MEALEY’S TMTM
Fracking ReportMay 2014 Volume 1, Issue #1
5th Circuit Panel Vacates Summary Judgment, Remands To Decide Intervenor’s StatusNEW ORLEANS — A unanimous Fifth Circuit U.S. Court of Appeals panel ruled May 7 that an Eastern Districtof Texas judge lacked jurisdiction over an assignment of rights dispute among natural gas well operating companiesbecause a nondiverse intervenor destroyed subject-matter jurisdiction; the panel vacated a summary judgment orderand remanded the lawsuit with instructions to determine if the intervenor is an indispensable party. SEE PAGE 4.
Wyoming Supreme Court Defines Trade Secrets, Remands Fracking Fluid Disclosure CaseCHEYENNE, Wyo. — The Wyoming Supreme Court issued a unanimous opinion March 12 vacating a lower rulingthat the components of hydraulic fracturing fluid are exempt from disclosure as trade secrets and instructing the lowercourt to apply the federal definition of trade secrets to review a Wyoming Oil & Gas Conservation Commission orderdenying requests for disclosure of the chemicals in the fluid; the mandate issued March 28. SEE PAGE 5.
Order To Produce Seismic Data Affirmed; Water Well Suit Fact Discovery Ends May 23SCRANTON, Pa. — Phase 1 fact discovery in a lawsuit in the U.S. District Court for the Middle District ofPennsylvania alleging contamination of residential water wells with hydraulic fracturing chemicals closes May 23; amotion by the natural gas extraction company defendants for reconsideration of an October 2013 order to produceseismic data and open hole logs was denied in January. SEE PAGE 7.
Louisiana Appeals Panel Rules Plaintiffs Lack Standing To Seek Restoration DamagesLAKE CHARLES, La. — A unanimous Third Circuit Louisiana Court of Appeal panel on May 7 affirmed summaryjudgment against surface estate owners seeking damages from oil and natural gas operators for allegedly failing to restorethe surface estate; the panel applied the subsequent purchaser doctrine and concluded that the plaintiffs lack standingto seek damages for alleged injuries before they purchased the subject land. SEE PAGE 10.
Legacy Oil Pollution Claims Dismissed Without Prejudice In Louisiana Federal CourtNEW ORLEANS — Defense motions to dismiss were granted in part on April 22 with leave to amend in a wellfield legacy contamination lawsuit pursued by landowners in the U.S. District Court for the Eastern Districtof Louisiana. SEE PAGE 12.
Oklahoma Class Plaintiffs Appeal Dismissal Of Claims For Waste Hauling PollutionDENVER — Class action representatives of an Oklahoma action alleging fly ash and produced water contaminationfiled an appellant brief April 21 in the 10th Circuit U.S. Court of Appeals seeking reversal of an order denying remandunder the local controversy exception to the Class Action Fairness Act of 2005 or, alternatively, vacating summaryjudgment for defendants for failing to state a claim. SEE PAGE 15.
Texas Supreme Court Remands Attorney Fee Award Dispute Arising From Royalty SuitAUSTIN, Texas — The Supreme Court of Texas issued a per curiam opinion on April 25 remanding an attorney feedispute with instructions for the trial court to develop a record sufficient to calculate attorney fees with the lodestarmethod; the disputed attorney fees are from a lawsuit to enforce an assignment of working interests in oil and natural gasproducing wells. SEE PAGE 18.
Natural Gas Operator Held Liable To Indemnify Driller For Contamination LitigationCOLUMBUS, Ohio — A natural gas operating company sued by a drilling company with which it contracted tospud wells in West Virginia is liable under the drilling contract to reimburse settlement and litigation costs for a relatedwell-water contamination lawsuit naming both companies as defendants, the presiding U.S. District Court for theSouthern District of Ohio judge ruled April 16. SEE PAGE 19.
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MEALEY’STMTM
Fracking ReportMay 2014 Volume 1, Issue #1
Cases in this Issue Page
Chesapeake Louisiana v. Buffco Production Inc., et al., No. 13-40458,5th Cir. ........................................................................................................... 4
Powder River Basin Resource Council, et al. v. Wyoming Oil & GasConservation Commission, et al., No. 13-120, Wyo. Sup. ........................... 5
Susan Berish, et al. v. Southwestern Energy Production Co., et al.,No. 10-1981, M.D. Pa........................................................................................ 7
Lisa Parr, et al. v. Aruba Petroleum Inc., No. 11-1650, County Courtat Law No. 5 of Dallas County, Texas ........................................................... 9
Carlos Boone, et uxor v. ConocoPhillips Co., et al., No. 13-1106, La. App.,3rd Cir. ........................................................................................................... 10
Catherine P. Alford, et al. v. Chevron USA Inc., et al., No. 13-5457(consolidated), E.D. La........................................................................................ 12
William Reece, et al. v. AES Corp., et al., No. 14-7010, 10th Cir. .......................... 15Larry T. Long, et al. v. Robert M. Griffin, et al., No. 11-1021, Texas Sup.............. 18Warren Drilling Inc. v. Equitable Production Co., No. 12-425, S.D. Ohio ............. 19Thomas A. Neuhard, et uxor v. Range Resources-Appalachia, No. 11-1989,
M.D. Pa. ......................................................................................................... 21Rugh A. Mason, et uxor v. Range Resources-Appalachia, et al., No. 12-369,
W.D. Pa............................................................................................................... 22Edward E. Kamuck v. Shell Energy Holdings, et al., No. 11-1425, M.D. Pa........... 24Joe Rath, et al. v. BHP Billiton Petroleum (Arkansas) Inc., et al., No. 13-602,
E.D. Ark. ............................................................................................................. 25Daniel W. Nicholson v. XTO / Exxon Energy Inc., No. 13-899, N.D. Texas ........ 26Sheila Russell, et al. v. Chesapeake Appalachia, et al., No. 14-148, M.D. Pa............ 28Bobbie Hill, et al. v. Southwestern Energy Co., No. 12-500, E.D. Ark.................... 30Mary L. Vermillion, et al. v. Mora County, N.M., et al., No. 13-1095, D. N.M.... 31Columbia Gas Transmission v. Gary Galloway, No. 14-77, E.D. Ky. ...................... 33Thomas Chaffee, et al. v. Talisman Energy USA Inc, et al., No. 14-690,
M.D. Pa............................................................................................................... 33Tennessee Gas Pipeline Co. v. Permanent Easements, et al., No. 14-1821,
3rd Cir. ................................................................................................................ 35Dr. Alfonso Rodriguez, M.D., v. Michael L. Krancer, et al., No. 12-1458,
M.D. Pa............................................................................................................... 36
Published document is available at the end of the report. For other availabledocuments from cases reported on in this issue, visit www.mealeysonline.com or call1-800-MEALEYS.
In this Issue
Assignment Of Rights5th Circuit Panel Vacates SummaryJudgment, Remands To DecideIntervenor’s Status.......................................... page 4
Trade SecretsWyoming Supreme Court Defines TradeSecrets, Remands Fracking FluidDisclosure Case .............................................. page 5
Order To Produce Seismic Data Affirmed;Water Well Suit Fact Discovery EndsMay 23...............................................................page 7
VerdictTexas Jury Awards $2.9 Million To FamilyAlleging Harm From Natural GasFracturing ........................................................... page 9
Legacy DamagesLouisiana Appeals Panel Rules PlaintiffsLack Standing To Seek RestorationDamages....................................................... page 10
Legacy Oil Pollution Claims DismissedWithout Prejudice In LouisianaFederal Court ............................................... page 12
AppealOklahoma Class Plaintiffs AppealDismissal Of Claims ForWaste Hauling Pollution.............................. page 15
Texas Supreme Court Remands AttorneyFee Award Dispute Arising FromRoyalty Suit ................................................. page 18
Duty To DefendNatural Gas Operator Held Liable ToIndemnify Driller For ContaminationLitigation...................................................... page 19
Lease DisputePennsylvania Federal Judge Rules GasWell Activity Did Not Extend TermOf Lease....................................................... page 21
Pennsylvania Federal Judge DeniesSummary Judgment In NaturalGas Lease Dispute........................................ page 22
April Trial Stayed Pending DispositiveMotion Ruling In PennsylvaniaFederal Court ............................................... page 24
RoyaltiesMarch 2015 Royalty Trial Set InArkansas; Some Claims DismissedIn January Order.......................................... page 25
Wrongful DeathGas Well Operator Objects To OrderDenying Dismissal In Texas FederalCourt ........................................................... page 26
Personal InjuryGas Well Operators Seek Order ToSupport Claims Before SummaryJudgment Discovery ..................................... page 28
Waste DisposalDiscovery Dispute Reported By OilfieldWell Operators In Arkansas InjectionSuit .............................................................. page 30
Ordinance ChallengeNew Mexico Property Owners AmendComplaint In Suit ChallengingFracking Ban................................................ page 31
PipelineGas Pipeline Operator Seeks DeclaratoryJudgment, Removal Of Bull FromEasement...................................................... page 33
Property DamagePennsylvania Plaintiffs Sue Well, PipelineOperators For Loss Of Property Value............page 33
Natural Gas Pipeline Operator Appeals$78,000 Award In PennsylvaniaEasement Suit .............................................. page 35
MEALEY’S Fracking Report Vol. 1, #1 May 2014
Cite as Mealey’s Fracking Report, Vol. 1, Iss. 1 (5/14) at p.___, sec.___. 3
News
5th Circuit Panel VacatesSummary Judgment, RemandsTo Decide Intervenor’s StatusNEW ORLEANS — A unanimous Fifth Circuit U.S.Court of Appeals panel ruled May 7 that an EasternDistrict of Texas judge lacked jurisdiction over anassignment of rights dispute among natural gas welloperating companies because a nondiverse intervenordestroyed subject-matter jurisdiction; the panel vacateda summary judgment order and remanded the lawsuitwith instructions to determine if the intervenor is anindispensable party (Chesapeake Louisiana v. BuffcoProduction Inc., et al., No. 13-40458, 5th Cir.).
(Opinion in Section D. Document #94-140513-013Z.)
Chesapeake Louisiana filed state law claims against Free-man Capital, Buffco Production Inc., Twin Resources,Wayne Freeman and Freeman Resources to recoverfor alleged overpayment of an assignment of deep rightsin the Geisler Unit property in Harrison County, Texas(No. 10-359, E.D. Texas). Chesapeake Louisianaclaimed federal jurisdiction because the defendants arecitizens of Texas and it is a citizen of Oklahoma.
2008 AgreementThe alleged overpayment involved a transaction arisingfrom a July 2008 agreement between Chesapeake Loui-siana and Buffco. Chesapeake Louisiana agreed to payapproximately $232 million to acquire Buffco’s workinginterests in the deep rights in the Geisler, Bowen, Hembyand Yow units for three years. The letter contains anon-operator clause through which Chesapeake Louisi-ana agrees to make the same offer to non-operating work-ing interests in the same properties. Freeman, FreemanCapital and Harleton Oil & Gas Inc. are the owners ofthe non-operating working interests.
Based on faulty information from a third party, Chesa-peake Louisiana believed Buffco and Freeman each
owned 50 percent interests in the Geisler unit deeprights, for which it paid each of them $6.8 million.The parties agree the proper allocation of the workinginterests in the Geisler unit is Buffco, 25 percent; Free-man, 22 percent, Freeman Capital, 3 percent; andHarleton Oil 50 percent. Therefore, by its paymentto Buffco and Freeman, Chesapeake Louisiana ac-quired only 47 percent of the working interests in theGeisler Unit.
Buffco, Freeman and Freeman Capital alleged in coun-terclaims that Chesapeake Louisiana was required to pur-chase their interests in the Bowen, Hemby and Yowproduction units.
Harleton Oil intervened and alleged claims againstChesapeake Louisiana, Freeman and Buffco. HarletonOil sought 50 percent of the $13.6 million paid toBuffco and Freeman. In exchange, Harleton Oilwould transfer its interest in the Geisler Unit to Che-sapeake Louisiana. Harleton alleged fraud claimsagainst Buffco for misrepresenting its Geisler Unitinterests to Chesapeake Louisiana.
Chesapeake Louisiana and Buffco settled their dispute.Subsequently, Judge Rodney Gilstrap granted sum-mary judgment in favor of Chesapeake Louisiana andHarleton Oil with respect to the Geisler Unit and infavor of Chesapeake Louisiana with respect to theBowen, Hemby and Yow units.
Summary JudgmentFollowing the entry of summary judgment, Freemanand Freeman Capital filed a joint motion to dismissfor lack of subject matter jurisdiction on the groundsthat Harleton Oil’s intervention destroyed diversityand its status as an indispensable party.
Judge Gilstrap concluded that Harleton Oil is adefendant-intervenor and denied the motion. In addi-tion, he ruled that an analysis of whether supplementaljurisdiction attached was unnecessary.
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Freeman, Freeman Capital, Buffco and Harleton Oilappealed.
Judges Patrick E. Higginbotham, W. Eugene Davisand Catharina Haynes heard the appeal and filed aper curiam opinion overturning the judgment in part.
‘‘As a court of limited jurisdiction, we must first satisfyourselves, independent of the district court’s determi-nation, that subject-matter jurisdiction exists over theparties’ claims related to the Geisler Unit,’’ according tothe panel.
‘‘As the parties correctly acknowledge, diversity jurisdic-tion existed over the suit prior to Harleton’s interven-tion; however, we must consider whether Harleton’sintervention destroyed diversity such that the districtcourt lacked jurisdiction over this matter.’’
First, the panel considered whether Harleton Oil isproperly recognized as a defendant-intervenor or aplaintiff-intervenor. ‘‘Here, the principal purpose ofthe suit and the primary and controlling matter in dis-pute suggest that Harleton is a plaintiff,’’ according tothe panel.
‘Plaintiff-Intervenor’‘‘Harleton’s proper alignment as a plaintiff-intervenoris further illustrated by the fact that the summaryjudgment order awarded relief to both Harleton andChesapeake, and both Harleton and Chesapeake areessentially aligned on appeal in seeking affirmance ofthe order. Further, Harleton affirmatively seeks to bealigned with Chesapeake in certain circumstances, suchas when it argues that its unjust enrichment claim istimely because its claim can relate back to the unjustenrichment claim filed by Chesapeake. Finally, whileHarleton brought a claim against Chesapeake, Buffco,and Freeman, no party has brought a claim againstHarleton, and Harleton has no potential for liability.Such a lack of potential for liability against a partysuggests that the party should be aligned as a plaintiff,’’according to the panel.
‘‘Having determined that Harleton should have beenaligned as a plaintiff-intervenor, we are bound to con-clude that the district court lacked diversity jurisdictionover the Geisler Unit claims.
‘‘Therefore, because there was no subject-matter juris-diction over the parties’ Geisler Unit claims following
Harleton’s intervention, we must vacate the grant ofsummary judgment with respect to the Geisler Unitclaims,’’ according to the panel. The panel remandedthe claims to permit the District Court to consider ifHarleton is an indispensable party and if the GeislerUnit-related claims should be dismissed.
With respect to Freeman and Freeman Capital’s coun-terclaims for interests in the Bowen, Hemby and Yowunits, the appellants aver that the counterclaims mustbe dismissed because subject matter jurisdiction islacking over the Geisler Unit claims, according to thepanel. Contrary to Freeman and Freeman Capital, anindependent basis for jurisdiction exists, according tothe panel.
‘We Affirm’
‘‘Harleton did not destroy diversity with respect to theseclaims because its claims were limited to the GeislerUnit,’’ according to the panel. ‘‘Further, the amountin controversy with respect to these claims exceeded$75,000. Therefore, because Freeman and FreemanCapital’s only challenge on appeal rests on their juris-dictional argument, we affirm the district court’s deci-sion concerning the Bowen, Hemby, and Yow Units.’’
Jesse R. Pierce and Brian Kevin Tully of Pierce &O’Neill in Houston represent Chesapeake Louisiana.Ben Taylor of Fulbright & Jaworski in Dallas and EricM. Albritton of Albritton Law in Longview, Texas,represent Freeman and Freeman Capital. Gene FrancisCreely II of Creely Law Firm in Houston representsBuffco. Gregory Dunne Smith of Ramey & Flock inTyler, Texas, represents Harleton Oil. �
Wyoming Supreme Court DefinesTrade Secrets, RemandsFracking Fluid Disclosure CaseCHEYENNE, Wyo. — The Wyoming Supreme Courtissued a unanimous opinion March 12 vacating a lowerruling that the components of hydraulic fracturingfluid are exempt from disclosure as trade secrets andinstructing the lower court to apply the federal defini-tion of trade secrets to review a Wyoming Oil & GasConservation Commission order denying requests fordisclosure of the chemicals in the fluid; the mandate
MEALEY’S Fracking Report Vol. 1, #1 May 2014
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issued March 28 (Powder River Basin Resource Council,et al. v. Wyoming Oil & Gas Conservation Commis-sion, et al., No. 13-120, Wyo. Sup.).
(Opinion in Section E. Document #94-140513-033Z. Mandate available. Document #94-140513-034R.)
Powder River Basin Resource Council, Wyoming Out-door Council, Earthworks and Center for EffectiveGovernment fka OMB Watch appealed the denial ofdisclosure of public records documenting the identityof chemicals used in hydraulic fracturing operationsin Wyoming from the Wyoming Oil & Gas Conserva-tion Commission (WOGCC) pursuant to the Wyom-ing Public Records Act (WPRA; Wyoming StatuteSubsection 16-4-204) and the Wyoming hydraulicfracturing disclosure rule.
7th Judicial DistrictAfter WOGCC denied the request for information, theenvironmental groups filed a petition for review underthe Wyoming Administrative Procedure Act (APA;Wyo. Statute Annotated section 16-3-114[c]) March23, 2012, in the Wyoming Seventh Judicial DistrictCourt, Natrona Co. The groups argue the supervisorarbitrarily refused to disclose information, and the deci-sions was an abuse of discretion and contrary to the law.
Halliburton Energy Services intervened, and the partiesstipulated to a record including 65 requests for tradesecret status approved by the WOGCC supervisor andposted on the commission website. The stipulatedrecord also included correspondence with respect tothe amendments by the commission to rules for exemp-ting certain information about hydraulic fracturing pro-ducts from disclosure as trade secrets.
The environmental groups and Halliburton filed cross-motions for summary judgment based on the stipulatedrecord. Judge Catherine E. Wilking conducted a hear-ing on the motions and granted summary judgmentMarch 21, 2013, rejecting the claims of the environ-mental groups.
The environmental groups appealed.
The Wyoming Supreme Court heard oral argumentsNov. 20 and issued the opinion March 12.
‘‘Proceedings to challenge denial of access to documentsclaimed to be public must follow procedures establishedby the WPRA, and those are not subject to reviewunder the Administrative Procedures Act [Sheaffer v.University of Wyoming, 2006 Wy 99, N 4, 139 P.3d468, 470 (Wyo. 2006)],’’ Justice Michael K. Daviswrote for the court.
‘Reverse And Remand’
‘‘We will therefore reverse and remand to the districtcourt. That court will have to decide whether to permitAppellants to amend their pleadings and file appro-priate documents to seek an order to show cause, orwhether to dismiss the case instead. In the latter event,Appellants may file new action with the appropriaterequest for an order to show cause as contemplatedby the WPRA. The district court is vested with broaddiscretion to determine whether to allow amendmentof pleadings, and we will not interfere with that dis-cretion. Voss v. Goodman, 2009 WY 40, N 14, 203P.3d 415, 420 (Wyo. 2009). Regardless of whichchoice the district court makes, on presentation of anadequate application for an order to show cause, thedistrict court should conduct appropriate proceedingsand determine whether the information Appellantsseek constitutes trade secrets or not, with the burdenof showing that they do upon the custodian (here theSupervisor) and any intervenors.’’
‘‘We understand the difficulty attendant upon holdingthese proceedings — they must be conducted in sucha manner that the information sought to be protectedis not disclosed until the court can determine whetherit is in fact subject to disclosure,’’ according to the court.‘‘This may require the use of in camera hearings, sealedfiles, or even closed hearings, tools that courts custo-marily use in cases involving trade secrets.’’
The court then turned to the standard to be appliedon remand to trade secret cases under the WPRA. ‘‘Thisis a general question of law which can be answeredwithout regard to the limited record we have, and itis in the interest of judicial economy to do so,’’ accord-ing to the court.
E M A I L T H E E D I T O R
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Vol. 1, #1 May 2014 MEALEY’S Fracking Report
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‘‘In order to maintain an open and accountable govern-ment, the Wyoming legislature enacted WPRA in1969. The Act provides a public right of access torecords of the state, its agencies, and local governmententities. Wyo. Stat. Ann. § 16-4-202(a) (LexisNexis2013),’’ according to the court.
‘Disclosure Generally’
‘‘The WPRA, like the FOIA [federal Freedom of In-formation Act], requires that disclosure generally pre-vail over secrecy.’’
‘‘Striking a delicate balance between the public’s rightof access to government records and the protectionof proprietary information, the WPRA contains severalexemptions from disclosure, which are set forth in§ § 16-4-203(b) & (d),’’ according to the court.
The exemption pertinent to the current case addressingtrade secrets, privileged information and confidentialcommercial, financial, geological or geological data isfound in 16-4-203(d)(v), according to the court. Thisexemption has never been subject to interpretation.
‘‘Having carefully contemplated the purpose of theWPRA, studied relevant case law, and considered com-peting arguments, we adopt the definition of tradesecrets articulated by federal courts under the FOIA.A trade secret in the public records context is ‘a secret,commercially viable plan, formula, process or devicethat is used for the making, preparing, compounding,or processing of trade commodities and that can besaid to be the end product of either innovation or sub-stantial effort [Anderson v. Department of Health &Human Services, 907 F.2d 936, 943-44 (10th Cir.)],’ ’’according to the court. ‘‘This ‘definition requires thatthere be a direct relationship between the trade secretand the productive process.’ Id.’’
‘‘We are left with the question of whether individualingredients of hydraulic fracturing formulae can consti-tute trade secrets under the definition we adopt. Wecannot resolve that issue in this appeal, unfortunately.’’
‘Independently Resolve’
‘‘The district court must independently resolve this dis-pute based on the credibility of the witnesses and per-suasiveness of the evidence presented by each party,’’according to the court.
Justices Marilyn S. Kite, William U. Hill, Barton Voigtand E. James Burke joined in the opinion.
Shannon Rose Anderson of Powder River Basin ResourceCouncil in Sheridan, Wyo., and Timothy J. Preso, LauraD. Beaton and Katherine Kirklin O’Brien of Earth-justice in Bozeman, Mont., represent the appellants.Eric A. Easton and Peter K. Michael of the WyomingAttorney General’s Office in Casper, Wyo., representsWOGCC. Steven L. Leifer of Baker Botts in Wash-ington, D.C., and John A. Masterson and Alaina M.Stedillie of Lewis Roca Rothgerber in Casper representHalliburton. �
Order To Produce Seismic DataAffirmed; Water Well SuitFact Discovery Ends May 23SCRANTON, Pa. — Phase 1 fact discovery in a law-suit in the U.S. District Court for the Middle Districtof Pennsylvania alleging contamination of residentialwater wells with hydraulic fracturing chemicals closesMay 23; a motion by the natural gas extraction com-pany defendants for reconsideration of an October2013 order to produce seismic data and open holelogs was denied in January (Susan Berish, et al. v.Southwestern Energy Production Co., et al., No. 10-1981, M.D. Pa.).
(Order extending discovery deadline available. Docu-ment #94-140513-026R. Order denying motion toreconsider available. Document #94-140513-027R.)
Suzanne Berish is the lead plaintiff among a group ofmore than two dozen residents of Lenox Township,Susquehanna County. The lawsuit was filed in the Sus-quehanna County Court of Common Pleas (SuzanneBerish, et al. v. Southwestern Energy Production Co., etal., No. 10-1882, Pa. Comm. Pls., Susquehanna Co.).The plaintiffs include adults and children who livewithin a quarter mile of the so-called Price Well No. 1.
RemovalSouthwestern Energy Production filed notice ofremoval Sept. 23, 2010, to the Middle District ofPennsylvania.
A motion filed by the plaintiffs for leave to join de-fendants Halliburton Energy Services Inc., BJ Services
MEALEY’S Fracking Report Vol. 1, #1 May 2014
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Co., Shlumberger Limited and Union Drilling Inc. wasgranted May 3, 2012, by Judge A. Richard Caputo.
The plaintiffs allege in the third amended complaintfiled May 17, 2012, that Halliburton Energy Services,Union Drilling, Schlumberger Limited and BJ Servicesprovided services, equipment and support to South-western Energy Production, the owner and operatorof Price Well No. 1.
The plaintiffs allege that they have been exposed tohazardous chemicals, including barium, manganeseand strontium, by the hydraulic fracturing of the defen-dants. As a result of the fracking, their real propertieshave been damaged, and the value of their real proper-ties has been diminished, according to the plaintiffs.
Plaintiff Connor Seamon avers that as a result of drink-ing contaminated water, he has become physically illand manifests neurological symptoms of exposure totoxicants, including heavy metals. The plaintiffs allegenegligence, private nuisance, strict liability and trespasscauses of action.
The plaintiffs seek an injunction ordering the defen-dants to stop releasing contaminants, which they allegeis a violation of the Pennsylvania Hazardous SitesCleanup Act (35 Pa. Statutes subsection 6020.1.1).They also seek compensatory and punitive damagesin addition to creation of a medical monitoring fund.
The plaintiffs voluntarily dismissed SchlumbergerLimited in November 2012.
Seismic DataJudge Caputo entered an order Aug. 27, 2013, instruct-ing Southwestern Energy Production and SchlumbergerTechnology Corp., a nonparty contractor, to file briefsregarding the discovery of seismic data and open holelogs. The defendants opposed the release on the groundsthat the data are trade secrets.
Judge Caputo issued an order Oct. 11 granting the plain-tiffs access to seismic data and open hole logs. The orderwas stayed Oct. 28 pending disposition of the motionto reconsider filed Oct 24.
Judge Caputo denied the motion Jan. 16. ‘‘There are sixelements used to determine whether information mustbe kept secret so it confers a competitive advantage to
the owner of the information [Pestco Inc. AssociatedProducts Inc., 800 A2d. 700, 706 (Pa. Super. 2005)],’’according to Judge Caputo. ‘‘The burden is on SEPCO[Southwestern Energy Production Co.] to demonstratethat the open hole logs and the seismic data are tradesecrets.’’
First, the information claimed by Southwestern EnergyProduction to be a trade secret is known by Schlum-berger and an unknown number of employees, accord-ing to Judge Caputo. ‘‘Moreover, there is no evidenceof any protection SEPCO required of Schlumberger torequire its employees of the information learned bothwhile working at Schlumberger and after leavingSchlumberger’s employ.’’
Second, some 25 to 50 Southwestern Energy Produc-tion employees are aware of the information, accordingto Judge Caputo. ‘‘There is no evidence of any require-ments on SEPCO’s employees regarding the prohibi-tion of dissemination of this information while in theemploy of SEPCO or thereafter.’’
Third, Southwestern Energy Production shared theinformation with Schumberger, a contractor, accordingto Judge Caputo. The distribution of the informationis unknown, and there is no evidence of restrictions onthe distribution of the evidence.
Value Of InformationFourth, there is a lack of evidence of the value of theinformation about the information, according to JudgeCaputo. Fifth, it is undisputed that Southwestern EnergyProduction spent considerable money to develop thedata, which mitigates in favor of classifying the infor-mation as a trade secret.
Finally, the sixth issue concerns the value of the dataabout Price No. 1 Well to other potential well sites. Theauthority cited by the defendants for trade-secret classi-fication under this test, the Texas Supreme Court opi-nion in In re Bass (113 S.W.3d 735 [Texas 2003]), isdistinguishable, according to Judge Caputo.
‘‘In Bass, the non-participating royalty interest ownersof land sued the mineral estate owner claiming thatimplied duty to develop the land was breached. Themineral estate owner contracted with Exxon to run ageological survey of seismic activity on the entire land.The mineral estate owner never opted to develop the
Vol. 1, #1 May 2014 MEALEY’S Fracking Report
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land. In seeking to support their claim of breach ofimplied duty to develop the land, the royalty interestowners sought the seismic data because it would ‘revealwhether development would be profitable.’ In re Bass,113 S.W.3d at 738.’’
The seismic data at issue in Bass was not confined to asingle well, according to Judge Caputo. ‘‘In Bass, it isapparent that it relates to the entire 22,000 acres.’’
For these reasons, the motion to reconsider is denied,according to Judge Caputo.
The parties stipulated Feb. 28 to an extension of thecase management deadlines. Judge Caputo endorsedthe stipulation March 3. Fact discovery, includingfact depositions, will be completed by May 23, accord-ing to Judge Caputo. ‘‘All other deadlines in the SecondAmended Case Management Order dated September30, 2013 shall be extended accordingly.’’
CounselPatrick Walsh of Kelly, Polishan, Walsh & Solfanelliof Old Forge, Pa., represents Price. Michael Gleeson,M.D., of the Law Office of Michael Gleeson in Arch-bald, Pa., Peter J. Cambs and William J. Dubanevichof Parker Waichman in Port Washington, N.Y., andChristopher P. Caputo of Caputo & Mariotti in Moo-sic, Pa., represent the plaintiffs.
Joel Robin Burcat and Matthew M. Haar of SaulEwing in Harrisburg, Pa., and John H. Barr, MichaelC. Connelly and Robert D. Ayers of Bracewell & Giu-liani in Houston represent BJ Services. David R. Fineand George A. Bibikos of K&L Gates in Harrisburgrepresent Southwestern Energy Production and Halli-burton Energy Services. Patricia Fecile-Moreland ofMarks, O’Neill, O’Brien & Courtney in Philadelphiaand David P. Helwig of Marks, O’Neill, O’Brien &Courtney in Pittsburgh represent Union Drilling. �
Texas Jury Awards $2.9 MillionTo Family Alleging HarmFrom Natural Gas FracturingCase name: Lisa Parr, et al. v. Aruba Petroleum Inc.
Case number: 11-1650
Court: County Court at Law No. 5 of Dallas County,Texas
Judge: Mark Greenberg
Verdict / Settlement (breakdown): $2.9 million($275,000 diminution of real property value, $750,000each for past physical pain and suffering to Bob andLisa Parr, $500,000 past physical pain and suffering toEmma Duval, $100,000 each for future physical painand suffering to Bob and Lisa Parr, $50,000 for pastphysical pain and suffering to Emma Duval, $100,000each to Bob and Lisa Parr for past mental anguish,$100,000 for past mental anguish to Emma Duval)
Plaintiff(s): Lisa Parr, minor daughter Emma Duval,Robert Parr
Defendant(s): Aruba Petroleum Inc.
Date: April 22, 2014
Background: Lisa and Robert Parr own 40 acres overthe Barnett Shale in Wise County, Texas. Hydraulicfracturing for natural gas extraction began in 2008 inthe Barnett Shale. Twenty-two wells eventually weredrilled within two miles of the Parrs’ residence; nowells or natural gas extraction activities occur on theParrs’ tract. The Parrs attribute their personal injuriesand property damage to benzene, toluene, ethylben-zene, xylene and other volatile organic compoundsused to complete the wells by hydraulic fracturing.The Parrs named 11 defendants in the lawsuit filedin 2011. Aruba Petroleum Inc. and Encana Oil &Gas (USA) Inc. remained as defendants in the 11thamended petition filed Sept. 17, 2013. HalliburtonCo. was granted a no-evidence summary judgmentin 2013 on the grounds that its actions were not theproximate cause of the Parrs’ alleged injuries. Settle-ments were reached with the remaining defendantsprior to trial. Aruba Petroleum was granted summaryjudgment on negligence, gross negligence and trespasscauses of action. The trial proceeded on the claim ofprivate nuisance against Aruba Petroleum. The jury wasinstructed to determine if Aruba Petroleum intention-ally created a private nuisance and if the company’sconduct was abnormal and out of place; five of thesix the jurors answered the first question in the affirma-tive and the second question in the negative. The jurydeclined to award punitive damages.
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Claim: Personal injury, property damage
Injury: Chronic nose bleeding, irregular heartbeat,muscle spasms, open sores, emotional distress, harm tolivestock, damage to the environment, loss of propertyvalue
Defense: The Parrs cannot prove Aruba Petroleumcaused their injuries because of the number of wellsdrilled near their property by other oil and gas com-panies. Aruba Petroleum complied with applicablefederal and state laws and air quality and drilling safetyguidelines established by the Texas Railroad Commis-sion and the Texas Commission on EnvironmentalQuality.
Other:
Plaintiff attorneys: Brad J. Glide, Glide Law Firm,Houston; David Matthews, Mathews & Associates,Dallas; Richard A. Capshaw, Capshaw & Associates,Dallas
Defense attorneys: Ben Barron, Ben K. Barron PC,Dallas; Michael J. Mazzone, Haynes & Boone, Houston
Key related documents: 11th amended complaintavailable. Document #15-140506-058C. Verdict inSection B. Document #15-140506-057V. �
Louisiana Appeals Panel RulesPlaintiffs Lack StandingTo Seek Restoration DamagesLAKE CHARLES, La. — A unanimous Third CircuitLouisiana Court of Appeal panel on May 7 affirmedsummary judgment against surface estate owners seek-ing damages from oil and natural gas operators forallegedly failing to restore the surface estate; the panelapplied the subsequent purchaser doctrine and con-cluded that the plaintiffs lack standing to seek dam-ages for alleged injuries before they purchased thesubject land (Carlos Boone, et uxor v. ConocoPhillipsCo., et al., No. 13-1106, La. App., 3rd Cir.; 2014 La.App. LEXIS 1204).
(Opinion in Section A. Document #94-140513-012Z.)
Carlos and Lori Boone appealed a motion for sum-mary judgment and exception of prescription decidedagainst them in the Louisiana 15th Judicial DistrictCourt of Vermillion Parish (No. 92292). Judge JohnDamian Trahan granted the motion filed by EnerQuestOil & Gas, a former lessee of the property.
Rights ReservedThe Boones purchased 18.66 acres of land encumberedby mineral reservations and oil and natural gas leases for$120,000 in August 2005 from Primeaux PropertiesInc. Primeaux Properties purchased the tract in 2003from Aaron Lagneaux and Eric Lagneaux, who inher-ited the property. Oil and natural gas operations on theproperty date back to 1972. The Lagneauxs reservedthe minerals and mineral rights of the property in the2003 sale.
EnerQuest acquired the wells and operating rightson the tract in 2000 from Phillips Petroleum Co. Ener-Quest sold its operating rights and interest in the prop-erty to Petro ‘‘E’’ in 2004. The sale and assignment toPetro ‘‘E’’ included EnerQuest’s use of the surface of thesubject property and the obligation to clean and restorethe surface.
The Boones asserted contamination and propertydamage in the lawsuit filed in May 2010. The Boonesalleged claims against six oil and natural gas operators.They allege claims against ConocoPhillips Co. as suc-cessor to Phillips Petroleum, EnerQuest and Petro ‘‘E’’and three other operators.
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In support of their claims, the Boones alleged the dis-covery of abandoned debris and equipment on the landand asserted a failure to properly clean and restore theproperty. The Boones identified three of five wells onthe property in a first amended petition filed in July2012 that they allege were operated by EnerQuestbefore its sale to Petro ‘‘E.’’
EnerQuest moved for summary judgment on thegrounds that the Boones as a matter of law are pre-cluded from asserting a tort or contract claim for prop-erty damage before its 2005 acquisition of the propertywithout a specific assignment of that right from PhillipsPetroleum.
Leave To AmendThe Boones offered assignments of rights from Pri-meaux and the Lagneauxs in response to the summaryjudgment motion. Judge Trahan granted the Boonesleave to file a supplemental and amending petitionasserting their right as assignees to the rights of theprevious owners, claims for fraud and conspiracy andsolidary liability of all defendants.
Judge Trahan then granted EnerQuest summary judg-ment andexceptionof prescription. The Boones appealed.
‘‘We begin with a review of the subsequent purchaserrule or doctrine [Eagle Pipe and Supply Inc. v. AmeradoHess Corp., 79 So.3d 246, 256-57 (La. 10/25/11)],’’Judge Ulysses Gene Thibodeaux wrote for the panel.
‘‘Relevant to our inquiries here, a real right is notdefined by the Civil Code but has long been held tobe a proprietary interest and a species of ownership,which ‘defines the relation of man to things and may,therefore, be declared against the world.’ Eagle Pipe andSupply, Inc., 79 So.3d at 259,’’ according to the panel.‘‘A real thing and a real obligation both attach to athing. Id. at 261; La. Civ. Code art. 1764, RevisionComments—1984, (b).’’
‘‘As illustrated by Eagle Pipe and Supply, Inc. through itsanalysis of Clark v. J.L. Warner Co. et al., La. Ann. 408(1851) and subsequent jurisprudence, the formerowner retains the right to recover damages caused bythe former owner’s lessee during the former owner’sownership of the property,’’ according to the panel.
The August 2005 sale and conveyance of the propertyfrom Primeaux to the Boones does not assign the seller’s
personal right to sue the lessee for damage done to theland before the date of the sale, according to the panel.
‘Subsequent Purchaser’‘‘Lagneaux reserved the rights to himself in 2003, andin 2005 Primeaux, who never obtained them fromLagneaux, referenced the mineral and lease reservationsin its sale to the Boones and pointed the Boones to therecorded prior act of sale from Lagneaux. Accordingly,the Boones knew that the land was encumbered byreserved mineral rights and leases. Under the subse-quent purchaser doctrine, they do not have a right ofaction to sue for damages occurring prior to their ac-quisition of the property.’’
In an attempt to sue EnerQuest, the Boones obtainedassignments from Lagneaux and Primeaux in September2012, according to the panel. ‘‘We find that the assign-ments also fail to provide the plaintiffs with a right ofaction for pre-acquisition damages against EnerQuest.’’
Lagneaux had no right of action in tort against Pri-meaux to assign in 2012 as a matter of law, accordingto the panel. Louisiana Civil Code Article 3493, whichgoverns damage to immovable property, has a one-yearstatute of limitations. The statute of limitations expiredin March 2004, according to the panel.
Primeaux could not assign contractual rights to theBoones in September 2012 because it did not acquirecontractual rights from Lagneaux in 2003, accordingto the panel. ‘‘Accordingly, the Boones did not obtainany tort or contract rights from the previous ownersvia the assignments to sue for damages prior to theact of sale in 2005.’’
Alternatively, the Boones aver that they have a right ofrecovery as third-party beneficiaries of the surface leasegranted in 2002 by Lagneaux to EnerQuest, accordingto the panel. In Andrepont v. Acadia Drilling Co. (231So.2d 347 [1969]), the Louisiana Supreme Court iden-tified three criteria for determining if contracting partiesprovided a benefit for a third party. The Boones havenot met their burden of proving they are third-partybeneficiaries under the contracts, according to thepanel.
‘Withheld Its Lease’Finally, the Boones aver that the 2002 surface leasehad a 10-year term and was effective until 2012, which
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included their ownership of the surface, according to thepanel. ‘‘We disagree. As previously discussed, Lagneauxwithheld its leases and contractual rights from assign-ment to the Boones, and in any event the surface leasedid not provide for damages. It only provided for restora-tion which was not due until six months after the leaseexpired.’’
‘‘Based upon the foregoing, we affirm the trial court’sjudgment granting the motion for summary judgmentand exception of prescription in favor of EnerQuest Oil& Gas, LLC. Costs of this appeal are assessed to theplaintiffs, Carlos and Lori Boone.’’
Judges Sylvia R. Cooks and John E. Conery joined inthe opinion.
Warren A. Perrin of Perrin, Landrey, deLaunary, Dar-tez & Ouellet in Lafayette, La., and Michael GregoryStag of Smith Stag in New Orleans represent the plain-tiffs. Morgan J. Wells Jr. of Larzelere Picou Wells Simp-son Lonero in Metairie, La., represents EnerQuest.Rebecca H. Dietz of King, Krebs & Jurgens in NewOrleans represents ConocoPhillips. �
Legacy Oil Pollution ClaimsDismissed Without PrejudiceIn Louisiana Federal CourtNEW ORLEANS — Defense motions to dismiss weregranted in part on April 22 with leave to amend in awell field legacy contamination lawsuit pursued bylandowners in the U.S. District Court for the EasternDistrict of Louisiana (Catherine P. Alford, et al. v.Chevron USA Inc., et al., No. 13-5457 [consolidated],E.D. La.; 2014 U.S. Dist. LEXIS 55724; See 4/15/14,Page 27).
(Order available. Document #15-140506-037R. Thirdamended complaint available. Document #15-140506-038C. Brief in support of motion to reconsideravailable. Document #15-140506-039B. Responseto motion to reconsider available. Document #15-140506-041B.)
Plaintiffs led by Catherine Alford filed suit in the 25thJudicial District Court in Plaquemines Parish, La., (No.60-4883) to recover damages for contamination of their
property in the so-called Potash Field by oil and gasoperators Chevron USA Inc., Goodyear PetroleumCo., Hilcorp Energy I, Laurent Oil & Gas, MalloyEnergy Co., Noble Energy Inc., Shell Oil Co., ExxonMobil Corp., Gulf Oil Corp., Anadarko E&POnshore, BP America Production Co., Chevron USAHoldings Inc., Four Star Oil and Gas, French GulfCoast Partners and Pan American Petroleum Corp.
Removing DefendantThe lawsuit was removed in August 2013 by Chev-ron USA.
This so-called legacy litigation, as described in Marin v.Exxon Mobil Corp. (48 So.3d 234, 238 [La. 2010]),arises from operations conducted decades ago that leftan unwanted legacy in the form of actual or allegedcontamination, according to Judge Sarah S. Vance.Facilities constructed by the defendants during extrac-tion operations allegedly released hazardous substancesonto the plaintiffs’ property, according to Judge Vance.
Exxon Mobil moved to dismiss or for a more definitestatement in September 2013, which Judge Vancegranted in part on April 1 with leave to amend (2014U.S. Dist. LEXIS 44621). Judge Vance denied themotion for a more definite statement. Pursuant to theApril 1 order, the plaintiffs filed a third amended sup-plemental complaint on April 21.
