A natural gas producer took a $200 million breach of contract claim to trial in the Texas Business Court this spring. It collected one dollar.
Todd Mensing tried the case as lead counsel for the midstream company on the receiving end of that demand, before Judge Patrick K. Sweeten in the court’s Third Division. Only the second case tried to completion in the Texas Business Court, it turned on a question of timing that runs through a multitude of midstream contracts and had never been squarely decided.
The favored shipper clause at the center of the case
Both sides signed a 15-year gas gathering agreement in 2014. Inside it sat a favored shipper provision, the kind of clause a customer negotiates when it commits to a long-term deal early and wants protection against a later customer getting a better deal. Language like that appears across the midstream sector. Its meaning gets litigated far less often than it gets drafted.
The company later executed three contracts with affiliates that initially provided lower rates. Whether the producer’s own rate needed to match the affiliate rate at that moment, or only once gas actually started moving under those contracts, was a central question in the case. One reading produced a nine-figure damages model. The other produced nothing.
Judge Sweeten took the second reading. Language promising “the same service fee charged to the Third-Party Contract,” he ruled, “provides that the reduced charge…would be applied at the time the new shipper has actually availed themselves of gas shipping services.”
Separately, the company argued that affiliate contract language automatically ratcheted up the affiliate rates to match the producer’s rate if the affiliate contracts triggered the favored shipper provision. But the Court did not need to reach that argument. No gas had moved under the affiliate contracts, the Court reasoned. Nobody had been invoiced. Without a rate in operation there was nothing for the favored shipper clause to match, and the damages column emptied out.
A defense built on sequence rather than intent
Large contract defenses usually argue about what the parties meant. Course of dealing, industry custom, negotiating history, the testimony of the people who signed. Those cases turn into a contest of narratives, and a nine-figure damages model gives a plaintiff a great deal of room to tell one.
The defense argued about the order of events instead. Three affiliate contracts existed. No gas had flowed under them. No invoice had been issued. Everything the producer needed to reach its number sat on the far side of something that had not happened yet, and the trial team built a winning argument around that gap.
Winning that way takes subtraction. A defense can raise every available argument and dilute the one that decides the case. Mensing tried the matter with five other lawyers from his firm: D.J. Ringquist, Nicholas Petree, Brittainie Zinsmeyer, Al Montelongo and Kelsi White.
Where the one dollar came from
Contract trials rarely end in a clean sweep for either side, and this one did not. Judge Sweeten found that the company had breached a separate audit provision by failing to produce the affiliate contracts within the 14 days the agreement allowed. A breach occurred. But it caused no measurable loss.
Nominal damages exist for exactly that situation. Texas courts enter them when a plaintiff proves a violation but cannot attach a number to the harm. One dollar records that the contract was broken and that breaking it cost nothing.
Mensing framed the outcome narrowly when the ruling came down.
“It is rewarding for [the company] to have prevailed and defeated this claim,” he said.
Trying a case in a court with no playbook
Texas opened the Business Court on Sept. 1, 2024. High-value commercial disputes now route to judges who handle nothing else. Filings reached 185 in the first year, split between 106 original petitions and 79 removals, with 79 landing in the Houston division and 52 in Dallas. Judges issued 42 written opinions and disposed of 60 cases, 85% of them within 180 days.
Going first in a new forum carries a cost that never shows up in a judgment. No prior trials meant no accumulated knowledge about how these judges run a courtroom, what they want from an expert, or how quickly they move. Lawyers in the court’s first cases were reading a bench with no track record, against procedures that had been written but not yet tested on anyone.
Mensing’s firm has now won both of the first two trials the court completed. Managing partner John Zavitsanos cited that record when the Houston Business Journal named the firm the region’s fastest-growing law firm in May.
“We even won the first two trials in the newly formed Texas Business Courts, where a lot of the complex commercial litigation in the state is migrating,” Zavitsanos said.
What the ruling settles for midstream operators
Anyone drafting a favored shipper provision now has an answer to the question that may decide these disputes. A benchmark rate can attach at signature or at service, and the two produce wildly different exposure. Two sentences of drafting could resolve it. Their absence produced a trial.
Producers reading the ruling get something usable too. A clause written to trigger on execution rather than on service may have changed the answer, and nothing in the opinion stops parties from drafting it that way going forward. Counterparties who want the signature trigger now know they have to say so, in terms a court will not have to reconstruct years later from context.
The trial record behind Todd Mensing
Mensing has tried more than 60 cases over two decades and holds a board certification in Civil Trial Law from the Texas Board of Legal Specialization, a credential built around documented courtroom volume rather than years in practice.
His trial docket runs both directions. A McMullen County jury returned $41.8 million in 2023 against an Energy Transfer affiliate after finding that hydrogen sulfide and carbon dioxide injected into a disposal well had trespassed on two operators’ mineral estates, with Mensing as lead trial counsel for the plaintiffs. Three years on, he was defending against a nine-figure demand and holding it to a dollar.
Volume sits underneath both results. His firm reports being in trial nearly every month since 2016 and publishes a year-by-year count on its own site. That series runs from 23 trials across 2018 and 2019 through nine in the first stretch of 2026.
For a general counsel weighing counsel on a bet-the-company contract dispute, the size of the original claim matters less than the size it shrank to by verdict.
Editor’s Note: The opinions expressed here by the authors are their own, not those of impakter.com — Cover Photo Credit: KATRIN BOLOVTSOVA.
