Seminole Pipeline Co. v. Broad Leaf Partners, Inc.

• Decision Date: 15 October 1998
• Docket Number: No. 14-96-00825-CV,14-96-00825-CV
• Citation: 979 S.W.2d 730
• Parties: SEMINOLE PIPELINE COMPANY, MAPCO, INC., and Mid-america Pipeline Company, Appellants, v. BROAD LEAF PARTNERS, INC., Pierre Cavaness, Carolyn Cavaness, Betty Crawford, Dr. Robert Hardie, Herbert Klatte, Esther Mae Klatte, James Jeffress, Sonya Jeffress, James Nitsch, Lois Nitsch, Charles Nitsch, Roy White, Dorothy White, David Schulz, Vicki Schulz, W.W. O'Donnell, Regina O'Donnell, W.H. Tonn, III, and Jeanne Tonn, as Independent Executrix of the Estate of W.H. Tonn, Appellees. (14th Dist.)
• Court: Texas Court of Appeals

Page 730

979 S.W.2d 730

SEMINOLE PIPELINE COMPANY, MAPCO, INC., and Mid-america Pipeline Company, Appellants, v. BROAD LEAF PARTNERS, INC., Pierre Cavaness, Carolyn Cavaness, Betty Crawford, Dr. Robert Hardie, Herbert Klatte Esther Mae Klatte, James Jeffress, Sonya Jeffress, James Nitsch, Lois Nitsch, Charles Nitsch, Roy White, Dorothy White, David Schulz, Vicki Schulz, W.W. O'Donnell, Regina O'Donnell, W.H. Tonn, III, and Jeanne Tonn, as Independent Executrix of the Estate of W.H. Tonn, Appellees.

No. 14-96-00825-CV.

Court of Appeals of Texas Houston (14th Dist.).

Oct. 15, 1998.

Kevin F. Risley, Frank W. Gerold, Houston, William Charles Powers, Austin, for appellants.

Joseph A. Garnett, Lauren L. Beck, Houston, George Chandler, Lufkin, Richard Sheehy, Walter Zivley, Michael C. Clark, Houston, for appellees.

Before YATES, HUDSON and FOWLER, JJ.

OPINION

HUDSON, Justice.

This is an appeal from a suit arising out of an explosion at an underground salt-dome storage facility and pipeline pumping station. Twenty-two plaintiffs sued appellants, Seminole Pipeline Company, MAPCO, Incorporated, and Mid-America Pipeline, for damages resulting from the explosion. ¹

On appellants' motion, the trial was bifurcated. Phase one of the trial resolved liability issues on actual and punitive damages, and determined the amount of the plaintiff's compensatory damages. The jury found each of the defendants (1) was negligent; (2) created a nuisance by their use of the property; (3) was grossly negligent; (4) acted with malice; (5) proximately caused the plaintiffs' damages by their negligence; and (6) created a permanent nuisance. Also finding appellants jointly and severally liable for the total amount of plaintiffs' damages, the jury awarded appellees approximately 5.4 million dollars in actual damages for property damage and mental anguish. In phase two, the jury assessed punitive damages and awarded appellees 46 million dollars in exemplary damages against each appellant.

After several post-verdict hearings, the trial court reduced the exemplary damage award from 46 million dollars to four times the amount of actual damages, or approximately 21.6 million dollars. The trial court rendered judgment and the defendants appealed, raising forty-six points of error. A number of plaintiffs filed cross-appeals.

On February 27, 1998, appellants and ten of the appellees, Pierre Cavaness, Carolyn Cavaness, Betty Crawford, Individually and as Trustee of the Betty A. Crawford Trust, Robert Hardie, James Jeffress, Sonya Jeffress, Charles E. Nitsch, James A. Nitsch, Lois B. Nitsch, and David Schulz, filed a joint motion to dismiss all claims between them on appeal. We granted their motion and issued an opinion on March 26, 1998. On March 27, 1998, appellants and six appellees, Broad Leaf Partners, Ltd., Herbert Klatte, Esther Mae Klatte, Roy White, Dorothy White, and Vicki Schulz, also filed a joint motion to dismiss. On April 30, 1998, this court granted the motion and ordered all points of error asserted by appellants against the settling appellees and all cross-points of error asserted by the settling appellees dismissed.

Twenty-two of appellants' points of error remain for our consideration. Appellants contend (1) the evidence is legally and factually insufficient to support the jury's finding of negligence and gross negligence, (2) the trial court misapplied the statutory cap on punitive damages and such damages are excessive, (3) the award for mental anguish is not supported by legally or factually sufficient evidence and is excessive, (4) the issue of mental anguish was improperly submitted to the jury, and (5) the trial court erred in calculating the amount of prejudgment interest. Appellees, W.W. O'Donnell, Regina O'Donnell, W.H. Tonn, III, and Jeanne Tonn, as Executrix of the Estate of W.H. Tonn, II, bring seven cross-points. We affirm the judgment of the trial court in part and also reverse and remand in part.

