Johnson Family Trust v. Antero Resources Corp. ( 2016 )

STATE OF WEST VIRGINIA
SUPREME COURT OF APPEALS
Johnson Family Trust,
Plaintiff Below, Petitioner FILED
November 10, 2016
vs) No. 16-0070 (Harrison County 13-C-371) RORY L. PERRY II, CLERK
SUPREME COURT OF APPEALS
OF WEST VIRGINIA
Antero Resources Corporation,
Defendant Below, Respondent
MEMORANDUM DECISION
Petitioner and plaintiff below Johnson Family Trust, by counsel Stephen A. Wickland,
appeals the December 29, 2015, order of the Circuit Court of Harrison County that denied its
motion to alter or amend the court’s judgment order entered on March 4, 2015. In that order, the
circuit court granted the motion for summary judgment filed by respondent and defendant below
Antero Resources Corporation (“Antero”), and denied petitioner’s motion to evict Antero and for
forfeiture of bond. Antero, by counsel W. Henry Lawrence and Richard M. Yurko, Jr., filed a
response in support of the circuit court’s order. Petitioner submitted a reply.
This 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 affirming the circuit court’s order is appropriate under Rule 21
of the Rules of Appellate Procedure.
The parties entered into a Surface Use Agreement (“SUA”) dated May 8, 2009, which
provided that the SUA
is for a term of two (2) years from the date hereof and as long thereafter as any of
the facilities, as described herein are utilized for the purposes of oil and gas
development and transmission. In the event any operations are NOT initiated
within two (2) years from the date hereof, this agreement will become null and
void.
....
Grantee agrees to pay Grantors consideration in the amount of $2,500.00 at the
time of the execution of this agreement by Grantors, an additional $14,600.00 if
Grantee begins construction of this well-site location. This payment is an “all­
inclusive payment and covers payments for all production pipelines, frac-pits,
ponds, production facilities, well-site, above or below ground water lines and
1
access roads. This payment also includes payment for damages to trees, pastures
and other growing crops.
....
Grantors agree and consent that this SUA will be effective for all shallow and/or
deep wells that are drilled on Grantor’s [sic] lands from the locations described
and shown herein. Grantors agree to approve and sign any and all documents
required under the laws and regulations for the State of West Virginia for the
drilling of wells from Grantor’s [sic] lands.
Grantors agree to allow the use of water for onsite or offsite operations taken from
any frac-pit and/or pond constructed by Grantee’s operations hereunder. Grantors
further agree to allow Grantee to lay temporary above ground water lines over and
across the lands to transport water to and from frac-pit(s) or pond(s) owned by
Grantee, whether or not said ponds or frac pits are located on or off lease.
Grantors agree to approve and sign all documents required under the rules and
regulations of the State of West Virginia to allow the transportation of said water.
Grantee’s operations may include but are not limited to the drilling, re-entry,
maintenance and operation, including the laying, constructing, inspecting,
maintaining, repairing, altering, replacing, and relocating a pipeline to transport
production off of the lease from any wells to be located on the above described
land.
Additionally, under the SUA, Antero agreed to restrict traffic to and from the well-site to
only essential personnel.
Petitioner filed a complaint against Antero on August 29, 2013, in the Circuit Court of
Harrison County alleging a breach of the SUA. Petitioner alleged that Antero drilled three oil and
gas wells on the subject property and that, in or about 2011, all of the wells were completed.
Petitioner further alleged that, upon completion of the wells, the property should have been
abandoned by Antero and restored to its previous condition but that, instead, Antero and its
agents, employees and contractors re-entered the property without permission or compensation to
petitioner and began using the land for water purification pools, pipe storage for other wells,
storage of equipment, and parking of vehicles. Petitioner alleged that such operations have
brought dangerous and poisonous chemicals upon the property, have continued to disturb the
surface, and have otherwise utilized the property for purposes not anticipated by the SUA.
Antero filed an answer on October 4, 2013.
On June 18, 2014, petitioner filed a motion to evict Antero and for forfeiture of bond in
which it alleged that it executed the SUA “believing that [it] was for a two-year term, that their
land would be reclaimed and restored, and that they would have full access to all their property
2
after two (2) years, except for maintenance and upkeep of the wells.”1 Petitioner argued that
Antero disregarded its obligation under the SUA to reclaim the property after two years by using
the property for storage of water, pipe for other wells, parking vehicles, installing lights,
establishing an office “that worked 24 hours a day after the expiration of the two-year term,” and
blocking the roadway that was used as a logging road for petitioner’s land.
