeks to avoid its own obligations to perform under the Dealer Agreement
by relying on its own failure to perfect a security interest in AmeriCredit’s favor, … one who
prevents or makes impossible the performance of a condition precedent upon which his liability
under a contract is made to depend cannot avail himself of its nonperformance.” (internal
quotation marks omitted)). 13 Richard A. Lord, Williston on Contracts § 39:7 (4th ed. 2013) (“A
party that prevents the occurrence of a condition may be said to be estopped from benefiting
from the fact that the condition precedent to its obligation failed to occur.”). This basic and
completely logical principle of contract law, sometimes called the “doctrine of prevention,”
constitutes “a principle of fundamental justice.” In re Deepwater Horizon, 786 F.3d 344, 361
(5th Cir. 2015).
Thus, when a contract conditions one party’s obligations upon the occurrence of
something within that party’s control, that party (Enterprise) has an implied duty not to prevent
the condition from occurring. See Clement v. Producers’ Ref. Co., 277 S.W. 634, 635–36 (Tex.
Comm. App. 1925) (“[I]f the act to be done by the party binding himself can be done only upon
a corresponding act being done or allowed by the other party, an obligation by the latter to do or
allow to be done the act or things necessary for the completion of the contract will necessarily be
implied.”); Holguin v. Twin Cities Servs., Inc., 750 S.W.2d 817, 819 (Tex. App.—El Paso 1988,
no writ) (“[W]here one person obligates himself to perform services for another as here, an
obligation on the part of the other party to supply the subject matter of the contract will be
implied.” (internal quotation marks omitted)); Mann Frankfort Stein & Lipp Advisors, Inc. v.
Fielding, 289 S.W.3d 844, 850 (Tex. 2009) (“In other words, when it is clear that performance
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expressly promised by one party is such that it cannot be accomplished until a second party has
first performed, the law will deem the second party to have impliedly promised to perform the
necessary action.”); In re: KSRP, Ltd, No. 10-7001, 2011 WL 13096691, at *7 (Bankr. S.D. Tex.
Aug. 17, 2011) (“When the contract gives a party discretion regarding the extent of its
performance, courts consider the purposes and nature of the contract and frequently impose a
‘good-faith’ requirement on the terms of the contract.”); 14 Tex. Jur. 3d Contracts § 326 (“Where
a contract is to be performed on the happening of a future event, the law will impute to the
promisor a promise that it will in no way act to prevent the happening of the event, and that it
will hold itself in constant readiness to cooperate where cooperation is necessary to achieve the
occurrence of the event; if the promisor, in violation of this implied covenant, does something to
prevent the occurrence of the event, the contract will then become just as absolute as if the event
had actually taken place.”).21
This implied duty is imposed on the party whose obligation is conditioned upon an event
within its control to ensure that the contract is not illusory. Mann Frankfort, 289 S.W.3d at 850
(“[I]f one party makes an express promise that cannot reasonably be performed absent some type
of performance by the other party, courts may imply a return promise so the dealings of the
21
See also Catherine M.A. McCauliff, Corbin on Contracts § 40.19, at 598 (Rev. ed. 1999) (“A
contractor whose promissory duty is subject to a condition eliminates that condition by unjustly
preventing its fulfillment, even though the contractor has made no express promise not to prevent
fulfillment.” (emphasis added)); id. at 599 (“In a good many cases, however, the promisor’s prevention of
the fulfillment of the condition is itself regarded as a breach of contract. The court finds that the promisor
has made an implied promise not to prevent or make the performance of the condition more difficult.”);
13 Richard A. Lord, Williston on Contracts § 38:15 (4th ed. 2013) (“When the occurrence of the
condition is largely or exclusively within the control of one party, so that the other party is significantly or
totally dependent on the controlling party, the express language of condition will typically give rise to an
implied promise of one sort or another: either that the condition will occur or that the controlling party
will make some effort—ranging from a minimal, subjective good faith effort to a substantial, objectively
reasonable effort—to see that the conditioning event will occur. Generally speaking, the more control one
party has over whether the condition will occur, the more likely a promise will be implied, and the more
stringent or substantial the implied promise imposed on it will be.”).
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parties can be construed to mean something rather than nothing at all.”).22 Courts rightly avoid
construing a written agreement in a way that renders it illusory, especially when (as here) the
contract expresses the parties’ mutual intention “to be legally bound hereby.”23 See, e.g., 2
Joseph M. Perillo et al., Corbin on Contracts § 5.28, at 149 (Rev. ed. 1995) (“The tendency of
the law is to avoid the finding that no contract arose due to an illusory promise when it appears
that the parties intended a contract.”). “When words are put in promissory form, courts are loath
to give them an interpretation that makes them empty in fact and misleading to others.” Id. § 5.32
at 179.
Thus, in arguing that it could (and did) purposely avoid using Magellan’s Facilities,
Enterprise has admitted its violation of this basic rule of contract construction as well as its
breach of the implied duty to not prevent the occurrence of any so-called “condition” precedent
to its performance. Without more, its Motion therefore fails.
22
In an effort to excuse its deliberate failure to transport crude to the Magellan Connection Point,
Enterprise argues that the COD Agreement is “a form of output/requirements contract.” Motion at 19.
Although the COD Agreement is not an “output/requirements” contract, even if it could be viewed as
such, that would not matter. Requirements contract are merely one type of agreement in which a party’s
performance obligation is subject to a condition within that party’s exclusive control. See Restatement
(Second) of Contracts § 77 cmt d. The law discussed above equally applies to output/requirements
contracts. Indeed, the very case Enterprise relies on stands for the proposition that the law imposes on
requirements buyers an implied duty that prevents them from evading their contractual obligations by
reducing their requirements. See N. Nat. Gas Co. v. Conoco, Inc., 986 S.W.2d 603, 608 (Tex. 1998); see
also Empire Gas Corp. v. Am. Bakeries Co., 840 F.2d 1333, 1339–41 (7th Cir. 1988).
23
Ex. 1-B at 1.
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4) Section 4.1 Contains No Clear and Unambiguous Language That Either:
(i) Limits The Commitment To Crude Enterprise Continuously
Owns/Controls From End-To-End Of The Transport From Origin
Point-To-Destination Point, or
(ii) Permits Enterprise To Avoid Its “Commitment” By Reselling Product
At A Location Downstream From The Origin Point Where It Was
Owned And Controlled By Enterprise
Enterprise also argues that the only reasonable interpretation of Section 4.1, as written, is
one that permits Enterprise to avoid its express commitment just by reselling its crude oil to its
marketing customer(s) or someone else, at ECHO Terminal or somewhere else, downstream
from the Origin Point where Enterprise owns the Product and begins transporting the Product in
its own name and for its own account. That is also incorrect.
a) Enterprise’s interpretation of the ownership/control requirement is not
reasonable, much less the only reasonable interpretation
First and foremost, the COD Agreement has no “plain language” that unambiguously
limits the commitment to crude Enterprise owns or controls continuously from end-to-end of the
transport, from Origin Point to Destination Point. In fact, nothing in the contract expressly
answers the question: when or where must the Eagle Ford crude be owned or controlled by
Enterprise in order for its Magellan transportation commitment to apply?
Subparts A and B of Section 4.1 state that the Enterprise commitment applies to “all
deliveries of Product that are Owned or Controlled by Shipper [or any Affiliate],” but they do not
directly identify any particular time or place where Enterprise’s ownership or control must exist
in order for its exclusive use commitment to apply. Nor is that matter specifically addressed in
the contract’s definitions of the terms “Owned” or “Controlled.” The term “Owned” is defined:
1.32 “Owned” shall mean Product to which Shipper or its Affiliate holds title;
provided, however, the custody of Product by an Affiliate of Shipper that is
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transporting such Product for the account of a party or parties other than
Shipper or its Affiliates does not constitute being Owned.24
The definition of “Controlled” is substantially the same.25
However, when the language of the COD Agreement is examined in full and in context,
all signs point to the Origin Point, strongly indicating that Enterprise’s ownership or control of
crude at any Eagle Ford Origin Point is sufficient to satisfy Section 4.1’s owned/controlled
requirement. Eagle Ford Origin Points are the central focus of the whole COD Agreement.
Further, the COD Agreement owes its very existence to crude oil transportation business
coming from Eagle Ford origins, and the contract revolves around crude Enterprise owns and
markets from certain Eagle Ford Origin Points. What is more, subparts A and B of Section 4.1
tie Enterprise’s commitment to “all deliveries of Product that are Owned or Controlled by
Shipper [or any Affiliate].” This clear and plain reference to “all” deliveries indicates that
Enterprise’s ownership of Product at the Origin Point or at any time or place along the route
between Origin Point and Destination Point is sufficient. Unlike the Enterprise interpretation,
this view harmonizes all provisions of the COD Agreement and is consistent with the mutual
intent and purpose of the agreement— as Enterprise put it, “the intent of the agreement was for
all of the marketing volume to move through these [Magellan] connections, and that is our
intent….”26
Magellan submits that its interpretation of the ownership/control requirement is the only
reasonable interpretation of Section 4.1 when construed in the manner required by well-
established principles discussed above. Enterprise’s interpretation, on the other hand, is wholly
24
Ex. 1-B at 2, Section 1.32.
25
Ex. 1-B at 2, Section 1.6.
26
Ex. 1-A.
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unreasonable because it would allow Enterprise to switch its commitment off or on at will. A
cardinal rule of contract interpretation is to avoid, if possible, any such unreasonable
construction of the language used. See Plains, 473 S.W.3d at 305.
At a minimum, Magellan’s interpretation is a reasonable construction consistent with the
circumstances under which the COD Agreement was made, the purpose for which it was made,
the contract as a whole, and the express language used in Section 4.1. This precludes summary
judgment based on Enterprise’s argument that the COD Agreement unambiguously requires
Enterprise to own or control its Eagle Ford crude continuously from end-to-end of the transport
from an Origin Point to a Destination Point.
b) Regardless, Enterprise cannot avoid its commitment by manipulating Product
ownership/control downstream from an Origin Point
Just as delivery of Product to Magellan’s Connection Point is within the sole control of
Enterprise, so is ownership or control of Product at all times and locations between an Origin
Point and a Connection Point into Magellan’s distribution system. Enterprise is not compelled by
any law or regulation to sell its Eagle Ford crude after it leaves an Origin Point but before it
reaches the Magellan Facilities. Instead, and as far as is currently known, pursuant to buy-sell
agreements it made after executing the COD Agreement Enterprise is voluntarily reselling to a
customer, at ECHO Terminal, the same volume of crude Enterprise purchases from the customer
and thus owns at an Origin Point.
As discussed above, when a contracting party’s obligation is actually conditioned upon
the occurrence of an event or subject to a requirement within that party’s own control, the law
prevents the party from avoiding its obligation by causing the condition or requirement not to be
fulfilled. That principle applies to the contract requirement of Product ownership or control by
Enterprise. The contract requirement is satisfied if Enterprise purchases and owns crude at an
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Origin Point, and no subsequent transfer of ownership can defeat Enterprise’s transportation
commitment to Magellan.27
For all of these reasons, the no-evidence Motion for summary judgment on Magellan’s
breach of contract claim should be denied.
B. ENTERPRISE IS NOT ENTITLED TO SUMMARY JUDGMENT ON MAGELLAN’S CONTRACT
REFORMATION CLAIM (SECOND CLAIM, IN THE ALTERNATIVE)
Enterprise next contends that Magellan’s reformation claim fails because Magellan
cannot demonstrate the existence of a mutual mistake. In particular, Enterprise argues that
“[e]vidence of mistake must be clear, exact and satisfactory” and that “Magellan cannot make
this showing.”
For Enterprise to make this argument, at this stage, is ironic. Enterprise filed the Motion
less than two months into the case, and then moved to block all the discovery Magellan had
commenced. To then argue that Magellan has no evidence sufficient to prove its reformation
claim, as will be required at trial, takes “gumption” to say the least.
“A party should not be able to abuse the discovery process by withholding key evidence
from a party opponent and then use that lack of evidence to win a judgment.” McInnis v. Mallia,
261 S.W.3d 197, 204 (Tex. App.—Houston [14th Dist.] 2008, no pet.). “Parties are entitled to
full, fair discovery and to have their cases decided on the merits.” Ford Motor Co. v. Castillo,
279 S.W.3d 656, 663 (Tex. 2009). It is a clear abuse of discretion to terminate a party’s claim on
27
Because it cannot point this Court to any contract provision which states that for crude to be subject to
Enterprise’s transportation commitment it must be owned/controlled by Enterprise not only at an Origin
Point but all at all times and points along the transportation route to a Destination Point, Enterprise resorts
to arguing that nothing in the contract expressly obligates Enterprise to “ensure that the crude oil remains
owned by Enterprise or its affiliates at all stages of the transport.” Motion at 20 (emphasis added). That
argument misses the point. Regardless of whether the COD Agreement requires Enterprise to maintain
ownership of Product all the way from Origin Point to a Connection Point with the Magellan Facilities, it
does require Enterprise to ensure that the commitment to exclusively utilize Magellan’s facilities is
honored and fulfilled even if ownership of Product is transferred to another at some stage of the Product’s
transport from an Origin Point.
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the merits, for lacking sufficient evidence, before any discovery has taken place. See id. That is
precisely what Enterprise is asking the Court to do here. The request should be denied.
But regardless of its obvious prematurity, Enterprise’s argument is meritless. Even
without the benefit of any discovery, Magellan has presented sufficient evidence to raise a
genuine issue of fact regarding its reformation claim. “[R]eformation requires two elements: (1)
an original agreement and (2) a mutual mistake, made after the original agreement, in reducing
the original agreement to writing.” Cherokee Water Co. v. Forderhause, 741 S.W.2d 377, 379
(Tex. 1987). Magellan has offered ample evidence of both. Mark Daggett negotiated the COD
Agreement on Magellan’s behalf. As Mr. Daggett explains in his affidavit, both parties
expressed, in writing, their understanding that Enterprise was agreeing to exclusively utilize the
Magellan Facilities for all deliveries of Enterprise “marketing” volume of crude oil moving from
the Origin Points to the Destination Points. Thus, assuming the parties’ true agreement is not
faithfully embodied in Section 4.1 of the COD Agreement (and, again, it is), then Magellan has,
at the very least, presented sufficient evidence that the COD Agreement, as written, is the result
of a mutual mistake in reducing the parties’ actual agreement to writing. Summary judgment at
this stage is, therefore, both premature and entirely improper.
C. ENTERPRISE IS NOT ENTITLED TO SUMMARY JUDGMENT ON MAGELLAN’S
DECLARATORY JUDGMENT CLAIM (THIRD CLAIM)
Enterprise argues that Magellan’s declaratory judgment claim duplicates Magellan’s
breach of contract claim and, therefore, is not justiciable. That is incorrect. The declaratory
judgment claim concerns more than Enterprise’s past breach of the COD Agreement; it also
concerns Enterprise’s legal obligation for future performance of the transportation commitment
over the remaining four years of the COD Agreement’s term. Accordingly, the declaratory
judgment claim is justiciable.
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Although declaratory relief “is not available to settle disputes already pending before
[the] court,” this rule does not apply where the declaratory relief sought “has greater
ramifications than the original suit.” BHP Petroleum Co. Inc. v. Millard, 800 S.W.2d 838, 841–
42 (Tex. 1990) (internal quotation marks omitted). This most often occurs where, as here, “the
requested declaratory relief reaches beyond the pending suit to future events arising out of the
ongoing and continuing relationship between the parties.” Cont’l Homes of Texas, L.P. v. City of
San Antonio, 275 S.W.3d 9, 21 (Tex. App.—San Antonio 2008, pet. denied). Thus, in a breach of
contract case, if the requested declaratory relief seeks “an interpretation of the … contract, which
would have the effect of defining the obligations of the parties under that contract for the
foreseeable future,” then that relief is not barred or non-justiciable merely because of a pending
breach of contract claim seeking past damages.28 BHP Petroleum Co. Inc., 800 S.W.2d at 842;
accord Indian Beach Prop. Owners’ Ass’n v. Linden, 222 S.W.3d 682, 702 (Tex. App.—
Houston 2007, no pet.).
In sum, the motion for summary judgment on Magellan’s declaratory judgment claim
fails because the law permits Magellan to pursue a “monetary award … for past damages
suffered as a result of [the defendant’s] breach” and simultaneously obtain “declaratory [relief]
… intended to prevent future damages.” Halliburton Energy Servs., Inc. v. Axis Techs., LLC, 444
S.W.3d 251, 263 (Tex. App.—Dallas 2014, no pet.) (emphasis added).
28
All of the cases Enterprise cites are distinguishable on this basis. In all of them, the declaratory relief
sought involved backward-looking relief, between parties with no ongoing contractual relationship. See
Clark v. Dillard’s, Inc., 460 S.W.3d 714, 727 (Tex. App.—Dallas 2015, no pet.); Hydroscience Techs.,
Inc. v. Hydroscience, Inc., 401 S.W.3d 783, 801–02 (Tex. App.—Dallas 2013, pet. denied); Heritage Life
Ins. Co. v. Heritage Grp. Holding Corp., 751 S.W.2d 229, 235 (Tex. App.—Dallas 1988, writ denied);
Boatman v. Lites, 970 S.W.2d 41, 43 (Tex. App.—Tyler 1998, no pet.).
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D. ENTERPRISE IS NOT ENTITLED TO SUMMARY JUDGMENT ON MAGELLAN’S
PROMISSORY ESTOPPEL CLAIM (FOURTH CLAIM, IN THE ALTERNATIVE)
Enterprise contends that, as a matter of law, the parties’ written agreement bars
Magellan’s Fourth Claim, its alternative claim for promissory estoppel. That is also incorrect.
Although “[p]romissory estoppel is not applicable to a promise covered by a valid
contract between the parties,” “promissory estoppel will apply to a promise outside a contract.”
Trevino & Assocs. Mech., L.P. v. Frost Nat. Bank, 400 S.W.3d 139, 146 (Tex. App.—Dallas
2013, no pet.) (emphasis added). In other words, the existence of a written agreement does not
bar a promissory estoppel claim if (1) the written agreement is invalid, or (2) the promise relied
on is not part of the parties’ written agreement. See id.; see also Transcon. Realty Inv’rs, Inc. v.
John T. Lupton Tr., 286 S.W.3d 635, 648 (Tex. App.—Dallas 2009, no. pet) (“If the elements of
promissory … estoppel are met, then a promise may enforce an otherwise unenforceable
contract”); Harris Const. Co., LTD. v. GGP-Bridgeland, L.P., 698 F. Supp. 2d 723, 730 (S.D.
Tex. 2010) (holding that a party’s oral promise that “materials and work furnished under [a]
Contract would be of good quality, free from faults and defects and in conformance with the
Contract” was a “promise outside the parties’ contract” and thus enforceable by a promissory
estoppel claim). For these reasons, promissory estoppel is often described as “a viable alternative
to breach of contract.” Trevino, 400 S.W.3d at 146.
Here, Magellan has pled a promissory estoppel claim, in the alternative to its breach of
contract claim. Magellan’s promissory estoppel claim seeks to recover on the promise Enterprise
made to Magellan on October 18, 2011,29 that Enterprise would exclusively use the Magellan
Facilities for all Origin Point-to-Destination Point deliveries of Enterprise’s “marketing”
volumes of crude oil—that is, crude Enterprise owns and markets from an Origin Point, as
29
Ex. 1-A.
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distinguished from crude others own and merely transport in their own names and for their own
accounts, on an Enterprise pipeline. Magellan believes that Enterprise’s promise is synonymous
with the Enterprise transportation commitment as expressed in Section 4.1 of the parties’ written
agreement. However, if the Court should determine that Enterprise’s interpretation of Section 4.1
of the COD Agreement is the only reasonable interpretation of its transportation “commitment”
as expressed in the written contract (which it should not), then Magellan would have an
actionable promissory estoppel claim based on Enterprise’s promise. This is so for at least two
reasons.
First, under Enterprise’s construction of the Section 4.1, its promise would fall outside of
the parties’ written contract and thus provide a basis for an independent promissory estoppel
claim. See Harris Const. Co., LTD., 698 F. Supp. 2d at 730. Second, if Section 4.1 of the COD
Agreement means what Enterprise says, then its exclusive-use commitment is illusory and
unenforceable. Without a valid agreement, promissory estoppel provides an available remedy.
See Transcon. Realty Inv’rs, Inc., 286 S.W.3d at 648.
In other words, Enterprise cannot have it both ways. If the promise at issue is embodied
in Section 4.1 of the COD Agreement (which it is), then Magellan is entitled to pursue and
recover damages under its breach of contract claim. If, on the other hand, the Court endorses the
Enterprise interpretation of Section 4.1 as a matter of law, then Magellan has a viable claim for
promissory estoppel.
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E. ENTERPRISE IS NOT ENTITLED TO SUMMARY JUDGMENT ON MAGELLAN’S FRAUD
CLAIM (FIFTH CLAIM)
As Magellan alleged in its Original Petition,30 when it approved and signed the COD
Agreement as written, Magellan accepted as true and relied upon various Enterprise
misrepresentations or material omissions including the following:
Enterprise’s representation that for all of its “marketing volume” of Eagle Ford crude
oil—which Magellan understood to mean crude oil Enterprise would purchase from
Eagle Ford customers and would have the legal right to transport from the Eagle Ford
Shale to Houston-area destination points—Enterprise intended to use the Magellan
Facilities and was legally binding itself to transport the crude through the Magellan
Facilities.
Enterprise’s representation that by suggesting certain changes in the contract
definitions of “Owned” and “Controlled,” Enterprise was not attempting to change
the substance or effect of the parties’ actual agreement regarding Enterprise’s
exclusive use of the Magellan Facilities.
Enterprise’s representation that the “transportation volumes”—the Eagle Ford crude
being excluded from the scope of Enterprise’s transportation commitment to
Magellan—were limited to customer-owned (not Enterprise-owned) crude that
Enterprise Pipeline would be transporting from an Eagle Ford location to a final
destination as directed by those customers pursuant to bona fide transportation
agreements between the pipeline company and its customers.
The lack of any disclosure that, in fact, Enterprise was planning to replace existing
marketing agreements with buy/sell agreements and claim that once the crude was
resold to the marketing customer Enterprise’s commitment to make exclusive use of
the Magellan Facilities no longer applied.
Magellan’s Original Petition also alleges that Enterprise’s misrepresentations or
concealments of material information continued after the parties signed the COD Agreement -
misleading Magellan to believe that Enterprise really intended to make exclusive use of the
Magellan Facilities being developed at great cost, not that Enterprise viewed its “commitment”
30
See Original Petition ¶¶ 30-35.
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as nothing more than an option to use Magellan’s facilities if/when Enterprise chose not to use its
own.31 Such conduct by Enterprise clearly supports Magellan’s claim of fraud.32
The no-evidence Motion does not challenge the admissibility or sufficiency of
Magellan’s evidence in support of its fraud claim, and for good reason. The no-evidence Motion
is premature, as Magellan has not had any discovery. The currently available evidence presented
by Magellan is clearly admissible; the parol evidence rule does not apply to a fraud claim.33
Finally, even if the Motion were not premature, Magellan’s burden would only be to present a
scintilla of evidence which could support its fraud claim, giving Magellan the benefit of all
reasonable inferences. Lightning Oil Co., 520 S.W.3d at 45.
Enterprise’s summary judgment argument rests on (i) an assumption that Enterprise’s
interpretation of the COD Agreement is correct as a matter of law, and (ii) an assertion that if the
Court agrees with Enterprise’s interpretation of the contract as written, Magellan’s reliance on
Enterprise’s misrepresentations was unjustifiable as a matter of law, because Magellan must
have known it was being lied to. Neither of those is correct.
31
See Original Petition ¶¶ 45-49.
32
A claim for fraudulent inducement arises when a party is induced to enter into an agreement through
fraud or misrepresentation. See Haase v. Glazner, 62 S.W.3d 795, 798–99 (Tex. 2001). To prevail on a
fraudulent inducement claim, a plaintiff must show (1) that the defendant knowingly made a false
representation, (2) intending to induce the plaintiff to enter into an agreement, and (3) that the plaintiff
relied on the misrepresentation to its detriment. See Hoffman v. L & M Arts, 838 F.3d 568, 576 (5th Cir.
2016). In addition, “[a] contractual promise made with no intention of performing may give rise to an
action for fraudulent inducement.” Tony Gullo Motors I, L.P. v. Chapa, 212 S.W.3d 299, 304 (Tex.
2006).
33
See Santos v. Mid-Continent Refrigerator Co., 471 S.W.2d 568, 569 (Tex. 1971); In re Border Steel,
Inc., 229 S.W.3d 825, 835 n.12 (Tex. App.—El Paso 2007, orig. proceeding) (Despite the general rule
that extrinsic evidence is inadmissible to vary or add to the terms of an unambiguous agreement, such
“evidence is admissible in cases where there are allegations of fraudulent inducement.”); Dallas Farm
Mach. Co. v. Reaves, 307 S.W.2d 233, 239 (Tex. 1957) (noting that the fraud exception to parol evidence
rule applies even if the written contract contains a merger clause).
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First, for all the reasons discussed above, Enterprise’s construction of the COD
Agreement is not the only reasonable construction, or even a reasonable construction. For this
reason alone, the motion for summary judgment on Magellan’s fraud claim should be denied.
Second, even if the Court accepted Enterprise’s interpretation of the contract as written,
that would not defeat the fraud claim as a matter of law. In this regard, Enterprise cites various
cases for the proposition that reliance on a misrepresentation is unjustified and unjustifiable if the
matter misrepresented “is directly contradicted by the express, unambiguous terms of a written
agreement.” See, e.g., H2O Sols., Ltd. v. PM Realty Grp., LP, 438 S.W.3d 606, 624 (Tex. App.—
Houston [1st Dist.] 2014, pet. denied) (emphasis added). However, to defeat a claim of reliance
on fraudulent misrepresentation, Texas law requires direct contradiction in express terms. Id. at
624–25.34 As the cases cited by Enterprise make clear, the mere fact that a court, upon applying
applicable rules of contract interpretation, may determine a contract to be unambiguous, does not
necessarily mean that a party who relied on misrepresentations about the agreement must have
known they were misrepresentations. An agreement that lacks clarity may nonetheless be found
to be technically “unambiguous.” See Universal Health Servs., Inc. v. Renaissance Women’s
Grp., P.A., 121 S.W.3d 742, 746 (Tex. 2003) (“Lack of clarity does not create an ambiguity….”).
34
All of the cases Enterprise cites satisfied this basic requirement and thus are readily distinguishable.
See, e.g., Nat’l Prop. Holdings, L.P. v. Westergren, 453 S.W.3d 419, 424 (Tex. 2015) (holding that a
plaintiff’s reliance on the defendant’s oral promise to pay $1 million was unjustified because the contract
expressly limited total compensation to $500,000); H2O Sols., Ltd., 438 S.W.3d at 625 (“[A]ny alleged
misrepresentations concerning these issues [asserted by plaintiff] are contradicted by the express terms of
the contract … .”); Miller Glob. Properties, LLC v. Marriott Int’l, Inc., 418 S.W.3d 342, 348 (Tex.
App.—Dallas 2013, pet. denied) (holding that an investor’s reliance on the defendant’s oral
representations that plans for a resort were complete was unjustified because the schedules attached to the
parties’ agreement clearly “demonstrated that the construction plans required extensive additions”); DRC
Parts & Accessories, L.L.C. v. VM Motori, S.P.A.,112 S.W.3d 854, 858 (Tex. App.—Houston [14th Dist.]
2003, pet. denied) (holding that a retailer’s reliance on a manufacturer’s oral representation that the
distributor would have the “exclusive right” to sell the manufacturer’s product was unjustified where the
contract expressly stated that the retail’s right to distribute was “non-exclusive”).
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This most often occurs when a provision is unclear on its face and yet, “after applying the
pertinent rules of contract interpretation,” can still be given a certain or definite meaning. Nassar
v. Liberty Mut. Fire Ins. Co., 508 S.W.3d 254, 258 (Tex. 2017). For this reason, to defeat a claim
of reliance on a fraudulent misrepresentation, Texas law requires proof that the written contract
“directly contradict[s]” the defendant’s oral misrepresentation in “express … terms.” H2O Sols.,
Ltd., 438 S.W.3d at 624 (emphasis added).
Here, whatever may be said for Enterprise’s interpretive arguments, the COD Agreement
does not directly contradict Enterprise’s misrepresentations, in express terms. The contract does
direct or expressly state that Enterprise can defeat its exclusive-use obligation by transferring
title to crude downstream from an Origin Point or by refusing to deliver crude oil to the
Magellan Connection Point. Indeed, Enterprise’s argument is that the COD Agreement permits
such things because it does not specifically or expressly prohibit them.35
Accordingly, the Motion for summary judgment on Magellan’s fraud claim should be
denied.
F. BECAUSE THE MOTION IS PREMATURE IN ANY EVENT, IT COULD NOT BE GRANTED
BEFORE MAGELLAN HAS HAD ADEQUATE TIME TO CONDUCT RELEVANT DISCOVERY
The Enterprise Motion constitutes a no-evidence motion for summary judgment under
Rule 166a(i). See Tex. R. Civ. P. 166a(i). A no-evidence motion may be filed only “[a]fter
adequate time for discovery.” Id. Magellan has had no discovery or opportunity for discovery, let
alone the “adequate time for discovery” that Rule 166a(i) requires before a no-evidence motion
for summary judgment may be filed. Indeed, immediately after it filed the no-evidence Motion,
Enterprise moved to stay any and all discovery by Magellan,36 thus ensuring that Magellan could
35
Motion at 11, SOF ¶ 21.
36
See Ex. 2-F.
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not have “adequate time for discovery” and compounding the impropriety of the premature no-
evidence Motion. It is no answer to argue, as Enterprise has in its stay motion, that discovery is
“premature” and “unnecessary” because the Court “need not and indeed cannot consider any
extraneous evidence in determining the threshold legal issue raised in Enterprise’s motion for
summary judgment.”37 Enterprise has it backwards: what is premature is its no-evidence Motion,
not the discovery Enterprise has effectively blocked for the time being.38
By filing its no-evidence Motion at the virtual outset of the case, prior to any opportunity
for discovery by Magellan, Enterprise seeks to have the Court decide the whole case (all five
claims) against Magellan before Plaintiff’s case gets off the blocks—that is, before Magellan
(and the Court) learn anything more about what the Enterprise personnel who actually negotiated
the contract with Magellan understood Enterprise’s “commitment” to mean and require; what
Enterprise actually intended with respect to its future performance or non-performance; all the
ways and means Enterprise has used or is using to circumvent its commitment; the scope and
magnitude of Magellan’s damages, and other matters essential to prove Magellan’s claims at
trial.
Magellan is plainly entitled to discovery on its breach of contract claim. “Whether a
contract is ambiguous … must be decided by examining the contract as a whole in light of the
circumstances present when the contract was entered.” Anglo-Dutch Petroleum Int’l, Inc., 352
S.W.3d at 449–50 (emphasis added). Magellan has a right to discovery regarding all such
37
Motion at 1.
38
Ironically, Enterprise itself asserts and relies on many alleged facts that are far beyond the four corners
of the COD Agreement, including facts relating to intent (or lack thereof), opportunity, motives for
entering into the COD Agreement, Magellan’s alleged mindset in not objecting to certain of Enterprise’s
actions, and the like. Apparently, Enterprise does not believe its own legal argument that the Court must
wear blinders when it interprets the COD Agreement, examining the four corners of the document and
nothing else.
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circumstances, including evidence going to the parties’ respective intentions, purposes, and
understandings of their agreement. The Court should reject Enterprise’s invitation to decide the
“threshold legal issue” in a vacuum devoid of all discoverable evidence of such circumstances.
Moreover, even if the Court were persuaded that Enterprise’s interpretation of the
contract is the only reasonable one, that would not defeat Magellan’s claims for contract
reformation, promissory estoppel, and/or fraud. Magellan would still be entitled to discovery
into, at a minimum, whether the contract resulted from a mutual mistake in reducing the parties’
actual agreement to writing, what Enterprise’s own records show about the representations and
promises it made to Magellan, and whether Enterprise had an intent not to perform when it
entered into the contract or otherwise intentionally misled Magellan.39
For all the reasons discussed above, the Motion is misguided on all counts and should be
denied across the board, here and now. However, if the Court is inclined to believe that on some
element of a claim for which Magellan will have the burden of proof at trial, the evidence
currently before the Court, along with all reasonable inferences favorable to Magellan, may not
supply the scintilla of evidence necessary to withstand a summary judgment motion, then
pursuant to Rule 166a(g) Magellan moves the Court to defer ruling and continue the Motion as
needed to give Magellan adequate time and opportunity to conduct discovery essential to
resolution of the Motion.
VI. CONCLUSION
For the reasons set forth above, the no-evidence Motion for summary judgment should be
denied in its entirety.
39
If, despite the representations Enterprise made to Magellan when the COD Agreement was executed,
Enterprise intended all along to ensure that any purported “conditions” on its commitment never occurred,
then Enterprise both breached its agreement and committed fraud.
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Respectfully submitted,
GABLEGOTWALS
By: /s/ David L. Bryant
David L. Bryant
State Bar No. 24084344
dbryant@gablelaw.com
113 Pleasant Valley Drive, Suite 204
Boerne, Texas 78006
Telephone: (830) 336-4810
Facsimile: (918) 595-4990
Lisa T. Silvestri
State Bar No. 00797967
lsilvestri@gablelaw.com
100 W. Fifth St., Suite 1100
Tulsa, Oklahoma 74103
Telephone: (918) 595-4800
Facsimile: (918) 595-4990
And
FIGARI + DAVENPORT, LLP
Bill E. Davidoff
State Bar No. 00790565
bill.davidoff@figdav.com
Amanda Sotak
State Bar No. 24037530
amanda.sotak@figdav.com
901 Main Street, Suite 3400
Dallas, Texas 75202
Telephone: (214) 939-2000
Facsimile: (214) 939-2090
ATTORNEYS FOR PLAINTIFF,
MAGELLAN CRUDE OIL
PIPELINE COMPANY, L.P.
PLAINTIFF’S RESPONSE IN OPPOSITION TO DEFENDANT’S MOTION FOR SUMMARY JUDGMENT – Page 51
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CERTIFICATE OF SERVICE
I certify that on September 18, 2017, I forwarded a true and correct copy of the foregoing
document to the following counsel via EFile:
E. Leon Carter
lcarter@carterscholer.com
J. Robert Arnett II
barnett@carterscholer.com
Joshua J. Bennett
jbennett@carterscholer.com
Courtney Barksdale Perez
cperez@carterscholer.com
CARTER SCHOLER PLLC
8150 N. Central Expressway
Suite 500
Dallas, Texas 75206
Attorneys for Defendant
Enterprise Crude Oil LLC
/s/ David L. Bryant
David L. Bryant
PLAINTIFF’S RESPONSE IN OPPOSITION TO DEFENDANT’S MOTION FOR SUMMARY JUDGMENT – Page 52
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Exhibit 1
Affidavit of Mark E. Daggett
Plf Resp in Opp to Motion for Summary Judgment 53
SR125
Plf Resp in Opp to Motion for Summary Judgment 54
SR126
Plf Resp in Opp to Motion for Summary Judgment 55
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Exhibit 1-A
Jake Everett Email to Mark Daggett, Oct. 18, 2011
Plf Resp in Opp to Motion for Summary Judgment 64
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From: Everett, Jake fin?;ilio:Ji-EvereU'.c'gt.-rofl.coni]
Sent: Tuesday, October 18, 2011 1:21 PM
To: Daggett, Mark E
Cc: McMurry, Pat; Moore, Kenneth
Subject: Revision to the dist agreement
Mark,
Pat asked me to get in touch with you about a revision to the distribution agreement. We would like to
revise the definition of "Control" to eliminate the clauseon legalauthorization to transport. Our
affiliate. Enterprise Crude Oil Pipeline will be transporting crude for 3,d parties under transportation
agreement rather than a marketing agreement so only the 3,d party will have authority to determine the
ultimate destination.
I believe the intent of the agreement was for all of the marketing volume to move through these
connections and that is our intent, but as soon as a 3'dparty requests a delivery outside of this
agreement, we don't want to be in default. Please let me know if you disagree with our interpretation.
Our legal folks are revising the statement and I'llforward to you, if that is acceptable. If you would
rather have your folks revise and forward to us, please let me know. The attached doc has NOTbeen
revised, but I've included it anyway for review.
Jake Everett, P.E.
Manager. Onshore Business Development
Enterprise Crude Pipeline
713-381.3060
832-331-2201 Cell
This message (including any attachments) isconfidential and intended for a specific individual and
purpose. If you are not the intended recipient, please notify the sender immediately and delete this
message.
Plf Resp in Opp to Motion for Summary Judgment 65
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Exhibit 1-B
Crude Oil Distribution Agreement, Oct. 31, 2011
Plf Resp in Opp to Motion for Summary Judgment 66
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CRUDE OIL DISTRIBUTION AGREEMENT
This Crude Oil Distribution Agreement C'I Agreement") js made and entered into this 31 St
day of October, 201 I(the "Effective Daten) by and between Enterprise Crude Oil LLC. a Texas
limited liability company ("Shipper"), and Magellan Pipeline Company, L.P., a Delaware limited
partnership ("Magellan"). Shipper and Magellan are sometimes hereinafter referred to
individually as a "Party" or coUectively as the "Parties".
RECITALS:
WHEREAS. Magellan owns and operates cenain crude oil pipeline facilities in the
Houston, Texas area, including pipeline facilities that extend from Genoa Junction to BP's Texas
City Refinery in Galveston Coonty (via an approximately 26.3 mile long. 26-inch diameter
pipeline) and from Speed Junction to Valero's Houston Refinery (via an approximately 1.09 mUe
long, 24-inch diameter pipeline) (hereinafter collectively referred to as the "Existing Magellan
Facilities");
WHEREAS, Magellan is contemplating the construction of a new 24-inch pipeline from
Genoa Junction to Speed Junction. a new 24-ineb pipeline from Speed Junction to Deer Park and
construction of or improvements to other existing delivery points at Houston Refinjn~ LP's
Refinery, Pasadena Refming System, Inc.'s Houston Refinery and Red Bluff Tank Farm. Shell's
Deer Park Refinery and Enterprise Crude Pipeline LLC' 5 r'Enterprise Pipeline") pipeline at
Anahuac Junction (hereinafter collectively referred to as the "New Magellan Facilities". and,
together with tbe Existing Magellan Facilities, the "Magellan Facilities");
WHEREAS, Enterprise Pipeline owns the 24-inch diameter crude oil pipeline facility
("Eagle Ford Pipeline System") that extends from the Origin Points (as hereinafter defined) in
south Texas to the Connection Point (as hereinafter defmed) with Magellan's Genoa Junction and
owns the Webster-area tenninallocated south of Genoa Junction (the "Ecbo Terminal"); and
WHEREAS, Shipper, to facilitate Magellan's construction of the New Magellan Facilities,
is wUling to provide the commitment described in this Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the promises and of the mutual covenants and
agreements contained herein, and of other good and valuable consideration the receip~ adequacy
and sufficiency of whicb are acknowJedged, and intending to be legally bound hereby, Magellan
and Shipper agree as follows:
1. DEFINITIONS. In addition to the definitions set forth in the foregoing preamble, the
following terms shall have the defmitions set forth below for the purposes of this
Agreement:
1.1 CCAffilhtte'" means. in relation to a Party, any entity that (A) directJy or indirectly
controls such Party~ (B) is directly or indirectly controlled by such Party; or (C) is
direcLJy or jndirectly controlled by an entity that directly or indirectly controls such
Party. For purposes of this definition, the term "control", including the tenns
"controlling" and "controJled by", means the possession, directly or indirectly, of
Plf Resp in Opp to Motion for Summary Judgment 67
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the power to direct or cause the direction of the management and policies of an
entity_
1.2 "Agreement" has the meaning set forth in the first paragraph of this Agreement.
1.3 .tBarrel" means forty-two (42) U.S. Gallons (each being 231 cubic incbes)
temperature corrected to sixty (60) degrees Fahrenheit.
1.4 uCommitment Exceptions" bas the meaning set forth in Section 4.2(B).
1.S "Connection Point" means each of the following points at which the Magellan
Facilities are connected and capable of receiving Product as of the In-Service Date:
A. Point ofinteICOnnection between tbe Magellan Facilities and Enterprise
Pipeline's Eagle Ford Pipeline System at or near Genoa Junction; and
B. Point of intetconnection between the Magellan Facilities and Ente.tprise
Pipeline's Echo Tenninal at or near Genoa Junction.
1.6 "Controlled" shall mean, when referring to Product, Product that Shipper or its
Afftliates. as the case may be, bas the legal right to transport; provided, however,
the custody of Product by an Affiliate of Shipper that is transporting sum Product
for the account of a party or parties other than Shipper or its Affiliates does not
constitute Control.
1.7 "Default Termination" bas the meaning set forth in Section 2.2.
1.8 "Destination Point" means the following points:
A. Valero's Houston Refinery;
B. BP's Texas City Refinery;
C. Enterprise Pipelinets Anahuac Junction; amd
D. Shell's Deer Park Refinery.
Magellan may, but shall have no obligation to, construct additional points at which
the Magellan Facilities will be connected and capabJe of delivering Product during
the Term of this Agreement, including, without limitation, the following:
Maratbon~s Texas City Refinery, Valero's Texas City Refinery, Seaway Crude
Pipeline Company's Texas Cjty Terminal, Seaway Crude Pipeline Company's
Galena Park Terminal, Houston Fuel Oil Terminal Company's Houston Terminal,
Oil Tanking's Houston Tenninal, Houston Refining LP's Houston Refinery,
Pasadena Refining, Inc.'s Houston Refjnery, Pasadena Refining, Inc.'s Red Bluff
Tank Farm andlor Magellan Terminal Holdings, L.P.'s Galena Park Terminal (the
"Future Destination Points"). If connected, these Future Destination Points will
be deemed added to this definition of Destination Points.
1.9 ~·Disputett has the meaning set forth in Section 9.9.
1.10 "Dispute Notice" has the meaning set forth in Section 9.9.
2
Plf Resp in Opp to Motion for Summary Judgment 68
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1. J I "Eagle Ford Pipeline System" has the meaning set forth in the recitals.
L12 "Echo Terminal" bas the meaning set forth in the recitals.
1.13 e'Eft'eetlve Date'· has the meaning set forth in the rust paragraph of this Agreement.
1,14 ''Enterprise Pipel1ne" has the meaning set forth in the recitals.
1.15 "Enterprise PJpellne Local Tarltr Rate~' means the rate charged by EnteIprise
Pipeline under the Joint Tariff.
1,16 "Existing ·Magellan Facilities" has the meaning set forth in the recitals.
1.17 ''Force Majeure" has the meaning set fonh ill Section 6.1.
J.18 ''Future Destination Points" bas the meaning set forth in Section 1.8.
1.19 '4Governmental AuthorUy'\ means any governmental entity exercising executive,
legislative. judicial, regulatory or administrative functions or pertaining to
government, including any governmental authority, agency, department, board,
commission or instrumentality, and any tribunal, court or arbitrator of competent
jurisdiction.
1.20 '1n·Servic:e Date" has the meaning set forth in Section 2.1.
1.21 "Incentive Program Rate" means the rate in the Joint Tariff for shippers that
qualify for the incentive program as set forth in the Joint Tariff.
1.22 "Initial Incentive Magellan Rate" means $O.28S3.
1.23 "Joint Tarif1'" means that certain joint tariff (Texas Railroad Commission Tariff
No. __) together with aU applicable rules and regulations, as each may be
supplemenled. amended or reissued from time to time.
1.24 "Law" means all applicable local, state and federal constitutions, laws (including
common law), treaties, statutes, orders, decrees. rules, regulations, codes, and
ordinances issued by any Governmental Authority, and including judicial or
administrative orders, consents, decrees, and judgments, and determinations by, or
interpretations of any of the foregoing by any Governmental Authority having
jurisdiction over the matter in question and binding on a given Party.
1.25 "Liabilities" has the meaning set fonh in Section 8.1.
1.26 "MageJlan" ha~ the meaning set forth in the first paragraph of this Agreement.
1.27 UMagellan Facilities" has the me.aning set forth in the recitals.
J .28 uMlnimum Volume Threshold" means 20~OOO barrels per day per month.
Plf Resp in Opp to Motion for Summary Judgment 69
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1.29 "New Magellan Facilities" has the meaning set forth in the recitals.
1.30 "011 Pipeline Index" has the meaning set forth in Section 3.3A.
1.31 "Orlgin Point" means the fonowing points on the Eagle Foro Pipeline System:
A. Gardendale (LaSalJe County. Texas);
B. Lyssy (Wilson County Texas);
f
C. Marshall (Gonzales County, Texas); and
D. Milton (Kames County, Texas).
1.32 uOwned u shall mean Product 10 which Shipper or its Affiliate holds title; provided,
however, the custody of Product by an Affiliate of Shipper that is transponing such
Product for the account of a party or parties other tban Shipper or its Afftliates does
not constitute being Owned.
J.33 "Party" and "Parties" have the meanings set forth in the first paragraph of this
Agreement.
) .34 "Product" means crude oil and condensate meeting the specifications provided for
in the Joint Tariff, as such tariff may be supplemented, amended or reissued from
time to time.
1.35 ''Shipper'' has the meaning ·sct forth in the first paragraph of this Agreement.
1.36 "Tariff Escalation" has the meaning set forth in Section 3.3(A).
1.37 ·Term" has the meaning set forth in Section 2.1.
2. CONTRACT TERM AND DEFAULT
2.1 Term. The term of this Agreement ("Term") shaH commence on the Effective
Date and shall continue untiJ the tenth (1 otb) anniversary of the In-Service Date (as
bereinafter defined). Transportation services contemplated hereunder shan be
availabJe on the first day of the first calendar month after Magellan provides written
notice to Shipper tbat the New Magellan Facilities are operational (the "In-Service
Date"). Such notice must be provided at least fifteen (15) days prior to the
In-Service Date. The In-Service Date is estimated to be approximately fourteen
(14) months after the Effective Date.
2.2 Default. A Pany shall be in default under this Agreement if il: (A) defaults in the
payment or performance of any obligation in this Agreement; andlor CB) files or has
filed against it a petition in bankruptcy. for reorganization, or for appointment of a
receiver or trustee, which is not dismissed or withdrawn within sixty (60) days of
filing. Unless a default under this section has been cured to the reasonable
satisfaction of the non-de.faulting Party within ten (10) days of the defaulting
Party's receipt of written notice from the non-defaulting Patty of such asserted
default, then, in addition to all other avaiJable rights and remedies all of which are
cumularive. this Agreement may be immediateJy tenninated at the opt~on of the
Plf Resp in Opp to Motion for Summary Judgment 70
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non-defaulting Patty by delivery of written notice of termination to the defaulting
PaI1y (a 4'Default Termination").
3. JOINT TARIFF AND INCENTIVE PRQGRAM RATES
3.1 Joint TarllY. Transportation services under this Agreement are sUbject to, and the
Parties are required to comply with, the provisions of the Joint Tariff.
3.2 Incentive Program Rate. Subject to Secdon 3.3, during the Term of this
Agreemen~ Magellan agrees that the Incentive Program Rate under the Joint Tariff
will be equal to or Jess than the Enterprise Pipeline Local TarlffRate plus the Initial
Incentive Magellan Rate.
3.3 Inttiallneentive Magellan Rate Escalation and Adjustment.
A. The Initial Incentive Magellan Rate may be increased by Magellan beginning
on July 1, 2012, and each July 1st of thereafter during the Term (the ~'TaritT
Escalation"); provided, however, that (A) any Tariff Escalation will not exceed
the amount of any increase permiued in accordance with the indexing
methodology sel forth in 18 C.F.R. §342.3~ or any successor thereto (the &6on
Pipeline Index") and (B) the Initial Incentive Magellan Rate will not decrease
during the Tenn.
B. In the event Magellan elects not to increase Its lJ1itial Incentive Magellan Rate
in any given year of the Term, Magellan reserves the right to increase its Initial
Incentive Magellan Rate in any subsequent year during the Term by the
allowable cumulative percentage increase foregone by Magellan in prior years.
C. In addition to and not subject to the limitations set forth above, in the event
Magellan is required by a change from the Law as it existed on the Effective
Date to: (i) make signjficant improvements to all or any portion of the Magellan
Facilities or (ji) to incur significant additional expenses for public safety,
poJiution contro] or for any other reason with respect to the Magellan Facilities,
and the effect of the cost and expense thereof to Magellan is not reflected in the
Oil Pipeline Index, Magellan may increase the Initial Incentive Magellan Rate
to reflect the effect of such costs and expenses incurred by Magellan to comply
with such change in Law. Magellan shall notify Shipper, not less than ninety
(90) days prior to the impJementation of any increase in the lnitial Incentive
MagelJan Rate under this Section 3.3(C), of the amount of such proposed
increase, the r~ason for such increase and the method of calculating such
increase. Shipper shall have the right to notify Magellan within thirty (30) days
after Shipper receives Magellan's notice, of Shipper's decision not to pay such
increase. If Shipper fails to timely notify Magellan of its decision, then it shaH
be deemed for purposes of this Agreement that Shipper accepts and approves
such increase. If Shipper notifies MageUan that it will not accept such increase
then such increase shaJ] be null and void .. but MageIJan shall have the right to
terminate this Agreement within thirty (30) days afler Magellan receives
Shipper's notice in which case neither Party shall have any further obligations
to the other Party hereunder except as to obligations already accrued. Magellan
Plf Resp in Opp to Motion for Summary Judgment 71
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may, in its sole discretion, elect whether or not to request any such increase or
fee allowed under this paragraph.
4. SHIPPER COMMITMENTS, EXCEPTIONS, AUDIT RIGHTS AND PENALTY
4. J Transportation Commitment. Following the In-Service Date. Shipper agrees:
A. to exclusively utilize the Magellan Facilities for all deliveries of Product
that are Owned or Controlled by Shipper; and
B. to use best efforts to cause Sbipperts Affiliates to exclusively use the
MagelJan Facilities for all deliveries of Product thaI are Owned or
Controlled by any of its Affiliates;
provided. that such deliveries are made from an Origin Point and are either:
(i) transported on the Eagle Ford Pipeline System through Echo Tenninal to
the Connection Point and delivered to any of the Destination Points, or
(ii) transported on the Eagle Ford Pipeline System to the Connection Point and
delivered to any of the Destination Points.
4,2 Transportation Commilmeat Exceptions.
A. If, at any point during the Term hereof, Shipper requires more capacity than
Magellan has avaiJable, Shipper may utilize third party facilities to transport
such excess Product until such time that Magellan has capacity available; and
B. If a third party connects to a Future Destination Point before Magellan. and
Magellan laler connects to such Future Destination Point, then Magellan must
offer Shipper a tariff rate to such Fuwre Destination Point equal to or less than
the third party tariff rate at such Future Destination Point or such Future
Destination Point shan not be considered a Destination Point under Section 1.8
(the exceptions in Section 4.2(A) and (B) are hereinafter collectively referred to
as the UCommitment Exceptions").
4.3 Payments. Subject to Section 3.3 and in accordance with the Joint Tariff, in any
month that Shipper transports the Minimum Volume Threshold, or more than the
Minimum Volume Threshold, Shipper will pay the Initial Incenlive Magellan Rate
for the volumes transported in such month. H Shipper fails to transport rhe
Minimum Volume Threshold in a month, Shipper will pay the base rate under the
Joint Tariff for the volumes transported in such month; provided, however. if
Shipper nominates capacity in e·xcess of the Minimum Volume Threshold. but
MageJlan is unable to provide the nominated capacity in such month, Shipper will
pay the [njtial Incentive Magellan Rate for the volumes actual1y transported in such
month even jf less than the Minimum Volume Threshold. All payments due by
Shipper under this Agreement shall be made in accordance with the terms of the
Joint Tariff.
Plf Resp in Opp to Motion for Summary Judgment 72
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4.4 Magellan's Limited Right to Audit and PenaJty. Magellan shall have the right to
audit Shipper's records necessary to verify Shipper's compliance with the
provisions of Sections 4.1 and 4.2. This audit must be conducted during normal
business bours, at a reasonable time and reasonable location and must be conducted
within one (1) year after December 31 It of each calendar year for such previous
year's transportation services. The cost of such audit shall be borne by Magellan if
Shipper is found to be in compliance with Section 4.1 and 4.2. If such audit
concludes that Shipper is nor in compliance with Sections 4.1 or 4.2. the cost of
such audit sball be borne by Shipper, and Shipper shall pay to Magellan an amount
equal to the Initial Incentive Magellan Rate multiplied by (A) the number of Barrels
of Product Shipper transported during such calendar year on a third party pipeline
minus (B) the number of Barrels of Product Shipper ttansported during such
calendar year on a third party pipeline due to the Commitment Exceptions. as
concluded by such audit_
5. ASSIGNMENT AND SUCCESSION. Neither Party may assign this Agreement. or any
of its right6 or obligations hereunder~ without the prior written consent of the other Party,
such consent not to be unreasonably withheld, delayed or conditioned. Subject to the
foregoing provision, the tenns and provisions of this Agreement shall be binding upon and
inure to tho benefit of the respective suc~ol'G. osGignG nnd legal representatives of the
Parties.
6. FORCE MAJEURE
6.1 Defined. The term "Force Majeure" means any cause, event or circumstance of
whatever natwe which is not within the reasonable control of the Party claiming to
be adversely affected thereby including. but not limited 10, acts of God or public
enemy, the elements, fjre, accident, explosions, freezing. breakdowns, strikes, other
industrial. civil or public disturbance, inability to obtain permits, materials,
equipment or labor, or any laws. rules, regUlations, acts, prohibition or restraints of
any government or governmental body or authority, civil or military. Neither Party
wiJl be entitled to the benefit of Porce Majeure under any of the following
circumstances: (A) to the extent the failure was caused by the gross negligence of
the Party claiming relief; (B) to the extent the failure was caused by the Party
claiming reJief having failed to remedy the condition and to resume performance
with reasonable dispatch; (C) the ability of either Party to obtain better
consideration or lower cost for perfonnance; or (D) economic hardsbip.
6.2 Notice and Termination. If any condition of Force Majeure should occur, the
Party adversely affected thereby shall promptly give notice thereof to the other
Party. Such notice shall (A) state the date that the Force Majeure began, (B)
describe the Force Majeure and (C) provide an estiJnate of the date the condition of
Force Majeure will cease. The Party experiencing the condition of Force Majeure
will not be in default and will not be liable for any failure to perform while a
condition of Force Majeure exists to (he extent such failure is caused by the Force
Majeure. At the conclusjon of the condition of Force Majeure. the Party claiming
Force Majeure will promptlY notify the other Pany that the condition of Force
Majeure has concluded nnd provjde the date of such conclusion. Any commitments
within the Agreement will be suspended during the period of Force Majeure and at
the conclusion of the Force Majeure period all commitments under the Agreement
7
Plf Resp in Opp to Motion for Summary Judgment 73
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will be reestablished and the Term wilJ be extended by the same number of days as
the Force Majeure was in effect. If an event of Force Majeure prevents a Party from
the performance of its obligations hereunder for a period of at least J20 consecutive
days, then the other Pan), may elect to terminate this Agreement with no funher
future obligation to the other Party; provided. however. that (i) Magellan must, to
the extent not prevented by Force Majeure or the tenns of the Joint Tariff, complete
the transportation and delivery of any Product that was delivered by Shipper to
Magellan at the Connection Point on or prior to such tennination, and (ii) Shipper
must pay any transportation cbarges due under the Joint Tariff as may have accrued
prior to the occurrence of the condition of Force Majeure.
7. NOTICES. Notices under this Agreement sball be deemed to have been sufficientJy given
or served for all purposes if delivered personally to the Party, or jf sent by facsjmile or
electronic mail with a hard copy mailed on the same day, or if sent by confirmed overnight
courier, in each case addressed to Ihe Pany as set fonh below or to such other address as
one Party may have directed in writing to the other Party prior to the delivery of any such
notice.
If to Magellan:
Magellan Pipeline Company. L.P.
One Wjlliams Center
P.O. Box 22186
Tulsa, Oklahoma 74121
Attention: Scon Devers
Phone: (918)574-7712
Fax: (918) 574·7264
E-mail: .
~ll .;\..~I~f~ma~dlaI1IJ2.com
If to Shipper:
Enterprise Crude Oil LLC
J 100 Louisiana, Suite 1800
Houston. Texas 77002
Attention: Senior Vice President - Crude Oil & Offshore
Phone: (713)381-6679
Fax:
E-mail:
H. INDEMNIFICA TION
8.1 MAGELLAN SHALL INDEMNIFY, DEFEND AND HOLD HARMLESS
SHIPPER. ITS PARENTS AND AFFILIATES. AND ITS AND THEIR
RESPECTIVE MEMBERS. MANAGERS. OFFICERS, DlRECTORS,
PARTNERS, Ef\1PLOYEES, AGENTS AND OTHER REPRESENTATNES
FROM AND AGAINST ANY CLAIMS, ACTIONS, JUDGMENTS,
LIABILITIES. LOSSES. COSTS~ DAMAGES, FINES. PENALTIES AND
EXPENSES (COLLECTIVELY "LIABILITIES") ARJSING 1N CONNECTION
WITH THIS AGREEMENT BUT ONLY AS TO THE EXTENT OF: (A) THE
NEGLIGENCE OR WILLFUL MISCONDUcr OF MAGELLAN. ITS
8
Plf Resp in Opp to Motion for Summary Judgment 74
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EMPLOYEES, AGENTS, CONTRACTORS AND OTHER
REPRESENTATIVES, OR (B) THE FAILURE OF MAGELLAN TO COMPLY
WITH THE TERMS AND CONDITIONS OF THIS AGREEMENT.
8.2 SHIPPER SHALL INDEMNIFY, DEFEND AND HOLD HARMLESS
MAGELLAN, ITS PARENTS AND AFFILIATES, AND ITS AND THElR
RESPEcrIVE MEMBERS, MANAOERS, OFFICERS, DIRECTORS.
PARTNERS, EMPLOYEES, AGENTS AND OTHBR REPRESENTATIVES
FROM AND AOAINST ANY LIABILITIES ARISING IN CONNECI10N
WITH THIS AGREEMBNT BUT ONLY TO THE EXTENT OP: (A) THE
NEGLIGENCE OR WILLFUL MISCONDUCT OF SHIPPER, ITS
EMPLOYEES. AGENTS, CONTRACTORS AND OTHER
REPRESENTATIVES, OR (B) THE FAn..URE OF SHIPPER TO COMPLY
WITH THE TERMS AND CONOmONS OF THIS AGREEMENT.
8.3 THE DWEMNITIES EXPRESSED IN SECTIONS 8.1 AND 8.2 OF THIS
AGREEMENT SHALL SURVIVE THE EXPIRATION OR TERMINATION OF
THIS AGREEMENT.
9. GENERAL PROVISIONS
9.1 Changes and Waiver. Neither this Agreement nor any lerm or provision hereof
may be changed, waived, discharged or terminated except by an instrument in
writing signed by the Party against which enforcement of such change, waiver,
discbarge or termination is sought.
9.2 Governing Law. THIS AGREEMENT, AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER, SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF TEXAS, WITHOUT REGARD TO CONFLlcrS OF LAWS
PRINCIPLES THAT WOULD REQUIRE THE. APPUCATION OF ANY
OTHER LAW.
9.3 ConfidentiaUty. Each Party recognizes and acknowledges the other Pany's
proprietary interest in Ibis Agreement. and agrees not to divulge any of the contents
hereof to any other person, firm. corporation or other entity. Each party agrees to
be responsible for enforcing the confidentiality of this Agreement and agrees to
lake such action as necessary to prevent any disclosure by any of its agents or
empJoyees. Thjs Section 9.3 shall survive the tennination of this Agreement for a
period of two (2) years.
9.4 No Third Party Beneficiary. Nothjng in this Agreement shall be considered or
construed as conferring any right or benefits on persons not a party to this
Agreement.
9.5 Severability. Both Parties expressly agree that it js nol the intention of either Party
to violale public policy or Slate or federal statutory or common Jaws and that if any
sentence, paragraph. clause or combination thereof in this Agreement is in violation
of the same, such paragraph, clause or sentence. or combination of the same shall
be inoperative and the remainder of this Agreement shall remain binding upon the
9
Plf Resp in Opp to Motion for Summary Judgment 75
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Parties hereto, provided that the reasonable expectation of each Party at the time it
entered into this Agreement is not materially impaired.
9.6 Limitation of liability. Except as othetwise set forth herein, in no event shaJl
either Party be liable to Ihe other for any special, punitive~ exemplary.
consequential. incidental, indirect or similar losses or damages in respect of tbis
Agreement howsoever caused (including. but not limited to. Joss of revenue, loss of
profits or loss of present or future opportunities), whether or not foreseeable, other
than such damages as are awarded or paid to third parties and which an indemnified
person is legally compelled to pay to such third parties and entitled to
indemnification hereunder.
9.7 Endrety. This Agreement between the Parties comprises the entire agreement
between the Parties with respect to the subject matter hereof, and there are no
agreements, understandings, requirements, w8lT8tlties or representations, oral or
written, eJtpressed or implied. that are not merged herein or superseded hereby.
other than as set forth in the Joint Tariff.
9.8 Records Retention. Bach Party agrees to maintain all records related to this
Agree.ment for a period of at leas[ sixty (60) monrh~ from the entry of such record.
9.9 Dispute Resolution. In the event of a dispute, controversy or claim arising out of
or reJating to this Agreement ('4Dispute"), the Panies shall first undenake to settle
their Dispute by good faith negotiations. Bither Pany may commence this process
by serving the other Pany with a written notice ("Dispute Notice") that concisely
describes the nature of the Dispute and the relief or remedy requested. The Pany
receiving such Dispute Notice shall, within fifteen (1S) days of its receipt thereoft
provide the giver of the Dispute Notice a concise written response setting forth the
responder's position wjth respect to the asserted Dispute. If for any reason
whatsoever the Dispute has not been settled within thirty (30) days of service of the
Dispute Notice. then the Parties agree to submit the Dispute to non...binding
mediation with a neutral mediator selected by the Parties. If the Parties cannot
agree on a mediator or if the Dispute cannot be settled by mediation within one
hundred twenty (120) days of service of the Dispute Notice, then either Party may
submit the Dispute to any state or federal court sitting in Dallas County, Texas.
EACH PARTY HEREBY IRRBVOCABLY AND UNCONDITIONALLY
CONSENTS TO THE JURISDICTION OF ANY SUCH COURT IN ANY SUCH
PROCEEDING AND HEREBY IRREVOCABLY AND UNCONDITIONALLY
WAlVES ANY DEFENSE OF AN INCONVENIENT FORUM TO THE
MAINTENANCE OF ANY ACflON OR PROCEEDING iN ANY SUCH
COURT. ANY OBJECfION TO VENUE WITH RESPECT TO ANY SUCH
ACflON OR PROCEEDL"lG AND ANY RIGHT OF JURISDICTION ON
ACCOUNT OF THE PLACE OF RESIDENCE OR DOMICILE OF EITHER
PARTY. EACH PARTY HEREBY IRREVOCABLY WAIVES, TO THE
FULLEST EXTENT PERl\1fITED BY LAW, ANY AND ALL RIGHT TO
TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR
INDIRECTLY ARISING OUT OF OR RELATING TO A DISPUTE UNDER
THIS AGREEMENT OR THE TRANSACflONS CONTEMPLATED BY THIS
AGREEMENT.
10
Plf Resp in Opp to Motion for Summary Judgment 76
SR148
9.10 Remedies Cumulative. Each Party's rights and remedies under this Agreement
shall be in addition to, and not in limitation or exclusion of, any other rights or
remedies (0 which such Party may otherwise be entitled (whether by agreemen~
operation of law or otherwise).
9.ll Course of DeaUng, ett. Neither course of performance, nor course of dealing, nor
usage of trade shall be used to qualify. explain or supplement any of the terms of
this Agreement.
9. J2 Headings and Sections. All references to "Sections" herein penain to Sections of
Ihis Agreemen~ unless expressly stated otherwise. Headings are for purposes of
reference only and shall not be used to construe the meaning of this Agreement.
9.13 No Interpretation Against Draftsman. The Parties acknowledge and agree that
lhe language used in this Agreemenl shall be deemed to be chosen by the joint
action of the Parties hereto to express their mutual intent, and no rule of strict
construction against anyone Party shall be applied hereto. No implications or
inferences shall be drawn from the deletion or addition to terms of previous drafts
or versions of this Agreement. Each Party acknowledges for itself that it has had
the opponunity ro participate in the preparation of this Agreement. and that.
therefore. in the event of any ambiguity in, or controversy with respect 10, the
meaning of any lenn or provision contained in this Agreement, no presumption or
inference shall be drawn against either Party's interpretation or construction of this
Agreement by reason of such Party's or its counsel's panicipation in the drafting of
this Agreement.
IN WITNESS WHEREOF, the Panies herero have caused this Agreement to be duly
executed as of the day and year first above written.
Magellan Pipeline Company, L.P.
By: Magellan Pipeline GP. LLC. itS general partner
By:
~
~ Title: ClEO Title: SVp, Crude and Offshore
JJ
Plf Resp in Opp to Motion for Summary Judgment 77
SR149
Exhibit 1-C
Joint Tariff Agreement, Nov. 1, 2011
Plf Resp in Opp to Motion for Summary Judgment 78
SR150
November 1, 2011
Mr. Malt Hurley
Senior Vice President Crude Oil and OflShore
Bntelprise Cmde Pipeline LLC
1100 Louisiana. Suite 1800
Houston. Texas 77002
Ro: MageUan Pipeline Company, L.P. ("Magellanj and Enterprise Crude Pipeline
LLC ("Enteqnise") Joint Tariff on Bast Houston Dis1n"bution System and Bagle
Ford Pipeline System
DcarMark:
The purpose of this letter is to confinn the agreement between MageUan and Enterprise to enter
into ajoint tarifffor crude oil transportation from certain Origin Points (as hereinafter defined) in
south Texas on Enterprise's Eagle Ford Pipeline System through the Connection Point (as
hereinafter defined) and to a Destination Point (as hereinafter defined) (the "Joint Tariftj.
MageUan and· Bntcrprisc agree to maintain the Joint Tariff for teD (JO) years fiom the In-8ervicc
Date (as hereinafter defined). The Jomt Tarifrrate sball be the sum of the Enterprise local tariff
and the Magellan local tariff.
Magellan and Enterprise agree to offer an incentive program under 1M Joint Tariff to shippers
that enter into a ten (10) year agreement with Magellan purs\18l1t to which the shipper agrees to
ship under the Joint Tariff all elUde oil owned or controlled by it from an Origin Point through
the Connection Point and to a Destination PoinL The Joint Tariff rate under the incentive
program will be equal to or less than 'the sum of the Enterprise local tariff and the Initial
Incentive Magellan Rate (as hereinafter defined). The Initial Incentive Magellan Rate may be
escalated based OD certain conditions. In any month that a shipper transports the Minimum
Volmne Threshold (as hereinafter defined), or more than the Minimum Volume Threshold, the
shipper will pay the lnitiallncenlive Magellan Rate for the volumes transported in such month. If
the shipper fails to transport the Minimum Volume Threshold in a month, the shipper will pay
the base rate under the Joint Tarifffor the volumes transponed in suell month.
The fonn of the Joint Tariff will be substantially sjmilar to that certain Joint Tariff (TRRC No.
113) effective February Jt 201 J. The incentive program to be offered under the Joint Tariff will
be substantially similar to form attached he~to.8S Exhibit A.
For purposes of this letter agreement, the foUowing definitions shall apply:
"Connection Point" means (i) the point of interconnection between Magellan's facilities
and Enterprise Pipeline's Eagle Ford Pipeline System at or near Genoa Junction. and (ii)
Plf Resp in Opp to Motion for Summary Judgment 79
SR151
the point of interconnection between the Magellan's facilities and Enterprise PipeUne·,
Echo Terminal at or ncar Genoa Junction.
"Destination Point" means the following points:
A. Valero's Houston Refinery;
B. BP's Texas City Refinery;
C. Enterprise Pipeline's Anahuac Junction; and
D. Shell's Deer Park Refinery.
Magellan may, but shall have no obligation to, coostruct additional points at
which Magellants facilities will be coMected dwing the term of1hc Joint Tariff,
including, without limitation, the following: Marathon's Texas City Retmery,
Valero's Texas City Refinery. Seaway Crude Pipeline Company's Texas City
Terminal, Seaway CNde Pipeline Company's Galena Park Terminal, Houston
Fuel Oil Terminal Company's Houston TenninaJ, Oil Tanlcing's Houston
TenninaJ, Houston Refining LP's Houston Refinery. Pasadena Refinin& Inc.',
Houston Refinery, Pasadena Refining, Inc.'s 1led Bluff Tank Pann and/or
Magellan Terminal Holdinp, L.P. 's Galena Park Terminal (the "Future
Destblation Pointsj. If connected, these Future Destination Points will be deemed
added to this defuUtion of Destination Point
"In-Service Date'· means the f'int day of the first calendar month after Maaellan provides
written notice to Enterprise that the New Magellan Facilities (as hereinafter defined) are
operatioaal.
"Initial Incentive Magellan Rate" meaps SO.2853.
"Minimum Volume Threshold" means 20,000 barrels per day per month.
"New Magellan FaciUties" means the following facilities to be bullt by MageUan:
A a new 24-inch pipeline from Genoa Junction 10 Speed Junction;
B. a new 24..inch pipeline from Speed Junction to Deer Park; and
C. construction of Df improvements to other existing delivery points at Houston
Refining LP's Refinery, Pasadena Refining System, Inc. 's Houston Refinery
and Red Bluff Tank F8J1Il, SbeJl's Deer Park Refinery and Bnterprise's
pipeline at Anahuac Junction.
"Origin Points" means the following points on the Eagle Ford Pipeline System:
Gardendale (LaSalle County, Texas) Milton (Kames County, Texas)
Lyssy (Wilson CO\Ulty, Texas) Marshall (Gonzales County. Texas)
If the foregoing accurately sets forth our 8~m~nt cO.Deeming the Joint Tariff. please so signify
by signing in the space provided below and returning an executed copy to my attention.
Plf Resp in Opp to Motion for Summary Judgment 80
SR152
Sincerely.
Magellan PIpeline Company, L.P.
By: Magellan Pipeline OPt LLC.
Us Oeneral Partner
Accepted and agreed CO this _ day
of November, 2011:
Eaterprise Crude PipeUae LLC
Plf Resp in Opp to Motion for Summary Judgment 81
SR153
.BxblbitA
[Form oflncentive Pzogram under.Joint Tariftl
Plf Resp in Opp to Motion for Summary Judgment 82
SR154
BxhibitA
(FalDloflJiCeiltive Prop_ \1n4er Joint Tariiij
Plf Resp in Opp to Motion for Summary Judgment 83
SR155
R.C.T. No. XX
MAGELLAN PIPELINE COMPANY, L.P.
JOINT INCENllVE PIPELINE TARIFF
APPLYING ON THE TRANSPORTATION OF
CRUDE PETROLEUM
TO POINTS NAMED HEREIN
Governed, except 88 otherwise provided herein, by rules and regulations published In Maganan PIpeline
Company. LP.'s R.C.T No. XYZ supplements thereto and relssues thereof. .
The rates named In this Tariff are expressed In cents a banet 01 42 U.S. GaDons and 818 subject to change 88
provlded bY law.
The matter pubUshed herein will have no adverse effect on the quality of the human environment.
EFFECTIVE:
IasLlSd & CompBud 8y: TIna R. Granpl, Plpalfne T8JSff&
MAGELLAN PIPEUNE COMPANY. LP.
One WIllIamS CGntsr- MD 31·'
TulSa. 0Idah0ma 74172
(018) 574-7416
Plf Resp in Opp to Motion for Summary Judgment 84
SR156
PIPEUNE INCENTIVE PROGRAM
1G-YEAR MARKET COMMITMENT
ITEM INCENTIVE PROGRAM
NO. From: Oftgln PoInts on the Enterprise Eagfe Ford Pfpetfne System
To: BP Texas CIty Refinery; Entsrpri8e PIpeIfne's Anahuac Jet; Valero Houston Refinery and She!1 Deer
Park Reftnery
1. Ra1ea eet forth in this lIem appty 10 deDvettes of Crude Pelroleum .rom the IncenUve Rate Ortains
defined as OrIgin PoJnta on the entarpltaD EegkJ Ford PfpeDne System, Texas 10 the rncenUva
Deslinatlona defined In paragraph 4 01 this Item.
Ally Shlppar dashing to avan AseIf of the IncentlYe Ra&aa sa set forth herein must satisfy lID 01 the
forrowing provisions to be B ·PartlClpating Shlppaf
• Shtppe18 must enter Into a prIot Wlftten crude 011 dlatribudon agreement wUh MPL.
• The term of the crude oil distribu!fon agreement shaD be at least one hundmd twenty (120)
months.
• To receive the Incentive Ra1e, the shipper must meat or exceed B MInImum Volume ThreshDld
af 20,000 barrels pur day per month 10 be ttanapDrted from an Incentive Origin porm to an
Incentive Destination Potnt.
