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Kennedy v. Consol Energy Inc.

Superior Court of Pennsylvania

April 22, 2015

EARL KENNEDY, ELIZABETH KENNEDY, CHARLES G. ELY, II, JAMES SISLEY, 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

Argued December 10, 2014

Page 627

[Copyrighted Material Omitted]

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Appeal fro the Order Entered February 26, 2014, in the Court of Common Pleas of Greene County, Civil Division at No(s): 225 of 2007. Before NALITZ, J.

John M. Smith, Canonsburg, for APPELLANTS.

Brendan A. O'Donnell, Canonsburg, for Earl Kennedy, APPELLANT.

Brad A. Funari, Pittsburgh, for APPELLEES.

BEFORE: BENDER, P.J.E., BOWES, and ALLEN, JJ.

OPINION

Page 629

BOWES, J.

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 " 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,

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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 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 Deed[1] 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 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, 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, 503 Pa. 140, 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

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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 ...


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