Atlantigas Corp. v. Columbia Gas Transmission Corp. , 210 F. App'x 244 ( 2006 )

UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 05-2180
ATLANTIGAS CORPORATION,
Plaintiff - Appellant,
and
TRIAD ENERGY RESOURCES CORPORATION; ENERGY
MARKETING SERVICES, INCORPORATED; AGF,
INCORPORATED; ADVANTAGE ENERGY MARKETING,
INCORPORATED; 1564 EAST LANCASTER AVENUE
BUSINESS TRUST; NICOLE GAS MARKETING,
INCORPORATED; STAND ENERGY CORPORATION,
PLAINTIFF CLASS: Natural Gas Marketing
Customers of Columbia Gas Transmission
Corporation (“TCO”) That Were Damaged By An
Illegal Gas Scheme Perpetrated By Defendants,
Plaintiffs,
versus
COLUMBIA GAS TRANSMISSION CORPORATION;
COLUMBIA GULF TRANSMISSION COMPANY; COLUMBIA
LNG CORPORATION; CLNG CORPORATION; DOMINION
COVE POINT LNG, LP; DOMINION COVE POINT LNG
COMPANY, LLC, DEFENDANT CLASS A: Three
Federally Regulated Interstate Natural Gas
Pipeline Companies (Columbia Gas Transmission
Company, Columbia Gas Gulf Transmission
Company, And The Cove Point LNG Limited
Partnership) That Participated in An Illegal
Scheme, etc.; BASE PETROLEUM INCORPORATED;
HOWARD ENERGY COMPANY, INCORPORATED; DYNEGY,
INCORPORATED; SEMCO PIPELINE COMPANY; SEMCO
ENERGY VENTURES, INCORPORATED; VIRGINIA
ELECTRIC AND POWER COMPANY; EL PASO MERCHANT
ENERGY, LP; COLUMBIA ENERGY SERVICES
CORPORATION,
Defendants - Appellees.
Appeal from the United States District Court for the Southern
District of West Virginia, at Charleston. Robert C. Chambers,
District Judge. (CA-04-867-2; CA-04-868-2; CA-04-869-2; CA-04-870-
2; CA-04-871-2; CA-04-872-2; CA-04-873-2; CA-04-874-2)
Argued: September 19, 2006 Decided: December 19, 2006
Before SHEDD and DUNCAN, Circuit Judges, and Richard L. VOORHEES,
United States District Judge for the Western District of North
Carolina, sitting by designation.
Affirmed by unpublished per curiam opinion.
ARGUED: Barry Bach, HODES, ULMAN, PESSIN & KATZ, P.A., Towson,
Maryland, for Appellant. G. Hamilton Loeb, PAUL, HASTINGS,
JANOFSKY & WALKER, L.L.P., Washington, D.C.; Roxane A. Polidora,
Ryan Takemoto, PILLSBURY, WINTHROP, SHAW & PITTMAN, L.L.P., San
Francisco, California, for Appellees. ON BRIEF: Steven B.
Schwartzman, Eric W. Gunderson, HODES, ULMAN, PESSIN & KATZ, P.A.,
Towson, Maryland, for Appellant. Sabrina Rose Smith, Christopher
T. Timura, PAUL, HASTINGS, JANOFSKY & WALKER, L.L.P., Washington,
D.C., Thomas R. Goodwin, Johnny M. Knisely, II, GOODWIN & GOODWIN,
L.L.P., Charleston, West Virginia, for Appellees Columbia Gas
Transmission Corporation, Columbia Gulf Transmission Company,
Columbia LNG Corporation, CLNG Corporation, Base Petroleum,
Incorporated, and Columbia Energy Services Corporation; John H.
Tinney, Charleston, West Virginia, James W. Draughn, Jr., Michael
S. Becker, KIRKLAND & ELLIS, L.L.P., Washington, D.C., for
Appellees SEMCO Pipeline Company and SEMCO Energy Ventures,
Incorporated; Jeffrey M. Wakefield, Erica M. Baumgras, FLAHERTY,
SENSABAUGH & BONASSO, Charleston, West Virginia, Howard Feller,
Bryan A. Fratkin, J. Brent Justus, MCGUIREWOODS, L.L.P., Richmond,
Virginia, for Appellees Dominion Cove Point LNG, LP, Dominion Cove
Point LNG Company, LLC, Defendant Class A: Three Federally
Regulated Interstate Natural Gas Pipeline Companies (Columbia Gas
Transmission Company, Columbia Gulf Transmission Company, and The
Cove Point LNG Limited Partnership) That Participated in An Illegal
Scheme, etc., and Virginia Electric and Power Company; Mark E.
