Greenshields v. Warren Petroleum Corporation

• Decision Date: 16 December 1957
• Docket Number: 5450.,No. 5449,5449
• Citation: 248 F.2d 61
• Parties: W. D. GREENSHIELDS, Appellant, v. WARREN PETROLEUM CORPORATION, a corporation; et al., Appellees. Julius LIVINGSTON and Livingston Oil Company, a corporation, Appellants, v. WARREN PETROLEUM CORPORATION, a corporation; et al., Appellees.
• Court: U.S. Court of Appeals — Tenth Circuit

248 F.2d 61 (1957)

W. D. GREENSHIELDS, Appellant, v. WARREN PETROLEUM CORPORATION, a corporation; et al., Appellees.

Julius LIVINGSTON and Livingston Oil Company, a corporation, Appellants, v. WARREN PETROLEUM CORPORATION, a corporation; et al., Appellees.

Nos. 5449, 5450.

United States Court of Appeals Tenth Circuit.

September 3, 1957.

Rehearing Denied September 27, 1957.

Writ of Certiorari Denied December 16, 1957.

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

W. D. Greenshields, Ponca City, Okl., for appellant, W. D. Greenshields.

Duke Duvall, Oklahoma City, Okl., and Ted R. Fisher, Tulsa, Okl., for appellants, Julius Livingston and Livingston Oil Co.

Reford Bond, Jr., Chickasha, Okl., and Richard W. Fowler, Oklahoma City, and Warren M. Sparks, Tulsa, Okl., for appellees, Warren Petroleum Corp. and Oklahoma Natural Gas Co. (John S. Carlson, O. L. Lupardus and T. Maxwell Anderson, Tulsa, Okl., were with them on the brief).

Villard Martin, Garrett Logan and Villard Martin, Jr., Tulsa, Okl., for appellee, The Atlantic Refining Co. Richard W. Fowler, Oklahoma City, Okl., Reford Bond, Jr., Chickasha, Okl., and Lynn J. Bullis, Jr., Oklahoma City, Okl., for appellees, The Superior Oil Co., Mazda Oil Corp., Bolsa Chica Oil Corp. and J. E. Trigg; Reford Bond, Jr. and Hatcher & Bond, Chickasha, Okl., for appellee, Great Western Producers, Inc.

Before PHILLIPS, PICKETT and LEWIS, Circuit Judges.

Writ of Certiorari Denied December 16, 1957. See 78 S.Ct. 334.

LEWIS, Circuit Judge.

Appellant Greenshields, plaintiff below, is one of numerous owners of royalty rights in the Ringwood oil and gas field in Major County, Oklahoma. He initiated this action in the State Court of Major County as a purported class action "for himself and all others similarly situated", naming as defendants all those individuals and corporations holding leases from the royalty owners in the Ringwood Field; also named party defendants were the Warren Petroleum Corporation and Oklahoma Natural Gas Company, referred to as `plant operators', who, though holding no lease rights in the field, had exclusive contractual rights with the lessee defendants for the purchase of gas produced in this field. Plaintiff had no direct contractual relationship with the plant operators but did with some but not all of the named lessee defendants.

Greenshields is a resident of Oklahoma; the lessee defendants are residents of Oklahoma and numerous other states; the plant operators, Warren Petroleum and Oklahoma Natural Gas, are both corporations foreign to Oklahoma. Upon petition of the plant operators and some of the non-resident lessee defendants, including Great Western Drilling Co. and Great Western Producers, Inc., the cause was removed to the United States District Court for the Western District of Oklahoma pursuant to 28 U.S.C.A. § 1441(c). That court refused remand and, by subsequent rulings, required plaintiff to amend his pleadings to eliminate all aspects of a class action and to dismiss as against all defendants other than the plant operators and those lessee defendants with whom Greenshields had contractual relations. Included in the latter group are the appellants Livingston and Livingston Oil Company who cross complained against the plant operators adopting the gravamen of plaintiff Greenshields' complaint and cause. The case as actually tried in the United States District Court was substantially an action for breach of contract by Greenshields against his lessees and the plant operators with a cross complaint against the latter upon the part of the lessees Livingston and Livingston Oil. Appellants join in asserting error in allowing removal from the state court and error in the determination of the merits.

