United States District Court, E.D. Oklahoma
DORSEY J. REIRDON, Plaintiff,
CIMAREX ENERGY COMPANY AND CIMAREX ENERGY CO. OF COLORADO, Defendants.
OPINION AND ORDER
P. Shreder, United States Magistrate Judge.
matter comes before the Court on motion by Defendants Cimarex
Energy Company and Cimarex Energy Co. of Colorado (together,
“Cimarex”) for partial dismissal of the
Plaintiff's Complaint for failure to state a claim. For
the reasons set forth below, the Court finds that the
Defendants' Partial Motion to Dismiss Plaintiff's
Original Complaint for Failure to State and Claim and Brief
in Support [Docket No. 25] should be hereby GRANTED IN PART
and DENIED IN PART.
Plaintiff alleges in his Complaint that he is a resident of
Texas and owns mineral interests in Oklahoma wells operated
by Cimarex Energy Co. of Colorado. He contends that Cimarex
used, caused to be used, and/or allowed third parties to use
natural gas from Oklahoma wells, but that despite express
provisions in the oil and gas leases, Cimarex
“knowingly and systematically underpaid royalty”
to him through a policy of not paying royalties, and that
Cimarex failed to disclose on monthly royalty checkstubs that
it “was not paying royalty on the full volume and value
of production from the Oklahoma wells.” Docket No. 2,
pp. 1-2, ¶¶ 1-6.
addition to the personal allegations, the Plaintiff asserts
that he is acting as representative of a class defined as:
All non-excluded persons or entities who are or were royalty
owners in Oklahoma wells where Cimarex, including its
predecessors or affiliates, is or was the well operator and
working interest owner (or, as a non-operating working
interest owner, Cimarex separately marketed gas), and who,
from January 1, 2013 are or were entitled to share in royalty
proceeds payable under oil and gas leases that contain an
express provision stating that royalty will be paid on gas
used off the lease premises and/or in manufacture of
The persons or entities excluded from the Class are: (1)
agencies, departments or instrumentalities of the United
States of America and the State of Oklahoma; (2) officers of
the Court involved in this action; (3) publicly traded oil
and gas exploration companies and their affiliates; and (4)
persons or entities that Plaintiff's counsel is, or may
be prohibited from representing under Rule 1.7 of the
Oklahoma Rules of Professional Conduct.
Docket No. 2, pp. 3-4, ¶ 15. The class allegations
indicate that the common questions of fact include: (a)
whether, under express terms of the oil and gas leases under
which Reirdon and the putative Class are entitled to be paid
royalty, Cimarex has or had a duty to pay royalty on Fuel
Gas; (b) whether Cimarex has paid the full amount of royalty
owed on Fuel Gas; and (c) whether Cimarex's uniform
royalty payment methodology breaches Cimarex's express
duties to pay royalty on Fuel Gas. See Docket No. 2,
pp. 4-5, ¶ 19.
Plaintiff's Complaint sets out the following enumerated
causes of action: (I) breach of contract, (II) tortious
breach of contract, (III) unjust enrichment, and (IV) fraud
(actual and constructive) and deceit, as well as enumerated
claims for (V) an accounting and (VI) an injunction. The
Defendants have moved to dismiss Counts II through VI.
complaint must contain “a short and plain statement of
the claim showing that the pleader is entitled to
relief[.]” Fed.R.Civ.P. 8(a)(2). Detailed factual
allegations are not required, but the statement of the claim
under Rule 8(a)(2) must be “more than an unadorned,
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009),
citing Bell Atlantic Corp. v. Twombly, 550 U.S. 544,
555 (2007), citing Papasan v. Allain, 478 U.S. 265,
286 (1986). “A pleading that offers labels and
conclusions or a formulaic recitation of the elements of a
cause of action will not do. Nor does a complaint suffice if
it tenders naked assertion[s] devoid of further factual
enhancement . . . To survive a motion to dismiss, a complaint
must contain sufficient factual matter, accepted as true, to
state a claim to relief that is plausible on its face. A
claim has facial plausibility when the plaintiff pleads
factual content that allows the court to draw the reasonable
inference that the defendant is liable for the misconduct
alleged.” Iqbal, 556 U.S. at 678, quoting
Twombly, 550 U.S. at 555-557, 570 [internal quotation
marks omitted]. “While legal conclusions can provide
the framework of a complaint, they must be supported by
factual allegations.” Iqbal, 556 U.S. at 679.