Williams, HUDDLESTON BOLEN, Huntington, West Virginia, Steven Dahm,
PILLSBURY, WINTHROP, SHAW & PITTMAN, L.L.P., San Francisco,
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California, for Appellee Dynegy, Incorporated; David K.
Hendrickson, HENDRICKSON & LONG, Charleston, West Virginia, Paul J.
Franzetti, MCDADE, FOGLER & MAINES, Houston, Texas, for Appellee El
Paso Merchant Energy, LP.
Unpublished opinions are not binding precedent in this circuit.
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PER CURIAM:
In this contract action, the district court granted Appellees’
joint motion to dismiss Appellant AtlantiGas Corporation’s claims
arising out of an alleged illegal natural gas parking and lending
scheme perpetrated by Appellees on the basis that AtlantiGas
Corporation (“AtlantiGas”) lacked standing due to its sale of those
claims under an Asset Purchase Agreement. AtlantiGas appeals the
district court’s disposition. For the reasons that follow, we
affirm.
I.
Gaslantic Corporation (“Gaslantic”) was a purchaser of natural
gas supplies in the wholesale market for resale to commercial and
industrial end-user customers, who in turn burned the gas for
heating or manufacturing purposes. Gaslantic also provided
advisory services to the end-user natural gas customers in
connection with those customers’ acquisition of natural gas.
In September 1998, pursuant to an Asset Purchase Agreement
(the “Agreement”), Pepco Services, Inc. (“PSI”) agreed to purchase
and Gaslantic agreed “to sell, transfer, convey, and deliver to
[PSI] . . . all of the Acquired Assets for the consideration
specified [in the Agreement].” The parties defined the term
“Acquired Assets” in part as “all right, title, and interest in and
to all of the assets and properties of [Gaslantic] owned, used or
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held for use by [Gaslantic] primarily in connection with the
Business, whether tangible or intangible, whether real, personal,
or mixed, whether fixed, contingent or otherwise, and wherever
located. . . .” The “Business” as defined in the Agreement is
limited to the “business of retail natural gas marketing and
advisory services.” In addition to selling all of its Acquired
Assets, Gaslantic agreed to change its name to AtlantiGas
Corporation and contracted, as AtlantiGas, not to engage in any
natural gas related business for a specified period of time.
In consideration for Gaslantic’s sale of all of its Acquired
Assets, PSI agreed to pay Gaslantic $4.23 million plus Contingent
Payments, which were calculated according to PSI’s annual gross
earnings.
In February 1999, subsequent to consummation of the PSI and
Gaslantic Agreement, two natural gas pipeline companies, Columbia
Gas Transmission Corporation and Columbia Gulf Transmission
Company, disclosed their conduct in an alleged illegal parking and
lending scheme to the Federal Energy Regulatory Commission
(“FERC”). According to this disclosure, from 1996 to May 1999,
three pipeline companies (“Pipeline Company Defendants”) were
allegedly providing eight select natural gas shipper companies
(“Select Shipper Defendants”) with illegal natural gas storage and
transportation services in exchange for “kickback” payments. The
scheme allegedly allowed the Select Shipper Defendants to deliver
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natural gas at locations and prices that other natural gas shippers
could not meet.
FERC instituted an investigation and in October 2000, issued
an order approving a Stipulation and Consent Agreement with regard
to the two pipeline companies who reported their actions. Under
this order, Columbia Gas Transmission Corporation and Columbia Gulf
Transmission Company agreed to refund certain penalties and
disgorge profits to the industry participants who FERC found had
been illegally excluded from the scheme.
