Crihfield et al v. EQT Production Company et al
Filing
76
MEMORANDUM OPINION AND ORDER GRANTING PLAINTIFFS' MOTION TO TRANSFER (DKT. NO. 72 AND CONDITIONALLY TRANSFERRING THE CASE. Case reassigned to District Judge John Preston Bailey for all further proceedings. District Judge Irene M. Keeley no longer assigned to case Signed by Senior Judge Irene M. Keeley on 10/11/18. (mh)
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF WEST VIRGINIA
PATTY J. CRIHFIELD and
R. KEITH CRIHFIELD,
Plaintiffs,
v.
EQT
EQT
EQT
EQT
//
CIVIL ACTION NO. 1:17CV34
(Judge Keeley)
PRODUCTION COMPANY,
CORPORATION, EQT ENERGY, LLC,
INVESTMENTS HOLDINGS, LLC, and
GATHERING, LLC,
Defendants.
MEMORANDUM OPINION AND ORDER GRANTING PLAINTIFFS’ MOTION TO
TRANSFER [DKT. NO. 72] AND CONDITIONALLY TRANSFERRING THE CASE
The
plaintiffs,
Patty
J.
and
R.
Keith
Crihfield
(“collectively, “the Crihfields”), have moved to transfer their
claims in this case to a related case at the Wheeling point of
holding court that has been certified as a class action. The
defendants, EQT Production Company, EQT Corporation, EQT Energy,
LLC,
EQT
Investment
Holdings,
LLC,
and
EQT
Gathering,
LLC
(collectively, “EQT”), oppose the transfer (Dkt. No. 73). For the
following reasons, the Court GRANTS the Crihfields’ motion (Dkt.
No. 72) and CONDITIONALLY TRANSFERS this case to the docket of the
Honorable John Preston Bailey.
I.
The Crihfields are owners of oil and natural gas mineral
interests in Doddridge County, West Virginia. On December 12, 2016,
CRIHFIELD, et ux. v. EQT PRODUCTION, et al.
1:17CV34
MEMORANDUM OPINION AND ORDER GRANTING PLAINTIFFS’ MOTION TO
TRANSFER [DKT. NO. 72] AND CONDITIONALLY TRANSFERRING THE CASE
they filed suit in the Circuit Court of Doddridge County against
EQT (Dkt. No. 1-1), alleging that EQT did not pay agreed upon
royalties for the lease of their oil and natural gas mineral
interests.
Specifically,
they
allege
that
EQT
deducted
post-production costs, such as transportation and processing, in
violation of the lease provisions.
They further allege that EQT
engaged in an elaborate scheme to use various corporate structures
to
pay
its
own
subsidiaries
and
sister
companies
the
post-production costs. On March 2, 2017, EQT removed the case to
this Court based upon diversity of citizenship (Dkt. No. 1).
After EQT filed multiple motions to dismiss for failure to
state a claim (Dkt. Nos. 3, 5, 7), the Crihfields moved for leave
to amend their complaint (Dkt. No. 11). After the Court granted the
motion, the Crihfields filed their amended complaint on March 27,
2017, asserting four causes of action: (1) Breach of Contract, (2)
Breach of Fiduciary Duty, (3) Misrepresentation/Fraud, and (4)
Punitive Damages (Dkt. No. 16).
When EQT Production Company (“EQT Production”) filed its
answer, it also filed a motion to dismiss Count Two, Breach of
Fiduciary Duty, for failure to state a claim. (Dkt. Nos. 19; 20).
EQT Corporation, EQT Energy, LLC, EQT Investment Holdings, LLC, and
EQT Gathering, LLC (collectively, “the EQT Entities”) moved to
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CRIHFIELD, et ux. v. EQT PRODUCTION, et al.
1:17CV34
MEMORANDUM OPINION AND ORDER GRANTING PLAINTIFFS’ MOTION TO
TRANSFER [DKT. NO. 72] AND CONDITIONALLY TRANSFERRING THE CASE
dismiss Counts One through Four. In June 2017, at an initial
scheduling conference, the plaintiffs indicated that the case
should be stayed pending further developments in Leggett v. EQT
Production, et al., 800 S.E.2d 850 (W. Va. 2017). Finding good
cause to do so, the Court stayed the case (Dkt. No. 35).
