Opinion

J&R Passmore, LLC v. Rice Drilling D, LLC

Court: District Court, S.D. Ohio
Filed: Mar 29, 2024
Cited by: 0 cases
Authority: More cited than 28.4%

The opinion

IN THE UNITED STATES DISTRICT COURT

FOR THE SOUTHERN DISTRICT OF OHIO

EASTERN DIVISION

J&R PASSMORE, LLC et al., :

Plaintiffs, : Case No. 2:18-cv-01587

v. : Chief Judge Algenon L. Marbley

RICE DRILLING D, LLC et al., : Magistrate Judge Kimberly A. Jolson

Defendants. :

OPINION & ORDER

This matter is before this Court on four motions for summary judgment—Ascent and

XTO’s Motion for Summary Judgment (ECF No. 443); Defendants’ Motion for Summary

Judgment (ECF No. 444); Gulfport’s Motion for Summary Judgment (ECF No. 445); and

Plaintiffs’ Motion for Summary Judgment (ECF No. 447)—and Plaintiffs’ Motion to Stay or in

the Alternative for Leave to File Supplemental Motion for Summary Judgment (ECF No. 477).

For the reasons set forth infra, this Court orders as follows:

 Threshold Matters.

o Issue Preclusion as to Count I: Plaintiffs’ motion is DENIED on this issue as to

all Defendants.

o Gulfport’s Bankruptcy Settlement: Summary judgment is appropriate on

Plaintiffs’ claims against Gulfport for damages that accrued before May 17, 2021,

so Gulfport’s motion is GRANTED.

o Passmore and XTO’s Joint Operating Agreements: XTO’s request for summary

judgment on joint operating agreement grounds is DENIED.

o Joint Venture Theory as to Ascent and XTO: Consistent with the carve outs and

clarifications in this Court’s opinion, infra Section III.A(4), Ascent and XTO’s

motion for summary judgment on this issue is GRANTED IN PART AND

DENIED IN PART.

 Count I – Declaratory Judgment. Summary judgment is:

o DENIED as to Plaintiffs; and

o DENIED IN PART AND GRANTED IN PART as to Defendants. It is

GRANTED only as to the following four parcels based on the Schusters’

November 12, 2021 lease language—14-00372.000; 14-00075.000; 26-03329.000;

and 26-03298.000—and DENIED as to the rest.

 Count II – Trespass. Summary judgment is:

o DENIED as to Plaintiffs; and

o GRANTED IN PART AND DENIED IN PART as to Defendants. It is

GRANTED only as to the following properties and DENIED as to the rest:

 Tracts 2, 7, 13, and 44 of the Bennington Units;

 Tract 22 of the Marcum East Unit;

 Tract 14 of the Heller B Unit; and

 Tracts 5 and 21 of the Heller A Unit.

 Counts III & IV – Conversion & Unjust Enrichment. Summary judgment is:

o GRANTED IN PART as to Defendants regarding the following properties:

 Tracts 2, 7, 13, and 44 of the Bennington Units;

 Tract 22 of the Marcum East Unit;

 Tract 14 of the Heller B Unit; and

 Tracts 5 and 21 of the Heller A Unit.

o DENIED as to all other issues.

 Affirmative defenses. Plaintiffs’ Motion is DENIED as to all affirmative defenses.

 Plaintiffs’ Motion to Stay. Plaintiffs’ motion to stay is GRANTED.

I. BACKGROUND

A. Factual Background

Plaintiffs J&R Passmore, LLC (“Passmore”); Bruce and Jennifer Schuster; Brent and

Doreen Butler; and Ryan and Cheryl Feiock (collectively, “Plaintiffs”) own various pieces of

property in Belmont County, Ohio, as well as the oil and gas rights to these properties. (ECF No.

38, ¶¶ 1–4). Defendant Rice Drilling D, LLC, (“Rice”) entered into leases with Plaintiffs for the

development of oil and gas minerals on Plaintiffs’ properties. (Id., ¶¶ 31–37).

Rice and Defendant Gulfport Energy Corporation (“Gulfport Energy”) subsequently came

to an agreement whereby they agreed to drill wells in Belmont County. (Id., ¶ 46). Pursuant to this

agreement, each drilled wells on Passmore’s property, while Rice drilled additional wells on the

Schusters’, Butlers’, and Feiocks’ properties. (Id., ¶¶ 49–50, 62, 71, 80). Rice and Gulfport Energy

shared in the revenue produced from the sale of oil, gas, and other hydrocarbons from the wells on

each of these properties. (Id., ¶¶ 54–58, 65–66, 74–75, 82–83). Rice also assigned certain interests

it had in its lease with Passmore and in certain leases with other then-putative class members to

Defendant Gulfport Appalachia, LLC (“Gulfport Appalachia”). (ECF No. 262 at 1).

XTO Energy Inc. (“XTO”) and Ascent Resources–Utica, LLC (“Ascent”) agreed to share

the burden of the funding, exploration, and development of their jointly owned interests in Belmont

County. (ECF No. 38, ¶ 92). XTO and Ascent also have agreements with Rice to allow XTO and

Ascent to drill wells on the Passmore and Schuster properties. (Id., ¶ 93). Pursuant to these

agreements, XTO drilled wells on the Passmore and Schuster properties. (Id., ¶¶ 96, 107). XTO

and Ascent share in the revenue produced from the sale of oil, gas, and other hydrocarbons

produced from the wells on these properties. (Id., ¶¶ 97, 100–05, 108, 111–14). Additionally, XTO

has acquired interests in four leases containing the contract language at-issue in this matter. (ECF

No. 391 at 3).

While the parties and their respective experts agree that the Marcellus Shale, Utica Shale,

and Point Pleasant are separate geological formations, the parties disagree on what the relevant

contract language within the leases intended to convey to Defendants versus reserve to Plaintiffs.

Plaintiffs allege that Defendants have infringed on Plaintiffs’ mineral rights by drilling on and

producing from property that they are not entitled to drill—specifically, the Point Pleasant—

outside of the terms of their leases. (ECF No. 38, ¶¶ 51–52, 63–64, 72–73, 80–81, 98–99, 109–

10). Defendants allege that at the time of the contract negotiations, the Point Pleasant formation

was understood to be part of the Utica Shale, and therefore, the language in the leases allows them

to drill into the Point Pleasant formation.

B. Procedural Background

Plaintiffs filed this action on December 6, 2018 (ECF No. 1), and subsequently filed an

amended Complaint a few months later. (ECF No. 38). The Defendants then filed a series of

Motions to Dismiss (ECF Nos. 47–49), in response to which this Court: (1) denied Rice’s Motion

to Dismiss; (2) granted Ascent and XTO’s Motions to Dismiss as to the Butlers and Feiocks; (3)

denied Ascent and XTO’s Motions to Dismiss as to Passmore and the Schusters; and (4) dismissed

the Butlers’ and Feiocks’ claims against Ascent and XTO. (ECF No. 82 at 15). In July 2021,

Plaintiffs filed and were granted an unopposed Motion to add Gulfport Appalachia, LLC as a

defendant, because Gulfport Appalachia was assigned some of Rice’s interests in the leases and in

light of Gulfport Energy’s recent bankruptcy proceedings (together, “Gulfport”). (ECF No. 262 at

1; ECF No. 264).

Plaintiffs requested to proceed with their claims as a class action, but this Court denied

class certification after oral argument. (ECF Nos. 382, 430, 437). This Court subsequently received

four motions for summary judgment: one from Ascent and XTO (ECF No. 443), one from all the

Defendants (ECF No. 444, 471), one from Gulfport (ECF No. 445), and one from the Plaintiffs

(ECF No. 447). Plaintiffs filed an omnibus opposition to all three cross-motions (ECF No. 451),

and Defendants opposed Plaintiffs’ motion (ECF Nos. 450, 452, 453). Plaintiffs also sought leave

to amend, and thereafter amended, their complaint to clarify the properties at issue. (ECF Nos.

