Trans Energy, Inc. et al v. EQT Production Company

Filing 29

MEMORANDUM OPINION AND ORDER DENYING DEFENDANT'S MOTION TO DISMISS AND GRANTING DEFENDANT'S MOTION TO STAY AS FRAMED: Denying 13 Motion to Dismiss; Granting 24 Motion to Stay; Action is stayed pending decision of 4th Circuit; parties to inform Court when Blackshere Lease action has been resolved. Signed by Senior Judge Frederick P. Stamp, Jr on 1/23/14. (soa)

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF WEST VIRGINIA
TRANS ENERGY, INC.,
a Nevada corporation,
PRIMA OIL COMPANY, INC.,
a Delaware corporation and
REPUBLIC PARTNERS VI, LP,
a Texas limited partnership,
Plaintiffs,
v.

Civil Action No. 5:13CV93
(STAMP)

EQT PRODUCTION COMPANY,
a Pennsylvania corporation,
Defendant.
MEMORANDUM OPINION AND ORDER
DENYING DEFENDANT’S MOTION TO DISMISS
AND GRANTING DEFENDANT’S MOTION TO STAY AS FRAMED
I.

Procedural History

The plaintiffs, Trans Energy, Inc., Prima Oil Company, Inc.,
and Republic Partners VI, LP (“the plaintiffs”), filed a complaint
in this Court based on diversity jurisdiction.

The plaintiffs are

seeking a declaratory judgment, based on several sub-claims, that
they are the rightful title holders to an oil and gas lease that
covers land located in Wetzel County, West Virginia and thus are
entitled to a quiet title declaration.

In the alternative, the

plaintiffs seek a declaration that they are the rightful title
holders based on a claim of adverse possession.

The lease in

question is an 1892 lease executed by L.H. and J.S. Robinson (the
“Robinson Lease”).

These same plaintiffs, and the defendant in this case, EQT
Production Company (“EQT”), were involved in a prior action in this
Court, Trans Energy Inc. et al. v. EQT Production Co., No. 1:11CV75
(N.D. W. Va. 2011) (“Blackshere Lease action”).

That action also

involved an additional plaintiff, Republic Energy Ventures, LLC
(“REV”).

That case arose from the parties’ competing claims of

interest in the gas rights of a 3,800 acre plot of land located in
Wetzel and Doddridge Counties, West Virginia (“Blackshere Lease”).
This Court granted summary judgment to the plaintiffs based on a
finding that Prima Oil Company, Inc. (“Prima”) was a bona fide
purchaser of the Blackshere Lease and that it was the rightful
owner of both the oil and gas rights related to the Blackshere
Lease.

EQT then appealed that judgment to the United States Court

of Appeals for the Fourth Circuit.

A final disposition has not

been entered.1
Subsequently, EQT filed a declaratory judgment action in the
Circuit Court of Wetzel County, West Virginia, that seeks a

1

Trans Energy Inc. et al. v. EQT Production Co., No. 12-2553
(4th Cir.).
Oral argument was heard by the Fourth Circuit on
December 12, 2013 in which EQT argued that (1) this Court lacked
diversity jurisdiction because REV was not a diverse party; (2)
this Court’s finding of summary judgment in favor of the plaintiffs
should be reversed and summary judgment should be found in favor of
EQT; and (3) this Court’s finding of summary judgment in favor of
the plaintiffs should be set aside and the Fourth Circuit should
remand to this Court for further proceedings (all arguments were
argued in the alternative to each other). See http://coop.
ca4.uscourts.gov/OAarchive/mp3/12-2553-20131212.mp3 (Retrieved on
January 15, 2014).
2

declaration of the rightful title holder to the Robinson Lease
(“the state court action”).

The defendants in that action are the

four plaintiffs from the Blackshere Lease action in this Court.
The three plaintiffs then filed the instant action in this Court,
seeking declaratory judgment of the rights of the parties to the
Robinson Lease at issue in the state court action.
Thereafter, EQT filed a motion to dismiss claiming that
because of the ongoing parallel state action, this Court should
abstain from hearing this action.

Later, EQT filed a motion to

stay based on similar arguments.
II.
A.

Facts

Motion to Dismiss
The defendant has made three arguments in its motion to

dismiss: (1) that this Court should abstain from hearing this
action pursuant to the factors set forth in Nautilus;2 (2) the
plaintiffs are judicially estopped from omitting an indispensable
party,

REV,

that

would

destroy

complete

diversity

among

the

plaintiffs and EQT; and (3) if this Court does not abstain, subject
matter jurisdiction will ultimately be destroyed because EQT will
join REV as a party and thereafter realign the parties, destroying
diversity in this action.

