ANR Pipeline Co. v. Shell Oil Co.

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525 A.2d 991 (1987)

ANR PIPELINE COMPANY, Plaintiff Below, Appellant, v. SHELL OIL COMPANY, Shell Western E & P, Inc., and Shell Offshore, Inc., Defendants below, Appellees.

Supreme Court of Delaware.

Submitted: May 12, 1987.

Decided: May 14, 1987.

Henry N. Herndon, (argued), Grover C. Brown, P. Clarkson Collins, Jr., and Barbara MacDonald, of Morris, James, Hitchens & Williams, Wilmington, and Rebecca H. Noecker, Colorado Springs, Colo., Eric B. Brown, Detroit, Mich. and Robert D. Rooney, Houston, Tex., for appellant.

G. Edward Pickle, (argued), Shell Oil Co., Houston, Tex., E. Norman Veasey, Allen M. Terrell, Jr., and Stephen E. Herrmann, of Richards, Layton & Finger, Wilmington, for appellees.



This is an interlocutory appeal from the Court of Chancery that is being considered by this Court on an expedited basis. All of the parties are Delaware corporations. The Chancery action was commenced on September 8, 1986 with the plaintiff's request for a declaratory judgment. The underlying dispute involves the proper construction of a force majeure clause in contracts between these parties.

Following the initiation of the Chancery action, the parties sought to settle their dispute and entered into a stipulation which provided that no further litigation could be initiated except upon notice to the other party. On March 13, 1987, the defendants notified the plaintiff that they intended to file actions in the State District Court for Lafayette Parrish, Louisiana. That same day, the plaintiff filed and served an amended Chancery complaint and motion for a preliminary injunction against the defendants' prosecution of an action in Louisiana. The defendants responded, in Chancery on March 19, 1987, with a motion to dismiss or stay the Delaware action in favor of the new Louisiana litigation.

Following briefing and oral argument, the Court of Chancery issued its April 2, 1987, Memorandum Opinion and Order denying *992 the plaintiff's motion to enjoin the Louisiana action and granting the defendants' motion to stay the Delaware action. On April 7, 1987, this Court entered its Order accepting the plaintiff's interlocutory appeal. The issue on appeal is the decision of the Court of Chancery to stay the Delaware litigation between these parties in favor of the subsequent litigation commenced by the defendants, in Louisiana, involving the same cause of action. Following the submission of briefs, this Court heard oral argument on May 12, 1987.

The Memorandum Opinion of the Court of Chancery properly recognized that as a general rule, (a) litigation should be confined to the forum in which it is first commenced and (b) that a defendant should not be permitted to defeat the plaintiff's choice of forum in a pending suit, by commencing litigation involving the same cause of action, in another jurisdiction of its own choosing. McWane Cast Iron Pipe Corp. v. McDowell-Wellman E. Co., Del.Supr., 263 A.2d 281, 283 (1970). The Court of Chancery also properly recognized that the factors to be considered in ruling on a motion to stay a Delaware action in favor of subsequent litigation are set forth in General Foods Corp. v. Cryo-Maid, Inc., Del.Supr., 198 A.2d 681 (1964).

Although the Court of Chancery acknowledged the prior pendency of the Delaware action and analyzed each of the Cyrd-Maid factors, the record is not clear that it did so with regard for the appropriate standard. In granting the defendant's motion to stay the Delaware litigation, it appears that the standard applied by the Court of Chancery was "which forum is the most appropriate one in which to litigate this dispute" and concluded that "the circumstances tip in favor of" the defendants' litigation in Louisiana. However, in order for a defendant to prevail on a motion to stay a plaintiff's Delaware action on the ground of forum non conveniens, pending the outcome of a suit subsequently filed by the defendant, the burden is upon the defendant to show inconvenience and hardship sufficient to move the Court of Chancery to delay the exercise of its jurisdiction. Texas City Refining, Inc. v. Grand Bahama Petroleum Company, Ltd., Del.Supr., 347 A.2d 657 (1975); Moore Golf, Inc. v. Ewing, Del.Supr., 269 A.2d 51 (1970).

The defendants' motion to stay the Delaware action should be reconsidered, in the first instance, by the Court of Chancery according to the appropriate standard. The interests of justice require reconsideration of the defendants' motion by the Court of Chancery and further review by this Court on an expedited basis pursuant to Supreme Court Rule 19. Therefore, the Court of Chancery is directed to reconsider the defendants' motion to stay the Delaware litigation and make a determination as to whether or not the defendants have sustained their burden of showing inconvenience and hardship sufficient to cause the Court of Chancery to delay the exercise of its jurisdiction. In reconsidering the defendants' motion to stay the instant Delaware action, the Court of Chancery should make findings of fact and conclusions of law and make a report thereof to this Court on or before May 29, 1987.

Jurisdiction is hereby retained as to all issues in this appeal.

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