Bidell Equipment LP v Caliber Midstream GP LLC, 2017 ABQB 76

Court of Queen’s Bench of Alberta Citation: Bidell Equipment LP v Caliber Midstream GP LLC, 2017 ABQB 76 Date: 20170203 Docket: 1501 04573 Registry: Calgary Between: Bidell Equipment LP Plaintiff - and - Caliber Midstream GP LLC and Caliber Midstream Partners, L.P. Defendants _______________________________________________________ Memorandum of Decision of J.L. Mason , Master in Chambers _______________________________________________________ [ 1 ] Bidell Equipment LP (“Bidell”) manufactures and supplies gas equipment.

It advances this claim against Caliber Midstream Partners, LP (“Caliber LP”) and its general partner, Caliber Midstream GP LLC (“Caliber GP”) (together, “Caliber”) in relation to the cancellation of an order for six compression units. Caliber’s defence is that there was no agreement reached for the purchase of the units, or alternatively that the onerous cancellation provisions in Bidell’s Manufacturing Terms and Conditions do not form part of any agreement. [ 2 ] Bidell’s claim was filed on April 24, 2015. Caliber filed a defence on May 13, 2015.

Bidell filed an amended statement of claim on May 26, 2015 and Caliber filed an amended defence on June 10, 2015. Bidell served an affidavit of records on June 12, 2015. Caliber served an affidavit of records on August 10, 2015. Bidell commenced its questioning in January of 2016. Questioning by both sides was scheduled to be completed in June of 2016. [ 3 ] In late May 2016, Caliber changed counsel and cancelled the remaining questioning sessions. On June 22, 2016, Caliber filed

this application to stay the action and have the litigation take place in Colorado. The defendants further seek to have the claim against Caliber GP struck or summarily dismissed, and to further amend the defence. [ 4 ] Pursuant to orders granted by Master Farrington on June 8, 2016 and Master Prowse on June 29, 2016, July 21, 2016 and August 4, 2016, questioning is substantially complete and scheduled to be concluded by mid-February, 2016. [ 5 ] For the reasons that follow, Caliber has not established that Colorado is a clearly more appropriate forum for the adjudication of this dispute.

The application to strike or summarily dismiss the claim against Caliber GP is dismissed. The application to further amend the defence is allowed in part, to the extent of the clerical amendments only. Background to the litigation [ 6 ] Caliber LP is a Delaware limited partnership, with a head office in Denver, Colorado. It is an energy infrastructure company that provides midstream services to producers in North Dakota.

Bidell is a Calgary - based limited partnership with offices and an equipment manufacturing facility here. [ 7 ] In the fall of 2014, Allison Nold, a professional engineer with a Caliber LP subsidiary, contacted John Burroughs, a sales representative for Bidell in the Denver, Colorado area. She wanted to source some compression units required for an expansion of Caliber LP’s gas processing plant in Hay Butte, North Dakota planned for the following spring that she had been unable to source in the United States on a timely basis. Caliber LP needed three types of compression units, two of each type. [ 8 ] Ms.

Nold and Mr. Burroughs communicated back and forth in this regard and met on 3-5 occasions to discuss Caliber LP’s needs. On October 10, 2014, Mr. Burroughs sent Ms. Nold three quotations, providing details of the key components of the units and their price in US dollars. The quotations contained Bidell’s “Manufacturing Terms and Conditions”, including the following provision: 21(

a) This Quotation is governed by the laws of the Province of Alberta and its courts shall have exclusive jurisdiction over any disputes arising from this Quotation or the manufacture of the Bidell Products. The Purchaser attorns to the jurisdiction of the courts of the Province of Alberta (the “Alberta exclusive jurisdiction and choice of law clause”). [ 9 ] Shortly after receipt of the quotations, Ms. Nold and another Caliber representative flew to Calgary to tour Bidell’s production facility, meet a number of its employees and discuss the project. Ms.

Nold subsequently inquired with Bidell Vice President Mat Clark, as to whether Bidell would be prepared to accept an arrangement whereby Caliber would pay for the engineering up front without committing to purchase the units. Mr. Clark indicated this might be possible, and that Bidell has “had success with this approach in order to get a head start on those projects that full approvals may be delayed.” [ 10 ] On November 7, 2014, Mr. Clark advised Ms.

