Nucor, Inc. v. Petrohawk Energy Corp.
| Decision Date | 12 November 2015 |
| Docket Number | Case No. 14-CV-132-ABJ |
| Parties | NUCOR, INC., a Wyoming Corporation, and BILL FARLEIGH, d/b/a FARLEIGH OIL PROPERTIES, Plaintiffs, v. PETROHAWK ENERGY CORPORATION, a foreign corporation, Defendant. |
| Court | U.S. District Court — District of Wyoming |
The plaintiffs' Motion for Partial Summary Judgment (Doc. No. 36), the plaintiffs' memorandum in support (Doc. No. 37), the defendant's opposition (Doc. No. 43), the defendant's Motion for Summary Judgment (Doc. No. 38), the defendant's memorandum in support (Doc. No. 39), the plaintiffs' opposition (Doc. No. 40), the affidavit of Tom E. Swanson (Doc. No. 40-1), and the defendant's reply (Doc. No. 44) are before the Court. After reviewing the parties' submissions, the applicable law, and being fully advised, the Court finds that the defendant's Motion for Summary Judgment (Doc. No. 38) should be GRANTED IN PART, DENIED IN PART, and the plaintiffs' Motion for Partial Summary Judgment (Doc. No. 36) should be DENIED for the reasons stated below.
The plaintiffs are two twenty-five percent (25%) working interest owners of a single natural gas well in Big Horn County, Wyoming, who claim that the defendant operator did not pay any royalties from 1992 until 2006. The two owners, Nucor Oil and Gas, Inc. ("Nucor") and Bill Farleigh ("Farleigh"), are suing Petrohawk Energy Corporation ("Petrohawk") for the unpaid royalties. Petrohawk merged with KCS Mountain Resources Inc. ("KCS"), the company that allegedly owed the plaintiffs royalties during that period of time. First, the Court will give a brief factual background. Next, Court will present the standard of review, followed by an analysis of the law and facts as to both motions. Finally, the Court will conclude by listing what issues remain for trial.
The Lamb Bishop 1A Well ("the Well") is located in Section 12, Township 51 North, Range 93 West, Big Horn County, Wyoming. The parties agree, relying on a title opinion (Doc. No. 39-1), that the plaintiffs, Nucor and Farleigh, each owned a twenty-five percent (25%) working interest in the Well from 1992 until 2006.
From the beginning of plaintiffs' ownership in 1983 until November of 1991, they received mineral royalties. That month, the Natural Gas Processing Company wrote the plaintiffs a letter explaining it would not be purchasing gas from the Well for economic reasons. The plaintiffs believed that the Well was taken out of production, thus ending their mineral royalty payments.
In 1992, KCS acquired the other fifty percent (50%) working interest in the Well. KCS also became the operator the Well. KCS operated the well from 1992 until 2006.1 On July 12, 2006, shareholders of KCS approved the company's merger with Petrohawk, the defendant, effective April 20, 2006. Doc. No. 37-1, pp. 57-66. Petrohawk was the surviving entity. OnOctober 1, 2006, Petrohawk sold its right and duty to operate and fifty percent (50%) working interest in the Well to Saga Petroleum, LLC ("Saga"). Doc. No. 37-1, pp. 67-69. On February 17, 2011, Saga mailed a letter to Farleigh requesting documentation of his interest in the Well, stating that, Doc. No. 37-1, p. 70. Farleigh replied on February 22, 2011, attaching documents verifying ownership. Doc. No. 39-5, p. 2. Tom Swanson, Exploration Manager for Farleigh, stated that the February 17, 2011, letter, "caused Plaintiffs to investigate whether the well was, in fact shut in as they had previously believed." Doc No. 37-2, pp. 2-3.
The plaintiffs investigated the situation, discovering that the Well had produced gas from 1992 to 2006. A summary of the Well's production during that period of time indicated that 89,165 MCF had been produced.2 Doc. No. 37-1, p. 45. Annual production averaged about 5944 MCF during the fifteen year period. The Well averaged annual production of 32,022 MCF from 1983 to 1991. Doc. No. 37-1, pp. 46-49.