458, 465, 466). This Court held oral argument on all four summary judgment motions (ECF No.

480), which are now ripe for review. Additionally, prior to this Court’s oral argument on the

summary judgment motions, Plaintiffs sought to stay this case in light of Gulfport’s filing of a

motion for contempt in the United States Bankruptcy Court for the Southern District of Texas

(“Bankruptcy Court”) (ECF No. 477), which Gulfport agrees is the best course of action (ECF No.

479). This motion is now also ripe for review.

II. STANDARD OF REVIEW

Summary judgment is appropriate “if the movant shows that there is no genuine dispute as

to any material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P.

56(a); Maben v. Thelen, 887 F.3d 252, 258 (6th Cir. 2018). The court’s function at the summary

judgment stage is “not [] to weigh the evidence and determine the truth of the matter but to

determine whether there is a genuine issue for trial.” Anderson v. Liberty Lobby, Inc., 477 U.S.

242, 249 (1986). The court thus asks “whether ‘the evidence presents a sufficient disagreement to

require submission to a jury or whether it is so one-sided that one party must prevail as a matter of

law.’” Patton v. Bearden, 8 F.3d 343, 346 (6th Cir. 1993) (quoting Anderson, 477 U.S. at 251–

52). Ultimately, “summary judgment will not lie if the dispute is about a material fact that is

‘genuine,’ that is, if the evidence is such that a reasonable jury could return a verdict for the non-

moving party.” Anderson, 477 U.S. at 248. That is, “there is no issue for trial unless there is

sufficient evidence favoring the nonmoving party for a jury to return a verdict for that party.” Id.

at 250. Evidence that is “merely colorable” or “not significantly probative,” however, is not enough

to defeat summary judgment. Id. at 249–50

The party seeking summary judgment carries the initial burden of presenting the court with

law and argument in support of its motion, as well as identifying the relevant portions of “‘the

pleadings, depositions, answers to interrogatories, and admissions on file, together with the

affidavits, if any,’ which it believes demonstrate the absence of a genuine issue of material fact.”

Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986) (quoting Fed. R. Civ. P. 56). If this initial

burden is satisfied, then the burden shifts to the nonmoving party to set forth specific facts showing

that there is a genuine issue for trial. See Fed. R. Civ. P. 56(e); see also Anderson, 477 U.S. at 250.

Importantly, at the summary judgment stage, the court must “view[] factual evidence in the

light most favorable to the non-moving party and draw[] all reasonable inferences in that party’s

favor.” Barrett v. Whirlpool Corp., 556 F.3d 502, 511 (6th Cir. 2009). Accordingly, at this stage

in the litigation, the court must accept the non-moving party’s version of events without weighing

the evidence or assessing the credibility of prospective witnesses. Cordell v. McKinney, 759 F.3d

573, 578 (6th Cir. 2014). But, “[t]he mere existence of a scintilla of evidence to support [the non-

moving party’s] position will be insufficient; there must be evidence on which the jury could

reasonably find for the [non-moving party].” Copeland v. Machulis, 57 F.3d 476, 479 (6th Cir.

1995) (citing Anderson, 477 U.S. at 252).

III. LAW & ANALYSIS

A. Threshold Matters

1. Issue Preclusion

Unsurprisingly, Plaintiffs seek to preclude Defendants from asserting that: (1) the leases

conveyed Plaintiffs’ rights to the Point Pleasant to Defendants; and (2) any trespass was innocent.

In arguing as much, they allege that an Ohio state court decision “addressed the precise issue set

forth in Count I; namely, did Rice and Gulfport have the rights to drill and produce the Point

Pleasant Formation?” (ECF No. 447 at 40 (discussing Tera, LLC v. Rice Drilling D, LLC, 2023-

Ohio-273, P51, 205 N.E.3d 1168, 1184 (7th Dist. 2023))). In response, Defendants point to this

Court’s prior decision in the TERA II litigation to assert that “Ohio law does not permit non-mutual

offensive issue preclusion—the theory upon which Plaintiffs rely—in this case.” (ECF No. 450 at

2 (citing TERA II, LLC v. Rice Drilling D, LLC, No. 2:19-cv-02221, 2023 WL 4236670, at *6

(S.D. Ohio June 28, 2023))).

While Defendants are partially correct inasmuch as “Ohio courts generally require

mutuality of parties to apply collateral estoppel,” this Court recently elaborated on the limited

exceptions where non-mutual offensive collateral estoppel is permitted—“where the defendant

‘clearly had his day in court on the specific issue brought into litigation within the later proceeding,

[then] the non-party plaintiff [can] rely upon the doctrine of collateral estoppel to preclude the

relitigation of that specific issue.’” TERA II, 2023 WL 4236670, at *5 (quoting In re: E.I. Dupont

de Nemours and Co. C-8 Personal Injury Litig., 54 F.4th 912, 922 (6th Cir. 2022)). The

relationship between the Passmore litigation and the TERA, LLC state litigation mirrors that of the

relationship between the TERA II litigation and the TERA, LLC state litigation and, as was the case

in TERA II, “[h]ere, Plaintiffs attempt to stop Defendants from relitigating the issues which

defendants previously litigated and lost against another plaintiff.” Id. at *6. Considering this Court

did not find an exception to the general mutuality-of-parties requirement to be warranted in TERA

II where the parties were even more similar, “the application of non-mutual offensive collateral

estoppel would be unfair to Defendants” as to different plaintiffs. Id. at *6. As such, this Court

DENIES Plaintiffs’ request for summary judgment on preclusion.

2. Gulfport’s Bankruptcy Settlement (ECF No. 445)

While Gulfport joined and incorporated the broader motion for summary judgment on

behalf of all Defendants (ECF No. 444), Gulfport separately moved for partial summary

judgment “on all claims for damages that accrued before May 17, 2021” based on Gulfport’s

interpretation of the parties’ settlement agreement. (ECF No. 445 at 1).

The settlement agreement in question splits Plaintiffs’ claims against Gulfport into two

categories: settled claims and reserved claims. (ECF No. 445-3 at PageID 43305). Settled claims

pre-date Gulfport’s bankruptcy “emergence date”—May 17, 2021—while reserved claims are

those that accrued on or after this date, regardless of whether such claims had already been

asserted. (Id.).

Plaintiffs agree that any of their claims—be it declaratory judgment, trespass, conversion,

or unjust enrichment—for Gulfport’s actions prior to May 17, 2021, have been settled, such that

“Gulfport has no liability for those claims prior to that time” and owes no damages for that period

of time. (ECF No. 451 at 56). Where Plaintiffs appear to disagree is regarding whether “Plaintiffs

release all claims they asserted … against Gulfport before May 17, 2021,” as Plaintiffs maintain

that claims they previously asserted against Gulfport extend past May 17, 2021, and those claims

are still live. (Id.). This Court interprets Plaintiffs’ argument as emphasizing that the temporal

element relevant to the settled versus reserved divide hinges on the time of the conduct or at

issue in a given claim, not when Plaintiffs brought that claim.

This Court agrees, and finds there to be a clear overlap of the parties’ perspectives on the

impact of the settlement agreement: Plaintiffs’ claims for damages that accrued before May 17,

2021, were “settled” by the post-bankruptcy settlement agreement, but Plaintiffs’ claims for

damages that accrued (and conduct that occurred) on or after May 17, 2021, were “reserved” in

the settlement agreement, even if the foundation of such claims was asserted prior to this date.

