United States District Court, N.D. Oklahoma
OPINION AND ORDER
V. EAGAN CJ UNITED STATES DISTRICT JUDGE.
before the Court are defendant Mack C. Chase's (Chase)
motion to dismiss (Dkt. # 13), defendant Chase Oil
Corporation's (Chase Oil) motion to dismiss (Dkt. # 14),
and defendant Mack Energy Corporation's (Mack Energy)
motion to dismiss (Dkt. # 15). The defendants argue that the
claims against them should be dismissed for lack of personal
jurisdiction and, in the alternative, ask the Court to
dismiss this case due to a similar suit pending in New Mexico
state court. Chase also argues that the claims against him
should be dismissed for failure to state a claim. Dkt. # 13,
at 14. Plaintiff argues that the issue of personal
jurisdiction was already decided before the case was removed
to this Court and, even if the Court considers the issue, it
has specific personal jurisdiction over the defendants in
this case. Moreover, plaintiff asserts that it has
sufficiently stated a claim against Chase and that the Court
should not dismiss this case in favor of the New Mexico suit
because the claims in this suit that are independent of the
issues being litigated in New Mexico. Dkt. ## 20, 21, 22.
is an Oklahoma corporation owned and controlled by Brian
Broaddus. Dkt. # 21-1, at 1. In 1996, Broaddus was the
president of B/R Energy Partners, Inc., which entered into a
letter agreement with Chase Oil (Letter Agreement), under
which B/R Energy Partners, Inc. agreed to purchase and market
gas produced by Chase Oil from certain wells in northwest New
Mexico. Dkt. # 21-2. B/R Energy Partners, Inc. and Chase Oil
entered into a more formal agreement in 1997 (1997
Agreement), which was replaced by a third agreement in 1998
that altered the amount charged for certain services (1998
Agreement). Dkt. ## 21-3, 21-4. Under the 1997 and 1998
Agreements, B/R Energy Partners, Inc. agreed to make
disbursements on Chase Oil's behalf for all known
burdens, such as royalty interests and state and federal
taxes, based on information provided by the well operators.
Dkt. # 21-4, at 12. Chase Oil agreed to pay B/R Energy
Partners, Inc. a monthly fee for accounting services
associated with revenue disbursement, and B/R Energy
Partners, Inc. agreed to provide records of disbursements to
Chase Oil on a quarterly basis. Id. The 1998
Agreement was for an initial term of one year, and afterward
would continue on a month-to-month basis. Id. at 8.
The agreement could be terminated by either party after the
initial term with thirty days written notice. Id.
time of the agreements, B/R Energy Partners, Inc. was a Texas
corporation with its principal place of business in Tulsa,
Oklahoma. Dkt. # 21-1, at 1-2. On November 23, 1998, B/R
Energy Partners, Inc. terminated its corporate existence. Two
days later, Phoenix Energy Consulting Services, Inc. was
incorporated in Oklahoma. Dkt. # 21-6. In 2001, Phoenix
Energy Consulting Services, Inc. became Phoenix Energy
Marketing, Inc., the plaintiff in this case. Dkt. # 21-1, at
1; Dkt. # 21-8. Plaintiff asserts that it is the lawful
corporate successor to B/R Energy Partners, Inc. Dkt. # 21-1,
at 2. Plaintiff has registered the trade name B/R Energy, and
it or its predecessor has done business under that name since
1999. Id.; Dkt. ## 21-7, 21-9. Plaintiff asserts
that its principal place of business, and the principal place
of business of its predecessors, has always been Tulsa,
Oklahoma. Dkt. # 21-1, at 2. Plaintiff also asserts that
nearly all business conducted between plaintiff and
defendants during their business relationship was handled, on
plaintiff's end, from its office in Tulsa. Id.
