In Re Bp Oil Supply Company

• Decision Date: 03 August 2010
• Docket Number: No. 14-10-00424-CV.,14-10-00424-CV.
• Parties: In re BP OIL SUPPLY COMPANY, Relator.
• Court: Texas Court of Appeals

317 S.W.3d 915

In re BP OIL SUPPLY COMPANY, Relator.

No. 14-10-00424-CV.

Court of Appeals of Texas,

Houston (14th Dist.).

Aug. 3, 2010.

COPYRIGHT MATERIAL OMITTED

Sean Gorman, Christopher Wayne Lacy, Houston, for appellants.

Lee L. Kaplan, Justin McKenzie Waggoner, Houston, Sean C. Grimsley, Denver, CO, Philip Scott Beck, Chicago, IL, for appellees.

Panel consists of Justices BROWN, SULLIVAN, and CHRISTOPHER.

OPINION

JEFFREY V. BROWN, Justice.

On May 13, 2010, relator, BP Oil Supply Company, filed a petition for writ of mandamus in this court. See Tex. Gov't Code Ann. § 22.221 (Vernon 2004); see also Tex.R.App. P. 52. In the petition, BP asks this court to compel the Honorable Alexandra Smoots-Hogan, presiding judge of the 164th District Court of Harris County, to set aside her order denying BP's motion to dismiss, or in the alternative, to stay. We conditionally grant the petition.

I

The underlying dispute relates to a buy-sell agreement ¹ between BP and the real party in interest, ConocoPhillips Company. The agreement required BP to deliver 54,000 barrels per day of Heavy Louisiana Sweet crude oil to ConocoPhillips in Empire, Louisiana, and required ConocoPhillips to deliver 54,000 barrels per day of West Texas Intermediate crude oil to BP in Cushing, Oklahoma. Due to Hurricanes Gustav and Ike, BP failed to deliver the required volumes of crude oil to ConocoPhillips in August and September 2008. Instead, BP made its August and September deliveries in November 2008. ConocoPhillips then paid the November 2008 price for the delayed deliveries, rather than the August and September 2008 prices. BP alleges that because the market price dropped significantly between August and November 2008, ConocoPhillips' refusal to pay the August and September 2008 prices damaged BP in the amount of more than $50 million. ConocoPhillips, on the other hand, asserts that paying the August and September 2008 prices would have resulted in a windfall to BP.

The parties unsuccessfully mediated their dispute before either filed suit. At 12:02 p.m. (CST), on November 4, 2009, BP filed a breach-of-contract action against ConocoPhillips in Delaware state court, seeking more than $50 million in damages. That same day, at 5:40 p.m. (CST), ConocoPhillips filed a declaratory-judgment action in the 164th District Court in Harris County seeking a declaration that it did not breach the buy-sell agreement and asserting a claim for breach of the duty of good faith and fair dealing.

On November 2, ConocoPhillips moved to dismiss or, alternatively, to stay the Delaware case for forum non conveniens. BP filed its own motion to dismiss or, alternatively, to stay the Texas case on December 7.

The hearing in the Delaware case took place on January 12, 2010; on February 25, the Delaware court denied ConocoPhillips' motion to dismiss. See BP Oil Supply Co. v. ConocoPhillips Co., C.A. No. N09C-11-028, 2010 WL 702382 (Del.Super. Feb. 25, 2010). The Harris County trial court set BP's motion to be heard on January 22. However, on January 20 BP requested that the hearing be reset for February 26, and on February 23 requested that the hearing be reset again for March 26. The trial court heard and denied BP's motion to dismiss or, alternatively, to stay at the March 26 hearing.

At a scheduling conference on April 12, the Delaware court entered an order setting its case for trial on March 21, 2011. The Texas trial court also issued a docket control order on April 12 setting its case for trial on November 1, 2010.

II

To be entitled to the extraordinary relief of a writ of mandamus, the relator must show that the trial court abused its discretion and there is no adequate remedy by appeal. In re Laibe Corp., 307 S.W.3d 314, 316 (Tex.2010) (orig. proceeding) (per curiam). A trial court abuses its discretion if it reaches a decision so arbitrary and unreasonable as to constitute a clear and prejudicial error of law, or if it clearly fails to correctly analyze or apply the law. In re Columbia Med. Ctr. of Las Colinas, 306 S.W.3d 246, 248 (Tex.2010) (orig. proceeding) (per curiam); In re Cerberus Capital Mgmt., LP., 164 S.W.3d 379, 382 (Tex.2005) (orig. proceeding) (per curiam). In determining whether appeal is an adequate remedy, we consider whether the benefits outweigh the detriments of mandamus review. In re BP Prods. N. Am., Inc., 244 S.W.3d 840, 845 (Tex.2008) (orig. proceeding).

