Jp Morgan Trust Co. Nat. v. Mid-America Pipeline, 05-2231 JWL.
| Citation | 413 F.Supp.2d 1244 |
| Decision Date | 07 February 2006 |
| Docket Number | No. 05-2231 JWL.,05-2231 JWL. |
| Parties | JP MORGAN TRUST COMPANY, NATIONAL ASSOCIATION, in its capacity as Trustee of the FI Liquidating Trust, on behalf of Farmland Industries, Inc., now known as Reorganized FLI, Inc., Plaintiff, v. MID-AMERICA PIPELINE COMPANY, et al., Defendants. |
| Court | U.S. District Court — District of Kansas |
Constance L. Shidler, James P. Zakoura, Smithyman & Zakoura, Chtd., Overland Park, KS, for Plaintiff.
Benjamin S. Tschudy, Teresa J. James, Martin, Pringle, Oliver, Wallace & Bauer, LLP, Daniel D. Crabtree, Stinson Morrison Hecker LLP, Overland Park, KS, C. Robert Stell, Crowe & Dunlevy, Judy H. Morse, Oklahoma City, OK, Cynthia F. Grimes, Grimes & Rebein, L.C., Lenexa, KS, James G. Flaherty, Anderson & Byrd LLP, Ottawa, KS, Mark S. Carder, Stinson Morrison Hecker LLP, Kansas City, MO, for Defendants.
This lawsuit arises from a dispute regarding pipeline systems which were formerly used to transport blend stocks and natural gas liquids between Conway, Kansas, and an oil refinery formerly owned by Farmland Industries, Inc. located in Coffeyville, Kansas. Plaintiff JP Morgan Trust Company, National Association, brings this lawsuit in its capacity as the liquidating trustee established under the Chapter 11 bankruptcy reorganization plan of Farmland Industries, Inc., now known as Reorganized FLI, Inc. (Farmland). Defendant Mid-America Pipeline Company, LLC and its predecessors (Mid-America) previously provided common carrier/public utility service, in part by way of leased capacity on a pipeline owned by defendant Texaco Natural Gas, Inc. (Texaco) extending between Conway and El Dorado, Kansas. Texaco terminated the lease as of August 31, 2001, and removed the pipeline from common carrier/public utility service, thus allegedly depriving Farmland of its needed pipeline capacity between Conway and its refinery in Coffeyville. Texaco subsequently leased, then sold, the pipeline to one or more of the defendant ONEOK entities. Farmland's complaint asserts various state law contract, antitrust, and tort claims against entities associated with Mid-America, Texaco, and ONEOK.1
This matter is presently before the court on the motions of Mid-America, Williams Energy Services (Williams), and the ONE OK defendants to dismiss (Docs. 11, 14, 16 & 19) Farmland's complaint. In these motions, defendants raise a myriad of arguments in favor of dismissal of Farmland's complaint. After thoroughly considering the parties' arguments, the court concludes that it will grant the motions in part and deny them in part. Specifically, the court will deny Mid-America's motion to dismiss Mid-America Pipeline Company (MAPCO). The court will grant Mid-America's motion to dismiss Farmland's claims against Mid-America Pipeline Company, LLC (MAPL) with respect to Farmland's third-party beneficiary and tort claims, and the court will otherwise deny this motion. The court will grant Williams' motion in its entirety, and deny the ONE OK defendants' motion in its entirety.
Farmland's complaint alleges that for more than fifty years it owned and operated a petroleum refinery located in Coffeyville, Kansas. The refining process for making gasoline, diesel, and the other essential petroleum products requires the efficient blending of crude oil with butanes and other feedstock products which are commonly referred to as "blend stocks" or "NGLs" (natural gas liquids products). The area in and around Conway, Kansas, is characterized by underground, excavated salt dome storage which is ideal for the storage of blend stocks and NGLs. These blend stocks and NGLs are brought to Conway from across the Midwest and stored for later transport to petroleum refineries such as Farmland's Coffeyville refinery. At all relevant times, pipelines existed that connected these blend stocks and NGLs in storage in Conway with the Coffeyville refinery. Additionally, the Coffeyville refinery produced blend stocks and NGLs. When the Coffeyville refinery produced more blend stocks and NGLs than were needed for refining, they were pipelined back to Conway for storage until a later time.
Farmland's blend stocks and NGLs were transported to and from the Coffeyville refinery and Conway through El Dorado, Kansas, via a common carrier, public utility pipeline system that was at all relevant times owned and/or operated by what plaintiff collectively refers to as the "MAP Entities." These include Mid-America Pipeline Company (MAPCO), a Delaware corporation which was converted in 2002 to Mid-America Pipeline Company, L.L.C. (MAPL) and their predecessor MAPCO Intrastate Pipeline Company (collectively and singularly, Mid-America), as well as Williams Energy Services (Williams). The parties' business relationship dates back to at least 1982.
