#United States #Energy Transfer #Cardinal Midstream #Reese Marketos #Beaver County

Landmark Verdict for Cardinal Midstream

In a significant legal triumph, Cardinal Midstream II, LLC was awarded nearly $52 million by a Pennsylvania state court, resolving a protracted contract dispute with Energy Transfer, LP. This verdict marks a pivotal moment in a case that spotlighted significant breaches of agreement and negligence in construction practices by Energy Transfer.

Overview of the Dispute

The dispute originated from an earnout payment that Energy Transfer allegedly failed to pay to Cardinal Midstream as part of a larger transaction involving a gathering system, which was sold in 2017. Cardinal Midstream argued that Energy Transfer’s direct connection of the gathering system into its own pipeline violated their contractual terms, effectively monopolizing gas flow for its own refinery.

The legal battles, which unfolded through an 18-day bench trial presided over by Hon. James J. Ross, saw the court conclude that Energy Transfer was liable for breaching its obligations. This breach was primarily related to an earnout payment of $33 million, which was deemed owed but unpaid, alongside nearly $19 million in prejudgment interest.

Court Findings

Judge Ross’s ruling was particularly critical of Energy Transfer's conduct, stating, “Energy Transfer's greed overcame legal requirements.” The court's findings included that:

• - Energy Transfer’s actions had left the gathering system ill-equipped to meet the contractual provisions.
• - The negligence in the construction of its 40.5-mile Revolution Pipeline contributed to a serious explosion shortly after the earnout period commenced, thereby undermining Energy Transfer's attempts at invoking a force majeure defense.

The ruling reflects a meticulously designed opinion derived from extensive testimony and evidence, including over 1,500 exhibits and 65 potential witnesses. The trial featured testimony from key executives of Energy Transfer, some of which was described by the court as “programmed” and lacking credibility, raising concerns on the reliability of their statements under cross-examination.

Legal Representation and Preparation

The Reese Marketos team, led by attorney Joel Reese, stepped in just four months before the begining of the trial. Reese's formidable representation demonstrated significant expertise in handling such high-stakes litigation, bringing forward a comprehensive approach to the case’s various elements.
Other members of the legal team included partners Pete Marketos, Josh Russ, and Adam Sanderson, showcasing their collaborative efforts in navigating through the complexities of the trial.

Conclusion

This landmark ruling not only reinforces the importance of contractual adherence in corporate relationships but also serves as a crucial precedent in similar commercial disputes within the energy sector. For Cardinal Midstream, the victory against Energy Transfer underscores both resilience in legal battles and the reliability of proper representation in navigating corporate complexities effectively.

As companies like Reese Marketos continue to champion for their clients in high-profile disputes, this case stands testament to the rigor and resolve necessary in today’s competitive business environment. For more insights regarding their impactful litigation experiences, visit rm-firm.com.