Kennedy v. Consol Energy Inc. ( 2015 )

J-A35043-14
2015 Pa. Super. 93
EARL KENNEDY, ELIZABETH KENNEDY, IN THE SUPERIOR COURT OF
CHARLES G. ELY, II, JAMES SISLEY, PENNSYLVANIA
JOANNA STORER, JOHN O. HARKER,
AND THE EARL KENNEDY TRUST,
Appellants
v.
CONSOL ENERGY INC., A DELAWARE
CORPORATION AND CNX GAS COMPANY,
LLC, A VIRGINIA LIMITED LIABILITY
COMPANY,
Appellees No. 514 WDA 2014
Appeal from the Order February 26, 2014
In the Court of Common Pleas of Greene County
Civil Division at No(s): 225 of 2007
BEFORE: BENDER, P.J.E., BOWES, and ALLEN, JJ.
OPINION BY BOWES, J.: FILED APRIL 22, 2015
This is an appeal challenging multiple orders and a judgment entered
following a non-jury verdict that disposed of claims asserted by Earl
Kennedy, Elizabeth Kennedy, Charles G. Ely, II, James Sisley, Joanna Storer,
John O. Harker, and the Earl Kennedy Trust (“the Kennedys”) in piecemeal
fashion. The Kennedys are the owners of oil and gas rights in a 790-acre
tract of land in Gilmore Township, Greene County, which was owned in fee
at one time by James L. Garrison. Consol Energy Inc. is the owner of the
Pittsburgh coal seam under that tract, and CNX Gas Company drilled wells
and extracted coalbed methane gas from that seam for Consol (collectively
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“Consol”). The Kennedys challenge the trial court’s grant of judgment on
the pleadings in favor of Consol on the count seeking to quiet title to coalbed
methane gas in the Pittsburgh seam; judgment in favor of Consol following a
bench trial in a second quiet title action to coalbed methane gas in the Rider
seam; and summary judgment for Consol on their claims for trespass,
conversion, unjust enrichment, and replevin stemming from Consol’s alleged
intrusion into adjacent strata owned by the Kennedys during its
degasification of the Pittsburgh coal seam in preparation for mining. After
thorough review, we affirm.
In a January 14, 1932 deed, some of the heirs of Mr. Garrison, who
are predecessors in title to the Kennedys, conveyed their interest in the
property to other heirs, but excepted and reserved the coal of the Pittsburgh
or River vein in and beneath that tract, and “all of the oil and gas in place”
underlying the property. Those reservations provided:
EXCEPTING AND RESERVING, however, from this
conveyance . . . all the coal of the Pittsburgh or River vein in and
beneath said tract of land, TOGETHER with the free,
uninterrupted use and enjoyment of right of way into and under
said lands at such points and in such manner as may be
considered proper and necessary for the advantageous and
economical operation thereof, and in the digging, mining,
ventilating, draining and carrying away said coal and without
liability therefor, the grantees also waiving any and all damages
that arise therefrom to the surface, or to anything therein or
thereon by reason of such digging, mining, ventilating, draining,
and transporting of the said coal . . .
AND ALSO EXCEPTING AND RESERVING to . . . all the oil
and gas in place in and under said lands . . . and also with the oil
and gas in place there is hereby reserved the exclusive right to
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lease any part or all of said lands for the purpose of drilling and
operating thereon for natural gas and petroleum oil, and also the
right to construct and maintain pipe lines, gates and drips for the
transportation of oil or gas produced therefrom, and with the
right to use sufficient water for all operations thereon and the
right of ingress and egress . . .
Deed, 1/14/1932, at 2-3.
In 1961, by a series of deeds, the Kennedys’ predecessors in title
conveyed their interests in “all of the coal in the Pittsburgh or River vein in
and beneath” the tract to Consol,
TOGETHER with the free, uninterrupted use and enjoyment of
right of way into and under said lands at such points and in such
manner as may be considered proper and necessary for the
advantageous and economical operation thereof, and in the
diffing, mining, ventilating, draining and carrying away said coal
and without liability therefore, . . .
BEING the same interest in said tract of coal and mining rights
which was reserved . . . in deed . . . dated January 14, 1932.
1961 Deed1 at 2. Thus, after 1961, the Kennedys remained the owners of
“all of the oil and gas in place” in the subject property, but Consol owned the
coal in the Pittsburgh seam.2
Present in the coal itself is coalbed methane gas, a highly combustible
gas that must be ventilated during the coal mining process to prevent
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1
A series of deeds were executed conveying the interests in the Pittsburgh
or River Vein of coal to Consol. Since all contain the same language
regarding the coal and the reservation of oil and gas rights, we simply refer
to the deeds collectively as the 1961 Deed.
2
The record establishes that some of the Plaintiffs own the surface of the
subject property.
