Decker et al v. Statoil USA Onshore Properties, Inc. et al

Filing 208

MEMORANDUM OPINION AND ORDER GRANTING IN PART AND DEFERRING IN PART DEFENDANT'S 146 MOTION FOR PARTIAL SUMMARY JUDGMENT, GRANTING DEFENDANT'S SUPPLEMENTAL 204 MOTION FOR PARTIAL SUMMARY JUDGMENT, DEFERRING RULING ON PLAINTIFFS' [ 143] MOTION FOR PARTIAL SUMMARY JUDGMENT AND DEFERRING RULING ON INTERVENOR-DEFENDANT'S 148 MOTION FOR PARTIAL SUMMARY JUDGMENT. The pending motions in limine 160 162 164 167 170 172 174 and the Deckers' pending motion to strike 184 all potentially affect determinations as to Count Two, those motions are also DEFERRED. Signed by Senior Judge Frederick P. Stamp, Jr. on 6/7/17. (copy to counsel via CM/ECF) (lmm)

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF WEST VIRGINIA
DEAN PATRICK DECKER, III
and LORETTA DECKER,
Plaintiffs,
v.

Civil Action No. 5:15CV114
(STAMP)

STATOIL USA ONSHORE
PROPERTIES, INC.,
a Delaware corporation
and PETROEDGE ENERGY, LLC,
a Delaware limited
liability company,
Defendants,
and
EQT PRODUCTION COMPANY,
Intervenor-Defendant.
MEMORANDUM OPINION AND ORDER
GRANTING IN PART AND DEFERRING IN PART
DEFENDANT’S MOTION FOR PARTIAL SUMMARY JUDGMENT,
GRANTING DEFENDANT’S SUPPLEMENTAL
MOTION FOR PARTIAL SUMMARY JUDGMENT,
DEFERRING RULING ON PLAINTIFFS’ MOTION
FOR PARTIAL SUMMARY JUDGMENT AND
DEFERRING RULING ON INTERVENOR-DEFENDANT’S
MOTION FOR PARTIAL SUMMARY JUDGMENT
This is a commercial contract dispute arising out of a joint
venture for the acquisition, exploration, and development of oil
and gas leases.

The parties have filed cross-motions for partial

summary judgment.

For the following reasons, the defendant’s

motion for partial summary judgment is granted in part and deferred
in part and the defendant’s supplemental motion for partial summary

judgment is granted.

This Court defers ruling on the plaintiffs’

motion for partial summary judgment and the intervenor-defendant’s
motion

for

partial

summary

judgment

pending

those

parties’

settlement of Count Two.
I.

Facts

The plaintiffs, Dean Patrick Decker and Loretta Decker (“the
Deckers”), claim entitlement to overriding royalty interests in oil
and gas leases held by defendant Statoil USA Onshore Properties,
Inc. (“Statoil”) and intervenor-defendant EQT Production Company
(“EQT”). The Deckers’ claims arise out of a 2011 agreement between
Decker Energy, LLC (“Decker Energy”) and PetroEdge Energy, LLC
(“PetroEdge”) called the “Participation Agreement.” ECF No. 143-3.
Dean Decker was the sole member of Decker Energy.

ECF No. 146-1 at

59 (providing a signature line for Decker Energy listing Dean
Decker as Decker Energy’s “Sole Member”).

At that time, Decker

Energy held oil and gas leases in Tyler County, West Virginia and
was investigating title to leases in properties in Tyler and Wetzel
Counties for later acquisition.

ECF Nos. 143-1 at 2; 145-1.

Through the Participation Agreement, Decker Energy and PetroEdge
sought to cooperate in the acquisition and development of these
leases.

ECF No. 145-1 at 2.

