United States District Court, E.D. Kentucky, Southern Division, London
MEMORANDUM OPINION & ORDER
GREGORY F. VAN TATENHOVE, District Judge.
Defendant EQT Production Company (EQT) wants a do-over. After a week-long trial, EQT is clearly unhappy with the outcome and wants to re-litigate the issues. Unfortunately for EQT, the Federal Rules of Civil Procedure do not provide the losing party with a second chance just because that party disagrees with a jury's verdict or a judge's decision. More than mere disagreement with the outcome is required. EQT continues to experience the same difficulty it has had throughout this litigation - that of meeting the legal standards required to obtain its goals. Because EQT has failed to satisfy that legal standard, its post-trial motions will be DENIED. In one motion, EQT requests judgment as a matter of law, a new trial, entry of judgment in its favor concerning its equitable defenses, and also requests that the trespass wells not be transferred to the Plaintiff. [R. 198.] Plaintiff Journey Acquisition-II, LP (Journey) opposes each of EQT's motions and moves for entry of judgment in Journey's favor concerning EQT's equitable defenses. [R. 204, R. 205.] For the reasons explained below, EQT's post-trial motions will be DENIED, and Journey's Motion for Entry of Judgment will be finally resolved by separate order.
The Court has set out the factual background in previous orders, and will only give a brief recitation of the facts and procedural posture here to provide the necessary context for the instant motions. In 2001, EQT and Journey entered into a contract by which EQT agreed to sell, lease, and otherwise transfer certain lands as well as certain interests in oil, natural gas, mineral rights, and related assets connected to several large tracts of land located in southeastern Kentucky - mainly in Letcher, Perry, and Leslie Counties. This lawsuit arose from a dispute between the parties as to which property and interests were actually conveyed. The disputed properties include tracts of land that EQT owned, lands and interests that EQT leased from thirdparty owners, and several hundred existing wells and their associated equipment and operations. Throughout this litigation, EQT has maintained that it intended to convey only the lands, wells, and interests located wholly within blue-outlined boundaries on a series of maps attached to the parties' contract as Exhibit N. Journey, however, contends that the properties and interests conveyed were those specifically listed and described on other attached exhibits.
Journey brought suit in this Court in June 2012. After much discovery and several amended complaints, EQT moved for summary judgment, and Journey filed four motions for partial summary judgment. In August 2014, the Court issued a Memorandum Opinion and Order in which it denied EQT's motion for summary judgment and granted three of Journey's motions for summary judgment while partially granting the fourth. [R. 141.] Specifically, the Court found that the documents at issue were not ambiguous, and that extrinsic evidence of EQT's intent concerning their meaning was not admissible. [R. 141 at 17-26, 30-33.] The Court also found that the plain language of the contract stated that EQT must convey to Journey any of the oil, gas, or fee mineral interests located within the geographic areas outlined in blue on the Exhibit N maps, and that to the extent that EQT had not conveyed those interests, EQT was in breach of the contract. [ Id. at 26-29.] In light of its findings concerning ambiguity, the Court further found that the conveyances were not limited to only the interests within the blue lines, but that the contractual documents also unambiguously conveyed to Journey the interests specifically listed and described on certain attached exhibits. [ Id. at 26-27, 34-35.] In doing so, the Court also found that EQT had not met its burden of demonstrating mutual mistake, and therefore rejected EQT's request for reformation of the contract. [ Id. at 35-41.] Thus, because EQT had been operating wells on land that Journey owned, the Court found that EQT was in breach of contract and had committed trespass.
