Exploration Energy Partners v. Mountaineer Gas Transmission ( 2013 )

STATE OF WEST VIRGINIA
SUPREME COURT OF APPEALS
Exploration Energy Partners, LLC,
a North Carolina limited liability company, FILED
Plaintiff Below, Petitioner June 28, 2013
RORY L. PERRY II, CLERK
SUPREME COURT OF APPEALS
vs) No. 12-0706 (Pleasants County 12-C-4) OF WEST VIRGINIA
Mountaineer Gas Transmission, Inc.,
a Nevada corporation; and Unified
Investments, LLC, a Nevada limited
liability company, Defendants Below,
Respondents
MEMORANDUM DECISION
Petitioner Exploration Energy Partners, LLC, by counsel William J. Leon, appeals the
Circuit Court of Pleasants County’s April 17, 2012 order granting respondents’ motion to dismiss
in an action for damages pursuant to a contract. Respondents Mountaineer Gas Transmission,
Inc., and Unified Investments, LLC, by counsel Joseph G. Troisi, have filed a response.
The Court has considered the parties’ briefs and the record on appeal. The facts and legal
arguments are adequately presented, and the decisional process would not be significantly aided
by oral argument. Upon consideration of the standard of review, the briefs, and the record
presented, the Court finds no substantial question of law and no prejudicial error. For these
reasons, a memorandum decision is appropriate under Rule 21 of the Rules of Appellate
Procedure.
In November of 2010, Respondent Mountaineer Gas (“Mountaineer”) entered into a
contract with U.S. Exploration, LLC, (“U.S. Exploration”), who is not a party to this appeal,
whereby Mountaineer agreed to sell U.S. Exploration a thirty percent undivided interest in
leaseholds to thirty-five oil and gas wells located in Pleasants, Wood, and Ritchie Counties in
exchange for an initial investment of $62,700. As further consideration for its acquisition of the
assets, U.S. Exploration was obligated to expend additional sums to return to production at least
seventy-five percent of the wells subject to the contract. On September 29, 2011, U.S. Exploration
transferred its interests in the leaseholds and wells acquired from Mountaineer to Petitioner
Exploration Energy Partners, LLC, (“Energy Partners”) by assignment and bill of sale. According
to U.S. Exploration, it paid Respondent Mountaineer the initial $62,700 required by the contract.
Thereafter, as required, U.S. Exploration and, subsequently, petitioner allege that they invested
substantial time and money to return several of the wells subject to the contract to production. At
some point after the execution of the November 23, 2010, contract, Respondent Mountaineer
conveyed some or all of its rights in the assets subject to said contract to Respondent Unified
Investments, LLC.
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Petitioner Energy Partners alleges that neither it nor its predecessor, U.S. Exploration,
received the compensation due to them pursuant to the contract and, therefore, initiated a civil
action below. On February 23, 2012, respondents filed an answer and motion to dismiss based
upon a forum-selection clause in the November 2010 contract requiring that any actions regarding
the contract must be brought in Dallas County, Texas. After hearing arguments on the motion, the
circuit court found that the forum-selection clause was valid and enforceable and entered an order
on April 17, 2012, granting respondents’ motion to dismiss. It is from this order that Petitioner
Energy Partners appeals.
This Court has previously held that “‘[a]ppellate review of a circuit court’s order granting
a motion to dismiss a complaint is de novo.’ Syllabus Point 2, State ex rel. McGraw v. Scott
Runyan Pontiac-Buick, Inc., 194 W.Va. 770, 461 S.E.2d 516 (1995).” Syl. Pt. 1, Cantley v.
