L&D Invs. v. Antero Res. Corp.
| Decision Date | 24 April 2023 |
| Docket Number | 21-0613 |
| Parties | L&D INVESTMENTS, INC., a West Virginia corporation, RICHARD SNOWDEN ANDREWS, JR., MARION A. YOUNG TRUST, CHARLES A. YOUNG, DAVID L. YOUNG, and LAVINIA YOUNG DAVIS, Successors of Marion A. Young Trust, CHARLES LEE ANDREWS, IV, and FRANCES L. ANDREWS Plaintiffs Below, Petitioners, v. ANTERO RESOURCES CORPORATION, and MIKE ROSS, INC., Defendants Below, Respondents. |
| Court | West Virginia Supreme Court |
1
L&D INVESTMENTS, INC., a West Virginia corporation, RICHARD SNOWDEN ANDREWS, JR., MARION A. YOUNG TRUST, CHARLES A. YOUNG, DAVID L. YOUNG, and LAVINIA YOUNG DAVIS, Successors of Marion A. Young Trust, CHARLES LEE ANDREWS, IV, and FRANCES L. ANDREWS Plaintiffs Below, Petitioners,
v.
ANTERO RESOURCES CORPORATION, and MIKE ROSS, INC., Defendants Below, Respondents.
No. 21-0613
Supreme Court of Appeals of West Virginia
April 24, 2023
Submitted: February 7, 2023
Appeal from the Circuit Court of Harrison County The Honorable Thomas A. Bedell, Judge Civil Action No. 13-C-528-2
David J. Romano, Esq.
Romano Law Office, LC
Clarksburg, West Virginia
Counsel for Petitioners
Michael Jacks, Esq.
Jacks Legal Group, P.L.L.C.
Morgantown, West Virginia
Guardian ad Litem for Respondent Unknown Heirs
JUSTICE BUNN deemed herself disqualified and did not participate in the decision.
JUDGE MICHAEL J. OLEJASZ sitting by temporary assignment.
SYLLABUS BY THE COURT
1. "'Where the issue on an appeal from the circuit court is clearly a question of law or involving an interpretation of a statute, we apply a de novo standard of review.' Syllabus point 1, Chrystal R.M. v. Charlie A.L., 194 W.Va. 138, 459 S.E.2d 415 (1995)." Syl. Pt. 1, Bayer MaterialScience, LLC v. State Tax Comm'r, 223 W.Va. 38, 672 S.E.2d 174 (2008).
2. "Where a fund is brought into a court of equity through the services of an attorney, who looks to that alone for his compensation, although his interest cannot technically be called a 'lien,' he is regarded as the equitable owner of the fund, to the extent of the reasonable value of his services; and the court administering the fund will intervene for his protection, and award him a reasonable compensation, to be paid out of it." Syl. Pt. 8, Weigand v. All. Supply Co., 44 W.Va. 133, 28 S.E. 803 (1897).
3. This Court adopts the persuasive authority of the Restatement (Third) of Restitution and Unjust Enrichment § 29 (Am. Law Inst. 2022), in its entirety, as the law of this State:
(1) As the terms are used in this section, a "common fund" consists of money or other property in which two or more persons (the "beneficiaries") are entitled to share by reason of their common or parallel interests therein. A "claimant" is a beneficiary, or a person acting by agreement on behalf of a beneficiary, who succeeds in creating, preserving, or enlarging a common fund by asserting the legal rights of a beneficiary
(2) A claimant may require those beneficiaries for whom the claimant is not acting by agreement to contribute to the reasonable and necessary expense of securing the common fund for their benefit, in proportion to their respective interests therein, as necessary to prevent unjust enrichment.
(3) A beneficiary is liable in restitution only if:
(a) Liability will not oblige the beneficiary to make a net payment in cash;
(b) The measurable value added to the beneficiary's interest in the common fund by the claimant's intervention exceeds the beneficiary's liability to the claimant;
(c) The claimant has neither acted gratuitously nor received full compensation from others; and
(d) Liability will not impose an obligation that should properly have been the subject of contract between the claimant and the beneficiary.
(4) Liability in restitution may be reduced or eliminated if the court finds that the person from whom restitution is sought has made a valuable contribution to the transaction by which the common fund is created, preserved, or enlarged.
OPINION
WOOTON, JUSTICE
The underlying lawsuit, a quiet title action and concomitant claim for unpaid oil and gas royalties, ultimately resulted in two separate monetary settlements, one for the benefit of the named plaintiff/petitioners, and one for the benefit of a separate group of individuals ("the Unknown Heirs") whose interests are wholly aligned with petitioners' interests but with whom petitioners' counsel ("Counsel") has never been able to establish contact. This appeal presents a single, straightforward issue: under the facts and circumstances of this case, is Counsel entitled to payment of an attorney fee and costs from the separate settlement fund he negotiated on behalf of the Unknown Heirs, despite the fact that he has no contractual relationship with them?
