Shelton v. Exxon Corp.
| Citation | 668 F. Supp. 1013 |
| Decision Date | 03 September 1987 |
| Docket Number | Civ. A. No. H-83-1575. |
| Parties | Robert R. SHELTON, et al., Plaintiffs, v. EXXON CORPORATION, et al., Defendants. |
| Court | United States District Courts. 5th Circuit. United States District Courts. 5th Circuit. Southern District of Texas |
Joseph D. Jamail, Jamail, Kolius & Mithoff and William Key Wilda, Joe H. Foy, and Charles G. King, III, Bracewell & Patterson, Houston, Tex., for plaintiffs.
Frank G. Harmon and William N. Blanton, III, Baker & Botts and Alfred H. Ebert, Jr., Andrews & Kurth, Houston, Tex., for defendants.
Pending before the Court are the parties' Motions for Reconsideration of the Court's July 28, 1987, oral orders (1) for realignment of the parties, and (2) of dismissal for lack of subject-matter jurisdiction. Since the July 28, 1987, hearing, all of the parties have forwarded correspondence to the Court encouraging a course of action, in whole or in part, different from the oral disposition made of this case on July 28, 1987. While the Court is reluctant to review its prior orders, the Court will construe all of the letters, attached materials, and filings made after July 28, 1987, as Motions for Reconsideration which will be considered and handled in this Order. Having considered these Motions for Reconsideration, the complete case file, the representations of counsel at the July 28, 1987, hearing in open court, and the applicable court rules and law, the Court is of the opinion that all of the Motions for Reconsideration should be, and hereby are, DENIED. Furthermore, the Court's oral orders (1) for realignment and (2) of dismissal for lack of subject-matter jurisdiction are AFFIRMED for the following reasons.
Robert Shelton, his various corporate entities (Shelton Ranch Corp., Shelton Ranches, Inc., and Shelton Land and Cattle Company), W.E. Harwood Trust, and W.E. Harwood, Trustee hereinafter referred to collectively as the Shelton Plaintiffs filed their Original Petition in this case in state court in 1979. It was removed to federal court in 1983 by Defendant Exxon, after King Ranch was voluntarily dismissed by the Shelton Plaintiffs. The basic substance of the Shelton Plaintiffs' claims was originally made against essentially two Defendants, Exxon Corporation and King Ranch, Inc., as stated in Plaintiff's Original Petition in Cause No. 79-47541 filed in the 133rd District Court of Harris County, Texas. The Shelton Plaintiffs alleged then, and still allege, to be the holders of an undivided mineral interest, mineral royalty interest, and royalty interests in relation to land owned by the King Ranch.
As originally pleaded in state court, the Shelton Plaintiffs stated that "King Ranch, Inc., retained what may commonly be called all executive rights ... and by virtue of the retention of these executive rights the Defendant, King Ranch Inc., became obligated to the Shelton Plaintiffs, and duty bound to exercise reasonable prudence in good faith to enforce the obligations of the leases with ... the lessee Exxon...." Plaintiffs' Original Petition at 3. As to Defendant Exxon, the Shelton Plaintiffs alleged a direct claim against Exxon for underpayment of royalties due to Exxon's failure "to market the gas produced from the King Ranch in such fashion as would net the owners of undivided mineral interest and mineral royalty interests, including your Plaintiffs, royalty commensurate with the true market value of such gas as defined by the contracts ... and to exercise either reasonable prudence or good faith in the manner in which it computed severance tax to reduce Plaintiffs' royalties by a sum not justified by the actual severance tax in fact paid by Exxon to the State of Texas knowing and realizing that the method ... would substantially diminish, the royalties...." Plaintiffs' Original Petition at 5.
Since the original state court petition was filed in 1979, the forum, allegations, parties, and claims have undergone an apparent metamorphosis through a long and convoluted procedural history. Within the first year of this suit, the two principal Defendants, King Ranch and Exxon, settled all claims for additional royalties on production through August 31, 1980. Because Exxon has continually contested the Shelton Plaintiffs' right and/or power to maintain and prosecute this action on their own behalf, the June 5, 1980, settlement between King Ranch and Exxon was made without the participation and over the protest of the Shelton Plaintiffs. The Shelton Plaintiffs still maintain that the settlement of June 5, 1980, is not binding on them.
