Poulos v. LBR Holdings, LLC

792 S.E.2d 588, 238 W. Va. 89, 2016 W. Va. LEXIS 762
CourtWest Virginia Supreme Court
DecidedOctober 26, 2016
DocketNo. 15-0907
StatusPublished
Cited by2 cases

This text of 792 S.E.2d 588 (Poulos v. LBR Holdings, LLC) is published on Counsel Stack Legal Research, covering West Virginia Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Poulos v. LBR Holdings, LLC, 792 S.E.2d 588, 238 W. Va. 89, 2016 W. Va. LEXIS 762 (W. Va. 2016).

Opinions

Davis, Justice:

This appeal was brought by the Petitioners, Gregory G. Poulos; Jason G. Poulos; Pamela F. Poulos; Shaun D. Rogers; Kevin H. Rogers; Derek B. Rogers; and T.G. Rogers, III (collectively “Petitioners”), defendants below, from an August 19, 2015, order of the Circuit Court of McDowell County that granted judgment in favor of the Respondent, LBR Holdings, LLC (“Respondent”), plaintiff below. This case was tried before the circuit court, without a jury, to resolve ownership of coalbed methane (“CBM”) under a 1938 deed. The assignments of error presented by the Petitioners can be distilled as follows: (1) the 1938 deed was not ambiguous; (2) CBM was a valuable resource in 1938; (3) the Coalbed Methane Wells and Units statute, W. Va. Code § 22-21-1 et seq., had no application to this case; (4) Respondent’s expert testimony should not have been submitted; and (5) accounting claims should not have been dismissed.1 After a careful review of the briefs, the record submitted on appeal, and listening to the argument of the parties, we affirm.2

I.

FACTUAL AND PROCEDURAL HISTORY

The dispute in this matter arises from the conveyance of real property and minerals in a 1938 deed. Specifically, the record indicates that, by deed dated May 27, 1938 (“the 1938 deed”), T.G. and Martha Rogers and Lloyd and Anne F. Rogers conveyed all their property interest in seven parcels of property [92]*92(totaling approximately 3,800 acres) located in McDowell County, West Virginia, to Lon B. Rogers, except for “an undivided one-half interest in the oil and gas” under the property-

Through a series of transfers, the Respondent became the record owner of all of Lon B. Rogers’ interests in the property, as well as all the Lloyd and Anne F. Rogers’ interests in the property. Accordingly, the Respondent now owns a 75% interest in the oil and gas under the property, 100% of the coal and all other mineral interests under the property, together with certain portions of the surface of the property. The Petitioners are the record owners of the remaining 25% interest in the oil and gas under the property that was formerly owned by T.G. and Martha Rogers.

The record further shows that, beginning in 1997, EQT Production Company (“EQT”) and GeoMet, Inc., and GeoMet Operating Company, Inc. (collectively “GeoMet”), have drilled and operated CBM wells on the property and generated royalties therefrom. There is no dispute that the Respondent is entitled to 75% of the CBM royalties. However, EQT and GeoMet have placed in escrow or otherwise withheld payment of 25% of the CBM royalties based upon uncertainty as to whether the CBM royalties are payable to the Respondent as the owner of all the coal and other mineral interests in the property, or to the Petitioners as the owners of a 25% interest in the gas in the property.

On November 21, 2013, the Respondent filed its complaint against the Petitioners, GeoMet, and EQT, seeking a declaration of ownership of all CBM on the property and an accounting of royalties from GeoMet and EQT. The Petitioners filed an answer, counterclaim, and crossclaims also seeking a declaration of ownership and an accounting of royalties. Subsequently, GeoMet was dismissed, and the CBM ownership issue was bifurcated from the accounting claims.

After denying the parties’ cross-motions for summary judgment, the circuit court held a bench trial on November 12 and 13, 2014. The dispositive issue for determination at trial was whether CBM was considered “gas” for purposes of the Petitioners’ reservation in the deed. The circuit court determined that there is a “distinct line between CBM and gas,” and that the weight of the evidence at trial showed that CBM in 1938 was a dangerous, deadly hazard and a nuisance to be avoided and not a commercial resource. Additionally, the circuit court found that the commercialization of CBM in McDowell County, West Virginia, did not occur until the 1990’s. Accordingly, the circuit court concluded that the predecessors of the Petitioners, based on the totality of the circumstances, did not intend the reservation in the 1938 deed to include an interest in the then-dangerous nuisance CBM. The circuit court also rejected a distinction between production rights under a lease, and ownership rights under a deed. Finding the two analogous, the circuit court held:

[I]f a lease conveying the right to produce “gas” does not include the right to produce CBM absent specific language to the contrary or other indicia of the parties’ intent, then deed language conveying or reserving “gas” does not include ownership of CBM absent specific language to the contraiy or other indicia of the parties’ intent.

The circuit court granted judgment in favor of the Respondent, memorializing its rulings in its order of August 19, 2015. This appeal followed.

II.

STANDARD OF REVIEW

With respect to reviewing the decisions of lower courts made in the context of bench trials, this. Court has stated:

In reviewing challenges to the findings and conclusions of the circuit court made after a bench trial, a two-pronged deferential standard of review is applied. The final order and the ultimate disposition are reviewed under an abuse of discretion standard, and the circuit court’s underlying factual findings are reviewed under a clearly erroneous standard. Questions of law are subject to a de novo review.

Syl. pt. 1, Public Citizen, Inc. v. First Nat'l Bank in Fairmont, 198 W.Va. 329, 480 S.E.2d 538 (1996).

[93]*93With these standards governing our review of this case, we proceed to address the issues raised.

III.

DISCUSSION

We now turn to a discussion of the issues. First, we consider whether the 1938 deed was ambiguous. Second, we address whether CBM was a valuable resource in 1938. Third, we analyze the application of the coalbed Methane Wells and Units Statute, W. Va. Code § 22-21-1 et seq, Fourth, we review the testimony of the Respondent’s expert witness. Fifth, we determine whether the accounting claims should have been dismissed.

A. The Meaning of the Term ‘‘Gas” in the 1938 Deed Reservation was Ambiguous

The first issue we address is the circuit court’s determination that, under the 1938 deed, the term “gas” was ambiguous with respect to whether it was intended to encompass CBM. Specifically, the 1938 deed provides:

[T]he parties of the first part [T.G. Rogers and Lloyd Rogers], ... do hereby grant and convey unto the party of the second part of [Lon Rogers], ... all their right, title and interest, in and to all the hereinafter described property, and being a two-thirds (2/3) undivided interest (the party of the second part owning the other one-third (1/3) undivided interest), said property being situated in McDowell County, West Virginia ... including all lands, minerals, rights, interests, easements, rents, issues and profits therefrom.... But there is excepted from the above described property an undivided one-half interest in the oil and gas under said property and the same is reserved to T.G. Rogers and Lloyd Rogers, parties of the first part, their heirs and assigns,

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Bluebook (online)
792 S.E.2d 588, 238 W. Va. 89, 2016 W. Va. LEXIS 762, Counsel Stack Legal Research, https://law.counselstack.com/opinion/poulos-v-lbr-holdings-llc-wva-2016.