Abuse of Discretion

BP argues that the trial court abused its discretion by denying BP's motion because principles of comity require deference to the first-filed Delaware case and that the later-filed Texas case be stayed. “Our federal system benefits from a measure of state-to-state comity, which, while not a constitutional obligation, is a ‘principle of mutual convenience whereby one state or jurisdiction will give effect to the laws and judicial decisions of another.’ ” In re AutoNation, Inc., 228 S.W.3d 663, 670 (Tex.2007) (orig. proceeding) (quoting Gannon v. Payne, 706 S.W.2d 304, 306 (Tex.1986)); see also Nowell v. Nowell, 408 S.W.2d 550, 553 (Tex.Civ.App.-Dallas 1966, writ dism'd) (“Comity has frequently been defined as the recognition that one sovereignty allows within its territory to the legislative, executive, or judicial act of another sovereignty, having due regard to the rights of its own citizens.”).

The mere pendency of a prior suit in one state cannot be pleaded in abatement or in bar to a subsequent suit in Texas, even though both suits are between the same parties and involve the same subject matter. In re State Farm Mut. Auto. Ins. Co., 192 S.W.3d 897, 900 (Tex.App.-Tyler 2006, orig. proceeding) (citing Evans v. Evans, 186 S.W.2d 277, 279 (Tex.Civ.App.-San Antonio 1945, no writ)); Project Eng'g USA Corp. v. Gator Hawk, Inc., 833 S.W.2d 716, 724 (Tex.App.-Houston [1st Dist.] 1992, no writ). Texas is entirely sovereign and unrestricted in its powers, whether legislative, judicial, or executive, and it does not acknowledge the right of any other state to hinder its own sovereign acts or proceedings. In re State Farm Mut. Auto. Ins. Co., 192 S.W.3d at 901 (citing Mills v. Howard, 228 S.W.2d 906, 907 (Tex.Civ.App.-Amarillo 1950, no writ)); see also Crown Leasing Corp. v. Sims, 92 S.W.3d 924, 927 (Tex.App.-Texarkana 2002, no pet.) (“Courts of sister states are considered foreign to each other, and a suit pending in another state may not be pleaded in abatement of another suit involving the same subject matter brought in another state.”).

When a matter is first filed in another state, the general rule is that Texas courts stay the later-filed proceeding pending adjudication of the first suit. In re AutoNation, Inc., 228 S.W.3d at 670. It is generally appropriate for courts to apply principles of comity where another court has exercised jurisdiction over the matter and where the states agree about the public policy at issue. In re State Farm Mut. Auto. Ins. Co., 192 S.W.3d at 901 (citing Bryant v. United Shortline Inc. Assurance Servs., N.A., 972 S.W.2d 26, 31 (Tex.1998)). Once stayed, the later action remains pending until the judgment in the prior action becomes final. Id. (citing Bryant, 972 S.W.2d at 31). “It is a salutary rule because, if the determination of the suit in the foreign jurisdiction is in favor of the plaintiff there, he may plead it in bar of the local action. On the other hand, if he is the loser in the foreign suit, the plaintiff in the local action necessarily is the prevailing party in the foreign suit and further litigation on his part is not necessary.” Mills, 228 S.W.2d at 908.

A resolution of the abuse-of-discretion question demands a close inspection of the two pending actions. In re State Farm Mut. Auto. Ins. Co., 192 S.W.3d at 901 (citing Nowell, 408 S.W.2d at 553). To obtain a stay of the later action, it is, as a general rule, necessary that the two suits involve the same cause of action, concern the same subject matter, involve the same issues, and seek the same relief. Id. (citing Nowell, 408 S.W.2d at 553). One test to determine whether the causes of action are identical is to ascertain whether the parties could obtain all the relief in the prior suit that they would be entitled to in the subsequent action. Id. (citing Nowell, 408 S.W.2d at 553). Additional factors include, but are not limited to (1) which action was filed first; (2) whether the parties are the same in both actions; and (3) the effect of a judgment in the later action on any order or judgment entered in the prior action. Id.

Here, the Delaware case was filed first. The two cases involve the same parties, the same subject matter, and same contract, implicating the Uniform Commercial Code. The Delaware court was the first to exercise jurisdiction over the parties and subject matter of this case. A judgment in the Texas case would render the Delaware court's order denying ConocoPhillips' motion to dismiss moot. Moreover, because of the earlier trial setting, the Harris County trial court will likely try the underlying case first, and BP's choice of forum will be lost.

ConocoPhillips argues that a Texas court should extend comity to another state only when the other state would do the same for Texas. Under the principle of mutual convenience, Texas will recognize the laws and judicial decisions of other states, expecting that those states will extend Texas the same consideration. K.D.F. v. Rex, 878 S.W.2d 589, 593-94 (Tex.1994) (orig. proceeding). Because comity is grounded in cooperation and mutuality, Texas should not extend comity to another state so long as that state declines to extend comity to Texas or other states under the same or similar circumstances. Id. at 594. Nevertheless, “[i]n the absence of a clear indication to the contrary, we will treat [another state] as a cooperative jurisdiction. Texas will extend comity to the law of a cooperative jurisdiction so long as that law does not violate Texas public policy.” Id. at 595.

Under Delaware law, where one of...