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CAUSE NO. 2017-48075
TOTAL PETROCHEMICALS & REFINING § IN THE DISTRICT COURT OF
USA, INC. and ACE PROPERTY & §
CASUALTY INSURANCE COMPANY §
vs. HARRIS COUNTY, TEXAS
KINDER MORGAN PETCOKE, LP and. §
KINDER MORGAN PETCOKE GP LLC § 164th JUDICIAL DISTRICT
DEFENDANTS’ MOTION FOR PARTIAL SUMMARY JUDGMENT.
AS TO DAMAGES
Defendants Kinder Morgan Petcoke, LP (“Kinder Morgan”) and Kinder Morgan Petcoke
GP LLC file this motion
for partial summary judgment on damages and would show the Court as
follows:
BACKGROUND
Plaintiff TOTAL Petrochemical USA, Inc. (“TOTAL”) executed a “Coke Cutting
and Crane Contract” with TGS Development, LP (the “Crane Contract”). Kinder Morgan
subsequently acquired the Crane Contract through a series of assignments. See Exhibit A, Crane
Contract.
TOTAL settled claims made against it for the injury and death of Gary Counts (the
“Counts’ Claims”) using funds contributed by Kinder Morgan, TOTAL, and Ace Property &
Casualty Insurance Company’s (“CHUBB”) (collectively the “Parties’) under a Funding
Agreement. Ultimately, this lawsuit is an attempt to recover the money the parties contributed
under the Funding Agreement by resolving how liability should have been apportioned between
Kinder Morgan and TOTAL under
the Crane Contract.
Kinder Morgan Petcoke GP LLC is the general partner of Kinder Morgan Petcoke, LP and is not a necessary
party with independent liability in this case.
The Parties filed cross motions for partial summary judgment on the issue of
whether Kinder Morgan breached the Crane Contract. The cross motions did not address the
Measure or amount of damages. The court denied Kinder Morgan’s motion. TOTAL’s and
CHUBB’ s motions are pending before the court. This motion addresses TOTAL’s and CHUBB’s
damage claims and conclusively shows that their alleged damages are consequential damages
which
are waived in the Crane Contract. Altematively, if recovery of damages is not barred in its
entirety by the waiver of consequential damages, the damages are limited by the Crane Contract
to $6,000,000, of which Kinder Morgan has already paid a significant portion.
ARGUMENT AND AUTHORITIES
The Crane Contract bars all of Plaintiffs’ alleged damages because they are special,
indirect, or consequential damages.
The Crane Contract expressly releases and prevents either party from making
Claims for special, indirect, or consequential damages in any dispute. Specifically, it states:
ARTICLE 23CONSEQUENTIAL DAMAGES
NEITHER PARTY SHALL BE LIABLE TOTHE OTHER FOR
SPECIAL, INDIRECT, OR CONSEQUENTIAL DAMAGES
RESULTING FROM OR ARISING OUT OF THIS CONTRACT,
INCLUDING WITHOUT LIMITATION, LOSS OF PROFITS OR
BUSINESS INTERRUPTIONS, HOWEVER THEY MAY BE
CAUSED, AND DAMAGES CAUSED BY SUCH PARTY’S
NEGLIGENCE, EVEN IF SUCH PARTY HAS BEEN NOTIFIED
OF THE POSSIBILITY OF SUCH DAMAGE EACH PARTY
RELEASES THE OTHER FROM LIABILITY THEREFROM.
Exhibit A, Crane Contract, Article 23 at TPROQ000561 (emphasis added). Therefore, under
Article 23 of the Crane Contract, TOTAL’s special, indirect, or consequential damage claims, are
barred as a matter
of law.
The amount of Kinder Morgan's contribution under the Fi ing Agreement is available in Exhibit H 1 of
Plaintiffs’ Motion, First Amendment to Agreement to Fund a Settlement of Claims Against TOTAL.