Thereafter, on October 22, 2004, AtlantiGas joined seven other
“non-select” natural gas shipper companies (collectively
“Plaintiffs”) in filing a proposed class action against the
Pipeline Company Defendants and the Select Shipper Defendants
(collectively “Appellees”) in West Virginia state court, seeking
damages under theories of breach of contract, unjust enrichment,
and violations of state and federal antitrust laws. Appellees
removed the case to federal court. Subsequently, Appellees filed
a joint motion to dismiss AtlantiGas pursuant to Rule 12(b)(1) of
the Federal Rules of Civil Procedure for lack of subject matter
jurisdiction. In short, Appellees contended that pursuant to the
terms of the Agreement AtlantiGas had sold the claims it asserted
in the underlying lawsuit to PSI and, therefore, did not have
standing to pursue those claims against Appellees.
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II.
A.
The district court dismissed all of AtlantiGas’s claims,
concluding that AtlantiGas had sold all its claims under the terms
of the Agreement. The district court found that the language of the
Agreement was clear and unambiguous on its face and that since the
claims arising out of the alleged illegal parking and lending
scheme had been transferred to PSI as part of the sale of
Gaslantic, AtlantiGas had not suffered a redressable injury and,
therefore, did not have standing to pursue the instant claims
against Appellees. On appeal AtlantiGas challenges the district
court’s conclusion.
This court reviews the district court’s dismissal for lack of
subject matter jurisdiction de novo. Richmond, Fredericksburg &
Potomac R.R. Co. v. United States, 945 F.2d 765, 768-69 (4th Cir.
1991) (citing Revene v. Charles County Comm’rs, 882 F.2d 870, 872
(4th Cir. 1989); Shultz v. Dept. of the Army, 886 F.2d 1157, 1159
(9th Cir. 1989)). In ruling on a Rule 12(b)(1) motion a court must
apply the standard applicable to a motion for summary judgment,
under which the nonmoving party must set forth specific facts
beyond the pleadings to show that a genuine issue of material fact
exists. Richmond, 945 F.2d at 768 (citing Trentacosta v. Frontier
Pacific Aircraft Indus., 813 F.2d 1553, 1558 (9th Cir. 1987)).
“The moving party should prevail only if the material
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jurisdictional facts are not in dispute and the moving party is
entitled to prevail as a matter of law.” Id. (citing Trentacosta,
813 F.2d at 1558).
We apply the substantive law of the State of Delaware to
AtlantiGas’s claims, as the parties agreed that the Agreement is
“governed by and construed in accordance with the domestic laws of
Delaware.” See Erie R.R. Co. v. Tompkins, 304 U.S. 64, 78 (1938),
Klaxon Co. v. Stentor Electric Mfg. Co., 313 U.S. 487, 496-97
(1941) and Oglesby v. Penn Mutual Life Ins. Co., 877 F. Supp. 872,
878 (D. Del. 1994) (noting that “[u]nder Delaware law, where
contracting parties have agreed on what law governs, a court may
forgo independent analysis and accept the parties’ agreement”)
(citing Wilmington Trust Co. v. Wilmington Trust Co., 24 A.2d 309,
313 (Del. Ch. 1942); Rosenmiller v. Bordes, 607 A.2d 465, 468 (Del.
Ch. 1991); National Acceptance Co. of California v. Mark S. Hurm,
M.D., P.A., CA 84L-JN-7, 1989 WL 70953 *1 (Del. Super. Ct. June 16,
1989)).
B.
A court does not have subject matter jurisdiction over an
individual who does not have standing. “Standing is a threshold
jurisdictional question which ensures that a suit is a case or
controversy appropriate for the exercise of the courts’ judicial
powers under the Constitution of the United States.” Pye v. United
States, 269 F.3d 459, 466 (4th Cir. 2001) (citing Steel Co. v.
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Citizens for a Better Env’t, 523 U.S. 83, 102 (1998)). The core
goal of the standing requirement is to ensure that a plaintiff has
enough of a stake in the case to litigate it properly. Id.There are three basic components to standing: injury,
causation and redressability. Marshall v. Meadows, 105 F.3d 904,
906 (4th Cir. 1997). To satisfy the constitutional standing
requirement, a plaintiff must provide sufficient evidence to
support the conclusion that: (1) plaintiff suffered an injury in
fact, which is an invasion of a legally protected interest that is
concrete and particularized, and actual or imminent, not
conjectural or hypothetical; (2) there is a causal connection
between the injury and the conduct complained of; and (3) it is
likely, as opposed to merely speculative, that the injury will be
redressed by a favorable decision of the court. Lujan v. Defenders
of Wildlife, 504 U.S. 555, 560-61 (1992) (citations and internal
quotation marks omitted); White Tail Park, Inc. v. Stroube, 413
F.3d 451, 458 (4th Cir. 2005).
