Magers et al v. Chesapeake Appalachia, LLC

Filing 59

MEMORANDUM OPINION AND ORDER granting Defendant CNX Gas Company, LLC's 44 Motion to Dismiss; CNX Gas Company, L.L.C. terminated as party defendant. Signed by Senior Judge Frederick P. Stamp, Jr on 8/13/13. (soa)

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF WEST VIRGINIA
JEREMIAH N. MAGERS and
ANDREA J. MAGERS,
Plaintiffs,
v.

Civil Action No. 5:12CV49
(STAMP)

CHESAPEAKE APPALACHIA, LLC
CNX GAS COMPANY, LLC and
COLUMBIA GAS TRANSMISSION, LLC,
Defendants.
MEMORANDUM OPINION AND ORDER
GRANTING DEFENDANT CNX GAS COMPANY, LLC’S MOTION TO DISMISS
I.
The

plaintiffs,

Procedural History

Jeremiah

Magers

and

Andrea

J.

Magers

(“Magers”), commenced this action by filing a complaint in the
Circuit Court of Marshall County, West Virginia.

The complaint

sought damages against Chesapeake Appalachia, LLC (“Chesapeake”)
for the alleged contamination of the Magers’ well with methane, and
the subsequent diminution in the value of their home, which the
plaintiffs claimed are a result of the Chesapeake’s drilling
operations on lands adjacent to the Magers’ home.

The complaint

claimed that Chesapeake violated §§ 22-6-30, -7-3 of West Virginia
Code and Chesapeake’s mining permit.

The plaintiffs asked for

compensatory and punitive damages due to the alleged methane
contamination.
Chesapeake removed the case to this Court claiming diversity
jurisdiction pursuant to 28 U.S.C. §§ 1332(a) and 1441(a).

The

plaintiffs then filed a motion to amend their complaint.

This

motion was granted and the amended complaint added CNX Gas Company,
LLC

(“CNX”)

defendants.

and

Columbia

Gas

Transmission

(“Columbia”)

as

This amended complaint only varied from the original

complaint in that it alleged that CNX’s shallow gas wells and
Columbia’s gas storage field also caused methane contamination of
their well.

Columbia submitted a motion to dismiss which, after

full briefing, was denied. The Court did, however, grant defendant
Columbia’s alternate motion which required the plaintiffs to file
a more definite statement.

The plaintiffs submitted their more

definite statement, which added several details to their original
allegations and an additional allegation of a West Virginia Code
§

22-6B-3

violation

committed

by

Chesapeake,

but

relied

on

primarily the same legal arguments.
CNX then filed a motion to dismiss.

This motion argues that

the amended complaint and more definite statement impermissibly
relied on legal conclusions, and that the plaintiffs’ legal theory
was inapplicable.

This prompted a memorandum in opposition by the

plaintiffs that argues that their pleadings put forth sufficient
claims under sound legal theories.

The reply brief by defendant

CNX again argues that plaintiffs cannot state a cause of action
under the cited laws.

For the reasons that follow, this Court will

grant the defendants’ motion to dismiss.

2

II.

Applicable Law

When assessing a motion to dismiss for failure to state a
claim under Rule 12(b)(6) of the Federal Rules of Civil Procedure,
a court must accept all well-pled facts contained in the complaint
as true.

Nemet Chevrolet, Ltd v. Consumeraffairs.com, Inc., 591

F.3d 250, 255 (4th Cir. 2009).

However, “legal conclusions,

elements of a cause of action, and bare assertions devoid of
further factual enhancement fail to constitute well-pled facts for
Rule 12(b)(6) purposes.” Id. (citing Ashcroft v. Iqbal, 129 S. Ct.
1937,

1949

(2009)).

This

Court

also

declines

to

consider

“unwarranted inferences, unreasonable conclusions, or arguments.”
Wahi v. Charleston Area Med. Ctr., Inc., 562 F.3d 599, 615 n.26
(4th Cir. 2009).
It has often been said that the purpose of a motion under Rule
12(b)(6) is to test the formal sufficiency of the statement of the
claim for relief; it is not a procedure for resolving a contest
about the facts or the merits of the case.

