Dwyer et al v. Range Resources-Appalachia, L.C.C. et al

Filing 21

MEMORANDUM OPINION AND ORDER GRANTING RANGE-RESOURCES APPALACHIA, LLC'S MOTION TO DISMISS AND GRANTING CHESAPEAKE APPALACHIA, LLC'S PARTIAL MOTION TO DISMISS: Granting 7 Motion to Dismiss; Granting 11 Partial Motion to Dismiss; Range Resources-Appalachia, L.C.C. terminated. Pltff. & Chesapeake to meet and file proposed scheduling order by 5/24/14. Signed by Senior Judge Frederick P. Stamp, Jr on 4/24/14. (soa)

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF WEST VIRGINIA
CAROL G. DWYER and
ELIZABETH ELLEN FLUHARTY,
Plaintiffs,
v.

Civil Action No. 5:14CV21
(STAMP)

RANGE RESOURCES-APPALACHIA, LLC
and CHESAPEAKE APPALACHIA, LLC,
Defendants.
MEMORANDUM OPINION AND ORDER
GRANTING RANGE-RESOURCES APPALACHIA, LLC’S
MOTION TO DISMISS AND
GRANTING CHESAPEAKE APPALACHIA, LLC’S
PARTIAL MOTION TO DISMISS
I.

Procedural History

The plaintiffs, Carol G. Dwyer (“Dwyer”) and Elizabeth Ellen
Fluharty

(“Fluharty”),

filed

their

amended

complaint

for

declaratory judgment in the Circuit Court of Brooke County, West
Virginia on January 14, 2014.

In this complaint, the plaintiffs

seek a declaratory judgment that the defendants can no longer enter
upon their property and that both the leases entered into on
September 15, 2007 (“Fluharty Lease”) and October 22, 2007 (“Dwyer
Lease”) with Range Resources-Appalachia, LLC (“Range”) and the
alleged assignment of those leases to Chesapeake Appalachia, LLC
(“Chesapeake”) are void and no longer constitute encumbrances on
plaintiffs’ property.

On February 19, 2014, the defendants filed a joint notice of
removal on the basis of diversity of citizenship pursuant to 28
U.S.C. § 1332. The plaintiffs filed a motion to remand, which this
Court denied in a separate memorandum opinion and order.

Prior to

the plaintiffs filing their motion to remand, the defendants filed
separate motions to dismiss.

First, Range filed its motion to

dismiss, arguing that it should be dismissed from the action
because it has no present interest in the leases and because
plaintiffs have failed to allege any facts to suggest that Range is
any more likely to enter onto the plaintiffs’ properties than any
other member of the general public.

The plaintiffs responded by

arguing that Range should not be dismissed because it has an
interest in how the leases were procured, and a sufficient amount
of facts in the complaint directly relate to the origination of the
leases. Range replied by first stating that the plaintiffs failed
to respond to all of Range’s arguments and instead, only focused on
its argument concerning its lack of interest in the leases.

As to

the plaintiffs’ actual response, Range asserts that even if it were
possible to have a legal interest in the acquisition or procurement
of the leases, plaintiffs’ argument would fail because the amended
complaint does not seek a judicial declaration concerning Range’s
purported interest in the acquisition or procurement of the leases.
Thereafter, Chesapeake filed a partial motion to dismiss.

In

its motion to dismiss, Chesapeake first argues that the purported
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lack of notice of assignment is not a valid basis to void the
leases

because

assignment.

plaintiffs

contractually

waived

notice

of

Second, Chesapeake asserts that the alleged improper

notarization of the leases does not invalidate the leases and even
so, such claims are time-barred.

Third, Chesapeake asserts that

plaintiffs’ fraudulent inducement claim is time-barred by the
relevant statute of limitations.

Lastly, Chesapeake argues that

the plaintiffs’ acknowledged receipt of thousands of dollars in
consideration is fatal to their adequacy of consideration theory.
The plaintiffs did not file a response.
For the reasons stated below, this Court grants Range’s motion
to dismiss and grants Chesapeake’s partial motion to dismiss.
II.

Facts

The plaintiffs each entered into separate oil and gas leases
with Range, which was formerly known as Great Lakes Energy.
Plaintiff Fluharty entered into such lease on September 15, 2007
and plaintiff Dwyer entered into such lease on October 22, 2007.
These leases were later assigned to Chesapeake on or about June 1,
2010.

The plaintiffs assert that such assignments were done

without their notice.

The plaintiffs, however, do not assert that

such assignments were prohibited by the original leases, or that
the

leases

required

that

the

plaintiffs

assignment.

3

be

notified

of

any

The plaintiffs do, however, make various allegations as to why
this Court should declare the leases and subsequent assignments
void.