This understanding is in line with this Court’s prior articulations of the impact of this same

settlement agreement. (See TERA II, No. 2:19-cv-02221, Jury Instructions, ECF No. 687 at 36,

44, 45). Summary judgment is therefore appropriate on Plaintiffs’ claims against Gulfport for

damages that accrued before May 17, 2021, so Gulfport’s motion is GRANTED. But out of an

abundance of caution, this Court emphasizes that Plaintiffs are correct that their claims for

damages against Gulfport accruing after May 17, 2021 are fair game for this Court and a potential

jury to consider, particularly in light of Gulfport’s admission of production after this date. (See

ECF No. 477 at 7).

3. Passmore and XTO’s Joint Operating Agreements

XTO claims that even if the Passmore leases do not permit production from the Point

Pleasant, XTO nonetheless “had the right to drill through and produce from the Point Pleasant

beneath the Passmore tracts in the Heller A and Heller B Units” pursuant to Passmore and XTO’s

joint operating agreements (“JOAs”). (ECF No. 443 at 5). In XTO’s view, if the Passmore leases

did not grant the right to drill the Point Pleasant, then the Point Pleasant beneath Heller A and B

is an “unleased … mineral interest[]” that is therefore subject to the depth-restriction-free JOA

lease, under which XTO can develop that land.

In response, Plaintiffs assert that the JOAs do not solve XTO’s problem, as they

“encumber[] parcels of land not at issue in this lawsuit[.]” (ECF No. 451 at 52). In support of this,

Plaintiffs explain that “the leases and interests subject to the JOA are identified on Ex. ‘A’” which,

in Passmore’s view, shows that the JOAs “appl[y] solely to Passmore’s unleased interest in Parcels

35-00196.000, 35-00196.001, 36-00134.000, and 35-90010.000 – NOT to Parcels 35-00172.000,

36-00134.000 and 35-00175.000.”1 (Id. at 53). To make their point, Plaintiffs give an example of

how Passmore’s working interest in the Heller B Unit was calculated and explain that this

calculation would be incorrect under Defendants’ theory. Plaintiffs also show that Exhibit A to the

Heller B Unit JOA refers to relevant tracts as being part of an “Oil and gas Lease[] Subject to

Agreement” such that, in their view, this land cannot be understood to be “unleased” as Defendants

argue.2 (Id. (citing ECF No. 493-14 at 41422–23)).

Based on the parties’ briefing, this Court understands the lay of the land as to this argument

to be as follows:

1 The Court notes that Plaintiffs included parcel number 36-00134.000 in both categories, and this Court understands

this parcel number to cover tracts in different units, but this Court understands Plaintiffs to be asserting that the entire

parcel is unleased.

2 In making this argument, Plaintiffs state that “Ex. A reflects that Parcels 35-00172.000, 35-00173.000 and 35-

00175.000 were contributed leases by XTO” but then connect the tracts listed in Exhibit A (Tracts 13, 14, and 15, of

Heller B) to “Parcels 35-00172.000, 36-00134.000 and 35-00175.000.” But other information connects Tract 14 of

Heller B to 35-00173.000, not 36-00134.000. (See ECF No. 454 at 2). As this other information aligns with this Court’s

understanding, this Court therefore interprets Plaintiffs’ reference to 36-00134.000 as it relates to Heller B Tract 14

to be a clerical error.

XTO

argues

Parcel Parcel Tract

Unit Wellbore? subject

Owner Number Number

to JOA

lease?

36-00133.000 7 No No

Bennington Passmore 36-00460.000 13 No No

Unit B 36-00134.000 2 No No

Schusters 14-00252.000 44 No No

35-00172.000 21 No Yes

Heller Unit A Passmore 36-00134.000 27 Yes Yes

35-00175.000 5 No Yes

35-00172.000 13 Yes Yes

Heller Unit B Passmore 35-00173.000 14 No Yes

35-00175.000 15 Yes Yes

Oral argument on this issue was instructive, as there is not a lot of on point case law in

Ohio. Based on the evidence, the arguments of counsel, and viewing the evidence in the light most

favorable to the nonmovant—which, on this issue, is Plaintiffs—the JOAs function as follows.

The “contract area” of the JOAs defines the parties’ “contributions” to the JOA, which are then

subject to the accompanying JOA lease. Before the JOAs, Passmore had some properties that were

already leased with Rice and some that were not. After reaching an impasse on an agreement about

the properties not yet leased to Rice, conversations shifted to the potential of forced unitization.

As a way to avoid this, Passmore contributed some of these unleased properties to the JOAs. XTO

also contributed some properties to the JOAs. So, this Court understands that the JOAs cover these

specifically dedicated plots of land—land that is not otherwise subject to a lease with Rice. Based

on this understanding and without a clear explanation contradicting this, this Court cannot then

make sense of the argument that any unleased interest—such as for the Point Pleasant, if the Smith-

Goshen leases are not found to have granted that interest—is somehow subsumed into the JOA

and its related lease. As such, summary judgment on JOA grounds is DENIED.

4. Joint Venture Theory for Ascent and XTO

In their summary judgment motion, Ascent and XTO claim that Plaintiffs failed to plead

joint venture and that, regardless, they hold no leases and operated no units or wells subject to the

Passmore or Schuster leases. (ECF No. 443 at 2). To the contrary, Plaintiffs assert that Ascent and

XTO may be jointly and severally liable for all of Plaintiffs’ potential damages pursuant to Ohio

Revised Code § 2307.22(A)(1), which Plaintiffs allege requires any party with more than a 50%

working interest in a pooled unit to be held jointly and severally liable in tort for all damages

relating to that pooled unit. (ECF No. 451 at 51–52).

Whether a joint venture exists is a question of fact, guided by the five O’Toole factors: 1)

existence of a joint contract; 2) Defendants’ intent to form a joint venture; 3) a “community of

interest and control, including contributions to the joint venture”; 4) Defendants’ “mutual right to

direct and control the purpose of the joint venture”; and 5) Defendants’ agreement to share in the

profits and the losses. Anchor v. O’Toole, 94 F.3d 1014, 1024 (6th Cir. 1996); Bennett v. Sinclair

Ref. Co., 57 N.E.2d 776, 782 (Ohio 1944). Ohio law is clear that each party who has entered into

a joint venture agreement is “liable for the negligent and tortious acts of the other members,

pursuant to the venture, that result in injury to third persons.” Hulett v. Am.’s Finest Serv. Co., No.

1:03-cv-2497, 2005 WL 2233261, at *12 (N.D. Ohio Sept. 14, 2005); Ohio Rev. Code §

2307.22(A)(1).

This Court first addressed the issue of joint liability at the motion to dismiss stage of this

litigation in regard to Ascent, in which this Court explained that “Plaintiffs have pleaded sufficient

facts to allege a plausible claim of a joint venture and that Defendants may therefore be liable for

the negligent and tortious acts of their co-adventurers.” (ECF No. 82 at 13). Put differently, where

a Plaintiff has alleged that one Defendant physically trespassed onto its property, “it is immaterial

whether [another Defendant] physically trespassed”—that other Defendant can be liable vis-à-vis

a joint venture. (ECF No. 82 at 5). But a joint venture only covers so much, and this Court

determined that “XTO and Ascent cannot be liable for any of Rice’s drilling activities on the Butler

and Feiock properties,” thereby dismissing those claims against Ascent and XTO. (Id. at 6).

Before laying out the analysis as to Passmore and the Schusters, a few things are worthy

of mention. First, this Court does not read the Ohio joint and several tort liability statute quite the

same as Plaintiffs do, so this Court refrains from holding that a 50% working interest automatically

equals 50% liability. (See ECF No. 451 at 50–52). Second, when this Court reviewed joint and

several liability at the summary judgment stage in the related TERA II litigation, XTO had been

dismissed, hence the lack of discussion about XTO’s potential liability there. TERA II, 2023 WL

4236670, at *6. Also, Plaintiffs properly pled the existence of a joint venture in their operative

complaint. (ECF No. 38 at 18). Lastly, XTO and Passmore’s joint operating agreements regarding

the Heller A and Heller B Units come back into play here. Supra Section III.A(3).