On June 26, 2014, Antero filed a motion for summary judgment and memorandum in
support thereof and response to the motion to evict and forfeit bond in which it argued that it
currently maintains three gas wells on petitioner’s land; that the three wells continue to produce
gas; that petitioner’s belief that the SUA was for a two-year term and that petitioner would have
full access to its property after two years is an unreasonable interpretation of the SUA; and that
petitioner failed to show that Antero’s use of the property was for anything other than what
Antero had a right to do under the terms of the SUA. In support of its motion and response,
Antero included the sworn affidavit of Timothy R. Rains, Antero’s Supervisor of Surface Land
Operations who negotiated the SUA with petitioner’s agent and, after petitioner filed a response
to the motion, filed a reply with a supplemental affidavit from Mr. Rains.
By order entered March 4, 2015, the circuit court granted Antero’s motion for summary
judgment and denied petitioner’s motion to evict and forfeit bond. On March 13, 2015, petitioner
filed a motion to alter or amend judgment, which was denied by order entered December 29,
2015. This appeal followed.
This Court has held that
[t]he standard of review applicable to an appeal from a motion to alter or
amend a judgment, made pursuant to W. Va. R. Civ. P. 59(e), is the same standard
that would apply to the underlying judgment upon which the motion is based and
from which the appeal to this Court is filed.
Syl. Pt. 1, Wickland v. Am. Travellers Life Ins. Co., 204 W. Va. 430, 513 S.E.2d 657 (1998). In
this case, the judgment underlying petitioner’s Rule 59(e) motion is summary in nature.
Summary judgment is appropriate “only when it is clear that no genuine issue of fact to be tried
and inquiry concerning the facts is not desirable to clarify the application of the law.” Syl. Pt. 1,
in part, Tolliver v. Kroger Co., 201 W. Va. 509, 498 S.E.2d 702 (1997). (Internal quotations and
citations omitted). For purposes of summary judgment, a “genuine issue”
“is simply one half of a trialworthy issue, and a genuine issue does not arise
unless there is sufficient evidence favoring the non-moving party for a reasonable
jury to return a verdict for that party. The opposing half of a trialworthy issue is
present where the non-moving party can point to one or more disputed ‘material’
facts. A material fact is one that has the capacity to sway the outcome of the
1
In other words, petitioner allegedly believed that it would have full access to its
property two years from May 8, 2009, the date the SUA was executed.
3
litigation under the applicable law.” Syllabus point 5, Jividen v. Law, 194 W.Va.
705, 461 S.E.2d 451 (1995).
Syl. Pt. 3, in part, Greenfield v. Schmidt Baking Co., Inc., 199 W. Va. 447, 485 S.E.2d 391
(1997). Once a circuit court is satisfied that summary judgment is proper and has granted such
relief, “‘[its] entry of summary judgment is reviewed de novo.’ Syl. Pt. 1, [in part,] Painter v.
Peavy, 192 W.Va. 189, 451 S.E.2d 755 (1994).” Syl. Pt. 1, in part, McGraw v. St. Joseph’s
Hosp., 200 W. Va. 114, 488 S.E.2d 389 (1997).
In its first assignment of error, petitioner argues that Antero breached the SUA by failing
to reclaim the property after the two-year term had expired and that the circuit court erred in
failing to address this breach in its March 4, 2015, order. Upon our review, we find no error.
The SUA provides that it
is for a term of two (2) years from the date hereof and as long thereafter as any of
the facilities, as described herein are utilized for the purposes of oil and gas
development and transmission. In the event any operations are NOT initiated
within two (2) years from the date hereof, this agreement will become null and
void.
(Emphasis added).
Although the contract at issue is a surface use agreement, provisions similar to the one
quoted above are commonly found in oil and gas leases and have been addressed by this Court.
As such, our case law is instructive.
Known as the “habendum” or “term” clause, its purpose
is to define and limit the duration of the lessee’s estate. The habendum clause of
virtually all contemporary oil and gas leases provides for a relatively short
“primary” term, consisting of a fixed period of time off from a few months to five
or ten years, at the end of which period there must be production (or in some
leases, the prosecution of drilling operations); the habendum clause also provides
that the lease may be preserved for an indefinite period of time beyond the
expiration of the primary term “as long thereafter” as oil or gas is produced in
paying quantities (or in some leases, for as long thereafter as operations for oil or
gas are being conducted).
