Corder v. Antero Resources Corporation et al

Filing 239

MEMORANDUM OPINION AND ORDER GRANTING THE PLAINTIFFS' MOTION TO AMEND THEIR COMPLAINTS (DKT. NO. 184 ). Signed by Senior Judge Irene M. Keeley on 5/4/21. (mh)

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF WEST VIRGINIA
GERALD W. CORDER,
Plaintiff,
v.

CIVIL ACTION NO. 1:18CV30
(Judge Keeley)

ANTERO RESOURCES CORPORATION,

c/w 1:18CV31, 1:18CV32,
1:18CV33, 1:18CV34, 1:18CV35,
1:18CV36, 1:18CV37, 1:18CV38,
1:18CV39, and 1:18CV40

Defendant.

MEMORANDUM OPINION AND ORDER GRANTING THE PLAINTIFFS’
MOTION TO AMEND THEIR COMPLAINTS [DKT. NO. 184]

These

consolidated

cases

involve

claims

for

breach

of

contract related to royalty payments for natural gas interests.
The

plaintiffs

are

Gerald

W.

Corder,

Marlyn

Sigmon,

Garnet

Cottrill, Randall N. Corder, Janet C. Packard, Leroy Packard,
Lorena Krafft, Cheryl Morris, Tracy Bridge, Angela Nicholson,
Kevin McCall, and Brian McCall (collectively “the Plaintiffs”).
All are owners of several mineral interests in Harrison County and
Doddridge County, West Virginia. They allege that the defendant,
Antero Resources Corporation (“Antero”), improperly deducted postproduction costs from royalty payments due them under certain oil
and gas leases (“the Leases”) (Dkt. No. 30 at 34). 1 Id. Antero
denies these allegations (Dkt. Nos. 39).
Unless otherwise noted, citations to docket entries herein refer
to Civil Action No. 1:18CV30.
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1:18CV30

MEMORANDUM OPINION AND ORDER GRANTING THE PLAINTIFFS’
MOTION TO AMEND THEIR COMPLAINTS [DKT. NO. 184]
Pending is the Plaintiffs’ motion to amend their complaints,
which the Court now GRANTS (Dkt. No. 184).
I.

Background

A. Factual Allegations
The Plaintiffs allege that they own oil and gas interests
that were leased, assigned or otherwise acquired by and presently
held by Antero. 2 They also assert that Antero had duties and
responsibilities to them pursuant to leases covering the following
tracts of land:
(A)

48.69 acres (Deed Book 393, Page 399)

Several leases cover this tract which require Antero to pay
a royalty “on gas, including casinghead gas or other gaseous
substance, produced from said land and sold or used beyond the
well or for the extraction of gasoline or other product, [in] an
amount equal to One-Eighth (12.5%) (amended to be 15%) of the net
amount realized by Lessee computed at the wellhead from the sale
of such substances” (Dkt. No. 30 at 25).
(B)

50.82 acres (Deed Book 839, Page 23)

The lease covering this tract requires Antero “to pay oneeighth (1/8) of the value at the well of gas from each and every
gas well from which is marketed and used off the premises.” The
The recitation of the facts is taken from the second amended
complaints (Dkt. No. 30).
2
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MEMORANDUM OPINION AND ORDER GRANTING THE PLAINTIFFS’
MOTION TO AMEND THEIR COMPLAINTS [DKT. NO. 184]
Plaintiffs claim that this lease was later amended to require “1/8
of the value of the gas from each well.” Id.
(C)

54.18 acres (Deed Book 1082, Page 656)

The lease covering this tract requires Antero to pay “oneeighth of the value at the well of the gas from each and every
well.” Id. at 25-26.
(D)

104.75 acres (Deed Book 1103, Page 733)

The lease covering this tract requires Antero “to pay 1/8 of
the price received by the lessee from the sale of such gas.” Id.
at 26.
(E)

59 acres (Deed Book 1084, Page 203)

The lease covering this tract requires Antero to pay “1/8 of
the gross proceeds received from each and every well drilled on
said properties providing natural gas, an amount equal to oneeighth (1/8) of the gross proceeds received from the sale of same
at the prevailing price for gas at the well, for all natural gas
saved and marketed from the said premises.” Id.
(F)