First,

the

plaintiffs

assert

that

John

Liggett,

a

representative of Range, made false representations that drilling
would begin on the plaintiffs’ property within two years. Further,
the plaintiffs assert that Mr. Liggett fraudulently induced the
plaintiffs to sign the lease agreements by asserting that if they
did not sign immediately, the compensation for the lease would be
reduced by half.

The plaintiffs next allege that the leases were

wrongfully notarized without the parties being present and by a
person impersonating a notary, which they assert violates public
policy.

Further, the plaintiffs assert that the leases are void

for lack of adequate consideration, calling the amount being
provided to the plaintiffs a “paltry sum.”

Lastly, the plaintiffs

argue that the leases are void for lack of a definite term and
unconscionable on their face because the language of the leases
permit the defendants to possess a leasehold interest for an
indefinite time in the future.
III.

Applicable Law

In 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

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a cause of action, and bare assertions devoid of further factual
enhancement fail to constitute well-pled facts for Rule 12(b)(6)
purposes.”
(2009)).

Id. (citing Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949
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

essentially

most
the

favorable
court’s

to

the

inquiry

party
is

making

directed

the
to

claim

and

whether

the

allegations constitute a statement of a claim under Federal Rule 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 is face.’”
Giarratano v. Johnson, 521 F.3d 298, 302 (4th Cir. 2008) (quoting

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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.
IV.

A.

Discussion

Range’s Motion to Dismiss
Range first argues that, as to plaintiffs’ request for a

declaration that the leases and assignments of the leases from
Range to Chesapeake, these claims must be dismissed because Range
is no longer a party to the leases and has no current interest in
the leases at issue. In response, the plaintiffs assert that Range
has an interest in the procurement of the leases.

Specifically,

the plaintiffs assert that the claims alleging that the plaintiffs
were fraudulently induced into signing the leases, that the leases
were notarized in violation of West Virginia law, and that the
leases lack a definite term concern the procurement or origination
of the lease.

Plaintiffs assert that as to the origination of the

leases, which these claims allegedly cover, Range is the only party
with any interest.

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In order to assert a declaratory judgment action against a
defendant, that defendant must be sufficiently “interested” in the
subject matter of the action.

28 U.S.C. § 2201(a).

Even if this

Court were to find that Range has an interest in the origination of
the lease and this somehow makes them a proper party for this
declaratory judgment action, such an interest would only apply to
plaintiffs’

claims

notarization.

for

fraudulent

inducement

and

improper

As to plaintiffs’ claim concerning whether or not

the leases lack a definite term, however, this Court finds that
Range does not have an interest in such claim pursuant to 28 U.S.C.
§ 2201(a).

If this Court were to find that the leases lack a

definite term, the result may be a finding that such leases are
void.

Range, however, no longer has an interest in the leases due

to its assignment of such interest to Chesapeake.

Thus, if this

Court were to make a finding that the leases were now void due to
a lack of a definite term, the only affected party would be
Chesapeake.
As to the plaintiffs’ claims concerning fraudulent inducement
and improper notarization, this Court finds that the fraudulent
inducement claims are barred by the statute of limitations and the
improper notarization claim is not a valid basis to void a lease.
These claims will be more fully discussed below when analyzing
Chesapeake’s motion to dismiss.

Thus, even if this Court were to

determine that Range does have some type of interest in the

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origination of the lease based on plaintiffs’ claims for fraudulent
inducement and improper notarization and such interest would make
Range a proper party to the declaratory judgment action, the
underlying claims are simply not viable.

Accordingly, all claims

concerning the plaintiffs’ declaratory judgment action must be
dismissed as to Range.
The plaintiffs, in addition to seeking a declaration that the
leases and assignments are void, also seek an injunction against
the defendants to prevent them from entering on the plaintiffs’
properties.

Range asserts that this Court must deny this request

because the plaintiffs have failed to establish the requirements
necessary to allow for such injunction.

The plaintiffs failed to

respond to Range’s argument, or make any affirmative argument as to
why an injunction in the proper remedy against Range.
A plaintiff seeking a permanent injunction must satisfy a
four-factor test.
2743, 2756 (2010).

Monsanto Co. v. Geertson Seed Farms, 130 S. Ct.
In satisfying this four-factor test,

[a] plaintiff must demonstrate: (1) that it has suffered
an irreparable injury; (2) that remedies available at
law, such as monetary damages, are inadequate to
compensate for that injury; (3) that, considering the
balance of hardships between the plaintiff and defendant,
a remedy in equity is warranted; and (4) that the public
interest would not be disserved by a permanent
injunction.
eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388, 391 (2006); see
also Monsanto Co., 130 S. Ct. At 2756.