CHUBB does not have any direct claims against Kinder Morgan. CHUBB paid part of the settlement of the
Counts’ Claims against TOTAL because it is the insurer of TOTAL. CHUBB is subrogated to TOTAL’s claim for
The claims against Kinder Morgan are based upon the alleged failure to obtain
additional insurance coverage that would have provided coverage to TOTAL for the Counts’
Claims. TOTAL’s and CHUBB’s alleged damages are for the amounts they paid to defend and
settle the Counts’ Claims. TOTAL’s Response to Kinder Morgan's Objection to Plaintiff's
Proposed Summary Judgment Order at 2. In essence, they claim they would not have had to pay
those amounts if Kinder Morgan had obtained what they allege was the contractually required
The proper measure of damages is a question of law for the court. Allied Vista, Inc.
v. Holt, 987 S.W.2d 138, 141 (Tex. App.Houston [14 Dist.] 1999, pet. denied). At common
law, actual damages may be either “direct” or “consequential.” Arthur Andersen & Co. v. Perry
Equip. Corp., 945 S.W.2d 812, 816 (Tex. 1997). Direct damages, which flow naturally and
necessarily froma defendant’s wrongful act, compensate the plaintiff fora loss that is conclusively
presumed to have been foreseen by the defendant as a usual and necessary consequence of its
wrongdoing. See id.
By contrast, consequential damages “result naturally, but not necessarily, from the
defendant’s wrongful acts.” Stuart v. Bayless, 964 S.W.2d 920, 921 (Tex. 1998) (quoting Arthur
Andersen, 945 S.W.2d at 816).Consequential damages are those damages that “require the
existence of some other fact (known or unknown) beyond the relationship between the parties.”
Powell Elec. Sys. v. Hewlett Packard Co., 356 S.W.3d 113, 119 (Tex. App.Houston [1st Dist.]
2011, reh’ g denied).
the amount paid by CHUBB. Thus, CHUBB’s
claims are subject to Kinder Morgan’ s defenses to TOTAL’s claims
and damages. See Mid Continent Ins. Co. v. Liberty Mutual Ins. Co., 236 S.W.3d 765, 774 (Tex. 2007)(in a
subrogation case, “the insurer stands in the shoes of the inured, obtaining only those rights held by the insured against
a third party, subject to any defenses held by the third party against the insured.”)
Texas courts have held that a broad array of damages are consequential damages,
ncluding: penalties
to third parties, loss of use of money, costs to respond to and repair a ruptured
pipeline, costs to remediate contamination
from a pipeline rupture, costs to repair damages
to a
power plant, delay costs, costs for IT development, lost salaries, replacement equipment, travel
costs, lost profits, fees to use a third parties’ railroad
tracks during repair, costs to rent backup
generator
after a power outage, loss of efficiency, excess gas and oil costs, excess labor costs, costs
for replacement power, costs for testing and monitoring, and costs for future monitoring and to
remove the contamination
were all consequential damages
under Texas law. See e.g. El Paso
Mktig., LP. v. Wolf Hollow I, L.P., 383 S.W.3d 138, 139 (Tex. 2012) (replacement power and.
repair costs); Tenn. Gas Pipeline Co. v. Technip United States Corp., No. 01 CV, 2008
Tex. App. LEXIS 6419, at *21 32 (Tex. App. Houston [1st Dist] Aug. 21, 2008, pet. denied)
(cost for renting a backup generator, costs to pay a penalty
to a third party, lost profits; loss of use
of money, loss of efficiency, excess use of gas and oil, excess labor costs); Kiewit Offshore Servs.
v. Dresser Rand Glob. Servs., No. H 1299, 2016 U.S. Dist. LEXIS 117835, at *34 (S.D. Tex.
2016) (delay fees even as liquidated damages); BCC Merch. Sols., Inc. v. Jet Pay, LLC, 129 F.
Supp. 3d 440, 475 76 (N.D. Tex. 2015) (costs for IT Development, lost staff salaries, replacement
equipment, travel costs, and lost profits); Balfour Beatty Rail, Inc. v. Kan. City S. Ry., Civil Action
No. 3:10 L, 2012 U.S. Dist. LEXIS 106574, at *60 (N.D. Tex. 2012) (fees paid to use a
third parties’ railroad tracks; Bechtel Corp. v. CITGO Prods. Pipeline Co., 271 S.W.3d 898 (Tex.
App.Austin 2008, no pet.) (costs
to res pond to a pipeline rupture, costs to repair the pipeline,
costs to remediate the soil and groundwater, costs for testing and monitoring, and costs
for future
monitoring and to remove the contamination).
TOTAL’s and CHUBB’ s alleged damages are for amounts they paid to defend and.
settle the Counts’ Claims. These alleged damages are classic consequential damages claims
because they may result “naturally’ from Kinder Morgan's alleged breach but they do not
“necessarily” result from it. The death
of Mr. Counts and the resulting damages certainly did not
“necessarily” flow from the mere fact that Kinder Morgan did not obtain certain insurance.
