      TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN


                                ON MOTION FOR REHEARING


                                      NO. 03-08-00219-CV



            Senna Hills, Ltd. and HBH Development Company, LLC, Appellants

                                                v.

                              Sonterra Energy Corporation, Appellee


     FROM THE DISTRICT COURT OF TRAVIS COUNTY, 53RD JUDICIAL DISTRICT
                   NOS. D-1-GN-05-001625 & D-1-GN-05-001526
            HONORABLE STEPHEN YELENOSKY, JUDGE PRESIDING



                                DISSENTING OPINION


               We withdraw our opinion and judgment dated July 3, 2009, and substitute

the following in its place.

               I, too, believe that the language of the Propane Service Agreements is unambiguous

and can be given a definite legal meaning. However, I believe that the trial court’s reading of the

contractual language was correct and disagree with the majority’s interpretation of the Agreements.

Therefore, I respectfully dissent from the majority’s opinion.

               Both Agreements have the following relevant provisions:


               •       The paragraph titled “Easement Use Fee,” which states,
                       “Except as provided below, Developer’s right to receive an
                       Easement Use Fee shall continue for so long as the Propane
                      System is a propane system and the Propane System is owned
                      by Southern Union,” and

               •      The paragraph titled “Assignments,” which provides,
                      “Southern Union shall have the right to transfer and assign, in
                      whole or in part, all and every feature of its rights and
                      obligations under this Letter Agreement and in the Propane
                      System . . . . In such event, Southern Union shall be released
                      from any further obligation under this Letter Agreement and
                      Developer agrees to look solely to Southern Union’s
                      successor for the performance of such obligations.”


Significantly, the January 1997 Agreement also has two other paragraphs that touch on or address

the Easement Use Fees. Under Paragraph 6, titled “Developer Bonus,” the Developers have the

right to receive a “Developer’s Bonus” if the system was converted to a natural gas system or if

Southern Union sold the system to an unaffiliated company. Under paragraph 7, titled “Right to

Continue to Receive Easement Use Fee,” if following a system conversion the Developers did

not notify Southern Union that they were electing to receive a Developer’s Bonus, the Developers

had the right to continue receiving Easement Use Fees for two years after the conversion, fees

that otherwise would have ceased upon the conversion of the system to something other than a

propane system.

               Ignoring the clear and unambiguous language of the “Easement Use Fee” paragraphs,

which condition the Developers’ right to receive the fee upon Southern Union’s ownership of the

system, the majority determines that the Assignments paragraphs should be read as transferring

Southern Union’s obligation to pay Easement Use Fees to Southern Union’s successor. What the

majority fails to recognize or address is that the relevant portions of the Agreements do not speak

in terms of Southern Union’s obligation to pay the fees. The Agreements provide instead that


                                                2
the Developers’ right to receive the payments continued only for so long as Southern Union owned

the system. Thus, when Southern Union sold the system to ONEOK in 2003, the Developers no

longer had the right to look to anyone for payment of the fees. In other words, the Agreements

unambiguously provided that upon Southern Union’s sale of the system, the “Developer’s right to

receive an Easement Use Fee” ceased and was not assigned to Southern Union’s successor.

               The majority, while it does not expressly say so, apparently attaches significance to

the phrase “[e]xcept as provided below,” for it is only through reference to this qualifying phrase

that it may overlook the plain language terminating the Developers’ right to receive the easement use

fee upon the sale of the system. I do not, however, read the “[e]xcept as provided below” portion of

the Easement Use Fees paragraphs as referring to the Assignment paragraphs. Instead, I believe

that “[e]xcept as provided below” is general boilerplate language and essentially surplusage unless

the parties supplied additional terms and conditions related to the fees, as they did in the January

1997 Agreement, wherein paragraphs 6 and 7 provide circumstances under which the Developers’

right to receive the fees could continue for another two years rather than terminating if Southern

Union converted the system to natural gas.1

               While the Assignment provisions do state that Southern Union would require its

successor to assume Southern Union’s contractual obligations, the Easement Use Fees paragraphs

plainly state that Southern Union’s obligation to pay the fees and, more importantly, the Developers’

“right to receive” the fees terminated once the system was sold to an unaffiliated company. The




       1
         Notably, the September 1998 Austin’s Colony contract makes no provision for a
continuation of the fees beyond the sale or conversion of the system.

                                                 3
Assignment paragraphs would not, therefore, transfer an obligation to pay the fees to the system’s

purchaser simply because the purchase would have ended the Developers’ right to receive such fees.

               I would hold that the plain language of the Agreements provides that the

Developers no longer had a right to receive the Easement Use Fees once Southern Union sold the

system to ONEOK. The language is clear, definite, and unambiguous, and under my reading of

the Agreements, it is possible to enforce the contracts exactly as written, without disregarding,

overlooking, or finessing any of the contractual provisions. See J.M. Davidson, Inc. v. Webster,

128 S.W.3d 223, 229 (Tex. 2003). Because I disagree with the majority’s conclusion that the

obligation to pay the fees survived the sale and was assigned to Southern Union’s successors along

with Southern Union’s other contractual obligations, I respectfully dissent.



                                             __________________________________________

                                             David Puryear, Justice

Before Chief Justice Jones, Justices Puryear and Henson

Filed: January 15, 2010




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