The Participation Agreement had three principal parts. First,
Decker Energy agreed to sell to PetroEdge interests in a set of oil
and gas leases held by Decker Energy called the “Initial Leases,”

2

identified in Exhibit A-1 to the Participation Agreement.
143-3 at 5, 10, 12, 14.
to

transfer

retaining
Further,

90%

10%

of

Decker

of

For each Initial Lease, Decker Energy was

its

its

ECF No.

working

original

Energy

would

interest1

to

PetroEdge

working

interest.

receive

an

interest2 called the “Initial Lease ORRI.”

Id.

overriding

Id. at 10.

while
at

6.

royalty

If Decker

Energy held more than an 83% working interest in an Initial Lease,
Decker Energy was entitled to an overriding royalty interest in the
amount of the percentage difference between the percentage of
Decker Energy’s working interest and 83%.

Id.

Thus, if Decker

Energy held an 87% working interest in an Initial Lease, it would
be entitled to an overriding royalty interest of 4% in that lease.
See ECF No. 204-6 at 7.

Decker Energy was also “entitled to assign

the Initial Lease ORRI or cause the Initial Lease ORRI to be paid
to [the Deckers].”

ECF No. 143-3 at 23.

Second, Decker Energy and PetroEdge agreed that PetroEdge
would investigate certain properties identified in Exhibit A-3 to
the Participation Agreement, called the “Target Leases.”

Id. at

1

A working interest in an oil and gas lease is “the right to
work on the leased property to search, develop, and produce oil and
gas, as well as the obligation to pay all costs.”
“Working
Interest,” Black’s Law Dictionary (10th ed. 2014).
2

An overriding royalty interest in an oil and gas lease is
“[a] share of either production or revenue from production (free of
the costs of production) carved out of a lessee’s [working]
interest under an oil-and-gas lease.”
“Royalty, Overriding
Royalty,” Black’s Law Dictionary (10th ed. 2014).
3

33.

PetroEdge could then acquire the Target Leases.

Id.

Upon

acquiring a Target Lease, PetroEdge was to “assign to Decker
[Energy] an undivided working interest in such Target Lease” and an
overriding royalty interest in that lease.

Id.

As with the

Initial Lease ORRI, Decker Energy was “entitled to assign such
overriding royalty or cause such overriding royalty to be paid to
[the Deckers].”

Id.

Third, Decker Energy and PetroEdge agreed to create an “Area
of Mutual Interest” (“the AMI”), which included the Initial Leases,
the Target Leases, and other adjacent properties.

Id. at 6, 34.

The parties agreed that if one of them sought to acquire a lease
within the AMI, the other party would have a right of first refusal
to acquire that lease on the same terms.

Id. at 34-35.

In effect,

this prevented Decker Energy and PetroEdge from competing for
leases within the AMI.
PetroEdge later pooled and unitized a set of leases, including
one of the Initial Leases called “the Welch Lease,”3 into a pooled
unit known as “the Ball Unit.”

ECF Nos. 145-2, 146-5 at 4.

PetroEdge then drilled a well on the Ball Unit known as “Ball Unit
1H” and began making royalty payments directly to the Deckers. ECF

3

The Initial Leases included several leases in the name of
Mary Maxine Welch. See ECF No. 204-2 at 10-11. “The Welch Lease”
referred to in this memorandum opinion and order is identified as
“#120” in Exhibit A-1 to the Amendment to the Participation
Agreement and it includes 69.5 net acres. ECF No. 204-2 at 10.
Further, the lease is recorded at Book 371, Page 217 in Ellsworth
District, Tyler County, West Virginia. Id.
4

Nos. 145-2 at 2-3; 143-6 at 1.

There is no evidence of a written

assignment from Decker Energy to the Deckers or of a written
invocation of Decker Energy’s right to cause the payments to be
directed to the Deckers. Rather, the parties informally understood
that the royalties would be paid directly to the Deckers.

ECF No.

204-6 at 9.
Decker Energy and PetroEdge then executed an “Amendment to the
Participation Agreement” (“the Amendment”).

