Flanagan v. Stalnaker
| Decision Date | 01 December 2004 |
| Docket Number | No. 31716.,31716. |
| Citation | 216 W.Va. 436,607 S.E.2d 765 |
| Court | West Virginia Supreme Court |
| Parties | Michael D. FLANAGAN and Julie L. Flanagan, Plaintiffs Below, Appellants, v. Stephen P. STALNAKER, doing business as Greenwood Rig Company, Defendant Below, Appellee. |
Larry L. Skeen, Esq., Skeen and Skeen, Charleston, for Appellants.
Loren B. Howley, Esq., Grantsville, for Appellee.
In this appeal, the appellants, Michael and Julie Flanagan, ask this Court to reverse the August 19, 2003, order of the Circuit Court of Calhoun County which held that the appellants, who reside on a 50 acre tract of land in Sherman District, Calhoun County, are not entitled to free surplus gas from the appellee, Stephan P. Stalnaker, d/b/a Greenwood Rig Company, an oil and gas lessee who currently operates a well on the appellants' property. The appellants contend that they have a right to such gas pursuant to a 1990 lease which states that the lessors may take free surplus gas for use "in one dwelling house on said land." The Circuit Court determined that adjoining the appellant's 50 acre tract is another 50 acre tract, owned by Robert and Annette Sweeney, which has received free surplus gas for its dwelling for many years prior to the appellants' claim. Both tracts were originally part of a 100 acre tract subject to a lease made in 1918 which included a similar free gas provision. In ruling against the appellant Flanagans, the Circuit Court concluded that the 1990 lease was supplemental to the 1918 lease, rather than a separate contract, and that, accordingly, the appellants' claim for free surplus gas is precluded by the free gas hook-up on the Sweeney tract.
This Court has before it the petition for appeal, all matters of record and the memoranda of law of counsel. As discussed below, this Court is of the opinion that the Circuit Court committed error in denying the appellants' claim for free surplus gas. The 1990 lease expressly provided for such gas for one dwelling and contained no language to the effect that the right was supplemental to the 1918 lease. The 1990 lease, although applicable to the original 100 acres, did not recognize that the property was divided many years ago into the two 50 acre tracts. Nevertheless, it permitted the drilling of a specific type of well on the appellants' tract to a depth not authorized under the 1918 lease. Accordingly, this Court holds that the appellants are entitled under the 1990 lease to free surplus gas for one dwelling on their 50 acre tract.
In addition to their claim for free surplus gas, the appellants sought damages for the alleged excessive use of their property by appellee Stalnaker in his oil and gas operations. Stalnaker, on the other hand, sought damages from the appellants for their alleged interference with his right to use the surface as outlined in the leasehold. In the August 19, 2003, order, the Circuit Court denied damages to the appellants, granted nominal damages to Stalnaker in the amount of $1.00 and awarded Stalnaker injunctive relief to prevent further interference by the appellants. As reflected in a subsequent order entered on December 18, 2003, the Circuit Court awarded appellee Stalnaker $812 in attorney fees regarding the degree to which the appellants' interference had been wilful and wanton. For the reasons stated below, this Court affirms those rulings.
Therefore, the August 19, 2003, order of the Circuit Court of Calhoun County is reversed to the extent that it denied the claim of appellants Michael and Julie Flanagan for free surplus gas for one dwelling on their 50 acre tract. That order, and the order of December 18, 2003, are affirmed as to the denial of the appellants' claim for damages, the granting of nominal damages and injunctive relief to appellee Stalnaker and the award to Stalnaker of $812 in attorney fees. Accordingly, this action is remanded to the Circuit Court for further proceedings consistent with this opinion.
In 1918, P.A. Bourn was the owner of a 100 acre tract of land in Sherman District, Calhoun County. In October 1918, he leased the oil and gas interests therein to Hope Natural Gas Company. The lease provided Bourn with free gas from the lessee's operations at the rate of 150,000 cubic feet per year for "one dwelling house on said land." Thereafter, Bourn divided the surface into 50 acre tracts. The surface of the first tract, including a dwelling, was conveyed by Bourn to his daughter and, ultimately, acquired by Robert and Annette Sweeney. The Sweeneys are receiving free gas pursuant to the 1918 lease, and their entitlement thereto is not in dispute.
The surface of the second 50 acre tract was conveyed to a second daughter and, later, to a descendant of Bourn by the name of Harry Lee Vannoy. No dwelling appeared on that tract until 1999. In June 2000, the appellant Flanagans acquired the surface of the tract and, soon after, claimed the right to free surplus gas.
