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 TO ALTER OR AMEND JUDGMENT PURSUANT TO RULE 59 OF THE
FEDERAL RULES OF CIVIL PROCEDURE
FREDERICK P. STAMP, JR. UNITED STATES DISTRICT JUDGE
the jury trial of this civil action, the plaintiffs have
filed a motion to alter or amend judgment pursuant to Federal
Rule of Civil Procedure 59. The plaintiffs argue that the
judgment should be altered or amended for the following
reasons: (1) the defendant, EQT Production Company, has no
authority to deduct taxes from the plaintiffs; (2) the
plaintiffs are entitled to a 1/8 royalty without deductions
as a matter of law; (3) the defendant failed to follow
Leggett v. EQT Production Company, 800 S.E.2d 850 (
W.Va.) (“Leggett II”), cert.
denied, 138 S.Ct. 472 (2017) in performing its
“net back” or “work back” royalty
calculation; and (4) without a written policy detailing
deductions, the defendant's policy is arbitrary and vague
and not enforceable in law.
the defendant's authority to deduct taxes from the
plaintiffs' royalties, the plaintiffs argue that only the
legislature has the power to tax, and that the defendant has
no such power. Furthermore, the plaintiffs assert that, by
law, the taxes at issue are imposed on the producer, and that
Leggett II said nothing about a shifting of the
burden of the producer's tax to the royalty owner. As to
the plaintiffs' entitlement to a 1/8 royalty without
deductions, the plaintiffs argue that the written agreement
between the defendant and the West Virginia Department of
Environmental Protection controls the royalty distribution.
The plaintiffs contend that the agreement requires that the
defendant pay a 1/8 royalty to the plaintiffs and was never
modified to permit deductions. The plaintiffs allege that the
defendant adopted a verbal deduction policy in 2012, but that
the defendant's agreement with the West Virginia
Department of Environmental Protection was never modified to
reflect the verbal deduction policy. Thus, the plaintiffs
argue that the defendant must follow its written agreement
with the West Virginia Department of Environmental Protection
and ignore its oral policy permitting deductions.
whether the defendant followed Leggett II in its
royalty calculations, the plaintiffs argue that the
defendant's use of its index price violates West Virginia
law because Leggett II requires that the downstream
price be compared to the wellhead price. Lastly, the
plaintiffs argue that the defendant's oral deduction
policy is unenforceable because the defendant agreed in
writing to pay the plaintiffs a 1/8 royalty. The plaintiffs
conclude that the April 11, 2018 verdict is contrary to law
and must be altered. Accordingly, the plaintiffs request a
judgment restoring to the plaintiffs all royalties due to
them, including general deductions and deductions for taxes.
defendant filed a response in opposition to the motion, in
which it argues that there is no valid basis in either fact
or law to grant the relief requested by the plaintiffs. The
defendant cites this Court's standard for granting a
motion under Rule 59: “The United States Court of
Appeals for the Fourth Circuit has recognized three grounds
for amending an earlier judgment: (1) to accommodate an
intervening change in controlling law; (2) to account for new
evidence not available at trial; or (3) to correct a clear
error of law or prevent manifest injustice.” Moore
v. Life Ins. Co. of N. Am., 708 F.Supp.2d 597, 614 (N.D.
W.Va. 2010), aff'd, 439 Fed.Appx. 245 (4th Cir.
2011) (citing Pacific Ins. Co. v. Am. Nat'l Fire Ins.
Co., 148 F.3d 396, 403 (4th Cir. 1998)). The defendant
notes that the plaintiffs do not argue that there has been a
change in controlling law or that any new evidence has come
to light, but rather appear to argue that there has been
clear error of law.
defendant argues that there has been no clear error of law.
