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Bickett v. Countrymark Energy Resources, LLC

United States District Court, W.D. Kentucky, Owensboro Division

March 30, 2017

EDMUND BICKETT; and BICKETT BROTHERS FARMS PLAINTIFFS
v.
COUNTRYMARK ENERGY RESOURCES, LLC DEFENDANT

          MEMORANDUM OPINION AND ORDER

          Greg N. Stivers, Judge

         This matter comes before the Court on Plaintiffs' Motion for Partial Summary Judgment (DN 41), Defendant's Motion for Partial Summary Judgment (DN 42), and Defendant's Motion to Strike (DN 46). For the following reasons, Plaintiffs' Motion for Partial Summary Judgment and Defendant's Motion for Partial Summary Judgment are GRANTED, and Defendant's Motion to Strike is DENIED.

         I. SUMMARY OF FACTS AND CLAIMS

         A. History of Property and Oil Drilling Operations

         This lawsuit centers around a dispute between the surface owner and mineral owner of real property that was formerly part of the Camp Breckenridge military base located in Union County, Kentucky. (Def.'s Mot. Partial Summ. J. Ex. 2, DN 42-3 [hereinafter 1965 Mineral Deed]; Def.'s Mot. Partial Summ. J. Ex. 5, DN 42-6 [hereinafter 1966 Surface Deed]). The mineral rights in the property were conveyed by warranty deed in 1965 from the United States to United States Steel and Carnegie Pension Fund. (1965 Mineral Deed). The mineral rights passed through various successors in interest and were eventually assigned to Defendant Countrymark Energy Resources, LLC (“Defendant”), in 2010. (Def.'s Mot. Partial Summ. J. Ex. 13, DN 42-14). The surface estate was conveyed by warranty deed in 1966 from the United States to Plaintiff Edmund Bickett (“Bickett”), his brother James C. Bickett, and their wives. (1966 Surface Deed). Language in the deed reserved the following rights for the mineral holders:

1. Rights of the owner or owners of minerals and mineral rights, including the United States of America, to such use of the surface areas of the property conveyed hereby which is reasonably necessary to prospect, explore, mine, operate, produce, store and remove minerals, provided, however, that the owner or owners of the mineral rights shall be liable to the owner or owners of the surface area for actual damages caused thereby to the surface, improvements, livestock and growing crops. This provision shall not be in derogation of any other rights of the owners of minerals and the surface under the laws of the State of Kentucky. Nothing herein shall constitute or be construed as a waiver of the sovereign immunity and power of the United States of America as the owner of the reserved coal and mining rights in and under the property hereby conveyed.
2. Rights of the owners of minerals and mineral rights, including the United States of America, and surface property owners to the non-exclusive use of existing roads within the confines of Camp Breckinridge Reservation for the purpose of ingress and egress. Reference herein to the various roads within the confines of Camp Breckinridge Reservation is based on a map heretofore filed for record on March 18, 1966, in the records of the Union County Court Clerk's Office in Deed Book 182, page 1, . . . . Said map is incorporated herein by reference as if fully copied herein.
3. Any and all existing reservations, easement, etc., recorded or unrecorded, or public highways, roads, railroads, pipelines, drainage, sewer lines, water lines, telephone and telegraph lines, and public utilities, if any. (1966 Surface Deed 7-8). Eventually, two tracts were conveyed solely to Bickett and his wife.

(Def.'s Mot. Partial Summ. J. Ex. 8, DN 42-9). Edmund Bickett leases the land for farming purposes to Plaintiff Bickett Brothers Farm (“Bickett Brothers”), a partnership composed of his sons, Tim Bickett and Kim Bickett. (T. Bickett Dep. 12:24-13:2, Feb. 23, 2016, DN 42-19).

         In 1965, the mineral rights were conveyed to Ashland Oil and Refining Company (“Ashland”). (Def.'s Mot. Partial Summ. J. Ex. 3, DN 42-4). Ashland drilled seventeen wells on the property in 1966. (Def.'s Mot. Partial Summ. J. Ex. 9, Attach. A, DN 42-10; Def.'s Mot. Partial Summ. J. Ex. 9, at ¶ 2, DN 42-10 [hereinafter Hancock Aff.]). Access roads to the wells were created no later than 1968 and have not substantially changed since this time. (Hancock Aff. ¶ 3; T. Bickett Dep. 38:18-39:10). Ashland installed electric lines and poles on the property for the purpose of running its oil wells at some time prior to 1991 and also installed gates and access points on the property. (T. Bickett Dep. 23:3-24:7, 70:10-11; Def.'s Mot. Partial Summ. J. Ex. 19, ¶ 6, DN 42-20 [hereinafter Coker Aff.]).

         B. Prior Litigation

         While in the process of drilling the wells in 1966, Ashland filed a lawsuit in Union Circuit Court alleging that James and Edmund Bickett had been interfering with, harassing and intimidating persons performing the drilling work. (Def.'s Mot. Partial Summ. J. Ex. 14, DN 42-15). The Bicketts counterclaimed for $150, 000, alleging that Ashland had been using the surface unreasonably, arbitrarily, and capriciously and had unreasonably, and unnecessarily damaged the surface and the improvements of their land. (Def.'s Mot. Partial Summ. J. Ex. 16, at 3, DN 42-17).

