Justia West Virginia Supreme Court of Appeals Opinion Summaries

The case involves a class action lawsuit brought by Jacklin Romeo, Susan S. Rine, and Debra Snyder Miller against Antero Resources Corporation. The plaintiffs, who own oil and gas interests in Harrison County, West Virginia, allege that Antero breached the terms of their leases by failing to pay the full one-eighth royalty specified in the leases. They argue that Antero improperly deducted postproduction costs from the gross sale proceeds of the gas, contrary to West Virginia Supreme Court precedents in Wellman v. Energy Resources, Inc. and Estate of Tawney v. Columbia Natural Resources, L.L.C.The United States District Court for the Northern District of West Virginia, presided over by Chief Judge Thomas S. Kleeh, certified two questions to the Supreme Court of Appeals of West Virginia. The first question asked whether the requirements of Wellman and Estate of Tawney extend only to the "first available market" as opposed to the "point of sale" when the duty to market is implicated. The second question asked whether the marketable product rule extends beyond gas to require a lessee to pay royalties on natural gas liquids (NGLs) and, if so, whether lessors share in the cost of processing, manufacturing, and transporting the NGLs to sale.The Supreme Court of Appeals of West Virginia reaffirmed its previous rulings in Wellman and Estate of Tawney, holding that the requirements extend to the point of sale, not just to the first available market. The court also held that royalties are payable on NGLs, but absent express language in the lease, lessors do not share in the costs of processing, manufacturing, and transporting residue gas and NGLs to the point of sale. The court emphasized that any deductions for postproduction costs must be clearly and unambiguously stated in the lease agreements. View "Romeo v. Antero Resources Corporation" on Justia Law

The case involves Francis Kaess, who owns mineral interests in land in Pleasants County, West Virginia, subject to an oil and gas lease with BB Land, LLC. The lease provides for in-kind royalties, meaning Kaess is entitled to a portion of the physical oil and gas produced. However, Kaess did not take his share in-kind, and BB Land sold his share and deducted postproduction costs from his royalties.The United States District Court for the Northern District of West Virginia reviewed the case and denied BB Land's motion for summary judgment on the issue of improper deductions. The court found that the requirements for deducting postproduction costs, as established in Wellman v. Energy Resources, Inc. and Estate of Tawney v. Columbia Natural Resources, LLC, apply to in-kind leases. BB Land then sought to certify questions to the Supreme Court of Appeals of West Virginia.The Supreme Court of Appeals of West Virginia reviewed the certified questions. The court reaffirmed the principles established in Wellman and Estate of Tawney, which require that any deductions for postproduction costs must be expressly stated in the lease, identify specific deductions, and indicate the method of calculating these deductions. The court held that these requirements also apply to leases with in-kind royalty provisions.The court concluded that there is an implied duty to market the minerals in oil and gas leases with in-kind royalty provisions. If the lessor does not take their share in-kind, the lessee must market and sell the lessor's share along with their own and pay the lessor a royalty based on the gross proceeds received at the first point of sale to an unaffiliated third-party purchaser, free from any deductions for postproduction expenses. The court answered both certified questions in the affirmative. View "Kaess v. BB Land, LLC" on Justia Law

The case involves Francis Kaess, who owns mineral interests in land in Pleasants County, West Virginia, subject to an oil and gas lease with BB Land, LLC. The lease, dated January 6, 1979, provides for in-kind royalties, meaning Kaess is entitled to a portion of the physical oil and gas produced. BB Land began production in 2018, but Kaess did not take his share in-kind. Instead, BB Land sold Kaess' share and paid him royalties after deducting postproduction costs.Kaess filed a lawsuit in the United States District Court for the Northern District of West Virginia, alleging improper deductions of postproduction costs from his royalties, among other claims. The district court denied BB Land's motion for summary judgment on the improper deductions claim, finding that the requirements for deducting postproduction costs set forth in Wellman v. Energy Resources, Inc. and Estate of Tawney v. Columbia Natural Resources, LLC apply to in-kind leases. BB Land then moved to certify a question to the Supreme Court of Appeals of West Virginia.The Supreme Court of Appeals of West Virginia reviewed the case and answered two certified questions. First, the court held that there is an implied duty to market the minerals in oil and gas leases containing an in-kind royalty provision. If the lessor does not take physical possession of their share, the lessee must either deliver the lessor's share to a third-party purchaser near the wellhead, buy the lessor's share, or market and sell the lessor's share along with their own.Second, the court held that the requirements for deducting postproduction costs from royalties, as established in Wellman and Estate of Tawney, apply to leases with in-kind royalty provisions. Therefore, if the lessee markets and sells the lessor's share, the lessee must tender the lessor's percentage share of the gross proceeds, free from any deductions for postproduction expenses, received at the first point of sale to an unaffiliated third-party purchaser in an arm's length transaction. View "Francis Kaess v. BB Land, LLC" on Justia Law