Exxon Mobil on April 11 moved for reconsiderationwith respect to the classification of servitude andimplied obligations of mineral servitude holders.Exxon Mobil challenges the application of the obliga-tions as successor to Humble Oil & Refining.
‘‘The Court’s Order and Reasons states that theFebruary 17, 1960 Servitude Agreement attached toPlaintiffs’ petition grants a mineral servitude to Hum-ble Oil on Plaintiffs’ property. Exxon respectfully sub-mits that this legal conclusion is manifestly erroneous,as the Servitude Agreement does not convey any rightsto Exxon with respect to exploring for, producing, orreducing minerals to possession or ownership.’’
The agreement grants only rights with respect to con-struction and maintenance of pipelines and equipmentfor treating, transporting and storing oil, gas, sulfur,saltwater brine and other minerals on the subjectland, according to Exxon Mobil. ‘‘Absolutely no rights
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to explore for, produce, or reduce to possession andownership any minerals are transferred through thedocument. Thus, by its very terms, the 1960 ServitudeAgreement cannot be classified as a Mineral Servitude.’’
ReconsiderBecause the agreement does not convey mineral servi-tude or mineral rights, the plaintiffs cannot state a causeof action under Louisiana Mineral Code articles 11 and22, according to Exxon Mobil. ‘‘As such, Exxonrespectfully requests this Court reconsider its findingthat Exxon is a mineral servitude owner, and therefore,its conclusion that ‘the complaint plausibly alleges thatExxon breached the duties it owes to plaintiffs as amineral servitude holder to ‘keep[] the property subjectto the [servitude] in good order’ and to ‘exercise [its[rights with reasonable regard’ for those of plaintiffs.’ ’’
The plaintiffs cite Louisiana Civil Code 639 in an April28 response to the motion to reconsider. ‘‘Civil CodeArticle 639 declares that a limited personal servitude isa real right that confers ‘in favor of a person a specifieduse of an estate less than full enjoyment,’ ’’ according tothe plaintiffs.
‘‘Because limited personal servitudes such as a minerallease ‘constitute an intermediary category between usu-fruct and predial servitudes,’ they are ‘regulated byapplication of the rules governing usufruct and predialservitudes to the extent that their application is com-patible with the rules governing a right of use of servi-tude.’ [La. Civil Code article 645],’’ according to theplaintiffs. ‘‘Both the rules governing usufruct and therules governing predial servitudes require restoration ofthe thing subject to the usufruct or predial servitude.’’
‘‘Exxon clearly has the obligation of ‘preserving thesubstance’ of the plaintiffs’ property under both the1950 Lease and the 1960 Servitude [Eagle Pipe andSupply Inc. v. Amerada Hess Corp., 79 So.3d 246,258-259],’’ according to the plaintiffs.
The plaintiffs also aver that they have the right to enforcemineral lessee obligations arising from the end ofmineral lease. ‘‘Exxon ignores the fact that a minerlease is ‘a hybrid institution’ [Mineral Code Article16] that may be classified as a limited personal servi-tude,’’ according to the plaintiffs.
Eagle Pipe‘‘When the mineral lease terminates, the lessee’s obliga-tion to the surface owner does not disappear, as the lessee
is ‘always with the obligation of preserving the sub-stance.’ [Eagle Pipe, 79 So.3d at 258-259] (emphasisadded),’’ according to the plaintiffs.
‘‘Exxon is responsible for its obligations both underthe 1950 Lease and the 1960 Servitude,’’ according tothe plaintiffs.
The order issued April 22 grants in part with leave toamend motions filed in September 2013 by ChevronUSA, Four Star Oil and Gulf Oil (collectively, Chev-ron); Anadarko E&P Onshore, BP America and PanAmerican Petroleum (collectively, BP); Hilcorp EnergyI; and French Gulf Coast Partners to dismiss certain ofthe plaintiffs’ claims and for a more definite statement.Judge Vance denied the motions for a more definitestatement.
Judge Vance dismissed all the claims without prejudice,except the claims under Civil Code articles 2683(2),2686 and 2692 and Mineral Code articles 11 and 122.The plaintiffs have 21 days to file an amended complaint.
Judge Vance dismissed claims for restoration damagesunder Civil Code article 2683(3) as premature becausethe plaintiffs do not allege that the 1950 lease hasexpired. The plaintiffs are correct that obligationsimposed on lessees under Civil Code articles 2683,2686, 2688 and 2692 and articles 11 and 122 of theMineral Code continue (Marin, 48 So.3d at 256),according to Judge Vance.
Civil Code article 2683(2) and Mineral Code articles11 and 122 collectively require mineral lessees to useleased property as a so-called prudent administrator,according to Judge Vance. The plaintiffs allege in thearticle 2686 claim that the defendants used the leasedproperty in a way that may cause damage to the prop-erty, according to Judge Vance. The Article 2692 claimalleges that the subject property was damaged by theimproper storage of waste, which triggers a duty torepair the property, according to Judge Vance.
Without Prejudice
Judge Vance dismissed without prejudice claims for frau-dulent concealment, restoration, breach of express con-tract, violation of the prudent operator doctrine, land loss,punitive damages, continuing trespass, civil fruits, conti-nuing nuisance, strict liability and unjust enrichment.
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Donald T. Carmouche, Diane Adele Owen, JohnHogarth Carmouche, Ross Joseph Donnes, VictorLynn Marcello and William Robert Coenen III of Tal-bot, Carmouche & Marcello in Baton Rouge, La., andWilliam Peter Connick of Connick & Connick inMetairie, La., represent the plaintiffs.
Michael Raudon Phillips, Brittany Buckley Salup,David Philip Curtis, Michelle Purchner Cumberlandand Shannon A. Shelton of Kean Miller in New Orleansand Alan James Berteau, Charles Simon McCowan IIIand Louis Victor Gregoire Jr. of Kean Miller in BatonRouge represent Chevron USA, Gulf Oil, ChevronUSA Holdings and Four Star Oil and Gas.
Loulan Joseph Pitre Jr., Demarcus J. Gordon, JaneJackson and Terrence Kent Knister of Gordon, Arata,McCollam, Duplantis & Egan in New Orleans repre-sent Goodrich Petroleum and Malloy Energy. Craig
Isenberg, Andrea Mahady Price, Michelle M. Ruther-ford, Richard Edward Sarver and Zachary I. Rosenbergof Barrasso, Usdin, Kupperman, Freeman & Sarver inNew Orleans represent Hilcorp Energy I. Paul J.Hebert and David K. McCory of Ottinger Hebert inLafayette, La., represent Laurent Oil & Gas.
Joseph P. Farnsworth and Daria Burgess Diaz of StonePigman Walther Wittman in New Orleans representNoble Energy. Patrick Wise Gray, Amy Allums Leeand Jack Brandon Stanley of Johnson Gray McNamarain Lafayette represent Shell Oil. Phillip E. Foco of Tay-lor, Porter, Brooks & Phillips in Baton Rouge andAnthony Joseph Lascaro and John Allain Viator ofBienvenu, Bonnecaze, Foco, Viator & Holinga inBaton Rouge represent Exxon Mobil.
James E. Lapeze and Jonathan J. Fox of Liskow &Lewis in New Orleans represent Anadarko E&P.
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James P. Dore of Kean Miller, Amy DeGeneres Berret,Benn Vincent and Shelly J. Harrison in Baton Rougerepresent BP America Production. Patrick S. Ottingerand Hebert of Ottinger Hebert in Lafayette representFrench Gulf Coast Partners. Dore and Vincent repre-sent Pan American Petroleum. �
Oklahoma Class PlaintiffsAppeal Dismissal Of ClaimsFor Waste Hauling PollutionDENVER — Class action representatives of an Okla-homa action alleging fly ash and produced water con-tamination filed an appellant brief April 21 in the 10thCircuit U.S. Court of Appeals seeking reversal of anorder denying remand under the local controversyexception to the Class Action Fairness Act of 2005or, alternatively, vacating summary judgment for defen-dants for failing to state a claim (William Reece, et al. v.AES Corp., et al., No. 14-7010, 10th Cir.).
(Appellant brief available. Document #94-140513-030B.)
Bill Reece is the lead plaintiff in a putative class actionremoved in November 2012 to the U.S. District Courtfor the Eastern District of Oklahoma (Bill Reece, et al. v.AES Corp., et al., No. 12-457, E.D. Okla.; 2013 U.S.Dist. LEXIS 2236) pursuant to the Class Action Fair-ness Act (CAFA; U.S. Code 28:1332[d]) by XTOEnergy Inc. from the LeFlore County, Okla., CountyCourt (No. 11-256).
Amended ComplaintThe plaintiffs filed a first amended complaint on Aug.20, 2013, alleging claims against AES Corp., AESShady Point Inc., AES Shady Point, MMHF aka Mak-ing Money Having Fun, Thumbs Up Ranch, DarylJackson dba Daryl Jackson Trucking, Kevin J. Jackson,Kenneth Jackson, Chad Jackson, GCI Mining akaGeorge Colliers Inc., Mountain Minerals, BrazilCreek Minerals Inc., Farrell-Cooper Mining Co., AshGrove Resources, Marine Coal Sales Co., Hunter RidgeCoal Co., International Coal Group, Coal CreekMinerals, McCorkle Truck Line Inc., Star Bulk akaPX Transportation Inc., R&J Trucking Inc., SEECOInc., XTO Energy Inc., Stephens Production Co.,Chesapeake Operating Inc., Petrohawk Operating
Co., Hanna Oil & Gas Co., Highland Oil & Gas,Cholla Petroleum Inc., BP America Production Co.,Ross Production Co., Shields Operating Inc., SednaEnergy Inc., Hogback Exploration Inc., Bishop Truck-ing, Bear Productions Inc., Graco Fishing & RentalTools Inc., TXD Transport, Mike Krebbs Construc-tion Inc., Big Mac Tank Trucks, Oklahoma Big MacTank Truck, B&B Gas Well Services Inc. and BearTransports.
The plaintiffs allege that chemicals in oil and natural gaswell waste and in coal combustion waste and fly ashhauled to and deposited at a dump site one mile southof Bokoshe, Okla., in LeFlore County have contami-nated the environment where they live and work. Thehaul routes to the dump site are also contaminatedwith fugitive chemicals from the hazardous wastes, ac-cording to the plaintiffs.
Defendants AES, AES Shady Point Inc. and AES ShadyPoint own a coal-fired electricity generation plant inLeFlore County, according to the plaintiffs. DefendantsGCI Mining, Mountain Minerals, Brazil Creek Miner-als, Farrell-Cooper Mining, Ash Grove Resources, Mar-ine Coal, Hunter Ridge, International Coal and CoalCreek deliver coal and limestone to the AES ShadyPoint plant, according to the plaintiffs.
Well DefendantsDefendants SEECO, a wholly owned subsidiary ofSouthwestern Energy; XTO Energy; Stephens Produc-tion; Chesapeake Operating; Petrohawk Operating;Hanna Oil & Gas; Highland Oil & Gas; Cholla Pet-roleum; BP America Production; Ross Production;Shields Operating; Sedna Energy; Hogback Explora-tion own oil and natural gas wells in Arkansas andOklahoma, according to the plaintiffs.
Defendants Bishop Trucking, Bear Productions, GracoFishing & Rental Tools, TXD Transport, Mike KrebbsConstruction, Big Mac Tank Trucks, B&B Gas WellServices and Bear Transports hauled produced fluidwastes (PFW) from the oil and natural gas wells tothe MMHF dump site, according to the plaintiffs.
Making Money Having Fun operates the MMHF dis-posal site, according to the plaintiffs. Thumps Up Ranchowns the land where the disposal site is located. Daryl,Kevin, Kenneth and Chad Jackson own Thumbs UpRanch, according to the plaintiffs.
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By disposing of the waste and fly ash at the dump, theAES defendants have caused the release of arsenic, bar-ium, chromium, copper, lead, manganese, mercury,nickel, vanadium and zinc from the dump site, accord-ing to the plaintiffs.
The PFW from oil and gas wells includes saltwater,sand, acid, oil- and water-based drilling fluids, comple-tion flowback fluid, frack flowback fluid, workoverflowback fluid, rainwater gathered at the well sites, dril-ling cuttings and pit water generated in the extractionof oil and natural gas, according to the plaintiffs.
The plaintiffs allege that they are exposed to hydrochlo-ric acid, hydraulic fracturing sand, diesel fuel, surfac-tants, potassium chloride, benzene and isopropanolfrom the PFW.
Class AreaThe plaintiffs allege that the class area is within threemiles of the MMHF dump.
Class claims alleged by the plaintiffs in the firstamended complaint are abnormally dangerous activitystrict liability, public and private nuisance, trespass,negligence, negligence per se, trespass, diminution ofproperty values, personal injury, unjust enrichmentand violations of Oklahoma law.
The damages alleged by the plaintiffs are diminutionof property value; loss of use of property; contaminationof soil, surface and groundwater and the air; and perso-nal injuries such as respiratory conditions, skin and eyeirritations, cancer and death.
The plaintiffs in December 2012 moved to remandunder the local controversy and home state exceptionsto CAFA. Judge Heaton denied the motion in April2013 after concluding that the plaintiffs had not mettheir burden of establishing class citizenship.
The plaintiffs filed a renewed motion to remand inMay 2013 with a proffer of class membership and addi-tional evidence of class citizenship. Judge Heatondenied the motion and declined to consider the profferof citizenship evidence as untimely.
The defendants in September 2013 moved to dismissthe first amend complaint for failure to state a claimpursuant to Federal Rule of Civil Procedure 12(b)(6).
Judge Heaton granted the motion on Jan. 8, 2014, andentered final judgment on Jan. 28 for the defendants.The plaintiffs appealed.
The plaintiffs assign errors with respect to the denialof remand under the local controversy exception toCAFA and to dismissal for failing to state a claim.
‘Local Controversy’‘‘The allegations set forth in the FAP [first amendedpetition] and the reasonable inferences and interpre-tation of those allegations demonstrate that this caseis a local controversy,’’ according to the plaintiffs.
‘‘The district court’s failure to remand this case to statecourt as a local controversy pursuant to 29 U.S.C.A§ 1332(d)(4)(A) was [in] error and undermines CAFA’sstatutory purpose,’’ according to the plaintiffs.
The plaintiffs aver that they met their burden ofshowing that at least one defendant is ‘‘significant’’and a citizen of Oklahoma and that the principal inju-ries occurred in Oklahoma.
With respect to the failure to state a claim error, theplaintiffs aver that they satisfied Federal Rule of CivilProcedure 8(a)(2). ‘‘The FAC [first amended com-plaint] alleges facts which if taken as true, for the pur-poses of Fed.R.Civ.P. 12(b)(6), provide the districtcourt and Defendants with exactly the kind of noticeand evidence of Appellants’ claims and demands forrelief to which Defendants are entitled,’’ according tothe plaintiffs.
‘‘Together with the prodigious body of probative evi-dence pled with specificity by Appellants, and the im-portant inferences which reasonably can and must bedrawn in Appellants’ favor, the FAC satisfies in everyrespect the ‘short and plain statement’ requirement ofFed.R.Civ.P. (8(a), as well as the ‘plausible’ referenceexpressed in Bell Atl. Corp., [Bell Atlantic Corp. v.Twombly, 550 U.S. 544 (2007)] 550 U.S. 544,’’ accord-ing to the plaintiffs.
‘‘For the foregoing reasons, Appellants respectfullyrequest that this Court reverse the district court’sorder denying remand as to this action in its entirety.Alternatively, Appellants further request this Courtvacate the district court’s order dismissing Appellants’claims, both with prejudice and without on the basis
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that Appellants have met the pleading standards setforth under Fed.R.C.P. 8(a).’’
CounselClark O. Brewster, Montgomery L. Lair and J. RandallMiller of Brewster & De Angelis in Tulsa, Okla., repre-sent the plaintiffs.
David W. Wulfers, Todd Maxwell Henshaw, Kara E.Moore and Shannon Davis of James, Potts & WulfersInc. of Tulsa and Mary B. Scott and William McAlisterof Abowitz, Timberlake, Dahnke & Gisinger in Okla-homa City represent Bear Productions and BearTransports.
Jeff Belote of Jeff Belote Law in McAlester, Okla.,represents Integrity Energy. Linda C. Martin and N.Lance Bryan of Doerner, Saunders, Daniel & Andersonin Tulsa and Dru Warren of Dru Warren Law inPoteau represent MMHF, Thumbs Up Ranch andthe Jacksons. Matthew S. Panach, Bradley A. Gungolland Jordan K. Russell of Gungoll, Jackson, Collins, Box& Devoll in Enid, Okla., represent Quick Transport.
James M. Reed, Michael E. Smith and Sharon T. Tho-mas of Hall, Estill, Hardwick, Gable, Golden & Nelsonin Tulsa represent AES Corp., AES Shady Point, Mon-tana Minerals and Coal Creek Mineral. Brian R.McLaughlin of McLaughlin & Sanders in Stigler,Okla., represents Bishop Trucking and B&B GasWell Services. Matthew T. Warren Gotcher and Mat-thew Thomas Sheets of Gotcher & Beaver in McAles-ter, Okla., represent Mike Krebbs Construction.
Floyd James III of Law Offices of Green, Johnson &Mumina in Oklahoma City represents GCI Mining.Mark K. Stonecipher and Lance E. Effel of Fellers,Snider, Blankenship, Bailey & Tippens in OklahomaCity represent TXD Transport. Harold E. Heath ofHarold Heath Law Offices in Holdenville, Okla., repre-sents C&C Tank Service. Robert M. Honea of Hardin,Jesson & Terry in Fort Smith, Ark., represents XTOEnergy, Cholla Petroleum and Hogback Exploration.
Defense CounselC. Michael Daily of Daily & Woods in Fort Smithrepresents Hanna Oil & Gas and Shields Operating.Pine Drewyor of Kendall Drewyor Law Firm in Rogers,Ark., and Sherry P. Bartley of Mitchell Williams Law inLittle Rock represent Farrell-Cooper Mining and Brazil
Creek Minerals. Charles D. Neal, Gary C. Crapster andRachel D. Parrilli of Steidley & Neal in Tulsa, Jeff A.Woods, Justin W. Ross and Courtney Ross Samfordof Wyatt, Tarrant & Combs in Louisville, Ky., andGeorge P. Sibley III, Robert M. Rolfe, D. Alan Rudlinand Joshua P. Hanbury of Hunton & Williams inRichmond, Va., represent Marine Coal Sales, Interna-tional Coal Group and Hunter Ridge Coal.
Steven E. Holden and Ryan C. Harper of Holden &Carr in Tulsa and Jason T. Seay of Tulsa representEastern Tank Service. L. Mark Walker and C. MilesTolbert of Crowe & Dunlevy in Oklahoma City repre-sent A&A Tank Truck. Timothy J. Bomhoff andJodi W. Disman of McAfee & Taft in OklahomaCity in represent Chesapeake Operating, PetrohawkOperating, SEECO and Ross Explorations. WilliamS. Leach and Jessica L. Dickerson of McAfee & Taftin Oklahoma City represent Ross Explorations.
Michael J. McDaniel, Robert P. Coffey Jr., Philard L.Rounds Jr. and David C. Senger of Brennan, Smith &Cherbini in Muskogee represent C&C Tank TruckServices. Philip O. Watts of Oklahoma City, AllisonJ. Maynard of Wilson, Elser, Moskowitz, Edelman &Dicker in Dallas and Sean M. Higgins of Wilson Elserin Houston represent Ash Grove Resources.
Daniel K. Zorn and Stephen R. Palmer of Collins,Zorn & Wagner in Oklahoma City represent BigMack Tank Trucks. Shannon H. Ratliff and Lisa A.Paulson of Ratliff Law Firm in Austin, Texas, andAndrew D. Sims, Russel R. Barton and Michael V.Fitzpatrick of Harris, Finley & Bogle in Fort Worth,Texas, represent XTO Energy.
Additional Defense CounselR. Stratton Taylor, Clint Russell and Sean Burrageof Taylor, Burrage, Foster, Mallett, Downs, Ramsey& Russell in Claremore, Okla., represent Stephens Pro-duction. Neal Tomlins of Tomlins Law in Tulsa rep-resents Sinclair Trucking. Jared D. Giddens and J.Dillon Curran of Conners & Winters in OklahomaCity represent Graco Fishing & Rental Tools. WilliamD. Perrine, Reagan L. Madison and James N. Crews ofPittman, MacIsaac & Roy in Calgary, Alberta, Canada,represent PX Transportation.
Thomas M. Ladner of Ladner, Little & Eldredge inTulsa and Stephen M. Ryan of DLA Piper in Houston
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represent Highland Oil & Gas. Truman B. Ruckler Jr.of Tulsa in represents Sedna Energy. Rick D. Wescottof Wescott Law Office in Tulsa represents HogbackExploration. Ian P. Faria of Coats Rose in Houstonrepresents Big Mac Tank. �
Texas Supreme Court RemandsAttorney Fee Award DisputeArising From Royalty SuitAUSTIN, Texas — The Supreme Court of Texasissued a per curiam opinion on April 25 remandingan attorney fee dispute with instructions for the trialcourt to develop a record sufficient to calculate attorneyfees with the lodestar method; the disputed attorneyfees are from a lawsuit to enforce an assignment ofworking interests in oil and natural gas producing wells(Larry T. Long, et al. v. Robert M. Griffin, et al., No. 11-1021, Texas Sup.).
(Opinion available. Document #15-140506-061Z.)
Robert M. Griffin, Robert M. Griffin Jr., Marvin andMarie Ogilvie and Charles Conrad sued Larry T. Long,L. Allan Long and B. Virginia Long in their capacitiesas the trustees of the Lawrence Allan Long Trust, theCharles Edward Long Trust, the Larry Thomas LongTrust and the John Stephen Long Trust in the 124thDistrict Court in Gregg County (No. 97-1009) in con-nection with oil and natural gas ventures.
Working InterestThe plaintiffs allege that the trusts failed to assign theworking interest due them under assignment agree-ments in which the plaintiffs agreed to pay a portionof drilling and operating costs in exchange for partialworking interests in producing wells.
The plaintiffs filed an affidavit in 2001 supporting arequest for attorney fees of $100,000 for 644.5 hoursworked by two attorneys on their behalf. The plaintiffsaverred that 30 percent of the time was spent on theassignment claim but argued that the assignment issuewas ‘‘inextricably intertwined’’ with other claims againstthe trusts on which the attorneys spent 95 percent ofthe time.
Following a 2003 bench trial, Judge Nathan E. Whiteruled for the plaintiffs and awarded them $35,000in fees.
On appeal, the 12th District Court of Appeals affirmedthe judgment with modifications (144 S.W.3d 99).The Texas Supreme Court reversed the appeals court(222 S.W. 3d 412 [Texas 2006]) after concluding thatthe assignment agreements did not comply with thestatute of fraud and could not be enforced on futurewells and that the plaintiffs are not entitled to prevail ona separate claim involving a litigation agreement withthe trusts. The case was remanded to the trial court todetermine the attorney fee award.
On remand, the trial court awarded the plaintiffs$30,000 in fees and post-judgment interest accruingfrom the date of final judgment in 2009. The courtof appeal affirmed the trial court judgment with respectto the attorney fee award in May 2011 but modifiedthe judgment to accrue interest from the 2003 judg-ment of the trial court (No. 09-260, Texas App., 12thDist.; 2011 Tex. App. LEXIS 10143).
Lodestar CalculationIn the instant appeal, the trusts aver that the evidencedoes not support the amount of the attorney fee andthat post-judgment interest should accrue from the2009 final judgment. ‘‘Because the Griffins offered noevidence of the time expended on particular tasks, aswe have required when a claimant elects to prove at-torney’s fees via the lodestar method, we agree with theLong Trusts that the Griffins did not provide the trialcourt with legally sufficient evidence to calculate a rea-sonable fee,’’ according to the court.
‘‘We explained in El Apple I, Ltd. v. Olivas that general-ities about the tasks performed provide insufficientinformation for the fact finder to meaningfully reviewwhether the tasks and hours were reasonable and neces-sary under the lodestar method. 370 S.W.3d 757, 763(Tex. 2012),’’ according to the court. ‘‘Sufficient evi-dence includes, at a minimum, evidence ‘of servicesperformed, who performed them and at what hourlyrate, when they were performed, and how much timethe work required.’ Id. at 764.’’
‘‘Likewise, in City of Laredo v. Montano, we reversedand remanded to redetermine attorney’s fees when theattorney testified to the time expended and the hourlyrate but failed to provide evidence of the time devotedto specific tasks. 414 S.W.3d 731, 736-37 (Tex. 2013).’’
‘‘Here, as in El Apple and Montano, the affidavit sup-porting the request for attorney’s fees only offers gen-eralities,’’ according to the court.
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‘‘We note that here, as in El Apple, contemporaneousevidence may not exist. But the attorneys may recon-struct their work to provide the trial court with suffi-cient information to allow the court to perform ameaningful review of the fee application. El Apple,370 S.W.3d at 764.’’
Alternatively, the plaintiffs argue that the 35 percentcontingency fee agreement is sufficient to establish thatthe claim for attorney fees is reasonable and customary,according to the court. The argument is without merit,according to the court.
Contingency Fee‘‘Even if supporting evidence is not required for thecontingency fee method of proof (as it is for the lodestarmethod), the contingency fee method cannot supportthe trial court’s fee award because the final judgmentawarded no monetary relief except for attorney’s fees.Because the contingency method cannot support thetrial court’s fee award, and no legally sufficient evidencesupports the award under the lodestar method, weremand to redetermine attorney’s fees.’’
The court did not reach the assignment of error relatedto the accrual of interest. ‘‘We are confident that, onremand, the lower courts will apply the principles weclarified in Long v. Castle Texas Production Limited Part-nership, __ S.W.3d __ (Tex. 2014) [2014 Tex. LEXIS252], to properly assess the date from which postjudg-ment accrues,’’ according to the court.
F. Franklin Honea of Law Offices of F. Frank Honeain Dallas, Ronny Lee Adkison of The Adkison LawFirm in Henderson, Texas, and Mike A. Hatchelland Thomas F. Loose of Locke Lord in Dallas representthe trusts. Rex A. Nichols Sr. of Nichols & Nicholsin Longview, Texas, and Andrew George Khoury ofLongview represent the plaintiffs. �
Natural Gas Operator HeldLiable To Indemnify DrillerFor Contamination LitigationCOLUMBUS, Ohio — A natural gas operating com-pany sued by a drilling company with which it con-tracted to spud wells in West Virginia is liable under thedrilling contract to reimburse settlement and litigation
costs for a related well-water contamination lawsuitnaming both companies as defendants, the presidingU.S. District Court for the Southern District of Ohiojudge ruled April 16 (Warren Drilling Inc. v. EquitableProduction Co., No. 12-425, S.D. Ohio; 2014 U.S.Dist. LEXIS 52064).
(Order available. Document #15-140506-006R.)
Warren Drilling Co. Inc. sued Equitable ProductionCo. and Ace American Insurance Co. in April 2012in the Nobel County, Ohio, Court of Common Pleas(No. 12-85) for breach of contract and indemnificationfor contamination of the land surface or water pursuantto a March 2006 drilling contract with respect to Jack-son County, W.Va., natural gas wells. Equitable Pro-duction removed the action in May 2012 to theSouthern District of Ohio and filed cross-claims againstWarren Drilling.
Underlying LawsuitWarren Drilling performed drilling operations on threenatural gas wells from November 2007 to February2008 in Jackson County on property owned by Dennisand Tamera Hagy. The Hagys sued Equitable Pro-duction and Warren Drilling, BJ Services Corp. USAand Halliburton Energy Services, which were hiredby Equitable Production to conduct natural gas welldrilling operations, in the U.S. District Court for theSouthern District of West Virginia for contaminatinga water well on which they depend for domestic water(Dennis Hagy et al. v. Equitable Production Co., et al.,No. 10-1372, S.D. W.Va.; 2012 U.S. Dist. LEXIS91773; See 7/17/12, Page 6). They allege that Equita-ble Production owned and operated the natural gaswells.
The claims against Halliburton and Warren Drillingwere resolved by settlement. The claims against Halli-burton were dismissed May 17, 2012. The claimsagainst Warren Drilling were dismissed April 24,2012, in accord with a $40,000 settlement. EquitableProduction was granted summary judgment May 17,2012.
A unanimous Fourth Circuit U.S. Court of Appealspanel affirmed summary judgment Oct. 8 for EquitableProduction (Dennis Hagy, et al. v. Equitable Pro-duction Co., et al., No. 12-1926, 4th Cir.; 2013 U.S.App. LEXIS 20478; See 10/15/13, Page 24).
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Warren Drilling filed a claim in November 2010 againstAce American Insurance Co. for coverage and a defensein the Hagy litigation under a commercial general liabi-lity policy it obtained pursuant to the drilling contractwith Equitable Production. Ace American Insurancedenied coverage April 15, 2011. Warren Drilling noti-fied Equitable Production in May 2011 of the denialand asserted an obligation under the March 2006 dril-ling contract to indemnify for all costs of defendingthe Hagy litigation. Equitable Production did not in-demnify Warren Drilling.
In addition to $40,000 for the settlement, Warren Dril-ling seeks to recover $155,000 it alleges it spent defend-ing the Hagy litigation. Warren Drilling settled with AceAmerican Insurance in April 2013. Warren Drilling andEquitable Production filed cross-motions for summaryjudgment in November and October 2013.
3 Issues In DisputePennsylvania law applies under a choice-of-law provi-sion in the March 2006 drilling contract, according toJudge James L. Graham. ‘‘Three distinct issues are indispute here: (1) which party has a right to indemni-fication under the Drilling Contract; (2) whether thatparty must prove that the claim made against it by theHagys was legally valid; and (3) whether its expenses inthe Hagy litigation were reasonable,’’ according toJudge Graham.
Warren Drilling and Equitable Production argue thatthe other party bears the duty to indemnify under thecontract. Equitable Production cites Section 11.5 of thedrilling contract; Warren Drilling cites Section 11.6 ofthe drilling contract.
For Section 11.5 to apply, the contamination mustoriginate on or above the surface or from a liquid orsolid in the control of Warren Drilling, according toJudge Graham. ‘‘The record before the court demon-strates that neither requirement is satisfied.’’
‘‘The court does find as a matter of law that § 11.6applies here,’’ according to Judge Graham. ‘‘Underthis section EQT [Equitable Production] must indem-nify Warren for claims of pollution or contaminationto the extent that they are: (1) ‘not assumed by Cont-ractor [Warren] in Subparagraph 11.5,’ (2) not coveredby Warren’s insurance, and (3) not caused by the neg-ligence or misconduct of Warren or its employees.’’
‘‘None of these limitations come into play here.’’
‘‘EQT argues that even if § 11.6 does apply, Warren isnot entitled to indemnification because Warren has notdemonstrated the validity of the Hagys’ underlyingclaim against Warren,’’ according to Judge Graham.
‘‘Warren contends that the Drilling Contract requiredEQT to defend and indemnify Warren against allclaims, not just claims for which Warren was actuallyliable,’’ according to Judge Graham.
‘Plain Language’‘‘The court finds that the Drilling Contract containsplain language by which EQT’s duty to indemnifywas triggered by the making of a claim for contami-nation against Warren.’’
‘‘To hold otherwise would render § 11.6 meaningless,’’according to Judge Graham.
With respect to the reasonableness of the settlementamount and Warren Drilling’s litigation expenses,Warren Drilling has not met its burden, according toJudge Graham. ‘‘Though it has submitted evidencethat it reached a $40,000 settlement with the Hagys,it has not provided any analysis as why that amountwas reasonable, other than to vaguely assert that atrial would have been expensive. Further, Warren hasmerely alleged that it expended $155,000 in attorneys’fees and costs in connection with the Hagy litigation,without submitting any evidence to substantiate thatamount.’’
‘‘Accordingly, the court will instruct the parties tosubmit additional evidence and briefing on the issuesof the reasonableness of the settlement amount andthe litigation expenses.’’
With respect to the reasonableness of Warren Dril-ling’s request for fees and costs under section 11.6 ofthe drilling contract for the instant litigation, JudgeGraham noted that Equitable Production offered noargument in opposition. ‘‘Accordingly, the court willalso instruct the parties to submit additional evidenceand briefing on the issue of the reasonableness [of]those fees and costs,’’ according to Judge Graham.
Colleen Elizabeth Cook, Daniel Patrick Corcoran andJames Scott Huggins of Theisen, Brock, Frye, Erb &
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Leeper in Marietta, Ohio, represent Warren Drilling.Lyle B. Brown and J. Kevin West of Steptoe & John-son in Columbus represent Equitable Production. Dar-ius N. Kandawalla and Sabrina Christine Haurin ofBailey Cavalieri in Columbus represent Ace AmericanInsurance. �
Pennsylvania Federal JudgeRules Gas Well ActivityDid Not Extend Term Of LeaseWILLIAMSPORT, Pa. — Lycoming County, Pa.,property owners seeking a declaratory judgment againsta natural gas extraction company in the U.S. DistrictCourt for the Middle District of Pennsylvania weregranted summary judgment April 30; the judge con-cluded that the oil and natural gas lease expired underits own terms because the extraction activity occurred onan adjacent property in violation of the unambiguouslease (Thomas A. Neuhard, et uxor v. Range Resources-Appalachia, No. 11-1989, M.D. Pa.; 2014 U.S. Dist.LEXIS 59602).
(Order in Section C. Document #15-140506-053R.)
Range Resources-Appalachia and Thomas and BarbaraNeuhard are litigating whether a five-year oil and nat-ural gas lease executed in June 2006 expired becausea natural gas well was not developed on the surface ofthe Neuhards’ 47-acre property in Lycoming Countyduring the term of the lease.
Notice Of RemovalThe Neuhards filed suit in September 2011 in the Lycom-ing County Court of Common Pleas (No. 11-1738).Range Resources-Appalachia filed notice in October2011 to remove the lawsuit to the Middle District ofPennsylvania.
Summary judgment discovery commenced in February2012 on cross-motions filed by the plaintiffs and RangeResources-Appalachia.
‘‘The Court held oral argument on the motions onMarch 26, 2014,’’ according to Judge Matthew W.Brann. ‘‘There are no material facts in dispute, andthe issues before the Court involve interpretation ofcontract provisions as a matter of law.’’
The disputed oil and natural gas was executed June 21,2006, according to Judge Brann. ‘‘The Lease providedRange the rights to procure oil and gas from forty-seven(47) acres owned by the Neuhards situate[d] in LewisTownship, Lycoming County, Pennsylvania. TheLease contains a primary term of five years calculatedfrom June 21, 2006. Unless extended by the com-mencement of drilling operations or as otherwise pro-vided, the Lease would expire by its own terms on June21, 2011.’’
Range Resources-Appalachia executed a designationof unit document June 13, 2011, creating the NullEugene A Unit, which includes the Neuhards’ tract,according to Judge Brann.
‘‘The language of the Lease, Range’s activities, and thepositions of the parties raise three legal issues,’’ accord-ing to Judge Brann. The issues are whether RangeResources-Appalachia began activities before the leaseexpired, whether the unit created for extractionexceeded the lease and whether drilling a well on theadjacent Null property satisfied the lease, according toJudge Brann.
‘Commencement’‘‘First, did Range’s activities prior to June 21, 2011, theexpiration date of the Lease’s primary term, constitutethe ‘commencement of a well’ as a matter of law?’’
‘‘This Court recently decided this particular issue inRoe v. Chief Exploration & Development LLC [No.11-816, M.D. Pa., Aug. 13, 2013; 2013 U.S. Dist.LEXIS 113914] finding that activity undertaken ingood faith in preparation to drill satisfied a lease’s com-mencement clause,’’ according to Judge Brann.
‘‘Pennsylvania cases adopt this posture as well,’’ accord-ing to Judge Brann.
Range Resources-Appalachia’s activities before June 21,2011, included obtaining permits from governmentagencies, staking a location for a well site, negotiatingwell-drilling operation agreements with the plaintiffsand neighboring land owners, obtaining easements,removing timber and constructing an access road andpad site, according to Judge Brann. ‘‘These activities aresufficient to constitute the commencement as a matterof law. [Pemco Gas Inc. v Bernardi, 1977 Pa. Dist. &Cnty. Dec. LEXIS122, Dec. 30, 1977].’’
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‘‘Even though Range’s activities in beginning the wellon the neighboring Null property satisfied the com-mencement clause as a matter of law, by the terms ofthe Lease those drilling activities must have been per-formed wither ‘on the Leased Properties or on a spacingunit containing a portion of the Leased Properties’ inorder to extend the Lease. Lease § 8.1,’’ according toJudge Brann.
‘‘The concrete issue before the Court is whether Range’sdesignation of a unit of approximately three hundredninety-five (395) acres exceeded its unitization author-ity under the Lease.’’
Unit Size‘‘The Neuhards submit that, by the plain language ofthe lease, the acreage amounts articulated in Section 9.2operate so as to limit the maximum extent of a unit’ssize to the 350 acres surrounding each well, based onthe allusion to section 9.2 in section 12.1,’’ according toJudge Brann.
‘‘The Court holds that Range’s unit designation violatesits unitization authority under the plain and unambig-uous terms of the Lease, because the Lease is clear that aunit cannot be larger than 350 acres surrounding eachwell in the unit, and a unit cannot contain more thanone well without the permission of the Lessor, whichRange did not obtain.’’
‘‘Although Range undoubtedly commenced a well priorto the expiration of the primary term, it did not do so onthe Leased premises, but on a premises adjacent to theLeased Premises that was not unitized according to theLease,’’ according to Judge Brann. ‘‘Under a plain read-ing of the Lease, Range’s activities on the Null Propertyadjacent to the Leased Premises did not constitute dril-ling activities ‘on the Leased Premises.’ Nor was there asufficient modicum of activity in preparation for dril-ling on the Leased Premises during the primary periodto extend the Lease — the operative activity was per-formed on the Null Property.’’
‘‘In sum, Range commenced a well before the expira-tion of the Lease’s primary term,’’ according to JudgeBrann. ‘‘That well, however, was neither ‘on the LeasedPremises’ nor ‘on a unit containing a portion of theLeased Premises.’ Range exceeded its unitizationauthority under the plain and unambiguous languageof the Lease and did not commence a well on the
Neuhard’s property. Consequently, the Lease expiredby its own terms on June 21, 2011.’’
Michael A. Dinges of Elion, Wayne, Grieco, Carlucci,Shipman & Irwin in Williamsport represents the plain-tiffs. Andrew D. Sims and Troy Okruhlik of Harris,Finley & Bogle in Fort Worth, Texas, and J. DavidSmith of McCormick Law Firm in Williamsport repre-sent Range Resources-Appalachia. �
Pennsylvania Federal JudgeDenies Summary JudgmentIn Natural Gas Lease DisputePITTSBURGH — A magistrate judge’s recommen-dation in the U.S. District Court for the Western Dis-trict of Pennsylvania to deny summary judgment in anatural gas lease dispute was adopted April 16 by thepresiding judge over the objection of the defendants,who are accused of allowing the disputed lease toexpire (Rugh A. Mason, et uxor v. Range Resources-Appalachia, et al., No. 12-369, W.D. Pa.; 2-14 U.S.Dist. LEXIS 53195).
(Order available. Document #15-140506-031R.)
Rugh and Sherry Mason sued Range Resources-Appa-lachia and NiSource Energy Ventures in February 2012in the Washington County, Pa., Court of CommonPleas (No. 12-1159) to stop the companies from ob-taining production rights for natural gas under theirland. The defendants removed the declaratory judg-ment lawsuit March 26, 2012, to the Western Districtof Pennsylvania.
Declaratory JudgmentThe plaintiffs seek a declaration that they rather thanthe defendants own all drilling and production rights tothe natural gas associated with the land. The plaintiffsfurther allege that Range Resources-Appalachia inter-fered with Rugh Mason’s relationship with his em-ployer after he refused to amend and ratify a March1961 lease or to enter into a new lease for gas produc-tion rights with the company.
The Masons own 151 acres of a 165-acre tract inWashington County that is the subject of a March22, 1961, lease executed by John Burig, Flora Burig
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and Anna C. Burig with The Manufacturers Light andHeat Co. John and Anna Burig are deceased; it is pre-sumed Flora Burig is also deceased because John, herhusband, was born in 1889. The Masons succeeded toownership of the subject land though Sherry Mason,who has been the owner of the land since at least theexecution of a lease in October 1984 but did not objectto the lease for more than 25 years.
Columbia Gas Transmission and NiSource EnergyVentures have succeeded to the Manufacturers Light’srights under the lease.
The primary term of the lease was 10 years. A provisionof the lease extended the lease as long as the lesseeoperates any portion of the subject land in search ofor by production of natural gas and oil or if the land ispart of a production unit or a natural gas storage field.The lessee is granted in the lease sole authority to deter-mine if the operation satisfies the conditions and if theroyalties paid are adequate compensation.
There is no evidence that the Burigs ever considered thelease forfeited or terminated. Nor is there evidence thatthe Masons have demanded Columbia Gas Transmis-sion or its assignees drill a well on the subject property,according to Jeffrey Kramer, the Range Resources-Appalachia landman responsible for land and leaseacquisitions in Washington County.
Columbia Gas Transmission operates the Donegal Sto-rage Field created by Manufacturers Light and HeatCo., which includes the subject property.
2005 SubleaseColumbia Gas Transmission entered into a subleasein December 2005 with Range Resources-Appalachiapredecessor Great Lakes Energy Partners for gas devel-opment and production rights in the Donegal StorageField except for the sandstone gas storage formation.The sublease includes any rights remaining under the1961 lease.
Columbia Gas Transmission assigned to NiSourceEnergy Ventures in December 2009 all of its rightsand interests as sublessor under the 2005 subleasewith Great Lakes Energy Partners. NiSource EnergyVentures sublet to Range Resources-Appalachia theproduction rights for all formations below the top of
the Rhinestreet formation in the Donegal Storage Fieldpursuant to the gas storage leases, including the 1961lease.
