Anderson Living Trust v. WPX Energy Prod., LLC, CIV 12-0040 JB/WPL
| Decision Date | 26 May 2015 |
| Docket Number | No. CIV 12-0039 JB/SCY,No. CIV 12-0040 JB/WPL,CIV 12-0040 JB/WPL,CIV 12-0039 JB/SCY |
| Court | U.S. District Court — District of New Mexico |
| Parties | THE ANDERSON LIVING TRUST, f/k/a THE JAMES H. ANDERSON LIVING TRUST; THE PRITCHETT LIVING TRUST; CYNTHIA W. SADLER; ROBERT WESTFALL; LEE WILEY MONCRIEF 1988 TRUST; KELLY COX TESTAMENTARY TRUST 7/1238401; MINNIE PATTON SCHOLARSHIP FOUNDATION TRUST; and SWMF PROPERTIES, INC., Plaintiffs, v. WPX ENERGY PRODUCTION, LLC f/k/a WPX ENERGY SAN JUAN, LLC; WILLIAMS PRODUCTION COMPANY, LLC; and WPX ENERGY ROCKY MOUNTAIN, LLC, f/k/a WILLIAMS PRODUCTION RMT, COMPANY, LLC, Defendants, and THE ANDERSON LIVING TRUST, f/k/a THE JAMES H. ANDERSON LIVING TRUST; THE PRITCHETT LIVING TRUST; CYNTHIA W. SADLER; SHIRLEY L. SCANLON LIVING TRUST; ROBERT WESTFALL; LEE WILEY MONCRIEF 1988 TRUST; and NEELY-ROBERTSON REVOCABLE FAMILY TRUST, Plaintiffs, v. CONOCOPHILLIPS COMPANY, LLC, Defendant. |
THIS MATTER comes before the Court on: (i) the Motion for Reconsideration of Order Denying Defendants' Motion to Dismiss Based on Statute of Limitations, filed July 17, 2014 in Anderson Living Trust v. WPX Prod., LLC, No. CIV 12-0040 JB/WPL (Doc. 261)("Motion to Reconsider"); and (ii) the Defendant's Motion to Dismiss Claims in Plaintiffs' Second Amended Complaint, filed October 18, 2013 in Anderson Living Trust v. ConocoPhillips Co., LLC, No. CIV 12-0039 JB/KBM (Doc. 97)("MTD"). The Court held a hearing on September 2, 2014. The primary issues are: (i) whether the Court should reconsider its earlier Memorandum Opinion and Order, filed May 16, 2014 in Anderson Living Trust v. WPX Prod., LLC, No. CIV 12-0040 JB/KBM (Doc. 246)("MOO"), in which the Court declined to "dismiss[ the Plaintiffs' case] in part," i.e., to cut off damages sustained before October 20, 2007, on statute-of-limitations grounds; and (ii) whether the Court should cut off damages in Anderson Living Trust v. ConocoPhillips Co., LLC, No. CIV 12-0039 JB/KBM ("ConocoPhillips"), where this question is substantially the same one that the Court answered in the negative in its MOO in Anderson Living Trust v. WPX Prod., LLC, No. CIV 12-0040 JB/WPL ("WPX"). The Court answers no to both questions. The Court stands behind its earlier analysis in WPX; it was right to refuse to cut off damages, and it will thus deny the Motion to Reconsider. The Court will also extend the MOO's reasoning to ConocoPhillips, and, for the same reasons that the Court declines to cut off damages in WPX, it will refuse to cut them off in ConocoPhillips. The Court will, however, dismiss the same claims in ConocoPhillips that it dismissed in WPX, thus granting the MTD in part and denying it in part.
The Court has summarized these cases' facts in numerous other opinions, see, e.g., MOO at 2-6; Memorandum Opinion at 5-9, filed June 28, 2013 in ConocoPhillips (Doc. 76), and has even made detailed findings of fact in WPX while ruling on a class-certification motion, see Memorandum Opinion and Order at 3-75, filed March 19, 2015 in WPX (Doc. 278)("Class Certification MOO"). The Court will not rehash the facts here, but, rather, will outline only those facts that are relevant to the disposition of the motions before it. On October 20, 2011, two nearly identical groups of Plaintiffs,2 represented by the same group of attorneys, filed two lawsuits in state court. Compare Anderson Living Trust v. Williams Prod. Co., D-117-CV-2011-00511 (1st Jud. Dist. Ct., Cnty. of Rio Arriba, State of N.M.)(Raphaelson, J.), with Anderson Living Trust v. ConocoPhillips Co., LLC, D-117-CV-2011-00510 (1st Jud. Dist. Ct., Cnty. of Rio Arriba, State of N.M.)(Raphaelson, J.). The two suits are similar in every way except that one of them, WPX, is against Defendants WPX Energy Production, LLC, Williams Production Company, LLC, and WPX Energy Rocky Mountain, LLC (collectively, "the WPX Defendants"), while the other, ConocoPhillips, is against Defendant ConocoPhillips Co., LLC. Compare Fourth Amended Complaint for Underpayment of Oil and Gas Royalties, filed September 27, 2013 in WPX (Doc. 129)("WPX Complaint"), with Second Amended Complaint for Underpayment of Oil and Gas Royalties, filed September 27, 2013 in ConocoPhillips (Doc. 91)("ConocoPhillips Complaint").