2. In addirlon 10 the terma and condtfona contafned In thJa llam. all applicable narea and ragufaUona In
MPL's R.C.T. No. XX, supplements theralo and "Islues lhereaf, also apply.
s. Madcat commltm!m Inca. Hal!!
Market
FROM TO Commltmant
(Incentive Origin, (Incand" DestInations) Incentive Rate
(cents Det barrefJ
100
8P TeJCU City Refinery xxx
Enterprise PIpeJIne'I Anahuac Jet xxx
En1srprfs,', Eagle Ford
PIpeD,", System 0lfgln8 Valera HDuston Ratln81)' xxx
Shell Deer Park Refinery xxx
escalation of the rncenu~ Rata will be in accardance With the WI1t1en crude 00 distribution agreement.
4. An VOSumss to whlch the Partfcfpatlng ShIpper hords title In ita name. or has Ute legal "ght to shiP. frem
an rncentlve Origin for dallvery to an Inc8ntlve DestlnaUon will apply toward the monthly Mlrdmum
Volume Threshold.
S. Carrier wIIllnvofce the Participating Shfpper at the fa.
sel out In Paragraph 4 of INa Item at the time of
delivery. Paru~lpdng Shfpper will bear all other applicable charges In the applicable rules and
regulations In MPL~ R.C.T. No. XXX and any Bupplements thereto and reissues thereof.
6. In the event the Participating Shfpper ships less than the Minimum Volume Threshold In any month, lhen
Participating Shipper shall pay the applicable base rata lor volumas transported In such month;
provided, however, H Participating Shipper nominates capacity in excass of the Minimum Volurns
Threshold. but Magellan is uriabre to provide the nominated capacity 1n 8uch month, Participating
ShIpper wOl pay the Incentive Rate for the volumes actually transported In such monUl even If ress than
the MInImum Volume Threshold.
I Participating Carrier I Enterprise Crude Pipeline LLC
MPL - R,C.T. No. XXX· pago 201 2
Plf Resp in Opp to Motion for Summary Judgment 85
SR157
Exhibit 1-D
Connection Agreement, Dec. 16, 2011
Plf Resp in Opp to Motion for Summary Judgment 86
SR158
CONNECTION AGREEMENT
THIS CONNECTION AGREEMENT ("Agreement") is made and entered into this
16&' day of December, 2011 (the "Effective Date tl ), by and between ENTERPRISE CRUDE
PIPELINE, LLC, a Texas Limited Liability Company ("ENTERPRlSEIt), and MAGELLAN
PIPELINE COMPANY, L,P., a Delaware limited partnership (ffMPL"). ENTERPRISE and
MPL are sometimes hereinafter referred to individually as "Party" and collectively as
"Parties."
WI1NESSE1H:
~S, ENTERPRISE and MPL were successor-in.. interests to that certain
Connecdon Agreement dated April 29. 2009 by and between TEPPCO Crude Pipeline, LLC
and BP Pipelines (North America) Inc. and now desire to tenninate such agreement and
replace it in its entirety with this new Agreement; and
WHEREAS, ENTERPRISE owns a twenty-four inch (24") crude oil pipeline
extending from ENTERPRISE's Katy Station in Katy, Texas to Genoa Junction in Houston,
Texas ("Genoa Junction") (the "ENTERPRISE Katy Pipeline"); and
WHEREAS, ENTERPRISE will construct and own two (2) twenty-four inch (24")
bi-directional crude oil pipelines extending from Genoa Iunction to ENTERPRISE's Echo
Tenninal in Houston, Texas (the "ENTERPRISE Echo Pipelines"): and
WHEREAS, ENTERPRISE owns an eighteen inch (18") crude oil pipeline extending
from Anahuac Junction in Webster, Texas ("Anahuac Junction") to Morgan's Point, Texas
(the "ENTERPRISE 18" Pipeline"); and
WHEREAS, MPL owns a twenty-four inch (24") bi-directional crude oil pipeline
extending from Genoa Junction to Speed Junction in Pasadena, TX with various destination
points as established in MPL's local pipeline tariff (as may be amended from time to time)
(the "Existing l\1PL 24" Pipeline"), and may construct and own a new twenty-four inch
(24") crude oil pipeline from Genoa Junction to Speed Junction (the "New MPL 24"
Pipeline'')(tbe "Existing MPL 24" Pipeline and the New MPL 24" Pipeline arc herein
collectively referred to as the "Magellan 24" Pipelines"); and
WHEREAS, MPL owns a twenty-six inch (26") crude oil pipeline extending from
Genoa Junction to the BP Texas City Refmery in Texas City, Texas (the "MPL 26"
Pipeline"); and
WHEREAS, the ENTERPRISE Katy Pipeline and ENTERPRISE Echo Pipelines
will be connected to the :MPL 24" Pipelines and the MPL 26" Pipeline at Genoa Junction
with such connection electrically isolated from thc MPL 24" Pipelines and MPL 26"
Pipeline by one or more insulating flange gaskets that will be owned and operated by MPL
(the "Genoa Insulating Flanges"); and
WHEREAS, the ENTERPRISE 18" Pipeline will be connected to the MPL 26"
Pagel of 12
Plf Resp in Opp to Motion for Summary Judgment 87
SR159
Pipeline at Anahuac Junction with such connection electrically isolated from the
ENTERPRISE 18" Pipeline by an insulating flange gasket that is owned and operated by
ENTERPRISE (the "Anahuac Insulating Flange"); and
WHEREAS, ENTERPRISE shall own and operate the connection facilities and
equipment on the ENTERPRISE side of the Oenoa Insulating Flanges and the Anahuac
Insulating Flange (colJectively the "ENTERPRISE COlUlection Facilities") and MPL &ban
own and operate the connection facilities and equipment on the MPL side of the Genoa
Insulating Flanges and the Anahuac Insulating Flange (collectively the I&MPL Connection
Facilities',). all as more fully illustrated in Exhibit "A-l tt, "A_2ft and ~A-3" as attached. or to
be attached, and incorporated herein (the ENTERPRISE Connection Facilities and the MPL
Connection Facilities herein collectively referred to as the "Connection Facilities',,; and
WHEREAS, ENTERPRISE and MPL desire to set forth the tenns and conditions
whereby crude oil will be transported on each Party's respective pipelines as herein
identified through the operation ofllie Connection Facilities. respectively.
NOW, THEREFO~ in consideration of the mutual covenants, agreements and
conditions herein contained, the receipt and sufficiency of which are hereby acknowledged,
ENTERPRISE and MPL hereby agree as follows:
1. Agreement. Each Party agrees to operate their respective Connection Facilities
under the terms and conditions of this Agreement. Upon either Party's written request, the
other Party shall confirm its agreement to appropriate governmental authorities.
2. Construction Obligations and Ownership.
a) Compliance and Timing. Each Party shan use its commercially reasonable
efforts to construct, own. operate and maintain its respective pipelines and
Connection Facilities as provided herein this Agreement and at all times, in
compliance with an applicable laws and regulations, and applicable engineering,
safety, and generally-accepted industry standards, and as otherwise agreed herein.
b) ENTERPRISE Construction Obligations.
i) ENTERPRISE shall, at its sole cost and expense, perfonn the construction
work as more fully designated in Exhibit "B-1" as attached and incorporated
herein, in order to connect the ENTERPRISE 18" Pipeline to the MPL 26"
Pipeline at Anahuac Junction. As part of the connection work,
ENTERPRISE shall perform the work and install a custody meter and prover
in accordance with the design and procedures as provided in Exhibit "B-1 '\
unless otherwise agreed to by the Parties in writing.
ii) ENTERPRISE shalJ, at its sole cost and expense, perfonn the construction
work as more fully designated in Exhibit "B ...2" as attached and incorporated
herein, in order to connect the ENTERPRISE Echo Pipelines to the MPL
24" Pipelines and the MPL 26" Pipeline at Genoa Junction. .
Page 2 of 12
Plf Resp in Opp to Motion for Summary Judgment 88
SR160
c) MPL Construction Obligations.
i) MPL shall, at its sole cost and expense, perfonn the construction work
designated in Exhibit &CC-l " as MPL '8 responsibility in order to
accommodate the connection of the ENTERPRISE 18" Pipeline at Anahuac
Junction, and such work shan be performed in accordance with the design
and procedures as provided in Exhibit "C-l", unless otherwise agreed to by
the Parties in writing.
ii) MPL shall, at its sole cost and expense, perform the construction work
designated in Exhibit ''C·2'' as MPL's responsibility in order to
accommodate the connection of the ENTERPRISE Echo Pipelines at Genoa
Junction, and such work shall be perfonned in accordance with the design
and procedures as provided in Exhibit "C-2" , unless otherwise agreed to by
the Parties in writing. As part of the connection wor~ MPL shall perform
the work and install a custody meter and prover.
d) The Parties shall cooperate and provide reasonable access as needed by the other
Party at Genoa Junction and Anahuac Junction to alJow for completion of the
work as designated in Exhibits "B" and Exhibits "C", and as otherwise
reasonably needed for maintenance and operation thereafter of the Connection
Facilities.
e) Completion of Work, Upon completion of its respective obligations as outlined
above in b) and c), each Party shall give written notice to the other Party of
completion (the "Notlee of Completion"). As used herein, the tenns "complete"
and "completion" shall mean that a Party has executed completely and fully,
without deviation herefrom, their respective obligations for connection at Genoa
Junction or Anahuac Junction as bereby undertaken by that Party, or that a
Party's obligations have been substantially completed and any deviations from
the provisions hereof have been waived in writing by the Party receiving Notice
of Completion.
3. Operation and Maintenance.
a) Each Party hereby warrants that it shall at all times operate its respective
Connection Facilities in a prudent and safe manner and shall maintain its
Cormection Facilities in 0. structurally fit and safe condition, and that upon
discovery of wear, deterioration or structural failure, it shall take such action as
may be reasonably necessary to remedy the same. Notwithstanding this
obligation, each Party shall have the unilateral right at any time to inspect the
other Party's Connection Facilities and equipment, that is, the ENTERPRISE
Connection Facilities and the MPL Connection Facilities respectively, upon
advance notice and with a representative present, and to request the other IJarty to
take such actions and make such repairs as are reasonably necessaty, in the
requesting Party's reasonab1e opinion, for the continued safe and accurate
operation of the other Party's Connection Facilities and equipment. The advance
notice requirement does nol apply when and where on-site inspection is required
by any Party due to an emergency situation \vhich is either threatening or is likely
Pagelof12
Plf Resp in Opp to Motion for Summary Judgment 89
SR161
to threaten life, property or the environment.
b) Supervisory control and line integrity equipment ha.-a been installed at Genoa
Junction and Anahuac Junction on the respeotjve sides of the Genoa Insulating
Flanges and the Anahuac Insulating Flange by both Parties, respectively, and,
upon reasonable request, each Party will provide. or make available, data on
valve status, pressure and temperature to the other Party. The cost of
communicating the data to the respective Party will be the responsibili1y of the
Party requesting the data.
c) Line surveillance data in the fonn of volume data from the MPL meter banks
located at Genoa Junction shall be provided, or made ~vailable, by MPL to
ENTERPRISE. The cost of communicating the data to ENTERPRISE will be the
responsibility of ENTERPRISE.
d) Line surveillance data in the form of volume data from the ENTERPRISE meter
banks located at Genoa Junction or Anahuac lunction shall be provided, or made
available. by ENTERPRISE to MPL. The cost of communicating the data to MPL
wiJl be the responsibility ofMPL.
e) Magellan agrees to provide reasonable eJectrical power up to a maximwn of 45
KVa for ENTERPRISE at Anahuac Junction to operate ENTERPRISE's pumps
and equipment as neoessary for the operation of the Anahuac Junction
connection. Such electrical power shall be provided at no cost to ENTERPRISE.
4. Maximum Allowable Operating Pressure. The maximum allowable operating
pressure (UMAOP") shall be 8S follows:
a) 698 psig for deliveries through the MPL Connection Facilities from the
EN1ERPRISE Katy Pipeline into the MPL 26" Pipeline at Genoa Junction.
b) 950 psig for deliveries through the MPL Connection Facilities from the
ENTERPRISE Katy Pipeline into the Existing MPL 24" Pipeline, and 1440 psig
for deliveries through ·the MPL Connection Facilities from the ENTERPRISE
Katy Pipeline into the New MPL 24" Pipeline.
c) 950 psig for deliveries through the MPL Connection Facilities from the
ENTERPRISE Echo Pipelines into the Existing fv.1PL 24" Pipeline, and 1440 psiS
for deliveries through the MPL Connection Facilities from the ENTERPRISE
Echo Pipeline into the New MPL 24" Pipeline.
d) 1440 psig for deliveries through the ENTERPlUSE Connection Facilities from
the MPL 24" Pipelines into the ENTERPRISE Echo Pipelines.
e) 698 psig for deliveries through the MPL Connection Facilities from the
ENTERPRISE Echo Pipelines into the MPL 26" Pipeline.
£) 1440 psig for deliveries through the tvlPL Connection Facilities from the MPL
26" Pipeline into the Enterprise 18" Pipeline.
Page 4 o!l2
Plf Resp in Opp to Motion for Summary Judgment 90
SR162
s. Custody Transfer Measurement and Crude ~iI Ouality.
a) For purposes herej~ the Genoa Insulating Flanges and the Anahuac Insulating
Flange are herein at times referred to collectively as the ''Insulating Flanges".
Risk of loss and transfer of custody shall take place where the crude oil passes the
Insulating Flanges, that is, ENTERPRISE shall have custody of the crude oil and
all obligations as to risk of loss of the crude oil that is in the ENTERPRISE
Connection Facilities and MPL shall have custody of the crude oil and aU
obligations as to risk of loss of the e.rude oil that is in the MPL Connection
Facilities.
b) The point of custody transfer shall be at the Insulating Flanges as sated above.
however, volume and quality measurements between MPL and ENTERPRISE
shall be determined at the designated points as follows:
i) MPL Genoa Junction meter banks for crude oil transported to the MPL 26"
Pipeline from the ENTBRPRISE Katy Pipeline or the ENTERPRISE Echo
Pipelines.
ii) MPL Genoa Junction meter banks for crude oil transported to the MPL 24"
Pipelines from the ENTERPRISE Katy Pipeline or the ENTERPRISE Echo
Pjpelines.
iii) ENTERPRISE Genoa Junction meter banks for crude oil transported to the
ENTERPRISE Echo Pipelines from the MPL 24" Pipelines.
iv) ENTERPRISE Anahuac Junction meter banks for crude oil transported to
the ENTERPRISE 18" Pipeline from the MPL 26" Pipeline.
c) The MPL Genoa Junction meter banks will be maintained ltnd operated by MPL
to meet or exceed the standards specified in the Manual of Petrolewn
Measurement Standards as published by the American Petroleum Institute
(nAPI"), latest edition (nMPMS").
d) The ENTERPRISE Oenoa Junction and Anahuac Junction meter banks will be
maintained and operated by ENTERPRISE to meet or exceed the standards
specjfied in the Manual of Petroleum Measurement Standards as published by the
API, latest edition WlMS.
e) Each Party shall calibrate its meter banks with a National Institute of Standard
Technology (''NIST') certified prover once per batch or when circumstances
warrant a verification of the previously applied meter factor. Such proving shall
only take place after line conditions have stabilized.
f) Each Party shall provide advance notice to the other Party of aU meter proving
activities and shall permit the other Party's representative to witness such meter
proving activities. Data on custody transfer measurement at each Party's meter
banks will be made available to the other Party.
Pagc50f12
Plf Resp in Opp to Motion for Summary Judgment 91
SR163
g) A valid meter calibration for the custody transfer meter must fall within +/.
0.05% repeatability for five (5) consecutive runs. A meter factor variance shall
not exceed 0.25% from the previously applied meter factor. The calculated meter
factor shall be applied to aU metered volumes of crude oil associated with the
active batch.
h) lbe MPL measurement tickets and proving reports shall be the primary
documents for custody transfer for crude oil transported to (a) the MPL 26"
Pipeline from the ENTERPRISE Katy Pipeline or the ENTERPRISE Echo
Pipelines at Genoa Junotion; and (b) the MPL 24'· Pipelines from the
ENTERPRISE Katy Pipeline or the ENTERPRISE Echo Pipelines at Genoa
Junction.
i) The ENTERPRISE measurement tickets and proving reports shall be the primary
documents for custody transfer for crude oil transported to (a) the ENTERPRISE
Echo Pipelines from the MPL 24" Pipelines at Genoa Junction; and (b) the
ENTERPRISE 18" Pipeline from the MPL 26" Pipeline at Anahuac Junction.
6. Access. Each Party shall have the right of ingress and egress of its employees and
agents to and from the property of the other Party as reasonably necessary to perfonn its
obligations hereunder. To the extent any employees or agents of a Party are hereby or
otherwise granted access to or across the other Party's property, then such personnel shall be
subject to aU such other Party's safety and operational rules and policies (as in effect at the
time of access).
7. Shut-In Rights. Scheduling and Operations.
fl) Shut-In Rights. Each Party shall have the right to shut..in their respective
Connection FaciJities at any time either Party reasonably believes that any person,
property. or the environment is at risk of injwy or damage. Each Party will usc
reasonable efforts to give the other Party 24-hour advance notice of a shutdown,
except in the case of emergency when either Party may shut down immediately.
If the situation allows, such Party win use reasonable efforts to notify the other
Party prior to any such shut-in; however, such Party shall not be liable to the
other Party for any cost or damage incurred as a result of such shut..in. The
Connection Facilities that have been shut-in shall be reactivated as soon as the
Party shutting in its Connection Facilities remedies any risks to persons, property
or the environment.
b) Scheduling, The Parties will cooperate with each other to accommodate
nominations made Wlder the applicable tariffs for transportation of crude oil on
the respective Parties' pipelines through the Connection Facilities.
c) Batch Size and Line Fill. Minimwn batch size shall be 50,000 barrels unless
otherwise agreed upon by the Parties. After deliveries are made through Anahuac
Junction, ENTERPRISE shall subsequently receive any crude oil remaining in
lincfill in MPL's 26" Pipeline in a timely manner that minimizes disruption to the
operation of MPL's 26" Pipeline. This linefiJl volwne is estimated to be
Page6of12
Plf Resp in Opp to Motion for Summary Judgment 92
SR164
approximately 37,000 b81Teis, and ENTERPRISE shall accommodate the delivery
of this linefill immediately upon notice from MPL of the need to receive such a
delivery.
d) Flow Rates.
i) Flow rates for deliveries and/or receipts by ENTERPRISE and MPL through
Genoa Junction shall be no less than 8,000 barrels per hour for the first full
14 calendar months of the Tenn and 13,000 barTeJs per hour thereafter.
Slower flow rates into the MPL Connection Facilities from ENTERPRISE
shaJJ be accommodated solely at MPL·s discretion. Slower rates into an
ENTERPRISE Connection Facilities shall be accommodated solely at
ENTERPRISE's discretion. Notwithstanding the above, any deliveries
received into the MPL Connection Facilities in Genoa Junction destined for
delivery to Anahuac Junction must meet the flow rates as specified in it)
below for receipt through Genoa Junction.
ii) Flow rates for deUverie.~ from MPL to ENTERPRISE at Anahuac Junction
shall be no less than 8000 barrels per hour for the first full 12 calendar
months of operation and 10,700 barrels per hour thereafter. Slower flow
rates shall be accommodated solely at MPL's discretion.
iii) For the purposes of establishing minimum flow rate requirements, the
Parties will use the parameters of West Texas Intennediate crude oil,
specifically, an API gravity of 40 (forty) degrees and a viscosity of 10 (ten)
ccntistokes at 68 (sixty-eight) degrees Fahrenheit. As the API gravity and
viscosity change, these minimum capacity requirements will be adjusted
accordingly in a manner agreed upon by the Parties, i.e., as the API gravity
decreases and viscosity increases, the minimum flow rate requirement will
be reduced. For example, both ENTERPRISE and MPL must have the
capability to deliver andlor receive crude oil of API gravity of 40 (forty)
degrees and a viscosity of 10 (ten) centistokes at 68 (sixty-eight) degrees
Fahrenheit through Genoa Junction at the now tates described above in i).
8. IndemnlficatioD.
a) MPL Indemnity. To the extent pennitted by law, MPL will indemnify, defend,
and hold hannJess ENTERPRISE and its affiliates and their respective
representatives from and against any and all claims (including, but not limited to.
claims for injury or death to persons, damage to property, and damage to the
environment) arising out of this Agreement in connection with: (a) the
installation, operation, maintenance, repair, and removal of the MPL Connection
Facilities or any other equipment owned by MPL that is installed, maintained and
operated by MPL as contemplated by this Agreement; or (b) the negligence or
\\rj)lful nlisconduct of MPL or its affiliates or their respective representatives.
l\1PL intends this indemnity to apply except to the extent that any claims result
from the negligence or willful misconduct of ENTERPRISE or its affiliates or
their respective representatives. This indemnity will survive the tennination of
this Agreement.
Pmgc7ofl2
Plf Resp in Opp to Motion for Summary Judgment 93
SR165
b) ENTERPRISE Indemnity. To the extent pennitted by law~ ENTERPRISE will
indemnifY, defend, and hold harmless MPL and its aftUiates and their respective
representatives from and against any and all claims (including, but not limited to;
claims for injwy or death to persons, damage to property, and damage to the
environment) arising out of this Agreement in connection with: (a) the
installation, operation, maintenance, repair, and removal of the ENTERPRISE
Connection Facilities or any other equipment owned by ENTERPRISE that is
instaUed, maintained and operated by ENTERPRISE as contemplated by this
Agreement; or (b) the negligence or willful misconduct of ENTERPRISE or its
affiliates or their respective representatives. ENTERPRISE intends this
indemnity to apply except to the extent that any claims result from the negligence
or willful misconduct of MPL or its affiliates or their respective representatives.
This indemnity will survive the tcnnination of this Agreement.
c) Limitation of Liability. In no event will any Party be liable to the other Party for
any incidental, special, indirect, exemplary, punitive, or consequential damages
incurred by the other Party and resulting from or arising out of this Agreement,
including, without limitation, Joss of profits, lost business opportunities, or
business interruptions, regardless of how they are caused, including by the
negligence of such Party; provided, however, that this provision does not release
a Party from incidental, special, indirect1 exemplaty, punitive, or consequential
damages inclllTed by a third party (other than an affiliate or representative of a
Party) for which that Party has assumed liability under the indemnities provided
in this Agreement.
9. Insurance. During the term of this Agreement, each Party shall maintain or shall
cause to be maintained insunmce policies providing coverage as follows:
a) workers compensation coverage at statutory limits covering each of their
respective operations and work being perfonned pursuant to this Agreement, and
employers liability coverage in the minimum amount of One Million Dollars
($1,000,000) each accident, One Million Dollars ($1,000,000) disease - each
employee and One Million Dollars ($1,000.000) disease - policy limit; and
b) commercial general liability coverage (or other liability coverage for the
operations described herein), including products/compJeted operations, sudden
and accidental poJ1ution, and contractual liability coverage. in the minimum
amoWlt of One Million Dollars ($].000,000) per occurrence and Two Million
Dollars ($2,000,000) aggregate; and
c) commercial auto liability covering owned, hired, rented and non...owned
automotive equipment in the amount of One Million Dollars ($1,000,000)
combined single limit; and
d) excess umbrella liability insurance coverage in excess of the tcnns and limits of
insurance specified above with a combined limit of S 10,000,000.
Any Party may earry insurance with deductibles and nonetheless be considered in
Page I of 12
Plf Resp in Opp to Motion for Summary Judgment 94
SR166
compliance with the foregoing insurance requirements. All insurance premiums, self-
insurance claim expenses, loss and costs, deductibles, se1f insurance retention costs, captive
reinsurance. fronting deductibles, or fronting arrangements, and similar self funded
programs applicable to the insurance policies required herein, shall be the sale responsibility
of the respective Party's account.
Any agreement with any contractor or subcontractor for the perfonnance of any work
hereunder shall use commercially reasonable efforts to require that such contractor or
subcontractor maintain insurance policies providing coverage of the types and limits that are
industty standard for the type and extent of work to be done. In aU cases, such contractors
or subcontractors wilt comply with regulatory insurance requirements.
10. Damage and Destruction. If a Party's Connection Facilities are damaged or any
part thereof is destroyed, that party shall make a good faith determination as to whether the
damaged or partially destroyed facilities can be repaired or restored at a cost that can be
recovered. However, no Party shall be obligated to restore their respective Connection
Facilities and if such Connection Facilities are not repaired or restored to an operable
condition then that Party shall so notify the other Party in writing and this Agreement shall
terminate as of the date of such notice solely in regards to the inoperable Connection
Facilities.
11. lndependeot Contractor Status, This Agreement will not be construed to form a
partnership or a joint venture between the Parties or to grant any Party the right to act as an
agent on behalf of any other Party. Should either Party perfonn work on behalf of the
other Party pursuant to this Agreement, such Party shall perfonn in the status of an
independent contractor and shall not be deemed to be an agent or employee of the other
Party.
12. Term. The initial term of this Agreement shall begin on the Effective Date and shall
continue for ten (10) years from the first day of the first calendar month following MPL '8
last Notice of Completion for the last work completed in accordance with Section 2 e), and
shall automatically extend thereafter for additional one (1) year periods, subject to the
following termination option. Either Party may elect to teaninate this Agreement by
providjng written notice of tennination to the other Party at least six (6) months prior to the
end of the thcn-CmTent temt, to be effective as of the end of such tenn.
The Parties further agree that, upon tennination of this Agreement, ENTERPRISE
may, at its sole option, pennanently shut-in or disconnect the .ENTERPRISE Connection
Facilities and MPL may, at its sole option, pennanently shut-in or disconnect the MPL
Connection Facilities.
13. Compliance with Laws. This Agreement is in all respects subject to all applicable
federal, state and local laws, and all directives, regulations and orders issued or published by
any federal, state, or local board, commission or agency_
14. Notices. Notices will be in writing and delivered either: (A) by overnight courier to
the address set forth below; or (B) by facsimile to the number set forth below confinned
within one (1) business day after being sent by facsimile by certified u.s. mail, return
receipt requested, OT by overnight courier, to the address set forth below. Any Party may
Page90flZ
Plf Resp in Opp to Motion for Summary Judgment 95
SR167
change its notice address or fax Dumber upon notice to the other Parties.
Magellan Pipeline Company, LoP. Enterprise Crude Pipeline, LLC
Attn: Director Crude Oil Transportation Attn: VP Crude Pipeline and Storage
One Williams Center, Ste. 3100 1100 Louisiana St
Tulsa. OK 74172 Houston, TX 77002-S227
Facsimile: (918) 574-7264 Facsimile: (713) 381-4039
15. }"orce Majeure. Each Party hereto shall be excused from the performance of its
obligations hereunder, except the obligation to make monetary payments. when and to the
extent that such perfonnancc is delayed or prevented by fire, explosion, act of God;
breakdown of machinery or equipment; riots, strikes, labor disputes; voluntary or
involuntary compliance with any law, order, regulation, request or recommendation of any
governmental authority; or any cause, whether similar or dissimilar, reasonably beyond the
control of the Party claiming suspension. Such party shall notify the other Party as soon as
practicable after the occurrence of the event of force majeure. Nothing herein shall be
construed to require the Parties hereto to settle any strike or labor disputes. Each Party shall,
to the extent it has the power to do so, exercise reasonable efforts to remedy a force majeure
situation.
16. Taxes. Bach party shall respectively pay aU of any ad valorem taxes assessed
against its assets, including without limitation, all associated meters, provers, R TU' s, other
equipment, and the associated pipeline .and rights-of-way and real estate.
17. Default. In case of a breach of this Contract by any Party, the non-breaching Party
shall give the breaching Party notice of the breach and 8 reasonable period to cure under the
circumstances, not less than thirty (30) nor more than two-hundred seventy (270) days. If
such breach is not cured within the given cure period, the non-breaching Party may
thereupon tenninate this Agreement without limitation of its other rights and remedies.
18. Counterparts. This Agreement may be executed by facsimile and in cOWlterparts,
any of which sball constitute an original and be fully binding on the Party who executes
same and all of which, when delivered, shall constitute a single Agreement.
19. Severability. Should any provision of this Agreement be found contrary to or in
conflict with any applicable Jaw. the same shall not affect the other terms or provisions of
this Agreement or the whole of this Agreement and this Agreement and such provision shall
be deemed modified to the extent necessary to comply with such applicable law, but only
for the period of time such law is in effect.
20. Waiver. The waiver by or the failure of either Party to take action with respect to
any breach of any term, covenant or condition of this Agreement shalJ not be deern~d 10
constitute a waiver of such term, covenant or condition on any subsequent breach of the
tenn, covenant or condition.
21. Additional Rights. The Parties expressly agree hereto that the execution of this
Agreement and the performance of the service contemplated herein are without prejudice to
any additional rights or obligations the Parties have to each other under separate and distinct
agreements.
PagelOofJ2
Plf Resp in Opp to Motion for Summary Judgment 96
SR168
22. Modifications. This Agreement constitutes the entire agreement between the Parties
with respect to the transactions contemplated herein, and it supersedes all prior discussions,
understandings or agreements (oral or written) between the Parties with respect to the same.
No amendment or modification of this Agreement shall be made except by the execution by
MPL and ENTERPRlSE or their duly authorized designees of written agreements that
specifically refer to this Agreement.
23. Succession and Assignmeut of Rights. Each of the Parties may freely assign any of
its rights and obligations hereunder to an affiliate. Any company that shall succeed by
purchase, merger, or consolidation to title to substantially a11 of the properties or assets of a
Party to this Agn.-ement utilized in the perfonnance of this Agreement, shall be entitled to
the rights and shall be subjcct to the obligations of its predecessor in title under tbis
Agreement. Except as otherwise provided in this Scction, no assignment of this Agreement
or any of the rights or obligations hereunder shall be made by any Party unless such Party
has obtained the prior written consent of the other Parties, which consent shall not be
unreasonably withheld, deJayed or conditioned. This Agreement and each of its covenants
and obligations shaU inure to the benefit of and be binding upon the Parties hereto and upon
their respective successors and assigns.
24. Governing Law. The interpretation and performance of this Agreement shall be
govemed by the laws of the State of Texas, without recourse to any principles of law
governing the conflicts of law that might otherwise be applicable. The Parties will submit
any disputes arising out of this Agreement to the exclusive jurisdiction of the u.s. District
Court located in Houston, Texas, if federal jurisdiction is available, and to the courts of the
State of Texas located in HarTis County, Texas if federal jurisdiction is not available.
25. Business Practices.
a) Each Party hereto agrees to comply with all laws and lawful regulations
applicable to any activities carried out in the name of or on behalf of the other
Party under the provisions of this Agreement and/or any amendments to it.
b) Each Party hereto agrees that all financial settlements, billings and reports
rendered to the other Party as provided for in this Agreement and/or any
amendments to it will to the best of its knowledge and belief reflect properly the
facts about all activities and transactions .related to this Agreement, which data
may be relied upon as being complete and accurate in any further recording and
reporting made by such other Party for whatever purpose.
c) Each Party hereto agrees to notify the other Party promptly upon discovery of
any instance where the notifying Party fails to comply with Part (a) of this
Paragraph, or where the notifying Party has reason to believe data covered by
Part (b) of this Paragraph is no longer accurate and complete.
26. Headings. The beadings of the paragraphs of this Agreement have been inserted for
convenience of reference only and are Dot to bc considered part of this Agreement and shall
in no way affect the interpretation of any of the provisions of this Agreement.
PSsc 11 oft2
Plf Resp in Opp to Motion for Summary Judgment 97
SR169
27. Entirety. This Agreement constitutes the entirety of the understanding between the
Parties with respect to the subject matter dealt with herein, and replaces and supersedes all
prior agreements, conditions, understandings, representations and warranties made between
the Parties with respect to the subject maner hereof; whether written or oral.
IN WITNESS WHEREOF, the Partitll; have executed this Agreement as of the date
set forth hereinabove.
ENTERPRISE CRUDEPlPELINE, LLC MAGELLAN P1PELINE COMPANY. LoP.
P'80 12 of 12
Plf Resp in Opp to Motion for Summary Judgment 98
SR170
Exhibit A-1
System Overview
Enterprise 24"
from Katy
~MAGELLAN
~~ MIDSTREAM PARTNERS. L.P.
1 0.5 0 1 2- 3 .~ ~.!
M1Ies·
. , II
Plf Resp in Opp to Motion for Summary Judgment 99
SR171
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Plf Resp in Opp to Motion for Summary Judgment 100
SR172
exhibIt A-I
Anahuac Jet Site Plan
Ownership Chanle and Custody Transfer
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Plf Resp in Opp to Motion for Summary Judgment 101
SR173
ExhlbltB·1
Anahuac Jet Connection
Enterprise'. Construction Responsibilities
I. Objective
The objective of this connection is to provide B pipeline route to access Enterprlsets Morgan's
Point Barge Facility located near laPorte Texas. To accomplish this, Magellan will provide to
enterprise, a connectIon to Magellan's 28 Jnch Genoa Jet. to Texas City Pipeline System. This
connectIon will occur at a location near Webster. Texas known as Anahuac Jet. Enterprise has
an 18 inch pipeline In the fmmediate vicinIty of Anahuac Jet. and will connect per Magellan's
requ1rements for construction, measurement and crude 011 qualily control.
II. Project Description
Enterprise wUl:
1. Instan a skid mounted custody quality measurement facIlIty capable of handling manlina flow
rates as described tn 7(d) (II). The custody transfer measurement facility will be equipped
with Corlolls flow meters, a stationery prover and 8 crude aD sampling system.
2. Provide measurement and flow data to Magellan.
3. ProvJde to Magellan an 1SN double bloc!( & bleed takeoff valve which will Include an Insulating
flange Installed by Enterprise separating Enterprise and Magellan on the downstream sfde of
the valve. Magellan will own and operate thIs valve.
4. ProvIde a spool piece to be Installed by Magellan between the two Magellan block valves at
Anahuac Jet. The new spool p1ece will have the takeoff tee In It and the takeoff valve
attached.
5. Enterprise will locate its flow computer, RTU, and MCC inside Magellan's existing control
building.
6. Relocate the satellite dish to 8 new mounting pole Installed by Enterprise.
7. Coordinate with Magellan so downtime is minimized Bnd much of the work can be done
stmultaneously during the downtime.
Plf Resp in Opp to Motion for Summary Judgment 102
SR174
exhibit B·2
Genoa Jet Connection
EnterprIse's Construction Responsibilities
I. Objective
Enterprise Is making certain modifications at It's Genoa Jet. Station to accommodate connections to its new
ECHO Terminal via 2..24 inoh pipelines. As part of these modifications at Genoa Jet. Enterprise will construct a
dfstrfbuUon manifold that will provIde connectivity to Magerlan's 26 Inch outbound pIpeline, exlsUng 24 rnch
pIpeline and a future 24 Inch pipeline for Inbound crude 011 receIpts and outbound crude oU deliveries.
U. Project Descrlptfon
enterprise wUl:
1. Enterprise will construct 2-24 Inch pipelines between lhe Enterprise Genoa Jel StaUon and the new
ECHO Tennlnal 8S shown on exhibit A-2.
2. enterprise will construct a new distribution manifold at Genoa to accommodate connectivIty to Magellan's
Genoa Jet pipelines.
3. Provlde custody transfer measurement for crude 011 receipts from Magellan destined for ECHO Terminal
4. Capture measurement and flQW data provided by Magellan from theIr new custody meter, 88 needed.
5. Provide measurement and flow data to Magellan from EnterprIse's custody meter for receIpts.
Retention: Life of Anat
DIstribution: p~ Faa
Plf Resp in Opp to Motion for Summary Judgment 103
SR175
exhibit C-1
Anahuac Jet Connection
Magellan's Construction Responsibilities
t. Objective
Participate wHh Enterprise In the construction of a conneolion between the Magellan 26" pIpeline
from Genoa Jet to Texas City, TX and the Enterprise 18" PipeUne from Webster, TX to Morgan's
Point, Texas at Magetfan's Anahuac Jet station. This will enable Enterprise to deliver CfUde otl to
Magellan at Genoa Jet fer redelivery back to Enterprise at Anahuac Jet The crude 011 will then
flew on to Enterprise's Morgan's Pornt facility.
U. Project Description
Magellan wiD:
1. Take ownersh1p and operate the 18- DB&B takeoff valve to be furnished by Enterprise.
a. There wiU be an insulating flange Inslalled by Enterprise separatfng Enterprise and
Magellan on the downstream side of the valve.
2. Install a spool to be constructed by Enterprise between the two Magerlan btock valves at
AnahuBCJcl
s. The new spool will have the takeoff tee In It and the takeoff valve attached.
3. Provide space tn the existing controls bulfdlng to allow Enterprise to tocate lhelr flow
computerJ RTU. end MCC.
4. ReJocate the satellite dish to 8 new mounUng pole Installed by Enterprise.
5. Coordinate with Enterprise so downtime is mlnlmlzed and much of the work can be done
Simultaneously during the downtime.
6. Capture measurement and flow data provided by Enterprise.
7. Construct 8 new SCAOA screen for this location (it Is currenUy caned N. Clear Creek valve
site).
8. ProvIde 45KVa power.
Plf Resp in Opp to Motion for Summary Judgment 104
SR176
exhibit C·2
Genoa Jet Connection
Mage"an's Construction Responsibilities
I. Objective
Construct 8 new manlfokJ and custody transfer meter to accommodate new connections to Enterprise at Genoa
Jct. The new connectlons will allow Magellan to receive deliveries from the Enterprise Katy Pipeline or from either
of the two new enterprIse pipelines from ECHO Station.
II. Project Description
Magellan will:
1. Construct 24" connections to the two Enterprise pipelines between the enterprise and Magellan statton,
as shown on Exhibit A·2.
2. InstaJl a new ANSI 600# block manifold thai willlnDlude headers for the two new Incoming 24U JInes from
Enterprise.
3. Inatall a new custody transfer meter and prover to measure crude oil transported to Speed Jet. The meter
and prover slatton will be ANSI 800# rated and capable of accommodaUng flowrates up to 15,000 barrels
per hour.
4. Capture measurement and flow data provided by Enterprise from their custody meter, as needed.
5. Provide measurement and flow data to Enterprise from Magellan's new custody meter.
Plf Resp in Opp to Motion for Summary Judgment 105
SR177
Commercial Contract Summary for Cobblestone
1. Magellan Business Unit
iJ Transportatlon Approved bV legal _ _
o Marine Verified DOA
}4 Crude 011
2. Contract Type
:J Throughput (Pipeline & Termlnalling)
_I Storage (non·renewable fuels)
J Renewable Fuels (Ethanol & Blodlesel)
IS Joint Tariff/Connection Agreements
iJ Add!tlve
a Confidentiality
LJ Purchase/Sale
o Consulting Services
iI Ammonia I Joint Venture (Clrtfe one)
r: Other
3. Customer
~£v-=-~'C~~"~?:...:.',.::..r..:::6_-,-a~~tr all..:.,.. ~ t. ( c
4. Contract Name ~
(b"ne"'~ N .-'7 e e --eJ
c
5. Commercial Owner
Northern Region Mgr (Jlm Johnston)
Central Region Mgr (Fred Neeley)
Southwest Region Mgr (Aaron Cissell)
Southeast Region Mgr (David Biggs)
Storage and Additive Services Mgr (Mike Ward)
Director, Crude Oil (Scott Devers)
Director, Marine (Aaron MII~rd)
Other \1;--. !I. f..,JkJ/,p....t;(r
6. Key Dates
~ Contract Start Date (Effective Date) /~/~/J I Commencement Date _ _ _ _ __
r: Contract End Date or End of Primary Term I~ ~cA!
U Renewal Provisions &- Ie .-r- · / _
~_____
i I
o EscalatIon Provisions _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ __
/J(. Requested Notification Date from Cobblestone (i.e. 120 days prior to End Date _ _ _ _ _ _ __
[J Annual Review Provisions _ _ _ _ _ _ __
7. Brief Contract Description
~~ee: 0'/ t:I'I-O och-..
--lo.fA~A'~(,I~.D~r;I--___'o_y"7'-S~.,Ir. . :-.""..:..~--!....--I------- _ _ _ _ _ _ _ _-'{see pg 2)
8. ~p~~~ntractman~ _______________ ~ _ _ _ _ _ _ _ _ __
~
9. Submitted by: \£ - p. Date: ____2_0-..,,)~~..:..~-'2.--
_+0-7/.
Plf Resp in Opp to Motion for Summary Judgment 106
SR178
Exhibit 1-E
Crude Oil Purchase Agreement, April 29, 2011
(redacted), andFirst Amended and Restated Crude Oil
Purchase and Sale Agreement, Jan. 31, 2011 (redacted)
Plf Resp in Opp to Motion for Summary Judgment 107
SR179
EXECUTION VERSION
CRUDE OIL PURCHASE AGREEMENT
April 28, 2011
ENTERP Rl SE CRUDE OIL LLC
"Buyer"
And
-•
"Producer"
1·17556Iv.25 0022)841001)2
Plf Resp in Opp to Motion for Summary Judgment 108
SR180
TABLE OF CONTENTS
ARTICLE I CERTAIN DEFINITIONS ......................................................................................... 1
ARTICLE II 'fERM ...................................................................................................................... 10
ARTICLE III CONSTRUCTION AND COMMENCEMENT DATE ........................................ 11
3.1. Construction of the Eagle Ford Pipeline ............................................................................ 11
3.2. Fee Lands, Easements and Rights-of- Way ........................................................................ 11
3.3. Commencement Date ......................................................................................................... 11
3.4. Line Fill .............................................................................................................................. 11
ARTICLE IV PURCHASE AND SALE OF PRODUCER CRUDE OIL ................................... 11
4.1. Purchase by Buyer ............................................................................................................. 11
4.2. Volwne Limitations........................................................................................................... 11
4.3. Pipeline System Rules and Regulations; Specifications .................................................... 12
4.4. Scheduling .......................................................................................................................... 13
4.5. Trucking Costs ................................................................................................................... 13
4.6. Statements and Payments ................................................................................................... 13
4.7. Audit Rights ....................................................................................................................... 13
4.8. Statement Errors ................................................................................................................. 14
4.9. Creditworthiness ................................................................................................................ 14
4.10. Lien and Security Interest. ............................................................................................... 14
4.11. Setoff and Recoupment .................................................................................................... 15
4.12. Option to Convert to Buy/SeU ......................................................................................... 15
4.13. Reservation of Rights ....................................................................................................... 16
4.14. Measurement and Tests .................................................................................................... 16
ARTICLE V REVENUE COMMITMENTS AND DEFICIENCY PAYMENTS ...................... 17
5.1. Revenue Commitment ....................................................................................................... 17
5.2. Deficiency Payment ........................................................................................................... 17
ARTICLE VI WAR.RANTY OF l·ITLE ...................................................................................... 18
6.1. Title Warranty .................................................................................................................... 18
6.2. Proceeds of Production ...................................................................................................... 18
6.3. Indemnification .................................................................................................................. 18
6.4. Title and Risk of Loss ........................................................................................................ 19
ARTICLE VII WAIVER OF CERTAIN DAMAGES ................................................................. 19
ARTICLE vnl FORCE MAJEURE ............................................................................................ 19
8.1. Suspension of Obligations ..................................................................................................19
8.2. Definition of Force Majeure .............................................................................................. 19
8.3. Strikes ................................................................................................................................ 20
8.4. Interruption of Operations..................................................................................................20
1·175561 v.2S 0022384/00132
Plf Resp in Opp to Motion for Summary Judgment 109
SR181
ARTICLE rx GOVERNING LAW; VENUE; DISPUTE RESOLUTION ................................. 20
9.1. Govern.ing Law .................................................................................................................. 20
9.2. Venue ................................................................................................................................. 20
9.3. Negotiation ......................................................................................................................... 21
ARTICLE X TAXES .................................................................................................................... 21
10.1. Taxes ................................................................................................................................ 21
10.2. Reimbursement ................................................................................................................ 21
ARTICLE XI ASSIGNMENT ...................................................................................................... 21
11.1. Assignment ...................................................................................................................... 21
11.2. Notice of AssigIlment ...................................................................................................... 22
J 1.3. Transfer ofSelJer's and Producer's Interests ................................................................... 22
ARTICLE XII NOTICE AND STATEMENTS ........................................................................... 23
12.1. Notice ............................................................................................................................... 23
12.2. Routine Communications................................................................................................. 25
12.3. Change of Address ........................................................................................................... 25
ARTICLE XIII MISCELLANEOUS ........................................................................................... 25
13.1. Amendments .................................................................................................................... 25
13.2. Collfidentiality ................................................................................................................. 25
I 3.3. Default.............................................................................................................................. 26
13.4. Waiver .............................................................................................................................. 28
13.5. No Third Party Beneficiaries ........................................................................................... 28
13.6. Rules and Regulations ...................................................................................................... 28
13.7. I-Iazard Corrununication ................................................................................................... 28
13.8. No Partnership ................................................................................................................. 28
13.9. Published Financial Data ................................................................................................. 28
13.10. Headings ........................................................................................................................ 29
13.11. Rules of Construction .................................................................................................... 29
13.12. Entire Agreement ........................................................................................................... 29
13.13. Applicable Laws ............................................................................................................ 29
13.14. Severability .................................................................................................................... 29
13.15. Joint Preparation ............................................................................................................ 30
13.16. Further Assurances ......................................................................................................... 30
13.17. No Inducements ............................................................................................................. 30
) 3.18. Joint aIld Several Liability ............................................................................................. 30
13.19. Survival .......................................................................................................................... 30
13.20. COW1terpart Executioll ................................................................................................... 30
EXJfIBIT A............................................................................................................ Points of Receipt
EXHIBIT B ................................................................ Example Calculation of Deficiency Payment
11
147SS61v.25OO22384100132
Plf Resp in Opp to Motion for Summary Judgment 110
SR182
CRUDE OIL PURCHASE AGREEMENT
This Crude Oil Purchase AgTeement (this "Agreemellt') is madc and entered into this
28 'h day of Apri l, 2011 (the "Effective Date"), by and between ENTERPJUSE CRUDE OIL
L a Texas limi ted liabil'
"Party," or collectivel y as the "Parties"
WITNESSETH :
WHEREAS, Seller purchases, owns or controls barrels of crude oil produced from
ccrtain oi I and gas well s of Producer located in the Eagle Ford Shale area of South Texas that the
Parties desire for Buyer to purchasc; and
WHEREAS, Buyer is a buyer and sell er of crude oil , and is a shipper on the Pipeline
System; and
WHEREAS, an Affiliate of Buycr is cu rrently designing, engineering and constructing
thc Eagle fo rd Pipeline: and
WHEREAS, Se ll er desires to sell to Buyer, and Buyer desires to purchase from Seller,
Producer Crude Oi l on the te nns ancl condi tions set forth herein.
NOW THEREFORE, in consideration of the mutual promises, covenants and
ag reements herein contained, Seller, Producer and Buyer hereby covenant a nd agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
Unless otherwise requi red by the context, the terms defined in this Article I shall have,
for all purposes of th.i s Agreement, the respective meanings set forth in thi s At1icle I:
1.1. "Affiliate" shall mean any Person that directly or indirectly Through one or more
intermediaries, control s or is cOlllrolJed by or is under common control with another Person. TI,C
term "control" (incl uding its derivatives and similar terms) shall mcan possessing the power to
di rect or cause the dircction of the management and policies of a Person, whether through
ownership, by contract, or otherwise. Any Person shall be deemed to be an Affi li ate of any
specified Person if slich Person owns fi fty percent (50%) or more of the voting sewrities of the
specified Person, or if the spccified Person owns fifty percellt (50%) or more of the voting
securiti es of such Person , or if flft")' percent (50%) or more of the voting securities of the
specified Person and such Person are wldcr common COlllro!.
147556t v.25 0022384/00 112
Plf Resp in Opp to Motion for Summary Judgment 111
SR183
1.2. "Agreemellt' shall have the meaning given to such term in the preamble of thi s
Agreement.
1.3. "A IIIIIIIII Trallsportation Revelllle Comlllitmenl" shall mean, with respect to each
COniTnct Year in the Primary Tenn, the amount set fonh for such Contract Year under thc
co lumn entitled "Annual Transponation Revenue Comm itment ($)" in the table in Section 5.1 .
IA. "APt' shall mean the American Petrolewn Insti tute.
1.6 . ".-iSM c" shall mean the American Society of Mechanical Engineers.
1.7. "ASTM" means the American Socicty for Testing Materials.
1.8. " Ballkmptcy" shall mean, with respect to any Person, (i) the filing by sllch Person
of a petition. including, without limitarion, a petition under rhe Banknlptcy Code, seeking to
adjudicate sllch Person a bankrupt or an insolvent or otherwise commencing, uuthorizing, or
acq uiescin g in the commencement of a proceeding or cause of action seek ing liquidation.
winding up, rcorganization, turangemen t, mJjustment , protection, composition, or ot her relief
with respect to itself or its debts under any bankruptcy, insolvency, or other simi lar law now or
hereafter in elIect or seeking the appointment of a trus tee, receive r, liquidator, custodian or other
si milar official over it or any substan tial part of its property, or consenting to any such reli ef or to
the appo intment of or taJdng possession by any such officia l in an involuntary case or other
proceed ing commenced against it, or taking any corporate or similar offi cial action to autho ri ze
uny of the fore going; (i i) the commencement of an involuntary case or other proceeding against
such Person seeking liquidati on, Winding up, reorganization, arrangement, adj ustment,
protection, composition, or other relief with respect to such Person or its debts under any
bank.ntptcy, insolvency or other similar law now or hereafter in effect or seeking the appointment
of a ttustee, receiver, liquidator, custodian or other simil ar official over such Person or any
substantial pan of its property, which involuntary case or other proceeding shall remain
undismissed and unstayed for a period of fifteen (15) days; (i ii ) the making of an assignment or
any general arrangement [or the be nefit of creditors; (iv) such Person's otherwise becoming
bankmpt or inso lvent (however evidenced); (v) such Person's gene rally bcing unable or
admitting its inability to pay its debts as they fall due (or otherwise gene rall y fa iling to pay its
de bts as they t:,l1 due); or (vi) Stich Person 's fili.ng an answer or other pleading admitting or
fa iling to contest the allegati ons of a petition fi led against it in any proceed ing of the foregoing
nature, or taking any other action to authorize any of the actions sct forth above.
1:175561\'.25 002238·I/00 I3J.
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Plf Resp in Opp to Motion for Summary Judgment 112
SR184
1.9. "Ballkruptcy Code" shall have the meaning given io such term in Section 13.3 (d).
1. 10. "Barrer' shall mean forty-two (42) gallons of231 cubic inches per gallon at 60
degrees Fahrenheit (60 0 F).
1. 12. "Basis for Requesting Assurance" shall have the meaning given to such term in
Section 4.9 .
1. \ 3. .. BPD" shall mean Barrels per Day.
1. 14 . " Bus illess DIIY" shall mean any ca lendar day other than Sarurdays and Sundays
Ihat commercia l ban.1(s in Houston . Texas are open fo r business.
1. 15. "Buyer" shal l have the meaning given to such tenn 11\ Ihe preamble of Ih.is
Agrcc ment.
1. 16. "Central Clock Time" shall mean Centra l Standard time, as adjusted fo r Central
Daylight time .
1.17. "Claims" shall mean any ancl all claim s, demands and causes of acti on of any
kind and all losses, damages, li abi lities, costs and expenses of whatever nauu'c (includ ing court
costs and reasonable attorneys' fees).
1.18. "CNOOC" means OOGe America, Inc., a Delaware corpo ration and subsidiary
of the China National Offshore Oil Corporation.
1. 19. "Commencement Date" shall have the meaning g ivcn to such term in Section 3.3
of tllis AgTeemcnt.
1.20. "Colldellsllte" shall mean Ihose grade or grades of Crude Petroleum designated as
"Condensate" pursuant to the Rules and Regulali ons. The Cllrrent Rules and Regulations prov ide
that Crude Petroleum with an API gravity between 51 and 90 inclusi ve is designated as
·'Condensate ."
1.22. "Colltract Yea r" shall mean a period commencing at 7:00 a.m., Central Clock
Time, on the CommencemcI1! Date and ending at 7:00 a.m. , Central Clock T ime on the same day
and calendar month of the l'ollowin g calcndar year and thereafter for succeedi ng periods of
twelvc ( 12) co nsecutive Months each .
147556 1" .25 0022)84/00 1)2
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Plf Resp in Opp to Motion for Summary Judgment 113
SR185
1.23. "Cmde" or '·e m lle Oir' or "Cmde Petroleum" shal l mean the grade or grades of
direct liquid product of oil or gas wells meeting the specilications fo r either "Crude Petrol eum"
or "Condensate" as set forth in the applicable Rules and Regulations .
1.25. "Cumulative Tmnsportation Revellue Commitment" sholl have the meaning
given to such term in Section 5.2 of this Agreeme.nt.
1.26. "Culllulative Tral/sportatioll Reven ue Receipt" shall have the meaning given to
such term in Section 5.2 of this Agreement.
1.27. "Cushing Comlllon Stream Domestic Sweet Crude Oir' shall mean Domestic
Sweet Crude Oi l that is delivered in a common stream at Cushing Temlina l.
1.28. "Cushil/g Terlllinaf' shall mean Enl eqllise Pipeline ' s terminal fac il iti es on the
Pipe li ne System at or near Cushing, Oklahoma.
1.29. "Day" or "Daily" shall mean a period of twenty-fouf (24) hours, commencing at
7:00 a.m., Cent ral Clock Time, un a calenda r day and end ing at 7:00 a.m., Central Clock Tim e.
on the next succeed ing calendar day.
1.30. "De/aulting Party" shall have the meaning given to such term in Section 13.3(b)
of this Agreement.
1.3 1. "Deficiel/cy Pnymelll" shall have the meaning given to such term in Section 5.2
of this Agreement.
1.32. "Delivery Ticket" shal l moan a shipping/loading docume nt or doc uments stati ng
the type and quality of Cmde Oil delivered, the volwne delivered and method of measurement ,
the corrected specifie gravity, temperature, and S&W content.
1.33. "Domestic Sweet Cmde Oir' shall mean a grade of Crude Oil, currently defined
by the NYMEX as having an AI'l gravity between 37 and 42 degrees and a su lfur content of less
than forty- two hundredths of one percent (0.42%), as such specifications may be amended by the
NYMEX from ti me to time.
1.34. "Due Dare" shall have the mean.in g given to such term in Section 4.6(b) of this
Agreement.
1.35. "Eagle Forll Pipelin e" shall mean 11 crude oil pipeline and related fac ilities
running from a locat ion within the Eag le Ford Sha le area in Sou th Texas to Sealy Station, to be
n
1:l7SS6 I v.25 002 2384 /00 1
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Plf Resp in Opp to Motion for Summary Judgment 114
SR186
constructed by Enterprise Pipeline, which, when completed and operational, will become a part
of the Pipeline System.
1.36. "Eagle Ford Pipelille Commoll Stream" shall mean the Crude Oil that IS
delivered in a common stream at the Houston Ternlinal from the Eagle Ford Pipeline.
1.3 7. "Effective Date" shall have the meaning given to such term in the preamb le to
this Agreement.
1.38. "Ellterprire Pipelille" shall mean Enterprise Crude Pipeline LLC, a Texas limited
liabi lity company and an Affiliate of Buyer.
1.39. "Evellt of Defallff' shall have the meaning given to such term in Section 13.3(a)
of this Agreement.
lAO. "Extellded Term" shall have the meaning given to such term in Article II of this
Agreement.
1041. "Fee A djllstmellt Multiplier" shall mean, with respect to any date on which any
fee or other amount hereunder is adjusted, the lesser of (i) 1.0400 or (i i) the FERC Index in effect
as of such date. For the purposes of illustration only, the following example is provided to
demonstrate the calcul ation of the annual adjustment of the Weighted Average Transportation
Rate, using hypothetical values for the FERC Index:
1042. "FERC IlIdex" shall mean the "Mu ltiplier to Use" as published by the Federal
Energy Regulatory Commission under the title " Oil Pipeline lndex," and is currently publi shed
in the month of July of each year on the Internet at http://www.ferc.gov/industries/oillgen-
info/pipeli ne-index.asp.
1.43. " Force M ajeure" shall have the meaning given to such term in Section 8.2 of this
Agreement.
1044. "Govemmentlll Authority" shall mean (i) the United States of America, (ii) any
state, county, parish, municipali ty or other governmental subdivision within the United States of
America, and (iii) any court or any govenmlental department, commission, board, bureau,
agency or other instrumentality of the United States of America or of any state, county,
municipality or other governmental subd ivision within the United States of America.
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Plf Resp in Opp to Motion for Summary Judgment 115
SR187
1.45. "Gravity Adjustmellt Scale" shall mean, with respect to any Month, the deduction
instructions with respect to certain gravities of Crude Oil published with the WTI Price for such
Month, under the heading "Gravity Adj. Scale."
1.46. "Gros.'t Proceeds" shall have the meaning given to such tenn in Section 4.1 of this
Agreement.
1.47. "Houston Tenninaf' shall mean Enterprise Pipeline"s tenninal facilities on the
Pipeline System at or near Houston, Texas.
1.48. "'Insecure Party" shall have the meaning given to such term in Section 4.11 of
this Agreement.
1.49. ~'Interest Rate" shall mean an annual rate of interest equal to two percent (2%)
above the prime rate published by the Wall Street Journal from time to time, or the maximum
legal rate, whichever is the lesser.
1.50. '~Inlerests" shall mean any right, title, or interest in lands, weIJs, or leases and the
right to produce oil andlor gas therefrom whether arising from fee ownership, working interest
ownership, mineral ownership, leasehold ownership, or arising from any pooling, unitization or
conununitization of any of the foregoing rights.
1.51. "Liens" shall have the meaning given to such term in Section 4.10(b) of this
Agreement.
1.52. "Losses" shall mean any actual loss, cost, expense, liability, damage, demand,
suit, sanction, claim, judgment, lien, fme or penalty, including reasonable attorney's fees,
asserted by a third party not Affiliated with the Party incurring such, and whkh are incurred by
the applicable indemnified Persons on accoWlt of injuries (including death) to any persOn or
damage to or destruction of any property, sustained or alleged to have been sustained in
connection with or arising out of the matters for which the indemnifying party has indemnified
the applicable indemni fled Persons.
1.53. "Maximum A""ual VO!llnre" shall have the meaning given such tenn in Section
4.2(b).
1.54. "Maximun, Cumulative Deficiellcy PaYlnellt Obligation" shall have the meaning
given such tenn in Section 5.2.
1.55. "Maximuln Daily Volume" shall have the meaning given such term in Section
4.2(b).
1.56. "/ttlaximllm Monthly Volume" shall have the meaning given such term in Section
4.2(b).
1.57. UMontil" or HMo"t"ly" shall mean a period of time beginning at 7:00 a.m.,
Central Clock Time on the first day of a calendar month and ending at 7:00 a.m., Central Clock
Time on the first day of the next succeeding calendar month.
147SS6tv.2S 0022384/00132
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Plf Resp in Opp to Motion for Summary Judgment 116
SR188
1.58. "MSDS' shall have the meaning given such tenn in Section 13.7.
1.59. "Noll-Defaldti"g Party'" shall have the meaning given to such tenn in Section
13.3(b) of this Agreement.
1.60. "NYMEX' shall mean the New York Mercantile Exchange; provided, that in the
event the NYMEX ceases to operate as a commodity futures exchange, then the Parties shall
mutually agree to an alternative commodity futures excbange to use for purposes of this
Agreement.
1.61. "Off-Spec Crude Oir shall have the meaning given to such tenn in Section 4.3.
1.62. "Parties" shall have the meaning given to such tenn in the preamble of this
Agreement.
1.63. "Party" shall have the meaning given to such tenn in the preamble of this
Agreement.
1.64. "Party Providillg ASSllrallce" shall have the meaning given to such tenn in
Section 4.9 of this Agreement.
1.65. "Party Requesting Assurance'~ shall have the meaning given to such term in
Section 4.9 of this Agreement.
1.66. ~~Performance Assurallce" shall have the meaning given to such teml in Section
4.9 of this Agreement.
1.67. "Persoll" shall mean any individual, finn, corporation, trust, partnership, limited
liability company, association, joint venture, other business enterprise or Govenunental
Authority.
1.68. "Pipeline PO/illS of Receipt' shall mean the Crude Oil receiving facilities to be
installed by Enterprise Pipeline on the Pipeline System at or near the locations indicated on
Exhibit A, as such exhibit may be amended from time to time.
1.69. "Pipe/hIe Syste'll" shall mean the crude oil pipeline system o\vned by Affiliates of
Buyer, including, without limitation, the Eagle Ford Pipeline.
1. 70. "Points of Receipf' shall mean, collectively, the Pipeline Points of Receipt and
the Truck Points of Receipt.
1. 71. "Prilnary Term" shal1 have the meaning given to such term in Article It of this
Agreement.
1.72. "Prodllcer" shall have the meaning given to such tenn in the preamble of this
Agreement.
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Plf Resp in Opp to Motion for Summary Judgment 117
SR189
1. 73. "Proliucer Cl"llde Oir' shall mean (i) all Crude Oi l produced from or attributable
to lnterests owned by Producer, Seller and/or its Affiliates and (ii) with respect to well s in which
Producer and/or any of its Affiliates is the operator, Crude Oi l produced from such wells that is
attributab le to the Intere sts in such wells owned by other working interest owners and royall)'
owners which is not taken "in-kind" by such working interest owners and royalt), owners and for
whic.h Producer, Scller and/or their Affiliat es has the right and/or obli gation to deliver such
Crude Oi l, but only for the period that Producer, Se ller and/or their Affi liates has such right or
ob ligation. For the avoidance of doubt, except as described in (ii) above, Producer Crude Oil
shall not include Crude Oil purchased by Produce r, Seller 'Uld/or any of their Affiliates from
third panics.
1.74. "Proliucer Force Majeure Credit' shall mean, with respect to each Day that
Buyer is unable to receive at the Points ofRcccipt, all or any ponion of tile Producer Crude Oil ,
up to the Max imum Daily Volume in effect for such Day, sch edu led hereunder by or On behalf of
Seller for such Day, due to an event of Force Majeure, a volume of Producer Crude Oi l equal to
the lesser of (x) the Maximum Dai ly Volume in effcct for suc h Day, minus the volume (in
Barrels) of Producer Crude Oil that was recei veJ hereunder at the Point s of Receipt on such Day,
or (y) a volume (in Barr'ls) of Producer Crude Oil equal to the average deli veries of Producer
Crude Oil hereunder to the Points of Receipt during the th.irty (30) Day period immediately
preced ing the first Day of such event of Force Majeure, minus the volume (in Barrels) of
Producer Crude Oil th at was received hereunder at th.c Points of Receipt on such Day; provided.
however, there shall be no Producer Force Majeure Credit for the first five (5) Days of 'my such
event of Force Majeure.
1.75. "Producer Force Maje ure Credit AllolVallce" sha ll mean, with respect to any
Month, the produc t of (i) the total vo lume (in Barrels) of Producer Force Majeure Credi ts, if any ,
applicable to such Month mu ltiplied by (ii) the Weighted Average Trrulsportatioll Rate in effect
for such Month .
1.76. "Producer Party" shall have the meaning given to such term in Section 13. 18(b).
: • I · " II '
t47ll6h.ll002238·11001)2
Plf Resp in Opp to Motion for Summary Judgment 118
SR190
1.80. "Qualifyillg Interests" shall have the meaning given to such term in Section
1I .3(a) of this Agreement.
1.81. "Qualifying It,teresls Agreenlenf' shall have the meaning given to such term in
Section 11.3(b) of this Agreement.
1.82. "Qualifying Interests Transferee" shall have the meaning given to such term in
Section 1) .3(a) of this Agreement.
1.83. "Rules and Regulations" shaH have the meaning given to such tenn in Section
4.3.
1.84. "Sealy Stalioll" shaH mean Enterprise Pipeline's facilities on the Pipeline System
at or near Sealy, Austin County, Texas.
1.85. "Seller" shall have the meaning given to such teoo in the preamble of this
Agreement.
1.86. "Seller Party·' shall have the meaning given to such tenn in Section 13.18(a).
1.88. "S& W' shall mean sediment and water.
1.89. "Taxes" shall mean any or all current or future taxes, fees, levies, charges,
assessments andlor other impositions levied, charged, imposed, assessed or collected by any
Governmental Authority having jurisdiction.
1.90. "Term:' shall have the meaning given to such tenn in Article II oftrus Agreement.
1.91. "TI,ird Party Crude Oif' shall mean, with respect to any Month, the volume (in
Barrels) of Crude Oil other than Producer Crude Oil which is either (i) purchased during such
Month by Buyer at the Third Party Crude Oil Points of Receipt from any Person other than a
Party or its Affiliates or (ii) received at the Third Party Crude Oil Points of Receipt during such
Month by Enterprise Pipeline from any Person other than a Party or its Affiliates for shipment on
the Eagle Ford Pipeline.
1.92. "Tllud Party Crllde Oil Allowance" shall mean, with respect to any Month, the
product of (i) the total volume (in Barrels) of Third Party Crude Oil, if any, applicable to such
Month multiplied by (ii) the Weighted Average Transportation Rate in effect for such Month.
1.93. "Tllird Party Crude Oil Points of Receipt' shall mean those certain Points of
Receipt which are described as being a "Third Party Crude Oi I Point of Receipt'· in the table
147SS6lv.2S 0022384100132
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Plf Resp in Opp to Motion for Summary Judgment 119
SR191
captioned "Location of Pipeline Points of Receipt" or "Location of Truek Points of Receipt" in
Exhibit A, as applicable, as such exhibit may be amended from time to time.
1.94. " Total Cum Illative Transportation Revenue Commitment" shall have the
meaning given to such tenn in Section 5.1 of thi s Agreement.
1.95. "Truck Points of Receipt' shall mean the Cmde Oil receiVIng faci lities to be
installed by Sellcr or its designee at or near the locati ons indicated on Exh ibit A, as sllch exhibit
may be amended from time to time.
1.96. " TruckiJlg Costs" shall mean, with respcct to any Month, the product of (i) the
volume of Producer Crude Oil delivered by Seller at the Truck Points of Receipt during such
Month, multiplied by (ii) the Trucking Rate in effect for such Momh .
, • ~ I ' " " :, '
.. , ' .
ARTICLE II
TERM
The telm of this Agreement sha ll commence 011 the Effective Date and unless soo ner
terminated as provided herein, shall remain in fu ll force and effect until the end of the tenth
(IOlh) Contract Year (the "Primary Tert""); provided, however, at the option of Seller, provided
that neither Seller nor Producer is in default at the end of the Primary Term or at the time of the
notice of extension described below in this Article II, the term of this Agreement may be
extended beyond the expiration of the Primary Tenn for a single period of five (5) Contract
Years, extendi.ng until the end of the fifteenth (15th) Contract Year (the "Extellded Term ," and ,
the Primary Term as may be extended by the Extend ed Term, the "Term"). To exercise such
option to extend the Term, Seller shall deliver to Buyer a notice thereof no later than twel ve ( 12)
Months prior to the expiration of the Primary Tenn . Subject to Section J3.3(c), termination or
cancellation of this Agreement shall not relieve the Parties from any obligation accruing or
accrued prior to the date of such termination.
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Plf Resp in Opp to Motion for Summary Judgment 120
SR192
ARTICLE In
CONSTRUCTION AND COMMENCEMENT DATE
3.1. Construction of the Eagle Ford Pipeline. Buyer shall, or shall cause Enterprise
Pipeline to, design, engineer, modify. construct, and equip, the Eagle Ford Pipeline, including the
Pipeline Points of Receipt, which shall include the equipment set forth in Exhibit A under the
column captioned "Pipeline Equipment" in the table captioned '*Equipment at Pipeline Points of
Receipt." Seller shall, or shall cause its designee to, design, engineer, modify, construct, and
equip, the Crude Oil storage and other facilities necessary to enable Seller to deliver Producer
Crude Oil to Buyer (i) into the Eagle Ford Pipeline at the Pipeline Points of Receipt and (ii) into
trucks at the Truck Points of Receipt, including, without limitation, the equipment for each type
of Point of Receipt set forth in the applicable tables in Exhibit A under the columns captioned
"Seller's Equipment."
3.2. Fee Lands, Easements and Rights-of-Way. Upon Buyer's request, Seller shaH
grant, convey bargain, transfer and assign, or shaH cause to be granted, conveyed, bargained,
t
transferred and assigned, to Buyer or Enterprise Pipeline for purposes of constructing, owning,
operating, repairing. replacing and maintaining the Eag)e Ford Pipeline, (i) such fee lands owned
by Seller andlor its Affiliates as are reasonably necessary for such purposes, (ii) such easements
and rights-of-way over, across, and Wlder lands owned by Seller and/or its Affiliates as are
reasonably necessary for such purposes and (iii) such easements and rights-of-way owned by
Seller and/or its Affiliates over, across and under lands owned by third parties as are reasonably
necessary for such purposes. The fonn of the documents used to convey any such fee lands,
easements and/or rights-of-way shall be mutually agreed to by Seller and Buyer or Entel1lrise
Pipeline.
3.3. Commencement Date. The uCommellcelnellt Daten under this Agreement shall
be the first day of the Month following the date Buyer notifies Seller that the Eagle Ford Pipeline
is ready to commence commercial service with respect to the receipt~ transportation, handling,
and delivery of Producer Crude Oil hereunder.
3.4. Line Fill. As between the Parties. Buyer, as a shipper on the Pipeline System,
shall be responsible for providing to the applicable carriers a pro-rated share of line fill based on
the forecasted volumes of Producer Crude Oil to be sold and purchased hereunder.
ARTICLE IV
PURCHASE AND SALE OF PRODUCER CRUDE OIL
4.1. Purchase by Buyer. Upon the Commencement Date, pursuant to the tenus and
conditions of this Agreement, including the volume linutations in Section 4.2, Seller shall sell
and deliver to Buyer, and Buyer shaH purchase and receive from Seller, the volumes of Producer
Crude Oil which have been scheduled and delivered by or on behalf of Seller to any of the Points
of Receipt. With respect to each Month, Buyer shall pay Seller the Purchase Price for each
Barrel of Producer Crude Oil purchased by Buyer during such Month (the "Gross Proceeds")
4.2. Volwne Limitations.
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Plf Resp in Opp to Motion for Summary Judgment 121
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(a) Seller may, at its option, deliver volumes of Producer Crude Oil in excess of the
Maximum Daily Volume, the Maximum Monthly Volume and/or the Maximum Annual Volume
to Buyer pursuant to tllis Agreement; provided, however, Buyer shall never be obligated to
purchase or receive (i) more than the ivfaximum Daily Volume on any Day, (ii) more than the
Maximum Monthly Volume in any Month, and (iii) more than the Maximum Annual Volume in
any Contract Year.
(b) As used herein, "Maximum Daily Volume" shall mean, with respect to each Day
during each Contract Year set forth in the table below, the Daily volume of Producer Crude Oil
for such Contract Year as set forth in the colwnn entitled "Maximum Daily Vo]wne."
uMaximllm Annual Volume" shall mean. with respect to each Contract Year set forth in the
table below, the volume of Producer Crude Oil for such Contract Year as set forth in the column
entitled ~'Maximum Annual Volume." For any Month in any Contract Year, the "Maximllm
Monthly Volume" shall be the product of (i) the number of Days in such Month times (ii) the
quotient of the Ma."( imum Annual Volume for such Contract Year divided by 365.
Maximum Annual Volume
Contract Year Maximum Daily V.plume CBPD) (in Barrels)
1 50,000 18,250,000
2 75,000 27,375,000
3 75,000 27,375,000
4 100,000 36,500,000
5 100,000 36,500,000
6 100,000 36,500,000
7 100,000 36,500,000
8 lOO,OOO 36,500,000
9 100,000 36,500.,000
10 100,000 36,500,000
the lesser of (i) 110% of the the lesser of (i) 110% of the volume
All remaining average Daily volume of of Producer Crude Oil actually
Contract Years Producer Crude Oil actuall y purchased by Buyer from Seller
purchased by Buyer from Seller hcreupder during the immediately
hereunder during the preceding Contract Year or (ii) the
immediately preceding Contract Maximwn Annual Volume for such
Year or (ii) the Maximum Daily immediately preceding Contract
Volume for such immediately Year.
preceding Contract Year.
4.3. Pipeline System Rules and Regulations; Soecificqtions. The Parties acknowledge
that Buyer is a shipper on the Pipeline System and via truck transportation, and that all
transponation of Crude Oil perfonned on the Pipeline System and via truck shall be subject to
the rules and regulations in applicable tariffs in effect from time to time (as aJuended from lime
to time. the "Rules a"d Reglliations') Buyer shall never be required to purchase or accept
Producer Crude Oil which does not meet the specifications set forth in the Rules and Regulations
("Of/-Spec. Crude Oif'). Seller agrees to indemnify, defend and hold Buyer harmless from any
I 47S56Jv.2S 0022384100132
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and all Claims and Losses incurred in connection with, or in any manner whatsoever relating to
Off-Spec Crude Oil andlor the handling thereof. This inderrurity and defense obligation shall
survive the termination of this Agreement for the applicable statutory limitations period. Seller
warrants to Buyer that the Crude Oil delivered hereunder shall not be contaminated by chemicals
foreign to virgin crude oil, including chlorinated andlor oxygenated hydrocarbons and lead.
