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Waveland Drilling Partners III-B, LP v. New Dominion, LLC

Court of Appeals of Oklahoma, Division III

July 20, 2018

WAVELAND DRILLING PARTNERS III-B, LP, WAVELAND RESOURCE PARTNERS II, LP, WAVELAND DRILLING PARTNERS 2011-B, LP, AND WAVELAND DRILLING PARTNERS III-A, LP, Plaintiffs/Appellees,
v.
NEW DOMINION, LLC, Defendant/Appellant.

          Mandate Issued: 02/13/2019

          APPEAL FROM THE DISTRICT COURT OF OKLAHOMA COUNTY, OKLAHOMA, HONORABLE PATRICIA G. PARRISH, TRIAL JUDGE.

          Jayne Jarnigan Robertson, JAYNE JARNIGAN ROBERTSON, P.C., Oklahoma City, Oklahoma, for Plaintiffs/Appellees,

          Billy M. Croll, HARTZOG, CONGER, CARSON & NEVILLE, Oklahoma City, Oklahoma, and Fred M. Buxton, General Counsel, Tulsa, Oklahoma, and Stephen Q. Peters, TOMLINS & PETERS, PLLC, Tulsa, Oklahoma, for Defendant/Appellant.

          Barbara G. Swinton, Presiding Judge.

         ¶1 Defendant/Appellant New Dominion, LLC (NDL) appeals from a temporary injunction granted in favor of Plaintiffs/Appellees Waveland Drilling Partners 2011-B, LP, Waveland Drilling Partners III-A, LP, Waveland Drilling Partners III-B, LP, and Waveland Resource Partners II, LP (Waveland) in the District Court for Oklahoma County on December 9, 2016. NDL asserts that it was denied due process by the entry of a temporary injunction without an evidentiary hearing, and that the temporary injunction was improperly granted under the facts presented. We affirm.

         BACKGROUND

         ¶2 Waveland instituted an action against NDL seeking a money judgment and declaratory judgment related to the Restated and Amended Eight East Participation Agreement (Participation Agreement) between the parties. Under the Participation Agreement, the Eight East Participants, who include Waveland, sell gas from wells to the first purchaser of gas, who then remits payment to NDL as contract operator of the wells. NDL is required to remit the gas sales payments to the Eight East Participants, including Waveland, their royalty owners, and the State of Oklahoma for gross production taxes. In July of 2014, NDL was removed as operator of the gathering system by a majority vote of the participants. NDL continues to serve as contract operator of wells under the Participation Agreement, but was notified in January 2016 that its right "to market, collect the revenues from the Gas (including natural gas liquid hydrocarbons and oil separated at the wellhead or collected along the Gathering System) and to distribute the net proceeds therefrom" was terminated by the agreement of a majority of the Participants. NDL was also notified that the parties had agreed that Hunton would take over its obligations. Hunton then began selling condensate collected from the Gathering System to Enerfin. When NDL learned of the agreement with Enerfin, it demanded that Hunton deliver the proceeds received on condensate sales to NDL so that the proceeds could be disbursed to the participants and royalty owners.

         ¶3 NDL withheld from natural gas proceeds which were held in trust for Waveland $70, 000.00, the amount that it estimated due for condensate sales in the month of September 2016. Waveland claimed that NDL then threatened to distribute the $70, 000.00 to third parties, including other working interest owners, royalty owners, and the Oklahoma Tax Commission.

         ¶4 Waveland sought and obtained an emergency ex parte restraining order (TRO) on November 20, 2016, precluding NDL from distributing the amount "offset" from Waveland proceeds and from making further offsets. NDL filed an objection and motion to vacate the TRO, and issued a notice of hearing for November 28, 2016. Hearings were held on November 28, December 2, and December 6, 2016. A temporary injunction was issued in favor of Waveland on December 10, 2016. NDL appeals from this order.

         STANDARD OF REVIEW

         ¶5 An action involving the grant or denial of injunctive relief is equitable in nature. An order granting an injunction will not be reversed unless the trial court abused its discretion or the decision is clearly against the weight of the evidence. Dowell v. Pletcher, 2013 OK 50, ¶ 5, 304 P.3d 457.

         ANALYSIS

         ¶6 NDL argues that it was denied due process below because Waveland failed to give NDL adequate notice of their emergency ex parte motion for temporary restraining order; Waveland's reason for failing to give notice was "contrived"; and the TRO changed the status quo. NDL also argues that it was deprived of due process by entry of ...


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