Natrona Service, Inc. v. Continental Oil Co.

• Decision Date: 06 July 1977
• Docket Number: No. C75-146-B.,C75-146-B.
• Citation: 435 F. Supp. 99
• Parties: NATRONA SERVICE, INC., a Wyoming Corporation, Plaintiff, v. CONTINENTAL OIL COMPANY, a Delaware Corporation, Kerr-McGee Corporation, a Delaware Corporation, Phillips Petroleum Company, a Delaware Corporation, Meurer, Serafini and Meurer, Inc., Polaris Company, a division of Meurer, Serafini and Meurer, Inc., John Doe 1, John Doe 2, John Doe 3, John Doe 4, John Doe 5, John Doe 6, John Doe 7, John Doe 8, John Doe 9, and John Doe 10, Defendants.
• Court: U.S. District Court — District of Wyoming

435 F. Supp. 99

NATRONA SERVICE, INC., a Wyoming Corporation, Plaintiff, v. CONTINENTAL OIL COMPANY, a Delaware Corporation, Kerr-McGee Corporation, a Delaware Corporation, Phillips Petroleum Company, a Delaware Corporation, Meurer, Serafini and Meurer, Inc., Polaris Company, a division of Meurer, Serafini and Meurer, Inc., John Doe 1, John Doe 2, John Doe 3, John Doe 4, John Doe 5, John Doe 6, John Doe 7, John Doe 8, John Doe 9, and John Doe 10, Defendants.

No. C75-146-B.

United States District Court, D. Wyoming.

July 6, 1977.

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Robert Jerry Hand and Dennis M. Hand of Hand, Hand & Hand, Casper, Wyo., Lawrence H. Averill, Jr., John E. Stanfield of Smith, Stanfield & Scott, Laramie, Wyo., H. Byron Mock, Salt Lake City, Utah, for plaintiff Natrona Service, Inc.

William T. Schwartz, Casper, Wyo., Richard L. Schrepfermen and Edmond F. Noel, Jr., of Holme, Roberts & Owen, Denver, Colo., J. Derrill Cody and Clydine Cornett, Oklahoma City, Okl., for defendant Kerr-McGee Corp.

Carl L. Lathrop and Nick Kalokathis of Lathrop & Uchner, Cheyenne, Wyo., Thomas M. Blume, Denver, Colo., and Lewis J. Ottaviani, Bartlesville, Okl., for plaintiff Phillips Petroleum Co.

Bruce R. Merrill of Continental Oil Co., Houston, Tex., and Houston G. Williams of Wehrli & Williams, Casper, Wyo., for defendant Continental Oil Co.

Richard L. Harring of Calkins, Kramer, Grimshaw & Harring, Denver, Colo., and Paul J. Hickey of Rooney & Horiskey, Cheyenne, Wyo., for defendants Meurer, Serafini and Meurer, Inc., and Polaris Co., a division of Meurer, Serafini and Meurer, Inc.

MEMORANDUM OPINION AND ORDER

BRIMMER, District Judge.

This case arises from a dispute in 1974 between the plaintiff, Natrona Service, Inc. and its president, John MacGuire, and his former clients, Kerr-McGee and Continental Oil Company (Conoco) and a competitor of Natrona Service, Inc.'s in the claim-staking and validation business, Meurer, Serafini and Meurer (MS&M). The defendants seek a summary judgment against the plaintiff's complaint alleging violations of the antitrust laws of the United States; it is therefore necessary to detail the facts which the extensive discovery of the parties has brought to light. John MacGuire has been added as a party plaintiff herein.

John MacGuire had built up a substantial claim-staking business, involving the actual staking of claims and, when given the authorization to take a project to completion, the validation of those claims in accordance with appropriate federal and state mining laws. MacGuire designed his operation to perform all tasks necessary to acquire valid mining claims. He called it a "turn-key" operation. Over the years he performed practically all of the claim-staking work in Wyoming in which the major energy companies had engaged. Typically, the energy company, such as the defendants Kerr-McGee and Conoco, would map out a large area of land open for uranium exploration and would contract with Natrona Service, Inc. to stake the lands in that area on its behalf. Until 1974 the plaintiffs had little or no competition in Wyoming, although other firms competed with plaintiffs to do survey work, set discovery monuments, or put in corner and side-corner posts. It is generally agreed that Natrona Service, Inc. did its job well, but conflicts arose between MacGuire and the field representatives of Kerr-McGee and Conoco.

In the spring of 1974, those conflicts began to intensify. MacGuire began to raise the prices for his services substantially. The Casper representatives for Kerr-McGee and Conoco began to protest. Personality conflicts developed between MacGuire and Henry Johnson the district geologist for Conoco in Casper when Johnson accused MacGuire of a conflict of interest because Natrona Service, Inc. had been performing work for Conoco's competitors in an area previously worked for Conoco and had even overstaked some Conoco claims for one of Conoco's competitors which Natrona Service, Inc. itself had staked for Conoco. In turn, MacGuire complained that Johnson would not authorize Natrona Service, Inc. to overstake claims on behalf of Conoco which MacGuire considered invalid.