Buyer shall have the right, without prejudice to any other remedy available, to reject and return
to Seller any quantities of Crude Oil which are found to be so contaminated even after delivery.
4.4. Scheduling. At least five (5) Business Days prior to the Commencement Date and
on or before the twenty fifth (25th) Day of each succeeding Month during the Tenn, Seller and
Buyer shall mutually agree upon a forecasted amount of the volumes and grades of Producer
Crude Oil to be sold and purchased hereunder at each Point of Receipt during the following
Month. The Parties acknowledge that such forecasted amount is likely to be more accurate in the
first weeks of the Month, and more of an estimate for the later weeks. Seller shall make
commercially reasonable efforts to notify Buyer of any changes to such forecasted amoWlt.
Subject to Section 4.2, Buyer shall make commercially reasonable efforts to acconllnodate such
changes.
4.6. Statements and Payments.
(a) Statements. On or before the ninth (9 u1) Business Day after the end of each
Month during the Tenn, Buyer shall render to Seller a detailed statement for the preceding
Month setting forth the calculation of the Settlement Amount.
(b) Payments. The Party owing the Settletnent Amount shall pay such Settlement
Amount in accordance with the wire transfer payment instructions set forth in Section 12.1 on or
before the nventieth (20th) day of the Month following the Month of delivery (the "Due Date");
provided, however, (i) if the Due Datc is on a Saturday or Texas bank holiday other than
Monday, the Due Date shall be the preceding Business Day, and (ii) if the Due Date is on a
Sunday or a Monday Texas bank holiday, the Due Date shall be the succeeding Business Day.
(c) Late Payments. Any Settlement Amount not paid in full by the Due Date will be
deemed dclinquent and will accrue interest at the Interest Rate, such interest to be calculated
from and including the Due Date but excluding the date the delinquent amount is paid in full.
(d) Necessary Documents. Upon request, each Party agrees to furnish all
substantiating documents incident to the delivery of Crude Oil hereunder, including a Delivery
Ticket for each volwne delivered.
4.7. Audit Rights. Upon not less than thirty (30) days prior written notice to the other
Parties, any Party or its agent shall have the righ~ at reasonable times during business hours and
at its own expense, to audit the books and records of the other Party or Parties to the extent
necessary to verify: (i) the accuracy of any statement, charge or computation made under or
147SS61v.2S 0022384100132
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Plf Resp in Opp to Motion for Summary Judgment 123
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pursuant to this Agreement, (ii) the ownership of the Interests to which the Producer Crude Oil
purchased and sold hereunder is produced from or attributable to, andlor (iii) whether any
Interests sold, conveyed or transferred by Producer are Qualifying Interests; provided, however,
no Party shall have the right to perform an audit pursuant to this Section 4.7 more than once
during any twelve (12) Month period.
4.8. Statement Errors. In the event an error is discovered in the amount shown to be
due on any statement rendered by Buyer hereunder, such error shall be adjusted without interest
or penalty as soon as reasonably possible, but no later than thirty (30) Days after the discovery of
the error. If a dispute arises as to the amount payable hereunder, the disputed statement shall
nevertheless be paid in full, but payment shall not waive the payor's right to dispute such
statement in accordance with this Section 4.8. Any invoice dispute or statement adjustment shall
be in writing and shall state the basis for the dispute or adjustment. Upqn the resolution of the
dispute, any required payment shall be made within fifteen (15) Days after such resolution, along
with interest accrued at the Interest Rate from and including the Due Date but excluding the date
paid. All undisputed statements rendered hereunder shall be deemed to be final and not subject to
audit two (2) years after the date on which the statement is rendered. The provisions of Section
4.7 and thls Section 4.8 shall survive the tennination of this Agreement for the later of (i)
twenty-four (24) Months following the date on which such tennination occurred, or (ii) until a
dispute initiated with such twenty-four (24) Month period is finalJy resolved.
4.9. Creditworthiness. Should any Party have reasonable grounds for doubting the
ability of any other Party to perfonn its obligations hereunder (as further defined below, the
'·Basis for Request;"g Assurance''), the Party having the Basis for Requesling Assurance
("Party Requesting Assurance") shall have the right to request and receive from such other
Party ("Party Providillg Assurollce") adequate assurance of performance C'Perjortnance
Assurance~') as provided herein. Such Performance Assurance shall be due no later than ten (10)
Days after the written request of the Party Requesting Assurance and shall take one of the
following fonns, at the sole option and discretion of the Party Requesting Assurance: (i) a
security interest in the Crude Oil to which thc Party Providing Assurance has title, but which is
in the possession of the Party Requesting Assurance; or (ii) a guarantee of all of the obligations
hereunder of the Party Providing Assurance from a creditworthy party, as determined by the
Party Requesting Assurance in its commercially reasonable discretion. Without limitation, a
Basis for Requesting Assurance shall include any reasonable grounds for insecurity with respect
to the perfonnance of the Party Providing Assurance andlor any groWlds that may constitute a
basis for requesting adequate assurance of pcrfonnance under Section 2-609 of the Unifonn
Commercial Code.
4.10. Lien and Security Interest.
(a) Buver's Liens. Producer and Seller hereby acknowledge that Buycr has a
possessory lien under applicable law in Producer Crude Oil in the possession of Buyer.
Furthermore and in addition, Producer and Seller further grant Buyer a lien and security interest
in all Producer Crude Oil in the possession of Buyer and proceeds thereof to secure any and all
amounts owed by Seller under this Agreement. Producer and Seller acknowledge and agree that
Buyer may perfect such security interest in Producer Crude Oil by possession or any other
method by which such security interest may be perfected under applicable law. The security
147SS61v.25 0022384100132
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Plf Resp in Opp to Motion for Summary Judgment 124
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interest hereby granted by Producer and SeBer is in addition to, and not in lieu of, such liens as
Buyer may have under applicable law.
(b) Subordination of Liens. The Parties acknowledge that Producer, Seller and their
respective Affiliates may hold or be entitled to certain liens (whether choate or inchoate) and/or
security interests with respect to the Producer Crude Oil delivered hereunder, including, without
lintitation, a statutory lien as an oil and gas interest owner pursuant to Section 9.343 of the Texas
Business and Commerce Code and an "operator's lien" or unonwoperator's lien" pursuant to an
operating agreement between some or all of such Persons (collectively, "Liens"). Producer and
Seller, for themselves and for their respective Affiliates, hereby subordinate any and all of Liens
in the Producer Crude Oil delivered hereunder to Buyer's rights under this Agreement.
4.11. Setoff and Recoupment. Upon the occurrence of either or both of (i) an Event of
Default on the part of any Party, or (ii) circumstances constituting a Basis for Requesting
Assurance, the Non-Defaulting Party (as defined herein) and/or the Party Requesting Assurance,
as the case may be (the "'Insecure Party") shall have the right, in its sole discretion, to undertake
anyone or all of the following actions: (a) the Insecure Party may exercise recoupment by
retaining, freezing, holding, andior liquidating Cnlde Oil in the possession of the Insecure Party
(or any proceeds held by the Insecure Party from the sale thereot), the Gross Proceeds, or any
other amount that would be otherwise deliverable or payable to the other Party or Parties under
this Agreement to satisfy and apply to any amounts owed by the Defaulting Party (as defined
herein) andlor the Party Providing Assurance, as the case may be (referred to as the "other Party"
in this Section 4.11, whether one or more), under this Agreement or applicable law as of the time
of such recoupment or at any later time; andlor (b) the Insecure Party may exercise setoff by
retaining, freezing, holding, and liquidating Crude Oil, the Gross Proceeds, or any other amount
that would be otherwise deliverable or payable to the other Party under this Agreement as a
setoff or offset against any runounts that are due or may become due from the other Party to the
Insecure Party under this Agreement or applicable law as of the t~e of the setoff or offset or at
any later time. Should the Insecure Party elect to exercise its rights under this Section 4.11, the
Insecure Party shall notify the other Party in writing. within ten (10) days of such recoupment,
setoff, and/or offset; provided, however, the Insecure Party shall not be required to provide the
other Party with any advance notice whatsoever before exercising the rights of recoupment,
setoff, andlor offset as set forth herein. Each Party does hereby agree to (i) a lifting of the
automatic stay in bankruptcy under 11 U.S.C. § 362 and other applicable law to the extent
necessary to allow for the recoupment, setoff, andlor offset provided for under this Agreement
and (ii) not oppose a motion by an Insecure Party seeking authority to do same. Each Party
further agrees that, without limiting the scope of any recoupment that may be exercised under the
terms of this Section 4.11, that any recoupment exercised as provided for herein shall be
considered to be within a single transaction. The rights granted to the Insecure Party pursuant to
this Section 4.11 are in addition to any rights of recoupment, setoff, and/or offset against the
other Party to which the Insecure Party may be otherwise entitled.
4.12. Option to Convert to Buy/Sell. Seller shall have an option to request an
amendment to this Agreement. to be effective no sooner than three (3) ~lonths after providing
written notice thereof, to provide for the Monthly purchase by Seller of volumes of either (x)
Cushing Common Stream Domestic Sweet Crude Oil, with delivery to be made at Cushing
Tcnninal, or (y) Eagle Ford Pipeline Common Stream Crude Oil of a like grade, with delivery to
147SS61v.2S 0022384/00132
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be made at Houston Tennjnai, in either case, equal to the volumes of Producer Crude Oil sold by
Seller to Buyer hereunder each Month, for a price equal to the Base Price (wroch price, in the
case of Eagle Ford Pipeline Common Stream Crude Oil delivered at Houston Tenninal, shall be
adjusted in accordance with the Gravity Adjustment Scale for the gravity of such Eagle Ford
Pipeline Common Stream Crude Oil delivered at Houston Tenninal), subject to the tenus and
conditions in, and the fonn of, an amendment to this Agreement to be mutually agreed upon by
the Parties, which amendment shall include, without limitation, (i) that a minimum of twenty-
five percent (25%) of the Maximum Daily Volume, Maximum Monthly Volume, Maximum
Annual Volume, Annual Transportation Revenue Commitment, Cumulative Transportation
Revenue Commitment and the remaining Total Cumulative Transportation Revenue
Commitment would be subject to the "buy-sell" structure set forth in such amendment, (ii) that
the volumes of Cushing Common Stream Domestic Sweet Crude Oil to be purchased by Seller at
Cushing Tenninal would be deemed delivered at forty (40) degrees gravity, (iii) that Seller
would be responsible for obtaining capacity at or downstream of the Cushing Terminal and/or
the Houston Terminal, as applicable, for the further storage andlor shipment of Crude Oil
purchased by Seller, (iv) the right for Seller, upon ninety (90) days advance written notice to
Buyer, to either terminate such amendment (but not this Agreement) or, subject to the limitation
in (i) above, change the volumes subject to the "buy-sell" structure set forth in such amendment,
at any time after three (3) Months after the effective date of such amendment, and (v) such other
amendments, ancillary agreements and/or additional provisions as are reasonably requested by
any Party, including, without limitation, additional credit and Bankruptcy protection provisions
and/or support to reflect the increased risk to Buyer. To exercise such option, Seller shall deJiver
to Buyer written notice thereof, and the Parties shaH negotiate in good faith to agree upon the
telTIls and conditions of such amendment; provided, however, if the Parties are unable to agree
upon the terms and conditions of such amendment within ninety (90) days of Buyer's receipt of
such notice from Seller, th.is Agreement shall continue in full force and effect Wl~amended for
the remainder of the Term tmless terminated earlier as provided herein.
4.13. Reservation of Rights. Each Party reserves to itself all rights, setoffs,
counterclaims, and other defenses which it is or may be entitled to arising under this Agreement.
4.14. Measurement and Tests. All measurements hereunder shall be made from static
tank gauges on 100 percent tank table basis or by positive displacement meters. All
measurements and tests shall be made in accordance with the latest ASTM or ASME-API
(Petroleum PO tvteter Code) published l11ethods then in effect, whichever apply. Volume and
gravity shall be adjusted to 60 degrees Fahrenheit by the use of Table 6A and SA of the
Petroleum Measurement Tables ASTM Designation D 1260 in their latest revision. Producer
Crude Oil delivered hereunder shall be marketable and acceptable in the applicable common or
segregated stream of the carriers involved but not to exceed 1% S&W. Full deduction for all free
water and S& W content shall be made according to the APIIASTM Standard Method then in
effect. Any Party shaH have the right to have a representative witness all gauges, tests and
measurements. In the absence of such Party's representative, such gauges, tests and
measurements shall be deemed to be correct.
1475S61v.25 0022384100132
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ARTlCLEV
REVENUE COMMITMENTS AND DEFICfENCY PAYMENTS
5. 1. Revenue Commitment. Pursuant to the terms he reof, Sellcr agrees to se ll to
Buyer, during the Primary Term, at least sufficient volumes of Producer Crude Oi l he reunder so
ive Transportation Revenue Receipt hereunder in an amount not less
as mo re pattieularly described in the table below (the " Tolal Cumulative
lie COlllmitmellf' ):
Contract Annua l Adjusted Annual
Year Volum e Weighted TransI!ortation Tra usI!ortation
Egu ivalent Average Revenue Revenue
(in Barrels) TransI!ortation Commitment (S) Commitment ($)
Rate ($ Jler
• For the avoidance of doubt , the Parties ac knowledge that (i) the amounts shovm in the colu mn
entit led "Adjusted Wei ghted Average Transportntio n Rate ($ pcr Barrel)" in the tab le above arc
based upon the Weighted Average Transportation Rate, as adjus ted each Contract Year by a
multiplier of 1.04, (ii) such Bmounts in snch column are Llsed herein only for purposes of
de termi ning the Total Cumulative Transportation Revenue Commitment, and (iii) the actual
Weighted Average T ransportation Rate hereunder shall be based on the actual Fee Adjustment
Multiplier in effect from timc to ti me.
5.2. Deficiencv Payme nt. If, as of the end of any Contract Year duri ng the Primary
Term , th e amount set forth for such Contract Year under the co lumn entitled "Clunulative
Transpo rtat ion Revenue Corrun itment ($)" in the table in Section 5. 1 above (the "Cllmlliative
Trallsp or tation Revel/lie CO llllltilme/lf') cxceeds thc sum. without duplication, of (v) the total
cumulative Purchase Price Co nd~n sate Componenl for every Month as of the end of the sixth
(6 th ) Month afte r the end of such ContTact Year. plus (w) the total cumulative Purchase Price
th
Crude Petroleum Componen t fo r every Month as of the end of the sixth (6 ) Month after the end
of such Contract Year, plus (x) the to tal cumulat ive Third Party C rude Oil All owance for every
Month d uring such Contract Year, plus (y) the total cumulati ve Producc'f Force Maje ure Credit
All owance for every Month as of the end of such Contract Year, plus (z) the total cumulative
14 7SS6 ! \ .25 0022384,00 I J2
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amounts of any Deficiency Payment (hereinafter defined) which Seller has paid to Buyer
pursuant to this Agreement as of the end of the immediately preceding Contract Year (such sum
being the "Cun,uiative Transportation Revenue Receipf'), then Sel1er shall ·pay to Buyer,
pursuant to a statement delivered pursuant to Section 4.6, an amount equal to the amount by
which the Cumulative Transportation Revenue Commitment as of the end of such Contract Year
exceeds the Cumulative Transportation Revenue Receipt applicable to such Contract Year (such
difference being the uDejiciellcy Paymenf'); provided, however, (i) at such time if ever, that the
l
cumUlati!Wlll'ency Payments incurred and paid by Seller to Buyer hereunder equals
or excee (the "Maximum Cumulative Deficiency Payntent Obligatioll"), then
Seller soo ave no er obligation hereunder to pay any Deficiency Payment or portion
thereof in excess of the Maximum Cumulative Deficiency Payment Obligation (provided that
SeHer shall not be relieved of the obligation to pay all unpaid Deficiency Payments up to the
Maximum Cumulative Deficiency Payment Obligation), and (ii) notwithstanding anything in this
Section 5.2 or elsewhere in this Agreement to the contrary, if the Tenn is not extended beyond
the end of the Primary Tenn, then the total cumulative Purchase Price Condensate Component
and the total cumulative Purchase Price Crude Petroleum Component used to calculate the
Cumulative Transportation Revenue Receipt applicable to the tenth (loth) Contract Year shall be
calculated as of the end of such Contract Year and not six (6) Months after the end of such
Contract Year. An example calculation of the Deficiency Payment~ using hypothetical values for
the various components of the Cumulative Transportation Revenue Receipt, is attached as
Exhibit B.
ARTICLEVl
WARRANTY OF TITLE
6.1. Tille Warranty. Seller represents and warrants to Buyer that (i) Seller has title to
and/or the right to sell all Producer Crude Oil delivered hereunder, free and clear of all royalties,
liens, encumbrances and all applicable foreign, federal. state and local Taxes, and (ii) Seller has
the right, power, title and authority to enter into this Agreement. Producer represents and
warrants to Buyer that Producer has the right, power, title and authority to enter into this
Agreement.
6.2. Proceeds of Production. Seller agrees to make payment of aU royalties,
overriding royalties, production payments, and all other payments for interests attributable to
Producer Crude Oil due to any Person under any leases or other dOCUfllents in accordance with
the tenns thereof.
6.3. Indemnification. Seller agrees to indemnify, defend and hold Buyer harmless
from any and all Claims and Losses incurred in connection with or in any manner whatsoever
1
relating to (i) any breach of the representations and warranties made by Seller pursuant to
Section 6.1 above, and (ii) payment of royalties, overriding royalties, production payments, and
all other payments for interests attributable to Producer Crude Oil. Producer agrees to
indemnify, defend and hold Buyer harmless from any and all Claims and Losses incurred in
cOlUlection with, or in any manner whatsoever relating to any breach of the representations and
warranties made by Producer pursuant to Section 6.1 above. These indemnity and defense
obligations shall survive the termination of this Agreement for the applicable statutory
limitations period.
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6.4. Title and Risk of Loss. Title to and risk of loss of the Producer Crude Oil
purchased by Buyer from Seller hereunder shall pass from Seller to Buyer as such Producer
Crude Oil passes the last pennanent delivery flange and/or meter connecting Seller's andlor
Producer's facilities into Buyer's facilities at the Points of Receipt.
ARTICI.JE VII
WAIVER OF CERTAIN DAMAGES
NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS
AGREEMENT, IN NO EVENT SHALL ANY PARTY BE LIABLE TO ANY OTHER
PARTY, ANY SUCCESSORS IN INTEREST OR ANY BENEFICIARY OR ASSIGNEE
OF THIS AGREEMENT FOR ANY CONSEQUENTIAL, INCIDENTAL, INDIRECT,
SPECIAL, OR PUNITIVE DAMAGES ARISING OUT OF THIS AGREEMENT OR
ANY BREACH HEREOF. THIS ARTICLE VII SHALL APPLY NOTWITHSTANDING
THE SOLE, JOINT OR CONCURRENT NEGLIGENCE, FAULT OR
RESPONSIBILITY OF THE PARTY WHOSE LIABILITY IS WAIVED BY TmS
PROVISION, OR ANY OTHER EVENT OR CONDITION, WHETHER ANTICIPATED
OR UNANTICIPATED, AND REGARDLESS OF WHETHER PRE-EXISTING PRIOR
TO THE DATE OF TIllS AGREEMENT. NOTWITHSTANDING THE FOREGOING,
LOSSES, DAMAGES AND COSTS INCURRED BY BUYER IN CONNECTION WITH
OR CAUSED BY OFF-SPEC CRUDE OIL AND/OR HANDLING THEREOF, SHALL
BE CONSIDERED DIRECT DAMAGES AND NOT CONSEQUENTIAL, INCIDENTAL,
INDIRECT, SPECIAL, OR PUNITIVE DAMAGES.
ARTICLE VIII
FORCE MAJEURE
8. 1. Suspension of Obligations. If either Seller or Buyer is rendered unable, wholly or
in part, by reason of Force Majeure, from carrying out its obligations under this Agreement
(other than the obligation to make payment of amounts due hereunder, including any Deficiency
Payment), then upon said Party's giving written notice and reasonably full particulars of such
Force Majeure to the other Parties, which shall be done as soon as practicable after the
occurrence of the cause relied on, the obligations of the Party giving such notice (other than the
obligation to make payment of amounts due hereunder, including any Deficiency Payment), so
far as they are affected by such Force Majeure, shall be suspended during the continuance of any
inability so caused, but for no longer period, and such cause shall be remedied with all
reasonable dispatch.
8.2. Definition of Force Majeure. The term "Force Majellre shall mean acts of God,
U
acts of federal, state or local government or any agencies thereof, compliance with rules,
regulations or orders of any Governmental Authority or any office, department, agency or
instrumentality thereof, strikes, lockouts or other industrial disturbances, acts of the public
enemy, acts of terrorism, wars, blockades, insurrections, riOls, epidemics, landslides, lightning,
earthquakes, fires, extreme temperatures, storms, hurricanes, floods, or other adverse weather
conditions, washouts, arrests and restraint of rulers and people~ civil disturbances, explosions,
breakage or accident to machinery or lines of pipes, freezing of wells or lines of pipes,
requisitions, directives, diversions, embargoes, priorities or expropriations of government or
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Govenunental Authorities, legal or de facto, whether purporting to act under some constitution,
decree, law or otherwise, failure of pipelines or other carriers to transport or furnish facilities for
transportation, rules and regulations with regard to transportation by common carriers, failures,
disruptions, or breakdowns of machinery or of facilities for production, manufacture,
transportation, distribution, processing or consumption (including, but not by way of limitation,
the Pipeline System), allocation or curtailment by third parties of downstream capacity, the
necessity for making repairs, alterations, enlargements or connections to .. or performing
maintenance on, machinery or facilities of production, manufacture, transportation, distribution,
processing or consumption (including, but not by way of limitation, the Pipeline System),
inability to secure or delays in securing rights-of-way and pennits, transportation embargoes or
failures or delays in transportation or poor road conditions, partial or entire failure of crude oil
supply or downstream pipeline market constraints, and, without limitation by enumeration, any
other cause or causes, whether of the kind herein enumerated or otherwise, not reasonably within
the control of the Party claiming suspension, which, by the exercise of due diligence, such Party
shall not have been able to avoid. The Party claiming Force Majeure shall not be entitled to the
benefit of the provisions of Section 8.1 to the extent that the claimed condition (i) is within the
reasonable control of such Party, (ii) is caused by the gross negligence, breach of default of such
Pany, or (iii) involves the payment of any amounts then owed hereunder by such Party. TIle
Party claiming Force Majeure shall also take all commercially reasonable efforts to remedy, or
mitigate the effects of, the claimed Force Majeure condition.
8.3. Strikes. The settlement of strikes or lockouts shall be entirely within the
discretion of the Party having the difficulty. The requirement that any Force Majeure shall be
remedied with all reasonable dispatch shall not require the settlement of strikes or lockouts by
acceding to the demands of the opposing party, when such is deemed inadvisable in the
discretion of the Party having the difficulty.
8.4. Interruption of Operations. Buyer and/or its Affiliates may, without liability to
Seller. interrupt the operations of their facilities for the purpose of perfonning inspections,
pigging, maintenance, testing, alterations, modifications, expansions, connections, repairs or
replacements, but such interruption shall be for only such time as may be reasonable. Buyer
shall give Seller advance written notice, except in case of emergency, of its intention to interrupt
operations and of the estimated time thereof.
ARTICLE IX
GOVERNING LAW; VENUE; DISPUTE RESOLUTION
9.1. Governing Law. This agreement is entered into in the State of Texas and shaH be
governed, interpreted and construed in accordance with the laws of the State of Texas without
regard to the conflicts of laws provisions thereof.
9.2. Venue. EXCLUSIVE VENUE FOR ANY SUIT, ACTION OR
PROCEEDING BROUGHT BY ANY PARTY IN CONNECTION WITH TInS
AGREEMENT OR ARlSING OUT OF THE TERl\IIS OR CONDITIONS HEREOF
SHALL BE IN HARRIS COUNTY, TEXAS. THE PARTIES HEREBY IRREVOCABLY
Al"-'D UNCONDITIONALLY WANE, TO THE FULLEST EXTENT THEY MAY
LEG ALL Y AND EFFECTfVELY DO SO, ANY OBJECTION THEY MAY NOW OR
1475561 v.25 0022384/00132
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HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUIT, ACT10N, OR
PROCEEDING ARISING OUT OF OR RELATING TO TmS AGREEMENT OR TIlE
TRANSACTIONS CONTEMPLATED HEREBY IN THE STATE AND FEDERAL
COURTS SITUATED IN THE CITY OF HOUSTON, HARRIS COUNTY, TEXAS.
9.3. Negotiation. Prior to submitting any dispute for resolution by a court, a Party
shall provide written notice to the other of the occurrence of such dispute. If the Parties have
failed to resolve the dispute within fifteen (15) Business Days after such notice was given, the
Parties shall seek to resolve the dispute by negotiation between senior management personnel of
each Party. Such persOIUlel shall endeavor to meet and attempt to amicably resolve tbe dispute.
If the Parties are unable to resolve the dispute for any reason within thjny (30) Business Days
after the original notice of dispute was given, then any Party shall be entitled to pursue any
remedies available at law or in equity; provided, however, this Section 9.3 shall not limit a
Party's right to initiate litigation prior to the expiration of the time periods set forth in this
Section 9.3 if application of such limitations would prevent a Party from filing a lawsuit or claim
witrun the applicable period for filing lawsuits (e.g. statutes of limitation, prescription, etc.).
ARTICLE X
TAXES
10.1. Taxes. Seller shall pay any and all Taxes levied on Producer Crude Oil or the
transportation thereof, except for property Taxes assessed upon Producer Crude Oil purchased by
Buyer in the Pipeline System. Buyer or its Affiliates shall pay any and all Taxes levied on the
Pipeline System.
10.2. Reimbursement. In the event Buyer or any of its Affiliates pays or remits any Tax
for or on behalf of Seller or Producer, including, without limitation, severance ta.xes on
production, Seller shall reimburse Buyer for the same as part of the net amount due hereunder as
shown on the Monthly statement described in Section 4.6. Seller hereby agrees to indemnify,
defend and hold hannless Buyer and its Affiliates from and against any and all Claims and
Losses arising out of or related to such. Taxes. This indemnity and defense obligation shall
survive the termination of this Agreement for the applicable statutory limitations period.
ARTICLE XI
ASSIGNMENT
11.1. Assignment. Notwithstanding anything in this Agreement to the contrary, this
Agreemen~ and the rights and obligations created hereby, may be assigned, in whole but not in
part, by any Party; provided, however, (i) this Agreement shall not be assigned by any Party
without the prior written consent of the other Parties, which consent shall not be unreasonably
withheld, conditioned or delayed, and (ii) any such assignment shall expressly require that the
assignee assume and agree to discharge the duties and obligations of its assignor under this
Agreement. Notwithstanding the toregoing, any Party may assign any of its rights, or delegate
any of its obligations, under trus Agreement to one or more of its Affiliates without the consent
of the other Parties, provided that no such assignment shall relieve the assignor Party from any of
its obligations hereunder. No such assignment shall effect or operate 10 discharge accrued but
unpaid obligations of the assignor under this Agreement. Notwithstanding anything to the
147SS61v.2S C0223M/00132
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Plf Resp in Opp to Motion for Summary Judgment 131
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contrary herein contained, if Seller is the assigning Party consent to assignment may be refused
by Buyer if Buyer reasonably detennines that (x) Seller's proposed assignee's financial condition
is not sufficient to support the payment to Buyer of the Deficiency Payments that would come
due hereunder if such assignee failed to deliver any Producer Crude Oil hereunder after the
effective date of such assignment, or (y) the proposed assignee's financial condition renders the
proposed assignee less creditworthy than Seller. Notwithstanding anything to the contrary herein
contained, if Buyer is the assigning Party consent to assignment may be refused by Seller if
Seller reasonably determines that Buyer's proposed assignee's financial condition is not
sufficient to support such assignee's performance of this Agreement.
11.2. Notice of Assignment. No such assignment, nor any succession to the interest of
any Party, shall be effective and binding until the other Parties are furnished v.ith prop<;r and
satisfactory evidence of such assignment or succession.
11.3. Transfer of Seller's and Producer's Interests. Notwithstanding anything to the
contrary in this Article XI, Seller and Producer may sell, conveyor otherwise transfer any
Qualifying Interests in accordance with the following:
(a) Ouali(ying Interests. For the purposes of this Agreement, (i) "Qllalifyillg
rtuerests" shall mean any of SeBer and/or Producer·s Interests which were acquired by
Seller and/or Producer pursuant to a bona-fide, good-faith, anns-lengtl1 transaction
without the intent of reselling such Interests at the time of such acquisition, and (ii) a
"QIlalifying Interests Transferee" shall mean a third party who acquires Qualifying
interests from Seller and/or Producer.
(b) Transfers of Qualifying Interests. If (i) Seller and/or Producer sells,
conveys, or othenv1se transfers any Qualifying Interests to a Qualifying Interests
Transferee, (ii) such Qualifying Interests Transferee desires to enter into a Crude Oil
purchase agreement with Buyer and any necessary ancillary agreements (collectively, the
"QlIalifying Interests Agreeme"f'), (iii) such Qualifying Interests Transferee is
experienced and reputable, meets Buyer's reasonable credit requirements and is
otherwise reasonably acceptable to Buyer, and (iv) such Qualifying Interests Transferee
is not (and none of its Affiliates is) In material default under any other agreement with
Buyer or any of its Affiliates, then (x) Buyer agrees to negotiate with such Qualifying
lnterests Transferee in good faith in an effort to agree upon and execute a Qualifying
Interests AgreeJuent with such Qualifying Interests Transferee on commercial tenns
acceptable to Buyer, and (y) Buyer, Seller and Producer agree to negotiate in good faith
in an effort to agree upon and execute an amendment to this Agreement and any
necessary ancillary agreements, which would provide for, without limitation, a reduction
to the Maximum Daily Volume, Maximum Monthly Volume and Maximum Annual
Volume (with a corresponding reduction to the Annual Transportation Revenue
Commitment. Cumulative Transponation Revenue Commitment and Total Cumulative
Transportation Revenue Commitment) in mutually agreeable amounts, which amounts
shall take into account and be based upon any revenue anellor volume commitments made
by such Qualifying Interests Transferee pursuant to the Qualifying Interests Agreement,
and address all other issues potentially impacted by such transfer of Qualifying Interests
147SS61v.2S 0022384/00132
22
Plf Resp in Opp to Motion for Summary Judgment 132
SR204
to the satisfaction of each of the Parties; provided, however, Buyer shall not be obligated
to amend this Agreement if the Qualifying Interests Agreement is not executed.
(c) Qualifying Interests Agreement Limitations. Notwithstanding Section
11.3(b) above, it is acknowledged and agreed that (i) neither Buyer nor Enterprise
Pipeline nor any of their Affiliates shall have any obligation to design, construct or install
any new facilities or otherwise modify the Pipeline System or add any Points of Receipt
to accommodate transfers of Qualifying Interests, (ii) neither Buyer nor its Affiliates are
obligated to provide the same terms to a Qualifying Interests Transferee in a Qualifying
Interests Agreement as are contained herein and/or in any ancillary agreement, (iii)
Buyer's combined obligations under the Qualifying Interests Agreement and this
Agreement, as amended as provided in Section 11.3 (b) above, shall be no greater than
Buyer's obligations under this Agreement before such amendment as if such transfer of
Qualifying Interests had never occurred, and (iv) upon the execution of a Qualifying
Interests Agreement, the Crude Oil produced from or attributable to such transferred
Qualifying Interests shall no longer be considered Producer Crude Oil.
Cd) Transfer to CNOOC. Notwithstanding Section 11.3(c)(ii) above, if (i)
CNOOC is or becomes a Qualifying Interests Transferee and (ii) CNOOC is not (and
none of its Affiliates is) in material default under any other agreement with Buyer or any
of its Affiliates, then, subject to the other provisions of Section 11.3(c) above, Buyer
agrees to enter into a Qualifying Interests Agreement with CNOOC on the same tenns as
are in this Agreement; provided, however, in connection with the execution of such
Qualifying Interests Agreement with CNOGC, if CNOOC does not meet Buyer's
reasonable credit requirements, then Buyer shall have the right to require that CNOOC
provide to Buyer a guaranty of CNOOC's obligations under such Qualifying Interests
Agreement from an entity, and in a fonn, reasonably acceptable to Buyer.
ARTICLE XII
NOTICE AND STATEMENTS
12.1. Notice. Any notice, statement, payment~ claim or other conununication required
or pennitted hereunder shall be in writi.ng and shall be sent by: (i) facsimile transmission; (ii)
delivered by hand; (iii) sent by United States mail with all postage fully prepaid; or (iv) by
courier with charges paid in accordance with the customary arrangements established by such
courier, in each of the foregoing cases addressed to the Party at the following addresses:
Buyer: NOTICES AND CORRESPONDENCE:
Enterprise Crude Oil LLC
Attn: Vice President - Crude Oil Marketing
1100 Louisiana, Suite 1500
Houston, Texas 77002
Fax: 713-381-7870
ACCOUNTING MATTERS:
t475561v.25 0022384/00132
23
Plf Resp in Opp to Motion for Summary Judgment 133
SR205
Enterprise Cnlde Oi l LLC
Attn: Vice Presiden t - Crude O il Marketing
I 100 Louisiana, Suite 1500
Houston, Texas 77002
f ax: 7 13-3 81 -7870
PA YMENT BY WIRE :
Enterprise Cnlde OiI LLC
Well s Fargo Bank. N.A ., San Francisco. CA
ABA: 121000248
Account No.: 10 1820433 1
Sel ler and Producer: NOTICES AND CORRES PONDENCE :
ACCOUNTING MATTERS:
PA YMENT BY WIRE:
Such notices, statements, payments. claims or other communications shall be deemed
received as fo ll ows: (i) if deli ve red personally, upon deli very: (ii) if sent by Un.ited States mail.
whether by exp ress mail , regis tered mail , cen ifl ed mai l or regular mai l, the no tice shall be
deemed to have bccn recei ved on the day receipt is refused or is confirmed ora lly or in writ ing by
24
Plf Resp in Opp to Motion for Summary Judgment 134
SR206
the receiving Party, (iii) if sent by a courier service, upon delivery; or (iv) if sent by facsimile, on
the Business Day following the day on which it was transmitted and confirmed by transmission
report or such earlier time as confinned orally or in writing by the receiving Party.
12.2. Routine Communications. Notwithstanding the foregoing, routine
communications between the Parties, including, but not limited to conununications concerning
scheduling and forecasts of the volwnes of Crude Oil to be sold and purchased hereunder, may
be conducted via telephone, facsimile andlor electronic mail.
12.3. Change of Address. Notices of change of address of any Party shall be given in
writing to the other Parties in the lnanner aforesaid and shall be observed in the giving of all
future notices, statements, payments, claims or other communications required or pennitted to be
given hereunder.
ARTICLE XIII
MISCELLANEOUS
13.1. Amendments. All modifi.cations, amendments or changes to this Agreement,
whether made simultaneously with or after the execution of this Agreement, shall be in writing,
executed by Producer. Buyer and Seller.
13.2. Confidentiality.
(a) Confidentiality. Each Party agrees that it shall maintain all tenns and conditions
of this Agreement in strictest confidence, and that it shall not cause or permit disclosure of this
Agreement or any provisions contained herein without the express \-....ritten consent of the other
Parties.
(b) Permitted Disclosures. Notwithstanding Section 13.2(a) of this Agreement t
disclosures of any tenns and provisions of this Agreement otherwise prohibited may be made by
any Party (j) to the extent necessary for such Party to enforce its rights bereWlder against any
other Party; (ii) to the extent to which a Party is required to disclose all or part of this Agreement
by a statute or by the order or rule of a court, agency, or other governmental body exercising
jurisdiction over the subject matter hereol: by order, by regulations, or by other compulsory
process (including, but not limited to, deposition, subpoen~ interrogatory, or request for
production of documents); (iii) to the extent required by the applicable regulations of a securities
or commodities exchange; (iv) to a third Person in connection with a proposed sale or other
transfer of a Party's interest in this Agreement, provided such third Person agrees in writing to be
bOWld by the temlS of tllis Section 13.2; (v) to its own directors, officers, employees, agents and
representatives; (vi) to an Affiliate; or (vii) to a co-working interest owner or royalty owner of
Producer Crude Oil delivered hereunder, provided such co-working interest owner or royalty
owner agrees in writing to be bound by the terms of this Section 13.2.
(c) Notification. If any Party is or becomes aware of a fact, obligation, or
circumstance that has resulted or may result in a disclosure of any of the lenns and conditions of
this Agreement authorized by Section 13.2(b)(ii), (iii) or (iv) above, it shall so notify in writing
the other Parties promptly and shall provide documentation or an explanation of such disclosure
as soon as it is available.
t47SS61v.2S 0022384100132
2S
Plf Resp in Opp to Motion for Summary Judgment 135
SR207
(d) Party Responsibility. Each Party shall be deemed solely responsible and liable for
the actions of its directors, officers, employees, agents, representatives and Affiliates for
maintaining the confidentiality commitments of this Section 13.2.
(e) Public Announcementc;. The Parties agree that prior to making any public
announcement or statement with respect to this Agreement or the transaction represented herein,
the Party desiring to make such public announcement or statenlcnl shall provide the other Parties
with a copy of the proposed announcement or statement prior to the intended release date of such
announcement. The other Parties shall thereafter consult with the Party desiring to make the
release, and the Parties shall exercise their reasonable best efforts to (i) agree upon the text of a
joint public annOWlcement or statement to be made by such Parties or (ii) in the case of a
statement to be made solely by one Party, obtain approval of the other Parties to the text of a
public announcement or statement. Nothing contained in this Section 13.2 shall be construed to
require any Party to obtain approval of the other Parties to disclose infonnation with respect to
this Agreement or the transaction represented herein to any Governmental Authority to the extent
required by applicable law or necessary to comply with disclosure requirements of the Securities
and Exchange Commission, New York Stock Exchange, or any other regulated stock exchange.
(0 Survival. The provisions of this Section 13.2 shall survive any expiration or
tennination of thls Agreement for a period of one (1) year.
13.3. Default.
(a) Events of Default. Each of the following shall constitute an event of default
("Event oj Dejaulf'):
(i) for reasons other than Force Majeure or Seller or Producer's material
default or breach (including, without limitation, Seller'S failure to timely meet its
obligations pursuant to Section 3.1 and Section 3.2 above), (x) the Commencement Date
has not occurred on or before April 1, 2014, which date may be extended by one Day for
each Day during the continuance of an event of Force Majeure up to and including
January 1, 2015, and (y) Buyer is not purchasing and accepting, on a Daily basis, at the
Points of Receipt, Producer Crude Oil tendered by SeUer to Buyer herewtder equal to at
least the lesser of (A) eighty percent (80%) of the Maximum Daily Volume in effect for
the first Contract Year hereunder, (8) the Daily volume of Producer Crude Oil that Seller
can reasonably demonstrate that it has the ability to deliver to the Points of Receipt~ or
(C) the total volume of Producer Crude Oil tendered by Seller to Buyer hereunder;
provided. however. after the Commencement Date has occurred, this Section 13.3{a)(i)
shall be of no further force and effect;
(ii) the Bankruptcy of any Party;
(iii) the failure by any Party to make, when due, any undisputed payment under
this Agreement required to be made by it if such failure is not remedied on or before the
fifth (5th) Business Day after written notice of such failure is given to the Party; or
(iv) the failure of any Party to provide, when due, Performance Assurance
pursuant to Section 4.9.
1475561v.2S 0022384/00132
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Plf Resp in Opp to Motion for Summary Judgment 136
SR208
(b) Remedies.
(i) Upon the occurrence of an Event of Default of the type described in
subparagraph (i) or (ii) of Section 13.3(a) above with respect to a Party or Parties under
this Agreement (the "De/au/tilll Party") and prior to the cure thereof, Buyer, in the event
that either Seller or Producer is the Defaulting Party, or Seller or Producer, in the event
that Buyer is the Defaulting Party (the '~Non-Defaulting Party''), shall be entitled in its
sole discretion to suspend perfonnance or terminate this Agreement and pursue such
other remedy or remedies as may be available to it under this Agreement (including,
without limitation, exercising the rights of recoupment, setoff, offset, andlor liquidation),
at law or in equity, subject, however, to the limitations set forth in Article VIl.
(ii) Upon the occurrence of an Event of Default of the type described in
subparagraphs (iii) or (iv) of Section 13.3(a) above with respect to the Defaulting Party
and prior to the cure thereof, the Non-Defaulting Party shall be entitled in its sole
discretion to suspend performance under (but not tenninate) this Agreement and pursue
such other remedy or remedies as may be available to it under this Agreement (including,
without limitation, exercising the rights of recoupment, setoff, or offset), at law or in
equity, subject~ however, to the limitations set forth in Article VII.
(iii) No election of remedies shall be required or implied as the result of a
Party's decision to avail itself of a remedy hereunder.
(tv) In addition to all other rights Wlder this Agreement, upon the occurrence
of an Event of Default in which Seller or Producer is the Defaulting Party and in which
Buyer is entitled to tenninate this Agreement, Buyer may, at its sole option, without
notice or demand, (i) accelerate and declare due and payable the entire amount of all
Deficiency Payments that would come due hereunder for the remaining Tenn of the
Agreement if no Producer Crude Oil was delivered and there was no Third Party Crude
Oil after the occurrence of such Event of Default, andlor (ii) to liquidate this Agreement
by terminating the Agreement.
(c) Effect of Tennination. At any time after the termination of this Agreement
pW"Suant to this Section 13.3, the Parties shall have no further rights or obligations with respect
to this Agreement, except as specifically set forth herein and except (x) in the event that Seller or
Producer was the Defaulting Party, for the payment of the Deficiency Payments that would come
due hereunder for the remaining Tenn of th.is Agreement based on the fact that no Producer
Crude Oil will be delivered and there will be no Third Party Crude Oil after such termination or
that have been accelerated and declared due and payable hereunder by Buyer pursuant to Section
13.3(b) above, and, without duplication, (y) the payment of any outstanding Settlement Amount
by Buyer to Seller or Seller to Buyer. as applicable.
(d) Bankruptcy Safe Harbor Provisions. Without limiting the applicability of any
other provision of title 11 of the United States Code, 11 U.S.C. §§ 101, et seq., as amended (the
"Ballkruptcy Code") (including without limitation Sections 362, 546, 553, 556, 560, 561 and
562 thereof and the applicable definitions in Section 101 thereof), the Parties acknowledge and
agree that: (i) this Agreement and all transactions entered into hereunder constitute "forward
1475S6lv.25 0022384/00132
27
Plf Resp in Opp to Motion for Summary Judgment 137
SR209
contracts" and/or l4swap agreements" and this Agreement constitutes a "master netting
agreement" as defmed in section 101 of the Bankruptcy Code; (ii) each Party is a "master netting
agreement participant," a ~~forward contract merchant" and/or a "swap participant" as defined in
the Bankruptcy Code; (iii) the rights of the Parties under this Section 13.3 constitute "contractual
rights" to liquidate, tenninate or accelerate, as applicable, this Agreement and the transactions
entered into hereunder; (iv) any margin or collateral provided under any margin, collateral.
security, or similar agreement related hereto and all payment obligations of any Party to any
other Party hereunder constitute a "margin payment" or a "settlement payment" as defined in
section 101 of the Bankruptcy Code; and (v) the Parties are entitled to the rights under, and
protections afforded by, sections 362,546,553,556,560,561 and 562 of the Bankruptcy Code.
13.4. Waiver. No waiver of any tenn, provision or condition ofthls Agreement shall be
effective unless in writing signed by the Parties, and no such waiver shall be deemed to be or
construed as a further or continuing waiver of any such tcnn, provision or condition or as a
waiver of any other tenn, provision or condition of the Agreement, unless specifically so stated
in such written waiver.
13.5. No Third Party Beneficiaries. Except for Persons indemnified hereunder, this
Agreement is not for the benefit of any third party and nothing herein, expressed or implied,
confers any right or remedy upon any Person not a party hereto.
13.6. Rules and Regulations. The terms, provisions and activities undertaken pursuant
to this Agreement shall be subject to all applicable laws, orders and regulations of all
Governmental Authorities. If applicable, the Parties agree to comply with all provisions (as
amended) of the Equal Opportunity Clause prescribed in 41 C.F.R. 60-1.4; the Affirmative
Action Clause for disabled veterans and veterans of the Vietnam Era prescribed in 41 C.F.R.60-
250,4; the Affinnative Action Clause for Handicapped Workers prescribed in 41 C.F.R. 60-
741.4; 48 C.F .R. Chapter I Subpart 19.7 regarding Small Business and Small Disadvantaged
Business Concerns; Executive Order 12138 and regulations thereunder regarding subcontracts to
women-owned business concerns; Affinnative Action Compliance Program (41 C.F.R. 60-1.40);
annually filing of SF-I00 Employer Infonnation Report (41 C.F.R. 60-1.7); 41 C.F.R.60-1.8
prohibiting segregated facilities; and the Fair Labor Standards Act of 1938 as amended.
13.7. Hazard Conununication. Seller shall provide its Material Safety Data Sheet
("ly[SDS') to Buyer. Each Party acknowledges the hazards and risks in handling and using
Crude Oil. Each Party shall read the MSDS and advise its employees, its Affiliates, and third
parties, \vho may purchase or come into contact with such Crude Oil, about the hazards of Crude
Oil, as well as the precautionary procedures for handling such Crude Oil, which are set forth in
such MSDS and any supplementary MSDS or written warnings which Seller may provide to
Buyer from time to time.
13.8. No Partnership. It is not the intention of the Parties to create, nor is there created
hereby. a partnership. trust, joint venture or association. The status of each Party hereunder is
solely that of an independent contractor.
13.9. fublished Financial Data. Unless express1y provided otherwise herein, in the
event any published price, adjustment index, interest rate or other financial data referred to in
1475561v.25 0022384100132
28
Plf Resp in Opp to Motion for Summary Judgment 138
SR210
this Agreement ceases to be published, the Parties shall mutually agree to an alternative
published price, adjustment index, interest rate or other financial data representative of such data
referred to in this Agreement.
13.10. Headings. The headings and captions in this Agreement have been inserted for
convenience of reference only and shall not define or limit any of the tenns and provisions
hereof.
13.11. Rules of Construction. In construing this Agreement, the following principles
shall be followed:
(a) examples shall not be construed to limit, expressly or by implication, the matter
they illustrate;
(b) the word ~'includes9' and its syntactical variants meWl "includes, but is not limited
to" and corresponding syntactical variant expressions;
(c) the plural shall be deemed to include the singular and vice versa, as applicable;
(d) all references in this Agreement to an uArticle," "Section," "subsection," or
"Exhibit" shall be to an Article, Section, subsection, or Exhibit of this Agreement, unless the
context requires otherwise;
(e) unless the context otherwise requires, the words "this Agreement," ·'hereof,"
uhereunder," ·'herein," "hereby," or words of similar import shall refer to this Agreement as a
whole and not to a particular Article, Section, subsection, clause or other subdivision hereof; and
(t) each Exhibit to this Agreement is attached hereto and incorporated herein as n
part of this Agreement, but if there is any conflict or inconsistency between the main body of this
Agreement and any Exhibit, the provisions of the main body of this Agreement shall prevail.
13.12. Entire Agreement. This Agreement contains the entire agreement between the
Parties relating to the subject matter hereof and there are no oral promises, agreements or
warranties affecting same.
13.13. Applicable Laws. This Agreement shall be subject to vaJid and applicable
Federal, State and local la\vs and rules, orders or regulations, of any Governmental Authority
having appropriate jurisdiction; provided however, nothing contained herein shall be construed
as a waiver of any right to question or contest any such law, order, rule or regulation in any
forum having appropriate jurisdiction.
13.14. Severability. If any provision of this Agreement shall be held to be invalid, illegal
or unenforceable, (i) the validity, legality and/or enforceability of the remaining provisions shall
not~ in any way, be affected or impaired thereby and (ii) in lieu of such inval id, illegal or
unenforceable provision, there shall be automatically added to this Agreement a provision as
similar to such invalid, illegaJ or unenforceable provision as may be possible and be legal, valid
and enforceable.
\475S61v.25 0022384100132
29
Plf Resp in Opp to Motion for Summary Judgment 139
SR211
13.15. Joint Pre.paration. Producer, Seller and Buyer acknowledge and mutually agree
the) that this Agreement and all contents herein were jointly prepared by the Parties.
13.16. Further Assurances. Each Party shall take such acts and execute and deliver such
documents as may be reasonably required to effectuate the purposes of this Agreement.
13.17. No Inducements. No director, employee, or agent of any Party shall give or
receive any commission, fee, rebate, gift, or entertainment of significant cost or value In
connection with this Agreement.
13.18. Joint and Several Liability.
~ Parties. Each of
_ (each, a "Seller Party") shall be jointly and e to
respect of all representations, warranties, covenants and agreements of Seller hereunder. The
Seller Parties shall be treated as one Party under this Agreement with respect to each Seller
Party's liability hereunder. Without limiting the generality of the foregoing sentence, (i) aU
conditions related to either of the Seller Parties hereunder as "Seller" or as a "Party" shall mean
that the condition has occurred in respect of either or both as applicable in the context, and (ii) aU
references to either of the Seller Parties as "Seller" or as a "partyn shaH mean either or both of
the Seller Parties as applicable in the context.
~ Producer Parties. Each
_ (each, a "Producer Party") shall jomtly and sev ly liable to Buyer 111 respect
of all representations. warranties, covenanL«; and agreements of Producer hereunder. The
Producer Parties shall be treated as one Party under this Agreement with respect to each
Producer Party's liability hereunder. Without limiting the generality of the foregoing sentence,
(i) all conditions related to either of the Producer Pwties hereunder as "Producer" or as a "Party"
shall mean that the condition has occurred in respect of either or both as applicable in the
context, and (ii) all references to either of the Producer Parties as '·Producer" or as a "Party" shall
mean either or both of the Producer Parties as applicable in the context.
13.19. Survival. The provisions of this Article 13 shall survive the termination of thls
Agreement.
13.20. Counterpart Execution. This Agreement may be executed in any number of
counterparts, each of which shall be considered an original, and all of which shall be considered
one and the same instrument. Any signature contained in a counterpart of this Agreement
transmitted by facsimile or electronically shall be deemed to be an original signature.
[Signature pages follow]
1475561v.25 0022384100132
30
Plf Resp in Opp to Motion for Summary Judgment 140
SR212
BUYER:
ENTERPRISE CRUDE OIL LLC
By: Enterprise Crud GP LLC
Its: Sole Manag
1475561 v.2S 0022384100132
32
Plf Resp in Opp to Motion for Summary Judgment 141
SR213
EXHIBIT A
POINTS OF RECEIPT
Location of Pip!illne Points Qf Receipt:
Name County
I X/Y Coordinates or
Lat.lLong.
Third Party Crude Oil
Point of Receipt?
Gardendale La Salle TBD by Enterprise Yes
Pipeline
I
Equipment at Pipeline Points of Receipt:
SELLER'S EQUIPMENT PIPELINE EOUIPMENT----
{TQ be in~talleds
Qr i~ designee);
Q~ratcg
TBD by Enterprise Pipeline and
designee
and maintained b~ Seller (TQ be irul'!lIed,-o[le[ateg
Producer~s
~g~~ign~~l
ACT- Automated Custody Transfer Meter
1
aog mruolained b~ Bu~er
Storage tanks
--
Location ofIruck Points of Receipt:
Name County XIY Coordinates or Third Party Crude Oil
Lat.lLoog. Point of Receipt?
Gardendale Lo Salle TBD by Enterprise Yes
Pipeline
Equipment at Truck Points of Receipt:
SELLER'S EQUIPMENT
(To be installed. operated and maintained b~ Sel.kr
or its designee)
Storage tank(s)
Pump(s)
1475S61v.2S 0022384/00132
Exhibit A
Plf Resp in Opp to Motion for Summary Judgment 142
SR214
Srabi lization facilities
Truck rack and teaselweliline interconnects
1475561 v.2S 0022334100132
Exh ibit A - Page 2
Plf Resp in Opp to Motion for Summary Judgment 143
SR215
~
O:l
~-
U
z:
--
O:l
U
0:.
~ O:l
...
f-<
~
.....
Q
~
0
ttl
~
z: P-
::t:
x
O:l -
0
f-<
nding reduction to the Annual Transportation Revenue Commitment,
Cumulative Transportation Revenue Commitment Bnd TOlHl Cumulative TransJX)rtation Revenue
Commitment) in mutually agreeable amounts, which amounts shall take i I1to account and be
based upon any revenue andlor volume commitments made by such Qualifying Interests
Transferee pursuant to the Qualifying Interests Agreement, and address all other issues
potentially impacted by such transfer of Qualifying Interests to the satisfaction of each of the
Parties; provided, however, Enterprise shall not be obligated 10 amend this Agreement if the
Qualifying Interests Agreement is not eXe<:uted.
I 566921\v.J oo22384/001J 2
2l
Plf Resp in Opp to Motion for Summary Judgment 171
SR243
(c) Qualifying Interests Agreement Limitations. Notwithstanding Section 11.3(b)
abovew it is acknowledged and agreed that (i) neither EnteJprise nor Entetprise Pipeline nor any
of 1heir Affiliates shaJl have any obligation to design, conJtrUd or install any new facilities or
otherwise modify the Pipeline System or add any Points of Receipt to accommodate transfers of
Qualifying Interests. (ii) neither Enterprise nor its Affiliates are obligated to provide the same
tenns to a Qualifying Interests Transferee in a Qualifying Interests Agreement as are contained
herein and/or in any ancillary agreement, (iii) Enterprise's combined Obligations under the
Qualifying Interests Agreement and this Agreement, as amended as provided in Section 1J.3(b)
above, shall be no greater than Enterprise's obligations under this Agreement before such
amendment 8S if such transfer of Qualifying Interests had never occurred, and (iv) upon the
execution of a Qualifying Interests Agreeme~ the Crude Oil produced from or attributable to
such transferred Qualifying Interests shall no longer be considered Producer Crude Oil.
(d) Transfer to CNOOC. Notwithstanding Seclion I I. 3(cXii) above. ifei) CNOOC is
or becomes a Qualifying Interests Transfcrc:e and (ii) CNOOC is not (and none of its Affiliates
is) in material default under any other agreement with Enterprise or any of its Affiliates, then,
subject to ahe other provisions of Section It.l(c) above, Enterprise agrees to enter into a
Qualifying Interests Agreement with CNOOC on lhc same terms as an: in this Agreement;
provided, however, in connection with the execution of such Qualifying Interests Agreement
with CNOOC. if CNOOC does not meet Enterprise's ~nable credit requirements, then
Enterprise shall have the right to require that CNOOC provide to Enterprise a guaranty of
CNOOC's obligations under such QuaJifying Intercs1S Agreement from an entity. and in a Conn,
reasonably acceptable to Enterprise.
ARTICLE XII
NOTICE AND STATEMENTS
12. I. ~. Any notice, statement. payment. claim or other communication required
or permitted hereunder shall be in writing and shall be sent by: ei) facsimile transmission;
(ii) delivered by hand; (iii) sent by United States mail with all postage fully prepaid; or (iv) by
courier with eharges paid in accordance with the customary arrangements established by such
courier. in each of the foregoing cases addressed to the Party at the following addresses:
Enterprise: NOTICES AND CORRESPONPENCE:
Enterprise Crude Oil LLC
Attn: Vice President - Crude Oil Marketing
t 100 Louisiana, Suite J500
Houston, Texas nOO2
Fax: 713-381-7870
1566924--.) 0022384100132
Plf Resp in Opp to Motion for Summary Judgment 172
SR244
ACCOUNTING MAITERS:
Enterprise Crude Oi I LLC
Attn: Vice President Crude Oil Marketing
1100 Loujsi~ Suite 1500
Iiouston, Texas 77002
Fax: 713-381-7870
PAYMENT BY WIRE:
Enterprise Crude Oi I LLC
Wells Fargo Bank~ N.A., San Francisco. CA
ABA: 121000248
Account No.: 1018204331
_ and Producer: NOTICES ANP CORRESPONDENCE:
ACCOUNTING MAITERS:
PA YMENT BY WIRE:
Such notices. statements, payments, claims or other communications shall be deemed
received 8S follows: (i) if delivered personally, upon delivery; (ii) if sent by United States mail,
1566924.... 30022384100132
2S
Plf Resp in Opp to Motion for Summary Judgment 173
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whether by express mail, registered mail, certified mail or regular mail, the notice shall be
deemed to have been received on the day receipt is refused or is confirmed orally or in writing by
the receiving Party; (iii) if sent by a courier servic~ upon delivery; or (iv) if sent by faaimiie, on
the Business Oay following the day on which it was transmitted and confmned by transmission
repor1 or such earlier time as confinned orally or in writing by the receiving Pany.
12.2. Routine CommOOicatiOll5. Notwithsnmding the foregoing. routine
communications be1Wcen the Parties, including. but not limited to communications concerning
scheduling and forecasts of the volumes of Crude Oil to be sold and purchased hereunder, may
be conducted via telephone, facsimile andlor electronic mail.
12.3. Change of Add3SS. Notices of change of address of any Party shall be given in
writing to ehe other Parties in the manner aforesaid and shall be observed in the giving of all
future notices, statements, payments, claims or other communic:ations required or pcnnitted to be
given hereunder.
ARTICLE XIII
MISCELLANEOUS
13. t. Amendments. AU modifications, amendments or changes to this Agreement,
whether made simultaneously with or after the exeartion of this Agreement. shall be in writing.
ex~utcd by Producer, Enterprise a n d _
13.2. Con f1dentialjty.
(a) Cpnfidentiality. Each Party agrees that it shall maintain all tenns and conditions
of this Agreement in stridest confidence. and that il shall not cause or permit disclosure of this
Agreement or any provisions contained herein without the express written consent of the Other
Parties.
(b) Pqmitted Pisclosures. Notwithstanding Section 13.2(a) of this Agreement,
disclosures of any tenns and provisions of this Agreement otherwise prohibited may be made by
any Party (i) to the extent necessary for such Party to enforce its rights hereunder against Bny
other Party; (ii) to the extent to which 8 Party is required 10 disclose Bll or part of this Agreement
by 8 statute or by the order or rule of a court. agency, or other governmental body exercising
jurisdiction over the subject matter hen:of, by order, by regulations, or by other compulsory
process (includin& but not limited to, deposition, subpoena. interrogatory, or request for
production of documents); (iii) to the extent required by the applicable regulations ofa securities
or commodities exchange; (iv) to a third Person in connection with a proposed sale or other
h'8nSfer of a ParcyYs interest in this Agreement, provided such third Penon agrees in writing to be
bound by the terms of this Section 13.2; (v) to its own directors, officers, employees, agents and
representatives; (vi) to an Affiliate; or (vii) to a co-working interest owner or royalty owner of
Producer Crude Oil delivered hereunder. provided such co-working intemt owner or royalty
owner agrees in writing to be bound by the tenns of this Section 13.2.
(e) Notification. If any Pany is or becomes aware of a fact, obligation, or
circumstance that has resulted or may resulr in a disclosure of any of the terms and conditions of
this Agreement authorized by Section 13.2(bXii)., (iii) or (iv) above, it shall so notify in writing
I566924v.) OOl2J84IOO 132
26
Plf Resp in Opp to Motion for Summary Judgment 174
SR246
the other Parties promptJy and shall provide documentation or an explanation of such disclosure
as soon as it is available.
(d) Party Responsibility. Each Party shall be deemed solely responsible and liable for
the actions of its dire.:tof'S. officers. employees, agents, representatives and Affiliates for
maintaining the confidentiality commitments of this Section 13.2.
(e) Public AnnouDcemen1S. The Parties agree that prior to making any public
announcement or statement with respect to this Agreement or the transaction represented hc~in,
the Party desiring to make such public announcement or statement shall provide the other Parties
with a copy of the proposed announcement or statement prior to the intended release dote of such
announcement. The other Parties shall thereafter consult with the Party desiring to make the
release, and the Parties shall exercise their reasonable best efforts to (i) agree upon the text of a
joint public announcement or statement to be made by such Parties or (ii) in the case of a
statement to be made solely by one Party, obtain approval of the other Parties to the text of a
public announcement or statement. Nothing contained in this Section 13.2 shall be construed to
require any Party to obtain approval of the other Parties to disclose infonnation with respect to
this Agreement or the transaction represented herein to any Governmental Authority to the extent
required by applicable law or necessary to comply with disclosure requirements of the Securities
and Exchange Commission, New York Stock Exchange, or any other regulated stock exchange.
(f) Survival. The provisions of this Section 13.2 shall survive any expiration or
tenninalion of this Agreement for 8 period of one (J) year.
13.3. 1lmWl.
(a) EVents of Default Each of the following shall constitute an event of default
(..EW!nt 0/De/llIllr):
(i) for reasons other than Force Majeure or or Producer's
material default or breach (including, without limitation. lure to timely
meet its obJigations pursuant to Section 3.1, Section 3.~ or above), (x) the
Commencement Date has not occurred on or before April I, 2014, which date may be
extended by one Day for each Day during the continuance of an event of Force Majeure
up to and including January 1. 2015, and (y) Enterprise is not purchasing and accepting.
on a Daily basis, at the Points of Receipt. Producer Crude Oil rendered b y _ o
Enterprise hereunder equal to at least the lesser of (A) eighty percent""'(8o%)'Orihe
Maximum Daily Volume in effect for the first Contract Year hereunder. (B) the Daily
volume of Producer Crude Oil tha~ can reasonably demonstrate that it has the
ability to deliver to the Points of Recei~ or (e) the total volume of Producer Crude Oil
tendered by _ to Enterprise hereunder. provided. however. after the
Commencement Date has occurred, this Section I3.3(aXi) shall be of no further force and
effect;
(ii) the Bankruptcy of any Party;
J S6{)924 v.) 002238410002
Plf Resp in Opp to Motion for Summary Judgment 175
SR247
(iii) the failure by any Party to make, when due, any undisputed payment under
this Agreement required to be made by it if such failure is not remedied on or before the
fifth (5th) Business Day after written notice of such failure is given to the Party;
(iv) the failure of any Party to provide, when due, Performance Assurance
pursuant to Section 4.10; or
(v) the breach b y _ o f its obligations under Section 6.2.
(b) Remedies.
(i) Upon the occurrence of an Event of Default of the type described in
subparagraph (i) or (ii) of Section I 3.3(a) above with respect to a Party or Parties under
this Agreement Party") and prior to the cure thereof, E~ the
event that either Producer is the Defaulting Party, or _ or
Producer, in the is the Defaulting Party (the "Non-DefaultltrK
Party"), shall be entitled in its sale discretion to suspend perform.nce or terminate this
Agreement and pursue such other remedy or remedies as may be available to it under this
Agreement (including. without limitation, exercising the rights of recoupment, setoff,
offset, andlor liquidation), at law or in equity. subject, however, 10 the limitations set
forth in Article VII.
(ii) Upon the occurrence of an Event of Default of the type described in
subparagraphs (iii) or (iv) of Section 13.3(a) above with respect to the Defaulting Party
and prior to the cure thereof, the Non-Defaulting Party shall be entitled in its sale
discretion to suspend performance under (but not terminate) this Agreement and pursue
such other remedy or remedies as may be available to it under this Agreement (including,
without limitation, exercising the rights of recoupment, setofT. or offset), at Inw or in
equity, subject, however, to the limitations set forth in Article VII.
(iii) Upon the occurrence of an Event of Default of the type described in
subparagraph (v) of Section 13.3{a) above, Enterprise shall have the right. but not the
obligation, to make payment directly to Other Interest Owners out of t h e _
Gross Proceeds and pursue such oUm remedy or n:medies as may be ~
Enterprise under this Agreement (including, without limitation, exercising the rights of
recoupment, setoff, or offset), at law or in equity, subject, however, to the limitations set
forth in Article VII.
(iv) No election of remedies shall be required or implied as the result of a
Party's decision to avail itself of a remedy hereunder.
(v) In addition to all ~under this Agreement, upon the occurrence
of an Event of Default in w h i c h _ or Producer is the Defaulting Party and in
which Enterprise is entitled to tenninate this Agreemen~ Enterprise may, at its sole
option, without no tice or demand, (i) accelerate and declare due and payable the entire
amount of all Deficiency Payments that would come due hereunder for the remaining
Term of the Agreement if no Producer Crude Oil was delivered and there was no Third
IS66924v.J 0022384100132
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Plf Resp in Opp to Motion for Summary Judgment 176
SR248
Party Crude Oil after the occurrence of such Event of Default, and/or (ii) to liquidate this
Agreement by tenninadng the AgreemenL
(c) Effect of Tennination. At any time after the tennination of this Agreement
pur3uant to this Section 13.3, the Panics shall have no further rights or obligations with respect
to this eKcept as specifically set forth herein and except (x) in the event that
or Producer was the Defaulting Party, for the payment of the Deficiency Payments
come due hereunder for the remaining Tenn of this Agreement based on the fact that
no Producer Crude Oil will be delivered and there will be no Third Party Crude Oil after such
tennination or that have been accelerated and declared due and payable hereunder by Enterprise
pursuant to Section 13.3(b) above. ~du~ the payment of any outstanding
Settlement Amount by Enterprise to_o~to Enterprise, as applicable.
(d) Bankruptcy Safe Harbor Provisions. Without limiting the applicability of any
other provision of title 11 of the United States Code, 11 U.S.C. §§ 101, et seq., as amended (the
"Ba"kruptcy Code") (including without limitation Sections 362, 546, 553, 556, 560. 56) and
562 thereof and the applicable definitions in Section 10 J thereof), the Parries acknowledge and
agree that: (i) this Agreement and all transactions entered into hereunder constitute "forward
contracts" and/or "swap agreements" and this Agreement constitutes a "master netting
agreement" as defined in section 10 J of the Bankruptcy Code; (ii) each Party is a "master netting
agreement panicipant," a "forward contract merchant" and/or a "swap participant" as defined in
the Bankruptcy Code; (iii) the rights of the Parties under this Section 13.3 constitute "contractual
rights" to liquidate.. terminate or accelerate. as applicable. this Agreement and the transactions
entered into hereunder; (Iv) any margin or collateral provided under any margin, collateral,
security, or similar agreement related hereto and all payment obligations of any Party to any
other Pany hereunder constitute a "margin payment" or a "settlement payment" as defined in
section 101 of the Bankruptcy Code; and (v) the Parties are entitled to the rights under, and
protections afforded by. sections 362, 546. 553, SS6, 560, 56) and 562 of the Bankruptcy Code.
13.4. ~. No waiver of any term, provision or condition of this Agreement shall be
effective unless in writing signed by the Parties, and no such waiver shall be deemed to be or
construed as a further or continuing waiver of any such term, provision or condition or as a
waiver of any other tenn. provision or condition of the Agreement, unless specificalJy so stated
in such written waiver.
13.5. No Third Party Beneficiaries. Except for Persons indemnified hereunder, this
Agreement is not for the benefit of any third party and nothing herein. expressed or implied,
confers any right or remedy upon any Person not a party hereto.
J3.6. Rules and RegUlations. The tenns. provisions and activities undertaken pursuant
to this Agreement shall be subject to all applicable laws, orders and regulations of all
Oovernmental Authorities.
13.7. Hazard Communication. _
("MSDSj to Enterprise; and Enterpri~ide its MSDS 10_
shaU provide its Material Safety Data Sheet
Each Party
acknowledges the hazards and risks in handling and using Crude Oil. Each Party shall read the
MSDS and advise its employees, its Affiliates, and third parties, who may purchase or come into
1S66924v.3 0022184100132
29
Plf Resp in Opp to Motion for Summary Judgment 177
SR249
contact with such Crude Oil. about the hazards of Crude Oil. as well as the precautionary
procedures for handling such Crude Oi~ which are set forth in such MSDS and any
supplementary MSDS or written warnings which _ may provide to Enterprise from
time to time.
13.8. No Partnership. It is not the intention of the Parties to creal~ nor is there created
hereby, a partnership, trust, joint venture or association. The status of each Party hereunder is
solely that of an independent con~r.
13.9. Published Financial Data. Unless expressly provided otherwise herein, in the
event any published price, adjustment index. interest rate or other financial data referred to in
this Agreement ceases to be published, the Parties shall mutually agree to an alternative
published price, adjustment index, interest rate or other financial data representative of such data
refened to in this Agreement.
13.10. Headings. The headings and captioru; in this Agreement have been inserted for
convenience of reference only and shall nOl define or limit any of the terms and provisions
hereof.
13.11. Rules of Construdion. In conslrUing this Agreement, the following principles
shall be followed:
(a) examples shall not be construed to limit, expressly or by implication, the matter
they illustrate;
(b) the word "includes" and its syntactical variants mean "includes, but is not limited
to" and corresponding syntactical variant expressions;
(c) the plural shaJl be deemed to include the singular and vice ve~ as appJicable;
(d) all references in this Agreement to an "Article." ''Section,'' 14subsection,tt or
"Exhibit' shall be to an Article, Section, subsection, or Exhibit of this Agreement, unless the
context requires otherwise;
(e) unless the context otherwise requires, the words "this Agreement." "bereof,"
4'hereunder," "herein.'· "hereby." or words of similar import shall refer to this Agreement as a
whole and not to a particular Article, Section, subsection, clause or other subdivision hereof; and
(f) each Exhibit to this Agreement is attached hereto and incorporated herein as a
part of this Agreement, but if there is any conflict or inconsistency between the main body of this
Agreement and any Exhibit, the provisions of the main body of this Agreement shall prevail.
13.12. Entire Agreement. This Agreement contains the entire agreement between the
Parties relating to the subject matter hereof and there are no oral promises, agreements or
warranties affecting same.
13.1 J. Applicable Laws. This Agreement shall be subject to vaJid and applicable
Federal, State and local laws and rules, orders or regulations, of any Governmental Authority
1566924v.) 0022384100132
30
Plf Resp in Opp to Motion for Summary Judgment 178
SR250
having appropriate jurisdiction; provided however, nothing contained herein shall be construed
as a waiver of any right to question or contest any such law, order. rule or regulation in any
forum having appropriate jurisdidion.
13.14. Seyerability. If any provision of this Agreement shall be held to be invalid, illegal
or unenforceable. (i) the validity, legalityand/or enforceability of the remaining provisions shall
not, in any way, be affected or impaired thereby and (ii) in lieu of such invalid, illegal or
unenforceable provision, there shall be automatically added to this Agreement a provision as
similar to s~h invalid, illegal or unenforceable provision as may be possibJe and be legal. valid
and en forceable.
13.1 s. Joint Prepamtion. Producer, _ and Enterprise acknowledge and
mutually agree that this Agreement and all cont~ere jointly prepared by the Parties.
13.16. further Assurances- Each Party shall lake such acts and execute and deliver such
documents as may be reasonably required to effectuate the purposes of this Agreement
13.17. No Inducements. No director. employee, or agent of any Party shall give or
receive any commission, fee. rebate. gift, or entertainment of significant Cost or value in
connection with this Agreement.
13.18. Joint and Several Liability.
Energy
(a)
Enterprise -
heR:under.
0_
Energy Marketing. Inc. a n d _
be jointly and several~
warranties. covenants and agreements
shall be tn:atcd as one Party under this Agrcc~
respect to each
M
ore in sentence, conditions related to either of the _
the_
s liability hereunder. Without limiting the generality of the
Panics hen:under as
or as a "Party" shall mean that the condition ~n respect of either or
~k:able in the context, and (ii)a11 references to either of
_ ' or as a "Party" shall mean either or both of t h e _ Parties as applicable in
the context.
Parties as
~ producer Parties- Each
_each, a ~tP'Dducer to n
respect of all representations, warranties, covenants and agreements of Producer hereunder. The
Producer Parties shall be treated as one Party under this Agreement with respect to each
Producer Party's liability hereunder. Without limiting the generality of the foregoing sentence,
(i) all conditions related to either of the Producer Parties hereunder as "Producer" or as a "Party"
shall mean that the condition has occurred in respect of either or both as applicable in the
context, and (ii) aU references to either of the Producer Panies as "Producer" or as a "Pany" shall
mean either or both of the Producer Parties as applicable in the context.
13.19. Original Agreement. The Original AgRement is hereby amended Bnd restated in
its entirety and replaced and superseded by this Agreement effective as of the Effective Date.
1566924 v ) 00211&41(01)2
-' I
Plf Resp in Opp to Motion for Summary Judgment 179
SR251
13.20. Surviyal. The provisions of this Article 13 shall survive the tennination of this
Agreement.
13.21. Counteman Execution. This Agreement may be executed In any number of
counterpans. each of which shall be considered an original, and all of which shall be considered
one and the same instrument. Any signature con(ained in a counterpan of this Agreement
transmined by facsimile or electronically shall be deemed to be an original signature.
[Signature pages follow]
1566924v.3 0022J84IOO1J2
Plf Resp in Opp to Motion for Summary Judgment 180
SR252
IN WITNESS WHEREOF, the Parties have executed this Agreemenl 10 be effective as
of the Effective Dale.