McCullough Oil, Inc. v. Rezek, 176 W. Va. 638, 642-43, 346 S.E.2d 788, 793 (1986) (citations
omitted).
In this case, the SUA clearly provides that the term is for two years and “as long
thereafter as any of the facilities . . . are utilized for the purposes of oil and gas development and
transmission.” The evidence demonstrates that Antero is still using the property for purposes of
oil and gas development and transmission, as permitted under the SUA, and, thus, Antero has not
4
breached the contract by not reclaiming the property. According to the sworn affidavits of Mr.
Rains of Antero, Antero currently maintains three gas wells on petitioner’s property under the
SUA. These wells, which were constructed within two years of the execution of the SUA2 and
are currently producing gas. The evidence further demonstrated that petitioner’s property is
being used for oil and gas development and transmission. Petitioner has failed to submit any
evidence or legal authority in support of its position that the SUA has expired such that
reclamation should have taken place, nor has it cited to any evidence within the appendix record
in support of such claim. Indeed, petitioner’s argument fails to comport with Rule 10(c)(7) of the
West Virginia Rules of Appellate Procedure (requiring that appellate briefs “must contain
appropriate and specific citations to the record on appeal”). Furthermore, it is beyond cavil that
“‘[s]elf-serving assertions without factual support in the record will not defeat a motion for
summary judgment.’ Williams v. Precision Coil, Inc., 194 W.Va. 52, 61 n. 14, 459 S.E.2d 329,
338 n. 14 (1995).” Barbina v. Curry, 221 W. Va. 41, 48, 650 S.E.2d 140, 147 (2007). See West
Virginia Fire & Cas. Co. v. Mathews, 209 W. Va. 107, 112 n. 5, 543 S.E.2d 664, 669 n. 5 (2000)
(stating that “[s]tatements made by lawyers do not constitute evidence in a case.”). As we held in
syllabus point three of Williams,
[i]f the moving party makes a properly supported motion for summary
judgment and can show by affirmative evidence that there is no genuine issue of
material fact, the burden of production shifts to the nonmoving party who must
either (1) rehabilitate the evidence attacked by the moving party, (2) produce
additional evidence showing the existence of a genuine issue for trial, or (3)
submit an affidavit explaining why further discovery is necessary as provided in
Rule 56(f) of the West Virginia Rules of Civil Procedure.
194 W. Va. at 56, 459 S.E.2d at 333. To carry its burden, the nonmoving party must offer “more
than a mere ‘scintilla of evidence’ and must produce evidence sufficient for a reasonable jury to
find in a nonmoving party’s favor. Anderson [v. Liberty Lobby, Inc.], 477 U.S. [242,] at 252, 106
S.Ct. [2505,] at 2512, 91 L.Ed.2d [202,] at 214 [(1986)].” Williams, 194 W. Va. at 60, 459
S.E.2d at 337. Petitioner has failed to create a genuine issue of material fact with regard to its
allegation that Antero breached the SUA by failing to reclaim the property after two years.
Therefore, we conclude that the circuit court did not err in granting summary judgment in favor
of Antero on this issue.3
2
In his complaint, petitioner avers that Antero began work on the wells on October 13,
2009, August 17, 2010, and May 10, 2011, respectively, the third well having been commenced
more than two years after the execution of the SUA. However, petitioner failed to submit any
evidence in support of this allegation. In contrast, Mr. Rains’s sworn supplemental affidavit
submitted during the summary judgment proceedings clearly states that the third well was
commenced “on June 30, 2010[,] which is before May 8, 2011.”
3
In a related assignment of error, petitioner argues that the circuit court erred in denying
petitioner relief for Antero’s purported violations of reclamation requirements set forth in the
SUA and the permit issued to Antero by the State of West Virginia. Petitioner contends that,
under the SUA, Antero agreed to “[f]ertilize, lime and re-seed disturbed areas with Meadow Mix
and mulch if necessary.” As support for its claim that the well permit also requires that certain
(continued . . .)
