Barring an appeal, a federal judge on Wednesday granted Dynegy Inc.’s request to move its lawsuit against former merger partner Enron Corp. moved from New York City to a Texas court. U.S. District Judge Melinda Harmon of the Southern District of Texas ruled for Dynegy in its countersuit against Enron, which filed a $10.5 billion breach-of-contract lawsuit against its downtown Houston rival after Dynegy backed out of a merger plan at the end of November. Days later, Enron declared bankruptcy.

Dynegy spokesman Steve Stengel said the case was now in the court “where it belongs,” adding that the result was exactly what Dynegy expected. “We want to resolve this lawsuit as quickly as possible,” he added. Enron was not available to comment on whether there would be an appeal.

Dynegy’s countersuit, filed Dec. 3, the day after Enron filed for bankruptcy, asks the court to enforce Dynegy’s option to buy Enron’s Northern Natural Gas Co. pipeline. Enron used the pipeline as collateral in exchange for a $1.5 billion cash transfusion by Dynegy and Dynegy shareholder ChevronTexaco when they first announced their merger in early November.

Enron had wanted the case considered in New York as part of its bankruptcy case. If the lawsuit against Dynegy remained in New York, the pipeline lawsuit would not be considered until the bankruptcy was completed, taking as long as a year. By moving the case to a Texas court, the pipeline lawsuit would be considered separately, and more likely, much more quickly.

Harmon ruled Wednesday that while the lawsuit by Dynegy is “related” to Enron’s bankruptcy proceeding, Dynegy’s lawsuit is still a civil matter, not a federal matter like Enron’s bankruptcy. Because Enron and Dynegy completed their option agreement over the pipeline in Texas, the case should be remanded to the state, Harmon ruled. She remanded the case to the 129th Judicial District Court in Harris County, TX.

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