Both suits are proposed class actions on behalf of landowners who executed long-term leases with the Defendants. See WPX Complaint ¶ 26, at 10-12; ConocoPhillips Complaint ¶ 24, at 9-11. The leases, which were executed, for the most part, in the 1940s, allow the Defendants to drill for natural gas on the Plaintiffs' land in exchange for a royalty payment -- usually one-eighth of the proceeds from sale. See WPX Complaint ¶ 26, at 10-12; ConocoPhillips Complaint ¶ 24, at 9-11. The Plaintiffs contend that the Defendants have been underpaying the royalties in a number of ways3 -- most notably by paying royalty on natural-gas liquids at the same price per MMBtu4 that they pay for natural gas, which is a cheaper product -- since time immemorial, and they are seeking damages for this underpayment going back to 1985. See WPX Complaint ¶ 33, at 14; ConocoPhillips Complaint ¶ 19, at 7-8; id. ¶¶ 31-32, at 12-13.
The named Plaintiffs are individuals and trusts owned by individuals with no in-depth knowledge of the oil-and-gas industry, although their levels of oil-and-gas sophistication, of course, vary from Plaintiff to Plaintiff. Owing to the age of the leases, no Plaintiff personally executed the lease that now pays his or its royalty; rather, all of the named Plaintiffs inherited their royalty interests. See WPX Complaint ¶ 26, at 10-12; ConocoPhillips Complaint ¶ 24, at 9-11. The only consistent information5 the Plaintiffs receive regarding their royalties are their monthly check stubs, which contain figures -- broken down by well, for those Plaintiffs who own royalty interests in more than one well -- for the total "price," "quantity," "value," "deductions," and "net [proceeds]" of all gas recovered from the Plaintiff's well over that payment period, and the "interest," "paid int[erest]," "value," "deductions," and "net share" of the Plaintiff's royalty. E.g., Check Stubs of James H. Anderson Living Trust (dated over numerous years), filed with the Court during the class-certification proceedings as Plaintiffs' Ex. 1. See WPX Complaint ¶¶ 86-87, at 26-27; id. ¶ 95, at 28-29; ConocoPhillips Complaint ¶¶ 81-82, at 24-25; id. ¶ 90, at 27. The Plaintiffs also receive the actual checks, which contain only the final dollar figure of the royalty payout for that payment period. See, e.g., Check Stubs of James H. Anderson Living Trust at 1-2.
The Defendants in both cases -- who also share overlapping counsel, but not completely identical counsel, like the Plaintiffs in the two cases -- removed their cases to federal court on January 12, 2012, asserting federal jurisdiction under the Class Action Fairness Act, 28 U.S.C. § 1332(d) ("CAFA"). See Notice of Removal, filed January 12, 2012 in WPX (Doc. 1); Notice of Removal, filed January 12, 2012 in ConocoPhillips (Doc. 1). On October 18, 2013, the Defendants in each case -- within an hour and ten minutes of one another -- filed twin motions to dismiss. See MTD; Defendants' Motion to Dismiss Claims in Plaintiffs' Fourth Amended Complaint, filed October 18, 2013 (Doc. 145)("WPX MTD"). The WPX MTD and the MTD now before the Court in ConocoPhillips are nearly identical; the variations appear to be entirely substitutions in the parties' names. Compare MTD, with WPX MTD. After briefing and a hearing on the WPX MTD, the Court issued its MOO denying the motion. The Court will now summarize: (i) the briefing and hearing on the WPX MTD; (ii) the briefing on ConocoPhillips' MTD; (iii) the Court's MOO denying the WPX MTD; and the WPX Defendants' attempt to overturn the MOO in (iv) the briefing on the Motion to Reconsider; and (v) the hearing on ConocoPhillips' MTD.
The Court will first outline the arguments that the parties made when fighting the WPX MTD, as the Motion to Reconsider is not supposed to advance facts or legal grounds that the WPX Motion did not raise. The Court will review the parties' briefs in the order in which the parties submitted them and then summarize the hearing.
Before the WPX Defendants filed the WPX MTD, the Court had dismissed several of the Plaintiffs' claims in a Memorandum Opinion, filed June 28, 2013 in both WPX and ConocoPhillips (Doc. 108)( ). The Memo. Opinion was, like this Memorandum Opinion, double captioned, and it dismissed several corresponding claims in both cases. See Memo. Opinion at 1. The Memo. Opinion's only significance to the motions now before the Court is that it dismissed a claim for breach of the marketable-condition rule, concluding that New Mexico does not recognize the marketable-condition rule.6 See Memo. Opinion at 88 n.7. When the Plaintiffs filed their WPX Complaint -- i.e., when they amended their pre-Memo. Opinion complaint to reflect the impact of the Courts' decisions -- they reasserted a claim, titled "Implied Covenant to Market -- Unreasonable Expenses (New)," which the WPX Defendants argued was just a restyling of the marketable-condition claim. WPX Complaint ¶¶ 102-105, at 32-33. The Court ultimately agreed with the WPX Defendants and dismissed the implied-covenant-to-market claim in its MOO. See MOO at 84-95.
The WPX Defendants filed the WPX MTD pursuant to rule 12(b)(6) of the Federal Rules of Civil Procedure to dismiss, in part, the "Plaintiffs' first, second, fourth, fifth, eleventh, and twelfth causes of action" based upon the applicable statutes of limitations. WPX MTD at 1. The WPX MTD also sought the dismissal of the Plaintiffs' twelfth cause of action in its entirety for failure to state any claim upon which relief can be granted, contending that, under the United States Court of Appeals for the Tenth Circuit's interpretation of New...
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