Back in 1990, when the surface of the second tract was owned by Harry Lee Vannoy, the heirs of P.A. Bourn, including Vannoy, who was also a partial mineral owner, and others who owned mineral interests, executed a series of leases, known as the "1990 lease." The 1990 lease, although pertaining to the entire 100 acres, allowed Rogers & Son, the successor lessee to Hope Natural Gas Company, to drill a special deep well on the second tract.1 That well was known as the Bourn # 4 Well and is the well from which the appellants claim the right to free surplus gas. As the 1990 lease stated:
The Lessors may lay a line to any gas well drilled on said land and take gas therefrom free for their own use for heat and light in one dwelling house on said land, out of any surplus gas over and above what Lessee, its successors and assigns, may require to operate the lease [.]
Rogers & Son assigned its interest in the Bourn # 4 Well to the appellee, Stephen P. Stalnaker, in February 2002. In January 2003, Stalnaker notified the appellants, who had been temporarily receiving free surplus gas from the Bourn # 4 Well, that they did not have a right to such gas and that it would be terminated as of May 1, 2003.
In April 2003, the appellants filed a declaratory judgment action in the Circuit Court of Calhoun County seeking confirmation of their right to free surplus gas for their dwelling on the second 50 acre tract. In addition, the appellants sought damages for the alleged excessive use of their property by Stalnaker. Stalnaker, on the other hand, sought damages from the appellants for their alleged interference with his oil and gas operations.
The Circuit Court concluded that the 1990 lease was ambiguous and that extrinsic evidence would, therefore, be allowed to determine whether the 1990 lease provided the appellants with the right to free surplus gas. As the Circuit Court stated: "Because the 1990 agreement does not clearly state whether the free gas provision therein is supplemental to or separate from the free gas provision in the 1918 lease, it is proper to consider extrinsic evidence in order to ascertain the intention of the parties to the 1990 agreement [.]"2
Thereafter, on July 7, 2003, the Circuit Court conducted an evidentiary hearing concerning the appellant Flanagans' claim to free surplus gas. Evidence was also submitted on the parties' respective damage claims. Following the hearing, the Circuit Court entered the order of August 19, 2003, holding that the 1990 lease was supplemental to the original 1918 lease, rather than a separate contract, and that, therefore, the appellants' claim for free surplus gas was precluded by the free gas hook-up being used by the Sweeneys. In so ruling, the Circuit Court noted the testimony of Harry Lee Vannoy, one of the appellants' predecessors in title, who stated that, at the time he executed the 1990 lease as one of the lessors, he did not negotiate for a free gas right concerning the second 50 acre tract. Rather, as one of the mineral owners of the tract, he was more interested in royalties, than in free gas, from the oil and gas operations on the property.
In addition, the Circuit Court denied the appellants' damage claim, finding that the evidence revealed that appellee Stalnaker had used the appellants' tract only to the extent reasonably necessary to carry out his oil and gas operations under the leasehold. On the other hand, the Circuit Court found that the appellants had interfered with appellee Stalnaker's operations but that, inasmuch as the appellants had not caused any significant loss of production, they were only liable to Stalnaker for nominal damages in the amount of $1.00. Nevertheless, the Circuit Court awarded Stalnaker injunctive relief against further interference. Finally, pursuant to the order entered on December 18, 2003, the Circuit Court awarded Stalnaker $812 in attorney fees regarding the degree to which the appellants' interference, although not resulting in significant loss of production, had been wilful and wanton.
As stated above, the appellant Flanagans filed a declaratory judgment action in the Circuit Court seeking confirmation of their right to free surplus gas under the 1990 lease. The Circuit Court determined that the 1990 lease was ambiguous, conducted a hearing to consider extrinsic evidence concerning the intention of the parties to the 1990 lease and held that the appellants were not entitled to the free surplus gas. Generally, this Court employs a de novo standard of review in such circumstances. Syllabus point 3 of Cox v. Amick, 195 W.Va. 608, 466 S.E.2d 459 (1995), holds: "A circuit court's entry of a declaratory judgment is reviewed de novo." Syl. pt. 1, Foundation For Independent Living v. Cabell-Huntington Board of Health, 214 W.Va. 818, 591 S.E.2d 744 (2003); syl. pt. 1, Butler v. Price, 212 W.Va. 450, 574 S.E.2d 782 (2002). More specifically, this Court, in Co...
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