Judge Davis Applies McWane Factors and Grants Defendant’s Motion to Stay

September 14, 2021

Publication| Commercial Litigation

In Highland Pipeline Leasing, LLC v. Magellan Pipeline Company, L.P., C.A. No. N20C-08-275 EMD CCLD, Judge Davis granted the defendant’s motion to stay.  In the underlying dispute, Magellan Pipeline Company L.P. (“Magellan”) entered into an agreement to lease a 158-mile pipeline in Arkansas (the “Ozark Line”) from Highland Pipeline Leasing LLC (“Highland”), with Spectra Energy Partners, LP (“Spectra”) serving as guarantor of the lease.  In August 2017 Magellan reported issues with the Ozark Line.  Pursuant to the lease, Magellan sought certain repair costs from Highland, and Highland denied responsibility for the costs.

On April 22, 2020, Magellan initiated an action in Oklahoma state court against Highland for breach of the lease.  Magellan subsequently moved to amend to add Spectra as a defendant pursuant to its guarantor obligations, which the Oklahoma court granted on November 10, 2020.   

Prior to the motion to amend being decided by the Oklahoma court, Highland and Spectra filed a complaint in the instant action requesting that the Superior Court of Delaware enter declaratory judgments that (1) Highland need not share costs associated with the Ozark Line, and (2) Spectra has no obligations under the guaranty.  On November 2, 2020, Magellan filed a motion to stay the Delaware action. 

In Delaware, when determining whether a suit should be stayed or dismissed for forum non conveniens, the Court will consider whether there is a related action pending in another jurisdiction.  “[I]f the foreign action is first-filed, the Court will conduct an analysis under the McWane three-factor test.”  Under McWane, the Court considers whether (1) there is prior action pending elsewhere, (2) in a court capable of doing prompt and complete justice, (3) involving the same parties and same issues.  Defendant Magellan argued that McWane applied, requiring the Delaware action to be stayed.  The plaintiffs opposed the motion, claiming that the Delaware action was first-filed because it was the first action to include both Highland and Spectra as parties.  Further, in arguing against the stay, Highland and Spectra claimed that the Oklahoma court was incapable of doing prompt and complete justice because it could not exercise personal jurisdiction over the parties. 

Judge Davis determined that the Oklahoma action was first-filed and granted the stay.  The Court found that the parties were “substantially similar to those” involved in the Oklahoma action.  Parties can be substantially similar under McWane “where related entities are involved, but not named in both actions,” and, as Judge Davis stated in his opinion, “[a]mending a case to include all relevant parties does not strip a case of first-filed status.”  Judge Davis disagreed that the Oklahoma court was incapable of doing prompt and complete justice because the Oklahoma court had already ruled that it could exercise personal jurisdiction.  Therefore, because the Oklahoma action was first-filed in a capable court and involves the same issues and parties, Judge Davis granted Magellan’s motion to stay under McWane.

Analysis: The CCLD will not lightly contest another state court’s determination of jurisdiction when applying the McWane three-factor test.  Further, the decision makes clear that “[a]mending a case to include all relevant parties does not strip a case of first-filed status.” 

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