Swan & Matheson Resources LLC et al v. XTO Energy Inc et al

Filing 11

ORDER denying 7 plaintiffs' motion to remand to state court (as more fully set out in order). Signed by Honorable Vicki Miles-LaGrange on 6/25/2013. (ks)

IN THE UNITED STATES DISTRICT COURT FOR THE
WESTERN DISTRICT OF OKLAHOMA
SWAN & MATHESON RESOURCES,
LLC; SHELDON SWAN, AS
SUCCESSOR DEATH TRUSTEE OF THE
SHIRLENE B. SWAN LIVING TRUST;
KRISHEL RESOURCES, INC.,
Plaintiffs,
vs.
XTO ENERGY INC., AND CANYON
PARTNERS, LLP,
Defendants.

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Case No. CIV-13-480-M

ORDER
Before the Court is plaintiffs’ Motion to Remand Action to State Court, filed May 14, 2013.
On June 4, 2013, defendant XTO Energy Inc. (“XTO”) filed its response, and on June 10, 2013,
plaintiffs filed their reply. Based upon the parties’ submissions, the Court makes its determination.
I.

Introduction
On April 5, 2013, plaintiff filed the instant action in the District Court of Major County, State

of Oklahoma. This case involves a dispute over the ownership and corresponding entitlement to
royalties for mineral estates underlying real property in Major County, Oklahoma. The Petition
alleges that plaintiff Krishel Resources, Inc. (“Krishel”) acquired title to the mineral interests in
1987, that the Shirlene B. Swan Living Trust (“Swan Trust”) acquired the mineral interests from
Krishel in 2008, and that plaintiff Swan & Matheson Resources, LLC (“SMR”) acquired the mineral
interests from the Swan Trust in 2011. The Petition contends that Krishel, SMR, and the Swan Trust
are the only parties who have held good title to the mineral interests from 1987 through present day.

XTO is the operator of oil and gas wells that have produced from the mineral interests. The
Petition alleges that XTO has improperly failed to pay plaintiffs the royalties attributable to the
production from those wells. Plaintiffs further allege in the Petition that defendant Canyon Partners,
LLP (“Canyon”) received a fraudulent deed to a portion of the mineral interests in 2006, and that
from 2006 through present day Canyon has received royalty payments attributable to these interests
that should have been paid to plaintiffs.
In the Petition, plaintiffs allege the following claims for relief: (1) declaratory relief –
specifically a declaration by the Court as to the mineral and leasehold rights and obligations of the
parties; (2) deed cancellation against Canyon only; (3) quiet title against Canyon only; and (4) an
accounting. On April 30, 2013, plaintiffs dismissed their claims against Canyon with prejudice. On
May 10, 2013, XTO removed this action to this Court on the basis of diversity jurisdiction.
Plaintiffs now move to remand this action back to state court.
II.

Discussion
Diversity jurisdiction exists if the amount in controversy exceeds $75,000.00, exclusive of

interest and costs, and the action is between citizens of different states. See 28 U.S.C. § 1332(a).
In the case at bar, plaintiffs assert that the amount-in-controversy requirement has not been met.1
[W]here a state court complaint does not identify a specific amount
that the plaintiff seeks to recover, the burden is on a defendant
seeking removal to demonstrate that this jurisdictional prerequisite is
satisfied by “affirmatively establish[ing]” in the petition [or notice of
removal] that the amount in controversy exceeds the statutory
requirement.

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Plaintiffs do not dispute that the parties are diverse.
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McPhail v. Deere & Co., 529 F.3d 947, 955 (10th Cir. 2008). The removing party must establish
the amount in controversy by a preponderance of the evidence. See id. Further, “[t]he burden is on
the party requesting removal to set forth, in the notice of removal itself, the underlying facts
supporting [the] assertion that the amount in controversy exceeds [$75,000].” Laughlin v. Kmart
Corp., 50 F.3d 871, 873 (10th Cir. 1995) (internal quotations and citation omitted) (emphasis in
original). Finally, “[w]hen a Plaintiff is seeking injunctive or equitable relief and not monetary
damages, the amount in controversy is the value of the right sought to be protected by the litigation.”
Perrin v. Tenneco Oil. Co., 505 F. Supp. 23, 25 (W.D. Okla. 1980).
Plaintiffs assert that the amount in controversy is $53,670, the amount of royalties that have
been paid by XTO to other persons attributable to plaintiffs’ minerals interests reduced by the
amount that plaintiffs have already recovered from Canyon and Legacy Royalties, another entity that
had received royalties from XTO. In its response, XTO asserts, in part, that the requisite amount
in controversy is satisfied based upon plaintiffs’ claim for declaratory relief. Specifically, XTO
asserts that based upon the affidavit of Erich Palko, XTO’s Manager of Reservoir Development, that
was attached to XTO’s Notice of Removal, the value of the mineral interests that plaintiffs seek a
declaration that they own is over $75,000 and, thus, the requisite amount in controversy is met.
In their reply, plaintiffs assert that the only remaining claim in this case is for an accounting
and conversion of amounts due plaintiffs by virtue of said accounting and, therefore, the value of
the mineral interests is irrelevant. Specifically, plaintiffs assert that XTO has already credited SMR
with ownership of the mineral interests. However, in its Answer, XTO specifically denies that
plaintiffs are entitled to receive any royalty payments from XTO. See Answer [docket no. 8] at ¶
15. Further, in its response to plaintiffs’ motion to remand, XTO specifically states that it has not

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conceded that SMR is the current owner of the mineral interests and is entitled to future royalties.
See XTO’s Response to Motion to Remand and Brief in Support [docket no. 9] at 6.
Having carefully reviewed the parties’ submissions, the Petition, XTO’s Notice of Removal,
and XTO’s Answer, the Court finds that SMR’s ownership of the mineral rights is disputed, that
plaintiffs’ claim for declaratory relief is still at issue, and the value of the mineral rights can be used
to satisfy the requisite amount in controversy. The Court further finds that XTO has “affirmatively
established” that the amount in controversy exceeds $75,000. Specifically, the Court finds that
based upon the affidavit of Mr. Palko, the value of the mineral interests exceeds $75,000.
Accordingly, the Court finds that there is diversity jurisdiction and that this action should not be
remanded back to state court.
III.

Conclusion
For the reasons set forth above, the Court DENIES plaintiffs’ Motion to Remand Action to

State Court [docket no. 7].
IT IS SO ORDERED this 25th day of June, 2013.

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