Enterprise Products Partners LP announced July 19 that the company has prevailed in its appeal against Energy Transfer Partners. This appeal stems from a 2014 Dallas jury verdict in a lawsuit filed by Energy Transfer over a proposed pipeline project that was cancelled due to a lack of customer support.
In April 2011, Enterprise and Energy Transfer signed a series of agreements disclaiming any partnership or joint venture absent executed definitive documents and board approvals of the two companies. Definitive agreements were never executed and board approval was never obtained. The parties signed these disclaiming agreements in an effort to avoid this type of lawsuit.
In a company statement, Enterprise management said the company is grateful that the Dallas Court of Appeals reaffirmed the importance of written contracts.
“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,” said Enterprise appellate lawyer David E. Keltner. “Sophisticated parties need the right to rely on written contracts. Partnership by ambush is a bad public policy and goes against the freedom to contract guaranteed by the Texas Constitution. The business world breathed a sigh of relief today when ‘partnership by ambush’ was ruled out of bounds in Texas.”
Enterprise Products Partners is one of the largest publicly traded partnerships and a leading North American provider of midstream energy services to producers and consumers of natural gas, NGLs, crude oil, refined products and petrochemicals. Enterprise’s services include: natural gas gathering, treating, processing, transportation and storage; NGL transportation, fractionation, storage, and export and import terminals; crude oil gathering, transportation, storage, export and terminals; petrochemical and refined products transportation, storage and terminals; and a marine transportation business that operates primarily on the United States inland and Intracoastal Waterway systems. The partnership’s assets include approximately 50,000 miles of pipelines; 260 million barrels of storage capacity for NGLs, crude oil, refined products and petrochemicals; and 14 billion cubic feet of natural gas storage capacity.