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Beattie v. The Williams Companies, Inc.

United States District Court, D. Kansas

August 24, 2017

DAVID W. BEATTIE, Plaintiffs,
v.
THE WILLIAMS COMPANIES, INC., et al., Defendants.

          MEMORANDUM AND ORDER

          ERIC F. MELGREN, UNITED STATES DISTRICT JUDGE.

         Plaintiffs David and Rhonda Beattie assert that Defendants The Williams Companies (“TWC”) and Mid-Continent Fractionation and Storage, LLC (“MCFS”) breached a settlement agreement. There are a multitude of motions before the Court, including two motions to dismiss, one motion for leave to file an amended complaint, and two motions for hearings on these motions.

         MCFS asserts that this Court lacks subject matter jurisdiction because complete diversity does not exist. Plaintiffs do not contest MCFS's assertion that diversity jurisdiction is lacking but instead attempt to amend their complaint to assert a federal claim. Because the Court does not have subject matter jurisdiction, and Plaintiffs' attempt to add a federal claim is improper, the Court grants MCFS's motion and denies Plaintiffs' motion to amend. The remaining motions are moot.

         I. Factual and Procedural Background

         Plaintiffs David and Rhonda Beattie, owners of property in McPherson County, originally filed a Complaint against TWC in December 2016. TWC is a corporation organized in Delaware. Plaintiffs suffered hardships, health issues, loss of the use of their home, and damages to their farm operations and personal property due to TWC's use of brine ponds adjacent to their property.

         Plaintiffs and TWC negotiated a settlement agreement for the settlement and release of their claims, as well as for the sale of Plaintiffs' land. Plaintiffs state that the parties had agreed to all the material terms through electronic messages and a written agreement from TWC. Plaintiffs allege that TWC had agreed to purchase Plaintiffs' land (240 acres) for $2, 400, 000 and the residences and other buildings on the land for an additional $700, 000 totaling $3, 100, 000. TWC allegedly reneged on this agreement and Plaintiffs seek to enforce it.

         After Plaintiffs filed their Complaint, TWC filed a Motion to Dismiss asserting that it did not own the brine ponds and that it had not made any attempt to purchase land from Plaintiffs. TWC stated that it was incorporated in Delaware and its principal place of business was in Oklahoma. TWC also asserted that it held an interest in a subsidiary company (Williams Partners, L.P.) which owned a subsidiary company (Williams Partners Operating, LLC) which owned a subsidiary company (Williams Field Services Group, LLC) which owned an entity named MCFS. TWC stated that MCFS is the entity that owns the brine ponds adjacent to Plaintiffs' property, and MCFS had made efforts to purchase certain parcels of the land identified by Plaintiffs over the last few years. Accordingly, TWC alleged that MCFS would be the proper party defendant and that this Court did not have personal jurisdiction over TWC.

         Instead of filing a response, Plaintiffs filed an Amended Complaint and added MCFS as an additional Defendant. Plaintiffs' allegations did not change but they stated several additional facts. Plaintiffs assert that all of their communications regarding the alleged settlement agreement were through “Williams” and “Williams Companies.” They allege that they never dealt with anyone purporting to represent MCFS in the transaction, but out of an abundance of caution, they were adding MCFS as a defendant.

         TWC again filed a Motion to Dismiss (Doc. 10) asserting that Plaintiffs had sued the wrong party and that the Court lacked personal jurisdiction over it. On April 13, 2017, MCFS filed its Answer to Plaintiffs' Complaint in which it stated that it was a foreign limited liability company organized under Delaware law and could be served on its registered agent in Topeka, Kansas. In addition, MCFS stated that upon current information and belief, MCFS admitted that the action involved a dispute between citizens of different states and in an amount in excess of $75, 000.

         Approximately one month later, MCFS filed a Motion to Dismiss (Doc. 28) asserting that the Court lacks subject matter jurisdiction. MCFS states that after a lengthy analysis of its entity structure, it discovered that it has unit holders in Kansas which destroys Plaintiffs' allegation of diversity jurisdiction. Thus, MCFS seeks dismissal of the entire action.

         Plaintiffs filed a response and a Motion for Leave to Amend Complaint (Doc. 36). They do not contest that MCFS is considered a citizen of Kansas and diversity jurisdiction may be lacking. Instead, they seek leave to add a federal claim under the Clean Air Act in an effort to establish this Court's subject matter jurisdiction. Plaintiffs have also filed two motions for hearings on the Motions to Dismiss and Motion for Leave to File Amended Complaint (Docs. 37, 45).

         II. Legal Standard

         Rule 12(b)(1) motions take one of two forms: (1) a facial attack on the sufficiency of the complaint's allegations as to the court's jurisdiction; or (2) a factual attack on the facts upon which subject matter jurisdiction is based.[1] Generally, the Court “must accept the allegations in the complaint as true.”[2] But in reviewing a factual attack, the Court “may not presume the truthfulness of the complaint's factual allegations.”[3] In a factual challenge under Rule 12(b)(1), the court “has wide discretion to allow affidavits, other documents, and a limited evidentiary hearing to resolve disputed jurisdictional facts.”[4] Once subject matter jurisdiction is challenged, the party claiming jurisdiction bears the burden of proof.[5]

         III. ...


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