United States District Court, W.D. Pennsylvania
THOMAS W. PFLASTERER and ROBIN M. PFLASTERER, as Co-Trustees of the THOMAS W. and ROBIN M. PFLASTERER FAMILY TRUST, Plaintiffs,
RANGE RESOURCES-APPALACHIA, LLC, Defendant.
PARADISE BAXTER UNITED STATES DISTRICT JUDGE
civil action, Plaintiffs Thomas W. Pflasterer and Robin M.
Pflasterer (collectively, "Plaintiffs"), acting as
Co-Trustees of the Pflasterer Family Trust (the
"Trust"), seek an accounting and damages for
alleged breach of an oil and gas lease held by the Defendant,
Range Resources - Appalachia, LLC (hereafter,
"Range" or "Range
Resources"). Pending before the Court is Range
Resources' partial motion to dismiss or, alternatively,
stay certain of Plaintiffs' claims. For the reasons that
follow, Range's motion will be granted in part and denied
29, 2009, Plaintiffs executed an oil and gas lease (the
"Lease") in favor of Range Resources relative to a
284-acre parcel of land situated in Washington County,
Pennsylvania (the "Property"). Amended Compl.,
¶ 8, ECF No. 9; ECF No. 9-2. In 2012, Plaintiffs
conveyed the Property and related mineral interests under the
Lease to the Trust via quitclaim deeds. See Amended
Comp., ¶¶12-13, ECF No. 9; see also ECF
27 of the Lease addendum set forth Range's obligations to
develop the Property in accordance with a "reasonably
prudent operator" standard. Amended Compl. ¶ l1;
ECF No. 9-2 at 8, ¶27. By operation of a Lease
modification entered into on August 15, 2010, Range Resources
was permitted to include the Property in drilling units
larger than 640 acres in size, provided that more than four
(4) wells would be drilled. Amended Compl. ¶¶
40-41; ECF No. 9-9. According to Plaintiffs, this
modification ensured that the enlarged size of the drilling
unit would not exceed a ratio of one well to every 160 acres.
Amended Compl. ¶¶ 41-42; ECF No. 9-9.
March 2, 2011, Range Resources recorded its "Designation
of Unit" establishing the McAdoo Drilling Unit
("McAdoo Unit"). Amended Compl. ¶¶19-20;
ECF No. 9-5. The McAdoo Unit totals 640 acres and includes
approximately 203 acres of the Plaintiffs' Property.
Amended Compl. ¶20; ECF No. 9-5. Range has drilled two wells
on the McAdoo Unit, both of which were completed and went
into production in the latter half of 2011. Amended Compl.
March 26, 2013, Range Resources recorded its
"Designation of Unit" establishing the Dorothy
Green Drilling Unit ("Dorothy Green Unit"). Amended
Compl. ¶¶30-31; ECF No. 9-8. This unit totals
488.3177 acres and includes approximately 41 acres of the
Property. Id. Range has drilled three wells on the
Dorothy Green Unit, all of which began producing hydrocarbons
in 2013. Amended Compl. ¶¶32-36.
hydrocarbon streams that were collected at the well heads on
the McAdoo and Dorothy Green Units were transported to a
facility where the hydrocarbons underwent processing to
produce natural gas liquids ("NGLs") and residue
gas. Amended Compl. ¶¶ 77-78. Both types of
products were then sold by Range and royalties were paid on
the sales of each product. Amended Compl. ¶¶46, 76.
virtue of their lease agreement with Range Resources,
Plaintiffs are members of a class of lessors who challenged
Range's calculation of royalty payments in a civil class
action styled Donald C. Frederick, et al. v. Range Re
source s-Appalachia, LC, No. 1:08-cv-228 (W.D. Pa.). The
underlying dispute in the Frederick litigation
concerned the extent to which Range Resources could deduct
certain post-production costs from the royalties it was
paying to class members. As part of the settlement agreement
in Frederick, the district court entered an order on
March 17, 2011 (hereafter, the "Frederick
Order") that amended the class members' lease
agreements so as to impose caps on the amount of
post-production costs that Range could deduct. Amended Compl.
¶¶14-15; ECF No. 9-4. In the case of royalties
attributable to "Wet Shale Gas production," the
Frederick Order capped deductions of post-production
costs at an amount equal to the lessor's "pro rata
royalty share of $0.80 per MMBTU." ECF No. 9-4,
¶l(B)(1)(b)(i). In the case of royalties attributable to
"Dry Shale Gas production," the deductions of
post-production costs were capped at an amount equal to the
lessor's "pro rata royalty share of $0.72 per
MMBTU." Id. at ¶ l(B)(1)(b)(ii).