105 acres (Deed Book 1084, Page 197)

The lease covering this tract requires Antero to pay “1/8 of
the gross proceeds received from each and every well drilled on
said properties providing natural gas, an amount equal to oneeighth (1/8) of the gross proceeds received from the sale of same
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MEMORANDUM OPINION AND ORDER GRANTING THE PLAINTIFFS’
MOTION TO AMEND THEIR COMPLAINTS [DKT. NO. 184]
at the prevailing price for gas at the well, for all natural gas
saved and marketed from the premises.” Id.
(G)

44.4 acres (Deed Book 99)

The lease covering this tract requires Antero to pay “$100
per year for each and every gas well obtained on the premises.”
Id.
(H)

50 acres (Deed Book 143, Page 291)

The lease covering this tract requires Antero to pay “1/8 of
the value at the well of the gas from each and every gas well
drilled on the premises.” Id.
According to the Plaintiffs, in violation of its contractual,
statutory and common law duties, Antero
ha[s] and continue[s] to take deductions, reduce
plaintiffs’ royalty payments, overcharge plaintiffs for
the deductions that they do charge plaintiffs, and
otherwise reduce and not pay for plaintiffs’ royalty on
volume and/or price and/or by taking the liquid
hydrocarbons which are part of the natural gas extracted
from
the
said
gas
and
subtracting
unauthorized
deductions therefrom.
Id. at 31. In addition, the Plaintiffs allege that Antero charged
them “with costs and charges which were unreasonably excessive and
not actual.” Id. at 32.
B. Procedural History
On December 6, 2017, the Plaintiffs filed a single complaint
in the Circuit Court of Harrison County, West Virginia against
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MEMORANDUM OPINION AND ORDER GRANTING THE PLAINTIFFS’
MOTION TO AMEND THEIR COMPLAINTS [DKT. NO. 184]
Antero Resources Corporation ("Antero"), Antero Midstream Partners
LP

("Midstream

Partners"),

Antero

Resources

Pipeline

LLC

("Pipeline"), and Antero Resources Investment LLC ("Investment")
(Dkt. No. 1-1). The state court severed the complaint and assigned
eleven separate civil action numbers. On February 12, 2018, Antero
and Midstream Partners removed the cases to this Court on the basis
of diversity jurisdiction (Dkt. No. 1). Because the cases raised
common questions of law and fact, the Court consolidated them under
Federal Rule of Civil Procedure 42(a) (Dkt. Nos. 29, 32, 38).
On March 9, 2018, the Plaintiffs amended their complaints to
state

four

causes

of

action:

breach

of

contract,

breach

of

fiduciary duty, fraud, and punitive damages (Dkt. No. 13). On June
11, 2018, the Court granted a motion to amend their complaints for
a second time, which allowed the Plaintiffs to set forth additional
allegations pertaining to the relevant chains of title for the
Leases (Dkt. Nos. 27, 29). The Court also granted in part the
defendants’
dismissing
defendants,

motion

to

Midstream
and

dismiss

the

Partners,

dismissing

all

second

Pipeline,
claims

amended
and

except

complaints,

Investment
the

as

Plaintiffs’

breach of contract claim (Dkt. No. 29 at 35-37).
Thereafter, Antero answered the Plaintiffs’ second amended
complaints, denying liability and asserting several affirmative
defenses, including payment and release (Dkt. No. 39). Relevant to
5

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MEMORANDUM OPINION AND ORDER GRANTING THE PLAINTIFFS’
MOTION TO AMEND THEIR COMPLAINTS [DKT. NO. 184]
the pending motion, Antero attached to its answer a Confidential
Settlement Agreement and Release of All Claims (“the Settlement
Agreement”) executed in August 2015 by Antero and plaintiffs Gerald
W. Corder, Randall N. Corder, Lorena Krafft, Cheryl Morris, Tracy
Bridge, Angela Nicholson, Kevin McCall, and Brian McCall (“the
Settling Plaintiffs”) 3 (Dkt. Nos. 39 at 31, 50 at 1). The Settlement
Agreement terminated a partition action filed by Antero in the
Circuit Court of Harrison County, West Virginia. 4 See Dkt. No. 50
at 1. In addition to the tracts affected by the partition suit,
the Settlement Agreement acknowledged that the Settling Plaintiffs
owned interests in several other properties located throughout
Harrison County, and identified those properties in an attached
Master Property List (“MPL”). Id. at 2. Pursuant to the Settlement
Agreement,

the

Settling

Plaintiffs

released

all

claims

or

potential claims relating in any way to the partition action or
the properties listed in the MPL that arose prior to the date of
the Settlement Agreement. Id. 2-3.
In addition, Paragraph 14 of the Settlement Agreement stated:

Plaintiffs Marilyn Sigmon, Garnett C. Cottrill, Janet Packard,
and Leroy Packard were not parties to the Settlement Agreement.
4 Pursuant to W. Va. Code § 37-4-1, et seq., Antero and its coplaintiff sought allotment or partition of the Settling
Plaintiffs’ mineral interests in certain tracts of land located in
Harrison County, West Virginia (Dkt. No. 50 at 1).
3

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MEMORANDUM OPINION AND ORDER GRANTING THE PLAINTIFFS’
MOTION TO AMEND THEIR COMPLAINTS [DKT. NO. 184]
Antero acknowledges that per the terms of said June 29,
1979 leases identified in the preceding two paragraphs,
production royalties payable pursuant to said leases
shall be deemed gross royalties and shall be calculated
without
regard
to
any
postproduction
or
market
enhancements costs claimed or incurred by Antero.
Id. at 5.
Paragraph 11 of the Settlement Agreement, however, required
the Settling Plaintiffs to execute lease modifications for all
properties identified on the MPL. Id. at 4. These included each of
the Plaintiffs’ properties at issue here, except for a 50-acre
tract located in Doddridge County, West Virginia (Tract H). Id. at
11-12. This lease modification, which was labeled “Exhibit A” to
the Settlement Agreement, is attached to the Plaintiffs’ Leases
regarding a 48.69-acre tract located in Harrison County, West
Virginia (Tract A). See Id. at 21; Dkt. No. 30-2 at 6. The
modification contains a Market Enhancement (Gross Proceeds) Clause
(“the Market Enhancement Clause”), which provides that
all oil, gas or other proceeds accruing to the Lessor
under this lease or by state law shall be without
deduction, directly or indirectly, for the cost of
producing, gathering, storing, separating, treating,
dehydrating, compressing, processing, transporting, and
marketing the oil, gas and other products produced
hereunder to transform the product into marketable form;
however, any such costs which result in enhancing the
value of the marketable oil, gas or other products to
receive a better price may be deducted from Lessor’s
share of production so long as they are based on Lessee’s
actual cost of such enhancements. However, in no event
shall Lessor receive a price that is less than, or more
than, the price received by Lessee
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MEMORANDUM OPINION AND ORDER GRANTING THE PLAINTIFFS’
MOTION TO AMEND THEIR COMPLAINTS [DKT. NO. 184]
(Dkt. No. 30-2 at 6).
Since the inception of this litigation, Antero has contended
that the Settlement Agreement bars the Settling Plaintiffs from
bringing this breach of contract action. Consequently, it has
sought to dismiss all of their claims (Dkt. No. 44). Finding their
general release of all potential claims against Antero to be
unambiguous,

the

Court

dismissed

with

prejudice

the

Settling

Plaintiffs’ breach of contract claims related to the properties
listed on the MPL that arose before the execution of the Settlement
Agreement (Dkt. No. 75 at 17).
The Plaintiffs have now moved for summary judgment on their
remaining breach of contract claims. They contend that the plain
language of the Settlement Agreement and the Market Enhancement
Clause

included

as

part

of

the

Settling

Plaintiffs’

lease

modification prohibits Antero from deducting any post-production
or market enhancement costs from their royalty payments (Dkt. No.
201-1 at 1). Antero opposes the motion, asserting it is based
entirely on Antero’s alleged breach of the Settlement Agreement,
which the Plaintiffs failed to reference in their second amended
complaints (Dkt. No. 180 at 3, 5-6). 5
Although in their second amended complaints the Plaintiffs have
alleged that Antero breached its contractual duties under the
Leases and the Market Enhancement Clause, they failed to reference
8

5

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MEMORANDUM OPINION AND ORDER GRANTING THE PLAINTIFFS’
MOTION TO AMEND THEIR COMPLAINTS [DKT. NO. 184]
Following the full briefing of the parties’ motions for
summary judgment, the Plaintiffs moved to amend their complaints
for a third time to “add specificity to their allegations and
clarify

that

the

Settlement

Agreement

and

Market

Enhancement

Clause were a part of the same agreement” (Dkt. No. 184 at 2-3).
This motion is now ripe for review.
II.
A.