On May 14, 2014, the plaintiffs filed the Complaint, claiming that they never received accountings nor royalties in violation of the Wyoming Royalties Payment Act ("WRPA")—Wyoming Statute §§ 30-5-301 through 30-5-305.3 Plaintiffs have moved for partial summary judgment, seeking judgment as a matter of law on liability under the WRPA, which would leave damages, interest, and attorneys' fees for trial. Petrohawk has moved for summary judgment, seeking judgment as a matter of law for four reasons: (1) the action is barred by the statute of limitations; (2) the WRPA cannot be used as a private cause of action; (3) plaintiffs have notdemonstrated a dispute of material fact as to damages; and (4) the action is barred by the doctrine of laches.
Summary judgment is appropriate where "there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). A dispute of fact is genuine if a reasonable juror could resolve the disputed fact in favor of either side. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A dispute of fact is material if under the substantive law it is essential to the proper disposition of the claim. Adler v. Wal-Mart Stores, Inc., 144 F.3d 664, 670 (10th Cir. 1998). When the Court considers the evidence presented by the parties, "[t]he evidence of the non-movant is to be believed, and all justifiable inferences are to be drawn" in the non-movant's favor. Anderson, 477 U.S. at 255.
The party moving for summary judgment has the burden of establishing the nonexistence of a genuine dispute of material fact. Lynch v. Barrett, 703 F.3d 1153, 1158 (10th Cir. 2013). The moving party can satisfy this burden by either (1) offering affirmative evidence that negates an essential element of the nonmoving party's claim, or (2) demonstrating that the nonmoving party's evidence is insufficient to establish an essential element of the nonmoving party's claim. See Fed. R. Civ. P. 56(c)(1)(A)-(B).
Once the moving party satisfies this initial burden, the nonmoving party must support its contention that a genuine dispute of material fact exists either by (1) citing to particular materials in the record, or (2) showing that the materials cited by the moving party do not establish the absence of a genuine dispute. See id. The nonmoving party must "do more than simply show that there is some metaphysical doubt as to the material facts." Matsushita Elec. Indus. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986). Rather, to survive a summary judgment motion, thenonmoving party must "make a showing sufficient to establish the existence of [every] element essential to that party's case, and on which that party will bear the burden of proof at trial." Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). Further, when opposing summary judgment, the nonmoving party cannot rest on allegations or denials in the pleadings but must set forth specific facts showing that there is a genuine dispute of material fact for trial. See Travis v. Park City Mun. Corp., 565 F.3d 1252, 1258 (10th Cir. 2009).
When considering a motion for summary judgment, the court's role is not to weigh the evidence and decide the truth of the matter, but rather to determine whether a genuine dispute of material fact exists for trial. Anderson, 477 U.S. at 249. Credibility determinations are the province of the fact-finder, not the court. Id. at 255.
Construing the plaintiffs' Complaint.
Before addressing each side's motion, the Court notes that the two-page Complaint lacks clarity and must be interpreted before further analysis. Paragraphs 5 and 6 explain the two causes of action present in this case.
Doc. No. 2, p.1. The above allegations discuss the statutory violation, which implicitly includes a legal entitlement to royalties. See WYO. STAT. ANN. § 30-5-301 (2015) (). The plaintiffs' potential legal entitlement comes from the JointOperating Agreement. Doc. No. 39-7. The Court is convinced that two causes of action are pled in the Complaint: breach of contract and violation of the WRPA.4
I. Petrohawk is entitled to partial summary judgment on the plaintiffs' claim for relief under Wyoming Statute §§ 30-5-305(b) and 30-5-303(c). Petrohawk is not entitled to summary judgment on the plaintiffs' other causes of action.
In the Complaint, the plaintiffs allege violation of the WRPA, which includes Wyoming Statute §§ 30-5-305(b) and 30-5-303(c). Wyoming Statute § 30-5-305(b) states that "[w]henever payment is made for oil and gas production to an interest owner, all of the following information shall be included and labeled on the check stub or on an attachment to the form of payment . . . ." WYO. STAT. ANN. § 30-5-305(b) (2015) (emphasis added); see also Morris v. CMS Oil and Gas Co., 2010 WY 37, ¶ 32, 227 P.3d 325, 334 (). If Wyoming Statute § 30-5-305(b) is violated, the violator is liable...
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