Utility Lines Construction Services Inc. v. Hoti, Inc.
2011 U.S. Dist. LEXIS 83035
| D. Del. | 2011Background
- ULCS sought damages for fraud, fraudulent misrepresentation, and breach of contract, and enforcement of a guaranty against HOTI (formerly Highlines) and Diversified under the Asset Purchase Agreement (APA) and related Guaranty.
- Highlines sold its material assets to ULCS on Dec. 14, 2009; the APA and Guaranty designated Delaware law and venue for disputes over $175,000.
- HOTI allegedly concealed liabilities related to the Amperical subcontract, and ULCS alleges HOTI certified representations at closing as true.
- Amperical and Cleco demanded remediation for defective work, with ULCS continuing to seek indemnification per the APA’s 1.7 and related covenants.
- Louisiana state court action (Louisiana suit) involves Entergy and others and alleges fraud, unfair trade practices, and related claims; the Louisiana action is pending.
- The Delaware action focuses on HOTI’s disclosures under the APA and on enforcing the Guaranty; the court denied dismiss, transfer, or stay and kept the case in Delaware.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Transfer to Louisiana as convenient forum | ULCS preferred Delaware; forum selection favors Delaware governing the APA | Defendants argued Louisiana forum for related suit; convenience weighs in favor of transfer | Motion to transfer denied |
| Failure to join indispensable parties | Louisiana entities are not necessary to adjudicate APA/Guaranty claims | Absent parties might affect relief or create parallel obligations | Motion to dismiss denied due to lack of necessary joinder under Rule 19 |
| Stay under Colorado River abstention | Parallel state case warrants staying federal proceedings to avoid piecemeal litigation | Exceptional circumstances justify abstention | Stay denied; proceedings not parallel and no exceptional circumstances warranted abstention |
Key Cases Cited
- Colorado River Water Conservation Dist. v. United States, 424 U.S. 800 (1976) (established Colorado River abstention doctrine and factors)
- Ryan v. Johnson, 115 F.3d 193 (3d Cir.1997) (exceptional circumstances factors for abstention)
- Stewart Org., Inc. v. Ricoh Corp., 487 U.S. 22 (1988) (discretion in transfer under §1404(a) for convenience and justice)
- Shutte v. Armco Steel Corp., 431 F.2d 22 (3d Cir.1970) (balance of factors in transfer analyses; deference to plaintiff's forum choice when reasonable)
- Kuhn Const. Co. v. Ocean and Coastal Consultants, Inc., 723 F. Supp. 2d 676 (D.Del.2010) (fraud/misrepresentation claims may proceed without absent contract parties; Rule 19 analysis guidance)
- E.I. duPont de Nemours & Co. v. Rhodia Fiber and Resin Intermediates, S.A.S., 197 F.R.D. 112 (D.Del.2000) (joinder and relationship of related entities in fraud cases)