Wellington Resource Group, LLC v. Beck Energy Corporation
Filing
45
OPINION AND ORDER granting 9 Plaintiff's Motion to Intervene. Signed by Magistrate Judge Elizabeth Preston Deavers on 7/23/2012. (er1)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF OHIO
EASTERN DIVISION
WELLINGTON RESOURCE
GROUP, LLC,
Plaintiff,
Civil Action 2:12-cv-00104
Judge Algenon L. Marbley
Magistrate Judge Elizabeth P. Deavers
v.
BECK ENERGY CORPORATION,
et al.,
Defendants.
OPINION AND ORDER
This matter is before the Court for consideration of the Motion to Intervene filed by
Proposed Third-Party Plaintiff Transact Partner’s International, LLC (“Transact”). (ECF No. 9.)
Pursuant to Federal Rule of Civil Procedure 24, Transact seeks to intervene in this diversity
action as a matter of right, or in the alternative, permissively at the Court’s discretion. Both
Plaintiff, Wellington Resources Group, LLC (“Wellington”), and Defendant, Beck Energy Corp.
(“Beck”), oppose intervention. For the reasons that follow, Transact’s Motion to Intervene is
GRANTED.
I. BACKGROUND
On February 1, 2012, Wellington brought this diversity action for breach of contract and
unjust enrichment against Beck.1 Within its Complaint, Wellington contends that in 2010 Beck
sought its assistance to locate a qualified purchaser for its oil and gas interests with respect to
certain real property. Wellington submits that on February 28, 2011 it entered into a contract
1
Wellington is a Pennsylvania corporation and Beck is an Ohio corporation.
with Beck. According to Wellington, the contract obligated Beck to pay five percent of the final
transaction price if Wellington provided a willing and able purchaser to Beck. Wellington
contends that in August 2011 it introduced Beck to XTO Energy, Inc. (“XTO”). Wellington
further maintains that, in December 2011, XTO agreed to purchase oil and gas leases from Beck
for $84,961,346.00. According to Wellington, despite XTO’s purchase, Beck refused to pay
Wellington the five percent brokerage fee. Based on these allegations, Wellington contends that
Beck is in breach of the February 2011 contract. Alternatively, Wellington brings a claim for
unjust enrichment, contending that Beck has inequitably received Wellington’s services without
providing compensation.
Transact, a North Carolina company, filed its Motion to Intervene on March 14, 2012.
Transact seeks to bring a breach of contract claim against Wellington. Within its proposed
Third-Party Complaint, Transact contends that it entered into a contract with Wellington on
January 31, 2011. The contract provided that Wellington would pay Transact two percent of the
total transaction price if Transact provided a willing and able buyer who ultimately purchased
Beck’s oil and gas interests. Transact maintains that it located XTO and initiated the
communications which ultimately led to XTO’s purchase of Beck’s property. Transact asserts
that despite XTO’s purchase of Beck’s oil and gas lease, Wellington refused payment, thus
breaching the contract. In the alternative to its breach of contract claim, Transact also seeks to
bring unjust enrichment claims against both Wellington and Beck. Transact specifically asserts
that it performed services that benefitted Wellington and Beck, and that it is entitled to
compensation.
As noted above, both Beck and Wellington oppose intervention. Beck contends that
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because Transact is not a licensed real estate broker in the state of Ohio, it does not have a legal
interest in this lawsuit. Wellington maintains that the January 31, 2011 contract between it and
Transact contains a binding arbitration clause. Accordingly, Wellington asserts that the Court
should enforce the arbitration clause by denying intervention. Additionally, Wellington
contends that permissive intervention is improper because including another party, based in
North Carolina, would unnecessarily complicate, and potentially delay, this action.
II. STANDARD
Transact moves to intervene in this case as a matter of right under Federal Rule of Civil
Procedure 24(a)(2) or permissively under Rule 24(b)(1)(B). In general, “Rule 24 is broadly
construed in favor of potential intervenors.” Purnell v. Akron, 925 F.2d 941, 950 (6th Cir.
