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Kave Consulting, LLC v. Chesapeake Appalachia, LLC

United States District Court, M.D. Pennsylvania

September 26, 2019

KAVE CONSULTING, LLC and POZZO, LLC, Plaintiffs,
v.
CHESAPEAKE APPALACHIA, LLC, EQUINOR USA ONSHORE PROPERTIES, INC., ALTA MARCELLUS DEVELOPMENT, LLC, MITSUI E&P USA, LLC, and LARCHMONT RESOURCES, LLC, Defendants. MEMORANDUM OPINION

          MEMORANDUM OPINION

          Matthew W. Brann United States District Judge.

         I. BACKGROUND

         Plaintiffs bring this action for an accounting of their royalty interests in certain oil and gas leases with Defendants in Bradford County, Pennsylvania, predicated on this Court’s diversity jurisdiction and brought under Pennsylvania law. Defendants have filed a motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(7) asserting that Plaintiffs have failed to join parties under Federal Rule of Civil Procedure 19. I respectfully disagree and for the reasons that follow, the motion is denied.

         II. DISCUSSION

         The theory underlying Federal Rule of Civil Procedure 19 is that “whenever feasible, the persons materially interested in the subject of an action…should be joined as parties so that they may be heard and a complete disposition made.”[1]Here, Defendants assert that Plaintiffs have failed to join as “necessary” parties William D. Gilbert, Jennifer Gilbert, and Barc-View Farms, LLC. There are two parcels of land at issue, and Plaintiffs own a combined 50% interest in the mineral rights of each parcel of land. The Gilberts own the remaining 50% of the mineral estate parcel of one parcel of land; Barc-View Farms owns the remaining 50% of the mineral estate parcel of the other parcel of land. The parties appear to agree that the title is clear, and there is no dispute regarding ownership or division of the sub-surface rights.

         The dispute arises in the context of the amount of royalties Defendants must pay to Plaintiffs under certain oil and gas leases that have been executed on the properties. The non-named parties, William D. and Jennifer Gilbert and Barc-View Farms, LLC, executed oil and gas leases with Defendants. Plaintiffs aver that they did not consent to natural gas production on those leases between 2006 and 2017, and no consideration has been paid to Plaintiffs for natural gas production during that time period. The instant action is for an accounting of the unpaid share of these royalties.

         Federal Rule of Civil Procedure 12(b)(7) provides that a party may move to dismiss an action for “failure to join a party under Rule 19.” In this matter, Defendants contend that the Gilberts and Barc-View Farms are “necessary parties” to this action. This Court has subject matter jurisdiction pursuant to 28 U.S.C. § 1332, and “a pre-answer challenge to a plaintiff’s failure to join an indispensable party is governed by Federal Rule of Civil Procedure 12(b)(7), and not Rule 12(b)(1), even though joinder of that party would destroy diversity jurisdiction”.[2]

         Since a “Rule 19 inquiry is bifurcated, ”[3] I only need turn to the second part of the inquiry if the movant satisfies the first. Under Rule 19(a), a court initially asks whether a party is necessary to an action.[4] Where a party is not a necessary party under Rule 19(a), the question of whether it is indispensable under Rule 19(b) need not be reached.[5] However, if a party is deemed necessary, then joinder must occur, if feasible.[6]

         Rule 19(a) states:

(a) Persons Required to Be Joined if Feasible.
(1) Required Party. A person who is subject to service of process and whose joinder will not deprive the court of subject-matter jurisdiction must be joined as a party if:
(A) in that person’s absence, the court cannot accord complete relief among existing parties; or
(B) that person claims an interest relating to the subject of the action and is so situated that disposing of the action in ...

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