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explosion or inhalation. Formerly the practice was to vent the gas into the
atmosphere. More recently, coalbed gas has proved to be commercially
marketable, and hence, valuable. Consequently, wells are drilled to extract
coalbed methane gas from the coal, a process called degasification.
Degasification is undertaken prior to the mining of coal to prevent explosions
in the mine, and the goal is remove fifty to eighty percent of the coalbed
methane.
In 2005, in order to degas the Pittsburgh seam underlying the subject
property, Consol drilled a series of vertical production wells to a depth of
several hundred feet below that coal seam, four of which are at issue herein.
They then drilled access wells nearby and angled them so that they would be
approximately horizontal as they entered the coalbed. At some point, the
horizontal leg of the well intersected the vertical production well. Additional
sidetracks of the horizontal well (horizontal legs) were drilled, and they also
flowed to the production well. The access well was then sealed and gas
flowed from the laterals to the production well.
The Pittsburgh coal seam has undulations and waves. The record
reveals that drillers used gamma radiation to guide drill bits into the seam.
Low readings indicated that the drill bit was located in the coal; higher
readings meant that the bit was approaching or located in clay or shale. The
driller had the ability to adjust the drill in the direction of the lower reading,
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presumably into the coal, where the highest levels of coalbed methane gas
were located.
In 2007, the Kennedys filed a multi-count complaint seeking, inter
alia, quiet title to the ownership of the coalbed methane gas in the
Pittsburgh or River veins under the subject tract. The trial court applied
United States Steel Corp. v. Hoge, 468 A.2d 1380 (Pa. 1983), and
concluded that Consol owned the coalbed methane gas, and granted
judgment on the pleadings in favor of Consol in the quiet title claim
regarding the coalbed methane gas ownership. After a non-jury trial on the
quiet title claim relative to the Pittsburgh Rider seam, the trial court ruled
against the Kennedys based on a lack of proof that the Rider seam was
located under the Kennedys’ property. Finally, summary judgment was
granted in favor of Consol on the trespass and conversion counts. The court
determined that the Kennedys failed to adduce sufficient evidence to raise
genuine issues of material fact for the jury that Consol, without privilege to
do so, intentionally or willfully trespassed into their strata and converted
their gas and minerals. Although one quiet title claim remained regarding
ownership of surface acreage, the Kennedys discontinued that claim in order
to perfect the instant appeals.
The Kennedys present three questions for our review:
1. Did the Trial Court commit an error of law when, entering
judgment on the pleadings, it conducted an inadequate
review of the deeds that clearly severed the coalbed methane
gas from the coal of the Pittsburgh or River vein based on its
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incorrect application of United States Steel Corporation v.
Hoge for the rule that the owner always owns coalbed
methane gas in the coal?
2. Did the Trial Court commit an error of law when it noted
substantial questions of material fact in the record but
entered summary judgment based on its own determination
of the facts?
3. Did the Trial Court commit an error of law when that [sic] it
construed a deed conveying the “Pittsburgh or River vein” of
coal to also convey a separate seam known as the Pittsburgh
Rider seam?
Appellants’ brief at 6.
The Kennedys contend that the trial court erred in relying upon Hoge
in granting judgment on the pleadings in favor of Consol in the quiet title
action involving ownership of the coalbed methane gas. The law is well
settled that
Entry of judgment on the pleadings is appropriate "when
there are no disputed issues of fact and the moving party is
entitled to judgment as a matter of law." Consolidation Coal
Co. v. White, 2005 Pa. Super. 155, 875 A.2d 318, 325 (Pa.
Super. 2005). Our scope of review is plenary and we will reverse
only if the trial court committed a clear error of law or if the
pleadings disclose facts that should be submitted to a trier of
fact. Id. "We accept as true all well-pleaded allegations in the
complaint." Id.
Sisson v. Stanley, 2015 Pa. Super. 18 (Pa.Super. 2015).
The Hoge case is pertinent herein. In Hoge, U.S. Steel, the owner of
coal rights pursuant to a 1920 coal severance deed, commenced an action
against the lessee of the oil and gas rights who began drilling wells in 1978
to recover coalbed methane gas. U.S. Steel maintained that, as the owner
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of the coalbed, it owned the coalbed methane gas. The issue before the trial
court in Hoge, as herein, was who owned the coalbed methane gas: the
party who possessed the oil and gas rights or the owner of the coal.
In making its determination, the Hoge trial court construed the July
23, 1920 coal severance deed to glean the intentions of the parties. That
deed conveyed the coal rights to U.S. Steel, together with the right to
ventilate, but reserved to the surface owners the “right to drill and operate
through said coal for oil and gas without being held liable for any damages.”
Hoge, supra at 1383. The deed made no mention of coalbed methane.