Instead, the damages would not have resulted if Mr. Counts had not been killed while working at
TOTAL’s facility. Additionally, these damages “require{d] the existence of some other fact
(known or unknown) beyond the relationship between the parties.” In this case, the “other fact ...
beyond the relationship” between Kinder Morgan and TOTAL was the death of Mr. Counts and
the damages
caused by his death.
Several courts applying Texas law in breach of contract actions have held that the
Plaintiffs’ costs associated with third party claims are consequential damages. In this regard,
courts have held that absent provisions in a statute or contract, “a plaintiff may only recover
attomey’s fees and other reasonable expenses which were incurred in litigation with a third party
as damages when such damages are the natural and proximate consequence of the defendant’ s
wrongful conduct, i.e, when those expenses represent consequential damages.” Great Am Ins.
Co. v. AFS/IBEX Fin. Servs., 612 F.3d 800, 807 (5th Cir. 2010); Lesikarv. Rappeport, 33 S.W.3d
282, 306 (Tex. App.Texarkana 2000, pet. denied). Because TOTAL’s and CHUBB’s alleged.
damages
are attomeys’ fees and costs incurred to defend/settle the third party Counts’ Claims, they
are consequential damages, which are waived by the Crane Contract. Thus, Kinder Morgan is
entitled to judgment as a matter of law against the damage claims of the Plaintiffs.
Alternatively, if Plaintiffs’ damages are not waived as consequential damages, their
damages are capped at the $6,000,000 combined limits set forth in the Crane
Contract.
TOTAL’s claim is that Kinder Morgan breached the Crane Contract because it did.
not obtain additional insurance coverage for TOTAL that covered the Counts’ Claims. Kinder
Morgan disagrees. However, assuming arguendo that: Kinder Morgan breached
by failing to
obtain the required insurance; that any such breach caused damages; and that the damages
are not
consequential damages expressly waived by agreement, Plaintiffs’ damages are limited to
$6,000,000, less amounts Kinder Morgan has already
paid.
The Crane Contract only required a total of $6,000,000 in insurance limits.
Specifically, the Crane Contract states:
(b) COMMERCIAL GENERAL LIABILITY INSURANCE
Including, but not limited to, coverage for death, bodily injury and.
property damage, broad for contractual liability Insuring the
Indenmity agreement, if any, set forth in this Contract and products
completed operations coverage with limits of not less than
$1,000,000 applicable to bodily injury, sickness or death for any
once occurrence and $1,000,000 for loss or damage to property for
any one occurrence
(d) EXCESS LIABILITY INSURANCE
Excess (umbrella) liability coverage following form and in excess
of the limits and terms of (a), (b), and (c) above, with a combined.
single limit for death, bodily injury and/or property damage of not
less than $5,000,000 for each occurrence.
ExhibitA, Crane Contract, Insurance Requirements at TPRO0000581.
As fully acknowledged by TOTAL and set forth in Exhibit H 1 of Plaintiffs’ Motion (First Amendment to
Agreement to Fund a Settlement of Claims Against TOTAL), Kinder Morgan has already contributed a significant
portion of this sum toward the settlement of the Counts’ Claims subject to the Funding A:
Defense costs are not in excess of the $6 million limits. There was nothing in the Crane Contract stating that
apolicy could not be an “exhausting” policy where defense costs are included and erode the $6 million policy limits.
See Phillips Petroleum Co. v. St Paul Fire & marine Ins. Co., 113 S.W.3d 37 (Tex. App.Houston [1 Dist] 2003,
‘pet denied) (reading an unspecified requirement for a CGL policy to necessarily mean that there is an unlimited duty
‘to defend until liability limits are exhausted by settlements or judgments requires the insertion of terms which the
court
may not do).
Essentially, Plaintiffs’ argument is that Kinder Morgan was required, but failed,
to obtain at least $6 million of general liability coverage that would have also insured TOTAL as
an additional insured for the Counts’ Claims. If Kinder Morgan committed a breach in this regard,
andif that breach caused damages, the damages are for not getting the allegedly required minimum
coverage for TOTAL, which was $6 million. Kinder Morgan cannot be and is not liable for failing
to obtain more coverage
for TOTAL than was required by the Crane Contract.