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Further, “[b]efore a court

grants

a

permanent

injunction,

the

court

must

first

find

necessity—a danger of future violations.”
The complaint, in this instance, is devoid of any facts that
would allow this Court to find necessity.

The plaintiffs have not

alleged that Range or its employees or agents have entered onto the
plaintiffs’ properties since the assignment of the leases to
Chesapeake.

Further, the plaintiffs have not alleged any facts

that would provide this Court any reason to believe there is a
danger that Range will enter the plaintiffs’ properties in the
future, as Range no longer has a working interest in the leases.
Accordingly, there is no need to evaluate the plaintiffs’ complaint
in conjunction with the four-factor test, as plaintiffs have failed
to make the initial showing of necessity.

Thus, this Court finds

that plaintiffs’ claim for a permanent injunction against Range
must be dismissed.
B.

Chesapeake’s Partial Motion Dismiss
In its motion to dismiss, Chesapeake argues that at least the

following four claims made against it by the plaintiffs must be
dismissed:
assignment;

(1)
(2)

plaintiffs’

claim

for

plaintiffs’

improper

waiver

of

notarization

notice
claim;

of
(3)

plaintiffs’ fraudulent inducement claim; and (4) plaintiffs’ lack
of adequate consideration claim.

The plaintiffs did not contest

Chesapeake’s arguments, as they did not file a response to the

9

motion to dismiss.

Nonetheless, this Court will evaluate each of

the Chesapeake’s arguments in turn.
1.

Notice of Assignment

In their complaint, the plaintiffs seem to assert that the
leases should be declared void because they were not provided
notice of the assignment to Chesapeake. Chesapeake argues that the
plaintiffs agreed under the leases to waive any right to notice of
any assignment or transfer of the leases.

Accordingly, Chesapeake

states that due to such agreement and the fact that West Virginia
law favors free assignability, any claim that the leases are void
because of a lack of notice of an assignment must be dismissed.
The general rule, under West Virginia law, “is that unless
there is some statutory prohibition or an express provision in the
lease

to

the

assignable.”

contrary,

a

lease

on

real

property

.

.

.

is

Randolph v. The Koury Corp., 312 S.E.2d 759, 762 (W.

Va. 1984); see also Syl. pt. 2, Easley Coal Co. v. Brush Creek Coal
Co.,

112

S.E.

512

(W.

Va.

1922)

(“Being

a

restraint

upon

alienation, a condition against assignment by a lessee or an
assignee

of

a

lessee

is

governed

by

the

rule

of

strict

construction, and it does not exist unless it has been clearly and
definitely provided in the lease or some other written instrument
made collateral thereto.”). After reviewing the leases attached to
the plaintiffs’ complaint, this Court finds that there are no
provisions preventing the assignment of the leases.

10

Instead,

paragraph 13 of the leases provide that, “Lessee shall have the
right to assign and transfer the within lease in whole or in part,
and Lessor waives notice of any assignment or transfer of the
within lease.”

ECF No. 1, Ex. A. *15.

Thus, the leases clearly

allow for the lessee to make assignments.
Further, while this Court has not been presented with any
argument that plaintiffs had a right to a notice of assignment, any
such right was waived by paragraph 13.

In West Virginia, to

establish waiver “there must be evidence demonstrating that a party
has intentionally relinquished a known right.”

Potesta v. U.S.

Fidelity & Guar. Co., 504 S.E.2d 135, 142 (W. Va. 1998) (citations
omitted). The waiver may be expressed or implied but if the waiver
is implied, “there must be clear and convincing evidence of the
party’s

intent

to

relinquish

the

known

right.”

Id.

Here,

paragraph 13 provides the necessary evidence to find that the
plaintiffs expressly waived any right to notice.

Accordingly, the

plaintiffs’ claim that the leases are void for lack of waiver must
be dismissed.
2.

Improper Notarization

Chesapeake

next

argues

that

the

plaintiffs’

claims

that

notarization issues constitute grounds to void the leases must be
dismissed because issues with notarization do not operate to void
the underlying lease and even so, such claims are time-barred.
Initially, as Chesapeake argues, under West Virginia law, the

11

proper notarization of a lease is immaterial to the validity and
enforceability

of

that

lease

between

the

parties

thereto.

Accordingly, this Court cannot find that such leases are void as
based on notarization issues. This is because, under West Virginia
Code § 31–1–1, transfers in an interest in land need only be in
writing and signed by all parties to the transfer in order to be
enforceable and valid between the parties to the transfer.
Va. Code § 31–1–1.

See W.

There is no mandate under West Virginia law

which requires proper notarization of a deed or lease in order to
render it enforceable.

The purpose of a notary is “merely to

acknowledge the authenticity of the signature.” Wolfe v. Greentree
Mortg. Corp., No. 3:09CV74, 2010 WL 391629 (N.D. W. Va. Jan. 26,
2010).