ECF No. 146-2.

Under

the Amendment, Decker Energy was to receive a 1% overriding royalty
interest in each Target Lease acquired by PetroEdge, which was to
be conveyed directly to the Deckers rather than Decker Energy
within ninety days of PetroEdge’s acquisition of the lease.
No. 145-3 at 4.

ECF

It also amended Exhibits A-1 and A-3 identifying

the Initial Leases and the Target Leases respectively. See ECF No.
155-1 at 4, 9-16.
Statoil

later

acquired

all

of

PetroEdge’s

West

Virginia

assets, including those under the Participation Agreement and the
Amendment.

ECF Nos. 146-3 at 18-22; 143-9.

Under § 15.4 of the

Participation Agreement, Decker Energy had the right to “tag along”
with PetroEdge’s sale to Statoil and sell its assets relating to
the Participation Agreement to Statoil on the same terms as
PetroEdge.

ECF No. 143-3 at 40.

Decker Energy exercised that

right and conveyed all of its interests, including “any royalty
interests,” in leases identified at Exhibit A, Schedule 1 to the

5

parties’ Purchase and Sale Agreement (“the PSA”) along with Decker
Energy’s

interests

in

the

Participation

Agreement

and

the

Amendment. ECF Nos. 146-4 at 17-21, 66-68, 72; 143-10; 145-4. The
Deckers

maintain

that,

based

on

their

communications

with

PetroEdge, Decker Energy conveyed all of its interests in the
Initial Leases and Target Leases except for its overriding royalty
interest and its working interest in Ball Unit 1H. ECF No. 143-10;
145-4.

However, Exhibit A, Schedule 1 to the PSA lists the Welch

Lease and Decker Energy’s overriding royalty interest in that lease
as one of the assets being purchased.

ECF No. 204-4 at 66.

Further, Exhibit A, Schedule 1 expressly excludes Decker Energy’s
10% working interest in Ball Unit 1H.

Id. at 68.

After these acquisitions, Statoil made royalty payments to the
Deckers for production from Ball Unit 1H.

ECF No. 145-5 at 2-3;

143-13. However, Statoil later notified the Deckers that they were
no longer entitled to royalties because Decker Energy conveyed all
of its interests in the Initial Leases and the Ball Unit to
Statoil, and Statoil stopped making payments to the Deckers.4
No. 143-15.

ECF

Statoil later assigned to the Deckers overriding

royalty interests in eighteen leases that Statoil claims are
acquired Target Leases.

ECF No. 145-6.

4

Then, after the Deckers

It is unclear whether Statoil has made payments to Decker
Energy for its 10% working interest in Ball Unit 1H. However, the
Deckers have not made a claim regarding Decker Energy’s working
interest, and that issue is not before this Court.
6

filed this civil action,
Target Leases.

EQT acquired Statoil’s interests in the

This Court has, thus, allowed EQT to intervene in

this civil action as a defendant.
The Deckers allege that PetroEdge and Statoil failed to pay
royalties to the Deckers or to assign to them overriding royalty
interests

in

the

Initial

Leases,

Target

Leases

acquired

by

PetroEdge or Statoil, and the Ball Unit and Ball Unit 1H—Counts
One, Two, and Three respectively. The Deckers also allege in Count
Four a claim for unjust enrichment against Statoil.
seek

a

declaration

that

they

hold

or

are

The Deckers

entitled

to

hold

overriding royalty interests in the Initial Leases, the acquired
Target Leases, and the Ball Unit and Ball Unit 1H.

They also seek

an accounting of the development and production on each lease and
the appointment of a special commissioner to execute and deliver
assignments of interests in the leases to them.

Further, the

Deckers request a judgment for all unpaid royalties on the leases
and for their unjust enrichment claim.
Statoil seeks summary judgment as to all counts and the
Deckers and EQT each seek summary judgment as to Count Two.

