Last Chance Minerals, Inc. v. BP Am. Prod. Co.
| Docket Number | Case No. 119,379 |
| Decision Date | 25 August 2023 |
| Citation | 539 P.3d 712 |
| Parties | LAST CHANCE MINERALS, INC., Intervening Plaintiff/Appellant, v. BP AMERICA PRODUCTION COMPANY f/k/a Amoco Production Company, Defendant/Appellee. |
| Court | United States State Court of Criminal Appeals of Oklahoma. Court of Civil Appeals of Oklahoma |
T. Matthew Smith, Taylor A. Moult, SMITH & KLUBECK, PLLC, Oklahoma City, Oklahoma, for Intervening Plaintiff/Appellant
Harvey D. Ellis, CROWE & DUNLEVY, Oklahoma City, Oklahoma, Charles D. Neal, Jr., STEIDLEY & NEAL, P.L.L.C., Tulsa, Oklahoma and David Patrick Long, SQUIRE PATTON BOGGS, (US) LLP, Dallas, Texas, for Defendant/Appellee
OPINION BY JAMES R. HUBER, JUDGE:
¶1 Intervening plaintiff, Last Chance Minerals, Inc., (LCM) appeals a district court order finding the undisputed evidence showed LCM's claims were not tolled and were barred by the applicable statute of limitations and, therefore, granting summary judgment in favor of defendant, BP America Production Company f/k/a/ Amoco Production Company (Amoco) and against LCM.1 The appeal has been assigned to the accelerated docket pursuant to Oklahoma Supreme Court Rule 1.36, 12 O.S.2021, ch. 15, app. 1.
BACKGROUND
¶2 This action was originally filed in Pittsburg County (C-2001-73) on January 16, 2001, by a group of royalty owners (Plaintiffs) against Amoco and Gothic Production Corporation. LCM was not one of the plaintiffs. Plaintiffs amended their Petition on June 24, 2002, asserting a putative class action on behalf of mineral/royalty owners in Amoco's wells in seven Oklahoma counties. Plaintiffs alleged that Amoco was the operator of drilling and spacing units for these mineral/royalty interests. Plaintiffs claimed that Amoco underpaid royalties on gas production by improperly deducting certain post-production costs from royalty payments to putative class members who had interest in these wells. Amoco sold the wells and the Choctaw Thrust Gathering System to Gothic in 1997.
¶3 Amoco opposed the certification of the class basically contending that none of the claims asserted by the royalty owners could be appropriately determined on a class basis.
¶4 After briefing and a hearing on Plaintiffs' motion to certify the class, the district court denied Plaintiffs' request to certify the class on December 26, 2002. The district court adopted the findings of fact and conclusions of law presented by Amoco. The district court found that Plaintiffs alleged Amoco improperly deducted gathering, compression, and dehydration costs incurred between the wellhead and the main transmission line, which are considered post-production costs. Relying on Mittelstaedt v. Santa Fe Minerals, Inc. , 1998 OK 7, 954 P.2d 1203, and Gillespie v. Amoco Prod. Co. , No. CIV-96-063-M (E.D. Okla. Jan. 11, 1999), the district court held post-production costs must be individually examined to determine if these costs can be properly deducted. This individualized inquiry required denial of class certification.
¶5 The district court listed several other reasons for denying class certification:
[T]he various royalty provisions included in the proposed class are materially different, and because Amoco did not treat all royalty owners in a like fashion, demonstrating that the predominance and superiority requirements have not been met.
¶6 The Oklahoma Court of Civil Appeals affirmed the district court's denial of class certification on September 14, 2004. The Court of Civil Appeals found Amoco's findings of fact and conclusions of law properly disposed of the class certification question. The Court elaborated on its ruling:
As a consequence, we find it unnecessary to discuss the controversy in detail. We think it sufficient to note that (1) gas produced by the wells in question was marketable at the wellhead, (2) the costs incurred between the wellhead and the pipeline tailgate to prepare the gas for introduction into the pipeline are post-production costs, and (3) the propriety of deducting those costs involves an individualized inquiry of the factors discussed in Mittelstaedt v. Santa Fe Minerals, Inc ., 1998 OK 7, 954 P.2d 1203, making this issue unsuitable for class action disposition. The need for individualized inquiry is further evident by the need to examine each of thousands of sales in deciding whether Amoco received the best market price for the gas vis-a-vis the costs incurred to prepare the gas for introduction into the pipeline. Like the trial court, we do not decide whether the deductions were proper, or whether the best price was obtained, leaving the parties to litigate the merits of these issues.
Watts v. Amoco Prod. Co. , Case No. 98,782 (Okla. Civ. App. Sept. 14, 2004).
