Naartex Consulting Corp. v. Watt

• Decision Date: 16 July 1982
• Docket Number: Civ. A. No. 81-1540.
• Citation: 542 F. Supp. 1196
• Parties: NAARTEX CONSULTING CORP., Plaintiff, v. James E. WATT, Secretary of Interior, et al., Defendants.
• Court: U.S. District Court — District of Columbia

542 F. Supp. 1196

NAARTEX CONSULTING CORP., Plaintiff, v. James E. WATT, Secretary of Interior, et al., Defendants.

Civ. A. No. 81-1540.

United States District Court, District of Columbia.

June 21, 1982.

As Amended July 16, 1982.

Daniel J. Piliero, II, Webster, Chamberlain & Bean, Washington, D. C., for Naartex Consulting Corp. and Russell Huff.

Thomas P. Humphrey, Washington, D. C., for J. D. Harrell.

Raymond N. Shibley, Washington, D. C., for Panhandle Western Gas Co.

Quarles & Brady, Peter C. Linzmeyer, Washington, D. C., for Fred L. Engle, d/b/a Resource Services Co.

Jerome C. Muys, John F. Shepherd, Washington, D. C., for Davis Oil Co.

B. Lee Ware, Houston, Tex., C. Michael Buxton, Washington, D. C., for Paul Messinger & Co., Southland Royalty Co., Michigan Wisconsin Pipe Line Co. and American Natural Resources Co. Raymond G. Larroca, Washington, D. C., for Reading & Bates Petroleum Co.

Gerald S. Fish, Washington, D. C., for defendant Secretary of the Interior.

Gerry Levenberg, Washington, D. C., for Gen. American Oil Co. of Texas.

MEMORANDUM OPINION

FLANNERY, District Judge.

This matter is before the court on both governmental and private defendants' motions to dismiss and on the joint motion of plaintiff and Russell Huff to intervene as a party plaintiff and to file a second amended complaint adding Russell Huff as a party plaintiff. For the reasons expressed below, defendants' motions are granted and plaintiff's and Russell Huff's motion is denied.

I. Facts

Under the Department of the Interior's simultaneous oil and gas leasing program, administered pursuant to the Mineral Leasing Act of 1920, 30 U.S.C. § 226(c), all offers to lease particular classes of parcels, are considered as having been simultaneously filed. Priority among the parcels is determined by a random drawing in which three applications are selected. The lease is awarded to the first qualified application of the three offers chosen. If all three applications are not qualified under DOI's regulations, no lease is issued and a new drawing is held.

In the case at bar, a drawing was held and lease number W-50394 was issued to the first of the three applications chosen at random, an application submitted by Norbert F. Albrecht. The lease was issued in March, 1974. Various assignments of drilling rights, reservations and transfers of royalty interests have occurred, which accounts for the large number of private defendants involved in this suit.

On January 25, 1979, Alvin Abrams, president of Geosearch, Inc., filed, in the Bureau of Land Management (BLM), a protest against the issuance of the lease to Albrecht. The basis for the protest was that Albrecht had a service agreement with Fred Engle, d/b/a Resource Service Company, a defendant in this suit, in violation of Interior Department regulations. In support of the protest, Abrams contended he was representing the entire class of persons who had filed unsuccessful offers for lease W-50394. On February 6, 1979, the BLM dismissed the protest on various grounds. Geosearch filed a notice of appeal and this appeal was dismissed by the Interior Board of Land Appeals (IBLA) on May 6, 1979, because no statement of reasons for the appeal had been filed.

On September 19, 1979, Abrams filed a second protest, this time as president of Naartex Consulting Corporation, plaintiff in the instant suit. This protest was based upon an agreement between Naartex and Russell Huff, another unsuccessful applicant for the lease in question. The agreement provided that in consideration for the transfer of Huff's interest in the lease to Naartex, Naartex would attempt to vindicate the "rights of all members of the class of persons who filed offers," through proceedings before the DOI and federal and state courts and would pay Huff 25% of the gross amount realized through its efforts.

On September 28, 1979, the BLM dismissed Naartex' protest. Naartex' appeal from this decision on October 29, 1979 was dismissed by the IBLA on June 9, 1980. On September 8, 1980, plaintiff petitioned the Board of Land Appeals to reconsider its initial decision dismissing plaintiff's appeal; the petition for reconsideration was denied by the IBLA on September 16, 1980. Finally, on December 12, 1980, plaintiff filed a petition with the Secretary of the Interior to review the decision of the IBLA; this petition was denied on April 6, 1981.

