Cavallo Mineral Partners, LLC v. EQT Prod. Co.

298 A.3d 413

CAVALLO MINERAL PARTNERS, LLC, Appellant

v.EQT PRODUCTION COMPANY, Gary W. McChesney, as Trustee of the McChesney Family Revocable Living Trust Dated February 12, 2013, Vantage Energy Appalachia, LLC, Vantage Energy Appalachia II, LLC, T & F Exploration, LP and Three Rivers Royalty, LLC.

No. 834 WDA 2022

Superior Court of Pennsylvania.

Argued June 27, 2023

Filed: June 26, 2023

Robert J. Burnett, Pittsburgh, appellant.

Mathew G. Brouse, Pittsburgh, for EQT Production Company, appellee and Rice Drilling B and Vantage Energy Appalachia II, LLC participants.

Peter D. Lyle, Cranberry Township, for McChesney, appellee.

Donald M. Jameson III, Pittsburgh, for T & F Exploration. appellee.

Kenneth J. Witzel, Cranberry Township, for Three Rivers Royalty LLC, appellee.

BEFORE: MURRAY, J., McLAUGHLIN, J., and COLINS, J.^*

OPINION BY MURRAY, J.:

Cavallo Mineral Partners, LLC (Appellant), appeals and petitions for permission to appeal, the trial court's order granting judgment on the pleadings (JOP) in favor EQT Production Company (EQT) and Rice Drilling B (Rice Drilling).¹ The trial court entered JOP against Appellant, with prejudice , as to Appellant's declaratory judgment action against EQT and Rice Drilling. The trial court entered JOP against Appellant, without prejudice , as to Appellant's actions against EQT and Rice Drilling for ejectment and mense profits, conversion, trespass and to quiet title. The trial court further denied, without prejudice , Appellant's motion for leave to file an amended complaint. We quash the appeal as interlocutory and deny Appellant permission to appeal.

On February 5, 2018, Appellant filed a complaint against EQT, Gary W. McChesney (McChesney), as Trustee of the McChesney Family Revocable Living Trust dated February 12, 2013 (the Trust), VEA, VEAII, T & F Exploration, LP (T&F), and Three Rivers Royalty, LLC (Three Rivers) (collectively, Defendants). Appellant filed an amended complaint on April 18, 2018. The trial court explained:

The allegations in the complaint arise from a deed conveyance which took place on April 16, 1990 between Des Moine Field [(Field)], widower, Grantor² and [ ] McChesney and Judith Anne McChesney [(Ms. McChesney)], his wife, Grantees [(collectively, the McChesneys)]. This conveyance was [related] to approximately 200 acres in Washington Township, Greene County [(the Subject Property)]....

Trial Court Order, 6/22/22, at 2-3 (footnote added).

In its Amended Complaint,³ Appellant detailed the chain-of-title supporting its claim to oil and gas interests underlying the Subject Property. Appellant averred an April 15, 1977, deed (the 1977 Deed) conveyed the Subject Property to Field and his wife, Catherine V. Field (Ms. Field) (collectively, the Fields). Amended Complaint, 4/18/18, ¶ 12. The 1977 Deed conveyed oil and gas interests underlying the Subject Property to the Fields. Id. Ms. Field died on May 26, 1981, after which her interest in the Subject Property vested in Field. Id. ¶ 14.

On April 16, 1990, Field conveyed by deed (the 1990 Deed) certain interests in the Subject Property to the McChesneys. Id. ¶ 15. The 1990 Deed included the following clauses:

EXCEPTING and reserving, all the Pittsburgh or River Vein of Coal, together with the necessary mining rights, in and underlying the aforesaid tract of land, as heretofore conveyed by Thomas J. Huffman. It is further understood and agreed that the above tract ... is sold subject to the terms of the oil and gas leases now on the same, and is subject to all the conditions in said leases.

AND the Grantor, for himself, his heirs and assigns, EXCEPTS AND RESERVES all coal and other minerals within and underlying the above-described tract of land ... not heretofore excepted and reserved, or otherwise transferred by instruments of record, together with the exclusive right to DEEP MINE and otherwise to develop and work and process for market the same, and other coal now owned or leased or hereinafter acquired by Grantor, his heirs or assigns....

The rights, easements, licenses, waivers and privileges herein excepted and reserved are in enlargement of and not in restriction of the rights incidental to the ownership of coal and other minerals and the same shall not terminate by reason of the completion of mining in and on the within described coal and mineral property.

Grantor shall give written notice to Grantees before conducting mining operations upon the Property, which notice shall be delivered to Grantees, at least six (6) months prior to commencement of such mining operations.

ALSO EXCEPTING AND RESERVING, for the benefit of Grantees, his heirs and assigns, all oil and gas not previously accepted, reserved or conveyed, together with the right to mine and operate for the same .

Amended Complaint, Exhibit 2 (1990 Deed), at 2-4 (emphasis added).

