Barr et al v. EQT Production Company

Filing 56

MEMORANDUM OPINION AND ORDER GRANTING AS FRAMED 49 PLAINTIFFS' MOTION TO AMEND. The plaintiffs are therefore DIRECTED to file their amended complaint. The parties, specifically the defendants, are DIRECTED to advise this Court of the status of The Kay Co., LLC v. EQT Production Company, Civil Action No. 1:13CV151-JPB, and the denial or granting of class certification. Signed by Senior Judge Frederick P. Stamp, Jr. on 5/22/2015. (copy to counsel of record via CM/ECF) (nmm)

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF WEST VIRGINIA
LARRY BARR and ELVA BARR,
Plaintiffs,
v.

Civil Action No. 5:14CV57
(STAMP)

EQT PRODUCTION COMPANY,
a Pennsylvania corporation,
Defendant.
MEMORANDUM OPINION AND ORDER
GRANTING AS FRAMED PLAINTIFFS’ MOTION TO AMEND
I.

Background

The plaintiffs, Larry Barr and Elva Barr (“the Barrs”),
initially filed this action in the Circuit Court of Wetzel County,
West Virginia.

It was subsequently removed to this Court by the

defendant, EQT Production Company (“EQT”).

The plaintiffs allege

that EQT has been conducting activities on their property that
constitute trespass and a nuisance given the EQT well pads that are
on their property. The complaint consists of six counts: breach of
contract, unjust enrichment, conversion, nuisance, negligence, and
punitive damages. The plaintiffs are seeking damages, both general
and punitive; abatement of the activities on the plaintiffs’
property by the defendant; and a declaration by this Court that all
the monies improperly obtained by EQT through its failure to pay
royalties to the plaintiffs should be placed in a constructive
trust.

The plaintiffs have now filed a motion to amend the complaint
to add additional claims and parties.

The plaintiffs first review

in their motion that this Court granted an extension of the
deadline for joinder of parties and amendment of pleadings to April
27, 2015.

The plaintiffs filed this motion on April 27, 2015.

The

plaintiffs assert that through discovery, they have uncovered that
the defendant and other EQT entities are involved in a “design and
plan to continue to avoid payment to lessors . . . all of the
royalties due to them.”

The plaintiffs argue that through a false

sale, the defendant and other EQT entities are able to shift costs
to the lessors rather than assuming those costs themselves.

The

plaintiffs thus seek to add five EQT entities as defendants, and to
add “all others similarly situated” as plaintiffs.
plaintiffs are seeking to make this a class action.

Thus, the

In adding new

parties, the plaintiffs have also asserted new causes of action:
declaratory judgment; breach of contract; and violations of West
Virginia Code § 22-6-8 (which provides a cause of action for the
inadequate compensation for oil and gas production).
In response, EQT asserts that the plaintiffs’ motion should
not be granted because a federal class action suit involving the
same or similar claims is already pending, The Kay Co., LLC v. EQT
Production Company, Civil Action No. 1:13CV151-JPB.

EQT argues

that the “first-filed rule” must govern because there are two
concurrent pending federal actions seeking relief for the same

2

alleged

conduct,

Kay

Co.

was

filed

first,

and

there

compelling circumstances to avoid the first-filed rule.

are

no

Further,

EQT contends that the plaintiffs may even be required to be joined
to

the

Kay

Co.

action.

EQT

argues,

in

addition,

that

the

plaintiffs have failed to outline a basis for the joinder of the
additional defendants as they are not parties to the lease in
question and have no contractual or other relationship with the
plaintiffs.

Finally, EQT asserts that requiring EQT and the other

proposed defendants to defend two competing class actions directed
at the same alleged conduct would be unduly prejudicial. Thus, EQT
contends that the amendment would be both futile and prejudicial.
In its reply, the plaintiffs argue that EQT’s argument is
premature because the proposed class in Kay Co. has not been
certified and could fail to be certified for a number of reasons.
Further, the plaintiffs assert that EQT fails to recognize that the
plaintiffs are seeking to not just add plaintiffs but also to add
causes of action that only came to light after discovery. Finally,
the plaintiffs contend that they have outlined a basis for the
joinder of the additional defendants based on their claims in the
amended complaint that the defendants are jointly and severally
liable for a joint venture.

3

This motion is ripe for review and this Court will now
consider it.

For the reasons that follow, this Court finds that

the plaintiffs’ motion to amend is granted.1
II.
Federal

Rule

of

Applicable Law

Civil

Procedure

15(a)(1)(A)

states,

in

pertinent part, that “[a] party may amend its pleading once as a
matter of course . . . before being served with a responsive
pleading.”

