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Packard v. Antero Resources Corp.

United States District Court, N.D. West Virginia

March 18, 2019

JANET C. PACKARD, ET AL., Plaintiffs,
v.
ANTERO RESOURCES CORPORATION, a Delaware corporation, Defendant.

          MEMORANDUM OPINION AND ORDER GRANTING DEFENDANT'S MOTION TO DISMISS THE AMENDED COMPLAINT [DKT. NO. 21] AND DISMISSING THE AMENDED COMPLAINT WITH PREJUDICE [DKT. NO. 20].

          IRENE M. KEELEY UNITED STATES DISTRICT JUDGE.

         In this consolidated breach of contract case, the plaintiffs, Janet C. Packard, Leroy Packard, Garnet C. Cottrill, and Marlyn C. Sigmon (“the Plaintiffs”), allege in their Amended Complaint that the defendant, Antero Resources Corporation (“Antero”), has breached certain lease agreements and violated its duty to act in good faith by pooling the Plaintiffs' mineral interests through the use of a horizontal well (Dkt. No. 20). Antero has moved to dismiss the Amended Complaint contending, among other things, that the Plaintiffs' reformed deeds are subject to the pooling modifications that were executed in 2012 (Dkt. Nos. 21, 22). Alternatively, it submits that the reformed deeds do not apply retroactively against it because, under West Virginia law, it is a third party whose rights will be affected (Dkt. No. 22). Because Antero's first argument disposes of the matter in its entirety, the Court GRANTS Antero's motion (Dkt. No. 21) and DISMISSES the Amended Complaint WITH PREJUDICE.

         I. BACKGROUND

         A. The Amended Complaint[1]

         In their Amended Complaint, the Plaintiffs allege that they own mineral interests in real property subject to three oil and gas leases. These include one tract containing 50.82 acres in Union District, Harrison County, West Virginia, two tracts containing 6.5 and 104.75 acres in Union District, Harrison County, West Virginia, and one tract containing 54.18 acres in Union District, Harrison County, West Virginia (“the Subject Property”) (Dkt. No. 20 at 1-13).[2] When the Plaintiffs inherited their interests in these tracts in 1987, those interests were subject to three oil and gas leases (“the Subject Leases”).[3] Id. at 2, 5, 10. Allegedly, the Subject Leases “did not provide authority for pooling or unitization.” Id. at 13.

         Later, in 1989, the Plaintiffs conveyed their interests in the 50.82-acre tract, the 6.5- and 104.75-acre tracts, and the 54.18-acre tract to Gerald W. Corder, Roger M. Corder, and Randall N. Corder (“the Corders”), respectively (“the 1989 Deeds”). Id. at 2, 5-6, 10-11. The Plaintiffs concede that all three conveyances “failed to reserve an undivided interest in the oil and gas to the grantors, ” which they describe as a “scrivenor's error.” Id. at 2, 6, 11. Although the 1989 Deeds failed to reserve their mineral interests, the Plaintiffs allege that the property tax on their mineral interests has been assessed and paid since at least 2004, making them “of record.” Id. at 4, 8-9, 12-13. These tax tickets are attached to the Amended Complaint as Exhibit 2 (Dkt. No. 20-2).

         While the property taxes were being assessed and paid, Antero acquired the Subject Leases in 2010 and 2012 (Dkt. No. 20 at 3, 6, 11).[4] After acquiring these leases, Antero had the Corders execute three oil and gas lease modifications that purportedly gave Antero the express right to “pool” the underlying mineral interests (“the Pooling Modifications”) (Dkt. No. 20-1).

         Nearly two years later, in 2014, the Plaintiffs and others filed suit in the Circuit Court of Harrison County, West Virginia, to reform the 1989 Deeds to include their previously omitted reservation of mineral interests (Dkt. No. 20 at 2-3, 6, 11, 13-14). Soon after filing suit, the Plaintiffs and others filed a “Notice of Lis Pendens” in the Office of the Clerk of Harrison County, West Virginia, to put others on notice that litigation was pending and that they claimed mineral interests under the 1989 Deeds (Dkt. No. 20-5). After their state court action succeeded (Dkt. No. 20-7), the parties executed reformed deeds, which were recorded in 2016 (“the Reformed Deeds”) (Dkt. Nos. 20 at 3-4, 6-8, 11-12; 22-3). The Reformed Deeds establish that the Plaintiffs and others retained their respective mineral interests in the 1989 Deeds. Id.

         Even though the Subject Leases do not expressly grant the right to pool or unitize, the Plaintiffs allege that Antero has drilled horizontal wells through each of the tracts at issue, produced minerals from the oil and gas estate, and pooled their gas with the gas of others (Dkt. No. 20 at 15-17). Accordingly, the Amended Complaint asserts a claim for breach of contract. Id. at 16-17.

         B. Procedural History

         The plaintiffs filed these actions in December 2017 in the Circuit Court of Harrison County, West Virginia (Dkt. No. 1-1). Antero timely removed them to this Court based on diversity jurisdiction (Dkt. No. 1). After Antero moved to dismiss each of the complaints (Dkt. No. 6), the Court held a scheduling conference during which it consolidated the cases and granted in part and denied in part Antero's motions (Dkt. Nos. 18, 19). Later, the Court issued a Memorandum Opinion explaining its decision, and expressly declining to address Antero's argument that it had the right to pool under the Pooling Modifications because the parties had not addressed what effect, if any, the Reformed Deeds had on these modifications (Dkt. No. 23 at 15). The Plaintiffs responded by filing an Amended Complaint alleging the instant breach of contract claim (Dkt. No. 20). Now pending is Antero's motion to dismiss the Amended Complaint, which is fully briefed and ripe for review (Dkt. No. 21).

         II. STANDARD OF REVIEW

         Federal Rule of Civil Procedure 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 the sufficiency of a complaint, a district 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 conclusions, and a formulaic recitation of the elements of a cause of action will not do.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (internal citation omitted). A court is “not bound to accept as true a legal conclusion couched as a factual allegation.” Papasan v. Allain, 478 U.S. 265, 286 (1986).

         In order to be sufficient, “a complaint must contain ‘enough facts to state a claim to relief that is plausible on its face.'” Anderson, 508 F.3d at 188 n.7 (quoting Twombly, 550 U.S. at 547). “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). A motion to dismiss “does not resolve contests surrounding the ...


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