5B Charles Alan Wright

& Arthur R. Miller, Federal Practice and Procedure § 1356 (3d ed.
1998).

The Rule 12(b)(6) motion also must be distinguished from a

motion for summary judgment under Federal Rule of Civil Procedure
56, which goes to the merits of the claim and is designed to test
whether there is a genuine issue of material fact.

Id.

For

purposes of the motion to dismiss, the complaint is construed in
the light most favorable to the party making the claim and the

3

court’s inquiry is directed to whether the allegations constitute
a statement of a claim under Federal Rules of Civil Procedure 8(a).
Id. § 1357.
A complaint should be dismissed “if it does not allege ‘enough
facts to state a claim to relief that is plausible on its face.’”
Giarratano v. Johnson, 521 F.3d 298, 302 (4th Cir. 2008) (quoting
Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)).

“Facial

plausibility is established once the factual content of a complaint
‘allows

the

court

to

draw

the

reasonable

inference

that

the

defendant is liable for the misconduct alleged.’” Nemet Chevrolet,
591 F.3d at 256 (quoting Iqbal, 129 S. Ct. at 1949).

Detailed

factual allegations are not required, but the facts alleged must be
sufficient “to raise a right to relief above the speculative
level.”

Twombly, 550 U.S. at 555.
III.

Discussion

The plaintiffs rely on three statutes, West Virginia Code
§§ 22-6, -6B, -7, as the legal basis for their claims.

CNX claims

that none of these statutes provide the plaintiffs with a cause of
action and, therefore, their case should be dismissed.

First, the

possibility of recovery will be addressed under the text of the
statutes.

Next, the possibility of recovery under a theory of

implied cause of action will be addressed.

Finally, this Court

will discuss the adequacy of a potential common law claim.

4

A.

Statutory claims based on an explicit cause of action
Article 6B (Oil and Gas Horizontal Well Production Damage

Compensation)

and

Article

7

(Oil

and

Gas

Production

Damage

Compensation) of Chapter 22 of the West Virginia Code are very
similar in their layout and purpose, thus the Court will evaluate
them in parallel. CNX argues that neither of these articles create
a cause of action for the Magers because the Magers’ land is merely
adjacent to the land upon which drilling activities have taken
place.

Further, CNX states that the Magers have not claimed that

drilling has occurred on their property.

When interpreting a

statute, this Court begins, as always, with the text.

At first

glance, there is ambiguity in the sections referring to those for
whom compensation for polluted waters is available, as they merely
reference liability to the “surface owner” for damages as a result
of drilling.

W. Va. Code §§ 22-6B-3(a), -7-3(a).

However, the

enacted purpose and definition sections for these statutes specify
who qualifies as a surface owner and thus who has a right to be
compensated.
The legislature enacted purpose sections to supplement the
statutes at issue in the instant case.

These purpose sections

contain nearly identical wording, which states that the law is
intended to protect surface owners of lands where the wells are
drilled.

W. Va. Code §§ 22-6B-1(c) (“It is the purpose of this

article to provide . . . compensation to surface owners of lands on

5

which horizontal wells are drilled.”) (emphasis added); W. Va. Code
§§ 22-7-1(d) (“It is the purpose of this article to provide . . .
compensation to surface owners of lands on which oil and gas wells
are drilled.”) (emphasis added).
Both statutes also provide definitions for what constitutes a
surface estate and a surface owner.

While the definition of

surface owner is not directly limited to superjacent landowners,
the

term

surface

estate

is

limited,

and

definitions should be read in concert.

it

appears

the

two

The definition sections

define “[s]urface estate” as “an estate in or ownership of the
surface of a particular tract of land overlying the oil or gas
leasehold being developed.”
(emphasis added).

W. Va. Code §§ 22-6B-2(6), -7-2(5)

The same sections define a “[s]urface owner” as

a person “who owns an estate in fee in the surface of the land.”
W. Va. Code §§ 22-6B-2(7), -7-2(6).

This definition means, in

other words, that a surface owner is an owner of a surface estate.
Therefore, the limited scope of surface estates should also apply
to surface owners, and surface estates are limited to lands where
development is occurring.

