Royalty and Royalty Interests: Underpayment Court Jurisdiction, Procedure and Review: Class Certification Limitations of Action

摘要

Plaintiff files this putative class action against Merit asserting that it had underpaid royalties by using the netback methodology rather than calculating royalties based on Kansas' implied covenant to market. This case was originally filed in state court which was removed to federal court by Merit. In an earlier order, the District Court judge certified the class as including all royalty owners of Merit Energy in wells where Merit had produced hydrocarbons from January 1, 1998 to the present. Defendant sought to limit the class to production that occurred five years from the date of the filing of the state court action under Kan. Stat. Ann. §60-511. Plaintiff argues that the monthly payments to the royalty owners constitute "open accounts" which toll the statute of limitations. The court determines that monthly royalty payments are not open accounts because payments change from month to month based on volumes and prices and that the parties did not treat these monthly payments as open accounts. Kansas recognizes the fraudulent concealment doctrine that tolls statutes of limitations. But the doctrine is limited to circumstances where the relief sought is based on fraud and not breach of contract. While there was some evidence that pre-2003 check stubs did not clearly identify the fact that the lessee was using the netback methodology, the court finds that the fraudulent concealment doctrine does not apply. Similarly, the court rejects the application of the discovery rule to toll the limitations period as to the unjust enrichment claim.