The Masons allege since 1961, no entity has paid anyconsideration for oil and natural gas productionsrights that may still exist under the 1961 lease. Theyalso allege neither Great Lakes nor Range Resources-Appalachia has paid royalties or other considerationexcept for delay rental paid in 2007.
Meanwhile, Range Resources-Appalachia has begunoperations within the Donegal Storage Field and as ofJan. 7, 2014, placed approximately 53 natural gas wellsinto production.
Magistrate Judge Robert C. Mitchell issued a reportand recommendation Feb. 26 to deny the plaintiffs’Dec. 23, 2013, motion for summary judgment inpart. The plaintiffs argue the payment of delay rentalcannot, as a matter of Pennsylvania law, extend thelease beyond its primary term, according to MagistrateJudge Mitchell. ‘‘Plaintiffs have presented no evidenceof abandonment, and the equitable defenses of laches,waiver and estoppel raise fact issues for trial,’’ accordingto Magistrate Judge Mitchell.
Joint ObjectionThe defendants filed a joint objection March 12.
Judge Joy Flowers Conti adopted the report and re-commendations on April 16. ‘‘In their objections,Defendants contend that the magistrate judge in theR&R [report and recommendations] erroneously con-cluded that there are genuine issues of material facton the issue of severability of the gas production rightsand storage rights by reason of: (i) the lease’s assign-ment clause; (ii) production rights under the leasebeing subleased to Range Resources, and the subleasebeing subsequently assigned to NEVCO [NiSourceEnergy Ventures]; and (iii) Range Resources’ consum-mation of a ‘top lease’ with Plaintiffs in 2007,’’ accord-ing to Judge Conti.
Contrary to the defendants, ‘‘[t]he R&R did not reachany conclusion with respect to the issue of severability,’’according to Judge Conti. ‘‘The R&R merely notedthat, although Defendants had argued that dual pur-pose leases in general appear compatible with thenotion of severability of storage and production rights,
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Defendants had not discussed the assignment clausein the lease, the history of the separate assignmentsof the production rights or the lease consummatedwith Plaintiffs in 2007.’’
‘‘It is noted that, had Defendants’ wished to file amotion for summary judgment arguing that theywere entitled to judgment as a matter of law on thequestion of who owns the product rights to the naturalgas reserves on Plaintiffs’ land, they could have doneso,’’ according to Judge Conti. ‘‘Because they chose notto file a motion, the magistrate judge in the R&Rmerely pointed out an issue that remains to be resolvedat trial.’’
The plaintiffs of Claysville, Pa., are pro se. Laura A. Langeand Paul K. Stockman of McGuireWoods in Pittsburghand James W. Pfeifer of Pepper Hamilton in Pittsburghrepresent Nisource Energy Ventures. Donald T. DulacJr. and Kenneth J. Witzel of Barnes Dulac Watkins inPittsburgh represent Range Resources-Appalachia. �
April Trial Stayed PendingDispositive Motion RulingIn Pennsylvania Federal CourtWILLIAMSPORT, Pa. — Natural gas operatorssued in the U.S. District Court for the Middle Districtof Pennsylvania filed a supplemental authority on April28 in support of dismissing a strict liability claim as amatter of law; the trial anticipated to start April 21 wasstayed in March pending a ruling on dispositive defensemotions (Edward E. Kamuck v. Shell Energy Holdings,et al., No. 11-1425, M.D. Pa.).
(Motion for stay available. Document #94-140513-028M. Supplemental authority available. Document#94-140513-029B.)
Edward Kamuck owns 93 acres that were once partof the Copp property in Tioga County, Pa. The entiretract was subject to an oil and gas lease, according to therecord. The original Copp lease did not address theextraction of natural gas from Marcellus Shale forma-tions, however, according to the record.
Lease HoldersShell Holdings GP, Shell Holdings LP and Shell Wes-tern Exploration & Production were lessees under the
Copp lease and in 2010 sought to expand their mineralrights to include Marcellus Shale natural gas extraction,according to the record.
Kamuck declined to amend the Copp lease, but theother owners agreed, according to the record. The ori-ginal 10-year lease on Kamuck’s property expired June12, 2011, according to the record.
After the defendants commenced natural gas extractionon the adjoining land, Kamuck sued. In the complaintfiled in August 2011, Kamuck sued for breach of con-tract, a declaratory judgment against the companies forhydraulic fracturing and for damages in torts.
The defendants moved to dismiss under Federal Ruleof Civil procedure 12(b)(6) for failing to state a claimand to strike the claims under Rule 12(f). The motionwas granted in part in April 2012, leaving only privatenuisance, negligence and strict liability causes of action.
The defendants on Jan. 17, 2014, moved to dismissthe remaining claims pursuant to Federal Rule of CivilProcedure 41(b) for failure to prosecute or, alterna-tively, for summary judgment. In support of thismotion, the defendants filed a supplemental authorityon April 28 from Ely v. Cabot Oil & Gas (No.0902284, M.D. Pa.). ‘‘On April 23, 2014, JudgeJohn E. Jones, III issued an Order adopting this Court’sReport and Recommendation in its entirety, grantingsummary judgment in favor of the defendants in thatcase on the issue of strict liability,’’ according to thedefendants.
‘‘The issue of whether Defendants natural gas drillingoperations are subject to strict liability was briefedby the parties in the instant case, and the Defendantsrelied specifically upon the analysis contained in thisCourt’s Report and Recommendation in the Ely mat-ter,’’ according to the defendants.
Strict LiabilityMagistrate Judge Martin C. Carlson issued the reportand recommendation on April 21, according to thedefendants. Magistrate Judge Carlson ruled as a matterof law, natural gas drilling activities are not subject tostrict liability, according to the defendants.
Meanwhile, the defendants filed an unopposed motionon March 19 to stay the trial set to begin April 21.
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Citing the Rule 41(b) motion to dismiss or, in thealternative, for summary judgment, the defendantsargue that a ruling on the motion could resolve allthe remaining issues in their favor.
‘‘Without knowing the outcome of the pending Dis-positive Motion, it is extremely difficult for the partiesto prepare intelligently and efficiently for the impend-ing trial, should any claims survive the DispositiveMotion,’’ according to the defendants.
The stay entered March 19 applies not only to the trial,but also to pending motions in limine and pretrial brief-ing deadlines.
Alan S. Fellheimer of Fellheimer & Eichen in Philadel-phia and Judith E. Fellheimer of Fellheimer, Eichen &Braverman in Philadelphia represent Kamuck. StefanieA. Lepore and Jeremy A. Mercer of Fulbright & Jaworskiin Canonsburg, Pa., and William D. Wood of Ful-bright & Jaworski in Houston represent the defendants. �
March 2015 Royalty Trial SetIn Arkansas; Some ClaimsDismissed In January OrderLITTLE ROCK, Ark. — A putative class action filedin the U.S. District Court for the Eastern District ofArkansas seeking recovery of royalties from a naturalgas company is scheduled for trial in March 2015;certain of the causes of action were dismissed in January2014 for failure to state a claim (Joe Rath, et al. v. BHPBilliton Petroleum (Arkansas) Inc., et al., No. 13-602,E.D. Ark.).
(Scheduling order available. Document #94-140513-005R. Brief in support of motion to dismiss classclaims available. Document #94-140513-006B. Ordergranting in part motion to dismiss available. Docu-ment #94-140513-007R.)
Joe Rath filed a class action complaint in October 2013against BHP Billiton Petroleum (Arkansas) Inc., BHPBilliton Petroleum (Fayetteville) Inc. and BHP BillitonPetroleum Marketing Inc. Rath alleges that the defen-dants engaged in deceptive or fraudulent practices todeprive him and a putative class of royalties owed underan oil and natural gas lease.
Class DefinitionsThe defendants are operators and working interestpartners who depend on well operators to provide thenames of leasors to whom royalties are owed, accordingto Rath. Rath proposes a class of mineral interest own-ers who are owed royalties by the defendants as opera-tors (Class I) and a class of mineral interest owners whoare owed royalties by the defendants as working interestpartners (Class II).
Rath avers that the defendants are liable under theoriesof fraud, constructive fraud and fraudulent conceal-ment; breach of contract; violation of the ArkansasDeceptive Trade Practices Act (Arkansas Code Anno-tated Sections 4-88-107[a][1], [8], [10] and [b]);breach of statutory duty of prudent good faith operator(Arkansas Code Annotated Section 15-73-207); unjustenrichment; conversion; civil conspiracy; and equitableaccounting.
Rath alleges that the defendants improperly deductpost-production expenses from royalties, fail to payroyalties as required by the leases, pay for volumesless than actually metered and conceal from royaltyowners that royalties are paid on the volume sold ratherthan the volume produced.
Rath seeks disgorgement, treble damages, compensa-tory and punitive damages, a declaratory judgmentwith respect to underpayment of royalties and a per-manent injunction against future underpayment ofroyalties.
The motion for class certification is due by Oct. 22,pursuant to the case management order enteredFeb. 27. A trial before Judge Brian S. Miller is sched-uled for March 16.
The defendants on May 8 moved to dismiss and tostrike the class of mineral owners in which the defen-dants are not operators (Class II). Rath alleges member-ship in Class I, according to the defendants.
Working Interest Class‘‘Nowhere does he allege that he is an integrated mineralinterest owner in a section in which BHP is a non-operating working interest party,’’ according to thedefendants. ‘‘As such, Mr. Rath cannot meet the firstqualification of class representation — being a memberof the class — as to Class II. Conversely, Class II hasbeen pleaded without any class representation.’’
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‘‘Because Mr. Rath’s Complaint contains allegations onbehalf of a class without proper representation andcannot be certified, BHP respectfully requests thatthe Court strike all allegations pertaining to Class IIpursuant to [Federal Rule of Civil Procedure] Rule23(d)(1)(D).’’
The causes of action alleged against the defendants werelimited by Judge Miller in a Jan. 16 order dismissing theprudent operator, unjust enrichment, equitable ac-counting and civil conspiracy claims. The defendantsmoved to dismiss on Dec. 4.
Rath sufficiently pleaded the alleged violations of theArkansas Deceptive Trade Practices Act and fraud, con-structive fraud and fraudulent concealment claims,according to Judge Miller. ‘‘Here, Rath sets forth spe-cific factual allegations that BHP engaged in fraudulentconduct,’’ according to Judge Miller.
‘‘BHP’s motion to dismiss Rath’s breach of contractclaim is denied because Rath has set forth sufficientallegations in support of his claim that BHP breachedthe lease by failing to properly pay royalty owners.’’ Bythe same reasoning, Rath’s claim for treble damagesunder Arkansas Code Annotated Section 15-74-708survives the motion to dismiss, according to JudgeMiller.
The motions to dismiss the request for injunctive reliefand damages under the theory of conversion are alsodenied, according to Judge Miller. ‘‘Rath has pled suffi-cient facts to support a claim that BHP has improperlycalculated and paid royalties and should therefore beenjoined from doing so in the future.’’
Conversion Dismissed‘‘BHP’s motion to dismiss the conversion claim is alsodenied because Rath’s allegations that BHP convertedfunds owed to royalty owners are sufficient to overcomea motion to dismiss,’’ according to Judge Miller.
‘‘BHP’s motion to dismiss Rath’s claim under the prudentoperator standard is granted,’’ according to Judge Miller.‘‘Although Rath alleges that BHP violated the prudentoperator standard in performing the lease obligations,these allegations are essentially part of Rath’s breach ofcontract claim and not a separate cause of action.’’
Rath’s unjust enrichment claim fails because Rath doesnot plead facts to support the conclusion the contract
between the parties is not legal or binding, accordingto Judge Miller. ‘‘The doctrine of unjust enrichmentgenerally does not apply where there is a binding, legalcontract.’’
Equitable accounting is a remedy available only whenthere is no remedy available at law, according to JudgeMiller. ‘‘Rath has not alleged or shown in any way thatthe accounts are so complicated that they can only besorted by a court in equity,’’ according to Judge Miller.‘‘Therefore, this claim is dismissed.’’
Rath fails to state a claim for civil conspiracy, accordingto Judge Miller. ‘‘Here, Rath simply states in a singlesentence that defendants are affiliate companies thatacted in concert to deprive him of royalties. This con-clusory statement is insufficient to support a plausibleclaim or to withstand a motion to dismiss.’’
Charles R. Hicks of Little Rock and Keith L. Graysonof Grayson & Grayson in Heber Springs, Ark., repre-sent Rath. John F. Peiserich, Julie DeWoody Great-house and Kimberly Logue of Perkins PeiserichGreathouse Morgan Rankin in Little Rock representthe defendants. �
Gas Well Operator ObjectsTo Order Denying DismissalIn Texas Federal CourtFORT WORTH, Texas — XTO / Exxon EnergyInc. filed objections April 29 to an order denying itsmotion to dismiss a lawsuit in the U.S. District Courtfor the Northern District of Texas seeking $9 millionfor wrongful death and property damage allegedlycaused by the release of chemicals used in hydraulicfracturing to complete natural gas wells; the orderwas entered April 15 by a magistrate judge (DanielW. Nicholson v. XTO / Exxon Energy Inc., No. 13-899, N.D. Texas).
(Order available. Document #94-140513-002R.Objection available. Document #94-140513-003B.)
Daniel Nicholson filed the lawsuit in November 2013.XTO filed a motion to dismiss on Jan. 6, which Magis-trate Judge Jeffrey L. Cureton denied Feb. 3. Magistrate
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Judge Cureton granted Nicholson leave to amend byFeb. 24 to cure defects in the complaint.
Amended ComplaintNicholson filed an amended complaint on Feb. 21alleging negligence for wrongful death, gross negligenceand property damage for failing to protect Vera Nichol-son, his mother, from the effects of drilling and compres-sion venting near his mother’s residence in Arlington,Texas. Nicholson also alleges that his brother, sister andher children, who also live in the mother’s residence,were exposed to the chemicals.
‘‘Defendant[s] knew they were creating a high degreeof risk and were indifferent to the precautions to elim-inate this risk,’’ according to Nicholson. ‘‘This recklessdisregard and breach of duty has taken the life of plain-tiff’s mother, Vera Nicholson.’’
XTO argued in the motion to dismiss filed March 7that the amended complaint does not cure the defectsidentified by Magistrate Judge Cureton.
‘‘In the amended complaint, Nicholson claims that‘Defendant XTO/Exxon Energy Inc. failed in theduty to protect Vera Nicholson[,] Plaintiff’s Motherand family from effects coming from close proximityof drilling and compression venting operations,’ ’’according to Magistrate Judge Cureton. ‘‘In additionaldocuments attached to the amended complaint, Plain-tiff alleges claims of negligence and gross negligenceagainst Defendants, setting forth various facts in sup-port of his claims.’’
To survive a motion to dismiss for failing to state aclaim pursuant to Federal Rule of Civil Procedure12(b)(6), the plaintiff must state a claim that is plausibleon its face, and the allegations must raise a right of reliefabove the level of speculation (Bell Atlantic Corp. v.Twombly, 550 U.S. 544, 555, 570 [2007]; Ashcroft v.Iqbal, 566 U.S. 662, 678 [2009]), according to Magis-trate Judge Cureton.
‘Not Convinced’‘‘Based on a review of the Plaintiff’s amended complaintand attached documents, all of which comprise thePlaintiff’s amended complaint, the Court is not con-vinced at this early juncture that Plaintiff can prove noset of facts that would entitle him to relief. Conse-quently, the Court concludes that Defendant’s Motion
to Dismiss Plaintiff’s Amended Complaint should beDENIED. In addition, the Court concludes thatDefendant’s Motion to Stay Discovery should alsobe DENIED.’’
In the objection filed April 29, XTO notes it has notconsented to the referral of the case to Magistrate JudgeCureton. ‘‘Pursuant to 28 U.S.C. § 636 [28 U.S. CodeSection 636], a motion to dismiss for failure to state aclaim may only be decided by a magistrate judge withthe consent of the parties,’’ according to XTO. ‘‘Where,as here, all parties have not consented to the transferof the lawsuit to a magistrate judge for all purposes, themagistrate judge is limited to entry of a report andrecommendation to the Article III judge. Accordingly,the Magistrate Judge’s Order denying XTO’s Motionto Dismiss for Failure to State a Claim should be treatedas a report and recommendation and reviewed by theCourt de novo.’’
The amended complaint should be dismissed on themerits, according to XTO. ‘‘The Amended Complaintis replete with conclusory, unsubstantiated allegationsthat XTO caused or contributed to the death of VeraNicholson.’’
‘‘Plaintiff must do more than generally allege thatXTO’s operations resulted in injury to Ms. Nicholson.Plaintiff does not allege what operations were per-formed in a manner contrary to the standards of areasonably prudent operator under the same or similarcircumstances, how such operations deviated from thestandards of a reasonably prudent operator, how any‘chemicals’ or ‘silica’ allegedly utilized in hydraulicfracturing operations approximately a mile below thesurface of the earth could have resulted in Ms. Nichol-son’s death, or how any ‘compressed gas operations’resulted in Ms. Nicholson’s death.’’
‘Legal Duty’
‘‘In Texas, an actionable claim for negligence requiresproof of a legal duty owed by Defendant to the Plaintiff,a breach of that duty, and damages proximately result-ing from that breach. Lane v. Halliburton, 529 F.3d548, 565 (5th Cir. 2008). A claim for gross negligencerequires further proof of ‘an extreme degree of risk’ and‘conscious indifference to that risk.’ Id. (citing Mobil OilCorp. v. Ellender, 968 S.W.2d 917, 921 (Tex. 1998)),’’according to XTO.
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‘‘Given the absence of any factual, nonconclusory alle-gations to support the claim, Plaintiff is inviting theCourt to infer that the alleged injuries possibly resultedfrom some wrongful act or omission of Defendant. Yet,such an invitation to infer the possibility of wrongfulconduct is insufficient to state a plausible claim forrelief.’’
‘‘The Court should not adopt the Magistrate Judge’sOrder because the Amended Complaint does not con-tain sufficient factual allegations to state a plausibleclaims for relief,’’ according to XTO.
Nicholson of Phoenix is pro se. Matthew S. Wolcottof XTO in Fort Worth and Jon-William NathanielJones and Andrew D. Sims of Harris, Finley & Boglein Fort Worth represent XTO. �
Gas Well Operators Seek OrderTo Support Claims BeforeSummary Judgment DiscoveryWILLIAMSPORT, Pa. — Natural gas extractioncompanies accused of contaminating water wells innorthern Pennsylvania filed a reply April 8 in supportof a case management order requiring the plaintiffs ina lawsuit removed Jan. 28 to the U.S. District Court forthe Middle District of Pennsylvania to make a primafacie case for their claims before the beginning of dis-covery; the plaintiffs responded March 25 to themotion filed March 12 (Sheila Russell, et al. v. Chesa-peake Appalachia, et al., No. 14-148, M.D. Pa.).
(Brief in support of Lone Pine order available. Docu-ment #94-140513-023B. Response to motion forLone Pine order available. Document #94-140513-024B. Reply in support of Lone Pine order available.Document #94-140513-025B.)
Chesapeake Appalachia and Nabors Completion &Production Services Co., incorrectly named as SuperiorWell Services Inc. in the complaint, filed a joint noticeof removal Jan. 28 in the lawsuit filed Dec. 27 in theDauphin County Court of Common Pleas (No. 13-11291) by Sheila Russell and 16 other plaintiffs forcontamination of their domestic water wells in Brad-ford Co., Pa.
Causes Of ActionThe plaintiffs aver they are the owners of recreationalproperty, certified organic farms and residences inBradford County. The plaintiffs allege property dam-age and personal injuries and seek to recover compen-satory and punitive damages under theories of privatenuisance, negligence, negligence per se and private tem-porary nuisance.
Chesapeake Appalachia and Nabors Completion fileda joint motion March 12 for a case management ordermodeled on Lore v. Lone Pine Corp. (1985 N.J. Super.LEXIS 1626). Federal district courts have broadauthority under Federal Rule of Civil Procedure16(c)(2)(L) ‘‘to ‘[adopt] special procedures for mana-ging potentially difficult or protracted actions thatmay involve complex issues, multiple parties, difficultlegal questions or unusual proof problems,’ ’’ accordingto the defendants. ‘‘It is from this language that a districtcourt’s authority to issue Lone Pine orders is derived.Roth v. Cabot Oil & Gas Corp., 287 F.R.D. 293, 298(M.D. Pa. 2012).’’
The claims in the instant complaint have been verifiedonly by Carol French, who resides on one of the subjectproperties, according to the defendants. ‘‘Although shemay be competent to verify the Complaint on behalfof Claude and Lynsey Arnold, who also reside on thatproperty, there are not facts pled indicating that shepossesses the requisite personal knowledge or infor-mation and belief to verify the allegations of the remain-ing plaintiffs. There is also no evidence in the recordthat any of the other plaintiffs endorsed the facts.Because only Carol French was willing to verify themost basic facts, Plaintiffs should be required to setforth proof that the factual and legal allegations intheir complaint are supportable.’’
‘‘Defendants respectfully request that this Court orderPlaintiffs to provide: (1) the identity of the ‘toxic and/orradioactive substances’ each Plaintiff was exposed to,the dates of exposure, and the amount of each chemicalto which Plaintiffs were exposed; (2) the precise diseaseor illness from which Plaintiffs suffer; (3) evidence sup-porting causation between Defendants’ actions and theinjuries in question; and (4) a description of the dam-ages to land each Plaintiff sustained, the dates of dam-age, and evidence Defendants caused the damage.’’
Lone PineThe plaintiffs aver in the response filed March 25 theinstant case is distinguishable from Lore v. Lone Pine.
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‘‘In Lone Pine, plaintiffs brought suit against 464 defen-dants who were involved in the management of a land-fill and the generation and hauling of toxic waste.Plaintiffs’ claims were for damage to property and var-ious personal injury claims based on water contami-nation. When the court entered its famous order,plaintiffs’ case had been on file for nine months. Inthat time plaintiffs had only served a handful of defen-dants and had failed to identify through discoverywhich defendants were responsible for which harms.Additionally, defendants had presented the court withstudies conducted by the EPA which cast serious doubton plaintiffs’ claims of pollution damage.’’
‘‘Plaintiffs’ case does not provide any of the circum-stances warranting entry of a Lone Pine order,’’ accord-ing to the plaintiffs. ‘‘Plaintiffs’ case has only just begun,there is no cause to regard Plaintiffs’ claims as dubiousat this point, and it is not a case for complicated medicalclaims or property valuations. Despite Defendants’ mis-leading arithmetic and creative summarization of Plain-tiffs’ Complaint, Plaintiffs present straightforward andproperly pleaded claims sounding in simple nuisance,negligence, and negligence per se. As such, there is nojustification for subjecting Plaintiffs to a standardbeyond that required under the Federal Rules of CivilProcedure.’’
In the reply filed April 8, the defendants argue that theplaintiffs failed to address the grounds cited for entryof a Lone Pine order, including misjoinder. In theirresponse, the plaintiffs abandoned their claims for med-ical damages, according to the defendants. ‘‘Althoughdiscovery into medical issues is now unnecessary in thiscase, a Lone Pine case management order is still appro-priate to address the myriad of other discovery issuesresulting from Plaintiffs’ misjoinder.’’
Improper Joinder‘‘Recognizing the complex factual, legal and discoveryissues that arise when multiple plaintiffs are improperlyjoined in a single action when their claims do not ariseout of the same transaction, occurrence, series of trans-actions or occurrences, or do not present a commonquestion of law or fact, Defendants sought an ordergranting a Motion for Severance and requested thisCourt sever the cases in the same manner Plaintiffsset forth their allegations in the Complaint — byhousehold,’’ according to the defendants. ‘‘If thisCourt is not inclined to grant the Motion for Severance,
Defendants argue, in the alternative, that a Lone Pinecase management order is necessary to handle the com-plex issues in this case.’’
‘‘Each of the 8 households claims exposure to differentcombinations of wells, and some families complain ofinjuries arising from as many as 13 wells,’’ according tothe defendants. ‘‘Plaintiffs’ complaint alleges 101 waysDefendants’ actions interfered with Plaintiffs’ use andenjoyment of land, including allegations of wells withintegrity issues, leaking or releasing natural gas andother toxic and/or radioactive substances into the air,ground, and waterways; damages to land, excessivenoise; excessive lights; releases of silica and otherdusts; releases of methane; excessive traffic; excessiveand offensive odors; and the very ambiguous ‘hostileand harassing environment. Assuming these allegationsare true, each household’s use and enjoyment wasuniquely affected by Defendants’ activities, becausePlaintiffs own or live on 8 non-contiguous tracts oflane (located in 3 townships) and each parcel of landwas affected by different well sites and has its ownunique topography and characteristics (varying in size,landscape, geological features, structures, access toroads, and proximity to water).’’
‘‘Plaintiffs also assert that they sustained 156 harms,including economic losses, damages to property, perso-nal injuries, and any combination of the like,’’ accord-ing to the defendants.
Amend Complaint‘‘Despite Defendants drawing Plaintiffs’ attention to theseproblems, Plaintiffs have not yet sought to amend theircomplaint, agreed to severance, or agreed to the proposedcase management order.’’
‘‘For the above mentioned reasons, and those discussedin the Brief in Support of the Motion for Lone PineCase Management Order, this Court must grantDefendants’ Motion for Lone Pine Case ManagementOrder.’’
Edward J. Ciarimboli and Clancy Boylan of Fellerman& Ciarimboli in Kingston, Pa., and Charles F. Speer,Peter B. Bieri and Andrew R. Klonowski of Speer LawFirm in Kansas City, Mo., represent the plaintiffs.Michael P. Leahey of Jackson Kelly in Pittsburgh rep-resents Chesapeake Appalachia. Daniel R. Michelmoreof Jackson Kelly in Pittsburgh represents Superior WellServices. �
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Discovery Dispute ReportedBy Oilfield Well OperatorsIn Arkansas Injection SuitLITTLE ROCK, Ark. — Natural gas extraction com-panies sued in the U.S. District Court for the EasternDistrict of Arkansas by Faulkner County, Ark., couplesalleging property damage from hydraulic fracturingwaste disposal in injection wells filed a status reporton May 5 describing Phase 1 discovery disagreementswith respect to the plaintiffs’ requests for seismic dataand depositions of corporate representatives (BobbieHill, et al. v. Southwestern Energy Co., No. 12-500,E.D. Ark.).
(Amended class action complaint available. Docu-ment #94-140513-001C. Status report available.Document #94-140513-010R. Order available. Docu-ment #94-140513-011R.)
Bobbie and Gwenna Hill and Joseph and CatherineSmith filed the putative class action on Aug. 10,2012. They initially alleged claims against only South-western Energy Co., the operator of the so-calledUnderwood injection well. The plaintiffs added Che-sapeake Energy and XTO Energy plus 11 plaintiffs inan amended complaint filed in October 2012; the com-plaint was dismissed in part on Sept. 26, 2013 (2013U.S. Dist. LEXIS 139917).
DefendantsThe plaintiffs filed a second amended class action com-plaint on Jan. 10, 2014. The defendants joined in theamended complaint are Southwestern Energy, its sub-sidiary SEECO Inc., Chesapeake Energy and XTOEnergy. The plaintiffs name the Hills and Smiths, sixadditional couples, a living trust and four individuals asclaimants in the amended complaint.
Southwest Energy and SEECO operate the so-calledUnderwood and Griffin Mountain Nos. 1 and 2, andCampbell injection wells, according to the plaintiffs.Chesapeake Energy operates the Cotton Hill (SRE 8-12) and Trammel injection wells, according to theplaintiffs. XTO Energy operates the Ferguson injectionwell, according to the plaintiffs.
The fracking fluid used to finish a well by hydraulicfracturing is described by the Arkansas Oil and Gas Com-mission (AOGC) as a mixture of water and substances
including formaldehyde, hydrochloric acid, distillates ofpetroleum, ethylbenzene, benzyl chloride, tirehanolamne,ethylene glycol, 1,2,4 trimethylbenzene, ammoniumchloride, magnesium hydroxide, potassium hydroxide,divinylbenzene, light aromatic naphtha, methanol, isopro-nanol, oxyalkylated alcohol, akyl dimethyl benzyl ammo-nium chloride, ammonia, mineral oil, naphthalene,ethoxylateed alchohol and vinyl copolymer, accordingto the plaintiffs. Some 10 percent of the fracking fluidflows back to the surface as waste, which the defendantsinject into vertical waste wells.
The plaintiffs propose a class comprising the residentsand property owners within three miles of disposalwells operated by the defendants in Arkansas. Undertheories of trespass, unjust enrichment and intentionaland reckless conduct, the plaintiffs seek an injunctionordering the defendants to monitor waste well fluidmigration, replevin of all profits derived by the defen-dants and $2 million in compensatory and $15 millionin punitive damages for each property of the namedplaintiffs.
Reckless ConductJudge D.P. Marshall Jr. entered an order on Feb. 14granting in part a motion to dismiss the amended classaction complaint filed by the defendants. The inten-tional and reckless conduct claim is dismissed becauseit was filed without authorization of the court, accord-ing to Judge Marshall.
In addition, the claim fails because it appears to bebased on Arkansas Code Annotated Section 15-73-207, the statute obliging prudent and reasonable opera-tion of wells, according to Judge Marshall. ‘‘This is akinto the duty implied in all contracts to do things onepromised fairly and in good faith. No stand-alone claimexists.’’
In addition, the intentional and reckless conduct claimis duplicative of the trespass claim, according to JudgeMarshall. The plaintiffs may use the evidence of allegedintentional and reckless conduct in support of the claimfor punitive damages. ‘‘Those allegations, though, arenot accepted as a belated new claim. About eighteenmonths in, we’ve finally got this lawsuit focused. Itneeds to stay focused,’’ according to Judge Marshall.
The defendants filed a status report on May 5, but theywere unable to reach a consensus with the plaintiffs.
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‘‘Plaintiffs provided their proposed changes to the draftJoint Status Report on May 5, 2014, and insertedPlaintiffs’ position on the status of discovery whichraised new arguments including individualized argu-ments about each Defendant,’’ according to the defen-dants. ‘‘Given the breadth and nature of Plaintiffs’changes to the format and substance of the Report,the Parties were unable to reach an agreement on aJoint Status Report and Defendants did not have anopportunity to consider and respond to the argumentsraised by Plaintiffs in advance of the Court’s deadline.’’
Rule 26(a)(1) Disclosures
The first phase of discovery is limited to the migrationof waste fluid to the subsurface strata of the plaintiffs’real property, according to the defendants. The partiesmade Federal Rule of Civil Procedure Rule 26(a)(1)initial disclosures on Nov. 15, 2013. The plaintiffshave not produced any documents for Phase 1 discov-ery, according to the defendants.
The defendants object to the April 17, 2014, requestby the plaintiffs for seismic data on the grounds that itis proprietary and outside the scope of the Dec. 19status report and conference. ‘‘Plaintiffs have alreadyreceived ample geologic information,’’ according tothe defendants.
‘‘The scope of Phase 1 discovery regarding geologicinformation is, and should remain, limited to the sub-surface geology of the injection wells, for which Defen-dants have produced responsive information.
‘‘A fishing expedition of Defendants’ highly confiden-tial information that has no bearing on the Phase 1 issueis simply not appropriate,’’ according to the defendants.
No depositions have occurred, according to the de-fendants. ‘‘The parties have a dispute over the scopeof depositions allowed in Phase 1.
‘‘In total, Plaintiffs’ omnibus April 28, 2014 depositionrequest would result in more than 30 depositions inPhase 1 of this action alone,’’ according to the defen-dants. ‘‘Those depositions would take several monthsto conduct given the number of Defendants and thevarious locations of the individuals listed in the De-fendants’ Initial Disclosures. Plaintiffs’ overly broad
request is contrary to their recognition, as evidencedby their Rule 26(f) Report, that the scope of discoveryrequired in Phase 1 is narrow. The number of deposi-tions necessary and the scope of the testimony in Phase1 is similarly limited.’’
Counsel
John R. Holton and Timothy R. Holton of DealCooper Holton in Memphis, Tenn., and Michael P.McGartland of McGartland & Borchardt in FortWorth, Texas, represent the plaintiffs.
Michele R. Blythe and Michael D. Morfey of An-drews Kurth in Houston and R. Scott Morgan, G.Alan Perkins and James D. Rankin III of PPGMRLaw in Little Rock represent Southwestern Energyand SEECO. Adria W. Conklin and Lyn PeeplesPruitt of Mitchell, Williams, Selig, Gates & Woodyardin Little Rock and Michelle P. Cullen of ChesapeakeEnergy in Oklahoma City represent ChesapeakeEnergy. Andrew D. Sims, Russell R. Barton andMichael V. Fitzpatrick of Harris, Finley & Bogle inFort Worth, Texas, and Robert M. Honea of Hardin,Jesson & Terry in Fort Smith, Ark., represent XTOEnergy. �
New Mexico Property OwnersAmend Complaint In SuitChallenging Fracking BanALBUQUERQUE, N.M. — New Mexico prop-erty owners and a hydrocarbon extraction trade groupseeking a declaratory judgment against Mora County,N.M., officials in the U.S. District Court for the Dis-trict of New Mexico for violating their constitutionallyprotected civil and property rights by the enactmentof a ban on hydraulic fracturing and hydrocarbonextraction filed an amended complaint Jan. 10; a casemanagement order filed March 20 includes a February2015 deadline for the parties to submit a consolidated,final pretrial order (Mary L. Vermillion, et al. v. MoraCounty, N.M., et al., No. 13-1095, D. N.M.).
(Case management order available. Document #94-140513-031R. First amended complaint available.Document #94-140513-032C.)
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Mary L. Vermillion, JAY Land Ltd. Co., Yates RanchProperty and the Independent Petroleum Associationof New Mexico seek declaratory and injunctive reliefagainst Mora County and county officials for the en-actment of Mora County Ordinance 2013-01, whichprohibits all hydrocarbon extraction in the county. Inthe lawsuit filed in November 2013, the plaintiffsallege that the ordinance violates their civil rightsunder the U.S. and New Mexico constitutions.
County Ordinance
The Mora County Board of Commissioners adoptedthe Mora County Community Water Rights & LocalSelf-Government Ordinance on April 29, 2013, (Ord.2013-01) to prevent the development of oil and naturalgas reserves, to ban hydraulic fracturing and to elimi-nate the constitutional rights and privileges of corpora-tions, according to the plaintiffs.
The ban is a violation of the U.S. Constitution 14thAmendment due process clause, the Fifth Amendmenttaking clause and the First Amendment guarantee ofthe exercise of speech, of the press, of assembly and topetition government for the redress of grievances,according to the plaintiffs.
The plaintiffs aver that they own mineral estates inMora County and that the ordinance prevents themfrom leasing their minerals to a corporation for thepurpose of oil and natural gas extraction.
‘‘The Ordinance does not serve a compelling state in-terest,’’ according to the plaintiffs. Contrary to the pre-amble of the ordinance, the purpose is to prevent thelawful development of oil and natural gas reserves andto ban hydraulic fracturing.
‘‘If Defendants’ true goal was to protect surface andgroundwater supplies within the County, the Ordi-nance would address other industries that are knownsources of water pollution such as the agriculture in-dustry,’’ the plaintiffs say.
‘‘Even if the goal of protecting water sources is takenas sincere and found to be sufficiently compelling, theblanket elimination of the First and Fifth Amendmentrights of corporations engaging or seeking to engage inactivities prohibited by the Ordinance is not narrowly
tailored to achieving that interest,’’ according to theplaintiffs. Nor is it rationally related to the state interestof protecting water sources.
Preemption
The plaintiffs also aver that the ordinance is invalidbecause it is preempted by New Mexico statute.‘‘Under the Enabling Act of 1910, the New MexicoConstitution, and the statutes based thereupon, theCommissioner of Public Lands has the authority andduty to lease and sell State lands, including issuing oiland gas leases, for the benefit of the common schools,other educational institutions, and other worthy statefunctions that benefit less fortunate citizens of the Stateof New Mexico,’’ they say.
The New Mexico Oil and Gas Act (New Mexico Sta-tutes Sections 70-2-4 and 70-2-5) confers authorityover oil and natural gas extraction to the Oil Conserva-tion Commission and Oil Conservation Division,according to the plaintiffs. ‘‘This authority includesthe ability to enact rules to ‘protect fresh water, publichealth, safety and the environment.’ N.M. Code R.[New Mexico Code Revised] § 19.15.39, and to ‘estab-lish safety procedures for drilling and production of oiland gas wells.’ N.M. Code. R. § 19.15.10.6.’’
The parties consented in February to have MagistrateJudge Carmen E. Garza conduct dispositive proceed-ings. Other matters are referred to Magistrate JudgeGregory B. Wormuth.
Magistrate Judge Wormuth issued an order March 20setting pretrial deadlines and a briefing schedule. Dis-covery is to be completed by Nov. 13, according toMagistrate Judge Wormuth. The plaintiffs have untilJune 16, 2014, to identify experts; all other parties haveuntil July 16 to identify experts.
Summary JudgmentMotions for summary judgment from the plaintiffs aredue Nov. 13 and from the defendants by Dec. 15.Responsive and reply briefing from the plaintiffs isdue Jan. 15 and on Feb. 15 from the defendants.
The plaintiffs are to submit a final pretrial order byJan. 18 to the defendants, according to MagistrateJudge Wormuth. The defendants have until Feb. 11to file with the court a final, consolidated pretrial order.
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Andrew J. Cloutier of Hinkle, Hensley, Shanor & Mar-tin in Roswell, N.M., and Steven Lechner and JaimieN. Cavanaugh of Mountain States Legal Foundationrepresent the plaintiffs. Eric D. Jantz of New MexicoEnvironmental Law Center in Santa Fe, N.M., Tho-mas Linzey of Community Environmental Legal inMercersburg, Pa., and Daniel E. Brannen Jr. of Bran-nen Law in Santa Fe represent the defendants. �
Gas Pipeline Operator SeeksDeclaratory Judgment, RemovalOf Bull From EasementCOVINGTON, Ky. — Columbia Gas Transmissionfiled a declaratory judgment complaint and motion fora temporary restraining order April 14 in the U.S. Dis-trict Court for the Eastern District of Kentucky againsta Foster, Ky., property owner who refuses to restrain anaggressive bull and dogs on his property to allow entryto a natural gas pipeline right of way (Columbia GasTransmission v. Gary Galloway, No. 14-77, E.D. Ky.).
(Complaint available. Document #15-140506-011C.Motion for temporary restraining order available.Document #15-140506-012M.)
‘‘This case arises from Defendant Gary Galloway’sunreasonable interference with Columbia’s rightsunder an easement, namely to access and maintain apipeline on Mr. Galloway’s property,’’ according toColumbia Gas Transmission.
Aggressive AnimalsGalloway refuses to temporarily pen his bull and cows,which he advises are aggressive, and dogs on the prop-erty, according to Columbia Gas Transmission.
Columbia Gas Transmission avers that it has an ease-ment through Galloway’s property based on a June 6,1946, agreement executed by Galloway’s predecessorsin interest, Albert and Louise Galloway, and CincinnatiGas Transmission Co., the predecessor to ColumbiaGas Transmission.
The subject pipeline is the primary feed to Cincinnatiand a part of the pipelines that provide service to theeastern seaboard of the United States, according toColumbia Gas Transmission. The pipeline is undergoing
maintenance in accordance with a Federal Energy Regu-latory Commission 7(c) certificate in conjunction withKO Transmission, a subsidiary of Duke Energy, accord-ing to Columbia Gas Transmission.
In the course of completing a survey of the easementApril 2, 2014, on Galloway’s property, Columbia GasTransmission representatives asked Galloway to pen theaggressive animals. In response to repeated requestssince, Galloway avers that damages would be dueunder the easement agreement if he were required topen the bull, according to Columbia Gas Transmission.
‘‘Mr. Galloway has consistently refused to pen, or other-wise remove from the easement area, the bull or otheraggressive animals,’’ according to Columbia GasTransmission.
Declaratory JudgmentColumbia Gas Transmission seeks declaratory judg-ment that the right of way agreement expressly grantsit the right to lay, maintain and remove the natural gaspipeline and to enter to the right of way. In addition,Columbia Gas Transmission seeks a declaration thatGalloway’s refusal to pen the aggressive animals is anunreasonable burden and interference with its rightsunder the agreement and that Galloway is required toprovide reasonable access by removing from the ease-ment any aggressive animals.
Columbia Gas Transmission seeks a temporary restrain-ing order requiring Galloway to remove the aggressiveanimals from the easement, temporary injunction grant-ing relief pending final judgment and entry of a perma-nent injunction.
J. Brian Jackson of McGuireWoods in Charlottesville,Va., represents Columbia Gas. �
Pennsylvania Plaintiffs SueWell, Pipeline OperatorsFor Loss Of Property ValueSCRANTON, Pa. — A natural gas extraction companyand a natural gas pipeline company were sued April 9in the U.S. District Court for the Middle District ofPennsylvania for loss of use by property owners; thedefendants have yet to file an appearance in the lawsuit
MEALEY’S Fracking Report Vol. 1, #1 May 2014
33
assigned April 11 to Judge Malachy E. Mannion (Tho-mas Chaffee, et al. v. Talisman Energy USA Inc, et al.,No. 14-690, M.D. Pa.).
(Complaint available. Document #94-140513-008C.)
Thomas and Carol Chaffee, Bill and Alicia Ferullo andLois Klotz are residents or owners of real property inBradford County, Pa. They sued Talisman Energy USAInc. and Central New York Oil and Gas Co. Inc. onApril 9 for damages under theories of private, continu-ing and abatable nuisance and negligence/recklessnessfor natural gas extraction and pipeline activities thathave allegedly damaged the real properties and reducedthe plaintiffs’ enjoyment of the real properties.
Drilling ActivitiesBeginning in late 2010, Talisman Energy began or hadothers begin drilling activities in close proximity to theirresidences and real properties, according to the plain-tiffs. The plaintiffs identify seven natural gas wells outof some 41 natural gas wells near their propertiesspudded and finished by hydraulic fracturing.