Field died testate on February 22, 1993. Id. ¶ 18. His will was admitted to probate in Allegheny County. Probate Volume 994, page 124. Field's six beneficiaries (the Field Heirs) were Oliver Field; Roy Field; Virginia Johnson; Netty Lumly; Nola Craig; and Donald and Diane Cecchett, or their respective survivors. See id.

Appellant averred that at the time of Field's death, Field owned all the oil and gas underlying the Subject Property. Amended Complaint, ¶ 23. Therefore, Appellant claims all oil and gas interests in the Subject Property passed equally in 1/6 shares to the Field Heirs. Id. Appellant averred it acquired its oil and gas interests in the Subject Property through the Field Heirs. Id. ¶ 24.

The Amended Complaint describes oil and gas activities on the Subject Property, all of which were recorded in Greene County. For example:

On February 28, 2003, the McChesneys executed an oil and gas lease with T&F (the 2003 Lease). The 2003 Lease was recorded in Greene County.

On August 29, 2007, the McChesneys executed an "Extension of Lease with T&F. T&F drilled and operated a shallow oil and gas well (McChesney No. 1 Well) on the Subject Property's surface. The extension was recorded in Greene County.

On February 20, 2009, T&F partially assigned its interests in the 2003 Lease ..., which was recorded in Greene County.

Also on February 20, 2009, the assignee to T&F's interests assigned all of its interest in the 2003 Lease (and other leases) to Range Resources Appalachia, which also was recorded in Greene County.

On September 28, 2012, Range Resources-Appalachia assigned its interest in the 2013 Lease (and other leases) to Vantage for five years and as long as operations are conducted on the properties.

On October 26, 2012, T&F assigned ownership of the McChesney No. 1 Well to the McChesneys, as it no longer was producing.

On January 2, 2013, EQT executed two oil and gas leases with the McChesneys with regard to the Subject Property: One lease affected 50 acres, the other affected 150 acres. These leases were recorded in Greene County.

On February 12, 2013, the McChesneys entered into two partial assignments of royalty interest with T&F. The McChesneys granted T&F a 2.25% interest in all royalties produced from the Subject Property. These assignments were recorded in Greene County.

On February 12, 2013, the McChesneys conveyed all oil and gas interests underlying the Subject Property to McChesney, as Trustee of the Trust. Ms. McChesney died on November 29, 2016.

On May 14, 2013, VEA recorded a Second Amended Declaration and Notice of Pooled Unit, which it recorded in the Recorder's office of Greene County, Pennsylvania. This Declaration indicated that the size of VEAII's drilling unit was almost 736 acres, of which 162.99 were from the Subject Property.

On February 27, 2015, with an effective date of December 20, 2011, VEA and VEAII executed a Third Amended Declaration and Notice of Pooled Unit, which it recorded in Greene County.

On November 18, 2015, EQT executed a Declaration – Notice of Allocation of Area, which it recorded in Greene County. EQT indicated the size of that particular drilling unit as 640 acres, of which 29.04 were from the Subject Property.

See Amended Complaint, ¶¶ 27-60. The amended complaint listed additional notices and declarations involving the Subject Property, all of which were recorded in Greene County. See id. ¶¶ 61-70. Appellant confirmed that "numerous horizontal wells [ ] were drilled and [ ] operated by EQT[,]" which required EQT to "physically enter the subsurface boundaries of the Subject Property." Id. ¶ 71. According to the Amended Complaint, Defendants were removing, producing, and comingling oil and gas from the Subject Property. Id. ¶¶ 72-78.

Appellant's amended complaint asserted the following actions against Defendants: (I) Quiet Title (against all Defendants); (II) Declaratory Judgment (against all Defendants); (III) Trespass (against EQT); (IV) Trespass (against VEA and VEAII); (V) Conversion (against all Defendants); and (VI) Ejectment and Mesne Profits (against all Defendants).

During the spring of 2018, certain defendants filed preliminary objections to Appellant's amended complaint, which the trial court denied in part. See Trial Court Order, 9/7/20. Thereafter, each of the Defendants filed answers and new matters.⁴ Appellant filed replies to the Defendants’ respective new matters.

On October 4, 2021, EQT and Rice Drilling filed the JOP motion underlying this appeal. They alleged: (a) Appellant's declaratory judgment action is barred by the statute of limitations; (b) Appellant's quiet title and declaratory judgment actions are barred because equitable reformation of a deed is unavailable as a remedy in quiet title and declaratory judgment actions; and (c) Appellant's actions for trespass, conversion and unjust enrichment should be dismissed, as they are derivative of Appellant's declaratory judgment and quiet title actions. Motion for JOP, 10/4/21, at 7, 9-10. No other defendant joined the motion or filed a separate JOP motion.

Appellant responded on November 5, 2021. Appellant and EQT and Rice Drilling subsequently filed briefs supporting their...