Warner v. Swepi, LP

• Docket Number: 1:19-cv-326
• Decision Date: 31 March 2022
• Parties: STEPHEN L. WARNER, Executor of the Estate of GAGE W. ALLAM, et al. Plaintiffs, v. SWEPI, LP, et al., Defendants.
• Court: U.S. District Court — Western District of Pennsylvania

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STEPHEN L. WARNER, Executor of the Estate of GAGE W. ALLAM, et al. Plaintiffs, v. SWEPI, LP, et al., Defendants.

No. 1:19-cv-326

United States District Court, W.D. Pennsylvania

March 31, 2022

MEMORANDUM OPINION

SUSAN PARADISE BAXTER, UNITED STATES DISTRICT JUDGE

I. INTRODUCTION

Plaintiffs in this case are a group of Pennsylvania property holders who entered into individual gas and oil leases with SWEPI LP. In their Second Amended Complaint - the operative pleading in this case, ECF No. 41, Plaintiffs assert breach of contract claims predicated I upon the allegation that SWEPI LP and its general partner, Shell Energy Holding GP, LLC (collectively "SWEPI"), failed to pay certain bonus monies that were owed under the Plaintiffs' lease agreements. Plaintiffs were previously part of a class action styled Walney, et al v. SWEPI LP, et al, No. 1:13-cv-102. On April 20, 2018, then-presiding U.S. District Court Judge Joy Flowers Conti issued a memorandum opinion and order in Walney granting partial summary judgment in favor of the class and concluding, as a matter of law, that the lease agreements constituted enforceable contracts. See Id. at ECF No. 177, 178, reported at Walney v. SWEPI LP, 311 F.Supp.3d 696 (W.D. Pa. 2018), reconsideration denied at ECF Nos. 217, 218, reported at 2018 WL 4076919, at*l(W.D. Pa. Aug. 27, 2018).

On September 17, 2018, the Walney class action was transferred to the undersigned. See Walney, No. 1:13-cv-102, ECF No. 221. Subsequently, on March 31, 2019, this Court granted SWEPI's motion to decertify the class on the grounds that the prerequisites for certification under Federal Rule of Civil Procedure 23(b)(3) were no longer satisfied. See Id. at ECF Nos. 249, 250, reported as Walney v. SWEPI LP, No. CV 13-102, 2019 WL 1436938 (W.D. Pa. Mar. 31, 2019).

Plaintiffs then commenced this civil action on November 7, 2019. See ECF No. 1. During the prosecution of their individual claims, certain discovery disputes ensued.

As a means of narrowing the areas of disagreement, this Court directed the parties to file motions for summary judgment concerning disputed matters that involve purely legal issues. As a result, the Court now has pending before it SWEPI's motion for summary judgment and Plaintiffs' cross-motion for partial summary judgment. ECF Nos. 65, 68.

II. STANDARD OF REVIEW

Summary judgment will be granted when there are no genuine issues of material fact in dispute and the movant is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(a). Where there are no disputed material facts and the question presented is one of pure law, any undisputed evidence must still be construed in the light most favorable to the non-movant. Rea v. Cincinnati Ins. Co., No. CIV.A. 3:13-21, 2014 WL 4198059, at *4 (W.D. Pa. Aug. 22, 2014).

III. DISCUSSION

Are the Parties Precluded from Re-litigating Issues Previously Decided in Judge Conti's April 20. 2018 Summary Judgment Ruling?

Initially, the parties disagree as to what force and effect, if any, should be given to Judge Conti's rulings, as set forth in her April 20, 2018 Memorandum Opinion and Order, which were rendered prior to decertification of the class. In particular, the parties disagree about whether they are presently bound by Judge Conti's previous determination that the lease agreements are enforceable contracts.

Plaintiffs contend that SWEPI is estopped from re-litigating this issue (and any others previously adjudicated) pursuant to the "law of the case" doctrine and/or principles of "issue preclusion." SWEPI counters that the "law of the case" doctrine has no applicability because this is not the same "case" as Walney. Alternatively, SWEPI maintains that Judge Conti's determination as to the existence of enforceable contracts should be vacated because it was clearly erroneous. SWEPI also argues that the decertification of Walney precludes any binding effect of rulings that were made while the case was still certified. Finally, SWEPI denies that the elements of issue preclusion are satisfied in this case.

A. Issue Preclusion (aka "Collateral Estoppel")

Initially, we consider Plaintiffs' assertion that issue preclusion ~ otherwise known as "collateral estoppel" - bars reconsideration of the prior summary judgment ruling. Although the parties disagree about whether federal or state law governs this issue, the distinction is ultimately immaterial. Under either federal or state principles, SWEPI is not estopped from relitigating the issue of whether the lease agreements are enforceable contracts..