Plaintiffs acknowledge that, because of their status as class
members, the Frederick Order modified the payment
terms of their own Lease with Range Resources. Amended Compl.
on the production codes set forth in the check stubs that
Range transmitted with its royalty payments, Plaintiffs
deduce that Range has been selling gas, natural gas liquids
("NGL's"), and condensates that are
attributable to the wells in the McAdoo and the Dorothy Green
Units. Amended Compl. ¶46; ECF No. 9-10. According to
Plaintiffs, the check stubs contain, among other things, a
"deduct code" of "CSW," which is
described as "PPC CAP .80/MMBTU." Amended Compl.
¶47; ECF Nos. 9-4 and 9-10. Plaintiffs believe and aver
that the "PPC CAP .80/MMBTU" deduction code
reflects the $.80 per MMBTU pro rata post-production cap for
"Wet Shale Gas" set forth in the Frederick
Order. Id. In addition to the royalty payments,
Range issued royalty statements that detailed, among other
things, the month of the hydrocarbon production, the type of
hydrocarbon produced, the volume of hydrocarbon produced, the
value of the hydrocarbon, and any deductions assessed against
the price of sale. Amended Compl. ¶45; ECF No. 9-10.
upon their examination of these records, Plaintiffs believe
that Range neglected or otherwise failed to properly cap its
post-production costs relative to the transactions identified
in the check stubs that it issued with royalty payments.
Amended Compl. ¶48. As a result, Plaintiffs conclude
that Range wrongfully reduced the royalty payments that were
made to the Trust by essentially taking unauthorized
deductions from the Trust's royalties. Id.
¶49. Plaintiffs also aver that Range has failed to abide
by its drilling obligations under the Lease.M
redress of these grievances, Plaintiffs filed the within
civil action in the Washington County Court of Common Pleas.
ECF No. 1-2. Range Resources removed the action to this Court
on October 25, 2018. ECF No. 1.
November 30, 2018, Plaintiffs filed their Amended Complaint,
ECF No. 9, which is presently their operative pleading.
Therein, Plaintiffs assert the following four causes of
• a breach of contract claim based on Range's
failure to drill additional wells in accordance with its
alleged obligations under the Lease (Count I);
• a breach of contract claim based on Range's
alleged failure to consistently apply the $.80/MMBTU
post-production cap for all sales of natural gas produced
from the McAdoo and Dorothy Green Units (Count II);
• an alternative breach of contract claim based on the
theory that Range should have applied the $.72/MMBTU
post-production cap relative to sales of natural gas produced
from the McAdoo and Dorothy Green Units (Count III); and
• a claim seeking an accounting of Range's records
to determine whether additional discrepancies exist relative
to Range's calculation of royalty payments and
application of the post-production caps required by the
Frederick Order (Count IV).
Resources filed its pending motion, along with a supporting
brief, on December 14, 2018. ECF Nos. 11 and 12. In its
motion, Range seeks to dismiss Counts II through IV of the
Amended Complaint or, alternatively, dismiss Count III and
stay Counts II and IV pending resolution of a post-settlement
dispute that is presently being litigated in the
Frederick case. Plaintiffs filed their response to
the motion and opposing brief on January 8, 2019. ECF Nos. 16
and 17. Range filed its reply brief on January 16, 2019. ECF
No. 18. As a result of the foregoing submissions, the issues
have been adequately joined and Defendant's motion is
ripe for adjudication.
STANDARD OF REVIEW
motion to dismiss is brought under Rule 12(b)(6) of the
Federal Rules of Civil Procedure. "When considering a
Rule 12(b)(6) motion, we accept all factual allegations as
true, construe the complaint in the light most favorable to
the plaintiff, and determine whether, under any reasonable
reading of the complaint, the plaintiff may be entitled to
relief." Wayne Land & Mineral Grp. LLC v.
Delaware River Basin Comm'n,894 F.3d 509, 526-27
(3d Cir. 2018) (internal quotation marks and citations
omitted). In order to survive dismissal, "a complaint
must contain sufficient factual matter, accepted as true, to
'state a claim to relief that is plausible on its
face.'" Ashcroft v. Iqbal,556 U.S. 662,
678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550
U.S. 544, 570 (2007). Plausibility means "more than a
sheer possibility that a defendant has acted
unlawfully." Id. "A claim has facial