Smith v. Chestnut Ridge Storage, LLC, 022421 WVSC, 19-1076
| Opinion Judge | ARMSTEAD, JUSTICE |
| Party Name | THOMAS W. SMITH, THOMAS W. SMITH, Administrator of the Estate of ELIZABETH ANNE SMITH, RACHEL DICKHUT, NANCY SMITH McGREGOR, MARY SMITH NELSON, and ELIZABETH SMITH ARTHUR, Petitioners v. CHESTNUT RIDGE STORAGE, LLC, Respondent |
| Attorney | Wade W. Massie, Esq. Penn, Stuart & Eskridge Abingdon, Virginia Stephen L. Thompson, Esq. Barth & Thompson Charleston, West Virginia Counsel for Petitioners Karen Kahle, Esq. Kahle Law Office Wheeling, West Virginia Counsel for Respondent Howard M. Persinger, III, Esq. Persinger & Persinger, L.C.... |
| Case Date | February 24, 2021 |
| Court | Supreme Court of Appeals of West Virginia |
Submitted: January 27, 2021
Appeal from the Circuit Court of Monongalia County The Honorable Debra H. Scudiere, Judge Civil Action No. 11-C-457
Wade W. Massie, Esq. Penn, Stuart & Eskridge Abingdon, Virginia Stephen L. Thompson, Esq. Barth & Thompson Charleston, West Virginia Counsel for Petitioners
Karen Kahle, Esq. Kahle Law Office Wheeling, West Virginia Counsel for Respondent
Howard M. Persinger, III, Esq. Persinger & Persinger, L.C. Charleston, West Virginia Counsel for Amici West Virginia Land and Mineral Owners' Association, West Virginia Royalty Owners' Association, West Virginia Farm Bureau and National Association of Royalty Owners, Appalachia
SYLLABUS BY THE COURT
1. "This Court reviews de novo the denial of a motion for summary judgment, where such a ruling is properly reviewable by this Court." Syl. Pt. 1, Findley v. State Farm Mut. Auto. Ins. Co., 213 W.Va. 80, 576 S.E.2d 807 (2002).
2. "A circuit court's entry of summary judgment is reviewed de novo." Syl. Pt. 1, Painter v. Peavy, 192 W.Va. 189, 451 S.E.2d 755 (1994).
3. "Summary judgment is appropriate if, from the totality of the evidence presented, the record could not lead a rational trier of fact to find for the nonmoving party, such as where the nonmoving party has failed to make a sufficient showing on an essential element of the case that it has the burden to prove." Syl. Pt. 2, Williams v. Precision Coil, Inc., 194 W.Va. 52, 459 S.E.2d 329 (1995).
4. "An order denying a motion for summary judgment is merely interlocutory, leaves the case pending for trial, and is not appealable except in special instances in which an interlocutory order is appealable." Syl. Pt. 8, Aetna Cas. & Sur. Co. v. Fed. Ins. Co. of NY, 148 W.Va. 160, 133 S.E.2d 770 (1963).
5. "A circuit court's denial of summary judgment that is predicated on qualified immunity is an interlocutory ruling which is subject to immediate appeal under the 'collateral order' doctrine." Syl. Pt. 2, Robinson v. Pack, 223 W.Va. 828, 679 S.E.2d 660 (2009).
6. "The litigation privilege is generally applicable to bar a civil litigant's claim for civil damages against an opposing party's attorney if the alleged act of the attorney occurs in the course of the attorney's representation of an opposing party and is conduct related to the civil action." Syl. Pt. 3, Clark v. Druckman, 218 W.Va. 427, 624 S.E.2d 864 (2005).
OPINION
ARMSTEAD, JUSTICE
In this appeal of a circuit court's order denying Petitioners'1 motion for summary judgment, we consider whether Petitioners are immune from Respondent Chestnut Ridge Storage LLC's ("Chestnut Ridge") lawsuit pursuant to the litigation privilege and the Noerr-Pennington doctrine.2 After review, [3] and for the reasons explained herein, we conclude that both of these immunities apply. We therefore reverse the circuit court's order and remand with instructions for the circuit court to enter summary judgment in favor of Petitioners.
I. FACTUAL AND PROCEDURAL BACKGROUND
Petitioners own an oil and gas estate underlying a track of 4, 572 acres located in Monongalia County and Preston County in West Virginia, and Fayette County in Pennsylvania. In 1987, Petitioners executed an oil and gas lease in favor of Fox Oil and Gas, Inc. The Lease was later acquired by Oil & Gas Management, Inc. ("OGM"). Petitioners signed an addendum to the lease on January 26, 1993 ("Addendum"), allowing the lessee to use depleted strata for gas storage. In July of 2007, OGM assigned approximately 2, 300 acres of Petitioners' tract to Chestnut Ridge for a storage project.