During a status conference on September 7, 2017, the Court
heard argument on the defendants’ motions to dismiss and concluded
that the Crihfields had failed to state a claim for Breach of
Fiduciary Duty, but had adequately pleaded claims for Breach of
Contract,
Misrepresentation/Fraud,
and
Punitive
Damages.
It
therefore dismissed Count Two of the amended complaint (Dkt. No.
38).1
During another status conference on September 14, 2017, the
parties requested that the Court reimpose the stay in the case
while a petition for writ of certiorari in Leggett was pending
before the Supreme Court of the United States. The parties also
advised that they intended to continue conducting discovery in
related cases, including The Kay Company, LLC, et al. v. EQT
Production Company, et al., Civil Action Number 1:13-CV-151 (“the
Kay Company case”)(Bailey, J.), and agreed that such discovery
1
Shortly thereafter, the parties stipulated to the dismissal
of defendant EQT Midstream Partners, LP (Dkt. No. 40).
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MEMORANDUM OPINION AND ORDER GRANTING PLAINTIFFS’ MOTION TO
TRANSFER [DKT. NO. 72] AND CONDITIONALLY TRANSFERRING THE CASE
would apply to the instant case. The Court stayed the case, and
scheduled a discovery completion date of July 30, 2018 (Dkt. No.
40).
Following the completion of discovery, the Crihfields advised
that they intended to seek leave to transfer their claims
to the
Kay Company class action pending before Judge Bailey. The Court set
a schedule for briefing the motion to transfer (Dkt. No. 71). That
motion is now fully briefed and ripe for disposition.
II.
28 U.S.C. § 1404(b) states in pertinent part, that “upon
motion, consent or stipulation of the parties, any action, suit or
proceeding of a civil nature . . . , may be transferred, in the
discretion of the court, from the division in which pending to any
other division in the same district.” In addition, “[f]or the
convenience of parties and witnesses, in the interest of justice,
a district court may transfer any civil action to any other
district or division where it might have been brought or to any
district or division to which all parties have consented. 28 U.S.C.
§ 1404(a).
Here, the Crihfields seek a transfer to the Wheeling division
of this District in order to pursue their claims as part of the Kay
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CRIHFIELD, et ux. v. EQT PRODUCTION, et al.
1:17CV34
MEMORANDUM OPINION AND ORDER GRANTING PLAINTIFFS’ MOTION TO
TRANSFER [DKT. NO. 72] AND CONDITIONALLY TRANSFERRING THE CASE
Company class action. The plaintiffs in Kay Company allege claims
for breach of contract, fraud, and punitive damages against EQT and
assert a theory of alter ego liability among the EQT Entities.
Judge Bailey has certified the following subclass of natural gas
lessors in the case:
All EQT natural gas lessors with flat rate leases
converted by operation of W. Va. Code, § 22-6-8 and that
received or were due to be paid royalties from defendants
and EQT’s production or sale of natural gas which was
produced within the boundaries of the State of West
Virginia from their estates during the period beginning
December 8, 2008, and extending to the present (during
any time within their leasehold period).
(Dkt. No. 72) (emphasis added). The Crihfields allege the following
interest in the flat rate lease at issue in this case:
Plaintiffs are the owners of those certain oil and
natural gas mineral interests lying and being in
Doddridge County, West Virginia, said interests described
generally in lease [sic] dated August 5, 1901, and
recorded in the Office of the Clerk of the County
Commission of Doddridge County, West Virginia at Deed
Book 19, Page 140, and referred to by defendants as
Equitable Lease No. 104916 and containing 351 acres, more
or less.
(Dkt. No. 16 at 1) (emphasis added).
The Crihfields’ mineral interests fall within the subclass of
flat
rate
leases
that
have
been
converted
to
1/8
leases
by
operation of Chapter 22, Article 6, Section 8(e) of the West
Virginia Code. As potential members of the subclass for lessors of
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CRIHFIELD, et ux. v. EQT PRODUCTION, et al.
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MEMORANDUM OPINION AND ORDER GRANTING PLAINTIFFS’ MOTION TO
TRANSFER [DKT. NO. 72] AND CONDITIONALLY TRANSFERRING THE CASE
converted flat rate wells, the Crihfields seek the opportunity to
pursue their claims against EQT as members of the Kay Company
class.
In support of their motion, the Crihfields argue that, because
this case and Kay Company involve the same claims, same defendants,
and same theory of liability, transferring the case would permit
“related litigation to be tried together,” thereby preventing
“multiplicity of litigation and . . . inconsistent results” (Dkt.
