Mcardle Family Partnership v. Antero Resources Corporation

CourtDistrict Court, N.D. West Virginia
DecidedMarch 26, 2024
Docket1:22-cv-00001
StatusUnknown

This text of Mcardle Family Partnership v. Antero Resources Corporation (Mcardle Family Partnership v. Antero Resources Corporation) is published on Counsel Stack Legal Research, covering District Court, N.D. West Virginia primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Mcardle Family Partnership v. Antero Resources Corporation, (N.D.W. Va. 2024).

Opinion

IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF WEST VIRGINIA

MCARDLE FAMILY PARTNERSHIP,

Plaintiff,

v. CIVIL NO. 1:22-CV-01 (KLEEH) ANTERO RESOURCES CORPORATION, KEY OIL COMPANY, and FRANKLIN L. BUTLER,

Defendants.

MEMORANDUM OPINION AND ORDER ADDRESSING DEFENDANT ANTERO RESOURCES CORPORATION’S PARTIAL MOTION TO DISMISS AND/OR STRIKE CLASS ALLEGATIONS OF THE SECOND AMENDED INDIVIDUAL AND CLASS ACTION COMPLAINT [ECF NO. 98]

Pending before the Court is Defendant Antero Resources Corporation’s Partial Motion to Dismiss and/or Strike Class Allegations of the Second Amended Individual and Class Action Complaint [ECF No. 98]. For the reasons discussed herein, the partial motion to dismiss is GRANTED IN PART and DENIED IN PART, and the motion to strike is DENIED. I. FACTS

The following facts are taken from the Second Amended Individual and Class Action Complaint (the “Second Amended Complaint”). For purposes of analyzing the motion to dismiss, the Court assumes that they are true. The Plaintiff, the Mcardle Family Partnership (“Plaintiff”), owns mineral royalty interests in various mineral estates situate MEMORANDUM OPINION AND ORDER ADDRESSING DEFENDANT ANTERO RESOURCES CORPORATION’S PARTIAL MOTION TO DISMISS AND/OR STRIKE CLASS ALLEGATIONS OF THE SECOND AMENDED INDIVIDUAL AND CLASS ACTION COMPLAINT [ECF NO. 98]

in Doddridge County, West Virginia. Second Am. Compl., ECF No. 95, at ¶ 1. Defendant Antero Resources Corporation (“Antero”) operated and developed certain Marcellus Shale oil and gas estates in which Plaintiff possesses an interest. Id. ¶ 2. Defendant Key Oil Company (“Key Oil”) operated and developed certain shallow well oil and gas estates in which Plaintiff possesses an interest. Id. ¶ 3. Defendant Franklin L. Butler (“Butler”) “is a party to this litigation in his capacity as a purported indispensable party solely within the context of Count [Two].” Id. ¶ 4. Plaintiff alleges that Antero and Key Oil are liable for underpayment, nonpayment, and untimely payment of oil and gas royalties. Plaintiff also brings class action claims against Antero only. By assignment recorded May 9, 2008, Plaintiff became vested with a 1/16 gross income overriding royalty interest in portions of what is collectively referred to as the Corlis P. Hudson lease, an approximately 491-acre mineral leasehold estate situate in the Central District of Doddridge County. Id. ¶ 18. Pursuant to the overriding royalty payment language, Plaintiff is to be paid “one- sixteenth (1/16) of the gross income derived from the sale of oil and gas from the aforesaid leases and/or any and all wells which may be drilled thereupon, free from costs of exploration, operation, maintenance or abandonment . . . .” Id. ¶ 21. MEMORANDUM OPINION AND ORDER ADDRESSING DEFENDANT ANTERO RESOURCES CORPORATION’S PARTIAL MOTION TO DISMISS AND/OR STRIKE CLASS ALLEGATIONS OF THE SECOND AMENDED INDIVIDUAL AND CLASS ACTION COMPLAINT [ECF NO. 98]

