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Angus Chem. Co. v. Glendora Plantation, Inc. - 782 F.3d 175 (5th Cir. 2015)

Rule:

Only when there is a choice of reasonable interpretations of the contract is there a material fact issue concerning the parties' intent that would preclude summary judgment. 

Facts:

Angus owns a facility in Sterlington, Louisiana, that produces nitroparaffin products, a byproduct of which is wastewater containing formaldehyde and acetone. The wastewater is removed through an underground pipeline that goes through land owned by others to a wastewater treatment plant three and one-half miles away. In 1978, IMC Chemical Group, Inc. (IMC), Angus's predecessor-in-interest, obtained rights of way or servitudes from the other landowners to construct and operate a wastewater pipeline. At issue here is the "Right of Way Easement Option" granted by George and Mary Tilford Smelser on March 28, 1978, to IMC and its successors and assigns. 

IMC constructed a 12" pipeline from its Sterlington plant, across the Smelser property, and to its wastewater treatment facility. Angus subsequently purchased the rights from IMC, and Glendora purchased the Smelser property. Angus sought permission to abandon the 12" pipeline from the affected landowners, and all but Glendora agreed. Angus filed a complaint seeking a declaratory judgment that (1) Angus has a valid servitude; (2) per the servitude, Angus may abandon the 12" pipeline after a new pipeline is in service; (3) Angus may lay a 16" pipeline, fiber optic cables, and a tracer wire; (4) the servitude will be 50' wide during construction of the 16" pipeline and 30' wide thereafter; and (5) Angus will have right of ingress and egress during construction. The district court granted Angus's motion for partial summary judgment, and Glendora appealed.

Issue:

Did the district court err when it granted the motion for partial summary judgment? (b) Did the District Court err when it considered extrinsic evidence?

Answer:

(a) Yes (b) Yes

Conclusion:

(a) The district court erred in granting a chemical company's motion for partial summary judgment in its action seeking a declaratory judgment that it had a valid servitude, that it could abandon a pipeline, and that it would have right of ingress and egress during construction because there was a material fact issue as to whether a right-of-way easement option required the removal of the pipeline. It is too much of a stretch to say that the Agreement is clear and unambiguous in its language when there are multiple reasonable interpretations of the implications of the word "replace." There is a material fact issue as to whether the Agreement requires the removal of the 12" pipeline; (b) Regardless of whether the agreement was ambiguous, it was improper for the district court to have considered extrinsic evidence. There was ambiguity in the option agreement as to whether the right to "replace" a pipeline included an obligation to remove the older pipeline that was being replaced.

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