Discussion

Applicable Law
Plaintiffs seeking to amend their pleading after the deadline

in the scheduling order has passed must satisfy the standards in
both Federal Rule of Civil Procedure 16(b) and Federal Rule of
Civil Procedure 15(a). Nourison Rug Corp. v. Parvizian, 535 F.3d
295, 298 (4th Cir. 2008).
Pursuant to FRCP 16(b), a motion to amend the complaint filed
after the scheduling order deadline shall be granted upon a showing
of “good cause.” Montgomery v. Anne Arundel Cty., Maryland, 182 F.
App'x 156, 162 (4th Cir. 2006); Nourison, 535 F.3d at 298. This
standard “focuses on the timeliness of the amendment and the
reasons for its tardy submission; the primary consideration is the
diligence of the moving party.” Montgomery, 182 F. App'x at 162.

or attach the relevant Settlement Agreement. See Dkt. No. 30; Dkt.
No. 180 at 5-6.
9

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MEMORANDUM OPINION AND ORDER GRANTING THE PLAINTIFFS’
MOTION TO AMEND THEIR COMPLAINTS [DKT. NO. 184]
Pursuant to FRCP 15(a), however, leave to amend “shall be
freely given when justice so requires.” A motion to amend should
be granted unless it would be prejudicial to the opposing party,
there has been bad faith, or the amendment would be futile. HCMF
Corp. v. Allen, 238 F.3d 273, 276-77 (4th Cir. 2001). Whether an
amendment is prejudicial depends on the nature of the amendment
and its timing. Laber v. Harvey, 438 F.3d 404, 427 (4th Cir. 2006).
The further a case progresses, the more likely it is that the
defendant will be prejudiced; but mere delay is an insufficient
reason to deny leave to amend. Foman v. Davis, 371 U.S. 178, 182
(1962). An amendment is futile if it fails to state a claim upon
which relief may be granted. United States ex rel. Wilson v.
Kellogg Brown & Root, Inc., 525 F.3d 370, 376 (4th Cir. 2008).
B.

Discussion
Here, the Plaintiffs seek to amend their complaints to add

specificity to their breach of contract allegations and to clarify
that the Settlement Agreement and the Market Enhancement Clause
were part of the same agreement. Because they filed their motion
after the deadline set by the Court’s scheduling order, June 30,
2018, they must satisfy both FRCP 16(b) and FRCP 15(a).
1.

FRCP 16(b)

Despite failing to incorporate the Settlement Agreement into
their

second

amended

complaints,
10

the

Plaintiffs

sufficiently

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MEMORANDUM OPINION AND ORDER GRANTING THE PLAINTIFFS’
MOTION TO AMEND THEIR COMPLAINTS [DKT. NO. 184]
pleaded a breach of contract claim premised on their numerous
leases with Antero and the Market Enhancement Clause (Dkt. Nos.
209 at 7-8, 30 at 25-26). Although it is undisputed that they
signed the Settlement Agreement in August 2015, the Plaintiffs did
not

inform

their

current

counsel

of

this

fact

due

to

the

confidentiality clause contained in the agreement (Dkt. No. 184 at
3).

Accordingly,

Plaintiffs’

counsel

never

learned

of

the

Settlement Agreement’s existence until after Antero made it part
of the record in this case and after the Court’s deadline to amend
pleadings had passed. Id.
Critically, the Settlement Agreement adds no new claims or
legal theories to the case, but rather is a part of the Leases
that have always been at the forefront of the case. Since their
counsel learned of the existence of the Settlement Agreement in
August 2018, the Plaintiffs have diligently pursued their breach
of contract claim and developed their case around Antero’s alleged
breach of the Leases, Settlement Agreement, and Market Enhancement
Clause. The parties have litigated this case and prepared for trial
as if the Plaintiffs had pleaded a breach of the Settlement
Agreement in their second amended complaints. Accordingly, no
additional

discovery

or

briefing

would

be

necessary

if

the

Plaintiffs are granted leave to file their proposed third amended
complaints.
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MEMORANDUM OPINION AND ORDER GRANTING THE PLAINTIFFS’
MOTION TO AMEND THEIR COMPLAINTS [DKT. NO. 184]
2.

