Eqt Prod. Co. v. Crowder

• Decision Date: 05 June 2019
• Docket Number: No. 17-0968,17-0968
• Citation: 242 W.Va. 1,828 S.E.2d 800
• Parties: EQT PRODUCTION COMPANY, Petitioner, Defendant Below v. Margot Beth CROWDER and David Wentz, Respondents, Plaintiffs Below
• Court: West Virginia Supreme Court

242 W.Va. 1

828 S.E.2d 800

EQT PRODUCTION COMPANY, Petitioner, Defendant Below

v.Margot Beth CROWDER and David Wentz, Respondents, Plaintiffs Below

No. 17-0968

Supreme Court of Appeals of West Virginia.

Submitted: March 12, 2019

Filed: June 5, 2019

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

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 horizontally thousands of feet beyond the Carr Tract and through mineral estates under neighboring properties.⁷

In mid-2012, the plaintiffs learned of EQT’s plans to use their surface lands to extract gas from beneath neighboring properties. On June 18, 2012, a lawyer for the plaintiffs mailed a letter to EQT stating that EQT had rights to use the plaintiffs’ surface lands only "as are reasonably necessary to extract the severed minerals from beneath the Carr tract." The plaintiffs’ lawyer further advised EQT that it did "not have the right to burden, damage and otherwise occupy the Crowder/Wentz property for the purpose of extracting minerals from other mineral tracts." Finally, the plaintiffs’ lawyer told EQT that it did not have lease rights or the plaintiffs’ permission to enter their surface lands, and warned EQT: "Do not enter the Crowder/Wentz property for oil and gas operations." EQT ignored this letter.

In February 2013, EQT entered onto the plaintiffs’ surface parcels (and adjacent parcels in the Carr Tract), built various two-lane roads, and cleared about forty-two acres. EQT also constructed a 19.7-acre well pad. After sixteen months of work, by June 2014, EQT had drilled nine new wells on the plaintiffs’ land, and had drilled some 9.7 miles (51,470 feet) of horizontal bores under neighboring properties. EQT claims that 37.5% of the horizontal bores were in the minerals beneath the Carr Tract, and the remaining 62.5% extended into minerals beneath neighboring tracts.⁸

The plaintiffs filed this lawsuit against EQT on November 26, 2014, and alleged that EQT had trespassed on their surface lands. The plaintiffs acknowledged that EQT had the right to enter and reasonably use their land under the 1901 lease, but only to extract gas from the mineral estate beneath their surface lands.⁹ Specifically, the plaintiffs contended that, "EQT did not have the right to enter on, burden, damage, or otherwise occupy Plaintiffs’ surface lands at all for the purpose of extracting minerals from other, neighboring mineral tracts."¹⁰

Following discovery, the plaintiffs made a motion for partial summary judgment. The plaintiffs asserted that there was no genuine issue of material fact that EQT had trespassed on their surface lands to not only drill into the mineral strata underlying their lands, "but to drill into, frac, produce and transport gas from neighboring mineral tracts."

Defendant EQT responded with its own motion for summary judgment. EQT argued that because (1) about 37.5% of the horizontal wellbore was through gas-bearing shale beneath the Carr Tract, and (2) the 1901 Carr oil and gas lease was unitized in 2011 with oil and gas leases on neighboring lands, then EQT’s actions were proper. EQT further asserted that horizontal drilling is reasonable and necessary to the production of natural gas in the shale formations under the Carr Tract; accordingly, it was reasonable and necessary to extend that drilling under neighboring properties to produce natural gas from beneath those properties.

In an order dated February 19, 2016, the circuit court found as a matter of law that EQT had trespassed on the plaintiffs’ surface lands, and so granted the plaintiffs’ motion and denied EQT’s motion. The circuit court found that EQT had the implied right to use the plaintiffs’ surface lands "for well pads, roads, and pipelines to drill into, and produce gas from, but only from, the mineral tract" underlying the plaintiffs’ lands. However, the circuit court found EQT had no express or implied right to enter or use the plaintiffs’ surface lands to drill into and produce gas from neighboring mineral tracts. Hence, the circuit court ruled that EQT was liable to the plaintiffs for trespass.¹¹

The parties proceeded to a jury trial on September 5, 2017,...