Moreover, the Letter Agreement was printed on B/R Energy
Partners, Inc. letterhead, which features a picture of an oil
rig superimposed on an outline of the state of Oklahoma and
identifies offices in Tulsa, Oklahoma and Englewood,
Colorado. Dkt. # 21-2. The 1997 and 1998 Agreements both
direct all telephone, facsimile, and written notices to be
sent to B/R Energy Partners, Inc.'s Tulsa office. Dkt. #
21-3, at 8; Dkt. # 21-4, at 8.
and its predecessor corporations continued conducting
business with Chase Oil as B/R Energy until plaintiff
terminated the 1998 Agreement on November 1, 2015. Dkt. #
14-1, at 6. Throughout this time, Broaddus remained in charge
of the corporations conducting business as B/R Energy.
Id. at 5; Dkt. # 21-1, at 1. In 2013 or 2014, the
United States Department of Interior, Office of Natural
Resource Revenue (ONRR) contacted Chase Oil because it was
conducting an audit to determine whether Chase Oil had
underpaid its federal royalties. Dkt. # 2-1, at 7; Dkt. #
14-1, at 7. Chase Oil requested information from plaintiff to
provide to ONRR for the audit. Dkt. # 2, at 7; Dkt. # 14-1,
at 9. Defendants assert that plaintiff refused to provide the
information, claiming that it was proprietary. Dkt. # 14, at
9. Plaintiff asserts that the request to provide information
for the audit was not covered by the 1998 Agreement and
instead constituted a separate oral agreement that it calls
the “Mack Agreement.” On November 1, 2015,
plaintiff terminated the 1998 Agreement. Dtk. # 14-1, at 6.
November 30, 2015, Chase Oil filed a suit against plaintiff,
Broaddus, the B/R Energy Group, Inc., and B/R Energy Inc.
(New Mexico defendants) in the District Court of Eddy County,
State of New Mexico (New Mexico suit). After Chase Oil filed
the New Mexico suit, plaintiff presented Chase Oil with an
invoice for $56, 000 for data mining work performed by
plaintiff to gather information for the ONRR audit as
requested by Chase Oil. Dkt. # 2-1, at 8; Dkt. #14, at 9 n.2.
Plaintiff asserts that the data mining work was performed
pursuant to the oral Mack Agreement. On May 21, 2016, Chase
Oil filed an amended complaint in the New Mexico suit,
asserting breach of the duty of good faith and fair dealing
and requesting indemnity and an accounting. Dkt. # 14-1. On
July 13, 2016, the New Mexico defendants filed an answer and
counterclaim alleging breach of contract for disclosure of
proprietary information and requesting indemnity. Dkt. #
September 9, 2016, plaintiff filed this case in the District
Court of Tulsa County, State of Oklahoma, alleging breach of
contract and unjust enrichment arising from Chase Oil's
failure to pay the data mining invoice and breach of contract
for disclosure of proprietary information. Dkt. # 2-4.
Plaintiff filed an amended petition on September 16, 2016.
Dkt. # 2-1. On October 5, 2016, Chase Oil and Mack Energy
filed motions to dismiss for lack of personal jurisdiction.
Dkt. ## 2-7, 2-8. The summons was issued for the amended
petition on October 21, 2016. Dkt. # 2-14, at 5. On November
7, 2016, the state court denied Chase Oil's and Mack
Energy's motions to dismiss the original petition without
explanation. Dkt. # 2-13. On November 11, 2016, Chase removed
the case to this Court. Dkt. # 2. Defendants now move to
dismiss for lack of personal jurisdiction, or, alternatively,
under Colorado River Water Conservation District v.
