Darville et al v. Germany et al

Filing 42

ORDER denying 40 Motion to Dismiss; granting 40 Motion to Stay Case. Signed by District Judge David C. Bramlette, III on June 7, 2021. (jm)

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF MISSISSIPPI
WESTERN DIVISION
ROBERT H. DARVILLE, et al.
v.

PLAINTIFFS
CIVIL ACTION NO. 5:20cv180-DCB-MTP

N. FORREST GERMANY, et al.

DEFENDANTS

MEMORANDUM OPINION AND ORDER
THIS MATTER is before the Court on a Second Motion to
Dismiss/Stay filed by Defendant Denbury Onshore, LLC (“Denbury”)
pursuant to Federal Rules of Civil Procedure 12(b)(1) and
12(b)(6).

[ECF No. 40] (the “Second Motion”).

The Plaintiffs

have filed no response to the Second Motion, and the time to
respond has expired.

The Court has been informed that counsel to

the Plaintiffs sent electronic mail to Magistrate Judge Michael T.
Parker on May 19, 2021, in which counsel states:

“I do not object

to the stay which has been requested by opposing counsel in the
above cases.”

Plaintiffs’ counsel was referring to the instant

case and to a related case, McComb School District v. Denbury
Resources, Inc. et al., 5:21-cv-00018-DCB-MTP (the “McComb School
District Case”).

Having considered the Second Motion and

supporting memorandum, the Plaintiffs’ lack of objection to the
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requested stay, and applicable statutory and case law, and being
otherwise informed in the premises, the Court finds that the
Second Motion should be granted in part and denied in part as
follows:
BACKGROUND
The Plaintiffs filed suit against the defendants 1 in the
Circuit Court of Pike County, Mississippi, on May 4, 2020.
No. 1-1].

[ECF

Among other things, the Plaintiffs claim that, since

April 2006, Denbury has failed to reallocate the oil and gas
participation tract factors in a portion of the McComb Field Unit
known as the “C” sand in violation of a 1998 Order issued by the
State Oil and Gas Board of Mississippi (the “Board”). 2

Id.

Denbury and Denbury Resources, Inc. are the only defendants that
remain in this lawsuit.
1

2

The Board’s 1998 Order provides in pertinent part:

The Board finds that based on prior geological evidence
submitted to the Board production exists in the Lower Tuscaloosa
Field Unit in three separate sands which are referred to as the
“A,” “B,” and “C” sands. In the initial phase of the McComb Field
Unit there was some production from the “C” sand. The present
operator of the McComb Field Unit, E.B. Germany & Sons, Inc.,
plans to produce oil and gas only from the “A” and “B” sands of
the Lower Tuscaloosa Sand Oil Pool, McComb Field, Pike County,
Mississippi, and, therefore, tract factors for tract participation
in the 259 tracts within the McComb Field Unit are based upon “A”
and “B” sands only with no credit given for the “C” sand. In the
event operator of the McComb Field Unit achieves any production
from the “C” sand (Little Creek Sand) in the lower Tuscaloosa Sand
Oil Pool, McComb Field, Pike County, Mississippi, in the future,
operator of the McComb Field Unit will recalculate all unit tract
2

Asserting diversity jurisdiction, Denbury removed the action
to federal court on September 14, 2020 (see Notice of Removal [ECF
No. 1]).

Thereafter, on December 8, 2020, Denbury filed a

petition with the Board to establish recalculated unit tract
participation factors for the “C” sand oil pools.

See Petition of

Denbury Onshore, LLC, Operator, to Establish Recalculated Unit
Tract Participation Factors to Include Credit for the “C” Sand Oil
Pools in the Unitized Formation of the McComb Field Unit, McComb
Field, Pike County, Mississippi, Docket No. 3-2021-D [ECF No. 216].
Denbury then moved the Court to dismiss or stay this action
until the Plaintiffs had exhausted “their administrative remedies
and the Board establishe[d] the recalculated tract factors for the
Unit.”

[ECF No. 21 ¶ 9].

Finding that the Board had regulatory

authority over such a determination, the Court granted Denbury’s
first motion to stay under the doctrine of administrative
exhaustion but denied its motion to dismiss.

[ECF No. 37].

By letter dated April 7, 2021, Denbury’s counsel informed the
Court that the Board had filed of record Order No. 127-2021 on
March 31, 2021 (the “March 2021 Order”).

Denbury’s counsel

participation factors to include credit for the “C” sand. No
credit is given for the “C” sand at this time because there is no
production planned at the present time from the “C” sand.
Order ¶ 14 [ECF No. 1-1 at 39].

