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Valley Rod & Gun Club v. Chesapeake Appalachia, LLC

United States District Court, M.D. Pennsylvania

March 29, 2017

VALLEY ROD & GUN CLUB, Plaintiff,
v.
CHESAPEAKE APPALACHIA, LLC, Defendant, ANADARKO E&P COMPANY, LP and STATOIL ONSHORE PROPERTIES, INC., Co-Defendants.

          MEMORANDUM

          A. RICHARD CAPUTO, UNITED STATES DISTRICT JUDGE

         Presently before me are motions for summary judgment filed by Defendants Statoil USA Onshore Properties, Inc. ("Statoil") and Chesapeake Appalachia, LLC ("Chesapeake") (Doc. 77), and Defendant Anadarko E&P Onshore LLC ("Andarko") (Doc. 73). This case arises out of the construction of a natural gas well pad by Defendant Chesapeake on Plaintiff Valley Rod & Gun Club's ("Plaintiff') property, pursuant to an executed oil and gas lease. Plaintiff claims that Chesapeake's use of rock, fill, mulch, and other surface material from Plaintiff's property in constructing the well pad constituted a "misappropriation" or "conversion" of that material. However, because both the lease and Pennsylvania law permit a lessee to access and use as much of the surface property as is "reasonably necessary" or "necessary and convenient" to extract the oil and gas, and because Plaintiff failed to provide sufficient evidence showing the existence of a genuine dispute as to any material fact, Defendants' summary judgment motions will be granted.

         I. Background

         Plaintiff, a Pennsylvania not-for-profit corporation, owns acreage and a lodge in Wilmot Township, Bradford County, Pennsylvania. (Doc. 1-1, at 4, Compl., ¶ 1). On July 20, 2006, Plaintiff executed an Oil and Gas Lease (the "Lease") with Defendant Anadarko. Anadarko later assigned part of the lessee interest to Defendant Chesapeake. Defendant Statoil received its partial interest in the lease by way of an assignment from Chesapeake. (Id. at ¶ 5.) Pursuant to the Lease, Plaintiff leased the oil and gas underlying its property. Specifically, the Lease provides as follows:

LESSOR hereby grants, demises, leases and lets exclusively to LESSEE the oil and gas, including coalbed methane gas, underlying the land herein leased, together with such exclusive rights as may be necessary or convenient for LESSEE, at its election, to explore for, develop, produce, measure and market production from the premises, using methods and techniques which are not restricted to current technology, including the exclusive right to conduct geophysical and other exploratory tests; to conduct dewatering operations upon formations in which LESSEE plans to produce coalbed methane gas; to drill, maintain, operate, cease to operate, plug, abandon, and remove wells; to use or install roads, electric power and telephone facilities, pipelines with appurtenant facilities, necessary or convenient for use in the production and transportation of products from the premises and from neighboring lands, and such rights shall survive the term of this agreement for so long thereafter as operations are continued on this Lease or adjacent lands; to use oil, gas, and non-domestic water sources, free of cost, to store gas of any kind underground regardless of the source thereof, including the injecting of gas therein and removing the same therefrom; to protect stored gas; to operate, maintain, repair, and remove material and equipment.

(Doc. 1 -1, at 13). According to the Complaint, the Lease and its recitations were also meant to promote public safety and protect the hunting, farming, recreation, and business operations of Plaintiff. (Compl., ¶ 8).

         By a letter dated November 8, 2010, Chesapeake notified Plaintiff that it was planning to drill gas wells on Plaintiffs property pursuant to the Lease. (Doc. 1-1, at 21).

         In connection with installing the well pad, Chesapeake installed roads, access, and drainage. (Compl., ¶ 9). It is undisputed that Chesapeake constructed the well pad, roads, and appurtenant facilities using, in part, rock, soil, mulch, and other surface material from Plaintiffs property. (Id. at ¶¶ 12, 16).

