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Double Eagle Energy Services LLC v. Markwest Utica E M G, LLC

United States District Court, W.D. Louisiana, Alexandria Division

January 30, 2019

DOUBLE EAGLE ENERGY SERVICES, LLC Plaintiff
v.
MARKWEST UTICA E M G, LLC Et al, Defendants

          REPORT AND RECOMMENDATION

          JOSEPH H.L. PEREZ-MONTES UNITED STATES MAGISTRATE JUDGE

         Before the Court is “Defendants' Motion To Dismiss Complaint Pursuant to Rule 12(b)(1) and Rule 12(b)(3) of the Federal Rule of Civil Procedure and 28 U.S.C. § 1334(C)(1)” (Doc. 6) wherein the mover seeks to dismiss the claims of Double Eagle Energy Services, LLC (“DEES”) because: (1) this Court lacks subject matter jurisdiction over Defendants MarkWest Utica EMG, LLC (“MarkWest”) and Ohio Gathering Company, LLC (“Ohio Gathering”); or (2) of improper venue. Additionally, Defendants request that this Court abstain from presiding over this matter and dismiss it in the interest of justice and comity with Ohio state courts and respect for Ohio law. For the following reasons, the Motion to Dismiss should be GRANTED.

         I. Background

         MarkWest solicited bids for construction of approximately 2.57 miles of natural gas pipeline (hereinafter referred to as the “Project”) in Monroe County, Ohio. (Doc. 1, ¶ 4.). Ohio Gathering acquired pipeline, leasehold, and/or easement rights and interest in, across, and/or under the immoveable property involved with the Project. Id. DEES submitted a bid and was awarded the contract for construction of the Project for a total lump sum amount of $3, 550, 086.14. (Id. ¶ 6).

         DEES alleges in its complaint that almost immediately upon arrival, it encountered numerous issues that increased costs and resulted in the submission of multiple change orders. (Id. ¶ 12). DEES filed the instant suit for breach of contract because MarkWest refused to pay DEES for the change orders and withheld 10% of the contract as a retainage.[1] DEES seeks the sum of $3, 779, 197.53 plus pre-judgment and post-judgment interest, costs, and attorneys' fees. (Doc.1, Prayer, ¶ A). DEES also seeks to validate and foreclose upon its Mechanic's Lien under the statutory guidelines of the Ohio Revised Code.

         Prior to filing this lawsuit, DEES filed for Chapter 11 bankruptcy in the Western District of Louisiana, Alexandria Division. In re Double Eagle Energy Services, L.L.C., No. 17-80717, United States Bankruptcy Court for the Western District of Louisiana. Defendants argue that this Court should dismiss the suit or abstain from presiding over it pursuant to 28 U.S.C. § 1334(c)(1) because it is a “non-core matter.” Alternatively, Defendants argue that the suit should be dismissed because the Western District of Louisiana is an improper venue. Defendants further seek dismissal under the doctrine of forum non conveniens because the contract contains a mandatory forum selection clause which requires the adversary proceeding to be adjudicated in Ohio. Finally, Defendants rely on the “local action doctrine” to support dismissal.

         Pursuant to a motion for leave (Doc. 15), Defendants filed a “Supplemental Memorandum in Further Support of Defendants' Motion to Dismiss Complaint Pursuant to Rule 12(b)(1) and Rule 12(b)(3) of the Federal Rules of Civil Procedure and 28 U.S.C. § 1334(C)(1)” (Doc. 18). In their Supplemental Memorandum, Defendants inform the Court of recent developments in the bankruptcy case which deprive this Court of jurisdiction. As of this date, DEES has not sought leave to respond to Defendants' Supplemental Memorandum.

         Attached to Defendants' Supplemental Memorandum is an “Order on Motion to Sell Movable and Immovable Property of the Estate to Secured Creditors” (the “Sale Order”) dated October 4, 2018. (Doc. 18-1).

         The Sale Order provides in pertinent part:

IT IS FURTHER ORDERED that the Debtor hereby transfers and assigns to GBT all of its rights and interests in the following causes of action, themselves collateral of Gibsland.[2]
A. Debtor's post-petition suit for breach of contract filed against Mark West Utica EMG, LLC, any lien rights referred to therein, pending in the United States District Court for the Western District of Louisiana, Alexandria Division, entitled “Double Eagle Energy Services, LLC versus Mark West Utica EMG, LLC”, No. 1:18-CV-00573.

         The Sale Order further provides in pertinent part:

IT IS FURTHER ORDERED that this order shall be determined to be a final order, self-executory, and implemented forthwith in accordance with Federal Rules of Bankruptcy Procedure 6004.[3]

         Defendants argue that not only does the Sale Order extinguish this Court's subject matter jurisdiction, but it also invalidates this ...


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