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provided the Court with a copy of the March 2021 Order and stated
in the letter:

“This Order concludes the administrative

exhaustion by the Mississippi State Oil and Gas Board.”

Letter

from William F. Blair, Esq. to Judge David C. Bramlette III and
Magistrate Judge Michael T. Parker of 4/7/2021.

In reliance on

counsel’s statement to the Court regarding exhaustion of
administrative remedies, the Court terminated the first stay.
[ECF No. 38].
Subsequently, the plaintiff in the McComb School District
Case appealed the Board’s March 2021 Order to the Chancery Court
of Pike County, Mississippi, Cause No. 21-cv-281-WS.
12].

[ECF No. 40-

Now that the March 2021 Order, which governs the tract

participation factors applicable to the parties in this lawsuit,
has been challenged on appeal, Denbury argues that the March 2021
Order is not final and that this case should be stayed until all
administrative proceedings are exhausted on appeal.

[ECF No. 41

at 2].
DISCUSSION
Having previously found that a stay pending exhaustion of
administrative remedies before the Board was appropriate in this
case [ECF No. 37], the issue now before the Court is whether the
case should be stayed, yet again, while the administrative
process continues on appeal.

The Court notes that appeals to the
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Mississippi chancery courts from Board orders such as the March
2021 Order are provided for, and governed by, the Mississippi
statutes that regulate the Board in general, Miss. Code Ann. §§
53–1–1 to -47, and those that regulate the unitization of oil and
gas fields and pools. Miss. Code Ann. §§ 53-3-101 to -119.

See

Miss. Code Ann. § 53-1-39 3 and § 53-3-119 4; see also Adams v.
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Section 53-1-39 provides in pertinent part:

(a) In addition to other remedies now available, the state, or any
interested person aggrieved by any final rule, regulation or order
of the board, shall have the right, regardless of the amount
involved, of appeal to the Chancery Court of the First Judicial
District of Hinds County, Mississippi, or to the chancery court of
the county in which all or a part of appellant's property affected
by such rule, regulation or order is situated, which shall be
taken and perfected as hereinafter provided, within thirty (30)
days from the date that such final rule, regulation or order is
filed for record in the office of the board; and the said chancery
court may affirm such rule, regulation or order, or reverse same
for further proceedings as justice may require.
Miss. Code. Ann. § 53-1-39 (West).
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Section 53-3-119 provides in pertinent part:

Any interested person adversely affected by any provision of
Sections 53-3-101 through 53-3-119 or by any rule, regulation or
order made by the state oil and gas board thereunder, or by any
act done or threatened thereunder, may obtain court review and
seek relief by appeal, which appeal shall be to the chancery court
of the county wherein the land involved, or any part thereof, is
situated. The term “interested person” as used herein shall be
interpreted broadly and liberally and shall include all mineral
and royalty owners. Any interested party may appeal to the
chancery court of the county wherein the land involved or any part
thereof is situated, if appeal be demanded within thirty (30) days
from the date that such rule, regulation or order of the board is
filed for record in the office of the board.
Miss. Code. Ann. § 53-3-119 (West).
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Miss. State Oil & Gas Bd., 854 So. 2d 7, 9 (Miss. Ct. App.
2003)(“The applicable statute governing judicial review of
certain actions of the Oil and Gas Board permits an appeal ‘to
the chancery court of the county in which all or a part of
appellant's property affected by such rule ... is situated ....’
Miss. Code Ann. § 53–1–39(a)(Rev.1999).”).

Given that no party

has asserted an objection to staying this federal lawsuit pending
the appeal of the Board’s March 2021 Order to the Chancery Court
of Pike County, Mississippi, the Court concludes that this case
should be stayed until the administrative appeal is final and
nonappealable in accordance with the governing state statutes.
To assist the Court in the efficient administration of this case,
and to avoid confusion in the future, the Court requests that the
parties file a joint notice in this matter, once the
administrative proceedings are final.
Accordingly,
IT IS HEREBY ORDERED that Defendant Denbury Onshore, LLC’s
Second Motion to Dismiss/Stay [ECF No. 40] is GRANTED IN PART as
to its request for a stay and DENIED IN PART as to its request to
dismiss this action; and
IT IS FURTHER ORDERED that this action is STAYED in its
entirety, including all pending motions, until Order No. 127-2021
of the State Oil and Gas Board of Mississippi shall become final
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and nonappealable; and
IT IS FURTHER ORDERED that the parties shall jointly file
notice in this matter through the Court’s CM/ECF system when Order
No. 127-2021 of the State Oil and Gas Board of Mississippi becomes
final and nonappealable.
SO ORDERED, this the 7th day of June, 2021.

/s/
David Bramlette_______
UNITED STATES DISTRICT JUDGE

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