From these purpose and definition

sections, it can be discerned that these statutes were intended to
protect

the

surface

owners

overlying

mineral

estates

being

developed by oil and gas operators, but not adjacent land owners.
Other courts have recognized the same limitation of surface
owners who can recover under Article 7, Chapter 22.

6

CSX Transp. v.

PKV Ltd. P’ship, 906 F. Supp. 339, 344 (S.D. W. Va. 1995);
Depeterdy v. Cabot Oil & Gas Corp., No. CA-97-966-2, 1999 WL
33229744, at *3 (S.D. W. Va. 1999).

Given that the Magers do not

claim that the drilling is occurring on their land, they cannot
state a claim under West Virginia Code §§ 22-6B and 22-7 against
any of the defendants.
The plaintiffs also claim that recovery is warranted under
West

Virginia

Code

§

requirements.

Under

enforcement

left

is

22-6-30,
the
to

which

explicit

the

sets

forth

language

Secretary

of

the

of

reclamation
Article

6,

Department

of

Environmental Protection, known as the “[d]irector” in the statute
and herein.

W. Va. Code § 22-6-1(f).

The specific statute that

the plaintiffs rely on, West Virginia Code § 22-6-30, controls the
reclamation of drilling sites when the drilling process ends and
the well is plugged.

See W. Va. Code § 22-6-30.

It sets out how

the surface should be restored and mentions only the involvement of
the director in this process.

Id.

Further, there is no mention of

a private cause of action for adjacent landowners in regards to
reclamation.

Additionally, the state of the well, and therefore

which requirements are applicable, has not been made clear by
either party.
Finally, the plaintiffs also vaguely reference the duty that
defendants owe them by virtue of their mining permits.
¶ 11.

ECF No. 1

Permits for operating wells are required by West Virginia

7

Code § 22-6-6(a) and the volume and concentration of pollutants
discharged by the wells are limited by this permit.
§ 22-6-7(4).

W. Va. Code

Prosecution of such violations, however, is left

solely to the director.

W. Va. Code §§ 22-6-34, -11-22(a) (“Any

such civil penalty may be imposed and collected only by a civil
action instituted by the director.”); see also W. Va. Code St. R.
§

47-10-16.2

(allowing

public

involvement

by

requiring

investigation of and response to complaints addressed to the
director).

Further, the director may propose a “mechanism for the

administrative resolution of violations” as an alternative to
prosecution.

W. Va. Code §§ 22-11-34(b).

Nothing in Chapter 22,

Article 6, 6B, or 7 explicitly allows for a private right of action
to adjacent surface owners, so the plaintiffs’ statutory claims
will be sufficient only if a right of action can be implied.
B.

Statutory claims based on an implied cause of action
The plaintiffs have not directly argued that their claims fall

under

an

implied

private

cause

of

action.

Their pleadings,

however, could be so interpreted and CNX has addressed that issue
in their motion to dismiss, claiming that the statutes should not
give rise to a private cause of action.
Supreme

Court

applicability

of
of

Appeals
implied

of

West

private

ECF No. 44 *3-4.

Virginia

cause

of

determines

actions

under

following four part test:
(1) the plaintiff must be a member of the class for whose
benefit the statute was enacted; (2) consideration must
8

The
the
the

be given to legislative intent, express or implied, to
determine whether a private cause of action was intended;
(3) an analysis must be made of whether a private cause
of action is consistent with the underlying purposes of
the legislative scheme; and (4) such private cause of
action must not intrude into an area delegated
exclusively to the federal government.
Hurley v. Allied Chemical Corporation, 262 S.E.2d 757, 758 (W. Va.
1980).
Recent case law has found that the most important factor in
applying Hurley is legislative intent. Fucillo v. Kerner (ex. rel.
J.B.),

No.

11-1783,

2013

WL

2460731

(W.

Va.

June

5,

2013).

Unfortunately, the legislative history available for the statutes
at issue is not substantive.
Spec. Sess. H.B. 401.

See, e.g., WV H.D. B. Hist., 2012 4th

As mentioned above, legislative purpose and

findings were written into the text for two of the statutes, W. Va.
Code §§ 22-6B-1, -7-1, but not for the reclamation or permit
sections, W. Va. Code §§ 22-6-6, -30.