The case involves a class action lawsuit brought by Jacklin Romeo, Susan S. Rine, and Debra Snyder Miller against Antero Resources Corporation. The plaintiffs, who own oil and gas interests in Harrison County, West Virginia, allege that Antero breached the terms of their leases by failing to pay the full one-eighth royalty specified in the leases. They argue that Antero improperly deducted postproduction costs from the gross sale proceeds of the gas, contrary to West Virginia Supreme Court precedents in Wellman v. Energy Resources, Inc. and Estate of Tawney v. Columbia Natural Resources, L.L.C.The United States District Court for the Northern District of West Virginia, which is handling the case, certified two questions to the Supreme Court of Appeals of West Virginia. The first question asked whether the requirements of Wellman and Estate of Tawney extend only to the "first available market" as opposed to the "point of sale" when the duty to market is implicated. The second question asked whether the marketable product rule extends beyond gas to require a lessee to pay royalties on natural gas liquids (NGLs) and, if so, whether the lessors share in the cost of processing, manufacturing, and transporting the NGLs to sale.The Supreme Court of Appeals of West Virginia answered the first question in the negative, holding that the requirements of Wellman and Estate of Tawney extend to the point of sale, not just to the first available market. The court reaffirmed that the lessee must bear all costs incurred in exploring for, producing, marketing, and transporting the product to the point of sale unless the lease provides otherwise.For the second question, the court held that the marketable product rule extends beyond gas to require a lessee to pay royalties on NGLs. However, the court also held that absent express language in the lease to the contrary, the lessors do not share in the cost of processing, manufacturing, and transporting residue gas and NGLs to the point of sale. View "Jacklin Romeo, Susan S. Rine, and Debra Snyder Miller v. Antero Resources Corporation" on Justia Law

The case revolves around a former underground coal miner, Randy Brown, who contracted occupational pneumoconiosis (OP) due to his exposure to coal dust. In 2016, he was granted a 30% permanent partial disability (PPD) award for his OP. In 2018, Brown sought an increase in his award, claiming his condition had worsened. The Occupational Pneumoconiosis Board (OP Board) examined Brown and determined that he had an additional 20% impairment, bringing his total impairment rating to 50%. The claims administrator granted an additional 20% PPD award, which was protested by Brown's employer, Rockspring Development, Inc.Rockspring's protest was heard by the West Virginia Workers’ Compensation Office of Judges, which affirmed the claims administrator’s decision. Rockspring then appealed to the West Virginia Workers’ Compensation Board of Review, which also affirmed the decision. During the pendency of the claim process, Brown underwent a bilateral lung transplant. Post-transplant, Brown’s pulmonary function testing and x-ray reports showed no evidence of OP. Rockspring argued that the Board of Review was clearly wrong in affirming the additional 20% PPD award because Brown no longer had OP or any pulmonary impairment.The Supreme Court of Appeals of West Virginia disagreed with Rockspring's argument. The court noted that the relevant statutes do not indicate whether the decisionmaker should consider the pulmonary function of the pre-transplant lungs or the function of the post-transplant lungs when the transplant occurred during the pendency of the claim proceedings. Given the unique circumstances of the case and the deference afforded to the Board of Review, the court affirmed the Board of Review’s decision granting Brown an additional 20% PPD award. View "Rockspring Development, Inc. v. Brown" on Justia Law