Despite these findings, however, the Court determined that a trial was necessary to resolve certain factual issues. Accordingly, the Court held a jury trial beginning on September 8, 2014, to assist in resolving the following issues: 1) whether any of Journey's claims were barred by EQT's defenses of laches, waiver, and estoppel, each of which involved factual disputes concerning timing, certain people's knowledge, and alleged misrepresentation or concealment; and 2) whether EQT was an "innocent" trespasser or a "bad faith" trespasser, a question which also involved factual determinations and had particular relevance to the amount of damages EQT owed. The resolution of these issues also would affect the final determination of questions such as whether EQT must pay Journey the past revenues for the trespass wells for the entire period between July 2001 and the present; and if so, whether EQT must pay Journey prejudgment interest on those revenues. Because the defenses of laches, waiver, and estoppel are equitable in nature, the jury acted only in an advisory capacity concerning those defenses, but issued a binding verdict concerning EQT's innocent trespass claim. After a week-long jury trial, the jury rejected each of EQT's equitable defenses, and separately found that EQT committed bad-faith trespass concerning certain listed wells belonging to Journey. Accordingly, Journey requests the Court enter judgment in accordance with the jury's verdict, and renews its argument for prejudgment interest on all past revenues owed to Journey. [R. 204, 205.] EQT, however, has moved for judgment as a matter of law in its favor, and also requests a new trial. [R. 198.]
Because EQT moved for judgment as a matter of law at trial [R. 192], EQT is essentially renewing that motion concerning the binding portion of the verdict. Federal Rule of Civil Procedure 50(b) governs the renewal of a motion for judgment as a matter of law after trial, and it allows the court to either enter judgment on the jury's verdict, direct entry of judgment as a matter of law despite the verdict, or to order a new trial. Fed.R.Civ.P. 50(b). Although ordering a new trial is one form of relief a court may grant when ruling on such a motion, Rule 50 applies only to binding jury cases and does not apply to bench trials or portions of a trial with an advisory jury. See Federal Ins. Co. v. HPSA, Inc., 480 F.3d 26, 32 (1st Cir. 1007). Accordingly, the Court will construe EQT's somewhat convoluted motion as: 1) a renewed motion for judgment as a matter of law under Rule 50(b) concerning the jury's finding that EQT was a badfaith trespasser; 2) a motion for findings of fact and conclusions of law under Rule 52(a) concerning EQT's equitable defenses; and 3) as a motion for a new trial under Rule 59. EQT's arguments concerning its equitable defenses will be addressed by separate order within the context of the parties' motions for judgment under Rule 52.
Under Federal Rule 50, "[j]udgment as a matter of law will be granted only where a party has been fully heard on an issue and there is no legally sufficient evidentiary basis for a reasonable jury to find for that party on that issue.'" Imwalle v. Reliance Med. Prods., Inc., 515 F.3d 531, 543 (6th Cir. 2008) (quoting Reeves v. Sanderson Plumbing Prods., Inc., 530 U.S. 133, 150 (2000)); Fed.R.Civ.P. 50(a)(1). The court may only grant judgment as a matter of law if, "in viewing the evidence in the light most favorable to the nonmoving party, reasonable minds could come to but one conclusion'" - that of finding in favor of the moving party. Imwalle, 515 F.3d at 543 (quoting Gray v. Toshiba Am. Consumer Prods., Inc., 263 F.3d 595, 598 (6th Cir. 2001)). The standard for granting judgment as a matter of law under Rule 50 involves the same inquiry as for granting summary judgment under Rule 56. Thus, in reviewing a Rule 50 motion, the court should review the record as a whole while drawing "all reasonable inferences in favor of the nonmoving party, and it may not make credibility determinations or weigh the evidence" - both of which are functions left to the jury. Reeves, 530 U.S. at 150. Additionally, the court "must disregard all evidence favorable to the moving party that the jury is not required to believe." Id.
In a diversity case such as this, when a party moves for judgment as a matter of law based on a challenge to the sufficiency of the evidence, the court should apply the standard of review "used by the courts of the state whose substantive law governs the action, " which in this case is Kentucky. Kusens v. Pascal Co., Inc., 448 F.3d 349, 360 (6th Cir. 2006). Under Kentucky law, a motion for judgment as a matter of law is the same as a motion for a directed verdict, see Adam v. J.B. Hunt Transp., Inc., 130 F.3d 219, 231 (6th Cir. 1997), and the trial judge should only grant such a motion if there is a complete absence of proof on a material issue in the action, or if no disputed issue of fact exists upon which reasonable minds could differ.'" Bierman v. Klapheke, 967 S.W.2d 16, 18-19 (Ky. 1998); see also Morales v. American Honda Motor Co., Inc., 151 F.3d 500, 506 (6th Cir. 1998) (quoting and applying Kentucky case law on this point). In reviewing a motion for a directed verdict in Kentucky, "the trial judge must draw all fair and reasonable inferences from the evidence in favor of the party opposing the motion." Bierman, 967 S.W.2d at 18. Where there is conflicting evidence, "it is the responsibility of the jury to determine and resolve such conflicts, as well as matters affecting the credibility of witnesses." Id. at 19. Because Rule 50 does not apply to matters where the jury acted in an advisory capacity, the Court need only apply this standard to the jury's finding that EQT was not an innocent trespasser. See Federal Ins. Co, 480 F.3d at 32.
