Coastal States Gas Producing Co. v. Producing Properties

• Decision Date: 12 April 1962
• Docket Number: Civ. A. No. 2054.
• Citation: 203 F. Supp. 956
• Parties: COASTAL STATES GAS PRODUCING COMPANY et al. v. PRODUCING PROPERTIES, INC., et al.
• Court: U.S. District Court — Southern District of Texas

203 F. Supp. 956

COASTAL STATES GAS PRODUCING COMPANY et al. v. PRODUCING PROPERTIES, INC., et al.

Civ. A. No. 2054.

United States District Court S. D. Texas, Corpus Christi Division.

April 12, 1962.

Fischer, Wood, Burney & Nesbitt, Tracy N. DuBose, Corpus Christi, Tex., for plaintiffs.

Thompson, Knight, Wright & Simmons, Morris Harrell, Dallas, Tex., and Marshall Boykin, Corpus Christi, Tex., for defendant Producing Properties, Inc.

Perkins, Floyd, Davis & Oden, Kenneth Oden, Alice, Tex., for defendant S. H. Howell.

GARZA, District Judge.

This case was originally filed in the 79th Judicial District Court of the State of Texas, and was subsequently removed by the Defendant Producing Properties, Inc., to this Court.

On November 1, 1958, the Plaintiffs, Coastal States Gas Producing Company and Southern Coast Corporation (the former a Delaware corporation qualified to transact business in the State of Texas, with its office and principal place of business in Corpus Christi, Texas; the latter being a Texas corporation with its office and principal place of business in Corpus Christi, Texas) entered into a written gas purchase contract with one S. H. Howell, a citizen of Texas. The said S. H. Howell later assigned his interest in said contract to the Defendant Producing Properties, Inc.

The contract involved in this controversy provided for arbitration in case any dispute arose between the parties. A dispute did arise and the Defendant Producing Properties, Inc., by letter, invoked arbitration in accordance with the arbitration provision of the contract. After receipt of said letter invoking the arbitration provision of the contract, the Plaintiffs filed this suit in the State Court and secured a temporary restraining order restraining and enjoining the Defendant Producing Properties, Inc., from invoking, or attempting to invoke, the provision of arbitration in said contract, alleging that the arbitration provision in said contract was against public policy and void under the Texas law.

In said suit, the Plaintiffs also are seeking monetary damages from the Defendant Producing Properties, Inc. The amount sought is in excess of $10,000.00. This suit was also brought against S. H. Howell, who has not joined in the petition for removal and is a nominal party only, for no relief is sought as against him by the Plaintiffs.

The Defendant Producing Properties, Inc., is also a Delaware corporation qualified to transact business in the State of Texas, with its office and principal place of business in Dallas, Texas. So, on the record, there is no diversity of citizenship between the Plaintiffs and the Defendant Producing Properties, Inc.

The Defendant Producing Properties, Inc., in its petition for removal, has stated that this Court has original jurisdiction under the provisions of Title 28 U.S.C.A. § 1331(a), and that they could remove to this Court pursuant to the provisions of Title 28 U.S.C.A. § 1441(b), in that it appeared from Plaintiffs' original petition filed in the State Court that this is a civil action arising under the laws of the United States, namely, Title 9 U.S.C.A., and specifically Section 2 thereof, and that the amount in controversy exceeded the sum of $10,000.00, exclusive of interest and costs.

After removing the case to this Court, the Defendant filed its answer, and also a motion to stay the proceedings until arbitration has been had in accordance with the terms of the contract, under the authority granted in 9 U.S.C.A. § 3.

The Plaintiffs have countered with a motion to remand, alleging that this Court does not have jurisdiction since the Defendant has not shown any provision giving this Court jurisdiction of the subject-matter of the controversy. They say that the mere fact that the contract in question has within it a provision for arbitration, is not sufficient to confer jurisdiction on this Court, and specifically point out that Title 9 U.S.C.A. § 4, in and of itself limits the scope of the Arbitration Act and requires that there be jurisdiction separate and apart from the arbitration statute. Included within Section 4 is the following language:

"A party aggrieved by the alleged failure, neglect, or refusal of another to arbitrate under a written agreement for arbitration may petition any court of the United States which, save for such agreement, would have jurisdiction under the judicial code at law, in equity, or in admiralty of the subject matter of a suit arising out of the controversy between the parties, for an order directing that such arbitration proceed in the manner provided for in such agreement."

The Defendant agrees that the Federal Arbitration Act under Title 9 U.S.C.A., does not contain independent grounds for jurisdiction in the United States District Court, but maintains that it is a law within the meaning of 28 U.S.C.A. § 1331, and that there is a substantive right created by the interstate commerce clause of the Constitution. It is their contention that Section 1331(a) of Title 28 U.S.C.A., gives jurisdiction to this Court over cases arising under the laws and statutes of the United States.

The Plaintiffs have...