2

Nautilus Ins. Co. v. Winchester Homes, 15 F.3d 371 (4th Cir.
1994).
3

In their response, the plaintiffs make two main arguments: (1)
REV is neither an indispensable party nor a necessary party under
Federal Rule of Civil Procedure 19; and (2) this Court must apply
the Colorado River3 factors rather than the Nautilus factors to
determine whether it should abstain, and, further, this Court
should abstain under either set of factors.
In its reply, the defendant argues that the Nautilus factors
should be applied to all of the plaintiffs’ claims except the
adverse possession claim.

The defendant contends that as to the

adverse possession claim, this Court could retain jurisdiction or
abstain

from

hearing

the

adverse

possession

claim

under

the

Colorado River factors. Further, the defendant contends that as to
its argument pertaining to REV, it was merely asserting that REV
can be joined and that the plaintiffs should be judicially estopped
from claiming that REV cannot be joined to this action.
B.

Motion to Stay
The defendant makes the following arguments in its motion to

stay: (1) substantive proceedings are already underway in the state
court action where EQT has already filed a dispositive motion (a
motion for partial summary judgment) and the plaintiffs have
admitted material facts, unlike the current action in this Court;
(2) the plaintiffs deliberately omitted REV as a party in this

3

Colorado River Conservation Dist. v. United States, 424 U.S.
800 (1976).
4

action in order to manufacture diversity; (3) if this Court does
not grant the defendant’s motion to dismiss, it will have to join
REV as a third party and thus the parties will no longer meet the
diversity requirement; and (4) because of (1)-(3), the three
factors of White v. Ally Financial Inc., et al., 2013 WL 164156,
No. 2:12-CV-00384 (S.D. W. Va. Jan. 15, 2013), will be met.
The plaintiffs argue that EQT only filed the state court
action in order to get around this Court’s ruling in the Blackshere
Lease action.

The plaintiffs contend that the same questions and

issues that arose in the Blackshere Lease action are at issue in
this case.

The plaintiffs also assert that there have not been

substantive proceedings in the state court because: (1) EQT has not
filed a motion for partial summary judgment; (2) the plaintiffs
have not admitted that they were put on notice of a competing claim
to the Robinson Lease and they timely objected to any and all
discovery requests from EQT;4 and (3) the plaintiffs assert that
REV is neither a necessary nor indispensable party.

Further, the

plaintiffs admit that their final assertion is currently being
decided by the Fourth Circuit in the Blackshere Lease action.
However, the plaintiffs argue that despite this Court’s ability to

4

The plaintiffs included an exhibit with their response. The
exhibit is a motion to reconsider the state court’s order deeming
the unanswered requests for discovery as admissions by the
defendants. ECF No. 27. In this motion, filed in the Circuit
Court of Wetzel County, West Virginia, the plaintiffs argue that
they timely objected and thus did not make admissions.
5

enter a limited stay to await the Fourth Circuit’s decision, EQT
has still failed to show that the potential harm to the plaintiffs
in having to defend themselves in the state court action would not
be extremely harmful.
The plaintiffs go on to argue that the less stringent factors
of White should not be applied, rather the Colorado River factors
should be applied to the motion to stay because the motion is based
on the existence of a parallel state court action.

The plaintiffs

thus argue that EQT has not shown that there are “exceptional
circumstances” necessary for a stay because: (1) the state court
has not affirmatively exercised jurisdiction; (2) the federal forum
and state forum are equally convenient; (3) this is simply parallel
litigation and it is not the type of piecemeal litigation that
warrants a stay; (4) no discovery has been had and the plaintiffs
have objected to EQT’s discovery-thus, the state court and this
Court are both at an early stage in the litigation; and (5)
although state law is applicable, this Court hearing the case would
not create undue friction with the state courts.
In the alternative, the plaintiffs go through the White
factors, arguing that: (1) this Court has the benefit of three
years experience with the parties because of the Blackshere Lease
action, thus judicial economy favors denying the motion; (2) EQT
will not be burdened by moving forward in this Court because this
Court will be able to efficiently decide this matter because of its

6

background with the Blackshere Lease action; and (3) a stay would
prejudice the plaintiffs because they would have to continue
litigating the issues that they have already litigated for over a
year and a half in the Blackshere Lease action.
In its reply, the defendant reiterates the contentions it made
in its motion to stay and in its motion to dismiss.

However, it

indicates in its reply that it filed a motion for partial summary
judgment on December 27, 2013, after it had filed the motion to
stay in this Court.
III.

Applicable Law

In cases involving a claim for equitable relief, federal
courts may stay the action based on abstention principles, if
applicable, but may also, “in appropriate circumstances, decline to
exercise jurisdiction altogether by either dismissing the suit or
remanding it to state court.”
517 U.S. 706, 721 (1996).

Quackenbush v. Allstate Ins. Co.,

On the other hand, federal courts may

not find that “those principles support the outright dismissal or
remand of damages actions.”
IV.
A.

