Williston Basin Interstate Pipeline Co. v. Sheehan Pipe Line Construction Co.

316 F. Supp. 2d 864, 2004 U.S. Dist. LEXIS 8004, 2004 WL 957246
CourtDistrict Court, D. North Dakota
DecidedMay 5, 2004
DocketA1-04-009
StatusPublished

This text of 316 F. Supp. 2d 864 (Williston Basin Interstate Pipeline Co. v. Sheehan Pipe Line Construction Co.) is published on Counsel Stack Legal Research, covering District Court, D. North Dakota primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Williston Basin Interstate Pipeline Co. v. Sheehan Pipe Line Construction Co., 316 F. Supp. 2d 864, 2004 U.S. Dist. LEXIS 8004, 2004 WL 957246 (D.N.D. 2004).

Opinion

ORDER

HOVLAND, Chief Judge.

Before the Court is the Defendant’s Motion to Stay in Deference to Firsh-Filed Action or Transfer. For the reasons set forth below, Court will stay any decision in this matter and will hold the motion in abeyance pending a ruling by the federal district court in Oklahoma.

I. FACTUAL BACKGROUND

This action arises out of a dispute as to how much the Defendant should be compensated for constructing the Grasslands Pipeline — a 250-mile pipeline running from northeastern Wyoming to southwestern North Dakota. The plaintiff, the Willi-ston Basin Interstate Pipeline Company (Williston Basin), is a Delaware corporation that is principally located in Bismarck, North Dakota. The defendant, Sheehan Pipe Line Construction Company (Shee-han), is an Oklahoma partnership engaged in the business of pipeline construction.

In November 2001, Williston Basin sought authorization from the Federal Energy Regulatory Commission (FERC), to construct, operate, and maintain the Grasslands Pipeline. In anticipation of receiving such authorization, Williston Basin contacted twelve contractors via letter in October 2002 to inform them of the planned construction of the pipeline.

Sheehan was the contractor ultimately selected by Williston Basin to construct the Grasslands Pipeline. On May 29, 2002, the parties executed a Contract Agreement and a Memorandum of Understanding. The Contract Agreement provided the following with respect to the commencement and completion of construction:

The Contractor shall begin the work of constructing said Project within two weeks after the date of written notice *866 from the Company to proceed under the contract and shall perform the work with due diligence and complete same within a total of 100 calendar days after the date of written notice, provided that the Contractor shall not be liable to the Company for any delay in completion of the construction which cannot be reasonably anticipated and protected against by the Contractor, and in the event of any such delay for such causes, then the period of completion above designated shall automatically be extended for a period equal to the duration of the delay.
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The construction of the Project is contingent upon the Federal Energy Regulatory Commission’s issuing Williston Basin a Certificate of Public Convenience and Necessity authorizing Company to construct and operate the facilities covered by this contract.

The Contract Agreement also provided the following with respect to the parties choice of laws:

This contract shall be interpreted under the laws of the State in which the construction of the pipeline occurs, notwithstanding the place of execution of this contract.

The Memorandum of Understanding provided an option selected by Williston Basin that the total price for Sheehan’s performance under the contract would not exceed $25,265,000.

On July 23, 2003, Williston Basin notified Sheehan that it could proceed with mobilization and preparatory work on the first segment of the pipeline. Shortly after commencing construction, Sheehan requested that the parties meet to discuss compensation to offset additional costs it had incurred. Thereafter, the parties met on numerous occasions but were unable to reach an agreement as to what, if any, additional compensation Sheenan was entitled to. In the meantime, Sheehan finished construction of the pipeline.

In mid-December 2003, Sheehan served Williston Basin with notice it was claiming a $5,248,133.54 pipeline construction lien pursuant to the provisions of Chapter 34-24 of the North Dakota Century Code for labor, material, and services it had performed and furnished on the entire pipeline between August 22-December 15, 2003. The lien was filed in North Dakota and recorded in Golden Valley, Billlings, Stark, and Dunn Counties.

On December 23, 2003, Sheehan filed a breach of contract action against Willi-ston Basin in federal district court in Tulsa, Oklahoma, but did not serve Willi-ston Basin with the summons and complaint until January 26, 2004. According to Sheehan, it encountered construction costs not originally contemplated in the parties’ agreement on account of Willi-ston Basin’s failure to timely supply appropriate government approvals.

On January 14, 2004, Williston Basin initiated an action in state court in North Dakota to declare Sheehan’s construction pipeline lien invalid. Sheehan removed the action to this Court on February 5, 2004, on the basis of diversity of citizenship and an amount in controversy exceeding $75,000.

On February 17, 2004, Williston Basin filed a motion in the Oklahoma federal district court case seeking either a dismissal of the case or a transfer of the case to North Dakota. On March 10, 2004, Sheehan filed a response in opposition to Williston Basin’s motion. On March 29, 2004, Williston Basin fried a reply in support of its motion. The Oklahoma federal district court has yet to rule on the motion.

On April 2, 2004, Sheehan filed a motion in this Court requesting a stay of the above-entitled action pending final disposi *867 tion of the Oklahoma case or, in the alternative, an order transferring the above-entitled action to Oklahoma. Sheehan’s motion is premised primarily upon the “first to file rule.” On April 16, 2004, Williston Basin filed a response in opposition to Sheehan’s motion.

II. LEGAL ANALYSIS

The “first to file” rule of judicial economy and comity provides that in cases of concurrent jurisdiction the first court in which jurisdiction attaches has priority to consider the case. See Orthmann v. Apple River Campground, Inc., 765 F.2d 119, 121 (8th Cir.1985); Northwest Airlines, Inc. v. American Airlines, Inc., 989 F.2d 1002, 1005 (8th Cir.1993) (stating that, absent compelling circumstances, the first-filed action should take precedence). The purpose of this rule is to promote the efficient use of judicial resources. Orthmann v. Apple River Campground, Inc., 765 F.2d 119, 121.

Sheehan contends this Court should honor the “first to file” rule and enter an order staying the above-entitled action in deference to the action pending in federal district court in Oklahoma. Sheehan dismisses the notion that compelling circumstances exist to warrant deviation from the rule as the parties’ respective claims emanate from the same conduct and the legal and factual issues to be analyzed and discovered are the same in both venues. In the event this Court is disinclined to grant a stay, Sheehan contends the Court should, in the interests of justice, enter an order transferring the above-entitled case to Oklahoma.

Williston Basin opposes a stay of this action and suggests this action should take precedence over the Oklahoma case.

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Related

Orthmann v. Apple River Campground, Inc.
765 F.2d 119 (Eighth Circuit, 1985)
Northwest Airlines, Inc. v. American Airlines, Inc.
989 F.2d 1002 (Eighth Circuit, 1993)

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Bluebook (online)
316 F. Supp. 2d 864, 2004 U.S. Dist. LEXIS 8004, 2004 WL 957246, Counsel Stack Legal Research, https://law.counselstack.com/opinion/williston-basin-interstate-pipeline-co-v-sheehan-pipe-line-construction-ndd-2004.