III.
A.
AtlantiGas initially contends that the district court erred in
dismissing the claims it asserts against Appellees because these
claims were unknown to AtlantiGas at the time it entered into the
Agreement and the Agreement provided only for the transfer of
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“known” claims. Alternatively, AtlantiGas maintains that, at a
minimum, the Agreement is ambiguous on the issue of whether the
claims were included or excluded as Acquired Assets under the
Agreement and, therefore, the district court improperly granted
Appellees’ motion to dismiss.
“The basic rule of contract construction gives priority to the
intention of the parties.” E.I. du Pont de Nemours & Co., Inc. v.
Shell Oil Co., 498 A.2d 1108, 1113 (Del. 1985) (citing Radio Corp.
of Am. v. Philadelphia Storage Battery Co., 6 A.2d 329 (Del. Supr.
1939); Pennwalt Corp. v. Plough, Inc., 676 F.2d 77, 80 (3rd Cir.
1982); DuPont v. Wilmington Trust Co., 45 A.2d 510 (Del. Ch. 1946);
Restatement (Second) of Contracts § 202). A court must determine
the intent of the parties from the language of the contract. Twin
City Fire Ins. Co. v. Delaware Racing Ass’n, 840 A.2d 624, 628
(Del. 2003) (citing Kaiser Alum. Corp. v. Matheson, 681 A.2d 392,
395 (Del. 1996)). This determination may require a court to decide
whether or not the disputed contract language is ambiguous. Id.“A contract is not rendered ambiguous simply because the parties do
not agree upon its proper construction.” Rhone-Poulenc Basic
Chems. Co. v. American Motorists Ins. Co., 616 A.2d 1192, 1196
(Del. 1992). Rather, “[c]ontract language is ambiguous if it is
‘reasonably susceptible of two or more interpretations or may have
two or more different meanings.’” Twin City Fire, 840 A.2d at 628(quoting Kaiser Alum. Corp., 681 A.2d at 395).
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Ambiguity does not exist where the court can determine the
meaning of the contract without any guide other than the knowledge
of the simple facts on which its meaning depends. Rhone-Poulenc,
616 A.2d at 1196 (quoting Holland v. Hannan, 456 A.2d 807, 815
(D.C. App. 1983)). Where no ambiguity exists, the contract will be
interpreted according to the “‘ordinary and usual meaning’ of its
terms.” Twin City Fire, 840 A.2d at 628 (quoting Rhone-Poulenc,
616 A.2d at 1195). A court will not torture contractual terms to
create ambiguity where the ordinary meaning of the terms leaves no
room for uncertainty. Id. (citing Zullo v. Smith, 427 A.2d 409,
412 (Conn. Supr. 1980)). Thus, the true test of whether a contract
is ambiguous “is not what the parties to the contract intended it
to mean, but what a reasonable person in the position of the
parties would have thought it meant.” Id. (citing Steigler v.
Insurance Co. of N. Am., 384 A.2d 398, 401 (Del. Supr. 1978); State
v. Attman/Glazer, 594 A.2d 138, 144 (Md. 1991)).
In upholding the intention of the parties, the court must
construe the agreement as a whole, giving effect to all provisions
contained therein. E.I. du Pont, 498 A.2d at 1113 (citing State v.
Dabson, 217 A.2d 497 (Del. Supr. 1966); Bamdad Mech. Co. v. United
Techs. Corp., 586 F. Supp. 551 (D. Del. 1984)). “Moreover, the
meaning which arises from a portion of the agreement cannot control
the meaning of the entire agreement where such interference runs
contrary to the agreement’s overall scheme or plan.” Id. (citing
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Stemerman v. Ackerman, 184 A.2d 28, 34 (Del. Ch. 1962); Bamdad
Mech. Co., 586 F. Supp. at 555; Faw, Casson & Co. v. Cranston, 375
A.2d 463, 466 (Del. Ch. 1977)). “All provisions of a policy are to
be read together and construed according to the plain meaning of
the words involved, as to avoid ambiguity while at the same time
giving effect to all provisions.” Hercules Inc. v. Onebeacon Am.