Id.
Discussion

Motion to Dismiss
The parties agree that as to the claims made under the

Declaratory Judgment Act, the Nautilus factors are applicable.
Further, the parties agree that as to the plaintiffs’ adverse
possession claim, the Colorado River doctrine is applicable.

7

The

parties disagree as to what standard should apply to the quiet
title claim.

The defendant contends that the Nautilus factors are

applicable whereas the plaintiffs argue that the Colorado River
doctrine applies.
Regarding which standard applies to actions that involve both
claims for declaratory judgment and claims for additional relief,
the

Fourth

Circuit

has

stated

that,

while

not

expressing

a

definitive view on the issue, their “jurisprudence suggests that,
in a ‘mixed’ complaint scenario the [declaratory judgment] standard
does not apply, at least to the non-declaratory claims.”

Great

American Ins. Co. v. Gross, 468 F.3d 199, 210 (4th Cir. 2006).
The right to quiet title or remove encumbrances upon personal
property may arise under the Declaratory Judgment Act.
A.L.R. 291.

See 105

“Declaratory proceedings regarding the construction

and interpretation of a written instrument, such as contracts,
ordinances,

statutes,

wills,

and

trusts,

appropriate’ for remedy under the DJA.”

are

‘particularly

Stone St. Asset Trust v.

Blue, 821 F. Supp. 2d 672, 676 (D. Del. 2011) (citing Stern & Co.
v. State Loan & Fin. Corp., 205 F. Supp. 702, 710 n.6 (D. Del.
1962) (citing Motor Terminals v. Natl. Car Co., 92 F. Supp. 155,
161 (D. Del. 1949)); see also Lehigh Coal & Nav. Co. v. Cent. R. of
N.J., 33 F. Supp. 362, 365 (E.D. Pa. 1940).

While there is no

on-point case law from any court in the Fourth Circuit analyzing
whether a quiet title action falls under the Declaratory Judgment

8

Act, district courts in other circuits have found that a quiet
title claim may qualify as a declaratory judgment claim. Stone St.
Asset Trust, 821 F. Supp. 2d at 676; Keiser Land Co., Inc. v.
Naifeh, 1:09-CV-1253, 2010 WL 3220642, *1 (W.D. Tenn. Aug. 13,
2010).
This Court finds that quiet title claims may not always
qualify as a declaratory judgment claim, but that the quiet title
claim in this action does.

The plaintiffs request in their

complaint that this Court declare that the plaintiffs are entitled
to quiet title of the Robinson Lease and that “there exist no
adverse assignments or grants of record in the South Penn Oil
Company chain of title that would put any third party purchaser on
notice of a possible cloud to title.”

ECF No. 1 *7.

Thus, this is

a case in which the plaintiffs’ quiet title claim qualifies as a
declaratory judgment claim rather than a non-declaratory judgment
claim, such as quiet title for the purpose of ejectment.

See

Marthens v. B & O Railroad Co., 289 S.E.2d 706 n.2 (W. Va. 1982)
(finding two types of quiet title claims, “the common law action of
ejectment” and an “equitable bill either to quiet title or to
remove a cloud . . . .”).

The plaintiffs seek a declaration by

this Court that no cloud or encumbrance exists as to the Robinson
Lease and thus their quiet title claim qualifies as a declaratory
judgment claim.

As such, the Nautilus factors will apply to the

plaintiffs’ quiet title claim.

9

1.

Application of the Colorado River Doctrine

The Colorado River doctrine permits federal courts to stay or
dismiss

claims

over

which

the

courts

have

federal

question

jurisdiction where pending parallel state proceedings raise the
identical issues.

Colorado River Conservation Dist. v. United

States, 424 U.S. 800 (1976).

The Colorado River doctrine is not a

doctrine of abstention, which is based upon the principles of
federalism and comity for state relations; rather, it is a doctrine
resting upon considerations of judicial economy and “wise judicial
administration.” Id. at 813. For this reason, courts should apply
the Colorado River doctrine only in exceptional circumstances. Id.
at 818.
The United States Court of Appeals for the Fourth Circuit has
summarized the approach for applying the Colorado River doctrine:
The threshold question in deciding whether Colorado River
abstention is appropriate is whether there are parallel
federal and state suits. If parallel suits exist, then
a district court must carefully balance several factors,
with the balance heavily weighted in favor of the
exercise of jurisdiction.
Although the prescribed
analysis is not a hard-and-fast one in which application
of a checklist dictates the outcome, six factors have
been identified to guide the analysis: (1) whether the
subject matter of the litigation involves property where
the first court may assume in rem jurisdiction to the
exclusion of others; (2) whether the federal forum is an
inconvenient one; (3) the desirability of avoiding
piecemeal litigation; (4) the relevant order in which the
courts obtained jurisdiction and the progress achieved in
each action; (5) whether state law or federal law
provides the rule of decision on the merits; and (6) the
adequacy of the state proceeding to protect the parties’
rights. In the end, however, abstention should be the
exception, not the rule, and it may be considered only
10

when the parallel state-court litigation will be an
adequate vehicle for the complete and prompt resolution
of the issues between the parties.
Chase Brexton Health Services, Inc. v. Maryland, 411 F.3d 457, 46364 (4th Cir. 2005) (internal quotations and citations omitted).
a.