As to the relevant facts, Defendants have drilled wells into and extracted oil and gas from

the Point Pleasant via fourteen different pooled units that include Plaintiffs’ property. (ECF No.

446 at 3–12). While different individual Defendants have drilled into or hold varying interests in

the pooled units, as this Court has explained, “Rice and Gulfport have an agreement to drill wells

… ; in turn, Rice has business agreements with XTO and Ascent; and XTO and Ascent have a

business agreement with each other.” (ECF No. 82 at 6; ECF No. 447-21). Therefore, regardless

of whether XTO or Ascent has or could have physically trespassed upon the Passmore or Schuster

land, they could be found liable by nature of a joint venture if Plaintiffs allege sufficient facts as

to that Defendant’s connection to the underlying unit.

A review of Plaintiffs’ documentation of the Defendants’ respective working interests in

pooled units still at issue reveals that XTO held more than a 50% working interest in each pooled

unit other than the Heller B Unit. (See generally ECF No. 447-16; ECF No. 447 at 3–12). Based

on this, XTO could be held jointly and severally liable for these units as a result of a potential joint

venture, so XTO’s request for summary judgment as to its involvement in a joint venture regarding

these units is DENIED. See TERA II, 2023 WL 4236670, at *8.

As to Ascent, it is true that Ascent was not assigned XTO’s rights, titles, and interests in

the units at issue here until July 1, 2022. (ECF No. 443 at 4; ECF No. 447 at 4–12). But Ascent

held a working interest, albeit a smaller one than XTO, in some of the Passmore and Schuster

property before then—specifically, the Bennington B Unit, the Heller A Unit, the Heller B Unit,

and the Kemper Unit. (ECF No. 447 at 4; ECF No. 447-21 (Ascent’s admission of these interests);

see, e.g., ECF No. 447-16 at PageID 44655–56, 44665–66); see TERA II, 2023 WL 4236670, at

*7 (finding no plausible joint venture where the relevant defendants “either never held leases or

did not have a working interest in these units, or they assigned those interests to the other

Defendants prior to the completion of the drilling of the wells”). And as distinct from TERA II,

Ascent’s working interest in Heller A and B nullifies any argument that Ascent could not be held

liable as a result of not being part of the joint operating agreements. As such, prior to its assignment

of XTO’s rights in July 2022, Ascent could be held jointly and severally liable for the other

Defendants’ conduct as to the Bennington B Unit, the Heller A Unit, the Heller B Unit, and the

Kemper Unit if a joint venture is found.

So, this Court must assess if there exists a genuine dispute of material fact regarding

whether (1) XTO operated a joint venture as to the Heller B Unit, and (2) Ascent operated a joint

venture as to the Bennington B Unit, the Heller A Unit, the Heller B Unit, and the Kemper Unit.

As to XTO and Heller B, between XTO’s working interest in Heller B (ECF No. 447-16 at

36) and the joint operating agreement that provides for pooling and unitization rights (ECF No.

443-14), there exists no genuine dispute of material facts that XTO was involved in a joint venture,

so XTO’s motion for summary judgment as to a joint venture with Heller B is DENIED. See Cosic

v. Kronberg, 2012-Ohio-5982, ¶ 18, 984 N.E.2d 414 (Ohio Ct. App. 2012) (finding a joint venture

where there was joint profit resulting from combined business efforts).

Also, neither parties’ arguments and supporting records allow this Court to determine one

way or the other whether Ascent operated a joint venture as to the Bennington B Unit, the Heller

A Unit, the Heller B Unit, and the Kemper Unit, so Ascent’s request for summary judgment on its

involvement in a joint venture as to these units is DENIED.

To be clear, the Court reiterates that both XTO and Ascent can only be held liable under a

joint theory of liability for the periods in which they held an ownership or working interest in the

pooled units. The above analysis of XTO’s potential liability applies to XTO prior to its assignment

of its rights and interests to Ascent in July 2022. Before this assignment, Ascent only had a working

interest in the Bennington B Unit, the Heller A Unit, the Heller B Unit, and the Kemper Unit, so

Ascent can only be found to have engaged in a joint venture as to these units. But after XTO’s

assignment, Ascent assumes the same level of liability as XTO had which, as analyzed above, may

provide for joint and several liability as to all of the units. After this assignment, XTO “no longer

operates nor holds an interest in the Bennington Unit B, Heller Unit A, Heller Unit B, or Kemper

A Unit,” so XTO cannot be held jointly and severally liable as to these units after July 2022. (ECF

No. 443-1). Summary judgment is therefore GRANTED as to XTO after the July 2022

reassignment of rights.

B. Count I: Declaratory Judgment

The parties submitted cross-motions for summary judgment on Plaintiffs’ request for a

declaratory judgment. Plaintiffs’ request seeks three things:

(1) Plaintiffs … specifically reserved in the subject leases the right to all products

contained in any formation below the base of the Utica Shale, including, but not

limited to the Point Pleasant formation,

(2) the Point Pleasant formation is a separate and distinct formation from the Utica

Shale, and lies below the base of the Utica Shale formation; and

(3) Rice, Gulfport, XTO and Ascent do not have the right under the subject leases

to produce oil, natural gas, or other hydrocarbon products from any formation

below the Utica Shale including, but not limited to, the Point Pleasant formation.

(ECF No. 38 at 29). Defendants argue that this Court should grant summary judgment in their

favor because the terms of the leases grant Defendants the authority to drill into the Point Pleasant.

(ECF No. 444 at 18). But before getting to the substance, Defendants have two threshold concerns:

that (1) Plaintiffs seek state law relief that the federal court is unable to provide, and (2) the Court

should decline jurisdiction over the request for relief.

1. Relief Sought by and Jurisdiction Over Declaratory Judgment

As a federal court sitting in diversity to adjudicate state law claims, the federal Declaratory

Judgment Act—a procedural law—controls requests for declaratory relief. Skelly Oil Corp. v.

Phillips Petroleum Co., 339 U.S. 667, 671 (1950). In this way, Defendants are correct that

Plaintiffs are necessarily seeking a declaratory judgment from this Court under federal law, and

Plaintiffs’ citations to state declaratory judgment law on this matter are irrelevant. But Plaintiffs

need not say some magic word to trigger this Court’s review; Plaintiffs request a declaratory

judgment in federal court, and such requests are addressed under the Declaratory Judgment Act.

See 28 U.S.C. § 2201(a) (requiring only “an appropriate pleading”).

So this Court considers whether an exercise of its discretionary jurisdiction is appropriate

based on the five “Grand Trunk factors”:

(1) whether the declaratory action would settle the controversy; (2) whether the

declaratory action would serve a useful purpose in clarifying the legal relations in

issue; (3) whether the declaratory action remedy is being used merely for the

purpose of “procedural fencing” or “to provide an arena for res judicata;” (4)

whether the use of the declaratory action would increase friction between our

federal and state courts and improperly encroach on state jurisdiction; and (5)

whether there is an alternative remedy which is more effective.

Travelers Indem. Co. v. Bowling Green Pro. Assoc., PLC, 495 F.3d 266, 271 (6th Cir. 2007)

(quoting Grand Trunk W. R.R. Co. v. Consol. Rail Co., 746 F.2d 323, 326 (6th Cir. 1984)).