Plaintiffs’ argument that they are entitled to more than the $6 million limits is based
entirely on aclearmisreading of one phrase
in the Crane Contract. Plaintiffs’ allege that the “Crane
Contract also obligated Kinder Morgan to make TOTAL ... Additional Insureds not only on the
minimum required insurance but on ‘all insurance carried by [Kinder Morgan], except Worker’
Compensation and Employer liability, whether required [by the Crane Contract or not].” See
Plaintiff Motion for Final Summary Judgment at p. 7. In its full context, the Crane Contract
provision at issue provides as follows:
Before
any of the Work is commenced
and during the entire progress
of the Work, TGS [Kinder Morgan] shall at TGS’ [Kinder Morgan]
sole cost and expense, cause to be issued and maintained
insurance
coverage as set forth n ExhibitX attached hereto and made a part
hereof for all purposes. As outlined
in greater detail in Exhibit
X, all
insurance camied by TGS [Kinder Morgan], except Worker's
Compensation and Employer Liability, whether required hereby
shall be endorsed to make TOTAL PETROCHEMICALS USA,
INC. ... additional insureds.
Exhibit A, Crane Contract at TPRO0000556.
Plaintiffs argue that the phrase “whether required hereby” modifies “all insurance
camied by Kinder Morgan” and since Kinder Morgan carried. a $10 million SIR and a $25 million
excess policy it is entitled to those benefits. However, read in its proper context the phrase
“whether required hereby” follows “as outlined in greater detail in Exhibit X” and modifies
workers compensation and employers liability. Thus, this provision should be read as “whether
ornot ExhibitX requires workers compensation or employers liability, TOTAL is not to be named.
as an additional insured on those policies.” If “whether required hereby” was applied to “all
insurance camied
by [Kinder Morgan]” as suggested
by Plaintiffs, it would lead to an absurd result.
TOTAL, by virtue of this contract for Crane Services at one facility in Texas, would be entitled to
claim additional insured status on every single policy of insurance carried by Kinder Morgan,
including its first party property policies insuring property all over the country, its directors &
officers policies, its commercial crime policies, its employment practices policies, its fiduciary
liability policies, its terrorism policies, its maritime protection
and indenmity policies, every excess
orumbrella policy, andonandon. Reading the clause in the proper manner, Plaintiffs simply have
no argument whatsoever for coverage beyond the specified policies and limits set forth n Exhibit
X to the Crane ContractCGL coverage with combined limits of $6 million.
Therefore, because the Crane Contract only required $6,000,000 in combined
limits, in the event of a breach that caused damages that were not consequential damages, such
damages
are limited to $6,000,000, less any payments already made by Kinder Morgan.
CONCLUSION
In Conclusion, Plaintiffs bring a breach of contract claim against Kinder Morgan
seeking Plaintiffs’ costs to defend and settle a third party death claim as damages. Those damages
are classic consequential damages under Texas law. The Crane Contract contains a valid waiver
and release of consequential damages. Thus, Plaintiffs have waived the right to recover such
damages
as a matter of law. In the altemative, in the unlikely event that the court finds that the
recovery
of consequential damages
was not waived, the damages are limited by the Crane Contract
to the combined limits of $6,000,000 specified in the Crane Contract.
PRAYER
Defendants
Kinder Morgan Petcoke, LP and Kinder Morgan Petcoke GP LLC pray that
their motion
for partial summary judgment on damages be granted, and that it recover
all other
relief at law or in equity to which they are entitled.
Respectfully submitted,
MUNSCH HARDT KOPF & HARR, P.C.
By: /s/ James M. Bettis, Jr.
James M. Bettis, Jr.
jbettis@munsch.com
State Bar No. 02268650
Justin K. Ratley
State Bar No.
jretley@munsch.com.
700 Milam Street, Suite 2700
Houston, Texas 77002
Tel: (713) 222
Fax: (713) 222
Emest “Butch” Boyd Jr.
State Bar No. 00783694.
butchboyd@butchboydlawfimm.com
UICH OYD AW IRM
2905 Sackett St.
Houston, Texas 77098
Tel: (713) 589
ATTORNEYS FOR DEFENDANTS,
KINDER MORGAN PETCOKE, LP AND
KINDER MORGAN PETCOKE GP, LLC
CERTIFICATE OF SERVICE
hereby certify that a true and correct copy of the foregoing has been electronically filed
and served on the following counsel of record on this the 13th day of August, 2019 in accordance
with the Texas Rules of Civil Procedure:
Jack G. Camegie
Kelly H. Leonard
Strasburger & Price, LLP
909 Fannin, Suite 2300
Houston, Texas 77010
Jack.camegie@strasburger.com
Kelly.leonard@strasburger.com
Sarah R. Sm
Lewis Brisbois Bisgaard & Smith, LLP
24 East Greenway Plaza, Suite 1400
Houston, Texas 77046
Sarah. Smith@lewishrisbois.com
/s/ James M. Bettis, Tr.