¶7 The Oklahoma Supreme Court denied certiorari on January 24, 2005, and issued mandate on February 10, 2005.
¶8 On October 4, 2004, while the appeal of the district court's denial of class certification was pending, a similar proposed class action, Chockley v. BP America Production Co. , CJ-2002-84, was filed in Beaver County, Oklahoma. LCM was allegedly also a putative class member of the Chockley class. Chockley was dismissed with prejudice on December 26, 2018, prior to a determination of class certification.
¶9 LCM and others filed Intervenors' Petition on March 15, 2006, and on the next day filed an Application to Intervene. The Intervenors' Petition was essentially identical to the Petition originally filed by Plaintiffs.2 In the Application to Intervene, LCM and the other applicants alleged they were members of the putative class proposed by Plaintiffs. They asserted the "Plaintiffs and the Applicants object to the exact same improper deductions taken by the defendant." LCM and the other applicants argued that they had elected to intervene in the existing suit rather than filing a separate lawsuit alleging the same claims.
¶10 Amoco objected to LCM's application to intervene.
¶11 The district court granted leave to intervene to those proposed intervenors "who have royalty interests in units in the Choctaw Thrust Gas Gathering System" on June 1, 2006, but only as to their royalty interests in units in Choctaw Thrust.
¶12 On May 16, 2017, on Amoco's motion, the district court dismissed LCM's claims for breach of duty of good faith and fair dealing, breach of fiduciary duty, breach of implied duty to market, and unjust enrichment against Amoco, leaving intact LCM's claims for breach of contract, fraud, and constructive fraud.
¶13 On November 6, 2017, Amoco moved for summary judgment against the Plaintiffs and the Intervening Plaintiffs, including LCM, on several grounds, including the statutes of limitations.3 Amoco argued LCM's breach of contract and fraud-based claims were barred by the applicable statute of limitations. As to LCM's breach of contract claim, Amoco asserted the claim was governed by the five-year statute of limitations provided for in 12 O.S.2021 § 95(A)(1).4 Amoco alleged LCM claimed Amoco deducted post-production costs from their royalties, which were not permitted under their leases. Amoco asserted the alleged monthly underpayment of royalty payments started the running of the statute of limitations. According to Amoco, since LCM claimed this conduct began in 1989, and no later than May 1998 (the last month LCM admittedly received a check stub from Amoco), LCM's breach of contract claims expired years before LCM filed its Intervenors' Petition on March 15, 2006.
¶14 In addition, Amoco argued it was entitled to summary judgment on the fraud and constructive fraud claims because these claims were barred by the two-year statute of limitations set forth in 12 O.S.2021 § 95(A)(3).5 Amoco alleged that a fraud-based action accrues upon the discovery of the fraud. Amoco claimed LCM knew or should have discovered the facts underlying their fraud-based claims that Amoco deducted post-production costs from their royalties well before March 15, 2004, two years prior to LCM filing its Intervenors' Petition on March 15, 2006. Amoco alleged LCM "reviewed and signed a transfer order explaining that the very post-production costs Intervenors allege were fraudulently hidden here would be deducted from its royalty payments."
¶15 Amoco also maintained that LCM's claims were not saved by the tolling doctrine.
¶16 In response, LCM argued its claims were saved by the tolling doctrine of American Pipe & Constr. Co. v. Utah , 414 U.S. 538, 94 S.Ct. 756, 38 L.Ed.2d 713 (1974). LCM alleged the filing of a class action tolls the statute of limitations and that tolling continues until the Oklahoma Supreme Court issues mandate on a district court's denial of class certification. LCM also claimed that it could rely on a separate later-filed class action in which LCM was allegedly a member of the putative class, such as the Chockley class action, to toll the statute of limitations. LCM claimed there was a pending proposed class certification dealing with LCM's claims from the time Plaintiffs filed their Petition until the Intervening Plaintiffs, including LCM, filed Intervenors' Petition.
¶17 On March 6, 2018, the district court entered an order denying Amoco's summary judgment motion as to Plaintiffs and granting the motion as to the two Intervening Plaintiffs, including LCM.6 The district court held "there is no evidence in the record when viewed in the light most favorable to Intervenor Plaintiffs, from which a reasonable jury could find that any applicable statute of limitations was tolled."
¶18 LCM appeals the district court's grant of summary judgment in favor of Amoco and against LCM.
STANDARD OF REVIEW
¶19 "Although a trial court in making a decision on whether summary judgment is appropriate considers factual matters, the ultimate decision turns on purely legal determinations, i.e. whether one party is entitled to judgment as a matter of law because there are no material disputed factual questions." Carmichael v. Beller , 1996 OK 48, ¶ 2, 914 P.2d 1051, 1053. "Therefore, as the decision involves purely legal...
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