Factors one and two weigh in favor of jurisdiction. While a declaratory judgment would

not resolve the entire controversy, “resolution of Plaintiffs’ declaratory judgment claim would

settle the threshold, and crucial, matter of whether Defendants acted outside the bounds of the

lease.” TERA II, 2023 WL 4236670, at *12. Either outcome clarifies the parties’ legal relationship,

mitigating the risk of future litigation. Id. (citing In re Murray Energy Holdings Co., 637 B.R. 820,

824 (Bankr. S.D. Ohio 2022); J.M. Smucker Co. v. Promotion in Motion, Inc., 420 F. Supp. 3d

646, 663 (N.D. Ohio 2019)). Factors three and four are neutral, as neither party provides evidence

one way or the other. And as to factor five, this Court must resolve the question Plaintiffs seek an

answer to in this request in order to grant any remedy for either party, which nullifies any argument

of judicial-resource-saving by not considering Plaintiffs’ request. Id. at *13 (citing Adrian Energy

Assocs. v. Michigan Pub. Serv. Comm’n, 481 F.3d 414, 422–23 (6th Cir. 2007)).

This Court is sensitive to the fact that Passmore and TERA II are distinct cases brought by

distinct plaintiffs, and makes clear where these cases differ throughout this opinion. But this

jurisdictional hurdle is not one of those places, as the cases are effectively on all fours as to the

Defendants’ arguments against exercising jurisdiction under the Declaratory Judgment Act. This

Court’s view of the matter has not changed since this Court addressed these same declaratory

judgment arguments in TERA II, and Defendants cite no compelling reason this should come out

differently from that analysis. As such, as the Grand Trunk factors weigh in favor of exercising

jurisdiction over this declaratory judgment request as well, Defendants’ motion as it pertains to

this issue is DENIED.

2. Summary Judgment as to Declaratory Judgment

As authority or lack thereof is relevant to all of Plaintiffs’ claims, the answer to the question

posed in order to evaluate this request for a declaratory judgment—whether there is a genuine

dispute of material fact regarding the proper interpretation of the parties’ lease language—applies

beyond a declaratory judgment. Bear in mind that this is not this Court’s first rodeo in tackling

such a question, as this Court was confronted with the same question as applied to slightly different

factual circumstances in TERA II. There, this Court was understandably presented with similar

arguments from both parties as to the appropriate contract interpretation. See TERA II, 2023 WL

4236670, at *13–15.

And as noted there, this Court is still without guidance from the Ohio Supreme Court on

the at-issue contract language, so this Court must once again predict how the court would rule.

Allstate Ins. Co. v. Thrifty Rent-A-Car Systems, Inc., 249 F.3d 450, 453–54 (6th Cir. 2001). This

Court therefore proceeds according to the road map laid out in TERA II.

In Ohio, oil and gas leases are “contract[s] subject to traditional rules of interpretation and

construction.” Shanesville Investments LLC v. Eclipse Resources I, LP, 358 F. Supp. 3d 665, 669–

70 (S.D. Ohio 2018). As such, summary judgment is inappropriate where there exists a “genuine

issue of material fact regarding ambiguous terms in the contract.” Royal Ins. Co. of Am. v. Orient

Overseas Container Line Ltd., 525 F.3d 409, 422 (6th Cir. 2008). In determining if the contract

language is ambiguous, the court asks whether such language is susceptible to two reasonable

interpretations. Schachner v. Blue Cross & Blue Shield of Ohio, 77 F.3d 889, 893 (6th Cir. 1996).

Only if the court finds the provision to be ambiguous based on the face of the contract does the

court then move on to “use traditional methods of contract interpretation to resolve the ambiguity,

including drawing inferences and presumptions and introducing extrinsic evidence.” Id. The

ambiguity decision is a question of law for the court, while the meaning of the ambiguous language

is a question of fact for the jury. Ohio Hist. Soc’y v. Gen. Maint. & Eng’g Co., 65 Ohio App. 3d

139, 146, 583 N.E.2d 340, 344 (Ohio 1989).

Thus, this Court must first decide if the lease language is ambiguous as to whether Plaintiffs

granted or reserved the rights to the Point Pleasant. This Court’s analysis of this question is

bifurcated, as one of the Schusters’ leases—the November 12, 2012 lease—is different from all

the others (the “Smith-Goshen leases”). And again, “[u]nfortunately, the leases do not define

independently the phrase and the parties disagree on its meaning.” TERA II, 2023 WL 4236670, at

*15. As to the legal landscape to guide this Court’s analysis of this question, not much has changed

since the TERA II discussion, as this Court still “lacks a wealth of Ohio caselaw on which it can

rely.” TERA II, 2023 WL 4236670, at *16. But one important thing differs here as compared to

TERA II: the grant clauses of the at-issue leases. In the TERA II leases, the grant clause provides

Defendants the right to drill “in the formations commonly known as the Marcellus Shale and the

Utica Shale.” Id. at *2 (quoting TERA II, No. 2:19-cv-02221, ECF No. 302; ¶ 50). But here, as to

the Smith-Goshen leases, the text provides no such grant. Instead, Plaintiffs granted the lessee the

rights to explore, drill, operate, produce and gather oil, gas and other hydrocarbons “other than as

reserved unto Lessor below.” (ECF No. 447-1 at 22) (emphasis added). As a result, the rub between

the Passmore parties’ views is not about whether the subsurface territory “commonly known as

the Utica Shale” was understood to include the Point Pleasant, as the Plaintiffs’ grant clause here

is not defined in that way. Rather, the Smith-Goshen grant clause directs us to the reservation

clause, which is broken into three separate subsets of rights reserved to Plaintiffs:

(1) from the surface of the leased Premises to the top of the formation commonly

known as the Marcellus Shale, (2) in any and all formations below the base of the

Marcellus Shale to the top of the formation commonly known as the Utica Shale,

and (3) in all formations below the base of the Utica Shale.

(Id. at 23).

One can hardly forget, but this dispute is about the Point Pleasant, which this Court

understands neither party disagrees is stratigraphically below the Utica. Based on the above

reservation clause subsets, then, this Court must decide whether the third subset reserved Plaintiffs’

rights to the Point Pleasant. Importantly, not only does the “commonly known as” language not

arise in the grant of rights, it also does not modify “Utica Shale” in the relevant reservation bucket.

At oral argument, Defendants argued to the contrary, attempting to import the “commonly

known as” modifier from the second subset of reserved rights into the third. But that is not what

the plain text provides. The parties are not arguing about a formation at the top of the Utica Shale,

so what lies at the top of what is “commonly known as the Utica Shale”—the second subset—is

not relevant to this dispute. Instead, the parties are arguing about a formation at the bottom of the

Utica Shale. This brings us to a different question than the one in TERA II, in which this Court

evaluated whether the Point Pleasant is part of what is “commonly known as the Utica Shale,”

given that those rights were specifically granted to those defendants. But here, the question is

whether the Point Pleasant is part of “the Utica Shale,” as Plaintiffs reserved their rights in the

Smith-Goshen leases to anything below the base of the Utica Shale—not what was commonly

known as the Utica Shale. The Point Pleasant is below the Utica, so if the Point Pleasant is not part

of the Utica Shale, then the Point Pleasant is below it.

This train of thought does not, however, apply to the Schusters’ November 10, 2012 lease,

which controls four properties and was amended in a way relevant to this dispute. (ECF No. 444

at 18–20). Previously, the reservation clause in this lease mirrored the other Smith-Goshen leases,

reserving the Schusters’ rights “in all formations below the base of the Utica Shale”—as discussed

supra. But this Schuster lease as amended instead reserves the Schusters’ rights “in all formations

200’ below the base of the formation commonly known as the Utica, defined herein as the

stratigraphic equivalent of 200’ below the top of the Curdsville member of the Lexington

formation[.]” (ECF No. 444-28 at 2). Defendants rely on Mr. Schuster’s testimony to assert that,

as a result, “this amendment permits the Defendants to act within the Point Pleasant[.]” (ECF No.

444 at 19 (citing Schuster Dep., ECF No. 444-9, at 95:21–25)).