Nold that if Caliber LP wanted to hold the production spots so that Bidell could meet the desired delivery dates, Bidell would accept signed copies of its “commercial pages”. Mr. Clark advised that this would “not take away opportunity to submit your p.o. and negotiate the terms conditions etc associated with it”. [ 11 ] On November 10, 2014, Caliber LP Chief Operating Officer David Scobel and Ms. Nold signed and initialled three pages entitled “Intent to Purchase”, which appear to be taken from Bidell’s quotations that had been previously sent.

Each state immediately above the signature line that “Caliber Midstream hereby signifies their intention to purchase the equipment specified in this quotation”. Two of the three state that Bidell’s Manufacturing Terms and Conditions will apply. [ 12 ] On all three Intents to Purchase, Ms. Nold wrote “Terms and final option selection to be defined on a forthcoming PO”. Ms. Nold emailed them that day to Mr. Burroughs in Denver and Mr. Clark in Calgary, indicating that “[a]s noted, options and terms will be defined on a forthcoming purchase order”. [ 13 ] Upon receipt of the signed Intents to Purchase, Mr.

Clark emailed Ms. Nold to confirm that Bidell would get the production slots allocated and equipment on order. He further confirmed what he apparently understood to be the “entire order” and made reference to three model numbers. Ms. Nold responded “2 of each – 6 total”. [ 14 ] Also on November 10, 2014, Ms. Nold emailed Mr. Burroughs and Mr. Clark a copy of a Master Services Agreement, (“MSA”) which states that the scope of the agreement was the performance of “work and services” by Bidell at Caliber LP’s request.

Caliber alleges in the alternative that these were the terms and conditions that the parties intended would govern any agreement concerning the compression units, but that they were never finalized. [ 15 ] The MSA includes a term that it shall be governed by Colorado law and selects Colorado as the exclusive jurisdiction for any “suit or proceeding hereunder”. Between November 14 and 19, 2014, Mr. Clark and Ms. Nold communicated concerning proposed changes to the MSA. Ms. Nold’s email to Mr. Clark of January 15, 2015 states that “[t]he MSA ....was never completed”.

She testified at questioning that the negotiations concerning the MSA were not finalized prior to this dispute arising, and that if this dispute were sent to Colorado for determination, Caliber would take the position that the MSA was not binding. [ 16 ] After November 10, 2014, while Ms. Nold communicated the options Caliber LP wanted on the compression units, and continued to communicate with Mr. Clark in Calgary as to the progress on their design and fabrication, she never sent Bidell a purchase order. [ 17 ] In January, 2015, Caliber LP cancelled the compression units.

Discussions then took place about Bidell’s engineering and cancellation costs for long lead components that it had ordered. Bidell issued an invoice in this regard, but no payment has been made. This action ensued in the spring of 2015. Is Colorado a clearly more appropriate forum? [ 18 ] Caliber concedes that Alberta has jurisdiction simpliciter in regard to this litigation. However, it asserts that Colorado is

clearly the more appropriate forum. Bidell asserts that the parties agreed under its Manufacturing Terms and Conditions that Alberta would be the forum, and in any event, the applicable factors support maintaining Alberta as the forum. It similarly does not dispute that Colorado would have jurisdiction simpliciter .

Agreement as to forum [ 19 ] Where parties have agreed to an exclusive jurisdiction clause, the court is inclined to hold the parties to their bargain in all but exceptional circumstances: TBM Transportation Ltd v Tri-Star Transport Ltd. , 2011 ABCA 358 ; ZI Pompey Industrie v ECU-Line NV , 2003 SCC 27 at paragraphs 21-22 ; 1400467 Alberta Ltd v Adderley , 2014 ABQB 339 . [ 20 ] While the available evidence appears to indicate that Bidell and Caliber LP reached some agreement concerning the six compression units, it is less clear as to whether their agreement included Bidell’s Manufacturing Terms and Conditions, and the Alberta exclusive jurisdiction and choice of law clause contained therein. [ 21 ] Each side points to various communications and documents in support of their respective positions in addition to those reviewed above.