The drilling and hydraulic fracturing caused ‘‘very loud,intermittent, and unpleasant noise’’ that could be heardfrom hundreds of feet away ‘‘and disturbed Plaintiffs’daily activities,’’ according to the plaintiffs.
In addition, flaring at the well pads ‘‘released toxic andhazardous smoke into the air and ground of the sur-rounding area,’’ according to the plaintiffs.
‘‘Defendant Talisman’s natural gas activities also inter-mittently create a strong and unpleasant chemical odorwhich can often be smelled, and even tasted, from Plain-tiffs’ properties.
‘‘The increased traffic caused by Defendant Talismancaused and continues to cause substantial intermittentdust and diesel fumes to enter Plaintiffs’ properties,’’according to the plaintiffs.
After the completion of the so-called Young 1 well,Klotz and the Chaffees noticed a ‘‘dramatic change inthe quality of their water supplies,’’ according to theplaintiffs. ‘‘The water coming from the water welllocated on the Chaffees’ property thereafter frequentlyturned milky white in color with an oily sheen thatwould eventually settle into small clumps in the
water. Additionally, Plaintiff Klotz subsequently hadthe water coming from the water well located on herproperty tested and discovered the presence of methane.’’
Water Well Vent
Talisman installed a vent on the Chaffees’ water wellin February 2013 to vent methane and provided a waterbuffalo to supply them potable water, according to theplaintiffs.
Activities at the Young well pad cause the release ofhazardous materials including silica, benzene, ethylben-zene, trimethylbenzene, toluene and xylene, accordingto the plaintiffs. Klotz and the Chaffees experienceburning eyes, throat and lungs; headaches, dizzinessand nausea; irritated skin; and a persistent metallictaste in the mouth, according to the plaintiffs.
The Chaffees moved out of their home on March 13,2013, in fear for their lives, and return only to performmaintenance tasks, according to the plaintiffs.
Central New York Oil constructed the so-called Stage-coach Pipeline, a 30-inch natural gas transmission line,in 2001. The pipeline is within 1,200 feet of the Fer-ullos’ property, according to the plaintiffs.
Central New York vented natural gas and other hazar-dous or radioactive chemicals from the pipeline Sept. 7,2011, for 10 hours, according to the plaintiffs. In addi-tion to releasing the hazardous materials and natural gas,the venting created a sound like a jet engine. ‘‘The Fer-ullos have no way of knowing if or when DefendantCentral New York might vent the Stagecoach Pipelinein the future.’’
Operation and maintenance of the pipeline causes‘‘intermittent, extremely disruptive, and extremely dan-gerous’’ large truck and heavy machinery traffic on therural roads around their properties, according to theplaintiffs.
Gathering Pipelines
Talisman Energy owns or operates at least four gather-ing pipelines within 1,800 feet of the Ferullos’ property,according to the plaintiffs. The gathering pipelinescause additional dangerous traffic and generate dustand diesel fumes, according to the plaintiffs.
Vol. 1, #1 May 2014 MEALEY’S Fracking Report
34
Tallisman also operates impoundments within fourmiles of their properties, according to the plaintiffs.Tallisman stores produced water from natural gaswells and fresh water in the impoundments, accordingto the plaintiffs. The produced water contains signifi-cant amounts of toxic, radioactive or otherwise hazar-dous substances, according to the plaintiffs.
Edward J. Ciarimboli of Fellerman & Ciarimboli inKingston, Pa., represents the plaintiffs. �
Natural Gas Pipeline OperatorAppeals $78,000 AwardIn Pennsylvania Easement SuitPHILADELPHIA — A natural gas pipeline companyordered to pay a Pike County, Pa., property owner$78,545 in compensation Feb. 24 in the U.S. DistrictCourt for the Middle District of Pennsylvania in aneminent domain condemnation action to allow con-struction of a second pipeline in an existing right-of-way filed notice of appeal April 7 in the Third CircuitU.S. Court of Appeals (Tennessee Gas Pipeline Co. v.Permanent Easements, et al., No. 14-1821, 3rd Cir.).
(Summary of case available. Document #94-140513-022B.)
Tennessee Gas Pipeline Co. filed a condemnationaction against Fox Hollow Estates under the NaturalGas Act (15 U.S. Code Section 717) in January 2011 toacquire permanent and temporary easements (Tennes-see Gas Pipeline Co. v. Permanent Easements, et al.,No. 11-28, M.D. Pa.; 2014 U.S. Dist. LEXIS 23895).Judge A. Richard Caputo conducted a bench trial inNovember 2013 and issued these findings of fact andlaw on Feb. 24.
Pike County
Fox Hollow Estates owns 298.97 acres in ShoholaTownship, Pike County, Pa. Fox Hollow Estatesacquired the property in May 2005 for $1,875,000with the intention to subdivide and sell single-familyresidences. Fox Hollow Estates has not developed thetract or received subdivision or development approvalfrom Shohola Township officials.
Tennessee Gas Pipeline’s predecessor, Tennessee GasTransmission Co., was granted an easement and right-of-way in 1955 to operate and maintain a pipeline onthe subject property. Tennessee Gas Pipeline received acertificate of public convenience and necessity on May14, 2010, from the Federal Energy Regulatory Com-mission to construct a new pipeline and compressorsand to modify existing facilities on its so-called 300Line, which includes the pipeline in the right-of-wayon the Fox Hollow Estates tract.
Tennessee Gas Pipeline filed a complaint in condemna-tion on Jan. 5, 2011, to condemn permanent rights-of-way and easements of 25 feet in width and comprising1.732 acres of the Fox Hollow Estates tract. TennesseeGas Pipeline sought to widen the right-of-way from 50feet to 75 feet. Tennessee Gas Pipeline also soughttemporary easements of 5.413 acres on the Fox HollowEstates tract to create workspace it required to constructthe second pipeline on the right-of-way. Tennessee GasPipeline avers that the temporary and permanent ease-ments are necessary to construct, operate and maintainthe pipeline approved in the May 14, 2010, certificate.
Tennessee Gas Pipeline and Fox Hollow Estatesentered into a stipulation on Feb. 18, 2011, agreeingto the entry of an order granting Tennessee Gas Pipe-line immediate possession of the rights-of-way uponposting of a bond to secure just compensation. FoxHollow Estates reserved the right to challenge theamount of compensation offered by Tennessee GasPipeline.
Construction CompleteTennessee Gas Pipeline completed construction of thesecond pipeline and restored the temporary right-of-way.
The fair market value of the Fox Hollow Estates tractdecreased by $20,000 as a result of the taking of thepermanent easement.
Before the taking, the temporary easement was coveredwith trees. The restored temporary easement has beengraded, mulched and seeded. To replace the treesremoved from the temporary easement, 155 trees areneeded. The cost of 155 trees is $6,885 plus $290 pertree for replanting for a total cost of $44,950 to restorethe temporary easement.
In the summary of the case filed April 16 by TennesseeGas Pipeline, three issues are identified for appeal.
MEALEY’S Fracking Report Vol. 1, #1 May 2014
35
The company avers admission of testimony by StephenSameroff, a Fox Hollow representative, and its experts,Michael Weeks and James Leary, to determine thatcompensation for the alleged taking was in error. Thecompany also avers that the court erred by awardingcompensation for the cost of replanting trees and restor-ing the temporary easement to pre-taking condition.
Finally, Tennessee Gas Pipeline avers that it was in errorto award $51,835 for replanting and restoring the tem-porary easement because the amount exceeds the mar-ket value of the temporary easement.
Elizabeth U. Witmer, James G. Rosenberg and Sean T.O’Neill of Saul Ewing in Wayne, Pa., and Matthew M.Haar and Patrick F. Nugent of Saul Ewing in Harris-burg represent Tennessee Gas Pipeline. John T. Stiehof Levy, Stieh & Gaughan in Milford, Pa., representsFox Hollow Estates. �
Pennsylvania Physician Argues1st Amendment StandingTo Challenge Trade Secrets ActSCRANTON, Pa. — The Pennsylvania physiciansuing the state attorney general and secretary of theDepartment of Environmental Protection in the U.S.District Court for the Middle District of Pennsylvaniafor relief from statutory restrictions on his ability todiscover the chemicals in proprietary hydraulic fractur-ing fluids used in natural gas extraction he alleges violatehis civil rights under the First and 14th amendments tothe U.S. Constitution and expose him to professionaldisciplinary action by the American Medical Associa-tion filed a brief April 30 opposing motions to dismisson the grounds he lacks standing (Dr. Alfonso Rodri-guez, M.D., v. Michael L. Krancer, et al., No. 12-1458,M.D. Pa.).
(Response to motion to dismiss available. Document#94-140513-020B. Amicus curiae brief in support ofmotion to dismiss available. Document #94-140513-021M.)
Alfonso Rodriguez, M.D., is a nephrologist and physi-cian specializing in the treatment of renal diseases,
hypertension and advanced diabetes, according to therecord. Rodriguez directs several hemodialysis unitsfrom his medical practice in Dallas, Pa.
Declaratory Judgment
Rodriguez filed a declaratory judgment action in July2012 against Michael L. Krancer, the secretary of thePennsylvania Department of Environmental Protec-tion (DEP), Robert F. Powelson, chairman of thePennsylvania Public Utility Commission, and theattorney general of Pennsylvania in their officialcapacities. When the suit was filed in July 2012,Linda L. Kelly was the attorney general. Kathleen G.Kane was sworn is a Pennsylvania attorney generalin January 2013 and automatically substituted forKelly in the action, according to the record. Krancerhas resigned and been replaced by E. ChristopherAbruzzo as DEP secretary.
Rodriguez avers that it is common knowledge in thenatural gas industry fracking fluids contain a mixture ofchemicals including benzene, toluene, ethylbenzene,xylene, microbiocides, gylcols, glycol ethers and petro-leum products.
Rodriguez alleged two counts against the defendantswith respect to the adoption in February 2012 bythe Pennsylvania General Assembly of Act 13. By adop-tion of Act 13, the General Assembly amended theOil and Gas Act (Pennsylvania Combined Statutes58:3222.1[b][11] 2012) to limit physicians treatingpatients exposed to fracking fluids from discoveringwhat chemicals are in the fluids designated as tradesecrets by a company, according to Rodriguez. Rodri-guez refers to Act 13 as the Medical Gag Act.
Physicians, Scientists & Engineers for Health Energyfiled a brief on Jan. 23, 2013, in support of Rodriguez.
Judge Richard A. Caputo concluded that Rodriguezlacks standing and granted defense motions to dismisson Oct. 23, 2013 (2013 U.S. Dist. LEXIS 152207). Inresponse to a motion to reconsider, Judge Caputogranted Rodriguez leave to file the amended complaintfiled Jan. 31, 2014.
Powelson, the chairman of the Pennsylvania PublicUtility Commission, was dismissed by stipulation onFeb. 7.
Vol. 1, #1 May 2014 MEALEY’S Fracking Report
36
Amended Complaint
The amended complaint does cure the deficiencies inthe pleadings because Rodriguez has not alleged aninjury, Rodriguez does not have standing to challengethe Act 13 provisions codified at Pennsylvania Conso-lidated Statutes 58:3222.1(b)(10) and (b)(11), accord-ing to Abruzzo.
Abruzzo’s argument is contrary to U.S. Supreme Courtprecedent, according to Rodriguez. ‘‘The SupremeCourt of the United States has established that standingto maintain a pre-enforcement anticipatory challenge tolaws restricting First Amendment speech need notimplicate criminal sanctions. The threat of criminal,civil and/or employment jeopardy provide a sufficientbasis for a plaintiff to establish standing to challenge alaw restricting First Amendment speech without theneed to the plaintiff to first subject himself to civil oremployment jeopardy.
‘‘Plaintiff can only gain access to the needed informa-tion under Act 13 by signing a broad and vaguelydefined confidentiality agreement that prohibits medi-cal communications required to be made by plaintiff byethical rules that govern plaintiff’s medical practice,’’according to Rodriguez.
‘‘Under these facts, every possible component necessaryto satisfy a pre-enforcement anticipatory First Amend-ment challenge to Act 13’s non-emergency medical gagrule is present to reject defendants’ motion to dismissfor lack of standing.’’
Halliburton Energy Services Inc. (HESI), which wasgranted leave April 3, 2014, to file an amicus curiaebrief in support of the defendants’ motions to dismiss,challenges Rodriguez’s claims on the merits rather thanthe affirmative defense of standing. HESI avers in thepetition for leave filed March 31 that it has investedmillions of dollars in the development of proprietaryhydraulic fracturing technology that is threatened byRodriguez’s challenge of Act 13.
‘‘The amended complaint of Dr. Alfonso Rodriguezrepresents a direct assault on the protection of intellec-tual property held by HESI and other similarly situatedentities,’’ according to HESI.
‘Overbroad View’‘‘Contrary to Plaintiff’s overbroad view of his FirstAmendment rights, where potential disclosure threa-tens to destroy the value of trade secrets, courts havefound that statutes, in particular the Uniform TradeSecrets Act (which has been adopted in Pennsylvania),that authorize enjoining speech that would dis-close trade secrets do not impermissibly infringe uponFirst Amendment rights. See DVD Copy Control Ass’n,Inc. v. Bunner, 31 Cal. 4th 864 (Cal. 2003) (prelimin-ary injunction issued pursuant to California tradesecret law did not violate First Amendment rights);see also Home Line Furniture, Inc. v. Bonner RetailMarketing, LLC, 630 F.Supp.2d 527 (E.D. Pa. 2009)(enjoining defendants from disclosing trade secretsunder the PUTSA [Pennsylvania Uniform TradeSecrets Act]). Because the Commonwealth can clearlyimpose directly upon Plaintiff, through the PUTSAand other vehicles, the same type of restrictions thatPlaintiff asserts are unconstitutional conditions, noneof the counts in the amended complaint states a validclaim.’’
The court may not as a matter of law grant the reliefRodriguez seeks, according to HESI. ‘‘Under Pennsyl-vania’s Statutory Construction Act, severability is notappropriate where the valid provisions of a statute ‘areso essentially and inseparably connected with, and sodepend upon, the void provision or application, thatit cannot be presumed the General Assembly wouldhave enacted the remaining provisions without thevoid one;’ or where the court finds that the remainingprovisions, standing alone, ‘are incomplete and incap-able of being executed in accordance with the legislativeintent.’ 1 Pa. C.S.A. [Consolidated Statutes Annotated]§ 1925.
‘‘Here, the Court may not rewrite Act 13 as Plaintiffseeks,’’ according to HESI. ‘‘Accordingly, the Courtshould dismiss Plaintiff’s claims to the extent he seeksthe disclosure of trade secrets to health professionalswithout any corresponding requirement to maintainthe confidentiality of those trade secrets.’’
CounselMichael M. Melloy, Lynn R. Rauch and ToddD. Kantorcyk of Manko, Gold, Katcher & Fox inBala Cynwyd, Pa., and Steven Leifer and ThomasC. Jackson of Baker Botts in Washington, D.C., repre-sent HESI.
MEALEY’S Fracking Report Vol. 1, #1 May 2014
37
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Paul Anthony Rossi of Kennett Square, Pa., repre-sents Rodriguez. Joshua John Voss of Conrad O’Brienin Harrisburg and Mark E. Seiberling and MatthewH. Haverstick of Conrad O’Brien in Philadelphiarepresent Abruzzo. Kane, Howard G. Hopkirk and
Gregory R. Neuhauser of the Pennsylvania Officeof Attorney General represent Kane. Jordan B. Yeagerof Curtin & Heefner in Doylestown, Pa., repre-sents Physicians, Scientists & Engineers for HealthEnergy. �
MEALEY’S Fracking Report Vol. 1, #1 May 2014
39
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Vol. 1, #1 May 2014 MEALEY’S Fracking Report
40
Docum
ents
STAT
E O
F LO
UISI
ANA
CO
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OF
APPE
AL, T
HIR
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RLO
S BO
ONE
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CO
MPA
NY, E
T AL
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Cour
t com
pose
d of
Uly
sses
Gen
e Th
ibod
eaux
, Chi
ef Ju
dge,
Sylv
ia R.
Coo
ks, a
nd
John
E. C
oner
y, Ju
dges
.
AFFI
RMED
. W
arre
n A.
Per
rin
Perr
in, L
andr
y, de
Laun
ay, D
arte
z & O
uelle
t 25
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ue F
ranc
e La
faye
tte, L
A 70
508
Telep
hone
: (3
37) 2
37-8
500
COUN
SEL
FOR:
Plai
ntiff
s/App
ellan
ts - C
arlo
s Boo
ne an
d Lo
ri Th
erio
t Boo
ne
Mor
gan
J. W
ells,
Jr.
Larz
elere
, Pico
u, W
ells,
Sim
pson
, Lon
ero,
LLC
3850
N. C
ause
way B
oulev
ard
Sui
te 11
00
Met
airie
, LA
7000
2 Te
lepho
ne:
(504
) 834
-650
0 CO
UNSE
L FO
R:
De
fend
ant/A
ppell
ee -
Emer
Que
st O
il &
Gas
, LLC
Mic
hael
Gre
gory
Sta
g Sm
ith S
tag,
LL
C
365
Can
al S
tree
t S
uite
285
0 N
ew O
rlea
ns, L
A 7
0130
T
elep
hone
: (5
04) 5
93-9
600
CO
UN
SEL
FO
R:
Pl
aint
iffs/
App
ella
nts
- Car
los
Boo
ne a
nd L
ori T
heri
ot B
oone
R
ebec
ca H
. Die
tz
Kin
g, K
rebs
& J
urge
ns, P
LL
C
201
St. C
harl
es A
venu
e 4
5th F
loor
N
ew O
rlea
ns, L
A 7
0170
T
elep
hone
: (5
04) 5
82-3
800
CO
UN
SEL
FO
R:
D
efen
dant
/App
elle
e - C
onoc
o Ph
illip
s Com
pany
THIB
ODE
AUX,
Chi
ef Ju
dge.
The
plain
tiffs,
Car
los
and
Lori
Boon
e, ap
peal
from
a m
otio
n fo
r
sum
mar
y ju
dgm
ent a
nd e
xcep
tion
of p
resc
riptio
n de
cided
adv
erse
ly to
them
and
filed
by
Ener
Ques
t Oil
& G
as, L
LC,
prop
erty
. Fi
ndin
g th
at th
e plai
ntiff
s fail
ed to
carry
their
bur
den
of p
rovi
ng a
valid
right
of a
ction
in to
rt or
con
tract,
we
affir
m th
e ju
dgm
ent d
ismiss
ing
Ener
Ques
t
from
the p
laint
I.
ISSU
ES
W
e mus
t dec
ide:
(1
) wh
ether
the
trial
cour
t erre
d in
gra
ntin
g su
mm
ary
judg
men
t to
Ener
Ques
t; an
d
(2
) ex
cept
ion o
f pr
escr
iptio
n.
II.
FA
CTS
AND
PRO
CEDU
RAL
HIS
TORY
In A
ugus
t of
200
5 th
e Bo
ones
pur
chas
ed 1
8.66
acre
s of
lan
d
encu
mbe
red
by m
iner
al re
serv
ation
s an
d oi
l and
gas
leas
es; t
he s
ale p
rice
was
$120
,000.0
0.
Th
e se
llers,
Pr
imea
ux
Prop
ertie
s, In
c.,
had
purc
hase
d th
e
encu
mbe
red
prop
erty
in
2003
fro
m A
aron
Lag
neau
x an
d Er
ic La
gnea
ux f
or
$105
,000.0
0. O
il an
d ga
s ope
ratio
ns o
n th
e pr
oper
ty a
llege
dly
date
back
to 1
972.
The
Lagn
eaux
acq
uisit
ion
was v
ia ge
nera
tiona
l inh
erita
nces
dati
ng b
ack
to 1
971,
and
it ap
pare
ntly
inclu
ded
the m
iner
als be
caus
e Lag
neau
x sp
ecifi
cally
res
BO
ON
Ev.
CO
NO
CO
PH
ILLIP
S
A-1
MEALEY’S Fracking Report Vol. 1, #1 May 2014
2
2003
.
The
defen
dant
oil a
nd g
as op
erator
, Ene
rQue
st, h
ad p
urcha
sed th
e
wells
and o
perat
ing ri
ghts
from
Philli
ps P
etrole
um C
ompa
ny in
2000
. En
erQue
st
sold
all o
f its
opera
ting
rights
and
intere
st in
the p
ropert
y, alo
ng w
ith al
l of i
ts
restor
e, the
surfa
ce of
the p
ropert
y.
In M
ay o
f 201
0, the
Boo
nes,
assert
ing c
ontam
inatio
n an
d pro
perty
dama
ge, fi
led su
it aga
inst s
ix oil
and g
as op
erator
s, inc
luding
CON
OCOP
HILL
IPS
,
The B
oone
s asse
rted t
hat th
ey ha
d with
in the
last
year
found
aban
done
d deb
ris an
d
equip
ment
and
assert
ed a
failur
e to p
roperl
y clea
n and
resto
re the
prop
erty.
In a
first
amen
ded p
etitio
n in J
uly of
2012
, the B
oone
s ide
ntifie
d thre
e of f
ive w
ells o
n
the pr
opert
y t.
EnerQ
uest
filed
a m
otion
for s
umma
ry jud
gmen
t asse
rting
that
the
Boon
es we
re pre
clude
d by l
aw fr
om as
sertin
g a to
rt or
contr
act c
laim
for pr
opert
y
dama
ge th
at pre
-dated
their
200
5 ac
quisi
tion
of the
prop
erty
witho
ut a
spec
ific
assign
ment
of tha
t righ
t from
the f
ormer
owne
r. A
mong
its e
xhibi
ts, E
nerQ
uest
that E
nerQ
uest
did no
t con
duct
any o
perat
ions o
n the
prop
erty a
fter A
pril 3
0, 20
04,
,
also a
ttach
ed th
e act
of sal
e from
Prim
eaux
to th
e Boo
nes d
ated A
ugus
t 26,
2005
,
show
ing th
at no
assig
nmen
t of p
re-ac
quisi
tion d
amag
e righ
ts we
re co
nvey
ed to
the
Boon
es by
the p
reviou
s own
er, Pr
imea
ux.
3
includ
ed n
ewly-
obtai
ned
assign
ments
of
rights
from
the
prev
ious
owne
rs,
Prim
eaux
and
Lag
neau
x. E
nerQ
uest
assert
ed th
at the
assi
gnme
nts w
ere in
valid
and
that a
ny to
rt cla
ims t
hey
soug
ht to
trans
fer w
ere p
rescri
bed
since
Lag
neau
x
sold
the pr
opert
y in 2
003 a
nd Pr
imea
ux so
ld the
prop
erty i
n 200
5.
The
trial
court
allo
wed
the B
oone
s pe
rmiss
ion t
o fil
e a
secon
d
supp
lemen
tal an
d ame
nding
petiti
on as
sertin
g the
ir rig
ht as
assign
ees t
o the
righ
ts
of the
prev
ious o
wners
; clai
ms fo
r frau
d an
d co
nspir
acy,
as we
ll as
the so
lidary
summ
ary ju
dgme
nt an
d exc
eptio
n of p
rescri
ption
.
III
. ST
ANDA
RD O
F REV
IEW
The g
rant o
r den
ial of
a mo
tion f
or su
mmary
judg
ment
is rev
iewed
de
wheth
er su
mmary
judg
ment
is ap
propri
ate; i
.e. w
hethe
r the
re is
any g
enuin
e issu
e
of ma
terial
fact,
and
whe
ther t
he m
ovan
t is e
ntitle
d to
judgm
ent a
s a m
atter
of
Sama
ha v
. Rau
, 07-1
726,
pp. 3
-4 (L
a. 2/2
6/08),
977
So.2
d 88
0, 88
2-83
perem
ptory
exce
ption
, with
evid
ence
bein
g int
roduc
ed a
t the
hea
ring
on th
e
to the
man
ifest
error-
Spec
ialize
d Lo
an
Servi
cing
LLC
v. Ja
nuar
y, 12
-2668
, pp.
3-4 (L
a. 6/2
8/13),
119
So.3
d 58
2, 58
4
(citat
ions o
mitte
d).
4 IV
. LA
W A
ND D
ISCU
SSIO
N
granti
ng th
e moti
on fo
r sum
mary
judgm
ent a
nd th
e exc
eptio
n of p
rescri
ption
filed
that t
he B
oone
s (1)
have
no
valid
contr
act c
laims
again
st En
erQue
st be
caus
e the
subs
eque
nt pu
rchase
r doc
trine
inva
lidate
s the
ir cla
ims f
or pre
-acqu
isitio
n prop
erty
dama
ge; t
he p
lainti
ffs ar
e not
a part
y to
any
lease,
assig
nmen
t, or
other
contr
act
with
EnerQ
uest;
and t
he pl
aintif
fs did
not o
btain
an as
signm
ent o
f any
contr
actua
l
rights
from
the p
reviou
s own
ers.
EnerQ
uest
furthe
r asse
rts th
at the
Boo
nes (
2)
have
no cl
aims i
n tort
beca
use a
ny to
rt cla
ims a
cquir
ed fr
om th
e prev
ious o
wners
do n
ot rel
ate b
ack
to the
orig
inal p
etitio
n; an
d En
erQue
st is
not s
olida
rily
liable
with
Petro
E fo
r any
actio
nable
tort
claim
s.
The B
oone
s argu
e tha
t (1)
their
contr
act c
laims
are v
alid b
ecau
se the
subs
eque
nt pu
rchase
r doc
trine
doe
s not
apply
; the
relev
ant c
ontra
cts g
ive th
em a
right
of ac
tion t
o sue
for d
amag
es an
d rest
oratio
n of t
he pr
opert
y; an
d the
contr
act
claim
s hav
e not
prescr
ibed b
ecau
se En
erQue
st op
erated
unde
r mine
ral le
ases u
ntil
2004
, and
the s
urfac
e lea
se wa
s in
effec
t unti
l 201
2. A
s to
the to
rt cla
ims,
the
Boon
es arg
ue th
at (2)
they
time
ly ass
erted
tort
claim
s aga
inst s
olida
ry an
d/or j
oint
tortfe
asors;
they
obta
ined
valid
assig
nmen
ts of
the to
rt cla
ims a
t the
time
of t
he
dama
ge; a
nd th
eir se
cond
supp
lemen
tal pe
tition
relat
es ba
ck to
the f
iling
of the
ir
origin
al pe
tition
for d
amag
es.
We b
egin
with
a rev
iew of
the s
ubseq
uent
purch
aser r
ule or
doctr
ine.
A-2
MEALEY’S Fracking Report Vol. 1, #1 May 2014
5
Subs
eque
nt Pu
rchas
er Do
ctrine
Th
e sub
seque
nt pu
rchase
r rule
is a
jurisp
ruden
tial
rule w
hich h
olds t
hat a
n own
er of
prope
rty ha
s no r
ight o
r ac
tual
intere
st in
recov
ering
from
a t
hird
party
for
dama
ge w
hich
was i
nflict
ed o
n the
prop
erty
befor
e his
pu
rchase
, in th
e abs
ence
of an
assig
nmen
t or s
ubrog
ation
of
the ri
ghts
belon
ging t
o the
owne
r of t
he pr
opert
y whe
n the
dama
ge w
as inf
licted
. Ea
gle P
ipe an
d Sup
ply, I
nc. v
. Ame
rada
Hess
Cor
p., 10
-2267
, p. 8
(La.
10/25
/11),
79 So
.3d 24
6, 25
6-57.
In art
iculat
ing th
e app
licati
on an
d sou
rce of
the s
ubseq
uent
purch
aser
doctr
ine, t
he L
ouisi
ana S
uprem
e Cou
rt in
Eagle
Pipe
and S
upply
, Inc
. prov
ided a
thorou
gh a
nalys
is of
the p
ertine
nt pri
ncipl
es of
Louis
iana
prope
rty l
aw a
nd
s in
the L
ouisi
ana
Civil
Cod
e. R
eleva
nt to
our
inquir
ies he
re, a
real r
ight i
s not
defin
ed by
the C
ivil C
ode b
ut ha
s lon
g bee
n held
of ma
n to t
hings
and m
ay, t
heref
ore, b
Eagle
Pipe
and S
upply
, Inc
., 79 S
o.3d a
t 259
(quo
ting H
arwo
od O
il &
Minin
g Co.,
240 L
a. at
652,
124 S
o.2d a
t 767
(195
8)).
A rea
l righ
t and
a rea
l obli
gatio
n both
attac
h to a
thing
. Id.
at 26
1; La
.Civ.
Code
art. 1
764,
Revis
ion C
omme
nts--1
984,
(b).1
The l
egal
right
that a
perso
n has
again
st an
other
perso
n to
dema
nd th
e pe
rform
ance
of
an o
bliga
tion
is ca
lled
a pe
rsona
l righ
t. D
istinc
t from
a rea
l righ
t, wh
ich ca
n be
ass
erted
aga
inst t
he w
orld,
a pe
rsona
l righ
t is e
ffecti
ve
only
betw
een t
he pa
rties.
La.
C.C.
art. 1
758.
This
court
relati
onsh
ip to
man
and
refers
mere
ly to
an o
bliga
tion
one o
wes t
o ano
ther w
hich m
ay be
decla
red on
ly ag
ainst
1 A rea
l obli
gatio
n is t
ransfe
rred t
o the
unive
rsal o
r part
icular
succ
essor
who a
cquir
es the
mo
vable
or im
mova
ble th
ing to
whic
h the
oblig
ation
is at
tache
d, wi
thout
a spe
cial p
rovisi
on to
tha
t effe
ct.
Bu
t a p
articu
lar s
ucce
ssor
is no
t pers
onall
y bo
und,
unles
s he
assu
mes
the p
erson
al ob
ligati
ons o
f his
trans
feror
with
respe
ct to
the th
ing, a
nd h
e may
libe
rate h
imsel
f of t
he re
al ob
ligati
on by
aban
donin
g the
thing
. La.C
iv.Co
de ar
t. 176
4.
6
Harw
ood
Oil &
Mini
ng C
o., 2
40 L
a. at
651,
124
So.2d
at 7
67 [c
iting
Reag
an [v
. Mur
phy,
235
La. [5
29], 5
41, 1
05 So
.2d [2
10], 2
14 [(
1958
))].
. .
. .
[a co
ntrac
t abo
ut pro
perty
] doe
s not
conv
ey an
y rea
l righ
t or
titlRi
char
d v.
Hall,
2003
-1488
, p. 1
7-18
(La.4
/23/04
), 87
4
Reag
an, [1
05 So
.2d at
] 214
.
. . . .
Re
al rig
hts,
and
real
oblig
ation
s pa
ss to
a su
bseq
uent
acqu
irer o
f the
thing
to w
hich
it is
attac
hed
witho
ut the
nee
d of
a sti
pulat
ion to
that
effec
t. L
a. C[
iv.Co
de] a
rt. 1
764,
Revis
ion C
omme
nts--1
984,
(c). A
pe
rsona
l righ
t, by c
ontra
st, ca
nnot
be as
serted
by an
other
in the
absen
ce of
an as
signm
ent o
r sub
rogati
on. L
a. C.
C.
art. 1
764,
Revis
ion C
omme
nts--1
984,
(d) an
d (f).
Ea
gle P
ipe an
d Sup
ply, In
c., 79
So.3d
at 26
1-62 (
footno
tes om
itted).
Based
upo
n the
foreg
oing,
real r
ights
and
oblig
ation
s atta
ch to
the
thing
, whil
e pers
onal
rights
and o
bliga
tions
attac
h to t
he pe
rson.
Furth
er, an
d more
spec
ifica
lly, t
he re
al rig
hts a
nd o
bliga
tions
of o
wners
hip a
ttach
to a
piec
e of
prope
rty w
hen i
t is s
old w
ithou
t the
need
of a
stipu
lation
, but
the pe
rsona
l righ
ts
and o
bliga
tions
arisi
ng fr
om a
lease
betw
een t
he fo
rmer
owne
r and
the l
essee
for
even
ts oc
curri
ng b
efore
the sa
le do
not
pass
to the
new
own
er un
less t
hey
are
spec
ifica
lly as
signe
d.
As il
lustra
ted by
Eag
le Pi
pe a
nd S
upply
, Inc
. thro
ugh
its an
alysis
of
Clar
k v.
J.L.
Warn
er Co
. et
al.,
6 La
.Ann
. 40
8 (18
51)
and
subs
eque
nt
jurisp
ruden
ce, th
e form
er ow
ner r
etains
the r
ight to
reco
ver t
he da
mage
s cau
sed by
aris
es be
caus
e his
real
rights
in th
e
7
owne
rship
of the
prop
erty h
ave b
een d
isturb
ed--h
is us
e, en
joyme
nt or
dispo
sal of
Eagle
Pipe
and
Sup
ply, I
nc.,
79 S
o.3d
at 26
4. T
he co
urt fu
rther
stated
:
Clar
k ex
plicit
ly sta
tes [t
hat]
the p
erson
al rig
ht of
the
prope
rty ow
ner t
o dem
and d
amag
es for
the i
njury
to the
pro
perty
mus
t be a
ssign
ed o
r sub
rogate
d if
the p
erson
al rig
ht is
to su
rvive
a ch
ange
of ow
nersh
ip in
the pr
opert
y:
plaint
iff i
s in
the u
sual
form
for t
he
conv
eyan
ce
of rea
l est
ate
and
its
appu
rtena
nces.
It do
es no
t tran
sfer h
er cla
im
for da
mage
s, ex
pressl
y, no
r is t
here
anyth
ing
in it
which
ind
icates
a
trans
fer
by
impli
catio
n. T
he ri
ghts
and
appu
rtena
nces
menti
oned
in th
e bil
l of s
ale h
ave
alway
s be
en c
onsid
ered
real
rights
. It
does
not
appe
ar, th
erefor
e, eit
her b
y law
or c
ontra
ct,
that t
he pl
aintif
f has
any c
laim
for da
mage
s pre
vious
to th
e 16th
of M
ay, 1
848,
when
he
purch
ased t
he pr
opert
y. Ea
gle P
ipe an
d Sup
ply, In
c., 79
So.3d
at 26
4-65 (
quoti
ng C
lark,
6 La.A
nn. a
t 409
).
He
re, th
e ac
t of s
ale fr
om P
rimea
ux to
the
Boon
es on
Aug
ust 2
6,
and d
elive
r[s] w
ith fu
ll gu
arante
e of t
itle an
d free
from
all e
ncum
branc
es an
d with
18.66
-acre
tract
of lan
d in t
he le
gal d
escrip
tion.
Like
wise,
the p
reviou
s act
of sal
e
from
Lagn
eaux
to P
rimea
ux in
2003
conta
ined a
lmos
t ide
ntica
l lan
guag
e. U
nder
Clar
k and
Eag
le Pi
pe, th
is lan
guag
e is g
enera
l lang
uage
and i
n the
usua
l form
for a
lessee
for d
amag
e alre
ady d
one t
o the
land
.
A-3
MEALEY’S Fracking Report Vol. 1, #1 May 2014
8
Prim
eaux
is su
bject
to mi
neral
reser
vatio
ns an
d lea
ses. T
he 20
05 P
rimea
ux ac
t of
sale t
o the
Boo
nes r
eferen
ces t
he p
rior s
ale fr
om L
agne
aux
to Pr
imea
ux in
200
3
and
provid
es the
reco
rdatio
n inf
ormati
on.
Both
acts
of sal
e stat
e tha
t the
sale
is
cting
the p
ropert
y. T
hus,
both
docu
ments
indica
te tha
t mine
ral ri
ghts
and l
eases
have
been
reser
ved a
nd en
cumb
er the
land
,
for da
mage
s.
The s
ubseq
uent
purch
aser d
octri
ne is
not li
mited
to ap
paren
t dam
ages;
it ap
plies
to pro
hibit
suit
again
st the
lesse
e whe
ther t
he pr
e-acq
uisitio
n dam
age i
s
appa
rent o
r not.
Eag
le Pi
pe a
nd S
upply
, Inc
., 79
So.3
d 24
6. If
dam
age t
o the
prope
rty is
appa
rent, t
he pu
rchase
r is p
resum
ed to
know
its c
ondit
ion an
d to h
ave
nego
tiated
a sal
e pric
e tak
ing th
e defe
cts in
to co
nside
ration
. Id.
If t
he da
mage
is
not a
ppare
nt, th
e purc
haser
has a
caus
e of a
ction
in re
dhibi
tion a
gains
t the s
eller
for
rescis
sion o
f the
sale
or red
uctio
n of t
he sa
le pri
ce, b
ut he
does
not h
ave a
righ
t of
.
The
subs
eque
nt pu
rchase
r doc
trine
is n
ot lim
ited
to tor
t clai
ms, a
s
show
n in
Clar
k, 6
La.A
nn. 4
08, a
nd it
is n
ot lim
ited
to ca
ses in
volvi
ng ex
pired
leases
, as s
ugge
sted b
y the
Boo
nes.
In it
s com
prehe
nsive
analy
sis of
the d
octri
ne,
the c
ourt
in Ea
gle P
ipe a
nd S
upply
, Inc
., 79
So.3
d at
266
(emph
asis
adde
d)
(footn
ote o
mitte
d), d
iscus
sed f
urthe
r jur
isprud
ence
tha
t inc
luded
the
rele
vant
issue
s, as
follow
s:
In
Matth
ews v
. Alsw
orth,
45
La.A
nn. 4
65, 1
2 So
. 51
8 (18
93),
prope
rty w
as so
ld su
bject
to an
exis
ting
lease
. Th
e new
owne
r file
d suit
again
st the
lesse
e for
a
his o
bliga
tions
, for
comp
ensat
ion fo
r the
dim
inutio
n in
9
the v
alue o
f the
pro
prope
rty, a
nd fo
r the
rent
for th
e yea
r whic
h ac
crued
in
the ye
ar be
fore t
he sa
le. T
his co
urt fo
und t
he ne
w ow
ner
had n
o righ
t of a
ction
to su
e for
dama
ges f
rom th
e less
ee
for d
amag
e to
the p
ropert
y befo
re the
sale,
eithe
r und
er the
leas
e con
tract
or in
tort.
Ins
tead,
the ri
ght t
o sue
for
dama
ge to
the
prope
rty in
flicte
d be
fore
the sa
le wa
s a
perso
nal r
ight o
f the
form
er ow
ner/l
essor
which
aros
e
the l
ease
durin
g the
tim
e the
less
ee o
wed
those
oblig
ation
s to t
he fo
rmer
owne
r/less
or.
Th
e form
er ow
ner h
ad no
t assi
gned
or su
broga
ted
this p
erson
al rig
ht to
the n
ew o
wner
in the
act o
f sale
. Th
e dee
d con
taine
d the
follo
wing
lang
uage
:
Said
lease
and
all th
e rig
hts
in,
to,
or un
der
the
same
are
trans
ferred
he
reby,
and
simult
aneo
usly
herew
ith,
to the
con
veye
e he
rein.
This
co
nvey
ance
is m
ade w
ith co
mplet
e tran
sfer
and
subro
gatio
n of a
ll rig
hts an
d all
actio
ns
of wa
rranty
or o
therw
ise ag
ainst
all fo
rmer
claim
ants,
prop
rietor
s, ten
ants,
or w
arran
tors
of the
prop
erty h
erein
conv
eyed
.
By th
is lan
guag
e, the
cou
rt he
ld the
new
own
er/les
sor
was s
ubrog
ated t
o the
lease
prov
ision
s, bu
t only
from
the
date
of his
purch
ase o
f the p
rope
rty is
liable
on
the
co
vena
nts
of his
lea
se,
and
to the
se,
unqu
estion
ably,
plai
ntiff
[the
new
prope
rty o
wner]
is
subro
gated
from
the d
ate of
his p
urcha
se. B
y the
use o
f
did n
ot be
come
an as
signe
e of d
amag
es of
date
prior
to M
atthe
ws, 4
5 La.A
nn. a
t 469
, 12 S
o. at
519.
Th
e pers
onal
right
of the
owne
r to s
ue fo
r dam
ages
was
not
expli
citly
assign
ed i
n the
act
of sal
e, an
d ad
dition
ally
was
not a
n ac
cesso
ry rig
ht wh
ich p
assed
wi
th the
title
with
out d
escrip
tion o
f, or
refere
nce t
o, the
cla
im.
In the
act o
f sale
, the
prop
erty
was s
pecif
ically
de
scribe
d, an
d the
re wa
s no
men
tion
of a
claim
for
were
addit
ional
rights
in th
e natu
re of
dama
ges,
the de
ed
Matth
ews,
45 L
a.Ann
. at
469,
12 S
o. at
519.
Matt
hews
reinf
orces
the pr
opos
ition
that p
erson
al rig
hts of
the f
ormer
owne
r do n
ot pa
ss wi
th the
prop
erty i
n an a
ct of
sale u
nless
spec
ifica
lly as
signe
d or
subro
gated
to th
e new
owne
r.
10
Thus
, eve
n whe
n prop
erty i
s con
veye
d duri
ng th
e term
of a
lease,
the
purch
aser c
anno
t rec
over
from
the le
ssee f
or da
mage
s acc
ruing
prio
r to
the sa
le.
See
also
Prad
os v
. Sou
th Ce
ntral
Bell
Tel.
Co.,
329
So.2d
744
(La.1
975).
In
Matth
ews,
12 S
o. 51
8, be
caus
e the
dee
d of
sale a
lso co
nvey
ed th
e lea
se an
d the
again
st the
lesse
e, bu
t only
for d
amag
es ari
sing a
fter t
he da
te of
sale.
In the
prese
nt ca
se, th
e acts
of sa
le fai
l to tr
ansfe
r any
pre-a
cquis
ition
rights
to th
e new
owne
rs for
dama
ges c
aused
by th
e less
ee pr
ior to
the a
ct of
sale
and
spec
ifica
lly w
ithho
ld the
mine
rals
and
all l
eases
from
the
act
of sal
e.