If a party seeks to amend its pleadings in all other

cases, it may only do so “with the opposing party’s written consent
or the court’s leave.
justice so requires.”
Rule

15(a)

The court should freely give leave when
Fed. R. Civ. P. 15(a)(2).

grants

the

district

court

broad

discretion

concerning motions to amend pleadings, and leave should be granted
absent some reason “such as undue delay, bad faith, or dilatory
motive

on

the

part

of

the

movant,

repeated

failure

to

cure

deficiencies by amendments previously allowed, undue prejudice to
the opposing party by virtue of allowance of the amendment or
futility of the amendment.”

Foman v. Davis, 371 U.S. 178, 182

(1962); see also Ward Elec. Serv. v. First Commercial Bank, 819
F.2d 496, 497 (4th Cir. 1987); Gladhill v. Gen. Motors Corp., 743
F.2d 1049, 1052 (4th Cir. 1984).

1

This Court notes that an offer of judgment is still open in
this case. It will close, at the end of business, May 25, 2015.
4

III.

Discussion

EQT asserts two of the elements from Foman that it believes
should bar the plaintiffs’ motion to amend: undue prejudice and
futility.
A.

This Court will review those assertions in turn.

Undue Prejudice: The First-Filed Rule
EQT

argues

that

allowing

the

plaintiffs

to

amend

their

complaint to transform this suit into a class action and add the
additional defendants would be unduly prejudicial under the “firstfiled rule.”

On the other hand, the plaintiffs contend that it is

unclear whether the pending case cited by EQT, Kay Co., will
actually result in a certified class as certification has not yet
taken place.

Thus, the plaintiffs assert that the application of

the “first-filed rule” at this juncture is premature.
“The well-established rule is that in cases of [federal]
concurrent jurisdiction, ‘the first court in which jurisdiction
attaches has priority to consider the case.’”

Northwest Airlines,

Inc. v. American Airlines, Inc., 989 F.2d 1002, 1005 (8th Cir.
1993) (quoting Orthmann v. Apple River Campground Inc., 765 F.2d
119, 121 (8th Cir. 1985)); see also Nutrition & Fitness, Inc. v.
Blue Stuff, Inc., 264 F. Supp. 2d 357, 360 (W.D.N.C. 2003);
Columbia Plaza Corp. v. Security Nat’l Bank, 525 F.2d 620, 626
(D.C. Cir. 1975) (stating “[s]ound judicial administration counsels
against separate proceedings, and the wasteful expenditure of
energy and money incidental to separate litigation of identical

5

issues should be avoided”). The United States Court of Appeals for
the Fourth Circuit has stated that the first filed case should have
priority absent a showing of a balance of convenience in favor of
the second filed action.

See Learning Network, Inc. v. Discovery

Communications, Inc., 11 F. App’x 297, 300 (4th Cir. 2001).
The decision to invoke the first-filed rule is an equitable
determination that is made on a case-by-case, discretionary basis.
Plating Resources, Inc. v. UTI Corp., 47 F. Supp. 2d 899, 903 (N.D.
Ohio 1999); Guthy-Renker Fitness, L.L.C. v. Icon Health & Fitness,
Inc., 179 F.R.D. 269, 270 (C.D. Cal. 1998).

This determination is

not entirely ungoverned; courts have recognized three factors to be
considered in determining whether to apply the first-filed rule:
(1) the chronology of the filings, (2) the similarity of the
parties involved, and (3) the similarity of the issues at stake.
E.g., Plating Resources, 47 F. Supp. 2d at 903.
Moreover,

even

if

a

court

finds

the

first-filed

rule

applicable, it may still make the discretionary determination that
the rule should be ignored as a result of “special circumstances,”
such as forum shopping, anticipatory filing, or bad faith filing.
Equal Employment Opportunity Comm’n v. Univ. of Pa., 850 F.2d 969,
976 (3d Cir. 1988) (citations omitted); 800-Flowers, Inc. v.
Intercontinental Florist, Inc., 860 F. Supp. 128, 132 (S.D.N.Y.
1994); Hop-In Food Stores, Inc. v. S & D Coffee, Inc., 642 F. Supp.
1106, 1107 (W.D. Va. 1986).

If a court determines that the suit

6

first

filed

with

it

should

be

disregarded

in

favor

of

the

later-filed suit, the court may stay its proceedings, dismiss the
case entirely, or transfer the case to its sister court.