No. 74 at 2). Moreover, the same discovery has been conducted in
both cases, and the same fact and expert witnesses will testify at
both trials (Dkt. Nos. 72 at 3; 74 at 2). Finally, a transfer will
provide
for
judicial
efficiency
and
conservation
of
judicial
resources (Dkt. No. 74 at 2-3).
EQT asserts that the interest of justice weighs against
transfer (Dkt. No. 73). The Crihfields’ complaint was “filed years
after . . . the class action complaint in Kay Company,” and while
the Crihfields could have filed their claims in the class action,
they elected to file a separate case that has pending before this
Court since March. Id. at 2-3. Nor is transfer necessary to “avoid
trials involving lengthy and duplicative testimony from witnesses,”
inasmuch as this case involves “only one royalty payment practice.”
Id. at 3.
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CRIHFIELD, et ux. v. EQT PRODUCTION, et al.
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MEMORANDUM OPINION AND ORDER GRANTING PLAINTIFFS’ MOTION TO
TRANSFER [DKT. NO. 72] AND CONDITIONALLY TRANSFERRING THE CASE
EQT contends that the Crihfields’ request to transfer their
case and join the class action, especially at this late stage, is
“an impermissible attempt at forum shopping” based on rulings
adverse to EQT in the Kay Company case. In support of this
contention, it cites Judge Bailey’s ruling that the defendants
(i.e., the EQT Entities in this case) are alter egos of one
another. Id. at 4-5.
III.
After carefully considering the arguments of the parties, the
Court concludes that this case should be transferred to Judge
Bailey. First, transfer would not move the case out of the Northern
District of West Virginia, but merely to another division within
the District. 28 U.S.C. § 1404(b). Second, the Kay Company class
action over which Judge Bailey currently presides presents the same
substantive
questions
at
issue
here,
namely
whether
EQT
impermissibly deducted post-production costs from the lessors’
royalty payments, and whether the EQT defendants are alter egos of
one another. Transfer will avoid the possibility of disparate
rulings or inconsistent results. Moreover, having previously agreed
that the discovery in Kay Company shall apply to this case, the
parties have already coordinated and completed discovery in both
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MEMORANDUM OPINION AND ORDER GRANTING PLAINTIFFS’ MOTION TO
TRANSFER [DKT. NO. 72] AND CONDITIONALLY TRANSFERRING THE CASE
cases and have acknowledged that the same witnesses would testify
at both trials. Third, the inclusion of the Crihfields’ claims in
the Kay Company case will prevent duplicative trials, thereby
facilitating judicial efficiency and preserving limited judicial
resources.
Finally, although EQT argues that the Crihfields are seeking
to take advantage of Judge Bailey’s rulings in Kay Company, the
Court finds no blatant forum shopping. Judge Bailey’s decision
regarding the EQT Entities’ alter ego status may ultimately be
favorable
to
lessor-class
members
in
Kay
Company,
but
the
plaintiffs in that case must still prevail on their breach of
contract claim. Moreover, the Crihfields could not reasonably be
seeking to circumvent some adverse ruling at this point of holding
court inasmuch as the undersigned has not yet been presented with
the opportunity to rule on the alter ego issue in this or any other
case involving the EQT Entities.
IV.
The interest of justice weighs in favor of transferring the
instant case to Judge Bailey.
Therefore, for the reasons discussed,
the Court GRANTS the Crihfields’ Motion to Transfer Case (Dkt. No.
72) and CONDITIONALLY TRANSFERS this case to the docket of the
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CRIHFIELD, et ux. v. EQT PRODUCTION, et al.
1:17CV34
MEMORANDUM OPINION AND ORDER GRANTING PLAINTIFFS’ MOTION TO
TRANSFER [DKT. NO. 72] AND CONDITIONALLY TRANSFERRING THE CASE
Honorable John Preston Bailey at the Wheeling point of holding
court, subject to Judge Bailey’s approval of the Crihfields’
participation in The Kay Company, LLC, et al. v. EQT Production
Company, et al., Civil Action Number 1:13-CV-151, as members of the
subclass for lessors of converted flat rate wells.
It is so ORDERED.
The Court directs the Clerk to transmit copies of this Order
to counsel of record.
DATED: October 11, 2018.
/s/ Irene M. Keeley
IRENE M. KEELEY
UNITED STATES DISTRICT JUDGE
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