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McCALL v. CHESAPEAKE ENERGY CORPORATION, 11-4164-cv. (2013)

Court: Court of Appeals for the Second Circuit Number: infco20130130108 Visitors: 19
Filed: Jan. 30, 2013
Latest Update: Jan. 30, 2013
Summary: SUMMARY ORDER ON CONSIDERATION WHEREOF, IT IS HEREBY ORDERED, ADJUDGED, AND DECREED that the judgment of said District Court be and it hereby is AFFIRMED. Plaintiff-Appellant, Mary Linda McCall, appeals from the district court's judgment dated September 14, 2011, dismissing her claims under Fed. R. Civ. P. 12(b)(6). McCall also appeals from the district court's denial of her request for discovery. We assume the parties' familiarity with the underlying facts, procedural history, and specific
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SUMMARY ORDER

ON CONSIDERATION WHEREOF, IT IS HEREBY ORDERED, ADJUDGED, AND DECREED that the judgment of said District Court be and it hereby is AFFIRMED.

Plaintiff-Appellant, Mary Linda McCall, appeals from the district court's judgment dated September 14, 2011, dismissing her claims under Fed. R. Civ. P. 12(b)(6). McCall also appeals from the district court's denial of her request for discovery. We assume the parties' familiarity with the underlying facts, procedural history, and specification of issues for review.

As a threshold matter, we affirm the district court's determination that McCall only had standing to bring claims against the defendants to whom she could attribute an individual injury, namely only those defendants who were signatories to the Joint Operating Agreements ("JOA") or the Volumetric Production Payments ("VPP") that impacted the wells in which McCall had a personal interest. That this suit was styled as a class action "adds nothing to the question of standing, for even named plaintiffs who represent a class `must allege and show that they personally have been injured, not that injury has been suffered by other, unidentified members of the class to which they belong and which they purport to represent.'" Lewis v. Casey, 518 U.S. 343, 357 (1996) (citation omitted).

This Court reviews a district court's dismissal for failure to state a claim pursuant to Rule 12(b)(6) de novo. Miller v. Wolpoff & Abramson, L.L.P., 321 F.3d 292, 300 (2d Cir. 2003). Here, "we `must accept all allegations in the complaint as true and draw all inferences in the non-moving party's favor.'" LaFaro v. N.Y. Cardiothoracic Grp., PLLC, 570 F.3d 471, 475 (2d Cir. 2009) (quoting Miller, 321 F.3d at 300). This Court will also consider any documents incorporated into the complaint by reference. DiFolco v. MSNBC Cable L.L.C., 622 F.3d 104, 112 (2d Cir. 2010). In this case, the Complaint incorporated both the JOAs and VPPs by reference.

As a matter of law, the conveyances from the Chesapeake Defendants to the banks in this case were term overriding royalty interests, which conveyed only an interest in gas when it was produced and not ownership of the unproduced gas in the ground. Interpretation of the VPPs is governed by Oklahoma law. The Oklahoma high court has held that "[w]hether a reservation of oil and gas reserves to the grantor, either expressly or by implication, any rights or interest in the land, or in the minerals in place, appears to be the essential difference between a conveyance of a mineral interest in the land and a royalty interest in the oil and gas produced therefrom." Pease v. Dolezal, 246 P.2d 757, 760 (Okla. 1952). It is plain from the language of the VPPs that the Chesapeake Defendants, the grantors in this matter, reserved to themselves rights in the land and the minerals in place. "The essential difference between a sale of a royalty interest and a sale of a mineral interest in land leased for minerals is that the purchaser of the royalty interest receives nothing under the lease unless profitable production is obtained." Id. Here, the banks bear just this risk. Taken together, these provisions make clear that the interest granted was only an interest in the gas once produced from the wells in question.

The JOAs governing the working interests in these wells expressly contemplate that the working interest owners indeed may convey their interests in the proportionate share of the production in just this manner. Because the VPPs did not convey the unproduced gas in the ground, McCall's claims for breach of contract and conversion both fail.

Furthermore, because McCall's claims of breach of contract and conversion fail, her claim of civil conspiracy also must fail. There is no independent tort of conspiracy in New York, Delaware, or Oklahoma—the three states in which the various defendants reside. See Peterson v. Grisham, 594 F.3d 723, 730 (10th Cir. 2010); Kirch v. Liberty Media Corp., 449 F.3d 388, 401 (2d Cir. 2006); Ramunno v. Cawley, 705 A.2d 1029, 1039 (Del. 1998). Because the claims that could have provided a basis for the civil conspiracy claim were dismissed, this claim must also fail as a matter of law and was rightly dismissed by the district court.

We have considered McCall's remaining arguments and find them to be without merit. Accordingly, the judgment of the district court hereby is AFFIRMED.

FootNotes


* The Clerk of the Court is directed to change the caption as set out above.
Source:  Leagle

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