By 
A major natural gas producer wanted $200 million from a pipeline operator over a contract dispute. After a trial in the new Texas Business Court, the judge awarded the plaintiff exactly $1.
Todd Mensing, a partner at Houston trial firm AZA Law, served as lead trial counsel for the pipeline company. A single question stood out: when does a “favored shipper” rate reduction take effect under this gas gathering agreement?
The $200 Million Demand
The plaintiff’s argument was simple: when AZA’s client signed new pipeline contracts listing lower rates with third parties, those lower rates were automatically owed upon execution. The 15-year gas gathering agreement, signed in 2014, contained a provision requiring the pipeline operator to match the most favorable rates offered to other shippers.
AZA’s client saw it differently. No gas had been delivered or billed under the new contracts and it was speculative on whether it would be. Among other arguments,the pipeline company argued that a rate reduction couldn’t trigger until a third party actually received and was charged for gas at a lower rate. Ink on paper wasn’t enough. The pipeline company also argued that even if gas flowed, the third party agreements contained ratcheting provisions which would make the third party rate match the plaintiff’s if the most favored nation provision applied to those third party agreements.
s The Trial Before Judge Sweeten
The trial took place in Houston in late January 2026 before Judge Patrick K. Sweeten of the Third Division. It was the second bench trial completed in the Texas Business Courts since the Legislature created them.
Mensing tried the case alongside AZA lawyers D.J. Ringquist, Nicholas Petree, Brittainie Zinsmeyer, Al Montelongo, and Kelsi White. Vinson and Elkins represented the plaintiff with its own large and strong team. Both sides brought serious firepower.
What the Court Ruled
Judge Sweeten sided with the defense on the issue of whether the pipeline company owed money. His April 2 ruling held that the contract’s rate-matching clause applies “at the time the new shipper has actually availed themselves of gas shipping services and is ‘charged pursuant to the third party contract’ for those services.”
Because no gas had been delivered or billed under the new contracts at the time of trial, the plaintiff’s $200 million damages claim failed. The court did assess $1 in damages for a separate audit provision violation. The pipeline company should have turned over the new contracts when the plaintiff first requested them.
“It is rewarding for our client to have prevailed and defeated this claim by continuing to defend the case vigorously through trial,” Todd Mensing said.
AZA Law, formally Ahmad, Zavitsanos and Mensing, has earned repeated Chambers USA recognition in commercial litigation and intellectual property. Law360 has named the firm a Texas Powerhouse.
Comments