Ins. Co., 852 A.2d 33, 35 (Del. Super. Ct. 2004) (citing Delaware
County Constr. Co. v. Safeguard Ins. Co., 228 A.2d 15 (Pa. Super.
1967)).
With these principles in mind, we turn to the district court’s
dismissal of AtlantiGas’s claims.
B.
In pertinent part, the Asset Purchase Agreement provides that
Gaslantic sold “all of the Acquired Assets.” (emphasis added).
These “Acquired Assets” are defined as:
all right, title, and interest in and to all of the
assets and properties of [Gaslantic] owned, used or held
for use by [Gaslantic] primarily in connection with the
Business, whether tangible or intangible, whether real,
personal or mixed, whether fixed, contingent or
otherwise, and wherever located, including, without
limitation, the following: . . . (e) all of its . . .
causes of action, chooses [sic] in action, rights of
recovery. . . .
(emphasis added). Moreover, “the Business” is defined in the
Agreement as “the business of retail natural gas marketing and
advisory services.”
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Our review of the Agreement leads us to conclude that
AtlantiGas’s contention that the parties only contracted to
transfer “known” claims is not supported by the clear language of
the Agreement and the use of the word “all.” In fact, the
Agreement does not differentiate between “known” and “unknown”
claims. Rather, according to the unambiguous language of the
Agreement, all assets that were “owned, used or held for use, by
[Gaslantic] primarily in connection with the [business of retail
natural gas marketing and advisory services]” were transferred from
Gaslantic to PSI as an Acquired Asset. Notably, the Agreement
further emphasized that such assets included those which are
“tangible or intangible, . . . whether fixed, contingent, or
otherwise” and specified that “all of [Gaslantic’s] . . . claims
. . ., causes of action, chooses [sic] in action, rights of
recovery, rights of set off, and rights of recoupment . . .” were
included in this definition. The use of the word “contingent”
would include assets dependent upon unknown future events. A
“contingency” is defined as “something liable to happen as an
adjunct to or result of something else.” Merriam-Webster
Dictionary, http://www.m-w.com/cgi-bin/dictionary (last visited
November 8, 2006).
Therefore, the question is whether the claims AtlantiGas
asserts against Appellees fall within the definition of “Acquired
Assets.” Or, put another way, were these claims “owned, used or
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held for use by Gaslantic primarily in connection with the
Business.” The Complaint answers this question in the affirmative.
AtlantiGas asserted its right to join in the Complaint against
Appellees on the basis that it “was (1) a purchaser, marketer,
wholesaler, manager, seller and shipper of natural gas; (2) a
customer of [Columbia Gas Transmission Corporation]; and (3) was
damaged by the illegal scheme perpetrated by defendants and subject
to this complaint.” However, since AtlantiGas’s claims arose out
of its role in the natural gas market, those claims were clearly
owned, used or held for use primarily in connection with the
Business and, therefore, passed as an asset to PSI under the
definition of “Acquired Asset.” Additionally, the use of the word
“all” solidifies our position that the claims asserted by
AtlantiGas were transferred to PSI under the Agreement. By using
the word “all,” the sale of claims language is unqualified and
absolute. As noted by the Delaware courts, “‘[a]ll’ means ‘all,’
or if that is not clear, all, when used before a plural noun such
as ‘assets,’ means ‘[t]he entire or unabated amount or quantity of;
the whole extent, substance, or compass of; the whole.’” Hollinger
Inc. v. Hollinger Intern., Inc., 858 A.2d 342, 377 (Del. Ch. 2004).
Given the unambiguity of the language of the Agreement, we
agree with the district court that AtlantiGas sold to PSI the
claims it asserts against Appellees. Consequently, AtlantiGas does
not have standing to assert those claims here and the district
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court properly granted Appellees’ joint motion to dismiss for lack
of subject matter jurisdiction.
C.
AtlantiGas alternatively argues that it has standing with
respect to the claims it asserts against Appellees because,
irrespective of whether it sold such claims under the Agreement,
through the Contingent Payment provision of the Agreement it
retained an ownership interest in the profits earned by PSI, which
interest was damaged due to the alleged illegal parking and lending
scheme.