FRCP 15(a)

The Plaintiffs’ request to amend also is not prejudicial to
Antero; it has not been made in bad faith, nor is it futile. First,
the Plaintiffs’ proposed amendment neither unduly delays these
actions nor unduly prejudices Antero. Although the Plaintiffs
filed their motion to amend after the close of discovery and after
the parties have filed cross-motions for summary judgment, delay
alone is an insufficient reason to deny their motion to amend.
Foman, 371 U.S. at 182. And, although the Plaintiffs could have
moved

to

amend

their

complaints

after

Antero

disclosed

the

Settlement Agreement, there is no risk of surprise to Antero
because the Plaintiffs’ position regarding the impact of the
Settlement Agreement on their claims has been well known to Antero
throughout this litigation.
Nor

will

including

specific

mention

of

the

Settlement

Agreement to the Plaintiffs’ breach of contract claim add new facts
or issues requiring additional discovery. Instead of complicating
the case with new causes of action or legal theories, the proposed
amendment merely adds specificity to the terms of the parties’
contract and the Plaintiffs’ breach of contract claim. Because the
Market Enhancement Clause and the Settlement Agreement were part
of the same settlement and contract, the parties have developed
this case as they would have had the Plaintiffs initially included
12

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MEMORANDUM OPINION AND ORDER GRANTING THE PLAINTIFFS’
MOTION TO AMEND THEIR COMPLAINTS [DKT. NO. 184]
allegations of Antero’s breach of the Settlement Agreement in their
second amended complaints. Moreover, both parties have addressed
the Settlement Agreement’s impact on the Leases and the Plaintiffs’
breach of contract claims in their motions for summary judgment.
Thus, the nature of the proposed amendment does not prejudice
Antero despite the late stage of the proceedings.
Second, the proposed third amended complaints have not been
offered in bad faith. The Plaintiffs initially did not incorporate
the Settlement Agreement into their breach of contract claim out
of fear of being found in breach of its confidentiality clause.
The proposed amendment seeks nothing more than to conform the
pleadings to the claims the parties have developed over the course
of the litigation. Thus, Plaintiffs’ desire to amend their claim
has not been interposed as a dilatory tactic or a motion made in
bad faith.
Finally, the Plaintiffs’ amendment would not be futile. As
the Court discussed in its Memorandum Opinion and Order granting
in part and denying in part Antero’s motion to dismiss (Dkt. No.
29 at 19-22), the Plaintiffs have sufficiently pleaded a breach of
contract claim based on the Lease and the Market Enhancement
Clause. Allowing this amendment would add helpful detail already
known to both sides.
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MEMORANDUM OPINION AND ORDER GRANTING THE PLAINTIFFS’
MOTION TO AMEND THEIR COMPLAINTS [DKT. NO. 184]
Nevertheless, as Antero contends, the Plaintiffs’ proposed
reassertion of claims against Midstream Partners, Pipeline, and
Investment, as well as their claims of breach of fiduciary duty,
fraud, and punitive damages is futile for the reasons addressed in
the

Court’s

prior

order

that

dismissed

with

prejudice

these

defendants and claims. Id. at 7-12, 23-34. Therefore, to the extent
the Plaintiffs seek to reassert such claims, the Court’s prior
dismissal order precludes them from doing so.
III. Conclusion
For the reasons discussed, pursuant to FRCP 16(b) and FRCP
15(a), the Court GRANTS the Plaintiffs’ motion to amend and leave
to file their complaints (Dkt. No. 184).
It is so ORDERED.
The Clerk SHALL transmit copies of this Memorandum Opinion
and Order to counsel of record.
DATED: May 4, 2021.
/s/ Irene M. Keeley
IRENE M. KEELEY
UNITED STATES DISTRICT JUDGE

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