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Ascent Resources - Marcellus, LLC v. Wadsworth

Supreme Court of West Virginia

May 19, 2017

Ascent Resources - Marcellus, LLC, f/k/a American Energy - Marcellus, LLC, Plaintiff Below, Petitioner
v.
Galford Wadsworth, Jr., Rada Wadsworth, and Steven Wadsworth, Defendants Below, Respondents

         Tyler County 15-C-26-H

          MEMORANDUM DECISION

         Petitioner Ascent Resources - Marcellus, LLC, f/k/a American Energy - Marcellus, LLC ("petitioner"), by counsel Amy M. Smith and Allison J. Farrell, appeals the Final Order entered by the Circuit Court of Tyler County on May 6, 2016. In this order, the circuit court dismissed petitioner's civil action after an evidentiary hearing because petitioner failed to prove the threshold allegation that it owned 100% of the working interest for the Marcellus Shale formation in the leasehold estate underlying respondents' surface property. Respondents Galford Wadsworth, Jr., Rada Wadsworth, and Steven Wadsworth (collectively, "respondents"), by counsel James G. Bordas and Jeremy M. McGraw, filed a summary response. Petitioner filed a reply.

         This Court has considered the parties' briefs and the record on appeal. The facts and legal arguments are adequately presented, and the decisional process would not be significantly aided by oral argument. Upon consideration of the standard of review, the briefs, and the record presented, the Court finds no substantial question of law and no prejudicial error. For these reasons, a memorandum decision affirming the circuit court's order is appropriate under Rule 21 of the Rules of Appellate Procedure.

         Factual and Procedural Background

         Respondents own the surface of 185.25 acres located in Tyler County, West Virginia.[1]On May 13, 2015, petitioner filed a "Verified Complaint for Declaratory, Monetary, and Injunctive Relief" against respondents. Petitioner sought to construct a ten to thirteen-acre oil and gas well pad on respondents' property that would obtain gas from neighboring properties through multiple horizontally-drilled wells. Respondents objected, prompting petitioner's complaint.

         Relevant to the instant appeal are paragraphs 11 and 12 in petitioner's complaint, in which petitioner alleged the following:

11. [Petitioner] owns 100% of the working interest for the Marcellus Shale formation in the leasehold estate underlying the Surface Property pursuant to the six oil and gas leases attached hereto as "Exhibits A-1 to A-6" ("Leasehold Estate").
12. [Petitioner] is a successor in interest to the original lessees identified in the leases attached hereto as "Exhibits A-1 to A-6."

         In their Answer, respondents stated as follows with respect to paragraphs 11 and 12:

11. [Respondents] must DENY the allegations in Paragraph 11 based upon the information and documentation provided. [Respondents] cannot determine whether or not [petitioner] holds the interest it alleges based upon a review of "Exhibits A-1 to A-6."
12. [Respondents] must DENY the allegations in Paragraph 11 [sic] based upon the information and documentation provided. [Respondents] cannot determine whether or not [petitioner] holds the interest it alleges based upon a review of "Exhibits A-1 to A-6."

         The matter proceeded to an evidentiary hearing on October 15, 2015. Petitioner presented the testimony of two of its employees. At the conclusion of the hearing, the circuit court directed the parties to submit written closing arguments, and the parties complied. By order entered on May 6, 2016, the circuit court found, in relevant part, as follows:

Other than the lease documents attached to [petitioner's] Complaint which are alleged to relate to a mineral estate beneath [respondents'] surface estate, [petitioner] submitted no other documents or evidence to support the allegation set forth in paragraphs 11 and 12 of the Complaint. Taking a close look at the lease documents, the amount of acreage expressed therein differs from [respondents'] surface estate acreage (e.g. 176 acres, more or less as compared to 185.25 acres.)
All of the aforementioned leases were entered into in the early 1980s and all had a five (5) year "primary term" with certain and specific conditions that could cause the lease terms to extend past the first five (5) years. The record before the Court is barren of any evidence whatsoever that the leasehold interests purported to have been granted by ...

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