While Defendants do not appear to provide a visual that would enable this Court to make

an independent judgment about the impact of the amended lease language, Plaintiffs submitted an

ODNR Type Log that includes the aforementioned layers. (See ECF No. 447 at 27). And even

applying the above definition to the Type Log in a light most favorable to Plaintiffs, this Court

agrees that, in accordance with the specifically amended language present only in the Schusters’

November 10, 2012 lease, the Schusters did not reserve their rights to the Point Pleasant as to these

four properties. Understanding this may be a snippet of a longer Type Log, based on the scale, the

top of the chart to the line above the Curdsville is no more than approximately four hundred feet.

So, two hundred feet below the top of the Curdsville cannot be said to incorporate the Point

Pleasant, which sits approximately fifty feet above the Curdsville. As to these four of the

Schusters’ properties, then, Plaintiffs’ reservation clause interpretation falls apart. This Court

therefore finds that there is no genuine dispute of material fact as to whether the Schusters’

November 12, 2012 lease reserved their rights to the Point Pleasant, so summary judgment in favor

of the Defendants as to the four properties controlled by that lease—14-00372.000; 14-00075.000;

26-03329.000; and 26-03298.000—is appropriate. Defendants motion is therefore GRANTED on

in this limited way.

Having aligned on what language this Court is to analyze as to the Smith-Goshen leases,

this Court turns to the parties’ arguments. Plaintiffs’ unambiguity argument primarily turns on two

related points: that (1) the Point Pleasant is a separate geological formation from the Utica Shale;

and (2) the lease’s granting clause must be read in context of the reservation clause, under which

the Plaintiffs served the rights to “all formations below the base of the Utica Shale.” In Plaintiffs’

view, combining these two points leads to the only reasonable conclusion in light of the grant

clause’s deference to the reservation clause here as opposed to that in TERA II: that Plaintiffs

reserved all of the oil and gas in the Point Pleasant because the Point Pleasant is a distinct formation

that sits below the base of the Utica Shale. In support of this, Plaintiffs walk through (1) the

stratigraphic definition of “formation” via their expert; (2) the Ohio Department of Natural

Resources’ (ODNR) analysis of wells in Eastern Ohio depicting the Point Pleasant as separate

from and below the Utica Shale; (3) the Ohio Legislature’s delineation of Point Pleasant and Utica

in its definition of “horizontal well”; and (4) the Well Completion Reports required by ODNR

upon the drilling and fracking of a well, which also lists the Point Pleasant as distinct from and

below the Utica. (ECF No. 447 at 24–28).

Defendants find the lease to be unambiguous in its conclusion to the contrary. Defendants

emphasize the requirement of using the ordinary, not stratigraphic, understanding of the word

“formation”; the role of the phrase “commonly known as” in the reservation clause; and the impact

of these two things on the term “Utica Shale”—which, together, Defendants say, confirm that

Plaintiffs did not reserve their rights to the Point Pleasant. (ECF No. 444 at 23–25). To elucidate

the plain meaning of the contract, Defendants point to lay witness testimony, online oil and gas

forums, and contemporaneous media information. (Id. at 26–28). Defendants also provide industry

and expert views from Ohio’s former State Geologist and ODNR employee and the Energy

Information Administration that align with their argument of the plain meaning. (Id. 28–30).

In surveying relevant or helpful precedent, this Court has even less to rely on here than in

TERA II given the related underlying state court proceedings in that case. Yet even there, this Court

found that “the Ohio Court of Appeals’ decision provides little substantive guidance in this matter

as the circumstances of the cases are different.” TERA II, 2023 WL 4236670, at *16.

This dearth of case law combined with the different grant and reservation clauses here

results in a closer call on the ambiguity question than this Court faced in TERA II. Here,

Defendants’ request for summary judgment is rife with references to the “commonly known as”

language, as it understandably was in TERA II.3 Indeed, Defendants characterize Plaintiffs’ claims

as “depend[ing] on the assertion that the Point Pleasant is not part of the formation commonly

known as the Utica Shale,” and analyze the plain meaning of “formation commonly known as the

Utica Shale.” (Id. at 10, 22). But as a result of the structure of the Smith-Goshen lease’s grant and

reservation clauses discussed supra, this Court is not interpreting what is “commonly known as

the Utica Shale.” To be sure, even when this Court was interpreting the “commonly known as”

language, this same argument was not persuasive enough to overcome summary judgment. TERA

3 (E.g., ECF No. 444 at 2 (discussing the history of “[t]he formation commonly known as the Utica Shale”), 3

(discussing “the public’s perception” of formations), 3–4 (discussing the components of what was “commonly known

as the Utica Shale”), 5 (discussing the “common understanding of the Utica Shale”), 8 (quoting Wickstrom discussing

what was “widely and commonly applied” as part of the Utica Shale)).

II, 2023 WL 4236670, at *16. So it certainly is not persuasive enough here in light of the Plaintiffs’

stronger arguments to the contrary based on the Smith-Goshen lease language. That said, a jury is

free to consider Defendants’ arguments regarding what was “commonly known as the Utica Shale”

in its interpretation of what is “below the Utica Shale,” as the former may be helpful in defining

the latter.

Regardless, the parties’ arguments again reveal ambiguity in the proper interpretation of

the relevant lease provision, albeit in a different way than in TERA II. Here, both parties support

their arguments as to whether “the Utica Shale” includes the Point Pleasant with definitions and

explanations from qualified individuals ranging “across the scientists, landowners, and drilling

companies that make up the oil and gas industry.” Id. But here, Plaintiffs’ interpretation is

compelling based on the specific lease provisions at issue. In a light most favorable to the

nonmovant, however, this Court cannot conclusively determine whether the phrase “below the

Utica Shale” includes the Point Pleasant. Therefore, both requests for summary judgment are

DENIED as to a declaratory judgment based on the unamended Smith-Goshen lease containing

the aforementioned reservation clause language.

Because this Court’s conclusion as to authority and contractual ambiguity as to all of the

other leases applies with equal force to all of Plaintiffs’ substantive claims, this Court need not

rehash those arguments below, and instead rests on this analysis. But any reference to authorization

under the lease does not apply to the four properties controlled by the November 12, 2012 Schuster

lease.

C. Count II: Trespass

Trespass requires (1) an unauthorized intentional act, and (2) entry upon land in the

possession of another. Georgetown of the Highlands Condo. Owners’ Ass’n v. Nsong, 2018-Ohio-

1966, ¶ 36, 113 N.E.3d 192, 199–200 (Ohio Ct. App. 2018). As explained supra Section III.B,

there exists a genuine dispute of material fact as to whether the leases grant Defendants the

authority to drill and extract minerals from the Point Pleasant—that is, whether Defendants’

drilling was authorized or unauthorized. Because of this, there logically exists a genuine dispute

of fact as to whether Defendants trespassed on Plaintiffs’ property by drilling into the Point

Pleasant below those properties, and this dispute is material: If the Defendants have the authority

to drill, Plaintiffs’ claim for trespass would fail, but if Defendants do not have authority to drill,

Plaintiffs’ trespass claim could—but would not necessarily—succeed.

What is more, Plaintiffs seek to satisfy an even higher burden, as they assert that

Defendants not only trespassed, but did so in bad faith—that is, “with the knowledge that [they

were] invading the rights of another, or under such circumstances as to charge [them] with

knowledge of the character of [their] act[.]” (ECF No. 447 at 35–38). As this Court finds that a

reasonable jury could find in favor of either party as to the authority question, this Court is not in

a position to determine a subsequent and potentially unnecessary question of whether, should the

act be found to be unauthorized, it was also done knowingly unauthorized. For this reason alone,

this Court cannot conclusively determine that Defendants, in fact, trespassed, let alone did so in

bad faith, so Plaintiffs’ motion for summary judgment as to trespass—including as to bad faith

trespass—is DENIED regarding all Defendants.

But deciding if this Court can determine whether Defendants conclusively did not trespass

requires more analysis. This Court starts with what it finds to be factually clear and established.