The court noted that at the time of the execution of the deed, coalbed
methane gas was not commercially marketable and was regarded as a
nuisance. Furthermore, in addition to the grantor’s reservation of an estate
in “oil and gas,” the grantor also reserved the right to drill through the coal
seam to access the gas. Since natural gas was contained in strata below the
coal seam, the trial court construed the reservation of oil and gas as
encompassing oil and natural gas only. Based on the conditions existing at
the time of the conveyance, the court concluded that the grantor conveyed
the coalbed methane gas with the coal in which it was present.
The Superior Court reversed, but the Supreme Court affirmed the trial
court, holding:
[A]s a general rule, subterranean gas is owned by whoever has
title to the property in which the gas is resting. When a
landowner conveys a portion of his property, in this instance
coal, to another, it cannot thereafter be said that the property
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conveyed remains as part of the former's land, since title to the
severed property rests solely in the grantee. In accordance with
the foregoing principles governing gas ownership, therefore,
such gas as is present in coal must necessarily belong to the
owner of the coal, so long as it remains within his property and
subject to his exclusive dominion and control. The landowner, of
course, has title to the property surrounding the coal, and owns
such of the coal bed gas as migrates into the surrounding
property.
Hoge, supra at 1383 (internal citations omitted) (emphasis in original).
The Kennedys argue that the facts herein are distinguishable from
those in Hoge and that the trial court incorrectly applied Hoge as a
universal rule that the coal owner always owns the gas in the coal. Instead,
they maintain that the trial court should have examined the deeds to
determine the intent of the parties as the Hoge Court did. Had it done so,
the Kennedys contend, the court would have interpreted the reservation in
the 1932 deed for “all of oil and gas in place,” as just that, all of the gas,
including the coalbed methane gas in the Pittsburgh or River vein.
Consequently, when their predecessors conveyed the coal to Consol by deed
in 1961, again reserving “all of the oil and gas in place,” they did not convey
the coalbed methane gas.
Consol relies on Hoge as definitively establishing that the owner of the
coal is also the owner of the coalbed methane gas in Pennsylvania and
represents that the recent Supreme Court decision in Butler v. Charles
Powers Estate ex rel. Warren, 65 A.3d 885, 893 (Pa. 2013), affirmed that
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rule.3 Consol contends further that, even if we examine the deeds as the
Kennedys advocate, the result is the same. In support of its position, Consol
points to language in the 1961 deed granting it the right of way to enter the
land in any manner “proper and necessary for the advantageous and
economical operation thereof,” and specifically, the right to ventilate. The
same language is contained in the 1932 deed. According to Consol, this
language is even broader than the language in the Hoge coal severance
deed because it recognizes Consol’s right to “advantageous and economic
operations” of its coal rights. Since the Kennedys’ predecessors did not
perceive coalbed methane as a valuable resource, Consol submits they did
not expressly reserve a right to it for the reasons advanced in Hoge. Consol
concludes that since Appellants’ predecessors did not expressly reserve and
except the coalbed methane when they conveyed the coal to Consol’s
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3
We do not agree with Consol’s view of United States Steel Corp. v.
Hoge, 468 A.2d 1380 (Pa. 1983), as a hard and fast rule. Furthermore, in
Butler v. Charles Powers Estate ex rel. Warren, 65 A.3d 885, 893 (Pa.
2013), the Supreme Court construed a reservation of the rights in
subsurface minerals and petroleum oil in an 1881 deed as not contemplating
the natural gas contained in the Marcellus shale. The Butler Court
reaffirmed the Dunham Rule, i.e., that a deed reservation of minerals does
not contemplate or include natural gas unless it is expressly stated therein
or unless there is clear and convincing evidence presented that the parties
intended, at the time of the conveyance, to include natural gas. The Court
distinguished Hoge based on the unique qualities of coalbed methane gas
that made it unlikely that one would intentionally reserve what was then
perceived as a valueless gas, and the reservation in the deed of the right to
drill through the coal to the oil and gas below.
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predecessor, there was no intent to retain that gas, and Consol owns
exclusive title to the coalbed methane in the Pittsburgh seam.
The Kennedys counter that, if their predecessors intended to convey
the methane gas with the coal, there would have been no need to convey
the right to ventilate the gas in the coal. Appellants’ brief at 23.
“Undoubtedly,” the Kennedys argue, the methane gas was severed from the
coal in the 1932 deed. Id. at 29. Additionally, the Kennedys attempt to
distinguish Hoge on the basis that it was a first conveyance case, i.e., the
coal severance deed was the first conveyance of an interest in the property,
rather than the second conveyance case such as the one here.
The record reveals the following. In 1932, the Kennedys’ predecessors
excepted
“all the coal of the Pittsburgh or River vein in and beneath said
tract of land, TOGETHER with the free, uninterrupted use and
enjoyment of right of way into and under said lands at
such points and in such manner as may be considered
proper and necessary for the advantageous and
economical operation thereof, and in the digging, mining,
ventilating, draining and carrying away said coal and without
liability therefore.”