James M. Bettis, Jr.
4846 6901 7504v.1
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CAUSE NO. 2017-48075 TOTAL PETROCHEMICALS & REFINING § IN THE DISTRICT COURT OF USA, INC. and ACE PROPERTY & § CASUALTY INSURANCE COMPANY § vs. HARRIS COUNTY, TEXAS KINDER MORGAN PETCOKE, LP and. § KINDER MORGAN PETCOKE GP LLC § 164th JUDICIAL DISTRICT DEFENDANTS’ MOTION FOR PARTIAL SUMMARY JUDGMENT. AS TO DAMAGES Defendants Kinder Morgan Petcoke, LP (“Kinder Morgan”) and Kinder Morgan Petcoke GP LLC file this motion for partial summary judgment on damages and would show the Court as follows: BACKGROUND Plaintiff TOTAL Petrochemical USA, Inc. (“TOTAL”) executed a “Coke Cutting and Crane Contract” with TGS Development, LP (the “Crane Contract”). Kinder Morgan subsequently acquired the Crane Contract through a series of assignments. See Exhibit A, Crane Contract. TOTAL settled claims made against it for the injury and death of Gary Counts (the “Counts’ Claims”) using funds contributed by Kinder Morgan, TOTAL, and Ace Property & Casualty Insurance Company’s (“CHUBB”) (collectively the “Parties’) under a Funding Agreement. Ultimately, this lawsuit is an attempt to recover the money the parties contributed under the Funding Agreement by resolving how liability should have been apportioned between Kinder Morgan and TOTAL under the Crane Contract. Kinder Morgan Petcoke GP LLC is the general partner of Kinder Morgan Petcoke, LP and is not a necessary party with independent liability in this case. The Parties filed cross motions for partial summary judgment on the issue of whether Kinder Morgan breached the Crane Contract. The cross motions did not address the Measure or amount of damages. The court denied Kinder Morgan’s motion. TOTAL’s and CHUBB’ s motions are pending before the court. This motion addresses TOTAL’s and CHUBB’s damage claims and conclusively shows that their alleged damages are consequential damages which are waived in the Crane Contract. Altematively, if recovery of damages is not barred in its entirety by the waiver of consequential damages, the damages are limited by the Crane Contract to $6,000,000, of which Kinder Morgan has already paid a significant portion. ARGUMENT AND AUTHORITIES The Crane Contract bars all of Plaintiffs’ alleged damages because they are special, indirect, or consequential damages. The Crane Contract expressly releases and prevents either party from making Claims for special, indirect, or consequential damages in any dispute. Specifically, it states: ARTICLE 23CONSEQUENTIAL DAMAGES NEITHER PARTY SHALL BE LIABLE TOTHE OTHER FOR SPECIAL, INDIRECT, OR CONSEQUENTIAL DAMAGES RESULTING FROM OR ARISING OUT OF THIS CONTRACT, INCLUDING WITHOUT LIMITATION, LOSS OF PROFITS OR BUSINESS INTERRUPTIONS, HOWEVER THEY MAY BE CAUSED, AND DAMAGES CAUSED BY SUCH PARTY’S NEGLIGENCE, EVEN IF SUCH PARTY HAS BEEN NOTIFIED OF THE POSSIBILITY OF SUCH DAMAGE EACH PARTY RELEASES THE OTHER FROM LIABILITY THEREFROM. Exhibit A, Crane Contract, Article 23 at TPROQ000561 (emphasis added). Therefore, under Article 23 of the Crane Contract, TOTAL’s special, indirect, or consequential damage claims, are barred as a matter of law. The amount of Kinder Morgan's contribution under the Fi ing Agreement is available in Exhibit H 1 of Plaintiffs’ Motion, First Amendment to Agreement to Fund a Settlement of Claims Against TOTAL. CHUBB does not have any direct claims against Kinder Morgan. CHUBB paid part of the settlement of the Counts’ Claims against TOTAL because it is the insurer of TOTAL. CHUBB is subrogated to TOTAL’s claim for The claims against Kinder Morgan are based upon the alleged failure to obtain additional insurance coverage that would have provided coverage to TOTAL for the Counts’ Claims. TOTAL’s and CHUBB’s alleged damages are for the amounts they paid to defend and settle the Counts’ Claims. TOTAL’s Response to Kinder Morgan's Objection to Plaintiff's Proposed Summary Judgment Order at 2. In essence, they claim they would not have had to pay those amounts if Kinder Morgan had obtained what they allege was the contractually required The proper measure of damages is a question of law for the court. Allied Vista, Inc. v. Holt, 987 S.W.2d 138, 141 (Tex. App.Houston [14 Dist.] 1999, pet. denied). At common law, actual damages may be either “direct” or “consequential.” Arthur Andersen & Co. v. Perry Equip. Corp., 945 S.W.2d 812, 816 (Tex. 1997). Direct damages, which flow naturally and necessarily froma defendant’s wrongful act, compensate the plaintiff fora loss that is conclusively presumed to have been foreseen by the defendant as a usual and necessary consequence of its wrongdoing. See id. By contrast, consequential damages “result naturally, but not necessarily, from the defendant’s wrongful acts.” Stuart v. Bayless, 964 S.W.2d 920, 921 (Tex. 1998) (quoting Arthur Andersen, 945 S.W.2d at 816).Consequential damages are those damages that “require the existence of some other fact (known or unknown) beyond the relationship between the parties.” Powell Elec. Sys. v. Hewlett Packard Co., 356 S.W.3d 113, 119 (Tex. App.Houston [1st Dist.] 2011, reh’ g denied). the amount paid by CHUBB. Thus, CHUBB’s claims are subject to Kinder Morgan’ s defenses to TOTAL’s claims and damages. See Mid Continent Ins. Co. v. Liberty Mutual Ins. Co., 236 S.W.3d 765, 774 (Tex. 2007)(in a subrogation case, “the insurer stands in the shoes of the inured, obtaining only those rights held by the insured against a third party, subject to any defenses held by the third party against the insured.”) Texas courts have held that a broad array of damages are consequential damages, ncluding: penalties to third parties, loss of use of money, costs to respond to and repair a ruptured pipeline, costs to remediate contamination from a pipeline rupture, costs to repair damages to a power plant, delay costs, costs for IT development, lost salaries, replacement equipment, travel costs, lost profits, fees to use a third parties’ railroad tracks during repair, costs to rent backup generator after a power outage, loss of efficiency, excess gas and oil costs, excess labor costs, costs for replacement power, costs for testing and monitoring, and costs for future monitoring and to remove the contamination were all consequential damages under Texas law. See e.g. El Paso Mktig., LP. v. Wolf Hollow I, L.P., 383 S.W.3d 138, 139 (Tex. 2012) (replacement power and. repair costs); Tenn. Gas Pipeline Co. v. Technip United States Corp., No. 01 CV, 2008 Tex. App. LEXIS 6419, at *21 32 (Tex. App. Houston [1st Dist] Aug. 21, 2008, pet. denied) (cost for renting a backup generator, costs to pay a penalty to a third party, lost profits; loss of use of money, loss of efficiency, excess use of gas and oil, excess labor costs); Kiewit Offshore Servs. v. Dresser Rand Glob. Servs., No. H 1299, 2016 U.S. Dist. LEXIS 117835, at *34 (S.D. Tex. 2016) (delay fees even as liquidated damages); BCC Merch. Sols., Inc. v. Jet Pay, LLC, 129 F. Supp. 3d 440, 475 76 (N.D. Tex. 2015) (costs for IT Development, lost staff salaries, replacement equipment, travel costs, and lost profits); Balfour Beatty Rail, Inc. v. Kan. City S. Ry., Civil Action No. 3:10 L, 2012 U.S. Dist. LEXIS 106574, at *60 (N.D. Tex. 2012) (fees paid to use a third parties’ railroad tracks; Bechtel Corp. v. CITGO Prods. Pipeline Co., 271 S.W.3d 898 (Tex. App.Austin 2008, no pet.) (costs to res pond to a pipeline rupture, costs to repair the pipeline, costs to remediate the soil and groundwater, costs for testing and monitoring, and costs for future monitoring and to remove the contamination). TOTAL’s and CHUBB’ s alleged damages are for amounts they paid to defend and. settle the Counts’ Claims. These alleged damages are classic consequential damages claims because they may result “naturally’ from Kinder Morgan's alleged breach but they do not “necessarily” result from it. The death of Mr. Counts and the resulting damages certainly did not “necessarily” flow from the mere fact that Kinder Morgan did not obtain certain insurance. Instead, the damages would not have resulted if Mr. Counts had not been killed while working at TOTAL’s facility. Additionally, these damages “require{d] the existence of some other fact (known or unknown) beyond the relationship between the parties.” In this case, the “other fact ... beyond the relationship” between Kinder Morgan and TOTAL was the death of Mr. Counts and the damages caused by his death. Several courts applying Texas law in breach of contract actions have held that the Plaintiffs’ costs associated with third party claims are consequential damages. In this regard, courts have held that absent provisions in a statute or contract, “a