I. CONSTRUCTION AND HISTORY OF THE BRENHAM CAVERN

As common carrier pipeline companies, appellants transport ethane, propane, butane and other natural gas liquids (also known as NGL or LPG) through their pipeline networks. These products are actually gases, but they are most efficiently transported and stored while in a liquid state. To maintain these products in liquid form they must either be compressed or cooled. If they are not pressurized, these liquids will quickly revert back into a gaseous state at normal temperatures. ² To enhance their ability to deliver an uninterrupted supply of natural gas liquids, appellants have constructed a series of underground reservoirs into which they can divert and maintain these products under pressure. When appellants' supply of natural gas liquids exceeds demand, the excess product is diverted into an underground cavern. Likewise, when demand exceeds the supply, appellants make up the difference by drawing from their reserves.

Appellants began construction of the Brenham saltdome cavern storage facility in 1980, by a procedure known as "washing." Fresh water was injected into an underground salt formation and the resulting brine was extracted. By this method, appellants "washed out" a huge subterranean cavern. In 1981, appellants obtained a permit from the Texas Railroad Commission to use the cavern as a storage facility for up to 150,000 barrels of natural gas liquids.

NOTE: OPINION CONTAINS TABLE OR OTHER DATA THAT IS NOT VIEWABLE

Normally, natural gas liquids stored in saltdome caverns "float" on an underground lake of heavy brine where they are safely contained under pressure. ³ When additional natural gas liquids are injected into the cavern, brine is displaced and forced to the surface through a pipe known as the "brine string." The excess brine is collected in a large surface pit. When natural gas liquids are extracted from the reservoir, brine from the surface pit refills the cavern and keeps the remaining product under pressure. Thus, while the product inventory may vary from day to day, there remains an unbroken "string of brine" linking the brine pit on the surface with the brine lake at the bottom of the subterranean cavern. The weight of the brine within the brine string maintains pressure on the cavern and prevents the stored natural gas liquids from vaporizing and escaping to the surface.

If incoming product pushes the brine level below the bottom of the brine string, natural gas liquids will flow through the brine string to the surface. As the column of brine is displaced by product in the brine string, the pressure in the reservoir falls, natural gas liquids within the brine string and reservoir vaporize, and a "geyser" of escaping gas spews from the brine pit. As the pressure exerted on the product lessens, the flow of gas increases, and, if the path to the surface is not closed by mechanical means, all of the product inventory in the cavern will vaporize and escape into the atmosphere. When mixed with oxygen, NGL vapor is extremely flammable and capable of explosive ignition. ⁴ Because of this potential hazard, the cavern operator must carefully monitor the facility's inventory to insure that it never exceeds the capacity of the reservoir.

To prevent product escaping in the event of an accidental overflow, appellants equipped the brine string at the Brenham cavern with a pressure sensing device called a Barksdale switch. Theoretically, if gas escaped through the brine string, the Barksdale switch would detect the drop in pressure and activate a trip check system. Safety mechanisms would then automatically seal the cavern and prevent additional vapor from escaping into the air. The facility also had between 20 and 25 hazardous gas sensors around the facility to detect any escaping vapor. These sensors were connected to a trip check alarm inside the facility's office. Appellants also installed monitors to detect changes in cavern pressure, and to indicate the volume of product entering or leaving the cavern. Moreover, the hazardous gas sensors were monitored 24 hours a day in Mid-America's home office in Tulsa, Oklahoma by means of a computer network.

From 1981 until the date of the explosion, Seminole periodically increased the facility's storage capacity by "washing" the cavern with fresh water and further eroding the salt dome. Brine that could not be stored in surface holding pits was sold to outside vendors and transported off site. By November of 1991, Seminole had increased the Brenham cavern's storage capacity from 150,000 to 336,600 barrels. Seminole informed the Texas Railroad Commission of its new storage capacity and set the working capacity of the cavern at 300,000 barrels, 90% of the actual calculated capacity.

On March 31, 1992, Troy Boisen, a Mid-American employee living in Brenham, conducted a routine check of the trip check system, and found it to be operating normally.

II. THE ACCIDENT

On April 7, 1992, at approximately 6:09 a.m., a hazardous gas alarm sounded at Mid-America's office in Tulsa, Oklahoma. At 6:10 a.m., Dwight Aryain, the dispatcher monitoring the facility, called Boisen and informed him that a "hazardous gas fault" alarm had been activated at the cavern. Aryain asked Boisen to drive to the facility to determine the source of the signal. Boisen arose, took a shower, dressed, and stopped at a convenience store for a soft drink. He arrived at the cavern approximately 20 minutes after receiving the call.

Boisen immediately observed that a large cloud of "fog" had engulfed the facility. ⁵ When Boisen attempted to turn off the engine of his diesel pickup, the motor continued to run on the airborne gas vapor. Concluding there was probably not enough oxygen in the air to sustain him long enough to get to the facility's manual shut-off valve, Boisen retreated to the house of some nearby residents. From there, Boisen telephoned the Tulsa dispatch office and advised it of the hazardous gas situation. He then called...