Okla. Land Holdings v. BMR II, LLC, Case No. CIV-17-1036-D
| Decision Date | 27 July 2020 |
| Docket Number | Case No. CIV-17-1036-D |
| Parties | OKLAHOMA LAND HOLDINGS, LLC, Plaintiff, v. BMR II, LLC and ANDREW M. ASHBY, Defendants. |
| Court | U.S. District Court — Western District of Oklahoma |
Defendants1 BMR II, LLC, and Andrew M. Ashby (collectively "Defendants") have filed a Motion for Summary Judgment [Doc. No. 76]. Plaintiff Oklahoma Land Holdings, LLC ("OLH" or "Plaintiff"), has filed a Response [Doc. Nos. 89, 104] in opposition, to which Defendants have replied [Doc. No. 111]. Plaintiff subsequently filed a sur-reply with leave of Court [Doc. No. 116].
Defendants filed a Motion to Strike [Doc. No. 108], asking the Court to strike certain exhibits attached to Plaintiff's Response. Plaintiff responded in opposition to the Motion to Strike [Doc. No. 120], and Defendants replied [Doc. No. 123]. The Motion to Strike and all related filings will be considered as objections herein. All matters are fully briefed and at issue.
Summary judgment is proper "if the movant shows that 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); Universal Underwriters Ins. Co. v. Winton, 818 F.3d 1103, 1105 (10th Cir. 2016). "An issue is 'genuine' if there is sufficient evidence on each side so that a rational trier of fact could resolve the issue either way," and "[a]n issue 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) (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986)).
The Court's inquiry must be whether the evidence, when viewed "through the prism of the substantive evidentiary burden," Anderson, 477 U.S. at 254, "presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law." Id. at 251-52. Although the Court views all facts in the light most favorable to the nonmoving party at the summary judgment stage, "there is no issue for trial unless there is sufficient evidence favoring the nonmoving party for a jury to return a verdict for that party." Id. at 249.
The following is meant only as an overview of the case's factual background. Facts demarcated as disputed or undisputed will be set forth in the relevant subsections of this Order, as they pertain to each claim. The dispute at hand concerns oil and gas ventures in Oklahoma—more precisely, in a region known as the STACK or NW STACKencompassed by Woodward, Dewey, and Ellis counties. Defendant Andrew Ashby is an experienced engineer and president of BMR II.
There is now some dispute about whether Defendants were considering exploratory drilling projects in the STACK area before May 18, 2017. This is relevant because sometime in April 2017, Bill Thomas spoke with Danny Schlachter2 and discussed oil and gas deals. During these discussion, Mr. Schlachter offered to show Mr. Thomas a presentation Plaintiff OLH had developed with information on a play involving the NW STACK (the "OLH Presentation").
On May 2, 2017, the President of OLH, Rodney Moore, sent a Confidentiality Agreement [Doc. No. 76, Ex. 24] ("Confidentiality Agreement")3 to Mr. Thomas by email, and Mr. Thomas signed and returned it that same day. The parties dispute whether and how the OLH Presentation reached Defendants. By early May 2017, however, there were meetings involving both Bill Thomas and Defendant Ashby, and Defendant Ashby decided to start leasing acreage for the NW STACK project, initially using his own money. BMRII, at that time, was not yet formed and there is some dispute as to whether Bill Thomas was to be a part of the entity.
BMR II was eventually formed as a Colorado entity on July 16, 2017, received funding from investors in September 2017, and was registered to do business in the State of Oklahoma on March 14, 2018. By April 2018, approximately 68,000 acres in the relevant area were acquired on BMR II's behalf, and all such acreage was transferred to BMR II by assignment that month. BMR II began drilling its first well in June 2018 and its "proof of concept" drilling program is ongoing.
The Court's jurisdiction is predicated upon the complete diversity of the parties, pursuant to 18 U.S.C. § 1332. The amount in controversy exceeds $75,000.00. "A federal court sitting in diversity . . . must apply the substantive law of the forum state, including its choice of law rules." Otis Elevator Co. v. Midland Red Oak Realty Inc., 483 F.3d 1095, 1101 (10th Cir. 2007). Under Oklahoma law, different choice-of-law rules apply to actions that sound in tort and those that sound in contract. Bernal v. Charter Cty. Mut. Ins. Co., 209 P.3d 309, 315 (Okla. 2009).
