Williston Hunter ND, LLC v. Eagle Operating, Inc.
4:11-cv-00066
D.N.D.Jan 24, 2012Background
- Eagle Operating filed motions to stay all claims and counterclaims pending arbitration in related cases.
- Parties include Eagle Operating, Williston Hunter ND, LLC, and Magnum Hunter Resources Corporation (parent company of Williston Hunter).
- Purchase and Sale Agreement (PSA) settled a dispute from a prior joint venture; closing was postponed with potential price adjustments.
- Disputed upward adjustment of about $6 million included unpaid EFMU wells expenses ($5.9 million) in the Preliminary Settlement Statement.
- Magnum Hunter argued Eagle Operating breached the PSA by including EFMU expenses; Eagle asserted the dispute concerns price adjustments and is subject to arbitration.
- The PSA contains Section 2.5, which outlines dispute resolution procedures including a broad arbitration clause in 2.5(g) if unresolved.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Scope of arbitration clause | Magnum Hunter contends clause is narrow and excludes adjustment types. | Eagle asserts clause broadly covers disputes over proposed adjustments and related interpretations. | Arbitration clause broadly covers types and amounts of adjustments; disputes must be arbitrated. |
| Arbitrability of EFMU expense dispute | Magnus Hunter argues EFMU costs are not proper adjustments under PSA. | The dispute concerns interpretation and amounts under 2.5; arbitrable per clause. | Dispute regarding inclusion of EFMU expenses is arbitrable under Section 2.5(g). |
| Appropriate mechanism for final adjustments | Magnum Hunter seeks resolution via arbitration if mutual agreement fails. | If unresolved, final adjustments are to be decided by the Referral Firm or arbitration if interpretation is needed. | Final adjustments fall within the arbitration framework when agreement cannot be reached. |
Key Cases Cited
- 3M Co. v. Amtex Sec., Inc., 542 F.3d 1193 (8th Cir. 2008) (liberal policy favoring arbitration; doubts resolved in favor of arbitration)
- Twin City Monorail, Inc. v. Robbins & Meyers, Inc., 728 F.2d 1069 (8th Cir. 1984) (clarifies scope of narrow/arbitration clauses depending on ‘items’ vs. accounting method)
- Simmons Foods, Inc. v. H. Mahmood J. Al-Bunia & Sons Co., 634 F.3d 466 (8th Cir. 2011) (motion to compel arbitration standard; interpretive approach)