The Tyler Court of Appeals reversed a $2.5 million judgment against pipeline successors (Coffeyville Resources Crude Transportation, LLC v. ExxonMobil Pipeline Co., No. 12-23-00276-CV, 2025 WL 356222 [Tex. App.—Tyler Jan. 31, 2025, n.p.h.]), holding that an assignment made without required written consent was void ab initio and broke the chain of title for all subsequent transfers. The decision underscores Texas courts' commitment to enforcing consent-to-assign provisions as written, particularly when contracts explicitly state that non-compliant assignments are "void."
From 1944 to 2017: How a Forgotten Pipeline Consent Clause Sparked a Multi-Million Dollar Battle
In 1944, P.K. Birdwell granted Humble Pipe Line Company (ExxonMobil's predecessor) a pipeline easement across 126.7 acres for transporting oil, gas, and water. Humble built the Sand Flat Pipeline and later added a tank battery and flowline. ExxonMobil sold the tank battery and flowline to Scurlock Oil Company in 1974, and these facilities were demolished by 1978.
In October 2000, ExxonMobil entered into a Purchase and Sale Agreement (PSA) with Salter Creek Resources LLC to sell certain pipeline assets, including the Sand Flat Pipeline. Critically, Paragraph 23 of the PSA provided: "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."
Two months later, Salter Creek assigned its PSA interests to Seminole Creek, Ltd. (later Coffeyville) through a General Assignment document—without obtaining ExxonMobil's written consent. The pipeline and easement then passed through subsequent transfers: Coffeyville to Rose Rock (2007) and Rose Rock to SemGreen (2011).
In 2017, crude oil was discovered seeping into a stream on the property. The Texas Railroad Commission investigated and found "sufficient evidence to indicate that the crude oil release originated in the flow line while it was being operated by predecessor entities to ExxonMobil." The Commission ordered ExxonMobil to remediate. ExxonMobil then sued all downstream owners, claiming they had assumed liability for the spill under the PSA.
The Four Words That Changed Everything: "Void and of No Force and Effect"
The court began its analysis with fundamental contract interpretation principles, emphasizing that courts must "presume that the parties thereto intended every clause to have some effect." (citing Birnbaum v. SWEPI LP, 48 S.W.3d 254, 257 (Tex. App. - San Antonio 2001, pet. denied)). The court then examined whether Salter Creek's assignment to Coffeyville violated the PSA's consent requirement.
ExxonMobil advanced several arguments to avoid the provision's plain language. First, it claimed to have impliedly consented because the PSA was part of a larger transaction binder. The court rejected this, noting that the provision explicitly required "written" consent, making implied consent impossible under the contract's express terms.
Why Courts Won't Let You Split the Baby: Assets and Liabilities Travel Together
ExxonMobil also argued that the consent provision applied only to assignments of the PSA itself, not to the underlying assets, and that Coffeyville had "assumed" obligations rather than receiving them by "assignment." The court found this distinction untenable, observing that "[i]t is axiomatic that the parties would not have assumed the liabilities associated with the PSA's assets without the assignment of those assets as well."
The Legal Distinction That Matters: When "Void" Isn't "Voidable"
Most significantly, ExxonMobil contended it could waive the consent requirement, citing Twelve Oaks Tower I, Ltd. v. Premier Allergy, Inc., 938 S.W.2d 102 (Tex. App. - Houston [14th Dist.] 1996, no pet.). The court distinguished Twelve Oaks, which involved a landlord-tenant subletting provision that made unauthorized assignments merely "voidable." In contrast, the PSA stated that non-compliant assignments "shall be void and of no force and effect."
The court emphasized a critical distinction: the PSA's provision protected both parties equally and benefited both sides of the transaction, unlike typical landlord consent provisions that exist solely for the landlord's protection. Therefore, the parties' chosen language - making unauthorized assignments "void" rather than "voidable" - must be enforced as written.
When Title Dominoes Fall: How One Void Assignment Destroyed an Entire Chain
Having found that Salter Creek's assignment to Coffeyville was "void and of no effect," the court reached the inevitable conclusion: "Coffeyville had no interest in the Birdwell Easement to assign or convey to Rose Rock and SemGreen." All subsequent transfers failed because Coffeyville never acquired valid title to transfer.
This decision provides important guidance for oil and gas practitioners on several fronts. First, it reinforces that Texas courts will enforce consent-to-assign provisions strictly according to their terms, particularly when parties use unequivocal language like "void." Parties cannot rely on implied consent, participation in closing, or subsequent conduct to cure a failure to obtain required written consent.
Second, the case highlights the critical distinction between "void" and "voidable" provisions. When sophisticated commercial parties choose language making non-compliant assignments void ab initio, courts will not treat such provisions as mere technical requirements that can be waived. This underscores the importance of precise drafting—if parties want flexibility to waive consent requirements, they should avoid absolute language.
Finally, the decision illustrates the cascading consequences of a void assignment. Once the initial transfer failed, every downstream purchaser's title failed as well, regardless of their good faith or lack of knowledge about the consent violation. This should prompt buyers in asset acquisitions to carefully review not just their immediate seller's title, but the entire chain of title for compliance with any consent requirements in predecessor agreements. The case serves as a sobering reminder that in commercial transactions, a chain of title is only as strong as its weakest link.
