Grayhorse Energy, LLC v. Crawley Petroleum Corp.

2010 OK CIV APP 145, 245 P.3d 1249, 173 Oil & Gas Rep. 641, 2010 Okla. Civ. App. LEXIS 128, 2010 WL 5135247
CourtCourt of Civil Appeals of Oklahoma
DecidedJuly 29, 2010
Docket107,704. Released for Publication by Order of the Court of Civil Appeals of Oklahoma, Division No. 2
StatusPublished
Cited by6 cases

This text of 2010 OK CIV APP 145 (Grayhorse Energy, LLC v. Crawley Petroleum Corp.) is published on Counsel Stack Legal Research, covering Court of Civil Appeals of Oklahoma primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Grayhorse Energy, LLC v. Crawley Petroleum Corp., 2010 OK CIV APP 145, 245 P.3d 1249, 173 Oil & Gas Rep. 641, 2010 Okla. Civ. App. LEXIS 128, 2010 WL 5135247 (Okla. Ct. App. 2010).

Opinion

DEBORAH B. BARNES, Judge.

{1 Plaintiffs/Appellants Grayhorse Energy, LLC, TLJ Investments, LLC, Singer Bros. LLC, and Pedestal Oil Company, Inc., (collectively, the GrayHorse 1 group) seek review of the trial court's order sustaining Defendant/Appellee Crawley Petroleum Corporation's (Crawley) motion to dismiss for lack of subject matter jurisdiction. 2 We express no view upon the merits of any element of the GrayHorse group's claims, 3 but reverse the trial court's order because, in the context of mineral interests and oil and gas leaseholds, subject matter jurisdiction rests solely with the district courts to determine private rights, 4 and the Oklahoma Corporation Commission (the OCC), although possessing many of the powers of a court of record, is without the authority to entertain a suit for damages. 5 We remand this case for further proceedings.

FACTS AND PROCEDURAL BACKGROUND

T2 Crawley produces and operates oil and gas wells in Oklahoma. On May 4, 2009, the GrayHorse group filed a petition against Crawley seeking money damages pursuant to the alternative legal theories of conversion, negligence, constructive fraud, and unjust enrichment. The GrayHorse group asserts in the petition that Crawley is the operator of the Russell State # 2-86 oil and gas well (the Well) in which the GrayHorse group owns a working interest. It further claims that in 2008, without its authorization or approval, Crawley wrongfully used the GrayHorse group's "casing, pipe, wellbore and other associated personal property from [the Well]." The GrayHorse group claims that as a result of Crawley's wrongful use or conversion of this property, "the sale of oil and gas ceased and each plaintiff has suffered economic injury.”

*1252 T3 Crawley filed an answer in which it denies that it performed any wrongful acts. However, Crawley admits that it is the operator of the Well.

14 Crawley filed a motion to dismiss for lack of subject matter jurisdiction. Crawley argues in its motion that the matters the GrayHorse group seeks to litigate in the district court are matters over which the OCC had exclusive jurisdiction in a previous OCC Cause, CD No. 200804948, resulting in a forced-pooling order, OCC No. 558408 (the Pooling Order), involving the GrayHorse group, named as respondents, and Crawley, as applicant. Crawley maintains that the purpose of the pooling was to re-complete the Well in the Third Deese (Gibson Sand) formation, prior production from the Well having been from the lower Sycamore and Hunton formations. It appears from the documents attached to Crawley's motion to dismiss that the GrayHorse group elected not to participate in the development of the unit under the Pooling Order, 6 that it did not come forth in opposition to the Pooling Order at the OCC hearing, and that the Pooling Order was not appealed. Crawley argues that the GrayHorse group's attempt to now litigate its claims for conversion, negligence, constructive fraud, and unjust enrichment in the district court constitutes an impermissible collateral attack on the Pooling Order entered by the OCC. 7

{5 The GrayHorse group filed an objection to Crawley's motion to dismiss. Each of the Appellants (which, for convenience purposes only, we call, collectively, the Gra-yHorse group) asserts it is a working interest owner in the Well which has produced natural gas from the lower Sycamore and Hunton formations since 1984. The Gra-yHorse group contends it "owned and still own[s], collectively, 21.875% of the tubing, casing, pipe, wellbore and other associated personal property to the [Well]." 8 The Gra-yHorse group argues that its claims against Crawley constitute a private dispute for money damages and, therefore, the district court has subject matter jurisdiction.