The primary test for determining whether a willful or an innocent trespass was committed turns on "the intention, or the state of mind, of the trespasser based upon the circumstances surrounding the trespass at the time the trespass occurred." Church and Mullins Corp. v. Bethlehem Minerals Co., 887 S.W.2d 321, 324 (Ky. 1992). Under Kentucky law, it is "well settled" that a willful trespasser "knows he is wrong, " while "an innocent trespasser believes he is right." Lebow v. Cameron, 394 S.W.2d 773, 776 (Ky. App. 1965). The trespasser's intent is "a subjective matter, generally, and the mere proclamation of an innocent intent will not suffice." Id .; see also Swiss Oil Corp. v. Hupp, 69 S.W.2d 1037, 1041 (Ky. 1934) (emphasizing that the trespasser's mere testimony that he acted in good faith and believed he was right is not sufficient to entitle him to the advantage enjoyed by a good-faith trespasser). A trespasser's intent "can seldom be proved by direct evidence." Swiss Oil Corp., 69 S.W.2d at 1041. Rather, it involves considering the totality of the circumstances to determine "whether the trespass was perpetrated in a spirit of wrongdoing, with a knowledge that it was wrong, or whether it was done under a bona fide mistake, as where the circumstances were calculated to induce or justify the reasonably prudent man, acting with a proper sense of the rights of others, to go in and to continue along the way." Id .; Church and Mullins, 887 S.W.2d at 324 (explaining that intent of the trespasser depends on whether he acted under "an honest conviction that he was right, and with a proper sense of the rights of others, " or whether despite knowledge that his claim may not be valid he "deliberately chose the course of willful and reckless disregard" of the other party's "irreparable property rights") (citing Swiss Oil Corp., 69 S.W.2d at 1041).
"One who takes oil and gas from the land of another wrongfully is presumed to be a willful trespasser..., " although the presumption is rebuttable by demonstrating that "the defendant acted in good faith, honestly believing his acts complained of were privileged." Rudy v. Ellis, 236 S.W.2d 466, 468 (Ky. App. 1951). "The burden is always upon the offender to establish his status as an innocent or mistaken invader of another's property." Swiss Oil Corp., 69 S.W.2d at 1041. Moreover, "[t]he question of the intent of the trespasser is for the trier of fact to determine, " which in this case was the jury. Church and Mullins, 887 S.W.2d at 324. Here, the question of EQT's intent clearly turned on evidence that involved credibility determinations and factual findings, from which the jury determined that EQT was not a goodfaith trespasser. The Court should not disturb the jury's finding on this point apart from a showing by EQT that there was "a complete absence of proof" as to EQT's intent. Bierman, 967 S.W.2d at 18-19. Put simply, EQT has not met that burden.
In support of its motion, EQT first contends that it presented proof that its land and geology departments compared proposed well locations to maps which outlined the acreage EQT thought it owned, and argues that Journey did not present evidence of a contrary belief on the part of EQT. [R. 198-1 at 17.] EQT misunderstands its burden, however. It is EQT's burden as the trespassing party to prove its good-faith belief, and not Journey's burden to prove the opposite. See Swiss Oil Corp., 69 S.W.2d at 1041. At trial, the jury considered evidence that EQT never checked the blue boundaries on the Exhibit N maps against the line-by-line description on the conveyance documents, except for when Mr. Smallwood was concerned about the apparent discrepancy between the 6, 333 acres of the Fordson Lease listed on Exhibit A to the PSA, and the very different boundaries on Exhibit N. Tr. (Sept. 9, 2014) at 214-18. The jury learned that Mr. Smallwood then asked Michelle Weber about how the transaction documents related to the Fordson Lease should be interpreted, and saw the ...