The Supreme Court reversed the judgment of the circuit court granting summary judgment for Respondent in this action claiming that Respondent owned fifty percent interest in the oil and gas estate Petitioners purchased at prior tax sales, holding that the circuit court erred.In 1989, Respondent and Petitioners participated in a tax sale after a delinquent taxpayer neglected to pay taxes on 135 acres of property and twenty-five percent of its subjacent oil and gas estate. Respondent bought the property, and Petitioners bought the interest in the oil and gas estate. In 1993, Petitioner brought another twenty-five percent interest in the same oil and gas estate after another tax resulting from a different taxpayer's delinquency. Respondent subsequently filed this lawsuit claiming ownership in the fifty percent interest in the oil and gas estate Petitioners had purchased. The circuit court granted summary judgment for Respondent. The Supreme Court reversed, holding (1) Petitioners purchased a valid tax deed to the oil and gas estate, and Respondent lacked grounds to challenge Petitioners' tax-sale deed; and (2) as to Petitioners' 1995 deed, the delinquent taxpayer clearly owned the twenty-five percent interest in the oil and gas estate for which his taxes were delinquent. View "Collingwood Appalachian Minerals III, LLC v. Erlewine" on Justia Law

The Supreme Court held that the circuit court erred by denying Petitioners' counsel's request for an attorney fee and costs pursuant to the common fund doctrine in the underlying lawsuit involving a quiet title action and concomitant claim for unpaid and gas royalties, holding that the circuit court erred.The underlying lawsuit ultimately resulted in two separate monetary settlements, one for the benefit of Petitioners and one for the benefit of a separate group of individuals whose interests were wholly aligned with Petitioners' interests but with whom Petitioners' counsel had not been able to establish contact. At issue was whether counsel was entitled to payment of attorney fees and costs from the separate settlement fund he negotiated with the second settlement, despite the fact that counsel had no contractual relationship with those individuals. The Supreme Court reversed, holding that counsel was entitled under the common fund doctrine to require the beneficiaries for whom he was not acting by agreement to contribute to the "reasonable and necessary expense" of securing the common bond for their benefit. View "L&D Investments, Inc. v. Antero Resources Corp." on Justia Law

The Supreme Court affirmed the order of the Public Service Commission of West Virginia (PSC) ordering Equitrans, LC, a natural gas interstate pipeline company, to permit Hope Gas to connect a natural gas field tap on property owned by Ronald and Ashton Hall to Equitrans' "gathering line," holding that the PSC properly exercised jurisdiction in this matter.Seeking to divest itself of its gathering facilities Equitrans applied to the Federal Energy Regulation Commission (FERC) to abandon and sell its gathering facilities. FERC approved the application. When Equitrans denied Hope Gas's request to reestablish a service connection to the Halls' residence the Halls filed their complaint with the PSC. The PSC found that it had jurisdiction over the gathering facilities. The Supreme Court affirmed, holding that the PSC properly exercised jurisdiction over the gathering facility at issue. View "Equitrans, L.P. v. Public Service Comm'n of W. Va." on Justia Law

The Supreme Court answered certified questions seeking to clarify whether, in payment of royalties under an oil and gas lease, the lessor may be required to bear a portion of the post-production costs incurred in rendering the oil and gas marketable.Specifically, the district court asked whether Estate of Tawyne v. Columbia Natural Resources, LLC, 633 S.E.2d 22 (W. Va. 2006) is still good law in West Virginia and then asked the Supreme Court to expound upon its holding in Tawney. The Supreme Court answered (1) Tawney is still good law; and (2) this Court defines to answer the reformulated question of what level of specificity Tawney requires of an oil and gas lease to permit the deduction of post-production costs from a lessor's royalty payments. View "SWN Production Co., LLC v. Kellam" on Justia Law

The Supreme Court affirmed the summary and declaratory judgment order of the circuit court determining that Frank Bonacci and Brian Bonacci (together, the Bonacci brothers) were the owners of an undivided and unsevered oil and gas estate, holding that there was no error.The circuit court's order found that the Bonacci brothers were the owners of the undivided oil and gas estate at issue because the tax deeds through which Petitioners, two Florida limited liability companies, had allegedly obtained title to the same mineral estate were void. Petitioners appealed, arguing that the circuit court erred in concluding that the underlying tax deeds were void. The Supreme Court affirmed, holding that the tax deeds were void and conveyed no interest in the oil and gas estate underlying the surface panel now owned by the Bonacci brothers. View "Orville Young, LLC v. Bonacci" on Justia Law