Enterprise Products Wins Ruling in Legal Battle with Energy Transfer
(P&GJ) — Houston-based Enterprise Products Partners won a favorable ruling from the state Supreme Court appeal in its legal battle with Dallas-based Energy Transfer, resolving a dispute that began when Enterprise backed out of the proposed Double E pipeline project in 2011.
Although definitive agreements were never executed and Enterprise never got approval from its board of directors, Energy Transfer said it was misled when Enterprise pulled out of the deal, partnering instead with Enbridge to complete the expanded Seaway pipeline system.
Enterprise said the Double E project was canceled due to a lack of customer support, pointing out signed agreements with Energy Transfer that disclaimed any partnership or joint venture without definitive documents and board approvals of both companies. “Definitive agreements were never executed, and board approval was never obtained,” Enterprise contended. “The parties signed these disclaiming agreements precisely to avoid the type of lawsuit brought here.”
Despite this, a Dallas jury sided with Energy Transfer in a 2014 decision that Enterprise breached its fiduciary duties, awarding the company $535 million in damage. A panel of the Dallas Court of Appeals later issued a unanimous opinion reversing that verdict, and the Supreme Court of Texas unanimously affirmed that ruling in its decision.
The Court of Appeals and Supreme Court “correctly reaffirmed the importance of written contracts” with their decisions to overturn the jury verdict,” Enterprise appellate lawyer David E. Keltner said.
“This case needed decisive action because it had the potential to stand as one of the worst for business in Texas since the Texaco v. Pennzoil decision from the 1980s,” Keltner said. “Sophisticated parties need the right to rely on written contracts.”
The landmark Texaco-Pennzoil legal fight began after Texaco stepped in to acquire Getty Oil after it had already agreed to be acquired by Pennzoil, resulting in a $3 billion settlement and bankrupting Texaco.
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