1932 Deed, at 1. (emphasis supplied). They also excepted and reserved
“all the oil and gas in place” and “the exclusive right to lease any part or all
of said lands for the purpose of drilling and operating thereon for natural gas
and petroleum oil, and also the right to construct and maintain pipe lines,
gates and drips for the transportation of oil or gas produced therefrom . . .”
Id. Thus, in 1932, ownership of the coal estate and the oil and gas estate,
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while severed from ownership of the surface and subdivided into two
estates, resided in the same grantees. In the 1961 Deed, ownership of the
coal estate was conveyed to Consol’s predecessors.
We read Hoge as establishing the general rule that, when a coal
severance deed is silent as to ownership of the coalbed methane, or does
not expressly reserve coalbed methane from the coal conveyance or
specifically define coalbed methane as a gas, the coalbed methane gas
contained in the coal belongs to the owner of the coal. It is not a per se rule
as Consol suggests. Nonetheless, we find the Hoge Court’s reasoning
applicable on the facts herein.
In 1932, the Kennedys’ predecessors conveyed the property but
subdivided and reserved the coal estate and the estate for “all the oil and
gas in place in and under said lands.” With the oil and gas, they “reserved
the exclusive right to lease any part or all of said lands for the purpose of
drilling and operating thereon for natural gas and petroleum oil . . . .”
(emphases added). There was no mention of coalbed methane gas in the
deed; the only gas referenced in the oil and gas reservation was natural gas.
Since coalbed methane was explosive and perceived as a nuisance at the
time, the circumstances made it highly improbable that one would retain
rights to coalbed methane gas. This construction of the deed is buttressed
by the fact that the grantors in 1932 did not reserve the right to lease the
land for the purpose of drilling for coalbed methane gas, only natural gas
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and petroleum oil. In 1961, the Kennedys’ predecessors conveyed “the
same interest in coal and mineral rights reserved by Madie G. Smith to
Charles V. Garrison, et al, dated January 14, 1932,” retaining the right to
the oil and gas.
Nor are we persuaded by the Kennedys’ argument that the conveyance
of the right to ventilate is superfluous if the owner of the coalbed is also the
owner of the coalbed methane gas. The right of ventilation has been
construed as permission for the coal owner to reasonably encroach upon the
estate retained by the grantor for purposes of ventilating the coal seam.
Hoge, supra at 1384. Furthermore, we agree with the trial court that any
distinction between a first and second conveyance is immaterial.
We find the instant case virtually indistinguishable from Hoge. Both
involve a subdivided mineral estate with one party owning the coal and the
other party owning the oil and gas. The conditions existing when the 1932
deed was executed were very much the same as those identified by the
Hoge Court in construing that 1920 deed. Simply stated, it was just as
likely that when the 1932 deed was executed in this case, the parties’
reservation for oil and gas extended only to oil and natural gas. Moreover,
the specific reference to natural gas in the 1932 deed undermines the
Kennedys’ position that the reservation of “all oil and gas” included coalbed
methane. In interpreting deeds, the principle expressio unius est exclusio
alterius applies, meaning the express mention of one thing excludes all
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others. See Fidelity Mortgage Guarantee Co. v. Boff, 160 A. 120, 122
(Pa. 1932) (express mention of one thing in a grant implies the exclusion of
another).
Since the deed reservation for oil and gas did not expressly include
coalbed methane gas, which was regarded as a nuisance at the time of the
conveyance, but expressly reserved the right to drill for natural gas, we find
no evidence that the grantor intended to retain any right to the coalbed
methane gas. Thus, we concur with the trial court that based on the Hoge
rationale, the gas reserved was only natural gas; the coalbed methane gas
was conveyed with the coal. The Kennedys’ claim to the coalbed methane
gas fails and judgment on the pleadings in favor of Consol on that quiet title
action was proper.
Next, the Kennedys allege error in the trial court’s grant of summary
judgment on their claims that Consol’s drills trespassed into the Kennedys’
strata and converted their oil, gas and minerals for its profit. They claim
that the record was sufficient to create genuine issues of material fact on the
trespass and conversion claims, but that the trial court impermissibly
resolved factual issues that should have been reserved for the jury.
At the summary judgment stage, a trial court is required to
take all facts of record, and all reasonable inferences therefrom,
in a light most favorable to the non-moving party. This clearly
includes all expert testimony and reports submitted by the non-
moving party or provided during discovery; and, so long as the
conclusions contained within those reports are sufficiently
supported, the trial judge cannot sua sponte assail them in an
order and opinion granting summary judgment. Contrarily, the
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trial judge must defer to those conclusions, . . . and should those
conclusions be disputed, resolution of that dispute must be left
to the trier of fact.
