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Enterprise Products Wins Breach of Contract Verdict Against Energy Transfer Partners in Houston

A Houston district court jury has found that Dallas-based Energy Transfer Partners LP (ETP) breached its contract with competitor Enterprise Products Partners LP by failing to maintain the Old Ocean natural gas pipeline so Enterprise could service its Gulf Coast customers.

“This was a resounding victory for Enterprise. This case wasn’t about damages. It was about forcing ETP to restore and operate the pipeline in a condition that allows Enterprise to flow gas to its customers in a commercially viable way,” said Rusty Hardin of Houston’s Rusty Hardin & Associates LLP, who tried the case for Enterprise along with firm partners Jeremy Monthy, Andy Drumheller, Joe Roden and senior attorney Carolyn Courville. This is the second big energy sector win for the law firm this year, following an $8.5 million jury victory for Smith Energy Co. in West Texas.

The jury’s verdict accepted Enterprise’s contention that ETP lowered the pipeline pressure in a portion of the pipe it deliberately failed to maintain, thus making it impossible for Enterprise to flow gas in a meaningful way.

ETP and Enterprise are fierce competitors that have fought in Texas courts twice in the past year. ETP won the first round in a high-dollar case heard in Dallas that is currently on appeal. Enterprise’s win on Thursday focused on forcing ETP to keep its word. In the end, jurors found ETP did not honor the obligations of a contract dating back to 1980 regarding maintenance of the 240-mile Old Ocean natural gas pipeline used by both companies.

Jurors in Judge Alexandra Smoots-Hogan’s 164th District Court in Houston awarded Enterprise $2.2 million in lease payment reimbursements and $1.5 million in legal fees after the four-week trial.

Mr. Hardin stressed the importance of the jury finding by noting that restoring access to the pipeline will result in hundreds of millions of dollars in revenue for Enterprise in years to come. Jurors heard evidence that Enterprise was forced to find workarounds, including building its own $16 million seven-mile segment at the end of the pipeline.

“There never would have been a lawsuit if ETP had done what the jury has now found it was obliged to do, which is keep its word and honor its contract to allow my clients to use that pipeline as originally intended,” said Mr. Hardin.

The case is Enterprise Texas Pipeline LLC v. Energy Transfer Fuel LP, No. 2013-28613.

In the summer of 2014, Rusty Hardin & Associates helped Houston-based Smith Energy win more than $8.5 million after a West Texas jury found an oil and gas landman breached his fiduciary duty to the company by committing fraud and theft.

Rusty Hardin & Associates, LLP, has built a solid reputation for taking on the causes of its clients and obtaining favorable results in both civil matters and significant criminal cases. See rustyhardin.com.