They advance competing

interpretations of many of these. There are a variety of possible outcomes at trial. [ 22 ] In the circumstances, Bidell cannot rely on the Alberta exclusive jurisdiction and choice of law clause for the purposes of this application. [ 23 ] Caliber’s own pleadings confirm that the MSA was never concluded. Ms. Nold has testified to this effect, and that Caliber will take that position at trial. The defendants are similarly not entitled to rely on the exclusive jurisdiction clause the MSA contains naming Colorado as the parties’ chosen forum for resolution of disputes.

Factors informing determination as to forum [ 24 ] The parties agree that an applicant in a forum non conveniens application has a high standard to meet. Determination of whether another jurisdiction is clearly more appropriate requires consideration of a host of factors.

It is a discretionary decision and the court is entitled to assign such weight to the factors as the circumstances suggest is appropriate. [ 25 ] The parties further agree that the court’s decision as to forum may be informed by: the location of the parties and where they carry on business; where the cause of action arose and the damage occurred; the location of witnesses and documents; applicable substantive law and possible difficulty in proving foreign law; the costs of transferring jurisdictions; juridical advantages to the plaintiff and disadvantages to the defendant in the filing jurisdiction; the desirability of avoiding a multiplicity of legal proceedings; and the fair and efficient working of the Canadian legal system as a whole: Club Resorts Ltd v Van Breda , 2012 SCC 17 ; Breeden v Black , 2012 SCC 19 ; Pedwell v Snc-Lavalin , 2014 ABQB 309 .

Location of the parties and where they carry on business [ 26 ] Bidell is headquartered in Calgary and carries on business in Calgary and the US. At the time this dispute arose, Bidell had a sales representative in Colorado. In addition to its Calgary operations, at present it has two service locations in Wyoming and a “resident mechanic” who works out of his home in Colorado. Caliber LP is headquartered in Denver, and carries on business in Colorado and North Dakota. Caliber GP’s registered office is in Delaware. Location of cause of action and damage [ 27 ] The cancellation in issue was communicated by Ms.

Nold to Mr. Clark and another Bidell employee, Alan Halbert in Calgary. The situs of any loss suffered by Bidell is Alberta. Location of witnesses and documents [ 28 ] Bidell intends to call Sean Ulmer, Mr. Clark and Mr. Burroughs at trial. Mr. Ulmer and Mr. Clark reside in Alberta. Mr. Burroughs resides in Colorado. Initially Bidell did not intend to call Mr. Burroughs, but has secured his agreement to attend trial here given Caliber’s expressed interest in his evidence. [ 29 ] Caliber intends to call Ms. Nold and Mr. Scobel, who both reside in Colorado.

Prior to changing counsel, it had scheduled examinations of four Bidell witnesses in Calgary. After the change in representation, and the filing of the application to re-locate this dispute to Colorado, Caliber shifted its focus from Canadian witnesses to American witnesses. It restricted its questioning to Bidell’s corporate representative, Mr.

Ulmer, declined to question Bidell’s employees in Calgary and has since identified four American witnesses that it says are vital to its position at trial. [ 30 ] Caliber now advises that it intends to call two witnesses from its engineering consultant in Oklahoma, both of whom will both speak to the Hay Butte expansion and the subsequent cancellation of that project, which in turn led to the cancellation of the units at issue. It is not clear why two witnesses are necessary to speak to these topics, and in any event they relate to background and do not appear to be controversial.

An agreed statement of facts may be a preferred manner of dealing with these facts, and consistent with the parties’ obligations under foundational rule 1.2.

[ 31 ] Caliber further says that it will call representatives of two of Bidell’s non-party suppliers of some of the major components, Ariel Corporation and Dresser Inc. - Waukesha. These companies respectively operate in Ohio and Wisconsin. It seeks their evidence as to efforts that Bidell made to return these major components and if they could be used in other applications.