Because of this fact, West

Virginia Code §§ 22-6B-1, 7-1 will be addressed first.
As explained earlier, West Virginia Code Articles 22-6B and
22-7 are nearly identical statutes and they address compensation to
surface owners overlying minerals in the process of development.
The legislative purpose sections of Articles 6B and 7 directly
address the second factor under Hurley, legislative intent, and
also reflect on the first and third factors.

See W. Va. Code

§ 22-6B-1(c) (“It is the purpose of this article to provide . . .
compensation to surface owners of lands on which horizontal wells

9

are drilled.”) (emphasis added); W. Va. Code § 22-7-1(d) (“It is
the purpose of this article to provide . . . compensation to
surface owners of lands on which oil and gas wells are drilled.”)
(emphasis added).

These sections render the argument that the

legislature intended a private cause of action for the plaintiffs
untenable.
expressly

After all, the beneficiaries of both statutes are
limited

to

exclude

adjacent

surface

owners.

The

plaintiffs in this case are undisputedly not the owners of land
where the subject drilling is occurring. Given that the plaintiffs
are not members of the class to be benefitted from the legislation
and the importance of legislative intent, a private cause of action
cannot be implied from West Virginia Code §§ 22-6B or -7 for these
plaintiffs.
For the two latter sections, West Virginia Code §§ 22-6-6,
-30, legislative intent regarding an implied cause of action should
be inferred from their context and composition because explicit
sources of intent are lacking.

See Hill v. Stowers, 680 S.E.2d.

66, 74 (W. Va. 2009) (stating that when the legislative history is
lacking, the context should be considered). Under the Hurley test,
the first question is whether the plaintiffs are part of a group
for which the law was enacted.

The purpose of oil and gas drilling

regulation is to promote the environment and economy generally, but
not specifically for the benefit of landowners adjacent to drilling
operations.

To imply a private cause of action, the beneficiaries

10

must be more specific than the general public.

See A.C.M., Inc. v.

Daimer Trucks N. Am., LLC, No. 2:08-0169, 2009 WL 899454, at *7
(S.D. W. Va. Mar. 31, 2009).

In A.C.M., Inc., the relevant statute

required car manufacturers and distributors to compensate car
dealers for the work required for “preparation, delivery, and
warranty service on [their] products.”

Id. at *6.

The court found

that although this could constitute an intent to benefit consumers
“at some level of abstraction,” at some level, all statutes should
benefit society at large.

Id. at *7.

Adjacent landowners are, at

some level of abstraction, the beneficiaries of permitting and
reclamation requirements, but it is not clear that they were part
of the group intended to be beneficiaries by the legislature.
Historically, statutory and regulatory remedies and concern
for surface damage caused by mining operations has focused on the
superjacent landowner, who leased the mineral rights to their land
to another.

This is because under the common law, surface owners

had no right to prevent the mineral rights owner from performing
all reasonable mining operations on the land below which mining was
taking place, and reasonableness was determined in comparison to
industry practice.

Ronald W. Polston, Surface Rights of Mineral

Owners—What Happens When Judges Make Law and Nobody Listens?, 63,
N.D. L. Rev., 41, 42-43 (1987) (outlining the common law approach).
Reasonableness was also determined without regard to the damages
imposed on the surface estate, under a theory of implied easement.

11

Id. This balance of rights and the various alternatives to it have
been the subject of considerable debate, which has resulted in a
variety of solutions, created by both courts and legislatures. See
Michelle

Andrea

Wenzel,

The

Model

Surface

Use

and

Mineral

Development Accommodation Act: Easy Easements for Mining Interests,
42

Am.

U.

L.

Rev.

607,

627-647

(1993)

(discussing,

first,

developments by courts and, second, statutory solutions in response
to common law mining rights).
The reclamation statute cited by the plaintiffs addresses this
balance between the mineral lessor and lessee by requiring minimal
standards of restoration as production ends, notwithstanding the
reasonableness of such production.

See W. Va. Code §§ 22-6-30.

In

the debate regarding compensation for damage to surface estates due
to mining operations, a discussion of adjacent landowners’ rights
has been notably absent.

