Justice v. Pennzoil Co.

598 F.2d 1339, 4 Fed. R. Serv. 38
CourtCourt of Appeals for the Fourth Circuit
DecidedMay 21, 1979
DocketNo. 78-1151
StatusPublished
Cited by20 cases

This text of 598 F.2d 1339 (Justice v. Pennzoil Co.) is published on Counsel Stack Legal Research, covering Court of Appeals for the Fourth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Justice v. Pennzoil Co., 598 F.2d 1339, 4 Fed. R. Serv. 38 (4th Cir. 1979).

Opinion

K. K. HALL, Circuit Judge:

Plaintiffs, owners of the surface rights to certain land situate in Lincoln County, West Virginia, brought suit in state court against defendant Pennzoil Company, the lessee of oil and gas rights in the land, alleging that Pennzoil had unreasonably and negligently damaged the surface incident to its drilling of several oil wells. Defendant removed the case to federal district court on grounds of diversity. 28 U.S.C. § 1441(a). After several years of pretrial maneuvering and an eleventh-hour demand by plaintiffs for jury trial,1 the case came on for trial. The district court, disagreeing with defendant’s contention that under the substantive law of West Virginia the issue of unreasonable use is one to be determined by the judge, submitted the issue to the jury. The jury returned a verdict for the plaintiffs and awarded damages in the amount of $10,000. Defendant appeals certain rulings of the district court. We reverse.

The land in question was originally owned in fee simple by A. E. Robertson. In 1904 Robertson executed an oil and gas lease to the Holly Oil Company, Pennzoil’s predecessor in interest. In 1920 Robertson sold the land to B. P. McKinney, from whom these plaintiffs have acquired their interests by inheritance or devise. The 1920 deed contained the following reservation:

“. . the Parties of the first part [Robertson] does hereby reserve the Oil & Gass & right to operate same except Gass for domestic use as is set forth in leese.”

The record is silent as to whether A. E. Robertson is presently alive and, if he is not, to whom he devised or conveyed the oil and gas. Therefore the division of rights in the land is as follows: (1) the surface and all minerals other than oil and gas are owned by the plaintiffs, taking through B. P. McKinney, (2) the oil and gas are owned and leased to Pennzoil by A.E. Robertson or by unnamed parties taking through Robertson, and (3) Pennzoil is the lessee of oil and gas rights under the lease, taking through Holly Oil Company.

First. The controlling issue in this litigation is whether Pennzoil, in its drilling operations, exceeded its common law right “to use the ‘surface’ of the land in such manner and with such means as would be fairly necessary for the enjoyment of the mineral estate.” Squires v. Lafferty, 95 W.Va. 307, 309, 121 S.E. 90, 91 (1924). The West Virginia Supreme Court of Appeals has held that the issue of unreasonable use is one to be determined by the court.

“[W]e do not think that whether the plaintiff’s rights have been invaded, or whether the defendant has exceeded its [1342]*1342rights are questions of fact for determination of the jury. In a case where there is a dispute of fact, the jury should find the facts, and from such finding of facts by the jury it is the duty of the court to determine whether the use of the surface by the owner of the minerals has exceeded the fairly necessary use thereof, and whether the owner of the minerals has invaded the rights of the surface owner, and thus exceeded the rights possessed by the owner of such minerals.”

Adkins v. United Fuel Gas Co., 134 W.Va. 719, 61 S.E.2d 633 (1950).2

It has been held that federal rules usually control the allocation of function between judge and jury in diversity cases. Byrd v. Blue Ridge Rural Electric Cooperative, Inc., 356 U.S. 525, 533-40, 78 S.Ct. 893, 2 L.Ed.2d 953 (1958). See also Wratchford v. S. J. Groves & Sons Co., 405 F.2d 1061, 1065-66 (4th Cir. 1969). We think, however, that in a real property case arising under West Virginia law the rule of Adkins is binding on a federal court sitting in diversity. We perceive no conflict with the Supreme Court’s decision in Byrd.

In Byrd, the Court had before it a negligence action brought against an electric power company by the employee of a construction contractor. The employee had been injured while connecting power lines to one of defendant’s substations.

Jurisdiction was based on diversity of citizenship, and South Carolina law controlled the litigation. One affirmative defense raised was that the claim was within the exclusive jurisdiction of the state’s Workmen’s Compensation Act. The validity of this defense turned on disputed issues of fact. Under South Carolina law, the factual issues were to be decided by the judge rather than the jury. The Supreme Court rejected defendant/respondent’s argument that this rule was binding on a diversity court under Erie R. Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938), holding that

“[a]n essential characteristic of [the federal] system is the manner in which, in civil common-law actions, it distributes trial functions between judge and jury and, under the influence — if not the command' — of the Seventh Amendment, assigns the decisions of disputed questions of fact to the jury.”

Byrd v. Blue Ridge Rural Electric Cooperative, Inc., 356 U.S. at 537, 78 S.Ct. 893 at 901 (emphasis added and citations omitted).

The Court noted that the state rule was grounded merely in habit, since under past practice the issue of whether an employee was covered under Workmen’s Compensation had usually come before the state court on appeal from a decision of South Carolina’s Industrial Commission. The rule reflected, at most, “a policy that administrative determination of ‘jurisdictional facts’ should not be final but subject to judicial review.” Id. at 536, 78 S.Ct. at 900 (citations omitted). The Court found no indication that the rule was “intended to be bound up with the definition of the rights and obligations of the parties.” Id. Therefore, it was “merely a form and mode of enforcing [the jurisdictional defense],” id., and under these circumstances, the strong federal policy of allowing the jury to determine disputed issues of fact was held paramount to the state rule.

In contrast, the rule articulated in Adkins v. United Fuel Gas Co., supra, is one of state property law. Unreasonable use of land by a mineral owner is not measured by the tort standard of the ordinary reasonable man; rather, it is measured by concrete legal standards rooted in the common law. See Adkins v. United Fuel Gas Co., 61 S.E.2d at 635-36 and cases discussed therein. It is not a matter readily susceptible of jury determination. The rule of Adkins is not only bound up with but assures the [1343]*1343continuity of those substantive rights and obligations of the parties which were defined generations ago. Compare Wratchford v. S. J. Groves & Sons Co., 405 F.2d at 1065-66.

Most importantly, under Adkins disputed issues of fact are not assigned to the judge. All factual issues are resolved by the jury, and the ultimate question of property law is then decided by the judge on the basis of the jury’s findings. See p. 1343 infra.

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Justice v. Pennzoil Company
598 F.2d 1339 (Fourth Circuit, 1979)

Cite This Page — Counsel Stack

Bluebook (online)
598 F.2d 1339, 4 Fed. R. Serv. 38, Counsel Stack Legal Research, https://law.counselstack.com/opinion/justice-v-pennzoil-co-ca4-1979.