In December of 2007, Chestnut Ridge applied to the Federal Energy Regulatory Commission ("FERC" or the "Commission") for a certificate of public convenience and necessity to construct and operate a storage field. Petitioners intervened in that proceeding and objected to Chestnut Ridge's planned storage project because, they argued, the "areas proposed for storage on their property were not depleted and that the [Addendum] only allows [Chestnut Ridge] to employ depleted strata for storage."
Paragraphs two and three of the Addendum concern storage rights: 2. Lessor grants to Lessee the exclusive right to employ any depleted oil or gas stratum underlying the lands for the storage of gas and may, for this purpose, reopen and restore to operation any and all abandoned wells on the leased premises which may have penetrated said depleted stratum or may drill new wells thereon for the purpose of freely introducing and storing gas in such stratum and recovering the same therefrom.
3. It is agreed that the cessation of production from wells on the Leased Premises or upon other lands unitized therewith after the expiration of the original term of the Lease, shall not terminate the Lease whether the pooling units have been dissolved or not, if the Lands are used for the storage of gas prior to the plugging and abandonment of wells from which oil or gas has been produced except that it is agreed that the storage of gas shall not extend the terms of the Lease pertaining to any other sand or sands beyond 100 feet above and 100 feet below the sand or sand horizons which are being used to store gas. . . . [I]t is agreed that Lessee shall be the sole judge as to whether gas is being stored within the Leased Premises and that its determination shall be final and conclusive.
Chestnut Ridge did not object to Petitioners intervening in the FERC proceeding. In fact, Chestnut Ridge urged the Commission to allow the intervention, stating that it would "contribute to the development of a complete record (by furnishing assurances that Chestnut Ridge will provide [Petitioners] reasonable compensation for their various leasehold interests . . .) and will assist the Commission's decision-making process."
Additionally, Chestnut Ridge did not generally contest the assertion that the gas reserves were not fully depleted. Instead, Chestnut Ridge provided that they intended to negotiate with Petitioners to compensate them for the gas reserves that were still in place. While acknowledging that it had a duty to compensate Petitioners for such gas reserves, Chestnut Ridge argued that any dispute over this issue could be resolved in court, and stated that this issue should not prevent the Commission from approving its proposed storage facility.
The Commission entered an order on August 31, 2009, granting Chestnut Ridge's request. Relevant to the instant case, the Commission's order noted that Petitioners filed a "[t]imely, unopposed" motion to intervene in the FERC proceeding. The Commission's order also provides that Chestnut Ridge did not contest Petitioners' allegation that the gas reserves were not fully depleted:
The parties agree that the production field is not yet depleted, and Chestnut Ridge does not dispute [Petitioners]' contention that converting a currently producing field into a storage reservoir would be inconsistent with the provision of the parties' gas storage addendum. Thus, in assessing the proposal, we consider the burden that the proposed project would impose on property owners; [Petitioners] identify this burden as the loss of royalty payments that property owners would realize but for gas being left in place as part of the development of the proposed storage facility. This burden constitutes economic harm, and as such, can be remedied by Chestnut Ridge paying property owners the equivalent of what they would have received in royalties for gas that could have been produced, but that will instead remain in situ to serve as cushion gas to support the storage facility. The issue of just compensation is a matter for negotiation between property owners and Chestnut Ridge and if the parties are unable to reach an agreement, just compensation will be determined by appropriate court.
(Emphasis added).
Per the Commission's order, Chestnut Ridge had two years to complete construction of the storage facility. Chestnut Ridge did not complete construction of the storage facility within two years. In August of 2011, it sought a three-year extension to complete the project. Chestnut Ridge's request for an extension of time provided that "commercial and financial factors related to recent changes in the natural gas storage market and the overall state of the economy since the Certificate Order [2009 order] was issued have delayed the Project to date." Petitioners opposed this extension, asserting that Chestnut Ridge had failed to move the project forward in the previous two years. The Commission denied Chestnut Ridge's request to extend the timeframe, finding that Chestnut Ridge failed to take the necessary steps to construct the field, and that the project was not viable.
Chestnut Ridge then filed a motion for rehearing before the Commission. The Commission denied this motion, explaining that Chestnut Ridge's deadline for completing the project came and went, and it is still unable to secure financing or present any evidence of market demand for its storage services at the rates it says it would need to make its project viable. Therefore, we affirm the determination of the Director of OEP that "[g]iven the absence of customer demand and funding at this point . . . Chestnut Ridge's desire to maintain the viability of its certificate and its belief that circumstances will eventually change such that its project will become viable" are not "sufficient reasons to grant the requested three-year extension of...
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