         The parties eventually settled the matter and entered into a “Release of all Claims - Settlement in full” (“the Release”) in December 1968. (Def.'s Mot. Partial Summ. J. Ex. 17, DN 42-18 [hereinafter Release]). The Release provided that “[i]t is understood that this RELEASE covers all damages to the First Parties' Union County property, both temporary and permanent, and includes but is not limited to the space as shown on the attached map and the attached Summary of Damages, and includes those damages mentioned in Paragraph 1, at page 7, of the First Parties Deed. . . .” (Release 106-107). For the consideration of $10, 500, Edmund and James Bickett released and discharged Ashland, its successors and assigns, of and from:

(1) all damages incurred to the date of this instrument of whatsoever nature and character, including but not limited to, damages to land, crops, vegetation, timber, natural and man-made drainage ways, fences, roadways and improvements and
(2) all damages for the use and occupation of said surface areas as long as Second Parties shall prospect for, explore for, mine, operate, produce, store and remove the oil, gas, and all other minerals and mineral rights conveyed to them by the United States of America . . . .

(Release 107-08). The Release further provided that Ashland and its assigns were “permanently released from all claims for damages for the future use and occupation of those portions of the above described real estate referred to in part (2) of the immediately preceding paragraph.” (Release 108). Further, Ashland was “not released from such claims for damages that might arise as a consequence of their future operations of the lands owned by first parties, for example, growing crops, livestock, or improvements or damages outside of the roadways now in use or outside of the areas occupied by the existing oil wells, second parties shall be liable therefore . . . .” (Release 108 (emphasis added)). The summary of damages included as an exhibit to the Release demonstrates that compensation was paid to the Bicketts for 322, 993 square feet for the well sites and 123, 210 square feet for the access roads. (Release 125).

         C. Present Litigation

         Ashland transferred the mineral rights to Geigo Company LLP (“Geigo”) in 1991. (Def.'s Mot. Partial Summ. J. Ex. 19A, DN 42-21). In 2005, Geigo drilled an additional well (the “Geigo well”), bringing to eighteen the total number of wells on the property. (Def.'s Mot. Partial Summ. J. Ex. 9, Attach. A, DN 42-10). Geigo paid Edmund Bickett $1, 840 for permanent damages to the 0.46 acres associated with the drilling of this well. (Def.'s Mot. Partial Summ. J. Ex. 20, DN 42-22). The mineral rights were subsequently assigned to Defendant in 2010. (Def.'s Mot. Partial Summ. J. Ex. 13). In 2014, Defendant contracted with Bay Geophysical to perform seismic testing on the property, which resulted in crop damage to corn located on the property. (Hancock Dep. 14:22-15:2, Apr. 18, 2016, DN 43-10; Hancock Aff. ¶ 7). Defendant admitted liability for the loss of crops due to seismic testing, but the parties have not come to a resolution as to payment for the crops destroyed. (Def.'s Resp. Pls.' Mot. Partial Summ. J., DN 43-2 [hereinafter Def.'s Resp.]).

         This led Plaintiffs to file this action in Union Circuit Court. (Compl.) On July 15, 2015, the action was removed to this Court. (Notice Removal, DN 1). Plaintiffs assert a number of claims, seeking compensation for: (1) damage to crops due to the seismic testing; (2) use of more surface area than is reasonably necessary due to the number of access roads and well sites; (3) use of more surface area than is reasonably necessary due to electric poles and guywires; (4) burial of the electric lines and poles because they are an unreasonably dangerous use of the property; (5) replacement of gates on the property that are unreasonably and negligently maintained; (6) replacement and removal of pipe bridges on the property that are unreasonably and negligently maintained; (7) annual payments to maintain the access roads and well sites by spraying and mowing to maintain the noxious vegetation that negatively affects Plaintiffs' crop yield. (Compl. ¶¶ 5-13). Plaintiffs maintain that Defendant's negligence as to the structures complained of unreasonably and unnecessarily interferes with Plaintiffs' right to use the surface estate. (Compl. ¶ 13).

         Plaintiffs have moved for summary judgment as to the claim for crop damage due to seismic testing. (Pls.' Mot. Partial Summ J., DN 41). Defendant has moved for summary judgment as to all remaining claims. (Def.'s Mot. Partial Summ. J., DN 42). These matters have been fully briefed and are ripe for decision.

         II. JURISDICTION

         The Court has subject matter jurisdiction over this action under 28 U.S.C. § 1332 as there is complete diversity between the parties and the amount in controversy exceeds the sum of $75, 000.00.

         III. STANDARD OF REVIEW

         In ruling on a motion for summary judgment, the Court must determine whether there is any genuine issue of material fact that would preclude entry of judgment for the moving party as a matter of law. See Fed. R. Civ. P. 56(a). The moving party bears the initial burden stating the basis for the motion and identifying evidence in the record that demonstrates an absence of any material factual dispute. See Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). If the moving party satisfies its burden, the non-moving party must then produce ...


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