Big Baby

Co. v. Schecter, 812 F. Supp. 442, 443 (S.D. N.Y. 1993).
In this case, the Court agrees with the plaintiffs that the
application

of

the

first-filed

rule

at

this

time

would

be

premature. It is unclear whether or not the parties and the issues
in this case and Kay Co. will in fact be similar enough to invoke
the first-filed rule.
has

not

been

At this time, the proposed class in Kay Co.

certified.

Further,

the

process

of

class

certification is not always a simple one given the requirements for
such a certification.2

Thus, it is unclear whether that case will

in fact proceed as a class action and whether the issues that EQT
argues overlap will actually be heard in that action.

As such,

although Kay Co.’s action was filed first, what would make it
similar to this case, given the proposed amended complaint, is not
immediately clear and is only speculative at this time.

At the

least, the second and third factors listed above are not yet met,
Plating Resources, 47 F. Supp. 2d at 903, and given the deferential

2

“Rule 23(a) states four threshold requirements applicable to
all class actions: (1) numerosity (a ‘class [so large] that joinder
of all members is impracticable’); (2) commonality (‘questions of
law or fact common to the class’); (3) typicality (named parties’
claims or defenses ‘are typical . . . of the class’); and (4)
adequacy of representation (representatives ‘will fairly and
adequately protect the interests of the class’).” Amchem Products,
Inc. v. Windsor, 521 U.S. 591, 613 (1997).
7

standard for granting a motion to amend under Foman, this Court
cannot find that the plaintiffs’ motion should be denied.
However, this Court notes that Kay Co. is set for trial
January 19, 2016, prior to the March 1, 2016 trial date in this
action.

Accordingly, it may become apparent at a later time that

because of the issues and parties in Kay Co., i.e. a class
certification has been given, an application of the first-filed
rule would be appropriate. Thus, this Court is granting the motion
to amend as framed and will allow the first-filed rule argument to
be raised again in the future, if deemed appropriate at that time.
B.

Futility
EQT also asserts that joining the additional defendants would

be futile as the plaintiffs have failed to allege an actual
connection

between

the

defendants

and

the

plaintiffs.

The

plaintiffs argue that they have alleged such a connection, given
their claim that the defendants are jointly and severally liable
for the complained of conduct.
For a motion to amend to be denied for futility, the amendment
must be “clearly insufficient or frivolous on its face.”

Johnson

v. Oroweat Foods Co., 785 F.2d 503, 510-511 (4th Cir. 1986).
“Courts generally favor the ‘resolution of cases on their merits’
. . . [t]hus the substantive merits of a proposed claim [or
defense] are typically best left for later resolution, e.g.,
motions to dismiss or for summary judgment, . . . or for resolution

8

at trial.”

Rambus, Inc. v. Infineon Tech., AG, 304 F. Supp. 2d

812, 819 (E.D. Va. 2004) (quoting Davis v. Piper Aircraft Corp.,
615 F.2d 606, 613 (4th Cir. 1980)).
Under West Virginia law, “all partners are jointly liable for
all debts and obligations of a partnership, . . . members of a
joint venture are likewise jointly and severally liable for all
obligations pertaining to the venture, and the actions of the joint
venture bind the individual co-venturers.”

Armor v. Lantz, 535

S.E.2d 737, 743 (W. Va. 2000).
In their amended complaint, the plaintiffs assert that the
defendants “are engaged in a joint venture, and are acting in
concert with one another” to promulgate the alleged tortuous
conduct.

Given the deferential treatment of a motion to amend,

which is usually not the place to consider the substantive merits
of a party’s claim, this Court must find that the addition of the
new claims would not be futile.

The plaintiffs have provided

claims that appear to apply to EQT and the other EQT entities that
are proposed defendants.

Thus, this Court cannot find that

futility is a bar to the motion to amend.
IV.

Conclusion

Based on the analysis above, this Court finds that the
plaintiffs’ motion to amend complaint and join additional parties
is GRANTED AS FRAMED.

The plaintiffs are therefore DIRECTED to

file their amended complaint.

9

The parties, specifically the defendants, are DIRECTED to
advise this Court of the status of The Kay Co., LLC v. EQT
Production Company, Civil Action No. 1:13CV151-JPB, and the denial
or granting of class certification.
IT IS SO ORDERED.
The Clerk is DIRECTED to transmit a copy of this memorandum
opinion and order to counsel of record herein.
DATED:

May 22, 2015

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

10