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EQT Production Co. v. Crowder

Supreme Court of West Virginia

June 5, 2019

EQT PRODUCTION COMPANY, Petitioner, Defendant Below
v.
MARGOT BETH CROWDER and DAVID WENTZ, Respondents, Plaintiffs Below

          Submitted: March 12, 2019

          Appeal from the Circuit Court of Doddridge County The Honorable Timothy L. Sweeney, Judge Civil Action No. 14-C-64

          Nicolle R. Snyder Bagnell, Esq. Lucas Liben, Esq. Reed Smith LLP Pittsburgh, Pennsylvania Counsel for the Petitioner EQT Production Company

          David L. Grubb, Esq. Kristina Thomas Whiteaker, Esq. The Grubb Law Group Charleston, West Virginia David McMahon, Esq. Charleston, West Virginia Counsel for the Respondents Margot Beth Crowder and David Wentz

          George A. Patterson, III, Esq. Evan G. Conard, Esq. Bowles Rice LLP Charleston, West Virginia Counsel for Amicus Curiae Independent Oil and Gas Association of West Virginia, Inc.

          John F. McCuskey, Esq. Marc F. Mignault, Esq. Shuman, McCuskey & Slicer, PLLC Charleston, West Virginia Counsel for Amicus Curiae West Virginia Farm Bureau

          Bradley Ward Stephens, Esq. Morgantown, West Virginia Counsel for Amicus Curiae West Virginia Surface Owner's Rights Organization

         SYLLABUS BY THE COURT

         1. "A circuit court's entry of summary judgment is reviewed de novo." Syl. Pt. 1, Painter v. Peavy, 192 W.Va. 189, 451 S.E.2d 755 (1994).

         2. "Generally, findings of fact are reviewed for clear error and conclusions of law are reviewed de novo. However, ostensible findings of fact, which entail the application of law or constitute legal judgments which transcend ordinary factual determinations, must be reviewed de novo." Syl. Pt. 1, in part, State ex rel. Cooper v. Caperton, 196 W.Va. 208, 470 S.E.2d 162 (1996).

         3. "An encroachment by one person on the land of another is a trespass, although the damage may be negligible." Syl. Pt. 2, Hark v. Mountain Fork Lumber Co., 127 W.Va. 586, 34 S.E.2d 348 (1945).

         4. "The owner of the mineral underlying land possesses as incident to this ownership the right to use the surface in such manner and with such means as would be fairly necessary for the enjoyment of the mineral estate." Syl. Pt. 1, Squires v. Lafferty, 95 W.Va. 307, 121 S.E. 90 (1924).

         5. A mineral owner or lessee has an implied right to use the surface of a tract in any way reasonable and necessary to the development of minerals underlying the tract. However, a mineral owner or lessee does not have the right to use the surface to benefit mining or drilling operations on other lands, in the absence of an express agreement with the surface owner permitting those operations.

          HUTCHISON, JUSTICE.

         Plaintiffs Margot Beth Crowder and David Wentz own the surface of land in Doddridge County, West Virginia. Defendant EQT Production Company ("EQT") holds a century-old lease that allows EQT to drill wells to extract oil and gas from beneath the plaintiffs' surface estate. The plaintiffs brought this lawsuit to challenge EQT's use of their surface estate to drill horizontal wells that extend under neighboring properties so that EQT can extract natural gas from beneath those properties. The plaintiffs contend that EQT's lease does not allow it to use their surface estate to extract oil and gas from neighboring mineral estates. Hence, the plaintiffs assert EQT is trespassing on their surface tracts, to the extent it is drilling for and removing minerals from neighboring properties.

         The Circuit Court of Doddridge County agreed with the plaintiffs and entered an order granting partial summary judgment, finding EQT trespassed to the extent it used the plaintiffs' surface lands to conduct operations under neighboring mineral estates. A jury subsequently awarded the plaintiffs $190, 000.00 in damages. EQT appeals the circuit court's partial summary judgment order and the jury's damage award.

         For the reasons set forth below, we affirm the circuit court's order and the jury's award of damages.[1]

         I. Factual and Procedural Background

         Ownership of the plaintiffs' surface tracts traces back to Joseph L. and Bell Carr who, in 1901, owned a 351 -acre tract in Doddridge County, West Virginia. The Carrs owned the "Carr Tract" in fee, ad coelum.[2] "The common law rule . . . is that a land owner with a fee simple title owns everything over the land and under it to the center of the earth. This rule extends to the minerals, be they solid (like coal), fluid or fugacious minerals (like oil and gas)." Faith United Methodist Church & Cemetery of Terra Alta v. Morgan, 231 W.Va. 423, 429-30, 745 S.E.2d 461, 467-68 (2013).

         In August 1901, the Carrs leased the 351 acres of oil and gas below the Carr Tract to the predecessors of EQT. The lease agreement states that EQT's predecessor had a lease "for the sole and only purpose of mining and operating for oil and gas, and of laying pipe lines and building tanks, stations and structures thereon, to take care of said products[.]" The lease was to last "as long thereafter as oil or gas . . . is produced therefrom[.]" The parties agree that this lease remains in effect today.

         Until 1936, the Carrs and their successors in title owned the entire 351-acre tract in fee (subject, of course, to the 1901 oil and gas lease). Then, the owner of the Carr Tract decided to split the surface from the mineral estate beneath the tract.[3] In November 1936, the then-owner of the Carr Tract, R.L. McCulty, conveyed to Grace Lowther "the surface only" of the Carr Tract. [4] Mr. McCulty retained the right to the oil and gas royalties from the 1901 lease, as well as sole ownership of any other minerals beneath the surface.

         By the mid-1970s, Grace Lowther and her successors had partitioned the surface of the Carr Tract into several smaller parcels. In 1975, one of these parcels, within the boundaries of the original Carr Tract, was conveyed to the plaintiffs (Mr. Wentz and Ms. Crowder). The plaintiffs, who were married, constructed a home on their parcel built from timber cut on the land, and moved into the home in April of 1977.

         In 2003, the plaintiffs divorced. By several deeds, the plaintiffs partitioned their surface estate between themselves. Mr. Wentz now owns two parcels and Ms. Crowder owns one parcel. All three surface parcels are within the bounds of the 351-acre Carr Tract. Both plaintiffs live in homes on the surface tracts at issue.

         Between 1901 and 1936, and under the 1901 oil and gas lease, EQT's predecessors drilled three conventional vertical wells on the surface of the 351-acre tract.[5]These vertical wells were designed to pull oil and gas from the rock strata beneath the 351-acre Carr Tract. After the surface estate was severed from the mineral estate in 1936, EQT's predecessors drilled six more conventional vertical wells on the Carr Tract, with the last being drilled in 1995.

         By 2011, Patty J. and R. Keith Crihfield owned the mineral estate beneath the Carr Tract, an estate that included the right to royalties from the 1901 oil and gas lease. Defendant EQT owned the right to drill and operate under the 1901 lease and approached the Crihfields seeking to modify the lease. On March 11, 2011, the Crihfields signed an "Amendment of Ratification of Oil and Gas Lease" that allowed EQT to pool and/or unitize and combine the rights provided by the 1901 lease with other leases to drill and extract oil and gas under neighboring lands.[6]

         EQT then sought permits to drill modern, horizontal Marcellus shale gas wells on the plaintiffs' surface lands. EQT designed the wells to extract gas from a total area of 3, 232 acres, not just the 351 acres beneath the Carr Tract. Modern technology allowed EQT to initially drill vertically on the plaintiffs' surface lands, but then curve the head of the drill and extend the bore of the well ...


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