Parallel Proceedings

Following the Fourth Circuit’s analysis in Chase Brexton,
this Court must first determine whether the state and federal
actions are sufficiently similar to constitute parallel proceedings
before weighing the Colorado River factors to decide whether to
dismiss the non-declaratory judgment claims.

“Suits are parallel

if substantially the same parties litigate substantially the same
issues

in

different

forums.”

New

Beckley

Mining

Corp.

v.

International Union, United Mine Workers of America, 946 F.2d 1072,
1073 (4th Cir. 1991).

However, “suits need not be identical to be

parallel, . . . and the mere presence of additional parties or
issues in one of the cases will not necessarily preclude a finding
that they are parallel.”

AAR Int’l, Inc. v. Nimelias Enter. S.A.,

250 F.3d 510, 518 (7th Cir. 2001) (internal citations omitted).
“The question is not whether the suits are formally symmetrical,
but whether there is a substantial likelihood that the [state
litigation] will dispose of all claims presented in the federal
case.”

Id.

The state litigation involves a party, REV, that is not in
this action. However, both actions involve similar claims over the

11

rights to and the ownership of the Robinson Lease.

Thus, although

the two suits are not formally symmetrical, there is a substantial
likelihood that the state court action would dispose of all claims
presented in this case.

As such, this Court finds that the state

litigation does constitute a parallel proceeding and, therefore,
the first requirement in applying the Colorado River doctrine is
satisfied.
b.

Application of the Colorado River Factors

As this Court has now determined that the proceedings are
sufficiently similar to constitute parallel proceedings, it must
now determine whether the other factors weigh in favor of this
Court abstaining and, thus, dismissing this action.

A decision

declining to exercise jurisdiction over a federal action because of
parallel litigation in state court “does not rest on a mechanical
checklist, but on a careful balancing of the important factors as
they apply in a given case, with the balance heavily weighted in
favor of the exercise of jurisdiction.” Gannett Co., Inc. v. Clark
Constr. Group, Inc., 286 F.3d 737, 744 (4th Cir. 2002) (quoting
Moses H. Cone v. Mercury Constr. Corp., 460 U.S. 1, 16 (1983)).
(1)

Assumption of Jurisdiction Over the Property

The defendant contends that this factor “militate[s] neither
in favor nor against abstention.”

ECF No. 19 *6.

However, where

no property rights are at issue, this factor will weigh against
abstention. See Gannett Co., Inc. v. Clark Const. Group, Inc., 286

12

F.3d 737, 747 (4th Cir. 2002) (finding that when both actions are
in personam proceedings, this factor weighs against abstention).
The defendant does not allege that the state court has taken
jurisdiction over the property at issue.

The defendant only

asserts that it has filed a declaratory judgment action in state
court regarding ownership of the Robinson Lease. Accordingly, this
standard would be in favor of this Court maintaining jurisdiction
because no property rights are at issue despite the fact that real
property within the State of West Virginia is involved in the state
litigation.

There has been no assumption of jurisdiction over the

real property and thus this factor weighs against abstention.
(2)

Convenience of Forum

As to convenience of forum, the defendant again states that
this factor does not weigh for or against abstention.
*6.

ECF No. 19

As the defendant makes no attempt to demonstrate that the

federal

forum

is

inconvenient,

this

factor

weighs

against

abstention.
(3)

Piecemeal Litigation

The next factor to consider is the avoidance of piecemeal
litigation.

“Piecemeal litigation occurs when different tribunals

consider the same issue, thereby duplicating efforts and possibly
reaching different results.”
744.

Gannett Co., Inc., 286 F.3d 737 at

However, the potential for conflicting outcomes, without

more, is insufficient to warrant staying the exercise of federal

13

jurisdiction.

Chase Brexton, 411 F.3d at 457 (quoting Colorado

River, 424 U.S. at 816).

Rather, the exercise of jurisdiction

“must create the possibility of inefficiencies and inconsistent
results beyond those inherent in parallel litigation, or the
litigation

must

be

duplicate forums.”

particularly

ill-suited

for

resolution

in

Gannett Co., Inc., 286 F.3d at 744.

The defendant cursorily argues that this factor would weigh in
favor of abstention because retention of jurisdiction by this Court
would produce piecemeal litigation with the Blackshere Lease action
and the remaining claims pending in state court.

