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Julia v. Elexco Land Services

May 11, 2010

JOHN G. JULIA, PLAINTIFF,
v.
ELEXCO LAND SERVICES, INC. AND SOUTHWESTERN ENERGY PRODUCTION COMPANY, DEFENDANTS,



The opinion of the court was delivered by: Judge Caputo

MEMORANDUM

Presently before the Court is a motion to dismiss by Defendants Elexco Land Services, Inc. ("Elexco") and Southwestern Energy Production Company ("Southwestern"). (Doc. 6.) For the reasons discussed below, this motion will be granted in part and denied in part. This Court has jurisdiction over Plaintiff's claims pursuant to 28 U.S.C. § 1332 (diversity jurisdiction).

BACKGROUND

Plaintiff John G. Julia is the fee simple owner of two parcels of real estate containing approximately 142.11 acres in Susquehanna County, Pennsylvania. (Compl. ¶¶ 1, 4.) Richard Julia was the purported agent of Plaintiff with a "Power of Attorney General." (Compl. ¶ 13.) The granting of the "Power of Attorney General" was, however, defective under Pennsylvania law. (Compl. ¶¶ 19-22.)

On or about May 16, 2007, Richard Julia, on behalf of Plaintiff, entered into a preprinted form Paid Up Oil and Gas Lease prepared by Defendant Elexco. (Compl. ¶ 13.)

On or about April 23, 2008, Elexco assigned this lease agreement to Southwestern. (Compl. ¶ 16.) Plaintiff did not sign any documents with Defendants. (Compl. ¶ 18.) The lease agreement contained terms which allow Defendants to deduct "post production costs" before calculating Plaintiff's one-eighth royalty. (Compl. ¶ 28.) When entering into the agreement Elexco's agent stated that "'Defendant would never pay any more than $50.00 per acre so he better take the $50.00 per acre and that the Plaintiff will never get anymore.'" (Compl. ¶ 8.) Plaintiff subsequently learned this statement was false. (Compl. ¶ 9.)Plaintiff relied upon this representation to his detriment. (Compl. ¶ 38.) Plaintiff was also told by Elexco's agent that they could place a well on Plaintiff's neighbor's property and simply take the gas under the "rule of capture." (Compl. ¶ 42.) Plaintiff was also told that he would receive one-eighth of the amount realized from the sale at the well. (Compl. ¶ 43.)

Plaintiff filed a complaint in the Susquehanna County Court of Common Please on March 19, 2009. (Doc. 17.) Defendants removed the complaint here to the United States District Court for the Middle District of Pennsylvania on March 31, 2009. (Doc. 1.) On April 7, 2009, Defendants filed the present motion to dismiss. (Doc. 6.) After a court ordered stay to await the Pennsylvania Supreme Court's interpretation of 58 P.S. § 33, the motion has been fully briefed by both parties and his ripe for disposition. (Docs. 12, 14.)

LEGAL STANDARD

Federal Rule of Civil Procedure 12(b)(6) provides for the dismissal of a complaint, in whole or in part, for failure to state a claim upon which relief can be granted. Dismissal is appropriate only if, accepting as true all the facts alleged in the complaint, a plaintiff has not pleaded "enough facts to state a claim to relief that is plausible on its face," Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007), meaning enough factual allegations "'to raise a reasonable expectation that discovery will reveal evidence of'" each necessary element, Phillips v. County of Allegheny, 515 F.3d 224, 234 (3d Cir. 2008) (quoting Twombly, 550 U.S. at 556); see also Kost v. Kozakiewicz, 1 F.3d 176, 183 (3d Cir. 1993) (requiring a complaint to set forth information from which each element of a claim may be inferred). In light of Federal Rule of Civil Procedure 8(a)(2), the statement need only "'give the defendant fair notice of what the... claim is and the grounds upon which it rests.'" Erickson v. Pardus, 551 U.S. 89, 93 (2007) (per curiam) (quoting Twombly, 550 U.S. at 555). "[T]he factual detail in a complaint [must not be] so undeveloped that it does not provide a defendant [with] the type of notice of claim which is contemplated by Rule 8." Phillips, 515 F.3d at 232; see also Airborne Beepers & Video, Inc. v. AT&T Mobility LLC, 499 F.3d 663, 667 (7th Cir. 2007).

In deciding a motion to dismiss, the Court should consider the allegations in the complaint, exhibits attached to the complaint, and matters of public record. See Pension Benefit Guar. Corp. v. White Consol. Indus., Inc., 998 F.2d 1192, 1196 (3d Cir. 1993). The Court may also consider "undisputedly authentic" documents when the plaintiff's claims are based on the documents and the defendant has attached copies of the documents to the motion to dismiss. Id. The Court need not assume the plaintiff can prove facts that were not alleged in the complaint, see City of Pittsburgh v. W. Penn Power Co., 147 F.3d 256, 263 & n.13 (3d Cir. 1998), or credit a complaint's "'bald assertions'" or "'legal conclusions,'" Morse v. Lower Merion Sch. Dist., 132 F.3d 902, 906 (3d Cir. 1997) (quoting In re Burlington Coat Factory Sec. Litig., 114 F.3d 1410, 1429-30 (3d Cir. 1997)). "While legal conclusions can provide the framework of a complaint, they must be supported by factual allegations." Ashcroft v. Iqbal, 129 S.Ct. 1937, 1950 (2009).

When considering a Rule 12(b)(6) motion, the Court's role is limited to determining whether a plaintiff is entitled to offer evidence in support of her claims. See Scheuer v. Rhodes, 416 U.S. 232, 236 (1974). The Court does not consider whether a plaintiff will ultimately prevail. See id. A defendant bears the burden of establishing that a plaintiff's complaint fails to state a claim. See Gould Elecs. v. United States, 220 F.3d 169, 178 (3d Cir. 2000).

DISCUSSION

Plaintiff's Complaint contains three claims. First, Plaintiff alleges that the lease agreement is invalid because it was signed by Richard Julia on behalf of Plaintiff without a proper power of attorney. Second, Plaintiff alleges that the lease agreement is invalid because it conflicts with Pennsylvania's minimum royalty law, 58 P.S. ยง 33. Third, Plaintiff alleges that the lease agreement is invalid because Defendants fraudulently ...


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