SWN Prod. Co. v. Conley

• Decision Date: 02 November 2020
• Docket Number: No. 19-0267,19-0267
• Citation: 850 S.E.2d 695,243 W.Va. 696
• Court: West Virginia Supreme Court
• Parties: SWN PRODUCTION COMPANY, LLC, Putative Intervenor Below/Petitioner v. Corey CONLEY et al., Plaintiffs and Defendants Below/Respondents

243 W.Va. 696

850 S.E.2d 695

SWN PRODUCTION COMPANY, LLC, Putative Intervenor Below/Petitioner

v.Corey CONLEY et al., Plaintiffs and Defendants Below/Respondents

No. 19-0267

Supreme Court of Appeals of West Virginia.

Submitted: October 6, 2020

Filed: November 2, 2020

Timothy M. Miller, Esq., Robert M. Stonestreet, Esq., Jennifer J. Hicks, Esq., Babst, Calland, Clements & Zomnir, P. C., Charleston, WV, Counsel for Petitioner.

Daniel J. Guida, Esq., Guida Law Offices, Weirton, WV, Counsel for Respondent Corey Conley.

Richard N. Beaver, Esq., Phillips, Gardill, Kaiser & Altmeyer, PLLC, Wheeling, WV, Counsel for Respondents Lee M. Rabb, individually and as Trustee of the Eli Rabb Revocable Trust, dated October 7, 2005 and Trinity Health System Foundation and Joseph G. Nogay, Esq., Maximillian F. Nogay, Esq., Sellitti, Nogay & Nogay, PLLC, Weirton, WV, Counsel for Respondents Trienergy, Inc., Trienergy Holdings, LLC, and WPP, LLC.

WORKMAN, Justice:

Petitioner, SWN Production Company, LLC (hereinafter "SWN") appeals an order entered on February 22, 2019, by the Circuit Court of Brooke County, West Virginia, denying SWN's second motion to intervene in an action seeking to quiet title to a parcel of property brought by Respondent and plaintiff below, Corey Conley (hereinafter "Mr. Conley"). Mr. Conley has aligned himself with SWN and adopted the arguments of SWN. The Respondents and defendants below include Lee M. Rabb, individually and as Trustee of the Eli Rabb Revocable Trust dated October 7, 2005 (hereinafter "the Rabb Trust"), Trienergy, Inc., Trienergy Holdings, LLC, WPP, LLC (hereinafter collectively "Trienergy"), and Trinity Health System Foundation ("Trinity Health"), or (the Rabb Trust, Trienergy, and Trinity Health hereinafter collectively "Respondents"). The underlying action involves competing claims and interests in the mineral rights to Mr. Conley's property. It is represented that SWN has interests in oil and gas properties that would be affected by interpretation of the relevant deed. After Mr. Conley filed his Complaint and after the circuit court denied SWN's first motion to intervene, SWN entered into an oil and gas lease with Mr. Conley. Thereafter, the circuit court denied SWN's second motion to intervene and it is from that order that SWN appeals to this Court.

Having considered the record, the various briefs submitted, the relevant law, and the oral arguments presented, we find that the circuit court abused its discretion in determining that the SWN motion to intervene was untimely and erred as a matter of law in finding: (1) that SWN had no property interest relating to the subject of the complaint, (2) that disposition of the civil action would not impair or impede SWN's ability to protect its interests, and (3) that SWN's interests were adequately protected by Mr. Conley. Accordingly, this Court reverses the circuit court's order denying SWN's motion to intervene and remands this case to the Circuit Court of Brooke County, West Virginia, for further proceedings consistent with this opinion.

I. FACTS AND PROCEDURAL HISTORY

In 1959, Maria H. Milliken, by deed (hereinafter "the Milliken Deed"), conveyed certain mineral interests in a 161.53-acre tract located in Brooke County, West Virginia, to Eli Rabb. The Milliken Deed granted, bargained, sold, and conveyed "all that coal in and under" the tract together with the "surface rights which are incident or necessary to the removal of said coal." Additionally, the deed included the "[r]ights to explore, operate and drill for Oil and Gas with all necessary rights to produce and market same." The Milliken Deed excepted a 1/8 royalty "of any and all production of gas and oil that may be discovered on said property." A "complete agreement" clause was included in the Milliken Deed providing:

There is a complete agreement between [Milliken] and [Rabb], that because of the economic conditions, the low quality of the coal, and the uncertainty of marketing, that no specific start time has been designated. It is clearly understood that [Rabb], his heirs or assigns, may commence without notice to start mining operations at any time within the time limits set forth in the foregoing royalty agreement. Further, it could be that operations would be started in the latter of the year or so of this Deed or to be more clear in the 19th or 20th year, be it hereby agreed that so long as there remains coal to be mined, [Rabb] shall be allowed peacefully to mine and remove the remaining coal so long as the period shall not exceed an additional five years nor pass the 30th day of December, 1985.