Without more, it

remains unclear to this Court how retention of this action would
result in piecemeal litigation. The maintenance of the state court
action and this action would not create the possibility of anything
more than a potential for a conflicting outcome. Thus, without any
other argument regarding this factor, this Court must find that
this factor weighs against abstention.
(4)

Order of Jurisdiction and Progression

The defendant argues that (1) the state court action includes
all the plaintiffs in this action, and the plaintiff from the
Blackshere Lease action, REV, and (2) was filed prior to the
present action.

However, relevant to this inquiry is not only the

order in which the complaints were filed, but also how much
progress has been made in the two actions.
Hosp., 460 U.S. at 22.

See Moses H. Cone Mem’l

The defendant also contends that it has

14

moved to transfer the action to the West Virginia Business Court;
and it has served interrogatories, requests for production, and
requests for admissions on the defendants in the state court
action.
On the other hand, the plaintiffs argue that EQT overstates
the progression of the state court action.

The plaintiffs state

that they have properly objected to EQT’s service of discovery as
improper in light of this suit and that no discovery has otherwise
been had. Thus, the plaintiffs contend that because both suits are
at an early stage, this factor does not favor abstention.
This Court will also consider the parties’ arguments made in
favor of and in opposition to the defendant’s motion to stay at
this point in the order because they could either support or go
against abstention.

EQT contends in that motion that it has filed

a partial summary judgment motion and that the plaintiffs have made
material admissions by failing to respond to the defendant’s
discovery requests.

The plaintiffs argue that the defendant had

not filed a partial summary judgment (at the time they filed their
reply)

and

that

the

plaintiffs

had

filed

a

motion

for

reconsideration of the state court’s finding that the plaintiffs
had made material admissions because, as the plaintiffs argue, the
plaintiffs had actually objected to the defendant’s discovery
requests.

15

This Court first notes that the defendant’s assertion that it
filed

a

partial

summary

judgment

incorrect when it was first made.

in

its

motion

to

stay

was

Based on the defendant’s own

admissions, the partial summary judgment motion was not filed in
the state court action until December 27, 2013 (after the motion to
stay

was

filed

and

the

reply

to

the

motion

was

filed

in

opposition).
As to this factor, it does not appear that the state court
action has had substantive proceedings. First, the plaintiffs have
objected to discovery requests. Thus, the amount of discovery that
the defendant contends has occurred is likely curtailed in state
court at this time.

Further, because the partial summary judgment

motion was recently filed, it will also likely take some time to be
decided and is likely not fully briefed at this time.

Third, as to

the defendant’s assertion that the plaintiffs have made material
admissions, that may also change because of the plaintiffs’ pending
motion for reconsideration.

Accordingly, this Court cannot find

that this factor weighs in favor or against abstention because it
appears that the progress that the defendant has provided to uphold
this factor is either being questioned or is overstated.
(5)

Rule of Decision on the Merits and the Adequacy of
State Proceeding to Protect the Rights of the
Parties

As to the final two factors, EQT argues that both weigh in
favor of abstention. First, EQT argues that because the plaintiffs

16

are making claims regarding “wild” or “rogue” deeds, which run
afoul of the law of West Virginia, the disposition of such cases
should be left to the state courts of West Virginia.

Second, EQT

argues that the state proceeding is adequate to protect the
interests of all parties.

The plaintiffs contend that this factor

does not favor abstention.

The plaintiffs argue that retention of

jurisdiction would not create needless friction with important
state policies.
“[T]he Supreme Court has made clear that the presence of state
law and the adequacy of state proceedings can be used only in ‘rare
circumstances’ to justify Colorado River abstention.” Gannett Co.,
Inc., 286 F.3d at 746 (quoting Moses H. Cone, 460 U.S. at 26).

The

Fourth Circuit found that “these factors typically are designed to
justify retention of jurisdiction where an important federal right
is implicated and state proceedings may be inadequate to protect
the federal right . . . or where retention of jurisdiction would
create ‘needless friction’ with important state polices.”

Id.

(citing Moses H. Cone, 460 U.S. at 26; and Quackenbush v. Allstate
Ins. Co., 517 U.S. 706, 717-18 (1996)).

Indeed, merely because

state law is implicated “does not weigh in favor of abstention,
particularly since both parties may find an adequate remedy in
Id. at 747 (internal quotations

either state or federal court.”
omitted).

The Fourth Circuit has further recognized that in

diversity cases, “federal courts regularly grapple with questions

17

of state law, and abstention on the basis of the presence of state
law, without more, would undermine diversity jurisdiction.”

Id.

Although the defendant argues that West Virginia has not dealt
with “wild” or “rogue” deeds, this Court ascertains a different
understanding of the plaintiffs’ claim made in their complaint.
Although the plaintiffs use the terms “wild” or “rogue,” they also
couple the terms with the phrase “inasmuch as it purports to convey
an interest to which it cannot trace title,” followed by a cite to
a West Virginia case.

That case, Harper v. Pauley, 81 S.E.2d 728

(W. Va. 1953), stands for the notion that a deed may not stand if
it is not descriptive enough for the purpose of identifying the
land which it purports to convey.

