AEP Energy Servs. Gas Holding Co. v. Bank of Am., N.A., No. 08-4196 - U.S. Second Circuit
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AEP Energy Servs. Gas Holding Co. v. Bank of Am., N.A., No. 08-4196

Dispute Over Use of Natural Gas Storage Facility

In AEP Energy Servs. Gas Holding Co. v. Bank of Am., N.A., No. 08-4196, an action against two banks in alleging a superior right to continue to use the gas in a natural gas storage facility, the court affirmed in part summary judgment for defendants the district court was correct that defendant retained a valid security interest in the gas under the operative agreements, and the plaintiffs' refusal to return the gas thereafter constituted conversion.  However, the order is reversed in part where defendants could identify no special circumstances sufficient to overcome the presumption in favor of adjudication of the Tort and Contract Claims in the Texas District Court, where the action was originally filed prior to transfer.

 

As the court wrote:  "This action stems from a dispute over the rights to natural gas stored in the Bammel Gas Storage Facility, an underground gas reservoir located in Texas. The plaintiffs, AEP Energy Services Gas Holding Company ("AEP"), Houston Pipe Line Company LP ("HPL"), and HPL Resources Company LP ("HPLR") (hereinafter sometimes collectively the "plaintiffs") entered into a complex series of transactions with Enron Corporation or affiliates thereof (hereinafter collectively "Enron"), Bank of America, and the Bank of New York with respect to the right to use certain natural gas and assets contained in the Bammel Gas Storage Facility. The Bammel Gas Storage Facility is owned by the Bammel Gas Trust, a special-purpose entity formed and owned in equal part by Enron and Bank of America, of which the Bank of New York is Trustee."

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