Stewart v. American Intern. Oil & Gas Co., No. 87-1791
| Court | United States Courts of Appeals. United States Court of Appeals (9th Circuit) |
| Writing for the Court | Before NOONAN and THOMPSON; KELLEHER |
| Citation | 845 F.2d 196 |
| Parties | Ronald E. STEWART; John A. Gromala; John E. Donahue; Gerald R. Harland; Keith S. Humphreys; John D. Drake; Tom Dufour; Roger Sohnrey; Oklahoma Energy Investors; S & H Diversified; Sohnrey Bros., Plaintiffs, v. AMERICAN INTERNATIONAL OIL & GAS CO. and James A. Ragland, Defendants. MERIDIAN RESERVE OF OKLAHOMA, INC., Successor by Merger to American International Oil & Gas Company, Defendant/Third-Party Plaintiff/Appellant, v. LIBERTY EXPLORATION COMPANY, INC.; Robert Mills; Transworld Exploration Co.; A. Dale Smith; Orval C. White; Noble C. White; Noble Operating, Inc., Third-Party Defendants/Appellees. |
| Docket Number | No. 87-1791 |
| Decision Date | 20 April 1988 |
Page 196
Gerald R. Harland; Keith S. Humphreys; John D. Drake; Tom
Dufour; Roger Sohnrey; Oklahoma Energy Investors; S & H
Diversified; Sohnrey Bros., Plaintiffs,
v.
AMERICAN INTERNATIONAL OIL & GAS CO. and James A. Ragland,
Defendants.
MERIDIAN RESERVE OF OKLAHOMA, INC., Successor by Merger to
American International Oil & Gas Company,
Defendant/Third-Party Plaintiff/Appellant,
v.
LIBERTY EXPLORATION COMPANY, INC.; Robert Mills;
Transworld Exploration Co.; A. Dale Smith; Orval
C. White; Noble C. White; Noble
Operating, Inc., Third-Party
Defendants/Appellees.
Ninth Circuit.
Decided April 20, 1988.
Page 198
Michael D. Welch, Bartko, Welch, Tarrant & Miller, San Francisco, Cal., for defendant/third-party plaintiff-appellant.
Robert D. Baron, Eric S. Eissenstat, Fellers, Snider, Blankenship, Bailey & Tippens, Oklahoma City, Okl., for third-party defendants-appellees.
Appeal from the United States District Court for the Eastern District of California.
Before NOONAN and THOMPSON, Circuit Judges, and KELLEHER, * District Judge.
KELLEHER, District Judge:
Ronald E. Stewart, et al. (the Stewart Group), sued Meridian Reserve of Oklahoma, Inc. (Meridian), alleging that Meridian had defrauded it in connection with the sale of interests in certain oil and gas leases. Meridian filed a third-party complaint against Liberty Exploration Company, Inc. (Liberty) and Transworld Exploration Company (Transworld) seeking, inter alia, indemnity and contribution for any judgment the Stewart group might obtain against Meridian. 1 The district court dismissed the third-party complaint because it failed to show any derivative or secondary liability, as required under Fed.R.Civ.P. Rule 14. Thereafter, the district court imposed Fed.R.Civ.P. Rule 11 sanctions against Meridian, finding that the third-party complaint was frivolous and filed for an improper purpose. Meridian appeals the order of dismissal of its third-party complaint and the order imposing sanctions. We affirm both orders.
This case stems from the sale of interests in a number of oil and gas wells located in Oklahoma. In May of 1981, American International Oil and Gas Company (American) purchased these wells from Liberty and Transworld. Two months later, in a separate transaction, American sold the wells to the Stewart group.