1566924 , .> 0022 J84100132
Plf Resp in Opp to Motion for Summary Judgment 181
SR253
ENTERPRISE:
ENTERPRISE CRUDE OIL LLC
J566914y.J oo22384JOO In
14
Plf Resp in Opp to Motion for Summary Judgment 182
SR254
EXHIBIT A
POINTS OF RECEIPT
Location of Pipeline Points of Receipt:
Name County XIV Coordinat~ or Third Party Crude Oil
LatJLong. Point of Receipt?
Gardendale laSalle TBD by Enterprise Yes
Pipeline
EQuipment at Pipeline Points of Receipt:
PIPELINE EQUIPMENT
~~I~~de~= and maintained by ITo be installed· operated and maintained by
~ __ ____ Enterprise Qf its designee)
TBD by Enterprise Pipeline and Producer's ACT· Meter
designee
Storage tanks
location 0(100 Pojnts of Receipt:
Name County XIV Coordinates or Tbird Party Crude Oil
La.JLong. Point of Receipt?
Gardendale La Salle TBD by Enterprise Yes
Pipeline
Equipment at Truck Points of Receipt:
(To be installed. operated and maintained by
or its designee)
Storage tank(s)
Pump{s)
Stabilization facilities
Truck rack and lease/well line inrerconnects
I 566924v.3 0022384100132
Exhibit A
Plf Resp in Opp to Motion for Summary Judgment 183
SR255
,
f
,
,J
Plf Resp in Opp to Motion for Summary Judgment 184
SR256
Entesprise Crude Oil LlC
1100 louisiana Street, Suite 1000
Houston, Texas nOO2
Attention: Mark A. Hurley
Re: First Amended and Restated Crude Oil Pun:hase and Sale An,_,,,,,,,!
dated
Dear Mark:
_ and Producer acknowledge that (i) Enterprise, as shipper, is negotiating a
~9reement (the 'Throyghput Agreement") with Eagle Ford PipeUne LlC i~
E!m!"), as carrier, for transportation of crude oil from a point In or near Gardendale, Texas to a
point in or near Lyssy, Texas, and ~i} that Plains Pipeline, LP. and EnIarpf1se Crude Pipeline
LlC, an affiliate of Enterprise, ana, or may become, members of Eagle Ford.
and Producer acknowledge that in connection with the Throughput Agreement,
disclose to Eagle Ford and Its members 1) the existence of the referenced
Agreement and 2) the Identity of the parties to the Agreement. Additionally, _ a n d
Producer acknowledge Enterprise, at its sole risk, may agree to required crude~pay
obligetiOflS under the Throughput Agreement that substantially mirror, and are Intended 10
faCIlitate pelformance of, Enterprise's corresponding take-orllay obligations under the
Plf Resp in Opp to Motion for Summary Judgment 185
SR257
PIRST AMENDMENT TO I'IRST AMENDED AND RBSTATBD CRUDE 00:.,
PURCIIASE AND SALE AGUBMENT
This FUll Ameadmenl to First Amended ud Reswed Crude OU Pun:base and Sale
Apeemeat (this ..Pint AmsIUlasat') is made and entered into effective as of the 20th day of
July, 2012 (the "B/l1Jdlve DtIIB"), by and 8 Texas
llmitcd listlttllhl COIDlP8DY ~~~~
WHBRBAS, the Parties cotered inlO Ibat ceztain rllSt Ameaded and Restated Cnade Oil
PwdIase and Sale Apeemeot daIed as of January 31, 2012 (the "AaIeIuIaf~; and
WHEREAS, the PartIes desire to amend Ihe AmcDded AgreemenL
NOW, THBRBFO~deratiOD of the mutual promlae&. coveaanIS and
agreements herelD c o n w _ Producer and EoIclprise bereby coveoao18lld agree as
follows:
I. ]bird Partx Cmde OJI. Section 1.92 of the Ameoded AgJeemeDt. abe defmition of
-nunt pany CNde Oil," is beleby deleted in irs entirety and replaced with the followlag:
1.92. "TIdnl Ptstq Cnr4s 011" sbalJ mean, with respect to Illy Contract
Year, the volume (in BaneIa) of Crude 011 other than PIOducer Qude Oil which
is either (1) purchased during such CoD1IaCt Year by Bmerprise from any Person
otber dian a Party or Its Aftilialr.s BDd b'ansported Ibrough the Baste ford PipeIiDe
from die Thild Party Caude OU Points of ReceIpt (lDeludiDg .y DeW points of
receipt added to die Eagle Ford Pipeline either upstream of 0aR!ettdale or
between OardendaJe and Lyssy after die Sffecdve Date) to any point of delivmy
at or downstream of Sealy Station, or (Ii) received at the 1blnl Party Crude Oil
Points of ReceIpt (including any new points of receipt added 10 the Eagle Ford
Pipeline either upsbeam of Oatdcadale or betweel1 Gudcmdale and Lyssy after
the Effective Dale) during such CoDtracl Year by Enterprise Pipeline from any
Person other than a Party or its Affiliates and transported through the Eaale Pont
Pipeline 10 any point of delivery at or downstream of Sealy Slallon.
2. .Defined Terms. The following defined terms are bereby added to Article I of the
Amended Agreement:
I.XX. .~. shall mean the Pipeline Point of Receip( named as
'-oardendaJe" aDd furIhet descn1Jed in tho table captioned "LocaIiOll of Pipeline
Points of Receipt" in EDlltlt A.
1600646".2 00223 84100132
Plf Resp in Opp to Motion for Summary Judgment 186
SR258
I.XX ~.. shall mean Enterprise or lis Affiliate's cnade oilleCeipt
facilities on or adjacent to Ihc Bagte Ford Pipeline. located In W'dsoo County.
Texas.
3. RAtifigripp. The Parties hereby ratify the Ameuded AgreemeDlt as amended
hereby. ud represent and warrant to each other mal the Amended Agreement, as amended
hereby? is ill fuU force and effect.
(Sigmture pagefollDw31
1600646v.10022384100132
Plf Resp in Opp to Motion for Summary Judgment 187
SR259
IN WITNESS WHEREOF, the Parties bave executed this Firs! Amendment to be
effective as of the Effective Dale.
1600646• .1 001l384lOO132
,
Plf Resp in Opp to Motion for Summary Judgment 188
SR260
BNTERPRISE CRtJDE OIL LLC
By: Eolerprise Crude OP LLC
lb: SoleM~~
·1
l600646v.2 0022384100) 32
Plf Resp in Opp to Motion for Summary Judgment 189
SR261
Exhibit 1-F
Enterprise Pipeline Local Tariff, July 1, 2017
Plf Resp in Opp to Motion for Summary Judgment 190
SR262
Texas Intrastate No. 170.9.0
(Cancels TRRC No. 170.8.0)
ENTERPRISE CRUDE PIPELINE LLC
IN CONNECTION WITH PARTICIPATING CARRIERS SHOWN HEREIN
LOCAL PROPORTIONAL AND JOINT TARIFF
Containing
RATES, RULES AND REGULATIONS
For
THE SOUTH TEXAS SYSTEM
Governing
THE GATHERING AND TRANSPORTATION
of
CRUDE PETROLEUM AND PROCESSED CONDENSATE
by
PIPELINE
WITHIN THE STATE OF TEXAS
Operated by Enterpri&e Crude PipeUne LLC (P-S #2531360) Uader T-4 Permit Nos. 04568 and 09127
The provisions publisbed herela "ill-if effective-not result in an effect on the quality of the human environment.
EFFECTIVE JULY I" 2017
Issued and Compiled by:
Steve Miao
Enterprise Crude Pipeline LLC
] ]00 Louisiana Street, Suite 1000
Houston, Texas 77002· 5227
(713) 381-4778
szmiao(n)~rod.~om
Plf Resp in Opp to Motion for Summary Judgment 191
SR263
SECTION I
RULES AND REGULATIONS OF RAILROAD COMMISSION OF TEXAS
OIL AND GAS RULE §3.71, PIPELINE TARIFFS
(The provisions oftbis §3.71 adopted to be effective August 2S, 2003~ 28 TexReg 6816)
TITLE 16 OF THE TEXAS ADMINISTRATIVE CODE (TAC) Rule § 3. 71, PARAGRAPHS (1) - (19)
Every persoll owning, operating, or managing any pipeline, or any part of any pipeline, for the gathering, receiving,
loading, transporting, storing, or delivering of crude petrol cum as a common carrier shall be subject to and governed by the
following provisions. Common carriers specified in this section shall be referred to as ''pipelines," and the owners or
shippers of crude petroleum by pipelines shall be referred to as "shippers.'·
(1) All marketable on to be received for traosportadon. By the tenn "marketable oil" is meant any crude
petroleum adapted for refining or fuel purposes, properly settled and containing not more than 1.0% of basic sediment,
water, or other impurities above a point six inches below the pipeline connection with the tank: Pipelines shalJ receive for
transportation all such "marketable oil" tendered; but no pipeline shall be required to receive for shipment from anyone
person an amount exceeding 3.000 balTels of petroleum in any une day; and, if th~ uil It=Jul~ed for ttan~1X>natjon differs
materially in character from that usualJy produced jn the field and being transported therefrom by the pipe1in~ then it shall
bc transported under such terms as the shipper and the owner of the pipeline may agree or the commission may require .
• T/';.~ deviates from TAe Rule § 3.71, pQrogrDph (1) in thaI the limit/or basic: sedimellt. water. and olher impurities is
1.0 % rather thail 2.0% as provided in lire rule.
(2) Basic sediment, bow determined-temperature. In determining the amount of sediment, water, or other
impurities, a pipeline is authorized to make a test of the oil offered for transportation from an average sample from each
such tank, by the use of centrifugal machine, or by the use of any other appliance agreed upon by the pipeline llJ1d the
shipper. The same method of ascertaining the amount of the sediment, water, or other impurities sllall be used in the
delivery as in the receipt of oil. A pipeline shall not be required to receive for transportation, nor shall consignee be
required to accept as a delivCT)', any oil of a higher tempcr.!turc than 90 degrees Fahrenheit, except that during the summer
oil shall be received at any atmospheric temperature, and may be delivered at like temperature. Consignee shall have the
same right to lest the oil upon delivery at destination that the pipeline has to test before receiving from the shipper.
(3) "Barrel" defined. For the purpose of these sections, a "barrel" of crude petroleum is declared to be 42 gallons
of 231 cubic inches per gallon at 60 degrees Fahrenheit.
(4) Oil involved in litigation, etc.-indemnity against loss. When any oil offered for transponation is involved in
litigation, or the ownership is in dispute, or when the oil appears to be encumbered by lien or charge of any kind, the
pipeiine may require of shippers an indemnity bond to protect it against all loss.
(5) Storage. Each pipeline shalJ provide, without additional ohargc, sufficient storage:, sueh as is incident and
necessary to the transportation of oil, including storage at destination or so near thereto as to be available for prompt
delivery to destination point, for five days from the date of order of delivery at destination.
(6) Identity of oil, maintenance of oil. A pipeline may deliver to consignee either the identical oil received for
transportation, subject to such consequences of mixing with other oil as arc incident to the usual pipeline transportation, or
it may make delivery from its common stock at destination; provided: if this la-rt be done, the delivery shall be of
substantially like kind and market value.
(7) .Minimum quantity to be receh'ed. A pipeline shall not be required to receive less than one lank car-load of oil
when oj] is offered for loading into tank cars at de!-1ination of the pipeline. When oil is offered for transportation for other
than tank car delivery, a pipeline shall no( be required to receive less than 500 barrels.
{8} Gathering charges. Tariffs to be t1Icd by a pipeline shall specify separately the charges for gathering of the oil~
for transportalion, and for delivery.
(9) Measuring, testing, aDd deductions (refer~nce Special Order Number 20-63,098 effective June 18, 1973).
(A) Except as provided in subparagraph (B) of this paragraph. all crude oil tendered to a pipeline shall be
gauged and t~1ed by a representative of the pipeline prior to its receipt by the pipeline. The shipper may
be prescnt or represented at the gauging or testing. Quantities shall be computed from com::ctly compiled
tank tables showing 100% of the full capacity of the tanks.
ECPL TC:t85 Inlrastate No. 170.9.0 Pago 2 of ')
Plf Resp in Opp to Motion for Summary Judgment 192
SR264
(B) As an alternative to the method of measurement provided in subparagraph (A) of this paragraph, crude oil
and condensate may be measured and tested, before transfer of custody to the initial transporter, by:
(i) lease automatic custody transfer (LACT) equipment, provided such equipment is installed and
operated in accordance with the latest revision of American Petroleum Institute (API) Manual of
Petroleum Measurement Standards, Chapter 6.1, or;
(ii) any device or method, approved by the commission or its delegate, which yields accurate
measurements of crude oil or condensate.
ee) Adjustments to the quantities determined by the methods described in subparagraphs (A) or (B) of this
paragraph shaU be made for temperature from the nearest whole number degree to the basis of 60 degrees
Fahrenheit and to tbe nearest 5/10 API degree gravity in accordance with the volume correction Tables SA
and 6A contained in API Standard 2540. American Society for Testing Materials 012S0, Institute of
Petroleum 200, first edition, August 1980. A pipeline may deduct the basic sediment, water, and other
impurities as shown by the centrifugal or other test agreed upon by the shipper and pipeline; and 1.0% for
evaporation and loss during transportation. The net balance shaU be the quantity deliverable by the
pipeline. In allowing the deductions, it is not the intention of the commission to affect any tax or royalty
obligations imposed by the Jaws of Texas on any producer or shipper of crude oil.
(D) A transfer of custody of crude between transporters is subject to measurement as agreed upon by the
transporters.
(10) Delivery and demurrage. Each pipeline shall transport oil with reasonable diligence, considering the quality
of the oil, the distance of transponation, and other material elements, but at any time after receipt of a consignment of oil,
upon 24 hours' notice to the consignee, may offer oil for delivery from its common stock at the point of destination,
confonnable to paragrapb (6) of tbis section, at a rate not exceeding 10,000 barrels per day of 24 bours. Computation of
time of storage (as provided for in paragraph (5) of this ~-ection) shall begin at the expiration of such notice. At the
expiration of the time allowed in paragraph (S) of this section for storage at destination, a pipeline may assess a demurrage
charge on oil offered for delivery and remaining undelivered, at a rate for the first 10 days of $.001 per barre); and
thereafter at a rate ofS.007S per barrel, for each day of24 hours or fractional part thereof.
(11) Unpaid charges, Uen for and sale to cover. A pipeline shall have a lien on aU oil to cover charges for
transportation, including demurrage. and it may withhold delivery of oil until the cbarges arc paid. If the cbarges shalJ
remain unpaid for more than five days after notice of readiness to deJivcr. the pipeline may sell the oil at public auction at
the general office of the pipeline on any day not a legal holiday. The date for the sale shan be not less than 48 hours after
publicatjon of notice in a daily newspaper of general circulation pubJished in the city where tbe general office of the
pipeline is located. The notice shall give the time and place of the sale, and the quantity of the oil to be sold. From the
proceeds of the sale, the pipeline may deduct aU charges lawful1y accruing, including demurrage, and aJ1 expenses of the
sale. The net balance sbalJ be paid 10 the person lawfully entitled thereto.
(12) Notice of claim. Notice of claims for Joss, damage, or delay in connection with the shipment of oil mu~1 be
made in writing to the pipeline within 91 days after the damage, loss, or delay occurred. If the claim is for faiJure to make
delivery. the claim must be made within 91 days after a reasonable time for delivery has elapsed.
(13) Telephone-telegraph line-shipper to usc. If a pipeline maintains a private telegraph or telephone line, a
shipper may usc it without e~tra chargc, for mcssages incident to !\hipmcnts. However, a pipelinc sl1a1111ot be held liable for
failure (0 deliver any messages away from its office or for delay in transmission or for interruption of service.
(14) Contracts of transportation. When B consignment of oj) is accepted, the pipeJine shall give the shipper a run
ticket, and shaH give the shipper a statement that shows the amount of oil received for tnmsportalion, the points of origin
and destination. corrections made for temperature, deduction~ made for impurities. and the rate for such trdnsportation.
(1 S) Shipper's t8nk~. etc••·inspectiun. When il shipment of oil has been offered fOT transportation the pipeline shall
have the right to go upon the premises where the oil is produced or stored, and have access to any and all tanks or storage
reccptacles for the purposc of making any examination, inspection, or lest authorized by this section.
F.CtJL TCXiU Intrastate No. 170.').0 J»al:!c 3 of 13
Plf Resp in Opp to Motion for Summary Judgment 193
SR265
(16) Offers in excess of facilities. If oil is offered to any pipeline for transportation in excess of the amount that
can be immediately transported, the transportation furnished by the pipeline shall be apportioned among all shippers in
proportion to the amounts offered by each; but no offer for transportation shall be considered beyond the amount which the
person requesting the shipment then has ready for shipment by the pipeline. The pipeline shall be considered as a shipper of
oil produced or purchased by itself and held for shipment through its line, and its oil shall be entitled to participate in such
apportionate.
(17) Interchange of tonnage. Pipelines shaU provide the necessary connections and facilities for the exchange of
tonnage at every Jocality reached by two or more pipelines, when the commission finds that a necessity exists for
connection and under such regulations as said commission may detennine in each case.
t
(18) Reeeipt and delivery-necessary facilitIes for. Each pipeline shall instal) and maintain facilities for the
receipt and delivery of marketable crude petroleum of shippers at any point on its )jnc if the commission fmds that a
necessity exists therefor, and under regulations by the commission.
(19) Reports of loss from fires, lightning, and leakage.
(A) Each pipeline shall immediately notifY the commission district office. electronically or by telephone, of
each rrre that occurs at any oil tank owned or controlled by the pipeline, or of any tank struck by Hghtning.
Each pipeline shall in like manner report each break or Jeak in any of its tanks or pipelines from which
more than five barrels escape. Each pipeline shall me the required infonnation with tbe commission in
accordance with the appropriate commission fonn within 30 days from the date of the spill or leak.
(B) No risk of fire, stonn, flood. or act of God, and no risk resulting from riots, insurrection, rebellion, war, or
act of the pubJic enemy, or from quarantine or authority onaw or any order, requisition or necessity of the
government of the United States in time of war, shall be borne by a pipeline, nor sbaH any liability accrue
to it from any damage thereby occasioned. If loss of any erude oil from any such causes occurs after the
oil has been received for transportation, and before it has been delivered to the consignee, the shipper shall
bear a Joss in such proportion as the amount of his shipment is to an of the oj) held in transportation by the
pipeline at the time of such loss, and the shipper shall be entitled to have delivered only such portion of his
shipment as may remain after a deduction of his due proportion of such loss, but in such event the shipper
shall be required to pay charges onJ)' on the quantity of oil delivered. This section shall not apply if the
loss occurs because of negligence of the pipeline.
(e) Common carrier pipelines shall maj)'{retum receipt requested) or hand deliver to landowners (persons who
have legal title to the property in question) and residents (persons whose mailing address is the property in
question) of land upon which a spill or leak has occurred, a11 spiU or leak reports required by the
commission for that particular spill or leak within 30 days of flJing the required reports with the
commission. Registration with the commission by landowners and residents for the purpose of receiving
spilJ or leak reports shall be required every five years, with renewal registration starting January 1, 1999.
If a landowner or resident is not registered with the commjssjon~ the common carrier is not required to
furnish such reports to the resident or landowner.
ECPL T CADS Imra!l1alC Nu. 170.9.0 Page 4 "f tJ
Plf Resp in Opp to Motion for Summary Judgment 194
SR266
SECTJON2
RULES AND REGULATIONS
ITEM 1- ABBREVIATIONS AND DEFINITIONS
"APr' means American Petroleum Institute.
MASTM" means American Society for Testing and Material.
"88JTel" means forty-two United States gallons.
"Carrier" means Enterprise Crude Pipeline LLC ("ECPL") and every other common carrier of Petroleum by pipeline that
has entered into a joint rate tariff with ECPL and by reference therein bas applied these rules and regulations to the
transportation governed by such tariff.
"Common Grade(sY' as herein used means Petroleum moved through CarrierOs pipeline and associated facilities which is
commingled or intermixed with other Petroleum in said pipeline or facilities. Carrier's Common Grades and the
characteristics of each shall be determined by the Carrier.
"Consignee" means the party to whom a Shipper has ordered the delivery of Petroleum.
"Crude Petroleum" means the grade or grades of the direct liquid product of oil or gas wells which Carrier has undertaken
to gather or transport.
·'Nomination,n "Nominates" or "Tendered" as herein used means a written communication from a Shipper to a Carricr
requesting that Camer transport for Shipper in a given month a stated volume of a specified Petroleum from a specified
origin or origins to a specified destination under the terms and conditions of this tariff.
uPetroleum" means Crude Petroleum and/or Processed Condensate.
"Processed Condensate" means a petroleum product derived from Condensate that: (i) has been adequately processed
through a distillation tower at a stabiHzer, splitter or other distillation facility: (Ii) has remained segregated; (iii) has not
been blended with other hydrocarbons sincc its distillation; and (iv) meets any and aU federal, bute and local legal,
administrative and regulatory requirements necessary for such product to qualify for exportation a~ EAR99 under the
Export Administration RegUlations.
"Reid Vl:lpor Pressure" means the vapor pressure of gasoline, volatile crude oi), or other volati1e petroleum products at 100
degrees Fahrenheit as dctennincd by the latest edition of ASTM D 323, Standard Method of Test for Vapor Pressure of
Petroleum Products (Reid Method) or by ASTM D5191: Standard Test Method for Vapor Pressure of Petroleum Products
(Mini Method) and 06378: Standard Test Method for Determination of Vapor Pressure (VPX) of Petroleum Products,
Hydrocarbons, and Hydrocarbon-Oxygenate Mixtures (Triple Expansion Method), both of which determine total vapor
pressure (1VP), which may be converted to Reid Vapor Pressure.
··Shipper(s)" means the party or parties who agrees with Carrier for transportation of Petroleum.
ITEM 2 - ACCEPTANCE OF DELIVERY
After a shipment bas had time to arrive at destinatjon and on 24 hours' notice to Consignee: Carrier may begin delivery of
such sbipment to Consignee at its current rate of pumping. If all of sueh shipment cannot bc received by Consignee, a
demunagc charge of 0.50 cent per Barrel per 24 hours shan accrue, from the time said notice expires, on that part of such
shipment which has not then been received by Consignee.
If a Consignee is not abJe to receive Petroleum from Carrier at the time when Carrier has scheduled a delivery and if Canier
has no means of withholding delivery of such Petroleum, then Carrjer shan have the righf to sell such Petroleum to the first
availabJe purchaser at the best price obtainable; to use the proceeds thereof to pay pipeline transportation charges which
shall be due as if delivery had been made; and to hold the balance of such proceeds for whomsoever may be entitled
thereto.
ITEM 3 - CARRIER·S REMEDIES
The transponation of Petroleum may be refused or tenninatcd if Carrier determines that the Petroleum does not meet the
requirements established herein. Carrier shall have the right, at its sole discretion, to any remedy available, including but
not limited Lo the right without notice of liability to return, divert, sell or dispose of Petroleum which does not confonn to
its items and regulations. Shipper shall reimburse Carrier for all costs and expenses incurred by Camer in returning or
otherwise disposing of such non-confonning Petro]eum.
ECPl TI:)(05 tnlrnslalc No. 170.9.0 Page 5 "r 13
Plf Resp in Opp to Motion for Summary Judgment 195
SR267
ITEM 4 - CHARGES FOR ENVIRONMENTAL RELATED l\t:EMBERSBIPS AND FEES
To the extent Barrels transpon~d over Carrier's facilities are the basis of a charge by any public or private agency or
organization (such as the Marine Preservation Association). which charge is related to compliance with federal, state or
local environment Jaws or regulations (such as the Oil Pollution Act of 1990), Carrier shall have the right to assess Shipper
at a cost for any sueh charge attributable to that Shipper's Barrels, pro"ided Carrier has first given 30days advance written
notice to Shipper of its intention to make such assessment thereafter.
ITEM 5 - CLAIMS, SUITS, TIME FOR FILING
As a alndition precedent to recovery for loss, damage, injury or delay, claims must be filed in writing with the originating
or delivering Carrier within 91days after a reasonable time for delivery of the Petroleum, or in case of failure to make
delivery, then within 91 days after a reasonable time for delivery has elapsed; and SUilS shall be instituted against the
Carrier only within two years and one day from the day when notice in writing is given by the Camer to tbe claimant thal
the Carrier has disallowed the claim or any part of parts thereof specified in the notice. Where claims are not filed or suits
are not instituted thereon in accordance with the foregoing provisions, the Carriers shaH not be liable and such claims will
n01 be paid.
ITEM 6 - COMMON GRADE PETROLEUM-CONNECTING CARRIERS
When both receipts and deliveries of substantially the same grade of Petroleum are scheduled at the same location on
Carrier's system, including, but not limited to, interconnections with connecting carriers, Carrier reserves the right to offset
like volumes of such Common Grade Petroleum, in order to avoid the unnecessary use of energy that would be required to
physically pump the offsetting volumes. The applicable tariff rate will be applied to such transactions. When this right is
exercised, Carrier will make further deliveries for the Shipper involved from its Common Grade Petroleum.
ITEM 7 - DESTINATION FAClLITlES
Canier will deliver Petroleum to a Shipper or ;ts Consignee at destinations on its trunk lines. Petroleum wilJ be delivered
onJy into pipelines, tanks or other facilities that are provided by Shipper or Shipper's designee or Consignee or a connecting
carrier. Carrier will determine and advise Shippers and Consignees of the size and capacity of pipelines, tanks or other
facilities to be provided at point of delivery to meet the operating conditions of Camer's facilities at such point. Camer
will not accept Petroleum for transportation unless such facilities have been provided.
ITEM 8 - DISPATCHING
For each calendar month, Carrier will establish a sequence for pumping various grades of Petroleum througb its trunk lines
and will schedule the approximate time when Petroleum offered for shipment will be received by Carrier at origins and
delivered by Carrier at destinations.
Carrier will infonn each Shipper of the time within each calendar month when Petroleum will be received from such
Shipper at origins and Carrier wilJ infonn each Consignee of the time within each calendar month when Petroleum will be
delivered to such Consignee at destinations.
ITEM 9 - DIVERSION OR RECONSIGNMENT
Diversion or reconsignment may be made without charge if requested by the Shipper prior to arrival at original destination.
subject to the rates, rules, and regulations applicable from point of origins to thc final deSlination~ provided the then current
pipeline operations of the Carrier will permit such diversion or reconsignment. Such request must be confinned in writing.
ECPI.. Texas Intrastate No. 170.9.0 Page 6 of 13
Plf Resp in Opp to Motion for Summary Judgment 196
SR268
ITEM 10 - ESTABLISHMENT OF GRADES
Carrier will from time to time detennine which grades of Petroleum it will regularly gather from certain areas and which
grades of PetroJeum it will regularly transport as a Common Grade between panicuJar origins and destinations on its trunk
pipelines.
Camer will inform all interested persons of such delennination upon request by them and this win constitute the sole
holding out of the Carrier in regard to the grades ofPctroJeum transported.
A Shipper may request a different grade to be shipped than those grades determined by Carrier. Carner shan detcnnine
what additional storage or pumping infrastructure, if any, will be required to be supplied by Shipper to accommodate the
shipment of that different grade.
Carrier may from time to time undertake to gather or tran~on other or additional grades of Petroleum and Carrier may
from time to time; after giving reasonable notice to persons who may be affected, cease to gather or transport particular
grades of Petroleum.
ITEM 11 - GAUGING, TESTING AND VOIJUME CORRECTIONS
All Petroleum tendered to the pipeline may be tested for basic or foreign sediment and water and other impurities and
gauged or metered by Carrier's representative before or after acceptance into Carrier's facilities. In addition to the
provision under Paragraph 1S of Section 1, Carrier sbaJI have access to any and aU vehicles used for shipment of oil to the
pipeline for the purpose of making any examination. inspection, or test. Shipper shall have the right to witness all proving
of meters used in such measurement. Carrier reserves the right to test and measure and/or witness the testing and
measurement of al1 deliveries from its facilities.
Wherc the measurement is determined by tank gauge, such measurement shall be based upon tanks strapped and tables
compiled in accordance with Chapter 2, "Tank CaJibration", API Manual of Petroleum Measurement Standards, Latest
Edition, indicating 100% full capacity. Volume measurements by temperature compensated meters shall be further
corrected for meter factor and pressure in accordance with the latest edition of APT Manual of Petroleum Liquid
Hydrocarbons by Pipeline Displacement Meters.
Carner shall deduct from the volume of Petroleum received into Camer's facilities the actual amount ofsuspcnded basic or
foreign sediment, water and other impurities as ascertained by centrifuge or other tests agreed upon.
Carrier shall retain 2110 of 1% of the volumes of Petroleum received into Carner's facilities to cover loss due to shrinkage
and evaporation incident to transportation on Carrier's facilities, and the volumes delivered to Shipper from Camer's
t
facilities shan be net of such deduction ("Pipeline Loss AJlowance ').
The net calculated quantity at 60 degrees Fahrenheit less sediment and water and other impurities volume percentage shall
be the quantity received or delivered by Carner.
In addition to the Pipeline Loss Allowance set forth herein abo\'e~ a volume shrinkage deduction shall be applied starting at
4S.0Q API at 60 degrees Fahrenheit with a 1% adjustment, with further adjustments made in increments of 0.03 % for every
0.1 degree API. (For example 48.1 0 API = 1.93% deduction).
Except for arithmetic errors. all measurement and testing by Carricr shall be conclusive if a representative of the Shipper or
its Consignee was not present during such measuring and testing.
ECPl Texas Intrasla1c No. )70.9.0 Page 7 (If J)
Plf Resp in Opp to Motion for Summary Judgment 197
SR269
ITEM 12 - INVENTORY REQUffiEMENTS
Carner shall require Shipper to supply a pro rata share ofPetro)eum and inventory necessary forpjpeline and tankage fin to
assure efficient operation ofeamer's pipeline system.
Petrolcum furnished by a Shipper may be withdrawn from Carrier's pipeline system only after!
(1) Shipper has ceased shipments and Shipper has notified Carrier in writing to discontinue shipments in Carrier's pipeline
system, and;
(2) Shipper inventory balances have been reconciled between Shipper and Carrier.
Carrier may require advance payment of transportation cbarges on the volumes to be delivered from Carrier's pipeline
system, and any unpaid accounts receivable. before final delivery will be made. Carrier shall have a reasonable period of
time after the receipt of said notice to complete administrative and operational requirements ineider.t to Shipper's
withdrawal of the Petroleum.
ITEM 13 - LlABILI'I'V Olt' CARRJ£H
Carrier win not be liable for any loss of Petroleum while in the possession of Carrier, or for any delay in receiving or
delivering Petroleum if caused by an Act of God, the publie enemy, quarantine, the authority of law, strikes, riots, the act or
default of Shipper or Consignee, requisition by an agency of Government or any other cause not due to the negligence of
Carrier.
If such loss occurs to Petroleum in a segregated shipment, then the Shipper and Consignee thereof shall bear the entire 10ss~
damage or delay which occurs.
However, if sueh loss occurs to Petroleum which is not in a segregated shjpment~ then each Shipper of the grade of
P~trolewn so lost via the system in which the loss occurs shall share such loss in the proportion that the amount. of such
grade of Petroleum then in the custody of Carner for the account of such Shipper in such system bears to the total amount
ofsucb grade of Petroleum then in the custody of Carrier in such system.
Carrier will be obiigated to deliver only that portiOD of a Petroleum shipment remaining after deducting such loss.
Tram;portation cbarges will be made only on quantities of Petroleum delivered.
If Petro]cwn is lost in transit while in the custody of Carrier due to causes othcr than those described in the first paragraph
of this item, Carrier may obtain and deliver to Consignee thereof other Petroleum of the same quantity and grades as that
which was Jost, but Carrier sball not be obligated to do so; in the alternative, Camer may compensate Shipper for such loss
in money.
ITEM 14 -ORIGINATION FACILITIES
Carrier will receive Petroleum from Shippers at stations on its gathering Jines; a( leases or pJants to which its gathering lines
connect; and at origins on its trunk lines. Petroleum will be recejved only from pipelines, tanks or other facilities that are
provided by Shipper or Shipper's designce, or a connecting carrier, or a marketer of Petroleum. Carrier will detennine and
advise Shippers of the size and capacity of pipelines and tanks to be provided at the point of a receipt to meet the operating
conditions of Carrier's facilities at such point. Carrier will nOl accept Petroleum for transportation, unles~ such facilities
have been provided.
ECI1L TexllS Intrastate Nt'. 170.9.0 Page ~ of 13
Plf Resp in Opp to Motion for Summary Judgment 198
SR270
ITEM 15 - PAYMENT OF TRANSPORTATION AND OTHER CHARGES
Shipper or Consignee shall pay the transportation and all other charges accruing on Petroleum Nominaled for shipment,
adjusted to 6Q degrees Fahrenheit and with all deductions herein provided for. Carrier shall have a lien on an Petroleum
accepted for transportation to secure the payment of aJJ charges. and may withhold said J)etroleum from deJivery until all of
the said charges shall have been paid.
Shipper and Consignee shall be jointly and severally liable for the payment of gathering~ transportation and demurragc
charges upon Petroleum delivered by Canier to Consignee or to a point on Canier~s lines by mutual agreement orCarrier,
Shipper and Consignee.
Canier will bill Shipper each month for gathering charges on Petroleum gathered for Shipper during the previous month.
C.arrier will bill Shipper each month for transportation and demunage charges on Petroleum delivered to Consignee during
tbe previous month. If such a bilJ is not paid within 10 days after datc of invoice, Canier shall have the right to assess a latc
charge at an annual interest rate equivalent to 12S% of the prime rate of interest charged by Citibank N.A. of New York,
New York on 90 day loans to substantial and responsible commercial borrowers as of the due date. In the event the latc
charge, as described in the preceding sentence, is greater than the maximum ralc allowed by Jaw, then the maximum rate
allowed by law will be used. Such late charge shall accrue from 10 days after date of invoice unlil payment is made.
Carrier may require that all payments to Carrier for services pertaining to the transportation of Petroleum bc wire
transferred in accordance with the instructions on the Carriers invoice to Shipper.
In the event Carrier detennines that the financial condition of a Shipper of shipper's guarantor ( jf any) is or has become
impaired or unsatisfactory or Carrier detennines it is necessary to obtain security from a Shipper, Carrier, upon notice to
Shipper, will require any of the following prior to Carrier's delivery of Shipper's Products in Carrier~s possession Dr prior
to Carrier's acceptance of Shipper's Petroleum: (1) prepayment of a1l charges by wire transfer and shall be held by the
Carrier without interest accruing then:on until credited to the Shipper, (2) a letter of credjt at Shipper's expense in favor of
Carrier in an amount sufficient to ensure payment of all such charges and, in a form, and from an institution acceptable to
Carrier, or (3) a guaranty in an amount sufficjent to ensure payment of all such charges, and in a fonn, and from a third
party acceptable to Carrier. In the event Shipper fails to comply with any such requirement on or before tbe date supplied
in Carrier's notice to Shippcr. Carrier shall not be obligated to provide Shipper access to Carrier's facilities or provide
services pursuant to this tariffuntil such requirement is fully met.
ITEM 16 - QUALITY AND QUANTITY OF RECEIPTS AND DELIVERIES
Carrier wilt not make a delivery of less than 10,000 Barrels of Petroleum at any destinations on its trunk lines, except when
necessitated by dispatching contingencies and except where a smaJler delivery is authorized by an individual tariff.
however, Carrier will deliver smal1er quantities ofPelroleum to destinations on its gathering lines.
Carrier will also accept for transponation a grade of Petroleum which docs not meellbe conditions of the first paragraph of
tbis item, provided that:
(a) Carrier has available facilities to segregate sueh grade of Petroleum while it is in transit from all other grades of
Petroleum; and
(b) Carrier shall not be liabJe to Shipper or Consignee for changes in the gravity or quality of such grade of Petroleum while
it is in transit; and
(c) The Petroleum offered for transportation is made 8vaiJable at the origins of a shipment in a quantity which equals or
exceeds the following minimum:
Outside diameter Minimum quantity of
Largest pjpeline through Petroleum which
which shipmenl will move may be segregated
12 '* inches or less 10,000 barrels
14 - 18 inches 20,000 barrels
20 - 24 inches 35,000 barrels
Carrier reserves the right to require an assay on Petroleum nominat~ prior to acceptin$ Barrels for tralk~onation.
ECPL Teu," Inlrn~atc: No. 170.9.0 Page: 9 uf 13
Plf Resp in Opp to Motion for Summary Judgment 199
SR271
ITEM 17 - RATES APPLICABLE
The rate which shall apply to the transportation of Petroleum shall be the rate in effect on the date Petroleum is received by
Carrier for transportation. Likewise, the rules and regulations which sball govern 'be transponation of Petroleum shall be
the rules and regulations in effect on the date Petroleum is received by Carrier fOT transportation.
ITEM 18- RATES APPLICABLE FROM A.?+ID TO INTERMEDIATE POINTS
Petroleum received from a point on Carrier's lines which is not named in tariffs making reference to this tariff, but which
point is intermediate to a point from which rates are published in tariffs making reference to tbis tariff, will be assessed the
rate in effect to the next more distant point published in the tariff making reference to this tariff.
Petroleum delivered to a point on carner's lines which is not named in tariffs making reference to this tariff, but which
point is intermediate to a point to which rates are published in tariffs making reference to this tariff, will be asse~ thc rate
in effect to the next more distant point published in the tarifTmaking reference to this tariff.
ITEM 19 - SCHEDULING OF SHIPMENTS/ALLOCATION
All Shippers desiring to ship Petroleum through the lines of Camer shall promptly provide Carrier in the form of a
Nomination with all information needed by Carrier 10 schedule and dispatch each 'shipment of Petroleum which Shipper
offers to make; to satisfy Canier that offers to ship are in good faith; and to satisfy Carrier that shipments can be
transportcd in conformance with Carrier's tariffs. Carrier may refuse to receive Petroleum for transportation until Shipper
bas provided Carrier with such infonnation.
Except as sct forth in the immediately following paragraph, Canier shall not be obligated to accept Petroleum for
transportation during any calendar month unless the Shipper shan, on or before the 15th day of the preceding calendar
month, notifY the Carrier in writing of the kind and quantity of such Petroleum which it desires to ship. If 1Sth day of the
preceding calendar month is a non-business day, then such notification shall be due on the last business day immediately
prior to the 1Sth day of the preceding month.
In the event Shippers offer 10 ship more Petroleum via a particular pipeline or segment of )jne dwing any period of time
than can be pumped through such line or segment of line during such period, Carrier shall allocate available transportation
capacity on a fair and equitable basis to all Shippers pursuant to Carrier"s current proration policy. Carrier may, at the
requCb1 of any upstream pipeline, conduct verification to detennine whether or not allocation is necessary based on
upstream nominations, pursuant to Carrier's then current policy and procedures. A copy of such document is available upon
request.
ITEM 20 - SEPARATE PIPELINE AGREEMENTS
Separate agreemcn~ jf applicable, in association with pipeline connections or other facilities ancillary to the Carrier's
pipeline system and in accordance with this tariff shall be required of any Shipper or consignee before any obligation to
provide transponation shall rise.
ECPL Texas InlraSI&IC No. 170.9.0 Page' 0 of 13
Plf Resp in Opp to Motion for Summary Judgment 200
SR272
ITEM 21- SPECIFICATIONS REQUIRED AS TO QUALITY
Carrier will determine the quality of Processed Condensate in accordance with the following test methods: API gravity,
density and relative density by ASTM Standards D1298, D5002 and D287 at APl 60 degrees Fahrenheit; vapor pressure by
ASTM Standard 05191; and sediment and watcrby APTMPMS Chapter 10.4.
Carrier wi)) only accept Petroleum that does not contain any other excessive metals, chemicals, salts, or any other material
which would adversely affect downstream markets or pipelines. No Petroleum will be accepted for transportation except
merchantable Petroleum which is properly settled and contains not morc than I % of basic sediment, water, and other
impurities, and has a temperature not in excess of 120 degrees Fahrenheit and its gravity, viscosity, pour point, and other
characteristics are such that it will be readiJy susceptib1e to transportation through the Carrier's existing facilities. and wm
not materially affect the qualit), of other shipments or cause disadvantage to other Shippers andlor the Carrier. In addition,
Canier reserves the right to rejcct (any and all of, but not limited to) the following shipments:
(a) Petroleum having a Reid Vapor Pressure in excess of nine pounds per square inch abso1ute andlor an API gravity in
excess of 80.0°; and
(b) Petroleum where the Shipper or Consignee has failed to comply with applicable laws, rules, and regulations made by
government authorities Tegulating shipment of Petroleum. If Petroleum is accepted from tankage, settled bottoms in such
tanks must not be above a point four incbes below the bottom of the pipeline connection with the tank from which it enters
Camers facilities.
Quality specifications of a connecting carrier may be imposed upon Carrier when such limits aTe less than tl1at of Carrier, in
which case the limitations of the connecting carrier will be applied.
Carrier may, from time to time, undertake to transport other or additional grades of Petroleum and if, in the opinion of
Carrier, sufficient quantities are nOl nominated or facilities are not available to justify continued transportation of other or
additional grades, Carrier may: after giving reasonable nobce to Shippers who may be affected, cease transporting
particuJar grades of Petroleum.
If, upon investigation, Carrier determines that a Shipper has delivered to Carrier's facilities Petroleum that has been
contaminated by the existence of andlor excess amounts of impure substances, including but not limited to, chlorinated
andlor oxygenated hydrocarbons, arsenic, lead andlor other metals, such Shipper wilJ be excluded from fw1hcr entry into
applicabJe segments of the system until such time as quality specifications are met to the satisfaction of Carrier. Funher,
Carrier resen'es the right to dispose of an)' contaminated Petroleum locking its system. Disposal thereof, if necessary, may
be made in any reasonable commercial manner, and any liabiHty associated with the contamination or disposal of any
Petroleum shall be borne by the Shipper introducing the contaminated Petroleum into Carrier's system.
Carrier will from time to time determine which grades of Petro1eum it will regularly transport as a Common Grade between
particular receipt points and destination points on its pipeline systems. Carrier will infonn al1 subscribers to tariffs for the
system affected by such detennination and this will constitute the sole holding out of the Carrier in regard to the grades of
Petroleum transported.
Un1ess stated otherwise in written notice provided by Carrier to all subscribers to tariffs for the system affected. Carrier wm
not segregate ·Petrolcum of a kind andlor quality not currcntly transported through Carrier's facilities.
ITEM 22 -SPECIFICATIONS AS TO QllALITY AND LEGALITY OF SHIPMENTS
Carrier reserves the right to reject any and all Petroleum nominated where the Shipper or Consignee has f~led to compJy
with all applicable Jaws, items and regulations made by any governmentnl aU!horitje..~ regulating shipments of Petrolcum.
ECPI. Texas IntTaStalc No. )70.9.0 rage II of 13
Plf Resp in Opp to Motion for Summary Judgment 201
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ITEM 23 - STORAGE IN TRANSIT
The Carrier has working tanks that are needed by Camer to transport Petroleum but has no other tanks and, therefore, does
not have facilities for rendering, nor does it offer, a storage service. Provisions lor storage during transit in facilities
furnished by Shipper at points on Carrier's system will be permitted to the extent authorized under individuaJ tariffs.
ITEM 24 - TITLES
The act of delivering Petroleum to Carner for transportation shan constitute a warranty by Shipper that Shipper or
Consignee has unencumbered title thereto and that the same was produced in accordance with law.
SECTION 3
LOCAL PROPORTIONAL RATES IN CENTS PER BARREL
(U] All rates in this seetion are unchanged unless otherwise indicated.
TO
ECHO Terminal [C1C:iesBa JYAet:iee
FROM
(Harris Co.) {Haffis ~e.~
Altair (Colorado Co.) 249.25(1) [Cl
Hope (Lavaca Co.) 249.25(1) [el
Katy (Fort Bend Co.) 66.24 [C]
Sealy (Austin Co.) 249.2S(\) [C)
FOOTNOTE:
(I) GATHERING RATE:
A galhering cbarge of 60.00 cenlS per Barrel will apply in addition to tbe transponation rdh: ahove for the denolc:d movement
rCl(2) eO~'NEcrION l.T C9'9!a J.UNcrIO~:
The de!u~,ed HIe. ememl is enl) Bvailable fer eenneetiBn fe Magellae P~eliA~ C8fRPBA). 6_D • 24 er 26 ifteh pipelines Sf EmteftMebil
Pipeline CSIHPBfl), 24 inG~ pipelifte 'liB ECHQ TeRHina1.
@) P~tPO"ER FROM IiCHO TE,",UNAL:
Ro81es illehuie 8 flHlftpeve, fee sf IQ.4~ SeRlS perB8ffe1.
ECPL Texas Intrastato No. J70.9.0 Page] 2 of 13
Plf Resp in Opp to Motion for Summary Judgment 202
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SECTION 4
JOINT RATES IN CONNECTION WITH
MAGELLAN PIPELINE COMPANY, L.P.
IU] All rates in this section are unchanged.
RATE IN GATHERING RATE IN
FROM TO
CENTS PER BARREL CENTS PER BARREL
Texas City Marathon 302.63
Galveston Bay Refinety 60.00
(Galveston Co.) 291.7611)
Altair (Colorado Co.)
Hope (Lavaca Co.)
Sealy (Austin Co.)
344.18
Morgan's Point
60.00
(Harris Co.) 333.32(1)
Texas City Marathon 119.61
Galveston Bay Refinery 60.00
(Galveston Co.) 108.75 en
Katy (FortBcnd Co.)
137.32
Morgan's Point
60.00
(Hanis Co.) 126.45 (I)
FOOTNOTE:
(1) Any Shipper wbo ships aod delivers, In tbeJr nam", the Minimum Monthly Volume Requirement of 600,000 Barrels In
any calendar month to Texas City Marathon Galveston Bay Refiner), andlor Morgan's Point. Carrier "fll invoice tbe
Shipper at the Incentive Rate.
If Sbipper's Initial deU\'eI'Y from .he Incentive orildns to the inecnti\'e destination i5 Dot on the: first day of any calendar
month, the first month's MInimum Monthl)' Volume Requirement \\ill be prorated for the Dumber of days remaining iD tbr
initial month.
E,;eeptioD to Item No. 11, Section 2:
GAUGING. TESTING Al\D DEDUCTIONS: - Carrier shall deduct 0.3 of J% of the volumes of all Petroleum received into
Carrier's system 10 cover evaporation and loss during transportation.
Route: ECPL to Genoa Junction (Hams County, Texas) via ECHO Tenninal (Harris ColOUY, Texas); Magellan Pipeline Company. LP.
from Genoa Junction (Harris County. Texas) lo Texas City Mamthon Galveston Bay Rcfmery (Galveston County, Texas); ECPL from
Anahuac Junction (Harris County. Texas) to Morgan's Point (Harris County, Texas).
EXPLA..1\;ATION OF REFERENCE MARKS
[C] Cancel. [U] Unchanged rate.
PLEASE NOTE: IN THE EVENT OF ANY CONFLICT BETWEEN SECTION 1 AND SECTION 2 OF THIS
TARIFF, SECTION 2 WILL GOVERN.
ECPL Texas IntrastalcNo. 170.9.0 Page 13 of 13
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FILED
DALLAS COUNTY
9/20/2017 1:30 PM
FELICIA PITRE
DISTRICT CLERK
CAUSE
CAUSE NO.
NO. DC-17-07264
DC-17-07264
MAGELLAN CRUDE OIL
MAGELLAN CRUDE OIL PIPELINE COMPANY,
PIPELINE COMPANY, )
Delaware limited partnership,
L.P., a Delaware )
)
Plaintiff, ) IN
IN THE DISTRICT COURT
THE DISTRICT OF
COURT OF
)
vs.
vs. ) DALLAS
DALLAS COUNTY, TEXAS
COUNTY, TEXAS
)
ENTERPRISE CRUDE
ENTERPRISE OIL LLC,
CRUDE OIL LLC, aa Texas
Texas limited
limited ) 101st JUDICIAL
101st DISTRICT
JUDICIAL DISTRICT
liability company,
company, )
)
Defendant.
Defendant. )
PLAINTIFF’S RESPONSE
PLAINTIFF'S RESPONSE IN
IN OPPOSITION TO
OPPOSITION TO
DEFENDANT’S MOTION FOR
DEFENDANT'S MOTION PROTECTION AND
FOR PROTECTION TO STAY
AND TO STAY DISCOVERY
DISCOVERY
PENDING RESOLUTION
PENDING RESOLUTION OFOF DEFENDANT’S MOTION
DISPOSITIVE MOTION
DEFENDANT'S DISPOSITIVE
Defendant Enterprise Crude
Defendant LLC ("Enterprise")
Crude Oil LLC motion
filed the above-referenced motion
(“Enterprise”) filed
(“Stay Motion”)
("Stay August 10, 2017, on
on August
Motion") on on the heels of
of filing no-evidence Motion
filing its no-evidence Summary
Motion for Summary
Judgment
Judgment ("Motion Summary Judgment")
(“Motion for Summary on August
Judgment”) on August 4, 2017. That Motion
2017. That Summary
Motion for Summary
and the Stay Motion,
Judgment, and
Judgment, on September
Motion, are set for hearing on September 25, 2017.
2017. In the Stay Motion,
Motion,
Court to stay Enterprise’s
Enterprise asks the Court Enterprise's response document production
response to the document production requests
on July 21, 2017'
(“Magellan”) served on
Plaintiff ("Magellan") to quash document subpoenas Magellan
20171 and to
issued to on July
to three non-parties on July 31, 2017} pending the
31, 2017,2 outcome of the
the outcome the hearing on the Motion
on the
Summary Judgment.
for Summary main argument
Enterprise’s main
Judgment. Enterprise's argument is that the Motion Summary Judgment
Motion for Summary Judgment is
“case-ending” motion, and
a "case-ending" Mage1lan’s discovery requests are "premature,"
and thus that Magellan's “premature,”
and burdensome.
unnecessary, and Motion at 1.
burdensome. Stay Motion 1. Enterprise has everything
Enterprise has backwards. What
everything backwards. What
is premature is the Enterprise no-evidence
premature no-evidence Motion Summary Judgment,
Motion for Summary two
filed less than two
Judgment, filed
months Magellan sued
months after Magellan and before it has had
sued and had any
any discovery whatsoever.
whatsoever. Both Motion for
Both the Motion
Summary Judgment
Summary and the Stay Motion
Judgment and be denied.
Motion should be
A to Stay Motion.
Ex. A
1 See Ex.
'
Motion.
2
See Exs.
2 See B-D to Stay Motion.
Exs. B-D Motion.
PLAINTlFF’S RESP.
Plaintiff's OPP. TO
IN Opp.
Resp. in To DEFEND/\NT’S MOTION for
Defendant's Motion PROTECTION AND
FOR Protection TO Stay
And To DISCOVERY -
STAY Discovery Page 11
- Page
[I74Iss4;)
(1741854;)
SR341
SUMMARY or-‘ ARGUMENT
The Stay Motion should be denied, first and foremost, because Enterprise’s no-evidence
Motion for Summary Judgment is not “case-ending” at all. In fact, it is premature and improper
under Rule l66a(i) of the Texas Rules of Civil Procedure, and is otherwise unfounded for all the
reasons explained in Plaintiffs Response in Opposition to Defendant’s Motion for Summary
Judgment, which Magellan hereby adopts and incorporates in opposition to the Stay Motion.
Further, the Stay Motion is meritless for other reasons, and Enterprise has not met its burden to
show entitlement to the relief it requests. Indeed, Enterprise does not attempt to show that any
particular discovery request by Magellan is improper, and relies on little more than unsupported
incantations that Magellan’s requests are “overbroad,” “unduly burdensome,” or invasive of
Enterprise’s “trade secret” infomtation. Stay Motion at 8-12. In truth, Magellan’s document
production requests to Enterprise and the subpoenaed non—parties seek information that is (i) well
within the scope of permissible discovery under Rule 192.3(a) of the Texas Rules of Civil
Procedure, (ii) neither overly broad not unduly burdensome, and (iii) not subject to any
legitimate “trade secret” objection by Enterprise.
By virtue of the parties’ Rule 11 agreement regarding the Stay Motion, expressly made
“without prejudice to any argument of any party in connection with the motion for summary
judgment and/or the Stay Motion,”3 Enterprise obtained a blanket stay of all discovery pending
the September 25, 2017 hearing on its Motion for Summary Judgment. If and to the extent
Enterprise may have any colorable objection to any particular discovery request, or any
legitimate concern over discovery of proprietary business information, such issues should be
(and routinely area) resolved by conference between the parties and, if necessary, entry of a
3
Ex. A, attached hereto.
PLAlNT|FF'S RESP. IN OFF. TO DEFENDANT’S MOTION FOR PROTECTION AND TO STAY DISCOVERY — Page 2
(r741as4.|
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suitable confidentiality agreement or order—not by a motion for a blanket stay of all discovery
while Enterprise simultaneously urges the Court to grant a “case-ending” summary judgment
motion based on its assertion that Magellan has “no evidence” to support its claims. Both the
Motion for Summary Judgment and the Stay Motion should be denied, and discovery should
proceed.
ARGUMENT AND AUTHORITIES
I. ENTERPRISE HAS THE BURDEN or PRooE 0N ITs STAY MoTIoN
Enterprise’s attempt to shift the burden of proof to Magellan is unavailing. As the party
seeking a protective order under Rule 192.6, Enterprise bears the burden of proof. See, e.g.,
Estate of Pollack v. McMurrey, 858 S.W.2d 388, 392 (Tex. 1993) (“[A]s the party seeking
protection from discovery, the Estate bears the burden of proof.”). Specifically, “[a] party
seeking a protective order must show particular, specific and demonstrable injury by facts
sufficient to justify a protective order.” In re Collins, 286 S.W.3d 911, 919 (Tex. 2009) (internal
quotation and citation omitted). “So long as the discovery sought is within the scope of Rule
I66b /now Rule I92.3(a)], a trial court may not grant a protective order limiting discovery
unless the party seeking such protection has met this burden.” Masinga v. Whittington, 792
S.W.2d 940, 940-41 (Tex. 1990) (emphasis added); accord, Brewer & Pritchard, P.C. v.
Johnson, 167 S.W.3d 460, 466 (Tex. App.——Houston [l4th Dist.] 2005, pet. denied).
Furthennore, to meet its burden Enterprise “may not simply make conclusmy allegations that
the requested discovery is unduly burdensome or unnecessarily harassing” but “must produce
some evidence supporting its request for a protective order when sought on that basis.”
Blankinship v. Brown, 399 S.W.3d 303, 312 (Tex. App.—Dallas 2013, pet. denied) (citations
omitted, emphasis added)). Enterprise has not met those burdens of proof.
PLAINTlFF’S RESP. IN OPP. To DEFENDANT’S MOTION FOR PROTECTION AND To STAY DISCOVERY — Page 3
(I7AIas4,)
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II. MAGELLAN’S DISCOVERY REQUESTS ARE WELL WITHIN THE SCOPE or RULE 192.3,
AND NEITHER OVERBROAD Non UNDULY BURDENSOME
Rule 192.3, Scope of Discovery, provides in pertinent part as follows:
(a) Generally. In general, a party may obtain discovery regarding any
matter that is not privileged and is relevant to the subject matter of the
pending action, whether it relates to the claim or defense of the party
seeking discovery or the claim or defense of any other party. It is not a
ground for objection that the information sought will be inadmissible at
trial if the information sought appears reasonably calculated to lead to the
discovery of admissible evidence.
(b) Documents and tangible things. A
party may obtain discovery of the
existence, description, nature, custody, condition, location, and contents of
documents and tangible things (including papers, books, accounts,
drawings, graphs, charts, photographs, electronic or videotape recordings,
data, and data compilations) that constitute or contain matters relevant to
the subject matter of the action. A
person is required to produce a
document or tangible thing that is within the person's possession, custody,
or control.
Id. (bold italics added).
Magellan’s discovery requests to date seek documents clearly relevant to the subject
matter of the action—the relationships and dealings between Magellan and Enterprise arising
from their Crude Oil Distribution Agreement dated October 3], 2011 (“COD Agreement”).‘ And
although that alone makes the requests permissible under Rule 192.3, the requests also seek
information which is directly relevant to the specific claims alleged in Magellan’s Original
Petition, including its claims for breach of contract and fraud, and its alternative claims for
reformation of contract and promissory estoppel.
First, MagellarI’s requests to Enterprise seek documents relevant to Enterprise’ liability to
Magellan, including documents showing: the circumstances surrounding the COD Agreement,
such as the business reasons why Enterprise entered into the COD Agreement; the
4
See Ex. B, attached hereto.
PLAINTIFI-"S RESP. IN OPP. T0 DEFENDANT’S MOTION FOR PROTECT ION AND TO STAY DISCOVERY — Page 4
N14135:.)
SR344
representations and promises Enterprise made to Magellan in connection with the COD
Agreement; the Enterprise contract negotiators’ understandings and intentions regarding the
Enterprise transportation commitment made to Magellan in the COD Agreement (the
commitment to “exclusively utilize” the Magellan Facilitiess); whether the COD Agreement, as
written, resulted from a mutual mistake in reducing the parties’ actual agreement to writing; the
communications between Enterprise and its Eagle Ford crude oil customers revealing which
party initiated the replacement of Enterprise’s purchase agreements with buy-sell agreements and
why; all the ways and means Enterprise has used to bypass Magellan; and whether Enterprise
had an intent not to perform when it entered into the COD Agreement or otherwise intentionally
misled Magellan.
Second, Magellan’s requests seek Enterprise business records necessary determine and
quantify the extent of Enterprise’s breach of the COD Agreement and thus the damages
Magellan has suffered to date. Magellan’s requests are no broader than is reasonably required to
do that—to identify, determine, and quantify the Eagle Ford crude oil volumes that Enterprise
should have shipped through Magellan’s facilities but did not.
Through its subpoenas to the three non—party Enterprise customers currently known to
Magellan—the customers for which, afler entering into the COD Agreement with Magellan,
Enterprise replaced pre-existing crude oil purchase-only (marketing) agreements with buy-sell
agreements designed to circumvent Enterprise’s transportation commitment to Magellan-
Magellan seeks to discover the non-parties’ documents relating to Enterprise’s liability and
Magellan’s damages, including: copies of their original Eagle Ford crude oil marketing
agreements with Enterprise, the replacement buy-sell agreements with Enterprise, or similar
5
Ex. B at 6, Section 4.].
PLAINTIFF’S RESP. IN OPP. TO DEFENDANT’S MOTION FOR PROTECTION AND TO STAY DISCOVERY — Page 5
muusq.)
SR345
agreements with Enterprise or its affiliates, relating only to Eagle Ford crude oil and to the time
period relevant to the case; correspondence between the non-party and Enterprise regarding such
agreements; and documents reasonably necessary to determine and quantify the volumes of
Eagle Ford crude oil Enterprise should have transported through the Magellan Facilities to
relevant Houston-area destinations, but did not.
None of Magellan’s document production requests are “overbroad” or “unduly
burdensome,” as Enterprise blithely suggests without any specifics or any support. Stay Motion
at 8-12. Indeed, Enterprise’s entire argument about overbreadth and burden is premised on the
very same assertion made in its Motion for Summary Judgment, that the COD Agreement allows
Enterprise to deliberately circumvent its commitment to make exclusive use of the Magellan
Facilities, and thus that Magellan has no right to discover the particulars about Enterprise’s
circumvention schemes or the extent of the resulting damages to Magellan. That is clearly
wrong, for all the reasons explained in MageIlan’s response in opposition to the Motion for
Summary Judgment.
Neither are Magellan’s discovery requests improperly duplicative, as Enterprise says.
Stay Motion at 13. While the non-parties may have some responsive documents identical to
responsive documents in Enterprise’s possession, that is far from a certainty, especially since
some requested documents date back a number of years, and since Enterprise has previously
represented to Magellan (in connection with Magellan’s audits) that Enterprise no longer has
certain important documents such as all of the original Eagle Ford marketing agreements with
the non-parties currently known to Magellan. Moreover, no case cited by Enterprise supports the
proposition that a subpoena to non-party is subject to being quashed merely because there is a
PLAlNT|FF’S RESP. IN OPP. To DEFENDANT’S MOTION FOR PROTECTION AND To STAY DISCOVERY — Page 6
lI74II§4.)
SR346
possibility that the non-party may possess some documents which duplicate those that a party
itself possesses and may eventually produce in the action.
Finally, but importantly, Enterprise’s argument that some of Magellan’s requests seek
inadmissible “parol evidence” is completely misguided. Stay Motion at 8. In the first place,
Enterprise’s argument that any “parol evidence” will be inadmissible at trial is incorrect, as
shown by the authorities cited in Magellan’s Response in Opposition to Defendant’s Motion for
Summary Judgment, at pages 22 and 45-46. Secondly, for discovery purposes the test is not
whether the information will be admissible at trial but whether it is relevant to the subject matter
of the action. See Rule l92.3(a) and (b) (“It is not a ground for objection that the information
sought will be inadmissible at trial if the infonnation sought appears reasonably calculated to
lead to the discovery of admissible evidence.). In this regard, Enterpn'se’s heavy reliance on
Nat’! Union Fire Ins. Co. v. CB1 Industries, 907 S.W.2d 517 (Tex. 1995) is misplaced. In that
case, which involved only a claim for breach of contract, the court held that no further discovery
of parol evidence was appropriate because the insurance contract provision at issue was
PLAlNTlFF’S RESP. IN OPP. TO DEFENDANT’S MOTION FOR PROTECTION AND TO STAY DISCOVERY - Page 7
HNIBSA.)
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unambiguous as a matter of law. Id. at 521 (Tex. 1995). CB] Industries is readily distinguishable
and inapplicable here, for several reasons. 5
III. ENTERPRISE HAS No LEGITIMATE “TRADE SECRETS” OBJECTION To ANY or
MAG!-3LLAN’S DISCOVERY REQUESTS
Enterprise also argues that a protective order is warranted on the ground that “[t]he vast
majority of Mage1lan’s requests seek information about Enterprise’s business operations and
strategies in the Gulf coast region” and that “[t]his information constitutes trade secrets
belonging to Enterprise.” Stay Motion at 10. That, too, is completely false and unsupported.
Without pointing the Court to any particular requests made by Magellan, Enterprise
offers only a sweeping conclusion that “[i]n their totality, the requests would require Enterprise
to disclose its entire distribution network and pricing structure, and lay open all of its customer
arrangements in the region.” Stay Motion at 10. That is sheer nonsense. Any close examination
of Magellan’s actual requests shows that they are carefully tailored and reasonably confined to
information plainly relevant to the subject matter of the action, the specific claims alleged, and/or
°
First, the language of the COD Agreement does not unambiguously favor Enterprise’s position.
Second, unlike CB1 Industries, Magellan’s discovery requests seek evidence concerning the
circumstances surrounding the parties’ negotiation and entry into the COD
Agreement——evidence the
Court can and should consider in construing the CODAgreement, notwithstanding the parol evidence
rule. See First Bank v. Brumitl, No. 15-0844, 2017 WL1968830, at *l0 (Tex. May 12, 2017); Banker v.
Breawc, 128 S.W.2d 23, 24 (Tex. 1939) (contracting parties’ intention must be ascertained from their
agreement “in the light of the attending circumstances”); Basic Capital Management v. Dynex
Commercial, 348 S.W.3d 894, 899 (Tex. 2011) (for contract interpretation, a court may consider “the
undisputed evidence regarding [the contract’s] negotiation and purpose”); Sun Oil Co. (Del.) v. Madeley,
626 S.W.2d 726, 731 (Tex. 1981) (even when a court concludes that the parties’ contract is unambiguous,
it may consider the surrounding “facts and circumstances” as an “aid in the construction of the contract’s
language”). Third, in CB] Industries the surrounding circumstance were fully developed, whereas here
(due to the Stay Motion) they are not. See Ford Motor Co. v. Castillo, 279 S.W.3d 656, 664 (Tex. 2009)
(noting that discovery was unnecessary in CB! Industries because “the facts in [that case] were
sufficiently developed and all the relevant infonnation was at hand”). Fourth, unlike the plaintiff in CB1
Industries, Magellan also alleges claims for contract refonnation, promissory estoppel, and fraud. For
purposes of those claims, parol evidence is relevant and admissible regardless of any ambiguity in the
written contract. See, e.g., ISG Slate Operations, Inc. v. Nat’! Heritage Ins. C0,, 234 S.W.3d 711, 719-20
(Tex. App.—Eastland 2007, pet. denied); Probado Techs. Corp. v. Smarmet, Inc., No. CIV.A. C-09-349,
2010 WL 2232831, at *6 (SD. Tex. June 2, 2010).
PLAlNTlFF'S RESP. IN OPP. TO DEFENDANT'S MOTION FOR PROTECFION AND TO STAY DISCOVERY - Page 3
|mi3s4;)
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information reasonably necessary to determine and quantify the damages Magellan has suffered
as a result of Enterprise’s wrongful crude oil transportation schemes designed to avoid
Enterprise’s legal obligation to “exclusively utilize” the Magellan Facilities in accordance with
the COD Agreement.7 Here, too, Enterprise’s argument hinges on its assertion that such
information is not discoverable because the COD Agreement permits Enterprise to engage in
such schemes, with impunity. Again, that is wrong, for all the reasons explained in Magellan’s
response to the Motion for Summary Judgment.
Furthermore, to the extent any of the documents sought by Magellan may reveal
information Enterprise deems “proprietary” or “trade secret,” that is only because Enterprise
entered into a contractual commitment which inevitably involves such information.“ In Section
4.4 of the COD Agreement, Enterprise expressly granted Magellan the right to “audit Shipper’s
[Enterprise’s] records necessary to vertfiz Shipper ‘s compliance” with its contractual obligations
as set forth in Sections 4.1 and 4.2 of the contract.” Therefore, Enterprise has no valid basis for a
protective order blocking discovery of all such records, regardless of whether they include any
information Enterprise may reasonably consider to be proprietary or “trade secret.”
Indeed, the case Enterprise cites for its “trade secret” argument, In re
Bridgestane/Firestone, Inc., 106 S.W.3d 730 (Tex. 2003),‘° actually supports Magel1an’s
position. In that case, the Texas Supreme Court observed: “Any analysis of the necessity of trade
secret information to a fair adjudication must begin by examining the relationship between the
7
See Ex. B at 6, Section 4.].
8
Of course, insofar as any non-party may possess infonnation Enterprise shared with that non-party, the
infomiation cannot constitute an Enterprise “trade secret.” It is worth noting, too, that none of the non-
parties Magellan has subpoenaed to date have objected to Magel|an’s requests on the ground that they
invade the non-party’s trade secrets (or on any other ground, for that matter).
9
Ex. B at 7, Section 4.4 (emphasis added).
'°
See Stay Motion at I 1.
PLAlNTlFF'S RESP. IN OPP. To DEFENDANT’S MOTION FOR PROTECTION AND To STAY DISCOVERY — Page 9
4:741:54.)
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trade secret information sought and the material elements of the parties’ claims and defenses.”
Id. at 735 (emphasis added). In so noting, the Court relied on a Delaware case which allowed
discovery of the fonnula for Coca—Cola, “one of the best-kept trade secrets in the world,”
because it was necessary for the fair adjudication of the case. Id. In this case, it is abundantly
clear that Enterprise’s shipping records directly pertain to material elements of Magellan’s
claims and thus are discoverable, regardless of any proprietary nature of the records.
Under these circumstances, the mere fact that some of Magel1an’s discovery requests may
reach business information in which Enterprise has a valid “trade secret” interest, cannot warrant
an order prohibiting Magellan’s discovery of such information, much less the blanket stay of all
discovery sought by Enterprise. Any legitimate “trade secret” concerns are easily resolved
through a confidentiality agreement/order containing appropriate limitations on the use of such
information (e.g., for purposes of this litigation only). Although such agreement/orders are
commonplace in complex business litigation like this, neither Enterprise nor any subpoenaed
non-party has presented any proposed confidentiality agreement/order for Magellan’s
consideration. Instead, and ironically, Enterprise has effectively blocked all Magellan discovery
pending a hearing on the Motion for Summary Judgment, the motion in which Enterprise urges
the Court to dispose of all Magellan claims on the merits, before Magellan has any discovery
whatsoever, on the ground that Magellan has no evidence to support its claims.
CONCLUSION
For the reasons stated above, and in Magellan’s response to the Enterprise no-evidence
Motion for Summary Judgment, the Court should deny the Stay Motion, deny the Motion for
Summary Judgment, and permit Magellan to proceed with the discovery to which it is entitled.
PLAlNTlFF’S RESP. IN OPP. T0 DEFENDANT’S MOTION FOR PROTECT ION AND TO STAY DISCOVERY — Page l0
urmsa.)
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Respectfiilly submitted,
GABLEGOTWALS
By: /s/David L. Brvant
David L. Bryant
State Ba: No. 24084344
dbryant@gableIaw.com
113 Pleasant Valley Drive, Suite 204
Boeme, Texas 78006
Telephone: (830) 336-4810
Facsimile: (918) 595-4990
Lisa T. Silvestri
State Bar No. 00797967
1silvestri@gablelaw.com
100 W. Fifth St., Suite 1100
Tulsa, Oklahoma 74103
Telephone: (918) 595-4800
Facsimile: (918) 595-4990
And
FIGARI + DAVENPORT, LLP
Davidoff
Bill E.
StateBar No. 00790565
bill.davidoff@figdav.com
Amanda Sotak
State Bar No. 24037530
amanda.sotak@flgdav.com
901 Main Street, Suite 3400
Dallas, Texas 75202
Telephone: (214) 939-2000
Facsimile: (214)939-2090
ATTORNEYS FOR PLAINTIFF,
MAGELLAN CRUDE OIL
PIPELINE COMPANY, LP.
PL/\lNTIFF'S RESP. IN OPP. TO DEFEND/\NT'S MOTION FOR PROTECTION AND TO STAY DISCOVERY - Page I I
11741354,)
SR351
CERTIFICATE OF SERVICE
I certify that on September 20, 2017, I forwarded a true and correct copy of the foregoing
document to the following counsel via EFile:
E. Leon Carter
lcarter@carterscholer.com
J. Robert Arnett II
bamett@carterscholer.com
Joshua J. Bennett
jbennett@carterscho1er.com
Courtney Barksdale Perez
cperez@carterscholer.com
CARTER SCHOLER PLLC
8150 N. Central Expressway
Suite 500
Dallas, Texas 75206
Attorneys for Defendant
Enterprise Crude Oil, LLC
/s/David L. Bryant
David L. Bryant
PLAlNTlFF’S RESP. lN OPP. TO DEFENDANT’S MOTION FOR PROTECTION AND TO STAY DISCOVERY — Page I2
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EX. A
Ex. A
08/11/2017 Rule
08/11/2017 Agreement
Rule 11 Agreement
Plaintiffs Resp. Opp. To
Resp. in Opp. To Defendants Protection And
Defendants Motion for Protection To Stay Discovery -- 13
And To 13
SR353
FILED
DALLAS COUNTY
8/11/2017 4:20 PM
FELICIA PITRE
DISTRICT CLERK
GABLE
GOTWALS
oI\.~r.I.
I I3 Pleasant Valley Dr.
David L. Bryant 5““° 2°‘
‘”"””"'@g”b'”’”""°'"
nE§§'JI.°é 2ize3’ha)S37:~8e03g
1 o
www.gabIeIaw.cam
August I 1, 2017
E. Leon Carter
CARTER SCHOLER
8150 N. Central Expressway
Suite 500
Dallas, Texas 75206
Re: Magellan Crude Oil Pipeline Company, LP‘ v. Enterprise Crude Oil LLC,
Cause No. DC-17-07264, 101“ District Court, Dallas County, Texas
Dear Leon:
Pursuant to Rule 11 of the Texas Rules of Civil Procedure, this letter sets out an agreement
between the above-referenced Plaintiff and Defendant, and their respective attomeys, regarding
Defendant’s Motion for Protection and to Stay Discovery Pending Resolution of Defendant’s Dispositive
Motion (the “Stay Motion”), filed on August I0, 2017.
Specifically, agreed that: (i) Defendant will have the Stay Motion set for hearing on
it is
September 25, 2017, same time as the hearing on Defendant’s motion for summary judgment; and
at the
(ii) without prejudice to any argument of any party in connection with the motion for summary judgment
and/or the Stay Motion, from this date until September 26, 20I7 Plaintiff will not initiate any new
discovery and will suspend and hold in abeyance any obligation of Defendant or any non-party to respond
to Plaintiffs pending requests or subpoenas seeking discovery from Defendant or from non—parties.
Plaintiff will advise subpoenaed non-parties of this agreement.
If this agreement is satisfactory, please sign and return the same to our office.
AM #74
Sincerely yours,
David L, Bryant
Attorneys for Plaintiff
Attorneys for Defendant
( 17250132;
Opp. To
Resp. in Opp.
Plaintiffs Resp. Defendants Motion for Protection
To Defendants And To Stay Discovery -- 14
Protection And 14
SR354
Ex. B
Crude Oil Distribution Agreement
dated October 31, 2011
Resp. in Opp.
