Court Jurisdiction, Procedure and Review: Certified Question Oil and Gas Leases: Assignment; Statute of Frauds Mining Partnership: Elements

摘要

Valentine files this action asserting that he is the owner of several fractional interests in oil and gas leases that constitute mining partnerships with Sugar Rock, which is the operator under the leases. Valentine asserts that his ownership in the leases was conveyed by Deem to him in the 1950s and that he received payments by virtue of production through the 1990s. After Deem later conveyed its interest to Sugar Rock, Valentine stopped receiving payments and did not pay Sugar Rock when billed for leasehold expenses. Sugar Rock sued Valentine for non-payment but the matter was dropped for lack of prosecution. At the District Court, Sugar Rock moved for summary judgment based on the fact that Valentine was unable, after the discovery process was completed, to produce a written instrument evidencing the conveyance of the leasehold interests from Deem to Valentine. Valentine responded by alleging that his interests arose out of mining partnerships, which West Virginia recognizes may come into existence without a written instrument. The three elements of a mining partnership in West Virginia are: 1. co-ownership of lands or leases, 2. joint operation, and 3. sharing of profits and losses. The District Court finds that Valentine's inability to produce a written deed or assignment means that he can't prove co-ownership of the leases and thus grants Sugar Rock's motion for summary judgment. A state court action (Washburn) filed by persons in similar circumstances to Valentine reached a different conclusion based on some additional evidence, including the written Schedule K-1s that Sugar Rock had provided to them and Valentine over the years. Upon further review by the District Court, including an analysis of potentially conflicting West Virginia Supreme Court of Appeals opinions on the subject, it re-affirms the issuance of the summary judgment order. Held: certified question issued to the West Virginia Supreme Court of Appeals.