Under federal law, issue preclusion applies where:

1) The issue sought to be precluded is the same as that involved in the prior action; 2) The issue was actually litigated;

3) The issue was actually determined in a valid and final judgment; and

4) The determination was essential to the prior judgment.

Burlington Northern R.R. Co. v. Hyundai Merchant Marine Co., 63 F.3d 1227, 1231-32 (3dCir. 1995); see also United States v. Sharpe, No. CV 20-2490, 2021 WL 4453623, at *3 (E.D. Pa. Sept. 29, 2021). In this case, the Judge Conti's April 20, 2018 ruling was interlocutory and not a final, appealable judgment. See, e.g., Williams v. Wells Fargo Home Mortg, Inc., No. 2:06-CV-03681-LDD, 2010 WL 11534319, at *7 (E.D. Pa. Jan. 11, 2010), affd, 410 Fed.Appx. 495 (3d Cir. 2011) ("Partial summary judgment is not a final order and is not entitled to res judicata in other litigation."); see also Gallant v. Telebrands Corp., 35 F.Supp.2d 378, 393 (D.N.J. 1998) (citing authority). Consequently, SWEPI is not collaterally estopped from challenging the prior determination that the lease agreements constitute enforceable contracts.

Pennsylvania estoppel principles are similar to their federal counterpart. The Pennsylvania Supreme Court has recently stated that "[collateral estoppel will only apply where: the issue is the same as in the prior litigation; the prior action resulted in a final judgment on the merits; the party against whom the doctrine is asserted was a party or in privity with a party to the prior action; and the party against whom the doctrine is asserted had a full and fair opportunity to litigate the issue in the prior action." See In re Coatesville Area Sch. Dist., 244 A.3d 373, 379 (Pa. 2021) (citing Rue v. K-Mart Corp., 713 A.2d 82, 84 (Pa. 1998)). "In some renditions, courts add a fifth element, namely, that resolution of the issue in the prior proceeding was essential to the judgment." Id. (citing Office of Disciplinary Counsel v. Kiesewetter, 889 A.2d 47, 50-51 (Pa. 2005)). Once again, because Judge Conti's April 20, 2018 ruling was not a "final judgment on the merits," SWEPI is not collaterally estopped under

Pennsylvania law from challenging the enforceability of the lease agreements.

Plaintiffs contend, however, that Pennsylvania law draws a materially nuanced distinction between claim preclusion (or res judicata) on one hand, and issue preclusion (i.e., collateral estoppel) on the other, where finality is concerned. Citing Shaffer v. Smith, 673 A.2d 872, 875 (Pa. 1996), Plaintiffs posit that Pennsylvania follows the collateral estoppel rule articulated in Section 13 of Restatement (Second) of Judgments, to wit:

The rules of res judicata are applicable only when a final judgment is rendered. However, for purposes of issue preclusion (as distinguished from merger and bar), "final judgment" includes any prior adjudication of an issue in another action that is determined to be sufficiently firm to be accorded conclusive effect.

Restatement (Second) of Judgments § 13 (1982) (emphasis added). Plaintiffs point to Judge Conti's August 27, 2018 decision denying SWEPI's motion for reconsideration as evidence that she intended her April 20, 2018 partial summary judgment ruling to be a "firm" decision within the meaning of Restatement §13.

Plaintiffs' position is at odds, however, with the commentary to the Restatement rule. Comment g to Section 13 indicates that "finality" depends on "whether the conclusion in question is procedurally definite and not whether the court might have had doubts in reaching the decision." Thus, the fact "that the parties were fully heard, that the court supported its decision with a reasoned opinion, [and] that the decision was subject to appeal or was in fact reviewed on appeal, are factors supporting the conclusion that the decision is final for the purpose of preclusion." Id.

Here, Judge Conti's ruling on the enforceability of the leases was certainly supported with a reasoned opinion (two separate opinions, in fact). However, the opinion was never subject to appeal, much less actually reviewed on appeal, because no final ruling was issued on either liability or damages. Cf. Fed. R. Civ. P. 54(b) (allowing the district court to direct entry of a final judgment "as to one or more, but fewer than all, claims or parties"). Accordingly, Judge Conti's April 20, 2018 ruling could have been (and still can be) revised at any time before the entry of a judgment that adjudicates all the claims and all the parties' rights and liabilities in the Walney action. See Fed. R. Civ. P. 54(b) ("[A]ny order or other decision, however designated, that adjudicates fewer than all the claims or the rights and liabilities of fewer than all the parties does not end the action as to any of the claims or parties and may be revised at any time before the entry of a judgment adjudicating all the claims and all the parties rights and liabilities."). The fact that the Walney Court's April 20, 2018 decision was never subject to appellate review supports the conclusion that it was not sufficiently "firm" for purposes of applying issue preclusion.

Moreover the unique posture of this case gives rise to some concern that the parties were...