Newfield Exploration Mid-Continent Inc v. Core Resources LLC et al
ORDER granting 10 defendants' Motion to Dismiss Plaintiff's Amended Complaint and dismissing this action (as more fully set out). Signed by Honorable Vicki Miles-LaGrange on 3/30/2017. (ks)
IN THE UNITED STATES DISTRICT COURT FOR THE
WESTERN DISTRICT OF OKLAHOMA
CORE RESOURCES, LLC, and
Case No. CIV-16-1080-M
Before the Court is defendants’ Motion to Dismiss Plaintiff’s Amended Complaint, filed
October 25, 2016. On December 15, 2016, plaintiff filed its response, and on December 21, 2016,
defendants filed their reply.
Based upon the parties’ submissions, the Court makes its
Pursuant to Federal Rules of Civil Procedure 12(b)(7), 19(b), and 12(b)(6), defendants
move this Court to dismiss the claims set forth in plaintiff’s Amended Complaint. Specifically,
defendants assert that dismissal is proper under Rule 12(b)(7) and Rule 19(b) because plaintiff
failed to join an indispensable party, Paloma Partners, IV, LLC (“Paloma”), who is the owner of
the oil and gas leases that plaintiff seeks to nullify, and because Paloma and plaintiff are not
diverse, the feasibility of joinder is negated and the Court is divested of subject matter jurisdiction
under 28 U.S.C. § 1332(a)(1). Additionally, defendants assert that dismissal of plaintiff’s breach
of contract claim is proper under Rule 12(b)(6) because plaintiff did not plead facts sufficient to
demonstrate the existence of an enforceable joint operating agreement.1
Because this Court finds that this action should be dismissed pursuant to Rule 12(b)(7) and Rule
19(b), the Court need not address defendants’ Rule 12(b)(6) arguments.
Paloma took an assignment of the leases at issue in this case from defendant Core
Resources, LLC on September 9, 2016, one week before plaintiff filed the instant action. After
taking the assignment, Paloma became the owner of these leaseholds. The assignment was
recorded on September 21, 2016, two days after plaintiff recorded a lis pendens notice in the real
estate records of Kingfisher County. Part of the relief plaintiff is requesting in this case is for the
Court to declare as a matter of law that the leases, which are now owned by Paloma, are of no
current force and effect.
Plaintiff asserts that Paloma does not need to be joined as an additional defendant in this
lawsuit because Paloma recorded its assignment of the leases after this lawsuit was filed and after
plaintiff filed a lis pendens notice in the real estate records. Plaintiff further asserts that the reason
the lis pendens procedure exists is so that a plaintiff in a lawsuit involving rights in real estate can
record a lis pendens notice in the real estate records and thereafter be absolved of any need to keep
joining new assignees and successors to the named defendants in the lawsuit as ownership of the
property may change during the pendency of the lawsuit. Okla. Stat. tit. 12, § 2004.2 provides, in
pertinent part: “[w]hile an action is pending, no third person shall acquire an interest in the subject
matter of the suit as against the prevailing party’s title”. Okla. Stat. tit. 12, § 2004.2(A). Paloma,
however, did not acquire the leases in this case while this action was pending; Paloma acquired
the leases before this action was filed. Further, the Court finds there was no unreasonable delay
in the recording of Paloma’s assignment of the leases; the assignment was recorded only two weeks
after it was executed. Thus, the Court finds that the lis pendens doctrine does not appear to apply
in this case.
Additionally, even if the lis pendens doctrine applied in this case, the Court finds that said
doctrine does not usurp this Court’s analysis of whether Paloma is a necessary and indispensable
party. Further, based upon Lind v. Goble, 246 P. 472 (Okla. 1926), it appears that any judgment
in this case would be res judicata against Paloma and would operate as an estoppel against the
assertion of Paloma’s rights. The Court, thus, finds the effect of the lis pendens doctrine justifies
the need to conduct the necessary and indispensable analysis and supports a finding of
Under Rule 12(b)(7), a court may dismiss a case for failure to join a necessary and
indispensable party under Rule 19. “When applying Rule 19, a district court must first determine
whether the absent party is necessary to the lawsuit and, if so, whether joinder of the absent party
is feasible.” Davis v. United States, 192 F.3d 951, 957 (10th Cir. 1999) (internal citation omitted).