Lincoln Cnty. Comm’n, 221 W.Va. 468, 655 S.E.2d 490 (2007). We have also held that
[d]etermining whether to dismiss a claim based on a forum-selection clause
involves a four-part analysis. The first inquiry is whether the clause was
reasonably communicated to the party resisting enforcement. The second step
requires classification of the clause as mandatory or permissive, i.e., whether the
parties are required to bring any dispute to the designated forum or are simply
permitted to do so. The third query asks whether the claims and parties involved in
the suit are subject to the forum-selection clause. If the forum-selection clause was
communicated to the resisting party, has mandatory force and covers the claims
and parties involved in the dispute, it is presumptively enforceable. The fourth, and
final, step is to ascertain whether the resisting party has rebutted the presumption
of enforceability by making a sufficiently strong showing that enforcement would
be unreasonable and unjust, or that the clause was invalid for such reasons as fraud
or overreaching.
Syl. Pt. 4, Caperton v. A.T. Massey Coal Co., Inc., 225 W.Va. 128, 690 S.E.2d 322 (2009). After
careful consideration of the parties’ arguments, this Court concludes that the circuit court did not
err in granting respondents’ motion to dismiss based on the forum-selection clause.
As to the first element, this Court found in Caperton that the clause in that case was
reasonably communicated to the party resisting enforcement based upon the fact that Hugh M.
Caperton, one of the appellees, signed the contract in question as president of Sovereign Coal
Sales, Inc., one of the corporate parties to the agreement. Thereafter, Mr. Caperton founded
Harman Development Corporation and that company purchased Sovereign. In determining that
the first element was met, the Court noted that “. . . Sovereign [was a party] to the agreement, and
Mr. Caperton signed the contract in his capacity as president of Sovereign. Therefore, these
parties cannot claim ignorance of the plainly worded forum-selection clause . . . .” Id., at 143, 690
S.E.2d at 337. In this appeal Mr. Harry Slack Jr., who is a principal of Petitioner Energy Partners,
signed the contract in question in his official capacity as president of U.S. Exploration. Based
upon our prior holding in Caperton, the Court finds that the clause in question was reasonably
communicated to the party resisting enforcement.
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As to the second and third Caperton elements, petitioner has acknowledged that the
forum-selection clause at issue is mandatory, thereby satisfying element two as set forth above.
Petitioner has also acknowledged that the claims involved are claims that would be subject to the
forum-selection clause, thereby satisfying element three.
Finally, in regard to the fourth Caperton factor, the Court finds that petitioner has failed to
rebut the presumption of enforceability with a sufficiently strong showing that enforcement would
be unreasonable and unjust, or that the clause was invalid for such reasons as fraud or
overreaching. Petitioner’s entire argument on this point is that Texas courts have no subject
matter jurisdiction over cases concerning ownership rights arising under oil and gas leases
concerning realty located wholly outside that state. As such, petitioner argues that enforcing the
forum-selection clause is unreasonable. Citing Caperton, petitioner argues that unreasonable
forum-selection clauses will not be enforced. Id. 225 W.Va. at 154, 690 S.E.2d at 348. In
Caperton, we noted that
[c]hoice of forum and law provisions may be found unreasonable if (1) their
formation was induced by fraud or overreaching; (2) the complaining party “will
for all practical purposes be deprived of his day in court” because of the grave
inconvenience or unfairness of the selected forum; (3) the fundamental unfairness
of the chosen law may deprive the plaintiff of a remedy; or (4) their enforcement
would contravene a strong public policy of the forum state.
Id. (quoting Belfiore v. Summit Fed. Credit Union, 452 F.Supp.2d 629, 631-32 (D.Md. 2006)).
Petitioner admits that it has filed concurrent litigation in Dallas County, Texas, and argues that,
should the Texas court dismiss the action for lack of subject matter jurisdiction, it “will be
compelled to again file suit in West Virginia.” Based upon petitioner’s argument, it is clear that
petitioner will not be deprived of a remedy if the forum-selection clause is enforced, and the
clause is, therefore, not unreasonable.
For the foregoing reasons, we find no error in the decision of the circuit court and its April
17, 2012 order granting respondents’ motion to dismiss is affirmed.
Affirmed.
ISSUED: June 28, 2013
CONCURRED IN BY:
Chief Justice Brent D. Benjamin
Justice Menis E. Ketchum
Justice Allen H. Loughry II
DISSENTING:
Justice Robin Jean Davis
Justice Margaret L. Workman
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