Thus, it appears that the

plaintiffs are making an argument that title to the Hope deed
cannot be traced and thus could not convey an interest.
This

claim,

plaintiffs,
“grapple.”

are

along
all

with

claims

the
with

other
which

claims
a

made

federal

by

the

court

can

This Court has dealt with several adverse possession

claims, and has applied West Virginia law in regards to those
claims in which West Virginia law was applicable.

Accordingly,

this Court is not required to abstain simply because there are
claims in this action that would require the application of West
Virginia

law,

abstention.

and

this

factor

does

not

weigh

in

favor

of

This Court can adequately apply the state law in

question and can also adequately protect the rights of the parties

18

inasmuch as this Court has a background in applying West Virginia
law to these types of claims.
2.

Application of the Nautilus Factors

As an initial matter, under the Declaratory Judgment Act, 28
U.S.C. § 2201, federal courts are not required to hear declaratory
judgment actions.

See Nautilus, 15 F.3d at 375.

Rather, a

district court’s decision to hear such a case is discretionary.
Id.
Initially, the Fourth Circuit in Mitcheson v. Harris, 955 F.2d
235, 237-40 (4th Cir. 1992), indicated that when determining
whether to entertain a declaratory judgment action, a district
court should consider:
(i) the strength of the state’s interest in having the
issues raised in the federal declaratory judgment action
decided in the state courts; (ii) whether the issues
raised in the federal action can more efficiently be
resolved in the court in which the state action is
pending; and (iii) whether permitting the federal action
to go forward would result in unnecessary “entanglement”
between the federal and state court systems, because of
the presence of overlapping issues of fact or law.
Id. (as cited in Nautilus Ins. Co. v. Winchester Homes, Inc., 15
F.3d 371, 377 (4th Cir. 1994)).
Circuit

added

that

courts

Later, in Nautilus, the Fourth

should

also

consider

“whether

the

declaratory judgment action is being used merely as a device for
‘procedural fencing’–that is, ‘to provide another forum in a race
for res judicata’ or ‘to achieve a federal hearing in a case
otherwise not removable.’” 15 F.3d at 377 (quoting 6A J. Moore, B.

19

Ward & J. Lucas, Moore’s Federal Practice, ¶ 57.08[5] (2d ed.
1993)).
In Chase Brexton, however, the Fourth Circuit stated that when
the non-declaratory judgment claims and the declaratory judgment
claims are “so closely intertwined . . . judicial economy counsels
against

dismissing

the

claims

for

declaratory

judgment

while

adjudicating the [other] claims” as “the entire benefit derived
from exercising discretion not to grant declaratory relief is
frustrated.”

411 F.3d at 466-67.

This Court finds that the claims are closely intertwined in
this matter although the defendant argues that the quiet title
claim and the adverse possession claim are inapposite of each
other.

First, the claims arise from the same land in question.

Second, and more importantly, in order to determine whether the
adverse possession claim will require consideration because it is
pled in the complaint as an alternative claim to the plaintiffs’
quiet title and declaratory judgment claims, this Court must first
determine whether the quiet title claim or the other declaratory
claims are valid.

Thus, the plaintiffs’ claims may rise or fall

depending on any of their claims either under a quiet title
argument, an adverse possession argument, or a declaratory judgment
argument.

Thus, judicial economy surely counsels against staying

or dismissing the declaratory judgment claims when the same land is
at the crux of all the claims and the same evidence and discovery

20

will be required for all the claims. However, this Court will also
consider the Nautilus factors, but finds that abstention would
still be unwarranted in this action as to the declaratory judgment
claims.
a.

State’s Interest

Again, the defendant makes the argument that the state’s
interest is great because the plaintiffs make an argument as to
“wild” or “rogue” deeds in their complaint. The plaintiffs contend
that this Court has already decided questions of law at issue in
this case because of this Court’s involvement in the Blackshere
Lease action.
This Court has already stated that the plaintiffs’ claims as
to “wild” or “rogue” deeds is not a valid argument for the state’s
interest

because

it

appears

to

merely

be

a

poor

terminology in the complaint on the plaintiffs’ part.

choice

of

This Court

also recognizes that the plaintiffs’ contention that this Court has
already decided all of the questions of law at issue is also
misplaced.

There are issues that could arise in this action that

may not have arisen in the Blackshere Lease action because of the
different lease in question.

However, because the law at issue is

that which is settled state law and not controversial, the state
interest in trying this action as to the declaratory judgment
claims is no stronger than that of this Court.

Thus, this factor

weighs in favor of this Court maintaining jurisdiction.

21

b.

Efficiency of Resolution

At to this factor, the defendant argues that because REV (1)
is not joined in this action, (2) is a party in the state court
action, and (3) is an indispensable party, the state court would be
able to more efficiently resolve the issues at stake. Further, the
defendant contends that it has moved to refer the state court
action to the new Business Court Division in West Virginia which,
it contends, would be more efficient because it is designed to
handle

complicated

facilitated
contrast,

by

argue

two

disputes
state

that

REV

between

court
is

not

businesses

judges.