Plaintiffs Resp. To Defendants
Opp. To Defendants Motion for Protection And To
Protection And To Stay Discovery - 15
15
SR355
CRUDE OIL DISTRIBUTION AGREEMENT
This Cmde Oil Distribution Agreement (“Agreement”) is made and entered into this 31”
day. of October, 201 l(the “Effective Date”) by and between Enterprise Crude Oil LLC, a Texas
limited liability company (“Slrlpper"), and Magellan Pipeline Company, L.P., a Delaware limited
partnership (“Magellan”). Shipper and Magellan are sometimes hereinafter referred to
individually as a “Party” or collectively as the “Parti”.
RECITALS:
WHEREAS, Magellan owns and operates certain crude oil pipeline facilities in the
Houston, Texas area, including pipeline facilities that extend from Genoa Junction to BP's Texas
City Refinery in Galveston County (via an approximately 26.3 mile long, 26-inch diameter
pipeline) and from Speed Junction to Valero’s Houston Refinery (via an approximately 1.09 mile
long, 24-inch diameter pipeline) (hereinafter collectively referred to as the “Existing Magellan
Facilities");
WHEREAS, Magellan is contemplating the construction of a new 24-inch pipeline from
Genoa Junction to Speed Junction, a new 24-inch pipeline from Speed Junction to Deer Park and
construction of or improvements to other existing delivery points at Houston Refining LP’s
Refinery, Pasadena Refining System, Inc.’s Houston Refinery and Red Bluff Tank Farm, Shell’s
Deer Park Refinery and Enterprise Crude Pipeline LIJC’s (“Enterprise Pipeline”) pipeline at
Anahuac Junction (hereinafter collectively referred to as the “New Magellan Facilities”, and,
together with the Existing Magellan Facilities, the “Magellan Facilities”);
WHEREAS. Enterprise Pipeline owns the 24-inch diameter crude oil pipeline facility
(“Eagle Ford Pipeline System”) that extends from the Origin Points (as hereinafter defined) in
south Texas to the Connection Point (as hereinafter defined) with Magellan’s Genoa Junction and
owns the Webster-area terminal located south of Genoa Junction (the “Echo Tenninal”); and
WHEREAS, Shipper, to facilitate Magellan’s construction of the New Magellan Facilities,
is willing to provide the commitment described in this Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the promises and of the mutual covenants and
agreements contained herein, and of other good and valuable consideration the receipt, adequacy
and sufficiency of which are acknowledged, and intending to be legally bound hereby, Magellan
and Shipper agree as follows:
1. DEFINITIONS. In addition to the definitions set forth in the foregoing preamble, the
following terms shall have the definitions set forth below for the purposes of this
Agreement:
1.l “Affiliate” means. in relation to a Party, any entity that (A) directly or indirectly
controls such Party; (B) is directly or indirectly controlled by such Party; or (C) is
directly or indirectly controlled by an entity that directly or indirectly controls such
Party. For purposes of this definition. the term “control”, including the terms
“controlling” and “controlled by”, means the possession, directly or indirectly, of
Resp. in Opp.
Plaintiffs Resp. To Defendants
Opp. To Defendants Motion for Protection And To
Protection And 16
To Stay Discovery -- 16
SR356
the_power to direct or cause the direction of the management and policies of an
entity.
1.2 “Agreement" has the meaning set forth in the first paragraph of this Agreement.
1.3 “Banel” means forty-two (42) U.S. Gallons (each being 2.3] cubic inches)
temperature conected to sixty (60) degrees Fahrenheit.
1.4 "Commitment Exceptions" has the meaning set forth in Section 4.2(B).
[.5 “Connection Point” means each of tire following points at which the Magellan
Facilities are connected and capable of receiving Product as of the In-Service Date:
A. Point of interconnection between the Magellan Facilities and Enterprise
Pipeline’s Eagle Ford Pipeline System at or near Genoa Junction; and
B. Point of interconnection between me Magellan Facilities and Enterprise
Pipeline’s Echo Terminal at or near Genoa Junction.
1.6 “Controlled” shall mean, when referring to Product, Product that Shipper or its
Affiliates, as the case may be, has the legal right to transport; provided, however,
the custody of Product by an Affiliate of Shipper that is transporting such Product
for the account of a party or parties other than Shipper or its Affiliates does not
constitute Control.
1.7 “Default Termination" has the meaning set forth in Section 2.2.
1.8 “Destination Point” means the following points:
A. Valero’s Houston Refinery;
B. BP’s Texas City Refinery;
C. Enterprise Pipeline‘s Anuhuac Junction; and
D. Shell’s Deer Park Refinery.
Magellan may, but shall have no obligation to, construct additional points at which
the Magellan Facilities will be connected and capable of delivering Product during
the Term of this Agreement, including, without limitation, the following:
Marathon’s Texas City Refinery, Valero’s Texas City Refinery, Seaway Crude
Pipeline Company’s Texas City Terminal, Seaway Crude Pipeline Company's
Galena Park Terminal, Houston Fuel Oil Terminal Company’s Houston Terminal,
Oil Tanking’s Houston Terminal, Houston Refining LP’s Houston Refinery,
Pasadena Refining, Inc.’s Houston Refinery, Pasadena Refining, Inc.’s Red Bluff
Tank Farm and/or Magellan Terminal Holdings, L.P.’s Galena Park Terminal (the
“Future Destination Points"). If connected, these Future Destination Points will
be deemed added to this definition of Destination Points.
1.9 “Dispute" has the meaning set forth in Section 9.9.
1.10 “Dispute Notice” has the meaning set forth in Section 9.9.
2
Opp. To
Resp. in Opp.
Plaintiffs Resp. To Defendants Protection And
Defendants Motion for Protection And To 17
To Stay Discovery -- 17
SR357
“Eagle Ford Pipeline System" has the meaning set forth in the recitals.
1.12 “Echo Terminal" has the meaning set forth in the recitals.
1.13 "Effective Date" has the meaning set forth in the first paragraph of this Agreement.
1.14 “Enterprise Pipeline” has the meaning set forth in the recitals.
1.15 “Enterprise Pipeline Local Tariff Rate” means the rate charged by Enterprise
Pipeline under the Joint Tariff.
1.16 "Existing Magellan Facilities” has the meaning set forth in the recitals.
1.17 “Force Majeure" has the meaning set forth in Section 6.1.
1.18 “Future Destination Points” has the meaning set forth in Section 1.8.
1.19 “Govemmental Authority" means any governmental entity exercising executive,
legislative. judicial, regulatory or administrative functions or pertaining to
government, including any governmental authority, agency, department, board,
commission or instrumentality, and any tribunal, court or arbitrator of competent
jurisdiction.
1.20 "In-Service Date" has the meaning set forth in Section 2.1.
1.21 “Incentive Program Rate" means the rate in the Joint Tariff for shippers that
qualify for the incentive program as set forth in the Joint Tariff.
1.22 “initial Incentive Magellan Rate" means $0.2853.
1.23 “Joint Tariff" means that certain joint tariff (Texas Railroad Commission Tariff
No. ) together with all applicable rules and regulations, as each may be
supplemented, amended or reissued from time to time.
l .24 "Law” means all applicable local, state and federal constitutions, laws (including
common law), treaties, statutes, orders, decrees, rules, regulations, codes, and
ordinances issued by any Governmental Authority, and including judicial or
administrative orders, consents, decrees, and judgments, and determinations by, or
interpretations of any of the foregoing by any Governmental Authority having
jurisdiction over the matter in question and binding on a given Party.
1.25 “Liabilities” has the meaning set forth in Section 8.1.
1.26 “Magellan" has the meaning set forth in the first paragraph of this Agreement.
1.27 “Magellan Facilities“ has the meaning set forth in the recitals.
1.28 “Minimum Volume Threshold" means 20,000 barrels per day per month.
Opp. To
Resp. in Opp.
Plaintiffs Resp. To Defendants
Defendants Motion for Protection And To
Protection And To Stay Discovery -- 18
18
SR358
1.29 “New Magellan Facilities" has the meaning set forth in the recitals.
1.30 “Oil Pipeline Index" has the meaning set forth in Section 3.3A.
[.31 “Origin Point" means the following points on the Eagle Ford Pipeline System:
A. Gardendale (Lasalle County, Texas);
B. Lyssy (Wilson County. Texas);
C. Marshall (Gonzales County, Texas); and
D. Milton (Kames County, Texas).
1.32 “Owned” shall mean Product to which Shipper or its Affiliate holds title; provided,
however. the custody of Product by an Affiliate of Shipper that is transporting such
Product for the account of a party or parties other than Shipper or its Affiliates does
not constitute being Owned.
1.33 “Party" and “Parties" have the meanings set forth in the first paragraph of this
Agreement.
”
1.34 :‘Produc means crude oil and condensate meeting the specifications provided for
in the Joint Tariff, as such tariff may be supplemented, amended or reissued from
time to time.
1.35 “Shipper” has the meaning set forth in the first paragraph of this Agreement.
1.36 “Tariff Escalation" has the meaning set forth in Section 3.3(A).
1.37 “Term" has the meaning set forth in Section 2.1.
CONTRACT TERM AND DEFAULT
2.1 Term. The term of this Agreement (“Term”) shall commence on the Effective
Date and shall continue until the tenth (l0“') anniversary of the In—Service Date (as
hereinafter defined). Transportation services contemplated hereunder shall be
available on the first day of the first calendar month after Magellan provides written
notice to Shipper that the New Magellan Facilities are operational (the “In-Service
Date"). Such notice must be provided at least fifteen (15) days prior to the
In—Service Date. The In-Service Date is estimated to be approximately fourteen
( 14) months after the Effective Date.
2.2 Default. A Party shall be in default under this Agreement if it: (A) defaults in the
payment or performance any of obligation in this Agreement; andlor (B) files or has
filed against it a petition in bankruptcy, for reorganization, or for appointment of a
receiver or trustee, which is not dismissed or withdrawn within sixty (60) days of
filing. Unless a default under this section has been cured to the reasonable
satisfaction of the non-defaulting Party within ten (10) days of the defaulting
Pany’s receipt of written notice from the non-defaulting Party of such asserted
default, then, in addition to all other available rights and remedies all of which are
cumulative, this Agreement may be immediately terminated at the option of the
Opp. To
Resp. in Opp.
Plaintiffs Resp. To Defendants Protection And
Defendants Motion for Protection And To 19
To Stay Discovery -- 19
SR359
non—defaulting Party by delivery of written notice of termination to the defaulting
Party (a “Default Termination").
JOINT TARIFF AND INCENTIVE PROGRAM RATES
3.] Joint Tariff. Transportation services under this Agreement are subject to, and the
Parties are required to comply with, the provisions of the Joint Tariff.
3.2 Incentive Program Rate. Subject to Section 3.3, during the Term of this
Agreement, Magellan agrees that the Incentive Program Rate under the Joint Tariff
will be equal to or less than the Enterprise Pipeline Local Tariff Rate plus the Initial
Incentive Magellan Rate.
3.3 Initial Incentive Magellan Rate Escalation and Adjustment.
A. The Incentive Magellan Rate may be increased by Magellan beginning
Initial
on July 2012, and each July I“ of thereafter during the Term (the "Tariff
I,
Escalation”); provided. however, that (A) any Tariff Escalation will not exceed
the amount of any increase permitted in accordance with the indexing
methodology set forth in 18 C.F.R. §342.3, or any successor thereto (the “Oil
Pipeline Index") and (B) the Initial Incentive Magellan Rate will not decrease
during the Tenn.
B. In the event Magellan elects not to increase its Initial Incentive Magellan Rate
in any given year of the Term, Magellan reserves the right to increase its Initial
Incentive Magellan Rate in any subsequent year during the Term by the
allowable cumulative percentage increase foregone by Magellan in prior years.
C. In addition to and not subject to the limitations set forth above, in the event
Magellan is required by a change from the Law as it existed on the Effective
Date to: (i) make significant improvements to all or any portion of the Magellan
Facilities or (ii) to incur significant additional expenses for public safety,
pollution control or for any other reason with respect to the Magellan Facilities,
and the effect of the cost and expense thereof to Magellan is not reflected in the
Oil Pipeline Index, Magellan may increase the Initial Incentive Magellan Rate
to reflect the effect of such costs and expenses incurred by Magellan to comply
with such change in Law. Magellan shall notify Shipper, not less than ninety
(90) days prior to the implementation of any increase in the Initial Incentive
Magellan Rate under this Section 3.3(C), of the amount of such proposed
increase, the reason for such increase and the method of calculating such
increase. Shipper shall have the right to notify Magellan within thirty (30) days
after Shipper receives Magellan’s notice, of Shipper's decision not to pay such
increase. If Shipper fails to timely notify Magellan of its decision, then it shall
be deemed for purposes of this Agreement that Shipper accepts and approves
such increase. If Shipper notifies Magellan that it will not accept such increase
then such increase shall be null and void, but Magellan shall have the right to
terminate this Agreement within thirty (30) days after Magellan receives
Shipper’s notice in which case neither Party shall have any further obligations
to the other Party hereunder except as to obligations already accrued. Magellan
Opp. To
Resp. in Opp.
Plaintiffs Resp. To Defendants Protection And
Defendants Motion for Protection 20
To Stay Discovery -- 20
And To
SR360
Plaintiffs Resp. in Opp. To Defendants Motion for Protection And To Stay Discovery - 21
SR361
Plaintiffs Resp. in Opp. To Defendants Motion for Protection And To Stay Discovery - 22
SR362
Plaintiffs Resp. in Opp. To Defendants Motion for Protection And To Stay Discovery - 23
SR363
Plaintiffs Resp. in Opp. To Defendants Motion for Protection And To Stay Discovery - 24
SR364
Plaintiffs Resp. in Opp. To Defendants Motion for Protection And To Stay Discovery - 25
SR365
Plaintiffs Resp. in Opp. To Defendants Motion for Protection And To Stay Discovery - 26
SR366
FILED
DALLAS COUNTY
9/20/2017 11:07 PM
FELICIA PURE
DISTRICT CLERK
CAUSE NO. DC-17-07264
MAGELLAN CRUDE OIL PIPELINE IN THE DISTRICT COURT
COMPANY, L.P.,
Plaintiff,
vs. 101st JUDICIAL DISTRICT
ENTERPRISE CRUDE OIL, LLC,
Defendant. DALLAS COUNTY, TEXAS
DEFENDANT'S REPLY IN SUPPORT OF
MOTION FOR SUMMARY JUDGMENT
Defendant Enterprise Crude Oil, LLC files its reply in support of its motion
for summary judgment, responding to the arguments made by Magellan Crude Oil
Pipeline Company, L.P., as follows:
INTRODUCTION
Despite Magellan's attempts to complicate this case and confuse the issues,
the case presents a straightforward question of contract construction. As explained
in Enterprise's motion and in the sections below, the plain and unambiguous
language of the Distribution Agreement defeats Magellan's breach of contract claim
as a matter of law, and Magellan's remaining claims also fail.
ARGUMENTS AND AUTHORITIES
A. Enterprise's traditional summary judgment motion should be
granted because the proper construction of the Distribution
Agreement disposes of the entire case.
Enterprise has filed a traditional summary judgment motion under Rule
166a(c). Enterprise attached supporting evidence to its motion—most significantly
the subject contract—and invoked the standard for traditional summary judgment
Defendant's Reply in Support of Motion for Summary Judgment Pagei
SR367
motions.1 Enterprise’s motion does not invoke the no-evidence rule—Rule 166a(i)—
and does not follow the procedures for no-evidence motions. Instead, Enterprise
seeks an expeditious end to Magellan’s frivolous lawsuit via traditional summary
judgment, which is particularly appropriate when the controversy can be resolved
by the proper construction of an unambiguous contract. See Lopez v. Munoz,
Hockema & Reed, L.L.P., 22 S.W.3d 616, 617-18 (Tex. 2000).
Like a diligent propagandist, Magellan repeats over and over and over that
Enterprise’s motion is a “no-evidence” motion. It manifestly is not, and the Court
should see through Magellan’s transparent attempt to keep its lawsuit alive by
claiming that an adequate time for discovery has not elapsed.
B. Magellan’s breach of contract claim fails as a matter of law based on
the plain and unambiguous language of the Distribution Agreement.
1. The language of the Distribution Agreement defeats Magellan’s
breach of contract claim because it defines the limits of
Enterprise’s obligation under this requirements contract.
This is a contract interpretation case. Although the parties agree on the
rules of contract construction, Magellan turns those rules upside down and
backwards to twist the Distribution Agreement to state terms it manifestly does not
state. The starting point for the analysis is the actual language of the Distribution
Agreement. And the actual language unequivocally defeats Magellan’s claims:
4.1 Transportation Commitment. Following the In-Service Date,
Shipper [Enterprise] agrees:
A. to exclusively utilize the Magellan Facilities for all
deliveries of Product that are Owned or Controlled by
Shipper; and
1 Motion, at 13.
DEFENDANT’S REPLY IN SUPPORT OF MOTION FOR SUMMARY JUDGMENT PAGE 2
SR368
B. to use best efforts to cause Shipper’s Affiliates to
exclusively use the Magellan Facilities for all deliveries of
Product that are Owned or Controlled by any of its
Affiliates;
provided, that such deliveries are made from an Origin Point
and are either:
(i) transported on the Eagle Ford Pipeline System
through Echo Terminal to the Connection Point
and delivered to any of the Destination Points, or
(ii) transported on the Eagle Ford Pipeline System to
the Connection Point and delivered to any of the
Destination Points2
That language is clear and unambiguous. The Distribution Agreement is a type of
requirements contract, in which Enterprise agreed to use the Magellan Facilities to
transport a subset of the crude oil coming out of the Eagle Ford Shale, i.e., those
barrels that met the requirements expressly set forth in Section 4.1. Magellan’s
breach of contract claim does not allege that Enterprise failed to utilize the
Magellan Facilities for crude oil that met the requirements of Section 4.1. Instead,
Magellan alleges that Enterprise breached the Distribution Agreement by not
paying Magellan for crude oil that does not meet the requirements of Section 4.1.
Because Magellan’s claim is based upon an invalid interpretation of the contract, as
a matter of law Enterprise is entitled to judgment on that claim as a matter of law.
Magellan’s unsupported and unexplained effort to evade the clear language of
the Distribution Agreement, is wrong as a matter of law. As noted in a leading
treatise, “[i]n a requirements contract the quantity term is not fixed at the time of
contracting. The parties agree that the quantity will be the buyer’s needs or
2 Original Petition at Exhibit A, § 4.1 (emphasis added).
DEFENDANT’S REPLY IN SUPPORT OF MOTION FOR SUMMARY JUDGMENT PAGE 3
SR369
requirements of a specific commodity or service.” J. Perillo & H. Bender, CORBIN ON
CONTRACTS, § 6.5, p. 240 (West 1995). Here, the quantity of crude oil to be
transported on the Magellan Facilities is not fixed in the Distribution Agreement,
and Magellan tacitly concedes this point, making no contrary argument in its
response. Instead, the parties agreed that Enterprise’s crude oil shipments meeting
certain requirements would be transported on the Magellan Facilities. Therefore,
the Distribution Agreement necessarily is a requirements contract. Otherwise the
Distribution Agreement would fail for indefiniteness. See, e.g., Cox, Inc. v. Humble
Oil & Refining Co., 16 S.W.2d 285, 286-87 (Tex. Com. App. 1929).
The reason Magellan fights so hard to deny that the Distribution Agreement
is a requirements contract is because, with that understanding, the analysis is
straightforward. The purpose of a requirements contract is to give the buyer an
assured source of supply over an extended period of time without obligating him to
purchase a specified quantity, thus enabling him to meet the fluctuating needs of
his business. Tenn. Valley Auth. v. Imperial Professional Coatings, 599 F. Supp.
436, 438 (E.D. Tenn. 1984). Accordingly, courts have generally permitted buyers to
cut back or eliminate entirely their orders if there is a bona fide decrease in the
buyers’ needs. Tenn. Valley Auth., 599 F. Supp. at 439. It is generally held that a
requirements buyer does not undertake to establish or maintain any particular
level of requirements. Lambert Corp. v. Evans, 575 F.2d 132, 138 (7th Cir. 1978).
The seller instead assumes the risk of all good faith variations in the buyer’s
requirements, even to the extent of a determination to liquidate or discontinue the
business. HML Corp. v. General Foods Corp., 365 F.2d 77, 81 (3rd Cir. 1966).
DEFENDANT’S REPLY IN SUPPORT OF MOTION FOR SUMMARY JUDGMENT PAGE 4
SR370
Thus, the buyer under a requirements contract for the paint required for
nuclear power plants did not breach the contract when it cancelled construction of
the plants and purchased no paint. Tenn. Valley Auth., 599 F. Supp. at 439-40.
And, the buyer under a requirements contract for limestone to be used in a specific
construction project did not breach the contract when the project was cancelled and
it purchased no limestone. R.A. Weaver and Assoc., Inc. v. Asphalt Constr., Inc., 587
F.2d 1315, 1321 (D.C. Cir. 1978). Put differently, “a promise to buy from another
person or company all of some commodity or service that the promisor may
thereafter need or require in the promisor’s business is not a promise to have any
requirements.” CORBIN, § 6.5, pp. 247-48. To the contrary, “a requirements buyer
is privileged not to buy.” Id.
Professor Corbin’s treatise on contract law provides the following illustration:
(1) S promises to sell on stated terms, and B promises to buy, all
the coal that may be used by certain vessels then owned by B. Here, B
is privileged to withdraw the vessels from service and buy no coal at
all. B is privileged, also, to install oil burning boilers or a gas engine,
and buy no coal. There must, however, be an honest business
judgment for the withdrawal or conversion. But no coal for their use
may be bought of anyone other than S. If the vessels use coal, it must
be coal purchased from S.
CORBIN, § 6.5, p. 251; see also Angelica Uniform Group, Inc. v. Ponderosa Systems,
Inc., 636 F.2d 232 (8th Cir. 1980) (buyer under a requirements contract was entitled
to order reduced quantities highly disproportionate to a stated estimate if the
reductions were done in good faith).
Applied here, these principles preclude Magellan from prevailing on its
claims as a matter of law. Under the Distribution Agreement, Enterprise is entitled
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to engage in all of the following actions without breaching the agreement: (i) to
accept deliveries of crude at points other than the Origin Points; (ii) to ship crude to
destinations other than the Destination Points (e.g., other refineries or terminals);
(iii) to ship crude from an Origin Point to a Destination Point without going through
the Connection Point; and (iv) to ship crude owned by its customers without taking
ownership or control of the crude itself.3 In each case, Enterprise is not subject to
the incentive tariff under the Distribution Agreement because it only obligates
Enterprise to use the Magellan Facilities—and thus pay the incentive tariff—for
crude that Enterprise owns or controls and ships from an Origin Point to the
Connection Point and delivers to a Destination Point.
2. The plain language of Section 4.1 has meaning and does not
render the Distribution Agreement illusory.
That Enterprise has some control over the specifics of its requirements does
not render this requirements contract illusory as Magellan claims.
The promisor’s duty is conditional upon the existence of an objective
need for the commodity or service, and the promisor may have a
high degree of control over the happening of this condition, but
this does not render the promise illusory. It states a limitation upon
the promisor’s future liberty of action. The promisor no longer has an
unlimited option.
CORBIN, § 6.5, pp. 249-50 (emphasis added). For example, the fact that a city was
free to purchase natural gas from other suppliers, and was free to purchase as much
3 Magellan’s reference to Section 4.2 does not change the language of Section 4.1. Moreover, the
language of Section 4.2 is not inconsistent with the proper interpretation of Section 4.1. The
“Magellan Facilities” are defined as specific pipelines running from the Connection Point to the
Destination Points. Section 4.2 merely states that if Magellan’s pipelines are at capacity, Enterprise
can utilize a third party’s pipeline for ultimate delivery of the crude. It has nothing to do with
ECHO terminal, and does not preclude Enterprise from shipping crude to ECHO terminal. In fact,
the definition of “Connection Point” recognizes that Enterprise may ship crude to ECHO terminal.
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or as little oil from one supplier as it chose, did not render its contract to purchase
its requirements for oil from that supplier illusory. City of Lakeland, Fla. v. Union
Oil Co. of Calif., 352 F. Supp. 758, 764-65 (M.D. Fla. 1973).
The leading Texas case on requirements contracts illustrates this point. In
Northern Natural Gas Co. v. Conoco, Inc., 986 S.W.2d 603, 604-05 (Tex. 1998), a
pipeline company (Northern) agreed to deliver for processing all of the natural gas
that it purchased and received under specified gas purchase contracts to a gas
processor for a period of twenty years. After gas prices were deregulated,
Northern’s purchases of natural gas dropped dramatically, eventually to zero, as it
cancelled or declined to renew the gas purchase contracts. Id. at 605. In affirming
the court of appeals’ judgment reversing judgment for the gas processor, the
Supreme Court stated:
Northern was obligated to deliver for processing all gas that it bought
under the dedicated gas purchase contracts for twenty years, and as
long thereafter as purchases continued under those contracts, but
Northern was never obligated to perpetuate the gas purchase
contracts or to deliver any gas for processing if no gas was
purchased.
Id. at 606 (emphasis added).
Similarly, in Keyes Helium Co. v. Regency Gas Services, L.P., 393 S.W.3d 858,
860-61 (Tex. App.—Dallas 2012, no pet.), a midstream company (Regency) entered
into a contract to sell to a helium processing company (Keyes) all crude helium
produced at Regency’s Lakin Plant for a period of twelve years. Regency shut down
the Lakin Plant with three years remaining on the contract with Keyes due to
changes or anticipated changes in its business, and Keyes sued Regency. Id. In
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affirming a directed verdict for Regency, the Dallas Court of Appeals noted that a
party to a requirements contract may reduce its output or requirements, even to
zero, without breaching the contract so long as the reduction is made in good faith.
Id. at 864.
The logic of cases like Northern Natural Gas and Keyes Helium is fatal to
Magellan’s claims. In this case, as in Northern Natural Gas and Keyes Helium,
Enterprise was never obligated to ship crude from an Origin Point to a Destination
Point only through the Connection Point, or to accept deliveries of crude solely at
the Origin Points. As expressly recognized by the Texas Supreme Court, the fact
that Enterprise had some control over its requirements does not render the contract
illusory. 4 Northern Natural Gas, 986 S.W.2d at 607. Magellan’s contrary
arguments have no basis in the Distribution Agreement or in the law.
3. Magellan’s interpretation of the Distribution Agreement is
unreasonable.
Magellan argues that the Distribution Agreement is ambiguous because
Section 4.1 is subject to another reasonable interpretation. But Magellan’s
interpretation Magellan is as unreasonable as it is absurd because it ignores the
law, flouts common sense, and distorts the plain language of the contract. There is
simply no language in the Distribution Agreement itself or law supporting
Magellan’s argument that the agreement requires Enterprise to use the Magellan
Facilities exclusively for all deliveries of crude that are owned or controlled by
Enterprise or its affiliates. The requirements in Section 4.1 are not “covenants”
4The fact that Enterprise has paid Magellan more than $8.2 million under the Distribution
Agreement also defeats an argument that it is illusory. See Affidavit of Brent Secrest, ¶ 5.
DEFENDANT’S REPLY IN SUPPORT OF MOTION FOR SUMMARY JUDGMENT PAGE 8
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binding Enterprise to accept deliveries of crude solely at an Origin Point, to
transport crude solely to a Destination Point, or to route such deliveries solely
through the Connection Point. If the parties had wanted to create such an exclusive
arrangement, they would have used far different language—language that lacked
any of the multiple requirements and limitations of Section 4.1.
Although Magellan devotes considerable energy in one portion of its response
to arguing that the limitations or requirements in Section 4.1 are not conditions
precedent, in another portion Magellan argues—inconsistently—that Section 4.1’s
requirements are conditions precedent and that Enterprise purportedly waived such
conditions by not fulfilling them. Not so. Properly understood, these elements are
the limitations or requirements that define what portion of Enterprise’s shipments
of crude oil will be transported on the Magellan Facilities. Such provisions are
entirely common with requirements contracts—they cover some of the buyer’s
requirements, not all of the buyer’s requirements. See, e.g., Cox, Inc., 16 S.W.2d at
287 (all gasoline to be used by the buyer in operating a specific filling station, as
opposed to all gasoline purchased by the buyer); Texas Co. v. Pensacola Maritime
Corp., 279 F. 19, 23-24 (5th Cir. 1922) (all oil to be supplied to ships in Pensacola
during a fixed period, as opposed to all oil required by the buyer); Pace Corp. v.
Jackson, 284 S.W.2d 340, 343-44 (Tex. 1955) (all cigarettes for the buyer’s business
selling cigarettes in Kerr and Bandera Counties, as opposed to all cigarettes to be
sold anywhere).
Whether labeled a condition precedent or a limitation, the result is the same:
“provided, that” does not mean “shall exclusively.” The “provided, that” language
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instead limits Enterprise’s commitment and does not impose additional—and
superfluous—obligations on the part of Enterprise and its customers to exclusively
accept crude at Origin Points, exclusively route crude to the Connection Point, or
exclusively deliver crude to Destination Points. To have imposed those kinds of
obligations, the Distribution Agreement would need to state that “Enterprise shall
exclusively accept deliveries of crude at Origin Points,” 5 that “Enterprise shall
exclusively route crude through the Connection Point,” or that “Enterprise shall
exclusively deliver crude to Destination Points.” But it doesn’t say that. And any
contrary conclusion would render an additional requirement to route through the
Connection Point to a Destination Point superfluous because the function of the
Magellan Facilities is to connect the Connection Point (Genoa Junction) with the
Destination Points. As such, Magellan’s interpretation must be rejected. See Coker
v. Coker, 650 S.W.2d 391, 393 (Tex. 1983).
Moreover, Magellan’s interpretation would require Enterprise to abandon its
business of transporting crude oil for its customers. It would require Enterprise to
abandon any entry point on its Eagle Ford Pipeline system other than the four
specified Origin Points. It would require routing the entirety of the crude volume
transported by Enterprise through one point—Genoa Junction—regardless of the
efficiencies or economics of that routing. In short, Magellan’s argument would
5 Magellan does not contend that Enterprise is obligated to only accept deliveries of all crude it
purchases anywhere in the world at the Origin Points, but in so doing Magellan is being inconsistent
in the application of what it terms “covenants,” highlighting that its interpretation is fallacious. The
references to Origin Point, Connection Point, and Destination Points all come after the language
“provided, that,” and according to Magellan’s logic all of those terms would be “covenants.”
Requiring Enterprise to transport all crude that it buys anywhere in the world to an Origin Point
would be an obviously absurd result, as Magellan tacitly recognizes. That, however, is the direct
consequence of Magellan’s interpretation—mandating that Magellan’s interpretation be rejected.
DEFENDANT’S REPLY IN SUPPORT OF MOTION FOR SUMMARY JUDGMENT PAGE 10
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require Enterprise to engage in an illegal boycott of all refineries and terminals in
the Houston-Galveston area other than the four specified Destination Points.
Enterprise would never have bound itself to such an illegal exclusive dealing
arrangement.6
Finally, Magellan’s interpretation of the Distribution Agreement can be
correct only if Northern Natural Gas and Keyes Helium are wrong. In Northern
Natural Gas, the decisions to cancel and not renew the dedicated gas purchase
agreements were within Northern’s control. Northern Natural Gas Co., 986 S.W.2d
at 604-05. Under Magellan’s logic, however, Northern should have been obligated
to keep those contracts in effect so that it would continue to buy gas it was obligated
to send to Conoco for processing. That is not the law. The Texas Supreme Court
flatly rejected Magellan’s position. Id. at 606. Likewise, in Keyes Helium, the
decision to close the Lakin Plant was within the control of Regency. Keyes Helium
Co., 393 S.W.3d at 860-61. Therefore, according to Magellan, Regency should have
been obligated to keep the plant open so that it would continue to supply helium to
Keyes. The Dallas Court of Appeals rejected that position. Id. at 864. Magellan’s
theory and interpretation of the Distribution Agreement is therefore directly
contrary to controlling law, and must be rejected.
4. Magellan’s interpretation would render the Distribution
Agreement an illegal restraint on trade.
In an effort to manufacture ambiguity and create a fact issue, Magellan
contends that crude “Owned” or “Controlled” by Enterprise at any Origin Point, or
6 See infra Section B.4.
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owned or controlled by Enterprise “at any time or place along the route between
Origin Point and Destination Point,” 7 must be transported on the Magellan
Facilities. That is, Magellan argues that even if Enterprise sells the crude to a
third party at ECHO Terminal, or buys Eagle Ford crude at ECHO Terminal and
then sells it along the route, 8 Enterprise is required to compel its buyer to move
the crude through Magellan’s Genoa Junction and along the Magellan Facilities.9
Further, Enterprise’s affiliate, EPO, must refuse to do business with the buyer,
because, according to Magellan, by entering into the Distribution Agreement
Enterprise agreed to forego the use of “its own competing facilities” to transport the
crude.10
The problem is that such an agreement is per se unlawful. What Magellan
posits as “the only reasonable interpretation of Section 4.1” is in practical effect an
agreement among horizontal competitors to divide the transportation market for
crude produced in the Eagle Ford basin. Further, it is an agreement to induce or
coerce crude producers and purchasers to boycott all transportation facilities other
than the Magellan Facilities by conditioning an essential input–transport on
Enterprise’s Eagle Ford Pipeline–on doing business with Magellan to the exclusion
of all others. Such an agreement would be a naked restraint on trade and unlawful
7 Magellan Resp. Br. at 41.
8 This is itself a practical impossibility, further refuting Magellan’s interpretation. Crude is not
segregated at ECHO based on the crude’s origin; it is aggregated there based on quality with crude
from various sources, and there is no way to determine whether any particular batch of crude
purchased at ECHO was produced from an Origin Point.
9 Notably, Magellan’s position in this regard is directly contrary to the plain language of Section 4.1
of the Distribution Agreement stating that Enterprise shall use its “best efforts” to cause its
customers to use the Magellan Facilities. It does not say Enterprise shall compel or require its
customers to do so. See Original Petition, Ex. A, § 4.1.
10 Magellan Resp. Br. at 33.
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under Section 1 of the Sherman Act11 and its Texas equivalent.12 See United States
v. Topco Associates, Inc., 405 U.S. 596, 92 S.Ct. 1126, 31 L.Ed.2d 515 (1972)
(holding it is per se violation of Section 1 for competitors at same level of market
structure to allocate territories in order to minimize competition); Palmer v. BRG of
Georgia, Inc., 498 U.S. 46 (1990) (same). “Group boycotts, or concerted refusals by
traders to deal with other traders, have long been held to be in the forbidden
category.” Klor's, Inc. v. Broadway–Hale Stores, Inc., 359 U.S. 207 (1959). Boycott
violations “have generally involved joint efforts by a firm or firms to disadvantage
competitors by either directly denying or persuading or coercing suppliers or
customers to deny relationships the competitors need in the competitive struggle.”
Northwest Wholesale Stationers, Inc. v. Pacific Stationery and Printing Co., 472 U.S.
284, 294 (1985) (internal quotations and citations omitted). As per se antitrust
violations, agreements to divide markets or engage in group boycotts are presumed
to be anticompetitive. See Northern Pac. Ry. Co. v. U.S., 356 U.S. 1 (1958)
(collecting cases).
It is black-letter law that when presented with competing interpretations of a
contract, a court may not choose the interpretation that renders it unlawful. Lewis
v. Davis, 199 S.W.2d 146, 149 (Tex. 1947) (“When two constructions of a contract
are possible, preference will be given to that which does not result in violation of
law”). This is because contracting parties are presumed to know the law and intend
11 Section 1 of the Sherman Act provides that: “Every contract, combination in the form of trust or
otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign
nations, is declared to be illegal.” 15 U.S.C. §15.
12 Texas Free Enterprise and Antitrust Act of 1983, Tex. Bus. & Com. Code §§ 15.05.
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for their agreements to have legal effect. Dewhurst v. Gulf Marine Inst. of Tech., 55
S.W.3d 91, 97 (Tex. App.—Corpus Christi 2001, pet. denied). Since the Court must
presume an intention that the Distribution Agreement be lawful, Magellan’s
proposed reading violates the cardinal rule that agreements be interpreted to give
rise to the parties’ intent. Moreover, it places this Court in the position of having to
enforce an unlawful, anticompetitive arrangement. See Cayan v. Cayan, 38 S.W.3d
161, 166 n. 8 (Tex.App.—Houston [14th Dist.] 2000, pet. denied) (“But because the
purpose of the legal system is to combat unlawfulness, not promote it, we cannot
construe a contract to impose or enforce an illegal obligation.”).
5. Magellan cannot use parol evidence to change the meaning of
the Distribution Agreement.
As stated in Enterprise’s Motion for Summary Judgment, parol evidence may
not be used to create an ambiguity or “to show that the parties probably meant, or
could have meant, something other than what the agreement stated.” Anglo-Dutch
Petroleum Int’l, Inc. v. Greenberg Peden, P.C., 352 S.W.3d 447, 450-51 (Tex. 2011).
Notwithstanding this well-settled rule of contract construction, Magellan has
offered (1) a self-serving affidavit and (2) an email sent during the contract
negotiations in an attempt to explain what Magellan claims the parties really
intended despite what the plain language of the agreement actually says. This
evidence is inadmissible because when, as here, the parties’ negotiations have been
memorialized in a written agreement, the parol evidence rule excludes other
evidence of any prior or contemporaneous expressions of the parties relating to that
DEFENDANT’S REPLY IN SUPPORT OF MOTION FOR SUMMARY JUDGMENT PAGE 14
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transaction. Muhm v. Davis, 580 S.W.2d 98, 101 (Tex. Civ. App.—Houston [1st
Dist.] 1979, writ ref'd n.r.e.).
Moreover, courts construe an unambiguous document as a matter of
law. Coker v. Coker, 650 S.W.2d 391, 393 (Tex.1983). The Texas Supreme Court
has made clear that courts are to give effect to the intention of the parties as is
apparent in an unambiguous writing. City of Pinehurst v. Spooner Addition Water
Co., 432 S.W.2d 515, 518 (Tex.1968). Only if the intention of the parties as
expressed on the face of the document is doubtful may the court resort to parol
evidence to resolve the doubt. Miller v. Miller,700 S.W.2d 941, 951 (Tex. App.—
Dallas 1985, writ ref'd n.r.e.) (emphasis added). Sun Oil Co. v. Madeley, 626 S.W.2d
726, 732 (Tex. 1981) (“Only where a contract is first found to be ambiguous may the
courts consider the parties' interpretation. Where the meaning of the contract is
plain and unambiguous, a party's construction is immaterial.”). Accordingly, this
Court may not permissibly, as Magellan suggests, consider the affidavit or the
email in determining whether an ambiguity exists. Instead, this Court must first
determine as a matter of law based on the four corners of the Distribution
Agreement itself, whether an ambiguity exists. And it must do so without
consideration of the evidence Magellan has offered.
Because Magellan knows these basic rules of contract construction prohibit
the Court from considering its evidence, Magellan characterizes its parol evidence
as merely evidence of the “circumstances present when the contract was entered.”13
The cases Magellan cites in support of this proposition, however, do not support its
13 Magellan’s Resp. Br. at p. 49 (citing Anglo-Dutch Petroleum Int’l, Inc. 352 S.W.3d at 449-50).
DEFENDANT’S REPLY IN SUPPORT OF MOTION FOR SUMMARY JUDGMENT PAGE 15
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position. For example, in Anglo-Dutch Petroleum Int’l v. Greenberg Peden, P.C., the
Texas Supreme Court expressly cautioned that while “circumstances surrounding
the execution of a contract may inform its construction, [ ] there are limits.” 352
S.W.3d at 451. Then the court did precisely what this Court should do here—it first
focused solely on the language of the agreement itself. Id. at 452. In doing so, it
concluded that the contract at issue was not ambiguous and that consequently, the
extrinsic evidence the trial court considered in error was “of limited relevance” and
“[could not] be used to show the parties’ motives or intentions apart from the [ ]
Agreement.” Id.
The Texas Supreme Court reached a similar result in First Bank v. Brum,
also cited by Magellan. 519 S.W.3d 95 (Tex. 2017). In that case, the court similarly
construed the language of the contract at issue, determined that it was not
ambiguous, and therefore concluded that the trial court erred in (1) submitting the
issue to the jury at all; and (2) instructing the jury that it could consider extrinsic
evidence to add an unwritten term to an unambiguous written agreement. Id. at
106 (holding that “when a written contract is unambiguous . . . extrinsic evidence is
simply irrelevant and inadmissible on that issue. In such a case, the trial court can
neither submit the issue to a jury nor rely on extrinsic evidence to add terms to the
parties’ unambiguous agreement.”). The Court in First Bank did not stop there,
however. It further clarified its holding in Basic Capital Management v. Dynex
Commercial, upon which Magellan also relies for the erroneous proposition that its
extrinsic evidence here may be considered as evidence of the circumstances
surrounding the Distribution Agreement. Specifically, the Court stated:
DEFENDANT’S REPLY IN SUPPORT OF MOTION FOR SUMMARY JUDGMENT PAGE 16
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. . . references to “circumstances” surrounding a contract recognize that
evidence of the circumstances may assist courts in construing the language
the parties used, but they do not authorize courts to rely on such evidence to
add to or alter the terms contained within the agreement itself. When
parties ‘have a valid, integrated written agreement,’ the parol-evidence rule
‘precludes enforcement of prior or contemporaneous agreements.” . . . courts
may not rely on evidence of surrounding circumstances to make the language
say what it unambiguously does not say.
Id. at 109-110 (internal citations omitted).
The same analyses that the Texas Supreme Court applied in the cases above
when applied here demand a similar result. The Distribution Agreement expressly
states that Enterprise is only obligated to exclusively use the Magellan Facilities
when the crude being delivered is “owned or controlled by Enterprise,” “made from
an Origin Point,” “transported on the Eagle Ford Pipeline System through Echo
Terminal to the Connection Point,” and is “delivered to any of the Destination
Points.”14 This language, whose terms are expressly defined within the four corners
of the Distribution Agreement itself, can be given definite and certain legal
meaning. As such, it is not ambiguous. Id. at 104 (“If a written contract is so
worded that it can be given definite or certain legal meaning, then it is not
ambiguous.”) (quoting Natl’ Union Fire Ins. Co. of Pittsburgh, P.A. v. CBI Indus.
Inc., 907 S.W.2d 517, 520 (Tex. 1995). Magellan’s extrinsic evidence that the intent
of this plain, unambiguous language was “for all of the marketing volume to move
through these [Magellan] connections” 15 and extrinsic affidavit testimony averring
that the parties agreed that “crude oil could not be delivered to any Destination
14 Orig. Pet. at Ex. A § 4.1.
15 Magellan’s Resp. Br., Ex. 1-A.
DEFENDANT’S REPLY IN SUPPORT OF MOTION FOR SUMMARY JUDGMENT PAGE 17
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Point without utilizing Magellan’s Houston area crude oil distribution system” 16
adds to, alters and directly contracts the express terms to which the parties’
actually agreed. Accordingly, it is inadmissible parol evidence by any Texas
Supreme Court standard and it would be reversible error for this Court to consider
it.
6. Contrary to Magellan’s argument, the letter agreement relating
to the Joint Tariff does not amend or alter the Distribution
Agreement.
Magellan’s attempt to change the meaning of the Distribution Agreement by
what it refers to as the “Joint Tariff Agreement” is disingenuous and baseless.
Magellan falsely claims that the “Joint Tariff Agreement” expresses Enterprise’s
commitment and quotes a portion of that letter agreement. The full quote makes
clear that the “shipper” referenced in the Joint Tariff Agreement refers to third-
party shippers—not Enterprise:
Magellan and Enterprise agree to offer an incentive program under the
Joint Tariff to shippers that enter into a ten (10) year agreement with
Magellan pursuant to which the shipper agrees to ship under the Joint
Tariff all crude oil owned or controlled by it from an Origin Point
through the Connection Point and to a Destination Point. The Joint
Tariff rate under the incentive program will be equal to or less than
the sum of the Enterprise local tariff and the Initial Incentive
Magellan Rate (as hereinafter defined).17
Moreover, it identifies Enterprise as a “Participating Carrier,” not as a “shipper.”
The letter agreement refers to an incentive program under which Magellan and
Enterprise are the carriers and contemplates separate agreements with third party
shippers. It does not purport to restate, modify, or amend Enterprise’s obligation
16 Magellan’s Resp. Br., Ex. 1 at ¶ 9,11.
17 Magellan’s Resp. Br., Ex. 1-C, page 79.
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under the Distribution Agreement. Indeed, it does not reference or mention the
Distribution Agreement at all. Instead, the letter agreement expressly states that
its purpose is to confirm an agreement to establish a joint tariff. The Joint Tariff
itself does not purport to require anyone, let alone Enterprise, to transport crude
on any particular routing.18 Rather, it merely sets forth the rates that will be
available to third party shippers who qualify as a “Participating Shipper.”
Magellan’s argument is baseless.
C. Magellan’s declaratory judgment claim fails along with its breach of
contract claim and also fails because it is merely duplicative of its
breach of contract claim.
Magellan’s declaratory judgment claim is based on the same flawed
interpretation of the Distribution Agreement that underlies its breach of contract
claim. Because Magellan’s interpretation is wrong as a matter of law, not only does
its breach of contract claim fail, but also its declaratory judgment claim necessarily
fails for the same reasons.
Additionally, Magellan’s declaratory judgment claim is not justiciable
because the issues sought to be resolved are already pending in this suit via
Magellan’s breach of contract claim. See Clark v. Dillard’s, Inc., 460 S.W.3d 714,
726 (Tex. App.—Dallas 2015, no pet.); Hydroscience Techs., Inc. v. Hydroscience,
Inc., 401 S.W.3d 783, 801 (Tex. App.—Dallas 2013, pet denied). Accordingly, the
declaratory judgment claim should be dismissed for this reason as well.
Magellan’s cases do not support a different result. In BHP Petroleum Co. Inc.
v. Millard, 800 S.W.2d 838, 842 (Tex. 1990), the Court considered whether a
18 Magellan’s Resp. Br., Ex. 1-C, page 85.
DEFENDANT’S REPLY IN SUPPORT OF MOTION FOR SUMMARY JUDGMENT PAGE 19
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defendant could maintain a declaratory judgment counterclaim after the plaintiff
non-suited its claims. Continental Homes of Texas, L.P. v. City of San Antonio, 275
S.W.3d 9, 21 (Tex. App.—San Antonio 2008, pet. denied), also dealt with a
defendant’s declaratory judgment counterclaim in the city’s action for an injunction
under an ordinance. Indian Beach Property Owners’ Ass’n v. Linden, 222 S.W.3d
682 (Tex. App.—Houston [1st Dist.] 2007, no pet.) similarly involved a defensive
counterclaim that raised issues beyond the plaintiff’s claims. Halliburton Energy
Services, Inc. v. Axis Techs., LLC, 444 S.W.3d 251, 262-63 (Tex. App.—Dallas 2014,
no pet.) involved a declaratory judgment over ownership of materials that remained
unresolved after a breach of contract claim was decided, and the defendants’
argument was that this was a “double recovery,” not that it was non-justiciable.
D. Magellan’s promissory estoppel claim is precluded by the express
contract between the parties.
Enterprise is entitled to summary judgment regarding Magellan’s promissory
estoppel claim because under Texas law promissory estoppel is not applicable to a
promise covered by a valid contract between the parties. Richter v. Wagner Oil Co.,
90 S.W.3d 890, 899 (Tex. App.—San Antonio 2002, no pet.). Simply put, a promise
contained in a written contract cannot be the basis for a promissory estoppel claim.
Stable Energy, L.P. v. Kachina Oil & Gas, Inc., 52 S.W.3d 327, 336 (Tex. App—
Austin 2001, pet. denied).
On June 19, 2017, Magellan filed this lawsuit acknowledging that Magellan
and Enterprise executed the Distribution Agreement dated October 31, 2011. 19
19 Original Petition at Exhibit A.
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Magellan claims that while it has fully performed and complied with all of its
obligations under the Distribution Agreement, Enterprise breached the agreement
by failing to and refusing to fulfill its commitment to Magellan as set forth in
Section 4.1 to exclusively use the Magellan facilities.20 In its response, Magellan
asserts that Enterprise promised Magellan on October 18, 2011, thirteen (13) days
before the Distribution Agreement was executed, that Enterprise would exclusively
use the Magellan facilities for all Origin Point to Destination Point deliveries of
Enterprise’s “marketing” volumes of crude oil.21 Magellan readily conceded that
this alleged promise on October 18, 2011, “is synonymous with the Enterprise
Transportation Commitment as expressed in Section 4.1 of the parties’ written
agreement.”22 Under Texas law, however, promissory estoppel is only available in
the absence of a valid and enforceable contract. Doctors Hosp. 1997, LP v. Sambuca
Houston, L.P., 154 S.W.3d 634, 636 (Tex. App.—Houston [14th Dist.] 2004, no pet.).
The Petition is devoid of any allegation that the Distribution Agreement is
unenforceable for any reason. The problem with Magellan’s theory of pleading its
promissory estoppel claim asserted in the alternative is that promissory estoppel
does not apply as a matter of law when a valid contract governs the subject matter
of the promise. Enterprise does not dispute the validity and enforceability of the
parties’ Agreement and Magellan has sued to enforce it. 23 Indeed, Magellan
expressly relies on the Distribution Agreement in asserting claims for breach of
20 Original Petition, ¶¶ 70, 71.
21 Magellan Resp. Br., at 43.
22 Magellan Resp. Br., at 44.
23 Pleading in the alternative does not permit alleging a claim with no reasonable basis in
fact or law ‘in the alternative’ of a claim that does have support. That is simply not
permitted by Texas law.” Low v. Henry, 221 S.W.3d 609, 615 (Tex. 2007) (emphasis added).
DEFENDANT’S REPLY IN SUPPORT OF MOTION FOR SUMMARY JUDGMENT PAGE 21
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contract and declaratory judgment. The Distribution Agreement clearly delineates,
among other things, the scope of services provided, the parties’ obligations, and the
potential liability for breach.24 Further, it contains an integration clause which
provides that the agreement’s terms are the final expression of the parties’ intent,
and supersedes prior agreements. 25 Magellan has not—and cannot—provide a
plausible argument why the Distribution Agreement is not enforceable. For that
reason, Magellan has not stated a valid promissory estoppel claim, and summary
judgment is appropriate. Birenbaum v. Option Care, Inc., 931 S.W.2d 497 (Tex.
App.—Dallas 1997, pet. denied); Trevino & Assocs. Mech., L.P. v. Frost Nat. Bank,
400 S.W.3d 139 (Tex. App.—Dallas 2013, no pet.).
Magellan’s cause of action for promissory estoppel also fails as a matter of
law because it is predicated on an alleged promise it claims is contained in the
Distribution Agreement. Fertic v. Spencer, 247 S.W.3d 242, 250 (Tex. App.—El
Paso 2007, pet. denied); see Subaru, Inc. v. David McDavid Nissan, Inc., 84 S.W.3d
212, 226 (Tex. 2002) (promissory-estoppel action presumes there is no contract). In
other words, since the alleged promise is part of a valid contract, Magellan cannot
disregard the contract and sue for reliance damages under the doctrine of
promissory estoppel. Stable Energy L.P. v. Kachina Oil & Gas, Inc., 52 S.W.3d 327,
336 (Tex. App.—Austin 2001, no pet.) (citing Guaranty Bank v. Lone Star Life Ins.
Co., 568 S.W.2d 431, 434 (Tex. Civ. App.—Dallas 1978, writ ref’d n.r.e.)). Magellan
had the burden to raise a fact issue that the promise on which it relied to its
24 Original Petition, Ex. A.
25 Original Petition, Ex. A, § 9.7.
DEFENDANT’S REPLY IN SUPPORT OF MOTION FOR SUMMARY JUDGMENT PAGE 22
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detriment was outside of the underlying Distribution Agreement. Id. Magellan
does not and cannot make that allegation because the alleged promise falls squarely
within the scope of Section 4.1 of the Distribution Agreement as Magellan readily
concedes in its response.
E. Magellan cannot demonstrate a mutual mistake that would justify
reformation of the Distribution Agreement.
Magellan cannot maintain its reformation claim, as illustrated by one of the
cases Magellan itself cites. In Cherokee Water Co. v. Forderhause, 741 S.W.2d 377,
381 (Tex. 1987), the Texas Supreme Court reversed a judgment granting
reformation of a deed and rendered judgment for the defendant, recognizing that a
mutual mistake as to the legal effect of language used in a writing, as opposed to a
mutual mistake in reducing a prior agreement to writing, will not support
reformation. 741 S.W.2d at 379-80. At most, Magellan’s evidence is that its
employee, Mark Daggett, and Enterprise’s employee, Jake Everett,26 were mistaken
about the legal effect of the language used in the Distribution Agreement. That is
insufficient for reformation.
Reformation requires two elements. First, the party seeking reformation
must prove the true agreement of the parties—it is not enough to show that both
parties were mistaken about some feature of their bargain. National Resort
Communities v. Cain, 526 S.W.2d 510, 513 (Tex. 1975). Second, the party must
show that the provision erroneously written, included, or omitted in the written
26Magellan has not shown that Everett was a decision-maker for Enterprise (and he did not sign the
Distribution Agreement) or that Everett’s subjective belief about the Distribution Agreement was
shared by persons with authority to bind Enterprise.
DEFENDANT’S REPLY IN SUPPORT OF MOTION FOR SUMMARY JUDGMENT PAGE 23
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agreement was there by mutual mistake—it is not enough that the writing differed
from the oral agreement. Id. at 513-14. Magellan falls far short of making either
showing.
Additionally, the Everett email and the alleged conversations between
Everett and Daggett are in the nature of the back-and-forth characteristic of any
negotiation process. They do not constitute evidence of a final agreement or
evidence that the Distribution Agreement did not reflect the final agreement of the
parties. See, e.g., Capitol Rod & Gun Club v. Lower Colorado River Auth., 622
S.W.2d 887, 893 (Tex. App.—Austin 1981, writ ref’d n.r.e.). Magellan has failed to
show that it has a valid reformation claim.
F. The express language of the Distribution Agreement bars justifiable
reliance, which precludes Magellan from maintaining a fraud claim.
Magellan makes three primary arguments in an effort to salvage its fraud
claim, none of which is availing. First, Magellan contends (again) that Enterprise
filed a “no-evidence” motion for summary judgment, which can be defeated through
presentation of merely a scintilla of evidence. For the reasons noted above in
Section A, this is incorrect. Enterprise has moved under Rule 166a(c), because the
terms of the Distribution Agreement affirmatively disprove the element of
justifiable reliance. Second, Magellan asserts that Enterprise’s interpretation of the
Distribution Agreement is unreasonable. As detailed in Enterprise’s motion and in
this reply, a review of the plain and unambiguous language of the agreement proves
otherwise. And, third, Enterprise claims that the terms of the Distribution
Agreement do not disprove reliance because the agreement’s language does not
DEFENDANT’S REPLY IN SUPPORT OF MOTION FOR SUMMARY JUDGMENT PAGE 24
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directly contradict the alleged representation that all of Enterprise’s marketing
volumes would move through Magellan’s facilities. For the reasons below, that
argument likewise fails.
As an initial matter, the statement Magellan claims to have relied upon, that
“all marketing volumes” would be subject to the Distribution Agreement, is plainly
not true under either party’s reading of the agreement. Even Magellan recognizes
that the subset of crude subject to the Distribution Agreement is defined and
limited by the terms of Section 4.1. For this reason alone, Magellan’s alleged
reliance on such a statement is unreasonable and therefore unjustified. Indeed, this
would be true even if the statement were “all marketing volumes originating from
the Origin Points” (it was not), because crude arriving at places other than the
Destination Points are unambiguously excluded. In this respect, then, Section 4.1—
even as interpreted by Magellan—directly contradicts the claimed representation.
Nevertheless, Magellan contends that its subjective understanding27 of the
term “marketing volumes” can be a basis for fraud because the terms of the
Distribution Agreement do not directly and expressly contradict its belief that these
two words mean that any crude Enterprise owned or controlled at an Origin Point is
forever subject to the agreement, regardless of any subsequent change in title, its
ultimate destination, or its routing along the way. This is, of course, directly and
expressly contradicted by the agreement, which defines “Owned” and “Controlled”
to exclude crude transported “for the account of a party or parties other than
27See Magellan Resp. Br. at 45 (describing what “Magellan understood” the term “marketing
volume” to mean).
DEFENDANT’S REPLY IN SUPPORT OF MOTION FOR SUMMARY JUDGMENT PAGE 25
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[Enterprise] or its Affiliates.”28 And regardless of the mechanism used, whether
buy/sell or otherwise, a sale transfers title to a third party, at which point it is not
“Owned” or “Controlled” by Enterprise.
“[R]eliance upon an oral representation that is directly contradicted by the
express, unambiguous terms of a written agreement between the parties is not
justified as a matter of law.” DRC Parts & Accessories, L.L.C. v. VM Motori, S.P.A.,
112 S.W.3d 854, 858 (Tex. App.—Houston [14th Dist.] 2003, pet. denied) (en banc).
What Magellan appears to demand, and what the case law does not require,
however, is mirror-image language contradicting the inferences it supposedly drew
from the alleged representations. But courts applying the principles set out in DRC
Parts have recognized that oral representations may “directly contradict” a contract
even when the contract does not contain language that is the exact opposite, mirror
image of the alleged representation. In Rinard v. Bank of America, 349 S.W.3d 148,
153 (Tex. App.—El Paso 2011, no pet.), for example, the court found no justifiable
reliance based on the absence of a term. There, borrowers alleged that the lender
represented that credit disability insurance would be purchased. The note,
however, referred only to joint credit life insurance. A statement that “no credit
disability insurance will be purchased” was not required—that could be deduced
from the language of the agreement, and that was sufficient to negate justifiable
reliance.
Similarly, in Freedom Equity Grp., Inc. v. MTL Ins. Co., No. 01-14-00210-CV,
2015 WL 1135186, at *2-3 (Tex. App.—Houston [1st Dist.] Mar. 12, 2015, no pet.),
28 Distribution Agreement, §§ 1.6, 1.32.
DEFENDANT’S REPLY IN SUPPORT OF MOTION FOR SUMMARY JUDGMENT PAGE 26
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the Houston Court of Appeals dismissed a fraud claim for lack of justifiable reliance
where the parties’ agreement was inconsistent with, but not a mirror image of, the
alleged representation. In that case, the plaintiff alleged that it was induced to
enter a contract becoming a General Agent on a promise that, post-execution, it
would become a Managing Agent and its contractor would be demoted to General
Agent under it. The contract did not address—either positively or negatively—the
changing of titles. Nevertheless, the fact that the plaintiff entered a contract to
become a General Agent, combined with the contract’s merger clause, 29 was
sufficient to negate reliance on any promise. Id.
Here, Magellan entered into a contract that specified the requirements for
crude to be subject to the agreement, and they are: (1) that the crude be Owned or
Controlled by Enterprise or an affiliate; (2) that the crude come from an Origin
Point; (3) that it travel through the Connection Point; and (4) that it arrive at a
Destination Point. Any statement that crude not meeting these requirements
would nevertheless be subject to the agreement directly contradicts these express
terms, and is, as a matter of law, unjustifiable. See DRC Parts, 112 S.W.3d at 858-
29 Here, too, the Distribution Agreement provides that “[t]his Agreement between the Parties
comprises the entire agreement between the Parties with respect to the subject matter hereof, and
there are no agreements, understandings, requirements, warranties or representations, oral or
written, expressed or implied, that are not merged herein or superseded hereby, other than as set
forth in the Joint Tariff.” Distr. Agr. § 9.7. Where a contract is negotiated at arms-length by
sophisticated businessmen represented by counsel, this type of “merger” clause, is enforceable and
negates reliance on any alleged oral representations, an essential element of fraud as set out in the
charge above. See Playboy Enterprises, Inc. v. Editorial Caballero, S.A. de C.V., 202 S.W.3d 250, 258
(Tex. App.—Corpus Christi, 2006, pet. denied); see also IKON Office Solutions, Inc. v. Eifert, 125
S.W.3d 113, 126–28 (Tex. App.—Houston [14th Dist.] 2003, pet. denied) (providing that provisions
that contract was “entire agreement” and requiring any modifications to be in writing barred
fraudulent-inducement claim).
DEFENDANT’S REPLY IN SUPPORT OF MOTION FOR SUMMARY JUDGMENT PAGE 27
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59; Playboy Enters. Inc. v. Editorial Caballero, S.A. de C.V., 202 S.W.3d 250, 257-58
(Tex. App.—Corpus Christi 2006, pet. denied).
Furthermore, Magellan’s attempt to rely on the Everett email as the basis for
its fraud claim fails as a matter of law. To be actionable fraud, the individual who
made the allegedly false statement must also have the requisite scienter, i.e., the
speaker must have known the statement was false and intended that the other
party act in reliance on it. Landers v. Aurora Loan Services, LLC, 434 S.W.3d 291,
296 (Tex. App.—Texarkana 2014, no pet.); Southland Sec. Corp. v. INSpire Ins.
Solutions, Inc., 365 F.3d 353, 366 (5th Cir. 2004). The Everett email contains a
statement regarding an Enterprise engineer’s belief about the intent of the
Distribution Agreement.30 Magellan offers nothing to suggest that statement was
false, was known by Everett to be false, or that Everett intended that Magellan act
in reliance on it.
Additionally, a representation about the legal effect of a document is a
statement of opinion rather than a statement of fact and will not support a fraud
claim. Matheson Tri-Gas, Inc. v. Maxim Integrated Products, Inc., 444 S.W.3d 283,
290 (Tex. App.—Dallas 2014, pet. denied); Cheung-Loon, LLC v. Cergon, Inc., 392
S.W.3d 738, 746 (Tex. App.—Dallas 2012, no pet.). Everett’s statement cannot
support a fraud claim because it merely expressed an opinion about the effect of the
terms of the contract, a matter to which Magellan had equal access and about which
Magellan would be expected to have its own opinion and exercise its own judgment.
30 Magellan Resp. Br., Ex. 1-A, page 65.
DEFENDANT’S REPLY IN SUPPORT OF MOTION FOR SUMMARY JUDGMENT PAGE 28
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Matheson, 444 S.W.3d at 290; Cheung-Loon, 392 S.W.3d at 746. There is no
actionable fraud here, and summary judgment should be granted.
G. Magellan is not entitled to delay disposition of its meritless case.
There are two reasons the Court should reject any assertions by Magellan
that Enterprise’s summary judgment motion should be denied as “premature.”
First, Magellan’s argument and its cursory request for a continuance on these
grounds is unsupported under Texas Rule of Civil Procedure 166a(g). A
continuance is appropriate only “if it appears ‘from the affidavits of a party opposing
the [summary judgment] motion that he cannot for reasons stated present by
affidavit facts essential to justify his opposition.’” Joe v. Two Thirty Nine J.V., 145
S.W.3d 150, 161 (Tex. 2004) (quoting Tex. R. Civ. P. 166a(g)) (emphasis
added). Here, however, there are no affidavits attached to Magellan’s summary
judgment response explaining why Magellan cannot, by its own affidavit, present
facts essential to justify its opposition. So Magellan is not entitled to a continuance.
Second, Magellan’s request should be denied because discovery is
unnecessary. As Enterprise has explained in its motion, and reinforced above, the
Distribution Agreement is not ambiguous and must be construed as a matter of
law. So there are no fact issues and no discovery is required. See, e.g., Nat’l Union
Fire Ins. Co. of Pittsburgh, PA v. CBI Indus., Inc., 907 S.W.2d 517, 520–22 (Tex.
1995) (holding that the plaintiff was not entitled to a chance to conduct discovery,
and thereby manufacture a contractual ambiguity with inadmissible parol evidence
obtained through discovery, where there were no factual issues meriting discovery
on meaning of unambiguous contractual language). The Court should therefore
DEFENDANT’S REPLY IN SUPPORT OF MOTION FOR SUMMARY JUDGMENT PAGE 29
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deny Magellan’s request to delay the Court’s ruling on this motion, grant
Enterprise’s summary judgment motion, and dismiss this action in its entirety.
CONCLUSION
Summary judgment is appropriate in this case, which turns on the
construction of an unambiguous contract. That proper construction vitiates all of
Magellan’s claims, and those patently unmeritorious claims should be eliminated
through summary judgment. See Swilley v. Hughes, 488 S.W.2d 64, 68 (Tex. 1972).
Enterprise respectfully requests that the Court grant its motion and enter summary
judgment in favor of Enterprise on all of Magellan’s claim.
Dated: September 20, 2017 Respectfully submitted,
/s/ Courtney Barksdale Perez
E. Leon Carter
Texas Bar No. 03914300
lcarter@carterscholer.com
J. Robert Arnett II
Texas Bar No. 01332900
barnett@carterscholer.com
Courtney Barksdale Perez
Texas Bar No. 24061135
cperez@carterscholer.com
CARTER SCHOLER PLLC
8150 N. Central Expressway
Suite 500
Dallas, Texas 75206
Telephone: 214-550-8188
Facsimile: 214-550-8185
ATTORNEYS FOR DEFENDANT
ENTERPRISE CRUDE OIL, LLC
DEFENDANT’S REPLY IN SUPPORT OF MOTION FOR SUMMARY JUDGMENT PAGE 30
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CERTIFICATE OF SERVICE
This is to certify that on September 20, 2017, a true, correct and complete
copy of the foregoing document has been served on all counsel of record
electronically via a court-approved electronic filing system, in accordance with Rule
21a of the Texas Rules of Civil Procedure.
/s/ J. Robert Arnett II
J. Robert Arnett II
DEFENDANT’S REPLY IN SUPPORT OF MOTION FOR SUMMARY JUDGMENT PAGE 31
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CAUSE NO. DC-17-07264
MAGELLAN CRUDE OIL PIPELINE )
COMPANY, L.P., a Delaware limited partnership, )
)
Plaintiff, ) IN THE DISTRICT COURT OF
)
vs. ) DALLAS COUNTY, TEXAS
)
ENTERPRISE CRUDE OIL LLC, a Texas limited ) 101st JUDICIAL DISTRICT
liability company, )
)
Defendant. )
PLAINTIFF’S SUPPLEMENT TO RESPONSE TO
DEFENDANT’S MOTION FOR ENTRY OF A PROTECTIVE ORDER
GOVERNING THE PRODUCTION OF CONFIDENTIAL INFORMATION
Both before and after the December 4, 2017 hearing, Magellan initiated discussions with
Enterprise in an effort to agree upon an acceptable form of protective order. Magellan has always
agreed that a protective order is appropriate and has remained willing to negotiate over reasonable
terms that provide adequate protection while not preventing either party from preparing its case.
But, through the use of hyperbole and unsupported accusations, Enterprise has attempted to turn
the protective order discussions into a trial over Magellan’s motives in seeking and using
discovery.
Despite lengthy negotiations after the December 4, 2017 hearing on compromise forms of
protective order proposed by Magellan, Enterprise’s counsel failed to send the compromise revised
form he promised, instead proposing that Magellan scrap all other proposals and agree to a form
entered into in another unrelated case in a different jurisdiction that was based on the form of order
accepted by that jurisdiction.
At a Minimum, Revisions Are Necessary to Enterprise’s Proposed Form
The protective order proposed by Enterprise is not appropriate in this case in the form in
which Enterprise proposed it. Attached hereto as Exhibit 1 is a revised version of the protective
PLAINTIFF’S SUPPLEMENT TO RESPONSE TO DEF.’S MOT. FOR PROTECTIVE ORDER – Page 1
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order proposed by Enterprise, and attached hereto as Exhibit 2 is a redline showing how the revised
version differs from the proposal by Enterprise. To highlight, the following necessary revisions
have been made:
• The list of “Qualified Persons” who have the ability to view information designated
“For Counsel Only” or “Attorneys Eyes Only” has been expanded to include:
o In-house counsel actively assisting in the litigation and whose job is to
manage litigation. Specifically excluded are in-house counsel who make or
participate in competitive business matters of the parties.
o Auditors employed by the parties.
o Witnesses currently employed by the parties or witnesses who were
employed by the parties at the time the designated information was
generated.
o Court reporters, as well as litigation vendors and other litigation support
personnel.
• The description of how material will be designated “For Counsel Only” or
“Attorneys Eyes Only” has been clarified to describe that if only a portion of a
document is “For Counsel Only” or “Attorneys Eyes Only”, then only that portion
will be noted as such, allowing the rest of the document that is either not “Classified
Information” or is only “Confidential” to be treated as such.
• With the expansion of the list of “Qualified Persons” who can review “For Counsel
Only” or “Attorneys Eyes Only” information, the provision requiring all materials
designated as such be maintained at the offices of counsel or experts has been
removed.
• The requirement that a party log all “For Counsel Only” or “Attorneys Eyes Only”
documents shown to Qualified Persons has been removed.
• The procedure for challenging designation as a Qualified Person, which had no
correlating procedure for designating someone as a Qualified Person, has been
removed.
• The procedure for returning documents has been modified to allow retained counsel
to maintain one copy of documents produced in this case and designated as
Classified Information.
As noted in prior filings, this case centers on a Crude Oil Distribution (“COD”) Agreement
that specifically provides Magellan “the right to audit Shipper’s [Enterprise’s] records necessary
to verify Shipper’s [Enterprise’s] compliance with the provisions of Sections 4.1 [Transportation
PLAINTIFF’S SUPPLEMENT TO RESPONSE TO DEF.’S MOT. FOR PROTECTIVE ORDER – Page 2
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Commitment] and 4.2 [Transportation Commitment Exceptions].” The parties in this case agreed
that Magellan has a right to inspect the information that is the subject of discovery in this case, and
Enterprise agreed that an audit of the information is appropriate. Limiting access to information
produced by Enterprise in this case to retained counsel will unfairly and unreasonably hamstring
the ability of Magellan’s retained counsel to consult with their client as necessary to prepare
Magellan’s case. Despite the attempt by Enterprise to portray this dispute as a simple issue of
volumes, the filings to date and those attached to this supplement reveal that the issues are
complicated and require persons who understand the business that is the subject of the COD
Agreement to analyze the information to determine whether Enterprise has complied with its
obligations under the COD Agreement.
And to the extent that Enterprise contends that the limits it seeks to impose will apply to a
small subset of documents, that contention is counter to Enterprise’s many filings in this case to
date, including its filing with the Court of Appeals for the Fifth Judicial District. For example, in
its response to Magellan’s motion to compel Enterprise to produce documents responsive to its
requests for production, Enterprise stated:
Subject to the entry of a protective order, Enterprise has already
agreed to produce any communications regarding the conversion of
business arrangements for crude transported from the Origin Points,
and any communications that discuss Magellan or the Distribution
Agreement. Enterprise has also agreed to provide summary volume
information for the “relevant period” defined in the requests (similar
to information Enterprise already produced during the audits subject
to a Confidentiality Agreement). The remaining documents,
however, reveal Enterprise’s trade secrets and they must be shielded
from discovery under Texas Rule of Evidence 507 absent a showing
by Magellan that such information is necessary to its case.
(Enter. Resp. to Mot. to Compel, p.6) (Emphasis added).
Accordingly, not only is it necessary that the list of Qualified Persons be slightly broader
than retained counsel, it is necessary that the Protective Order require a party designating
PLAINTIFF’S SUPPLEMENT TO RESPONSE TO DEF.’S MOT. FOR PROTECTIVE ORDER – Page 3
{1773121;}
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information “For Counsel Only” or “Attorneys Eyes Only” be specific about its designations,
designating only the portion of a document, or a page of a document, that the party believes
warrants the restrictive designation.
The few remaining revisions are warranted to make the Protective Order manageable in the
context of this case, where Enterprise has telegraphed its intent to designate most, if not everything,
it is producing as Classified Information. This is shown by the fact that prior to the December 4,
2017 hearing on Magellan’s Motion to Compel, Enterprise had not produced one document
responsive to Magellan’s requests. And, since that date, Enterprise has produced to Magellan only
a small set of documents that appear to be the same as the documents previously provided to
Magellan in its contractually-permitted audits.
Enterprise’s Shifting Positions May Require the Court to Revisit This Issue
Regardless of which form of Protective Order the Court enters, it may need to be modified
once the details of Enterprise’s production and confidentiality designations become clearer than
they are now. To date, Enterprise’s has made so many conflicting and inconsistent representations
that it is impossible to know how much information Enterprise will be producing, from what
source(s),1 what specific information Enterprise deems to be “trade secret,” 2 and whether the trade
1
In Magellan’s pre-suit audits, Enterprise provided some information which apparently came from
Enterprise Pipeline (its pipeline affiliate), and in its original responses to the discovery requests Magellan
served on July 21, 2017, Enterprise did not object on the ground that the requests seek documents possessed
or controlled by Enterprise Pipeline, although Enterprise objected on every other imaginable ground. See
Ex. 3. However, in the Amended Objections Enterprise served on the eve of the December 4, 2017
discovery hearings, Enterprise stated for the first time that it will not produce its affiliates’ documents. See
Ex. 4.
2
Enterprise has consistently refused to identify, specifically, the responsive information for which it claims
trade secret protection, relying instead on a general “compilation” theory that practically all of its business
information is trade secret. And even that is a moving target, as can be seen by comparing Enterprise’s
original objections to Magellan’s discovery requests (Ex. 3) to its amended objections (Ex. 4). Among many
other changes, the amended objections Enterprise served on the eve of the December 4, 2017 discovery
hearing dropped its previously asserted trade secret objections to seven of Magellan requests for production,
including RFPs 12, 13, 15, 16, 17, 30, and 31.