United States, 424 U.S. 800 (1976), due to the prior
filed New Mexico suit. Dkt. ## 13, 14, 15.
argue that this Court does not have personal jurisdiction
over them as to plaintiff's claims. Plaintiff argues that
the issue of personal jurisdiction was already decided before
the case was removed to this Court and, even if the Court
considers the issue, it has jurisdiction over the defendants
in this case. The Court will first consider the effect of the
state court's November 7, 2016 order denying Chase
Oil's and Mack Energy's motions to dismiss the
Effect of the State Court Order
case is removed from a state court to a federal court, all
orders entered prior to removal “shall remain in full
force and effect until dissolved or modified by the district
court.” 28 U.S.C. § 1450. Federal courts have
interpreted § 1450 to mean that “[a]fter removal,
interlocutory orders of the state court are transformed into
orders of the court to which the case is removed.”
In re Diet Drugs, 282 F.3d 220, 231-32 (3d Cir.
2002); see also Resolution Trust Corp. v. Northpark Joint
Venture, 958 F.2d 1313, 1316 (5th Cir. 1992) (“A
prior state court order in essence is federalized when the
action is removed to federal court.”); Preaseau v.
Prudential Ins. Co. of Am., 591 F.2d 74, 79 (9th Cir.
1979) (“[T]he federal court . . . treats everything
that occurred in the state court as if it had taken place in
federal court.”) (internal quotation marks omitted).
“Thus, a federal court is free to reconsider a state
court order and to treat the order as it would any
interlocutory order it might itself have entered.”
Brown v. K-MAC Enter., 897 F.Supp.2d 1098, 1103
(N.D. Okla. 2012) (quoting Laney ex rel. Laney v.
Schneider Nat'l Carriers, Inc., 259 F.R.D. 562, 564
(N.D. Okla. 2009)); cf. Jenkins v. MTGLQ Inv'rs,
218 F. App'x 719, 724 (10th Cir. 2007) (finding that the
district court could set aside a default judgment entered in
state court after suit was removed).
even if the state court had denied the same motions that
defendants now bring, the Court could treat defendants'
motions to dismiss for lack of personal jurisdiction as
motions to reconsider under Rule 54(b). However, the Court
need not reconsider the state court's order, because the
state court did not rule on any of the motions now before the
Court. First, Chase did not file a motion to dismiss in the
state court, so his personal jurisdiction argument could not
have decided by that court. Second, the motions to dismiss of
Chase Oil and Mack Energy filed in the state court were
motions to dismiss plaintiff's original petition. Chase
Oil and Mack Energy were not served with the amended petition
until weeks after their motions to dismiss were filed.
Because plaintiff had filed an amended petition, the motions
to dismiss the original petition were moot when the state
court entered its order. Cf. Edwards v. Andrews, Davis,
Legg, Bixler, Milsten & Murrah, Inc., 650 P.2d 857,
859 (Okla. 1982) (noting that an amended petition is an
abandonment of the original pleading).Thus, the state court
order has no effect on defendants' current motions, and
the Court will consider defendants' arguments that the
Court lacks personal jurisdiction over them in this case.
Legal Framework for Personal Jurisdiction
defendant moves to dismiss for lack of personal jurisdiction
under Rule 12(b)(2), the plaintiff bears the burden of
establishing that the Court has personal jurisdiction over
the defendant. OMI Holdings, Inc. v. Royal Ins. Co. of
Canada, 149 F.3d 1086, 1091 (10th Cir. 1998).
“When a district court rules on a Fed.R.Civ.P. 12(b)(2)
motion to dismiss for lack of personal jurisdiction without
holding an evidentiary hearing, . . . the plaintiff need only
make a prima facie showing of personal jurisdiction
to defeat the motion.” Id. (citations
omitted). “The plaintiff may make this prima
facie showing by demonstrating, via affidavit or other
written materials, facts that if true would support
jurisdiction over the defendant.” Id. at 1091.
“In order to defeat a plaintiff's prima
facie showing of jurisdiction, a defendant must present
a compelling case demonstrating ‘that the presence of
some other considerations would render jurisdiction
unreasonable.'” Id. (quoting Burger
King Corp. v. Rudzewicz, 471 U.S. 462, 477 (1985)). The