DeArmitt v. New York Life Ins. Co., 73 A.3d 578, 599 (Pa.Super. 2013)
(citations omitted). In reviewing a trial court’s grant of summary judgment,
the question of whether there exist any genuine issues of material fact is
subject to a de novo standard of review. Drelles v. Manufacturers Life
Ins. Co., 881 A.2d 822, 830-31 (Pa.Super. 2005). Thus, we apply the same
standard as the trial court and consider all of the evidence in the light most
favorable to the Kennedys, the non-moving party. Any doubt in the
existence of a genuine issue of material fact must be resolved in favor of the
non-moving party. We will reverse only if there has been a clear error of
law or if there are facts disclosed by the record that should have been
resolved by the jury. Pa.R.C.P. 1035.2.
In support of their trespass claim, the Kennedys offered the report of
David M. Falkenstern, which identified Consol’s excursions underneath their
property. Mr. Falkenstern opined, based upon his analysis of documents
supplied by Consol, that the east leg of the well designated as B-17 was
outside the Pittsburgh vein for 319 feet and that the center and west legs
ran below that portion of the Pittsburgh seam known as the main bench.4
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4
The Pittsburgh or River Seam consists of the main bench, a layer of
carbonaceous shale called the draw slate, and the roof coal zone.
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Tracks one, three, six, eight and ten of the B-18 well were at times outside
the Pittsburgh vein. The east leg of well B-23A was at various times below
and above the Pittsburgh seam. Mr. Falkenstern concluded that, of the
23,307 feet of horizontal bore drilled on the subject property, 7,053 feet of
well was located outside the Pittsburgh seam, which is 30.26% of the total
bore. Report, David M. Falkenstern, 12/30/13, Exhibit G to Response to
Defendants’ Motion for Summary Judgment, 1/3/14. Thus, there was
evidence that Consol’s drills extruded into adjacent strata.
The Kennedys maintain that one can infer the necessary intent for
trespass from the fact that Consol knew, both during and after drilling, that
its wells were outside the Pittsburgh vein, but continued to drill through
strata it did not own and did not seal off the excursions or alert the
Kennedys. Appellants’ brief at 38. In support of their claim that Consol
knew that its wells extruded into the Kennedys’ strata, the Kennedys relied
upon evidence that the drillers had access to almost “real-time data”
regarding the position of the drill bit based on gamma readings and drill
cuttings, as well as the ability to redirect the drill bit within ten to twelve
feet. The Kennedys aver that “[c]learly, Consol knew where it was drilling
and, despite the ability to change course, allowed its wells to leave the
Pittsburgh or River vein and enter strata owned by the Kennedys,” which
demonstrates “Consol’s intent to be and remain in that strata.” Appellant’s
brief at 39, citing Report of David M. Falkenstern, 12/30/13, Exhibit G to
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Response to Defendants’ Motion for Summary Judgment, at 45-6. According
to the Kennedys, this evidence was sufficient to raise genuine issues of
material fact and the trial court should have denied summary judgment.
Instead, they allege that the trial court “assumed the role of arbiter of the
facts.” Appellants’ brief at 40.
Consol directs our attention to the deed that conferred upon it the
right to enter the surface and all strata for the purposes of mining and
ventilating. It relies upon Gedekoh v. Peoples Natural Gas Co., 133 A.2d
283 (Pa.Super. 1957), for the proposition that, since it had a right of entry,
no trespass action will lie, and that any extrusion for purposes of ventilating
the coal in the Pittsburgh seam was privileged as a matter of law. The
Kennedys counter that any privilege was exceeded by the mile of horizontal
wells on their property, which was tantamount to a commercial gas
production operation, not mere ventilation of the coal. Consol relies upon
language in the 1961 Deed that conveyed to it the “uninterrupted use and
enjoyment of right of way into and under said lands at such points and in
such manner as may be considered proper and necessary for the
advantageous and economical operation thereof.” 1961 Deed.
The trial court construed the deed as conveying an easement to use as
much of the original tract as necessary and convenient to ventilate and
extract the coal. Thus, Consol’s entry into adjacent strata for that purpose
was privileged. Gedekoh, supra. Furthermore, the court found nothing to
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suggest that Consol’s profitable extraction of coalbed methane gas exceeded
its privilege to engage in “advantageous and economical operation.” See
1961 Deed. Thus, the trial court found this legal issue dispositive of the
trespass claim. We concur.
It is well-settled law that in order to establish a claim for trespass, a
plaintiff must prove an intentional entrance upon land in the possession of
another without a privilege to do so. See Kopka v. Bell Tel. Co., 91 A.2d
232, 235 (Pa. 1952); Restatement, Torts, § 164. It is unnecessary that “the
actor knows or should know that he is not entitled to enter thereon.”
Restatement, Torts, § 163, comment b, quoted with approval in Kopka,
supra at 235. “Conduct which would otherwise constitute a trespass is not
a trespass if privileged.” Restatement 2d of Torts, § 158, comment e.