Caliber points out that it may be necessary to obtain an order from the Alberta court to arrange attendance of these non-party US witnesses at trial, along with an order from the court in the witness’ jurisdiction. [ 32 ] Bidell has ongoing relationships with these suppliers and confirmed at the hearing that it was prepared to facilitate their attendance at trial, as well as consent to any necessary orders in that regard so as to avoid court applications. [ 33 ] Caliber emphasizes the “substantial” number of American witnesses (up to seven, including Mr. Burroughs), but only three of these hail from Colorado.

Any non-party witnesses will still have to travel to trial, whether it takes place in Colorado or Alberta. It is possible in both Colorado and Alberta to have trial testimony by video to eliminate the need for travel. [ 34 ] All the relevant and material documents relating to contract formation – the quotations, the signed Intents to Purchase, the unsigned MSA, and the email communications - have already been exchanged between the parties.

All the documents are already in Calgary. [ 35 ] Bidell’s documents in support of its damages claim – purchase orders, shipping records, and email communications relating to the costs of the components of the compression units it purchased from its suppliers – have similarly been produced and are in Calgary.

There is no suggestion that Bidell has not produced and disclosed all relevant and producible records in this regard, nor has Caliber challenged the authenticity of any, or that they were sent and received as indicated. [ 36 ] Caliber asserts that it will need records from the non-party suppliers and that the Alberta rules require an application in this regard, along with a recognition order in the jurisdictions in which those suppliers carry on business. [ 37 ] The inability to obtain such records except from the non-party is an important element to be established under rule 5.13. Ms.

Nold stated under questioning that she had not reviewed Bidell’s production to determine if the non-party records Caliber seeks had already been produced. Further, Bidell confirmed that it would directly request any relevant and material records Caliber sought from the suppliers that are not otherwise available, and again consent to any necessary orders.

It is not clear whether an application under rule 5.13 is realistically required. [ 38 ] As Eidsvik J. noted in her reasons refusing to stay Alberta proceedings in favour of Colorado in RBZ Capital Corp v Petrol Alchemy LLC , 2014 ABQB 102 at paragraphs 32-33 : Both Alberta and Colorado have jurisdiction to deal with the dispute between the parties.

Although Colorado is in a different country, there are multiple daily direct flights between Alberta and Colorado – and at a flight time of around 2 ½ hours (which I take judicial notice of) it is faster to get there than many other places in Canada (Toronto and Montreal for instance). In addition, because of the availability of digitising documents for production purposes, video links for testimony and other technological advances in the building toward, and the presentation of a trial, distance is much less of an important factor than it used to be.

Here there are witnesses in both forums and documents are likely mostly in Colorado but can be easily transmitted as far as I’m aware. Applicable law [ 39 ] The extent of the parties’ agreement, and whether that agreement included the Alberta exclusive jurisdiction and choice of law clause remain to be determined.

Given Caliber’s position on the unfinalized MSA, the choice of Colorado law it contains is not in play. [ 40 ] Absent a contractual choice, the proper law of a contract is that of the jurisdiction with the closet connection to the contract, having regard to: where the contract was formed; where the contract was to be performed; the subject matter of the contract; and the place of business of each party: Canada (AG) v Nalleweg , 1998 ABCA 282 at paragraphs 23-24 . [ 41 ] Caliber LP sought out Bidell in regard to its need for compression units that it was unable to source within the United States within its timeline.

It was well aware that Bidell was a Calgary- based firm and that the equipment it sought would be designed and fabricated in Calgary, and was to be picked up and paid for in Calgary. [ 42 ] While it is true that negotiations occurred between Ms. Nold and Bidell’s sales agent Mr. Burroughs in Denver, Ms. Nold also communicated with Bidell’s employees in Calgary. Mr. Clark became involved after Ms. Nold flew to Calgary to tour Bidell’s facility, meet its employees and discuss the project. It was with Mr. Clark that Ms.

Nold discussed the possibility of an engineering only arrangement and who advised her that Bidell would accept signed copies of its “commercial pages”. [ 43 ] To the extent that Bidell’s position is that a contract of purchase was formed based on these documents, the Intents to Purchase were sent to Mr. Burroughs in Denver, but also copied to Bidell Vice President Mr. Clark in Calgary. Mr. Clark also received email confirmation from Ms. Nold as to the quantities of the units.

