Appeal Expected in Multi-Million Dollar Case Over Pipeline Partnership

After a March jury verdict of $319 million in damages, an appeal is expected in a Texas business litigation case that could lead to a $500 million final judgment against the defendant.

The case revolves around partnership status between companies. The courts who have tried it already have had to decide whether conduct that may have indicated a partnership (to build a pipeline) trumps a written agreement that allegedly precluded a partnership.

Energy Transfer Partners (ETP) alleged that it formed a legal partnership with Enterprise Product Partners in 2011 to jointly build an oil and gas pipeline. Enterprise then allegedly broke off the partnership to pursue similar plans with Enbridge Inc. 

ETP sued Enterprise and Enbridge, alleging tortious interference. ETP also alleged breach of contract and breach of fiduciary duties against Enterprise. Enterprise denied the allegations and argued that no partnership had been formed; the companies had not received approval from their boards for any joint venture.

A jury issued its $319 million verdict against Enterprise after a five-week trial and less than two days of deliberations. The jury rejected the claim of tortious interference against Enbridge.

An attorney representing Enterprise said that the company will move for a new trial, and that if the motion is not granted, Enterprise will appeal.

Observers said that the appeal is expected to be expensive for both sides because of the number of legal issues under consideration. The final ruling will most likely establish whether companies have a “safe zone” to explore business opportunities without inadvertently entering into a partnership or other legal commitment. 

With so much at stake, an attorney for Enbridge said he expects the case to reach the Texas Supreme Court.

Gregory D. Jordan is an Austin Oil and Gas lawyer. To learn more, visit http://www.theaustintriallawyer.com or call 512-419-0684.

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