in Re MVP Terminalling, LLC

CourtCourt of Appeals of Texas
DecidedAugust 23, 2022
Docket14-21-00399-CV
StatusPublished

This text of in Re MVP Terminalling, LLC (in Re MVP Terminalling, LLC) is published on Counsel Stack Legal Research, covering Court of Appeals of Texas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
in Re MVP Terminalling, LLC, (Tex. Ct. App. 2022).

Opinion

Petition for Writ of Mandamus Conditionally Granted and Memorandum Opinion filed August 23, 2022.

In The

Fourteenth Court of Appeals

NO. 14-21-00399-CV

IN RE MVP TERMINALLING, LLC, Relator

ORIGINAL PROCEEDING WRIT OF MANDAMUS 125th District Court Harris County, Texas Trial Court Cause No. 2020-68933

MEMORANDUM OPINION

On July 19, 2021, relator MVP Terminalling, LLC filed a petition for writ of mandamus in this court. See Tex. Gov’t Code Ann. § 22.221; see also Tex. R. App. P. 52. In the petition, MVP asks this court to compel the Honorable Kyle Carter, presiding judge of the 125th District Court of Harris County, to (1) vacate his March 11, 2021 order denying MVP’s plea in abatement and his July 14, 2021 order denying MVP’s motion for clarification and reconsideration on its plea in abatement and motion to stay; and (2) sign an order dismissing or abating the underlying suit. We grant the requested relief.

BACKGROUND

MVP, a joint venture between Magellan Midstream Partners, L.P. and an affiliate of Valero Energy Corporation, is a refined-products terminalling company and the owner and operator of a marine terminal located along the Houston Ship Channel. McCarthy Building Companies, Inc. is a construction company. On April 23, 2018, MVP and McCarthy entered into the Major Construction Contract (“MCC”), under which McCarthy agreed to furnish construction and related services for MVP’s Pasadena Terminal Phase 2 Project (the “Project”) on the Houston Ship Channel. The Project included constructing new docks and dredging the basin of the new marine terminal to allow refinery tankers and other large vessels to dock at the terminal.

MVP retained Terracon Consultants, Inc. to perform a geotechnical analysis of the subsurface conditions at the Project and prepare a geotechnical engineering report documenting the Project’s subsurface conditions for Phase 1 of the Project. The Phase 1 report was not updated for Phase 2. MVP gave the Phase 1 report to contractors, including RLB Contracting, Inc., to use and rely on in preparing bids for Phase 2. On May 23, 2018, McCarthy entered into a subcontract (the “Subcontract”) with RLB for dredging work for the Project.

In August 2018, RLB started its dredging work under the Subcontract. When RLB reached minus 38 feet below sea level, it encountered substantially harder material. RLB began to have equipment problems and difficulty excavating the harder material. RLB believed that the subsurface condition it had encountered varied greatly from the information provided by MVP and McCarthy in the Phase 1 2 report. On July 22, 2019, RLB advised McCarthy that it had encountered a differing site condition as defined in the MCC and the Subcontract, entitling RLB to change orders for additional time and compensation.

RLB subsequently gave McCarthy formal notice of its claim for differing site conditions and a request for a change order. Because the Subcontract contained a “pass-through” provision, which provided that RLB would not be entitled to a change order unless McCarthy was entitled to the relief from MVP under the MCC, RLB also requested that McCarthy seek a similar change order from MVP. After McCarthy advised RLB that it was required to continue its work during the dispute and McCarthy would take action to achieve completion, RLB retained its own geotechnical engineer, which found that the material RLB encountered at minus 38-foot elevation was substantially different than the subsurface conditions represented in the Phase 1 report. On August 10, 2019, MVP denied the request for a change order.

On November 21, 2019, RLB gave notice of completion of its work and submitted an internally prepared calculation of its differing site condition claim. RLB also filed a mechanic’s lien affidavit in the amount of $4,540,743.88 in Harris County to secure additional costs. In December 2019, McCarthy as principal, and Travelers Casualty and Surety Company, as surety, issued a bond to indemnify against and discharge the lien.

In September 2020, after RLB and McCarthy had issued multiple reports regarding the issue of the differing site conditions, MVP again denied RLB’s claim based on McCarthy’s denial of the existence of a differing site condition, denial of liability for RLB’s claim, and purported failure to pursue timely RLB’s pass-through claim.

3 On October 22, 2020, MVP sued McCarthy in the District Court for Tulsa County, Oklahoma, pursuant to a forum-selection clause in the MCC, asserting, among other claims, that McCarthy is liable for RLB’s additional costs. Five days later, RLB filed its original petition, in Harris County, against MVP, alleging MVP is liable for RLB’s additional costs. RLB amended its petition in the Texas case by adding McCarthy and Travelers as defendants on October 30, 2022.

McCarthy sent notice to MVP on November 4, 2020, that it was voiding the forum-selection clause. On November 17, 2020, McCarthy filed an original crossclaim in the Texas case against MVP for, among other claims, breach of contract based on MVP’s failure to pay the additional costs. McCarthy also filed an original counterclaim against RLB in the Texas case, alleging causes of action related to RLB’s claim for additional costs.

Two days later, McCarthy filed a motion to dismiss in the Oklahoma case, arguing that (1) the forum-selection clause in the MCC is voidable under the Texas “home-rule” statute found in section 272.001 of the Business and Commerce Code;1 and (2) the case should further be dismissed under the doctrine of forum non conveniens.

On December 22, 2020, MVP filed a plea in abatement in the Texas case. MVP contended that RLB’s and McCarthy’s claims against MVP in the Texas case should be abated in favor of the Oklahoma case because (1) the Oklahoma court had dominant jurisdiction because the Oklahoma case was the first-filed; and (2) the forum-selection clause in the MCC required that suit be filed in the District Court in Tulsa, Oklahoma.

1 See Tex. Bus. & Com Code Ann. § 272.001. 4 On January 14, 2021, the Oklahoma court denied McCarthy’s motion to dismiss and ordered McCarthy to answer the lawsuit; McCarthy answered the Oklahoma case and asserted counterclaims against MVP on January 29, 2021.

Also, on January 14, 2021, MVP advised the trial court that the Oklahoma court had denied McCarthy’s motion to dismiss. McCarthy and RLB each filed a response to MVP’s plea in abatement, contending that the forum-selection clause is voidable under section 272.001, they had voided the forum-selection clause, and principles of comity did not require abatement of the Texas case.

On March 11, 2021, the trial court signed the order denying MVP’s plea in abatement. MVP filed a motion for clarification and reconsideration. MVP asked the trial court to dismiss the Texas case based on RLB’s and McCarthy’s waiver of the right to object to the forum-selection clause, or alternatively abate the Texas case until entry of the final judgment in the Oklahoma case. MVP also filed a motion to stay, in which it advised the trial court that it intended to seek mandamus relief in the court of appeals and asked the trial court to stay the trial court proceedings until the appellate court had ruled on MVP’s mandamus petition.2 The trial court held a hearing on April 23, 2021, and signed the order denying MVP’s motions on July 14, 2021.

MVP brings this mandamus proceeding, asking this court to compel the trial court to vacate its March 11, 2021 order denying MVP’s plea in abatement and its July 14, 2021 order denying MVP’s motion for clarification and reconsideration on its plea in abatement, and to sign an order dismissing or abating the underlying suit.

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Bluebook (online)
in Re MVP Terminalling, LLC, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-mvp-terminalling-llc-texapp-2022.