Upon careful review of the briefs, the appendix record, the arguments of the parties, and the applicable law, we conclude that the circuit court erred by denying Counsel's request for an attorney fee and costs pursuant to the common fund doctrine. We reverse the judgment of the circuit court and remand this case for determination of a reasonable attorney fee and costs to be paid to Counsel from the settlement he negotiated on behalf of the Unknown Heirs.
I. Facts and Procedural Background
The underlying lawsuit was initially filed in 2013 on behalf of petitioner L&D Investments, Inc. against respondent Antero Resources Corporation.[1] The property at issue ("the Andrews Tract") consisted of two adjacent tracts of land totaling approximately 1,041 acres located on "Middle Fork of Sycamore Creek in the Union District of Harrison County," from which the oil and gas interests had been severed from the surface and coal interests in 1903. While this hard-fought case was ongoing, it generated three appeals to this Court: L & D Investments, Inc. v. Mike Ross, Inc., 241 W.Va. 46, 818 S.E.2d 872 (2018) and Antero Resources Corp. v. L & D Investments, Inc., Nos. 20-0964 & 20-0967, 2022 WL 1222944 (W.Va. Apr. 26, 2022) (memorandum decision).[2]
As detailed in L&D Investments, Charles Lee Andrews, who owned the subject property in fee simple as trustee for his mother, Mary Catherine Lee Andrews ("Mrs. Andrews"), conveyed the surface and coal interests in 1903 while excepting and reserving the oil and gas interests from the conveyance. Thereafter, when Mrs. Andrews died in 1920, the oil and gas interests were divided among her four children, who each received a twenty percent share, and the three children of her deceased daughter, who received equal shares of the remaining twenty percent. All of the petitioners herein are
heirs of one or more of Mrs. Andrews' descendants, or, in the case of L&D Investments, Inc., devisees of one or more of those heirs.
Through his diligent investigative efforts in the early stages of the litigation, Counsel was able to identify all of the descendants and heirs of Mrs. Andrews and, where applicable, their devisees. Because this was a quiet title action affecting the rights of all these individuals and/or entities, Counsel filed an Amended Complaint making them all parties defendant and thereafter made multiple attempts to give them all notice of the pendency of the suit. As a result of Counsel's efforts, the petitioners herein were located and agreed to be represented by Romano Law Office, LC.; however, Counsel was never able to locate and/or establish contact with the individuals designated herein as the Unknown Heirs.
Of specific relevance to the issue raised in this appeal, two facts are key. First, none of the Unknown Heirs have refused to participate in the lawsuit or refused to be represented by Counsel; rather, the simple fact is that Counsel has never been able to establish contact with them despite multiple attempts to give them notice of the suit and ascertain their wishes. Second, although Counsel was not able to establish contact with the Unknown Heirs, he was able to identify all of them, to establish their respective ownership interests in the oil and gas rights to the Andrews Tract, and to establish the percentage of
royalties to which each was entitled by virtue of the respondents' extraction of oil and gas both in the past and in the future.
As noted supra, the quiet title action was protracted. Ultimately, however, the petitioners were successful in establishing their ownership of the oil and gas rights in the Andrews Tract and thus their right to past, present, and future royalties based on their respective ownership percentages. In addition to negotiating a settlement for his clients, Counsel also negotiated a separate settlement for the Unknown Heirs: having established their individual percentage ownership interests in the oil and gas rights in the Andrews Tract, which altogether totaled 13.7777%, Counsel negotiated a settlement for them in the amount of $2,229,526.72 for unpaid royalties, with future royalties to be regularly paid into the settlement fund.
Because he had settled the case not only for his clients but also for the Unknown Heirs, Counsel filed a motion to hold the Unknown Heirs' settlement fund in the firm's IOLTA[3] account pending further efforts to contact these individuals and distribute the funds. The circuit court denied the motion on the ground that Counsel
has not demonstrated any legal standing upon which he should be allowed to represent or otherwise elicit further Court proceedings, as a fiduciary, on behalf of any Unknown Heirs' interests as such parties are named [d]efendants herein. There has been no showing of any attorney-client or fiduciary relationship between [petitioners'] legal counsel and the Unknown Heirs herein.
Accordingly, the settlement fund was paid into the Court Registry, and Counsel has not appealed from this decision.
Counsel also filed a motion to require the payment of prejudgment interest to the Unknown Heirs. The circuit court denied this motion as well, finding that Counsel "does not represent the Unknown Heirs as an attorney or fiduciary," and therefore "lacks the authority to file a motion on behalf of the Unknown Heirs in this Case." The court then sua sponte appointed a guardian ad litem ("the GAL") to represent the interests of the Unknown Heirs. The GAL's subsequent attempt to recover prejudgment interest for them was unsuccessful...
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