plaintiff may only recover attomey’s fees and other reasonable expenses which were incurred in litigation with a third party as damages when such damages are the natural and proximate consequence of the defendant’ s wrongful conduct, i.e, when those expenses represent consequential damages.” Great Am Ins. Co. v. AFS/IBEX Fin. Servs., 612 F.3d 800, 807 (5th Cir. 2010); Lesikarv. Rappeport, 33 S.W.3d 282, 306 (Tex. App.Texarkana 2000, pet. denied). Because TOTAL’s and CHUBB’s alleged. damages are attomeys’ fees and costs incurred to defend/settle the third party Counts’ Claims, they are consequential damages, which are waived by the Crane Contract. Thus, Kinder Morgan is entitled to judgment as a matter of law against the damage claims of the Plaintiffs. Alternatively, if Plaintiffs’ damages are not waived as consequential damages, their damages are capped at the $6,000,000 combined limits set forth in the Crane Contract. TOTAL’s claim is that Kinder Morgan breached the Crane Contract because it did. not obtain additional insurance coverage for TOTAL that covered the Counts’ Claims. Kinder Morgan disagrees. However, assuming arguendo that: Kinder Morgan breached by failing to obtain the required insurance; that any such breach caused damages; and that the damages are not consequential damages expressly waived by agreement, Plaintiffs’ damages are limited to $6,000,000, less amounts Kinder Morgan has already paid. The Crane Contract only required a total of $6,000,000 in insurance limits. Specifically, the Crane Contract states: (b) COMMERCIAL GENERAL LIABILITY INSURANCE Including, but not limited to, coverage for death, bodily injury and. property damage, broad for contractual liability Insuring the Indenmity agreement, if any, set forth in this Contract and products completed operations coverage with limits of not less than $1,000,000 applicable to bodily injury, sickness or death for any once occurrence and $1,000,000 for loss or damage to property for any one occurrence (d) EXCESS LIABILITY INSURANCE Excess (umbrella) liability coverage following form and in excess of the limits and terms of (a), (b), and (c) above, with a combined. single limit for death, bodily injury and/or property damage of not less than $5,000,000 for each occurrence. ExhibitA, Crane Contract, Insurance Requirements at TPRO0000581. As fully acknowledged by TOTAL and set forth in Exhibit H 1 of Plaintiffs’ Motion (First Amendment to Agreement to Fund a Settlement of Claims Against TOTAL), Kinder Morgan has already contributed a significant portion of this sum toward the settlement of the Counts’ Claims subject to the Funding A: Defense costs are not in excess of the $6 million limits. There was nothing in the Crane Contract stating that apolicy could not be an “exhausting” policy where defense costs are included and erode the $6 million policy limits. See Phillips Petroleum Co. v. St Paul Fire & marine Ins. Co., 113 S.W.3d 37 (Tex. App.Houston [1 Dist] 2003, ‘pet denied) (reading an unspecified requirement for a CGL policy to necessarily mean that there is an unlimited duty ‘to defend until liability limits are exhausted by settlements or judgments requires the insertion of terms which the court may not do). Essentially, Plaintiffs’ argument is that Kinder Morgan was required, but failed, to obtain at least $6 million of general liability coverage that would have also insured TOTAL as an additional insured for the Counts’ Claims. If Kinder Morgan committed a breach in this regard, andif that breach caused damages, the damages are for not getting the allegedly required minimum coverage for TOTAL, which was $6 million. Kinder Morgan cannot be and is not liable for failing to obtain more coverage for TOTAL than was required by the Crane Contract. Plaintiffs’ argument that they are entitled to more than the $6 million limits is based entirely on aclearmisreading of one phrase in the Crane Contract. Plaintiffs’ allege that the “Crane Contract also obligated Kinder Morgan to make TOTAL ... Additional Insureds not only on the minimum required insurance but on ‘all insurance carried by [Kinder Morgan], except Worker’ Compensation and Employer liability, whether required [by the Crane Contract or not].” See Plaintiff Motion for Final Summary Judgment at p. 7. In its full context, the Crane Contract provision at issue