New York Petroleum, Inc. v. Ashland Oil, Inc.

568 F. Supp. 1231, 38 Fed. R. Serv. 2d 200, 1983 U.S. Dist. LEXIS 14371
CourtDistrict Court, S.D. Mississippi
DecidedAugust 24, 1983
DocketCiv. A. Nos. W79-0019(B), W83-0035(B)
StatusPublished
Cited by1 cases

This text of 568 F. Supp. 1231 (New York Petroleum, Inc. v. Ashland Oil, Inc.) is published on Counsel Stack Legal Research, covering District Court, S.D. Mississippi primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
New York Petroleum, Inc. v. Ashland Oil, Inc., 568 F. Supp. 1231, 38 Fed. R. Serv. 2d 200, 1983 U.S. Dist. LEXIS 14371 (S.D. Miss. 1983).

Opinion

ORDER

BARBOUR, District Judge.

THIS CAUSE having come on to be heard on the Motion of Ashland Oil, Inc. and Koch Industries, Inc. for leave to amend their Answer to assert counterclaims against New York Petroleum Corporation, and on the Motion of New York Petroleum Corporation for voluntary dismissal of Ashland and Koch, and on the Motion of the United States Department of Energy to dismiss the complaint of Ashland and Koch or to enter summary judgment, and the Court having considered the memoranda offered and having heard the arguments of counsel does find as follows, to-wit:

I.

This action arose under provisions of the Economic Stabilization Act of 1970, 12 U.S.C. 1904 note. Factually, on December 22, 1976, the Federal Energy Administration (F.E.A.) issued a notice of probable violation to New York Petroleum Corporation (New York) alleging New York had over-charged Ashland Oil, Inc. (Ashland) and Koch Industries, Inc. (Koch) for crude oil produced during the period of September, 1973, through December, 1975. Subsequently, on July 29, 1977, the F.E.A. issued a remedial order to New York finding that New York had, in fact, over-charged Ash-land and Koch in ordering New York to pay to Ashland and Koch approximately $283,-000. Thereafter, on August 11, 1977, New York filed an application for stay and ap[1233]*1233peal of the remedial order. A hearing was held before the Office of Hearing and Appeals (O.H.A.) of the Department of Energy (D.O.E.) on August 8, 1978, which neither Ashland nor Koch attended, even though they had been supplied copies of all proceedings to date. On January 19, 1979, a decision and order was issued by the O.H.A. upholding the remedial order and requiring New York to pay to Ashland and Koch approximately $283,000. Pursuant to the provisions of the Economic Stabilization Act, New York brought suit against the D.O.E. in District Court on March 7, 1979, seeking declaratory and injunctive relief. Ashland and Koch were added as parties defendant on March 26, 1979. On June 6, 1979, Ashland and Koch filed their answer wherein they failed to assert their private cause of action as provided in Section 210 of the Economic Stabilization Act as a compulsory counter-claim against New York.

New York and the D.O.E. began settlement negotiations in late 1981 and early 1982. Ashland and Koch were provided a copy of the proposed “Agreed Final Judgment” representing the settlement between New York and the D.O.E. on March 23, 1982. Counsel for Ashland and Koch notified the D.O.E. by letter of date April 19, 1982, that Ashland and Koch objected to the $160,000 settlement amount being placed in an account of the United States Treasury. They represented to the parties that payment should be made to Ashland Oil Company “in such amount as to effect restitution of the losses suffered because of the over-charge.” Ashland and Koch thereafter set forth their actual out-of-pocket expenses resulting from the over-charges at only $79,381 (Ashland) and $2,500 (Koch). They explained that while they were unable to pass through over-charges occurring during the period September, 1973, through October, 1974, that the additional overcharges occurring after this period were passed through and shared by other refiners under provisions of the entitlements program.

On December 9, 1982, a hearing on the proposed Settlement and Agreed Final Judgment was held before Magistrate Countiss in which all parties participated, including Ashland and Koch. An Order dismissing the D.O.E. and requiring New York to pay $160,000 to the D.O.E. to “be deposited in a suitable escrow account for ultimate disposition by the D.O.E.” was issued by Magistrate Countiss. On January 11,1983, New York paid, by certified check, $161,532.42 into the escrow account called for in the Order. Exactly one month later, February 11, 1983, Ashland and Koch filed a motion for leave to amend their answer in Cause No. W79-0019(B) to assert a compulsory counter-claim against New York and brought a separate suit against the D.O.E. seeking injunctive and declaratory relief. Specifically, the counter-claims seek a private cause of action against New' York pursuant to Section 210 of the Economic Stabilization Act for the over-charges occurring between 1973 and 1975. If successful, Ash-land and Koch would be entitled to treble damages and attorneys fees. The suit against the Department of Energy is for restitution to Ashland and Koch of the entire $164,532.42 in the escrow account.

II.

Omitted counter-claims are governed by Rule 13(f) of the Rules of Civil Procedure, which provides as follows:

When a pleader fails to set up a counterclaim through over-sight, inadvertence, or excusable neglect, or when justice requires, he may by leave of court set up the counter-claim by amendment.

The leading United States Supreme Court case dealing with leave to amend pleadings is Foman v. Davis, 371 U.S. 178, 83 S.Ct. 227, 9 L.Ed.2d 222 (1962). Therein, the Court announced the general rule governing amendments to pleadings as following:

In the absence of any apparent or declared reason — such as undue delay, bad faith or dilatory motive on the part of the movant, the repeated failure to cure deficiencies by amendments previously allowed, undue prejudice to the opposing party by virtue of the allowance of the amendment, futility of the amendment, [1234]*1234etc. — the leave sought should, as the Rules require, be “freely given”. Of course, the grant or denial or an opportunity to amend is within the discretion of the District Court, but outright refusal to grant the leave without any justifying reason appearing for the denial is not an exercise of discretion; it is merely an abuse of that discretion inconsistent with the spirit of the Federal Rules.

371 U.S. at 182, 83 S.Ct. at 230.

The Fifth Circuit has held “[wjhere there has been such lack of diligence, the burden is on the party seeking to amend to show that the delay was due to over-sight, inadvertence, or excusable neglect.... Leave will be denied unless he shows some valid reason for his neglect and delay.” Freeman v. Continental Gin Company, 381 F.2d 459, 469 (5th Cir.1967). However, “[tjhe mere passage of time between an original filing and an attempted amendment is not a sufficient reason for denial of the motion.” Spartan Grain and Mill Company v. Ayers, 517 F.2d 214, 220 (5th Cir.1975).

Ashland and Koch admit that their failure to assert the compulsory counter-claim with their answer was not due to any oversight or inadvertence. Instead, they contend it was due to excusable neglect. As explained by counsel, Ashland and Koch were content to “let the D.O.E. carry the ball.” Although Ashland and Koch understood that the D.O.E. was pursuing a public right pursuant to Section 209 of the Economic Stabilization Act against New York, they were satisfied to identify their private cause of action against New York, as provided in Section 210, with the D.O.E.’s Section 209 claim. Ashland and Koch were furnished a copy of the remedial order dated July 29, 1979, finding that New York had over-charged them approximately $283,000.

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Related

New York Petroleum Corp. v. Ashland Oil, Inc.
757 F.2d 288 (Temporary Emergency Court of Appeals, 1985)

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Bluebook (online)
568 F. Supp. 1231, 38 Fed. R. Serv. 2d 200, 1983 U.S. Dist. LEXIS 14371, Counsel Stack Legal Research, https://law.counselstack.com/opinion/new-york-petroleum-inc-v-ashland-oil-inc-mssd-1983.