Tap Rock Res. v. Marathon Oil Permian LLC
| Docket Number | 2:23-cv-850-WJ-JHR |
| Decision Date | 30 November 2023 |
| Parties | TAP ROCK RESOURCES, LLC and TAP ROCK MINERALS, LP n/k/a CIVITAS DE BASIN MINERALS, LP, Plaintiffs, v. MARATHON OIL PERMIAN LLC, Defendant. |
| Court | U.S. District Court — Southern District of Texas |
THIS MATTER comes before the Court upon Defendant's Motion to Transfer Venue, filed October 3, 2023 (Doc 5). Having reviewed the parties' pleadings and the applicable law, the Court finds Defendant's motion is well-taken. Accordingly, it is GRANTED.
Plaintiffs' Complaint (Doc. 1-2) involves the equitable reformation of a contract (“the Agreement”) involving oil and gas interests (“the Assignment”) in certain property located in Eddy County, New Mexico. Docs. 5-1 & 6-1. Plaintiffs originally filed their Complaint in the Fifth Judicial District Court, County of Eddy, State of New Mexico Doc. 1-2, but Defendant removed the case to federal court (Doc. 1). Defendant then filed a Motion (Doc. 5) for a change of venue pursuant to 28 U.S.C. §1404(a) from this Court to the United States District Court for the Southern District of Texas, Houston Division in accordance with the Agreement's forum selection clause.
The Court offers a summary of the case's litigation history, to be considered within the context of Defendant's request for transfer:
A. The 2019 lawsuit in the District of New Mexico
On February 5, 2019, Marathon Oil Permian LLC (“Marathon”) filed a Complaint against Tap Rock Resources LLC (“TRR”) in the United States District Court for the District of New Mexico (Doc. 1-2 at 8), Cause No. 1:19-cv-00097. Id. Shortly after the filing of the 2019 Complaint, TRR and Marathon began settlement negotiations. Id. at 9. During that time, the Parties stipulated to a motion to stay pending “final resolution.” Doc. 26 (Cause No. 19-cv-00097). Negotiations lasted several months-with the Agreement being signed, entered into, and effective July 22, 2019. Doc. 5 at 5. On August 20, 2019, Marathon filed a notice of dismissal with prejudice regarding its claims against TRR. Doc. 29 (Cause No. 19-cv-00097).
B. The 2019 settlement agreement
Two specific provisions from the 2019 Agreement are relevant here. First, Marathon and TRR agreed the Agreement sets forth the “entire” agreement and “fully supersedes any and all prior agreements, arrangements, or understandings” between the Parties. Doc. 5 at 6-7; Doc. 6-1 at 7. The Parties also agreed that:
This Agreement shall be construed in accordance with the laws of the State of Texas, regardless of Texas's choice of law provisions. Any cause of action seeking the interpretation or enforcement of this Agreement or any of its terms shall be brought in the state district courts of Harris County, Texas, or the federal district courts for the Southern District of Texas, Houston Division. Notwithstanding anything to the contrary contained herein, venue for any cause of action related to real property over which a court in Texas does not have jurisdiction may be brought in New Mexico state or federal courts.
Doc. 5 at 3 (quoting Ex. B); Doc. 6-1 at 8.
The venue statute states:
For the convenience of parties and witnesses, in the interest of justice, a district court may transfer any civil action to any other district or division where it might have been brought or to any district or division to which all parties have consented.
28 U.S.C. §1404(a). But the usual Section 1404 calculus[1] changes when a transfer motion is predicated on a forum selection clause. “When the parties have agreed to a valid forum-selection clause, a district court should ordinarily transfer the case to the forum specified in that clause.” Atl. Marine Constr. Co., Inc. v. U.S. Dist. Ct. for the W. Dist. of Tex., 571 U.S. 49, 62 (2013). The presence of a valid (and mandatory) forum selection clause changes a district court's usual Section 1404(a) analysis. Id. at 63. Absent a showing “of inconvenience so serious as to foreclose a remedy,” a valid forum selection clause will be enforced. Carnival Cruise Lines, Inc. v. Shute, 499 U.S. 585, 594-95 (1991). Thus, when a Plaintiff “defies the forum-selection clause by bringing suit in a forum not bargained for by the parties, the Plaintiff's choice of forum merits no weight.” Weathers v. Circle K Stores, Inc., 434 F.Supp.3d 1195, 1207 (D.N.M. 2020) (internal citations and quotations omitted).
