In re Axis Energy Marketing, LLC (No. 01-23-00906-CV; April 23, 2024) arose from a pair of lawsuits stemming from the delivery of allegedly contaminated oil to a site in Midland County. Axis, which is in the business of sourcing crude oil, entered into an agreement with DK Trading & Supply LLC and Lion Oil Company to supply West Texas sour crude to locations specified by DK. Axis then contracted with Apricus Enterprises, Inc. to provide and deliver the oil to DK. After deliver, DK alleged that the oil was contaminated and sued Axis in Midland County for breach of contract, fraud, negligence, and gross negligence. In the meantime, Apricus sued Axis in Harris County breach of contract, sworn account, and quantum meruit to recover what Axis owed under the contract. In the Harris County suit, Axis filed a motion to transfer venue to Midland County and plea in abatement. After a hearing, the trial court denied the motion. Before the trial court signed the order, Axis added Apricus as a third-party defendant in the Midland County litigation. Apricus filed a plea in abatement in that case, which the trial court denied. Apricus also filed a motion for summary judgment on liability in the Harris County case. The trial court eventually granted that motion and set a hearing for attorney’s fees. Axis sought mandamus relief from the 14th Court of Appeals, which granted a stay. That court transferred the appeal to the 1st Court, which continued the stay.
In an opinion by Justice Hightower, the court granted Axis’s petition. Axis argued that the trial court abused its discretion by denying its plea of abatement because the common law rule of “dominant jurisdiction” dictated that venue be located in Midland County. Application of the rule becomes necessary “only when multiple suits are inherently interrelated and venue is proper in each county” (citations omitted). In this situation, “it is ‘impossible that two courts can, at the same time, possess the power to make a final determination of the same controversy between the same parties’” because each court possesses exclusive jurisdiction. The first issue was whether the Midland and Harris county lawsuits were “inherently interrelated.” A court must apply the “compulsory-counterclaim” test to determine, a part of which involves whether the two suits arise out of the same transaction or occurrence. To make this determination, the court must apply the ”logical relationship test,” which “is met when the same facts, which may or may not be disputed, are significant and logically relevant to both claims” (citation omitted).
Axis contended that the same crude oil is at issue in both cases. Apricus countered that the parties are different in the two suits and that Axis is merely seeking indemnification from it in the Harris County suit. But, as Axis argued, “the exact parties and issues are not required” for the compulsory-counterclaim test to apply, and, as the court noted, “it is sufficient if the claims can be amended to bring in all necessary and proper parties” (citations omitted). Here Axis had already added Apricus to the Midland County suit as a third-party defendant, so the liability issues arise from the same transaction for both parties. If Axis’s plea of abatement and transfer of venue were not granted, it “could result in Axis being held liable twice for the same crude oil,” the first for having provided contaminated crude and the second for not paying for it. The court rejected Apricus’s “two separate lawsuits” argument, holding that “a complete unity of parties and issues need not exist and not all elements of a compulsory counterclaim need to be met to determine that the two suits are inherently interrelated.” Axis’s contract with Apricus contained an indemnity provision holding Axis, as buyer, harmless from all losses before or after deliver to the buyer. A claim under this provision, consequently, would become fixed and certain by a rendition of judgment against Axis. Apricus argued that for this reason, the Harris County suit was not inherently interrelated. But, holding that the compulsory-counterclaim test is only a guide, the two suits had so many claims and counter-claims in common that they had to be tried together.
Apricus contested whether venue was proper in Midland County. If it wasn’t, the dominant jurisdiction rule did not apply to begin with. Apricus contended that since it sought injunctive relief, venue was proper only in Harris County, the county in which Apricus was domiciled [see § 65.023(a), CPRC]. The court didn’t buy this argument, noting that Apricus’s request for a TRO and temporary injunction was ancillary to its common law claims for damages. The mandatory venue provision of § 65.023(a) thus did not apply. Axis argued that venue was proper in Midland County because that is “where the contract was made, performed, and breached” (citation omitted). Apricus didn’t contest this point but argued that its choice of permissive venue in Harris County should not “be disturbed.” Unfortunately for Apricus, however, Axis did not challenge the trial court’s denial of its motion to transfer venue, only the denial of the plea in abatement. In short, Axis established that venue was proper in both counties, thereby invoking dominant jurisdiction. Since the suits were inherently interrelated, then, the trial court abused its discretion by denying Axis’s plea in abatement.
