Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Fout v. EQT Production Co.

United States District Court, N.D. West Virginia

April 6, 2018

JOHN FOUT, NANCY FOUT, J&N MANAGEMENT, LLC and J&N MANAGEMENT ENTERPRISES, LLC, Plaintiffs,
v.
EQT PRODUCTION COMPANY, a Pennsylvania corporation, Defendant.

          MEMORANDUM OPINION AND ORDER REGARDING DEFENDANT'S MOTIONS IN LIMINE

          FREDERICK P. STAMP, JR. UNITED STATES DISTRICT JUDGE.

         Pending before this Court are motions in limine filed by the defendant, EQT Production Company (“EQT”). The trial of this civil action[1] is scheduled to commence on April 10, 2018. Now before the Court are EQT's fourteen pending motions in limine which have been fully briefed: (1) Motion in Limine to Preclude Argument or Evidence of Alter Ego Relationship or the Sale Price Received by EQT Energy, LLC (ECF No. 82); (2) Motion in Limine to Preclude Argument or Evidence that Other Lessees Do Not Deduct or Allocate Post-Production Costs (ECF No. 83); (3) Motion in Limine to Preclude Argument or Evidence that Post-Production Costs Were Purportedly Never Defined or Invoiced to Plaintiffs, or Authorized by Plaintiffs (ECF No. 84); (4) Motion in Limine to Preclude Argument or Evidence that Allocation of Post-Production Costs Is Not Permitted by Other Leases (ECF No. 85); (5) Motion in Limine to Preclude Argument or Evidence that Allocation of Post-Production Costs Is Not Permitted by the Lease (ECF No. 86); (6) Motion in Limine to Preclude Argument or Evidence that Post-Production Costs Do Not Enhance the Value of the Natural Gas Produced from the Lease Premises (ECF No. 87); (7) Motion in Limine to Preclude Argument or Evidence Regarding Claims of Fraud or Misrepresentation (ECF No. 88); (8) Motion in Limine to Preclude Argument or Evidence Regarding the Henry Hub or Other Index Prices (ECF No. 89); (9) Motion in Limine to Preclude Argument or Evidence that the Price at which Gas Sold from the Lease Premises Is Purportedly Less than Fair Market Value (ECF No. 90); (10) Motion in Limine to Preclude Argument or Evidence Regarding Natural Gas Liquids (ECF No. 91); (11) Motion in Limine to Preclude Argument or Evidence that Royalties Paid to Plaintiffs by EQT Should Be Paid Without Deduction or Allocation of Any Post-Production Costs (ECF No. 92); (12) Motion in Limine to Preclude Argument or Evidence to Support a Claim for Punitive Damages (ECF No. 93); (13) Motion in Limine to Preclude Argument or Evidence Regarding Rulings Made in McDonald v. EQT Production Company or The Kay Company, LLC v. EQT Production Company (ECF No. 94); and (14) Motion in Limine to Preclude Argument or Evidence Regarding Senate Bill 360 (ECF No. 149).

         This Court has reviewed and considered the fully briefed motions and the memoranda and exhibits submitted by the parties as well as the comments by counsel concerning these motions at the pretrial conference on April 2, 2018. This Court will address those motions in limine and set forth its findings, as discussed below.

         EQT's Motions in Limine

         1. Motion in Limine to Preclude Argument or Evidence of Alter Ego Relationship or the Sale Price Received by EQT Energy, LLC (ECF No. 82) is GRANTED.

         EQT anticipates that the plaintiffs may seek to argue that there is purportedly an alter ego relationship between EQT and other affiliates and/or that the price upon which the plaintiffs' royalties are calculated should be based upon the price for natural gas sales that is received by EQT Energy, LLC, which is not a party to this case. EQT argues that the plaintiffs' contentions regarding affiliated and non-affiliated sales are irrelevant because EQT is the only defendant in the case and the only lessee obligated to pay royalties to the plaintiffs. Additionally, EQT argues that, even if the plaintiffs had included a claim of alter ego relationship or non-affiliate pricing in their complaint, any such claims were abandoned and waived as of the June 20, 2017 hearing, where discovery was limited to the reasonableness of post-production costs actually incurred by the lessee.

