The other property concept that Judge Chapmans initial ruling examined was whether Sabine was in horizontal privity of estate with each of the midstream companies involved.
In her final ruling, Judge Chapman acknowledged that there is some ambiguity under Texas law as to whether horizontal privity of estate remains a requirement for a covenant to run with the land.
In an analogous situation, where an assignee of a leasehold is obligated to pay rents to the landlord only by "privity of estate," and not by "privity of contract," law professors have long taught that the assignee's obligation for future rent terminates on subsequent assignment, even to an insolvent assignee.
The doctrinal reason is that privity of estate exists between the landlord and whoever occupies the status of tenant.
To impose real covenant liability on a title owner, a plaintiff must establish privity of estate connecting its claim with the defendant's obligation.
In such cases, because there is no contract (i.e., no assumption agreement) between the lessor and the successor lessee, the successor is in "
privity of estate" with the lessor, but is not in privity of contract."