T6 The trial court agreed with Crawley 9 and, in an order filed on October 28, 2009, granted Crawley's motion to dismiss for lack of subject matter jurisdiction. 10 In its order, *1253 the trial court set forth the following "Findings of Fact:"

1. Each of the Plaintiffs owns a fractional working interest in [the Well].
2. [The Welll is located on a 40 acre drilling and spacing unit established by [the OCC] described as:
SW/4 of the SW/4 of Section 36,
TSN, REW Garvin County, Oklahoma.
3. [Crawley] owns a fractional working interest in [the Well) and is the operator of [the Welll.
4. Prior to, on or about May 28, 2008 [the Well] had been productive from the Sycamore and Hunton formations.
5. [Crawley] on or about May 28, 2008 proposed to [the GrayHorse group] and other owners of working interests in [the Well] to recomplete [the Well) in the Third Deese (Gibson Sand) formation.
6. [The GrayHorse group] declined to participate as working interest owners in [Crawley's] proposal to recomplete [the Well) in the Third Deese (Gibson Sand) formation.
7. [Crawley] thereupon filed an application, Corporation Commission cause CD No. 200804943, for an order pooling interests and adjudicating the rights and equities of oil and gas owners in the Third Deese (Gibson Sand) common source of supply underlying the forty acre tract of land upon which [the Well] is located.
8. On August 21, 2008 [the OCC] entered its order number 558408 pooling and adjudicating the rights and equities of owners in the proposed completion efforts in the Third Deese (Gibson Sand) formation in [the Well].
9. [Crawley] proceeded to recomplete [the Welll in the Third Deese (Gibson Sand) formation after [the GrayHorse group} declined to participate in those efforts as working interest owners.
10. [The GrayHorse group] in this case alleges [Crawley] converted the casing, pipe and wellbore of [the Well] to its own use in recompletion of [the Well) in the Third Deese (Gibson Sand) formation, causing damage to [the GrayHorse group].

17 The trial court determined that because "[the OCC] has sole authority to adjust the rights and equities and protect the correlative rights of all interested parties in proceedings for the issuance of a pooling order" (citing Woods Petroleum Corp. v. Sledge, 1981 OK 89, 632 P.2d 393), the Gra-yHorse group's sole recourse was a timely appeal of the Pooling Order to the Oklahoma Supreme Court. Therefore, the trial court granted Crawley's motion to dismiss for lack of subject matter jurisdiction. From this order, the GrayHorse group appeals.

STANDARD OF REVIEW

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Ford v. Tulsa Public Schools
2017 OK CIV APP 55 (Court of Civil Appeals of Oklahoma, 2017)
Berryman v. Oklahoma Corp. Commission
2016 OK CIV APP 78 (Court of Civil Appeals of Oklahoma, 2016)
LADRA v. NEW DOMINION, LLC
2015 OK 53 (Supreme Court of Oklahoma, 2015)
Morgan v. Oklahoma Corp. Commission
2012 OK CIV APP 31 (Court of Civil Appeals of Oklahoma, 2011)

Cite This Page — Counsel Stack

Bluebook (online)
2010 OK CIV APP 145, 245 P.3d 1249, 173 Oil & Gas Rep. 641, 2010 Okla. Civ. App. LEXIS 128, 2010 WL 5135247, Counsel Stack Legal Research, https://law.counselstack.com/opinion/grayhorse-energy-llc-v-crawley-petroleum-corp-oklacivapp-2010.