Based on the evidence submitted by the parties, there is no question that Plaintiffs have established

their ownership rights to the minerals underlaying the properties they allege have been impacted

by Defendants’ actions. And there is no question that Defendants entered the properties crossed

by a well or wellbore intentionally, as Defendants appear to admit that they drilled into and

produced gas from the Point Pleasant. (ECF No. 447-18–21).

Even as to subsurface trespass, a plaintiff must still demonstrate “some type of physical

damages or interference” such that they were deprived of “reasonable and foreseeable use of the

subsurface.” Baker v. Chevron U.S.A. Inc., 533 Fed. App’x 509, 521–22 (6th Cir. 2013) (quoting

Chance v. B.P. Chemicals, Inc., 77 Ohio St.3d 17, 670 N.E.2d 985, 992–93 (1996)). In Ohio,

invasion by wellbore satisfies this physical-invasion requirement, Chance, 670 N.E.2d at 993, as

the requirement applies even as to pooled units where a landowner receives royalties for all the oil

and gas from a well within that unit, regardless of if the oil and gas is drained from that landowner’s

well, see TERA II, 2023 WL 4236670, at *19–20 (citing Golden Eagle Resources II, LLC v. Rice

Drilling D, LLC, Case No. 2:22-cv-2374, ECF No. 22 at 13 (S.D. Ohio Feb. 10, 2023)).

Here, Plaintiffs have easily satisfied this requirement as to some of Plaintiffs’ plots of land

the via plat maps, declarations of pooling, geosteering reports, and well completion reports that,

combined, reveal where wellbores cross Plaintiffs’ properties and where Defendants drilled. (See

ECF No. 447 at 4–12 (evaluating these documents as to each unit)). But physical invasion by

fracking poses a slightly different question: whether the wellbore fractures actually physically

intersect those properties not crossed by a wellbore. Plaintiffs attempt to answer this question

through geosteering reports, microseismic data, and well completion reports, which provide,

among other things, that “the fractures extend 500 feet from both sides of the wellbore” and that

“the vast majority of the wells at issue are drilled at 1000 foot spacing consistent with the

microseismic data.” (ECF No. 451 at 42–43). Plaintiffs conclude that application of these two

statements to the specifics of Plaintiffs’ property records confirm that “Plaintiffs’ [p]roperty is

within 500 feet of a wellbore in each unit, except as [sic] the Bennington Units (Tracts 2, 7, 13,

44), Marcum East Unit (Tract 22), Heller B (Tract 14), Heller [sic] [A] (Tracts 5, 21).” (Id. at 43

(citing ECF No. 447-6)). Under their view, all other tracts were therefore either physically invaded

by wellbore or by fracking.

Based on a review of the non-wellbore parcels, this Court finds that Plaintiff has presented

sufficient evidence for a reasonable juror to find that at least some of the non-wellbore parcels

were physically invaded by the fractures. But, as Plaintiffs admit, this is not the case for all tracts.

Accordingly, Defendants’ request for summary judgment on Plaintiffs’ trespass claim is

GRANTED only as to the following properties4 and DENIED as to the rest.

 Tracts 2, 7, 13, and 44 of the Bennington Units;

 Tract 22 of the Marcum East Unit;

 Tract 14 of the Heller B Unit; and

 Tracts 5 and 21 of the Heller A Unit.

D. Count III & IV: Conversion & Unjust Enrichment

Plaintiffs claim that, because of their possessory interest in the Point Pleasant and the

revenues generated therefrom, Defendants have unlawfully converted their property and have been

unjustly enriched as a result.

To establish conversion, a plaintiff must prove: “(1) plaintiff’s ownership or right to

possession of the property at the time of conversion; (2) defendant’s conversion by a wrongful act

or disposition of plaintiff’s property rights; and (3) damages.” 6750 BMS, L.L.C. v. Drentlau, 2016-

Ohio-1385, ¶ 28, 62 N.E.3d 928, 934 (Ohio Ct. App. 2016). And for a resulting unjust enrichment,

a plaintiff must show: “(1) a benefit conferred by a plaintiff upon a defendant; (2) knowledge by

4 This Court understands all tracts as to which summary judgment is granted to be XTO-drilled wells. (See ECF No.

454 at 1).

the defendant of the benefit; and (3) retention of the benefit by the defendant under circumstances

where it would be unjust to do so without payment.” Padula v. Wagner, 2015-Ohio-2374, ¶ 47, 37

N.E.3d 799, 813 (Ohio Ct. App. 2015) (quoting Hambleton v. R.G. Barry Corp., 12 Ohio St.3d

179, 183, 465 N.E.2d 1298 (Ohio 1984)). As previously established, although one can only assert

a claim of conversion for personal property, “subsurface minerals … become personal property

immediately upon severance.” TERA II, 2023 WL 4236670, at *20–21 (quoting Schlabach v.

Kondik, 2017-Ohio-8016, ¶ 23, 98 N.E.3d 1048, 1055 (Ohio Ct. App. 2017)). So, conversion, and

therefore unjust enrichment, is appropriate in the oil and gas context. See First Fed. Bank v.

Angelini, 2007-Ohio-6153, ¶ 8, 2007 WL 4090767 (Ohio Ct. App. 2007).

In their opposition to Plaintiffs’ conversion and unjust enrichment claims, Defendants

rightfully do not take issue with Plaintiffs’ lodging of these claims for subsurface minerals

generally. Instead, Defendants import their challenges to Plaintiffs’ trespass claim in full, and only

add that they never admitted to having extracted gas from Plaintiffs’ Point Pleasant and that there

is no evidence of such. Ascent and XTO additionally argue that the rule of capture bars Plaintiffs’

claims for conversion and unjust enrichment because they “were authorized to drill into and

produce from the Point Pleasant beneath all wellbore tracts in the Bennington B, Heller A, Heller

B, and Kemper A Units, meaning the rule of capture permits any drainage that may have occurred

from Plaintiffs’ properties.” (ECF No. 443 at 12).

As an initial matter, Ascent and XTO’s “rule of capture” argument has been implicated by

a few aspects of the above analysis. Based on this Court’s analysis thus far, this Court rejects any

rule of capture argument premised on a grant of rights to the Point Pleasant via either (1) the JOAs

and the accompanying JOA leases, supra Section III.A(3); or (2) the text of the unamended Smith-

Goshen leases at issue, supra Section III.B. As was the case in TERA II, application of the rule of

capture “in the manner put forth by the Defendants requires this Court to assume that Defendants

had the authority to drill into the Point Pleasant adjacent to Plaintiffs property.” TERA II, 2023

WL 4236670, at *22. But “because there exists a genuine issue of material fact as to whether

Defendants acted wrongfully in the first place,” summary judgment in favor of either party is

inappropriate. Id. Having concluded as much, it bears mentioning that finding the rule of capture

may apply in some way, shape, or form is distinct from the rule of capture applying in the precise

way put forth by a party. This Court, therefore, takes issue with the Defendants’ reference to the

TERA II grant of summary judgment in their favor regarding the former concept as support for the

idea that the rule of capture therefore bars Plaintiffs’ conversion and unjust enrichment claims

here, despite it not barring the plaintiffs’ claims there. (See ECF No. 443 at 13).

Moving on to more general issues, Defendants are correct that many of the issues lurking

under the trespass claim also arise as to the conversion claim. Indeed, this Court has already found

that prong one—plaintiff’s ownership or right to possession of the property—is established. And

two aspects of this Court’s analysis above apply to prong two, which requires defendant’s

conversion by a wrongful act or disposition of plaintiff’s property rights. First, the literal

conversion of Plaintiffs’ property occurred when the subsurface minerals were severed from the

land. Any arguments that Defendants did not actually drain or produce from Plaintiffs’ Point

Pleasant (other than those ruled out for defendant- or property-specific issues) are not persuasive.

