Harpole Construction, Inc. v. Medallion Midstream, LLC (In re Harpole Construction, Inc.)

565 B.R. 193
CourtUnited States Bankruptcy Court, D. New Mexico
DecidedJanuary 10, 2017
DocketCase No. 15-12630 t11; Adv. No. 16-1058 t
StatusPublished
Cited by2 cases

This text of 565 B.R. 193 (Harpole Construction, Inc. v. Medallion Midstream, LLC (In re Harpole Construction, Inc.)) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, D. New Mexico primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Harpole Construction, Inc. v. Medallion Midstream, LLC (In re Harpole Construction, Inc.), 565 B.R. 193 (N.M. 2017).

Opinion

OPINION

Hon. David T. Thuma, United States Bankruptcy Judge

Before the Court is plaintiffs objection to defendant’s demand for a jury trial on all claims. The Court concludes that defendant lost its right to a jury trial when it filed a counterclaim in this proceeding.

I. Findings of Fact

The Court finds the following facts for the limited purpose of ruling on the motion:1

Plaintiff Harpole Construction, Inc. filed this chapter 11 case on October 2, 2015. Harpole is a New Mexico corporation that installs and services oil pipelines in New Mexico and Texas. It conducts business from construction yards in Farmington, New Mexico; Hobbs, New Mexico; and Midland, Texas.

Hobbs and Midland are in the Permian Basin, an area well known for its large oil and natural gas deposits. Hobbs is on the border of New Mexico and Texas.

Defendant Medallion Midstream, LLC is a Delaware limited liability company. Medallion owns and operates oil pipelines in Texas. Medallion’s principal place of business is in Irving, Texas.

In early April 2016, a representative of Medallion invited Harpole to bid on four construction jobs. Shortly thereafter, Medallion delivered to Harpole a bid package that included a copy of Medallion’s form Master Service Contract (the “MSA”).

On April 12, 2016, Harpole submitted to Medallion bids on the four projects. Har-pole did not disclose that is was a debtor in possession. A Medallion representative called Harpole on April 19, 2016 and informed it that it was the successful bidder on all four jobs.

On or about the April 21, 2016 Harpole received from Medallion a “Request for Work Order” for each job. The documents were each signed by a Medallion representative. The next day Harpole signed and mailed the requests, together with a signed MSA, to Medallion.

On April 26, 2016, Medallion signed and mailed to Harpole a ‘Work Order” for each job. Harpole started work on the four projects in late April 2016.

On May 3, 2016, Medallion again contacted Harpole and asked it to bid on a [196]*196fifth job, known as the “Permian Resources” job. Medallion mailed a bid package to Harpole. Harpole submitted a bid for the Permian Resources job in late May, 2016. Medallion accepted Harpole’s bid, and signed a work order for the job on May 27, 2016.

Harpole maintained an open account with Medallion and sent weekly invoices. Between April and July, Medallion timely paid each invoice.

Medallion asserts that on July 27, 2016, it learned that the Reagan County Sheriffs Office was investigating a claim that Harpole was using a stolen trencher on the Permian Resources job. Medallion also alleges the owner of the trencher may file a criminal or civil complaint against Harpole. Harpole denies that it stole the trencher.

On August 29, 2016, Medallion sent Har-pole a letter terminating the MSA, terminating all outstanding work orders, and disputing certain charges by Harpole. As grounds for the termination, Medallion asserted that Harpole did not comply with applicable laws and that work was not performed in a workmanlike manner. Medallion disputed charges associated with four invoices totaling about $661,700 and any future charges on any of the five projects.

On October 11, 2016, Harpole filed this adversary proceeding against Medallion for breach of contract, conversion, and in-junctive relief. Harpole asserts Medallion breached the MSA by, inter aha, fading to provide proper notice of Harpole’s alleged breach; refusing to pay Harpole for work performed prior to the trencher incident; failing to allow Harpole to re-perform the work before hiring a third party; and overcharging Harpole. Harpole also asserts Medallion converted 4,200 wooden skids that Harpole left on Medallion’s property.

On October 20, 2016, MedaUion filed a complaint against Harpole in the United States District Court for the Northern District of Texas, Dallas Division (the “Texas Action”), alleging breach of contract and fraud. Medallion sought about $1 million in money damages stemming from allegedly inferior work Harpole performed at several job sites in Texas. On the same day, Medallion filed a motion in this Court, seeking dismissal, abstention, or a venue transfer to Dallas.

The judge in the Texas Action entered an order on November 2, 2016 closing the action because the automatic stay in this case prevented Medallion from prosecuting the action.

By an order entered October 21, 2016, the Court denied Harpole’s request for injunctive relief and set a briefing schedule for the motion to dismiss.

The Court denied Medallion’s motion to dismiss or abstain on November 23, 2016. Medallion filed an answer and counterclaim, in the adversary proceeding on December 5, 2016, asserting claims for breach of contract and fraud. The damages claimed total about $1,200,000. At the end of the counterclaim Medallion requested a trial by jury.

The issues raised in Medallion’s counterclaim cannot be separated from those raised in Harpole’s complaint; the facts in dispute are inextricably intertwined.

Harpole filed an answer to the counterclaim on December 14, 2016. The answer did not include an objection to the jury demand.

On December 19, 2016, Medallion consented to this Court presiding over a jury trial of its counterclaim.

Harpole objected to Medallion’s jury demand on December 21, 2016. Two days later Harpole filed an amended answer to [197]*197Medallion’s counterclaim, which included a short objection to the jury demand.

Briefs on the jury trial issue were filed on January 4, 2017, and the parties argued their positions on January 6, 2017.

II. Discussion

A. Right to a Jury Trial.

The Seventh Amendment provides that “[i]n Suits at common law, where the value in controversy shall exceed twenty dollars, the right of trial by jury shall be preserved....” U.S. Const., Arndt. 7. The term “suits at common law” included “suits in which legal rights were to be ascertained and determined, in contradistinction to those where equitable rights alone were recognized, and equitable remedies were administered.” Feltner v. Columbia Pictures Television, Inc., 523 U.S. 340, 348, 118 S.Ct. 1279, 140 L.Ed.2d 438 (1998) (internal quotation omitted). “The Seventh Amendment protects a litigant’s right to a jury trial only if a cause of action is legal in nature and it involves a matter of private right.’ ” Granfinanciera, S.A. v. Nordberg, 492 U.S. 33, 42 n. 4, 109 S.Ct. 2782, 106 L.Ed.2d 26 (1989).

To determine whether a party has a right to a jury trial, “[flirst, we compare the statutory action to 18th-century actions brought in the courts of England prior to the merger of the courts of law and equity. Second, we examine the remedy sought and determine whether it is legal or equitable in nature.” Granfinanciera, S.A. v. Nordberg, 492 U.S. 33, 42, 109 S.Ct. 2782, 106 L.Ed.2d 26 (1989) (internal quotation and citation omitted).

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Bluebook (online)
565 B.R. 193, Counsel Stack Legal Research, https://law.counselstack.com/opinion/harpole-construction-inc-v-medallion-midstream-llc-in-re-harpole-nmb-2017.