PLAINTIFF’S SUPPLEMENT TO RESPONSE TO DEF.’S MOT. FOR PROTECTIVE ORDER – Page 4
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secret information Enterprise seeks to restrict to Magellan’s outside counsel’s eyes only, is
minimal or voluminous.
For example, Enterprise never claimed that the any of the information it provided to
Magellan during the course of Magellan’s pre-suit audits is “trade secret” information, and it never
sought to prevent any of Magellan’s auditors or business personnel from reviewing that
information.3 However, Enterprise’s discovery responses indicate that Enterprise now claims
“trade secret” protection for all the information it provided to Magellan during the pre-suit audits,
along with all other information necessary to trace the movement of Eagle Ford barrels from an
Origin Point to a final destination point or to verify Enterprise’s assertions; i.e., that to the extent
Enterprise is required to produce such information in this case, it seeks or may seek to restrict
review to Magellan’s outside counsel only. 1
Enterprise’s representations to this Court, and to the Court of Appeals, portend just such
an overly broad designation of “trade secret” information, in an effort to unfairly and improperly
hamstring Magellan’s ability to understand and utilize discovery obtained in this litigation, for this
3
Such information included copies of some transportation agreements and some Eagle Ford crude oil
purchase contracts or buy-sell contracts between Enterprise and its customers, without redaction of
customer identities and most of the terms of the contracts. By emails, Enterprise also provided partial
information, or unverified assertions, that: (i) Enterprise batches a common stream barrel at the Origin
Points and sells a common stream barrel at the applicable destination but does not tie a specific Origin Point
to a barrel sold at a different location; (ii) Enterprise sells barrels that come from an Eagle Ford Origin Point
to unaffiliated third parties at ECHO Terminal, Genoa Junction, or other destinations; (iii) deliveries
Enterprise makes from an Origin Point to its ECHO Terminal do not go through the Magellan connection
point [at Genoa Junction] prior to delivery to a final destination; and (iv) when Enterprise sells Eagle Ford
barrels to a customer at ECHO Terminal, Enterprise does not track subsequent transportation thereof to any
final destination. Yet Enterprise also asserted that certain barrels were delivered through Enterprise
facilities (not Magellan facilities) based on transportation nominations made by Enterprise’s customers, and
that some product was transported by a customer from ECHO Terminal to a designated Destination Point,
but not through the Magellan facilities, because that was “not the most direct routing.” See emails identified
as Ex. 5. Pending determination whether and to what extent (if any) the Enterprise emails are properly
designated as confidential information, Magellan has omitted them from the copy of this Supplement filed
in the public record. Magellan will provide Exhibit 5 to the Court and will comply with the Court’s direction
regarding filing the same in some redacted version, or under seal if appropriate, following the hearing.
PLAINTIFF’S SUPPLEMENT TO RESPONSE TO DEF.’S MOT. FOR PROTECTIVE ORDER – Page 5
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litigation. Whenever Enterprise attempts to justify its refusal to produce the vast majority of the
requested documents, or to persuade the Court of Appeals that this Court’s order compelling
production is an abuse of discretion, Enterprise represents that “most of Magellan’s requests are
aimed at obtaining discovery of Enterprise’s trade secrets,”4 and that this Court’s order compelling
production encompasses “volumes of proven trade secrets.”5 Yet when Enterprise urges this Court
to impose draconian restrictions on Magellan’s ability to use any “trade secret” information
Enterprise may produce, it represents the opposite, that the trade secret documents will only
amount to a “select group of highly sensitive information.”6
Conclusion
While a protective order is warranted in this case, the facts presented to this Court do not
support entry of the protective order Enterprise seeks. Enterprise objected to almost all of
Magellan’s discovery requests to it and the nonparties as seeking trade secrets and is pursuing a
writ of mandamus on the same grounds. To limit Magellan’s review of this information to only
Magellan’s retained counsel would make preparation of this case extremely and unnecessarily
difficult and expensive. Under Enterprise’s proposal, only outside counsel or experts could review
information Enterprise now claims to be “trade secret.” Given the audit right provided in the
contract at issue, and the fact Enterprise previously provided Magellan information in the audits
did not claim (but now contends) is trade secret, the modestly broader list of authorized persons
proposed by Magellan in the revised protective order is appropriate. For all of these reasons, and
those previously described in its response to Enterprise’s motion, Magellan respectfully urges the
Court to approve the protective order attached hereto as Exhibit 1.
4
See Defendant’s Response to Motion to Compel, p. 1.
5
Defendant’s Petition for Writ of Mandamus, p. 25, excerpt attached as Ex. 6 (emphasis added).
6
See Defendant’s Motion for Entry of a Protective Order, p. 1 (emphasis added).
PLAINTIFF’S SUPPLEMENT TO RESPONSE TO DEF.’S MOT. FOR PROTECTIVE ORDER – Page 6
{1773121;}
SR403
Dated December 27, 2017.
Respectfully submitted,
GABLEGOTWALS
By: /s/ David L. Bryant
David L. Bryant
State Bar No. 24084344
dbryant@gablelaw.com
113 Pleasant Valley Drive, Suite 204
Boerne, Texas 78006
Telephone: (830) 336-4810
Facsimile: (918) 595-4990
Lisa T. Silvestri
State Bar No. 00797967
lsilvestri@gablelaw.com
100 W. Fifth St., Suite 1100
Tulsa, Oklahoma 74103
Telephone: (918) 595-4800
Facsimile: (918) 595-4990
PLAINTIFF’S SUPPLEMENT TO RESPONSE TO DEF.’S MOT. FOR PROTECTIVE ORDER – Page 7
{1773121;}
SR404
And
FIGARI + DAVENPORT, LLP
Bill E. Davidoff
State Bar No. 00790565
bill.davidoff@figdav.com
Amanda Sotak
State Bar No. 24037530
amanda.sotak@figdav.com
901 Main Street, Suite 3400
Dallas, Texas 75202
Telephone: (214) 939-2000
Facsimile: (214) 939-2090
ATTORNEYS FOR PLAINTIFF,
MAGELLAN CRUDE OIL
PIPELINE COMPANY, L.P.
CERTIFICATE OF SERVICE
I certify that on December 27, 2017, I forwarded a true and correct copy of the foregoing
document to the following counsel via EFile:
E. Leon Carter
lcarter@carterscholer.com
J. Robert Arnett II
barnett@carterscholer.com
Joshua J. Bennett
jbennett@carterscholer.com
Courtney Barksdale Perez
cperez@carterscholer.com
CARTER SCHOLER PLLC
8150 N. Central Expressway
Suite 500
Dallas, Texas 75206
Attorneys for Defendant
Enterprise Crude Oil, LLC
/s/ David L. Bryant
David L. Bryant
PLAINTIFF’S SUPPLEMENT TO RESPONSE TO DEF.’S MOT. FOR PROTECTIVE ORDER – Page 8
{1773121;}
SR405
Exhibit 1
NO. DC-17-07264
MAGELLAN CRUDE OIL PIPELINE § IN THE DISTRICT COURT
COMPANY, L.P., §
§
Plaintiffy §
§
vs. § 101st JUDICIAL DISTRICT
§
ENTERPRISE CRUDE OIL LLC, §
§
Defendant. § DALLAS COUNTY, TEXAS
CONFIDENTIALITY AND PROTECTIVE ORDER
Before the court is the joint motion of the parties for the entry of a confidentiality and
protective order ("Protective Order").After careful consideration, it is herebyORDERED as follows:
1. Classified Infonnation
"Classified Information" means any information of any type, kind, or character that is
designated as "Confidential", "For Counsel Only", or "Attorneys Eyes Only" byany of the supplying
or receiving persons, whether it be a document, information contained in a document, information
revealed duringa deposition, information revealed in an interrogatory answer, or otherwise.
2. Qualified Persons
"Qualified Persons" means:
a. For Counsel or Attorneys Only information:
i. retained counsel for the parties in this litigation and their respective
staff;
ii. in-house counsel for the receiving party who are actively involved in
assisting counsel for the receiving party in the prosecution or defense of this action,
and there paralegal, secretarial, and clerical assistants. This is limited to in-house
counsel who manage lidgadon and do not make or participate in competitive business
matters of the party for whom they work. Prior to receiving Classified Information,
{177312f>:)CONFIDEN'nAU'IY AND PROTECHVE ORDER Page 1
PLAINTIFF'S SUPPLEMENT TO RESPONSE TO DEF.'S MOT. FOR PROTECTIVE ORDER - Page 9
SR406
anyperson described in diis subsection must signa document a documentagreeing to
be bound by the terms of this Protective Order (such signed document to be
maintained by the retained counsel);
iii. anyemployee of die receiving partycurrendyor formerly serving as an
auditoron behalfof the receiving partywho, prior to receiving Classified Information,
must sign a document agreeing to be bound by the terms of this Protective Order
(such signed document to be maintained by the retained counsel);
iv. a witness currendy employed by the producing party or nonparty or a
witness who was formerly employed by the producing party or nonparty at the time
the Classified Information was generated who, prior to receiving Classified
Information, must sign a document agreeing to be bound by the terms of this
Protective Order (such signed document to be maintained by the retained counsel);
V. actual or potential independent experts or consultants (and their
administrative or clerical staf^ engaged in connection with this litigation (which shall
not include the current employees, officers, members, or agents of patties or affiliates
of parties) who, prior to any disclosure of Classified Information to such person, have
signed a document agreeing to be bound by the terms of this Protective Order (such
signed document to be maintained by the attorney retaining such person);
vi. this court and its staff and any other tribunal or dispute resolution
officer dvdy appointed or assigned in connection with thisHtigation.
vii. litigation vendors, court reporters, and other litigation support
personnel;
b. For Confidential information:
i. the persons identified in subparagraph2(a);
{1773126;)CONPIDENTIAI,ITY AND PROTECTIVE ORDER Page 2
PLAINTIFF'S SUPPLEMENT TO RESPONSE TO DEF.'S MOT. FOR PROTECTIVE ORDER - Page 10
SR407
ii. the party, if a natural person;
iii. if the party is an entity, such officers or employees of the party who
are actively involved in the prosecution or defense of this case who, prior to any
disclosureof Confidentialinformation to such person, have been designatedin writing
by notice to all counsel and have signeda document agreeingto be bound by the terms
of this Protective Order (such signed document to be maintained by the attorney
designatingsuch person);
iv. any person who was an author, addressee, or intended or authorized
recipient of the Confidential information and who agrees to keep the information
confidential, provided that suchpersons may seeand use the Confidential information
but not retain a copy.
c. Such other person as this court may designate after notice and an opportunity
to be heard.
3. Designation Criteria
a. Nonclassijied Information. Classified Information shall not include information
that either:
i. is in the public domain at the time of disclosure, as evidenced by a
written document;
ii. becomes part of the public domain through no fault of the recipient,
as evidenced by a written document;
iii. the receiving party can show by written document was in its rightful
and lawfiilpossession at the time of disclosure;or
{1773126;}CONnDI-N'n/\].ITY /\ND PROTECTINT- ORDER Page3
PLAINTIFF'S SUPPLEMENT TO RESPONSE TO DEF.'S MOT. FOR PROTECTIVE ORDER - Page 11
SR408
iv. lawfiilly comes into the recipient's possession subsequent to the time
of disclosure from another source without restriction as to disclosure, provided such
third party has the right to make the disclosure to the receivingparty.
b. Classifiedlnfi)mation. A party shalldesignateas Classified Information only such
information that the party in good faith believes in fact is confidential. Information that is
generally available to the public, such as public filings, catalogues, advertising materials, and
the like, shallnot be designated as Classified.
Information and documents that may be designated as Classified Information include,
but are not limited to, trade secrets, confidential or proprietary financial information,
operational data, business plans, and competitive analyses, personnel files, personal
information that is protected by law, and other sensitive information that, if not restricted as
set forth in this order, may subject the producing or disclosing person to competitive or
financial injury or potential legal liability to third parties.
Correspondence and other communications between the parties or with nonparties
may be designated as Classified Information if the communication was made with the
understanding or reasonable expectation that the information would not become generally
available to the public.
c. For Counsel or Attom^s Only. The designation "For Counsel Only" or
"Attorneys Eyes Only" shall be reserved for information that is believed to be unknown to
the opposing party or parties, or any of the employees of a corporate party. For purposes of
this order, so-designated information includes, but is not limited to, product formula
information, design information, non- public financial information, pricing information,
customer identification data, and certain study methodologies.
{l773l26;}CONniDENTIALITY AND PROTECnVE ORDER Page4
PLAINTIFF'S SUPPLEMENT TO RESPONSE TO DEF.'S MOT. FOR PROTECTIVE ORDER - Page 12
SR409
d. Ultrasensitive Information. At this point, the parties do not andcipatethe need for
higher levelsof confidentiality as to ultrasensitive documents or information. However, in the
eventthat a court orders that ultrasensitive documents or information be produced,the parties
will negotiate and ask the court to enter an ultrasensitive information protocol in advance of
production to further protect such information.
4. Use of Classified Infotmation
All Classified Information provided by any party or nonparty in the course of this litigation
shall be used solely for the purpose of preparation, trial, and appeal of this litigation and for no other
purpose, and shall not be disclosed except in accordance with the terms hereof.
5. Marking ofDocuments
Documents provided in this litigation may be designated by the producing person or by any
party as Classified Information by marking each page of the documents so designated with a stamp
indicating that the information is "Confidential", "For Counsel Only", or "Attorneys Eyes Only". If
only part of a document is designated "For Counsel Only" or "Attorneys Eyes Only", the designating
party shall produce two copies of the item—one copy with the "For Counsel Only" or "Attorneys
Eyes Only" information noted but visible, and one copy with the "For Counsel Only" or "Attorneys
Eyes Only" information shielded from visibility. In lieuof markingthe original of a document, if the
original is not provided, the designating party may mark the copies that are provided. Originals shall
be preserved for inspection.
6. Disclosiue at Depositions
Information disclosed at (a) the deposition of a party or one of its presentor former officers,
directors, employees, agents, consultants, representatives, or independent experts retained by counsel
for the purpose of this litigation, or (b) the deposition of a nonparty may be designated by any party
{1773126:)CONFIDENTIAI,nYAND PROTECTIVE ORDER Page5
PLAINTIFF'S SUPPLEMENT TO RESPONSE TO DEF.'S MOT. FOR PROTECTIVE ORDER - Page 13
SR410
as Classified Information by indicating on the record at the deposition that the testimony is
"Confidential" or "For Counsel Only" and is subject to the provisions of this Order.
Any party also may designate information disclosed at a deposition as Classified Information
by notifying all parties in writing not later than10days of receipt of the transcript of the specific pages
and lines of the transcript that shouldbe treated as Classified Information thereafter. Each partyshall
attach a copy of each such written notice to the face of the transcript and each copy thereofin that
party's possession, custody, or control. Alldeposition transcripts shall be treated as For Counsel Only
for a period of 10 days after initial receipt of thetranscript.
To the extent possible, the courtreporter shall segregate into separate transcripts information
designated as Classified Information with blank, consecutively numbered pages being provided in a
nondesignated main transcript. The separate transcript containing Classified Information shall have
page numbers that correspond to the blankpages in the main transcript.
Counsel fora party or a nonparty wimess shall have the right to exclude from depositions any
person who is not authorized to receive Classified Information pursuant to this Protective Order, but
such right of exclusion shall be applicable only during periods of examination or testimony during
which Classified Information is being used or discussed.
7. Disclosure to Qualified Persons
Classified Information shall not be disclosed or made available by the receiving party to
persons other than Qualified Persons except as necessary to comply with applicable law or the valid
order of a court of competent jurisdiction; provided, however, that in the event of a disclosure
compeUed by law or court order, the receiving partywill so notify the producing partyas prompdyas
practicable (if at all possible, prior to making such disclosure) and shall seek a protective order or
confidential treatment of such information. Information designated as For Counsel Only shall be
restricted in circulation to Qualified Persons described in subparagraph2(a).
{1T73J26;IC0NFIDENTI/\UTY ^\ND PROTECTIVE ORDER Page 6
PLAINTIFF'S SUPPLEMENT TO RESPONSE TO DEF.'S MOT. FOR PROTECTIVE ORDER - Page 14
SR411
8. Unintentional Disclosures
Documents unintentionally produced without designation as Classified Information later may
be designated and shall be treated as Classified Information from the date written notice of the
designation is provided to the receiving party.
If a receiving party learns of any unauthorized disclosure of Confidential information or For
Counsel Only information, the party shall immediately upon learning of such disclosure inform the
producing party of all pertinent facts relating to such disclosure and shall make all reasonable efforts
to prevent disclosure by each unauthorized person who received such information.
9. Documents Produced for Inspection Prior to Designation
In the event documents are produced for inspection prior to designation, the documents shall
be treated as For Counsel Only during inspection. At the time of copying for the receiving parties,
Classified Information shall be marked prominently "Confidential", "For Counsel Only", or
"Attorneys Eyes Only" by the producing party.
10. Consent to Disclosure and Use in Examination
Nothing in this order shall prevent disclosure beyond the terms of this order if each party
designating the information as ClassifiedInformation consents to such disclosure or if the court, after
notice to all affected parties and nonparties, orders such disclosure. Nor shall anything in this order
prevent any counsel of record from utilizing Classified Information in the examination or cross-
examination of any person who is indicated on the document as beingan author, source, or recipient
of the Classified Information, irrespective of which party produced such information.
IL Challenging the Designation
A party shall not be obligated to challenge the propriety of a designation of Classified
Information at the timesuchdesignation is made, and a failure to do so shallnot preclude a subsequent
challenge to the designation. In the eventthat any party to thislitigation disagrees at any stage of these
Im3126:}CONnDENnALITY y\ND PROTECHVE ORDER Page7
PLAINTIFF'S SUPPLEMENT TO RESPONSE TO DEF.'S MOT. FOR PROTECTIVE ORDER - Page 15
SR412
proceedings widi the designation of any information as Classified Information, the parties shall first
try to resolve the dispute in good faith on an informal basis, such as by production of redacted copies.
If the dispute cannot be resolved, die objecting party may invoke this Protective Order by objecting
in writing to the party who designated the document or informadon as Classified Information. The
designating party shall then have 14 days to move the court for an order preserving the designated
status of the disputed information. The disputed information shall remain Classified Information
unless and until the court orders otherwise.
Failure to move for an order shall constitute a termination of the status of such item as
Classified Information.
12. Manner of Use in Proceedings
In the event a party wishes to use any Classified Information in affidavits, declarations, briefs,
memoranda of law, or other papers filed in this litigation, the party shall do one of the following; (1)
with the consent of the producing party, file only a redacted copy of the information; (2) where
appropriate (e.g., in connection with discovery and evidentiary motions) provide the information
solely for in camera review; or (3) file such information under seal with the court consistent with the
sealing requirements of the court.
13. Filing Under Seal
The clerk of this court is directed to maintain under seal all documents, transcripts of
deposition testimony, answers to interrogatories, admissions, and other papers filed under seal in this
litigation that have been designated, in whole or in part, as Classified Information by any party to this
litigationconsistent with the sealingrequirements and standards of Texas Rule of CivilProcedure 76a.
14. Return of Documents
Not later than 60 days after conclusion of this litigation and any appeal related to it, any
Classified Information, all reproductions of such information, and any notes, summaries, or
{1773126;)CONFIDENnAI.riY /\N13 PROTI-Cl lVIi ORDER Page 8
PLAINTIFF'S SUPPLEMENT TO RESPONSE TO DEF.'S MOT. FOR PROTECTIVE ORDER - Page 16
SR413
descriptions of such information in the possession of any of the persons specified in paragraph 2
(except subparagraph 2(a)(iii)) shall be returned to the producing party or destroyed, except as this
court mayotherwiseorder or to the extent such information has been used as evidence at any trial or
hearing. Notwithstanding this obligation to return or destroy information, counsel may retain one
copyof Classified Information for theirrespective legal files and must describe to the producingparty
or nonparty the steps taken to ensure that such Classified Information will not be accessed, used, or
disclosed inconsistendy with the obligations under this Protective Order.
15. Ongoing Obligations
Insofar as the provisions of this Protective Order, or any other protective orders entered in
this litigation, restrictthe communication and use of the information protected by it, such provisions
shall continue to be binding after the conclusion of this litigation, except that (a) there shall be no
restriction on documents that are used as exhibits in open court unless such exhibits were filed under
seal,and (b) a party may seek the written permission of the producing party or order of the court with
respect to dissolution or modification of this, or any other, protective order.
16. Advice to Clients
This order shall not bar any attorney in the course of rendering advice to such attorney's client
with respect to this litigation from conveying to any party client the attorney's evaluation in a general
way of Classified Information produced or exchanged under the terms of this order; provided,
however, that in rendering such advice and otherwise communicating with the client, the attorney
shall not disclose the specific contents of any Classified Information produced by another party if
such disclosure would be contrary to the terms of this Protective Order.
(t773t26;(CONFIDEN"nAIJ'IYAND PROTf-CnVE ORDIiR Page 9
PLAINTIFF'S SUPPLEMENT TO RESPONSE TO DEF.'S MOT. FOR PROTECTIVE ORDER - Page 17
SR414
17. Duty to Ensute Compliance
Any party designating any person as a Qualified Person shall have the duty to reasonably
ensure that such person observes the terms of this Protective Order and shall be responsible upon
breach of such duty for the failure of such person to observe the terms of this Protective Order.
18. Legal Effect.
This Protective Order shall not abrogate or diminish any contractual, statutory, or other legal
privilege or protection ofa Patty or person with respect to anyinformation. The fact that anymaterials
are designated Confidential Information pursuant to this Protective Order shall not affect or operate
as a means of objection to the admissibility of any such material. The fact that materialsate designated
as Confidential Information pursuant to this Protective Order shall not affect what a trier of fact in
the proceedings may find to be confidentialor proprietary. Other than as specifically provided herein,
this Protective Order does not expandor limit the scope of discovery or the rights and the obligations
of any Partywith respect thereto in the Lawsvdt or any other proceeding.
19. Modification and Exceptions
The parries may, by writtenstipulation, providefor exceptions to this order and anypatty may
seek an order of this court modifying this Protective Order.
It is SO ORDERED this day of December 2017.
PresidingJudge
{1773126;}CONFlDIiN'nAI.n'Y AND PROTKCTIVK ORDER Page 10
PLAINTIFF'S SUPPLEMENT TO RESPONSE TO DEF.'S MOT. FOR PROTECTIVE ORDER - Page 18
SR415
Defendant’s Third Proposed Order (adapted from the Agreed Order entered in Magellan Crude Oil
Pipeline Co., LP v. Serv. & Mfg. Corp., Case No. 1:16-cv-1126-SS (W. D. Tex.))
NO. DC-17-07264
Exhibit 2
MAGELLAN CRUDE OIL PIPELINE § IN THE DISTRICT COURT
COMPANY, L.P., §
§
Plaintiff, §
§
vs. § 101st JUDICIAL DISTRICT
§
ENTERPRISE CRUDE OIL LLC, §
§
Defendant. § DALLAS COUNTY, TEXAS
CONFIDENTIALITY AND PROTECTIVE
ORDER
Before the court is the joint motion of the parties for the entry of a confidentiality and protective
order (“Protective Order”). After careful consideration, it is hereby ORDERED as follows:
1. Classified Information
“Classified Information” means any information of any type, kind, or character that is designated
as “Confidential”, “For Counsel Only”, or “Attorneys Eyes Only” by any of the supplying or
receiving persons, whether it be a document, information contained in a document, information
revealed during a deposition, information revealed in an interrogatory answer, or otherwise.
2. Qualified Persons
“Qualified Persons” means:
a. For Counsel or Attorneys Only information:
i. retained counsel for the parties in this litigation and their respective staff;
ii. in-house counsel for the receiving party who are actively involved in assisting
counsel for the receiving party in the prosecution or defense of this action, and
their paralegal, secretarial, and clerical assistants. This is limited to in-house
counsel who manage litigation and do not make or participate in competitive
business matters of the party for whom they work. Prior to receiving Classified
Information, any person described in this subsection must sign a document a
document agreeing to be bound by the terms of this Protective Order (such
signed document to be maintained by the retained counsel);
iii. any employee of the receiving party currently or formerly serving as an auditor
CONFIDENTIALITY AND PROTECTIVE ORDER – Page 23
{1773363;}
2669614v1
03982.409
PLAINTIFF'S SUPPLEMENT TO RESPONSE TO DEF.'S MOT. FOR PROTECTIVE ORDER - Page 19
SR416
Defendant’s Third Proposed Order (adapted from the Agreed Order entered in Magellan Crude Oil
Pipeline Co., LP v. Serv. & Mfg. Corp., Case No. 1:16-cv-1126-SS (W. D. Tex.))
on behalf of the receiving party who, prior to receiving Classified Information,
must sign a document agreeing to be bound by the terms of this Protective
Order (such signed document to be maintained by the retained counsel);
iv. a witness currently employed by the producing party or nonparty or a witness
who was formerly employed by the producing party or nonparty at the time the
Classified Information was generated who, prior to receiving Classified
Information, must sign a document agreeing to be bound by the terms of this
Protective Order (such signed document to be maintained by the retained
counsel);
ii.v. actual or potential independent experts or consultants (and their administrative
or clerical staff) engaged in connection with this litigation (which shall not
include the current employees, officers, members, or agents of parties or
affiliates of parties) who, prior to any disclosure of Classified Information to
such person, have signed a document agreeing to be bound by the terms of
this Protective Order (such signed document to be maintained by the attorney
retaining such person) and have been designated in writing by notice to all
counsel;);
iii.vi. this court and its staff and any other tribunal or dispute resolution officer duly
appointed or assigned in connection with this litigation.
vii. litigation vendors, court reporters, and other litigation support personnel;
b. For Confidential information:
i. the persons identified in subparagraph 2(a);
ii. the party, if a natural person;
iii. if the party is an entity, such officers or employees of the party who are actively
involved in the prosecution or defense of this case who, prior to any disclosure
of Confidential information to such person, have been designated in writing
by notice to all counsel and have signed a document agreeing to be bound by
the terms of this Protective Order (such signed document to be maintained by
the attorney designating such person);
iv.i. litigation vendors, court reporters, and other litigation support personnel;
CONFIDENTIALITY AND PROTECTIVE ORDER – Page 23
{1773363;}
2669614v1
03982.409
PLAINTIFF'S SUPPLEMENT TO RESPONSE TO DEF.'S MOT. FOR PROTECTIVE ORDER - Page 20
SR417
heard.
CONFIDENTIALITY AND PROTECTIVE ORDER – Page 3
{1773363;}
PLAINTIFF'S SUPPLEMENT TO RESPONSE TO DEF.'S MOT. FOR PROTECTIVE ORDER - Page 21
SR418
v.iv. any person who was an author, addressee, or intended or authorized recipient
of the Confidential information and who agrees to keep the information
confidential, provided that such persons may see and use the Confidential
information but not retain a copy.
c. Such other person as this court may designate after notice and an opportunity to be
heard.
CONFIDENTIALITY AND PROTECTIVE ORDER – Page 3
{1773363;}
PLAINTIFF'S SUPPLEMENT TO RESPONSE TO DEF.'S MOT. FOR PROTECTIVE ORDER - Page 22
SR419
3. Designation Criteria
a. Nonclassified Information. Classified Information shall not include information that
either:
i. is in the public domain at the time of disclosure, as evidenced by a written
document;
ii. becomes part of the public domain through no fault of the recipient, as
evidenced by a written document;
iii. the receiving party can show by written document was in its rightful and lawful
possession at the time of disclosure; or
iv. lawfully comes into the recipient’s possession subsequent to the time of
disclosure from another source without restriction as to disclosure, provided
such third party has the right to make the disclosure to the receiving party.
b. Classified Information. A party shall designate as Classified Information only such
information that the party in good faith believes in fact is confidential. Information that is generally
available to the public, such as public filings, catalogues, advertising materials, and the like, shall not
be designated as Classified.
Information and documents that may be designated as Classified Information include, but are
not limited to, trade secrets, confidential or proprietary financial information, operational data,
business plans, and competitive analyses, personnel files, personal information that is protected by
law, and other sensitive information that, if not restricted as set forth in this order, may subject the
producing or disclosing person to competitive or financial injury or potential legal liability to third
parties.
Correspondence and other communications between the parties or with nonparties may be
designated as Classified Information if the communication was made with the understanding or
reasonable expectation that the information would not become generally available to the public.
c. For Counsel or Attorneys Only. The designation “For Counsel Only” or “Attorneys Eyes
Only” shall be reserved for information that is believed to be unknown to the opposing party or
parties, or any of the employees of a corporate party. For purposes of this order, so-designated
information includes, but is not limited to, product formula information, design information, non-
public financial information, pricing information, customer identification data, and certain study
methodologies.
{1773363;}
CONFIDENTIALITY AND PROTECTIVE ORDER – Page 10
PLAINTIFF'S SUPPLEMENT TO RESPONSE TO DEF.'S MOT. FOR PROTECTIVE ORDER - Page 23
SR420
d. Ultrasensitive Information. At this point, the parties do not anticipate the need for higher
levels of confidentiality as to ultrasensitive documents or information. However, in the event that a
court orders that ultrasensitive documents or information be produced, the parties will negotiate and
ask the court to enter an ultrasensitive information protocol in advance of production to further
protect such information.
4. Use of Classified Information
All Classified Information provided by any party or nonparty in the course of this litigation shall
be used solely for the purpose of preparation, trial, and appeal of this litigation and for no other
purpose, and shall not be disclosed except in accordance with the terms hereof.
5. Marking of Documents
Documents provided in this litigation may be designated by the producing person or by any party
as Classified Information by marking each page of the documents so designated with a stamp
indicating that the information is “Confidential”, “For Counsel Only”, or “Attorneys Eyes Only”. If
only part of a document is designated “For Counsel Only” or “Attorneys Eyes Only”, the designating
party shall produce two copies of the item—one copy with the “For Counsel Only” or “Attorneys
Eyes Only” information noted but visible, and one copy with the “For Counsel Only” or “Attorneys
Eyes Only” information shielded from visibility. In lieu of marking the original of a document, if the
original is not provided, the designating party may mark the copies that are provided. Originals shall
be preserved for inspection.
6. Disclosure at Depositions
Information disclosed at (a) the deposition of a party or one of its present or former officers,
directors, employees, agents, consultants, representatives, or independent experts retained by counsel
for the purpose of this litigation, or (b) the deposition of a nonparty may be designated by any party
as Classified Information by indicating on the record at the deposition that the testimony is
“Confidential” or “For Counsel Only” and is subject to the provisions of this Order.
Any party also may designate information disclosed at a deposition as Classified Information by
notifying all parties in writing not later than 10 days of receipt of the transcript of the specific pages
and lines of the transcript that should be treated as Classified Information thereafter. Each party shall
attach a copy of each such written notice to the face of the transcript and each copy thereof in that
party’s possession, custody, or control. All deposition transcripts shall be treated as For Counsel Only
{1773363;}
CONFIDENTIALITY AND PROTECTIVE ORDER – Page 10
PLAINTIFF'S SUPPLEMENT TO RESPONSE TO DEF.'S MOT. FOR PROTECTIVE ORDER - Page 24
SR421
for a period of 10 days after initial receipt of the transcript.
To the extent possible, the court reporter shall segregate into separate transcripts information
designated as Classified Information with blank, consecutively numbered pages being provided in a
nondesignated main transcript. The separate transcript containing Classified Information shall have
page numbers that correspond to the blank pages in the main transcript.
Counsel for a party or a nonparty witness shall have the right to exclude from depositions any
person who is not authorized to receive Classified Information pursuant to this Protective Order, but
such right of exclusion shall be applicable only during periods of examination or testimony during
which Classified Information is being used or discussed.
7. Disclosure to Qualified Persons
To Whom. Classified Information shall not be disclosed or made available by the receiving party
to persons other than Qualified Persons except as necessary to comply with applicable law or the
valid order of a court of competent jurisdiction; provided, however, that in the event of a disclosure
compelled by law or court order, the receiving party will so notify the producing party as promptly as
practicable (if at all possible, prior to making such disclosure) and shall seek a protective order or
confidential treatment of such information. Information designated as For Counsel Only shall be
restricted in circulation to Qualified Persons described in subparagraph 2(a).
a. Retention of Copies During this Litigation. Copies of For Counsel Only information shall be
maintained only in the offices of outside counsel for the receiving party and, to the extent supplied to
experts described in subparagraph 2(a)(ii), in the offices of those experts. Any documents produced
in this litigation, regardless of classification, that are provided to Qualified Persons shall be maintained
only at the office of such Qualified Person and only necessary working copies of any such documents
shall be made. Copies of documents and exhibits containing Classified Information may be prepared
by independent copy services, printers, or illustrators for the purpose of this litigation.
b. Each party’s outside counsel shall maintain a log of all copies of For Counsel Only
documents that are delivered to Qualified Persons.
8. Unintentional Disclosures
Documents unintentionally produced without designation as Classified Information later may be
designated and shall be treated as Classified Information from the date written notice of the
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designation is provided to the receiving party.
If a receiving party learns of any unauthorized disclosure of Confidential information or For
Counsel Only information, the party shall immediately upon learning of such disclosure inform the
producing party of all pertinent facts relating to such disclosure and shall make all reasonable efforts
to prevent disclosure by each unauthorized person who received such information.
9. Documents Produced for Inspection Prior to Designation
In the event documents are produced for inspection prior to designation, the documents shall be
treated as For Counsel Only during inspection. At the time of copying for the receiving parties,
Classified Information shall be marked prominently “Confidential”, “For Counsel Only”, or
“Attorneys Eyes Only” by the producing party.
10. Consent to Disclosure and Use in Examination
Nothing in this order shall prevent disclosure beyond the terms of this order if each party
designating the information as Classified Information consents to such disclosure or if the court, after
notice to all affected parties and nonparties, orders such disclosure. Nor shall anything in this order
prevent any counsel of record from utilizing Classified Information in the examination or cross-
examination of any person who is indicated on the document as being an author, source, or recipient
of the Classified Information, irrespective of which party produced such information.
11. Challenging the Designation
Classified Information. A party shall not be obligated to challenge the propriety of a designation of
Classified Information at the time such designation is made, and a failure to do so shall not preclude a
subsequent challenge to the designation. In the event that any party to this litigation disagrees at any
stage of these proceedings with the designation of any information as Classified Information, the parties
shall first try to resolve the dispute in good faith on an informal basis, such as by production of redacted
copies. If the dispute cannot be resolved, the objecting party may invoke this Protective Order by
objecting in writing to the party who designated the document or information as Classified Information.
The designating party shall then have 14 days to move the court for an order preserving the designated
status of the disputed information. The disputed information shall remain Classified Information unless
and until the court orders otherwise.
Failure to move for an order shall constitute a termination of the status of such item as Classified
Information.
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a. Qualified Persons. In the event that any party in good faith disagrees with the designation of
a person as a Qualified Person or the disclosure of particular Classified Information to such person,
the parties shall first try to resolve the dispute in good faith on an informal basis. If the dispute cannot
be resolved, the objecting party shall have 14 days from the date of the designation or, in the event
particular Classified Information is requested subsequent to the designation of the Qualified Person,
14 days from service of the request to move the court for an order denying the disposed person (a)
status as a Qualified Person, or (b) access to particular Classified Information. The objecting person
shall have the burden of demonstrating that disclosure to the disputed person would expose the
objecting party to the risk of serious harm. Upon the timely filing of such a motion, no disclosure of
Classified Information shall be made to the disputed person unless and until the court enters an order
preserving the designation.
12. Manner of Use in Proceedings
In the event a party wishes to use any Classified Information in affidavits, declarations, briefs,
memoranda of law, or other papers filed in this litigation, the party shall do one of the following: (1)
with the consent of the producing party, file only a redacted copy of the information; (2) where
appropriate (e.g., in connection with discovery and evidentiary motions) provide the information
solely for in camera review; or (3) file such information under seal with the court consistent with the
sealing requirements of the court.
13. Filing Under Seal
The clerk of this court is directed to maintain under seal all documents, transcripts of deposition
testimony, answers to interrogatories, admissions, and other papers filed under seal in this litigation
that have been designated, in whole or in part, as Classified Information by any party to this litigation
consistent with the sealing requirements and standards of Texas Rule of Civil Procedure 76a.
14. Return of Documents
Not later than 60 days after conclusion of this litigation and any appeal related to it, any Classified
Information, all reproductions of such information, and any notes, summaries, or descriptions of such
information in the possession of any of the persons specified in paragraph 2 (except subparagraph
2(a)(iii)) shall be returned to the producing party or destroyed, except as this court may otherwise
order or to the extent such information has been used as evidence at any trial or hearing.
Notwithstanding this obligation to return or destroy information, counsel may retain attorney work
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product, including document indices, so long as that work product does not duplicate verbatim
substantial portions of the text of any Classified Informationone copy of Classified Information for
their respective legal files and must describe to the producing party or nonparty the steps taken to
ensure that such Classified Information will not be accessed, used, or disclosed inconsistently with the
obligations under this Protective Order.
15. Ongoing Obligations
Insofar as the provisions of this Protective Order, or any other protective orders entered in this
litigation, restrict the communication and use of the information protected by it, such provisions shall
continue to be binding after the conclusion of this litigation, except that (a) there shall be no restriction
on documents that are used as exhibits in open court unless such exhibits were filed under seal, and
(b) a party may seek the written permission of the producing party or order of the court with respect
to dissolution or modification of this, or any other, protective order.
16. Advice to Clients
This order shall not bar any attorney in the course of rendering advice to such attorney’s client
with respect to this litigation from conveying to any party client the attorney’s evaluation in a general
way of Classified Information produced or exchanged under the terms of this order; provided,
however, that in rendering such advice and otherwise communicating with the client, the attorney
shall not disclose the specific contents of any Classified Information produced by another party if
such disclosure would be contrary to the terms of this Protective Order.
17. Duty to Ensure Compliance
Any party designating any person as a Qualified Person shall have the duty to reasonably ensure
that such person observes the terms of this Protective Order and shall be responsible upon breach of
such duty for the failure of such person to observe the terms of this Protective Order.
18. Legal Effect.
This Protective Order shall not abrogate or diminish any contractual, statutory, or other legal
privilege or protection of a Party or person with respect to any information. The fact that any materials
are designated Confidential Information pursuant to this Protective Order shall not affect or operate as
a means of objection to the admissibility of any such material. The fact that materials are designated as
Confidential Information pursuant to this Protective Order shall not affect what a trier of fact in the
proceedings may find to be confidential or proprietary. Other than as specifically provided herein, this
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Protective Order does not expand or limit the scope of discovery or the rights and the obligations of
any Party with respect thereto in the Lawsuit or any other proceeding.
19. Modification and Exceptions
The parties may, by written stipulation, provide for exceptions to this order and any party may
seek an order of this court modifying this Protective Order.
It is SO ORDERED this day of December, 2017.
Presiding Judge
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Exhibit 3
CAUSE NO. DC-17-07264
MAGELLAN CRUDE OIL PIPELINE § IN THE DISTRICT COURT
COMPANY, L.P. a Delaware Limited §
Partnership, §
§
Plaintiff, §
§ 101st JUDICIAL DISTRICT
v. §
§
ENTERPRISE CRUDE OIL LLC, §
A Texas Limited Liability Company, §
§
Defendant. § DALLAS COUNTY, TEXAS
DEFENDANT’S OBJECTIONS AND RESPONSES
TO PLAINTIFF’S FIRST REQUEST FOR PRODUCTION
TO: Plaintiff Magellan Crude Oil Pipeline Company, L.P., by and through their attorney of
record, David L. Bryant, GableGotwals, 113 Pleasant Valley Drive, Suite 204, Boerne,
Texas 78006; Lisa T. Silvestri, GableGotwals, 100 W. Fifth Street, Suite 1100, Tulsa,
Oklahoma 74103; and Bill E. Davidoff, Figari & Davenport, LLP, 901 Main Street, Suite
3400, Dallas, Texas 75202.
Defendant Enterprise Crude Oil LLC (“Enterprise” or “Defendant”) serves its Objections
and Responses to Plaintiff’s First Request for Production, served on July 21, 2017, as follows:
I. INTRODUCTION
1. These Responses and Objections are made solely for the purposes of this action.
Each Response is subject to all objections as to confidence, privilege, relevance, materiality,
propriety, admissibility, and any and all other objections and grounds that would require the
exclusion of any statement, admission, or document, if any requests were made, or any statement
contained herein were made by a witness present and testifying in court or at a hearing, or any
documents produced herein were proffered as evidence in court or at a hearing, all of which
objections and grounds are reserved and may be interposed at the time of trial or hearing.
DEFENDANT’S OBJECTIONS AND RESPONSES TO PLAINTIFF’S
FIRST REQUEST FOR PRODUCTION PAGE 1
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2. Discovery, independent investigation, legal research and analysis will lead to
additional facts and evidence, and may establish entirely new factual conclusions and legal
contentions, all of which may lead to additions to, changes in and variations from the present
responses. Consequently, the following responses are given without prejudice to Enterprise’s
right to produce, at time of motions or trial, such further information or facts as may hereafter
become known and available to it.
3. The following Responses and Objections are based upon information presently
available to Enterprise and, except for explicit facts admitted herein, no incidental or implied
admissions are intended hereby. The fact that Enterprise has responded or objected to any of the
requests, or part thereof, should not be taken as an admission that Enterprise accepts or admits
the existence of any facts set forth or assumed by such requests and/or that such response
constitutes admissible evidence. The fact that Enterprise has responded to all or part of a request
is not intended and shall not be construed to be a waiver by Enterprise of all or any part of any
objection(s) to any request. Enterprise reserves the right to amend or supplement the following
responses in accordance with the Texas Rules of Civil Procedure as this matter proceeds.
4. The responses given herein exclude from their scope all documents or tangible
things (1) containing communications between counsel for Enterprise or between Enterprise and
its counsel; (2) generated or prepared in anticipation of litigation by or for Enterprise or its
representatives; and (3) reflecting the mental impressions, strategies, and analysis of Enterprise’s
counsel, and all such materials are being withheld. If Enterprise inadvertently produces any
information or documents protected by the attorney-client privilege, the work-product doctrine,
or any other privilege or protection, such production is not intended to and shall not operate as a
waiver of its privileges.
DEFENDANT’S OBJECTIONS AND RESPONSES TO PLAINTIFF’S
FIRST REQUEST FOR PRODUCTION PAGE 2
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5. Many of Magellan’s requests seek production of documents already in Magellan’s
possession, custody, or control, such as communications exchanged between the parties,
documents Enterprise has already provided to Plaintiff, or documents Magellan itself has
provided to Enterprise. Enterprise will not reproduce such documents unless Magellan is willing
to bear the cost of the production.
6. By stating that it has produced or will produce documents within its possession,
custody or control, Enterprise does not represent that any such documents exist. Rather,
Enterprise is responding only that, to the extent such documents exist and are located, they have
been or will be produced subject to and without waiver of any objection.
II. OBJECTIONS AND RESPONSES
REQUEST FOR PRODUCTION NO. 1. Regarding the COD Agreement, the following
Documents created or generated on or before October 31, 2011: (a) all drafts of said agreement;
(b) all Documents constituting or reflecting Communications between Magellan and Enterprise,
regarding said agreement; and (c) all Documents constituting or reflecting Enterprise internal
Communications regarding said agreement.
RESPONSE:
Enterprise objects that this request seeks information that is not relevant or reasonably calculated
to lead to the discovery of admissible evidence. Neither Enterprise nor Magellan contend that
there is any ambiguity in COD Agreement. As such, its terms are to be construed by the Court
as a matter of law. This request seeks parol evidence, that is, extrinsic evidence relating to the
parties’ motives, intent or understanding in entering into the COD Agreement, which evidence is
inadmissible when, as here, the terms of the parties’ agreement are unambiguous. Moreover, the
COD Agreement, which must be read together with the related-writings that give the effect to the
COD Agreement (i.e. the Connection Agreement, the Joint Tariff Agreement, etc.) contains a
merger clause. Thus, by the COD Agreement’s express terms, drafts, documents between
Magellan and Enterprise concerning the COD Agreement and/or internal communications
regarding the COD Agreement are not relevant.
Enterprise also objects that this request is unduly burdensome because it would require the
production of electronically stored information that is not reasonably available as requested and
some of which Enterprise cannot retrieve without unreasonable effort and expense. The request
is also unduly burdensome because it fails to identify particular custodians, purporting to require
a search of the entire company. Moreover, the burden imposed by this request far outweighs the
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FIRST REQUEST FOR PRODUCTION PAGE 3
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benefit to Magellan and is disproportionate to the needs of this case. In re State Farm Lloyds,
520 S.W.3d 595 (Tex. 2017).
Enterprise further objects that the request is overbroad because it uses omnibus terms, such as
“regarding,” to modify requests for general categories of documents, and therefore does not meet
the “reasonable particularity” requirements of the Texas Rules of Civil Procedure. Taken
literally, the request would require the production of thousands of pages of documents that have
little, if anything, to do with the claims or defenses at issue in this case.
Moreover, the request is overbroad and not reasonably limited in time to the extent it seeks
information at any time “before” October 31, 2011, without any limitation whatsoever.
Enterprise further objects to subpart (b) of the request as unduly burdensome to the extent that
the documents sought are equally available to or are already in Magellan’s possession, and
therefore can be obtained from another source that is more convenient, less burdensome or less
expensive, namely, Magellan.
Enterprise further objects to subpart (c) of the request because Enterprise’s internal
communications discuss, concern and/or contain Enterprise’s confidential and proprietary
information and trade secrets.
Enterprise is withholding documents responsive to this request under the work product and/or
attorney client privileges. Enterprise objects to any request for the production of a privilege log
regarding documents prepared or created after November 13, 2015.
REQUEST FOR PRODUCTION NO. 2. Regarding the Joint Tariff Agreement, the following
Documents created or generated on or before November 1, 2011: (a) all drafts of said agreement;
(b) all Documents constituting or reflecting Communications between Magellan and Enterprise,
regarding said agreement; and (c) all Documents constituting or reflecting Enterprise internal
Communications regarding said agreement.
RESPONSE:
Enterprise objects that this request seeks information that is not relevant or reasonably calculated
to lead to the discovery of admissible evidence. Neither Enterprise nor Magellan contend that
there is any ambiguity in COD Agreement (or the Joint Tariff Agreement for that matter). As
such, its terms are to be construed by the Court as a matter of law. This request seeks parol
evidence, that is, extrinsic evidence relating to the parties’ motives, intent or understanding in
entering into the Joint Tariff Agreement, which evidence is inadmissible when, as here, the terms
of the parties’ agreement are unambiguous. Moreover, the COD Agreement, which must be read
together with the related-writings that give the effect to the COD Agreement (i.e. the Connection
Agreement, the Joint Tariff Agreement, etc.) contains a merger clause. Thus, by the COD
Agreement’s express terms, drafts, documents between Magellan and Enterprise concerning the
Joint Tariff agreement and/or internal communications regarding the Joint Tariff Agreement are
not relevant.
DEFENDANT’S OBJECTIONS AND RESPONSES TO PLAINTIFF’S
FIRST REQUEST FOR PRODUCTION PAGE 4
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Enterprise further objects because that request is not reasonably limited in time to the extent it
seeks information at any time “before” November 1, 2011, without any limitation whatsoever
and over the course of six years after that.
Enterprise also objects that this request is unduly burdensome because it would require the
production of electronically stored information that is not reasonably available as requested and
some of which Enterprise cannot retrieve without unreasonable effort and expense. The request
is also unduly burdensome because it fails to identify particular custodians, purporting to require
a search of the entire company. Moreover, the burden imposed by this request far outweighs the
benefit to Magellan and is disproportionate to the needs of this case. In re State Farm Lloyds,
520 S.W.3d 595 (Tex. 2017).
Enterprise further objects that the request is overbroad because it uses omnibus terms, such as
“regarding,” to modify requests for general categories of documents, and therefore does not meet
the “reasonable particularity” requirements of the Texas Rules of Civil Procedure. Taken
literally, the request would require the production of thousands of pages of documents that have
little, if anything, to do with the claims or defenses at issue in this case.
Enterprise further objects to subpart (b) of the request as unduly burdensome to the extent that
the documents sought are equally available to or are already in Magellan’s possession, and
therefore can be obtained from another source that is more convenient, less burdensome or less
expensive, namely, Magellan.
Enterprise further objects to subpart (c) of the request because Enterprise’s internal
communications discuss, concern and/or contain Enterprise’s confidential and proprietary
information and trade secrets.
Enterprise is withholding documents responsive to this request under the work product and/or
attorney client privileges. Enterprise objects to any request for the production of a privilege log
regarding documents prepared or created after November 13, 2015.
REQUEST FOR PRODUCTION NO. 3. Regarding the Connection Agreement, the following
Documents created or generated on or before December 16, 2011: (a) all drafts of said
agreement; (b) all Documents constituting or reflecting Communications between Magellan and
Enterprise, regarding said agreement; and (c) all Documents constituting or reflecting Enterprise
internal Communications regarding said agreement.
RESPONSE:
Enterprise objects that this request seeks information that is not relevant or reasonably calculated
to lead to the discovery of admissible evidence. Neither Enterprise nor Magellan contend that
there is any ambiguity in COD Agreement (or the Connection Agreement for that matter). As
such, its terms are to be construed by the Court as a matter of law. This request seeks parol
evidence, that is, extrinsic evidence relating to the parties’ motives, intent or understanding in
entering into the COD Agreement, which evidence is inadmissible when, as here, the terms of
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the parties’ agreement are unambiguous. Moreover, the COD Agreement, which must be read
together with the related-writings that give the effect to the COD Agreement (i.e. the Connection
Agreement, the Joint Tariff Agreement, etc.) contains a merger clause. Thus, by the COD
Agreement’s express terms, drafts, documents between Magellan and Enterprise concerning the
Connection agreement and/or internal communications regarding the Connection Agreement are
not relevant.
Enterprise also objects that this request is unduly burdensome because it would require the
production of electronically stored information that is not reasonably available as requested and
some of which Enterprise cannot retrieve without unreasonable effort and expense. The request
is also unduly burdensome because it fails to identify particular custodians, purporting to require
a search of the entire company. Moreover, the burden imposed by this request far outweighs the
benefit to Magellan and is disproportionate to the needs of this case. In re State Farm Lloyds,
520 S.W.3d 595 (Tex. 2017).
Enterprise further objects because the request is overbroad and not reasonably limited in time to
the extent it seeks information at any time “before” December 16, 2011, without any limitation
whatsoever.
Enterprise further objects that the request is overbroad because it uses omnibus terms, such as
“regarding,” to modify requests for general categories of documents, and therefore does not meet
the “reasonable particularity” requirements of the Texas Rules of Civil Procedure. Taken
literally, the request would require the production of thousands of pages of documents that have
little, if anything, to do with the claims or defenses at issue in this case.
Enterprise further objects to the request as unduly burdensome to the extent that the documents
sought are equally available to or are already in Magellan’s possession, and therefore can be
obtained from another source that is more convenient, less burdensome or less expensive,
namely, Magellan.
Enterprise further objects to subpart (c) of the request because Enterprise’s internal
communications discuss, concern and/or contain Enterprise’s confidential and proprietary
information and trade secrets.
Enterprise is withholding documents responsive to this request under the work product and/or
attorney client privileges. Enterprise objects to any request for the production of a privilege log
regarding documents prepared or created after November 13, 2015.
REQUEST FOR PRODUCTION NO. 4. All Documents, whether created before or after the
COD Agreement, identifying any business or commercial considerations which led Enterprise
Crude Oil LLC to enter into the COD Agreement or caused or contributed to its interest in
pursuing that or any similar agreement with Magellan.
RESPONSE:
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FIRST REQUEST FOR PRODUCTION PAGE 6
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Enterprise objects that this request seeks information that is not relevant or reasonably calculated
to lead to the discovery of admissible evidence. Neither Enterprise nor Magellan contend that
there is any ambiguity in COD Agreement. As such, its terms are to be construed by the Court
as a matter of law. This Request seeks parol evidence, that is, extrinsic evidence relating to the
parties’ motives and intent in entering into the COD Agreement, which evidence inadmissible
when, as here, the terms of the parties’ agreement are unambiguous. Moreover, the COD
Agreement, which must be read together with the related-writings that give the effect to the COD
Agreement (i.e. the Connection Agreement, the Joint Tariff Agreement, etc.) contains a merger
clause. Thus, by the COD Agreement’s express terms, drafts, documents between Magellan and
Enterprise concerning the Connection agreement and/or internal communications regarding the
Connection Agreement are not relevant.
Enterprise further objects because the request is overbroad and not reasonably limited in time.
Such a request, seeking generally “all” documents relating to the business and commercial
factors that led Enterprise to consider doing business with Magellan, without limitation, could
encompass nearly every document and communication at Enterprise since the company’s
inception. For that reason, Enterprise also objects to the request as unduly burdensome.
Enterprise also objects that this request is unduly burdensome because it would require the
production of electronically stored information that is not reasonably available as requested and
some of which Enterprise cannot retrieve without unreasonable effort and expense. The request
is also unduly burdensome because it fails to identify particular custodians, purporting to require
a search of the entire company. Moreover, the burden imposed by this request far outweighs the
benefit to Magellan and is disproportionate to the needs of this case. In re State Farm Lloyds,
520 S.W.3d 595 (Tex. 2017).
Enterprise further objects because the request is overbroad and not reasonably limited in scope or
subject matter, and therefore constitutes nothing more than an impermissible fishing expedition.
See In re Am. Optical Corp., 988 S.W.2d 711, 713 (Tex. 1998) (orig. proceeding) (per curiam)
(“This Court has repeatedly emphasized that discovery may not be used as a fishing expedition.
Rather requests must be reasonably tailored to included only matters relevant to the case”)
(emphasis added) (internal citations omitted)).
Enterprise further objects to the request because the information sought discusses, concerns
and/or contains Enterprise’s confidential and proprietary information and trade secrets.
Enterprise is withholding documents responsive to this request under the work product and/or
attorney client privileges. Enterprise objects to the production of a privilege log regarding
documents prepared or created after November 13, 2015.
REQUEST FOR PRODUCTION NO. 5. All Documents, whether created before or after the
Joint Tariff Agreement, identifying any business or commercial considerations which led
Enterprise Crude Pipeline LLC to enter into the Joint Tariff Agreement or caused or contributed
to its interest in pursuing that or any similar agreement with Magellan.
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FIRST REQUEST FOR PRODUCTION PAGE 7
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RESPONSE:
Enterprise objects that this request seeks information that is not relevant or reasonably calculated
to lead to the discovery of admissible evidence. Neither Enterprise nor Magellan contend that
there is any ambiguity in COD Agreement (or the Joint Tariff Agreement for that matter). As
such, its terms are to be construed by the Court as a matter of law. This Request seeks parol
evidence, that is, extrinsic evidence relating to the parties’ motives and intent in entering into the
COD Agreement, which evidence is inadmissible when, as here, the terms of the parties’
agreement are unambiguous. Moreover, the COD Agreement, which must be read together with
the related-writings that give the effect to the COD Agreement (i.e. the Connection Agreement,
the Joint Tariff Agreement, etc.) contains a merger clause. Thus, by the COD Agreement’s
express terms, Enterprise’s “interests” in entering into the Joint Tariff Agreement are not
relevant.
Enterprise further objects because the request is overbroad and not reasonably limited in time to
the extent it seeks information at any time “before or after” the Joint Tariff Agreement, without
any limitation whatsoever. Such a request, seeking generally documents relating to the business
and commercial factors that led Enterprise to consider doing business with Magellan, without
limitation, could encompass nearly every document and communication at Enterprise since the
company’s inception. For that reason, Enterprise also objects to the request as unduly
burdensome.
Enterprise also objects that this request is unduly burdensome because it would require the
production of electronically stored information that is not reasonably available as requested and
some of which Enterprise cannot retrieve without unreasonable effort and expense. The request
is also unduly burdensome because it fails to identify particular custodians, purporting to require
a search of the entire company. Moreover, the burden imposed by this request far outweighs the
benefit to Magellan and is disproportionate to the needs of this case. In re State Farm Lloyds,
520 S.W.3d 595 (Tex. 2017).
Enterprise further objects because the request is overbroad and not reasonably limited in scope or
subject matter, and therefore constitutes nothing more than an impermissible fishing expedition.
See In re Am. Optical Corp., 988 S.W.2d 711, 713 (Tex. 1998) (orig. proceeding) (per curiam)
(“This Court has repeatedly emphasized that discovery may not be used as a fishing expedition.
Rather requests must be reasonably tailored to included only matters relevant to the case”)
(emphasis added) (internal citations omitted)).
Enterprise further objects to the request because the information sought discusses, concerns
and/or contains Enterprise’s confidential and proprietary information and trade secrets.
Enterprise is withholding documents responsive to this request under the work product and/or
attorney client privileges. Enterprise objects to any request for the production of a privilege log
regarding documents prepared or created after November 13, 2015.
DEFENDANT’S OBJECTIONS AND RESPONSES TO PLAINTIFF’S
FIRST REQUEST FOR PRODUCTION PAGE 8
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REQUEST FOR PRODUCTION NO. 6. All Documents, whether created before or after the
Connection Agreement, identifying any business or commercial considerations which led
Enterprise Crude Pipeline LLC to enter into the Connection Agreement or caused or contributed
to its interest in pursuing that or any similar agreement with Magellan.
RESPONSE:
Enterprise objects that this request seeks information that is not relevant or reasonably calculated
to lead to the discovery of admissible evidence. Neither Enterprise nor Magellan contend that
there is any ambiguity in COD Agreement (or the Connection Agreement for that matter). As
such, its terms are to be construed by the Court as a matter of law. This Request seeks parol
evidence, that is, extrinsic evidence relating to the parties’ motives and intent in entering into the
COD Agreement, which evidence is inadmissible when, as here, the terms of the parties’
agreement are unambiguous. Moreover, the COD Agreement, which must be read together with
the related-writings that give the effect to the COD Agreement (i.e. the Connection Agreement,
the Joint Tariff Agreement, etc.) contains a merger clause. Thus, by the COD Agreement’s
express terms, Enterprise’s “interests” in entering into the Connection Agreement are not
relevant.
Enterprise further objects because the request is overbroad and not reasonably limited in time to
the extent it seeks information at any time “before” the Connection Agreement, without any
limitation whatsoever and over the course of six years after that. Such a request, seeking
generally documents relating to the business and commercial factors that led Enterprise to
consider doing business with Magellan, without limitation, could encompass nearly every
document and communication at Enterprise since the company’s inception. For that reason,
Enterprise also objects to the request as unduly burdensome.
Enterprise also objects that this request is unduly burdensome because it would require the
production of electronically stored information that is not reasonably available as requested and
some of which Enterprise cannot retrieve without unreasonable effort and expense. The request
is also unduly burdensome because it fails to identify particular custodians, purporting to require
a search of the entire company. Moreover, the burden imposed by this request far outweighs the
benefit to Magellan and is disproportionate to the needs of this case. In re State Farm Lloyds,
520 S.W.3d 595 (Tex. 2017).
Enterprise further objects because the request is overbroad and not reasonably limited in time,
scope or subject matter, and therefore constitutes nothing more than an impermissible fishing
expedition. See In re Am. Optical Corp., 988 S.W.2d 711, 713 (Tex. 1998) (orig. proceeding)
(per curiam) (“This Court has repeatedly emphasized that discovery may not be used as a fishing
expedition. Rather requests must be reasonably tailored to included only matters relevant to the
case”) (emphasis added) (internal citations omitted)).
Enterprise further objects to the request because the information sought discusses, concerns
and/or contains Enterprise’s confidential and proprietary information and trade secrets.
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Enterprise is withholding documents responsive to this request under the work product and/or
attorney client privileges. Enterprise objects to any request for the production of a privilege log
regarding documents prepared or created after November 13, 2015.
REQUEST FOR PRODUCTION NO. 7. All Documents regarding authorization for
Enterprise Crude Oil LLC to enter into the COD Agreement.
RESPONSE:
Enterprise objects to the request as overbroad because it seeks “all documents regarding
authorization.” Neither Enterprise nor Magellan dispute the validity or enforceability of the COD
Agreement. Therefore, documents concerning authority for Enterprise to enter into the COD
Agreement are not relevant or reasonably calculated to lead to the discovery of admissible
evidence. Moreover, the request is unduly burdensome because the information being sought –
presumably discovery of who was authorized to act on behalf of Enterprise in entering into the
COD Agreement – can be obtained through a less burdensome means of discovery, namely
interrogatories and depositions.
Enterprise also objects that this request is unduly burdensome because it would require the
production of electronically stored information that is not reasonably available as requested and
some of which Enterprise cannot retrieve without unreasonable effort and expense. The request
is also unduly burdensome because it fails to identify particular custodians, purporting to require
a search of the entire company. Moreover, the burden imposed by this request far outweighs the
benefit to Magellan and is disproportionate to the needs of this case. In re State Farm Lloyds,
520 S.W.3d 595 (Tex. 2017).
Enterprise also objects to this request as overbroad because the request uses omnibus terms, such
as “regarding,” to modify requests for general categories of documents, and therefore does not
meet the “reasonable particularity” requirements of the Texas Rules of Civil Procedure. Taken
literally, the request would require the production of thousands of pages of documents that have
little, if anything, to do with the claims or defenses at issue in this case.
Enterprise is withholding documents responsive to this request under the work product and/or
attorney client privileges. Enterprise objects to any request for the production of a privilege log
regarding documents prepared or created after November 13, 2015.
REQUEST FOR PRODUCTION NO. 8. All Documents regarding authorization for
Enterprise Crude Pipeline LLC to enter into the Joint Tariff Agreement.
RESPONSE:
Enterprise objects to the request as overbroad because it seeks “all documents regard
authorization.” Neither Enterprise nor Magellan dispute the validity or enforceability of the COD
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Agreement (or the Joint Tariff Agreement for that matter). Therefore, documents concerning
authority for Enterprise to enter into the Joint Tariff Agreement are not relevant or reasonably
calculated to lead to the discovery of admissible evidence. Moreover, the request is unduly
burdensome because the information being sought – presumably discovery of who was
authorized to act on behalf of Enterprise in entering into the Joint Tariff Agreement – can be
obtained through a less burdensome means of discovery, namely interrogatories and depositions.
Enterprise also objects that this request is unduly burdensome because it would require the
production of electronically stored information that is not reasonably available as requested and
some of which Enterprise cannot retrieve without unreasonable effort and expense. The request
is also unduly burdensome because it fails to identify particular custodians, purporting to require
a search of the entire company. Moreover, the burden imposed by this request far outweighs the
benefit to Magellan and is disproportionate to the needs of this case. In re State Farm Lloyds,
520 S.W.3d 595 (Tex. 2017).
Enterprise also objects to this request as overbroad because the request uses omnibus terms, such
as “regarding,” to modify requests for general categories of documents, and therefore does not
meet the “reasonable particularity” requirements of the Texas Rules of Civil Procedure. Taken
literally, the request would require the production of thousands of pages of documents that have
little, if anything, to do with the claims or defenses at issue in this case.
Enterprise is withholding documents responsive to this request under the work product and/or
attorney client privileges. Enterprise objects to any request for the production of a privilege log
regarding documents prepared or created after November 13, 2015.
REQUEST FOR PRODUCTION NO. 9. All Documents regarding authorization for
Enterprise Crude Pipeline LLC to enter into the Connection Agreement.
RESPONSE:
Enterprise objects to the request as overbroad because it seeks “all documents regard
authorization.” Neither Enterprise nor Magellan dispute the validity or enforceability of the COD
Agreement (or the Connection Agreement for that matter). Therefore, documents concerning
authority for Enterprise to enter into the Connection Agreement are not relevant or reasonably
calculated to lead to the discovery of admissible evidence. Moreover, the request is unduly
burdensome because the information being sought – presumably discovery of who was
authorized to act on behalf of Enterprise in entering into the Connection Agreement – can be
obtained through a less burdensome means of discovery, namely interrogatories and depositions.
Enterprise also objects that this request is unduly burdensome because it would require the
production of electronically stored information that is not reasonably available as requested and
some of which Enterprise cannot retrieve without unreasonable effort and expense. The request
is also unduly burdensome because it fails to identify particular custodians, purporting to require
a search of the entire company. Moreover, the burden imposed by this request far outweighs the
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benefit to Magellan and is disproportionate to the needs of this case. In re State Farm Lloyds,
520 S.W.3d 595 (Tex. 2017).
Enterprise also objects to this request as overbroad because the request uses omnibus terms, such
as “regarding,” to modify requests for general categories of documents, and therefore does not
meet the “reasonable particularity” requirements of the Texas Rules of Civil Procedure. Taken
literally, the request would require the production of thousands of pages of documents that have
little, if anything, to do with the claims or defenses at issue in this case.
Enterprise is withholding documents responsive to this request under the work product and/or
attorney client privileges. Enterprise objects to any request for the production of a privilege log
regarding documents prepared or created after November 13, 2015.
REQUEST FOR PRODUCTION NO. 10. Regarding the marketing, transportation and/or
delivery of Eagle Ford Product to ECHO Terminal, to Genoa Junction, or to any other Houston
Area Destination(s), all Documents containing or reporting upon any Enterprise plans, proposals,
goals, projections, budgets, estimates, statistics, or histories thereof. This request is not limited to
Documents which focus exclusively on Eagle Ford Product as defined above; any Document
containing information applicable in whole or part to Eagle Ford Product, is included. For
example, this request includes memos, reports or analyses regarding the intended, expected or
actual utilization of the Rancho pipeline system and/or the Rancho II pipeline system for such
purposes.
RESPONSE:
Enterprise objects to the request as overbroad and unduly burdensome because it seeks “all
documents” “regarding” 14 distinct categories of documents contained within this request.
Enterprise further objects that this request is not reasonably limited in time or scope. Indeed, it
contains no temporal limitation whatsoever and seeks information touching upon 14 categories
of documents that cumulatively encompass Enterprise’s entire business within the Eagle Ford
Basin. Such a request, without limitation, could encompass nearly every document and
communication at Enterprise relating to the Eagle Ford Basin.
Enterprise also objects that this request is unduly burdensome because it would require the
production of electronically stored information that is not reasonably available as requested and
some of which Enterprise cannot retrieve without unreasonable effort and expense. The request
is also unduly burdensome because it fails to identify particular custodians, purporting to require
a search of the entire company. Moreover, the burden imposed by this request far outweighs the
benefit to Magellan and is disproportionate to the needs of this case. In re State Farm Lloyds,
520 S.W.3d 595 (Tex. 2017).
Because this request is not reasonably limited in its scope or subject matter, it also seeks
information that is not relevant or reasonably calculated to lead to the discovery of admissible
evidence on several fronts. First, information regarding Enterprise’s entire business in the Eagle
Ford Basin constitutes inadmissible parol evidence. Since neither Enterprise nor Magellan
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contend there is any ambiguity in the COD Agreement, it could not reasonably be calculated to
lead to the discovery of admissible evidence. Second, Enterprise does not dispute Magellan’s
contention that Enterprise has utilized the Rancho II pipeline system to transport crude during the
term of the COD Agreement. The relevant question then, is whether Enterprise’s utilization of
Rancho II somehow constitutes a breach of COD Agreement. Because the discovery sought in
this request would not answer this question, and instead seeks irrelevant information concerning
a fact that is not in dispute, it constitutes nothing more than an impermissible fishing expedition.
See In re Am. Optical Corp., 988 S.W.2d 711, 713 (Tex. 1998) (orig. proceeding) (per curiam)
(“This Court has repeatedly emphasized that discovery may not be used as a fishing expedition.
Rather requests must be reasonably tailored to included only matters relevant to the case”)
(emphasis added) (internal citations omitted)).
Enterprise also objects to this request as overbroad because the request uses omnibus terms, such
as “regarding,” to modify requests for general categories of documents, and therefore does not
meet the “reasonable particularity” requirements of the Texas Rules of Civil Procedure. Taken
literally, the request would require the production of thousands of pages of documents that have
little, if anything, to do with the claims or defenses at issue in this case.
Enterprise further objects to the request because the information sought discusses, concerns
and/or contains Enterprise’s confidential and proprietary information and trade secrets.
Enterprise is withholding documents responsive to this request under the work product and/or
attorney client privileges. Enterprise objects to any request for the production of a privilege log
regarding documents prepared or created after November 13, 2015.
REQUEST FOR PRODUCTION NO. 11. All Documents which constitute, or reflect,
Communications between Magellan and Enterprise, regarding (i) the construction of any New
Magellan Facilities, (ii) the In-Service Date, (iii) the use or non-use of the Magellan Facilities by
Enterprise following the In-Service Date, (iv) the disconnection of Enterprise facilities from
Magellan facilities at Anahuac Junction, (v) the meaning, effect, or impact of the COD
Agreement, the Joint Tariff Agreement or the Connection Agreement, and/or (vi) any dispute
between Magellan and Enterprise arising from the COD Agreement, the Joint Tariff Agreement
or the Connection Agreement. For clarity, recordings and notes of any phone calls or meetings
between Magellan and Enterprise, regarding any of the above matters, are included. However,
this request is not intended to include inter-party Communications specifically regarding any
Magellan Audit, as those are the subject of a separate request.
RESPONSE:
Enterprise objects to the request as unduly burdensome because communications between
Enterprise and Magellan are equally available to or are already in Magellan’s possession, and
therefore can be obtained from another source that is more convenient, less burdensome or less
expensive, namely, Magellan.
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Enterprise also objects that this request is unduly burdensome because it would require the
production of electronically stored information that is not reasonably available as requested and
some of which Enterprise cannot retrieve without unreasonable effort and expense. The request
is also unduly burdensome because it fails to identify particular custodians, purporting to require
a search of the entire company. Moreover, the burden imposed by this request far outweighs the
benefit to Magellan and is disproportionate to the needs of this case. In re State Farm Lloyds,
520 S.W.3d 595 (Tex. 2017).
Enterprise also objects to this request as overbroad because the request uses omnibus terms, such
as “regarding,” to modify requests for general categories of documents, and therefore does not
meet the “reasonable particularity” requirements of the Texas Rules of Civil Procedure. Taken
literally, the request would require the production of thousands of pages of documents that have
little, if anything, to do with the claims or defenses at issue in this case.
Enterprise is withholding documents responsive to this request under the work product and/or
attorney client privileges. Enterprise objects to any request for the production of a privilege log
regarding documents prepared or created after November 13, 2015.
REQUEST FOR PRODUCTION NO. 12. All Documents which were authored by any Non-
Lawyer Employee(s) of Enterprise, at any time during the Relevant Period, and which analyze,
discuss, comment on, question, or refer to (i) the enforceability of the COD Agreement or any of
its provisions, (ii) the meaning or effect of the COD Agreement or any of its provisions, (iii) the
understanding or intention of any person or party with respect to the COD Agreement or any of
its provisions, and/or (iv) the rights or obligations of either party with respect to the COD
Agreement or any of its provisions. This includes, for example, all Documents which raise any
question, or discuss or mention any view or opinion of any Non-Lawyer Employee of Enterprise,
about whether or how the COD Agreement may affect Your purchase, sale, marketing or
transportation of Eagle Ford Product or any other crude oil.
RESPONSE:
Enterprise objects to subpart (i) of the request. Neither Enterprise nor Magellan dispute the
validity or enforceability of the COD Agreement. Therefore, documents concerning evaluations
of the enforceability of the COD Agreement are not relevant or reasonably calculated to lead to
the discovery of admissible evidence.
Enterprise objects to subparts (ii), (iii) and (iv) of the request to the extent. Neither Enterprise
nor Magellan contend that there is any ambiguity in COD Agreement. As such, its terms are to
be construed by the Court as a matter of law. This Request seeks parol evidence, i.e.,
information that is not relevant or reasonably calculated to lead to the discovery of admissible
evidence. Moreover, the COD Agreement, which must be read together with the related-writings
that give the effect to the COD Agreement (i.e. the Connection Agreement, the Joint Tariff
Agreement, etc.) contains a merger clause. Thus, by the COD Agreement’s express terms,
information concerning the “meaning or effect of the COD Agreement,” the “understanding or
intention of any person or party with respect to the COD Agreement” and the “rights or
obligations of either party with respect to the COD Agreement,” are not relevant.
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Enterprise also objects that this request is unduly burdensome because it would require the
production of electronically stored information that is not reasonably available as requested and
some of which Enterprise cannot retrieve without unreasonable effort and expense. The request
is also unduly burdensome because it fails to identify particular custodians, purporting to require
a search of the entire company. Moreover, the burden imposed by this request far outweighs the
benefit to Magellan and is disproportionate to the needs of this case. In re State Farm Lloyds,
520 S.W.3d 595 (Tex. 2017).
Enterprise also objects to this request as overbroad because the request uses omnibus terms, such
as “regarding,” to modify requests for general categories of documents, and therefore does not
meet the “reasonable particularity” requirements of the Texas Rules of Civil Procedure. Taken
literally, the request would require the production of thousands of pages of documents that have
little, if anything, to do with the claims or defenses at issue in this case.
Enterprise further objects to the request in its entirety because the information sought discusses,
concerns and/or contains Enterprise’s confidential and proprietary information and trade secrets.
