The Supreme Court of Texas will consider whether a business version of common law marriage exists when companies do deals with each other in the Lone Star state.
The case has been viewed by the Texas legal community as the most important business dispute between two Texas companies since Joe Jamail’s epic Pennzoil-Texaco victory in the 1980s, which yielded a $10 billion bill for Texaco.
On Oct. 8, two pipeline giants, Dallas-based Energy Transfer Partners and Houston-based Enterprise Products Partners, will face off in Austin for the next chapter in their eight-year legal battle, this time for oral arguments in the Texas Supreme Court.
The main question in the case is whether oral partnership agreements are legally binding in Texas when companies enter business partnerships with each other. Enterprise, perhaps considered the old school of thought in this situation, says “no.” ETP, presumably the disrupter in the industry, says “yes.”
Legal experts say the outcome of the ETP-Enterprise case (if ETP wins) could have a significant impact on Texas companies that enter joint ventures and partnerships as part of their business.
Following a five-week trial in early 2014, a Dallas jury ruled ETP got wrongfully cut out of a lucrative pipeline deal that Enterprise had originally agreed to pursue with it, but decided to do with Canada-based Enbridge instead. The jury hit Enterprise with a $319 million jury verdict that ballooned to $535 million during final judgment proceedings.
ETP argued at trial that Enterprise and Enbridge illegally conspired to cut ETP out of the deal, and that Enbridge’s agreement with ETP was valid because they “walked like partners” and “talked like partners” to the rest of the world between the time they announced their joint venture agreement up until Enterprise cut it off.
Enterprise argued that there was never a legally-binding partnership because they never took the official steps to finalize the deal, and that the wording of all their documents supported this argument with the phrase “proposed joint venture.”
Enterprise appealed, and both companies, who have very deep pockets, immediately lawyered up with the top appellate talent in Texas for their next battle in Dallas’ Fifth Court of Appeals.
In 2017, the court of appeals reversed ETP’s half-billion-dollar payday when it ruled that there was no partnership between ETP and Enterprise, and that Dallas District Judge Emily Tobolowsky should have dismissed the case before the jury even started to deliberate because ETP had not met its burden of proof.
ETP appealed to the Texas Supreme Court, which ordered both parties last year to submit briefing on the merits for why — or why not — the high court should grant oral argument. The court sided with ETP this morning.
ETP’s legal team was presumably jumping up and down at the news, but we’ll never know. Dallas attorney Mike Lynn, ETP’s lead trial lawyer, declined to comment on SCOTX’s ruling.
Kelly Hart partner David Keltner, Enterprise’s lead appellate lawyer, did not immediately return a message left Friday by The Texas Lawbook seeking comment.
It is unknown at this time who will handle oral arguments in October for each side.
At trial, ETP’s legal team included Lynn, Chris Akin, Jeremy Fielding and David Coale of Lynn Pinker Cox & Hurst. ETP’s appellate team includes Haynes and Boone partners Nina Cortell, Karen Precella, Kelli Bills and Michael Hatchell as well as Enoch Kever’s Craig Enoch.
Tonja de Sloover, ETP’s associate general counsel and head of litigation, also has played a significant role in the case.
Enterprise’s lead trial lawyer was David Beck, and included Beck Redden colleagues Jeff Golub, Joe Redden Jr. and Jas Brar. Dallas lawyer Dick Sayles served as co-lead, whose team also included Shawn Long. In addition to Keltner, Enterprise’s appellate team includes Marianne Auld, also of Kelly Hart; Beck Redden’s David Gunn and Russell Post; Alexander Dubose Jefferson & Townsend’s Wallace B. Jefferson and Rachel Ekery; and Clark Hill Strasburger’s Michael Jung.
Raymond Albrecht, who at the time of the 2014 trial was Enterprise’s vice president of litigation, played a significant role in the case. According to his LinkedIn page, he left the company several months after the $535 million verdict and is now of counsel at the Archdiocese of Galveston-Houston.
The Lawbook was at the 2014 trial every day. For full previous trial coverage, click here.