Sector Refining, Inc. v. Enterprise Refining Co., 5-112.

• Citation: 771 F.2d 496
• Decision Date: 22 July 1985
• Docket Number: No. 5-112.,5-112.
• Parties: SECTOR REFINING, INC., Defendant-Appellant, v. ENTERPRISE REFINING COMPANY, Plaintiff-Appellee.
• Court: U.S. Temporary Emergency Court of Appeals

771 F.2d 496

SECTOR REFINING, INC., Defendant-Appellant, v. ENTERPRISE REFINING COMPANY, Plaintiff-Appellee.

No. 5-112.

Temporary Emergency Court of Appeals.

July 22, 1985.

COPYRIGHT MATERIAL OMITTED

Marynell Maloney, Maloney & Maloney, San Antonio, Tex., was on brief for defendant-appellant.

Glenn W. Patterson, Jr., Green, Downey, Patterson & Schultz, Houston, Tex., was on brief for plaintiff-appellee.

Before HOFFMAN, THORNBERRY and SEAR, Judges.

MEMORANDUM DECISION

SEAR, Judge:

Enterprise Refining Company ("Refining") brought this action in Texas state court against Sector Refining Company ("Sector") to recover damages for Sector's failure to process Refining's crude oil into refined petroleum products in accordance with their contract. Sector plead as an affirmative defense that the contract violated certain regulations of the Department of Energy ("the DOE"). Sector also asserted a third-party claim against Refining's corporate parent, Enterprise Products Company ("Products"), alleging that Products had violated the DOE's regulations. Products removed the action to the United States District Court for the Southern District of Texas, but was dismissed by Sector before trial. Following trial, the district court entered judgment on the jury verdict in favor of Refining. Thereafter, Sector moved for judgment notwithstanding the verdict, for a new trial and for remittitur. The district court denied Sector's motions. Sector appealed to the Fifth Circuit Court of Appeals, asserting that it was entitled to judgment as a matter of law because the contract violated the DOE's regulations. Alternatively, Sector contended that there was insufficient evidence to support either the jury's verdict that the contract did not violate the DOE's regulations or the amount of damages awarded. Sector also claimed that the damages awarded were excessive. Finding that "the controlling issues involve interpretation and application of the Emergency Petroleum Allocation Act," the Fifth Circuit transferred the appeal to this court pursuant to 28 U.S.C. § 1631.¹

Because we find that Sector failed to move for a directed verdict at the close of the evidence, we are unable to review Sector's claim that it is entitled to judgment as a matter of law on its affirmative defense. For the same reason, we are unable to consider Sector's contention that there is insufficient evidence to support the jury's verdict that the contract did not violate the DOE's regulations. We therefore affirm that portion of the district court's judgment. Sector also claims that there was insufficient evidence to support the jury's damage award and that the damage award is excessive. We find that these claims do not arise under the Emergency Petroleum Allocation Act. Consequently, we lack jurisdiction over them and transfer that portion of this appeal to the Fifth Circuit Court of Appeals.

I. BACKGROUND

On July 28, 1979, Sector and Refining entered into a Crude Oil Processing Agreement ("the Agreement"). The Agreement provided that Sector was, during the month of August 1979, to process 31,000 barrels of crude oil owned by Refining into 30,690 barrels of refined petroleum products ("the Plant Products"). Under the Agreement, Sector was to receive two dollars ($2.00) for each barrel of crude oil processed.

Refining delivered the 31,000 barrels of crude oil to Sector, but Sector returned only 6,871 barrels of refined product. It failed to return either the remainder of the Plant Products or Refining's crude oil.

Refining thereafter filed this action in Texas state court, asserting several Texas state law causes of action against Sector, including breach of contract, violations of the Texas Deceptive Trade Practices—Consumer Protection Act, Tex.Business and Commerce Code Ann. § 17.41 et seq. ("the Texas Consumer Protection Act"),² and fraud. In a pleading styled "Answer, Counterclaim and Third Party Claim," Sector pleaded as an affirmative defense that the Agreement was unenforceable because it constituted an attempt by Refining to sell crude oil at a price greater than that permitted by regulations which the DOE promulgated pursuant to the Emergency Petroleum Allocation Act, 15 U.S.C. § 751, et seq. ("the EPAA").³ Sector also asserted a counterclaim against Refining and a third-party claim against Products, in which Sector alleged that both Refining and Products had violated the Texas Consumer Protection Act,⁴ and that Products had "extracted illegal kickbacks" and violated the DOE's regulations.⁵

Alleging that Sector's third-party claim was a separate and independent claim over which the district court had original jurisdiction, Products removed to the United States District Court for the Southern District of Texas pursuant to 28 U.S.C. § 1441(c).⁶ Before trial, however, Sector dismissed its third-party claim against Products and its counterclaim against Refining.⁷ Consequently, the only claims tried to the jury were Refining's Texas state law claims against Sector.⁸