1991). Rule 24 provides in pertinent part:
(a)
Intervention of Right. On timely motion, the court must permit anyone to
intervene who:
***
(2)
claims an interest relating to the property or transaction which is the
subject of the action, and is so situated that disposing of the action
may as a practical matter impair or impede the movant’s ability to
protect its interest, unless existing parties adequately represent that
interest.
(b)
Permissive Intervention.
(1)
In General. On timely motion, the court may permit anyone to
intervene who:
***
(B)
has a claim or defense that shares with the main action a
common question of law or fact.
Fed. R. Civ. P. 24.
With regard to intervention as a matter of right, a party seeking to intervene must satisfy
four elements. Specifically, a potential intervenor must demonstrate “(1) that they have timely
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applied to intervene; (2) that they have a substantial legal interest in the pending litigation; (3)
that their ability to protect that interest is impaired; and (4) that the parties presently before the
court do not adequately represent that interest.” Cuyahoga Valley Ry. Co. v. Tracy, 6 F.3d 389,
395 (6th Cir. 1993). A party must demonstrate each element before the Court may grant
intervention as of right. Id.
Even if the Court denies intervention as a matter of right under Rule 24(a)(2), it may still
grant permissive intervention under Rule 24(b)(1)(B). See Purnell, 925 F.2d at 950 n.8 (noting
that although a party only moved for intervention as a matter of right, the district could have
considered permissive intervention). The decision of whether to grant permissive intervention is
within the Court’s sound discretion. See Blount-Hill v. Zelman, 636 F.3d 278, 287 (6th Cir.
2011) (reviewing permissive intervention determination for abuse of discretion). Like
intervention as a matter of right, permissive intervention requires a timely application.
Stupak-Thrall v. Glickman, 226 F.3d 467, 472 (6th Cir. 2000). Furthermore, the motion to
intervene must establish “at least one common question of law or fact.” United States v.
Michigan, 424 F.3d 438, 445 (6th Cir. 2005). The Court should also balance the factors of
“undue delay, prejudice to the original parties, and any other relevant factors . . . .” Michigan
State AFL-CIO v. Miller, 103 F.3d 1240, 1248 (6th Cir. 1997). Finally, this Court has provided
that “permissive intervention under Rule 24(b) is to be liberally granted, so as to promote the
convenient and prompt disposition of all claims in one litigation.” Berk v. Moore, No.
2:10–CV–1082, 2011 WL 1792534, at *3 (S.D. Ohio May 9, 2011) (internal quotations and
citations omitted).
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III. ANALYSIS
Once again, Transact moves for intervention as a matter of right, or in the alternative, for
permissive intervention. Under the circumstances of this case, even assuming that Transact fails
to meet the requirements of intervention as a matter of right, permissive intervention is
appropriate.2 Upon review of the record, the Court concludes that Transact’s Motion to
Intervene is timely, the relevant claims involve common issues of law and fact, and other factors
do not significantly weigh against intervention.
A.
Timeliness
As a preliminary matter, the Court finds that Transact filed a timely Motion to Intervene.
Transact filed its Motion to Intervene only six weeks after the original Complaint, and within a
month of learning that Wellington had filed this action. This case remains in its early stages, and
there is no indication that the original parties suffered prejudice as a result of the timing of
Transact’s Motion. Furthermore, neither party challenges the timeliness of Transact’s Motion to
Intervene.
B.
Common Question of Law or Fact
The Court also finds that Transact and Wellington’s claims share common questions of
both law and fact. First, as to common questions of law, Transact and Wellington each bring
unjust enrichment claims against Beck. In particular, both Transact and Wellington maintain
that Beck unjustly benefitted from brokerage services that they provided. Second, it is clear that
common questions of fact exist. The claims of Transact and Beck both arise from the sale of
2
Accordingly, the Court finds it unnecessary to determine whether Transact satisfies the
requirements of intervention as a matter of right.