The Agreement provided for AtlantiGas to receive Contingent
Payments from PSI as part of the purchase price. Specifically, in
this respect the Agreement provides as follows:
(ii) Subject to the terms and conditions of this
Agreement . . . [PSI] shall pay [Gaslantic] the following
contingent payments as part of the purchase price (each
individually, a “Contingent Payment;” collectively, the
“Contingent Payments”):
(A) On or before March 31, 2000, fifteen percent
(15%) of the first Six Million Dollars ($6,000,000) in
Adjusted Gross Receipts from the operations of the
Gaslantic Division relating to commodity sales, utility
advisory services and third-party contract services
(collectively, the “Operations”), in calendar year (“CY”)
1999, and twenty percent (20%) of all Adjusted Gross
Receipts from the Operations above $6,000,000 in CY 1999.
(B) On or before March 31, 2001, fifteen percent
(15%) of the first Fourteen Million Dollars ($14,000,000)
in Adjusted Gross Receipts from the Operations in
calendar year 2000, and twenty percent (20%) of all
Adjusted Gross Receipts from the Operations above
$14,000,0000 in CY 2000.
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(C) On or before March 31, 2002, fifteen percent
(15%) of the first Eighteen Million Five Hundred Thousand
Dollars ($18,500,000) in Adjusted Gross Receipts from the
Operations in calendar year 2001, and twenty percent
(20%) of all Adjusted Gross Receipts from the Operations
above $18,500,000 in CY 2001.
(D) On or before March 31, 2003, ten percent (10%)
of all Adjusted Gross Receipts from the Operations in CY
2002.
(E) On or before March 31, 2004, ten percent (10%)
of all Adjusted Gross Receipts from the Operations in CY
2003.
Despite AtlantiGas’s arguments to the contrary, this
Contingent Payment provision does not give AtlantiGas standing to
assert its claims against Appellees. First, the clear language of
the Agreement establishes that these Contingent Payments
represented a contractual right, and part of the consideration that
PSI paid to purchase Gaslantic. Or, put another way, Gaslantic
sold all of its Acquired Assets for $4.23 million and the
Contingent Payments. Therefore, if PSI did not pay AtlantiGas
according to the Contingent Payment schedule outlined in the
Agreement, and do so honestly as an accounting matter, AtlantiGas’s
recourse would be to pursue its recovery from PSI, and not from the
Appellees named here.* In fact, if AtlantiGas were permitted to
*
Indeed, AtlantiGas did sue PSI and settled all claims
asserted in that lawsuit. AtlantiGas Corp. v. Potomac Electric
Power Co. et al., No. 1:02-CV-00829 (PLF) (D.D.C. filed June 17,
2002). In its complaint against PSI, AtlantiGas alleged that PSI
withheld various post-closing payments due to PSI’s alleged
alteration of the company’s books and an alleged failure by PSI to
capture and appropriately account for PSI’s post-closing sales.
16
pursue its claims against Appellees, it would be receiving a double
recovery – first from PSI due to its failure to meet the correctly
adjusted Contingent Payment schedule and second from the Appellees,
whose illegal parking and lending scheme allegedly resulted in a
diminution of the Contingent Payments.
Moreover, as noted above, the Constitutional prerequisites to
establish standing require a plaintiff first to show that it
suffered an injury in fact, which means that it must establish an
invasion of a legally protected interest which is concrete and
particularized, and actual or imminent, not conjectural or
hypothetical. White Tail Park, 413 F.3d at 458. Here, there is no
evidence that AtlantiGas suffered a concrete and particularized
harm as a result of Appellees’ alleged actions. If we were to agree
with AtlantiGas’s contentions, then we would be forced to guess
what diminution in revenues, if any, is attributable to PSI and
what diminution, if any, is attributable to Appellees. Such
alleged damage is too conjectural and abstract, not distinct and
palpable. See Allen v. Wright, 468 U.S. 737, 751 (1984) (stating
that a core component for standing is that the plaintiff allege
personal injury fairly traceable to the defendant’s alleged
unlawful conduct and likely to be redressed by the requested
AtlantiGas alleged that as a result of this conduct, PSI diverted
monies owed to AtlantiGas and understated the final value of the
Gaslantic business.
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relief). Therefore, the district court properly dismissed
AtlantiGas’s claims against Appellees.
IV.
Based on the foregoing, it is hereby ordered that the order of
the district court is
AFFIRMED.
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