In response to interrogatories, the jury found that: (1) Refining did not use "the Crude Oil Processing Agreement as a subterfuge to violate, either directly or indirectly, the rules and regulations of the Department of Energy"; (2) Sector's "non-performance or breach of the Crude Oil Processing Agreement was the proximate cause of damages" to Refining; (3) Sector did not commit fraud upon Refining; and (4) the amount of damages sustained by Refining were $731,600.⁹

II. JURISDICTION

Although the parties have not questioned our jurisdiction to determine this appeal — indeed, Refining sought and obtained transfer of the appeal from the Fifth Circuit Court of Appeals to this court — appellate courts nevertheless have the responsibility to consider their jurisdiction sua sponte. Koke v. Phillips Petroleum Co., 730 F.2d 211, 214 (5th Cir.1984); Ross v. Inter-Ocean Ins. Co., 693 F.2d 659, 660 (7th Cir.1982); Atlantic Richfield Co. v. Federal Energy Administration, 556 F.2d 542, 552 n. 24 (Em.App.1977). The Temporary Emergency Court of Appeals ("the TECA") is a court of special and limited jurisdiction. MPGC, Inc. v. Department of Energy, 673 F.2d 1277, 1280 (Em.App.1982); Texaco, Inc. v. Department of Energy, 616 F.2d 1193, 1194 (Em.App.1979). Its jurisdiction is governed by section 211(b)(2) of the Economic Stabilization Act of 1970, 12 U.S.C. § 1904 note, incorporated by reference into the EPAA. See 15 U.S.C. § 754(a)(1). Section 211(b)(2) provides that the TECA "shall have jurisdiction of all appeals from the district courts of the United States in cases and controversies arising under this title or under regulations or orders issued thereunder." The TECA's principal inquiry in determining whether it has jurisdiction over an appeal is whether an EPAA issue was adjudicated by the district court.¹⁰Mobil Oil Corp. v. Department of Energy, supra, 728 F.2d at 1497; Francis Oil & Gas, Inc. v. Exxon Corp., 687 F.2d 484, 487, (Em.App.), cert. denied, 459 U.S. 1010, 103 S.Ct. 365, 74 L.Ed.2d 400 (1982); Texaco, Inc. v. Department of Energy, supra, 616 F.2d at 1198. Thus, this court has found that it has jurisdiction where the EPAA issue adjudicated was presented in the answer or counterclaim. See Citronelle-Mobile Gathering, Inc. v. Gulf Oil Corp., supra, 591 F.2d at 716; Sohio Petroleum Co. v. Caribou Four Corners, Inc., 573 F.2d 1259, 1262 (Em.App.1978); see also Coastal States Marketing, Inc. v. New England Petroleum Corp., 604 F.2d 179 (2d Cir.1979) (declining jurisdiction where only issue on appeal was district court's rejection of defense that contract was illegal under the DOE's regulations). Adjudication by the district court of an EPAA issue, however, does not create jurisdiction of the TECA over non-EPAA claims or issues joined in the same action. The TECA has consistently refused to exercise jurisdiction over issues not arising under the EPAA even though those issues may be joined in the same action with other issues or claims that do arise under the EPAA. Texaco, Inc. v. Department of Energy, supra, 616 F.2d at 1196; see Atlantic Richfield Co. v. Department of Energy, 655 F.2d 227 (Em.App.1981); Longview Refining Co. v. Shore, 554 F.2d 1006 (Em.App.), cert. denied sub nom, Shore v. Longview Refining Co., 434 U.S. 836, 98 S.Ct. 126, 54 L.Ed.2d 98 (1977); Spinetti v. Atlantic Richfield Co., 522 F.2d 1401, 1403 (Em.App.1975); Associated General Contractors v. Laborers International Union, Local 612, 489 F.2d 749 (Em.App.1973); City of Groton v. Federal Power Commission, 487 F.2d 927 (Em.App.1973). We fear this construction of TECA's jurisdiction, however, is overly narrow and results in the wasteful volleying of cases between the TECA and the courts of appeal:

We must wonder as to the wisdom and necessity of creating a special court such as TECA. Approximately thirty percent of TECA's cases are decided upon jurisdictional grounds.

Texaco, Inc. v. Department of Energy, supra, 616 F.2d at 1199 (Hoffman, J., dissenting).

In this case, Sector appeals from the final order of the district court denying its alternative motions for judgment notwithstanding the verdict, for a new trial and for remittitur. Sector asserts that it was entitled to judgment as a matter of law or a new trial because the Agreement, which the jury found Sector to have breached, was illegal. Sector contends that the Agreement constituted an attempt by Refining to sell crude oil at a price greater than that permitted by regulations which the DOE promulgated pursuant to the EPAA. The district court's order rejecting this argument clearly adjudicated an EPAA issue. See Coastal States Marketing, Inc. v. New England Petroleum Corp., supra, 604 F.2d at 187. Accordingly, we have jurisdiction over this portion of Sector's appeal. Similarly, we have jurisdiction to consider Sector's claim that there is not sufficient evidence to support the jury's verdict that the Agreement did not violate the DOE's regulations.

Sector also...