Coffeyville Resources v. ExxonMobil Pipeline Company: What is the effect of a “void” assignment?

ExxonMobil Pipeline owned a 1944 pipeline easement crossing a 126.7-acre tract. Its predecessor Humble Pipeline constructed an 11-mile pipeline crossing the tract. In 2000 ExxonMobil sold the pipeline to Salter Creek Resources. The assignment provided that “This Agreement may not be assigned, in whole or in part, without the prior written consent of the other Party hereto, and any such assignment that is made without such consent shall be void and of no force and effect.”  Salter Creek assigned the easement to Coffeyville Resources, which assigned it to Rose Rock, which assigned it to SemGreen–all without obtaining ExxonMobil’s consent.

In 2017, the owner of the 126-acre tract discovered crude seeping into a stream and complained to the Railroad Commission, which determined that the leak occurred when ExxonMobil was the owner and ordered it to clean up the spill. ExxonMobil sued Coffeyville, Salter Creek, Rose Rock and SemGreen alleging they had responsibility under the assumption of liability provisions of the original assignment.

In Coffeyville Resources v. ExxonMobil Pipeline Company, the Tyler Court of Appeals held that, because no consents to assignment were obtained, the assignments were void, so the defendants had no liability for the spill. ExxonMobil argued that it had impliedly consented to the assignment; the court held it could not do so because written consent to the assignment was required. ExxonMobil argued that it could choose whether or not to enforce the consent requirement; the Court disagreed. “Under the consent to assign provision … any assignment without written consent is void and not merely voidable.” Exxon elected not to appeal.

The evidence produced showed that it will cost ExxonMobil $2 million to remediate the spill.