The

parties have since indicated that the Deckers and EQT have settled
Count Two regarding the Target Leases pending a period of due
diligence to conclude on July 3, 2017.

See ECF No. 205.

This

Court will defer ruling on all motions as to Count Two until that
time. Thus, this Court considers only Statoil’s motion for partial

7

summary

judgment

and

supplemental

motion

for

partial

summary

judgment as to Counts One, Three, and Four.
II.

Applicable Law

Under Federal Rule of Civil Procedure 56, this Court must
grant a party’s motion for summary judgment if “there is no genuine
dispute as to any material fact and the movant is entitled to
judgment as a matter of law.”

Fed. R. Civ. P. 56(a).

A fact is

“material” if it might affect the outcome of the case. Anderson v.
Liberty Lobby, 477 U.S. 242, 248 (1986).

A dispute of material

fact is “genuine” if the evidence “is such that a reasonable jury
could return a verdict for the non-moving party.”

Id.

If the

nonmoving party “fails to make a showing sufficient to establish
the existence of an element essential to that party’s case, and on
which that party will bear the burden of proof at trial,” summary
judgment must be granted against that party.
Catrett, 477 U.S. 317, 322 (1986).

Celotex Corp. v.

In reviewing the supported

underlying facts, all inferences must be viewed in the light most
favorable to the party opposing the motion.

See Matsushita Elec.

Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986).
The party seeking summary judgment bears the initial burden of
showing the absence of any genuine issues of material fact.
Celotex, 477 U.S. at 322-23.

See

“The burden then shifts to the

nonmoving party to come forward with facts sufficient to create a
triable issue of fact.”

Temkin v. Frederick County Comm’rs, 945

8

F.2d 716, 718 (4th Cir. 1991), cert. denied, 502 U.S. 1095 (1992).
However, “a party opposing a properly supported motion for summary
judgment may not rest upon the mere allegations or denials of his
pleading, but . . . must set forth specific facts showing that
there is a genuine issue for trial.”
Inc., 477 U.S. 242, 256 (1986).

Anderson v. Liberty Lobby,

Moreover, “[t]he nonmoving party

cannot create a genuine issue of material fact through mere
speculation
Othentec

or

Ltd.

the
v.

building

Phelan,

of

526

one

F.3d

inference
135,

(internal quotation marks omitted).

140

upon
(4th

another.”
Cir.

2008)

The nonmoving party must

produce “more than a ‘scintilla’” of evidence “upon which a jury
could properly proceed to find a verdict for the party producing
it.” Id. (internal quotation marks omitted) (quoting Anderson, 477
U.S. at 251).
III.

Discussion

The core issues are whether, under the Participation Agreement
and the Amendment, the Deckers are entitled to overriding royalty
interests in the Initial Leases or in the Ball Unit and whether
Decker Energy assigned its royalty interests to the Deckers.

In

addition to its arguments on the merits, Statoil also argues that
the Deckers lack standing under Article III of the Constitution to
assert

Counts

One

and

Three.

This

Court

must

jurisdictional issue before proceeding to the merits.

9

discuss

the

A.

Standing
Article III of the United States Constitution limits federal

courts’ jurisdiction to actual “cases” and “controversies.”
Const. art. III, § 2.

U.S.

It is “an essential and unchanging part of

the case-or-controversy requirement” that the party asserting
federal jurisdiction establish standing.

Lujan v. Defenders of

Wildlife, 504 U.S. 555, 560 (1992). To establish standing, a party
must show: “(1) that it has suffered an injury in fact that is both
concrete

and

particularized

and

‘actual

or

imminent,

not

conjectural or hypothetical’; (2) that there is a causal connection
between the injury and the conduct complained of, i.e. the injury
is ‘fairly traceable’ to the challenged action; and (3) that it is
‘likely . . . that the injury will be redressed by a favorable
decision.’”

Star Sci. Inc. v. Beales, 278 F.3d 339, 358 (4th Cir.