(See, e.g., ECF No. 443 at 14 (arguing no proof of drainage)). Second, as to any “wrongfulness,”

there exists a genuine issue of material fact as to whether Defendants acted without authorization

in the first place, and this authorization question is a prerequisite to a finding of wrongful conduct.

As such, this Court’s analysis of the authority question, supra, forecloses summary judgment on

conversion in favor of either party. Summary judgment is therefore DENIED.

E. Affirmative Defenses

Defendants advance many affirmative defenses, and Plaintiffs seek summary judgment in

their favor for the following: (1) laches; (2) estoppel and quasi-estoppel; (3) consent; (4)

ratification; (5) accord and satisfaction; (6) unclean hands; and (7) waiver. (ECF No. 447 at 45–

51). As a threshold matter, Plaintiffs apply the correct standard to this issue in their motion,

concluding that “the material facts are not in dispute and Plaintiffs are entitled to judgment as a

matter of law as to these affirmative defenses.” (Id. at 45; contra ECF No. 450 at 21).

Unsurprisingly, and understandably given that Passmore and TERA II are effectively on

all fours as it pertains to this issue, Plaintiffs assert virtually identical arguments against

Defendants’ affirmative defenses here as were presented in TERA II. The only differences here are

that the unclean hands defense is separated from laches and waiver is broken out on its own. For

the sake of efficiency, this Court repeats only its bottom-line conclusions as to why summary

judgment on any of the aforementioned defenses is inappropriate.

As to laches, there remains a question of fact about whether Defendants were prejudiced

by Plaintiffs’ delay in bringing suit considering that Defendants continued to profit from their

activity on Plaintiffs’ property. TERA II, 2023 WL 4236670, at *28. But as the nonmovant,

interpreting the facts through the summary judgment lens, there is a world in which Defendants

can “prove that the amount of money spent to continue extraction and drill new holes would not

have been spent had the lawsuit been initiated earlier by Plaintiffs” such that “the money spent

may amount to loss of funds and material prejudice against Defendants sufficient to require

dismissal under the defense of laches.” Id. And the unclean hands defense depends on a finding

that Defendants acted wrongfully which, as discussed supra, this Court cannot determine at this

point.

Estoppel and quasi-estoppel require too fact-intensive of an inquiry to conclude at this stage

that no reasonable juror could find that Plaintiffs are not estopped from bringing their claims. It is

worth noting that regardless of the outcome on the authorization question, Plaintiffs’ acceptance

of royalties is not inconsistent with a legal position challenging the conduct that resulted in the

royalties. See Sims v. Anderson, 2015-Ohio-2727, 38 N.E.3d 1123, 1132 (Ohio Ct. App. 2015);

Bonner Farms, Ltd. v. Fritz, 355 Fed. App’x 10, 16 (6th Cir. 2009). This sentiment also applies to

Plaintiffs’ waiver argument, as whether acceptance of royalties functions as a waiver depends on

whether Plaintiffs’ acceptance was in line with their arguments about the issues with Defendants’

underlying conduct. TERA II, 2023 WL 4236670, at *29.

Due to the identical nature of the arguments made here to those made in TERA II, Plaintiffs

fail to address the consent defense, so Plaintiffs’ request for summary judgment on that defense is

denied on that ground alone. Similarly, as was the case in TERA II, this Court does not have the

information necessary to resolve the factual questions underlying Defendants’ ratification and

accord and satisfaction defenses, including whether these defenses apply in the first place.

In summary, there are material questions of genuine fact as to each affirmative defense

challenged by Plaintiffs, so summary judgment in their favor is DENIED.

F. Plaintiffs’ Motion to Stay (ECF No. 477)

As the motivating factor behind their motion to stay, Plaintiffs express concern over the

risk of an adverse judgment and sanctions resulting from Gulfport’s motion for contempt. (ECF

No. 477 at 2). In its motion, Gulfport asked the Bankruptcy Court to hold the Passmore Plaintiffs

in contempt of the parties’ settlement agreement, arguing that Plaintiffs are violating the parties’

agreement by litigating their claims in this Court. See supra Section III.A(2) (discussing the

settlement agreement). Gulfport sought similar redress in TERA II, and both motions for contempt

remain pending in the Bankruptcy Court as of the parties’ briefing on Plaintiffs’ motion to stay.

(ECF No. 477 at 7).

Substantively, as noted supra, this Court agrees with Plaintiffs that some of their claims

against Gulfport are live here: those for damages that accrued after May 17, 2021. And in absence

of a conclusion that none of the claims could possibly have accrued after this date, this Court will

not find good faith litigation of these claims to be improper. That being said, this Court appreciates

the procedural complexities involved in parallel litigation of the same issues, and therefore

considers the five stay factors: “(1) the need for a stay; (2) the stage of litigation; (3) whether the

non-moving party will be unduly prejudiced or tactically disadvantaged; (4) whether a stay will

simplify the issues; and (5) whether burden of litigation will be reduced for both the parties and

the court.” Zimmers v. Eaton Corp., No. 15-CV-2398, 2016 WL 1322343, at *2 (S.D. Ohio Apr.

5, 2016).

That the Plaintiffs—the party bringing this case—seek the stay and that Gulfport agrees

weigh in favor of granting a stay, particularly in light of the dollar figure penalty Plaintiffs may

face should the Bankruptcy Court disagree with this Court’s assessment of the scope of the

settlement agreement. (See ECF No. 477 at 8–9). The same goes for the stage of litigation, as

Plaintiffs are correct that this case would likely be heading toward a jury trial, during which that

penalty would increase substantially by nature of trial preparation expenses. (Id. at 9). Considering

Gulfport consents to a stay, this Court finds no potential prejudice in so granting. And as to factors

four and five, a stay both simplifies the issues and reduces the burden of litigation by militating

the risk of dual-track litigation on the same issues. Therefore, following the entry and effect of the

above conclusions, this litigation is STAYED pending resolution of Gulfport’s motion for

contempt in the Bankruptcy Court.

IV. CONCLUSION

For the reasons stated above, this Court rules as follows:

 Ascent and XTO’s Motion for Summary Judgment (ECF No. 443) is GRANTED IN

PART AND DENIED IN PART as to potential joint venture liability consistent with the

above opinion, and DENIED on all other grounds, including as to the effect of the joint

operating agreements and the rule of capture in this case.

 Defendants’ Motion for Summary Judgment (ECF No. 444) is GRANTED IN PART

AND DENIED IN PART. This Motion is GRANTED only as to the following:

o On Count I as to the four parcels subject to the Schusters’ November 12, 2012

amended lease—14-00372.000; 14-00075.000; 26-03329.000; and 26-03298.000;

and

o On Counts II, III, and IV as to the following properties:

 Tracts 2, 7, 13, and 44 of the Bennington Units;

 Tract 22 of the Marcum East Unit;

 Tract 14 of the Heller B Unit; and

 Tracts 5 and 21 of the Heller A Unit.

 Gulfport’s Motion for Partial Summary Judgment (ECF No. 445) is GRANTED

consistent with the above opinion.

 Plaintiffs’ Motion for Summary Judgment (ECF No. 447) is DENIED as to all issues,

including affirmative defenses.

 Plaintiffs’ Motion to Stay (ECF No. 477) is GRANTED.

Therefore, following the entry and effect of the above conclusions, this litigation is STAYED

pending resolution of Gulfport’s motion for contempt in the Bankruptcy Court. The parties are

ORDERED to alert this Court of such a resolution or any other related actions that could disrupt

or delay the lifting of the stay on the litigation in this Court.

IT IS SO ORDERED.

)

ALGENON [4 MARBLEY—

CHIEF UNITED STATES DISTRICT JUDGE

DATE: March 29, 2024

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.