United States District Court, E.D. Oklahoma
OPINION AND ORDER
KIMBERLY E. WEST UNITED STATES MAGISTRATE JUDGE
matter comes before the Court on Defendant Enterprise Crude
Oil, LLC's Motion to Dismiss Plaintiff's Fraud Claim
(Docket Entry #57). Plaintiff initiated this action on April
13, 2016 in the District Court in and for Marshall County,
Oklahoma. Defendant removed the case to this Court on April
alleges she is the owner of certain oil and gas wells in
Oklahoma. Defendant ExxonMobil Oil Corp. is identified as the
producing owner/operator of oil and gas wells in Oklahoma
which is obligated to pay oil and gas proceeds to Plaintiff.
Defendant Enterprise Crude Oil, LLC
(“Enterprise”) is a first purchaser of production
from oil and gas wells in Oklahoma which is also alleged to
be obligated to pay Plaintiff oil and gas proceeds. Plaintiff
contends Defendants were legally obligated to pay interest on
untimely payments to royalty owners, including Plaintiff.
Specifically, the First Amended Complaint defines the term
“Owner” as “persons with a legal interest
in the acreage under a well which entitles such person(s) . .
. to payments of O&G Proceeds.” (First Amended
Complaint (“FAC”) at ¶1). She also alleges
that he is an “Owner”. (FAC at ¶¶2-3).
The First Amended Complaint further defines “Untimely
Payments” as “‘proceeds from the sale of
oil and gas production or some portion of such proceeds
[that] are not paid prior to the end of the applicable time
periods provided' by statute”, citing to Okla.
Stat. tit. 52 § 570.10(D) and Okla. Stat. tit. 52 §
570, et seq. (FAC ¶5). Plaintiff alleges that
the Production Revenue Standards Act (the “Act”)
requires the payment of interest on any Untimely Payments
made to Owners. (FAC ¶6).
contends Defendants “are well aware of their
obligations to pay the required interest on Untimely
Payments” but “routinely delay payment of
production proceeds and deny Owners the interest payments to
which they are entitled as part of an overarching scheme to
avoid its obligations under Oklahoma law.” (FAC
alleging the personal basis for her claims, Plaintiff asserts
she brings the action as a representative of a class defined
All non-excluded persons or entities who: (1) received
Untimely Payments from Defendants (or Defendants'
designees) for O&G Proceeds from Oklahoma Wells; and (2)
whose payments did not include statutory interest.
The persons or entities excluded from the Class are: (1)
agencies, departments, or instrumentalities of the United
States of America or the State of Oklahoma; (2) publicly
traded oil and gas companies and their affiliates; (3)
persons or entities that Plaintiff's counsel may be
prohibited from representing under Rule 1.7 of the Oklahoma
Rules of Professional Conduct; and (4) officers of the court.
proceeds through the analysis required for class
certification, alleging the facts which she asserts warrants
certification. She also sets forth his qualification as a
representative of the class. (FAC ¶¶24-30).
Plaintiff reiterates that she and the putative class members
were entitled to oil and gas proceeds from Defendants, the
historical purpose for the Oklahoma statute under which she
proceeds, that payments of the proceeds were untimely, and
Defendants failed to pay the statutorily provided interest as
a result of the delay in payment of the oil and gas proceeds.
first cause of action, Plaintiff contends Defendant
“held O&G Proceeds belonging to Plaintiff and the
Class and Defendants failed to timely pay O&G Proceeds
owing to Plaintiff and the Class” and “[i]n
violation of the Act, when Defendants ultimately made its
(sic) Untimely Payments to Plaintiff and the Class,
Defendants did not pay the interest owing on the Untimely
Payments.” (FAC ¶¶50-51). Plaintiff concludes
on this claim that Defendants' failure to pay the due and
owing interest on the Untimely Payments was “knowing
and intentional and/or the result of Defendant's gross
negligence” which resulted in harm to Plaintiff and the
putative class. (FAC ¶¶52-53).
also asserts a claim for fraud, alleging Defendants owned
and/or operated numerous oil and gas wells throughout
Oklahoma and assumed the duties associated with the operation
of the wells, including the duty to pay oil and gas proceeds
to Owners in accordance with Oklahoma law. (FAC ¶56-57).
In the course of doing so, Plaintiff alleges Defendants
“took on such duties with the intent to deceive Owners
and not pay the full O&G Proceeds owed” -
specifically, the interest on Untimely Payments. Plaintiff
states Defendants “knowingly and intentionally
suppressed the fact that interest was owed to Plaintiff and
the Class members” and “intended to avoid their
obligation to pay the statutorily mandated interest and only
pay when an Owner specifically requests payment of the
statutory interest.” (FAC ¶58). Plaintiff states
that she and the putative class “relied on and trusted
Defendants to pay them the full O&G Proceeds to which
they were entitled under Oklahoma law” and alleges they
were damaged as a result. (FAC ¶¶59-60). Plaintiff
also asserts a claim for punitive damages under this fraud
allegation. (FAC ¶61).
separately set out claim, Plaintiff seeks equitable relief in
the form of an accounting and requests an order directing
Defendants “to disgorge themselves of any benefits
derived from their improper and unlawful use of
Plaintiff's and the Class' interest payments,
including interest that has accrued on such interest since
the time in which Defendants made the Disputed Payments to
Plaintiff and the Class. (FAC ¶¶63-67).
also asserts a claim for injunctive relief, requesting
“a permanent injunction, ordering Defendants to pay
interest as required by law when Defendants make future
Untimely Payments to Plaintiff, the Class, and Owners.”
requests dismissal of Plaintiff's common law fraud claim
contending (1) that the Energy Litigation Reform Act (the
“Reform Act”) specifically precludes Plaintiff
from pursuing the fraud claim through its “exclusive
remedy” language; and (2) that, should the fraud claim
be permitted to proceed, Plaintiff's allegations ...