Plaintiff has received partial payment associated with the Hudson 1/16 gross overriding royalty interest, but only on a “net” basis, after Antero took substantial, unwarranted deductions. Id. ¶ 22. Plaintiff also acquired additional interests which were previously held corporately by James Drilling Corporation. Id. ¶ 23. Specifically, by assignment recorded May 9, 2008, Plaintiff became vested with interests in the following leasehold estates: (1) the approximately 491-acre Hudson lease, (2) the approximately 34-acre W.D. Towner lease situate in the Central District of Doddridge County, and (3) the approximately 97-acre Stone lease situate in the Central District of Doddridge County. Id. ¶ 24. The Hudson corporate net profits interest is to be paid to Plaintiff as follows: “an amount equal to [1/64] of the gross income from all oil and/or gas which may be produced and sold by virtue of said leases, free from costs of exploration, operation, maintenance or abandonment.” Id. ¶ 25. The Towner overriding royalty is to be paid to Plaintiff as follows: “free of cost . . . a one-thirty-second (1/32) interest in all oil or gas produced from any and all wells drilled on the aforesaid tract of real estate, which interest is called or known as an over-ride, free and clear of all drilling, equipping and operating, and to pay to, or see that said income, if any, is paid direct to said MEMORANDUM OPINION AND ORDER ADDRESSING DEFENDANT ANTERO RESOURCES CORPORATION’S PARTIAL MOTION TO DISMISS AND/OR STRIKE CLASS ALLEGATIONS OF THE SECOND AMENDED INDIVIDUAL AND CLASS ACTION COMPLAINT [ECF NO. 98]

first party.” Id. ¶ 27. The Stone overriding royalty is to be paid to Plaintiff as follows: “free of cost . . . a one-thirty- second (1/32) interest in all oil or gas produced from any and all wells drilled on the aforesaid tract of real estate, which interest is called or known as an over-ride, free and clear of all drilling, equipping and operating, and to pay to, or see that said income, if any, is paid direct to said first party.” Id. ¶ 29. Key Oil has drilled numerous shallow wells pursuant to the underlying leasehold interests identified, and Antero has similarly drilled on the underlying Stone, Hudson, and Towner leases, portions of which Antero acquired from Key Oil. Id. ¶ 33. Despite Key Oil’s activities on the site, Key Oil has failed to pay royalties on production therefrom. Id. ¶ 35. Plaintiff has not been paid any royalties on the Hudson corporate net profits interest, the Towner lease, or the Stone lease. Id. ¶¶ 26, 28, 30, 57. Plaintiff proposes the following class definition: The “Class”

Persons and entities, including their respective successors and assigns, to whom Antero has paid overriding royalties (“ORRI Royalties”) on oil and natural gas, produced by Antero from wells located in West Virginia at any time since April 15, 2012, pursuant to overriding royalty agreements (the “Royalty MEMORANDUM OPINION AND ORDER ADDRESSING DEFENDANT ANTERO RESOURCES CORPORATION’S PARTIAL MOTION TO DISMISS AND/OR STRIKE CLASS ALLEGATIONS OF THE SECOND AMENDED INDIVIDUAL AND CLASS ACTION COMPLAINT [ECF NO. 98]

Agreements”) which do not expressly allow deductions for costs and expenses (excluding taxes)(the “Class”).

The “Gross Income Subclass”

Persons and entities, including their respective successors and assigns, to whom Antero has paid ORRI Royalties on oil and natural gas, produced by Antero from wells located in West Virginia at any time since April 15, 2012, pursuant to the ORRI Agreements which do not expressly allow deductions for costs and expenses (excluding taxes) and expressly state that the ORRI Royalties should be paid on a “gross income” basis (the “Gross Income Subclass”).

The “Free of Cost Subclass”

Persons and entities, including their respective successors and assigns, to whom Antero has paid ORRI Royalties on oil and natural gas, produced by Antero from wells located in West Virginia at any time since April 15, 2012, pursuant to ORRI Agreements which do not expressly allow deductions for costs and expenses (excluding taxes) and expressly state that the ORRI Royalties should be paid “free of costs” (the “Free of Cost Subclass”).

Excluded From the Class

Excluded in the Class, Gross Income Subclass, and Free of Cost Subclass are: (1) agencies, departments, or instrumentalities of the United States of America; (2) publicly traded oil and gas exploration companies; (3) any person who is or has been a working interest owner in a well produced by Antero in West Virginia; and (4) Antero. MEMORANDUM OPINION AND ORDER ADDRESSING DEFENDANT ANTERO RESOURCES CORPORATION’S PARTIAL MOTION TO DISMISS AND/OR STRIKE CLASS ALLEGATIONS OF THE SECOND AMENDED INDIVIDUAL AND CLASS ACTION COMPLAINT [ECF NO. 98]

Id. ¶ 10. Plaintiff asserts that each of the requirements for certification of a class is satisfied. Id. ¶¶ 11–17.

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Mcardle Family Partnership v. Antero Resources Corporation, Counsel Stack Legal Research, https://law.counselstack.com/opinion/mcardle-family-partnership-v-antero-resources-corporation-wvnd-2024.