A similar dispute developed between MacGuire and Kenneth Sandlin, engineering supervisor for Kerr-McGee in Casper, Wyoming. MacGuire had told Sandlin that certain claims which Kerr-McGee was contemplating purchasing from a third party were not valid and suggested that Sandlin give him permission to overstake them. However, Sandlin's superiors ultimately determined that the claims should be purchased from the third party in the interest of economy, and MacGuire was not given the project. MacGuire was angered by the decision and accused Kerr-McGee of improper conduct. Sandlin criticized MacGuire for having overstaked claims on behalf of a competitor which MacGuire had earlier staked for Kerr-McGee. However, despite these disputes Sandlin did sit down with MacGuire and suggest to him another method by which MacGuire could calculate his costs and hopefully bring his prices back into line, at least from Kerr-McGee's point of view. MacGuire did adopt this approach and subsequently was awarded a contract by Kerr-McGee.

Eventually, the escalating prices, the disputes over the overstaking issue, the charges and counter charges of unethical conduct and conflicts of interest, and the pressure from the home offices to keep costs down caused Sandlin and Johnson to look for another firm to compete with Natrona Service, Inc. MacGuire, in his deposition, admitted that those factors, and especially the pressure to keep costs down, were instrumental in the events which were to occur.

In 1973, Sandlin of Kerr-McGee had the opportunity to talk to Ken Wickware, who owned a surveying business and who had expressed an interest in getting into the claim-staking business. Sandlin had advised Wickware as to what equipment he would need, had informed him that MacGuire's operation was a good one to emulate, and had suggested to Wickware that he think seriously about the pitfalls of getting into the business. Nonetheless, Wickware did go into the business under the name of Conard, and in August 1973, he wrote to Sandlin informing him he was in business and soliciting whatever business Kerr-McGee might have to give. However, it was not until April 1974, after the dispute over the price increases MacGuire had made in February, that Sandlin contracted with Wickware and Conard for the claim-staking on Kerr-McGee's Belle Fourche Project in Wyoming. Trouble was just around the corner.

From the outset Conard had problems getting work done quickly, competently and efficiently. By the time the initial surveying on the Belle Fourche Project was completed, Wickware had joined forces with Ronald P. Harris in a joint venture called Polaris Company (Polaris). The two had acquired some drilling equipment, and when Kerr-McGee decided to carry the Belle Fourche Project through to completion, they had been awarded the contract. However, the equipment was not the proper equipment for use in the performance of the validation work, and the management of Polaris was unsatisfactory. When MacGuire's crews came across the claims being staked by Polaris, they reported to MacGuire that the work was not being done properly. MacGuire, in turn, was not dilatory in informing Sandlin of this fact. Sandlin confronted Wickware with this information, and after surveying the project, Wickware informed Sandlin that some of the work would have to be redone.

Meanwhile, Johnson of Conoco had also been looking for alternative to Natrona Service, Inc., especially after MacGuire had increased his prices on a project for Conoco from an initial bid of $65.35 per claim to completion to $92.00 per claim, and after he and MacGuire had gotten into a dispute over MacGuire's having overstaked some Conoco claims for a competitor. Thus, when Johnson was informed by members of a Conoco field crew that they had discovered a new firm which was staking claims for Kerr-McGee, he made inquiries of Kerr-McGee personnel as to who the new contractor was and as to what the quality of his work was. Although the Kerr-McGee people were reluctant to provide such information because Wickware was already under their employ, they did indicate that Wickware was doing the work, that it appeared to be satisfactory, but that it was slow. In June 1974, Conoco awarded its first contract to Wickware or Polaris.

Problems began to compound. The joint venture had simply taken on more work than it could effectively handle, and its lack of experience, proper equipment, competent personnel, and effective management began to take its toll. Simply, the work was not getting done. Claims were having to be "repapered", i. e., relocated, because they could not be validated within the sixty-day period required by the state mining laws. Conoco and Kerr-McGee personnel were growing more and more impatient with the delays and were demanding that the contracts be performed. Polaris was finding not only that it was becoming more and more difficult to deliver but also that it had severely underbid the projects, and that it could not find subcontractors to assist in the validation at the prices it had originally bid.

All the while, MacGuire was protesting to Johnson of Conoco and Sandlin of Kerr-McGee that the work being performed by Wickware or Polaris was not complying with the mining law requirements and urging that what they should do is fire Polaris and hire Natrona Service, Inc. to complete the projects. The defendants respectfully declined and insisted that Polaris had a contract which it was expected to perform.

This is not to say that throughout this period of turmoil, which would run from April and June 1974 to May 1975, Conoco and Kerr-McGee were offering no work whatever to Natrona Service, Inc. To the contrary, they had simply declined to replace Wickware with Natrona Service, Inc. on...