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A-W Land Co., LLC v. Anadarko E & P Co. LP

United States District Court, D. Colorado

March 16, 2017

A-W LAND CO., LLC; VERNON JESSER; MARY JESSER; KENT J. McDANIEL; DEANNA R. McDANIEL; MARVIN BAY; and MILDRED BAY, Co-Trustees of the Bay Family Trust, individually and on behalf of all others similarly situated, Plaintiffs,
v.
ANADARKO E&P COMPANY LP f/k/a RME PETROLEUM COMPANY; and ANADARKO LAND CORPORATION f/k/a RME LAND CORP., Defendants.

          OPINION AND ORDER DENYING MOTIONS FOR SUMMARY JUDGMENT

          Marcia S. Krieger Chief United States District Judge

         THIS MATTER comes before the Court pursuant to the parties' Motions for Summary Judgment (# 368, 369), their various supporting exhibits, and the parties' responses (# 377, 378) to each others' motions.

         FACTS

         In an Opinion and Order dated July 22, 2015 (# 303), this Court previously evaluated and addressed several legal arguments raised by the parties. Later, after the parties represented that there were additional, as-yet-undeveloped factual issues that could bear on the Court's analysis of the legal issues, the Court vacated (# 316) that Opinion. The parties then completed discovery and filed the instant briefs, again addressing the pertinent legal issues. Based on this Court's review of the parties' current motions, many of their arguments are largely unchanged, and thus, much of the Court's prior analysis remains applicable. As such, the Court reaffirms and incorporates the analysis and conclusions from its July 22, 2015 Opinion herein, and elaborates in this Opinion only as needed to address newly-presented factual or legal arguments. Thus, the reader's familiarity with that July 22, 2015 Opinion is assumed.

         In summary, the Plaintiffs represent a class of owners of surface lands found within the Wattenberg oil fields of northeastern Colorado. The members of the class trace their ownership of the surface lands to deeds issued by the Union Pacific Railroad Company (“Union Pacific”) during the first two decades of the 20th century. Union Pacific was granted title to the lands in question by Congress to facilitate the building of the transcontinental railroad. Having completed that task, Union Pacific was then authorized to dispose of its land holdings as it saw fit.

         Between 1901 and 1918, Union Pacific sold surface estates in the lands at issue here to the Plaintiffs' progenitors. Each of the deeds in question in this case reserved the mineral estates beneath those lands to Union Pacific. The “surface reservation” language in the deeds stated:

[The sale of the land e]xcept[ed] and reserv[ed] to said Union Pacific Railroad Company, its successors, and assigns:
First, all [oil, ][1] coal, and other minerals within or underlying said lands.
Second, the exclusive right to prospect in and upon said land for [oil, ] coal, and other minerals therein . . . . [and]
Third, the right of ingress, egress, and regress upon said land to prospect for, mine and remove any and all such [oil, ] coal or other minerals, and the right to use so much of said land as may be convenient or necessary for the right-of-way to and from such prospect places or mines, and for the convenient and proper operation of such prospect places, mines, and for roads and approaches thereto or for removal therefrom of [oil, ] coal, mineral, machinery, or other material.

         In the years following the lands transfer, Union Pacific sought to exploit its reserved mineral rights. It typically negotiated a “Surface Owner's Agreement” (“SOA”) with the owner of the surface estate. The SOA customarily acknowledged Union Pacific's ownership of the underlying minerals (including oil) and confirmed Union Pacific's right of access across the surface estate in order to remove the minerals or oil. In consideration for the surface owner entering into the SOA, Union Pacific typically offered the surface owner a royalty payment, usually 2.5% of the value of the minerals extracted.

         In or about 2000, the Defendants (collectively “Anadarko”) acquired Union Pacific's mineral interests under the lands owned by the Plaintiffs. Around the same time, the Colorado Supreme Court decided McCormick v. Union Pacific Resources Co., 14 P.3d 346, 348 (Colo. 2000) in which it held that the surface reservation language used by Union Pacific reserved fluidic minerals, even where the deeds failed to expressly state as much. The McCormick ruling conclusively resolved the question of whether oil and gas development on the land fell within the terms of the reservation. Believing that this ruling resolved its the potential for disputes over its land use, Anadarko decided to discontinue the practice of negotiating a SOA with surface owners. It also discontinued the associated practice of paying royalties to surface owners.

         As a result, the Plaintiffs commenced this suit. They allege that Anadarko's (and, more specifically, Anadarko's lessees') use of the surface of the Plaintiffs' land in order to access the subsurface minerals exceeds the scope of the surface reservations found in the underlying deeds. They contend such actions constitute trespass under Colorado law, entitling them to various economic and declaratory relief.

         Upon the Plaintiffs' motion for certification of a class action, this Court determined (# 120) that the claims of all putative class members presented certain common questions of law, specifically: (i) how the terms of the surface reservation in the Union Pacific deeds should be interpreted; (ii) whether Anadarko itself can be held liable for any trespasses on the Plaintiffs' land committed by its lessees; and (iii) whether permits issued by the Colorado Oil and Gas Conservation Commission (“COGCC”) operate to license conduct by Anadarko or its lessees that might otherwise be in violation of the terms of the surface ...


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