The

indispensable

and

would

be

plaintiffs,

in

and

is

fully

represented by Republic Partners VI, LP (“Republic”) in this
litigation.
Again, the defendant has stated that the motion to dismiss
does not hinge on whether or not REV is an indispensable party.
Thus, this Court, as analyzed in the next section, will not decide
that matter.

However, because REV is a party in the state court

and is not a party in this Court, that may be a factor that would
weigh in favor of abstention.

This is something that the Fourth

Circuit is currently considering in the Blackshere Lease action.
As

to

the

defendant’s

argument

that

the

Business

Court

Division would be able to handle this action more efficiently than
this Court, there is no evidence provided by the defendant of the
correctness of those assertions.

22

Thus, it is not clear to this

Court that the new Business Court Division would be more efficient
at handling this matter than this Court.
Accordingly, because neither of the defendant’s argument are
definitive at this point in time, this Court finds that this factor
weighs neither in favor of nor against abstention as to the
declaratory judgment claims.
c.

Entanglement

The defendant contends that this factor weighs in favor of
abstention because both the state court action and the instant
action seek a declaration regarding the ownership of the Robinson
Lease, and therefore the operative facts and controlling law are
the same. The plaintiffs, on the other hand, argue that this Court
can more expeditiously resolve the issues in this action because of
its greater familiarity with them.

Thus, because this Court has

already resolved the legal issues that arise in this action,
entanglement will not be avoided by this Court abstaining.
Again, both actions do have similar claims as to a declaration
regarding the ownership of the Robinson Lease. However, this Court
is

familiar

with

the

parties

to

this

action

and

with

the

application of the bona fide purchaser law. Further, although some
entanglement would result from this Court foregoing abstention,
entanglement will result regardless of whether this Court were to
dismiss the declaratory judgment claims.

This Court has declined

to abstain under the Colorado River doctrine and because identical

23

issues are involved in both categories of claims, entanglement
would result even without this Court deciding the declaratory
judgment claims because this Court could find that the plaintiffs
are entitled to title over the Robinson Lease based on adverse
possession.

As such, whatever weight is in favor of abstention is

diminished by the fact that entanglement would occur regardless of
dismissal of the declaratory judgment claims.
d.

Procedural Fencing

Lastly, the defendant asserts that the plaintiffs have engaged
in procedural fencing by not joining REV to this action in order to
obtain diversity jurisdiction.

Further, the defendant contends

that the plaintiffs are forum shopping because EQT filed its action
in state court first and not until then did the plaintiffs choose
to file in this Court.

The plaintiffs, in contrast, argue that

they would not have joined REV, in the Blackshere Lease action, if
the jurisdictional problems had been identified earlier.

Further,

the plaintiffs claim that EQT is actually the party forum shopping
because it filed the state court action knowing that this Court had
already decided the same legal issues in the Blackshere Lease
action.
It appears to this Court that both parties are jockeying for
position as to the claims in this action.

On the one hand, the

plaintiffs brought the action in this Court without REV, who they
claim does not have an interest but who was joined in the case they

24

claim is almost identical, the Blackshere Lease action.

On the

other hand, the defendant claims that the Fourth Circuit will
ultimately find that REV was indispensable and thus, this Court did
not have jurisdiction.

However, the defendant went on to file a

state court action before the Fourth Circuit made a decision on
that action and thus before an adverse ruling could be made against
the defendant that could possibly affect its rights as to the
Robinson Lease.

Accordingly, this Court finds that this factor

neither weighs in favor nor against abstention.

Thus, taken as a

whole, as stated previously, the Nautilus factors weigh in favor of
this Court maintaining jurisdiction over the declaratory judgment
claims.
3.

Joinder of Republic Energy Ventures, LLC

As to the parties’ contentions over the joinder of REV as a
party, this Court notes that the defendant has stated that its
motion to dismiss is not based on the indispensability of REV or
whether

the

jurisdiction.

joinder

of

REV

ECF No. 19 *12.

would

destroy

subject

matter

Further, although the defendant

attached a counterclaim and third-party complaint against REV, and
also a motion to realign the parties, those attachments were filed
as exhibits and were not filed as separate motions. ECF Nos. 13-2,
13-3.

Accordingly, the Court will not consider those exhibits as

a motion for joinder and a motion for realignment, respectively.
Further, as the defendant’s estoppel argument deals with the same

25

subject matter, this Court declines to find, at this time, that the
plaintiffs are judicially estopped from not joining REV as a party
to this action.
B.

Motion to Stay
The defendant makes similar arguments in its motion to stay as

in its motion to dismiss.