Oklahoma's choice-of-law rule for contract actions is bottomed on the terms of OKLA. STAT. tit. 15 § 162 (2009). Generally, "[t]he law of the state chosen by the partiesto govern their contractual rights and duties will be applied." Telex Corp. v. Hamilton, 576 P.2d 767, 768 (Okla. 1978).
Here, the contract at issue provides that the agreement is "governed by the laws of the State of Texas without regard to conflict of laws principles." Confidentiality Agreement [Doc. No. 76], Ex. 24 at 3; see also Motion at 19 n.14. The Court finds no reason to disregard this provision, and therefore, Texas law governs the resolution of the breach of contract claim.
In a tort action, Oklahoma follows the most-significant-relationship approach to conflict-of-laws issues. Hawk Enter., Inc. v. Cash Am. Int'l, Inc., 282 P.3d 786, 790 (Okla. Civ. App. 2012) (). "Oklahoma choice of law rules require the court to apply the tort law of the state with the most significant relationship to the occurrence and to the parties." Childs v. Okla. ex rel. Okla. State Univ., 848 P.2d 571, 578 n.41 (Okla. 1993).
To decide which state's law to apply, the Court considers the following factors: "(1) the place where the injury occurred, (2) the place where the conduct causing the injury occurred, (3) the domicile, residence, nationality, place of incorporation and place of business of the parties, and (4) the place where the relationship, if any, between the parties occurred." Brickner v. Gooden, 525 P.2d 632, 637 (Okla. 1974).
Where the opposing parties are from different states, as they are here, the third factor favors neither party. See Hawk, 282 P.3d at 791. The business dealings of the parties, however, are centered around Oklahoma, and the agreement at issue contemplated that the obligations under the contract would be performed in Oklahoma. See Confidentiality Agreement, [Doc. No. 89], Ex.4. Further, the case "involves . . . oil and gas business ventures in the Anadarko Basin in northwest Oklahoma." Motion at 11; see also Confidentiality Agreement ("Receiving Party is interested in a possible transaction...within the area of [certain counties] in Oklahoma.").
Some of the conduct causing the alleged injury occurred out of state. But the allegedly protected information, the consequences of the alleged misappropriation, the land involved in the dispute, and the projects at issue all involve Oklahoma. See Hawk, 282 P.3d at 791 (). For these reasons, the Court finds that Oklahoma "has the most significant relationship to the occurrence and the parties" in this case. Brickner, 525 P.2d at 637. The Court therefore will apply Oklahoma law to the resolution of disputes sounding in tort, to the extent state law has not been displaced by applicable federal laws.
Defendants contend that Plaintiff has attached certain evidence to its Response that "was never produced in discovery—even though it was repeatedly requested—aswell as certain documents that clearly pertain to inadmissible settlement discussions." Motion to Strike at 1. Further, they contend Plaintiff presents a "self-serving sham affidavit . . . that contradicts their own deposition testimony." Id.
a) The objections as to paragraphs 2,3,14 and Exhibit A of Rodney Moore's affidavit, paragraphs 3-5 of Exhibit 1, and paragraphs 9-10 of Exhibit 3 are sustained in part and overruled in part.
First, Defendants argue that the Court should disregard certain portions of Rodney Moore's Affidavit, submitted by Plaintiff as Exhibit 4 to its Response. Id. at 2. They argue the content of the affidavit directly contradicts Moore's deposition testimony. Id.
In considering a motion for summary judgment, the district court may disregard an affidavit that conflicts with the affiant's prior deposition testimony if the conflicting affidavit represents "an attempt to create a sham fact issue." Barber v. Hallmark Cards, Inc., 74 F.3d 1248 (10th Cir. 1996). The Tenth Circuit has described cases in which an affidavit raises a sham issue as "unusual." Law Co. v. Mohawk Const. & Supply Co., 577 F.3d 1164, 1169 (10th Cir. 2009). In determining if an affidavit creates a sham fact issue, courts consider whether: "(1) the affiant was cross-examined during his earlier testimony; (2) the affiant had access to the pertinent evidence at the time of his earlier testimony or whether the affidavit was based on newly discovered evidence; and (3) the earlier testimony reflects...
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