         In response, the plaintiffs argue that the downstream price paid to EQT Energy, LLC is the basis of all royalties. The plaintiffs explain as follows: (1) the enhanced downstream price, and only the enhanced downstream price, must be paid to the plaintiffs in order for EQT to receive any deductions; (2) adopting Leggett v. EQT Production Company, 800 S.E.2d 850 ( W.Va.), cert. denied, 138 S.Ct. 472 (2017), requires the enhanced downstream price to be the basis of royalties; (3) EQT has stated on the record that it pays the downstream or interstate pipeline rate as royalty, and the motion in limine would bar the downstream price, the only legal price, from being considered; and (4) without paying the downstream price to the plaintiffs, no deductions are possible. Accordingly, the plaintiffs oppose the motion in limine and move this Court to base all deductions upon only the enhanced downstream price that EQT received for the natural gas.

         This Court finds that the issue of alter ego was not pled in the plaintiffs' complaint and that, even if it was, it was waived at the June 20, 2017 status conference during which the parties agreed that the sole remaining issue is the reasonableness of the post-production expenses actually incurred by the lessee.[2]Accordingly, EQT's Motion in Limine to Preclude Argument or Evidence of Alter Ego Relationship or the Sale Price Received by EQT Energy, LLC (ECF No. 82) is GRANTED.

         2. Motion in Limine to Preclude Argument or Evidence that Other Lessees Do Not Deduct or Allocate Post-Production Costs (ECF No. 83) is GRANTED.

         EQT notes that the plaintiffs are parties to oil and gas leases with entities other than EQT and anticipates that the plaintiffs will seek to argue that lessees to the other leases do not deduct or allocate post-production costs before paying royalties to the plaintiffs. EQT argues that evidence regarding the practices of other lessees not party to this case is not relevant to the issue to be decided at trial.

         In response, the plaintiffs argue that information regarding other leases is relevant to evaluate post-production costs of EQT because none of EQT's deductions have ever been followed in the oil and gas industry. The plaintiffs contend that the procedures in the industry are relevant and material to determine whether EQT's deductions meet the reasonable and necessary standards set forth in Leggett.

         “Evidence is relevant if: (a) it has any tendency to make a fact more or less probable than it would be without the evidence; and (b) the fact is of consequence in determining the action.” Fed.R.Evid. 401. This Court finds that the practices of other lessees not party to this case is not relevant to the sole remaining issue in this matter, which is the reasonableness of the post-production expenses actually incurred by the lessee. Specifically, the practices of other lessees is not of consequence to the fact-finder in determining the sole remaining issue in this case. Accordingly, EQT's Motion in Limine to Preclude Argument or Evidence that Other Lessees Do Not Deduct or Allocate Post-Production Costs (ECF No. 83) is GRANTED. 3. Motion in Limine to Preclude Argument or Evidence that Post-Production Costs Were Purportedly Never Defined or Invoiced to Plaintiffs, or Authorized by Plaintiffs (ECF No. 84) is DEFERRED.

         EQT anticipates that the plaintiffs may seek to argue that the post-production costs allocated to the plaintiffs were purportedly never defined or invoiced to the plaintiffs, or authorized by them. EQT argues that any such reference or evidence has no tendency to prove or disprove the sole issue to be decided in this case (i.e., whether the post-production costs incurred and allocated to the plaintiffs are reasonable). EQT contends that there is no requirement that EQT define or invoice post-production costs to the plaintiffs, much less that these costs be authorized by them.

         The plaintiffs respond that the motion in limine should be denied because EQT should be forced to define “costs” and “invoice costs” before they are paid. The plaintiffs reason that a written policy is reasonable and necessary.

         This Court finds it appropriate to further consider at trial how the plaintiffs intend to use evidence that the post-production costs were never defined or invoiced to them. Accordingly, EQT's Motion in Limine to Preclude Argument or Evidence that Post-Production Costs Were Purportedly Never Defined or Invoiced to Plaintiffs, or Authorized by Plaintiffs (ECF No. 84) is DEFERRED. 4. Motion in Limine to Preclude Argument or Evidence that Allocation of Post-Production Costs Is Not Permitted by Other Leases (ECF No. 85) is GRANTED.

         EQT anticipates that the plaintiffs may seek to argue that the deduction or allocation of post-production costs is not permitted by other oil and gas leases to which the plaintiffs are parties. EQT argues that evidence regarding other leases is not relevant to this issue to be decided at trial. EQT further argues that such evidence would wrongly suggest to the jury that the lease at issue must allow the pro rata deduction or allocation of post-production costs, which is contrary to Leggett.

         In response, the plaintiffs argue that the motion in limine should be denied because of the difficulty of defining post-production costs. The plaintiffs contend that costs must be properly allocated, and ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.