Rule 19(a) provides, in pertinent part:
(a) Persons Required to Be Joined if Feasible.
(1) Required Party. A person who is subject to service of
process and whose joinder will not deprive the court of subjectmatter jurisdiction must be joined as a party if:
(A) in that person’s absence, the court cannot accord
complete relief among existing parties; or
(B) that person claims an interest relating to the
subject of the action and is so situated that disposing of the
action in the person’s absence may:
(i) as a practical matter impair or impede the
person’s ability to protect the interest; or
(ii) leave an existing party subject to a
substantial risk of incurring double, multiple, or
otherwise inconsistent obligations because of the
Fed. R. Civ. P. 19(a)(1).
Defendants contend that absent Paloma, the owner of leases at issue in this case, the Court
cannot make the requested determination without severely prejudicing the lessee’s rights.2 Having
The Court would note that plaintiff does not address whether Paloma is an indispensable party in
reviewed the parties’ submissions, the Court finds that Paloma is necessary to this lawsuit.
Specifically, the Court finds that Paloma claims an interest relating to the subject of this case –
Paloma owns the leases that plaintiff is asking the Court to declare as a matter of law are of no
current force and effect. Further, the Court finds that disposing of this case in Paloma’s absence
may as a practical matter impair or impede Paloma’s ability to protect the interest. As set forth
above, under Lind, it appears that any judgment in this case would be res judicata against Paloma
and will operate as an estoppel against the assertion of Paloma’s rights. Finally, the Court finds
that because plaintiff and Paloma are not diverse, joinder of Paloma is not feasible as this Court
would no longer have subject matter jurisdiction over this case.
If an absent party is necessary but cannot be joined, the district court
must then ascertain whether in equity and good conscience the
action should proceed among the parties before it, or should be
dismissed. If the district court concludes the action cannot proceed
in equity and good conscience, it must deem the absent party
indispensable and dismiss the suit.
Davis, 192 F.3d at 959 (internal quotations and citations omitted). Rule 19(b) enumerates four
factors which must be weighed when determining whether in equity and good conscience a suit
can proceed in the absence of a necessary party:
(1) the extent to which a judgment rendered in the person’s absence
might prejudice that person or the existing parties;
(2) the extent to which any prejudice could be lessened or avoided
(A) protective provisions in the judgment;
(B) shaping the relief; or
(C) other measures;
(3) whether a judgment rendered in the person’s absence would be
(4) whether the plaintiff would have an adequate remedy if the
action were dismissed for nonjoinder.
Fed. R. Civ. P. 19(b).
Having weighed the above factors, the Court finds that in equity and good conscience this
action cannot proceed in the absence of Paloma. Specifically, in the case at bar, plaintiff seeks to
nullify Paloma’s leasehold interests. Clearly, Paloma will be prejudiced, particularly in light of
the likely res judicata effect of any judgment, if a judgment is rendered in its absence. “No
procedural principle is more deeply imbedded in the common law than that, in an action to set
aside a lease or a contract, all parties who may be affected by the determination of the action are
indispensable.” Jicarilla Apache Tribe v. Hodel, 821 F.2d 537, 540 (10th Cir. 1987) (internal
quotations and citation omitted). Second, the Court finds that there are no alternative measures
that could be employed that would protect Paloma’s interests. Third, the Court finds that any
judgment rendered in Paloma’s absence would not be adequate and would likely result in
additional litigation. Finally, the Court finds plaintiff would have an adequate remedy if this action
were dismissed for nonjoinder. As set forth in defendants’ motion, there are other courts that are
capable of adjudicating this dispute.
Accordingly, for the reasons set forth above, the Court GRANTS defendants’ Motion to
Dismiss Plaintiff’s Amended Complaint [docket no. 10] and DISMISSES this action.
IT IS SO ORDERED this 30th day of March, 2017.
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