HOUSTON– After a full trial on the merits, a judge in the new Texas business court ruled that although Antero Resources Corp., one of the largest U.S. suppliers of natural gas and LPG, had won earlier rulings against a West Virginia pipeline owner, Stonewall Gas Gathering L.L.C., Antero would take only $1 of the $200 million it wanted in a breach of contract case under a “favored shipper” provision in a gas gathering agreement.
Antero alleged that when AZA client Stonewall entered new contracts listing lower rates with others, Antero was automatically entitled to those rates upon Stonewall’s execution of the new contracts. Stonewall argued that Antero was not entitled to an automatic reduction because Stonewall had yet to deliver gas and charge those lower rates, and that Stonewall would adjust the contract rates upward to match Antero’s rate if necessary.
Judge Patrick K. Sweeten of the Third Division of the Business Court of Texas ruled April 2 that although Antero could indeed get the same potentially lower rates in new pipeline contracts, but it could only get that rate when Stonewall delivers and charges gas at lower rates. No gas had been delivered and billed under the new contracts as of the time of trial earlier this year and Judge Sweeten ruled that Antero was therefore not entitled to the past and future damages it sought
“Antero sued asking for $200 million in damages. It is rewarding for Stonewall to have prevailed and defeated this claim by continuing to defend the case vigorously through trial,” said Todd Mensing, Stonewall lawyer on the case.
The 67-mile Stonewall pipeline is in West Virginia in the Marcellus Shale area of the Appalachian Basin. Stonewall is a subsidiary of DT Midstream, Inc. in Detroit.
The four-day trial was held in Houston in late January and was the second bench trial completed by one of Texas’ new business courts. The first bench trial was also won by AZA when the judge ruled its client validly invoked force majeure and was not liable for $26.5 million in damages related to natural gas deliveries it could not make during Winter Storm Uri.
The 15-year contract between Antero and Stonewall was signed in 2014. Antero sued in 2024 after Stonewall signed three new contracts with what Antero alleged were lower rates, thereby, according to Antero, triggering an automatic reduction in Antero’s rate. The judge assessed Stonewall $1 in damages for not providing the new contracts under the parties’ audit provision in the gas gathering agreement when Antero originally asked for them.
Mr. Mensing tried the case with fellow AZA lawyers D.J. Ringquist, Nicholas Petree, Brittainie Zinsmeyer, Al Montelongo, and Kelsi White. Vinson & Elkins represented Antero.
This case was covered by the media in Law360’s “Pipeline Operator Avoids $205M Damages In Gas Deal Dispute.” (subscription required), Texas Lawyer’s “‘Critical’ Piece of Evidence Yields Just $1 Judgment in Texas Business Court.” (subscription required) and Texas Lawbook’s “Pipeline Owner Sued for $200M Breach Owes $1 Biz Court Determines.” (subscription required).
Houston trial boutique Ahmad Zavitsanos & Mensing, or AZA, has earned repeated recognition from Chambers USA among the best in Texas in commercial law and intellectual property; the firm has been listed by Best Lawyers’ Best Law Firms as one of the country’s best commercial litigation firms for 13 years; has been named Litigation Department of the Year by Texas Lawyer three times; and was dubbed a Texas Powerhouse law firm by Law360.