BE&K Engineering Co., LLC v. RockTenn CP, LLP, C.A. No 8837-VCL (Del. Ch. Jan. 15, 2014) (Laster, V.C.)

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In this memorandum opinion, the Court of Chancery granted a motion for partial summary judgment and issued a permanent anti-suit injunction, finding that the agreement governing the Delaware and Georgia litigation contained a valid Delaware forum selection clause.

BE&K Engineering, which later became KBR Engineering Company, LLC, (“Plaintiff”) and RockTenn CP, LLP (“RKT CP”) entered into an agreement governing engineering work provided by Plaintiff on projects at facilities owned by RKT CP (“Engineering Agreement”).  The Engineering Agreement selected courts in Wilmington, Delaware as the exclusive forum for any dispute (“Delaware Forum Clause”).  An affiliate of Plaintiff and Rock-Tenn Shared Services (“RKT SS” and together with RKT CP, “Defendants”) also entered an agreement governing construction work provided by the affiliate or members of its corporate family to RKT SS or members of its corporate family (“Construction Agreement”).  The Construction Agreement contained a forum selection clause that allowed RKT SS to sue in any forum but required Plaintiff to sue in a Georgia court.  Plaintiff moved for partial summary judgment declaring that the Engineering Agreement governed its work on the disputed transaction and for declarations that the Engineering Agreement governed specific work orders.  If successful on its motions, Plaintiff also asked the court to convert a preliminary anti-suit injunction to a permanent anti-suit injunction.

Plaintiff and RKT CP entered into the Engineering Agreement on December 21, 2010 in conjunction with a strategic project to upgrade a pulp and paper mill in Hodge, Louisiana (“Strategic Project”).  The Engineering Agreement was a master agreement, meaning it was not limited to the Strategic Project, and the parties used it to govern engineering work provided by Plaintiff on any of RKT CP’s projects.  The parties selected Delaware law to govern the Engineering Agreement and chose the state and federal courts in Wilmington for any dispute “aris[ing] out of relat[ing] to [the Engineering Agreement], and Work Order(s), or the breach thereof.”

As a continuation of the Strategic Project, RKT CT hired SW&B Construction Company, LLC, an affiliate of Plaintiff, (“SW&B”) to provide construction services.  SW&B was a wholly owned subsidiary of Kellogg Brown & Root, LLC (“Kellogg”), which was a wholly owned subsidiary of Plaintiff.  The counterparties of the Construction Agreement were RKT SS and Kellogg.  Like the Engineering Agreement, the Construction Agreement was a master agreement used for goods and services that Plaintiff and its affiliates provided to RKT CP and its affiliates.  The parties selected Georgia law to govern the Construction Agreement.

On June 7, 2013, SW&B filed an action against RKT CP in Georgia under the Construction Agreement (“Georgia Action”).  On August 12, 2013, RKT CP filed a third party complaint in the Georgia Action against Plaintiff for a breach of the Engineering Agreement.  All but one of the seven substantive counts of the third party complaint related to the Engineering Agreement.  Also on August 12, RKT SS moved to intervene in the Georgia Action and filed a third party complaint implicating the Engineering Agreement.

Plaintiff filed a complaint in the Delaware Superior Court on August 12, 2013 for breach of the Engineering Agreement.  On August 23, 2013 Plaintiff filed suit in the Court of Chancery against Defendants to enjoin them from asserting claims under the Engineering Agreement outside of Delaware.  The Court of Chancery issued a preliminary anti-suit injunction barring the Defendants from litigating its claims under the Engineering Agreement in the Georgia Action.

In this action, the Court granted Plaintiff’s motion for partial summary judgment, ruling that the Engineering Agreement governed Plaintiff’s work on the Strategic Project and disputed work orders, and issued a permanent anti-suit injunction, barring Defendants from litigating claims under the Engineering Agreement in the Georgia Action. 

The Defendants made multiple material admissions in the Georgia Action, and to the Court of Chancery before Plaintiff moved for summary judgment,demonstrating that the Engineering Agreement governed the work Plaintiff and its affiliates provided on the Strategic Project.  The Court held that Defendants were bound by these admissions.  Defendants argued that their statements in the Georgia Action and to the Court of Chancery regarding the Engineering Agreement were statements of legal theories, not statements of fact.  The Court ruled, however, that Defendants’ representations to the Court and in the Georgia Action were issues of fact.  Among other reasons, the Court pointed out that Defendants made representations in sections of their complaints in the Georgia Action “under the heading Material Facts,” and used words such as “in fact.” 

In explaining its reasoning for granting partial summary judgment, the Court denied the Defendants’ request to conduct discovery to find extrinsic evidence because the plain language of the Engineering Agreement indicated that Plaintiff’s services on the Strategic Project would be covered under the Engineering Agreement, which implicated the Delaware Forum Clause.  The Court granted partial summary judgment and enjoined Defendants from bringing claims in the Georgia Action that relied on the Engineering Agreement or the specific work orders at issue in this case.

The full opinion is available here.

Topics:  Anti-Suit Injunctions, Forum Selection Clause, Injunctions, Summary Judgment

Published In: Civil Procedure Updates, Civil Remedies Updates, General Business Updates, Construction Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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