In 1982, Mid-America owned a six-inch diameter pipeline between Conway and El Dorado, a distance of approximately sixty-six miles. On July 19, 1982, Mid-America as "Carrier" and Farmland as "Shipper" entered into a transportation agreement that was intended to meet Farmland's service demand to transport the blend stocks and NGLs, as well as refined petroleum products, back and forth between the Coffeyville refinery and El Dorado. The agreement called for the construction of an additional pipeline between El Dorado and the Coffeyville refinery based upon guaranteed revenues paid by Farmland to Mid-America. The agreement provided that Mid-America would "construct, maintain, and operate" (1) a pipeline from El Dorado to Coffeyville with a six-inch diameter pipeline segment and a four-inch diameter pipeline segment, and (2) a separate six-inch diameter pipeline segment to El Dorado from Coffeyville. The agreement set forth a throughput commitment whereby Farmland was required to pay Mid-America to transport three million barrels each year for ten years even if Farmland did not transport three million barrels per year. In the agreement, Mid-America agreed to transport the product on a "timely and ratable" basis and to file any necessary tariffs with the Federal Regulatory Commission (FERC) and/or the Kansas Corporation Commission (KCC) to implement the terms and conditions of the agreement. The agreement also required Mid-America to enter into a joint tariff agreement with Kansas Nebraska Pipeline Company (Kaneb) to provide further pipeline transportation from El Dorado to points on the larger Kaneb system so that Farmland could transfer its refined petroleum products on the Kaneb system in Kansas, Nebraska, and the Dakotas. The parties agreed that Mid-America would "operate the pipeline system as a common carrier" to transport petroleum products into and out of Farmland's Coffeyville refinery. Farmland's complaint alleges that a common carrier operates as a public utility in Kansas, is regulated by the KCC, and has all of the rights and obligations of public service in addition to any private contract obligations. The agreement required Mid-America to "exercise due diligence ... to secure all necessary federal, state and local permits and licenses for the construction, operations, and maintenance of the facilities." Mid-America further agreed that while it could assign its rights, no assignment relieved it from any of its obligations under the agreement.
The 1982 agreement between Farmland and Mid-America was amended effective May 1, 1985, and was entirely superseded by a new agreement. The 1985 agreement provided for the construction of an additional eight-inch pipeline adjacent to the previously constructed Mid-America four-inch pipeline segment in order to provide for Farmland's greatly increased transportation needs. In the 1985 agreement, Farmland guaranteed to transport five million additional barrels of blend stock, NGLs, and refined petroleum products per year for eight years. Again, Farmland agreed to a "take-or-pay" contract provision whereby it promised to pay Mid-America for the transportation of five million barrels per year for eight consecutive years regardless of whether Farmland actually transported that volume. This financial commitment totaled $3.75 million per year, which effectively guaranteed Mid-America the revenue it needed to construct the additional pipeline, operate it, and profit on the investment. The agreement reaffirmed Mid-America's earlier contractual obligation to continue to maintain and operate (1) a six-inch pipeline from El Dorado to near Burden, Kansas (which lies between El Dorado and Coffeyville), and (2) a six-inch pipeline from Coffeyville to El Dorado. Mid-America again agreed to obtain and maintain its FERC, KCC, and joint Kaneb tariffs. The KCC tariff that was made a part of the agreement provided for pipeline transport all the way from Conway to the Coffeyville refinery and then out of the Coffeyville refinery back to El Dorado, where the refined products were transferred into the Kaneb pipeline. In the period encompassed by the 1985 agreement and through August 31, 2001, Mid-America had available to use, and did in fact use, both its owned six-inch pipeline between Conway and El Dorado and pipeline capacity that it leased from Texaco between Conway and El Dorado in order to meet both its private contract and common carrier/public utility obligations. The 1985 agreement again required Mid-America to operate its pipeline system as a common carrier and to "exercise due diligence to secure all necessary federal, state, and local permits and licenses for the construction, operation, and maintenance." Mid-America agreed not to assign or transfer any interest in the pipeline system except to a successor upon sale of substantially all of its assets, but any such succession would not relieve Mid-America from its obligations under the 1985 agreement.
During the period of the 1985 agreement, Farmland transported or paid for the...
To continue reading
Request your trial
-
In re Co.
...and Micro–Time and preserves the causes of action against CRG, Epstein, and Ravaris. Cf. JP Morgan Trust Co., Nat'I Ass'n v. Mid–America Pipeline Co., 413 F.Supp.2d 1244, 1277–80 (D.Kan.2006) (reservation clause more specific than Browning preserved post-confirmation lawsuit by liquidating ......
-
In re the Antioch Company, Case No. 08-35741 through 08-35747
...and Micro-Time and preserves the causes of action against CRG, Epstein, and Ravaris. Cf. JP Morgan Trust Co., Nat'l Ass'n v. Mid-America Pipeline Co., 413 F. Supp. 2d 1244, 1277-80 (D. Kan. 2006) (reservation clause more specific than Browning preserved post-confirmation lawsuit by liquidat......
-
In re Commercial Loan Corp.
...claim because the firm "was not a party in interest with respect to the plan"); see also JP Morgan Trust Co., N.A. v. Mid-America Pipeline Co., 413 F.Supp.2d 1244, 1278 n. 19 (D.Kan.2006) (expressing doubt that defendants could assert res judicata when they "were not creditors of the estate......
-
Larkin v. Bank of Am., N.A. (In re Larkin)
...where court can properly take judicial notice of the extra-pleading materials); J.P. Morgan Trust. Co. Nat. Ass'n v. Mid–Am. Pipeline Co., 413 F.Supp.2d 1244, 1257–58, 1260–61 (D.Kan.2006).29 See Proof of Claim No. 7, as amended.30 See Dkt. 104, 109, and Notice of Payment Change filed as do......