Thus, even if this Court were to find defects in the

notarization of the leases at issue, it would not equate to a
finding that the leases are void between the parties. Accordingly,
this

Court

need

not

address

Chesapeake’s

argument

concerning

whether such claims are time-barred.
3.

Fraudulent Inducement Claim

Chesapeake next argues that plaintiffs’ claims that they were
fraudulently induced into signing the leases also fail because such
claims are time-barred.

This Court agrees.

Under West Virginia

law, common law fraud claims are governed by the two-year “catch-

12

all” statute of limitations found in West Virginia Code § 55-2-12.1
See Alpine Property Owners Assoc. Inc. v. Mountaintop Development
Co., 365 S.E.2d 57, 66 (W. Va. 1987).
for

the

claim,

however,

does

not

The statute of limitations
start

to

accrue

until

the

plaintiff “knew or should have known by the exercise of reasonable
diligence of the nature of their claims.”

Stemple v. Dobson, 400

S.E.2d 561, 564 (W. Va. 1990).
In

this

instance,

the

plaintiffs

assert

misrepresentations caused the fraudulent inducement.
plaintiffs

claim

that

Mr.

Liggett,

a

landman

that

two

First, the

procuring

the

contracts for Range, falsely stated that the property would be
drilled within two years of the plaintiffs signing the leases. The
leases in this situation were signed in September and October 2007.
Therefore, the plaintiffs should have known that any such alleged
statements were false by September and October 2009.

This is over

four years before the plaintiffs filed their amended complaint in

1

West Virginia Code § 55-2-12 provides:

Every personal action for which no limitation is
otherwise prescribed shall be brought: (a) Within two
years next after the right to bring the same shall have
accrued, if it be for damage to property; (b) within two
years next after the right to bring the same shall have
accrued if it be for damages for personal injuries; and
(c) within one year next after the right to bring the
same shall have accrued if it be for any other matter of
such nature that, in case a party die, it could not have
been brought at common law by or against his personal
representative.
W. Va. Code § 55-2-12.
13

January 2014.

Accordingly, any such claim based on Mr. Liggett’s

alleged representation concerning when drilling would begin is
time-barred, as the plaintiffs should have known of such claims
over four year prior to filing their complaint.
The

second

misrepresentation,

that

the

plaintiffs

state

fraudulently induced them into signing the leases was Mr. Liggett’s
alleged statement that if they did not sign the lease “right away,”
the payment would drop from $100.00 per acre to $50.00 per acre.
This statement was made prior to the plaintiffs signing the leases
in September and October 2007.

Plaintiffs should have known soon

after signing the leases whether the payments per acre did in fact
drop to $50.00, as Mr. Liggett allegedly stated that they were to
drop “right away.”
based

on

complaint

this
was

Accordingly, any claim that the lease is void

representation
not

filed

for

is

clearly

more

than

time-barred,
six

years

as

the

after

the

plaintiffs signed the leases.
4.

Adequate Consideration

Chesapeake next argues that the plaintiffs’ argument that the
leases are void for lack of adequate consideration must fail as the
plaintiffs were provided $5,200.00 and $7,018.50 as consideration
for entering into the Fluharty Lease and Dwyer Lease, respectively.
This Court agrees.

The plaintiffs clearly received consideration

for entering into the leases, as evidenced by the above amounts.
“[U]under West Virginia law it is improper for courts to engage in

14

after-the-fact review as to whether consideration provided was
inadequate.”

Charter Commc’ns VI, LLC v. Eleazer, 412 F. Supp. 2d

588, 597 (S.D. W. Va. 2006). Accordingly, as the consideration was
not illusory or nominal, this Court finds that it would be improper
to

question

the

adequacy

of

consideration

provided

to

the

plaintiffs. Thus, any claim seeking to declare the leases void for
lack of adequate consideration must be dismissed.
V.

Conclusion

For the reasons stated above, Range Resources-Appalachia,
LLC’s motion to dismiss (ECF No. 7) is GRANTED. Accordingly, Range
Resources-Appalachia, LLC is hereby DISMISSED from this action.
Further, Chesapeake Appalachia, LLC’s partial motion to dismiss
(ECF No. 11) is GRANTED.

The plaintiffs and Chesapeake are

DIRECTED to meet and confer and file a proposed scheduling order on
or before May 24, 2014, pursuant to this Court’s April 8, 2014
order. Further, such proposed scheduling order should also include
an explanation of the remaining claims in plaintiffs’ complaint.
IT IS SO ORDERED.
The Clerk is DIRECTED to transmit a copy of this memorandum
opinion and order to counsel of record herein.
DATED:

April 24, 2014

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

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