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Alliance Energy & Engineering Corp. v. Rodgers

United States District Court, W.D. Kentucky, Bowling Green Division

June 6, 2018



          H. Brent Brennenstuhl United States Magistrate Judge.

         Before the Court is the motion of non-party Michael T. May, Ph.D. for a protective order, DN 23. Plaintiff Alliance Energy & Engineering Corporation has filed a response in opposition at ¶ 25 and May has replied at ¶ 26. The Defendants/Counter Claimants have not filed a response.

         Nature of the Case

         According to Alliance's complaint, it is a corporation engaged in oil and gas well exploration and development. Defendant Ronnie Charles Rodgers held an assignment of an interest in an oil lease identified as the “Michael Murphy Lease.” Rogers, in turn assigned his interest to Alliance, acting individually and on behalf of co-defendant R&R Plus, LLC. The contract between the parties obligated Rodgers to specified duties in operating and producing the well. Alliance contends that the defendants failed to perform under the contract and also that Rodgers made untrue representations about the well production. Alliance's complaint asserts causes of action for fraud, breach of contract, unjust enrichment, and punitive damages (DN 1).

         The Motion for Protective Order

         May states that defendant Rodgers is currently under indictment in the Eastern District of Kentucky, facing charges of fraud related to solicitation of investments in oil and gas well production ventures throughout Kentucky and Tennessee.[1] May contends the allegations in the complaint are similar to the indictment. The Complaint states:

This is an action for damages arising out of the purchase of an oil lease in Overton County, Tennessee by Alliance Energy & Engineering Corporation from Ronnie Charles Rodgers, doing business through a Tennessee limited liability company named R&R Plus LLC., Ronnie Charles Rodgers committed fraud by misrepresenting the performance of the oil well associated with the lease and has breached the purchase agreement in several material respects.

(DN 1, p. 1). The indictment, in turn, states:

The plan was to create an appearance of business legitimacy; obtain money from investors under falsely-created expectations of profit; obtain more money from investors than was necessary to drill the wells; go through the motions of drilling what the Operators expected to be dry holes or wells within minimal production; lull and placate complaining investors with false excuses for non-production; use large sums of investor money for personal expenses and purchases; and ultimately, discontinue any contract with the investors.

(DN 23, p. 3).

         May is a Professor of Geology at Western Kentucky University. He also performs geological studies for oil and gas investors and operators, including Rodgers. May has also conducted studies for Kentucky Oil and Gas, Inc., in which he, Rodgers, and others have an ownership interest. Kentucky Oil and Gas has also sued Rodgers on a similar fraud allegation in a civil suit pending in this court.[2]

         With regard to the pending criminal charges against Rodgers, May states “the United States Government is well aware of Dr. May's involvement in the facts underlying the Criminal Case, though he is not presently the target of an investigation. Dr. May is expected to be a material witness at the trial in the Criminal Case” (DN 23, p. 4). He seeks a stay of this action to protect him from giving a discovery deposition, at which be indicates he may refuse to answer questions and assert his rights under the Fifth Amendment. In the alternative, he asks that Plaintiff be permitted to question him only as to matters directly related to the Michael Murphy Oil Lease.

         The Fifth Amendment states that “no person shall be . . . compelled in any criminal case to be a witness against himself. U.S. Const. amend. V. “The fifth amendment privilege not only protects the individual against being involuntarily called as a witness against himself in a criminal prosecution but also privileges him not to answer questions put to him in any other proceeding, civil or criminal, formal or informal, where the answers might incriminate him in future criminal proceedings.” In re Morganroth, 718 F.2d 161, 164-65 (6th Cir. 1983).

         In advocating for a stay of this action, May cites Eastwood v. United States, No. 2:06-cv-164, 2008 U.S. Dist. LEXIS 106777 (E.D. Tenn. Nov. 14, 2008), which set forth the following factors a ...

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