Lagn
eaux
reser
ved
the ri
ghts
for h
imsel
f in
2003
, and
in 2
005
Prim
eaux
, who
neve
r obta
ined t
hem
from
Lagn
eaux
, refe
rence
d the
mine
ral an
d lea
se res
ervati
ons
in its
sale
to the
Boo
nes a
nd po
inted
the B
oone
s to t
he re
corde
d prio
r act
of sal
e
from
Lagn
eaux
. Ac
cordi
ngly,
the B
oone
s kne
w tha
t the
land
was
encu
mbere
d by
reserv
ed m
ineral
righ
ts an
d lea
ses. U
nder
the su
bseq
uent
purch
aser d
octri
ne, th
ey
do no
t hav
e a ri
ght o
f acti
on to
sue t
he le
ssee f
or da
mage
s occ
urring
prior
to th
eir
acqu
isitio
n of t
he pr
opert
y.
Th
e Assi
gnme
nts
In Se
ptemb
er of
2012
, the B
oone
s obta
ined a
ssign
ments
from
form
er
owne
rs, L
agne
aux a
nd P
rimea
ux, in
attem
pts to
obtai
n the
righ
t to s
ue E
nerQ
uest
for da
mage
s tha
t the a
ct of
sale d
id no
t con
vey.
We f
ind th
at the
assig
nmen
ts als
o
fail t
o pro
vide
the p
lainti
ffs w
ith a
righ
t of a
ction
for p
re-ac
quisi
tion
dama
ges
again
st En
erQue
st. T
he L
agne
aux a
ssign
ment
attem
pts to
assig
n all
perso
nal a
nd
tort c
auses
of ac
tion,
includ
ing in
herit
ed ri
ghts,
to th
e Boo
nes.
Like
the a
ct of
sale,
howe
ver,
the as
signm
ent s
pecif
ically
exclu
des m
ineral
and
contr
actua
l righ
ts an
d
A-4
MEALEY’S Fracking Report Vol. 1, #1 May 2014
11
leases
. Th
e La
gnea
ux a
ssign
ment
states
in th
e fou
rteen
th pa
ragrap
h (em
phasi
s
adde
d):
Nothi
ng he
rein
shall
affec
t and
this
Agre
emen
t spe
cifica
lly ex
clude
s the
mine
ral r
ights
and/o
r con
tractu
al rig
hts, in
cludin
g, bu
t not
limite
d to,
leases
, of th
e
Parti
es
had t
aken
a low
er pri
ce fr
om P
rimea
ux be
caus
e of d
amag
e cau
sed to
the l
and b
y
EnerQ
uest,
Lag
neau
x wo
uld h
ave k
nown
this
at lea
st by
the t
ime o
f sale
. Th
us,
unde
r La
.Civ.
Code
art.
231
5, an
d un
der
La.C
iv.Co
de a
rt. 3
493
spec
ifica
lly
gove
rning
dama
ge to
immo
vable
prop
erty,
Lagn
eaux
had o
ne ye
ar, or
until
Marc
h
of 20
04 to
brin
g su
it ag
ainst
EnerQ
uest.
The
refore
, in
2012
, Lag
neau
x ha
d no
right
of ac
tion i
n tort
to as
prescr
ibed e
ight y
ears
earli
er.
With
rega
rd to
the as
signm
ent b
y Prim
eaux
, also
in S
eptem
ber 2
012,
Prim
eaux
could
not
assign
contr
actua
l righ
ts un
der t
he le
ases b
ecau
se Pr
imea
ux
did n
ot ac
quire
contr
actua
l righ
ts up
on it
s purc
hase
from
Lagn
eaux
in 2
003.
If
Prim
eaux
thou
ght i
t had
to ta
ke a
lower
sale p
rice f
rom B
oone
in A
ugus
t of 2
005
beca
use o
f dam
age b
y a le
ssee,
it wo
uld ha
ve ac
quire
d tha
t kno
wled
ge at
least
by
the ti
me of
sale
and w
ould
have
had a
year,
or un
til Au
gust
of 20
06, t
o brin
g its
tort s
uit.
Howe
ver,
Prim
eaux
did
not t
ake
a low
er pri
ce; s
ince
it pa
id on
ly
$105
,000.0
0 for
the pr
opert
y in 2
003 a
nd so
ld it
to the
Boo
nes f
or $1
20,00
0.00 i
n
2005
, the
re ha
d be
en n
o dim
inutio
n of
value
. In
any
even
t, wh
en P
rimea
ux
exec
uted t
he as
signm
ent in
2012
, it ha
d no r
ight o
f acti
on to
assig
n to t
he B
oone
s.
Acco
rding
ly, th
e Bo
ones
did n
ot ob
tain
any
tort o
r co
ntrac
t righ
ts fro
m the
previo
us ow
ners
via th
e assi
gnme
nts to
sue f
or da
mage
s cau
sed pr
ior to
the a
ct of
sale i
n 200
5.
12
The
Boon
es sig
ned
affida
vits
statin
g tha
t Lag
neau
x an
d Pr
imea
ux
inten
ded t
o assi
gn co
ntrac
tual r
ights
to the
Boo
nes i
n the
assig
nmen
ts wh
ere th
ey
refere
nced
all r
ights
and c
auses
of ac
tion.
Tha
t is no
t wha
t these
assig
nmen
ts, th
e
words
of a
contr
act a
re cle
ar an
d exp
licit
and l
ead t
o no a
bsurd
cons
eque
nces,
no
art. 2
046.
Whe
n Ene
rQue
st ass
erted
in it
s moti
on fo
r sum
mary
judgm
ent t
hat t
he
Boon
es wo
uld no
t be a
ble to
prev
ail on
its c
laims
for d
amag
es ag
ainst
EnerQ
uest,
the bu
rden s
hifted
to th
e Boo
nes t
o sho
w tha
t they
could
prev
ail at
trial
:
Th
e bu
rden
of pro
of rem
ains
with
the m
ovan
t. Ho
weve
r, if
the m
ovan
t will
not b
ear t
he bu
rden o
f proo
f at
trial
on th
e ma
tter
that i
s be
fore
the c
ourt
on th
e mo
tion
fs b
urden
on
the m
otion
doe
s not
requir
e him
to n
egate
all
essen
tial
eleme
nts of
the a
dvers
s clai
m, ac
tion,
or de
fense,
bu
t rath
er to
point
out to
the c
ourt
that th
ere is
an ab
sence
of
factua
l sup
port
for o
ne o
r more
elem
ents
essen
tial t
o
if the
adv
erse
party
fail
s to
produ
ce f
actua
l su
pport
su
fficie
nt to
estab
lish
that h
e will
be ab
le to
satisf
y his
ev
identi
ary b
urden
of p
roof a
t tria
l, the
re is
no g
enuin
e iss
ue of
mate
rial f
act.
La.C
ode C
iv.P.
art. 9
66(C
)(2).
The
only
evide
nce
addu
ced
by th
e Bo
ones
are th
e ele
venth
-hour
assign
ments
whic
h do n
ot co
nvey
any v
alid t
ort or
contr
act c
laims
to th
e Boo
nes.
Acco
rding
ly, w
e find
that
the as
signm
ents
do no
t prov
ide th
e Boo
nes w
ith a
right
of ac
tion i
n tort
or in
contr
act to
sue E
nerQ
uest
for da
mage
s to t
he pr
opert
y prio
r to
the B
oone
s acq
uisitio
n of t
he pr
opert
y.
13
Stipu
lation
Pou
r Autr
ui
The
Boon
es ass
ert th
at the
ir co
ntrac
t clai
ms a
re sti
ll va
lid b
ecau
se,
while
not a
ctual
parti
es, th
ey ar
e thir
d part
y ben
eficia
ries t
o the
surfa
ce le
ase th
at
Lagn
eaux
gran
ted to
Ene
rQue
st in
2002
, purs
uant
to La
.Civ.
Code
art. 1
978.2 T
hey
cite H
azelw
ood
Farm
, Inc
. v. L
iberty
Oil
& Ga
s Cor
p., 0
2-266
(La.A
pp. 3
Cir.
4/2/03
), 84
4 So
.2d 3
80, w
rits d
enied
, 03-1
585
and
03-16
24 (L
a. 10
/31/03
), 85
7
So.2d
476.
The
re, th
e orig
inal 1
926
lease
provid
ed (e
mpha
sis ad
ded):
shall
be re
spon
sible
for al
l dam
ages
caus
ed
found
to cr
eate
a stip
ulatio
n po
ur a
utrui
in fav
or of
the H
azelw
ood
corpo
ration
,
which
acq
uired
own
ership
in 1
991
(Haz
elwoo
d wa
s ow
ned
by th
e Ed
muns
ton
family
who
had o
wned
the p
ropert
y sinc
e 196
8). T
he co
urt in
Haz
elwoo
d Far
m,
Inc., 8
44 So
.2d 38
0, ex
plaine
d tha
t this
findin
g was
the la
w of
the ca
se ba
sed up
on
a prio
r app
eal, w
hich m
ore th
oroug
hly an
alyze
d the
issu
e.
More
spec
ifica
lly, i
n Ha
zelwo
od F
arm,
Inc.
v. Lib
erty
Oil &
Gas
Corp
., 01-3
45 (L
a.App
. 3 C
ir. 6/
20/01
), 79
0 So
.2d 93
, writ
denie
d, 01
-2115
(La.
7/26/0
1), 7
94 S
o.2d
834,
the p
lainti
ff wa
s fou
nd to
hav
e no
right
of ac
tion
as a
party
to, o
r as a
n assi
gnee
of, a
mine
ral le
ase be
caus
e, as
here,
the v
endo
r befo
re
ghts
to him
self.
The
court
did,
howe
ver,
find t
hat t
he la
ngua
ge of
the o
rigina
l lea
se, ob
ligati
ng th
e gran
tee/le
ssee
to pa
y for
all da
mage
s cau
sed by
its o
perat
ions,
confe
rred a
bene
fit on
the c
urren
t
owne
r, Haz
elwoo
d:
Our j
urisp
ruden
ce re
cogn
izes s
evera
l fac
tors w
hich m
ust
be co
nside
red in
deter
minin
g whe
ther a
contr
act p
rovide
s
2
A co
ntrac
ting
party
may
stip
ulate
a be
nefit
for a
third
pers
on c
alled
a th
ird p
arty
bene
ficiar
y. O
nce t
he th
ird pa
rty ha
s man
ifeste
d his
inten
tion t
o ava
il him
self o
f the
bene
fit, th
e pa
rties
may n
ot dis
solve
the c
ontra
ct by
mutu
al co
nsen
t with
out t
he b
enef
s agre
emen
t.La
.Civ.
Code
art. 1
978.
A-5
MEALEY’S Fracking Report Vol. 1, #1 May 2014
14
for a
stip
ulatio
n po
ur a
utrui.
Th
ese f
actor
s are
en
umera
ted in
And
repon
t v. A
cadia
Dril
ling
Co.,
231
So.2d
347,
351,
255 L
a. 34
7 (19
69) a
s:
(1) T
he e
xisten
ce o
f a
legal
relati
onsh
ip be
twee
n the
prom
isee
and
the th
ird p
erson
inv
olving
an
ob
ligati
on
owed
by
the
pro
misee
to
the
bene
ficiar
y wh
ich
perfo
rman
ce o
f the
prom
ise w
ill dis
charg
e; (2)
the
exist
ence
of
a fac
tual r
elatio
nship
be
twee
n the
prom
isee a
nd th
e thir
d pe
rson,
where
(a)
there
is a
possi
bility
of
future
lia
bility
eithe
r pers
onal
or rea
l on t
he pa
rt of
the p
romise
e to
the b
enefi
ciary
again
st wh
ich p
erform
ance
of
the p
romise
e (si
c) wi
ll pro
tect
the f
ormer;
(b)
securi
ng a
n ad
vanta
ge
for
the
third
perso
n ma
y be
nefic
ially
affec
t the p
romise
e in a
mate
rial
way;
(c) th
ere a
re tie
s of k
inship
or o
ther
circu
mstan
ces
indica
ting
that a
ben
efit b
y wa
y of
gratui
ty wa
s inte
nded
. Se
e Sm
ith,
Third
Part
y Ben
eficia
ries i
n Lou
isian
a: T
he
Stipu
lation
Pou
r Autr
ui, 1
1 Tu
l.L.R
ev. 1
8, 58
(193
6).
Hazel
wood
Far
m, In
c., 79
0 So.2
d at 1
00.
The H
azelw
ood c
ourt
did no
t spe
cifica
lly ap
ply th
e ind
ividu
al fac
tors
abov
e, bu
t rath
er foc
used
upon
lang
uage
of th
e lea
se in
Andr
epon
t, and
the a
lmos
t
identi
cal l
angu
age i
n the
lease
in H
azelw
ood.
In A
ndrep
ont,
a sha
re cro
p ten
ant
and t
he la
ndow
ner e
ntered
into
a verb
al lea
se wh
erein
the la
ndow
ner a
llowe
d the
tenan
t to fa
rm so
ybea
ns on
the l
and i
n retu
rn for
twen
ty pe
rcent
of his
crop
. Late
r,
the ow
ner a
lso gr
anted
the o
il an
d gas
defen
dant
a lea
se; bu
t the
owne
r neg
otiate
d
broad
er lan
guag
e so
that
the fi
nal v
ersion
of t
he le
ase p
rotec
ted n
ot jus
t the
owne
r/less
or bu
t also
prote
cted t
he fa
rmer/
lessee
, Mr. A
ndrep
ont:
The p
rinted
form
use
d as
the o
il an
d ga
s lea
se ini
tially
timbe
r an
d gro
wing
crop
s of
the L
essor
caus
ed b
y Id
15
Id.
Upon
rev
iewing
this
lan
guag
e, the
Lou
isian
a Su
preme
Cou
rt fou
nd i
t to
create
a s
tipula
tion
pour
au
trui
seekin
g to e
nforce
a be
nefit
stipu
lated
in hi
s fav
or by
the
lando
wner
lesso
r as
a co
nditio
n of
a co
mmuta
tive
contr
act b
etwee
n the
land
owne
r less
or an
d the
oil a
nd ga
s les
see. D
efend
ants,
as as
signe
es of
the oi
l and
gas l
essee
, are
, the
refore
, pa
rties
to the
con
tract
in wh
ich t
he
Id. a
t 350
. Th
erefor
e, the
co
urt r
easo
ned
that
Andre
pont,
as
bene
ficiar
y of
the
stipu
lation
, had
a dir
ect r
ight o
f acti
on ag
ainst
the le
ssee
to rec
over
his da
mage
s. Ha
zelwo
od F
arm,
Inc.,
790 S
o.2d a
t 100
-01.
Beca
use
the la
ngua
ge in
the
lease
was s
trikin
gly si
milar
to th
at in
Andr
epon
t, the
Haz
elwoo
d co
urt in
terpre
ted th
e lea
se as
provid
ing a
stipu
lation
pour
autr
ui in
favor
of Ha
zelw
ood.
Like
wise,
in M
agno
lia C
oal T
ermina
l v.
Philli
ps O
il Com
pany
, 576
So.2d
475,
477 (
La. 1
991)
(emph
asis a
dded
), als
o cite
d
for a
ll da
mage
s ca
used
by
Magn
olia C
oal, 5
76 S
o.2d 4
75, a
high
ly dis
tingu
ishab
le ca
se, di
d not
discu
ss sti
pulat
ion p
our a
utrui
but d
id all
ow th
e ne
w lan
down
er, M
agno
lia, t
o
recov
er ag
ainst
the cu
rrent
lessee
, Phil
lips O
il, qu
oting
the a
bove
lang
uage
from
the m
ineral
lease
retai
ned
by th
e ori
ginal
owne
rs. T
he su
it wa
s for
conti
nuing
dama
ge ca
used
by th
e imp
roper
plugg
ing of
a we
ll tha
t was
leakin
g a ga
llon o
f oil
Amino
il, wh
ich la
ter m
erged
with
Phil
lips,
took
respo
nsibi
lity fo
r plug
ging
the
well a
nd cl
eanin
g the
prop
erty;
and i
t agre
ed in
writ
ing to
take
care
of the
prob
lem.
Two
years
afte
r M
agno
lia s
pent
almos
t $1
2 mi
llion
to pu
rchase
and
beg
in
deve
loping
the
2,200
-acre
tract,
Ami
noil
aban
done
d its
effo
rts, b
ut oil
poc
kets
16
reapp
eared
two m
onths
later
. Mag
nolia
lost
its fi
nanc
ial su
pport
on an
$86 m
illion
termi
nal a
nd st
oppe
d con
struc
tion d
ue to
contr
act f
ailure
s. T
he L
ouisi
ana S
uprem
e
Court
award
ed M
agno
lia $2
.1 mi
llion f
or su
rface
dama
ges.
In dis
cussi
ng j
urisd
iction
al co
nflict
s, wh
ere t
he c
ommi
ssion
er of
cons
ervati
on ha
d wron
gly fo
und t
he w
ell to
have
been
prop
erly p
lugge
d, the
court
caus
e of
actio
n no
t in
the p
urview
of t
he m
ineral
cod
e. T
he c
ourt
then
stated
:
erty r
ight a
rising
out o
f the
origi
nal
Id. a
t 483
. Th
e cou
rt cit
ed A
ndrep
ont,
231
So.2d
347,
for th
is pro
posit
ion.
Since
And
repon
t doe
s not
conta
in thi
s lan
guag
e,
right
to rec
eive i
ts pa
rt of
the
dama
ges
befor
e or
separa
tely
from
the d
amag
es pa
id to
the s
hare
cropp
er,
Andre
pont,
by th
e oil
and g
as les
see, p
ursua
nt to
La.R
.S. 9:
3204
. In
spite
of th
e
conte
xtual
dissim
ilarit
ies, i
t is t
his q
uote
from
Magn
olia
Coal
that t
he p
lainti
ffs
have
cryp
ticall
y an
d im
provid
ently
pull
ed fr
om th
e case
with
out f
urthe
r ana
lysis
and w
ithou
t rec
oncil
ing it
with
Eagle
Pipe
twen
ty ye
ars la
ter.
Here,
the
defen
dant
EnerQ
uest,
pred
ecess
or of
the d
efend
ant P
etro
ything
on th
e prop
erty,
but r
ather,
comp
letely
vaca
ted
the p
ropert
y an
d so
ld all
of i
ts ass
ets a
nd o
bliga
tions
a ye
ar be
fore t
he B
oone
s
purch
ased
the p
ropert
y, as
discu
ssed
fully
below
. M
oreov
er, th
e Boo
nes d
id no
t
introd
uce t
he m
ineral
lease
for a
comp
ariso
n of t
he la
ngua
ge. A
nd he
re, th
ere w
as
no c
ontin
uing
dama
ge b
y En
erQue
st, a
s a c
ontin
uing
tort i
s one
in w
hich
the
Eagle
Pipe
, 79 S
o.3d a
t 279
. We f
ind no
supp
ort fo
r th
Magn
olia C
oal c
ase.
A-6
MEALEY’S Fracking Report Vol. 1, #1 May 2014
17
The o
nly le
ase in
the r
ecord
betw
een a
form
er ow
ner a
nd E
nerQ
uest,
is the
200
2 su
rface
lease
gran
ted b
y La
gnea
ux b
efore
its sa
le of
the p
ropert
y to
Prim
eaux
in 20
03.
The s
urfac
e lea
se tha
t Lag
neau
x gran
ted to
Ene
rQue
st did
not
conta
in lan
guag
e sim
ilar t
o the
abov
e lan
guag
e or a
ddres
s dam
ages
in an
y man
ner.
It all
owed
Ene
rQue
st to
use t
he su
rface
of th
e lan
d for
cons
tructi
ng an
d acc
essing
its fa
cilitie
s and
oblig
ated E
nerQ
uest
to rem
ove i
ts fix
tures
and r
estore
the l
and a
s
nearl
y as
practi
cable
to it
s orig
inal c
ondit
ion w
ithin
six m
onths
afte
r the
lease
expir
ed.
It ac
know
ledge
d the
rece
ipt of
adeq
uate
and s
uffici
ent c
onsid
eratio
n for
this
acce
ss, p
resum
ably
the l
ease
paym
ents
and
any
other
incom
e fro
m the
mine
rals b
y whic
h Lag
neau
x wou
ld pro
fit w
hen E
nerQ
uest
broug
ht the
prod
uct to
the s
urfac
e. I
t ex
tende
d the
prov
ision
s of
the l
ease
to the
heir
s, de
visee
s,
exec
utors,
admi
nistra
tors,
repres
entat
ives,
succ
essors
, and
assig
ns of
the l
essor
and
the le
ssee.
How
ever,
the p
rovisi
ons i
t exte
nded
did n
ot inc
lude m
oney
dama
ges o
r
prope
rty da
mage
s.
Nor c
ould
the pa
rties
have
inten
ded i
n 200
2 for
a ben
efit to
inure
to a
future
purch
aser w
ho ow
ned n
o mine
ral ri
ghts
and w
ho st
ood t
o gain
nothi
ng by
an
of co
nside
ration
rec
eived
in s
uch
scena
rio.
More
over,
und
er the
And
repon
t
factor
s, the
re wa
s no
lega
l or f
actua
l rela
tions
hip b
etwee
n En
erQue
st an
d the
Boon
es. M
r. Boo
ne ad
mitte
d in h
is de
posit
ion th
at he
had n
ever
met L
agne
aux.
The
inten
tion
of the
part
ies a
nd th
e lan
guag
e reg
arding
dam
ages
is
param
ount
in the
juris
prude
nce
on s
tipula
tions
pou
r au
trui.
In
Brou
ssard
v.
North
cott
Explo
ratio
n Co
., Inc
., 48
1 So
.2d 1
25, 1
27 (L
a.198
6), th
e Lo
uisian
a
Supre
me C
ourt
found
no
stipu
lation
pou
r au
trui i
n fav
or of
the p
lainti
ff ev
en
thoug
h an a
ttemp
t to m
odify
the l
angu
age,
simila
r to
Andr
epon
t, wa
s mad
e. T
he
18
court
reite
rated
that
a stip
ulatio
n pou
r autr
ui ex
ists w
hen s
ome a
dvan
tage t
o a th
ird
perso
n is c
reated
as a
cond
ition o
r con
sidera
tion o
f a co
mmuta
tive c
ontra
ct:
In ord
er to
deter
mine
if a
stipu
lation
exist
s, we
mus
t look
to
the in
tentio
n of t
he pa
rties
at the
time t
he m
ineral
lease
wa
s ne
gotia
ted.
This
can
best
be
acco
mplis
hed
by
comp
aring
the
stan
dard
dama
ge c
lause
found
in
the
origin
al ve
rsion
of
the m
ineral
lease
to th
e mo
dified
ve
rsion
agree
d to b
y the
parti
es. T
he un
modif
ied ve
rsion
of
the D
amag
e Clau
se rea
d as f
ollow
s:
dama
ges
to tim
ber
and
growi
ng c
rops
of
In ne
gotia
ting
the m
ineral
lea
se the
part
ies
Howe
ver,
they
did n
ot mo
dify
the m
ineral
lea
se to
on, w
e can
easil
y dis
tingu
ish A
ndrep
ont v
. Aca
dia D
rillin
g Co
., 25
5 La
. 34
7, 23
1 So.2
d 347
(196
9), an
d Ha
rgro
der v
. Colu
mbia
Gulf T
rans
missi
on C
o., 29
0 So.2
d 874
(La.1
974).
Li
kewi
se, in
Lejeu
ne B
ros.,
Inc.
v. Go
odric
h Petr
oleum
Co.,
06-15
57,
p. 8 (
La. A
pp. 3
Cir.
11/28
/07), 9
81 So
.2d 23
, 29,
writ d
enied
, 08-2
98 (L
a. 4/4
/08),
978 S
o.2d 3
27, th
e cou
rt co
mpare
d the
lease
at is
sue t
o the
lease
in B
rous
sard
and
found
no st
ipulat
ion po
ur au
trui in
favo
r of t
he pl
aintif
fs:
As
in B
rous
sard
, the
dam
age
claus
e in
the B
aez
Lease
was
simila
rly m
odifi
ed.
The
origin
al da
mage
dama
ges t
o tim
ber a
nd g
rowing
crop
s of L
essor
caus
ed
the
all d
amag
es to
Lesso
r ca
Thus
, just
as in
Brou
ssard
, the d
amag
es pe
rmitte
d by t
he
Baez
Lea
se we
re lim
ited t
o the
dama
ges s
uffere
d by t
he
Lesso
r, M
r. Ba
ez.
The t
rial c
ourt
did no
t err
in fin
ding
LeJeu
ne B
rothe
rs wa
s not
a thir
d part
y ben
eficia
ry of
the
Baez
Lea
se.
19
In Wa
gone
r v. C
hevro
n USA
Inc.,
45,50
7 (La
.App
. 2 C
ir. 8/
18/10
) 55
So.3d
12,
writ
denie
d, 10
-2773
(La
. 3/2/
12),
83 S
o.3d
1032
, whic
h we
find
parti
cular
ly illu
strati
ve d
ue to
the
factua
l sim
ilarit
ies in
volvi
ng th
e sam
e leg
al
issue
s as t
hose
herei
n, the
seco
nd ci
rcuit
found
no st
ipulat
ion po
ur au
trui i
n fav
or
mine
ral le
ase w
ith a
form
er
owne
r. B
ased u
pon t
he su
bseq
uent
purch
aser d
octri
ne, f
inding
no co
nvey
ance
of
rights
in th
e acts
of sa
le, an
d find
ing no
lang
uage
confe
rring
third
party
righ
ts su
ch
as the
lang
uage
in M
agno
lia C
oal T
ermina
l, the
Wag
oner
court
foun
d tha
t the
plaint
iff ha
d no r
ight t
o sue
for p
re-ac
quisi
tion d
amag
es un
der t
he m
ineral
lease
s
obtai
ned b
y thre
e form
er oil
and g
as les
sees.
The
assig
nees/
lessee
s who
were
still ot
dismi
ssed i
n the
judg
ment
affirm
ed.
More
rec
ently
than
And
repon
t, the
Lou
isian
a Su
preme
Cou
rt ha
s
identi
fied t
hree c
riteri
a for
deter
minin
g whe
ther c
ontra
cting
parti
es ha
ve pr
ovide
d
a ben
efit f
or a t
hird p
arty:
1) the
stipu
lation
for a
third
party
is m
anife
stly c
lear;
2) the
re is
certa
inty
as to
the b
enefi
t prov
ided
the th
ird
party
; and
3) t
he b
enefi
t is n
ot a
mere
incide
nt of
the
contr
act b
etwee
n the
prom
isor a
nd th
e prom
isee.
. . .
The m
ost b
asic r
equir
emen
t of a
stipu
lation
pou
r au
trui i
s tha
t the
con
tract
manif
est a
clea
r inte
ntion
to
bene
fit th
e thir
d part
y; ab
sent s
uch a
clea
r man
ifesta
tion,
a pa
rty c
laimi
ng to
be
a thi
rd pa
rty b
enefi
ciary
cann
ot me
et his
burd
en o
f proo
f. A
stipu
lation
pou
r autr
ui is
neve
r pres
umed
. The
party
claim
ing th
e ben
efit b
ears
the
burde
n of p
roof.
Josep
h v. H
ospit
al Se
rvice
Dist
. No.
2 of P
arish
of St
. Mar
y, 05
-2364
, pp.
8-9 (L
a.
10/15
/06),
939
So.2d
120
6, 12
12 (
citati
ons
omitte
d) (fo
otnote
omi
tted);
La.C
iv.Co
de ar
t. 19
78; L
a.Civ.
Code
art.
1831
; see
also
Eag
le Pi
pe a
nd S
upply
,
A-7
MEALEY’S Fracking Report Vol. 1, #1 May 2014
20
Inc., 7
9 So.3
d 246
. Fo
r the
reaso
ns sa
ted, w
e find
that
the pl
aintif
fs ha
ve no
t met
their
burde
n of p
roving
that
they a
re thi
rd pa
rty be
nefic
iaries
unde
r the
contr
acts
as
assert
ed.
Th
e 200
2 Sur
face L
ease
The B
oone
s argu
e tha
t the
2002
surfa
ce le
ase be
twee
n Lag
neau
x and
EnerQ
uest
had a
ten-y
ear t
erm; t
hat it
was
effec
tive u
ntil 2
012 w
hich i
nclud
ed th
e
owne
rship
of the
Boo
nes w
ho p
urcha
sed th
e prop
erty
in Au
gust,
200
5; an
d tha
t
there
was n
o evid
ence
that
it wa
s assi
gned
to an
other
opera
tor.
We d
isagre
e. A
s
previo
usly
discu
ssed,
Lagn
eaux
with
held
its le
ases a
nd co
ntrac
tual r
ights
from
the
assign
ment
to the
Boo
nes,
and
in an
y eve
nt the
surfa
ce le
ase d
id no
t prov
ide fo
r
dama
ges.
It on
ly pro
vided
for r
estora
tion w
hich w
as no
t due
until
six m
onths
after
the le
ase ex
pired
. Also
as di
scusse
d, the
Boo
nes w
ere no
t part
ies to
the l
ease,
and
the le
ase d
id no
t prov
ide a
stip
ulatio
n po
ur a
utrui
in fav
or of
the B
oone
s.
More
over,
the l
ease
had a
n effe
ctive
date
of Au
gust
1, 20
02, m
eanin
g tha
t it w
ould
have
expir
ed as
of A
ugus
t 1, 2
012,
and t
he B
oone
s did
not o
btain
the as
signm
ents
See L
ejeun
e Bro
s., In
c., 98
1 So.2
d at 2
8.
In ad
dition
to th
ere b
eing
no v
alid
assign
ment
from
Lagn
eaux
, the
record
is cl
ear t
hat E
nerQ
uest
cease
d its
opera
tions
on th
e prop
erty a
s of A
pril 3
0,
2004
, and
sold
all o
f its
phys
ical a
nd c
ontra
ctual
rights
, inc
luding
its l
eases
, to
. O
n Ap
sale
also
includ
ed a
ll pe
rsona
l pro
perty
, fix
tures,
fac
ilities
, tan
ks,
pump
s,
equip
ment,
mac
hinery
, well
s, we
llhea
ds, l
icens
es, p
ermits
, ease
ments
, righ
ts of
21
relati
ng to
the p
ropert
ies. T
his sa
le wa
s effe
ctive
on M
ay 1,
2004
.
Tem
phasi
s add
ed)
includ
ing w
ithou
t lim
itatio
n, all
righ
ts wi
th
respe
ct to
the us
e and
occu
patio
n of th
e sur
face o
f and
the s
ubsu
rface
depth
s und
er
g and
aban
don
all w
ells a
s req
uired
by
regula
tory
autho
rities
, to
level
all d
umps
, fill
in all
pits
,
remov
e all
debri
s, an
d othe
rwise
resto
re the
surfa
ce of
the l
and a
s req
uired
in th
e
mine
ral s
ervitu
de o
r lea
ses,
and
to co
mply
with
all a
pplic
able
orders
and
regula
tions
. Th
us, th
e surf
ace l
ease
rights
and o
bliga
tions
were
sold
and a
ssign
ed
,
prope
rty, p
hysic
al, c
ontra
ctual,
or o
therw
ise, a
fter A
pril 3
0, 20
04, o
ver a
yea
r
befor
e the
plain
tiffs
purch
ased t
he pr
opert
y on A
ugus
t 26,
2005
.
The B
oone
s argu
e tha
t Ene
rQue
st op
erated
on th
e prop
erty u
ntil 2
004,
and
that
a pe
rsona
l ac
tion
has
a lib
erativ
e pre
script
ion o
f ten
yea
rs un
der
legisl
ation
, a p
erson
al ac
tion
is s
La.C
iv.Co
de ar
t. 349
9. T
his ar
ticle
follow
s num
erous
othe
r arti
cles p
rovidi
ng fo
r
short
er, m
ore sp
ecifi
c pres
cripti
ve p
eriod
s, inc
luding
prev
iously
disc
ussed
artic
le
3492
whic
h go
verns
clai
ms f
or pro
perty
dam
age
and
provid
es a
one-y
ear
prescr
iptive
peri
od.
With
rega
rd to
a ten
-year
prescr
iptive
peri
od fo
r a p
erson
al
actio
n ari
sing
in co
ntrac
t, we
hav
e alre
ady
found
that
the B
oone
s hav
e fail
ed to
introd
uce
any
evide
nce
of a
contr
act b
y En
erQue
st tha
t gran
ts the
m a
right
of
actio
n ag
ainst
EnerQ
uest.
Acc
ording
ly, th
e Boo
nes h
ave n
ot pro
duce
d ev
idenc
e
that p
rovide
s the
m a r
ight o
f acti
on in
tort
or co
ntrac
t aga
inst E
nerQ
uest.
22
Relat
ion B
ack
In Se
ptemb
er 20
12, tw
o and
a ha
lf ye
ars af
ter fi
ling s
uit in
May
2010
,
the B
oone
s file
d a se
cond
supp
lemen
tal pe
tition
. Th
e peti
tion a
ttach
ed th
e new
ly
obtai
ned a
ssign
ments
, atte
mpted
to cr
eate
rights
in th
e Boo
nes a
s assi
gnee
s of t
he
forme
r own
ers, r
eitera
ted th
e earl
ier ca
uses
of ac
tion,
and a
dded
caus
es of
actio
n
for fr
aud,
cons
pirac
y, co
ncert
ed a
ction
, and
con
cealm
ent.
For
the fi
rst ti
me, i
t
alleg
ed a
caus
e of a
ction
unde
r the
Lou
isian
a Env
ironm
ental
Qua
lity A
ct, L
a.R.S.
30:22
71-22
81. T
he B
oone
s asse
rt tha
t the n
ew pe
tition
relat
ed ba
ck to
the o
rigina
l
petiti
on in
2010
. We m
ust d
isagre
e.
Even
if th
e Se
ptemb
er 20
12 a
ssign
ments
from
the
previo
us o
wners
had c
onfer
red va
lid an
d tim
ely ri
ghts,
the a
ssign
ments
aros
e two
and a
half
years
after
the or
igina
l peti
tion w
as fil
ed in
May
of 20
10.
As di
scusse
d, the
tort
rights
had p
rescri
bed b
efore
the or
igina
l peti
tion w
as fil
ed, a
nd th
e assi
gnme
nts di
d not
confe
r a ri
ght o
f acti
on in
con
tract.
Th
e rig
hts s
ough
t to
be b
estow
ed in
the
assign
ments
were
not e
xigibl
e at th
e tim
e of s
uit in
2010
. The
refore
, the c
laims
in
the ne
w pe
tition
were
supp
lemen
tal, n
ot am
endin
g, no
matt
er ho
w the
capti
on of
the pe
tition
read
s, an
d the
relat
ion ba
ck of
La.C
ode C
iv.P.
art. 1
153 a
pplie
s only
to
amen
ding p
etitio
ns.
Smith
v. C
utter
Biolo
gical,
99-20
68 (L
a.App
. 4 C
ir. 9/
6/00),
770 S
o.2d 3
92.3
-
Allen
v. S
tate,
Dept.
of P
ublic
Safe
ty &
Corre
ction
s, 12
-430,
p. 6 (
La.A
pp. 3
Cir.
11/7
/12),
107 S
o.3d 1
06, 1
10 (q
uotin
g
3 Un
der L
a.Cod
e Ci
v.P. a
rt. 1
151,
a pa
rty m
ay a
mend
its
petiti
on if
the
new
claim
s ac
crued
prior
to fi
ling t
he or
igina
l suit
; und
er Ar
ticle
1155
, a p
arty m
ay be
perm
itted t
o fil
e a
supp
lemen
tal p
etitio
n set
ting
forth
relate
d ite
ms o
f dam
age
or ca
uses
of ac
tion
that b
ecam
e ex
igible
after
the o
rigina
l peti
tion w
as fil
ed; b
ut the
relat
ion ba
ck of
Arti
cle 11
53 ap
plies
only
to the
amen
ded p
etitio
n. Se
e Cutt
er Bi
ologic
al, 77
0 So.2
d at 4
11-12
.
A-8
MEALEY’S Fracking Report Vol. 1, #1 May 2014
23
Cutte
r Biol
ogica
l, 770
So.2d
at 41
3). N
or do
es an
origi
nal p
etitio
n file
d by a
party
witho
ut a r
ight o
f acti
on to
file
it. Se
e Nag
hi v.
Bren
er, 0
8-252
7 (La
. 6/26
/09),
17
So.3d
919.
In TC
C Co
ntrac
tors,
Inc. v
. Hos
pital
Servi
ce D
ist. N
o. 3 o
f Par
ish of
Lafou
rche,
10-68
5, p.
22-23
(La.A
pp. 1
Cir
12/8/
10),
52 So
.3d 11
03, 1
116-
17, th
e
first
circu
it fou
nd th
at cla
ims a
rising
via
an as
signm
ent d
id no
t bec
ome e
xigibl
e
prior
to the
date
of the
assig
nmen
t:
[O]ur
law,
as in
terpre
ted in
the j
urisp
ruden
ce, h
olds t
hat
in ord
er for
the d
octri
ne of
relat
ion ba
ck to
apply
and t
o cir
cumv
ent t
he e
ffect
of pre
script
ion, a
new
cau
se of
actio
n ass
erted
in a
n am
ende
d pe
tition
(1) m
ust h
ave
been
in e
xisten
ce a
t the
time
the
origin
al pe
tition
was
filed
; (2)
must
have
bee
n ve
sted
in the
plai
ntiffs
at th
at
or oc
curre
nce s
et for
th or
attem
pted t
o be s
et for
th in
the
See
La.
C.C.
P. art
. 115
3.
Be
caus
e a ci
vil ac
tion b
y defi
nition
can b
e brou
ght
only
by a
pers
on h
aving
a ri
ght o
f acti
on, i
t stan
ds to
rea
son t
hat a
n acti
on in
stitut
ed by
a pe
rson d
eterm
ined t
o
suffi
cient
to int
errup
t pres
cripti
on.
See
La. C
.C.P.
art.
68
1 and
La.
C.C.
art. 3
462.
. . . T
he re
lation
back
theo
ry em
bodie
d in L
a. C.
C.P.
art. 1
153 a
ssume
s tha
t the
re is
a leg
ally
viable
clai
m to
which
the
plead
ing c
an r
elate
back
. Na
ghi v
. Bren
er, 0
8-252
7, p.
10 (L
a. 6/2
6/09),
17
So.3d
919
, 925
. . .
. ch
aracte
r of t
he ri
ght to
so
can b
e give
n leg
al eff
ect o
nly fr
om th
e effe
ctive
date
of the
assi
gnme
nt, a
nd t
he a
ssign
ment
could
not
retroa
ctive
ly cu
re the
initia
l abs
ence
of a
righ
t of a
ction
by
the p
lainti
ffs.
24
Acco
rding
ly, th
e clai
ms
petiti
on do
not
relate
bac
k to t
he or
igina
l peti
tion.4 M
oreov
er, as
fully
discu
ssed
abov
e, the
assi
gnme
nts d
o no
t con
fer e
xistin
g rig
hts.
Addit
ionall
y, the
Boo
nes
have
not s
hown
that
they h
ad an
exigi
ble cl
aim un
der L
a.R.S.
30:22
76 at
the t
ime
of the
orig
inal p
etitio
n or
at the
time
the
LEQA
clai
m wa
s firs
t alle
ged
in the
secon
d su
pplem
ental
peti
tion.
Con
trary
to the
alle
gatio
ns in
the
petiti
ons,
Mr.
Boon
e test
ified
in h
is de
posit
ion o
n M
ay 8
, 201
3, tha
t he h
ad n
ot inc
urred
any
remed
iation
cos
ts as
requir
ed b
y La
.R.S.
30:2
276(G
)(3).
See
Mar
gone
, LLC
v.
Addis
on R
esour
ces,
Inc.,
04-70
(La.A
pp. 3
Cir.
12/1
5/04),
896
So.2
d 11
3, wr
it
denie
d, 05
-
assert
ions
in bri
ef, th
e ori
ginal
and
first
supp
lemen
tal p
etitio
ns d
o no
t asse
rt
solid
ary li
abilit
y, an
d the
add
itiona
l clai
ms a
nd c
auses
of a
ction
in th
e sec
ond
supp
lemen
tal pe
tition
do no
t rela
te ba
ck to
the o
rigina
l peti
tion.
V.
CONC
LUSI
ON
Ba
sed u
pon
the
granti
ng th
e moti
on fo
r sum
mary
judgm
ent a
nd ex
cepti
on of
presc
riptio
n in f
avor
of En
erQue
st Oi
l & G
as, L
LC.
Costs
of th
is ap
peal
are as
sessed
to th
e plai
ntiffs
,
Carlo
s and
Lori
Boo
ne.
AFFI
RMED
.
4
tion
of the
ir sta
tus c
hang
e as
one
of a
simple
cha
nge
in ca
pacit
y and
there
fore a
nalog
ous t
o Giro
ir v.
South
Louis
iana M
edica
l Cen
ter, D
iv. of
Hos
pitals
, 47
5 So.2
d 104
0 (La
.1985
), is
misp
laced
. Th
e wron
gful d
eath
claim
that
was a
llowe
d to
relate
ba
ck in
Giro
ir ha
d acc
rued p
rior t
o the
time o
f the
filin
g of t
he or
igina
l peti
tion.
A-9
MEALEY’S Fracking Report Vol. 1, #1 May 2014
PA
RR
v.A
RU
BA
PE
TR
OLE
UM
PLT
FV
ER
DIC
T
B-1
MEALEY’S Fracking Report Vol. 1, #1 May 2014
B-2
MEALEY’S Fracking Report Vol. 1, #1 May 2014
B-3
MEALEY’S Fracking Report Vol. 1, #1 May 2014
B-4
MEALEY’S Fracking Report Vol. 1, #1 May 2014
IN TH
E UNI
TED S
TATE
S DIST
RICT C
OURT
FOR T
HE M
IDDL
E DIST
RICT O
F PEN
NSYL
VANI
A
THOM
AS A.
NEUH
ARD a
nd:
Case
No. 4:
11-cv-
01989
BARB
ARA S
. NEU
HARD
,: :
Plaint
iffs,
: :v.