We find merit in Consol’s claim that it was privileged to enter adjacent
strata by virtue of the right-of-way conveyed in the deed, and the Kennedys
do not seriously dispute said that entry was privileged. Consol had a “free,
uninterrupted use and enjoyment of right of way into and under” lands
owned by the Kennedys. See 1961 Deed. The Kennedys’ position that the
right-of-way did not permit the commercial production of coalbed methane
gas is refuted by the language of the reservation in the deed. The deed
contemplated use of the right of way “in such a manner as may be
considered proper and necessary for the advantageous and economical
operation . . . in the digging, mining ventilating, draining and carrying away
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said coal and without liability therefore.” Id. The fact that the
degasification operation is a profitable enterprise does not exceed or run
afoul of the right of way. We find this language in the deed to be legally
dispositive of the Kennedys’ trespass claim.5
Having concluded that Consol’s right to enter adjacent strata in order
to ventilate the coalbed methane gas negated the Kennedys’ trespass claim,
we turn to the Kennedys’ claim that Consol converted their gas contained
therein. In proving conversion, the Kennedys must prove that Consol
intended to assert control over the Kennedys’ gas that was inconsistent with
the Kennedys’ rights.6 This Court recently reiterated our definition of
conversion:
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5
The trial court concluded that the Kennedys, the party with the burden of
proof, failed to establish the intent necessary for a prima facie cause of
action in trespass or conversion. It noted, “the variance in gamma readings
does not automatically mean that the bit is in or out of the Pittsburgh seam.”
Trial Court Opinion, 2/26/14, at 10. Higher readings were also consistent
with the location of the bit in the roof coal zone of the Pittsburgh seam that
was mostly shale and clay. The court concluded that the higher gamma
readings did not equate to knowledge on the part of Consol at the time that
the drill was located outside the seam in an adjacent strata. Moreover, the
court declined to infer the requisite intent to trespass and convert from the
facts presented, reasoning that there was little financial motivation for
Consol to intentionally leave “the gas-rich Pittsburgh seam” to invade “the
nearby gas[-]poor shale and clay” owned by the Kennedys. Id. Although
our affirmance rests on legal grounds, we agree with the trial court’s view of
this evidence and its refusal to draw the inference the Kennedys desired.
6
The Kennedys alleged in their complaint that Consol had wrongfully taken
or used oil, water and other minerals, as well as gas. On appeal, their
argument is limited to the conversion of gas.
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The classic definition of conversion under Pennsylvania law is
"the deprivation of another's right of property in, or use or
possession of, a chattel, or other interference therewith, without
the owner's consent and without lawful justification."
McKeeman v. Corestates Bank, N.A., 2000 Pa. Super. 117,
751 A.2d 655, 659 n. 3 (Pa. Super. 2000). Although the exercise
of control over the chattel must be intentional, the tort of
conversion does not rest on proof of specific intent to commit a
wrong. Id.
Hranec Sheet Metal, Inc. v. Metalico Pittsburgh Inc., 2014 Pa. Super.
LEXIS 4564, 6-7, 2014 Pa. Super. 278 (Pa.Super. 2014) (quoting L.B. Foster
Co. v. Charles Caracciolo Steel and Metal Yard, Inc., 777 A.2d 1090,
1095-1096 (Pa.Super. 2001)). There is no such thing as a reckless,
negligent or accidental conversion. See Restatement of Torts, §§ 223,
comment b, and 224.
In support of their conversion claim, the Kennedys point to evidence
from Jeremy Hayhurst that there was gas immediately above and below the
Pittsburgh seam. Deposition of Jeremy Hayhurst, 12/10/13, at 143.
Furthermore, Mr. Hayhurst confirmed that the sidetracks in adjacent strata
were open cavities to which gas could migrate as it moved from an area of
higher pressure to one of lower pressure. Id. at 277. The Kennedys charge
that the trial court disregarded evidence that Consol’s wells traversed
through their property and that Consol did not seal those excursions.
According to the Kennedys, one can reasonably infer that the Kennedys’ gas
migrated to the wells and was converted. At the very least, they say, the
evidence raised genuine issues of material fact regarding the conversion
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claim. See Creazzo v. Medtronic, Inc., 903 A.2d 24 (Pa.Super. 2006)
(“[A] proper grant of summary judgment depends upon an evidentiary
record that either (1) shows the material facts are undisputed or (2)
contains insufficient evidence of facts to make out a prima facie cause of
action or defense[.]”).
We agree with the Kennedys that there is evidence in the record from
which one could reasonably conclude that some gas contained in their
property migrated to Consol’s wells and was produced. However, in order to
make out a claim for conversion of that gas, it was incumbent upon the
Kennedys to offer evidence of the value of the converted gas, a burden that
the Kennedys acknowledge. See Appellants’ brief at 45. The Kennedys
contended below, and reiterate here, that since Consol did not differentiate
the source of the gas produced, it was impossible for them to measure how
much gas was produced from open wells traversing their strata.7 They
assert that the trial court should have applied the “confusion of goods
doctrine” as in Stone v. Marshall Oil Co., 57 A. 183, 186 (Pa. 1904) and
____________________________________________
7
We note that the Kennedys introduced some evidence of the amount of gas
located in their adjacent strata. Their expert, Jeffery Dick, prepared a report
in which he described the results of a canister desorption study performed
on a well in West Virginia located just ten miles from the subject property.