Enterprise is withholding documents responsive to this request under the work product and/or
attorney client privileges. Enterprise objects to any request for the production of a privilege log
regarding documents prepared or created after November 13, 2015.
REQUEST FOR PRODUCTION NO. 13. All Documents which were authored by any
Lawyer Employee of Enterprise, at any time prior to February 16, 2017, and which analyze,
discuss, comment on, question, or refer to (i) the enforceability of the COD Agreement or any of
its provisions, (ii) the meaning or effect of the COD Agreement or any of its provisions, (iii) the
understanding or intention of any person or party with respect to the COD Agreement or any of
its provisions, and/or (iv) the rights or obligations of either party with respect to the COD
Agreement or any of its provisions. This includes, for example, all Documents which raise any
question, or discuss or mention any view or opinion of any Lawyer Employee of Enterprise,
about whether or how the COD Agreement may affect Your purchase, sale, marketing or
transportation of Eagle Ford Product or any other crude oil.
RESPONSE:
Enterprise objects to subpart (i) of the request. Neither Enterprise nor Magellan dispute the
validity or enforceability of the COD Agreement. Therefore, documents concerning
enforceability of the COD Agreement are not relevant or reasonably calculated to lead to the
discovery of admissible evidence.
Enterprise objects to subparts (ii), (iii) and (iv) of the request to the extent. Neither Enterprise
nor Magellan contend that there is any ambiguity in COD Agreement. As such, its terms are to
be construed by the Court as a matter of law. This Request seeks parol evidence, i.e.,
information that is not relevant or reasonably calculated to lead to the discovery of admissible
evidence. Moreover, the COD Agreement, which must be read together with the related-writings
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that give the effect to the COD Agreement (i.e. the Connection Agreement, the Joint Tariff
Agreement, etc.) contains a merger clause. Thus, by the COD Agreement’s express terms,
information concerning the “meaning or effect of the COD Agreement,” the “understanding or
intention of any person or party with respect to the COD Agreement” and the “rights or
obligations of either party with respect to the COD Agreement”, are not relevant.
Enterprise also objects that this request is unduly burdensome because it would require the
production of electronically stored information that is not reasonably available as requested and
some of which Enterprise cannot retrieve without unreasonable effort and expense. The request
is also unduly burdensome because it fails to identify particular custodians, purporting to require
a search of the entire company. Moreover, the burden imposed by this request far outweighs the
benefit to Magellan and is disproportionate to the needs of this case. In re State Farm Lloyds,
520 S.W.3d 595 (Tex. 2017).
Enterprise further objects to the request in its entirety because the information sought discusses,
concerns and/or contains Enterprise’s confidential and proprietary information and trade secrets.
Enterprise is withholding documents responsive to this request under the work product and/or
attorney client privileges. Enterprise objects to any request for the production of a privilege log
regarding documents prepared or created after November 13, 2015.
REQUEST FOR PRODUCTION NO. 14. All other Documents which contain any reference
(whether specific or general) to the COD Agreement or to any party’s rights or obligations under
the COD Agreement. For clarity, this request does not broadly request or require You to search
for each and every Document that might arguably “relate” to the COD Agreement in some way.
Rather, this request narrower: its object is to discover any Documents (not duplicative of
Documents produced in response to one of the preceding requests) that contain an actual
reference (in any form) to the COD Agreement or to a party’s rights or obligations thereunder.
RESPONSE:
Enterprise objects because the request is global, overbroad and not reasonably limited in time or
scope. Moreover, it is cumulative of each preceding request. It is not narrowly tailored to
discover a discrete category of documents and instead, a global “catch-all” attempt to cast its net
far and wide in furtherance of an impermissible fishing expedition. See In re Am. Optical Corp.,
988 S.W.2d 711, 713 (Tex. 1998) (orig. proceeding) (per curiam) (“This Court has repeatedly
emphasized that discovery may not be used as a fishing expedition. Rather requests must be
reasonably tailored to included only matters relevant to the case”) (emphasis added) (internal
citations omitted)).
Because the request is global and so overbroad, Enterprise also objects that it is unduly
burdensome as it would require Enterprise to search each and every document within Enterprise
for documents that might contain a reference to the COD Agreement, whether or not such
document is in fact “related” in any way to this dispute. Enterprise also objects that this request
is unduly burdensome because it would require the production of electronically stored
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information that is not reasonably available as requested and some of which Enterprise cannot
retrieve without unreasonable effort and expense. The request is also unduly burdensome
because it fails to identify particular custodians, purporting to require a search of the entire
company. Moreover, the burden imposed by this request far outweighs the benefit to Magellan
and is disproportionate to the needs of this case. In re State Farm Lloyds, 520 S.W.3d 595 (Tex.
2017).
This global request seeks information that contains a reference to the COD Agreement, however,
neither Enterprise nor Magellan contend that there is any ambiguity in COD Agreement. As
such, its terms are to be construed by the Court as a matter of law. This request seeks parol
evidence, i.e., information that is not relevant or reasonably calculated to lead to the discovery of
admissible evidence. Moreover, the COD Agreement, which must be read together with the
related-writings that give the effect to the COD Agreement (i.e. the Connection Agreement, the
Joint Tariff Agreement, etc.) contains a merger clause. Thus, by the COD Agreement’s express
terms, information concerning the “meaning or effect of the COD Agreement,” the
“understanding or intention of any person or party with respect to the COD Agreement” and the
“rights or obligations of either party with respect to the COD Agreement,” are not relevant.
Enterprise further objects to the request in its entirety because the information sought discusses,
concerns and/or contains Enterprise’s confidential and proprietary information and trade secrets.
Enterprise is withholding documents responsive to this request under the work product and/or
attorney client privileges. Enterprise objects to any request for the production of a privilege log
regarding documents prepared or created after November 13, 2015.
REQUEST FOR PRODUCTION NO. 15. All other Documents which contain any reference
(whether specific or general) to the Joint Tariff Agreement. For clarity, please see comments on
Request for Production No. 14, also applicable here.
RESPONSE:
Enterprise objects because the request is global, overbroad and not reasonably limited in time or
scope. Moreover, it is cumulative of each preceding request. It is not narrowly tailored to
discover a discrete category of documents and instead, a global “catch-all” attempt to cast its net
far and wide in furtherance of an impermissible fishing expedition. See In re Am. Optical Corp.,
988 S.W.2d 711, 713 (Tex. 1998) (orig. proceeding) (per curiam) (“This Court has repeatedly
emphasized that discovery may not be used as a fishing expedition. Rather requests must be
reasonably tailored to included only matters relevant to the case”) (emphasis added) (internal
citations omitted)).
Because the request is global and so overbroad, Enterprise also objects that it is unduly
burdensome as it would require Enterprise to search each and every document within Enterprise
for documents that might contain a reference to the Joint Tariff Agreement, whether or not such
document is in fact “related” in any way to this dispute. Enterprise also objects that this request
is unduly burdensome because it would require the production of electronically stored
DEFENDANT’S OBJECTIONS AND RESPONSES TO PLAINTIFF’S
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information that is not reasonably available as requested and some of which Enterprise cannot
retrieve without unreasonable effort and expense. The request is also unduly burdensome
because it fails to identify particular custodians, purporting to require a search of the entire
company. Moreover, the burden imposed by this request far outweighs the benefit to Magellan
and is disproportionate to the needs of this case. In re State Farm Lloyds, 520 S.W.3d 595 (Tex.
2017).
This global request seeks information that contains a reference to the Joint Tariff Agreement,
however, neither Enterprise nor Magellan contend that there is any ambiguity in COD
Agreement (of the Joint Tariff Agreement for that matter). As such, its terms are to be construed
by the Court as a matter of law. This Request seeks parol evidence, that is, extrinsic evidence
relating to the parties’ motives and intent in entering into the COD Agreement. Parol evidence is
inadmissible when, as here, the terms of the parties’ agreement are unambiguous. Therefore, it
seeks information that is not relevant or reasonably calculated to lead to the discovery of
admissible evidence. Moreover, the COD Agreement, which must be read together with the
related-writings that give the effect to the COD Agreement (i.e. the Connection Agreement, the
Joint Tariff Agreement, etc.) contains a merger clause. Thus, by the COD Agreement’s express
terms, information concerning the “meaning or effect of the COD Agreement,” the
“understanding or intention of any person or party with respect to the COD Agreement” and the
“rights or obligations of either party with respect to the COD Agreement,” are not relevant.
Enterprise further objects to the request in its entirety because the information sought discusses,
concerns and/or contains Enterprise’s confidential and proprietary information and trade secrets.
Enterprise is withholding documents responsive to this request under the work product and/or
attorney client privileges. Enterprise objects to any request for the production of a privilege log
regarding documents prepared or created after November 13, 2015.
REQUEST FOR PRODUCTION NO. 16. All other Documents which contain any reference
(whether specific or general) to the Connection Agreement. For clarity, please see comments on
Request for Production No. 14, also applicable here.
RESPONSE:
Enterprise objects because the request is global, overbroad and not reasonably limited in time or
scope. Moreover, it is cumulative of each preceding request. It is not narrowly tailored to
discover a discrete category of documents and instead, a global “catch-all” attempt to cast its net
far and wide in furtherance of an impermissible fishing expedition. See In re Am. Optical Corp.,
988 S.W.2d 711, 713 (Tex. 1998) (orig. proceeding) (per curiam) (“This Court has repeatedly
emphasized that discovery may not be used as a fishing expedition. Rather requests must be
reasonably tailored to included only matters relevant to the case”) (emphasis added) (internal
citations omitted)).
Because the request is global and so overbroad, Enterprise also objects that it is unduly
burdensome as it would require Enterprise to search each and every document within Enterprise
DEFENDANT’S OBJECTIONS AND RESPONSES TO PLAINTIFF’S
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for documents that might contain a reference to the Connection Agreement, whether or not such
document is in fact “related” in any way to this dispute. Enterprise also objects that this request
is unduly burdensome because it would require the production of electronically stored
information that is not reasonably available as requested and some of which Enterprise cannot
retrieve without unreasonable effort and expense. The request is also unduly burdensome
because it fails to identify particular custodians, purporting to require a search of the entire
company. Moreover, the burden imposed by this request far outweighs the benefit to Magellan
and is disproportionate to the needs of this case. In re State Farm Lloyds, 520 S.W.3d 595 (Tex.
2017).
This global request seeks information that contains a reference to the Connection Agreement,
however, neither Enterprise nor Magellan contend that there is any ambiguity in COD
Agreement (or the Connection Agreement for that matter). As such, its terms are to be construed
by the Court as a matter of law. This Request seeks parol evidence, that is, extrinsic evidence
relating to the parties’ motives and intent in entering into the COD Agreement. Parol evidence is
inadmissible when, as here, the terms of the parties’ agreement are unambiguous. Therefore, it
seeks information that is not relevant or reasonably calculated to lead to the discovery of
admissible evidence. Moreover, the COD Agreement, which must be read together with the
related-writings that give the effect to the COD Agreement (i.e. the Connection Agreement, the
Joint Tariff Agreement, etc.) contains a merger clause. Thus, by the COD Agreement’s express
terms, information concerning the “meaning or effect of the COD Agreement,” the
“understanding or intention of any person or party with respect to the COD Agreement” and the
“rights or obligations of either party with respect to the COD Agreement,” are not relevant.
Enterprise further objects to the request in its entirety because the information sought discusses,
concerns and/or contains Enterprise’s confidential and proprietary information and trade secrets.
Enterprise is withholding documents responsive to this request under the work product and/or
attorney client privileges. Enterprise objects to any request for the production of a privilege log
regarding documents prepared or created after November 13, 2015.
REQUEST FOR PRODUCTION NO. 17. All Eagle Ford Crude Oil Purchase Agreements,
and all modifications, amendments or replacements of such agreements. This includes any and
all such agreements ever in existence during the Relevant Period, even if no Eagle Ford Product
was actually purchased or sold pursuant thereto and regardless of whether such agreement was
subsequently amended, restated, terminated, rescinded, repealed, replaced or abandoned. So, for
example, this request includes the following agreements as well as all similar agreements: Crude
Oil Purchase Agreement between Enterprise and Petrohawk Energy Corporation, dated March
11, 2011; Crude Oil Purchase Agreement between Enterprise and GeoSouthern Energy
Corporation, dated March 11, 2011; Crude Oil Purchase Agreement between Enterprise and
Chesapeake Energy Corporation, dated April 28, 2011.
RESPONSE:
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Enterprise objects that this request seeks information that is not relevant or reasonably calculated
to lead to the discovery of admissible evidence. The business terms of Enterprise’s customer
agreements have no bearing on the actual issues to be decided in this case. Contracts are not
necessary to determine damages – an issue that is premature in any event – because volume
information alone is sufficient. And to the extent Magellan seeks information relevant to the
issue of bad faith, information regarding the business rationale for contract structure – not the
contracts themselves – is more properly tailored to the needs of the case.
Enterprise further objects because this request is not reasonably tailored to the claims and
defenses in the case.
Enterprise objects to the request as overbroad and unduly burdensome because it seeks “all” of
Enterprise’s agreements. Enterprise also objects that this request is unduly burdensome because
it would require the production of electronically stored information that is not reasonably
available as requested and some of which Enterprise cannot retrieve without unreasonable effort
and expense. The request is also unduly burdensome because it fails to identify particular
custodians, purporting to require a search of the entire company. Moreover, the burden imposed
by this request far outweighs the benefit to Magellan and is disproportionate to the needs of this
case. In re State Farm Lloyds, 520 S.W.3d 595 (Tex. 2017). Further, the documents sought are
equally available to or are already in Magellan’s possession, and therefore can be obtained from
another source that is more convenient, less burdensome or less expensive, namely, Magellan.
Enterprise further objects that this request is not reasonably limited in time.
Enterprise further objects to the request in its entirety because the information sought discusses,
concerns and/or contains Enterprise’s confidential and proprietary information and trade secrets.
REQUEST FOR PRODUCTION NO. 18. All Eagle Ford Crude Oil Sale Agreements, and all
modifications, amendments or replacements of such agreements. This includes any and all such
agreements ever in existence during the Relevant Period, even if no Eagle Ford Product was
actually purchased or sold pursuant thereto and regardless of whether such agreement was
subsequently amended, restated, terminated, rescinded, repealed, replaced or abandoned.
RESPONSE:
Enterprise objects that this request seeks information that is not relevant or reasonably calculated
to lead to the discovery of admissible evidence. The business terms of Enterprise’s customer
agreements have no bearing on the actual issues to be decided in this case. Contracts are not
necessary to determine damages – an issue that is premature in any event – because volume
information alone is sufficient. And to the extent Magellan seeks information relevant to the
issue of bad faith, information regarding the business rationale for contract structure – not the
contracts themselves – is more properly tailored to the needs of the case.
Enterprise objects to the request as overbroad and unduly burdensome because it seeks “all” of
Enterprise’s agreements. Enterprise also objects that this request is unduly burdensome because
DEFENDANT’S OBJECTIONS AND RESPONSES TO PLAINTIFF’S
FIRST REQUEST FOR PRODUCTION PAGE 20
PLAINTIFF'S SUPPLEMENT TO RESPONSE TO DEF.'S MOT. FOR PROTECTIVE ORDER - Page 49
SR446
it would require the production of electronically stored information that is not reasonably
available as requested and some of which Enterprise cannot retrieve without unreasonable effort
and expense. The request is also unduly burdensome because it fails to identify particular
custodians, purporting to require a search of the entire company. Moreover, the burden imposed
by this request far outweighs the benefit to Magellan and is disproportionate to the needs of this
case. In re State Farm Lloyds, 520 S.W.3d 595 (Tex. 2017). Further, the documents sought are
equally available to or are already in Magellan’s possession, and therefore can be obtained from
another source that is more convenient, less burdensome or less expensive, namely, Magellan.
Enterprise further objects that this request is not reasonably limited in time.
Enterprise further objects because this request is not reasonably tailored to the claims and
defenses in the case.
Enterprise further objects to the request in its entirety because the information sought discusses,
concerns and/or contains Enterprise’s confidential and proprietary information and trade secrets.
REQUEST FOR PRODUCTION NO. 19. All Eagle Ford Crude Oil Buy/Sell Agreements,
and all modifications, amendments or replacements of such agreements. This request includes
any and all such agreements ever in existence during the Relevant Period, even if no Eagle Ford
Product was actually purchased or sold pursuant thereto and regardless of whether the agreement
was subsequently amended, restated, terminated, rescinded, repealed, replaced or abandoned. So,
for example, this request includes the following agreements as well as all similar agreements:
First Amended and Restated Crude Oil Purchase and Sale Agreement between Enterprise and
Chesapeake Energy Corporation, dated January 31, 2012; First Amended and Restated Crude Oil
Purchase and Sale Agreement between Enterprise and Petrohawk Energy Corporation, dated
June 29, 2012; First Amended and Restated Crude Oil Purchase and Sale Agreement between
Enterprise and GeoSouthern Energy Corporation, dated June 29, 2012.
RESPONSE:
Enterprise objects that this request seeks information that is not relevant or reasonably calculated
to lead to the discovery of admissible evidence. It essentially seeks information encompassing
Enterprise’s entire business in the Eagle Ford Basin. Enterprise does not dispute Magellan’s
contention that Enterprise has entered into buy/sell agreements to facilitate the transport crude
during the term of the COD Agreement. The relevant question then, is whether Enterprise’s
utilization of such buy/sell agreements somehow constitutes a breach of COD agreement.
Because the information Magellan seeks would not answer this question, and instead seeks
irrelevant information concerning a fact that is not in dispute and does not concern any claim or
defense at issue in this case, it constitutes nothing more than an impermissible fishing expedition.
See In re Am. Optical Corp., 988 S.W.2d 711, 713 (Tex. 1998) (orig. proceeding) (per curiam)
(“This Court has repeatedly emphasized that discovery may not be used as a fishing expedition.
Rather requests must be reasonably tailored to included only matters relevant to the case”)
(emphasis added) (internal citations omitted)).
DEFENDANT’S OBJECTIONS AND RESPONSES TO PLAINTIFF’S
FIRST REQUEST FOR PRODUCTION PAGE 21
PLAINTIFF'S SUPPLEMENT TO RESPONSE TO DEF.'S MOT. FOR PROTECTIVE ORDER - Page 50
SR447
Enterprise objects to the request as overbroad and unduly burdensome because it seeks “all” of
Enterprise’s agreements. Enterprise also objects that this request is unduly burdensome because
it would require the production of electronically stored information that is not reasonably
available as requested and some of which Enterprise cannot retrieve without unreasonable effort
and expense. The request is also unduly burdensome because it fails to identify particular
custodians, purporting to require a search of the entire company. Moreover, the burden imposed
by this request far outweighs the benefit to Magellan and is disproportionate to the needs of this
case. In re State Farm Lloyds, 520 S.W.3d 595 (Tex. 2017). Further, the documents sought are
equally available to or are already in Magellan’s possession, and therefore can be obtained from
another source that is more convenient, less burdensome or less expensive, namely, Magellan.
Enterprise further objects that this request is not reasonably limited in time.
Enterprise further objects because this request is not reasonably tailored to the claims and
defenses in the case.
Enterprise further objects to the request in its entirety because the information sought discusses,
concerns and/or contains Enterprise’s confidential and proprietary information and trade secrets.
REQUEST FOR PRODUCTION NO. 20. All Documents which discuss or mention the
business or commercial motivation(s) that led Enterprise Crude Oil LLC to enter into any Eagle
Ford Buy/Sell Agreement.
RESPONSE:
Enterprise objects to this request because it is unduly vague and ambiguous. Within the context
of Plaintiff’s First Request for Production, it is unclear what Plaintiff means by “commercial
motivation(s).”
Enterprise objects that this request seeks information that is not relevant or reasonably calculated
to lead to the discovery of admissible evidence. It essentially seeks information encompassing
Enterprise’s entire business in the Eagle Ford Basin. Enterprise does not dispute Magellan’s
contention that Enterprise has entered into buy/sell agreements to facilitate the transport crude
during the term of the COD Agreement. The relevant question then, is whether Enterprise’s
utilization of such buy/sell agreements somehow constitutes a breach of COD agreement.
Because the information Magellan seeks would not answer this question, and instead seeks
irrelevant information concerning a fact that is not in dispute and does not concern any claim or
defense at issue in this case, it constitutes nothing more than an impermissible fishing expedition.
See In re Am. Optical Corp., 988 S.W.2d 711, 713 (Tex. 1998) (orig. proceeding) (per curiam)
(“This Court has repeatedly emphasized that discovery may not be used as a fishing expedition.
Rather requests must be reasonably tailored to included only matters relevant to the case”)
(emphasis added) (internal citations omitted)).
Enterprise further objects because the request is overbroad and not reasonably limited in time
because it seeks information at any time, without any limitation whatsoever. Such a request,
DEFENDANT’S OBJECTIONS AND RESPONSES TO PLAINTIFF’S
FIRST REQUEST FOR PRODUCTION PAGE 22
PLAINTIFF'S SUPPLEMENT TO RESPONSE TO DEF.'S MOT. FOR PROTECTIVE ORDER - Page 51
SR448
without limitation, could encompass nearly every document and communication at Enterprise
since the company’s inception. For that reason, Enterprise also objects to the request as unduly
burdensome.
Enterprise also objects that this request is unduly burdensome because it would require the
production of electronically stored information that is not reasonably available as requested and
some of which Enterprise cannot retrieve without unreasonable effort and expense. The request
is also unduly burdensome because it fails to identify particular custodians, purporting to require
a search of the entire company. Moreover, the burden imposed by this request far outweighs the
benefit to Magellan and is disproportionate to the needs of this case. In re State Farm Lloyds,
520 S.W.3d 595 (Tex. 2017).
Enterprise further objects to the request because the information sought discusses, concerns
and/or contains Enterprise’s confidential and proprietary information and trade secrets.
Enterprise is withholding documents responsive to this request under the work product and/or
attorney client privileges. Enterprise objects to any request for the production of a privilege log
regarding documents prepared or created after November 13, 2015.
REQUEST FOR PRODUCTION NO. 21. All Documents reflecting internal Enterprise
Communications, or Communications between Enterprise and the other contracting party(ies),
regarding any Eagle Ford Crude Oil Purchase Agreement, any Eagle Ford Crude Oil Sale
Agreement, or any Eagle Ford Crude Oil Buy/Sell Agreement, which occurred on or before the
date of execution of such agreement. This includes, for example, emails or letters which shed
light on which party initiated the contract discussions, the reasons for either party’s interest in
such contract, and/or negotiation of the terms of the contract.
RESPONSE:
Enterprise objects that this request seeks information that is not relevant or reasonably calculated
to lead to the discovery of admissible evidence. It essentially seeks information encompassing
Enterprise’s entire business in the Eagle Ford Basin. Enterprise does not dispute Magellan’s
contention that Enterprise has entered into buy/sell agreements to facilitate the transport crude
during the term of the COD Agreement. The relevant question then, is whether Enterprise’s
utilization of such buy/sell agreements somehow constitutes a breach of COD agreement.
Because the information Magellan seeks would not answer this question, and instead seeks
irrelevant information concerning a fact that is not in dispute and does not concern any claim or
defense at issue in this case, it constitutes nothing more than an impermissible fishing expedition.
See In re Am. Optical Corp., 988 S.W.2d 711, 713 (Tex. 1998) (orig. proceeding) (per curiam)
(“This Court has repeatedly emphasized that discovery may not be used as a fishing expedition.
Rather requests must be reasonably tailored to included only matters relevant to the case”)
(emphasis added) (internal citations omitted)).
Enterprise objects to the request as overbroad and unduly burdensome because it seeks “all” of
Enterprise’s internal communications concerning “all” of its agreements concerning crude in the
Eagle Ford Basin. This request is unduly burdensome because it would require the production of
DEFENDANT’S OBJECTIONS AND RESPONSES TO PLAINTIFF’S
FIRST REQUEST FOR PRODUCTION PAGE 23
PLAINTIFF'S SUPPLEMENT TO RESPONSE TO DEF.'S MOT. FOR PROTECTIVE ORDER - Page 52
SR449
electronically stored information that is not reasonably available as requested and some of which
Enterprise cannot retrieve without unreasonable effort and expense. Moreover, the burden
imposed by this request far outweighs the benefit to Magellan and is disproportionate to the
needs of this case. In re State Farm Lloyds, 520 S.W.3d 595 (Tex. 2017).
Enterprise also objects to this request as overbroad because the request uses omnibus terms, such
as “regarding,” to modify requests for general categories of documents, and therefore does not
meet the “reasonable particularity” requirements of the Texas Rules of Civil Procedure. Taken
literally, the request would require the production of thousands of pages of documents that have
little, if anything, to do with the claims or defenses at issue in this case.
Enterprise further objects because this request is not reasonably tailored to the claims and
defenses in the case.
Enterprise further objects that this request is not reasonably limited in time.
Enterprise further objects to the request in its entirety because the information sought discusses,
concerns and/or contains Enterprise’s confidential and proprietary information and trade secrets.
Enterprise is withholding documents responsive to this request under the work product and/or
attorney client privileges. Enterprise objects to any request for the production of a privilege log
regarding documents prepared or created after November 13, 2015.
REQUEST FOR PRODUCTION NO. 22. All Eagle Ford Crude Oil Transportation
Agreements, including but not limited to any such agreements between or among Enterprise
entities.
RESPONSE:
Enterprise objects that this request seeks information that is not relevant or reasonably calculated
to lead to the discovery of admissible evidence. This request seeks information regarding all of
Enterprise’s transportation agreements in the Eagle Ford Basin, and thus its entire business in the
Eagle Ford Basin. Enterprise does not dispute Magellan’s contention that Enterprise has entered
into buy/sell agreements to facilitate the transport crude during the term of the COD Agreement
or that it has transported crude using routes that do not utilize Magellan’s Facilities at the
Connection Point. The relevant question then, is whether Enterprise’s utilization of such buy/sell
agreements and/or its use of routes that do not utilize Magellan’s Facilities at the Connection
Point somehow constitutes a breach of COD agreement. Because the information Magellan
seeks would not answer this question, and instead seeks irrelevant information concerning facts
that are not in dispute and does not concern any claim or defense in issue in this case, it
constitutes nothing more than an impermissible fishing expedition. See In re Am. Optical Corp.,
988 S.W.2d 711, 713 (Tex. 1998) (orig. proceeding) (per curiam) (“This Court has repeatedly
emphasized that discovery may not be used as a fishing expedition. Rather requests must be
reasonably tailored to included only matters relevant to the case”) (emphasis added) (internal
citations omitted)).
DEFENDANT’S OBJECTIONS AND RESPONSES TO PLAINTIFF’S
FIRST REQUEST FOR PRODUCTION PAGE 24
PLAINTIFF'S SUPPLEMENT TO RESPONSE TO DEF.'S MOT. FOR PROTECTIVE ORDER - Page 53
SR450
Enterprise further objects because the request is overbroad and not reasonably limited in time
because it seeks information at any time, without any limitation whatsoever. Such a request,
without limitation, could encompass nearly every document and communication at Enterprise
since the company’s inception. For that reason, Enterprise also objects to the request as unduly
burdensome.
Enterprise also objects that this request is unduly burdensome because it would require the
production of electronically stored information that is not reasonably available as requested and
some of which Enterprise cannot retrieve without unreasonable effort and expense. The request
is also unduly burdensome because it fails to identify particular custodians, purporting to require
a search of the entire company. Moreover, the burden imposed by this request far outweighs the
benefit to Magellan and is disproportionate to the needs of this case. In re State Farm Lloyds,
520 S.W.3d 595 (Tex. 2017).
Enterprise further objects because this request is not reasonably tailored to the claims and
defenses in the case.
Enterprise further objects that this request is not reasonably limited in time.
Enterprise further objects to the request because the information sought discusses, concerns
and/or contains Enterprise’s confidential and proprietary information and trade secrets.
Enterprise is withholding documents responsive to this request under the work product and/or
attorney client privileges. Enterprise objects to any request for the production of a privilege log
regarding documents prepared or created after November 13, 2015.
REQUEST FOR PRODUCTION NO. 23. All Documents reflecting internal Enterprise
Communications, or Communications between Enterprise and the other contracting party(ies),
regarding any Eagle Ford Crude Oil Transportation Agreement, which occurred on or before the
date of execution of such agreement. This includes, for example, emails or letters which shed
light on which party initiated the contract discussions, the reasons for either party’s interest in
such contract, and/or negotiation of the terms of the contract.
RESPONSE:
Enterprise objects that this request seeks information that is not relevant or reasonably calculated
to lead to the discovery of admissible evidence. It seeks information regarding all of Enterprise’s
transportation agreements in the Eagle Ford Basin, and thus its entire business in the Eagle Ford
Basin. Enterprise does not dispute Magellan’s contention that Enterprise has entered into
buy/sell agreements to facilitate the transport crude during the term of the COD Agreement or
that it has transported crude using routes that do not utilize Magellan’s Facilities at the
Connection Point. The relevant question then, is whether Enterprise’s utilization of such buy/sell
agreements and/or its use of routes that do not utilize Magellan’s Facilities at the Connection
Point somehow constitutes a breach of COD agreement. Because the information Magellan
DEFENDANT’S OBJECTIONS AND RESPONSES TO PLAINTIFF’S
FIRST REQUEST FOR PRODUCTION PAGE 25
PLAINTIFF'S SUPPLEMENT TO RESPONSE TO DEF.'S MOT. FOR PROTECTIVE ORDER - Page 54
SR451
seeks would not answer this question, and instead seeks irrelevant information concerning facts
that are not in dispute and does not concern any claim or defense at issue in this case, it
constitutes nothing more than an impermissible fishing expedition. See In re Am. Optical Corp.,
988 S.W.2d 711, 713 (Tex. 1998) (orig. proceeding) (per curiam) (“This Court has repeatedly
emphasized that discovery may not be used as a fishing expedition. Rather requests must be
reasonably tailored to included only matters relevant to the case”) (emphasis added) (internal
citations omitted)).
Enterprise also objects that this request is unduly burdensome because it would require the
production of electronically stored information that is not reasonably available as requested and
some of which Enterprise cannot retrieve without unreasonable effort and expense. The request
is also unduly burdensome because it fails to identify particular custodians, purporting to require
a search of the entire company. Moreover, the burden imposed by this request far outweighs the
benefit to Magellan and is disproportionate to the needs of this case. In re State Farm Lloyds,
520 S.W.3d 595 (Tex. 2017).
Enterprise also objects to this request as overbroad because the request uses omnibus terms, such
as “regarding,” to modify requests for general categories of documents, and therefore does not
meet the “reasonable particularity” requirements of the Texas Rules of Civil Procedure. Taken
literally, the request would require the production of thousands of pages of documents that have
little, if anything, to do with the claims or defenses at issue in this case.
Enterprise further objects to the request because the information sought discusses, concerns
and/or contains Enterprise’s confidential and proprietary information and trade secrets.
Enterprise is withholding documents responsive to this request under the work product and/or
attorney client privileges. Enterprise objects to any request for the production of a privilege log
regarding documents prepared or created after November 13, 2015.
REQUEST FOR PRODUCTION NO. 24. All existing Enterprise reports or analyses which,
for all or any part of the Relevant Period, identify, determine, quantify and/or summarize Eagle
Ford Product volumes, ownership, transportation and distribution routing, and/or final
destination or delivery points. For clarity, this request seeks production of reports or analyses
already in existence; it does not purport to require Enterprise to create any new reports or
analyses for purposes of responding to the request.
RESPONSE:
Enterprise objects to this request because it is unduly vague and ambiguous. Within the context
of Plaintiff’s First Request for Production, it is unclear what Plaintiff means by “final destination
or delivery points.”
Enterprise objects that this request is overbroad, unduly burdensome and seeks information that
is not relevant or reasonably calculated to lead to the discovery of admissible evidence.
Enterprise does not dispute Magellan’s contention that Enterprise has entered into buy/sell
DEFENDANT’S OBJECTIONS AND RESPONSES TO PLAINTIFF’S
FIRST REQUEST FOR PRODUCTION PAGE 26
PLAINTIFF'S SUPPLEMENT TO RESPONSE TO DEF.'S MOT. FOR PROTECTIVE ORDER - Page 55
SR452
agreements to facilitate the transport crude during the term of the COD Agreement or that it has
transported crude using routes that do not utilize Magellan’s Facilities at the Connection Point.
The relevant question then, is whether Enterprise’s utilization of such buy/sell agreements and/or
its use of routes that do not utilize Magellan’s Facilities at the Connection Point somehow
constitutes a breach of COD agreement. This request goes well beyond seeking information that
could assist the court in answering that question and essentially seeks discover how Enterprise
conducts its entire business in the Eagle Ford Basin. Because it seeks information concerning
facts that are not in dispute it and does not concern any claim or defense at issue in this case, this
request constitutes nothing more than an impermissible fishing expedition. See In re Am. Optical
Corp., 988 S.W.2d 711, 713 (Tex. 1998) (orig. proceeding) (per curiam) (“This Court has
repeatedly emphasized that discovery may not be used as a fishing expedition. Rather requests
must be reasonably tailored to included only matters relevant to the case”) (emphasis added)
(internal citations omitted)).
Enterprise also objects that this request is unduly burdensome because it would require the
production of electronically stored information that is not reasonably available as requested and
some of which Enterprise cannot retrieve without unreasonable effort and expense. The request
is also unduly burdensome because it fails to identify particular custodians, purporting to require
a search of the entire company. Moreover, the burden imposed by this request far outweighs the
benefit to Magellan and is disproportionate to the needs of this case. In re State Farm Lloyds,
520 S.W.3d 595 (Tex. 2017).
Enterprise objects because the case is cumulative of each preceding request. It is not narrowly
tailored to discover a discrete category of documents and instead, a global “catch-all” attempt to
cast its net far and wide in furtherance of an impermissible fishing expedition. Enterprise also
objects that this request is unduly burdensome because it would require the production of
electronically stored information that is not reasonably available as requested and some of which
Enterprise cannot retrieve without unreasonable effort and expense. The request is also unduly
burdensome because it fails to identify particular custodians, purporting to require a search of the
entire company. Moreover, the burden imposed by this request far outweighs the benefit to
Magellan and is disproportionate to the needs of this case. In re State Farm Lloyds, 520 S.W.3d
595 (Tex. 2017).
Enterprise further objects that this request is not reasonably limited in time.
Enterprise further objects to the request because the information sought discusses, concerns
and/or contains Enterprise’s confidential and proprietary information and trade secrets.
Enterprise is withholding documents responsive to this request under the work product and/or
attorney client privileges. Enterprise objects to any request for the production of a privilege log
regarding documents prepared or created after November 13, 2015.
REQUEST FOR PRODUCTION NO. 25. All Documents which Enterprise utilizes or could
utilize, with respect to all or any part of the Relevant Period, to identify, determine, quantify
and/or summarize Eagle Ford Product volumes, ownership, transportation and distribution
DEFENDANT’S OBJECTIONS AND RESPONSES TO PLAINTIFF’S
FIRST REQUEST FOR PRODUCTION PAGE 27
PLAINTIFF'S SUPPLEMENT TO RESPONSE TO DEF.'S MOT. FOR PROTECTIVE ORDER - Page 56
SR453
routing, and/or final destination or delivery points. For clarity, this request seeks Documents
sufficient to give Magellan the same assessment and reporting capability Enterprise has with
respect to Eagle Ford Product.
RESPONSE:
Enterprise objects to this request because it is unduly vague and ambiguous. Within the context
of Plaintiff’s First Request for Production, it is unclear what Plaintiff means by “final destination
or delivery points.”
Enterprise objects that this request is overbroad, unduly burdensome and seeks information that
is not relevant or reasonably calculated to lead to the discovery of admissible evidence.
Enterprise does not dispute Magellan’s contention that Enterprise has entered into buy/sell
agreements to facilitate the transport crude during the term of the COD Agreement or that it has
transported crude using routes that do not utilize Magellan’s Facilities at the Connection Point.
The relevant question then, is whether Enterprise’s utilization of such buy/sell agreements and/or
its use of routes that do not utilize Magellan’s Facilities at the Connection Point somehow
constitutes a breach of COD agreement. This request goes well beyond seeking information that
could assist a judge or jury in answering that question and essentially seeks discover how
Enterprise conducts its entire business in the Eagle Ford Basin. Because it seeks information
concerning facts that are not in dispute and does not concern any claim or defense at issue in this
case, this request constitutes nothing more than an impermissible fishing expedition. See In re
Am. Optical Corp., 988 S.W.2d 711, 713 (Tex. 1998) (orig. proceeding) (per curiam) (“This
Court has repeatedly emphasized that discovery may not be used as a fishing expedition. Rather
requests must be reasonably tailored to included only matters relevant to the case”) (emphasis
added) (internal citations omitted)).
Enterprise also objects that this request is unduly burdensome because it would require the
production of electronically stored information that is not reasonably available as requested and
some of which Enterprise cannot retrieve without unreasonable effort and expense. The request
is also unduly burdensome because it fails to identify particular custodians, purporting to require
a search of the entire company. Moreover, the burden imposed by this request far outweighs the
benefit to Magellan and is disproportionate to the needs of this case. In re State Farm Lloyds,
520 S.W.3d 595 (Tex. 2017).
Enterprise further objects that this request is not reasonably limited in time.
Enterprise further objects to the request because the information sought discusses, concerns
and/or contains Enterprise’s confidential and proprietary information and trade secrets.
REQUEST FOR PRODUCTION NO. 26. All Documents which Enterprise utilizes or could
utilize, with respect to all or any part of the Relevant Period, to trace the transportation and
distribution of Eagle Ford Product from any Origin Point to its final destination or delivery point,
including by date, volume, shipper, transportation or distribution routing, and final destination or
DEFENDANT’S OBJECTIONS AND RESPONSES TO PLAINTIFF’S
FIRST REQUEST FOR PRODUCTION PAGE 28
PLAINTIFF'S SUPPLEMENT TO RESPONSE TO DEF.'S MOT. FOR PROTECTIVE ORDER - Page 57
SR454
delivery point. For clarity, this request seeks Documents sufficient to give Magellan the same
tracing capability Enterprise has with respect to Eagle Ford Product.
RESPONSE:
Enterprise objects to this request because it is unduly vague and ambiguous. Within the context
of Plaintiff’s First Request for Production, it is unclear what Plaintiff means by information
Enterprise “could utilize” or “final destination or delivery points.”
Enterprise objects that this request is overbroad, unduly burdensome and seeks information that
is not relevant or reasonably calculated to lead to the discovery of admissible evidence.
Enterprise does not dispute Magellan’s contention that Enterprise has entered into buy/sell
agreements to facilitate the transport crude during the term of the COD Agreement or that it has
transported crude using routes that do not utilize Magellan’s Facilities at the Connection Point.
The relevant question then, is whether Enterprise’s utilization of such buy/sell agreements and/or
its use of routes that do not utilize Magellan’s Facilities at the Connection Point somehow
constitutes a breach of COD agreement. This request goes well beyond seeking information that
could assist a judge or jury in answering that question and essentially seeks discover how
Enterprise conducts its entire business in the Eagle Ford Basin. Because it seeks information
concerning facts that are not in dispute and does not concern any claim or defense at issue in this
case, this request constitutes nothing more than an impermissible fishing expedition. See In re
Am. Optical Corp., 988 S.W.2d 711, 713 (Tex. 1998) (orig. proceeding) (per curiam) (“This
Court has repeatedly emphasized that discovery may not be used as a fishing expedition. Rather
requests must be reasonably tailored to included only matters relevant to the case”) (emphasis
added) (internal citations omitted)).
Enterprise also objects that this request is unduly burdensome because it would require the
production of electronically stored information that is not reasonably available as requested and
some of which Enterprise cannot retrieve without unreasonable effort and expense. The request
is also unduly burdensome because it fails to identify particular custodians, purporting to require
a search of the entire company. Moreover, the burden imposed by this request far outweighs the
benefit to Magellan and is disproportionate to the needs of this case. In re State Farm Lloyds,
520 S.W.3d 595 (Tex. 2017).
Enterprise further objects to the request because the information sought discusses, concerns
and/or contains Enterprise’s confidential and proprietary information and trade secrets.
REQUEST FOR PRODUCTION NO. 27. All Documents showing any Enterprise tariffs, fees,
charges or incentives for transportation and distribution of crude oil from ECHO Terminal to any
Destination Point or any Future Destination Point.
RESPONSE:
Enterprise objects that this request is overbroad, unduly burdensome and seeks information that
is not relevant or reasonably calculated to lead to the discovery of admissible evidence. This
DEFENDANT’S OBJECTIONS AND RESPONSES TO PLAINTIFF’S
FIRST REQUEST FOR PRODUCTION PAGE 29
PLAINTIFF'S SUPPLEMENT TO RESPONSE TO DEF.'S MOT. FOR PROTECTIVE ORDER - Page 58
SR455
request essentially seeks discover the entirety of Enterprise’s business concerning crude routed
via ECHO Terminal to any Destination Point or Future Destination Point. Because it seeks
information concerning facts that are not in dispute and does not concern any claim or defense at
issue in this case, this request constitutes nothing more than an impermissible fishing expedition.
See In re Am. Optical Corp., 988 S.W.2d 711, 713 (Tex. 1998) (orig. proceeding) (per curiam)
(“This Court has repeatedly emphasized that discovery may not be used as a fishing expedition.
Rather requests must be reasonably tailored to included only matters relevant to the case”)
(emphasis added) (internal citations omitted)).
Enterprise also objects that this request is unduly burdensome because it would require the
production of electronically stored information that is not reasonably available as requested and
some of which Enterprise cannot retrieve without unreasonable effort and expense. The request
is also unduly burdensome because it fails to identify particular custodians, purporting to require
a search of the entire company. Moreover, the burden imposed by this request far outweighs the
benefit to Magellan and is disproportionate to the needs of this case. In re State Farm Lloyds,
520 S.W.3d 595 (Tex. 2017).
Enterprise further objects that this request is not reasonably limited in time.
Enterprise further objects to the request because the information sought discusses, concerns
and/or contains Enterprise’s confidential and proprietary information and trade secrets.
REQUEST FOR PRODUCTION NO. 28. All existing Enterprise reports or analyses which,
for all or any part of the Relevant Period, identify, determine, quantify and/or summarize actual
transportation and distribution of crude oil from ECHO Terminal to any Destination Point or any
Future Destination Point. For clarity, this request seeks production of reports or analyses already
in existence; it does not purport to require Enterprise to create any new reports or analyses for
purposes of responding to the request.
RESPONSE:
Enterprise objects that this request is overbroad, unduly burdensome and seeks information that
is not relevant or reasonably calculated to lead to the discovery of admissible evidence. This
request essentially seeks to discover the entirety of Enterprise’s business concerning crude routed
via ECHO Terminal to any Destination Point or Future Destination Point. Because it seeks
information concerning facts that are not in dispute and does not concern any claim or defense at
issue in this case, this request constitutes nothing more than an impermissible fishing expedition.
See In re Am. Optical Corp., 988 S.W.2d 711, 713 (Tex. 1998) (orig. proceeding) (per curiam)
(“This Court has repeatedly emphasized that discovery may not be used as a fishing expedition.
Rather requests must be reasonably tailored to included only matters relevant to the case”)
(emphasis added) (internal citations omitted)).
Enterprise also objects that this request is unduly burdensome because it would require the
production of electronically stored information that is not reasonably available as requested and
some of which Enterprise cannot retrieve without unreasonable effort and expense. The request
DEFENDANT’S OBJECTIONS AND RESPONSES TO PLAINTIFF’S
FIRST REQUEST FOR PRODUCTION PAGE 30
PLAINTIFF'S SUPPLEMENT TO RESPONSE TO DEF.'S MOT. FOR PROTECTIVE ORDER - Page 59
SR456
is also unduly burdensome because it fails to identify particular custodians, purporting to require
a search of the entire company. Moreover, the burden imposed by this request far outweighs the
benefit to Magellan and is disproportionate to the needs of this case. In re State Farm Lloyds,
520 S.W.3d 595 (Tex. 2017).
Enterprise further objects that this request is not reasonably limited in time.
Enterprise further objects to the request because the information sought discusses, concerns
and/or contains Enterprise’s confidential and proprietary information and trade secrets.
REQUEST FOR PRODUCTION NO. 29. All Documents which Enterprise utilizes or could
utilize, with respect to all or any part of the Relevant Period, to trace the transportation and
distribution of crude oil from ECHO Terminal to any Destination Point or any Future Destination
Point, including by date, volume, shipper, transportation or distribution routing, and/or final
destination or delivery point. For clarity, this request seeks Documents sufficient to give
Magellan the same tracing capability Enterprise has with respect to deliveries of crude oil from
ECHO Terminal to any Destination Point or Future Destination Point.
RESPONSE:
Enterprise objects to this request because it is unduly vague and ambiguous. Within the context
of Plaintiff’s First Request for Production, it is unclear what Plaintiff means information
Enterprise “could utilize” or by “final destination or delivery points.”
Enterprise objects that this request is overbroad, unduly burdensome and seeks information that
is not relevant or reasonably calculated to lead to the discovery of admissible evidence. This
request essentially seeks to discover the entirety of Enterprise’s business concerning crude routed
via ECHO Terminal to any Destination Point. Because it seeks information concerning facts that
are not in dispute and does not relate to any claim or defense at issue in this case, this request
constitutes nothing more than an impermissible fishing expedition. See In re Am. Optical Corp.,
988 S.W.2d 711, 713 (Tex. 1998) (orig. proceeding) (per curiam) (“This Court has repeatedly
emphasized that discovery may not be used as a fishing expedition. Rather requests must be
reasonably tailored to included only matters relevant to the case”) (emphasis added) (internal
citations omitted)).
Enterprise also objects that this request is unduly burdensome because it would require the
production of electronically stored information that is not reasonably available as requested and
some of which Enterprise cannot retrieve without unreasonable effort and expense. The request
is also unduly burdensome because it fails to identify particular custodians, purporting to require
a search of the entire company. Moreover, the burden imposed by this request far outweighs the
benefit to Magellan and is disproportionate to the needs of this case. In re State Farm Lloyds,
520 S.W.3d 595 (Tex. 2017).
Enterprise further objects that this request is not reasonably limited in time.
DEFENDANT’S OBJECTIONS AND RESPONSES TO PLAINTIFF’S
FIRST REQUEST FOR PRODUCTION PAGE 31
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Enterprise further objects to the request because the information sought discusses, concerns
and/or contains Enterprise’s confidential and proprietary information and trade secrets.
REQUEST FOR PRODUCTION NO. 30. All Documents which constitute, or reflect,
Communications between any Non-Lawyer Employee(s) of Magellan and any Non-Lawyer
Employee(s) of Enterprise, regarding any Magellan Audit.
RESPONSE:
Enterprise objects to this request as unduly burdensome because the documents sought are
equally available to or are already in Magellan’s possession, and therefore can be obtained from
another source that is more convenient, less burdensome or less expensive, namely, Magellan.
Enterprise also objects that this request is unduly burdensome because it would require the
production of electronically stored information that is not reasonably available as requested and
some of which Enterprise cannot retrieve without unreasonable effort and expense. The request
is also unduly burdensome because it fails to identify particular custodians, purporting to require
a search of the entire company. Moreover, the burden imposed by this request far outweighs the
benefit to Magellan and is disproportionate to the needs of this case. In re State Farm Lloyds,
520 S.W.3d 595 (Tex. 2017).
Enterprise further objects to the request because the information sought discusses, concerns
and/or contains Enterprise’s confidential and proprietary information and trade secrets.
REQUEST FOR PRODUCTION NO. 31. All Documents which constitute, or reflect,
Communications between Non-Lawyer Employees of Enterprise, regarding any Magellan Audit.
RESPONSE:
Enterprise also objects that this request is unduly burdensome because it would require the
production of electronically stored information that is not reasonably available as requested and
some of which Enterprise cannot retrieve without unreasonable effort and expense. The request
is also unduly burdensome because it fails to identify particular custodians, purporting to require
a search of the entire company. Moreover, the burden imposed by this request far outweighs the
benefit to Magellan and is disproportionate to the needs of this case. In re State Farm Lloyds,
520 S.W.3d 595 (Tex. 2017).
Enterprise further objects the request because Enterprise’s internal communications discuss,
concern and/or contain Enterprise’s confidential and proprietary information and trade secrets.
Enterprise is withholding documents responsive to this request under the work product and/or
attorney client privileges. Enterprise objects to any request for the production of a privilege log
regarding documents prepared or created after November 13, 2015.
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FIRST REQUEST FOR PRODUCTION PAGE 32
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REQUEST FOR PRODUCTION NO. 32. All Documents Enterprise provided to Magellan in
connection with any Magellan Audit.
RESPONSE:
Enterprise objects to this request as unduly burdensome to the extent that the documents sought
are equally available to or are already in Magellan’s possession, and therefore can be obtained
from another source that is more convenient, less burdensome or less expensive, namely,
Magellan.
Enterprise also objects that this request is unduly burdensome because it would require the
production of electronically stored information that is not reasonably available as requested and
some of which Enterprise cannot retrieve without unreasonable effort and expense. The request
is also unduly burdensome because it fails to identify particular custodians, purporting to require
a search of the entire company. Moreover, the burden imposed by this request far outweighs the
benefit to Magellan and is disproportionate to the needs of this case. In re State Farm Lloyds,
520 S.W.3d 595 (Tex. 2017).
REQUEST FOR PRODUCTION NO. 33. All Documents You do or may use or rely on to
support the following affirmative defense alleged in ¶ 3 of Your Original Answer: “3. ECO is
entitled to a credit or offset for any monies Plaintiff has received for the transport of crude that
Plaintiff contends is subject to the Distribution Agreement, to the extent tariffs were paid by any
third-party purchaser of such crude for transportation through the Magellan distribution system.”
This includes all Enterprise Documents purporting to show that Magellan received any such
monies.
RESPONSE:
Enterprise objects to this request in that it is overly broad and unduly burdensome. Enterprise is
not required to marshal its evidence in response to an overly broad request.
Enterprise further objects to this request as premature. Discovery is ongoing and Enterprise
expects its own discovery efforts, if necessary, to result in Enterprise’s receipt of documents and
information relevant to its defenses, affirmative defenses, and responsive to this request. Subject
to and without waiving the foregoing objections, Enterprise reserves the right to supplement this
response as permitted by the Texas Rules of Civil Procedure.
Date: October 4, 2017 Respectfully submitted,
/s/ J. Robert Arnett II
E. Leon Carter
Texas Bar No. 03914300
lcarter@carterscholer.com
J. Robert Arnett II
DEFENDANT’S OBJECTIONS AND RESPONSES TO PLAINTIFF’S
FIRST REQUEST FOR PRODUCTION PAGE 33
PLAINTIFF'S SUPPLEMENT TO RESPONSE TO DEF.'S MOT. FOR PROTECTIVE ORDER - Page 62
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Texas Bar No. 01332900
barnett@carterscholer.com
Joshua J. Bennett
Texas Bar No. 24059444
jbennett@carterscholer.com
Courtney Barksdale Perez
Texas Bar No. 24061135
cperez@carterscholer.com
CARTER SCHOLER PLLC
8150 N. Central Expressway
Suite 500
Dallas, Texas 75206
Telephone: 214-550-8188
Facsimile: 214-550-8185
ATTORNEYS FOR DEFENDANT
ENTERPRISE CRUDE OIL LLC
CERTIFICATE OF SERVICE
This is to certify that on October 4, 2017, a true, correct and complete copy of the
foregoing document has been served on all counsel of record via a court-approved electronic
filing system, in accordance with Rule 21a of the Texas Rules of Civil Procedure.
/s/ J. Robert Arnett II
J. Robert Arnett II
DEFENDANT’S OBJECTIONS AND RESPONSES TO PLAINTIFF’S
FIRST REQUEST FOR PRODUCTION PAGE 34
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Exhibit 4
CAUSE NO. DC-17-07264
MAGELLAN CRUDE OIL PIPELINE § IN THE DISTRICT COURT
COMPANY, L.P. a Delaware Limited §
Partnership, §
§
Plaintiff, §
§ 101st JUDICIAL DISTRICT
v. §
§
ENTERPRISE CRUDE OIL LLC, §
A Texas Limited Liability Company, §
§
Defendant. § DALLAS COUNTY, TEXAS
DEFENDANT’S AMENDED OBJECTIONS AND RESPONSES
TO PLAINTIFF’S FIRST REQUEST FOR PRODUCTION
TO: Plaintiff Magellan Crude Oil Pipeline Company, L.P., by and through their attorney of
record, David L. Bryant, GableGotwals, 113 Pleasant Valley Drive, Suite 204, Boerne,
Texas 78006; Lisa T. Silvestri, GableGotwals, 100 W. Fifth Street, Suite 1100, Tulsa,
Oklahoma 74103; and Bill E. Davidoff, Figari & Davenport, LLP, 901 Main Street, Suite
3400, Dallas, Texas 75202.
Defendant Enterprise Crude Oil LLC (“Enterprise” or “Defendant”) serves its Amended
Objections and Responses to Plaintiff’s First Request for Production, served on July 21, 2017, as
follows:
I. INTRODUCTION
1. Discovery, independent investigation, legal research and analysis will lead to
additional facts and evidence, and may establish entirely new factual conclusions and legal
contentions, all of which may lead to additions to, changes in and variations from the present
responses. Consequently, the following responses are given without prejudice to Enterprise’s
right to produce, at time of motions or trial, such further information or facts as may hereafter
become known and available to it.
DEFENDANT’S AMENDED OBJECTIONS AND RESPONSES TO PLAINTIFF’S
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2. The following Responses and Objections are based upon information presently
available to Enterprise and, except for explicit facts admitted herein, no incidental or implied
admissions are intended hereby. The fact that Enterprise has responded or objected to any of the
requests, or part thereof, should not be taken as an admission that Enterprise accepts or admits
the existence of any facts set forth or assumed by such requests and/or that such response
constitutes admissible evidence. The fact that Enterprise has responded to all or part of a request
is not intended and shall not be construed to be a waiver by Enterprise of all or any part of any
objection(s) to any request. Enterprise reserves the right to amend or supplement the following
responses in accordance with the Texas Rules of Civil Procedure as this matter proceeds.
3. Enterprise objects to the definition of “Enterprise” used by Magellan in its
requests, which purports to impose discovery obligations upon corporate entities other than
Enterprise Crude Oil, LLC. As used in these objections and responses, “Enterprise” refers to
Enterprise Crude Oil, LLC and its predecessors and successors only, and Enterprise assumes no
obligation to produce documents in the care, custody and control of other entities in responding
to these requests.
4. By stating that it has produced or will produce documents within its possession,
custody or control, Enterprise does not represent that any such documents exist. Rather,
Enterprise is responding only that, to the extent such documents exist and are located, they have
been or will be produced.
II. OBJECTIONS AND RESPONSES
REQUEST FOR PRODUCTION NO. 1. Regarding the COD Agreement, the following
Documents created or generated on or before October 31, 2011: (a) all drafts of said agreement;
(b) all Documents constituting or reflecting Communications between Magellan and Enterprise,
regarding said agreement; and (c) all Documents constituting or reflecting Enterprise internal
Communications regarding said agreement.
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FIRST REQUEST FOR PRODUCTION PAGE 2
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RESPONSE:
Enterprise objects that this request seeks information that is not relevant or reasonably calculated
to lead to the discovery of admissible evidence. Neither Enterprise nor Magellan contend that
there is any ambiguity in COD Agreement. As such, its terms are to be construed by the Court
as a matter of law. This request seeks parol evidence, that is, extrinsic evidence relating to the
parties’ motives, intent or understanding in entering into the COD Agreement, which evidence is
inadmissible when, as here, the terms of the parties’ agreement are unambiguous. Moreover, the
COD Agreement, which must be read together with the related-writings that give the effect to the
COD Agreement (i.e. the Connection Agreement, the Joint Tariff Agreement, etc.) contains a
merger clause. Thus, by the COD Agreement’s express terms, drafts, documents between
Magellan and Enterprise concerning the COD Agreement and/or internal communications
regarding the COD Agreement are not relevant.
Enterprise also objects that this request is unduly burdensome because it would require the
production of electronically stored information because it fails to identify particular custodians,
purporting to require a search of the entire company. Should the Court determine that the
requested information is discoverable, Enterprise will confer with Magellan regarding the proper
custodians and search terms for responding to this request.
Enterprise further objects to subpart (c) of the request because Enterprise’s internal
communications discuss, concern and/or contain Enterprise’s confidential and proprietary
information and trade secrets.
Enterprise is withholding documents responsive to this request under the work product and/or
attorney client privileges. Enterprise objects to any request for the production of a privilege log
regarding documents prepared or created after November 13, 2015.
REQUEST FOR PRODUCTION NO. 2. Regarding the Joint Tariff Agreement, the following
Documents created or generated on or before November 1, 2011: (a) all drafts of said agreement;
(b) all Documents constituting or reflecting Communications between Magellan and Enterprise,
regarding said agreement; and (c) all Documents constituting or reflecting Enterprise internal
Communications regarding said agreement.
RESPONSE:
Enterprise objects that this request seeks information that is not relevant or reasonably calculated
to lead to the discovery of admissible evidence. Neither Enterprise nor Magellan contend that
there is any ambiguity in COD Agreement (or the Joint Tariff Agreement for that matter). As
such, its terms are to be construed by the Court as a matter of law. This request seeks parol
evidence, that is, extrinsic evidence relating to the parties’ motives, intent or understanding in
entering into the Joint Tariff Agreement, which evidence is inadmissible when, as here, the terms
of the parties’ agreement are unambiguous. Moreover, the COD Agreement, which must be read
together with the related-writings that give the effect to the COD Agreement (i.e. the Connection
Agreement, the Joint Tariff Agreement, etc.) contains a merger clause. Thus, by the COD
DEFENDANT’S AMENDED OBJECTIONS AND RESPONSES TO PLAINTIFF’S
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Agreement’s express terms, drafts, documents between Magellan and Enterprise concerning the
Joint Tariff agreement and/or internal communications regarding the Joint Tariff Agreement are
not relevant.
Enterprise also objects that this request is unduly burdensome because it would require the
production of electronically stored information but does not identify particular custodians,
purporting to require a search of the entire company. Should the Court determine that the
requested information is discoverable, Enterprise will confer with Magellan regarding the proper
custodians and search terms for responding to this request.
Enterprise further objects to subpart (c) of the request because Enterprise’s internal
communications discuss, concern and/or contain Enterprise’s confidential and proprietary
information and trade secrets.
Enterprise is withholding documents responsive to this request under the work product and/or
attorney client privileges. Enterprise objects to any request for the production of a privilege log
regarding documents prepared or created after November 13, 2015.
REQUEST FOR PRODUCTION NO. 3. Regarding the Connection Agreement, the following
Documents created or generated on or before December 16, 2011: (a) all drafts of said
agreement; (b) all Documents constituting or reflecting Communications between Magellan and
Enterprise, regarding said agreement; and (c) all Documents constituting or reflecting Enterprise
internal Communications regarding said agreement.
RESPONSE:
Enterprise objects that this request seeks information that is not relevant or reasonably calculated
to lead to the discovery of admissible evidence. Neither Enterprise nor Magellan contend that
there is any ambiguity in COD Agreement (or the Connection Agreement for that matter). As
such, its terms are to be construed by the Court as a matter of law. This request seeks parol
evidence, that is, extrinsic evidence relating to the parties’ motives, intent or understanding in
entering into the COD Agreement, which evidence is inadmissible when, as here, the terms of
the parties’ agreement are unambiguous. Moreover, the COD Agreement, which must be read
together with the related-writings that give the effect to the COD Agreement (i.e. the Connection
Agreement, the Joint Tariff Agreement, etc.) contains a merger clause. Thus, by the COD
Agreement’s express terms, drafts, documents between Magellan and Enterprise concerning the
Connection agreement and/or internal communications regarding the Connection Agreement are
not relevant.
Enterprise also objects that this request is unduly burdensome because it would require the
production of electronically stored information but does not identify particular custodians,
purporting to require a search of the entire company. Should the Court determine that the
requested information is discoverable, Enterprise will confer with Magellan regarding the proper
custodians and search terms for responding to this request.
DEFENDANT’S AMENDED OBJECTIONS AND RESPONSES TO PLAINTIFF’S
FIRST REQUEST FOR PRODUCTION PAGE 4
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Enterprise further objects to subpart (c) of the request because Enterprise’s internal
communications discuss, concern and/or contain Enterprise’s confidential and proprietary
information and trade secrets.
Enterprise is withholding documents responsive to this request under the work product and/or
attorney client privileges. Enterprise objects to any request for the production of a privilege log
regarding documents prepared or created after November 13, 2015.
REQUEST FOR PRODUCTION NO. 4. All Documents, whether created before or after the
COD Agreement, identifying any business or commercial considerations which led Enterprise
Crude Oil LLC to enter into the COD Agreement or caused or contributed to its interest in
pursuing that or any similar agreement with Magellan.
RESPONSE:
Enterprise objects that this request seeks information that is not relevant or reasonably calculated
to lead to the discovery of admissible evidence. Neither Enterprise nor Magellan contend that
there is any ambiguity in COD Agreement. As such, its terms are to be construed by the Court
as a matter of law. This Request seeks parol evidence, that is, extrinsic evidence relating to the
parties’ motives and intent in entering into the COD Agreement, which evidence inadmissible
when, as here, the terms of the parties’ agreement are unambiguous. Moreover, the COD
Agreement, which must be read together with the related-writings that give the effect to the COD
Agreement (i.e. the Connection Agreement, the Joint Tariff Agreement, etc.) contains a merger
clause. Thus, by the COD Agreement’s express terms, drafts, documents between Magellan and
Enterprise concerning the Connection agreement and/or internal communications regarding the
Connection Agreement are not relevant.
Enterprise further objects because the request is overbroad and not reasonably limited in subject
to the extent it seeks information about “similar” agreements not at issue in this lawsuit, or
general factors that “led” Enterprise to enter into the Joint Tariff Agreement. Such a request,
seeking generally “all” documents relating to the business and commercial factors that led
Enterprise to consider doing business with Magellan (not just the agreements at issue in this
suit), without limitation, could encompass nearly every document and communication at
Enterprise regarding its Gulf Coast operations. Should the Court determine that the requested
information is discoverable, and subject to an appropriate protective order, Enterprise will
produce internal communications that discuss or set forth the business or commercial reasons for
entering into the COD Agreement specifically, if any, but it will not produce information about
general economic conditions, oil production and markets, or other Enterprise facilities or
contemplated facilities that may have tangentially contributed to an interest in entering the COD
Agreement.
Enterprise also objects that this request is unduly burdensome because it would require the
production of electronically stored information but does not identify particular custodians,
purporting to require a search of the entire company. Should the Court determine that parol
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FIRST REQUEST FOR PRODUCTION PAGE 5
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evidence is discoverable, Enterprise will confer with Magellan regarding the proper custodians
and search terms for responding to this request.
Enterprise further objects to the request because the information sought discusses, concerns
and/or contains Enterprise’s confidential and proprietary information and trade secrets.
Enterprise is withholding documents responsive to this request under the work product and/or
attorney client privileges. Enterprise objects to the production of a privilege log regarding
documents prepared or created after November 13, 2015.
REQUEST FOR PRODUCTION NO. 5. All Documents, whether created before or after the
Joint Tariff Agreement, identifying any business or commercial considerations which led
Enterprise Crude Pipeline LLC to enter into the Joint Tariff Agreement or caused or contributed
to its interest in pursuing that or any similar agreement with Magellan.
RESPONSE:
Enterprise objects that this request seeks information that is not relevant or reasonably calculated
to lead to the discovery of admissible evidence. Neither Enterprise nor Magellan contend that
there is any ambiguity in Joint Tariff Agreement. As such, its terms are to be construed by the
Court as a matter of law. This Request seeks parol evidence, that is, extrinsic evidence relating
to the parties’ motives and intent in entering into the Joint Tariff Agreement, which evidence is
inadmissible when, as here, the terms of the parties’ agreement are unambiguous.
Enterprise further objects because the request is overbroad and not reasonably limited in subject
to the extent it seeks information about “similar” agreements not at issue in this lawsuit, or
general factors that “led” Enterprise to enter into the Joint Tariff Agreement. Such a request,
seeking generally documents relating to the business and commercial factors that led Enterprise
to consider doing business with Magellan, without limitation, could encompass nearly every
document and communication at Enterprise regarding its Gulf Coase operations. See In re Am.
Optical Corp., 988 S.W.2d 711, 713 (Tex. 1998) (orig. proceeding) (per curiam) (“This Court
has repeatedly emphasized that discovery may not be used as a fishing expedition. Rather
requests must be reasonably tailored to included only matters relevant to the case”) (emphasis
added) (internal citations omitted)). Should the Court determine that the requested information is
discoverable, and subject to an appropriate protective order, Enterprise will produce internal
communications that discuss or set forth the business or commercial reasons for entering into the
Joint Tariff Agreement specifically, if any, but it will not produce information about general
economic conditions, oil production and markets, or other Enterprise facilities or contemplated
facilities that may have tangentially contributed to an interest in entering the Joint Tariff
Agreement.
Enterprise also objects that this request is unduly burdensome because it would require the
production of electronically stored information but does not identify particular custodians,
purporting to require a search of the entire company. Should the Court determine that parol
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evidence is discoverable, Enterprise will confer with Magellan regarding the proper custodians
and search terms for responding to this request.
Enterprise further objects to the request because the information sought discusses, concerns
and/or contains Enterprise’s confidential and proprietary information and trade secrets.
Enterprise is withholding documents responsive to this request under the work product and/or
attorney client privileges. Enterprise objects to any request for the production of a privilege log
regarding documents prepared or created after November 13, 2015.
REQUEST FOR PRODUCTION NO. 6. All Documents, whether created before or after the
Connection Agreement, identifying any business or commercial considerations which led
Enterprise Crude Pipeline LLC to enter into the Connection Agreement or caused or contributed
to its interest in pursuing that or any similar agreement with Magellan.
RESPONSE:
Enterprise objects that this request seeks information that is not relevant or reasonably calculated
to lead to the discovery of admissible evidence. Neither Enterprise nor Magellan contend that
there is any ambiguity in Connection Agreement. As such, its terms are to be construed by the
Court as a matter of law. This Request seeks parol evidence, that is, extrinsic evidence relating
to the parties’ motives and intent in entering into the Connection Agreement, which evidence is
inadmissible when, as here, the terms of the parties’ agreement are unambiguous. Moreover, the
Connection Agreement, which must be read together with the related-writings that give the effect
to theonnectionOD Agreement (i.e. the COD Agreement, the Joint Tariff Agreement, etc.)
contains a merger clause. Thus, by the Connection Agreement’s express terms, Enterprise’s
“interests” in entering into the Connection Agreement are not relevant.
Enterprise further objects because the request is overbroad and not reasonably limited in scope
the extent it seeks information about agreements “similar” to the Connection Agreement but not
in issue in this lawsuit, or general factors that “led” Enterprise to consider doing business with
Magellan, which could encompass nearly every document and communication at Enterprise
regarding its Gulf Coast operations. See In re Am. Optical Corp., 988 S.W.2d 711, 713 (Tex.
1998) (orig. proceeding) (per curiam) (“This Court has repeatedly emphasized that discovery
may not be used as a fishing expedition. Rather requests must be reasonably tailored to
included only matters relevant to the case”) (emphasis added) (internal citations
omitted)). Should the Court determine that the requested information is discoverable, and
subject to an appropriate protective order, Enterprise will produce internal communications that
discuss or set forth the business or commercial reasons for entering into the Connection
Agreement specifically, if any, but it will not produce information about general economic
conditions, oil production and markets, or other Enterprise facilities or contemplated facilities
that may have tangentially contributed to an interest in entering the Joint Tariff Agreement.
Enterprise also objects that this request is unduly burdensome because it would require the
production of electronically stored information but does not identify particular custodians,
DEFENDANT’S AMENDED OBJECTIONS AND RESPONSES TO PLAINTIFF’S
FIRST REQUEST FOR PRODUCTION PAGE 7
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purporting to require a search of the entire company. Should the Court determine that the
requested information is discoverable, Enterprise will confer with Magellan regarding the proper
custodians and search terms for responding to this request.
Enterprise further objects to the request because the information sought discusses, concerns
and/or contains Enterprise’s confidential and proprietary information and trade secrets.
Enterprise is withholding documents responsive to this request under the work product and/or
attorney client privileges. Enterprise objects to any request for the production of a privilege log
regarding documents prepared or created after November 13, 2015.
REQUEST FOR PRODUCTION NO. 7. All Documents regarding authorization for
Enterprise Crude Oil LLC to enter into the COD Agreement.
RESPONSE:
Enterprise objects to the request as overbroad because it seeks “all documents regarding
authorization”, and therefore does not meet the “reasonable particularity” requirements of the
Texas Rules of Civil Procedure.
Enterprise further objects that the request seeks information not reasonably calculated to lead to
the discovery of admissible evidence. Neither Enterprise nor Magellan dispute the validity or
enforceability of the COD Agreement, rendering the information sought irrelevant.
Enterprise also objects that this request is unduly burdensome because it would require the
production of electronically stored information but does not identify particular custodians,
purporting to require a search of the entire company. Should the Court determine that the
requested information is discoverable, Enterprise will confer with Magellan regarding the proper
custodians and search terms for responding to this request.
Upon entry of an appropriate protective order, Enterprise will produce documents, if any, that
indicate persons at Enterprise other than the signatory to the COD Agreement authorized the
signatory to execute the agreement, or documents sufficient to confirm the authority of the
signatory to execute the agreement.
Enterprise is withholding documents responsive to this request under the work product and/or
attorney client privileges. Enterprise objects to any request for the production of a privilege log
regarding documents prepared or created after November 13, 2015.
REQUEST FOR PRODUCTION NO. 8. All Documents regarding authorization for
Enterprise Crude Pipeline LLC to enter into the Joint Tariff Agreement.
RESPONSE:
DEFENDANT’S AMENDED OBJECTIONS AND RESPONSES TO PLAINTIFF’S
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Enterprise objects to the request as overbroad because it seeks “all documents regarding
authorization”, and therefore does not meet the “reasonable particularity” requirements of the
Texas Rules of Civil Procedure.
Enterprise further objects that the request seeks information not reasonably calculated to lead to
the discovery of admissible evidence. Neither Enterprise nor Magellan dispute the validity or
enforceability of the Joint Tariff Agreement, rendering the information sought irrelevant.
Enterprise also objects that this request is unduly burdensome because it would require the
production of electronically stored information but does not identify particular custodians,
purporting to require a search of the entire company. Should the Court determine that the
requested information is discoverable, Enterprise will confer with Magellan regarding the proper
custodians and search terms for responding to this request.
Upon entry of an appropriate protective order, Enterprise will produce documents, if any, that
indicate persons at Enterprise other than the signatory to the Joint Tariff Agreement authorized
the signatory to execute the agreement, or documents sufficient to confirm the authority of the
signatory to execute the agreement.
Enterprise is withholding documents responsive to this request under the work product and/or
attorney client privileges. Enterprise objects to any request for the production of a privilege log
regarding documents prepared or created after November 13, 2015.
REQUEST FOR PRODUCTION NO. 9. All Documents regarding authorization for
Enterprise Crude Pipeline LLC to enter into the Connection Agreement.
RESPONSE:
Enterprise objects to the request as overbroad because it seeks “all documents regarding
authorization”, and therefore does not meet the “reasonable particularity” requirements of the
Texas Rules of Civil Procedure.
Enterprise further objects that the request seeks information not reasonably calculated to lead to
the discovery of admissible evidence. Neither Enterprise nor Magellan dispute the validity or
enforceability of the COD Agreement, rendering the information sought irrelevant.
Enterprise also objects that this request is unduly burdensome because it would require the
production of electronically stored information but does not identify particular custodians,
purporting to require a search of the entire company. Should the Court determine that the
requested information is discoverable, Enterprise will confer with Magellan regarding the proper
custodians and search terms for responding to this request.
Upon entry of an appropriate protective order, Enterprise will produce documents, if any, that
indicate persons at Enterprise other than the signatory to the Connection Agreement authorized
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the signatory to execute the agreement, or documents sufficient to confirm the authority of the
signatory to execute the agreement.
Enterprise is withholding documents responsive to this request under the work product and/or
attorney client privileges. Enterprise objects to any request for the production of a privilege log
regarding documents prepared or created after November 13, 2015.
REQUEST FOR PRODUCTION NO. 10. Regarding the marketing, transportation and/or
delivery of Eagle Ford Product to ECHO Terminal, to Genoa Junction, or to any other Houston
Area Destination(s), all Documents containing or reporting upon any Enterprise plans, proposals,
goals, projections, budgets, estimates, statistics, or histories thereof. This request is not limited to
Documents which focus exclusively on Eagle Ford Product as defined above; any Document
containing information applicable in whole or part to Eagle Ford Product, is included. For
example, this request includes memos, reports or analyses regarding the intended, expected or
actual utilization of the Rancho pipeline system and/or the Rancho II pipeline system for such
purposes.
RESPONSE:
Enterprise objects to the request as overbroad and unduly burdensome because it seeks “all
documents” “regarding” 14 distinct categories of documents contained within this request.
Enterprise further objects that this request is not reasonably limited in scope to matters at issue in
this lawsuit. Indeed, it seeks information touching upon 14 categories of documents that
cumulatively encompass Enterprise’s entire business within the Eagle Ford Basin. Such a
request, without limitation, could encompass nearly every document and communication at
Enterprise relating to its Gulf Coast operations.