2002) (quoting Lujan, 504 U.S. at 560-61).
federal

jurisdiction

bears

the

burden

of

“The party invoking
establishing

these

elements.” Lujan, 504 U.S. at 561. At the summary judgment stage,
the party asserting jurisdiction “must ‘set forth’ by affidavit or
other evidence ‘specific facts’” supporting standing, id. (quoting
Fed. R. Civ. P. 56(e)), and “establish that there exists no genuine
issue of material fact as to justiciability or the merits.”

Dep’t

of Commerce v. U.S. House of Representatives, 525 U.S. 316, 329
(1999).

10

Statoil argues that the Deckers lack standing to seek a
declaration that they are entitled to overriding royalties in the
Initial Leases or the Ball Unit because they were not parties to
the Participation Agreement or the Amendment and because Decker
Energy never assigned its interests in those leases to the Deckers.
The Deckers do not dispute that they were not personally parties to
those agreements.

Rather, the Deckers argue that Decker Energy

effectively assigned its royalty interests in the Initial Leases to
them by assigning royalty payments to the Deckers as evidenced by
the parties’ course of performance.
It is clear from the evidence submitted that the question of
standing

is

equivalent

to

a

determination

on

the

merits.

Essentially, Statoil argues that the Deckers lack standing because
they have no interest in the Initial Leases or the Ball Unit.

This

is precisely the issue on which the Deckers seek a judicial
determination.

Thus, the issue of standing and the merits have

effectively merged.

This Court will therefore consider Statoil’s

motions on the merits as to Counts One, Three, and Four.5
B.

Statoil’s Motions for Partial Summary Judgment
The Deckers claim they are entitled to overriding royalty

interests in the Initial Leases, including the Welch Lease, and in

5

This Court notes that standing likely exists as to the
Deckers’ claimed interests in the Target Leases under Count Two.
Thus, even if the Deckers lack standing to assert Counts One and
Three, this Court still has subject matter jurisdiction in this
civil action.
11

the Ball Unit because it includes the Welch Lease.

Thus, the

Deckers’ claimed interest in the Ball Unit is dependent upon a
finding that they are entitled to an interest in the Welch Lease,
which in turn is dependent upon a finding that the Deckers are
entitled to overriding royalty interests in the Initial Leases.
Thus, this Court considers Counts One and Three concurrently.
1.

The Initial Leases and the Ball Unit

Statoil argues that all of the Initial Leases either expired,
were transferred to Statoil, or both.

All but two of the Initial

Leases, including the Welch Lease, expired in 2012, 2013, or 2014
but many have since been renewed or renegotiated by Statoil.
Nos. 204-7 at 8-9; 146-5 at 4; 204-8.

ECF

While the Deckers argue that

more than two of the Initial Leases were unexpired, the only
evidence they offer to support this argument are the unsworn report
and supplemental report of their retained expert, Robert Chase,
Ph.D., P.E.
This
judgment.

Court

may

not

consider

those

materials

on

summary

See Peak ex rel. Peak v. Cent. Tank Coatings, Inc., 606

F. App’x 891, 895 (10th Cir. 2015); DG&G, Inc. v. FlexSol Packaging
Corp. of Pompano Beach, 576 F.3d 820, 826 (8th Cir. 2009); Pack v.
Damon Corp., 434 F.3d 810, 815 (6th Cir. 2006); Scott v. Edinburg,
346 F.3d 752, 759 (7th Cir. 2003); Provident Life & Accident Ins.
Co. v. Goel, 274 F.3d 984, 1000 (5th Cir. 2001); Fowle v. C & C
Cola, a Div. of ITT-Cont’l Banking Co., 868 F.2d 59, 67 (3d Cir.