The study revealed that the stratum located directly above the Pittsburgh
Seam yielded 2.37 to 4.85 standard cubic feet of gas per ton. No attempt
was made, however, to value that gas.
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Gribben v. Carpenter, 185 A. 712 (Pa. 1936), and that they are entitled to
the value of the entire production of Consol’s wells.
"Confusion of goods as understood in English and American law, is the
wilful and fraudulent intermixture of the chattels of one person with the
chattels of the other, without the consent of the latter in such a way, that
they cannot be separated and distinguished." Stone v. Marshall Oil Co.,
57 A. 183, 186 (Pa. 1904). In Stone, the plaintiff sought an accounting for
its share of gas profits from the lessee oil companies. The master originally
found that the oil companies fraudulently confused the gas from several
wells, but refused to apply the confusion of goods doctrine. The defendants
maintained that it was impossible to determine what quantity was produced
by a particular well as the gas from the plaintiffs’ well was commingled with
the gas of other wells. On appeal, this Court rejected that defense, finding
that the failure to keep an account was not an innocent error on the
defendants’ part. The defendants fraudulently failed to keep an account
despite a legal and moral obligation to pay plaintiffs one-fourth of the profits
and it was impossible to approximate the quantity, although it was
unquestionably a large quantity.
The Stone Court cited Sutherland on Damages, sec. 101, which
provides: "A reasonable rule which has much authority to support it, is, that
one who has confused his own property with that of other persons shall lose
it when there is a concurrence of these two things: first, that he has
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fraudulently caused the confusion, and secondly, that the rights of the other
party after the confusion are not capable otherwise of complete protection.”
Id. at 186. In that case, the Court ordered that the plaintiffs receive the full
amount of the profits, so that “the wrongdoer shall not profit by his wrong
and the innocent party shall not suffer by it.” Id.
In Gribben v. Carpenter, 185 A. 712, 713-14 (Pa. 1936), the
chancellor found that defendants, the minor plaintiff’s uncles, one of whom
was her guardian, “conspired and colluded by manipulating, controlling and
managing the leasing of plaintiff's land and a valuable producing gas well
thereon, so as to deprive and defraud her of a valuable lease and the large
sums of money that it would produce.” Plaintiff’s expert calculated her
damages at seventy percent of the value of the gas sold from both wells,
and the chancellor adopted this figure as the probable percentage of the gas
that was produced by her well. Based on the chancellor’s finding of
fraudulent confusion, however, our High Court applied Stone and held that
the plaintiff was entitled to the proceeds from the sale of gas from both
wells.
Consol argues that, as Stone and Gribben illustrate, the confusion of
goods doctrine applies only where a defendant commits fraud with the intent
of depriving the plaintiff of his rightful proceeds. Fraud was not pled nor
proved herein. Furthermore, in both Stone and Gribben, the plaintiffs
offered evidence of damages, unlike the Kennedys herein. The trial court
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agreed with Consol’s position that Stone and Gribben were distinguishable
as they involved bad faith and fraud and refused to apply the doctrine. In
the absence of evidence of damages, the court entered summary judgment.
As of the filing of the motion for summary judgment, there were no
fraud claims remaining in the instant lawsuit. Nor was there any allegation
or proof of a contractual duty on the part of Consol to account to the
Kennedys. Thus, absent from the record is evidence of the type of
fraudulent intermingling of gas that would trigger the confusion of goods
doctrine. On the record before us, we concur with the trial court’s refusal to
apply confusion of goods to remediate the Kennedys’ failure to establish an
ascertainable loss, a necessary element of a conversion action. 8 See
Lesoon v. Metropolitan Life Ins. Co., 898 A.2d 620 (Pa.Super. 2006).
Summary judgment on the conversion claim was proper.
____________________________________________
8
The trial court found the Kennedys’ damages to be de minimis. On appeal,
the Kennedys argue that the trial court erroneously based that conclusion
upon the report of Consol expert Thomas Souers, which was submitted with
Consol’s pretrial statement and which was not part of the evidentiary record
for purposes of summary judgment. Mr. Souers’ report revealed that
according to the same canister desorption study cited by Mr. Dick, the gas
content of the Pittsburgh Seam in Greene County was 125 to 265 standard
cubic feet of gas per ton, which was far in excess of the gas content of the
adjacent strata. See footnote 7, infra; Defendants’ Pre-Trial Statement,
Exhibit A. Although the Kennedys object to the trial court’s reliance upon
Mr. Souers’s report, we note that the Kennedys rely upon that same report
in support of their contention that Consol may have drilled outside the
Pittsburgh seam. See Appellants’ brief at 38. Regardless, since we find that
the confusion of goods doctrine was inapplicable herein absent fraud, the
trial court’s mistaken reference to this evidence is of no consequence.