See Michelle Andrea Wenzel, The Model

Surface

Development

Use

and

Mineral

Accommodation

Act:

Easy

Easements for Mining Interests, 42 Am. U. L. Rev. 607 (1993);
Ronald W. Polston, Surface Rights of Mineral Owners—What Happens
When Judges Make Law and Nobody Listens?, 63, N.D. L. Rev., 41
(1987). Considering the historical context, there is little reason
to think the legislature had adjacent landowners specifically in
mind when enacting these statutes.1 The plaintiffs are, therefore,

1

The only section of Article 6 that directly addresses adjacent
owners is not relevant to the plaintiffs’ claims. That section
allows adjacent owners to recover the costs of sealing an abandoned
12

not members of a special group of beneficiaries of West Virginia
Code § 22-6-6 or -30, under the first Hurley factor.
As previously noted, West Virginia Code Chapter 22, Article 6
lacks a legislative purpose section, and legislative intent, as per
the second Hurley factor, must be determined by analyzing the act
as a whole. Hurley v. Allied Chemical Corporation, 262 S.E.2d 757,
763 (W. Va. 1980) (explaining that intent may be found in the
structure of the statute or the context of enactment).

Two

features of Article 6 suggest that a right of action was not
intended for adjacent land owners: (1) the article primarily
protects superjacent landowners and coal operators and (2) the
director is already responsible for enforcement.

First, several

sections within the article benefit the coal operators below the
drilling and the landowners above.

These groups are given notice

of drilling, and the coal operators are allowed to object to
drilling and fracturing.

W. Va. Code §§ 22-6-9, -13, -15.

The

legislature considered the impact to these groups and enacted
protections for them, but did not explicitly provide similar rights
to adjacent landowners.
Second, the director has authority, staff, and duty to both
supervise drilling operators and enforce Article 6.

This suggests

that a private cause of action was not contemplated.
Code

§§

22-6-2(a),

well on nearby lands.

(c)(2).

See W. Va.

Finally, Article 6 provides the

W. Va. Code § 22-6-32.
13

director with the power to sue for injunctive relief against
violators, and there are civil penalties provided for any willful
violations of the article. Because adjacent landowners do not have
many

other

rights

under

Article

6

and

there

are

alternative

regulatory mechanisms, legislative intent militates against an
implied cause of action.
Under the third Hurley factor, the implied cause of action
must be evaluated within the legislative scheme.

It seems that

Chapter 22, Environmental Resources, and Article 6 specifically are
not meant to protect individual property owners, but all citizens
of West Virginia.

Further, it would be counter-intuitive for

Article 6 to provide for a private cause of action because there
are already ways to recover under the common law.

In this case of

methane pollution, negligence and nuisance are reasonable theories
of recovery.

In fact, it seems recovery under negligence was

favored by the legislature through the inclusion of a section which
creates the rebuttable presumption that drilling is the proximate
cause of fresh water deprivation when the oil and gas well is
within 1000 feet of the water source.

W. Va. Code § 22-6-35.

Further, violation of a permit or other provisions of Article 6
could potentially be used as part of a per se negligence claim.
Considering the alternate means of recovery and their support
within the statute, an implied private cause of action would be
unnecessary and not compatible with the legislative scheme.

14

Finally, the fourth Hurley factor is not an issue because the
federal government does not exclude the states in the area of
environmental protection and compensation. Given all of the above,
under the Hurley test, an implied cause of action cannot be implied
for any of the statutes that the plaintiffs claim were violated.
C.

Common law causes of action
The plaintiffs have also argued that their pleadings put forth

a negligence claim.

ECF No. 35 *7.

The defendants assert in reply

that there was no legal duty supporting this claim and that the
facts alleged were insufficient to make liability plausible.
assert

a

negligence

claim

with

sufficient

specificity,

To
four

elements must be alleged: duty, breach, causation, and resultant
damages.

5 Charles Alan Wright & Arthur R. Miller, Federal

Practice and Procedure § 1249 (3d ed. 2013).

The plaintiffs have,

in several instances, pleaded both causation and resultant damage;
thus those two factors are not at issue.