12

1989); Solis v. Prince George’s Cnty, 153 F. Supp. 2d 793, 798-99
(D. Md. 2001).
Chase’s

findings

The Deckers had an opportunity to present Dr.
in

the

form

of

an

affidavit

or

deposition

testimony when responding to Statoil’s original motion for partial
summary judgment and its supplemental motion but failed to do so
each time.

Accordingly, this Court will not consider Dr. Chase’s

reports, and the Deckers fail to demonstrate a genuine dispute of
material fact regarding the expiration of Initial Leases.
Further, most of the Initial Leases, including the Welch Lease
and the other unexpired lease, were conveyed to Statoil by Decker
Energy under the PSA.
at 9-12.

Compare ECF No. 146-4 at 66-68, with 146-2

The PSA lists the Welch Lease, including Decker Energy’s

royalty interest, in Exhibit A, Schedule 1 as an asset to be
transferred to Statoil. ECF No. 146-4 at 66. Moreover, Exhibit A,
Schedule 1 expressly excluded Decker Energy’s 10% working interest
in Ball Unit 1H, clearly indicating that Decker Energy did not
intend to reserve its royalty interest in the Welch Lease. See id.
at 68. Thus, all of Decker Energy’s interests in unexpired Initial
Leases were conveyed to Statoil except for its working interest in
Ball Unit 1H.
Nevertheless, the Deckers argue that Decker Energy could not
have conveyed the Welch Lease or the other unexpired Initial Lease
to Statoil because the Deckers personally held those royalty
interests and were not parties to the PSA.

13

Statoil argues that

there is no contractual or evidentiary basis for the Deckers’
claims.

Thus, this Court must determine whether the Initial Lease

ORRI was to be transferred directly to the Deckers or was otherwise
assigned to the Deckers.
a.

Contractual Basis

A “valid written instrument which expresses the intent of the
parties in plain and unambiguous language is not subject to
judicial construction or interpretation but will be applied and
enforced according to such intent.”
S.E.2d 62, 72 (W. Va. 2013).

New v. GameStop, Inc., 753

Where the terms of a contract are

unambiguous, extrinsic evidence of the parties’ statements or
intent are irrelevant to contradict or change the terms of the
agreement unless there is a showing of illegality, fraud, duress,
mistake, or insufficiency of consideration.

Mountain State Coll.

v. Holsinger,742 S.E.2d 94, 101 (W. Va. 2013).
“Contract

language

is

considered

ambiguous

where

an

agreement’s terms are inconsistent on their face or where the
phraseology can support reasonable differences of opinion as to the
meaning of words employed and obligations undertaken.”

State ex

rel. Fazier & Oxley, L.C. v. Cummings, 569 S.E.2d 796, 803-04 (W.
Va. 2002) (internal quotation marks omitted).

“The mere fact that

parties do not agree to the construction of a contract does not
render it ambiguous.”
879,

885

(W.

Va.

Salem Int’l Univ., LLC v. Bates, 793 S.E.2d

2016)

(internal

14

quotation

marks

omitted).

Flanagan v. Stalnaker, 607 S.E.2d 765, 769 (W. Va. 2004). Further,
“a document that may appear on its face to be free from ambiguity,
may be deemed latently ambiguous,” Energy Dev. Corp. v. Moss, 591
S.E.2d 135, 143 (W. Va. 2003), if “some collateral matter [] makes
the meaning uncertain.”

Flanagan, 607 S.E.2d at 769 n.4.

“[A]

contract that is silent as to a point is not ambiguous in that
regard,” but creates a legal question as to “the effect of the
contract rather than interpreting its language.”

Holsinger, 742

S.E.2d at 102.
The Participation Agreement and the Amendment unambiguously
entitle Decker Energy, not the Deckers, to overriding royalty
interests in Initial Leases that Decker Energy held more than an
85% working interest in.

ECF No. 143-3 at 10.

The agreements also

provide that “Decker [Energy] shall be entitled to assign the
Initial Lease ORRI or cause the Initial Lease ORRI to be paid to
[the Deckers],” id. at 23, expressly stating that the Deckers would
not directly hold these royalty interests.