Is this “an action affecting real property in Eddy County, New Mexico,” (Doc. 21 at 12) as Plaintiffs claim, or is this an action “to reform the terms of the Settlement Agreement” (Doc. 5 at 1) as Defendant claims? For the reasons below, the Court finds the Defendant's argument carries the day.
The only real limitation on the Court's discretion to transfer a case under 28 U.S.C. § 1404(a) is the requirement that the new forum be a “district or division where [the case] might have been brought.” 28 U.S.C. § 1404(a). Obviously, this contract reformation case could have been brought in “state district courts of Harris County, Texas, or the federal district courts for the Southern District of Texas, Houston Division.” Doc. 5 at 3; Doc. 6-1 at 8. Thus, this consideration does not place any limitation on the Court's discretion to transfer the instant case. Although much argument is made in the pleadings about the local action doctrine, “the proper venue for a civil action shall be determined without regard to whether the action is local or transitory in nature.” 28 U.S.C. § 1391(a)(2); see Doc. 23 at 2. Assuming the local action doctrine is applicable, however, Plaintiffs' argument still fails because this is an in personam transitory contract dispute seeking an equitable remedy.
A court must have jurisdiction over both the subject matter and the parties. Ins. Corp. of Ir., Ltd. v. Compagnie Des Bauxites De Guinee, 456 U.S. 694, 701 (1982) ).
Because the courts are divided on the question of whether the local action doctrine is jurisdictional, the Court will presume it is-thereby giving Plaintiffs the benefit of the doubt. See infra ¶ II.B. Assuming, then, that the local action doctrine affects jurisdiction rather than venue, the Court must decide whether this action is local or transitory in nature. See Docs. 5, 21, 23.
Prior to the fifteenth century, jurors in England were chosen from the vicinity of the events at issue. See June Entman, Abolishing Local Action Rules: A First Step Toward Modernizing Jurisdiction and Venue in Tennessee, 34 U. Mem. L. Rev. 251, 256-57 (2004) (citing William H. Wicker, The Development of the Distinction Between Local and Transitory Actions, 4 Tenn. L. Rev. 55, 58-62 (1926)). As Blackstone explained, local actions involved “possession of land,” whereas transitory actions dealt with “injuries that might have happened any where.” 3 William Blackstone, Commentaries on the Laws of England 294 (1768). As a practical matter, courts declined to act in rem with respect to extraterritorial property. See Mostyn v. Fabrigas, 98 Eng. Rep. 1021, 1029 (K.B. 1774).
Nevertheless, even English courts of equity were not constrained from entering in personam decrees that affected parties' rights in real property. See Penn v. Lord Baltimore, 27 Eng. Rep. 1132 (Ch. 1750) (). The United State Supreme Court adopted this legal reasoning in the case of Massie v. Watts, 10 U.S. (6 Cranch) 148 (1810), finding that Kentucky had subject matter jurisdiction over Plaintiff's suit to recover lands in Ohio because the suit was not a local action since it dealt with a contract dispute. Id. at 158-60.
Firmly established under English common law, the local action doctrine was then “imported” into the jurisprudence of this country in 1811. Prawoto v. PrimeLending, 720 F.Supp.2d 1149, 1152 (C.D. Cal. 2010). As Chief Justice John Marshall stated, actions “are deemed transitory, where transactions on which they are founded, might have taken place anywhere; but are local where their cause is in its nature necessarily local.” Livingston v. Jefferson, 15 F. Cas. 660, 664 (C.C.D. Va. 1811) (No. 8,411). From this point forward, courts in the United States have referred to the local action doctrine as jurisdictional. See Casey v. Adams, 102 U.S. 66 (1880); Ellenwood v. Marietta Chair Co., 158 U.S. 105 (1895); Fall v. Eastin, 215 U.S. 1 (1909).
However, even against this jurisdictional backdrop, courts have routinely decided actions involving[2] real property can be transitory. See Dull v. Blackman, 169 U.S. 243, 246-47 (1898) ().
In December 2011, Section 1391(a) was amended to remove any distinction between local or transitory actions. See Federal Courts Jurisdiction and Venue Clarification Act of 2011, Pub. L. No. 112-63, 135 Stat. 758 (2011). The statute states: “the proper venue for a civil action shall be determined without regard to whether the action is local or transitory in nature.” 28 U.S.C. § 1391(a)(2). Clearly this language was aimed at curtailing the local action doctrine-but its effect has been unclear.
Currently courts are split as to whether the local action doctrine rule affects venue or jurisdiction. Some courts have held the Act only eliminated the local action...
To continue reading
Request your trial