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Chieftain Royalty Co. v. Marathon Oil Co.

United States District Court, E.D. Oklahoma

June 7, 2018

CHIEFTAIN ROYALTY COMPANY, Plaintiff,
v.
MARATHON OIL COMPANY, Defendant.

          OPINION AND ORDER

          STEVEN P. SHREDER UNITED STATES MAGISTRATE JUDGE

         This matter comes before the Court on motion by Defendant Marathon Oil Company (“Marathon”) for dismissal of the Plaintiff's First Amended Complaint for failure to state a claim. For the reasons set forth below, the Court finds that the Defendant's Motion to Dismiss Plaintiff's First Amended Complaint and Brief in Support [Docket No. 26] is hereby GRANTED IN PART and DENIED IN PART.

         BACKGROUND

         The Plaintiff Chieftain Royalty Company (“Chieftain”) is an Oklahoma Corporation that owns oil and/or gas wells, including a well in Blaine County, Oklahoma, described as Boeckman 1-13H. The Defendant Marathon Oil Company is the operator of that same well. Chieftain contends that Defendant, as the operator, is obligated to pay oil and gas production proceeds to Plaintiff within certain time periods described by state statute. Plaintiff contends that the Defendant has failed to comply with this obligation, and instead engages in the practice of delaying payment of proceeds and denying interest payments.

         In addition to the personal allegations, Chieftain asserts that it is acting as representative of a class defined as:

All non-excluded persons or entities who
(1) Received, or during the pendency of this action will receive, Untimely Payments from Defendant for O&G Proceeds from Oklahoma Wells and whose payments did not also include the statutory interest prescribed by the Act;
(2) currently are, or become during the pendency of this action, Owners legally entitled to O&G Proceeds held by Defendant in Suspense Accounts (for reasons of unmarketable title, unknown addresses, and/or other reasons) for more than the applicable time periods prescribed in the Act, without the payment by Defendant of statutory interest prescribed by the Act for the benefit of such Owners.
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; and (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, and (5) Owners who are entitled to O&G Proceeds form an Oklahoma Well of less than $10.00 for a calendar year pursuant to Okla. Stat. tit. 52 § 570.10(B)(3)(a).

Docket No. 25, pp. 4-5, ¶ 17. The class allegations indicate that the common questions of fact include: (a) whether Plaintiff and the Class own legal interests in the Oklahoma Wells for which Defendant has an obligation to pay O&G Proceeds; (b) whether, under Oklahoma law, Defendant owed interest to Plaintiff and the Class on any Untimely Payments, either received or not yet received; and (c) whether Defendant had a duty to promptly investigate whether Plaintiff and the Class were owed interest and, if so, to properly pay the interest owed to the Plaintiff and the Class; (d) whether Defendant's failure to pay interest to Plaintiff and the Class on any Untimely Payments, either received or not yet received, constitutes a violation of the Act; (e) whether Defendant defrauded Plaintiff and the Class by knowingly withholding statutory interest; and (f) whether Defendant is obligated to pay interest on future Untimely Payments, either received or not yet received. See Docket No. 25, p. 5, ¶ 19.

         The Plaintiff's Complaint sets out the following enumerated causes of action: (I) breach of statutory duty to pay O&G Proceeds and interest, (II) breach of duty to investigate and pay, (III) fraud, and (IV) accounting and disgorgement, and (V) injunctive relief. The Defendants have moved to dismiss all Counts.

         ANALYSIS

         A 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, the-defendant-unlawfully-harmed-me accusation.” 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 Statutory Duty to Pay O&G Proceeds ...


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