Further, the Amendment

added a provision requiring overriding royalty interests in the
Target Leases to be transferred directly to the Deckers, while not
doing the same for the Initial Leases, id. at 4, further indicating
that the parties did not intend for the Deckers to directly hold
royalty interests in the Initial Leases unless Decker Energy
assigned them.

Thus, the Deckers were not contractually entitled

to overriding royalty interests in the Initial Leases.

15

The Deckers argue that the parties’ course of performance
modified the terms of the Participation Agreement and the Amendment
such that Decker Energy’s royalty interests in the Initial Leases
belonged to the Deckers. However, this Court finds the language of
those agreements to be unambiguous, and this Court will not
construe their plain language based on the parties’ subsequent
course of conduct.

New, 753 S.E.2d at 72.

Further, as discussed

below, the parties’ course of performance does not indicate Decker
Energy intended or attempted to assign its royalty interests to the
Deckers.
b.

Implied Assignment

The Deckers argue that Decker Energy assigned its overriding
royalty interests in the Initial Leases to them.
concede that no written assignment exists.

The Deckers

ECF No. 153 at 11.

Instead, the Deckers argue that an assignment can be implied based
on a Division of Interest Notice issued by Statoil, a check and
statement of interests issued by Statoil to the Deckers for royalty
payments, and copies of the Deckers’ 2013 and 2014 Internal Revenue
Service Form 1099-MISC stating their income from royalties.
The

Division

of

Interest

Notice

sets

out

the

parties’

interests in Ball Unit 1H, listing Decker Energy’s working interest
and the Deckers’ “ORRI” of about 1.1%.

ECF No. 153-6.

Statoil’s

checks to the Deckers also include a statement breaking down the
source of the payment and indicating a total overriding royalty

16

interest of about 1.1%.

ECF No. 153-13.

The Deckers’ 1099s state

the amount of royalties they received in 2013 and 2014.

ECF No.

153-17.
As a matter of accounting, Statoil sensibly listed Decker
Energy’s overriding royalty interests in the Deckers’ names, as
payments were made directly to them.

The 1099 forms do not

indicate the Deckers’ ownership of the royalty interests, as the
assigned payments were potentially taxable income the Deckers were
obligated to report.

At most, these documents tend to show that

Decker Energy intended to informally exercise its right to have
payments made directly to the Deckers.

Had Decker Energy intended

to assign its royalty interests, it would have done so through a
recorded, written instrument.

Accordingly, this Court finds that

Decker Energy did not assign to the Deckers its overriding royalty
interest in the Welch Lease or any of the Initial Leases.
Further, even if Decker Energy implicitly assigned its royalty
interests, the assignment would be invalid.

West Virginia’s

statute of frauds requires conveyances of any interest in real
property to be reduced to writing.

W. Va. Code § 36-1-3; Kennedy

v. Burns, 101 S.E. 156, 159 (W. Va. 1919).
also be recorded.

Such transfers must

See W. Va. Code §§ 40-1-8, 40-1-9.

Decker

Energy never executed or recorded a written assignment of its
royalty interests to the Deckers.
invalid and unenforceable.

17

Thus, any implied assignment is

c.
The

Equitable Estoppel

Deckers

alternatively

argue

that

Statoil

should

be

equitably estopped from denying that the Deckers hold royalty
interests in the Initial Leases and the Ball Unit.

Under West

Virginia law, equitable estoppel applies only where: (1) the party
to be estopped made “a false representation or . . . conceal[ed]
. . . material facts”; (2) the party to be estopped did so “with
knowledge, actual or constructive[,] of the facts”; (3) that “the
party to whom it was made . . . [lacked] knowledge or the means of
knowledge of the real facts”; (4) that the party to be estopped
intended that the representation “be acted on”; and (5) that “the
party to whom it was made . . . relied on or acted on it to his
prejudice.”