In June of 1983, the Stewart group brought an action in the Eastern District of California against defendant/third-party plaintiff/appellant Meridian, successor by merger to American, and American's president, James Ragland. At the time American sold the wells to the Stewart group, it and Ragland allegedly made certain representations to the Stewart group concerning the drilling and operating costs of the wells which induced the Stewart group to complete the transaction. The Stewart group later discovered that these representations
Page 199
were false. In its complaint, the Stewart group alleged that American, now Meridian, and Ragland violated Section 10(b) of the Securities Exchange Act of 1934, Securities and Exchange Commission Rule 10b-5, California Corporations Code sections 25110, 25401, 25501, 25503 and committed common law fraud, all on the basis of the representations American and Ragland made regarding the wells.For nearly two years Meridian disputed jurisdiction and service of process. Unsuccessful in this endeavor, Meridian next attempted to transfer the action from the Eastern District of California to Oklahoma pursuant to 28 U.S.C. Sec. 1404(a). In August of 1985, the district court denied the motion to transfer.
Meridian, however, had not been otherwise idle. In May of 1985, while its motion to transfer was pending, Meridian filed its third-party complaint against Liberty and Transworld, alleging RICO violations, securities violations, fraud, and seeking indemnity and contribution for any judgment the Stewart group might recover against Meridian. The purported core of Meridian's argument was that it had merely repeated to the Stewart group the very representations that Liberty and Transworld had made to Meridian when they sold the wells to them two months earlier. Liberty and Transworld each filed a motion to dismiss the third-party complaint. The Stewart group also moved to dismiss the third-party complaint.
Meridian filed its third-party complaint despite the fact that it also had filed a substantially identical claim against Liberty in the Western District of Oklahoma. The Oklahoma action was nearing trial at the time Meridian filed its third-party complaint in California. 2
The district court dismissed Meridian's third-party complaint, ruling that it failed to satisfy the requirements of Fed.R.Civ.P. Rule 14(a) and failed to state claims upon which relief could be granted. The district court found the third-party complaint to be pretextual and yet another of Meridian's attempts to get the action transferred to Oklahoma in order to avoid defending itself in California.
Thereafter, Liberty and Transworld filed motions seeking to assess monetary sanctions in the amount of their attorneys' fees pursuant to Fed.R.Civ.P. Rule 11. The district court issued an order imposing sanctions against Meridian on the grounds that Meridian had no factual or legal basis for the third-party complaint and that it was filed for an improper purpose.
Meridian timely appeals under 28 U.S.C. Sec. 1291, claiming error by the district court in dismissing the third-party complaint and in imposing sanctions.
I. Dismissal of the Third-Party Complaint
The district court dismissed Meridian's third-party complaint because it failed to meet Rule 14 pleading requirements. The district court found that the transaction which gave rise to the original complaint and the transaction which gave rise to the third-party complaint were completely separate. Also, the district court ruled that several of the...
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...also Doering v. Union County Board of Chosen Freeholders, 857 F.2d 191, 194 (3d Cir. 1988); Stewart v. American International Oil & Gas, 845 F.2d 196, 202 (9th Cir.1988). The Court must also make some inquiry regarding a sanctioned party's ability to pay a monetary sanction. Jackson, 875 F.......
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Dept. of Economic Devel. v. Arthur Andersen & Co., No. 85 Civ. 1292 (CES).
...(no implied right to indemnification under the securities laws and federal common law); Stewart v. American International Oil & Gas Co., 845 F.2d 196, 200 (9th Cir.1989) (citing Laventhol, Krekstein, Horwath & Horwath v. Horwitch, 637 F.2d 672, 676 (9th Cir.1980)); Stowell v. Ted S. Finkel ......
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Cabalce v. VSE Corp., Civil Nos. 12–00373 JMS–RLP, 12–00376 JMS–RLP, 12–00377 JMS–RLP, 12–00391 JMS–RLP.
...transfer to the third-party defendant the liability asserted against [it] by the original plaintiff.” Stewart v. Am. Int'l Oil & Gas Co., 845 F.2d 196, 200 (9th Cir.1988) (quoting 6 Charles A. Wright et al., Federal Practice & Procedure § 1446 at 157 (1971) (other citation omitted)). In sho......