Tuesday, May 10, 2016

Forum Shopping Curtailed: Venue Limited to Parish Where Drilling Rig Was Lost

Originally published by Court C. VanTassell.

In a May 4, 2016 opinion, Louisiana’s Third Circuit Court of Appeal made clear that venue was not proper in Concordia Parish—where plaintiff filed suit for damages resulting from the loss of its drilling rig in LaSalle Parish—because:  (1) the tortious conduct allegedly occurred and damages from the loss of the drilling rig were sustained in LaSalle Parish only, despite plaintiff’s assertion that it lost profits at its domicile in Concordia Parish, and (2) not all defendants were parties to a contract executed in Concordia Parish, and the fact that there may exist joint liability among the defendants did not confer venue there.

In D&D Drilling & Exploration, Inc. v. XTO Energy, Inc., D&D Drilling & Exploration, Inc. (“D&D”) filed suit in the Seventh Judicial District Court of Concordia Parish against XTO Energy, Inc. (“XTO”), Alliance Drilling Consultants, LLC (“Alliance”), Clifton Pritchard, and Alliance’s insurer, James River Insurance Company (“James River”), for damages resulting from the loss of D&D’s drilling rig.  D&D alleged that Pritchard, an employee of Alliance, which XTO retained to operate the rig, failed to ensure that sufficient drilling mud was on hand at the rig, and that the lack of sufficient drilling mud caused a well blow out and subsequent fire that destroyed the rig in LaSalle Parish.

In response to the lawsuit in Concordia Parish, XTO filed an exception of improper venue and the other defendants subsequently filed similar exceptions.  The trial court denied defendants’ exceptions and James River, Alliance, and Pritchard filed a joint answer before all defendants sought supervisory writs.  The Third Circuit first denied writs but the Louisiana Supreme Court granted writs and remanded the matter to the Third Circuit for full briefing and argument.

Concordia Parish was not a proper venue as to any of the defendants pursuant to Louisiana’s general venue rules prescribed by Code of Civil Procedure article 42.  Instead, D&D invoked exceptions to the general venue rules, and therefore bore the burden of proof to establish venue in Concordia Parish.

First, D&D attempted to establish venue in Concordia Parish pursuant to Code of Civil Procedure article 74, which provides that “[a]n action for the recovery of damages for an offense or quasi offense may be brought in the parish where the wrongful conduct occurred, or in the parish where the damages were sustained.”  The drilling rig was lost in LaSalle Parish but D&D asserted that this case called for an extension of the concept of “where the damages were sustained” to include Concordia Parish, where D&D allegedly lost profits as a result of the loss of the rig.  The Third Circuit disagreed and, instead, adhered to “the legion of cases that hold that the parish where the wrongful conduct occurred is the parish where damages were sustained under Article 74.”  In its reasoning, the Third Circuit quoted Besler v. St. Paul Fire & Marine Ins., 509 So.2d 12, 18-19 (La. App. 1 Cir. 1987) as follows:

The common thread that runs through the Coursey-Foster-King-Williams-Lapeyrouse line of cases is that, if any damage is caused to the plaintiff in the parish where the wrongful conduct occurred, that parish, and no other, is “the parish where the damages were sustained” for purposes of Article 74. This holding is consistent with the jurisprudence that Article 74 must be strictly construed. This holding evidences public policy determinations by the Coursey-Foster-King-Williams-Lapeyrouse courts that forum shopping should be minimized in actions for the recovery of damages for offenses and quasi offenses.

The Third Circuit concluded that the loss of the rig was the basis of D&D’s lawsuit and because that loss occurred in LaSalle Parish, LaSalle Parish was the only proper venue under Article 74.

Second, D&D attempted to establish venue in Concordia Parish pursuant to Code of Civil Procedure article 76.1, which states that “[a]n action on a contract may be brought in the parish where the contract was executed . . . .”  D&D and XTO executed a contract in Concordia Parish. However, the Third Circuit explained that Article 76.1 would not extend venue to Alliance, Pritchard, or James River, even if they were joint or solidary obligors of XTO, “because the article that governs venue in the case of joint and solidary obligors, La. Code Civ. P. art. 73, limits its exception to proper venues under Article 42,” which did not confer venue in Concordia Parish as discussed above.  The Third Circuit also rejected D&D’s argument that a verbal agreement between D&D and Alliance conferred venue in Concordia Parish pursuant to Article 76.1, because D&D offered no evidence of such an agreement at the hearing on the exception.   Similarly, the Third Circuit rejected D&D’s argument that the retainer of Alliance and Pritchard by XTO constituted a contract for D&D’s benefit, creating a stipulation pour autri under Code of Procedure article 1978, because D&D offered no such evidence at the hearing on the exception.

Finally, D&D argued that Alliance, Pritchard, and James River waived their rights to object to venue because they filed answers before they filed their notice of intent to apply for writs.  The Third Circuit disagreed and concluded that the parties timely manifested their intent to apply for writs, adding that D&D’s assertion would effectively strip any defendant of the right to appeal an adverse ruling on an exception of venue, as opposed to seeking redress through an application for supervisory writs.

After rejecting each of D&D’s arguments to confer venue upon Concordia Parish, the Third Circuit granted defendants’ applications for writs peremptorily and ordered the matter transferred to the Twenty-Eighth Judicial District Court of LaSalle Parish.

Liskow and Lewis represented XTO in this proceeding.  For more information regarding the decision, please feel free to contact appellate counsel Joe Norman at jbnorman@liskow.com or Kathryn Gonski at kzgonski@liskow.com.

Curated by Texas Bar Today. Follow us on Twitter @texasbartoday.

from Texas Bar Today http://ift.tt/21U4tTy
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