First, the defendant contends that this Court's prior
rulings were correct and that there is no basis upon which to
reconsider or amend them. The defendant asserts that each of
the plaintiffs' alleged grounds for their Rule 59 motion
have already been considered and ruled upon by this Court
either in its Memorandum Opinion and Order Denying
Plaintiffs' Motion for Partial Summary Judgment or its
Memorandum Opinion and Order Regarding Defendant's
Motions in Limine. The defendant again cites Moore,
which states that “[a] Rule 59(e) motion may not be
used to relitigate old matters and is an extraordinary remedy
that should be used sparingly . . . . It is improper to use
such a motion to ask the court to ‘rethink what the
court has already thought through-rightly or
wrongly.'” Id. (quoting Above the
Belt, Inc. v. Mel Bohannan Roofing, Inc., 99 F.R.D. 99,
101 (E.D. Va.1983)).
the defendant addresses the exhibits attached to the
plaintiffs' motion. The exhibits include Form WW-6A1
documents filed by the defendant with the West Virginia
Department of Environmental Protection in connection with the
wells at issue. The defendant argues the exhibits were not
offered as evidence at trial and do not constitute new
evidence unavailable at trial. Thus, the defendant contends
that the exhibits cannot provide a basis upon which to alter
or amend this Court's prior rulings or the judgment in
this case. See id. at 614-15 (“Rule 59(e)
motions may not be used . . . to raise arguments which could
have been raised prior to the issuance of the judgment, nor
may they be used to argue a case under a novel legal theory
that the party had the ability to address in the first
instance.” (quoting Pacific Ins. Co., 148 F.3d
at 403)). Even so, the defendant contends that the Form
WW-6A1 documents do not modify or overrule the applicable law
because, as a result of Leggett II, there is no
dispute that West Virginia Code § 22-6-8 governs the
royalties at issue in this case.
plaintiffs did not file a reply to the defendant's
response in opposition. For the reasons set forth below, the
plaintiffs' motion to alter or amend judgment is denied.
United States Court of Appeals for the Fourth Circuit has
recognized three grounds for amending an earlier judgment
under Federal Rule of Civil Procedure 59(e): (1) to
accommodate an intervening change in controlling law; (2) to
account for new evidence not available at trial; or (3) to
correct a clear error of law or prevent manifest injustice.
Pac. Ins. Co. v. Am. Nat'l Fire Ins. Co., 148
F.3d 396, 403 (4th Cir. 1998). “Rule 59(e) motions may
not be used . . . to raise arguments which could have been
raised prior to the issuance of the judgment, nor may they be
used to argue a case under a novel legal theory that the
party had the ability to address in the first
instance.” Id. A Rule 59(e) motion may not be
used to relitigate old matters and is an extraordinary remedy
that should be used sparingly. Id. It is improper to
use this motion to ask the court to “rethink what the
court ha[s] already thought through - rightly or
wrongly.” Above the Belt, Inc. v. Mel Bohannan
Roofing, Inc., 99 F.R.D. 99, 101 (E.D. Va. 1983).
Court finds that the plaintiffs' motion does not satisfy
any of the three grounds for amending an earlier judgment
under Rule 59(e). The plaintiffs do not assert that there has
been a change in the controlling law or that new evidence has
come to light that was not available at the time of trial.
Rather, the plaintiffs appear to rely on the third ground
under Rule 59(e), asserting that there has been a clear error
of law or manifest injustice.
plaintiffs first allege that the judgment should be altered
because the defendant has no authority to deduct the
producer's severance taxes from the plaintiffs. This
Court previously ruled on this issue in its order on the
plaintiffs' motion for partial summary judgment, finding
that “the issue of deducting severance taxes is
commensurate with the defendant's burden of proving by a
preponderance of the evidence whether the deductions of
post-production expenses were reasonable and actually
incurred.” ECF No. 157 at 1. At trial, the jury found
that the post-production expenses, including severance taxes,
were reasonable and actually incurred, and, accordingly, this
Court entered judgment for the defendant. ECF Nos. 169 and
170. This Court finds that the plaintiffs have not presented
any evidence ...