Enterprise further objects to the request because the information sought discusses, concerns
and/or contains Enterprise’s confidential and proprietary information and trade secrets.
Enterprise also objects that this request is unduly burdensome because it would require the
production of electronically stored information but does not identify particular custodians,
purporting to require a search of the entire company. Should the Court determine that the
requested information is discoverable, Enterprise will confer with Magellan regarding the proper
custodians and search terms for responding to this request.
Because this request is not reasonably limited in its scope or subject matter, it also seeks
information that is not relevant or reasonably calculated to lead to the discovery of admissible
evidence. The only relevant issue in this case is whether Enterprise had good faith business
reasons for the decisions Magellan alleges improperly reduced Enterprise’s use of the Magellan
facilities. These are: (1) conversion of marketing agreements to buy/sell arrangements; (2)
building the Rancho II pipeline; (3) increasing the tariff between ECHO terminal and Genoa
junction; and (4) disconnecting Anajuac Junction. Upon entry of an appropriate protective order,
Enterprise will produce non-privileged internal and external communications that (1) were made
in connection with the negotiation by Enterprise Crude Oil, LLC of agreements to transport
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crude from an Origin Point on the Eagle Ford Pipeline to the extent such documents discuss
either the Distribution Agreement, Magellan, or the reasons for changing any marketing
agreement to a buy/sell agreement for crude transported from an Origin Point; (2) AFEs,
presentations, studies and approvals for shutting down Rancho I and building the Rancho II
pipeline; (3) documents submitted to the Railroad Commission in connection with any tariff
increase on the bidirectional pipeline between ECHO terminal and Genoa Junction, or any
internal communication that discusses jointly the tariff and either the Distribution Agreement,
the Joint Tariff Agreement, or Magellan; and (4) AFEs, presentations, studies and approvals for
disconnecting Anajuac Junction, if any.
Enterprise is withholding documents responsive to this request under the work product and/or
attorney client privileges. Enterprise objects to any request for the production of a privilege log
regarding documents prepared or created after November 13, 2015.
REQUEST FOR PRODUCTION NO. 11. All Documents which constitute, or reflect,
Communications between Magellan and Enterprise, regarding (i) the construction of any New
Magellan Facilities, (ii) the In-Service Date, (iii) the use or non-use of the Magellan Facilities by
Enterprise following the In-Service Date, (iv) the disconnection of Enterprise facilities from
Magellan facilities at Anahuac Junction, (v) the meaning, effect, or impact of the COD
Agreement, the Joint Tariff Agreement or the Connection Agreement, and/or (vi) any dispute
between Magellan and Enterprise arising from the COD Agreement, the Joint Tariff Agreement
or the Connection Agreement. For clarity, recordings and notes of any phone calls or meetings
between Magellan and Enterprise, regarding any of the above matters, are included. However,
this request is not intended to include inter-party Communications specifically regarding any
Magellan Audit, as those are the subject of a separate request.
RESPONSE:
Enterprise objects to subpart (v) of the request, which seeks communications regarding “the
meaning, effect, or impact of the COD Agreement, the Joint Tariff Agreement or the Connection
Agreement,” because such information is irrelevant, insofar as parol evidence is not admissible
to alter the terms or meaning of an unambiguous agreement. Upon entry of an appropriate
protective order, Enterprise will produce communications between Magellan and Enterprise
regarding the identified topics.
Enterprise also objects that this request is unduly burdensome because it would require the
production of electronically stored information but does not identify particular custodians,
purporting to require a search of the entire company. Enterprise will confer with Magellan
regarding the proper custodians and search terms for responding to this request.
REQUEST FOR PRODUCTION NO. 12. All Documents which were authored by any Non-
Lawyer Employee(s) of Enterprise, at any time during the Relevant Period, and which analyze,
discuss, comment on, question, or refer to (i) the enforceability of the COD Agreement or any of
its provisions, (ii) the meaning or effect of the COD Agreement or any of its provisions, (iii) the
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understanding or intention of any person or party with respect to the COD Agreement or any of
its provisions, and/or (iv) the rights or obligations of either party with respect to the COD
Agreement or any of its provisions. This includes, for example, all Documents which raise any
question, or discuss or mention any view or opinion of any Non-Lawyer Employee of Enterprise,
about whether or how the COD Agreement may affect Your purchase, sale, marketing or
transportation of Eagle Ford Product or any other crude oil.
RESPONSE:
Enterprise objects to this request because it seeks documents that are not relevant nor reasonably
calculated to lead to the discovery of admissible evidence. Neither Enterprise nor Magellan
contend that there is any ambiguity in COD Agreement. As such, its terms are to be construed
by the Court as a matter of law. This Request seeks parol evidence, i.e., information that is not
relevant or reasonably calculated to lead to the discovery of admissible evidence. Moreover, the
COD Agreement, which must be read together with the related-writings that give the effect to the
COD Agreement (i.e. the Connection Agreement, the Joint Tariff Agreement, etc.) contains a
merger clause. Thus, by the COD Agreement’s express terms, information concerning the
“meaning or effect of the COD Agreement,” the “understanding or intention of any person or
party with respect to the COD Agreement” and the “rights or obligations of either party with
respect to the COD Agreement,” are not relevant.
Enterprise also objects that this request is unduly burdensome because it would require the
production of electronically stored information but does not identify particular custodians,
purporting to require a search of the entire company. Should the Court determine that the
requested information is discoverable, Enterprise will confer with Magellan regarding the proper
custodians and search terms for responding to this request.
Enterprise is withholding documents responsive to this request under the work product and/or
attorney client privileges. Enterprise objects to any request for the production of a privilege log
regarding documents prepared or created after November 13, 2015.
REQUEST FOR PRODUCTION NO. 13. All Documents which were authored by any
Lawyer Employee of Enterprise, at any time prior to February 16, 2017, and which analyze,
discuss, comment on, question, or refer to (i) the enforceability of the COD Agreement or any of
its provisions, (ii) the meaning or effect of the COD Agreement or any of its provisions, (iii) the
understanding or intention of any person or party with respect to the COD Agreement or any of
its provisions, and/or (iv) the rights or obligations of either party with respect to the COD
Agreement or any of its provisions. This includes, for example, all Documents which raise any
question, or discuss or mention any view or opinion of any Lawyer Employee of Enterprise,
about whether or how the COD Agreement may affect Your purchase, sale, marketing or
transportation of Eagle Ford Product or any other crude oil.
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RESPONSE:
Enterprise objects on the ground that the information sought is protected by the attorney-client
privilege and/or the work product privilege. Enterprise is withholding documents responsive to
this request. Enterprise objects to any request for the production of a privilege log regarding
documents prepared or created after November 13, 2015.
Enterprise further objects to subpart (i) of the request. Neither Enterprise nor Magellan dispute
the validity or enforceability of the COD Agreement. Therefore, documents concerning
enforceability of the COD Agreement are not relevant or reasonably calculated to lead to the
discovery of admissible evidence.
Enterprise objects to subparts (ii), (iii) and (iv) of the request on the ground that the information
sought is not relevant. Neither Enterprise nor Magellan contend that there is any ambiguity in
COD Agreement. As such, its terms are to be construed by the Court as a matter of law. This
Request seeks parol evidence, i.e., information that is not relevant or reasonably calculated to
lead to the discovery of admissible evidence. Moreover, the COD Agreement, which must be
read together with the related-writings that give the effect to the COD Agreement (i.e. the
Connection Agreement, the Joint Tariff Agreement, etc.) contains a merger clause. Thus, by the
COD Agreement’s express terms, information concerning the “meaning or effect of the COD
Agreement,” the “understanding or intention of any person or party with respect to the COD
Agreement” and the “rights or obligations of either party with respect to the COD Agreement”,
are not relevant.
REQUEST FOR PRODUCTION NO. 14. All other Documents which contain any reference
(whether specific or general) to the COD Agreement or to any party’s rights or obligations under
the COD Agreement. For clarity, this request does not broadly request or require You to search
for each and every Document that might arguably “relate” to the COD Agreement in some way.
Rather, this request narrower: its object is to discover any Documents (not duplicative of
Documents produced in response to one of the preceding requests) that contain an actual
reference (in any form) to the COD Agreement or to a party’s rights or obligations thereunder.
RESPONSE:
Enterprise objects because the request is global, overbroad and not reasonably limited in time or
scope. Moreover, it is cumulative of each preceding request. It is not narrowly tailored to
discover a discrete category of documents and instead, a global “catch-all” attempt to cast its net
far and wide in furtherance of an impermissible fishing expedition. See In re Am. Optical Corp.,
988 S.W.2d 711, 713 (Tex. 1998) (orig. proceeding) (per curiam) (“This Court has repeatedly
emphasized that discovery may not be used as a fishing expedition. Rather requests must be
reasonably tailored to included only matters relevant to the case”) (emphasis added) (internal
citations omitted)).
Because the request is global and so overbroad, Enterprise also objects that it is unduly
burdensome as it would require Enterprise to search each and every document within Enterprise
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for documents that might contain a reference to the COD Agreement, whether or not such
document is in fact “related” in any way to this dispute. Enterprise also objects that this request
is unduly burdensome because it would require the production of electronically stored
information but fails to identify particular custodians, purporting to require a search of the entire
company. Moreover, the burden imposed by this request far outweighs the benefit to Magellan
and is disproportionate to the needs of this case. In re State Farm Lloyds, 520 S.W.3d 595 (Tex.
2017).
This global request, due to its breadth, also encompasses parol evidence. Neither Enterprise nor
Magellan contend that there is any ambiguity in COD Agreement. As such, its terms are to be
construed by the Court as a matter of law. Accordingly, the requested information is not relevant
or reasonably calculated to lead to the discovery of admissible evidence.
Enterprise is withholding documents responsive to this request under the work product and/or
attorney client privileges. Enterprise objects to any request for the production of a privilege log
regarding documents prepared or created after November 13, 2015.
REQUEST FOR PRODUCTION NO. 15. All other Documents which contain any reference
(whether specific or general) to the Joint Tariff Agreement. For clarity, please see comments on
Request for Production No. 14, also applicable here.
RESPONSE:
Enterprise objects because the request is global, overbroad and not reasonably limited in time or
scope. Moreover, it is cumulative of each preceding request. It is not narrowly tailored to
discover a discrete category of documents and instead, a global “catch-all” attempt to cast its net
far and wide in furtherance of an impermissible fishing expedition. See In re Am. Optical Corp.,
988 S.W.2d 711, 713 (Tex. 1998) (orig. proceeding) (per curiam) (“This Court has repeatedly
emphasized that discovery may not be used as a fishing expedition. Rather requests must be
reasonably tailored to included only matters relevant to the case”) (emphasis added) (internal
citations omitted)).
Because the request is global and so overbroad, Enterprise also objects that it is unduly
burdensome as it would require Enterprise to search each and every document within Enterprise
for documents that might contain a reference to the Joint Tariff Agreement, whether or not such
document is in fact “related” in any way to this dispute. Enterprise also objects that this request
is unduly burdensome because it would require the production of electronically stored
information but fails to identify particular custodians, purporting to require a search of the entire
company. Moreover, the burden imposed by this request far outweighs the benefit to Magellan
and is disproportionate to the needs of this case. In re State Farm Lloyds, 520 S.W.3d 595 (Tex.
2017).
This global request, due to its breadth, also encompasses parol evidence. Neither Enterprise nor
Magellan contend that there is any ambiguity in Joint Tariff Agreement. As such, its terms are to
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be construed by the Court as a matter of law. Accordingly, the requested information is not
relevant or reasonably calculated to lead to the discovery of admissible evidence.
Enterprise is withholding documents responsive to this request under the work product and/or
attorney client privileges. Enterprise objects to any request for the production of a privilege log
regarding documents prepared or created after November 13, 2015.
REQUEST FOR PRODUCTION NO. 16. All other Documents which contain any reference
(whether specific or general) to the Connection Agreement. For clarity, please see comments on
Request for Production No. 14, also applicable here.
RESPONSE:
Enterprise objects because the request is global, overbroad and not reasonably limited in time or
scope. Moreover, it is cumulative of each preceding request. It is not narrowly tailored to
discover a discrete category of documents and instead, a global “catch-all” attempt to cast its net
far and wide in furtherance of an impermissible fishing expedition. See In re Am. Optical Corp.,
988 S.W.2d 711, 713 (Tex. 1998) (orig. proceeding) (per curiam) (“This Court has repeatedly
emphasized that discovery may not be used as a fishing expedition. Rather requests must be
reasonably tailored to included only matters relevant to the case”) (emphasis added) (internal
citations omitted)).
Because the request is global and so overbroad, Enterprise also objects that it is unduly
burdensome as it would require Enterprise to search each and every document within Enterprise
for documents that might contain a reference to the Connection Agreement, whether or not such
document is in fact “related” in any way to this dispute. Enterprise also objects that this request
is unduly burdensome because it would require the production of electronically stored
information but fails to identify particular custodians, purporting to require a search of the entire
company. Moreover, the burden imposed by this request far outweighs the benefit to Magellan
and is disproportionate to the needs of this case. In re State Farm Lloyds, 520 S.W.3d 595 (Tex.
2017).
This global request, due to its breadth, also encompasses parol evidence. Neither Enterprise nor
Magellan contend that there is any ambiguity in Connection Agreement. As such, its terms are
to be construed by the Court as a matter of law. Accordingly, the requested information is not
relevant or reasonably calculated to lead to the discovery of admissible evidence.
Enterprise is withholding documents responsive to this request under the work product and/or
attorney client privileges. Enterprise objects to any request for the production of a privilege log
regarding documents prepared or created after November 13, 2015.
REQUEST FOR PRODUCTION NO. 17. All Eagle Ford Crude Oil Purchase Agreements,
and all modifications, amendments or replacements of such agreements. This includes any and
all such agreements ever in existence during the Relevant Period, even if no Eagle Ford Product
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was actually purchased or sold pursuant thereto and regardless of whether such agreement was
subsequently amended, restated, terminated, rescinded, repealed, replaced or abandoned. So, for
example, this request includes the following agreements as well as all similar agreements: Crude
Oil Purchase Agreement between Enterprise and Petrohawk Energy Corporation, dated March
11, 2011; Crude Oil Purchase Agreement between Enterprise and GeoSouthern Energy
Corporation, dated March 11, 2011; Crude Oil Purchase Agreement between Enterprise and
Chesapeake Energy Corporation, dated April 28, 2011.
RESPONSE:
Enterprise objects to this request in its entirety because the information sought discusses,
concerns and/or contains Enterprise’s confidential and proprietary information and trade secrets.
Enterprise further objects that this request seeks information that is not relevant or reasonably
calculated to lead to the discovery of admissible evidence. The business terms of Enterprise’s
customer agreements have no bearing on the actual issues to be decided in this case. Contracts
are not necessary to determine damages – an issue that is premature in any event – because
volume information alone is sufficient. And to the extent Magellan seeks information relevant to
the issue of bad faith, information regarding the business rationale for contract structure – not the
contracts themselves – is more properly tailored to the needs of the case. Accordingly, Enterprise
further objects because this request is not reasonably tailored to the claims and defenses in the
case. Upon entry of an appropriate protective order, and subject to receipt of consent by the
contracting counterparty to waive any confidentiality provisions therein, Enterprise will produce
Eagle Ford Crude Oil Purchase Agreements executed by Enterprise Crude Oil, LLC during the
Relevant Period.
REQUEST FOR PRODUCTION NO. 18. All Eagle Ford Crude Oil Sale Agreements, and all
modifications, amendments or replacements of such agreements. This includes any and all such
agreements ever in existence during the Relevant Period, even if no Eagle Ford Product was
actually purchased or sold pursuant thereto and regardless of whether such agreement was
subsequently amended, restated, terminated, rescinded, repealed, replaced or abandoned.
RESPONSE:
Enterprise objects to the request in its entirety because the information sought discusses,
concerns and/or contains Enterprise’s confidential and proprietary information and trade secrets.
Enterprise further objects that this request seeks information that is not relevant or reasonably
calculated to lead to the discovery of admissible evidence. The business terms of Enterprise’s
customer agreements have no bearing on the actual issues to be decided in this case. Contracts
are not necessary to determine damages – an issue that is premature in any event – because
volume information alone is sufficient. And to the extent Magellan seeks information relevant to
the issue of bad faith, information regarding the business rationale for contract structure – not the
contracts themselves – is more properly tailored to the needs of the case. Accordingly, Enterprise
further objects because this request is not reasonably tailored to the claims and defenses in the
case. Upon entry of an appropriate protective order, and subject to receipt of consent by the
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contracting counterparty to waive any confidentiality provisions therein, Enterprise will produce
Eagle Ford Crude Oil Sale Agreements executed by Enterprise Crude Oil, LLC during the
Relevant Period.
REQUEST FOR PRODUCTION NO. 19. All Eagle Ford Crude Oil Buy/Sell Agreements,
and all modifications, amendments or replacements of such agreements. This request includes
any and all such agreements ever in existence during the Relevant Period, even if no Eagle Ford
Product was actually purchased or sold pursuant thereto and regardless of whether the agreement
was subsequently amended, restated, terminated, rescinded, repealed, replaced or abandoned. So,
for example, this request includes the following agreements as well as all similar agreements:
First Amended and Restated Crude Oil Purchase and Sale Agreement between Enterprise and
Chesapeake Energy Corporation, dated January 31, 2012; First Amended and Restated Crude Oil
Purchase and Sale Agreement between Enterprise and Petrohawk Energy Corporation, dated
June 29, 2012; First Amended and Restated Crude Oil Purchase and Sale Agreement between
Enterprise and GeoSouthern Energy Corporation, dated June 29, 2012.
RESPONSE:
Enterprise objects to the request in its entirety because the information sought discusses,
concerns and/or contains Enterprise’s confidential and proprietary information and trade secrets.
Enterprise further objects that this request seeks information that is not relevant or reasonably
calculated to lead to the discovery of admissible evidence. The business terms of Enterprise’s
customer agreements have no bearing on the actual issues to be decided in this case. Contracts
are not necessary to determine damages – an issue that is premature in any event – because
volume information alone is sufficient. And to the extent Magellan seeks information relevant to
the issue of bad faith, information regarding the business rationale for contract structure – not the
contracts themselves – is more properly tailored to the needs of the case. Accordingly, Enterprise
further objects because this request is not reasonably tailored to the claims and defenses in the
case. Upon entry of an appropriate protective order, and subject to receipt of consent by the
contracting counterparty to waive any confidentiality provisions therein, Enterprise will produce
Eagle Ford Crude Oil Buy/Sell Agreements executed by Enterprise Crude Oil, LLC during the
Relevant Period.
REQUEST FOR PRODUCTION NO. 20. All Documents which discuss or mention the
business or commercial motivation(s) that led Enterprise Crude Oil LLC to enter into any Eagle
Ford Buy/Sell Agreement.
RESPONSE:
Enterprise objects to the request because the information sought discusses, concerns and/or
contains Enterprise’s confidential and proprietary information and trade secrets.
Enterprise further objects that this request is overly broad to the extent it calls for production of
information generally about the benefits of buy/sell arrangements or general commercial
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circumstances or market conditions that may have had a tangential effect on Enterprise’s
business dealings. Upon entry of an appropriate protective order, Enterprise will produce
documents that were made in connection with the negotiation of agreements made by Enterprise
Crude Oil LLC to transport crude from an Origin Point on the Eagle Ford Pipeline to the extent
such documents discuss either the Distribution Agreement, Magellan, or the reasons for changing
any marketing agreement to a buy/sell agreement for crude transported from an Origin Point.
Enterprise also objects that this request is unduly burdensome because it would require the
production of electronically stored information but fails to identify particular custodians,
purporting to require a search of the entire company. Enterprise will confer with Magellan to
identify appropriate custodians and search terms for responding to this request.
Enterprise is withholding documents responsive to this request under the work product and/or
attorney client privileges. Enterprise objects to any request for the production of a privilege log
regarding documents prepared or created after November 13, 2015.
REQUEST FOR PRODUCTION NO. 21. All Documents reflecting internal Enterprise
Communications, or Communications between Enterprise and the other contracting party(ies),
regarding any Eagle Ford Crude Oil Purchase Agreement, any Eagle Ford Crude Oil Sale
Agreement, or any Eagle Ford Crude Oil Buy/Sell Agreement, which occurred on or before the
date of execution of such agreement. This includes, for example, emails or letters which shed
light on which party initiated the contract discussions, the reasons for either party’s interest in
such contract, and/or negotiation of the terms of the contract.
RESPONSE:
Enterprise objects to the request because the information sought discusses, concerns and/or
contains Enterprise’s confidential and proprietary information and trade secrets.
Enterprise objects that this request is overly broad and seeks information that is not relevant or
reasonably calculated to lead to the discovery of admissible evidence, to the extent it seeks the
details of Enterprise’s negotiations and negotiating strategy in general and is not limited to the
matters at issue in this lawsuit, namely the good faith business justification for using forms of
agreement that result in Enterprise neither owning or controlling crude oil from Origin Point to
Destination Point. Upon entry of an appropriate protective order, Enterprise will produce
documents that were made in connection with the negotiation of agreements made by Enterprise
Crude Oil, LLC to transport crude from an Origin Point on the Eagle Ford Pipeline to the extent
such documents discuss either the Distribution Agreement, Magellan, or the reasons for changing
any marketing agreement to a buy/sell agreement for crude transported from an Origin Point.
Enterprise also objects that this request is unduly burdensome because it would require the
production of electronically stored information but fails to identify particular custodians,
purporting to require a search of the entire company. Enterprise will confer with Magellan to
identify appropriate custodians and search terms for responding to this request.
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Enterprise is withholding documents responsive to this request under the work product and/or
attorney client privileges. Enterprise objects to any request for the production of a privilege log
regarding documents prepared or created after November 13, 2015.
REQUEST FOR PRODUCTION NO. 22. All Eagle Ford Crude Oil Transportation
Agreements, including but not limited to any such agreements between or among Enterprise
entities.
RESPONSE:
Enterprise objects to the request in its entirety because the information sought discusses,
concerns and/or contains Enterprise’s confidential and proprietary information and trade secrets.
Enterprise further objects that this request seeks information that is not relevant or reasonably
calculated to lead to the discovery of admissible evidence. The business terms of Enterprise’s
customer agreements have no bearing on the actual issues to be decided in this case. Contracts
are not necessary to determine damages – an issue that is premature in any event – because
volume information alone is sufficient. And to the extent Magellan seeks information relevant to
the issue of bad faith, information regarding the business rationale for contract structure – not the
contracts themselves – is more properly tailored to the needs of the case. Accordingly, Enterprise
further objects because this request is not reasonably tailored to the claims and defenses in the
case. Upon entry of an appropriate protective order, and subject to receipt of consent by the
contracting counterparty to waive any confidentiality provisions therein, Enterprise will produce
Eagle Ford Crude Oil Transportation Agreements executed by Enterprise Crude Oil, LLC during
the Relevant Period.
REQUEST FOR PRODUCTION NO. 23. All Documents reflecting internal Enterprise
Communications, or Communications between Enterprise and the other contracting party(ies),
regarding any Eagle Ford Crude Oil Transportation Agreement, which occurred on or before the
date of execution of such agreement. This includes, for example, emails or letters which shed
light on which party initiated the contract discussions, the reasons for either party’s interest in
such contract, and/or negotiation of the terms of the contract.
RESPONSE:
Enterprise objects to the request because the information sought discusses, concerns and/or
contains Enterprise’s confidential and proprietary information and trade secrets.
Enterprise further objects that this request seeks information that is not relevant or reasonably
calculated to lead to the discovery of admissible evidence. It seeks information regarding the
negotiation of all of Enterprise’s transportation agreements in the Eagle Ford Basin, and thus its
entire business in the Eagle Ford Basin. Enterprise does not dispute Magellan’s contention that
Enterprise has entered into buy/sell agreements to facilitate the transport crude during the term of
the COD Agreement or that it has transported crude using routes that do not utilize Magellan’s
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Facilities at the Connection Point. The relevant question then, is whether Enterprise’s utilization
of such buy/sell agreements and/or its use of routes that do not utilize Magellan’s Facilities at the
Connection Point somehow constitutes a breach of COD agreement. Upon entry of an
appropriate protective order, Enterprise will produce documents that were made in connection
with the negotiation of agreements executed by Enterprise Crude Oil, LLC to transport crude
from an Origin Point on the Eagle Ford Pipeline to the extent such documents discuss either the
Distribution Agreement, Magellan, or the reasons for changing any marketing agreement to a
buy/sell agreement for crude transported from an Origin Point.
Enterprise also objects that this request is unduly burdensome because it would require the
production of electronically stored information but fails to identify particular custodians,
purporting to require a search of the entire company. Enterprise will confer with Magellan to
identify appropriate custodians and search terms for responding to this request.
Enterprise is withholding documents responsive to this request under the work product and/or
attorney client privileges. Enterprise objects to any request for the production of a privilege log
regarding documents prepared or created after November 13, 2015.
REQUEST FOR PRODUCTION NO. 24. All existing Enterprise reports or analyses which,
for all or any part of the Relevant Period, identify, determine, quantify and/or summarize Eagle
Ford Product volumes, ownership, transportation and distribution routing, and/or final
destination or delivery points. For clarity, this request seeks production of reports or analyses
already in existence; it does not purport to require Enterprise to create any new reports or
analyses for purposes of responding to the request.
RESPONSE:
Enterprise objects to the request because the information sought discusses, concerns and/or
contains Enterprise’s confidential and proprietary information and trade secrets, and is subject to
contractual and regulatory restrictions on disclosure.
Enterprise further objects that this request is overbroad and seeks information that is not relevant
or reasonably calculated to lead to the discovery of admissible evidence, in that even under
Magellan’s interpretation of the COD Agreement, only volumes that arrive at the contractually
defined Destination Points are subject to the Agreement, but the request seeks information about
all routing and destinations for Eagle Ford Product. Upon entry of an appropriate protective
order, Enterprise will produce summary volume information for shipments of Eagle Ford
Product, but only to the extent (i) Enterprise is the shipper of record, (ii) the shipments originated
at an Origin Point, and (iii) the shipment was delivered to the ECHO Terminal, the Connection
Point, or a Delivery Point. In addition, subject to (i) entry of an appropriate protective order, (ii)
receipt of consent from third parties that purchased Eagle Ford Product from Enterprise, and (iii)
only to the extent permitted by applicable law or regulations, Enterprise will also provide
summary volume information for shipments of Eagle Ford Product that third parties purchased
from Enterprise, but only to the extent such third-party shipments were delivered to the
Connection Point.
DEFENDANT’S AMENDED OBJECTIONS AND RESPONSES TO PLAINTIFF’S
FIRST REQUEST FOR PRODUCTION PAGE 20
PLAINTIFF'S SUPPLEMENT TO RESPONSE TO DEF.'S MOT. FOR PROTECTIVE ORDER - Page 83
SR480
REQUEST FOR PRODUCTION NO. 25. All Documents which Enterprise utilizes or could
utilize, with respect to all or any part of the Relevant Period, to identify, determine, quantify
and/or summarize Eagle Ford Product volumes, ownership, transportation and distribution
routing, and/or final destination or delivery points. For clarity, this request seeks Documents
sufficient to give Magellan the same assessment and reporting capability Enterprise has with
respect to Eagle Ford Product.
RESPONSE:
Enterprise objects to the request because the information sought discusses, concerns and/or
contains Enterprise’s confidential and proprietary information and trade secrets, and is subject to
contractual and regulatory restrictions on disclosure.
Enterprise further objects that this request is overbroad and seeks information that is not relevant
or reasonably calculated to lead to the discovery of admissible evidence, in that even under
Magellan’s interpretation of the COD Agreement, only volumes that arrive at the contractually
defined Destination Points are subject to the Agreement, but the request seeks information about
all routing and destinations for Eagle Ford Product. Upon entry of an appropriate protective
order, Enterprise will produce summary volume information for shipments of Eagle Ford
Product, but only to the extent (i) Enterprise is the shipper of record, (ii) the shipments originated
at an Origin Point, and (iii) the shipment was delivered to the ECHO Terminal, the Connection
Point, or a Delivery Point. In addition, subject to (i) entry of an appropriate protective order, (ii)
receipt of consent from third parties that purchased Eagle Ford Product from Enterprise, and (iii)
only to the extent permitted by applicable law or regulations, Enterprise will also provide
summary volume information for shipments of Eagle Ford Product that third parties purchased
from Enterprise, but only to the extent such third-party shipments were delivered to the
Connection Point.
REQUEST FOR PRODUCTION NO. 26. All Documents which Enterprise utilizes or could
utilize, with respect to all or any part of the Relevant Period, to trace the transportation and
distribution of Eagle Ford Product from any Origin Point to its final destination or delivery point,
including by date, volume, shipper, transportation or distribution routing, and final destination or
delivery point. For clarity, this request seeks Documents sufficient to give Magellan the same
tracing capability Enterprise has with respect to Eagle Ford Product.
RESPONSE:
Enterprise objects to the request because the information sought discusses, concerns and/or
contains Enterprise’s confidential and proprietary information and trade secrets, and is subject to
contractual and regulatory restrictions on disclosure.
Enterprise further objects that this request is overbroad and seeks information that is not relevant
or reasonably calculated to lead to the discovery of admissible evidence, in that even under
Magellan’s interpretation of the COD Agreement, only volumes that arrive at the contractually
DEFENDANT’S AMENDED OBJECTIONS AND RESPONSES TO PLAINTIFF’S
FIRST REQUEST FOR PRODUCTION PAGE 21
PLAINTIFF'S SUPPLEMENT TO RESPONSE TO DEF.'S MOT. FOR PROTECTIVE ORDER - Page 84
SR481
defined Destination Points are subject to the Agreement, but the request seeks information about
all routing and destinations for Eagle Ford Product. Upon entry of an appropriate protective
order, Enterprise will produce summary volume information for shipments of Eagle Ford
Product, but only to the extent (i) Enterprise is the shipper of record, (ii) the shipments originated
at an Origin Point, and (iii) the shipment was delivered to the ECHO Terminal, the Connection
Point, or a Delivery Point. In addition, subject to (i) entry of an appropriate protective order, (ii)
receipt of consent from third parties that purchased Eagle Ford Product from Enterprise, and (iii)
only to the extent permitted by applicable law or regulations, Enterprise will also provide
summary volume information for shipments of Eagle Ford Product that third parties purchased
from Enterprise, but only to the extent such third-party shipments were delivered to the
Connection Point.
REQUEST FOR PRODUCTION NO. 27. All Documents showing any Enterprise tariffs, fees,
charges or incentives for transportation and distribution of crude oil from ECHO Terminal to any
Destination Point or any Future Destination Point.
RESPONSE:
Enterprise objects to the request because the information sought discusses, concerns and/or
contains Enterprise’s confidential and proprietary information and trade secrets, and is subject to
contractual and regulatory restrictions on disclosure.
Enterprise objects that this request is overbroad and seeks information that is not relevant or
reasonably calculated to lead to the discovery of admissible evidence. This request essentially
seeks discover the entirety of Enterprise’s business concerning crude routed via ECHO Terminal
to any Destination Point or Future Destination Point. Magellan’s only specific allegation with
respect to tariffs is that Enterprise increased the tariff on the bi-directional line connecting ECHO
Terminal with Genoa Junction. Enterprise will produce all tariffs applicable to the bi-directional
pipeline between ECHO terminal and Genoa Junction in effect during the Relevant Period as
defined in the requests. Enterprise notes that tariffs are publicly available from the Texas
Railroad Commission.
REQUEST FOR PRODUCTION NO. 28. All existing Enterprise reports or analyses which,
for all or any part of the Relevant Period, identify, determine, quantify and/or summarize actual
transportation and distribution of crude oil from ECHO Terminal to any Destination Point or any
Future Destination Point. For clarity, this request seeks production of reports or analyses already
in existence; it does not purport to require Enterprise to create any new reports or analyses for
purposes of responding to the request.
RESPONSE:
Enterprise objects to the request because the information sought discusses, concerns and/or
contains Enterprise’s confidential and proprietary information and trade secrets, and is subject to
contractual and regulatory restrictions on disclosure.
DEFENDANT’S AMENDED OBJECTIONS AND RESPONSES TO PLAINTIFF’S
FIRST REQUEST FOR PRODUCTION PAGE 22
PLAINTIFF'S SUPPLEMENT TO RESPONSE TO DEF.'S MOT. FOR PROTECTIVE ORDER - Page 85
SR482
Enterprise further objects that this request is overbroad, unduly burdensome and seeks
information that is not relevant or reasonably calculated to lead to the discovery of admissible
evidence, in that no Future Destination Point is operational and therefore none is subject to the
COD Agreement. Enterprise further objects to production of “all” reports, insofar as reports may
be distributed internally in draft form or exist in multiple copies across personnel. Enterprise
therefore interprets the request to require production of a single copy of final reports only. Upon
entry of an appropriate protective order, Enterprise will produce summary volume information
for shipments of Eagle Ford Product, but only to the extent (i) Enterprise is the shipper of record,
(ii) the shipments originated at an Origin Point, and (iii) the shipment was delivered to the
ECHO Terminal, the Connection Point, or a Delivery Point. In addition, subject to (i) entry of an
appropriate protective order, (ii) receipt of consent from third parties that purchased Eagle Ford
Product from Enterprise, and (iii) only to the extent permitted by applicable law or regulations,
Enterprise will also provide summary volume information for shipments of Eagle Ford Product
that third parties purchased from Enterprise, but only to the extent such third-party shipments
were delivered to the Connection Point.
REQUEST FOR PRODUCTION NO. 29. All Documents which Enterprise utilizes or could
utilize, with respect to all or any part of the Relevant Period, to trace the transportation and
distribution of crude oil from ECHO Terminal to any Destination Point or any Future Destination
Point, including by date, volume, shipper, transportation or distribution routing, and/or final
destination or delivery point. For clarity, this request seeks Documents sufficient to give
Magellan the same tracing capability Enterprise has with respect to deliveries of crude oil from
ECHO Terminal to any Destination Point or Future Destination Point.
RESPONSE:
Enterprise objects to the request because the information sought discusses, concerns and/or
contains Enterprise’s confidential and proprietary information and trade secrets.
Enterprise further objects that this request is overbroad and seeks information that is not relevant
or reasonably calculated to lead to the discovery of admissible evidence, in that no Future
Destination Point is operational and therefore none is subject to the COD Agreement. Enterprise
further objects to production of “all” documents that Enterprise uses or “could use” to trace
product, because use of such terms fails to identify the information sought with particularity, and
could include voluminous information of little probative value, such as voluminous meter
readings providing duplicative information. Enterprise will produce summary volume
information for shipments of Eagle Ford Product, but only to the extent (i) Enterprise is the
shipper of record, (ii) the shipments originated at an Origin Point, and (iii) the shipment was
delivered to the ECHO Terminal, the Connection Point, or a Delivery Point. In addition, subject
to (i) entry of an appropriate protective order, (ii) receipt of consent from third parties that
purchased Eagle Ford Product from Enterprise, and (iii) only to the extent permitted by
applicable law or regulations, Enterprise will also provide summary volume information for
shipments of Eagle Ford Product that third parties purchased from Enterprise, but only to the
extent such third-party shipments were delivered to the Connection Point.
DEFENDANT’S AMENDED OBJECTIONS AND RESPONSES TO PLAINTIFF’S
FIRST REQUEST FOR PRODUCTION PAGE 23
PLAINTIFF'S SUPPLEMENT TO RESPONSE TO DEF.'S MOT. FOR PROTECTIVE ORDER - Page 86
SR483
REQUEST FOR PRODUCTION NO. 30. All Documents which constitute, or reflect,
Communications between any Non-Lawyer Employee(s) of Magellan and any Non-Lawyer
Employee(s) of Enterprise, regarding any Magellan Audit.
RESPONSE:
Upon entry of an appropriate protective order, Enterprise will produce responsive documents.
For purposes of producing emails responsive to this request, Enterprise will conduct a search of
emails of the following custodians: Jocelyn Truitt and Charles Stovall.
REQUEST FOR PRODUCTION NO. 31. All Documents which constitute, or reflect,
Communications between Non-Lawyer Employees of Enterprise, regarding any Magellan Audit.
RESPONSE:
Enterprise objects to the request on the ground that it calls for production of documents protected
by the work product privilege. Enterprise is withholding documents responsive to this request.
Enterprise objects to any request for the production of a privilege log regarding documents
prepared or created after November 13, 2015.
Upon entry of an appropriate protective order, Enterprise will produce non-privileged
documents. For purposes of producing emails responsive to this request, Enterprise will conduct
a search of emails of the following custodians: Jocelyn Truitt and Charles Stovall.
REQUEST FOR PRODUCTION NO. 32. All Documents Enterprise provided to Magellan in
connection with any Magellan Audit.
RESPONSE:
Upon entry of an appropriate protective order, Enterprise will produce responsive documents.
For purposes of producing emails responsive to this request, Enterprise will conduct a search of
emails of the following custodians: Jocelyn Truitt and Charles Stovall.
REQUEST FOR PRODUCTION NO. 33. All Documents You do or may use or rely on to
support the following affirmative defense alleged in ¶ 3 of Your Original Answer: “3. ECO is
entitled to a credit or offset for any monies Plaintiff has received for the transport of crude that
Plaintiff contends is subject to the Distribution Agreement, to the extent tariffs were paid by any
third-party purchaser of such crude for transportation through the Magellan distribution system.”
This includes all Enterprise Documents purporting to show that Magellan received any such
monies.
RESPONSE:
Enterprise will produce responsive documents.
DEFENDANT’S AMENDED OBJECTIONS AND RESPONSES TO PLAINTIFF’S
FIRST REQUEST FOR PRODUCTION PAGE 24
PLAINTIFF'S SUPPLEMENT TO RESPONSE TO DEF.'S MOT. FOR PROTECTIVE ORDER - Page 87
SR484
Date: December 1, 2017 Respectfully submitted,
/s/ Linda R. Stahl
E. Leon Carter
Texas Bar No. 03914300
lcarter@carterscholer.com
J. Robert Arnett II
Texas Bar No. 01332900
barnett@carterscholer.com
Joshua J. Bennett
Texas Bar No. 24059444
jbennett@carterscholer.com
Courtney Barksdale Perez
Texas Bar No. 24061135
cperez@carterscholer.com
CARTER SCHOLER PLLC
8150 N. Central Expressway
Suite 500
Dallas, Texas 75206
Telephone: 214-550-8188
Facsimile: 214-550-8185
ATTORNEYS FOR DEFENDANT
ENTERPRISE CRUDE OIL LLC
CERTIFICATE OF SERVICE
This is to certify that on December 1, 2017, a true, correct and complete copy of the
foregoing document has been served on all counsel of record via a court-approved electronic
filing system, in accordance with Rule 21a of the Texas Rules of Civil Procedure.
/s/ Linda R. Stahl
Linda R. Stahl
DEFENDANT’S AMENDED OBJECTIONS AND RESPONSES TO PLAINTIFF’S
FIRST REQUEST FOR PRODUCTION PAGE 25
PLAINTIFF'S SUPPLEMENT TO RESPONSE TO DEF.'S MOT. FOR PROTECTIVE ORDER - Page 88
SR485
Exhibit 5
Exhibit 5
(Omitted Pending Determination of Filing Under Seal)
{1773415;}
PLAINTIFF'S SUPPLEMENT TO RESPONSE TO DEF.'S MOT. FOR PROTECTIVE ORDER - Page 89
SR486
Exhibit 6
NO. 05-17- -CV
___________________________________________
IN THE COURT OF APPEALS
FOR THE FIFTH JUDICIAL DISTRICT
___________________________________________
In Re Enterprise Crude Oil, LLC
___________________________________________
Original Proceeding from Cause No. DC-17-7264,
101st Judicial District Court, Dallas County
Hon. Staci Williams, Presiding
___________________________________________
PETITION FOR WRIT OF MANDAMUS
AND APPENDIX
___________________________________________
E. Leon Carter
Texas Bar No. 03914300
lcarter@carterscholer.com
J. Robert Arnett II
Texas Bar No. 01332900
barnett@carterscholer.com
Linda R. Stahl
Texas Bar No. 00798525
lstahl@carterscholer.com
Joshua Bennett
Texas Bar No. 24059444
jbennett@carterscholer.com
CARTER SCHOLER PLLC
8150 N. Central Expy, Suite 500
Dallas, Texas 75206
Telephone: 214-550-8188
Facsimile: 214-550-8185
EMERGENCY MOTION TO STAY FILED SEPARATELY
ORAL ARGUMENT REQUESTED
PLAINTIFF'S SUPPLEMENT TO RESPONSE TO DEF.'S MOT. FOR PROTECTIVE ORDER - Page 90
SR487
III. The Trial Court Abused Its Discretion as a Matter of Law
When It Ordered Enterprise to Produce Its Trade Secrets,
and Refused to Quash Subpoenas Requiring Enterprise’s
Customers to Do So, Without a Showing of Necessity and
Without Adequate Protective Measures.
Beyond failing to address the overbreadth of Magellan’s requests,
the trial court further erred when it failed to address the trade-secret
issues adequately. The trial court compelled Enterprise to respond to
requests that would encompass volumes of proven trade secrets, though
Magellan made no showing that such information is necessary to the
case. In competitive markets like the crude oil market at issue, an
entity's commercial information—its strategies, techniques, goals and
plans—can be its “life blood.” Duracell Inc. v. SW Consultants, Inc., 126
F.R.D. 576, 578 (N.D. Ga. 1989). However, “[t]he discovery rules are not
intended to forfeit a party’s ability to compete effectively in the market
by opening up tangentially relevant financial and marketing
information to competitors.” Id. That is especially true in Texas, where
courts are supposed to apply Texas Rule of Evidence 507.
Under Rule 507, Enterprise is entitled to withhold—and to
prevent its customers from disclosing—its trade secrets to Magellan, an
avowed competitor. Tex. R. Evid. 507(a). Once Enterprise establishes
that the information Magellan is demanding is trade secret, such
information cannot be produced until Magellan establishes that such
information is necessary for a fair trial. In re Cont’l Gen. Tire, Inc.,
979 S.W.2d 609, 615 (Tex.1998) (orig. proceeding). In fact, trial courts
25
PLAINTIFF'S SUPPLEMENT TO RESPONSE TO DEF.'S MOT. FOR PROTECTIVE ORDER - Page 91
SR488
FILED
DALLAS COUNTY
1/2/2018 5:19 PM
FELICIA PITRE
DISTRICT CLERK
CAUSE NO. DC-17-07264
MAGELLAN CRUDE OIL PIPELINE )
COMPANY, L.P., a Delaware limited partnership, )
)
Plaintiff, ) IN THE DISTRICT COURT OF
)
vs. ) DALLAS COUNTY, TEXAS
)
ENTERPRISE CRUDE OIL LLC, a Texas limited ) 101st JUDICIAL DISTRICT
liability company, )
)
Defendant. )
PLAINTIFF’S SECOND SUPPLEMENT TO RESPONSE TO
DEFENDANT’S MOTION FOR ENTRY OF A PROTECTIVE ORDER, FILING
EXHIBIT 5 IN REDACTED FORM
Magellan files this second supplement to its response to Enterprise’s Motion for Entry of
a Protective Order, for the sole purpose of filing, in redacted form, Exhibit 5 which was described
in but not attached to Magellan’s first supplement, filed on December 27, 2017. Exhibit 5 to
Magellan’s first supplement is attached hereto, in redacted form, and marked as Exhibit A hereto.
During the December 28, 2017 hearing, Magellan provided Exhibit 5 to the Court and to
Enterprise, in unredacted form. At that time, Magellan’s counsel inquired whether and to what
extent Enterprise deems the content of Exhibit 5 confidential information, but the Enterprise
attorney presenting Enterprise’s Motion for Entry of a Protective Order, Mr. Bennett, stated that
he was unable to answer and referred Magellan to another Enterprise attorney, Ms. Stahl.
Immediately following the hearing, Magellan provided Exhibit 5 to Ms. Stahl, noting that one of
the emails included in Exhibit 5 was recently produced by Enterprise without any legend or other
indication that Enterprise deems it confidential, and that the content of the remaining inter-party
emails included in Exhibit 5 is substantially similar to the email Enterprise produced without any
indication of confidentiality. In her written response, Ms. Stahl stated that Enterprise’s production
of the above-referenced email without any indication of confidentiality was inadvertent; and that
PLAINTIFF’S SECOND SUPP. TO RESPONSE TO DEF.’S MOT. FOR PROTECTIVE ORDER, FILING EX. 5 IN REDACTED FORM – Page 1
{1774000;}
SR489
Enterprise contends that other inter-party emails exchanged in the course of Magellan’s pre-suit
audits constitute or contain confidential information, as defined in the parties’ audit-related
Confidentiality Agreement, to the extent they consist of “non-public materials containing customer
lists, operational information, and business and financial information.” Exhibit B, attached. Then,
in a subsequent email to Magellan’s counsel, Ms. Stahl provided an Enterprise-redacted version
of Exhibit 5 in a form said to be “acceptable for filing.” Exhibit C, attached.
Magellan does not agree that the information contained in the inter-party emails included
in Exhibit 5 constitutes “confidential information” as defined in the audit-related Confidentiality
Agreement. Nor does Magellan agree with Enterprise’s assertions that the audit-related
Confidentiality Agreement precludes Magellan from using or disclosing in this action, for purposes
of pursuing the claims Magellan discovered through its pre-suit audits and alleges in its Original
Petition, any information falling within the Confidentiality Agreement’s definition of “confidential
information.” However, to avoid other needless disputes with and threats from Enterprise, and
reserving all rights, Magellan has redacted Exhibit 5 to eliminate any and all arguably “confidential
information” including all references to a specific customer, to specific terms of any known
agreement between Enterprise and a customer, to specific product volumes, or to specific contents
of any product transaction data found in spreadsheets Enterprise provided in a pre-suit audit.
Magellan’s redacted version of Exhibit 5 eliminates much of, but not all of, the same
information Enterprise suggested be redacted as “confidential.” Magellan has rejected some of
Enterprise’s redactions because they are unprincipled, inconsistent, and overly broad, including
information that cannot conceivably be confidential, such as information of a kind that Enterprise
itself has publicly disclosed and used in this action.
Dated January 2, 2018.
PLAINTIFF’S SECOND SUPP. TO RESPONSE TO DEF.’S MOT. FOR PROTECTIVE ORDER, FILING EX. 5 IN REDACTED FORM – Page 2
{1774000;}
SR490
Respectfully submitted,
GABLEGOTWALS
By: /s/ David L. Bryant
David L. Bryant
State Bar No. 24084344
dbryant@gablelaw.com
113 Pleasant Valley Drive, Suite 204
Boerne, Texas 78006
Telephone: (830) 336-4810
Facsimile: (918) 595-4990
Lisa T. Silvestri
State Bar No. 00797967
lsilvestri@gablelaw.com
100 W. Fifth St., Suite 1100
Tulsa, Oklahoma 74103
Telephone: (918) 595-4800
Facsimile: (918) 595-4990
PLAINTIFF’S SECOND SUPP. TO RESPONSE TO DEF.’S MOT. FOR PROTECTIVE ORDER, FILING EX. 5 IN REDACTED FORM – Page 3
{1774000;}
SR491
And
FIGARI + DAVENPORT, LLP
Bill E. Davidoff
State Bar No. 00790565
bill.davidoff@figdav.com
Amanda Sotak
State Bar No. 24037530
amanda.sotak@figdav.com
901 Main Street, Suite 3400
Dallas, Texas 75202
Telephone: (214) 939-2000
Facsimile: (214) 939-2090
ATTORNEYS FOR PLAINTIFF,
MAGELLAN CRUDE OIL
PIPELINE COMPANY, L.P.
CERTIFICATE OF SERVICE
I certify that on January 2, 2018, I forwarded a true and correct copy of the foregoing
document to the following counsel via EFile:
E. Leon Carter
lcarter@carterscholer.com
J. Robert Arnett II
barnett@carterscholer.com
Joshua J. Bennett
jbennett@carterscholer.com
Courtney Barksdale Perez
cperez@carterscholer.com
CARTER SCHOLER PLLC
8150 N. Central Expressway
Suite 500
Dallas, Texas 75206
Attorneys for Defendant
Enterprise Crude Oil, LLC
/s/ David L. Bryant
David L. Bryant
PLAINTIFF’S SECOND SUPP. TO RESPONSE TO DEF.’S MOT. FOR PROTECTIVE ORDER, FILING EX. 5 IN REDACTED FORM – Page 4
{1774000;}
SR492
Exhibit A
Exhibit 5 to Plaintiff’s Supplement to Response to
Defendant’s Motion for Entry of a Protective Order
Governing the Production of Confidential Information
(Redacted Form)
Plaintiff Second Supp. to Response to Def. Mot. For Protective Order, Filing Ex. 5 in Redacted Form - 5
SR493
Exhibit 5
Plaintiff Second Supp. to Response to Def. Mot. For Protective Order, Filing Ex. 5 in Redacted Form - 6
SR494
Plaintiff Second Supp. to Response to Def. Mot. For Protective Order, Filing Ex. 5 in Redacted Form - 7
SR495
Plaintiff Second Supp. to Response to Def. Mot. For Protective Order, Filing Ex. 5 in Redacted Form - 8
SR496
Plaintiff Second Supp. to Response to Def. Mot. For Protective Order, Filing Ex. 5 in Redacted Form - 9
SR497
Plaintiff Second Supp. to Response to Def. Mot. For Protective Order, Filing Ex. 5 in Redacted Form - 10
SR498
Plaintiff Second Supp. to Response to Def. Mot. For Protective Order, Filing Ex. 5 in Redacted Form - 11
SR499
Plaintiff Second Supp. to Response to Def. Mot. For Protective Order, Filing Ex. 5 in Redacted Form - 12
SR500
Plaintiff Second Supp. to Response to Def. Mot. For Protective Order, Filing Ex. 5 in Redacted Form - 13
SR501
Plaintiff Second Supp. to Response to Def. Mot. For Protective Order, Filing Ex. 5 in Redacted Form - 14
SR502
Plaintiff Second Supp. to Response to Def. Mot. For Protective Order, Filing Ex. 5 in Redacted Form - 15
SR503
Plaintiff Second Supp. to Response to Def. Mot. For Protective Order, Filing Ex. 5 in Redacted Form - 16
SR504
Plaintiff Second Supp. to Response to Def. Mot. For Protective Order, Filing Ex. 5 in Redacted Form - 17
SR505
Plaintiff Second Supp. to Response to Def. Mot. For Protective Order, Filing Ex. 5 in Redacted Form - 18
SR506
Plaintiff Second Supp. to Response to Def. Mot. For Protective Order, Filing Ex. 5 in Redacted Form - 19
SR507
Plaintiff Second Supp. to Response to Def. Mot. For Protective Order, Filing Ex. 5 in Redacted Form - 20
SR508
Plaintiff Second Supp. to Response to Def. Mot. For Protective Order, Filing Ex. 5 in Redacted Form - 21
SR509
Plaintiff Second Supp. to Response to Def. Mot. For Protective Order, Filing Ex. 5 in Redacted Form - 22
SR510
Plaintiff Second Supp. to Response to Def. Mot. For Protective Order, Filing Ex. 5 in Redacted Form - 23
SR511
Exhibit B
From: Linda Stahl
Sent: Thursday, December 28, 2017 4:22 PM
To: David L. Bryant
Cc: Leon Carter; Joshua Bennett; Lisa T. Silvestri; Bob Arnett
Subject: Re: Magellan v. Enterprise - Exhibit 5 to Plaintiff's Supplement to Response to
Defendant’s Motion for Entry of Protective Order
David,
Thanks for sending the Exhibit 5 materials to me for review. The information contained within these documents is
confidential information under the Confidentiality Agreement governing the audit, and will be designated as
Confidential for purposes of this lawsuit as well. Most have already been withheld on this basis. Each of the documents
in proposed Exhibit 5 were provided to Magellan in connection with the audit and are non-public materials containing
customer lists, operational information, and business and financial information subject to the protections of the
Agreement. As such, they must be held in strict confidence and not disclosed to anyone other than representatives of
Magellan with a legitimate need to review them. Filing the documents of public record violates the terms of the
Confidentiality Agreement, which Enterprise will not hesitate to enforce by way of injunction or other appropriate relief.
Moreover, under paragraph 5 of the Confidentiality Agreement, Magellan and its Representatives are required to
“reasonably cooperate with [Enterprise] to assure that, to the extent possible, confidential treatment will be accorded
to any such Confidential Information or Notes disclosed.” Giving us less than 24 hours’ notice of Magellan’s intent to
make Confidential Information public—right before a holiday weekend and without affording us any opportunity to seek
appropriate relief under Texas Rule of Civil Procedure 76a—is not “reasonable cooperation” and would risk only further
breach of the Confidentiality Agreement.
As indicated at the hearing, Enterprise does not object to the Court reviewing the materials in camera in connection with
the pending Motion for Entry of Protective Order. By providing the material only for review, the document is not a
“court record” for purposes of Rule 76a. See General Tire, Inc. v. Kepple, 970 S.W.2d 520, 525 (Tex. 1998).
With respect to ECO000650-652, the reviewer inadvertently failed to designate this correspondence – which contains
customer information and volume data – as Confidential. The request from Ms. Flock that includes images of portions of
the spreadsheet provided in the audit (and which has consistently been withheld from production on confidentiality
grounds) appears in several emails, which Enterprise will designate as Confidential upon entry of a Protective Order.
These are ECO 000561-563, ECO 000564-566, ECO 000567-570, ECO 000574-576, ECO 000579-581, ECO 000583-585,
000586-589, ECO 590-593, ECO 000594-597, ECO 000598-601, ECO 000610-613, ECO 614-618, ECO 000633-637, ECO
000638-642, ECO 000650-652, ECO 000653-656, and ECO 000657-659.
Pending entry of that order, the materials continue to be protected by the parties’ Confidentiality Agreement, and
Enterprise does not consent to filing of these materials publicly.
Regards,
Linda R. Stahl | Partner
lstahl@carterscholer.com
D: 214.736.3949
F: 214.550.8185
www.carterscholer.com
Plaintiff Second Supp. to Response to Def. Mot. For Protective Order, Filing Ex. 5 in Redacted Form - 24
SR512
8150 N. Central Expressway, Suite 500, Dallas, Texas 75206
This e-mail (including any attachments) may contain information that is private, confidential, or protected by attorney-client or other privilege. If you have received
this e-mail in error, please delete it from your system without copying it and notify sender by reply e-mail, so that our records can be corrected.
From: "David L. Bryant"
Date: Thursday, December 28, 2017 at 1:15 PM
To: Linda Stahl
Cc: Leon Carter , Joshua Bennett , "Lisa T.
Silvestri"
Subject: Magellan v. Enterprise - Exhibit 5 to Plaintiff's Supplement to Response to Defendant’s Motion for
Entry of Protective Order
Linda,
When we filed Magellan’s Supplement to Response to Defendant’s Motion for Entry of Protective Order, late yesterday,
we omitted Exhibit 5 pending a determination whether Enterprise believes there’s a need for that Exhibit to be filed
under seal. Though I was not present for the hearing this morning, I understand that Mr. Bennett was unable to answer
that but indicated you can. So I’m attaching Exhibit 5 and requesting your prompt advice whether Enterprise thinks it
needs to be filed under seal. The Exhibit includes 4 email chains, each ending in an email from Ms. Truitt to Ms. Flock. As
indicated below, the chain ending in Ms. Truitt’s 3/29/16 email was produced by Enterprise but not marked confidential.
If you’ve produced the others, please advise, because we couldn’t find them in your production. But their substance is
similar to the one we found in your production.
10/19/15 Truitt to Flock Not produced by ECO
03/29/16 Truitt to Flock ECO650 NOT MARKED CONFIDENTIAL
06/24/16 Truitt to Flock Not produced by ECO
06/19/17 Truitt to Flock Not produced by ECO
We’d like to file Exhibit 5 no later than tomorrow, one way or another, so please let us know today if possible. Thanks.
David
David L. Bryant | GableGotwals
San Antonio Area Office
113 Pleasant Valley Dr., Suite 204, Boerne, TX 78006
Direct 830.336.4810 | Fax 918.595.4990 | dbryant@gablelaw.com
Tulsa Office Direct 918-595-4825
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Plaintiff Second Supp. to Response to Def. Mot. For Protective Order, Filing Ex. 5 in Redacted Form - 25
SR513
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Plaintiff Second Supp. to Response to Def. Mot. For Protective Order, Filing Ex. 5 in Redacted Form - 26
SR514
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Plaintiff Second Supp. to Response to Def. Mot. For Protective Order, Filing Ex. 5 in Redacted Form - 27
SR515
Plaintiff Second Supp. to Response to Def. Mot. For Protective Order, Filing Ex. 5 in Redacted Form - 28
SR516
Plaintiff Second Supp. to Response to Def. Mot. For Protective Order, Filing Ex. 5 in Redacted Form - 29
SR517
Plaintiff Second Supp. to Response to Def. Mot. For Protective Order, Filing Ex. 5 in Redacted Form - 30
SR518
Plaintiff Second Supp. to Response to Def. Mot. For Protective Order, Filing Ex. 5 in Redacted Form - 31
SR519
Plaintiff Second Supp. to Response to Def. Mot. For Protective Order, Filing Ex. 5 in Redacted Form - 32
SR520
REDACTED: CONFIDENTIAL
REDACTED: CONFIDENTIAL
Plaintiff Second Supp. to Response to Def. Mot. For Protective Order, Filing Ex. 5 in Redacted Form - 33
SR521
REDACTED: CONFIDENTIAL
REDACTED: CONFIDENTIAL
REDACTED: CONFIDENTIAL
Plaintiff Second Supp. to Response to Def. Mot. For Protective Order, Filing Ex. 5 in Redacted Form - 34
SR522
REDACTED: CONFIDENTIAL
Plaintiff Second Supp. to Response to Def. Mot. For Protective Order, Filing Ex. 5 in Redacted Form - 35
SR523
Plaintiff Second Supp. to Response to Def. Mot. For Protective Order, Filing Ex. 5 in Redacted Form - 36
SR524
Plaintiff Second Supp. to Response to Def. Mot. For Protective Order, Filing Ex. 5 in Redacted Form - 37
SR525
Plaintiff Second Supp. to Response to Def. Mot. For Protective Order, Filing Ex. 5 in Redacted Form - 38
SR526
Plaintiff Second Supp. to Response to Def. Mot. For Protective Order, Filing Ex. 5 in Redacted Form - 39
SR527
Plaintiff Second Supp. to Response to Def. Mot. For Protective Order, Filing Ex. 5 in Redacted Form - 40
SR528
Plaintiff Second Supp. to Response to Def. Mot. For Protective Order, Filing Ex. 5 in Redacted Form - 41
SR529
Plaintiff Second Supp. to Response to Def. Mot. For Protective Order, Filing Ex. 5 in Redacted Form - 42
SR530
Plaintiff Second Supp. to Response to Def. Mot. For Protective Order, Filing Ex. 5 in Redacted Form - 43
SR531
Plaintiff Second Supp. to Response to Def. Mot. For Protective Order, Filing Ex. 5 in Redacted Form - 44
SR532
Plaintiff Second Supp. to Response to Def. Mot. For Protective Order, Filing Ex. 5 in Redacted Form - 45
SR533
NO. DC-17-07264
MAGELLAN CRUDE OIL PIPELINE § IN THE DISTRICT COURT
COMPANY, L.P., §
P/az‘tztg'fii
g
vs. g 101 st JUDICIAL DISTRICT
ENTERPRISE CRUDE OIL LLC, g
Defendant. g DALLAS COUNTY, TEXAS
CONFIDENTIALITY AND PROTECTIVE ORDER
4V0
Before the courtWoflo of the parties for the entry of a confidentiality and
protective order (“Protective Order”). After careful consideration, it is hereby ORDERED as follows:
1. Classified Information
“Classified Information” means any information of any type, kind, 0r character that is
designated as “Confidential”, “For Counsel Only”, 0r “Attorneys Eyes Only” by any of the supplying
or receiving persons, whether it be a document, information contained in a document, information
revealed during a deposition, information revealed in an interrogatory answer, 0r otherwise.
2. Qualified Persons
“Qualified Persons” means:
a. For Counsel or Attorneys Onlyinformation:
i. retained counsel for the parties in this litigation and their respective
staff;
ii. in-house counsel for the receiving party who are actively involved in
assisting counsel for the receiving party in the prosecution or defense of this action,
and their paralegal, secretarial, and clerical assistants. This is limited to in-house
counsel who manage litigation and do not make or participate in competitive business
matters of the party for whom they work. Prior t0 receiving Classified Information,
{1774434;} CONFIDENTIALITY AND PROTECTIVE ORDER Page 1
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any person described in this subsection must sign a document a document agreeing to
be bound by the terms of this Protective Order (such signed document to be
maintained by the retained counsel);
111. any employee 0f the receiving party currently or formerly serving as an
auditor on behalf 0f the receiving party who is actively involved 1n assisting counsel
for the receiving party 1n the prosecution or defense of this action. This is limited to
employees who d0 not make or participate in competitive business matters of the party
for whom they work. Prior to receiving Classified Information, any person described
in this subsection must sign a document a document agreeing t0 be bound by the
terms of this Protective Order (such signed document to be maintained by the retained
counsel);
iv. a person reasonably believed t0 have knowledge or information
relevant to the litigation and Who (a) is currently employed by the producing party or
nonparty, 0t (b) was employed by the producing party or nonparty at the time the
Classified Information was generated, provided that prior t0 receiving Classified
Information, the person must sign a document agreeing to be bound by the terms of
this Protective Order (such signed document to be maintained by the retained
counsel);
V. actual or potential independent experts 0r consultants (and their
administrative or clerical staff) engaged in connection with this litigation (which shall
not include the current employees, officers, members, 0r agents of parties or affiliates
0f parties) who, prior to any disclosure 0f Classified Information to such person, have
signed a document agreeing to be bound by the terms 0f this Protective Order (such
signed document to be maintained by the attorney retaining such person);
{1774434;}CONFIDENTIALITY AND PROTECTIVE ORDER Page 2
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Vi. this court and its staff, court reporters, and any other tribunal or
dispute resolution officer duly appointed or assigned in connection with this litigation.
V1i. litigation vendors and other litigation supportpersonnel who, prior t0
any disclosure of Classified Information to such person, have signed a document
agreeing to be bound by the terms of this Protective Order (such signed document to
be maintained by the attorney retaining such person);
b. For Confidential information:
i. the persons identified in subparagraph 2(a);
ii. the receiving party, if a natural person;
iii if the receiving party is an entity, such officers or employees of the
party Who are actively involved in the prosecution or defense 0f this case who, prior
t0 any disclosure 0f Confidential information to such person, have signed a document
agreeing t0 be bound by the terms 0f this Protective Order (such signed document to
be maintained by the retained counsel);
iv. any person who was an author, addressee, 0r intended or authorized
recipient of the Confidential information and Who agrees to keep the information
confidential, provided that such persons may see and use the Confidential information
but not retain a copy.
c. Such other person as this court may designate after notice and an opportunity
to be heard.
Designation Criteria
a. Nonc/amfied Information. Classified Information shall not include information
that either:
{1774434;}CONFIDENTIALITY AND PROTECTIVE ORDER Page 3
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i. is in the public domain at the time of disclosure, as evidenced by a
written document;
ii. becomes part 0f the public domain through no fault of the recipient,
as evidenced by a written document;
111. the receiving party can show by written document was 1n its rightful
and lawful possession at the time of disclosure;or
1v. lawfully comes into the recipient’s possession subsequent to the time
0f disclosure from another source Without restriction as to disclosure, provided such
third party has the right to make the disclosure to the receivingparty.
b. C/amfied Infomatian. A party shall designate as Classified Information only such
information that the party 1n good faith believes 1n fact is confidential. Information that is
generally available to the public, such as public filings, catalogues, advertising
materials, and
the like, shall not be designated as Classified.
Information and documents that may be designated as Classified Information include,
but are not limited to, trade secrets, confidential or proprietary financial information,
business plans, and competitive analyses, personnel files, personal
operational data,
information that is protected by law, and other sensitive information that, if not restricted as
set forth in this order, may subject the producing or disclosing person t0 competitive or
financial injury 0r potential legal liability to third parties.
Correspondence and other communications between the parties or with nonparties
may be designated as Classified Information if the communication was made with the
understanding or reasonable expectation that the information would not become generally
available t0 the public.
{1774434;}CONFIDENTIALITY AND PROTECTIVE ORDER Page 4
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c. For Comm] 0r Attorneys Onbl. The designation “For Counsel Only” or
“Attorneys Eyes Only” shall be reserved for information that is believed to be unknown t0
the opposing party or parties, or any of the employees of a corporate party. For purposes of
this order, so-designated information may include, without limitation, product formula
information, design information, non- public financial information, pricing information, and
customer identification data.
d. U/tmsemz'z‘z‘I/e Ilyrormalz'on. At this point, the parties do not anticipate the need for
higher levels of confidentiality as to ultrasensitive documents or information. However, in the
event that a court orders that ultrasensitive documents 0r information be produced, the parties
will negotiate and ask the court to enter an ultrasensitive information protocol in advance Of
production t0 further protect such information.
4. Use of Classified Information
A11 Classified Information provided by any party or nonparty in the course of this litigation
shall be used solely for the purpose ofpreparation, trial, and appeal of this litigation and for no other
purpose, and shall not be disclosed except in accordance with the terms hereof.
5. Marking ofDocuments
Documents provided in this litigation may be designated by the producing person or by any
party as Classified Information by marking each page of the documents so designated with a stamp
indicating that the information is “Confidential”, “For Counsel Only”, 0r “Attorneys Eyes Only”. If
only part of a document is designated “For Counsel Only” or “Attorneys Eyes Only”, the designating
mark the document in manner which identifies the part(s) designated “For Counsel Only”
party shall
or “Attorneys Eyes Only,” except that if such a document is produced only in a native format not
easily so marked, the producing party may identify the “For Counsel Only” or “Attorneys Eyes Only”
part(s) by any other reasonable means.
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6. Disclosure at Depositions
Information disclosed at (a) the deposition 0f a party or one of its present or former officers,
directors, employees, agents, consultants, representatives, or independent experts rstained by counsel
for the purpose of this litigation, 0r (b) the deposition of a nonparty may be designated by any party
as Classified Information by indicating 0n the record at the deposition that the testimony is
“Confidential” or “For Counsel Only” and is subject to the provisions ofthis Order.
Any party also may designate information disclosed at a deposition as Classified Information
by notifying all parties in writing not later than 10 days of receipt 0f the transcript of the specific pages
and lines of the transcript that should be treated as Classified Information thereafter. Each party shall
attach a copy 0f each such written notice to the face of the transcript and each copy thereof in that
party’s possession, custody, or control. All deposition transcripts shall be treated as For Counsel Only
for a period of 10 days after initial receipt of the transcript.
To the extent possible, the court reporter shall segregate into separate transcripts information
designated as Classified Information With blank, consecutively numbered pages being provided in a
nondesignated main transcript. The separate transcript containing Classified Information shall have
page numbers that correspond to the blank pages in the main transcript.
Counsel for a party or a nonparty witness shall have the right to exclude from depositions any
person who is not authorized to receive Classified Information pursuant to this Protective Order, but
such right of exclusion shall be applicable only during periods of examination or testimony during
which Classified Information is being used or discussed.
7. Disclosure t0 Qualified Persons
Classified Information shall not be disclosed or made available by the receiving party to
persons other than Qualified Persons except as necessary to comply with applicable law or the valid
order of a court of competent jurisdiction; provided, however, that in the event of a disclosure
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compelled by law or court order, the receiving party will so notify the producing party as promp tly as
practicable (if at all possible, prior t0 making such disclosure) and shall seek a protective order 0r
confidential treatment of such information. Information designated as For Counsel Only shall be
restricted in circulation t0 Qualified Persons described in subparagraph 2(a).
8. Unintentional Disclosures
Documents unintentionally produced Without designation as Classified Information later may
be designated and shall be treated as Classified Information from the date written notice 0f the
designation is provided t0 the receiving party.
If a receiving party learns of any unauthorized disclosure of Confidential information or For
Counsel Only information, the party shall immediately upon learning of such disclosure inform the
producing party 0f aJl pertinent facts relating to such disclosure and shall make all reasonable efforts
to prevent disclosure by each unauthorized person who received such information.
9. Documents Produced for Inspection Prior to Designation
In the event documents are produced for inspection prior to designation, the documents shall
be treated as For Counsel Only during inspection. At the time of copying for the receiving parties,
Classified Information shall be marked prominently “Confidential”, “For Counsel Only”, or
“Attorneys Eyes Only” by the producing party.
10. Consent to Disclosure and Use in Examination
Nothing in this order shall prevent disclosure beyond the terms of this order if each party
designating the information as Classified Information consents to such disclosure 0r if the court, after
notice to all affected parties and nonparties, orders such disclosure. Nor shall anything in this order
prevent any counsel of record from utilizing Classified Information in the examination or cross-
examination 0f any person Who is indicated on the document as being an author, source, or recipient
of the Classified Information, irrespective of which party produced such information.
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SR540
11. Challenging the Designation
A party shall not be obligated to challenge the propriety 0f a designation
of Classified
Information at the time such designation is made, and a failure to do so shall not preclude a subsequent
challenge to the designation. In the event that any party to this litigation disagrees at any stage
0f these
first
proceedings with the designation of any information as Classified Information, the parties shall
try to resolve the dispute in good faith on an informal basis, such as by production of redacted copies.
If the dispute cannot be resolved, the objecting party may invoke this Protective Order by objecting
in writing to the party who designated the document or information as Classified Information. The
designating party shall then have 14 days to move the court for an order preserving the designated
status 0f the disputed information. The disputed information shall remain Classified Information
unless and until the court orders Otherwise.
Failure to move for an order shall constitute a termination of the status of such item as
Classified Information.
12. Manner of Use in Proceedings
In the event a party wishes t0 use any Classified Information in affidavits, declarations, briefs,
memoranda of law, or Other papers filed in this litigation, the party shall do one 0f the following: (1)
with the consent of the producing party, file only a redacted copy of the information; (2) where
appropriate (e.g., in connection With discovery and evidentiary motions) provide the information
solely for in camera review; 0r (3) file such information under seal with the court consistent with the
sealing requirements 0f the court.
13. Filing Under Seal
The clerk 0f this court is directed to maintain under seal all documents, transcripts of
deposition testimony, answers t0 interrogatories, admissions, and other papers filed under seal
in this
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SR541
litigation that have been designated, in Whole or in part, as Classified Information by any party to this
litigation consistent with the sealing requirements and standards ofTexas Rule of Civil Procedure 76a.
14. Return of Documents
Not later than 60 days after conclusion of this litigation and any appeal related to it, any
Classified Information, all reproductions of such information, and any notes, summaries, or
descriptions of such information in the possession 0f any of the persons specified in paragraph 2
(except subparagraph 2(a)(111)) shall be returned to the producing party or destroyed, except as this
otherwise order or to the extent such information has been used as evidence at any trial or
court may
hearing. Notwithstanding this obligation to return or destroy information, counsel may retain one
copy of Classified Information for their respective legal files and must describe to the producing party
0r nonparty the steps taken t0 ensure that such Classified Information will not be accessed, used, or
disclosed inconsistently with the obligations under this Protective Order.
15. Ongoing Obligations
Insofar as the provisions of this Protective Order, or any other protective orders entered in
this litigation, restrict the communication and use of the information protected by 1t, such provisions
shall continue to be binding after the conclusion of this litigation, except that (a) there shall be n0
restriction 0n documents that are used as exhibits in open court unless such exhibits were filed under
seal, and (b) a party may seek the written permission of the producing party or order of the court with
respect to dissolution or modification of this, or any other, protective order.
16. Advice to Clients
This order shall not bar any attorney in the course of rendering advice to such attorney’s Client
with respect to this litigation from conveying to any party client the attorney’s evaluation in a general
way of Classified Information produced or exchanged under the terms of this order; provided,
however, that in rendering such advice and otherwise communicating With the client, the attorney
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SR542
not disclose the specific contents of any Classified Information produced by another party
if
shall
such disclosure would be contrary to the terms of this Protective Order.
17. Duty to Ensure Compliance
Any party designating any person as a Qualified Person shall
have the duty t0 reasonably
responsible upon
ensure that such person observes the terms of this Protective Order and shall be
breach 0f such duty for the failure of such person to observe the terms of this Protective Order.
18. Legal Effect.
This Protective Order shall not abrogate or diminish any contractual, statutory, or other legal
privilege or protection of a Party or person with respect to any information. The fact that any materials
are designated Confidential Information pursuant to this Protective Order shall not affect or operate
means of objection to the admissibility of any such material. The fact that materials are designated
as a
this Protective Order shall not affect what a trier of fact in
as Confidential Information pursuant to
be confidential or Other than as specifically provided herein,
the proceedings may find to proprietary.
this Protective Order does not expand or limit the scope of discovery 0r the rights and the obligations
of any Party with respect thereto in the Lawsuit or any other proceeding.
19. Modification and Exceptions
The stipulation, provide for exceptions to this order and any party may
parties may, by written
seek an order of this court modi
It is SO ORDERED this
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SR543