Texas Business Court Decision – Tuesday, May 20, 2025
No. 25-BC11B-005 NGL Water Solutions Permian, LLC v. Lime Rock Resources V-A, L.P. etc., et al. (Eleventh Division, Judge Dorfman)
Civil case – Venue. Plaintiff operates wastewater disposal wells in the Permian Basin, including wells in Loving County, Texas; defendant Pecos Valley holds leasehold mineral rights and operates oil and gas wells in the vicinity of plaintiff’s Colt McCoy SWD No. 3 well in Loving County. Defendant informed plaintiff that its injected wastewater had escaped confinement and damaged defendant’s well. Plaintiff and defendant entered into a Mutual Standstill Agreement to facilitate settlement discussions but were unable to resolve the matter. When the Agreement expired, plaintiff filed this declaratory judgment action seeking a declaration it was not responsible for the damages; it also contended that a damages waiver provision in a Shut In Agreement between it and defendant Lime Rock shielded it from liability; the Shut In Agreement contained a venue-selection clause stipulating that any lawsuits arising from the agreement had to be litigated exclusively in Harris County. After plaintiff filed the action, Pecos Valley filed a petition in Loving County, alleging, among other things, trespass and negligence, and seeking a declaratory judgment that plaintiff’s operations violated Pecos Valley’s right to possession and use of its mineral rights. Defendants then filed a motion to transfer venue with the Business Court, asserting mandatory venue lies in Loving County because this is a dispute involving real property governed by Section 15.011 of the Texas Civil Practice & Remedies Code. Plaintiff asserts venue is proper in Harris County.
Held:
(1) The essence of this dispute is an action to recover damages to real property; that a suit may sound in declaratory judgment does not alter the essential character of the dispute.
(2) The immunity plaintiff seeks based on the Shut In Agreement plainly affects defendant Pecos Valley’s interest in real properly in Loving County. Because the dispute concerns the attempted recovery of damages to real property, it must be transferred to Loving County.
(3) Alternatively, plaintiff’s suit involves an effort to recover an interest in real property within the meaning of Section 15.011; because plaintiff’s suit seeks to insulate it from liability for invasion of Pecos Valley’s real property in Loving County, Section 15.011 mandates that venue shall lay in Loving County.
(4) The venue-selection clause in the Shut In Agreement does not supersede Section 15.011; venue-selection clauses are generally unenforceable in Texas unless the contract constituted a “major transaction” as defined by Texas Civil Practice and Remedies Code Section 15.020(a). Major transactions are defined in that section as involving disputes of $1 million or more, but the Shut In Agreement states no value and imposes no monetary obligation on either party.
(5) With respect to plaintiff’s argument that the Business Court statute contains an exception to the general rule and does not require a major transaction, even if that argument is correct, Section 25A.006(a) is at most a permissive venue provision and the mandatory venue for real property disputes in Section 15.004 “beats permissive venue, every time.”
(6) This dispute, properly understood, affects recovery of an interest in real property or seeks immunity from a claim for alleged damages to real property in Loving County, and Loving County is the legally required venue. Defendants’ motion to transfer is granted.
(7) Although the court offered the plaintiff time to do so, plaintiff did not make an election pursuant to TEX. GOV’T CODE Sec. 25A.006(b) or (c) “and so the Court believes it lacks authority to transfer the case to Loving County. Accordingly, the Court dismisses this cause without prejudice.”