The instant suit was commenced on July 6, 1981, contending that the agency's denial of relief constituted an abuse of discretion, and seeking to have the agency's decisions set aside and the lease in question cancelled. Plaintiff also seeks to have the court find that the private defendants committed fraud in violation of the Mineral Leasing Act and order that the defendants' ill-gotten gains be paid into a suspense account with the court or other appropriate party.

This action must be dismissed for a number of compelling reasons.

II. Discussion

A. Jurisdiction and Venue

The District of Columbia Code sets out a number of possible bases for the exercise of in personam jurisdiction over corporations and persons not having their principal place of business or residence in the District. Since there is no suggestion that there has been any tortious injury in the District, the only plausible basis for an exercise of jurisdiction over the private defendants in this case is that they transact business in the District. D.C.Code § 13-423(a)(4). For this basis to apply, plaintiff must demonstrate not only that the defendants have transacted business in the District, but also that claims pursued by plaintiff arose out of the business transacted here. D.C.Code § 13-423(b); see generally Security Bank, N. A. v. Tauber, 347 F.Supp. 511 (D.D.C.1972).

Most private defendants contend that they do not transact business here and that none of plaintiff's claims arise from any scattered contacts they may have had with the District in the past. A few of the private defendants acknowledge that they do have certain contacts with the District, but, by way of affidavits, these defendants have sworn that any contacts with the District are limited to involvements with the federal government. See Affidavit of American Natural Resources Company and Michigan Wisconsin Pipeline Company. Thus, these contacts would fall within the "government contacts" exception to the District of Columbia long-arm statute and would not qualify these private defendants for in personam jurisdiction. See, e.g., Siam Kraft P. Co. Ltd. v. Parsons & Whittemore, Inc., 400 F.Supp. 810 (D.D.C. 1975), aff'd, 521 F.2d 324 (D.C.Cir.1975).

Plaintiff contends that it should be permitted to conduct discovery before the court concludes that it cannot exercise jurisdiction over the private defendants. This response is unpersuasive. First, plaintiff's complaint has not even alleged facts that would allow the court to conclude that there is personal jurisdiction over most of the private defendants. Even granting plaintiff's complaint the most liberal construction and furnishing it "the benefit of all inferences that can be derived from the facts alleged," Schuler v. United States, 617 F.2d 605, 608 (D.C.Cir.1979), the complaint does not withstand the motions to dismiss by most of the private defendants. See 4 C. Wright & A. Miller, Federal Practice and Procedure, § 1068 at 250 (1969); American Contract Designers, Inc. v. Cliffside, Inc., 458 F.Supp. 735, 737 (S.D.N.Y.1978); Ghazoul v. International Management Services, Inc., 398 F.Supp. 307, 309 (S.D.N.Y.1975).

In these circumstances, allowing plaintiff to conduct even limited discovery into the contacts of private defendants with the District would be unjustified. Plaintiff has not alleged the "`threshold' jurisdiction sufficient to demonstrate the fairness of allowing the suit to continue." American Contract Designers, Inc. v. International Cliffside, Inc., supra, 458 F.Supp. at 735. Moreover, even as to those defendants for whom plaintiff's complaint alleges business contacts with the District, discovery cannot be authorized. As noted, these defendants, the Natural Resources Company and Michigan Wisconsin Pipeline Company, have, by way of affidavit, indicated that any contacts with the District were restricted to participation in governmental operations. Plaintiff has not challenged these contentions with specific facts in affidavits, nor has it explained in an affidavit why it needs to conduct discovery in order to justify its opposition to defendant's motion, as required by the Federal Rules of Civil Procedure. See Fed.R.Civ.P. 56(e), (f).

Finally, even if there were some legitimacy to plaintiff's contention that it needs discovery to demonstrate personal jurisdiction, it appears that plaintiff has already been given "an adequate opportunity to obtain information through discovery." Vespe Contracting Company v. Anvan Corp., 433 F.Supp. 1226, 1233 n.9 (E.D.Pa. 1977); Berlin Democratic Club v. Rumsfeld, 410 F.Supp. 144, 151 (D.D.C.1976). Plaintiff filed its original complaint on July 6, 1981. The first of the private defendants received service in early July, 1981. Plaintiff sought no discovery at that time, either in the form of interrogatories or requests for production of documents. Nor did the plaintiff seek to depose any of the private defendants in July or August pursuant to Federal Rule of Civil Procedure 30(a). Further, the record reflects that the private defendants notified Naartex at least by September 4, 1981, that they were planning to file dispositive motions based, at least in part, on a lack of in personam jurisdiction. Despite the fact that plaintiff suggested the schedule for briefing of defendants' motions that was approved by the court on October 23, 1981, plaintiff made no attempt to initiate any discovery prior to the filing of the private defendants' motions to dismiss on November 23, 1981. On Naartex' motion, the court extended the time in which plaintiff could...