:(Ju
dge Br
ann)
:RA
NGE R
ESOU
RCES
–:
APPA
LACH
IA, L
LC,
: :De
fendan
t.:
MEMO
RAND
UMAp
ril 30,
2014
This c
ase co
ncerns
a disp
ute ov
er an
oil an
d gas
lease
execut
ed by
the
Parties
. Thom
as A.
Neuha
rd and
Barba
ra S.
Neuha
rd (“P
laintiff
s” or
“the
Neuha
rds” o
r “Le
ssors”
) initia
ted th
e case
by fil
ing a C
ompla
int in
the C
ourt o
f
Comm
on Ple
as of
Lycom
ing Co
unty o
n Sept
ember
28, 20
11 (EC
F No. 1
, Ex. A
).
The N
euhard
s seek
a Decl
arator
y Judg
ment
clarify
ing th
at the
oil an
d gas
lease
(“Leas
e”) th
at they
enter
ed int
o with
the D
efenda
nt, Ra
nge Re
source
s–Appa
lachia
,
LLC (
“Defe
ndant”
or “R
ange”
or “L
essee”
) expi
red by
its ow
n term
s.1
On Oc
tober
28, 20
11, th
e Defe
ndant
remove
d this
case
to Fed
eral C
ourt
1 The D
efenda
nt wa
s Grea
t Lake
s Ener
gy Par
tners,
LLC a
t the ti
me th
e Part
ies ex
ecuted
the Le
ase. T
he De
fendan
t later
chang
ed its
name to
its cu
rrent
form:
Range
Resou
rces—
Appal
achia,
LLC.
1
Case
4:11
-cv-01
989-M
WB
Doc
umen
t 40
Filed
04/30
/14 P
age 1
of 37
based
on div
ersity
jurisd
iction,
pursu
ant to
28 U.
S.C. §
1332 a
nd 28
U.S.C.
§ 1441
(ECF N
o. 1).2 T
hen-Ch
ief Un
ited St
ates D
istrict
Court
Judge
Yvette
Kane
presid
ed ove
r the c
ase un
til it w
as rea
ssigne
d to U
nited
States
Distri
ct Cour
t Judge
Rober
t D. M
ariani
on No
vember
16, 20
11. T
he cas
e was
subseq
uently
reass
igned
to the
under
signed
on Ja
nuary
17, 20
13.
The D
efenda
nt file
d an A
nswer
with a
ffirma
tive d
efense
s, and
made
a
counte
rclaim
seeki
ng a d
eclara
tory j
udgme
nt tha
t the L
ease is
valid
(ECF
No. 7)
.
The P
laintiff
s filed
an an
swer
to the
count
erclaim
(ECF
No. 8)
. Disc
overy
was
then c
onduct
ed.
The c
ase is
presen
tly be
fore th
e Cour
t on t
he Par
ties’ c
ross m
otions
for
summa
ry jud
gment
(ECF
Nos. 2
2, 23, 2
4, 25,
26, 27
, 28, 29
, 30, 31
, 32, 33
, 34).
The C
ourt h
eld or
al argu
ment
on the
moti
ons on
Marc
h 26, 2
014. T
here a
re no
mater
ial fac
ts in d
ispute
, and t
he iss
ues be
fore th
e Cour
t invol
ve int
erpret
ation o
f
contra
ct prov
isions
as a m
atter o
f law.
The P
arties
have
fully
briefe
d the
issues
and
the ca
se is n
ow rip
e. Co
nseque
ntly, t
he cas
e is am
endabl
e to di
spositi
on in
its
curren
t post
ure.
As ela
borate
d belo
w, the
Neuha
rds’ M
otion
for Su
mmary
Judgm
ent sh
ould
2 The P
laintiff
s are
citizen
s of P
ennsyl
vania.
The D
efenda
nt is a
limited
liabil
itycom
pany o
rganiz
ed und
er the
laws o
f the s
tate of
Delaw
are.
2
Case
4:11
-cv-01
989-M
WB
Doc
umen
t 40
Filed
04/30
/14 P
age 2
of 37
be gra
nted.
Range
Resou
rce’s M
otion
for Su
mmary
Judgm
ent sh
ould b
e deni
ed.
I.BA
CKGR
OUND
On Ju
ne 21,
2006,
the P
arties
execu
ted an
Oil an
d Gas
Lease
. Pls.’
Statem
ent M
ateria
l Fact
s ¶ 1,
Dec. 1
4, 2012
, ECF
No. 23
[here
inafte
r “Pls
.’ SOF
”].
The L
ease p
rovide
d Rang
e the r
ights t
o proc
ure oi
l and g
as fro
m for
ty-sev
en (47
)
acres
owned
by th
e Neuh
ards s
ituate
in Le
wis To
wnshi
p, Lyco
ming
Count
y,
Pennsy
lvania
.3 Id. ¶
4. The
Lease
conta
ins a p
rimary
term
of fiv
e year
s calc
ulated
from
June 2
1, 2006
. Pls.’
Br. S
upp. M
ot. Su
mm. J.
Ex.1,
Dec. 1
4, 2012
, ECF
No.
26 [he
reinaf
ter Pl
s.’ Br.
Supp.
]. Un
less e
xtende
d by t
he com
mence
ment
of dri
lling
operat
ions o
r as o
therw
ise pr
ovided
, the L
ease w
ould e
xpire
by its
own t
erms o
n
June 2
1, 2011
.
On Ju
ne 13,
2011,
Range
execu
ted a D
esigna
tion o
f Unit
docum
ent fo
r the
“Null
Eugen
e A Un
it,” wh
ich it
filed w
ith th
e Lyco
ming
Count
y Reco
rder o
f
Deeds
on Ju
ne 15,
2011.
Def.
’s State
ment
Mater
ial Fac
ts ¶ 28
, Dec.
14, 20
12, EC
F
No. 27
[here
inafte
r “De
f.’s SO
F”]. T
he De
signat
ion of
Unit D
ocume
nt ind
icates
that “b
y virtu
e of th
e auth
ority
confer
red by
the te
rms o
f the le
ases”
it crea
tes a
3 At so
me po
int du
ring t
he per
iod be
tween
June 2
1, 2006
and J
une 21
, 2011,
the
Neuha
rds we
re div
orced.
In th
e prop
erty s
ettlem
ent ag
reeme
nt, Ba
rbara
Neuha
rd bec
ame th
esol
e own
er of
the su
rface
of the
47 ac
res, an
d Thom
as and
Barba
ra Ne
uhard
retain
ed, eq
ually,
their o
wners
hip in
terest
s in th
e subs
urface
rights
to th
e prop
erty;
these
rights
inclu
de the
oil an
dgas
conte
mplate
d in t
he Le
ase.
3
Case
4:11
-cv-01
989-M
WB
Doc
umen
t 40
Filed
04/30
/14 P
age 3
of 37
NE
UH
AR
Dv.
RA
NG
ER
ES
OU
RC
ES
C-1
MEALEY’S Fracking Report Vol. 1, #1 May 2014
395.06
38 acr
e prod
uction
unit c
ompri
sed of
nine
separa
tely ow
ned pa
rcels o
f land
that in
cludes
the N
euhard
s’ 47 a
cres.
Def.’s
Br. S
upp. M
ot. Su
mm. J.
, Ex. 2
(T),
Dec. 1
4, 2012
, ECF
No. 26
[here
inafte
r Def.
’s Br. S
upp.].
A non
-mate
rial fa
ct
remain
s disp
uted w
hether
Range
notifi
ed the
Neuha
rds of
the u
nit pl
an and
their
filing
the De
signat
ion of
Unit d
ocume
nt pri
or to
July 7
, 2011.
Range
did, h
oweve
r, acqu
ire a R
oad Ri
ght of
Way
Agree
ment
signed
by
Barba
ra Ne
uhard
on Jun
e 16, 2
011. D
ef.’s S
OF, ¶
30. T
he Ag
reeme
nt pro
vided
Range
the r
ight to
widen
and g
rade a
turn
on a lo
cal ro
ad to
make
it easi
er for
Range
’s truc
k traf
fic to
acces
s the s
urface
locat
ion fro
m wh
ich th
ey int
ended
to
drill t
he “1H
” gas
well o
n the
Null p
ropert
y. Ra
nge pa
id Ba
rbara
Neuha
rd $3,
000
as con
sidera
tion f
or thi
s Agre
ement
. Id. ¶
¶ 31, 4
1.
Range
engag
ed in
numero
us oth
er pre
parato
ry act
ivities
prior
to dr
illing
throug
hout th
e spri
ng of
2011.
Range
obtai
ned se
veral m
andato
ry per
mits f
rom
state a
nd loc
al regu
latory
agenci
es, in
cludin
g drill
ing, zo
ning, a
nd dev
elopm
ent
permi
ts. Id
. ¶¶ 11
, 13, 14
, 16–18
, 22, 24
. Rang
e cont
racted
with
an eng
ineeri
ng
firm to
desig
n a gr
ading
and er
osion
contro
l plan
for th
e well
pad sit
e, and
entere
d
into v
arious
agree
ments
with
other
landow
ners re
gardin
g its c
onstru
ction.
Id. ¶¶
9,
23, 26
. On M
ay 28,
2011
Range
began
const
ructin
g the
access
roads
and p
ad site
for th
e well.
Id. ¶
25.
4
Case
4:11
-cv-01
989-M
WB
Doc
umen
t 40
Filed
04/30
/14 P
age 4
of 37
On Ju
ly 1, 2
011, th
e Neuh
ards, b
y and
throug
h coun
sel, no
tified
Range
that
it was
the Ne
uhards
’ posi
tion t
hat Ra
nge ha
d faile
d to c
omme
nce a w
ell on
the
Neuha
rds’ “
Lease
d Prem
ises,”
withi
n the
five y
ear pr
imary
term
of the
Lease
, and
theref
ore, th
at the
Lease
expir
ed by
its ow
n term
s. Pls
.’ SOF
, ¶ 12.
Rang
e
respon
ded by
letter
dated
July
7, 2011
, statin
g that
it bel
ieved
that it
main
tained
the
Lease
by th
e com
mence
ment
of a w
ell on
acreag
e unit
ized w
ith th
e Neuh
ards’
Lease
d Prem
ises p
rior to
the e
xpirat
ion of
the L
ease’s
prim
ary ter
m.
Range
then
contin
ued its
devel
opment
of th
e prop
erties
. Betw
een M
ay 28
and Se
ptemb
er 15,
2012,
Range
drille
d thre
e wells
that e
xtend
in dif
ferent
direct
ions fr
om th
e sam
e initia
l well
pad, ut
ilizing
conte
mpora
ry hor
izonta
l drill
ing
techno
logy n
ot ava
ilable i
n Penn
sylvan
ia at th
e time
the L
ease w
as sig
ned. S
ee
Def.’s
SOF,
¶¶ 32–
51. T
he we
llbore
s of tw
o of th
e three
wells
pass u
nder a
nd
throug
h the
Neuha
rds’ 4
7 acre
s. Id.
¶ 51.
As of
Decem
ber 20
12, Ra
nge ha
d
expend
ed app
roxim
ately
$4,000
,000 i
n conn
ection
with
drillin
g and
comple
ting t
he
wells.
Id. ¶
49.
II.DI
SCUS
SION
A.Le
gal St
anda
rds
1.Su
mmary
Judgm
ent St
andard
Summ
ary ju
dgment
is app
ropria
te when
“there
is no
genuin
e disp
ute as
to
5
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any m
ateria
l fact a
nd the
mova
nt is e
ntitled
to a j
udgme
nt as
a matte
r of la
w.” F
ED.
R.CIV
.P.56
(a); C
elotex
Corp.
v. Ca
trett,
477 U.
S. 317
, 330 (
1986).
A ge
nuine
issue
of ma
terial
fact ex
ists on
ly if “
the ev
idence
is suc
h that
a reas
onable
jury
could
find f
or the
nonm
oving
party.
” Ande
rson v
. Libe
rty Lo
bby, In
c., 477
U.S.
242, 24
8 (198
6). W
hen th
e cour
t consi
ders th
e part
ies’ a
rgume
nts, “[
t]he e
videnc
e
of the
non-m
ovant
is to b
e belie
ved an
d all j
ustifia
ble in
ferenc
es are
to be
draw
n in
his fa
vor.”
Id. at
255.
The b
urden
of est
ablish
ing th
e none
xisten
ce of
a “gen
uine is
sue” is
on th
e
party
movin
g for
summa
ry jud
gment
. In r
e Bres
sman,
327 F
.3d 22
9, 237
(3d Ci
r.
2003)
(inter
nal cit
ations
omitte
d). T
he mo
ving p
arty m
ay me
et this
burde
n by
either
(1) su
bmitti
ng pos
itive e
videnc
e that n
egates
an es
sential
eleme
nt of
the
nonmo
ving p
arty’s
claim
; or (2
) dem
onstra
ting t
hat th
e nonm
oving
party’
s
eviden
ce is i
nsuffic
ient to
estab
lish an
essen
tial ele
ment
of the
nonm
oving
party’
s
case.
Id. at
331.
In dec
iding
the m
erits o
f a pa
rty’s m
otion
for su
mmary
judgm
ent, th
e cour
t’s
role is
not to
evalu
ate th
e evid
ence a
nd dec
ide th
e truth
of th
e matte
r, but
to
determ
ine wh
ether
there
is a ge
nuine
issue
for tri
al or w
hether
judgm
ent as
a matte
r
of law
is pro
per. A
nderso
n, 477
U.S.
at 249.
The
standa
rd by
which
the c
ourt
decide
s a su
mmary
judgm
ent m
otion
does n
ot cha
nge wh
en the
partie
s file c
ross-
6
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C-2
MEALEY’S Fracking Report Vol. 1, #1 May 2014
motio
ns. W
eissm
an v. U
nited
States
Posta
l Serv
., 19 F
. Supp
. 2d 25
4, 259
(D.N.
J.
1998).
When
rulin
g on c
ross-m
otions
for su
mmary
judgm
ent, th
e cour
t must
consid
er the
moti
ons in
depend
ently,
Willi
ams v
. Phil
adelph
ia Hous
ing Au
thority
,
834 F.
Supp.
794, 7
97 (E.
D. Pa.
1993)
, aff’d
, 27 F.
3d 560
(3d C
ir. 199
4), an
d view
the ev
idence
prese
nted f
or eac
h moti
on in
the lig
ht mo
st favo
rable t
o the
nonmo
ving p
arty.
See M
atsush
ita Ele
c. Indu
s. Co.,
Ltd. v.
Zenit
h Radi
o Corp
.,
475 U.
S. 574
, 587 (
1986).
2.Ru
les of
Contr
act Co
nstruc
tion
The C
ourt ex
ercise
s dive
rsity j
urisdi
ction o
ver th
is case
, and t
herefo
re sta
te
substa
ntive
law ap
plies.
4 See,
e.g., E
rie R.
Co. v.
Tomp
kins, 3
04 U.S
. 64, 91
–92
(1938)
. Unde
r Penn
sylvan
ia law
, “a lea
se is i
n the
nature
of a c
ontrac
t and i
s
contro
lled by
princ
iples
of con
tract l
aw.”
T.W. P
hillip
s Gas
& Oil
Co. v.
Jedli
cka,
615 Pa
. 199, 2
08, 42
A.3d
261, 26
7 (201
2). A
ccordi
ngly, “
[t]he o
bject i
n
interp
reting
instru
ments
relati
ng to
oil an
d gas
intere
sts, li
ke any
writte
n
instru
ment,
‘is to
ascer
tain an
d effe
ctuate
the in
tentio
n of th
e part
ies.’”
4 “In t
he abs
ence o
f a co
ntroll
ing de
cision
by th
e Supr
eme C
ourt o
f Penn
sylvan
ia , a
federa
l court
apply
ing th
at state
’s subs
tantiv
e law m
ust pr
edict h
ow Pe
nnsylv
ania’s
highe
st cour
two
uld de
cide”
an iss
ue. B
errier
v. Sim
plicity
Mfg.
, Inc.,
563 F.
3d 38,
45–46
(3d C
ir. 200
9). “I
npre
dictin
g how
the h
ighest
court
of th
e state
would
resol
ve the
issue,
[the C
ourt] m
ust co
nsider
releva
nt sta
te prec
edent,
analo
gous d
ecisio
ns, co
nsider
ed dic
ta, sch
olarly
works
, and a
ny oth
errel
iable d
ata ten
ding c
onvinc
ingly
to sho
w how
the h
ighest
court
in th
e state
would
decid
e the
issue
at hand
.” Id.
at 46
(inter
nal qu
otatio
ns om
itted).
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Szyma
nowski
v. Bra
ce, 20
09 Pa.
Super
. 218, 9
87 A.2
d 717,
720 (
Pa. Su
per. C
t.
2009)
(quoti
ng He
ss v. J
ones, 3
35 Pa.
569, 7
A.2d
299 (1
939)).
“It is
a gene
rally
accept
ed pro
positio
n that
when
the ter
ms of
a writi
ng are
plain
and un
ambig
uous, t
here is
no ro
om fo
r inter
pretati
on or
constru
ction s
ince
the on
ly pur
pose o
f judic
ial con
structio
n is to
remo
ve dou
bt and
uncer
tainty.
” 11
RICHA
RDA.
LORD
,WILL
ISTON
ON CO
NTRA
CTS§
30:4
(4th e
d. 2013
); see
also
Steuar
t v. M
cChes
ney, 49
8 Pa. 4
5, 48–4
9, 444
A.2d 6
59, 66
1 (198
2). “T
he
meani
ng of
an una
mbigu
ous co
ntract
prese
nts a q
uestio
n of la
w. . . .
” Lesk
o v.
Frankf
ord Ho
sp.–B
ucks C
nty., 6
09 Pa.
115, 1
24, 15
A.3d
337, 34
2 (201
1). T
he
“focus
. . . is
upon
the ter
ms of
the a
greem
ent as
manif
estly e
xpress
ed, ra
ther th
an
as, pe
rhaps,
silent
ly int
ended.
” Steu
art, 44
4 A.2d
at 661
.
A cour
t must
consi
der th
e text
as a w
hole w
hen co
nstrui
ng the
langua
ge’s
operat
ive ef
fect.
Contr
ans, In
c. v. R
yder T
ruck R
ental,
Inc., 8
36 F.2
d 163,
169 (
3d
Cir. 19
87). “
[A]ll
provis
ions in
the a
greem
ent wi
ll be c
onstru
ed tog
ether
and ea
ch
will b
e give
n effe
ct . . .
we wi
ll not
interp
ret on
e prov
ision o
f a co
ntract
in a
manne
r whic
h resu
lts in
anothe
r port
ion be
ing an
nulled
.” LJL
Trans
p., Inc
. v. Pi
lot
Air Fr
eight
Corp.
, 599 P
a. 546,
560, 9
62 A.2
d 639,
647–4
8 (200
9) (in
ternal
citatio
ns om
itted).
“[A]
contr
act sh
ould b
e read
so as
to gi
ve me
aning
to all
of its
terms
when
read a
s an e
ntiret
y.” C
ontran
s, 836
F.2d a
t 169.
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The C
ourt as
sumes
genera
lly th
at the
parties
used
words
in th
eir “c
ommo
nly
accept
ed and
plain
mean
ing.”
Steuar
t, 444
A.2d a
t 661.
The
Court
also
recogn
izes, h
oweve
r, “tha
t every
agree
ment
is made
and t
o be c
onstru
ed wit
h due
regard
to th
e know
n char
acteri
stics o
f the b
usines
s to wh
ich it
relate
s . . . a
nd hen
ce
the lan
guage
used i
n a co
ntract
will b
e cons
trued
accord
ing to
its pu
rport i
n the
particu
lar bu
siness
.” Fra
nklin
Sugar
Ref. C
o. v. H
owell
, 274 P
a. 190,
118 A
. 109,
110 (1
922).
The C
ourt w
ill not
“rely
upon
a stra
ined c
ontriv
ancy”
to est
ablish
ambig
uity.
Steuar
t, 444
A.2d a
t 663.
Rath
er, th
e Cour
t seeks
to be
faith
ful to
the
meani
ng tha
t the p
arties
would
have
given
the lan
guage
at the
time o
f cont
ractin
g,
given
their r
espect
ive po
sitions
. Felm
ont Oi
l Corp
. v. Ca
vanaug
h, 300
Pa. S
uper.
520, 52
5, 446
A.2d 1
280, 12
83 (Pa
. Supe
r. Ct. 1
982).
B.Th
e Meri
ts
The la
nguage
of th
e Leas
e, Rang
e’s ac
tivitie
s, and
the po
sitions
of th
e
Parties
raise
three
legal i
ssues.
The
issues
are in
terrel
ated, a
s the r
esolut
ion of
the
first is
sue ne
cessar
ily im
pacts t
he res
olutio
n of th
e seco
nd and
third
issues
.
First,
did Ra
nge’s a
ctivitie
s prio
r to Ju
ne 21,
2011,
the e
xpirat
ion da
te of th
e
Lease
’s prim
ary ter
m, co
nstitu
te the
“comm
encem
ent of
a well”
as a m
atter o
f law?
If Ra
nge’s a
ctivity
prior
to Ju
ne 21,
2011
constit
uted t
he com
mence
ment
of a w
ell
as a m
atter o
f law,
then t
o exte
nd the
Lease
either
: secon
d, Rang
e must
have
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validl
y unit
ized t
he Ne
haurds
’ prop
erty u
nder th
e Leas
e’s ter
ms, or
, third
, Rang
e’s
actual
drilli
ng act
ivity
that w
as suf
ficien
t to co
nstitu
te the
comme
nceme
nt of
a well
was d
one “o
n the
Lease
d Prem
ises.”
5
The C
ourt fi
rst art
iculate
s the m
ateria
l port
ions o
f the L
ease a
nd the
ir
operat
ion, an
d then
addre
sses th
ese th
ree iss
ues se
riatim
.
1.Ma
terial
Provis
ions o
f the L
ease
Oil an
d gas
leases
typic
ally co
ntain
a prim
ary ter
m of
fixed
duratio
n,
expres
sed as
a num
ber of
years
. The
habend
um cla
use of
an oi
l and g
as lea
se,
which
gener
ally es
tablish
es the
prim
ary ter
m, de
scribe
s “the
durat
ion of
the in
terest
grante
d, subj
ect to
modi
ficatio
n by o
ther p
rovisio
ns con
tained
in the
lease
which
may p
rovide
for a
n exte
nsion
of the
lease.
” 3-27
EUGE
NEKU
NTZ, E
T AL.,
KUNT
Z,
LAW
OF OI
L AND
GAS §
27.1 (
2013).
Such
a leas
e will
termi
nate a
t the e
xpirat
ion
of its
prima
ry ter
m if t
he Le
ssee h
as not
engag
ed in
those
acts p
rescri
bed in
the
lease
that m
odify
the du
ration
or ac
tivate
a seco
ndary
term.
The L
ease s
ub ju
dice a
rticula
tes its
prim
ary ter
m as
follow
s:
1.1
It is a
greed
that th
is Agre
ement
shall
remain
in fo
rce fo
r a ter
mof
five y
ears fr
om th
e date
first w
ritten
above
(herei
nafter
desig
nated
“Prim
ary Te
rm”),
and s
hall co
ntinue
from
year to
year
therea
fter fo
rso
long a
s . . . t
he Le
ssee is
engag
ed in
a bona
fide a
ttempt
to sec
ure
5 The is
sues in
this c
ase re
late as
a logi
cal co
njunct
ion as
illust
rated:
Exten
sion o
f Leas
e = Co
mmenc
ement
AND (
on val
id Un
it OR o
n Leas
ed Pre
mises
).
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7
or res
tore th
e prod
uction
of oi
l, gas
and/or
coalb
ed me
thane
gas or
other
liquid
hydro
carbon
s by c
onduct
ing dr
illing
or rew
orking
operat
ions o
n the
Lease
d Prem
ises .
. . .
Def.’s
Br. S
upp. E
x 1, at
2, §1.
1 [her
einaft
er Le
ase].
The c
omme
nceme
nt cla
use of
the L
ease b
oth pr
escrib
es the
Lease
’s
autom
atic ter
minat
ion at
the en
d of it
s prim
ary ter
m (ab
sent th
e Less
ee’s a
ction t
o
extend
the L
ease)
and pr
ovides
the m
eans b
y whic
h the
Lesse
e can
activa
te the
second
ary ter
m of
the Le
ase:
8.1 U
nless
sooner
termi
nated
as oth
erwise
herei
n prov
ided, L
essee
shall c
omme
nce a w
ell on
the Le
ased P
remise
s or o
n a sp
acing
unit
contain
ing a p
ortion
of th
e Leas
ed Pre
mises
, with
in fiv
e (5)
years
from
the da
te first
writte
n abov
e and
shall d
rill sa
id we
ll with
due
dilige
nce.I
n the
event
the af
oresai
d well
is not
comme
nced w
ithin
such f
ive (5
) year
perio
d, thi
s Agre
ement
shall
be au
tomati
cally
termi
nated
in its
entir
ety, un
less L
essor
approv
es in
writin
g, thir
ty(30
) days
in ad
vance
of the
anniv
ersary
date o
f this A
greem
ent, th
econ
tinuat
ion of
this A
greem
ent on
a year
-to-ye
ar bas
is.
Lease
, §8.1 (
empha
sis ad
ded).
Read
togeth
er, th
ese tw
o prov
isions
allow t
he Le
ssee to
exten
d the
prima
ry
term
of the
Lease
beyon
d June
21, 20
11 if t
he Le
ssee c
omme
nced a
well o
n the
Lease
d Prem
ises o
r a un
it cont
aining
a port
ion of
the L
eased
Premi
ses be
fore th
e
expira
tion o
f the p
rimary
term.
6 If th
e Less
ee did
not fu
lfill th
ose co
nditio
ns, th
e
6 The L
essee
did no
t seek
an ext
ension
of th
e Leas
e in wr
iting n
or did
the L
essor
approv
eany
such
extens
ion. T
he pos
sibilit
y of e
xtendi
ng the
Lease
in th
is mann
er is n
ot at i
ssue.
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7
Lease
expir
ed by
its ow
n term
s at th
e end
of the
prim
ary ter
m.
2.Ra
nge “C
omme
nced a
Well”
as a M
atter o
f Law
The p
hrases
“cond
uct dr
illing
operat
ions”
and “c
omme
nce a w
ell,” a
s
utilize
d in t
his Le
ase, ar
e cons
trued
broadl
y to i
nclude
activ
ities o
ften p
erform
ed in
prepar
ation f
or dri
lling—
the ph
ysical
act o
f drill
ing be
fore th
e expi
ration
of th
e
prima
ry ter
m is n
ot a n
ecessa
ry pre
requis
ite to
extend
a leas
e. Th
is Cour
t recen
tly
decide
d this
partic
ular is
sue in
Roe v
. Chie
f Expl
oratio
n & De
velopm
ent LL
C,
4:11-c
v-0081
6, 2013
WL 4
083326
(M.D.
Pa. A
ug. 13
, 2013)
, findi
ng tha
t activ
ity
undert
aken i
n good
faith
in pr
eparat
ion to
drill
satisfi
ed a le
ase’s c
omme
nceme
nt
clause
. The
Court
cited
to lea
rned t
reatise
s that e
xplain
:
The g
eneral
rule i
s that a
ctual d
rilling
is unn
ecessa
ry, bu
t the lo
cation
of we
ll sites
, hauli
ng lum
ber on
the p
remise
s, erec
tion o
f derr
icks,
provid
ing a w
ater su
pply, m
oving
machi
nery o
n the
premi
ses an
dsim
ilar ac
ts prel
imina
ry to
the be
ginnin
g of th
e proc
ess of
drilli
ng,wh
en per
forme
d with
the b
ona fid
e inten
tion t
o proc
eed wi
th dil
igence
toward
the c
omple
tion o
f the w
ell, co
nstitu
te a co
mmenc
ement
orbeg
inning
of a w
ell or
drillin
g oper
ations
within
the m
eaning
of th
elea
se.
N ANC
YSAI
NT-PA
UL,S
UMME
RSOIL
AND G
AS§ 1
5:10 (
3d ed.
2013)
; see a
lso
Pemco
Gas, I
nc. v.
Berna
rdi, 5
Pa. D.
& C.
3d 85,
92, 19
77 WL
260 (
Pa. Co
m. Pl
.
1977).
Anot
her tre
atise s
tates:
Althou
gh the
re is s
ome li
mited
autho
rity to
the c
ontrar
y, in g
eneral
itapp
ears th
at the
courts
have b
een re
ady to
find t
he com
mence
ment
ofope
ration
s (or th
e purs
uit of
drilli
ng ope
ration
s) wher
e only
the m
ost
12
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modes
t prep
aratio
ns for
drilli
ng hav
e been
made
. . .
. . .
In bri
ef, dr
illing
operat
ions m
ay be
descri
bed as
any w
ork or
actua
lope
ration
s unde
rtaken
or co
mmenc
ed in
good f
aith fo
r the p
urpose
ofcar
rying
out an
y of th
e righ
ts, pri
vilege
s or d
uties
of the
lessee
under
alea
se, fo
llowe
d dilig
ently
and in
due c
ourse
by the
const
ructio
n of a
derric
k and
other
necess
ary str
ucture
s for th
e drill
ing of
an oi
l and g
aswe
ll, and
by th
e actu
al oper
ation o
f drill
ing in
the g
round.
P ATR
ICKH.
MART
IN&B
RUCE
M.KR
AMER
,WILL
IAMS
&MEY
ERS,O
IL AN
D GAS
LAW §
618.1
(2013
).
Pennsy
lvania
cases
adopt
this p
osture
as we
ll. Se
e, e.g.
, Hend
erson
v.
Ferrel
l, 183
Pa. 54
7, 38 A
. 1018
(1898)
; Bern
ardi, 5
Pa. D
. & C.
3d at 9
2–96;
see
also G
ood W
ill Hu
nting
Club, I
nc. v.
Range
Res.-A
ppalac
hia, L
LC, 4:
11-CV
-
1152, 2
013 W
L 2297
170, *1
7–18 (
M.D.
Pa. M
ay 24,
2013)
. For
examp
le, in
the
now se
minal
case
of Pe
mco G
as, In
c. v. B
ernard
i that c
ourt h
eld th
at the
defend
ant
“had c
omme
nced o
peratio
ns wit
hin th
e gene
rally
accept
ed me
aning
of tha
t phra
se.”
Berna
rdi,5
Pa. D.
& C.
3dat 9
5. In
the pe
riod f
rom th
ree m
onths
prior
to the
expira
tion o
f that l
ease to
the d
ay the
prim
ary ter
m exp
ired, t
he def
endant
surve
yed
the sit
e, bega
n nego
tiation
s conc
erning
the lo
cation
of th
e site
and th
e locat
ion of
the rig
ht-of-
way w
ith th
e plain
tiffs, a
cquire
d a rig
ht-of-
way o
ver a n
eighbo
ring
proper
ty, hi
red co
ntract
ors to
do th
e exca
vation
and d
rilling
work,
appli
ed for
and
13
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7
acquir
ed a d
rilling
perm
it, and
place
d pipe
on th
e site.
7 Id. a
t 95–9
6.
Similar
ly, th
e Supr
eme C
ourt o
f Penn
sylvan
ia has
held t
hat th
e prep
arator
y
action
s of st
aking
the lo
cation
of a w
ell and
attem
pting
to unl
oad lu
mber
at the
site
on the
final d
ay of
the pr
imary
term
constit
uted d
rilling
opera
tions
suffic
ient to
extend
the le
ase. H
enders
on, 38
A. at
1019.
This a
ctivity
comp
rised t
he
comme
nceme
nt of
drillin
g oper
ations
as a m
atter o
f law.
Id.
In th
e case
befor
e the C
ourt, R
ange’s
activ
ities b
efore
the ex
piratio
n of th
e
Lease
’s prim
ary ter
m on
June 2
1, 2011
inclu
ded, bu
t were
not li
mited
to: (1
)
obtain
ing re
gulato
ry per
mits a
nd app
rovals
from
govern
ment
agenci
es; (2
) staki
ng
the lo
cation
for th
e well
drill s
ite; (3
) nego
tiating
agree
ments
with
Plaint
iffs an
d
neighb
oring
landow
ners re
gardin
g drill
ing op
eratio
ns; (4
) obta
ining
easem
ents; (
5)
removi
ng tim
ber; an
d (6)
constru
cting r
oad ac
cess a
nd the
pad s
ite for
the w
ell to
begin
drillin
g. Th
ese ac
tivitie
s are
suffic
ient to
const
itute t
he com
mence
ment
of a
well a
s a m
atter o
f law.8 S
ee, e.g
., Bern
ardi, 5
Pa. D
. & C.
3d at 9
5–96;
Hende
rson,
38 A.
at 1018
–19; S
UMME
RSOIL
AND G
AS§ 1
5:10;
WILL
IAMS
&MEY
ERS,O
IL AN
D
7 Addit
ional c
ases o
f pers
uasive
autho
rity di
scusse
d by t
he cou
rt in t
he Be
rnardi
decis
ioninc
lude: A
llen v.
Cont’
l Oil C
o., 255
So.2d
842 (
La. 19
71); W
alton v
. Zatk
off, 37
2 Mich
. 491,
127 N.
W.2d
365 (1
964); P
eterso
n v. R
obinso
n Oil &
Gas C
o., 356
S.W.
2d 217
(Tex.
1962)
;Jon
es v. M
oore , 3
38 P.2
d 872
(Okla
. 1959)
.
8 The P
laintiff
s do n
ot con
test th
at the
Defen
dant’s
action
s were
done
in goo
d faith
and
that th
e Defe
ndant
dilige
ntly c
ontinu
ed the
drilli
ng ope
ration
s.
14
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7
GASL
AW § 6
18.1.
3.Un
itizatio
n
Even
though
Range
’s activ
ities in
begin
ning t
he we
ll on t
he nei
ghbori
ng
Null p
ropert
y satis
fied t
he com
mence
ment
clause
as a m
atter o
f law,
by the
terms
of the
Lease
those
drilli
ng act
ivities
must
have
been p
reform
ed eith
er “on
the
Lease
d Prem
ises o
r on a
spaci
ng uni
t conta
ining
a port
ion of
the L
eased
Premi
ses”
in ord
er to
extend
the L
ease.
Lease
, § 8.1
. Rang
e’s ac
tivitie
s prio
r to th
e
expira
tion o
f the p
rimary
term
were
not “o
n the
Lease
d Prem
ises.”
9 Id.
Conse
quentl
y, they
must
have
been p
erform
ed “on
a spac
ing un
it cont
aining
a
portio
n of th
e Leas
ed Pre
mises
” in or
der to
exten
d the
Lease
. Id.
Unitiz
ation, a
comm
on pra
ctice o
f the o
il and
gas in
dustry
that c
reates
units
contem
plated
in th
e Leas
e, “ref
ers to
the c
onsoli
dation
of m
ineral
or lea
sehold
intere
sts in
oil o
r gas
coveri
ng a c
ommo
n sour
ce of
supply
.”10 Amo
co Pro
d. Co. v
.
Heim
ann, 90
4 F.2d
1405,
1410
(10th
Cir. 19
90). T
he con
solida
ted un
it of
“lease
hold i
nteres
ts cove
ring a
ll or p
art of
a com
mon s
ource
of sup
ply . .
. [serv
es]
9 The C
ourt el
aborat
es on
this is
sue in
the f
inal su
bsectio
n (4)
below
.
10 “Alth
ough t
he ter
ms ‘p
ooling
’ and
‘unitiz
ation’
are fre
quentl
y used
inter
change
ably,
more
proper
ly ‘po
oling’
mean
s the b
ringin
g toge
ther o
f small
tracts
suffic
ient fo
r the g
rantin
g of
a well
permi
t unde
r appl
icable
spaci
ng rul
es wh
ereas
‘unitiz
ation’
. . . m
eans th
e join
operat
ionof
all or
some p
art of
a prod
ucing
reserv
oir.”
6-9 W
ILLIA
MS&M
EYER
S,OIL
AND G
ASLA
W§
901.
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MEALEY’S Fracking Report Vol. 1, #1 May 2014
to ma
ximize
produ
ction b
y effic
iently
drain
ing th
e rese
rvoir.”
1 B.
KRAM
ER&P
.
MART
IN,T
HELA
W OF
POOL
ING A
ND UN
ITIZA
TION§
1.02 (
3d ed.
2013)
.
Furth
ermore
, “the
goals o
f unit
izatio
n are
conser
ving r
esourc
es by
preven
ting
waste
and p
rotect
ing lan
downer
s’ corr
elativ
e righ
ts.”11 H
eimann
, 904 F
.2d at
1410–1
1. Under
a typi
cal oi
l and g
as lea
se, ab
sent g
overnm
ent in
volvem
ent, th
e
lessee
’s only
autho
rity to
unitiz
e the le
ased p
remise
s with
other
lands
is deri
ved
from
the pe
rmiss
ion gr
anted
to the
lessee
by th
e lesso
r, expr
essed
in the
terms
of
the lea
se agr
eement
. Amo
co, 90
4 F.2d
at 141
1 (citi
ng KR
AMER
&MAR
TIN, §8
.01).
Once
a lesso
r gran
ts the
lessee
that i
nteres
t in a l
ease, h
oweve
r, the
lessee
posse
ss
the po
wer to
unitiz
e the le
ssor’s
inter
est wi
thout
furthe
r cons
ent. I
d.
Conse
quentl
y, a les
sor ca
n lim
it that
autho
rity in
any w
ay in
the ter
ms of
the
agreem
ent to
prote
ct its i
nteres
ts. Th
e lesse
e reta
ins fre
edom
of con
tract a
nd is n
ot
oblige
d to c
ontrac
t with
a less
or dem
anding
unrea
sonabl
e or o
bjectio
nable
unitiza
tion c
onditio
ns. N
everth
eless,
when
a lesse
e sign
s an o
il and
gas lea
se, its
unitiza
tion a
uthori
ty ext
ends o
nly so
far a
s the te
rms o
f that l
ease p
rovide
.
“Desp
ite the
attitu
de tha
t the p
ooling
clause
is to
be lib
erally
const
rued, e
ach
11 “Corr
elativ
e righ
ts are
rights
which
one o
wner
posses
ses in
a com
mon s
ource
of sup
plyin
relatio
n to t
hose r
ights p
ossess
ed by
other
owner
s in th
e sam
e com
mon s
ource
of sup
ply.”
Heim
ann, 90
4 F.2d
at 141
1 n.4 (
quotin
g Unit
ed Pet
roleum
Explo
ration
v. Pre
mier
Res.,
511 F.
Supp.
127, 1
29 (W
.D. Ok
la. 198
0)) (in
ternal
quota
tions
omitte
d).
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poolin
g clau
se mu
st be c
areful
ly exa
mined
for sp
ecific
provi
sions
that re
strict t
he
power,
presc
ribe th
e mann
er in
which
it ma
y be e
xercis
ed, an
d desc
ribe th
e
conseq
uence
of its
exerci
se.” 4
-48KU
NTZ,L
AW OF
OIL A
ND GA
S§ 48
.3(a)(
1).
The c
oncret
e issue
befor
e the C
ourt is
wheth
er Ra
nge’s d
esigna
tion o
f a un
it
of app
roxim
ately
three
hundre
d nine
ty-fiv
e (395
) acre
s exce
eded i
ts unit
izatio
n
author
ity un
der th
e Leas
e. Th
e Neuh
ards c
ontend
that R
ange w
as lim
ited to
creatin
g a un
it of 3
50 acr
es by
the ter
ms of
the L
ease.
I.Ma
terial
Provi
sions
Regu
lating
Unitiz
ation
Autho
rityan
d Well
Spaci
ng
The u
nitiza
tion p
ortion
of th
e Leas
e prov
ides:
Lesse
e shal
l have
the r
ight at
any t
ime o
r time
s to po
ol and
consol
idate t
he Le
ased P
remise
s, in w
hole o
r in pa
rt or a
s to an
ystra
tum or
strata
, with
lands
or lea
ses ad
jacent
to or
in th
e imme
diate
vicini
ty of
the Le
ased P
remise
s, so a
s to co
nstitu
te a un
it or u
nits fo
rthe
purpo
se of
enteri
ng, wi
th the
owner
s and/
or les
sees, i
nto jo
intope
rating
agree
ments
provi
ding f
or the
joint
opera
tion a
nddev
elopm
ent of
the L
eased
Premi
ses or
portio
ns the
reof w
ithadj
oining
lands
to pre
vent th
e drill
ing of
an ex
cess n
umber
of we
lls or
of we
lls loc
ated t
oo clo
se to
the bo
undary
of th
e Leas
ed Pre
mises
,pro
viding
that s
aid un
it or p
ool is
not ar
bitrar
y and
the ac
reage
constit
uting
the un
it or p
ool is
compri
sed of
a mini
mum
of 50%
of th
eLe
ssor’s
acrea
ge OR
Lesso
r has
approv
ed suc
h unit
izatio
n in w
riting
to Le
ssee.
In the
absen
ce of
any sp
acing
order,
rule,
or reg
ulatio
n of
the Pe
nnsylv
ania D
epartm
ent of
Envir
onment
al Prot
ection
, any s
uchuni
t or u
nits s
hall b
e limi
ted in
size to
the a
rea su
rround
ing ea
ch we
llpro
vided
for in
Sectio
n 9.2 a
bove.
Lease
, § 12.
1.
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Sectio
n 12.2
furth
er pro
vides
that “d
rilling
. . . op
eratio
ns upo
n . . . a
ny suc
h
unit sh
all be
treate
d, for
all pur
poses
hereun
der, as
opera
tions
upon .
. . the
Lease
d
Premi
ses.”
Lease
, § 12.