In addition to the Shelton Plaintiffs, whom King Ranch alleged to represent in the pre-1980 claims, King Ranch does represent itself and other individual parties who hold interests in King Ranch, Inc., and/or King Ranch Oil & Gas, Inc. These individuals, mineral and royalty owners, have been referred to as "Executive Rights Beneficiaries." They and the King Ranch entities King Ranch, Inc., and King Ranch Oil & Gas, Inc. (KROG) never initiated participation in this suit. In state court, King Ranch was named as a defendant and subsequently settled pre-1980 claims for itself, and all Executive Rights Beneficiaries, including the Shelton Plaintiffs.
After the June 5, 1980, settlement, King Ranch remained as a defendant in the state court case until February 9, 1983, at which time Plaintiffs' Fourth Amended Original Petition was filed indicating that the Plaintiffs voluntarily nonsuited the then defendants, King Ranch, Inc., and King Ranch Oil and Gas, Inc. Exxon Corporation remained the sole defendant and therefore sought removal of the case to the United States District Court for the Southern District of Texas, Houston Division, based upon this Court's original jurisdiction under diversity of citizenship,1 exercisable via removal jurisdiction.2 Exxon Corporation's Petition for Removal at 2.3
In its Petition for Removal, Exxon Corporation asserted its right of removal based upon the diversity of citizenship that existed then and still exists between the Shelton Plaintiffs, citizens of Texas, and Defendant Exxon Corporation, a business entity incorporated in New Jersey, with its principal place of business in New York. The Shelton Plaintiffs did not move to remand the case, at least not directly or initially. Within a few months of the removal, however, Defendant Exxon Corporation filed an opposed Motion to Join Additional Parties. Exxon sought to join two King Ranch entities, King Ranch, Inc., and King Ranch Oil and Gas, Inc., via Fed.R. Civ.P. 19(a), and to realign the King Ranch entities as Plaintiffs, citing for authority Eikel v. States Marine Lines, Inc., 473 F.2d 959 (5th Cir.1973).4
The response and reply by the Shelton Plaintiffs sought to buttress and advocate their position that they had standing to sue Exxon directly and therefore the King Ranch was not needed. The Shelton Plaintiffs' opposition to joinder of the King Ranch, nonetheless, emphasized the antagonism between King Ranch and the Shelton Plaintiffs. Plaintiffs' Response to Defendant's Motion to Join Additional Parties at 4. Additionally, in Plaintiffs' Reply Brief in Support of their Response to Exxon's Motion to Join Additional Parties (Plaintiffs' Reply), the Shelton Plaintiffs again state the true nature of the suit and the parties' real interest:
Exxon's motivation for this motion is clear to Plaintiffs. Exxon wants to place a friendly figure on the other side of the docket. Certainly, Exxon's protestations about Ranch Interests' claim to exclusive powers to sue on behalf of these Plaintiffs sound hollow in view of the indifference of Ranch Interests toward Plaintiffs' rights. Although once defendants in this suit, Ranch Interests never asserted a cross-claim against Exxon and at this point have not made the slightest effort to intervene. Plaintiffs are indeed in a sorry state if they must depend upon so torpid a set of champions in this tournament.
By a prior order from a different Judge of this Court, the King Ranch entities were finally joined to the case pursuant to Rule 19. There was no finding at that time as to the applicability of section (a) or (b) of Rule 19. Impliedly, however, there was concern about the feasibility of joinder of these parties in that the Court asked for briefing as to the proper alignment of the parties. If made Defendants, as originally joined, the King Ranch entities, Texas corporations, would destroy complete diversity and the jurisdiction of this Court. This Judge does not agree with the prior order aligning the King Ranch entities as Plaintiffs. The order gives no reason(s) or finding(s) to support the joinder of the King Ranch entities as Plaintiffs except that the parties so agreed. Since it is with the alignment issue that both the joinder and jurisdiction issues are intertwined, this analysis shall start with the proper alignment of these parties.
Prior to the discussion on alignment, however, there is additional postremoval procedural history relevant to the subsequent analysis. Immediately after the order to join the King Ranch entities, but before the order on alignment, the Shelton Plaintiffs sought and received permission from the federal court to amend their "complaint" in order to assert claims against the King Ranch entities identical to those dropped in the voluntary nonsuit in state court. King Ranch responded with a Motion to Dismiss these claims for lack of diversity jurisdiction, citing Owen Equipment & Erection Co....
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