         Based on the foregoing events, Plaintiff commenced this action in the Court of Common Pleas of Bradford County, Pennsylvania. (Doc. 1, at 3). The Complaint consists of two counts. Count I asserts a trespass claim against Defendants. Count II asserts a claim for misappropriation/conversion of rock, fill, and other material from Plaintiffs property, in that "Defendants have made unauthorized, improper, or unlawful use of Plaintiffs property without permission, right, ownership or proper consent or agreement." (Compl., ¶ 25).

         On March 19, 2013, the action was removed to this Court. (Doc. 1, at 1). Subsequently, on March 26, 2013, both Anadarko and Chesapeake filed motions to dismiss the action pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure.

         On June 3, 2013, the Court dismissed with prejudice Count I of Plaintiffs Complaint against Defendants Chesapeake and Anadarko. (Doc. 20). On October 7, 2013, the Court, in the interest of judicial economy, ordered that Count I be dismissed as a claim against Defendant Statoil as well. (Doc. 34).

         The matter was referred to mediation on July 14, 2015. (Doc. 56). On September 25, 2015, the mediator issued a report advising the Court that settlement was not reached. (Doc. 60).

         On May 4, 2016, Defendants filed the instant motions for summary judgment. (Docs. 73, 77). Following a lengthy briefing period, the motions are now ripe for disposition.

         II. Discussion

         A. Legal Standard

         Summary judgment shall be granted "if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(a). Summary judgment is appropriate when "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Wright v. Corning, 679 F.3d 101, 103 (3d Cir. 2012) (quoting Orsatti v. N.J. State Police, 71 F.3d 480, 482 (3d Cir. 1995)). A fact is material if proof of its existence or nonexistence might affect the outcome of the suit under the applicable substantive law. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).

         Where there is no material fact in dispute, the moving party need only establish that it is entitled to judgment as a matter of law. See Edelman v. Comm'rof Soc. Sec, 83 F.3d 68, 70 (3d Cir. 1996). Where, however, there is a disputed issue of material fact, summary judgment is appropriate only if the factual dispute is not a genuine one. Anderson, 477 U.S. at 247-48. An issue of material fact is genuine if "a reasonable jury could return a verdict for the nonmoving party." Id. at 248. Where there is a material fact in dispute, the moving party has the initial burden of proving that: (1) there is no genuine issue of material fact; and (2) the moving party is entitled to judgment as a matter of law. See Howard Hess Dental Labs., Inc. v. Dentsply Int'l, Inc., 602 F.3d 237, 251 (3d Cir. 2010). The moving party may present its own evidence or, where the non-moving party has the burden of proof, simply point out to the court that "the nonmoving party has failed to make a sufficient showing on an essential element of her case." Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986).

         When considering whether there are genuine issues of material fact, the court is required to "examine the evidence of record in the light most favorable to the party opposing summary judgment, and resolve all reasonable inferences in that party's favor." Wishkin v. Potter, 476 F.3d 180, 184 (3d Cir. 2007). Once the moving party has satisfied its initial burden, the burden shifts to the non-moving party to either present affirmative evidence supporting its version of the material facts or to refute the moving party's contention that the facts entitle it to judgment as a matter of law. Anderson, 477 U.S. at 256-57. The Court need not accept mere conciusory allegations, whether they are made in the complaint or a sworn statement. Lujan v. Nat'l Wildlife Fed'n, 497 U.S. 871, 888 (1990).

         In order to prevail on a motion for summary judgment, the non-moving party must show "specific facts such that a reasonable jury could find in that party's favor, thereby establishing a genuine issue of fact for trial." Galli v. N.J. Meadowlands Comm'n,490 F.3d 265, 270 (3d Cir. 2007) (citing Fed.R.Civ.P. 56(e)). Although the non-moving party's evidence may be either direct or circumstantial, and "need not be as great as a preponderance, the evidence must be more than a scintilla." Id. (quoting Hugh v. Butler Cnty. Family YMCA,418 F.3d 265, 267 (3d Cir. 2005)). In deciding a motion for summary judgment, "the judge's function is not himself ...


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