The alleged agreement was to be performed in Calgary and its subject matter was the engineering and fabrication of compression units in Calgary. The units themselves were for use in North Dakota. Bidell is headquartered in Calgary, and Caliber LP in Colorado. [ 44 ] While there are Colorado connections, these are exceeded by the connections to Alberta and therefore the proper law of the alleged contract would be Alberta’s.

Costs of transferring jurisdiction/ juridical advantage and disadvantage [ 45 ] Caliber approached the costs of transferring jurisdiction along with the juridical advantage/disadvantage factor. [ 46 ] Caliber’s main thrust as to the juridical disadvantage that it will suffer if the action continues in Alberta is the loss of the efficiencies of litigating in the Colorado federal court system.

Any efficiencies in that regard are significantly diluted in the circumstances here where the Alberta litigation has progressed to the substantial conclusion of questioning. [ 47 ] The costs of pleading, document disclosure and questioning that have already taken place in Alberta will be wasted if this litigation moves to Colorado. Those processes were conducted with the assistance of multiple court orders issued by Master Farrington and Master Prowse.

A new action will need to be filed and defended, documentary and oral discovery repeated, and this court’s time and resources on the applications will similarly be wasted. [ 48 ] Caliber argues that given the streamlined processes available in Colorado for obtaining US non- party document disclosure and securing the attendance of non-party witnesses at trial, this will be more efficient and cheaper if the matter proceeds in Colorado. [ 49 ] I am not convinced that any savings in this regard outweigh the time and cost of what has already taken place in Alberta.

As Veit J. held in 1400467 Alberta Ltd v Adderley at paragraph 65 : …the applicants have waited too long and have taken too many steps in the Alberta process to be allowed to now move this litigation to Saskatchewan. [ 50 ] Caliber also emphasizes that the parties will be able to get this matter to trial more quickly in Colorado.

Bidell points out, however, that but for Caliber’s change of counsel and subsequent cancellation of examinations scheduled for June of 2016, this action could have been set down for trial in July, 2017. [ 51 ] I agree that it does not lie in Caliber’s mouth to rely on an extended time to trial that was caused at least in part by its choice to change counsel and not carry on with previously agreed upon steps. In any event, Caliber’s evidence from Colorado lawyer Thomas Overton is that the average time to trial from commencement in Colorado is 23.5 months. I question whether Caliber should get the benefit of Mr.

Overton’s suggested time frame of 12-18.5 months to trial if the parties are “diligent”, as its own conduct of asking this court to stay this action after over a year of litigation steps and court applications is hardly diligent. [ 52 ] Caliber further submits that it is at a disadvantage litigating in Canada as it does not operate anywhere in the country. Caliber had no apparent difficulty coming to Calgary to tour Bidell’s plant. Nor does it suggest that there have been difficulties in the nearly two years it has spent litigating this action in Alberta.

Whether the litigation is carried on here or in Colorado, one party will be outside of their home jurisdiction, neither of which is suggested to be unfair. [ 53 ] To the extent that Caliber raised a possibility that it may call an expert on standard industry terms in Colorado if this action is not stayed, I do not anticipate that this will be a difficult endeavour if it is required.

Caliber has already demonstrated its ability to secure an expert in civil procedure in the Colorado federal court. [ 54 ] If this action were stayed and the parties started over in Colorado, experts in Alberta law would be necessary, at added costs to both parties. Multiplicity of proceedings, conflicting judgments, and enforcement of judgment [ 55 ] Caliber argues that because there are no current proceedings in Colorado, there is no concern related to a multiplicity of proceedings.

However, this disregards the extensive proceedings between the parties and the applications before the court that have already taken place in Alberta.

Pleadings, production and disclosure of records and discoveries will need to be repeated, and may raise issues for interlocutory determination by the Colorado federal court. [ 56 ] As noted by the Supreme Court in Breeden v Black at paragraph 23 , multiplicity of proceedings is to be avoided. [ 57 ] The parties do not suggest that conflicting judgments are a risk here. [ 58 ] Caliber further argues that if Bidell is successful at trial in Alberta, it will have to enforce an Alberta judgment in Colorado.