2. Sec
tion 9
.2, how
ever, l
imits
the m
aximu
m siz
e of e
ach
unit cr
eated
under
the Le
ase, as
it rea
ds:
Lesse
e shal
l not
be req
uired
under
this p
rovisio
n to d
rill m
ore we
llstha
n requ
ired o
r allo
wed u
nder a
ny spa
cing o
rder, r
ule, or
regul
ation
of the
Penns
ylvani
a Depa
rtment
of En
vironm
ental P
rotect
ion, or
inthe
absen
ce of
any su
ch ord
er, m
ore th
an on
e well
in the
. . . (i
v)thr
ee hu
ndred
fifty
(350)
acres
aroun
d each
well f
rom wh
ich ga
s isbei
ng pro
duced
as the
princ
ipal p
roduct
from
depths
above
the to
p of
the On
ondaga
Form
ation.
Lease
, § 9.2
(emp
hasis a
dded).
The N
euhard
s subm
it that
, by th
e plain
langua
ge of
the lea
se, th
e acre
age
amoun
ts artic
ulated
in se
ction 9
.2 oper
ate so
as to
limit t
he ma
ximum
exten
t of a
unit’s
size to
the 3
50 acr
es sur
roundi
ng eac
h well,
based
on th
e allu
sion t
o sect
ion
9.2 in
sectio
n 12.1
. Unde
r this c
onstru
ction, R
ange e
xceede
d its u
nitiza
tion
author
ity.12
In con
trast,
Range
conte
nds th
at read
ing se
ctions
9.2 an
d 12.1
toget
her
limits
Range
’s pool
ing au
thority
in th
ree wa
ys: (1
) the u
nit m
ust no
t be a
rbitra
ry;
(2) th
e pool
ed uni
t must
be co
mprise
d of a
mini
mum
of 50%
of th
e Neuh
ards’
12 The N
euhard
s did
not ap
prove
Range
’s unit
izatio
n in w
riting
as con
templa
ted by
the
Lease
.
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acreag
e; and,
(3) th
e total
acreag
e in th
e unit
must
not ex
ceed 3
50 acr
es
surrou
nding
each
well i
n the
unit.
Range
subm
its tha
t base
d on t
his lan
guage,
it
has au
thority
to cr
eate a
unit c
ontain
ing th
ree we
lls wit
h an a
creage
limitat
ion of
1050 a
cres (t
he pro
duct o
f 3 we
lls wit
h 350
acres
around
each)
. Unde
r Rang
e’s
interp
retatio
n, the
exerci
se of
its uni
tizatio
n auth
ority
was p
roper.
The L
ease d
oes co
ntemp
late th
e poss
ibility
of m
ore th
an one
well p
er uni
t,
such t
hat Ra
nge’s i
nterpr
etatio
n is p
lausib
le. Th
e Leas
e, how
ever, r
equire
s the
Lesse
e to ob
tain th
e Less
or’s p
ermiss
ion in
order
to dr
ill mo
re tha
n one
well p
er
unit.
The L
ease p
rovide
s:
Well s
pacing
shall
not be
closer
than
one (1
) well
per sp
acing
unit as
indica
ted in
Sectio
n 9.2,
unless
Lesse
e has
obtain
ed wr
itten a
pprova
lfro
m the
Lesso
r, whic
h shal
l not
be unr
easona
bly wi
thheld
or de
layed
. . . .
Lease
, § 10.
2.
ii.Ra
nge E
xceede
d Its U
nitiza
tion A
uthori
ty
Each
Parties
’ cons
tructio
n of th
e Leas
e is pa
rtly ap
t and p
art in
error
. The
Lease
’s prov
isions,
partic
ularly
conce
rning
unitiza
tion a
nd we
ll spac
ing, m
anifes
t
at leas
t three
inter
ests th
at conf
lict in
the c
urrent
dispu
te: (1)
the N
euhard
s’ inte
rest
in ens
uring
their m
ineral
estate
comp
rises a
n appr
opriate
perce
ntage
of any
unit
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produc
ing oi
l or g
as, so
that t
heir ro
yalties
are n
ot dil
uted;13 (2
) all P
arties
’
(prim
arily
the lan
downer
s) inte
rests i
n mini
mizin
g surf
ace di
srupti
on fro
m
drillin
g;14 and, (
3) Ra
nge’s i
nteres
t in dr
illing
wells
as eff
icientl
y as e
conom
ically
possib
le.15 All t
hree o
f these
inter
ests a
re rep
resent
ed in
varyin
g degr
ee in
differ
ent
terms
of th
e Leas
e, and
the co
nfluen
ce of
these
intere
sts is
the fo
cal po
int fo
r
resolu
tion o
f the c
urrent
dispu
te.
a.Th
e Leas
e’s Pl
ain Te
rms L
imit M
aximu
m Un
itSiz
e to 35
0 Acre
s Abse
nt Per
missi
on
The C
ourt h
olds th
at Rang
e’s un
it desi
gnatio
n viol
ates it
s unit
izatio
n
author
ity un
der th
e plain
and u
nambig
uous te
rms o
f the L
ease, b
ecause
the L
ease is
clear
that a
unit ca
nnot b
e large
r than
350 ac
res su
rround
ing ea
ch we
ll in t
he uni
t,
and a u
nit ca
nnot co
ntain
more
than o
ne we
ll with
out th
e perm
ission
of th
e Less
or,
13 This i
nteres
t is ef
fectua
ted in
the o
peratio
n of th
e Leas
e’s ter
ms, fo
r exam
ple,
constru
ing to
gether
sectio
ns 12.
1, 9.2,
and 10
.2, as
the Co
urt su
bseque
ntly e
labora
tes.
14 This i
nteres
t is ex
presse
d in t
he Le
ase’s l
anguag
e, for
examp
le: “L
essee
agrees
to dr
illsuc
h wells
as a r
easona
bly pr
udent
operat
or wo
uld dr
ill . . .
to de
velop
and pr
oduce
from
theLe
ased P
remise
s effic
iently
, econo
mical
ly, wi
thout
waste
, and t
o the
best ad
vantag
e of L
essor.
” Le
ase, §
10.1.
The in
terest
is als
o expr
essed
in thi
s langu
age: “[
t]he L
eased
Premi
ses ar
econ
tinuou
sly us
ed for
dome
stic, ag
ricult
ure, re
creatio
nal, an
d othe
r purp
oses, a
nd ma
ny act
ivities
may b
e in pr
ogress
on th
e lands
. Henc
e, Less
ee sha
ll cond
uct its
opera
tions
so as
to mi
nimize
interf
erence
with
the ot
her ac
tivitie
s on t
hese L
eased
Premi
ses.”
Lease
, § 7.1
.
15 This i
nteres
t is ev
ident
as a te
xtual m
atter th
rougho
ut the
Lease
, most
pertin
ently
in the
introd
uction
: “Less
ee is d
esirou
s of le
asing
Lesso
r’s oi
l, gas
and co
albed
rights
conta
ined i
n, on,
and un
der th
e Leas
ed Pre
mises
for th
e purp
ose of
explo
ring f
or . . .
drilli
ng, op
eratin
g, prod
ucing
and re
movin
g oil,
gas, co
albed
metha
ne gas
and l
iquid
hydroc
arbons
there
from.
” Leas
e,Int
roduct
ion.
20
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which
Range
did n
ot obt
ain. S
teuart
, 444 A
.2d at
661; se
e also
Trans
-West
ern
Petrol
eum, In
c. v. U
.S. Gy
psum
Co., 5
84 F.3
d 988,
994–9
5 (10t
h Cir.
2009)
(Holl
oway,
J.) (a
ffirmi
ng a d
istrict
court’s
decis
ion fin
ding a
lease
expire
d by i
ts
terms
at the
end o
f its p
rimary
term
becaus
e the d
efenda
nt’s u
nitiza
tion s
cheme
contra
dicted
the u
nambig
uous te
rms o
f the le
ase).
The N
euhard
s’ inte
rest in
ensur
ing th
eir lan
d (and
royal
ty pay
ment)
compri
ses an
appro
priate
perce
ntage
of any
unit p
roduci
ng oil
and g
as to
is
protec
ted by
mult
iple p
rovisio
ns, bo
th tho
se ma
ndatin
g a m
inimu
m uti
lizatio
n of
the Ne
uhards
’ land
(sectio
n 12.1
) and
a maxi
mum
size o
f any
unit (s
ection
9.2).
Sectio
n 12.1
creat
es the
unam
biguou
s requi
rement
that t
he Le
ssee u
se a m
inimu
m
of 50%
of th
e Neuh
ards’ 4
7 acre
s in an
y unit
inclu
ding t
he Ne
uhards
’ land.
This
ensure
s that t
he Ne
uhards
’ land
will b
e inclu
ded in
a unit
in at
least a
mini
mum
amoun
t the N
euhard
s’ deem
ed suf
ficien
t at th
e time
of sig
ning t
he con
tract,
namely
50% of
their
47 ac
res.
Furth
ermore
, readi
ng sec
tions
9.2 an
d 10.2
toget
her, it
is cle
ar the
Lease
e
cannot
creat
e a un
it larg
er tha
n 350
acres
by dri
lling m
ore th
an one
well w
ithout
the Ne
uhards
’ perm
ission
. This
provi
sion p
rotect
s the N
euhard
s’ inte
rest fr
om
diluti
on by
preven
ting R
ange f
rom in
cludin
g the
Neuha
rds’ la
nd in
a unit
larger
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than t
he 350
acre
units c
ontem
plated
by th
e Leas
e with
out th
e Neuh
ards’ c
onsent
.16
b.En
forcin
g the
Lease
’s Plain
Term
s Does
Not L
eadto
Absur
d Resu
lts and
Is Ha
rmoni
ous wi
th the
Lease
as a W
hole
Range
argue
s that t
his re
ading
of the
Lease
’s plain
terms
is ina
ppropr
iate
becaus
e it co
nflicts
with
the se
cond a
nd thi
rd int
erests
enum
erated
above
, name
ly
the Pa
rties’ i
nteres
t in m
inimi
zing s
urface
disru
ption
and Ra
nge’s i
nteres
t in
develo
ping r
esourc
es in
the m
ost ec
onomi
cally
efficie
nt ma
nner.
These
consid
eratio
ns are
inter
relate
d. Ra
nge as
serts t
he Co
urt’s r
eading
of th
e Leas
e
underm
ines th
ose in
terest
s and
leads
to an
absurd
resul
t. The
Court
’s cons
tructio
n
of the
Lease
is, ho
wever
, both
a prop
er rea
ding o
f the L
ease’s
clear
and
unamb
iguous
terms
, and d
oes no
t lead
to abs
urd re
sults w
hen co
nstrui
ng the
terms
in the
conte
xt of
the tim
e that t
he Par
ties sig
ned th
e Leas
e. See
Cavan
augh, 4
46
A.2d a
t 1283
(“[I]t
is the
inten
tion o
f the p
arties
at th
e time
of en
tering
in th
ereto
that g
overns
, and s
uch in
tentio
n is to
be ga
thered
from
a read
ing of
the e
ntire
contra
ct.”).
The in
terest
in m
inimi
zing s
urface
disru
ption
from
drillin
g is e
xpress
ed in
aspira
tional
langua
ge thr
oughou
t the L
ease.
For e
xample
, sectio
n 10.1
charg
es the
16 Range
also c
ontinu
ally as
serts t
hat “c
apping
[a] u
nit siz
e at 3
50 acr
es is a
rbitra
ry in
andof
itself.”
Def.
’s Br. O
pp’n 9
, Jan. 4
, 2013,
ECF N
o. 29.
This a
rgume
nt has
no m
erit in
consid
eratio
n of th
e unam
biguou
s langu
age th
e Part
ies’ a
greed
to at t
he tim
e of si
gning
theLe
ase.
22
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Lesse
e with
a duty
to “d
evelop
and p
roduce
from
the Le
ased P
remise
s effic
iently
,
econom
ically
, with
out wa
ste, an
d to t
he bes
t advan
tage o
f the L
essor.
” Sect
ion
12.1 a
rticula
tes a d
esire
to “pr
event
the dr
illing
of an
excess
ive nu
mber
of we
lls or
of we
lls too
close
to the
bound
ary of
the L
eased
premi
ses.”
Consi
stent
with t
his
expres
sed as
piratio
nal pu
rpose,
Range
argue
s that “
the in
tent fo
r Sect
ion 10
.2 of
the Le
ase is
to pro
tect th
e Less
ors fro
m unr
easona
ble su
rface
intrus
ions re
sultin
g
from
the co
nstruc
tion a
nd ope
ration
of nu
merou
s pad
sites o
n the
leased
prem
ises.”
Def.’s
Br. S
upp., a
t 17.
It is c
lear fr
om th
e langu
age of
the L
ease th
at the
Parties
inten
ded to
minim
ize su
rface
disrup
tion.
Const
ruing
the Le
ase as
a whol
e, how
ever, i
t is als
o
clear
that th
e requ
ireme
nt of
permi
ssion
in sec
tion 1
0.2 no
t only
encou
rages
minim
al surf
ace di
srupti
on, bu
t also
unmista
kably
protec
ts the
Neuha
rds’ in
terest
from
being
dilute
d in a
unit l
arger
than 3
50 acr
es wit
hout th
eir pe
rmiss
ion. A
single
term
may s
erve m
ultipl
e purp
oses.
Moreo
ver, w
hen th
e word
s are
clear
and
unamb
iguous
, a Co
urt wi
ll not
enforc
e one
party’
s rende
ring o
f a pr
ovisio
n’s in
tent
over th
e clea
r langu
age of
the c
ontrac
t. See
, e.g.,
Steuar
t, 444
A.2d a
t 661.
Range
’s argu
ment
rests o
nly on
the c
ontinu
ed ass
ertion
that t
he per
missi
on
provis
ion is
meani
ngless
becau
se non
e of R
ange’s
actua
l drill
ing ac
tivitie
s have
impac
ted th
e surf
ace of
the N
euhard
s’ prop
erty.
Never
theles
s, Rang
e does
not
23
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addres
s the p
rovisio
n’s pr
otectio
n of th
e Neuh
ards’ p
roport
ion of
any u
nit cr
eated
under
the lea
se, no
r the p
aramo
unt co
nsider
ation:
the pl
ain an
d unam
biguou
s
words
of th
e Leas
e requ
iring p
ermiss
ion. S
ee id.
It is tr
ue tha
t the N
euhard
s’ may
not ha
ve bee
n able
to re
asonab
ly wit
hhold
consen
t base
d on s
urface
disru
ption
motiv
es, an
d that
they
may h
ave gi
ven co
nsent
to dri
ll more
than
one we
ll if a
sked.
These
facts
, howe
ver, do
not o
bviate
the
Lease
’s expr
ess re
quirem
ent fo
r perm
ission
, nor w
as sur
face d
isrupti
on the
only
intere
st prot
ected
by the
perm
ission
requi
rement
.17 In th
e Defe
ndant’
s own
words
,
“[a] c
ontrac
t shoul
d not
be int
erpret
ed in
a mann
er tha
t rende
rs prov
isions
meani
ngless
, super
fluous
, unrea
sonabl
e, cont
radicto
ry, or
would
lead t
o absu
rd
result
s.” D
ef.’s B
r. Repl
y Pls.’
Br. O
pp’n 6
, Jan. 1
8, 2013
, ECF
No. 33
(citin
g,
inter
alia, L
esko, 1
5 A.3d
at 342
–43).
Dismi
ssing
the pl
ain lan
guage
of the
permi
ssion
requir
ement
would
be co
ntrary
to fir
mly e
stabli
shed l
aw by
rende
ring
the pr
ovisio
n mean
ingles
s, and
the Co
urt de
clines
to do
so.
Moreo
ver, ev
en if p
ermiss
ion wa
s unne
cessar
y by t
he Le
ase’s l
anguag
e or if
it was
grante
d, Rang
e has
not de
monst
rated
its cur
rent u
nit co
nfigur
ation i
s
17 The P
arties
dispu
te whet
her th
e Neuh
ards w
ould h
ave gi
ven co
nsent
to allo
w more
than o
ne we
ll in a
unit.
Barba
ra Ne
uhard
indica
tes sh
e woul
d have
requi
red m
ore in
forma
tion
and de
libera
tion b
efore
decidi
ng the
matte
r. See
Pls.’
Br. Su
pp., E
x. F, D
ep. Ba
rbara
Neuha
rd,52–
53. M
oreove
r, it ap
pears t
he Ne
uhards
’ coul
d have
reaso
nably
withhe
ld con
sent fo
r the
purpos
e of p
rotect
ing ag
ainst t
he per
ceived
dilut
ion of
their
inter
est in
a unit
.
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approp
riate u
nder it
s own
const
ructio
n of th
e Leas
e. Th
e Leas
e allo
ws fo
r unit
s
larger
than
350 ac
res if
the un
it cont
ains m
ore th
an one
well,
becaus
e unit
s are
limited
in siz
e to th
e “thr
ee hun
dred f
ifty (3
50) ar
ound
each
well.”
Leas
e, § 9.2
.
“Arou
nd” is
not a t
erm of
art, a
nd is d
efined
in its
norm
al usag
e as: “
a circ
le or in
circum
ferenc
e . . . o
n all o
r vari
ous sid
es.” M
ERRIA
M-WE
BSTE
R(11t
h ed.)
.18
Readi
ng the
plain
terms
of th
e Leas
e in th
eir or
dinary
usage
, then,
the L
ease
seems
to su
ggest t
hat th
e 350
acres
around
each
well w
ould e
xtend
outwa
rd in
an
approx
imate
circle
, or at
least g
eneral
ly in
all dir
ection
s, with
the w
ell as
the
epicen
ter an
d each
point
on th
e extr
emity
gener
ally eq
uidista
nt fro
m the
well a
t the
approx
imate
cente
r. Th
e Cour
t is co
gnizan
t that u
nits a
re not
gener
ally co
ncentr
ic
circle
s and
that an
acre
is a sq
uare u
nit of
meas
ureme
nt.19 N
everth
eless,
the w
ell
would
not b
e locat
ed dra
matica
lly at
one sid
e of th
e 350
acres
but at
the re
lative
center
with
the ac
reage
“aroun
d” the
well,
especi
ally in
light
of the
Lease
’s term
s
and th
e drill
ing tec
hnolog
y avai
lable a
t the ti
me th
e Leas
e was
signed
. The
350
acre u
nit co
ntemp
lated b
y the
Lease
is aro
und a v
ertica
l well,
not tr
avelin
g alon
g
18 In de
fining
this a
nd oth
er ter
ms th
rougho
ut the
opini
on, th
e Cour
t relies
on th
edic
tionar
y as u
pdated
to da
te, not
a dicti
onary
from
2006.
Althou
gh wh
en con
struing
terms
it is
genera
lly ap
propri
ate to
invok
e their
conte
mpora
ry me
aning
to the
exten
t poss
ible, t
he Co
urt is
confid
ent th
at the
meani
ngs of
funda
menta
l prop
ositio
ns and
adjec
tives
in the
Engli
sh lan
guage
have n
ot cha
nged a
s dram
atically
since
2006 a
s, for
examp
le, dri
lling t
echnol
ogy ha
s.
19 Acre
is defi
ned as
: “a un
it in t
he Un
ited St
ates a
nd En
gland
equal t
o 43,5
60 squ
arefee
t.” M
ERRIA
M-WE
BSTE
R.
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the we
llbore
of a h
orizon
tal we
ll made
possi
ble by
drilli
ng tec
hnolog
y utili
zed af
ter
the Le
ase wa
s exec
uted.
See, e.
g., Pls
.’ Br. S
upp., E
x. H, D
ep. Ca
rl Stein
le, at
73–74
[herei
nafter
Dep. C
arl St
einle]
.
There
fore, t
o cont
ain a u
nit as
large
as 1,0
50 acr
es as
Range
argue
s that t
he
Lease
allow
s, the
three
wells
of tha
t unit
must
be ge
nerally
space
d out
such t
hat th
e
well s
ites ar
e locat
ed nea
r the g
eneral
cente
r of th
e 350
acre a
reas a
round
each
well,
with m
inima
l over
lap wi
th ano
ther w
ell’s s
urroun
ding a
creage
and i
n a
fashio
n that
harm
onizes
the o
ther p
rovisio
ns of
the Le
ase as
well a
s poss
ible.
To
form
the 39
5 acre
unit R
ange c
onstru
cted, i
t appea
rs from
the la
nguage
of th
e
Lease
that t
he we
lls mu
st be s
paced
in suc
h a wa
y that
the 3
50 acr
es aro
und ea
ch
well a
s the e
picent
er ext
ends o
utward
to in
clude
the ex
tra 45
acres
of th
e large
r
unit.
Range
has n
ot dem
onstra
ted th
at the
three
wells
locate
d on t
he sam
e well
pad
site, w
ithin
severa
l doze
n feet
of ea
ch oth
er, co
mport
with
this c
onstru
ction.
Range
furth
er arg
ues th
at this
inter
pretati
on of
the Le
ase fru
strates
both
the
intere
sts in
mini
mizin
g surf
ace di
srupti
on and
devel
oping
the re
source
s most
econom
ically
, becau
se it r
equire
s the c
onstru
ction o
f mult
iple w
ell site
s spac
ed in
such a
way t
o achi
eve th
e desi
red un
it size
. This
spaci
ng is n
ot nec
essary
in lig
ht
of cur
rent h
orizon
tal dri
lling t
echnol
ogy, w
hich a
llows
Range
to dr
ill thr
ee we
lls
from
the sa
me we
ll site.
Cons
equent
ly, Ra
nge ar
gues th
is cons
tructio
n does
not
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make
the m
ost ec
onomi
c sens
e in th
e cont
ext of
horiz
ontal d
rilling
.
This m
ay be
true to
day, bu
t it wa
s not
true a
t the ti
me th
e Part
ies sig
ned th
e
Lease
. The
horizo
ntal d
rilling
techno
logy n
ow re
adily
in use
was n
ot the
n
availab
le in P
ennsyl
vania,
and no
t pres
umabl
y cont
empla
ted by
the p
arties
. The
Court
is bou
nd to
constru
e the L
ease a
t the ti
me of
signin
g, and,
conse
quentl
y in
the co
ntext
of the
n-avai
lable d
rilling
techno
logy.
See Ca
vanaug
h, 446
A.2d a
t
1283.
Gener
al term
s of a
contr
act m
ay em
brace
later te
chnolo
gies, b
ut the
terms
thems
elves
are sti
ll appl
ied ac
cordin
g to t
heir o
rdinar
y mean
ing at
the tim
e they
were
used.
See id
.
Carl S
teinle,
Land
Manag
er for
Range
, state
d at h
is depo
sition
that th
e Leas
e
“was
made
for ve
rtical w
ellbore
s. Th
ere we
re no
horizo
ntal w
ellbore
s that I
know
of in
the St
ate of
Penns
ylvani
a at th
e time
the le
ase wa
s exec
uted.”
Dep.
Carl
Steinl
e, at 5
2–53.
Conse
quentl
y, the
Court
’s cons
tructio
n lead
s to an
ordin
ary an
d
approp
riate,
rather
than
absurd
resul
t, when
consi
dering
the L
ease “
with d
ue reg
ard
to the
know
n char
acteri
stics o
f the b
usines
s to wh
ich it
relate
s” at t
he tim
e of
signin
g. Fra
nklin
Sugar
Ref. C
o. v. H
owell
, 274 P
a. 190,
194, 1
18 A.
109, 11
0
(1922)
; Cava
naugh,
446 A
.2d at
1238;
see als
o Unit
ed Sta
tes v.
Rabin
owitz,
339
U.S. 56
, 70 (1
950) (F
rankfu
rter, J
., diss
enting
) (“Wo
rds m
ust be
read
with t
he
gloss
of the
exper
ience
of tho
se wh
o fram
ed the
m.”).
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Finally
, Rang
e argu
es tha
t findi
ng it e
xceede
d its u
nitiza
tion a
uthori
ty und
er
the Le
ase is
agains
t the N
euhard
s’ inte
rest b
ecause
Range
would
not u
se all
of the
Neuha
rds’ 4
7 acre
s in a n
ewly
design
ated u
nit ba
sed on
the 3
50 acr
e cap.
This
may b
e true,
but th
e argu
ment
is unpe
rsuasi
ve for
sever
al reas
ons. F
irst, th
e
Neuha
rds br
ought
this a
ction a
nd are
presu
mably
aware
of po
ssible
conseq
uences
—it is
not fo
r Rang
e or th
e Cour
t to de
cide th
e wisd
om or
prude
nce
of the
Neuha
rds’ d
ecisio
ns in
pursui
ng the
ir futu
re eco
nomic i
nteres
ts. Se
cond,
Range
prese
nted t
wo alt
ernate
unit c
onfigu
ration
s that d
o not
utilize
all 47
acres
,
but th
at does
not m
ean th
ere ar
e not
possib
le conf
igurat
ions th
at are
both
econom
ically
benef
icial an
d do u
tilize
all 47
acres;
Range
has li
ttle in
centiv
e to
demons
trate t
hose c
onfigu
ration
s now
. Thir
d, in
light
of the
fact t
hat th
is Leas
e
expire
d and
that R
ange h
as uti
lized d
rilling
techno
logy n
ot con
templa
ted by
its
terms
, it wo
uld se
em ap
propri
ate fo
r the P
arties
to ne
gotiate
a new
Lease
with
terms
amena
ble to
curre
nt cir
cumsta
nces a
nd wit
hout th
e 350
acre c
ap, if
this is
the
course
they
wish t
o take
.
The C
ourt is
cogni
zant o
f the r
amific
ations
of enf
orcing
the L
ease’s
terms
.
This i
s not
an aca
demic e
xercis
e of h
yper-te
chnica
l trivi
alities
, but ra
ther a
decisio
n with
emine
nt pra
ctical e
ffect.
Range
has in
vested
subst
antial
sums o
f
money
into
the pr
oject a
nd thi
s deci
sion d
oes ha
ve eco
nomic r
amific
ations.
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Those
rami
ficatio
ns, ho
wever
, exten
d beyo
nd the
imme
diate r
elatio
nship
betwe
en the
partie
s. “T
he mo
st imp
ortant
funct
ion of
contr
act law
is to
provid
e a
legal r
emedy
for b
reach
in ord
er to
enhanc
e the u
tility
of con
tractin
g as a
meth
od
of org
anizin
g econ
omic a
ctivity
. . . .”
Rich
ard A.
Posne
r, The
Law a
nd Ec
onom
ics
of Co
ntract
Inter
pretat
ion, 83
TEX.
L.RE
V. 158
1, 1582
(2005
) [here
inafte
r
Posne
r]. Th
is func
tion m
ay be
indepe
ndent
of int
erpret
ing co
ntract
terms
, but it
is
also r
ealize
d when
court
s enfo
rce co
ntract
s as w
ritten
and, co
nseque
ntly, p
rovide
a
stable
and p
redicta
ble co
ntract
ing en
vironm
ent fo
r that e
conom
ic activ
ity to
flouri
sh.20 Enfor
cing c
ontrac
ts as w
ritten
may a
lso en
courag
e bette
r draf
tsmans
hip in
the fir
st inst
ance.
When
it is c
lear th
at cont
racts w
ill be
enforc
ed acc
ording
to th
eir
terms
, partie
s know
they
cannot
write
ambig
uities
into
agreem
ents s
o that
they
can
act as
they
wish w
ithout
regar
d to t
he ter
ms of
the b
argain
and “
idly a
ssume
that
judges
will s
ave th
em fro
m the
ir blun
ders.”
ANT
ONIN
SCAL
IA&B
RYAN
A.
20 The C
ourt is
aware
that s
hiftin
g the
costs o
f writi
ng cle
ar and
more
thoro
ughly
prospe
ctive c
ontrac
ts to t
he par
ties on
the f
ront en
d, rath
er tha
n expe
nding
those
costs o
nliti
gation
to re
solve
disput
es aft
er the
y occu
r may,
in so
me in
stance
s, resu
lt in a
more
costly
and
less e
fficien
t outc
ome.
See, e.
g., Ric
hard A
. Posn
er, Th
e Law
and E
conom
ics of
Contr
actInt
erpret
ation
, 83 T E
X.L.
REV.
1581, 1
583–84
, 1608–
14 (20
05) (a
rticula
ting t
he var
iables
that
impos
e cost
s in th
e proc
ess of
draft
ing, li
tigatin
g, and
interp
reting
contr
acts, a
nd dem
onstra
ting
the va
rious
impli
cation
s of sh
ifting
this c
ost bu
rden).
Neve
rthele
ss, th
e Cour
t is pe
rsuade
d that
the be
nefit o
f sound
contr
act law
and a
clear
rule u
nder w
hich p
arties
may
bargai
n faci
litates
stable
found
ations
for a f
ountain
head o
f econ
omic a
ctivity
.
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GARN
ER,R
EADI
NGLA
W:TH
EINT
ERPR
ETAT
ION O
F LEG
ALTE
XTS x
xviii (
2012).
21
Even
when
contra
cts ar
e enfo
rced a
s writt
en, ho
wever
, partie
s may
still
choose
to re
ly on
ambig
uous fo
rm co
ntract
s and
chance
the h
azards
of lit
igatio
n.
That i
s an e
conom
ic deci
sion t
hat de
pends
on the
partic
ulars o
f each
situat
ion. S
ee,
e.g., P
osner,
at 158
3–84, 1
608–14
. Rega
rdless
of an
indiv
idual’
s choi
ce on
that
matter
, howe
ver, w
hen co
urts e
nforce
contr
acts a
ccordi
ng to
their t
erms p
arties
can
genera
lly pr
edict a
court
’s deci
sion b
ased o
n clea
r text
in the
event
of lit
igatio
n.
This p
rovide
s a m
easure
of sta
bility
for o
ne var
iable i
n the
calcul
us of
the pa
rties’
econom
ic deci
sion-m
aking.
See
id.
In thi
s case
, inste
ad of
procee
ding w
ith a q
uestio
nable p
lan in
light
of the
Lease
’s lang
uage a
nd cha
nged t
echnol
ogy, R
ange c
ould h
ave re
negoti
ated t
he
langua
ge and
enter
ed a n
ew ag
reeme
nt. T
ransac
tion c
osts a
side, n
othing
preve
nted
this c
ourse
of act
ion. F
urther
more,
nothi
ng pre
vents t
he Par
ties fro
m ren
egotiat
ing
in the
wake
of thi
s deci
sion.
This C
ourt w
ill not
refus
e to en
force
a clea
r and
unamb
iguous
contr
act an
d
will n
ot nul
lify its
terms
simply
becau
se a p
arty d
isregar
ded th
e agre
ement
or
formu
lated a
strain
ed con
trivanc
e of it
s term
s and
made
a busi
ness d
ecisio
n to
21 See a
lso Fe
lix Fr
ankfur
ter, A
Symp
osium
on St
atutor
y Con
struct
ion: F
orewa
rd, 3
V AND
.L.R
EV. 36
5, 368
(1950)
(“Jud
icial ex
pansio
n of m
eaning
beyon
d the
limits
indica
ted is
repreh
ensibl
e beca
use it
encour
ages s
lipsho
dness
in dra
ftsmans
hip an
d irre
sponsi
bility
inleg
islatio
n. It a
lso en
lists to
o heav
ily th
e priv
ate so
cial an
d econ
omic v
iews o
f judge
s.”)
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procee
d with
subst
antial
invest
ment.
See
Dep. C
arl St
einle,
at 67–6
8. Th
e Leas
e
was d
rafted
with
expres
sed lim
itation
s that f
rustra
te Rang
e’s ab
ility t
o utili
ze
moder
n hori
zontal
drillin
g tech
niques
. Whil
e this m
ay be
true, i
t does
not ch
ange
the lan
guage
of the
Lease
. Rang
e’s pr
oper re
medy
for th
is prob
lem wa
s to
negoti
ate a n
ew lea
se tha
t allow
ed Ra
nge to
devel
op the
prope
rty in
the m
anner
desire
d. En
forcin
g cont
racts a
s writt
en pro
vides
a clea
r found
ation u
pon wh
ich
parties
can c
onduct
this b
argain
ing ef
ficien
tly an
d care
fully,
and r
est as
sured
their
terms
will b
e hono
red.
4.Dr
illing
Adjac
ent to
Prem
ises D
id No
t Exte
nd Le
ase
In a f
inal at
tempt
to sav
e the L
ease, R
ange a
rgues
that it
s activ
ities o
n the
Null P
ropert
y prio
r to th
e expi
ration
of th
e Leas
e’s pr
imary
term
constit
ute dr
illing
operat
ions s
ufficie
nt to
preser
ve the
Lease
, becau
se the
drilli
ng res
ulting
from
those
initial
opera
tions
would
event
ually
pass o
n or u
nder th
e Neuh
ards’ p
ropert
y.
This a
rgume
nt is a
lso un
availin
g.
The L
ease u
nambig
uously
requi
res Le
ssee to
“com
mence
a well
on th
e
Lease
d Prem
ises o
r on a
spaci
ng uni
t conta
ining
a port
ion of
the L
eased
Premi
ses.”
Lease
, § 8.1
(emp
hasis a
dded).
Alth
ough R
ange u
ndoubt
edly c
omme
nced a
well
prior
to the
expir
ation o
f the p
rimary
term,
it did
not d
o so o
n22the
Lease
d
22 The w
ord “o
n” is n
ot a te
rm of
art, a
nd is d
efined
in its
norm
al usag
e as a
prepo
sition
meani
ng, in
ter al
ia: “a
funct
ion wo
rd to
indica
te posi
tion o
ver an
d in c
ontact
with
that w
hich
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premi
ses, bu
t on a
prem
ises a
djacen
t23 to th
e Leas
ed Pre
mises
that w
as not
unitiz
ed
accord
ing to
the L
ease.
Under
a plain
readi
ng of
the Le
ase, R
ange’s
activ
ities o
n
the Nu
ll Prop
erty a
djacen
t to th
e Leas
ed Pre
mises
do no
t const
itute d
rilling
activi
ties “o
n the
Lease
d Prem
ises.”
Nor
was th
ere a s
ufficie
nt mo
dicum
of
activi
ty in
prepar
ation f
or dri
lling o
n the
Lease
d Prem
ises d
uring
the pr
imary
term
in ord
er to
extend
the L
ease—
the op
erativ
e activ
ity wa
s perf
ormed
on th
e Null
Proper
ty. M
ere pe
rmitti
ng and
traver
sing w
ithout
more
is ins
ufficie
nt, pa
rticula
rly
under
the lan
guage
of thi
s Leas
e. See
, e.g.,
Berna
rdi, 5
Pa. D.
& C.
3d at 9
2–96;
SUMM
ERSO
IL AN
D GAS
§ 15:1
0 (list
ing ph
ysical
activ
ities a
s the p
rimary
opera
tive
acts o
f com
menci
ng dri
lling o
peratio
ns).
In adv
ancing
its ar
gument
, Rang
e relie
s on t
wo no
n-bind
ing ca
ses th
at are
readil
y disti
nguish
able f
rom th
e curr
ent sc
enario
. In A
& M
Oil, I
nc. v.
Miller
, 11
Kan. A
pp. 2d
152, 1
54–55,
715 P.
2d 129
5, 129
6–97 (
1986),
a Kans
as cou
rt foun
d
that th
e clea
r “lan
guage
of the
drilli
ng ope
ration
s clau
se” an
d the
defend
ant’s
activi
ty dur
ing th
e prim
ary ter
m tha
t comm
enced
operat
ions to
drill
a well
on a
neighb
oring
proper
ty tha
t woul
d even
tually
pass
under
the lea
sed pr
emise
s were
suppor
ts from
benea
th . . .
used
as a f
unctio
n word
to in
dicate
a pres
ence w
ithin.
” MER
RIAM-
W EBS
TER. 23 “A
djacen
t” is a
n adje
ctive d
efined
as, in
ter al
ia: “h
aving
a com
mon b
order:
abutt
ing,
touchi
ng.” M
ERRIA
M-WE
BSTE
R.
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suffic
ient to
exten
d the
lease.
The
drillin
g oper
ations
clause
at iss
ue in
that ca
se
provid
ed: [I]t is
expres
sly ag
reed t
hat if
lessee
shall
comme
nce op
eratio
ns for
drillin
g at an
y tim
e whil
e this l
ease is
in fo
rce, th
is leas
e shal
l rema
inin
force
and its
terms
shall
contin
ue so
long a
s such
opera
tions
arepro
secute
d and,
if pro
ductio
n resu
lts the
refrom
, then
as lon
g as
produc
tion c
ontinu
es.
A & M
Oil, I
nc. v.
Miller
, 11 Ka
n. App.
2d 15
2, 152,
715 P
.2d 12
95, 12
96 (19
86).
The b
road l
anguag
e of th
e drill
ing op
eratio
ns cla
use at
issue
in Mi
ller is
distin
ctly di
fferen
t from
the c
lause
at issu
e in th
e case
befor
e the C
ourt.
In Mi
ller
the op
eratio
ns cla
use co
ntaine
d no t
empor
al or g
eograp
hic lan
guage
qualify
ing th
e
phrase
“lesse
e shal
l comm
ence o
peratio
ns for
drilli
ng at a
ny tim
e.” M
iller, 7
15
P.2d a
t 1296
. Acco
rdingl
y, the
court f
ound t
hat th
ere wa
s no r
equire
ment
that
those
operat
ions ta
ke pla
ce on
the pl
aintiff
’s leas
ed pre
mises
.
In the
case
sub ju
dice, b
y cont
rast, t
he dri
lling o
peratio
ns cla
use is
explici
t
that “L
essee
shall c
omme
nce a w
ell on
the Le
ased P
remise
s.” L
ease, §
8.1. T
he
langua
ge qua
lifying
the lo
cation
of Le
ssee’s
activ
ities re
nders t
he Le
ase at
issue
suffic
iently
distin
ct from
the le
ase in
Mille
r such
that th
e outc
ome o
f that c
ase is
not pe
rsuasi
ve on
this C
ourt’s
ultim
ate ho
lding.
The
court’s
decis
ion in
Mille
r is
persua
sive, h
oweve
r, in r
einfor
cing t
he bla
ck lett
er law
that w
hen th
e unam
biguou
s
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langua
ge is c
lear, a
n agre
ement
’s term
s shou
ld be
enforc
ed acc
ording
ly.24 Id
. at
1296–9
7. In Ma
nzano
Oil Co
rp. v.
Chesa
peake
Opera
ting, I
nc., 17
8 F. S
upp. 2d
1217,
1220 (
D.N.M
. 2001)
, whic
h Rang
e also
cites
for su
pport,
a Unit
ed Sta
tes
Magis
trate J
udge in
the U
nited
States
Distr
ict Co
urt fo
r the D
istrict
of Ne
w Mexi
co
held t
hat, un
der Ne
w Mexi
co law
, the d
efenda
nt wh
o bega
n drill
ing on
a thre
e acre
proper
ty adj
acent
to the
leased
prope
rty du
ring t
he pri
mary
term
extend
ed the
lease
on the
prope
rty at
issue.
In th
at case
, the d
efenda
nt cou
ld not
drill
on the
leased
proper
ty wit
hout fi
rst obt
aining
a spec
ial zon
ing pe
rmit o
r vari
ance th
at was
diffic
ult to
acqui
re, so
the d
efenda
nt pur
chased
the a
djacen
t three
acre
proper
ty on
which
drilli
ng wa
s allo
wed a
nd com
mence
d a we
ll. M
anzano
Oil C
orp. v.
24 Furth
er app
lying
this p
rincip
le of la
w, ano
ther c
onside
ration
in co
nstrui
ng thi
s Leas
e iswh
ether
drillin
g und
er the
Lease
d Prem
ises w
ould e
ven sa
tisfy t
he dri
lling o
peratio
ns cla
use as
writte
n. In
the Le
ase, th
e drill
ing op
eratio
ns cla
use on
ly con
templa
tes dr
illing
“on th
e Leas
edPre
mises
or on
a spac
ing un
it cont
aining
a port
ion of
the L
eased
Premi
ses.”
Lease
, § 8.1
. Els
ewher
e in th
e Leas
e, how
ever, t
he dra
fter d
istingu
ished
betwe
en the
“Less
or’s o
il, gas
and
coalbe
d meth
ane ga
s right
s cont
ained
in,on
, and u
nder
the Le
ased P
remise
for th
e purp
ose of
. . .
drillin
g, oper
ating, p
roduci
ng and
remo
ving o
il, gas
, coalb
ed me
thane
gas, an
d liqu
idhyd
rocarb
ons th
ere fro
m.” L
ease, I
ntrodu
ction.
The L
ease d
rafter
recog
nized
a disti
nction
betwe
en the
prepo
sitions
in, on
, and u
nder,
and on
ly use
d “on”
in th
e drill
ing op
eratio
ns cla
use. T
he doc
trine o
f expr
essio
unius
est ex
clusio
alteri
us ins
tructs
that w
hen ce
rtain
words
are u
sed in
a cont
ract an
d othe
r word
s omi
tted, it
impli
es the
inten
tional
exclu
sion o
f the o
mitted
terms
. See,
e.g., L
inan-F
aye Co
nst. C
o., Inc
. v.Ho
us. Au
th. of
City
of Ca
mden,
49 F.
3d 915
, 936 (
3d Cir
. 1995)
; BLA
CK’SL
AWDIC
TIONA
RY(9t
h ed. 2
009).
Apply
ing th
is prin
ciple h
ere, dr
illing
“under
” the L
eased
Premi
ses wo
uld no
tnec
essari
ly sat
isfy th
e drill
ing op
eratio
ns cla
use th
at used
only
“on,” w
hen bo
th wo
rds we
re use
dtog
ether
earlier
in th
e docu
ment.
This
const
ructio
n also
make
s sens
e in th
e cont
ext of
drilli
ngtec
hnolog
y avai
lable a
t the ti
me th
e Leas
e was
signed
. See
Dep. C
arl St
einle,
at 70–7
2.
34
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7
Chesa
peake
Opera
ting, I
nc., 17
8 F. S
upp. 2d
1217,
1218–
19 (D
.N.M.
2001)
. The
defend
ant’s d
rilling
plan
would
event
ually
cross
onto t
he sub
terran
ean po
rtion o
f
the lea
sed pr
operty
, but n
ot unt
il afte
r the e
xpirat
ion of
the p
rimary
term.
Id.