provides as follows: Before any of the Work is commenced and during the entire progress of the Work, TGS [Kinder Morgan] shall at TGS’ [Kinder Morgan] sole cost and expense, cause to be issued and maintained insurance coverage as set forth n ExhibitX attached hereto and made a part hereof for all purposes. As outlined in greater detail in Exhibit X, all insurance camied by TGS [Kinder Morgan], except Worker's Compensation and Employer Liability, whether required hereby shall be endorsed to make TOTAL PETROCHEMICALS USA, INC. ... additional insureds. Exhibit A, Crane Contract at TPRO0000556. Plaintiffs argue that the phrase “whether required hereby” modifies “all insurance camied by Kinder Morgan” and since Kinder Morgan carried. a $10 million SIR and a $25 million excess policy it is entitled to those benefits. However, read in its proper context the phrase “whether required hereby” follows “as outlined in greater detail in Exhibit X” and modifies workers compensation and employers liability. Thus, this provision should be read as “whether ornot ExhibitX requires workers compensation or employers liability, TOTAL is not to be named. as an additional insured on those policies.” If “whether required hereby” was applied to “all insurance camied by [Kinder Morgan]” as suggested by Plaintiffs, it would lead to an absurd result. TOTAL, by virtue of this contract for Crane Services at one facility in Texas, would be entitled to claim additional insured status on every single policy of insurance carried by Kinder Morgan, including its first party property policies insuring property all over the country, its directors & officers policies, its commercial crime policies, its employment practices policies, its fiduciary liability policies, its terrorism policies, its maritime protection and indenmity policies, every excess orumbrella policy, andonandon. Reading the clause in the proper manner, Plaintiffs simply have no argument whatsoever for coverage beyond the specified policies and limits set forth n Exhibit X to the Crane ContractCGL coverage with combined limits of $6 million. Therefore, because the Crane Contract only required $6,000,000 in combined limits, in the event of a breach that caused damages that were not consequential damages, such damages are limited to $6,000,000, less any payments already made by Kinder Morgan. CONCLUSION In Conclusion, Plaintiffs bring a breach of contract claim against Kinder Morgan seeking Plaintiffs’ costs to defend and settle a third party death claim as damages. Those damages are classic consequential damages under Texas law. The Crane Contract contains a valid waiver and release of consequential damages. Thus, Plaintiffs have waived the right to recover such damages as a matter of law. In the altemative, in the unlikely event that the court finds that the recovery of consequential damages was not waived, the damages are limited by the Crane Contract to the combined limits of $6,000,000 specified in the Crane Contract. PRAYER Defendants Kinder Morgan Petcoke, LP and Kinder Morgan Petcoke GP LLC pray that their motion for partial summary judgment on damages be granted, and that it recover all other relief at law or in equity to which they are entitled. Respectfully submitted, MUNSCH HARDT KOPF & HARR, P.C. By: /s/ James M. Bettis, Jr. James M. Bettis, Jr. jbettis@munsch.com State Bar No. 02268650 Justin K. Ratley State Bar No. jretley@munsch.com. 700 Milam Street, Suite 2700 Houston, Texas 77002 Tel: (713) 222 Fax: (713) 222 Emest “Butch” Boyd Jr. State Bar No. 00783694. butchboyd@butchboydlawfimm.com UICH OYD AW IRM 2905 Sackett St. Houston, Texas 77098 Tel: (713) 589 ATTORNEYS FOR DEFENDANTS, KINDER MORGAN PETCOKE, LP AND KINDER MORGAN PETCOKE GP, LLC CERTIFICATE OF SERVICE hereby certify that a true and correct copy of the foregoing has been electronically filed and served on the following counsel of record on this the 13th day of August, 2019 in accordance with the Texas Rules of Civil Procedure: Jack G. Camegie Kelly H. Leonard Strasburger & Price, LLP 909 Fannin, Suite 2300 Houston, Texas 77010 Jack.camegie@strasburger.com Kelly.leonard@strasburger.com Sarah R. Sm Lewis Brisbois Bisgaard & Smith, LLP 24 East Greenway Plaza, Suite 1400 Houston, Texas 77046 Sarah. Smith@lewishrisbois.com /s/ James M. Bettis, Tr. James M. Bettis, Jr. 4846 6901 7504v.1