It is apparent, in considering the jurisdictional question, that general diversity does not here exist and that valid removal from state to federal court is dependent upon the existence of a "separate and independent claim" which if sued upon alone would be removable. If such exists, apparent from the original pleading, the entire cause is subject to removal. 28 U.S.C.A. § 1441(c); American Fire & Cas. Co. v. Finn, 341 U.S. 6, 71 S.Ct. 534, 95 L.Ed. 702; Pullman Co. v. Jenkins, 305 U.S. 534, 59 S.Ct. 347, 83 L.Ed. 334; McLeod v. Cities Service Gas Co., 10 Cir., 233 F.2d 242; Preas v. Phebus, 10 Cir., 195 F.2d 61. It is of no significance that the pleader has a separate claim which he could assert and federal jurisdiction cannot be used as an implement to narrow or restrict the pleader's cause so that finally, when issue is joined, the cause has become one where federal jurisdiction is clear. Removability is dependent upon the course of pleading actually used by the pleader and not by what he could have asserted had he so chosen. Since Sec. 1441(c) was intended to restrict, not enlarge, removal rights all doubts arising from defective, ambiguous and inartful pleadings should be resolved in favor of the retention of state court jurisdiction. Healy v. Ratta, 292 U.S. 263, 54 S.Ct. 700, 78 L.Ed. 1248; Aetna Ins. Co. v. Chicago, Rock Island & Pacific R. Co., 10 Cir., 229 F.2d 584. It is for the state court to determine the validity and essence of the complaint made if the pleader has asserted and claims but a single cause of action. Alabama Great Southern Ry. Co. v. Thompson, 200 U.S. 206, 26 S.Ct. 161, 50 L.Ed. 441.

Applying these rules to the original complaint¹ filed in the state court we are in accord with appellant's contention that the pleader has alleged claims in tort arising from civil conspiracy said to have been consummated by the lessee defendants and the plant operators. But we are of the further view that the pleader has specifically negatived the participation of the Great Western Drilling Company and Great Western Producers, Inc. in the alleged conspiracy in the manner and time the pleader asserts it was conceived and consummated between the remaining lessee defendants and plant operators.

In the first paragraph of paragraph 9 of the complaint the pleader has narrated the results of the so-called conspiracy and concludes by stating, "All because of the unconscionable, confiscatory and unreasonable `Gas Purchase Contracts' entered by the `defendant lessees' and `Plant Operators' all as will be hereinafter more particularly set out." Then in paragraph 11 it is alleged "That in late 1950 or early 1951 Warren Petroleum Corporation and Oklahoma Natural Gas Company, corporations, defendants herein entered `Gas Purchase Contracts' with all the different `lessee defendants' in the Ringwood Field, with the exception of two who will be hereinafter mentioned." Later in paragraph 11 the pleader alleges that the "Gas Purchase Contracts" were executed and entered by all the "lessee Defendants" except by the defendants Great Western Producers, Inc. and Great Western Drilling Company, a corporation, who have since entered the contract, however, with certain modifications as to producing zones committed under the same. That with this one exception all the lessees entered exact contracts and thus committed the sale of all their gas in the Ringwood Field. Still later in paragraph 17 it is alleged "That the `Gas Purchase Contracts' as have been entered by the defendant lessees are unconscionable, confiscatory, unreasonable and are an attempt to alienate valuable property rights from this plaintiff * * * That the contract was a connivance, collusion, and confederation between the plant operators, Warren Petroleum Corporation and Oklahoma Natural Gas Company and all the `lessee defendants' who signed the agreement * * *". (emphasis added)

Since the acts of the Great Western interests are alleged to have transpired at a different time than those of the other lessee defendants and are further asserted to have consummated in a different result, the pleader has negatived the participation of Great Western in the principal conspiracy of which he complains. The contracts signed by Great Western cover a less extensive gas zone than those executed by any of the other defendants. The harm alleged to have been suffered by plaintiff and "all others similarly situated" by the execution of the gas purchase contracts cannot, by the original state court pleading, be attributable to Great Western. The claim made against Great Western by plaintiff arises from subsequent and different acts occasioning different results. It is a "separate and independent claim" within the bounds of Sec. 1441(c) and as such permits removal to federal jurisdiction. The trial court properly granted the petitions of Great Western Drilling Company and Great Western Producers, Inc. for removal from the Oklahoma State Court.

Appellants attack the merit disposition of the cause by the trial court upon numerous grounds each one of which requires an interpretation and understanding of the terms and background of the gas purchase contracts entered into by the lessee defendants and the plant operators. These contracts are identical² as to both form and substance, varying only as to descriptive lands. The agreements commit the lessee defendants to sell the Ringwood gas to the plant operators at a price³ which plaintiff argues has caused the lessee defendants to breach their commitments to him and which neither reflects actual nor market value of the gas; and appellants are further aggrieved by the trial court's holding that the contracts include all gas produced in the Ringwood Field, are not confiscatory in nature and do not violate the rule against perpetuities.

The Ringwood Field produces both oil and gas from two zones, the Manning and the Cherokee. The Manning zone was first discovered in 1945 and 233 wells are still producing oil and casinghead gas from that zone. Prior to 1951, the date of the gas purchase contracts here in dispute, the wells were operated by the lessee defendants whose operating facilities saved only the oil produced. Vast quantities of casinghead gas...