See e.g., ECF No. 15 ¶ 12

(“As a direct and proximate cause of defendant’s operations, the
plaintiffs have suffered damages . . .”).
However, the sufficiency of their duty and breach statements
is less apparent.
plaintiffs

state

As regards duty, the main issues are that the
that

(1)

the

defendants’

duties

arise

statutes and (2) the duty owed is to provide compensation.

from
E.g.,

ECF No. 40 ¶ 27 (“CNX has a duty under West Virginia Code 22-7-3 to
compensate Plaintiff[s].”).

The common law duty underlying claims

15

of negligence is not based on statute, but a duty of reasonable
care to prevent foreseeable harm.

E.g., Matthews v. Cumberland &

Allegheny Gas Co. 77 S.E.2d 180, 187 (W. Va. 1953).

Furthermore,

it is a duty of care that underlies claims of negligence, not a
duty to compensate, as the plaintiffs have stated it.

Sparks v.

Chicago & E.I.R. Co., 42 F. Supp. 1019, 1020 (E.D. Ill. 1942)
(holding that a duty of an insurer is distinct from a duty of care,
thus they can not be interposed during pleading).

For these two

reasons, the duty alleged by plaintiffs is incompatible with a
claim of negligence.
There is a similar issue with the plaintiffs’ statements
regarding

breach.

The

allegation

that

compensation

for

the

contaminated well has not been paid is mentioned frequently in
their pleadings.

E.g., ECF No. 40 ¶ 28.

And yet an explicit

statement that the defendants acted negligently is lacking in both
the amended complaint and the more definite statement.
There are, however, two alternate methods for stating breach
in West Virginia law, res ipsa loquitur and prima facie negligence,
which may be relevant.

At one point, the plaintiffs hint at an act

of negligence by stating: “As a result of oversaturating its
storage field, Columbia has caused the release of fugitive methane
gas . . .”

ECF No. 40 ¶ 33.

Arguably, this constitutes a set of

facts compatible with res ipsa loquitur, as oversaturation would
seem most likely to be a result of negligence.

16

However, because

the plaintiffs have alleged that multiple defendants have polluted
the ground, it is not clear that elements of res ipsa loquitur
could be established.

See Foster v. City of Keyser 501 S.E.2d 165,

185 (W. Va. 1997) (holding that the conduct of third parties as an
alternate cause has to be sufficiently eliminated for res ipsa
loquitur to be applied).

Regardless of the applicability of res

ipsa loquitur, a statement of duty would still be necessary for a
plaintiff to recover.
There is also the possibility that prima facie negligence, due
to violation of the various statutes cited by the plaintiffs, was
alleged.

See e.g., ECF No. 15 ¶ 15.

Violation of a statute can

constitute prima facie negligence “if an injury proximately flows
from

the

non-compliance

and

the

regulation was intended to prevent.”
207, 208-09 (W. Va. 1990).

injury

is

of

the

sort

the

Miller v. Warren, 390 S.E.2d

For many of the same reasons mentioned

above, it is not clear that the statutes the plaintiffs cite were
meant to prevent their alleged injury.

This issue, however, is

ultimately moot because “[w]here there is no legal duty to take
care, there can be no actionable negligence.”

Reed v. Phillips,

452 S.E.2d 708, 712 (W. Va. 1994).
Therefore, without a clear statement of a legal duty owed to
the plaintiffs, the amended complaint and more definite statement
fail to give the defendants fair notice of a negligence claim, as
required for adequate pleading.

See Powell v. Residential Mortg.

17

Capital, No. C 09-04928JF(PVT), 2010 WL 2133011, at *9 (N.D. Cal.
2010); Twombly, 550 U.S. at 555 (citing Conley v. Gibson, 355 U.S.
41, 47 (1957)).
V.

Conclusion

For the above reasons, the plaintiffs have failed to state a
claim upon which relief may be granted.

Therefore, defendant CNX

Gas Company, LLC’s motion to dismiss is GRANTED.
IT IS SO ORDERED.
The Clerk is DIRECTED to transmit a copy of this memorandum
opinion and order to counsel of record herein.
DATED:

August 13, 2013

/s/ Frederick P. Stamp, Jr.
FREDERICK P. STAMP, JR.
UNITED STATES DISTRICT JUDGE

18