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Wheeland Family Ltd. Partnership LP v. Rockdale Marcellus LLC

United States District Court, M.D. Pennsylvania

September 26, 2019

WHEELAND FAMILY LTD. PARTNERSHIP LP, et al., Plaintiffs/Counterclaim Defendants,
ROCKDALE MARCELLUS LLC, Defendant/Counterclaim Plaintiff.


          Matthew W. Brann United States District Judge

         On July 3, 2019, this Court granted Defendant/Counterclaim Plaintiff Rockdale Marcellus LLC’s partial motion for judgment on the pleadings.[1] Plaintiffs now move for reconsideration of that Order and certification for appeal under 28 U.S.C. § 1292(b). The pertinent facts that animate this litigation are well-known to the parties and will not be restated here.[2]

         I. Motion for Reconsideration

         A. Standard of Review

         Federal Rule of Civil Procedure 54(b)[3] provides that interlocutory orders “may be revised at any time before the entry of a judgment adjudicating all the claims and all the parties’ rights and liabilities.” District courts “tend to grant motions for reconsideration sparingly and only upon the grounds traditionally available under Fed.R.Civ.P. 59(e).”[4] To be entitled to relief under Rule 59(e), the “party seeking reconsideration must establish at least one of the following grounds: (1) an intervening change in controlling law; (2) the availability of new evidence that was not available when the court granted the motion for summary judgment; or (3) the need to correct a clear error of law or fact or to prevent manifest injustice.”[5]

         Plaintiffs argue that the third ground applies here for three reasons: First, that the question of whether the 731-1V Well was properly drilled created an issue of fact; second, that the Court was mistaken in granting judgment on the pleadings on Plaintiffs’ implied covenant claim; and third, that this Court’s July 3, 2019 Memorandum Opinion did not address arguments pertaining to an alternative “savings clause.” As explained below, I deny reconsideration of all three.

         B. Discussion

         1. The 731-1V Well

          In the July 3, 2019 Order and Memorandum, this Court granted judgment on the pleadings on, inter alia, Count I of Rockdale’s counterclaims. That decision was based on the finding that Rockdale properly exercised its rights to extend Leases 3– 7 by invoking the shut-in provisions of those leases.[6]

         In the instant motion, Plaintiffs argue that this Court failed to consider their affirmative defense that the 731-1V Well was impermissibly drilled due to defects in the chain of title. According to this argument, if there were a defect in the chain of title, Rockdale and its predecessors may not have had the authority to drill the 731-1V Well, in which case Plaintiffs contend that the pooling of Leases 3–7 into the Marshall Brothers 731 Unit would not have permitted Rockdale to maintain those leases.

         I first note that a court is not required to accept conclusory affirmative defenses.[7] While the cited affirmative defense alleges that the well was “impermissibly drilled, ” nowhere in their Complaint or their judgment-on-the-pleadings papers did they allege the reason why it was impermissible, which they now argue is a title defect. From Plaintiffs’ pleadings, Rockdale would not have been put on notice of an alleged title defect. This bare-bones affirmative defense was therefore not sufficient to create an issue of material fact.[8]

         Even accepting the affirmative defense as alleged, the outcome would not change. The purported title dispute over the 731-1V Well centers on whether Rockdale’s predecessor drilled a well on property belonging to Marshall Brothers without first obtaining an interest in the Marshall Brothers lease. This alleged conduct may have infringed on the rights of the mineral owners under the Marshall Brothers lease, but it did not infringe on Plaintiffs’ rights. Plaintiffs cannot enforce rights that do not belong to them.[9]

         Furthermore, the leases provided for precisely this situation: “Production, drilling or reworking operations anywhere on a unit which includes all or any part of the leased premises shall . . . be treated as if it were production, drilling or reworking operations on the leased premises.”[10] Pursuant to this term, the alleged activity must be treated as if it were properly on the leased premises. Therefore, under the express terms of the relevant leases, concerns about the chain of title are not germane to this dispute.

         2. Breach of the Implied Covenant

         Plaintiffs next reiterate their argument that Rockdale’s conduct violated the terms of the leases, a claim confusingly styled as a breach of the implied covenant of good faith and fair dealing.[11] While it is unclear whether Plaintiffs argue for a breach of the implied covenant or a breach of contract, both possibilities were already considered and rejected by this Court.[12] In doing so, I found that Rockdale’s pooling was expressly authorized by the leases.[13] The implied covenant cannot override express terms of a contract, [14] and Plaintiffs present no new arguments for breach of contract.

         3. Savings Clauses

         Finally, Plaintiffs argue that the Court failed to address another “savings clause”[15] in the leases and that the determination of which clause applies is fact dependent. Again, this argument was considered and rejected: “[N]owhere do Leases 3–7 condition the application of the shut-in provision on a factual finding as to whether [the 731-1V Well] was capable of producing hydrocarbons in paying quantities. Rather, Rockdale was authorized to invoke the expansive shut-in provision when, among other requirements, the well was ‘not producing for any reason whatsoever.’”[16] Plaintiffs have not cited any authority demonstrating that the finding that the shut-in clause kept the leases in effect was clearly erroneous.[17]

         Assume, arguendo, that the continuing operations clause did apply. That clause does not affirmatively terminate the leases. Interpreted most generously to Plaintiffs, it provides for one scenario in which that particular clause would not extend the terms of the leases more than “one year beyond the completion of plugging operations or cessation of operations for a non-productive well.”[18] At that time, the continuing operations clause would not keep the leases in effect-but the shut-in clause would, and judgment on the pleadings would still be appropriate.

         It is understood that Plaintiffs may disagree with this Court’s previous ruling, but disagreement standing alone is not sufficient for reconsideration.[19]

         II. Motion for Certification of Interlocutory Appeal

         Plaintiffs also move for certification of the July 3, 2019 Order for interlocutory appeal under 28 U.S.C. § 1292(b). Courts strictly construe this statute, and it should be used to facilitate an appeal only in “exceptional circumstances.”[20] Plaintiffs must establish three elements before this Court may certify the order: “The Order must (1) involve a ‘controlling question of law, ’ (2) offer ‘substantial ground for difference of opinion’ as to its correctness, and (3) if appealed immediately ‘materially advance the ultimate termination of the litigation.’”[21] If those elements are met, the Court has discretion to certify the order.[22]

         A substantial ground for difference of opinion exists when controlling authority fails to resolve a pivotal matter.[23] A genuine doubt must exist about the legal standard governing a particular case.[24] The court should ...

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