United States District Court, N.D. West Virginia
JOHN FOUT, NANCY FOUT, J&N MANAGEMENT, LLC and J&N MANAGEMENT ENTERPRISES, LLC, Plaintiffs,
EQT PRODUCTION COMPANY, a Pennsylvania corporation, Defendant.
MEMORANDUM OPINION AND ORDER DENYING PLAINTIFFS'
MOTION FOR PARTIAL SUMMARY JUDGMENT AND GRANTING IN PART AND
DENYING IN PART DEFENDANT'S MOTION FOR SUMMARY
FREDERICK P. STAMP, JR. UNITED STATES DISTRICT JUDGE
civil action concerns the royalty payments that the
plaintiffs believe the defendant, EQT Production
Company, failed to pay them. The plaintiffs own an undivided
interest in oil and natural gas in Wetzel County, West
Virginia. The defendant and the plaintiffs entered into a
lease agreement, under which the defendant would pay a
flat-rate royalty payment in exchange for both development
and production rights. In their complaint, the plaintiffs
contend that the defendant has underpaid the plaintiffs and
incorrectly applied certain deductions to their royalty
payments. In addition to those actions, the plaintiffs also
believe that the defendant failed to provide a “full
and truthful accounting of the production from
Plaintiffs' minerals and the manner in which [the]
royalty [payment] was calculated.” ECF No. 1. The
plaintiffs assert six counts in their complaint, which are as
follows: (I) failure to properly account, (II) breach of
contract, (III) breach of fiduciary duties, (IV) fraud, (V)
negligent misrepresentation, and (VI) punitive damages.
the defendant filed a partial motion to dismiss Counts III
and IV (the claims for breach of fiduciary duties and fraud,
respectively), which this Court granted in part and denied in
part. As a result of that ruling, Count III was dismissed and
Count IV still remained. The plaintiffs also filed an earlier
motion for partial summary judgment, requesting judgment in
their favor as to Count II. Because the certified questions
in Leggett would be dispositive of Count II, the
Court denied without prejudice the motion for partial summary
judgment. Therefore, at that stage, Counts I, II, IV, V, and
Supreme Court of Appeals of West Virginia then answered the
Leggett certified question that was dispositive of
Count II in this case. Leggett v. EQT Prod. Co., 800
S.E.2d 850 (W.Va.), cert. denied, 138 S.Ct. 472
(2017). That court held:
[R]oyalty payments pursuant to an oil or gas lease governed
by West Virginia Code § 22-6-8(e) (1994) may be subject
to pro-rata deduction or allocation of all reasonable
post-production expenses actually incurred by the lessee.
Therefore, an oil or gas lessee may utilize the
“net-back” or “work-back” method to
calculate royalties owed to a lessor pursuant to a lease
governed by West Virginia Code § 22-6-8(e). The
reasonableness of the post-production expenses is a question
for the fact-finder.
Leggett, 800 S.E.2d at 868. Thus, the answer to the
certified question resolved Count II in favor of the
defendant because the defendant was permitted to deduct
reasonable post-production expenses under the lease governed
by the flat rate statute. The Court held a status conference
after the Supreme Court of Appeals of West Virginia answered
the Leggett certified question, and the parties
agreed that the sole remaining issue is the reasonableness of
the post-production expenses actually incurred by the lessee,
which is a question for the fact-finder.
plaintiffs have now filed a partial motion for summary
judgment and the defendant has filed a motion for summary for
summary judgment. Both motions are fully briefed at this time
and ripe for decision.
Federal Rule of Civil Procedure 56, this Court must grant a
party's motion for summary judgment if “there is no
genuine dispute as to any material fact and the movant is
entitled to judgment as a matter of law.” Fed.R.Civ.P.
56(a). A fact is “material” if it might affect
the outcome of the case. Anderson v. Liberty Lobby,
477 U.S. 242, 248 (1986). A dispute of material fact is
“genuine” if the evidence “is such that a
reasonable jury could return a verdict for the non-moving
party.” Id. If the nonmoving party
“fails to make a showing sufficient to establish the
existence of an element essential to that party's case,
and on which that party will bear the burden of proof at
trial, ” summary judgment must be granted against the
plaintiff. Celotex Corp. v. Catrett, 477 U.S. 317,
322 (1986). In reviewing the supported underlying facts, all
inferences must be viewed in the light most favorable to the
party opposing the motion. See Matsushita Elec. Indus.
Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986).
party seeking summary judgment bears the initial burden of
showing the absence of any genuine issues of material fact.
See Celotex, 477 U.S. at 322-23. “The burden
then shifts to the nonmoving party to come forward with facts
sufficient to create a triable issue of fact.”
Temkin v. Frederick County Comm'rs, 945 F.2d
716, 718 (4th Cir. 1991), cert. denied, 502 U.S.
1095 (1992). However, “a party opposing a properly
supported motion for summary judgment may not rest upon the
mere allegations or denials of his pleading, but . . . must
set forth specific facts showing that there is a genuine
issue for trial.” Anderson v. Liberty Lobby,
Inc., 477 U.S. 242, 256 (1986).
before the Court are two pending motions for summary
judgment, both of which have been fully briefed. Those
motions include: (1) the plaintiffs' motion for partial
summary judgment and (2) the defendant's motion for
summary judgment. Following its review of the fully briefed
motions, and the memoranda and exhibits submitted by the
parties, this Court finds that, for the reasons set forth
below, the plaintiffs' motion for partial summary
judgment must be denied and the defendant's motion for
summary judgment must be granted in part and denied in part.
The motions for summary judgment are discussed, in turn,
Plaintiffs' Motion for ...