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The Kennedys’ final issue is a challenge to the verdict in the non-jury
quiet title action involving the Pittsburgh Rider seam. They claim that the
trial court erred in interpreting the coal deeds as conveying both the
Pittsburgh or River vein and the Pittsburgh Rider coal seam to Consol.
Consol disputes the Kennedys’ characterization of the trial court’s findings.
According to Consol, the trial court agreed with the Kennedys that the deed
did not convey the Rider seam. The Kennedys could not prevail, however,
because there was no evidence that the Rider seam was located under the
subject property. We agree with Consol’s view of the trial court’s findings,
and we find ample support in the record for the court’s conclusions.
The Kennedys offered the testimony of Earl Kennedy, one of the
plaintiffs herein, and Ann Harris, a certified professional geologist. N.T. Non-
Jury Trial, 11/8/11, at 110. Earl Kennedy, although admittedly not an
expert, had worked in coal mines and was familiar with the Pittsburgh Rider.
Over objection, he was permitted to testify as to his understanding of the
Pittsburgh Rider. He defined the Pittsburgh Rider as “a seam located above
the Pittsburgh vein” and “separated in some places by several feet, some
other places by a few inches.” Id. at 22. Coal miners called it “the wild
coal, rooster coal.” Id. They would encounter it from time to time when
they were drilling roof bolts. In his experience as a coal miner, the
Pittsburgh Rider was not mined. Id. at 29. Mr. Kennedy explained that
“[t]he coal above the Pittsburgh Coal on our farm, once you get through the
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slate, that coal is called the -- according to the geologist it’s called the
Rider coal zone.” Id. at 43-4. When it was suggested that the geologist
referred to the coal above the slate as the roof coal of the Pittsburgh seam,
Mr. Kennedy conceded that he had heard it “called both roof coal zone and
rider coal zone.” Id. at 44.
Ms. Harris confirmed that there is a coal seam known as the Pittsburgh
Rider, and that is different from the roof coal zone of the Pittsburgh seam.
Id. at 110, 112. The Pittsburgh Rider is not continuous and not found
everywhere above a particular seam. Where it does exist, Ms. Harris posited
that “it can be as much as 25, 30 feet above” the roof coal zone of the
Pittsburgh seam. Id. at 115. However, Ms. Harris was unable to render any
opinion as to whether the Rider coal seam exists on the subject property.
Id. at 117.
The trial court noted considerable confusion between the roof coal
zone of the Pittsburgh seam, also referred to as the RCZ, and the Rider coal
seam. Ms. Harris largely agreed with Consol’s experts that the Pittsburgh
seam is composed of the main bench, a layer of carbonaceous shale called
the draw slate, and the roof coal zone. Id. at 114-15. Consol’s expert
geologist, Nick Fedorko III, reviewed the geological literature dating back to
1928, which described the Pittsburgh seam as a double bed of coal
consisting of a roof and a lower division separated by a clay parting. Id. at
137. It was his opinion that the RCZ is part of the Pittsburgh seam. Id. at
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147. Mr. Fedorko also stated with a reasonable degree of certainty that the
Rider seam is not located on the subject property. Id. at 153.
The trial court agreed with the Kennedys that the conveyance of the
Pittsburgh seam did not include the Rider seam, but also concluded that the
Rider seam was separate and distinct from the RCZ, which was the roof coal
zone of the Pittsburgh seam. The court ultimately found that the Kennedys
could not quiet title to the Rider seam because they failed to offer proof that
the Rider seam existed on their property.
The relevant standard of review of a court's decision in a non-jury trial
is as follows:
Our review in a non-jury case is limited to "whether the
findings of the trial court are supported by competent evidence
and whether the trial court committed error in the application of
law." We must grant the court's findings of fact the same weight
and effect as the verdict of a jury and, accordingly, may disturb
the non-jury verdict only if thecourt's findings are unsupported
by competent evidence or the court committed legal error that
affected the outcome of the trial. It is not the role of an
appellate court to pass on the credibility of witnesses; hence we
will not substitute our judgment for that of the factfinder. Thus,
the test we apply is "not whether we would have reached the
same result on the evidence presented, but rather, after due
consideration of the evidence which the trial court found
credible, whether the trial court could have reasonably reached
its conclusion."
Stephan v. Waldron Elec. Heating & Cooling LLC, 100 A.3d 660, 665
(Pa.Super. 2014) (internal citations omitted).
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We have thoroughly reviewed the certified record and, viewing the
evidence in the light most favorable to Consol as the verdict winner, we find
no basis to disturb the non-jury verdict.
For all of the foregoing reasons, we affirm.
Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 4/22/2015
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