## Facts

- Multiple companies co-owned a natural gas liquids fractionation plant under a Restated Operating Agreement.
- The agreement granted co-owners a preferential right to purchase an “ownership interest” in the plant before a sale to a non-owner (right of first refusal).
- The agreement also required each owner, in specified circumstances, to deliver raw natural gas liquids (“raw make”) to the plant for processing.
- Tenneco Oil’s plant interest was involved in three transactions challenged by the other co-owners:
  - Tenneco Oil conveyed its plant interest to its wholly owned subsidiary, Tenneco Natural Gas Liquids Corporation.
  - Tenneco Oil sold all stock of that subsidiary to an Enron affiliate; the subsidiary was renamed Enron Natural Gas Liquids Corporation.
  - The Enron affiliate sold all stock of Enron Natural Gas Liquids to another Enron entity.
- The co-owners sued for injunctive relief and damages alleging breach of contract, breach of fiduciary duty, and tortious interference, asserting the transactions triggered the right of first refusal and that delivery obligations were violated.
- The trial court granted summary judgment for the defendants; the court of appeals reversed; the Supreme Court of Texas granted review.

## Issues

1. Whether the sale of all stock of the corporate entity holding a plant ownership interest constituted a “transfer” of an “ownership interest” in the plant that triggered the contractual right of first refusal.
2. Whether the plaintiffs waived claims based on alleged noncompliance with the agreement’s “raw make” delivery obligations through their conduct and course of dealing.
3. Whether the plaintiffs preserved any complaint that additional discovery was required before summary judgment by complying with applicable summary-judgment procedures.

## Decision

- The Supreme Court of Texas reversed the court of appeals and rendered judgment for the defendants, reinstating the trial court’s summary judgment.
- The stock sales did not trigger the right of first refusal because the agreement addressed transfers of ownership interests in the plant, not changes in stock ownership of an entity holding the interest.
- The plaintiffs waived complaints about delivery (“raw make”) obligations by extended inaction and continued treatment of the transferee entity as a co-owner without timely enforcement.
- The plaintiffs failed to preserve a request for additional discovery because they did not follow required procedures for obtaining discovery-related continuance or relief in response to summary judgment.

## Legal Principles

- Absent explicit contract language, a sale of stock in an entity that owns an asset does not, by itself, constitute a transfer of the asset for purposes of a right of first refusal directed to asset or ownership-interest transfers.
- Courts will not treat a change in corporate control as a triggering “transfer” for a right of first refusal unless the agreement includes a change-of-control or equivalent provision.
- Waiver may be inferred from intentional conduct inconsistent with asserting a known contractual right, including prolonged acceptance of performance and failure to timely object or seek enforcement.
- A party opposing summary judgment on the ground that more discovery is needed must comply with procedural requirements for requesting a continuance or discovery relief; failure to do so forfeits the complaint.

## Conclusion

The court held that the operating agreement’s right of first refusal was not triggered by stock sales of the entity holding the plant interest, that delivery-obligation claims were waived by the co-owners’ conduct, and that procedural noncompliance barred reliance on lack of discovery to defeat summary judgment.


Tenneco Inc. v. Enterprise Prods. Co., 925 S.W.2d 640 (Tex. 1996)