Buckles v. Continental Resources, Inc.

Buckles v. Continental Resources, Inc., 2017 MT 235 (Sept. 21, 2017) (Shea, J.; McKinnon, J., dissenting) (6-1, rev’d)

Issue: Whether the district court erred by dismissing Buckles’ Complaint on the grounds that Continental Resources is not subject to personal jurisdiction in Montana.

Short Answer: Yes.

Reversed & remanded for an evidentiary hearing on jurisdiction

Facts: On April 28, 2014, Zachary died in North Dakota of exposure to high levels of hydrocarbon vapors while manually gauging crude oil production tanks on Continental’s Columbus Federal 2-16H well site near Alexander, North Dakota. Continental oversees operation of the Columbus Federal 2-16H well site from its corporate office in Sidney, Montana.

Zachary was employed by Janson Palmer, doing business as Black Gold Testing. Black Gold was contracted to perform manual tank gauging activities for Continental pursuant to Continental’s contract with BH Flowtest, Inc., who subcontracted with Black Rock Testing, Inc., who, in turn, subcontracted with Black Gold. BH Flowtest, 3 Black Rock, and Black Gold are all Montana business entities named as co-defendants with Continental in this action.

Continental is an Oklahoma corporation authorized to do business in Montana. Continental has significant operations in Montana, North Dakota, South Dakota, and Oklahoma, with field offices in Montana, North Dakota, South Dakota, Oklahoma, and Texas. The company owns an interest in 508 oil and gas wells in Montana and operates 348 oil and gas wells in Montana. It owns 119 motor vehicles that are licensed and registered in Montana. It also owns real property in multiple Montana counties, including in Richland County where this case is venued. Continental maintains two Montana field offices in Baker and Sidney.

Buckles filed suit in Richland County in March 2015. In April 2015, Continental moved to dismiss for lack of personal jurisdiction.

Procedural Posture & Holding: The district court granted the motion without holding an evidentiary hearing. The district court did not make any factual findings regarding personal jurisdiction, did not address Buckles’ allegations concerning personal jurisdiction made in her complaint, and did not note whether it considered those allegations in the light most favorable to Buckles. Buckles appeals and the Supreme Court reverses.

Reasoning: The Court applies a two-part analysis to determine whether a Montana court may exercise personal jurisdiction over a nonresident defendant. Jurisdiction can be either general or specific. Continental is not “at home” in Montana for purposes of general personal jurisdiction under Tyrell.

Specific jurisdiction under the long-arm statute depends on whether the defendant’s suit-related conduct created a substantial connection with the forum state. If the defendant did not engage in any of the activities enumerated in the long-arm statute, the analysis ends and the court does not have jurisdiction. However, if the defendant has done something to potentially confer jurisdiction, the Court will analyze the due process component.

Here, Continental’s Sydney, Montana office oversees the North Dakota wells where Zachary was killed. Continental contends its oversight does not include controlling contractors’ employees, or any action or omission giving rise to the estate’s claims. The Court holds that the dispositive question is whether a relationship exists among the defendant, the forumm and the litigation, not just Continental’s general contacts with Montana.

Buckles alleges that Continental and the other defendants breached their duty to “maintain a safe oil well site and secure work area,” and “allow[ed] an inherently dangerous and unsafe well site to be operated.” Whether Continental is ultimately liable for Zachary’s death through contract or agency vis-à-vis its Montana co-defendants goes to the merits of Buckles’ theory of liability.

Buckles’ complaint can be boiled down to two points: (1) Continental, acting jointly with its Montana co-defendants, caused Zachary’s death; and (2) Continental “allow[ed] an inherently dangerous and unsafe well site to be operated,” which resulted in Zachary’s death. There are disputed issues of fact as to whether Continental’s oversight of the wells at issue—which it acknowledges conducting from its Sidney office—contributed to the operation of “an inherently dangerous and unsafe well site” as alleged by Buckles. Likewise, there are disputed issues of fact as to whether Continental may be held liable vis-à-vis its contracts with its Montana co-defendants.

The Court concludes that a preliminary evidentiary hearing should be held on whether the district court has personal jurisdiction over Continental.

Justice McKinnon’s Dissent: The Court does not consider the district court’s 17-page response to a writ of supervisory control filed by Buckles in which the only issue was the court’s alleged error in granting Continental’s motion to dismiss for lack of personal jurisdiction. The Court should have taken judicial notice of the district court’s rationale explained in that brief and  considered it in this appeal. There are no disputed facts, but rather an absence of any facts establishing suit-related conduct on the part of Continental, other than a train of contracts with subcontractors and an injury occurring in North Dakota. The district court correctly ruled that specific jurisdiction was lacking.

Buckles has not met her burden of proof to demonstrate Continental’s suit-related conduct arose from its transaction of business in Montana. To the extent the Court is unhappy with the absence of underlying jurisdictional facts and seeks to facilitate a second fishing expedition to develop those facts, I dissent.