“While the 12(b)(6) standard does not require that
Plaintiff establish a prima facie case in h[is] complaint,
the elements of each alleged cause of action help to
determine whether Plaintiff has set forth a plausible
claim.” Khalik v. United Air Lines, 671 F.3d
1188, 1192 (10th Cir. 2012). This requires a determination as
to “whether the complaint sufficiently alleges facts
supporting all the elements necessary to establish an
entitlement to relief under the legal theory proposed.”
Lane v. Simon, 495 F.3d 1182, 1186 (10th Cir. 2007),
quoting Forest Guardians v. Forsgren, 478 F.3d 1149,
1160 (10th Cir. 2007).
Breach of Contract.
first asserts that the Plaintiff's Count II (Tortious
Breach of Contract) should be dismissed for failure to state
a claim, and the Court agrees that it should be dismissed.
“Oklahoma courts recognize tortious breach of contract
only in limited circumstances, such as in the context of
certain special relationships.” Davis v. PMA
Companies, Inc., 2013 WL 866893, at *4 (W.D. Okla. March
7, 2013). “The ‘special relationship' that
gives rise to tort liability for bad faith is marked by (1) a
disparity in bargaining power where the weaker party has no
choice of terms, also called an adhesion contract, and (2)
the elimination of risk. Tort liability is allowed in these
types of contracts, because bad faith, or more properly,
breach of the implied duty to deal fairly and in good faith,
precipitates the precise economic hardship the contract was
intended to avoid.” Embry v. Innovative Aftermarket
Systems, L.P., 2010 OK 82, ¶ 7, 247 P.3d 1158
(internal citations omitted).
this “special relationship” is usually applied in
the insurance contract context, and courts are generally
hesitant to expand it to include oil and gas leases, as
demonstrated by a line of cases from the Western District of
Oklahoma. See, e. g., Hitch Enterprises, Inc. v.
Cimarex Energy Co., 859 F.Supp.2d 1249, 1263-1264 (W.D.
Okla. 2012) (“The Oklahoma Supreme Court has
‘expressed [its] reluctance to extend tort recovery for
bad faith beyond the insurance field, ' and courts in
this judicial district have held that the lessee-royalty
owner relationship does not qualify as the type of
‘special relationship' necessary to support these
causes of action. Accordingly, the defendants are entitled to
dismissal of these claims for relief.”), citing
Chieftain Royalty Co. v. Dominion Oklahoma Texas Exploration
& Production, Inc., 2011 WL 9527717, at *3 (W.D.
Okla. July 14, 2011) (dismissing for failure to state a claim
where “Plaintiffs have not alleged facts showing the
requisite special relationship here, i. .e., that
the leases were adhesion contracts which eliminated risk and
the Court doubts that an oil and gas lease could give rise to
such a special relationship.”), and Morrison v.
Anadarko Petroleum Corp., 2010 WL 2721397, at *3-4 (W.D.
Okla. July 6, 2010). While the Court acknowledges that the
Plaintiff has alleged that a special relationship exists
here, the Plaintiff's allegation simply states,
“The relationship of oil and gas lessor-lessee is a
special relationship under Oklahoma law[, ]” and that
Cimarex's actions are more than a breach of contract.
See Docket No. 2, p. 9, ¶¶ 44-45. Such
conclusory allegations do not establish the Plaintiff's
claim. See McKnight v. Linn Operating, Inc., 2010 WL
9039794, at *5-6 (W.D. Okla. April 1, 2010) (“The
special considerations at ...