The main issue is whether or not the

more liberal standard of White or the more stringent standard of
the Colorado River doctrine applies.

The defendant contends that

the Southern District of West Virginia’s analysis in White is
applicable whereas the plaintiffs argue that the Colorado River
doctrine is applicable.
1.

Stay Based on the State Court Proceedings

Although the defendant argues that the motion to stay based on
the parallel state court proceedings should be based on the
analysis in White, a stay based on the state court proceedings
would require the applicability of the Colorado River doctrine.
White set out the analysis that should be applied to an action in
which

a

party

proceedings.

sought

a

stay

because

of

a

higher

court’s

White, 2013 WL at *8 (“A district court ordinarily

has discretion to delay proceedings when a higher court will issue
a decision that may affect the outcome of the pending case.”).

In

White, the court was contemplating whether or not it should stay
the case because of a ruling that was pending in the United States
Supreme Court; there was no discussion of parallel state court

26

proceedings.

Id.

Thus, this Court finds that the Colorado River

doctrine applies, and it will not grant a motion to stay based on
the Colorado River doctrine for the same reasons as set out
previously in this order for not granting the defendant’s motion to
dismiss.
2.

Stay Based on the Proceedings in the Fourth Circuit

The defendant has not asked for a stay of this action based on
the proceedings pending in the Fourth Circuit.

On the other hand,

the plaintiffs cursorily made the argument in their response to the
motion to stay that this Court should not grant a motion to stay
based on those proceedings because the defendant has not asked for
a stay on those grounds nor has it provided any support for a stay
on those grounds.

See ECF No. 26 *6.

This Court, however, may

grant a stay sua sponte and, based on the following analysis, will
do so.
A district court possesses inherent power to stay, sua sponte,
an action before it.

Crown Cent. Petroleum Corp. v. Dep’t of

Energy, 102 F.R.D. 95, 98-99 (D. Md. 1984) (citing Landis v. North
American Co., 299 U.S. 248, 254–255 (1936) (“The power to stay
proceedings is incidental to the power inherent in every court to
control disposition of the causes on its docket . . . .”)); see
also Clinton v. Jones, 520 U.S. 681, 706 (1997) (“The District
Court has broad discretion to stay proceedings as an incident to
its

power

to

control

its

own

docket.”).

27

In

exercising

its

judgment, the court must weigh competing interests and consider the
effects of the stay on the court’s docket, on counsel, and on the
litigants.

Landis, 299 U.S. at 254–255.

Further, the court must

ensure that the stay is not “immoderate” and limit the scope of the
stay within a reasonable time frame.

Id. at 257.

As stated previously, the plaintiffs, in opposition to the
motion to stay, recognize that this Court has discretion to grant
a limited stay but argue that real, legitimate harm will befall
them if this Court grants a stay.

The plaintiffs argue that if

this Court were to grant a motion to stay, the plaintiffs would be
required to go forward with the state court action and have to
continue protecting the validity of this Court’s prior rulings in
the Blackshere Lease action.
To the contrary, this Court finds that the plaintiffs will not
be so prejudiced.

The Fourth Circuit has already heard oral

argument from the parties and thus the appeal is likely close to a
resolution.

Further, as stated previously, this Court finds that

there have not been substantive proceedings in the state court
action.

Thus, a limited stay in this action would not prejudice

the plaintiffs as it appears that the Fourth Circuit will soon make
a ruling on the Blackshere Lease action and the state court action
is not near conclusion.

Additionally, the plaintiffs have been

able to file a motion to dismiss, or in the alternative to stay,

28

the

state

court

action,

and

thus

have

opportunities in the state court action.

not

been

denied

such

See ECF No. 13-1.

Additionally, because the Blackshere Lease action deals with
a jurisdictional issue, whether or not REV is an indispensable
party that would be crucial to this proceeding, it could prove to
be futile for this Court to continue with the current action
(especially given the defendant’s attachments to its motion to
dismiss).

If the Fourth Circuit were to overrule this Court’s

findings, or find that this Court lacked jurisdiction, any progress
made in this action would be wasted.
Accordingly, this Court will sua sponte stay this action
pending the outcome of the Fourth Circuit’s decision in Trans
Energy Inc., et al. v. EQT Production Co., No. 12-2553 (4th Cir.).
V.

Conclusion

For the reasons stated above, the defendant’s motion to
dismiss is DENIED.

Further, the defendant’s motion to stay is

GRANTED AS FRAMED.

Accordingly, this action is STAYED pending a

decision by the Fourth Circuit in Trans Energy Inc., et al. v. EQT
Production Co., No. 12-2553 (4th Cir.).

Finally, the parties are

DIRECTED to inform this Court when the Blackshere Lease action has
been resolved.
IT IS SO ORDERED.
The Clerk is DIRECTED to transmit a copy of this memorandum
opinion and order to counsel of record herein.

29

DATED:

January 23, 2014

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

30