On June 5, 2007, Eli Rabb and his wife, Lee M. Rabb, executed a Farmout Agreement with respect to the oil and gas rights underlying the same 161.53-acre tract of property identified in the Milliken Deed. The Farmout Agreement was entered into with Trienergy and provided for the transfer of all the oil and gas interest in the 161.53-acre tract while excepting and reserving a 1.5% overriding royalty in all oil and gas saved and produced. Mr. Rabb conveyed the 1.5% overriding royalty interest as a gift to Trinity Health and conveyed his interest in the oil and gas rights to Trienergy by a Conveyance and Assignment of Oil and Gas Rights dated May 16, 2008.

In the meantime, the 161.53-acre tract described in the Milliken Deed was subdivided into several smaller tracts by the Milliken heirs. By deed dated June 26, 2000, Mr. Conley obtained the surface and mineral rights, excepting coal, from James Lee and Beatrice S. Milliken, to a 3.763-acre parcel (hereinafter "the Conley parcel") that was carved out of the 161.53-acre tract.

Eli Rabb died testate on October 31, 2009. He devised his assets, including any interest flowing from the Milliken Deed, to the Rabb Trust.

As a result of the various instruments of conveyance and assignment, multiple parties claimed certain rights related to the oil and gas underlying the 161.53-acre tract. On May 5, 2014, Mr. Conley filed his action seeking, among other things, to quiet title to the oil and gas interests under the 3.763 acres of his property. Mr. Conley sought a declaration that he has good and marketable title to the mineral interests, including the oil and gas, underlying his property. Mr. Conley contends that the 1959 Milliken Deed acted merely as a lease of oil and gas rights to Eli Rabb and that the lease either lapsed, was invalid, or is unenforceable. Initially, Mr. Conley sued the instant Respondents, except for Trinity Health, as well as three other entities, Chesapeake Appalachia, LLC, Jamestown Resources, LLC, and AB Resources, all of whom were later dismissed.

Trienergy filed an answer generally denying that Mr. Conley had any interest in the oil and gas rights underlying the Conley parcel. The Rabb Trust filed a counterclaim seeking a declaration that Eli Rabb purchased the coal, oil, and gas underlying the 161.53-acre tract under the Milliken Deed, including the 3.763-acre Conley parcel. Trinity Health moved to intervene on the basis of the May 2008 recorded assignment of interest, evidencing a separate and distinct interest in an overriding royalty. Trinity Health's unopposed motion was granted on August 3, 2015.

In June 2016, Mr. Conley filed a motion for summary judgment requesting that the circuit court find the Milliken Deed to be unambiguous and to determine the legal effect of the language on the nature and ownership status of the oil and gas rights as referenced in the Milliken Deed. Specifically, Mr. Conley contended that the Milliken Deed, by its terms, created an unenforceable perpetual leasehold in the oil and gas and/or that the lease was abandoned by Eli Rabb for failure to explore or market the oil and gas.

The Respondents filed cross-motions for summary judgment contending that they had ownership or interests in the oil and gas because the unambiguous language of the Milliken Deed conveyed a fee simple interest in the oil and gas to Eli Rabb that could not be abandoned.

On July 21, 2016, SWN first moved to intervene. SWN indicated that while it did not have a direct interest in the 3.763 Conley parcel, it had interests in other properties comprising the remainder of the 161.53-acre tract. Thus, SWN argued that its interests were at stake and would be affected by any construction of the Milliken Deed. SWN further represented that it had been actively developing oil and gas property in the northern panhandle of West Virginia since 2014 and had only learned recently of the action filed by Mr. Conley. The Respondents objected to intervention by SWN.

On August 16, 2016, the circuit court entered an order denying SWN's motion to intervene for four reasons. First, the circuit court concluded that it was untimely since it was filed more than two years after the complaint was filed and during the pendency of summary judgment motions. Second, the circuit court found that SWN had no interest relating to the Conley parcel. Third, the circuit court determined that since SWN had no interest in the property, the disposition of the action would not impair SWN's ability to protect that interest. Fourth, the circuit court concluded that "to the extent [Conley] has aligned himself with SWN, SWN's interest are adequately represented by [Conley] in this matter."

In the order of August 16, 2016, the circuit court also granted Mr. Conley's request to delay ruling on the pending summary judgment motions for the purpose of engaging in limited discovery on the question of whether Mr. Rabb, or his attorney, was the party who prepared the Milliken Deed. The parties proceeded with limited discovery and renewed their respective motions for summary judgment in February 2017.

On June 16, 2017, the circuit court entered an order denying the cross-motions for summary judgment because it concluded that the language of the Milliken Deed was ambiguous regarding intent such that a jury determination was required. The circuit court concluded that a jury must determine...