Folio v. City of Clarksburg, 655 S.E.2d 143, 148 (W.

Va. 2007).
The Deckers fail to demonstrate that they lacked knowledge or
the means to obtain knowledge of the fact that Decker Energy did
not assign its royalty interests in the Initial Leases to them. As
discussed above, the Participation Agreement clearly provides that
Decker Energy could assign its royalty interests in the Initial
Leases or cause them to be paid to the Deckers.

No assignment was

ever executed and, while the Deckers assert an implied assignment,
they offer no reason for why they were unable to determine that
Decker Energy had not formally assigned its royalty interests to
them.

As Decker Energy’s sole member, Dean Decker was in the best

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position

to

know

whether

Decker

Energy

assigned

any

of

its

interests to the Deckers and he likely had an opportunity to affect
such an assignment.

See ECF No. 146-1 at 59.

Further, Statoil did not make any representations to the
Deckers

regarding

whether

interests to the Deckers.

Decker

Energy

assigned

any

of

its

Even if Statoil’s payments to the

Deckers constitute such representations, the Deckers could not
reasonably rely on those representations because Statoil did not
have authority to assign Decker Energy’s property interests.

Only

Decker Energy and its sole member, Dean Decker, were in a position
to transfer Decker Energy’s property interests to the Deckers.
Thus, Statoil is not equitably estopped from denying the Deckers’
claims.
This Court finds that the Deckers were not contractually
entitled to royalty interests in the Initial Leases or the Ball
Unit.

This Court further finds that Decker Energy did not assign

its royalty interests to the Deckers. Thus, Statoil is entitled to
judgment as a matter of law as to Counts One and Three.
2.

Unjust Enrichment

The Deckers seek damages for unjust enrichment, alleging they
provided

“work,

labor,

expense[,]

and

investment”

in

the

Participation Agreement and the Amendment, benefitting Statoil
without compensation to the Deckers for their efforts.

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However,

because

the

parties’

rights

and

obligations

are

defined

by

contracts, the Deckers’ claim must be dismissed.
Unjust enrichment is a quasi-contract claim, and under West
Virginia law “[a]n express contract and an implied contract,
relating to the same subject matter, [cannot] co-exist.”
Shepherd, 84 S.E.2d 140, 144 (W. Va. 1954).

Case v.

While the Deckers

themselves are not parties to the Participation Agreement or the
Amendment, they allege they enriched Statoil by expending time,
money, and labor on behalf of Decker Energy in furtherance of the
Participation Agreement and the Amendment. Their claims are, thus,
governed by contracts.

The parties’ rights and obligations are

entirely defined by those agreements and the Deckers cannot state
a claim for unjust enrichment.
IV.

Conclusion

The Deckers fail to demonstrate a genuine dispute as to any
material fact.

This Court finds that the Deckers have no right to

overriding royalty interests in the Initial Leases or the Ball Unit
and that Statoil is entitled to judgment as a matter of law as to
Counts One, Three, and Four.

Accordingly, Statoil’s motion for

partial summary judgment (ECF No. 146) is GRANTED IN PART and
DEFERRED IN PART, Statoil’s supplemental motion for partial summary
judgment (ECF No. 204) is GRANTED, the Decker’s motion for partial
summary judgment (ECF No. 143) is DEFERRED, and EQT’s motion for
partial summary judgment (ECF No. 148) is DEFERRED.

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Additionally,

because the pending motions in limine (ECF Nos. 160, 162, 164, 167,
170, 172, 174) and the Deckers’ pending motion to strike (ECF No.
184) all potentially affect determinations as to Count Two, those
motions are also DEFERRED.
IT IS SO ORDERED.
The Clerk is DIRECTED to transmit a copy of this memorandum
opinion and order to counsel of record herein.
DATED:

June 7, 2017

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

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