Overall fairness and relative strengths of connections [ 59 ] This dispute has connections to both Alberta and Colorado. However, it is more strongly connected to Alberta for the reasons stated, and it has been litigated here with Caliber’s full participation to this point. Requiring Bidell to start over in Colorado would be wasteful of the time and resources of the parties and this court. That would not be a fair or reasonable outcome. Conclusion on forum [ 60 ] Caliber LP chose to deal with an Alberta-based limited partnership and to pursue the design and fabrication of compression units in this province.

Bidell commenced its action in Alberta and the litigation has proceeded to the point that questioning is nearly complete. Multiple applications have been heard and Caliber has continued to seek substantive relief from this court. To stay this action and require Bidell to start afresh in Colorado would not be efficient, nor appropriate in the circumstances. It is Caliber’s burden to show that Colorado is a clearly more appropriate forum for the adjudication of this dispute. It has not met this burden.

Should the action against Caliber GP be struck or summarily dismissed? [ 61 ] Bidell confirms that it included Caliber GP in the action in its capacity as general partner of Caliber LP. The defendants acknowledge that Caliber GP is the general partner of Caliber LP and have not alleged a unique defence vis-à-vis Caliber GP. [ 62 ] The defendants now argue that Bidell had no business suing Caliber GP, as all of Bidell’s dealings were with Caliber LP, not Caliber GP.

This submission is inconsistent with the defence, and ignores that the general partner is liable for the debts and obligations of the limited partnership.

Caliber did not suggest that the substantive law of Delaware, where Caliber LP was formed, is any different. [ 63 ] To the extent that striking or summarily dismissing an action against Caliber GP determines that it bears no liability as general partner, that relief is inappropriate. [ 64 ] Turning to procedure, rule 2.2(1) is a permissive rule that allows an action to be brought against partners using the name of the partnership, to avoid having to name each individual partner.

Rule 2.3 provides a process to notify the non-named partners if this method is used. [ 65 ] It is true courts have held that generally, it is superfluous and may be improper to name individual partners in addition to the firm: Lafrentz v M & L Leasing Limited Partnership , 2000 ABQB 714 at paragraph 7 .

However, that case and others relied on by the defendants did not involve a foreign limited partnership. [ 66 ] In this case, the defendants were not in a position to assure Bidell that they would not take the benefit of potential procedural impediments in Colorado to enforcement of a judgment that names only the limited partnership. [ 67 ] Caliber also relies on Wabi Iron Works Ltd. v Patricia Syndicate , [1923] 3 DLR 363 (Ont. C.A.).

In that case, the Court struck out an individual partner as a defendant on the basis that the partner was already a judgment debtor by virtue of the default judgment obtained against the partnership. That is not the situation here. [ 68 ] In the circumstances, it is not inappropriate to include the general partner in the action. Bidell has included Caliber GP on the basis of its liability for the obligations of Caliber LP, and the claim has been defended by both Caliber LP and Caliber GP as one, with no distinct defence alleged on behalf of Caliber GP.

Caliber GP does not suggest that there is any unfairness or prejudice to it in being a named party. [ 69 ] Caliber’s application to summarily dismiss or strike the action against Caliber GP is dismissed. Should Caliber LP be permitted to further amend its amended statement of defence? [ 70 ] My conclusion as to the removal of Caliber GP from the action is determinative of the application to further amend the defence in regard to Caliber GP.

Those proposed amendments are not allowed. [ 71 ] Caliber also seeks amendments to the defence to allege that Colorado is the more appropriate jurisdiction to adjudicate this dispute. That issue has been resolved in this application and does not constitute an issue for trial. Those proposed amendments are accordingly not allowed. [ 72 ] The balance of the amendments sought are characterized by Bidell as clerical matters to which it does not object. Those amendments are allowed. [ 73 ] Bidell is entitled to costs of the application, payable forthwith. Heard on the 18 th day of January, 2017.

Dated at the City of Calgary, Alberta this 3rd day of February, 2017. J.L. Mason M.C.C.Q.B.A. Appearances: Donald D. Wilson DLA Piper (Canada) LLP

for the Defendants Michael P. Theroux & Beamer D. Comfort Bennett Jones LLP for the Plaintiff