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Grice v. CVR Energy, Inc.

United States Court of Appeals, Tenth Circuit

April 23, 2019

BENJAMIN GRICE and KAYLA PATCHETT, Plaintiffs - Appellants,
v.
CVR ENERGY, INC. and CVR REFINING, LP, Defendants - Appellees, and FLOWSERVE CORPORATION; FLOWSERVE US, INC.; DOUG RICHISON; and JOHN DOE ENGINEERING COMPANY, Defendants.

          APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF OKLAHOMA (D.C. NO. 4:16-CV-00459-GKF-FHM)

          Michael D. Robbins, Doyle Restrepo Harvin & Robbins, L.L.P. (Michael Patrick Doyle, Doyle LLP, Houston, Texas, and James Eloi Doyle, Doyle Restrepo Harvin & Robbins, L.L.P., Houston, Texas, with him on the briefs), Houston, Texas, for Appellants.

          Lee M. Smithyman (Arthur E. Rhodes with him on the brief), Smithyman & Zakoura, Chartered, Overland Park, Kansas, for Appellees.

          Before TYMKOVICH, Chief Judge, McKAY, and CARSON, Circuit Judges.

          TYMKOVICH, CHIEF JUDGE.

         Benjamin Grice suffered severe burns after an oil pump exploded at the refinery where he worked. He and his wife brought suit against the refinery's two parent corporations, CVR Energy and CVR Refining. They alleged the parent companies assumed responsibility for workplace safety at the oil refinery by entering into a services agreement for the benefit of Grice's employer, Coffeyville Resources. The district court granted summary judgment in favor of the parent companies, concluding that the agreement did not obligate them to provide safety services to the oil refinery.

         We first conclude that CVR Refining must be dismissed as a party under 28 U.S.C. § 1332, to preserve complete diversity of citizenship. We then affirm the district court's grant of summary judgment in favor of CVR Energy. The company did not have a duty to Grice to maintain the oil pump since the services agreement was for administrative and legal services and not for safety services that would subject CVR Energy to liability under Kansas law.

         I. Background

         Benjamin Grice worked for Coffeyville Resources Refining & Marketing (Coffeyville) as a refinery employee. While he was on shift, a leak sprung in a refinery pump, causing flammable hydrocarbons to pool on the unit floor. The hydrocarbons ignited when Grice and three coworkers responded to the leak. The resulting explosion severely burned Grice and killed one of his coworkers.

         The cause of the leak and explosion is undisputed. Excessive wear and tear allowed the pump's rotating parts to contact and shatter the pump's seal. It is also undisputed that a double mechanical seal would have prevented the leakage of flammable hydrocarbons. Coffeyville had commissioned a Process Hazard Analysis study before the accident that recommended an upgrade from a single to a double mechanical seal, and the company had scheduled to replace and upgrade the seals sometime after the accident occurred.

         Grice received workers' compensation benefits for his injuries, extinguishing any civil claims against Coffeyville. Grice and his wife then filed tort claims against Coffeyville's two parent corporations-CVR Energy and CVR Refining. CVR Energy indirectly owns sixty-six percent of CVR Refining, which in turn indirectly owns one-hundred percent of Coffeyville.

         The Grices argued to the district court that CVR Energy assumed responsibility for workplace safety by entering into a services agreement with CVR Refining. CVR Energy and CVR Refining executed the agreement in 2012 for the benefit of the two parties' six mutual subsidiaries engaged in the business of refining and transporting oil, including Coffeyville. The services CVR Energy was to perform for these six subsidiaries included providing "safety and environmental advice" and managing the subsidiaries' "day-to-day business and operations." App. 191. Included within those enumerated services, according to the Grices' interpretation of the agreement, was the obligation to ensure workplace safety by maintaining refinery equipment.

         Following discovery, both parties filed motions for summary judgment. The district court denied the Grices' motion, noting there existed genuine issues of material fact. The court concluded that there were questions as to "(1) whether the parties intended the Services Agreement as a safety services contract or cost-allocation mechanism; and (2) if a safety services contract was intended, the scope and nature of the duties owed by CVR Energy to Coffeyville employees." Grice v. CVR Energy, Inc., No. 16-CV-459-GKF-FHM, 2017 WL 1100906, at *4 (N.D. Okla. Mar. 23, 2017). But the district court later reversed course and granted CVR Energy and CVR Refining's motion for summary judgment after further considering extrinsic evidence. The court concluded the agreement was best read "to provide a cost-allocation mechanism for shared services," Grice v. CVR Energy, Inc., No. 16-CV-459-GKF-FHM, 2017 WL 3032221, at *5 (N.D. Okla. July 17, 2017), and therefore CVR Energy was not responsible for Grice's injuries.

         II. Jurisdiction

         We must first determine our jurisdiction in this diversity matter. When our jurisdiction relies solely on diversity of citizenship under 28 U.S.C. § 1332, each defendant must be diverse from each plaintiff. See, e.g., Ravenswood Inv. Co., L.P. v. Avalon Corr. Servs., 651 F.3d 1219, 1223 (10th Cir. 2011). The parties concede that the case lacked complete diversity when the complaint was filed because CVR Refining had unitholders in Kansas (the resident state of the Grices), a disclosure not revealed until this appeal was pending. There is no dispute, therefore, that the district court was without jurisdiction to rule on the merits of the case.

         But this fact does not necessarily divest our court of jurisdiction. The Supreme Court has clarified that appellate courts may cure this type of jurisdictional defect by dismissing a jurisdiction-spoiling dispensable party on appeal. Newman-Green, Inc. v. Alfonzo-Larrain, 490 U.S. 826, 827 (1989). ...


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