Relyi
ng on
the br
oad lan
guage
of the
lease’
s pool
ing cla
use, th
e cour
t wrot
e: “I
find t
hat ad
jacent
prope
rty an
d the
Lease
prope
rty we
re ‘po
oled’
or ‘co
mbine
d’ in
such a
way a
s to” e
xtend
the lea
se by
the co
mmenc
ement
of dr
illing.
25 Id. at
1220.
The d
ecisio
n in M
anzano
Oil C
orp. is
also d
istingu
ishabl
e from
the c
ase
before
the C
ourt, b
ecause
the c
ourt in
Manz
ano ba
sed its
holdi
ng on
the cr
itical
fact th
at the
adjace
nt lan
d and
leased
land w
ere po
oled v
alidly
by the
autho
rity
grante
d unde
r the le
ase, re
gardle
ss of
the pl
anned
eventu
al drill
ing be
neath
the
leased
prem
ises.
See id
. The
drillin
g unde
r the le
ased p
ropert
y afte
r the p
rimary
term
expire
d did
not im
pact th
e cour
t’s hol
ding, a
nd, co
nseque
ntly, t
he cas
e does
not su
pport R
ange’s
positi
on. S
ee id.
25 The c
ourt d
escrib
ed the
lease’
s pool
ing cla
use, w
riting:
Paragr
aph fiv
e of th
e Leas
e prov
ides, i
n pert
inent
part, t
hat De
fendan
t, the
lessee
,is “
grante
d the
right
. . . to
pool
or com
bine th
is leas
e, the
land c
overed
by it
orany
part o
r hori
zon th
ereof
with a
ny oth
er lan
d, leas
es, m
ineral
estate
s or p
arts
thereo
f for th
e prod
uction
of oi
l or g
as.” P
aragra
ph fiv
e also
conta
ins th
efol
lowing
langua
ge, to
wit:
Drilli
ng ope
ration
s on o
r prod
uction
from
any pa
rt of a
ny suc
h unit
shall
becon
sidere
dfor
all pu
rposes
, excep
t the p
ayment
of ro
yalty,
as op
eratio
nscon
ducted
upon
or pro
ductio
n from
the la
nd des
cribed
in th
is leas
e.
Manza
no Oil
Corp.
, 178 F
. Supp
. 2d at
1219.
35
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umen
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5 of 3
7
Accor
dingly
, the c
lear a
nd una
mbigu
ous lan
guage
of the
Lease
contr
ols.
Steuar
t, 444
A.2d a
t 661.
Rang
e did
not “c
omme
nce a w
ell on
the Le
ased
Premi
ses or
on a s
pacing
unit c
ontain
ing a p
ortion
of th
e Leas
ed Pre
mises
,” befo
re
the ex
piratio
n of th
e prim
ary ter
m. A
s a co
nseque
nce, th
e Leas
e expi
red by
its ow
n
terms
.
III.
CONC
LUSIO
N
In sum
, Rang
e com
mence
d a we
ll befo
re the
expir
ation o
f the L
ease’s
prima
ry ter
m. T
hat we
ll, how
ever, w
as nei
ther “
on the
Lease
d Prem
ises”
nor “o
n a
unit co
ntaini
ng a p
ortion
of th
e Leas
ed Pre
mises
.” Ra
nge ex
ceeded
its un
itizatio
n
author
ity un
der th
e plain
and u
nambig
uous la
nguage
in th
e Leas
e and
did no
t
comme
nce a w
ell on
the Ne
uhards
’ prop
erty.
Conse
quentl
y, the
Lease
expir
ed by
its ow
n term
s on J
une 21
, 2011.
The N
euhard
s’ Moti
on for
Summ
ary Ju
dgment
is gra
nted.
Range
’s Moti
on
for Su
mmary
Judgm
ent is
denied
.
An ap
propri
ate Or
der fo
llows
.
BY TH
E COU
RT:
s/ Matth
ew W
. Bran
nMa
tthew
W. B
rann
United
State
s Distr
ict Jud
ge
36
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umen
t 40
Filed
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/14 P
age 3
6 of 3
7
C-12
MEALEY’S Fracking Report Vol. 1, #1 May 2014
37
Case
4:1
1-cv
-019
89-M
WB
Doc
umen
t 40
File
d 04
/30/
14
Page
37
of 3
7
IN TH
E UNI
TED S
TATE
S DIST
RICT C
OURT
FOR T
HE M
IDDL
E DIST
RICT O
F PEN
NSYL
VANI
A
THOM
AS A.
NEUH
ARD a
nd:
Case
No. 4:
11-cv-
01989
BARB
ARA S
. NEU
HARD
,: :
Plaint
iffs,
: :v.
:(Ju
dge Br
ann)
:RA
NGE R
ESOU
RCES
–:
APPA
LACH
IA, L
LC,
: :De
fendan
t.: OR
DER
April
30, 20
14
AND N
OW, in
accor
dance
with t
he Me
moran
dum of
this s
ame d
ate, IT
ISHE
REBY
ORD
ERED
THAT
:
1.De
fendan
t Rang
e Reso
urces–
Appal
achia,
LLC’s
Moti
on for
Summ
aryJud
gment
is DE
NIED
(ECF
No. 25
).
2.Pla
intiff
Thom
as A.
Neuha
rd and
Barba
ra S.
Neuha
rd’s M
otion
forSu
mmary
Judgm
ent is
GRAN
TED (
ECF N
o. 22).
3.Th
e Oil a
nd Ga
s Leas
e of Ju
ne 21,
2006
entere
d into
by th
e Part
iesexp
ired b
y its o
wn ter
ms on
June
21, 20
11.
4.Th
e cler
k is d
irecte
d to e
nter ju
dgment
in fa
vor of
the P
laintiff
s and
close
the ca
se file
.
BY TH
E COU
RT:
s/ Matth
ew W
. Bran
nMa
tthew
W. B
rann
United
State
s Distr
ict Jud
ge
Case
4:11
-cv-01
989-M
WB
Doc
umen
t 41
Filed
04/30
/14 P
age 1
of 1
UNIT
ED ST
ATES
DIST
RICT
COUR
T
FOR T
HE M
IDDL
E DIST
RICT
OF PE
NNSY
LVAN
IA
Thom
as A.
Neuha
rd and
:Ba
rbara
S. Ne
uhard
: :Pla
intiffs
: Civi
l Actio
n No. 4
:11-CV
-1989
:vs.
: :Ra
nge Re
source
s-Appa
lachia
, LLC
: :De
fendan
t.:
JUDG
MENT
IN A
CIVI
L ACT
ION
The C
ourt h
as ord
ered t
hat (c
heck o
ne):
___the
plain
tiff___
______
______
______
______
______
______
______
__ rec
over fr
om th
edef
endant
_____
______
______
______
______
______
______
______
______
the a
mount
of$__
______
______
______
______
______
____do
llars ($
), whic
h incl
udes p
rejudg
ment
intere
st at th
e rate
of __
______
__perc
ent, pl
us pos
t judgm
ent in
terest
at the
rate o
f ____
_____
per an
num, al
ong wi
th cos
ts.
___ th
e plain
tiffrec
over n
othing
, the a
ction b
e dism
issed
on the
meri
ts, and
the d
efenda
nt___
______
______
______
______
______
____ r
ecover
y cost
s from
the p
laintiff
______
______
______
______
______
______
_.
X OT
HER:
Judgm
ent is
hereby
enter
ed in
favor
of the
Plain
tiffs p
ursuan
t to M
emora
ndum
andOr
der, bo
th dat
ed and
enter
ed on
the do
cket o
n Apri
l 30, 2
014.
Dated
: Apri
l 30, 2
014Ga
ry L.
Hollin
ger, A
cting C
lerk o
f Cour
tBy
: s/Lis
a A. G
onsalv
es, de
puty
Case
4:11
-cv-01
989-M
WB
Doc
umen
t 42
Filed
04/30
/14 P
age 1
of 1
C-13
MEALEY’S Fracking Report Vol. 1, #1 May 2014
IN TH
E UN
ITED
STAT
ES C
OURT
OF A
PPEA
LSFO
R TH
E FI
FTH
CIRC
UIT
No. 1
3-404
58
CHES
APEA
KE LO
UISI
ANA,
L.P.,
Plaint
iff -A
ppell
eev. BU
FFCO
PROD
UCTI
ON, IN
C.; TW
IN RE
SOUR
CES,
LLC;
WAYN
E E.
FREE
MAN;
FREE
MAN
CAPI
TAL,
LTD.
; FRE
EMAN
RESO
URCE
S, LT
D.;
FRM
GP, L
LC,
Defen
dants
-App
ellan
ts
FRAN
K M.
BUFK
IN II
I,
Interv
enor
Defen
dant
-App
ellan
tv. HA
RLET
ON O
IL &
GAS
, INCO
RPOR
ATED
,
Interv
enor
-App
ellan
t -Ap
pelle
e
Appe
alsfro
m the
Unit
ed St
ates D
istric
t Cou
rtfor
the E
astern
Dist
rict o
f Tex
as US
DC N
o. 2:1
0-CV-
359
Befor
eHIG
GINB
OTHA
M, D
AVIS
, and
HAY
NES,
Circu
it Jud
ges.
PER C
URIA
M:*
* Pursu
ant t
o 5TH
CIR.
R. 47
.5, th
e cou
rt ha
s dete
rmine
d tha
t this
opini
on sh
ould
not
be pu
blish
ed an
d is n
ot pre
ceden
t exce
pt un
der t
he lim
ited c
ircum
stanc
es set
forth
in 5T
H CI
R. R.
47.5.
4.
Unite
d Sta
tes C
ourt
of Ap
peals
Fifth
Circ
uit
FILE
DMa
y 7, 2
014
Lyle
W. C
ayce
Cler
k
C
ase:
13-4
0458
D
ocum
ent: 0
0512
6215
58
Pag
e: 1
Date
File
d: 05
/07/20
14
No.1
3-404
58
Asser
ting
divers
ity
jurisd
iction
, Ch
esape
ake
Louis
iana,
L.P.
(“Che
sapea
ke”) b
rough
t sev
eral s
tate-l
aw cl
aims a
gains
t (1) F
reema
n Cap
ital,
Ltd.
(“Free
man C
apita
l”);(2
)Buff
coPr
oduc
tion,
Inc. a
nd Tw
in Re
source
s, LLC
(colle
ctive
ly, “B
uffco”
);and
(3) W
ayne
E. F
reema
n, Fr
eeman
Reso
urces
, Ltd.
,
and
FRM
GP, L
LC (c
ollect
ively,
“Free
man”)
seek
ing to
recov
er its
alle
ged
overp
ayme
nt for
an as
signm
ent o
f the d
eep rig
hts in
the G
eisler
Unit
prop
erty.
Buffc
o, Fr
eeman
, an
d Fr
eeman
Cap
ital
counte
rclaim
ed,
alleg
ing t
hat
Chesa
peak
e was
requir
ed to
pur
chase
their
inter
ests i
n va
rious
prop
erties
referr
ed to
asthe
Bow
en, H
emby
, and
Yow
Unit
s.Ha
rleton
Oil &
Gas,
Inc.
(“Harl
eton”)
, the
hold
er of
50%
of the
deep
righ
ts in
the G
eisler
Unit
,
interv
ened
and a
sserte
dvari
ous c
laims
again
st Ch
esape
ake,
Freem
an, a
nd
Buffc
o. The d
istric
t cou
rt gra
nted s
umma
ry jud
gmen
t in f
avor
of Ch
esape
ake
and
Harle
tonwi
th res
pect
to the
Geis
ler U
nit c
laims
and
in fav
or of
Chesa
peak
e with
resp
ect to
the c
laims
concer
ning t
he Bo
wen,
Hemb
y, an
d Yow
Units
. How
ever,
becau
se Ha
rleton
’s prop
er ali
gnme
nt as
a plai
ntiff-i
nterve
nor
destr
oyss
ubjec
t-matt
erjur
isdict
ion, w
e VAC
ATE t
he di
strict
cour
t’s su
mmary
judgm
ent d
ecisio
n with
resp
ect to
the G
eisler
Unit
claim
sand
REM
AND
the
matte
r for
a dete
rmina
tion o
f whe
ther H
arleto
n is a
n ind
ispen
sable
party
. We
AFFI
RM th
e cou
rt’s d
ecisio
n wi
th res
pect
to the
Bow
en, H
emby
, and
Yow
Units
, as t
o whic
h an i
ndep
ende
nt gro
und f
or jur
isdict
ion ex
ists.
I. Fa
ctual
and P
roced
ural
Back
groun
d
Chesa
peak
e sue
d Free
man a
nd Bu
ffco,1 e
ssenti
ally s
eeking
to re
cover
an
overp
ayme
nt it
had
made
to th
em.
This
alleg
ed ov
erpay
ment
involv
ed a
trans
action
that
arose
out o
f a Ju
ly 31
, 200
8 Lett
er Ag
reeme
nt (th
e “Le
tter
1 Chesa
peak
e also
sued
Freem
an Ca
pital
but s
ubseq
uentl
y aba
ndon
ed its
claim
after
dis
coveri
ng th
at Fr
eeman
Cap
ital h
ad n
ot rec
eived
any p
ortion
of th
e $13
.6 mi
llion t
hat
Chesa
peak
e had
paid
for th
e Geis
ler U
nit.
2
C
ase:
13-4
0458
D
ocum
ent: 0
0512
6215
58
Pag
e: 2
Date
File
d: 05
/07/20
14
No.1
3-404
58
Agree
ment”
) ente
red in
to be
tween
Che
sapea
ke a
nd B
uffco.
Th
e Le
tter
Agree
ment
provid
ed th
at Ch
esape
ake w
ould
pay a
pprox
imate
ly $2
32 m
illion
to acq
uire a
n assi
gnme
nt of
Buffc
o’s w
orking
inter
ests i
n the
deep
righ
ts of
severa
l oil
and g
aspro
perti
es in
Texa
s for
a peri
od of
three
years
. Th
ese
prope
rties
includ
ed, a
mong
othe
rs, th
e Geis
ler U
nit an
dthe
Bow
en, H
emby
,
and Y
ow U
nits.
The L
etter
Agree
ment
contai
neda
“Non
-Ops
Clau
se” th
rough
which
Chesa
peak
e agre
ed to
mak
e the
same
offer
(with
the s
ame t
erms)
to the
owne
rs of
the no
n-ope
rating
work
ing in
terest
s of t
hese
prope
rties.
The
non-
opera
ting w
orking
inter
estow
ners
includ
ed Fr
eeman
, Free
man C
apita
l,and
Harle
ton.
Based
on fa
ulty i
nform
ation
from
a thi
rd pa
rtyto
the ef
fectt
hat B
uffco
and F
reema
n each
owne
d 50%
inter
ests i
n the
Geis
ler U
nit, C
hesap
eake
paid
Buffc
o and
Free
man $
6.8 m
illion
in ex
chan
ge fo
r wha
t Che
sapea
ke be
lieve
d
was 1
00%
of the
deep
righ
ts be
lowthe
Geis
ler U
nit. T
he pa
rties
now
agree
that t
he pr
oper
alloca
tion
of the
work
ing in
terest
s in
the G
eisler
Unit
was
actua
lly: B
uffco
with
25%,
Freem
an w
ith 22
%, Fr
eeman
Capit
al wi
th 3%
, and
Harle
ton w
ith 50
%. A
s a re
sult,
Chesa
peak
e only
recei
ved a
47%
intere
st in
the de
ep ri
ghts
of the
Geis
ler U
nit. C
hesap
eake
and B
uffco
agree
d not
to go
forwa
rd wi
ththe
trans
action
invo
lving
theBo
wen,
Hemb
y, an
d Yow
Unit
s,
which
was
sched
uled f
or a l
ater c
losing
date.
After
Chesa
peak
e sue
d to r
ecove
r its
overp
ayme
nt,Fr
eeman
, Free
man
Capit
al, an
d Buff
cocou
ntercl
aimed
, alle
ging t
hat C
hesap
eake
brea
ched
the
Lette
r Agre
emen
t by f
ailing
to pu
rchase
the B
owen
, Hem
by, a
nd Y
ow U
nits.
Freem
an C
apita
l als
o cla
imed
tha
t Ch
esape
ake
breach
ed t
he L
etter
Agree
ment
by fa
iling t
o pur
chase
its 3%
inter
est in
the G
eisler
Unit
.
Harle
ton in
terve
ned
pursu
ant
to Fe
deral
Rule
of C
ivil P
roced
ure
24(a)
(2).
Boile
d do
wn to
its e
ssenti
als, H
arleto
n sou
ght 5
0% of
the $
13.6
millio
n Che
sapea
ke pa
id to
Buffc
o and
Free
man,
and i
n exch
ange
Harl
eton
3
C
ase:
13-4
0458
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ocum
ent: 0
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e: 3
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File
d: 05
/07/20
14
CH
ES
AP
EA
KE
LO
UIS
IAN
Av.
BU
FFC
OP
RO
DU
CT
ION
D-1
MEALEY’S Fracking Report Vol. 1, #1 May 2014
No.1
3-404
58
would
conv
ey it
s inte
rest i
n the
Geis
ler U
nit to
Che
sapea
ke.
Harle
ton al
so
assert
ed v
ariou
s fra
ud c
laims
aga
inst
Buffc
o ba
sed o
n Bu
ffco’s
alle
ged
misre
presen
tation
s to C
hesap
eake
conc
erning
its in
terest
s in t
he G
eisler
Unit
and t
o Harl
etonc
oncer
ning i
ts off
er to
purch
ase H
arleto
n’s in
terest
s in t
he
Geisl
er Un
it. N
o part
y asse
rted a
claim
or co
unter
claim
again
st Ha
rleton
.
Chesa
peak
e and
Buff
co set
tled,
and t
he di
strict
cour
t dism
issed
all t
he
claim
s betw
een th
em.
The d
istric
t cou
rtthe
nen
tered
summ
ary ju
dgme
nt
based
on th
e part
ies’ v
ariou
s moti
ons,
rulin
g tha
t: (1)
Free
man,
Freem
an
Capit
al,an
d Harl
eton w
ere th
ird-pa
rty be
nefic
iaries
of th
e Lett
er Ag
reeme
nt
such
that
they c
ould
enfor
ce the
“Non
-Ops
Clau
se”; (2
) Buff
co an
d Free
man
were
unjus
tly en
riche
d by
the p
ortion
of th
e $13
.6 mi
llion
paym
ent f
rom
Chesa
peak
e tha
t is a
ttribu
table
to the
53%
of th
e Geis
ler U
nit ow
ned
by
Harle
ton an
d Free
man C
apita
l and
that
a con
struc
tive t
rust
shou
ld be
impo
sed
on th
at po
rtion
of th
e fun
ds; (3
) Harl
eton a
nd Fr
eeman
Capit
al sh
ould
conve
y
their i
nteres
tsin
the Ge
isler
Unitt
o Che
sapea
keaft
er rec
eiving
the f
unds
from
Buffc
o and
Freem
an; (4
) Che
sapea
ke w
as no
t enti
tled t
o any
repa
ymen
t ofth
e
$13.6
milli
on; (5
) Free
man a
nd Fr
eeman
Capit
al’s c
laims
again
st Ch
esape
ake
concer
ning t
he B
owen
, Hem
by, a
nd Y
ow U
nits f
ailed
as a
matte
r of la
w; (6
)
Harle
ton’s f
raud c
laims
again
st Bu
ffco s
urviv
e;2 and
(7) H
arleto
n and
Freem
an
Capit
al are
enti
tled
to rec
over
pre-ju
dgme
nt int
erest
again
st Bu
ffco
and
Freem
an.
Follo
wing
the d
istric
t cou
rt’s s
umma
ry jud
gmen
t ruli
ng, F
reema
n and
Freem
an C
apita
l file
d a
Motio
n to
Dism
iss fo
r La
ck o
f Sub
ject M
atter
Juris
dictio
n, ass
erting
tha
t Ha
rleton
’s int
erven
tion
destr
oyed
dive
rsity
becau
se it i
s prop
erly a
ligne
d as a
plain
tiff a
nd its
statu
s as a
n ind
ispen
sable
2In
enter
ing fin
al jud
gmen
t, the
distr
ict co
urt s
evere
d Harl
eton's
fraud
claim
s and
mad
e the
m the
subje
ct of
a sep
arate
action
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58
party
requ
ired t
he co
urtt
o dism
iss th
e acti
on.
The m
otion
asser
ted th
at the
distri
ct cou
rt lac
ked j
urisd
iction
over
the cla
imsr
elated
to th
e Geis
ler U
nitan
d
the Bo
wen,
Hemb
y, an
d Yow
Unit
s.
The d
istric
t cou
rt de
nied t
he m
otion
, alig
ning H
arleto
n as a
defen
dant-
interv
enor.
As a
result
, the c
ourt
conclu
ded,
federa
l juris
dictio
n exis
ted un
der
28 U
.S.C.
§ 13
32 a
nd, t
heref
ore, a
n an
alysis
of w
hethe
r su
pplem
ental
jurisd
iction
aros
e un
der
28 U
.S.C.
§ 13
67 w
as un
neces
sary.
Free
man,
Freem
an Ca
pital,
Buffc
o, an
d Harl
eton3 ti
mely
appe
aled.
II.Ge
isler
Unit C
laims
As a
cou
rt of
limite
d jur
isdict
ion, w
e mu
st fir
stsat
isfy
ourse
lves,
indep
ende
nt of
the d
istric
t cou
rt’s
deter
mina
tion,
that
subje
ct-ma
tter
jurisd
iction
exist
sove
r the
parti
es’ cl
aims r
elated
to th
e Geis
ler U
nit.
See
Kokk
onen
v. G
uard
ian L
ife In
s. Co
. of A
m., 5
11 U
.S. 37
5, 37
7 (19
94);S
ilver
Star E
nters.
, Inc.
v. M/
V Sa
rama
cca, 1
9 F.3d
1008
, 101
3 n.6
(5th C
ir. 19
94).
As pr
opon
ents
of jur
isdict
ion, C
hesap
eake
and H
arleto
n carr
y the
burde
n of
estab
lishin
g jur
isdict
ion.
SeeK
okko
nen,
511
U.S.
at 37
7. H
ere, o
nly tw
o
poten
tial
source
s of
jurisd
iction
exis
t:§
1332
(div
ersity
) an
d §
1367
(supp
lemen
tal).
As th
e part
ies co
rrectl
y ack
nowl
edge
, dive
rsity
jurisd
iction
exist
ed ov
er the
suit
prior
to Ha
rleton
’s int
erven
tion;4
howe
ver,
we m
ust
consid
er wh
ether
Harle
ton’s
interv
entio
n de
stroy
eddiv
ersity
such
that
the
distri
ct cou
rt lac
ked j
urisd
iction
over
this m
atter.
We b
egin
by d
eterm
ining
whe
ther H
arleto
n is
prope
rly a
ligne
d as
a
defen
dant-
interv
enor
(as th
e dist
rict c
ourt
conclu
ded)
or a p
lainti
ff-inte
rveno
r.
Ourg
enera
lly ac
cepted
test
for al
ignme
ntpla
ces th
e part
ies w
ith th
e sam
e
3Ha
rleton
also
asser
ted a
n alt
ernati
ve cla
im th
at we
do n
ot rea
ch d
ue to
our
jurisd
iction
al ru
ling.
4 Speci
ficall
y, Ch
esape
ake w
as a c
itizen
of Ok
lahom
a and
Freem
an, F
reema
n Cap
ital,
and B
uffco
were
citize
ns of
Texa
s and
the a
moun
t in co
ntrov
ersy e
xceed
ed $7
5,000
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58
“ultim
ate in
terest
s” in
the lit
igatio
non t
he sa
me si
de.G
riffin
v. Le
e, 621
F.3d
380,
388 (
5th Ci
r. 201
0).To
that
end,
we m
ust “l
ook be
yond
the p
leadin
gs, an
d
arran
ge th
e part
ies ac
cordin
g to t
heir
sides
in the
disp
ute”t
oens
ure t
hat t
he
parti
es ha
ve a
“collis
ion of
inter
est[s]
” ove
r the
“prin
cipal
purpo
se of
the su
it”
and t
he “p
rimary
and c
ontro
lling m
atter
in dis
pute.
” Ci
ty of
India
napo
lis v.
Chase
Nat’
lBan
k of C
ity of
N.Y.
, 314
U.S.
63, 6
9 (19
41) (c
itatio
n and
inter
nal
quota
tion m
arks o
mitte
d);see
also
Griffi
n, 62
1 F.3d
at38
8.
Here,
the p
rincip
al pu
rpose
of the
suit
andt
he pr
imary
and c
ontro
lling
matte
r in
dispu
te su
ggest
that
Harle
ton is
a p
lainti
ff. T
he d
istric
t cou
rt
conclu
ded
that H
arleto
n wa
s a d
efend
ant a
fter n
oting
that
“Harl
eton
and
Chesa
peak
e cou
ld no
t be c
lassif
ied as
shari
ng th
e sam
e inte
rest i
n the
suit
becau
se bo
th are
ope
nly c
ompe
ting
to cap
ture
the s
ame
pot o
f mon
ey.”
Howe
ver,
the co
nclus
ion th
at Ch
esape
ake
and
Harle
ton w
ere a
dvers
e in
seekin
g to r
ecove
r the
“sam
e pot
of mo
ney”
belie
sthe
fact
that b
oth pa
rties
only
wante
d to r
ecove
r mon
eyfro
m Bu
ffco a
nd F
reema
n to e
nsur
e tha
t Harl
eton
receiv
ed pa
ymen
t and
Che
sapea
ke re
ceive
d Harl
eton’s
inter
est in
the G
eisler
Unit.
Wheth
er thi
s was
done
direc
tly by
Buffc
o and
Freem
an pa
ying H
arleto
n
who w
ould
then
conve
y its
intere
st to
Chesa
peak
e or b
y refu
nding
part
of
Chesa
peak
e’s pa
ymen
t suc
h tha
t Che
sape
ake c
ould
then p
urch
ase H
arleto
n’s
intere
st in
practi
cality
did n
ot ma
tter t
o Che
sapea
ke an
d Harl
eton.
Harle
ton’s
prope
r ali
gnme
nt as
a pla
intiff-
interv
enor
is fur
ther
illustr
ated b
y the
fact
that th
e sum
mary
judgm
ent o
rder a
warde
d reli
ef to
both
Harle
ton an
d Che
sapea
ke, a
nd bo
th Ha
rleton
and C
hesap
eake
are e
ssenti
ally
align
ed on
app
eal i
n see
king a
ffirma
nce o
f the
orde
r.5Fu
rther,
Harl
eton
5 Indeed
, the d
istric
t cou
rt’sa
ward
ofsu
mmary
judg
ment
relief
again
st Fr
eeman
and
Buffc
o in f
avor
of Ha
rleton
rend
ers un
avail
ing H
arleto
n’s ar
gume
nt tha
t it sh
ould
be al
igned
as
a defe
ndan
t beca
use i
ts cla
ims a
gains
t Free
man a
nd B
uffco
are m
erely
“colla
teral
to the
pri
ncipa
l disp
ute—t
he en
forcea
bility
of th
e con
tract.
” Ha
rleton
’s cla
ims a
gains
t Free
man
and B
uffco
canno
t be m
erely
collat
eral fo
r pur
poses
of de
termi
ning j
urisd
iction
whe
n the
y 6
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58
affirm
ative
ly see
ks to
be al
igned
with
Che
sapea
kein
certai
n circ
umsta
nces,
such
as w
hen i
t argu
es tha
tits u
njust
enric
hmen
t clai
m is
timely
becau
seits
claim
can
rela
te ba
ck t
o the
tim
ely u
njust
enric
hmen
t cla
im f
iled
by
Chesa
peak
e. F
inally
, whil
e Harl
eton b
rough
t a cl
aim ag
ainst
Chesa
peak
e,6
Buffc
o, an
d Fr
eeman
, no p
arty h
asbro
ught
a clai
m ag
ainst
Harle
ton,a
nd
Harle
ton ha
s no p
otenti
al for
liabil
ity.
Such
a lack
of po
tentia
l for
liabil
ity
again
st a p
arty s
ugge
sts th
at the
party
shou
ld be
align
ed as
a pla
intiff.
See
16
JAME
S WM.
MOOR
E ET A
L.,MO
ORE’S
FEDE
RAL P
RACT
ICE
§106
.46 (3
d ed.
2013
)
(“The
inter
veno
r mus
t be p
otenti
ally l
iable
to the
plain
tiff o
n the
prim
ary cla
im
in ord
er to
be tr
eated
as a
defen
dant
to wh
om su
pplem
ental
juris
dictio
nmay
apply
unde
r Sect
ion 13
67(b)
. An i
nterve
ning p
lainti
ff with
in the
subse
ction
is
a part
y who
volun
tarily
choos
es to
interv
ene i
n an o
ngoin
g fed
eral a
ction
to
assert
its o
wn a
ffirma
tive c
laims
.”).
Indeed
, Harl
eton
interv
ened
to se
ek
affirm
ative
relie
f, not
to pro
tect it
s inte
rests
as a d
efend
ant.
There
fore,
based
on th
e natu
re of
Harle
ton’s c
laim,
it is
prope
r to a
lign i
t with
Chesa
peak
e as a
plaint
iff-int
erven
or.
Havin
g de
termi
ned
that
Harle
ton s
hould
hav
e be
en a
ligne
d as
a
plaint
iff-int
erven
or, w
e are
boun
d to c
onclu
de th
at the
distr
ict co
urt l
acked
are th
e prin
cipal
source
of re
lief f
orHa
rleton
und
er the
summ
ary ju
dgme
nt ord
er. S
eeInd
ianap
olis, 3
14 U
.S. at
69 (o
bservi
ng th
at in
align
ing th
e part
ies, co
urts
must
look t
o the
“re
alitie
s of th
e reco
rd” an
d “loo
k bey
ond t
he pl
eadin
gs an
d arra
nge t
he pa
rties
accord
ing to
the
ir sid
es in
the di
spute
”).6
The f
act th
at Ha
rleton
filed
a cla
im ag
ainst
Chesa
peak
e does
not m
ean t
hat t
he
parti
es’ in
terest
s were
not o
veral
l alig
nedv
is-à-v
is Fr
eeman
and B
uffco.
For
instan
ce, in
Gr
iffin,
an at
torne
yseek
ing to
recov
er fee
s for
his re
presen
tation
of a
bene
ficiar
y thr
ough
a lie
n on
the b
enefi
ciary’
s tru
st wa
s prop
erly a
ligne
d wi
th the
ben
eficia
ry as
a pla
intiff-
interv
enor
asbo
th pa
rties
sough
t reco
very f
rom th
e tru
st. S
eeGr
iffin,
621 F
.3d at
383,
388.
This
align
ment
was a
pprop
riate
despi
te the
fact
that th
e atto
rney
also s
ough
t reli
ef fro
m the
be
nefic
iary.
See i
d.;see
also
Dev.
Fin. C
orp. v
. Alph
a Hou
s. & H
ealth
Care,
Inc.,
54 F.
3d 15
6, 15
9-60 (
3d C
ir. 19
95) (
altho
ugh t
he in
terest
s of t
he or
igina
lplai
ntiff
and i
nterve
nor w
ere
“nomi
nally
” in co
nflict
, the i
nterve
nor w
as sti
ll best
align
ed as
a pla
intiff
when
the “
actua
l ad
versit
y of in
terest
” pitt
ed th
e inte
rveno
r aga
inst t
he or
igina
l defe
ndan
ts).
7
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divers
ity ju
risdic
tion o
ver t
he G
eisler
Unit
claim
s. Fi
rst, o
rigina
l juris
dictio
n
unde
r § 1
332
was d
estroy
ed b
ecaus
e the
part
ies w
ere n
o lon
ger d
iverse
—
speci
ficall
y, Ha
rleton
(plai
ntiff)
and B
uffco
and F
reema
n (de
fenda
nts) a
re all
citize
ns of
Texa
s. Se
eExxo
n Mob
il Corp
. v. A
llapa
ttah S
ervs.,
Inc., 5
45 U
.S.
546,
553 (
2005
) (“In
a cas
e with
mult
iple p
lainti
ffs an
d mult
iple d
efend
ants,
the pr
esenc
e in t
he ac
tion o
f a si
ngle
plaint
iff fro
m the
same
State
as a
single
defen
dant
depri
ves t
he di
strict
cour
t of o
rigina
l dive
rsity
jurisd
iction
over
the
entir
e acti
on.”).
Secon
d,§1
367(a
)’s su
pplem
ental
subje
ct-ma
tter j
urisd
iction
provis
iondo
esno
taffo
rdjur
isdict
ion ov
er the
Geis
ler U
nit cl
aims b
ecaus
e
Harle
ton’s
parti
cipati
on as
a pla
intiff-
interv
enor
would
be in
consis
tent w
ith
the re
quire
ments
of §
1332
. See
§ 136
7(b);s
ee als
oGrif
fin, 6
21 F.
3d at
386–
87
(“[W]
hile C
ongre
ss cod
ified t
he co
ncep
ts of
pend
ent a
nd an
cillar
y jur
isdict
ion
in § 1
367(a
), it a
ppare
ntly c
hose
to cir
cums
cribe
such
juris
dictio
n in §
1367
(b)
with
respe
ct to
plaint
iff int
erven
ors.”).
There
fore,
becau
se the
re wa
s no s
ubjec
t-matt
er jur
isdict
ion ov
er the
parti
es’ G
eisler
Unit
claim
sfoll
owing
Harl
eton’s
inter
venti
on, w
e mus
t vaca
te
the gr
ant o
f sum
mary
judgm
ent w
ith re
spect
to th
e Geis
ler U
nit cl
aims.
We
reman
d the
se cla
ims t
o allo
w the
distr
ict co
urt t
o con
sider
in the
first
instan
ce
wheth
er Ha
rleton
is an
indis
pens
able
party
such
that
dismi
ssal o
f the
entir
e
action
conc
erning
the G
eisler
Unit
is re
quire
d. Se
eBrow
n v. P
ac. Li
fe In
s. Co.,
462 F
.3d 38
4, 39
3–94
(5th
Cir.
2006
) (“If
a pe
rson w
ho qu
alifie
s und
er Ru
le
19(a)
cann
ot be
mad
e a p
arty b
ecaus
e, for
exam
ple, j
oinde
r wou
ld de
stroy
subje
ct-ma
tter
jurisd
iction
, a fe
deral
cou
rt mu
st de
termi
ne w
hethe
r tha
t
perso
n is ‘i
ndisp
ensab
le.’”).
III.B
owen
, Hem
by, a
nd Yo
w Un
itsCl
aims
We tu
rn n
ext t
othe
dist
rict c
ourt’
s den
ial of
relie
f on
Freem
an a
nd
Freem
an Ca
pital’
s cou
ntercl
aimsw
ith re
spect
to th
e Bow
en, H
emby
, and
Yow
8
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3-404
58
Units
.7 Free
man a
nd Fr
eeman
Capit
al ack
nowl
edge
on ap
peal
that t
hey h
ave
waive
d any
argu
ment
concer
ning t
he m
erits
of the
distr
ict co
urt’s
decis
ion,
arguin
g ins
tead
that t
heBo
wen,
Hemb
y, an
d Yo
w Un
its a
re com
pulso
ry-
counte
rclaim
s tha
t mus
t be d
ismiss
ed be
cause
subje
ct-ma
tter j
urisd
iction
is
lackin
g with
resp
ectto
the G
eisler
Unit
claim
s.
When
an
indep
ende
nt ba
sis fo
r jur
isdict
ion ex
ists w
ith re
spect
to a
counte
rclaim
,a fe
deral
cour
t may
adjud
icate
the cl
aim ev
en if
the o
rigina
l
claim
was
dismi
ssed f
or lac
k of s
ubjec
t-matt
er jur
isdict
ion.
McLa
ughli
n v.
Miss.
Powe
r Co.,
376 F
.3d 34
4, 35
5 (5th
Cir.
2004
); see
alsoK
uehn
e & N
agel
(AG
& Co
) v. G
eosou
rce, In
c., 87
4 F.2d
283,
291 (
5th Ci
r. 198
9);8 6
CHAR
LES A
.
WRIG
HT,A
RTHU
R R.
MILL
ER,&
MARY
KAY
KAN
E,FE
DERA
L PR
ACTI
CE A
ND
PROC
EDUR
E § 14
14, a
t 130
(3ded
. 201
0)(“I
f the c
ounte
rclaim
does
presen
t an
indep
ende
nt ba
sis of
fede
ral ju
risdic
tion,
howe
ver, t
he co
urt m
ay ad
judica
te it
as if i
t were
an or
igina
l clai
m de
spite
the d
ismiss
al of
plaint
iff’s c
laim.
”).
7No
tably,
Harl
eton d
id no
t asse
rt an
yinte
rest in
or cla
im in
volvi
ng th
ese un
its, n
or ha
s any
party
sugg
ested
that
Harle
ton is
an in
dispe
nsab
le pa
rty wi
th res
pect
to the
secla
ims.
There
fore,
our a
nalys
is of
Harle
ton’s
interv
entio
n ha
s no e
ffect
on ou
r con
sidera
tion
of Fr
eeman
and F
reema
n Cap
ital’s
claim
sreg
arding
the B
owen
, Hem
by, a
nd Yo
w Un
its.
8Fr
eeman
and F
reema
n Cap
ital u
rge th
at we
not r
ely on
Kue
hne,
arguin
g tha
t it
conflic
ts wi
th ou
r earl
ier-de
cided
opini
on in
City
of Ho
uston
v. St
anda
rd-Tr
iumph
Moto
r Co.,
347 F
.2d 19
4 (5th
Cir.
1965
). Ho
wever
,Kue
hne d
oes no
t con
flict w
ith an
d ind
eed ci
tes to
Stand
ard-Tr
iumph
Moto
r, am
ong o
ther c
ases,
for th
e prop
ositio
n tha
t a co
unter
claim
need
no
t be d
ismiss
ed wh
en su
pport
ed by
an in
depe
nden
t grou
nd fo
r juris
dictio
n. Se
eKue
hne, 8
74
F.2d a
t 291
. Even
if the
y did
conflic
twith
resp
ect to
whe
ther a
coun
tercla
im ca
n proc
eed
when
supp
orted
by an
inde
pend
ent b
asis f
or jur
isdict
ion, o
ur ru
le of
orderl
iness
requir
es us
to
follow
the e
arlier
-decid
ed ca
se of
Haber
man
v. Eq
uitab
le Lif
e Assu
rance
Socie
ty of
the
Unite
dStat
es, 22
4 F.2d
401 (
5th C
ir. 19
55), w
here
we he
ld tha
t a co
mpuls
ory co
unter
claim
cou
ld pro
ceed t
o a fin
al jud
gmen
t on t
he m
erits,
even
if the
cour
t lacke
d jur
isdict
ion ov
er the
pri
mary
claim
, beca
use d
iversi
ty jur
isdict
ion su
pport
ed th
e cou
ntercl
aim. S
ee22
4 F.2d
at40
9 (“[E
]ven i
f the
comp
laint
be di
smiss
ed, a
comp
ulsory
coun
tercla
im is
not r
equir
ed to
be
dismi
ssed w
here
it is s
uppo
rted b
y a pr
oper
groun
d of fe
deral
juris
dictio
n.”); s
ee als
oUnit
ed
States
v. W
heele
r, 322
F.3d
823,
828 n
.1 (5t
h Cir.
2003
) (exp
lainin
g tha
t whe
n “tw
o prev
ious
holdi
ngs o
r line
s of p
reced
ent c
onflic
t, the
earl
ier o
pinion
contr
ols a
nd is
the
bindin
g pre
ceden
t in th
e circ
uit” (c
itatio
n and
inter
nal q
uotat
ion m
arks o
mitte
d)).
9
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D-3
MEALEY’S Fracking Report Vol. 1, #1 May 2014
No.1
3-404
58
Here,
an
indep
ende
nt ba
sis fo
r sub
ject-m
atter
jurisd
iction
based
on
§133
2exis
ts for
the Bo
wen,
Hemb
y, an
d Yow
Unit
sclai
ms.T
he pa
rties
were
comple
tely d
iverse
as F
reema
n and
Free
man C
apita
l were
citiz
ens o
f Tex
as
and C
hesap
eake
was a
citize
n of O
klaho
ma. H
arleto
n did
not d
estroy
dive
rsity
with
respe
ct to
these
claim
s beca
use i
ts cla
ims w
ere lim
ited t
o the
Geisl
er Un
it.
Furth
er, th
e amo
unt i
n con
trove
rsy w
ith re
spect
to th
esecla
imse
xceed
ed
$75,0
00.T
heref
ore, b
ecaus
e Free
man a
nd Fr
eeman
Cap
ital’s
only
chall
enge
on ap
peal
rests
on th
eir ju
risdic
tiona
l argu
ment,
we a
ffirm
the di
strict
cour
t’s
decis
ioncon
cernin
gthe
Bowe
n, He
mby,
and Y
ow U
nits.
IV.C
onclu
sion
We V
ACAT
E an
d RE
MAND
the
distri
ct cou
rt’s s
umma
ry jud
gmen
t
decis
ion w
ith re
spect
to th
e Geis
ler U
nit cl
aimsa
nd A
FFIR
M the
cour
t’s
decis
ion w
ith re
spect
to th
e Bow
en, H
emby
, and
Yow
Units
claim
s.
10
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iled:
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/2014
D-4
MEALEY’S Fracking Report Vol. 1, #1 May 2014
March
12, 2
014
PO
WD
ER
RIV
ER
BA
SIN
RE
SO
UR
CE
CO
UN
CIL
v.W
YO
OIL
&G
AS
CO
MM
ISS
ION
E-1
MEALEY’S Fracking Report Vol. 1, #1 May 2014
E-2
MEALEY’S Fracking Report Vol. 1, #1 May 2014
E-3
MEALEY’S Fracking Report Vol. 1, #1 May 2014
E-4
MEALEY’S Fracking Report Vol. 1, #1 May 2014
E-5
MEALEY’S Fracking Report Vol. 1, #1 May 2014
E-6
MEALEY’S Fracking Report Vol. 1, #1 May 2014
E-7
MEALEY’S Fracking Report Vol. 1, #1 May 2014
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