5
Next, petitioner argues that the circuit court erred in failing to find that Antero breached
the SUA by using the property for “unauthorized purposes.” Petitioner argues that Antero parked
“multiple vehicles” on the property after the wells were completed; chemicals were stored on the
land; water was stored and removed from the frac-pit pond for wells located off-site; and that
lights were installed and an office established. Petitioner argues that these activities were neither
authorized nor contemplated under the SUA and that petitioner should be compensated for this
unauthorized use of its property.
We find no error. As previously established, petitioner failed to submit any evidence in
support of his motion to evict or in response to Antero’s motion for summary judgment,
including with regard to its claim that Antero has used the property for unauthorized purposes.
In fact, a plain reading of the SUA shows that petitioner
agree[d] to allow the use of water for onsite or offsite operations taken from any
frac-pit and/or pond constructed by Grantee’s operations hereunder. Grantors
further agree to allow Grantee to lay temporary above ground water lines over and
across the lands to transport water to and from frac-pit(s) or pond(s) owned by
Grantee, whether or not said ponds or frac pits are located on or off lease.
Furthermore, as set forth in the SUA, Antero’s “operations may include but are not
limited to the drilling, re-entry, maintenance and operation, including the laying constructing,
inspecting, maintaining, repairing, altering, replacing, and relocating a pipeline to transport
production off of the lease from any wells to be located on the above described land.”
steps be taken to reclaim the property, petitioner points to an exhibit that was purportedly
attached to and referenced in the SUA which, according to the SUA, shows the access roads,
layout, and location of the proposed drilling sites and states that “[a]ll cut and fill slopes will be
seeded and mulched immediately after construction.” However, petitioner fails to present any
further explanation or evidence that any of these steps have not been taken or should have been
taken at this point, fails to include a copy of the well permit in the appendix record for our
review, and fails to dispute Antero’s representation that, in fact, it has completed partial
reclamation of petitioner’s property and is awaiting final federal approval of its plans to conclude
reclamation. As we stated in State, Dept. of Health v. Robert Morris N., 195 W. Va. 759, 765,
466 S.E.2d 827, 833 (1995), “‘[a] skeletal “argument,” really nothing more than an assertion,
does not preserve a claim. . . . Judges are not like pigs, hunting for truffles buried in briefs.’”
(quoting United States v. Dunkel, 927 F.2d 955, 956 (7th Cir.1991)). See State v. Lilly, 194
W.Va. 595, 605 n. 16, 461 S.E.2d 101, 111 n. 16 (1995) (noting that “appellate courts frequently
refuse to address issues that appellants . . . fail to develop in their brief.”). See also Ohio Cellular
RSA Ltd. P’ship v. Bd. of Pub. Works of West Virginia, 198 W. Va. 416, 424 n. 11, 481 S.E.2d
722, 730 n. 11 (1996) (refusing to address issue on appeal that had not been adequately briefed).
Therefore, we decline to address this assignment of error.
6
This Court has held that “[w]here there has been a severance of the mineral estate and the
deed gives the grantee the right to utilize the surface, such surface use must be for purposes
reasonably necessary to the extraction of the minerals.” Syl. Pt. 2, Buffalo Mining Co. v. Martin,
165 W. Va. 10, 267 S.E.2d 721 (1980). By the same token, “[t]he owner of the mineral
underlying land possesses, as incident to this ownership, the right to use the surface in such
manner and with such means as would be fairly necessary for the enjoyment of the mineral
estate.” Syl. Pt. 1, Squires v. Lafferty, 95 W. Va. 307, 121 S.E. 90 (1924). The SUA shows that
it clearly permits Antero’s use of water from the frac-pit for onsite or offsite operations. With
regard to petitioner’s claims that Antero breached the SUA by parking vehicles on the property,
storing chemicals, and constructing temporary lighting and a temporary building (that have since
been removed), we find that petitioner failed to show that these uses of the surface are not “for
purposes reasonably necessary to extraction of the” oil and gas. Buffalo Mining Co., 165 W. Va.
at 10, 267 S.E.2d at 722, syl. pt. 2, in part. Thus, we conclude that the circuit court did not err in
granting summary judgment in favor of Antero on this issue.
For the foregoing reasons, we affirm.
Affirmed.
ISSUED: November 10, 2016
CONCURRED IN BY:
Chief Justice Menis E. Ketchum
Justice Robin Jean Davis
Justice Brent D. Benjamin
Justice Margaret L. Workman
Justice Allen H. Loughry II
7