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Packard v. Antero Resources Corp.

United States District Court, N.D. West Virginia

May 23, 2018

JANET C. PACKARD and LEROY PACKARD, husband and wife, Plaintiffs,
v.
ANTERO RESOURCES CORPORATION, a Delaware Corporation, Defendant.

          MEMORANDUM OPINION EXPLAINING ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT'S MOTIONS TO DISMISS [DKT. NO. 19]

          IRENE M. KEELEY, UNITED STATES DISTRICT JUDGE.

         During a joint scheduling conference in these consolidated cases on April 4, 2018, the Court GRANTED in part and DENIED in part the defendant's motions to dismiss. This Memorandum Opinion explains the Court's reasoning in support of that decision.

         I. BACKGROUND

         A. The Pleadings

         The facts are taken from the complaints and, as they must be, are construed in the light most favorable to the plaintiffs. See De'Lonta v. Johnson, 708 F.3d 520, 524 (4th Cir. 2013). On December 5, 2017, the plaintiffs, Janet C. Packard and Leroy Packard, Garnet C. Cottrill, and Marlyn C. Sigmon, filed three identical complaints in the Circuit Court of Harrison County, West Virginia, against the defendant, Antero Resources Corporation (“Antero”) (Dkt. No. 1-1).[1] The complaints allege that the plaintiffs own mineral interests in real property subject to three oil and gas leases. These include two tracts containing 104.75 and 6.5 acres in Union District, Harrison County, West Virginia; one tract containing 50.82 acres in Union District, Harrison County, West Virginia; and one tract containing 54.18 acres in Union District, Harrison County, West Virginia. Id. at 1-2. Allegedly, none of the leases “contain pooling or unitization authority” and “require[] the Lessor's consent to assign.” Id.

         Despite the fact that the leases do not expressly grant the right to pool or unitize, Antero has drilled horizontal wells through each of the tracts at issue, produced minerals from the oil and gas estate, and pooled the plaintiffs' gas with the gas of others. Id. at 3. The complaints make three claims for relief based on the allegedly unlawful pooling of the plaintiffs' property, including 1) trespass, 2) breach of contract, and 3) breach of the implied duty to protect against drainage. Id. at 4-5.

         Antero removed the cases to this Court on January 11, 2018, based on the Court's diversity jurisdiction (Dkt. No. 1). On January 18, 2018, Antero moved to dismiss each of the complaints (Dkt. No. 6). At a joint scheduling conference on April 4, 2018, the Court consolidated the cases and granted in part and denied in part Antero's motions (Dkt. No. 19).

         B. Supplemental Information

         In their briefs on the motions to dismiss, the parties have attached matters of public record that supplement the factual allegations in the complaints. Antero provided three leases and three lease modifications (Dkt. No. 6-1), while the plaintiffs included an order entered by the Circuit Court of Harrison County, West Virginia, in a recent case (Dkt. No. 8-1).

         The plaintiffs are three of seven children born to James Corder and Pearl Corder. In 1979 and 1981, James Corder and Pearl Corder executed three oil and gas leases covering their interest in the tracts at issue in this case (collectively, “the leases”) (Dkt. No. 8-1 at 2). Those leases do not contain a provision that expressly provides the right to pool or unitize the property. Two of the leases do provide for development “for the purpose of mining and operating for oil and gas, and of building tanks, stations, power plants, water stations and structures thereon to take care of the said products, and of laying pipe lines on, over, and across the leased premises and other lands of Lessor, for the purpose of conveying oil, gas, steam or water therein from and to wells and pipe lines on the premises and on adjoining and adjacent farms” (Dkt. No. 6-1 at 2, 5). The third lease includes a grant of “all other rights and privileges necessary, incident to, and convenient for the economical operation of said tracts or parcels of land for the production and transportation of said minerals.” Id. at 9.

         On October 31, 1987, James Corder died intestate, passing his fee simple interest in the tracts to his seven children. Id. at 2. On September 5, 1989, the children executed deeds conveying the tracts to brothers Gerald Corder, Randall Corder, and Roger Corder. Significantly, none of these deeds reserved an interest in oil and gas. Nonetheless, in 1992, the seven siblings completed a separation of the oil and gas interests, and each has since paid one-seventh of the taxes on the oil and gas interest for each property. Id.

         By assignments effective September 2008 and April 2010, Antero acquired the rights under the leases executed by James and Pearl Corder in 1979 and 1981. Id.[2] The deeds executed in 1989 led Antero to believe that the three brothers owned an undivided interest in the property, and it asked them to execute modifications to allow pooling. Id. In 2012, acknowledging that the original leases did not contain pooling or unitization authority, Gerald Corder, Randall Corder, and Roger Corder executed such modifications to include a pooling provision (Dkt. No. 6-1 at 14-22).

         Their brothers' interactions with Antero alerted the remaining siblings to the fact that they actually had not reserved oil and gas interests in the subject tracts (Dkt. No. 8-1 at 3). When they attempted to execute corrective deeds to address this omission, Roger Corder refused, arguing that he had never agreed to such a reservation. The other siblings therefore sought to reform the deeds to reflect their purported agreement by filing suit in the Circuit Court of Harrison County, West Virginia. Id. By order entered on November 3, 2015, Circuit Court Judge James A. Matish found that a mutual mistake had occurred in 1989, and directed the siblings to execute deeds reflecting the agreed reservation of undivided interests in the oil and gas. Id. at 7-8. No documents executed following Judge Matish's order were attached to the parties' briefs.

         II. STANDARD OF REVIEW

         Fed. R. Civ. P. 12(b)(6) allows a defendant to move for dismissal on the grounds that a complaint does not “state a claim upon which relief can be granted.” When reviewing a complaint, the Court “must accept as true all of the factual allegations contained in the complaint.” Anderson v. Sara Lee Corp., 508 F.3d 181, 188 (4th Cir. 2007) (quoting Erickson v. Pardus, 551 U.S. 89, 94 (2007)). “While a complaint . . . does not need detailed factual allegations, a plaintiff's obligation to provide the ‘grounds' of his ‘entitle[ment] to relief' requires more than labels and ...


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