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Beck’s oil and gas interests on the property to XTO. Furthermore, Transact and Beck’s claims
all involve interrelated questions regarding the services each corporation provided to facilitate
this sale.
C.
Other Factors
Finally, the Court finds that other factors do not weigh against intervention. As
highlighted above, before the Court may grant permissive intervention, it must consider the
effect of intervention on the original parties. Fed. R. Civ. P. 24(b)(3); cf. Miller, 103 F.3d at
1248 (holding that the district court improperly failed to provide the its reasoning for denying
permissive intervention). Under certain circumstances, such as when intervention would impact
the original case schedule, Courts have held that adding additional parties would result in undue
delay. See, e.g., Stupak-Thrall, 226 F.3d at 478 (holding intervention would cause undue delay
and prejudice original parties when it would interfere with the case schedule); Johnson v. City of
Memphis, 73 F. App’x 123, 133 (6th Cir. 2003) (holding that because extensive litigation had
already occurred, intervention would cause undue delay).
In this case, it does not appear that allowing Transact to intervene will cause significant
delay. Once again, this case is at its early stages, and Transact moved to intervene before any
case schedule had been set. Under these circumstances, the Court finds any potential for undue
delay to be minimal.
Additionally, the Court is unconvinced that the parties will suffer substantial prejudice
from intervention. Wellington contends, in conclusory fashion, that allowing Transact, a North
Carolina company, to join its action will unduly complicate the proceedings. Nevertheless,
without further detail, the Court is simply not convinced that inclusion of an additional out-of-
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state party will result in more than minimal prejudice to Wellington and Beck.
The Court also finds the parties’ other arguments against intervention to be unpersuasive.
Beck contends that the Court must deny intervention because Transact is not entitled to maintain
a cause of action under the applicable state law. Intervention under Rule 24, however, is not the
proper mechanism for considering the merits of Transact’s claims. It would, therefore, be
inappropriate for the Court to consider such issues at this stage of the proceedings. Beck is free
to challenge the merits of Transact’s unjust enrichment claim through the appropriate Federal
Rules of Civil Procedure.
Wellington maintains that the Court should deny intervention because of the arbitration
clause in its January 2011 contract with Transact. In its briefing, Transact concedes that the
contract contains a binding arbitration clause.3 Nevertheless, the Court finds no reasons to
conclude—and Wellington does not provide one—that allowing intervention will preclude
enforcement of the arbitration clause. As Transact suggest, it appears that the Court may stay
Transact’s claims against Wellington to allow for arbitration, while permitting the claims against
Beck to proceed.4
Finally, judicial economy favors intervention. As this Court has held, “[j]udicial
economy favors the disposition of related issues and claims in a single suit.” S.H. v. Stickrath,
251 F.R.D. 293, 297 (S.D. Ohio 2008) (citing Jansen v. City of Cincinnati, 904 F.2d 336, 339-40
3
Transact emphasizes, however, that Wellington did not invoke the clause until after it
sought to intervene.
4
The Court will discuss how this matter will proceed at the preliminary pretrial
conference. It makes no determination as to the ultimate impact of the arbitration clause at this
time.
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(6th Cir. 1990)). Here, as detailed above, Transact’s claims share common issues of law and fact
with the initial action. Based on the similar nature of Transact and Wellington’s claims, judicial
economy favors the resolution of the parties claims within the same action.
IV. CONCLUSION
For the foregoing reasons, Plaintiff’s Motion to Intervene is GRANTED. (ECF No. 9.)
The Clerk is DIRECTED to file Third Party Plaintiff-Intervenor’s Complaint (ECF No. 9-3)
along with the attached Co-Brokerage and Confidentiality Agreement (ECF No. 9-2).
IT IS SO ORDERED.
Date: July 23, 2012
/s/ Elizabeth A. Preston Deavers
Elizabeth A. Preston Deavers
United States Magistrate Judge
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