## Facts

- Texaco built and operated an oil refinery in El Paso, Texas from 1929 until 1984.
- In 1984, Texaco transferred the refinery to a wholly owned subsidiary (later TRMI Holdings, Inc.), which agreed in that transaction to assume responsibility for environmental contamination at the refinery.
- In 1986, TRMI sold the refinery to an entity in the El Paso Refinery, L.P. ownership chain through a purchase agreement and a special warranty deed, followed by intra-group conveyances.
- The purchase agreement and the deed contained restrictive “no-recourse” provisions that sought to prevent later owners from seeking contribution from TRMI or compelling TRMI to perform remediation relating to contamination at the site.
- El Paso Refinery, L.P. later entered bankruptcy, and the refinery was foreclosed upon and sold pursuant to a lender/examiner arrangement approved in the bankruptcy case.
- Refinery Holding Company, L.P. (RHC) acquired the refinery through that foreclosure sale and faced substantial environmental contamination issues.
- RHC filed an adversary proceeding in the bankruptcy court seeking declaratory relief defining the parties’ respective responsibilities for environmental contamination.

## Issues

1. Whether the “no-recourse”/anti-contribution provisions in the purchase agreement and deed constitute enforceable successor-binding obligations under Texas law (including as real covenants running with the land).
2. If not real covenants, whether the restrictions are enforceable against successors as equitable servitudes or otherwise as enforceable contractual limitations.
3. Whether a later purchaser and the bankruptcy estate may pursue private contribution/indemnity against prior owners despite the restrictive covenants, particularly in light of statutory environmental liability.
4. Whether bankruptcy and the foreclosure/sale process altered or extinguished TRMI’s contractual protections against successor claims.

## Decision

- The Fifth Circuit largely upheld enforcement of the restrictive covenants in favor of TRMI and Texaco, limiting RHC’s and the bankruptcy estate’s ability to seek contractual contribution or compel remediation from TRMI beyond the parties’ agreements.
- The court concluded the transaction documents reflected an intent to bind successors and that the environmental-liability allocation sufficiently related to the property to support successor enforcement under Texas law.
- The court determined RHC took the refinery with actual or constructive notice of the restrictions and therefore acquired the property subject to those limitations.
- The court rejected arguments that bankruptcy proceedings or the foreclosure sale eliminated TRMI’s bargained-for protections, reasoning the estate generally takes the debtor’s rights as it finds them absent applicable avoidance powers.
- The court distinguished public-law environmental obligations from the private contractual allocation of costs among owners, enforcing the latter without purporting to bar regulators from pursuing statutory remedies.

## Legal Principles

- Under Texas law, deed and sale-document provisions allocating environmental burdens may bind successors when the parties intended successor application, the restriction sufficiently relates to the land, and successors take with notice under a qualifying chain of title.
- A purchaser with notice of recorded or otherwise applicable restrictions generally cannot claim bona fide purchaser status to avoid those restrictions.
- Private contracts may allocate economic responsibility for contamination among parties even though environmental statutes may impose direct liability irrespective of contract; contractual allocation governs inter-party recourse unless invalidated.
- In bankruptcy, the estate typically acquires no greater contractual rights than the debtor possessed prepetition, and bankruptcy sales/foreclosures do not nullify third-party contractual protections absent a valid legal basis to do so.

## Conclusion

The Fifth Circuit enforced successor-binding “no-recourse” provisions in refinery sale documents under Texas law, holding that the current owner and the bankruptcy estate could not use private-law claims to shift cleanup costs to TRMI/Texaco contrary to the recorded contractual allocation, while leaving statutory environmental enforcement unaffected.


Refinery Holding Co., L.P. v. TRMI Holdings, Inc. (In re El Paso Refinery, L.P.), 302 F.3d 343 (5th Cir. 2002)