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R&J Oil v. Rodgers

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

January 10, 2020

R&J OIL, et al. PLAINTIFFS
v.
R.C. RODGERS, et al. DEFENDANTS

          MEMORANDUM OPINION AND ORDER

          Greg N. Stivers, Chief Judge

         This matter is before the Court on Plaintiffs' Motion for Partial Summary Judgment (DN 42) on Counts V and VI of their Complaint (DN 1). The motion is ripe for adjudication. For the reasons that follow, the motion is GRANTED.

         I. STATEMENT OF FACTS AND CLAIMS

         Plaintiffs Keith and Nikkoll Johnson are residents of Ohio who decided to invest in the oil and gas industry in hopes of enhancing their retirement savings. (Pls.' Mem. Supp. Mot. Partial Summ. J. 1, DN 43 [hereinafter Pls.' Mot.]).[1] Plaintiffs entered into a “Refurbishing Contract Agreement” with John Patterson (“Patterson”) and Defendants Ronnie Charles Rodgers (“Rodgers”) and R&R Plus, LLC (“R&R Plus”), a Tennessee limited liability company of which Rodgers was the sole member. (Pls.' Mem. Supp. Mot. Partial Summ. J. Ex. A, at 1, DN 43-1; Compl. ¶¶ 4, 8, DN 1). The Refurbishing Contract Agreement provided that Rodgers and R&R Plus would transfer mineral rights to a 67-acre tract in Tennessee, along with an existing well and associated personalty, and refurbish the existing well. (Pls.' Mem. Supp. Mot. Partial Summ. J. Ex. A, at 1-3). Patterson, who is not a party to this action, was to check the wells and remove the oil. (Pls.' Mem. Supp. Mot. Partial Summ. J. Ex. A, at 3).

         Plaintiffs, Rodgers, and R&R Plus entered into a separate “Escrow Agreement” to accomplish the transfer of the mineral rights, designating Defendant Elmer George (“George”) a party to the contract as the escrow agent.[2] (Pls.' Mem. Supp. Mot. Partial Summ. J. Ex. B, at 1, DN 43-2). The Escrow Agreement provided that Plaintiffs would deposit $105, 000 with George, who was not to release the funds “until receipt from the Parties of all documents, properly completed and executed, necessary to affect [sic] the transfer of ownership or assignment of the Oil and Gas Lease, including but not limited to the Assignment of Oil and Gas Lease and Refurbishing [Contract] Agreement between First Party and Second Parties herein . . . .” (Pls.' Mem. Supp. Mot. Partial Summ. J. Ex. B, at 1). The Escrow Agreement further stated that in the event the transfer documents were not received within thirty days, George was to return the escrow funds to Plaintiffs. (Pls.' Mem. Supp. Mot. Partial Summ. J. Ex. B, at 1).

         Plaintiffs, Rodgers, and R&R Plus also signed a document titled “Assignment of Oil and Gas Lease” (“Assignment”). (Pls.' Mem. Supp. Mot. Partial Summ. J. Ex. C, at 1, DN 43-3). Notwithstanding the nominal caption, the Assignment conveyed only an 87.5% working interest in a particular well (#12313) and did not include transfer of the referenced oil and gas lease. (Pls.' Mem. Supp. Mot. Partial Summ. J. Ex. C, at 1). Nevertheless, upon receipt of the executed Assignment and Refurbishing Contract Agreement, George disbursed the escrowed funds. (George Aff. ¶ 27).

         Notably, before closing it was necessary for Rodgers and R&R Plus to obtain the leasehold interest they were obligated to transfer to Plaintiffs under the terms of the Refurbishing Contract Agreement. George effected this transfer by drafting a document (“Adventure Assignment”) conveying Adventure Enterprises, Inc.'s interest in the well and lease to Rodgers and R&R Plus. (Pls.' Mem. Supp. Mot. Partial Summ. J. Ex. D, at 1, DN 43-4). The language of the Adventure Assignment assigned to Rodgers and R&R Plus all of Adventure Enterprises' interests in both the “well and Oil and Gas Lease . . . .” (Pls.' Mem. Supp. Mot. Partial Summ. J. Ex. D, at 1). Indeed, before preparing either transfer, George consulted John Nisbet, Adventure Enterprises' Tennessee attorney, who provided a written title abstract to George and advised that, “[b]ecause [Rodgers] is purchasing BOTH the well and lease, I would suggest that you include a paragraph about the lease.” (Pls.' Reply Mot. Partial Summ. J. Ex. 1, at 1, DN 50-1 (emphasis in original)).

         After the closing, relations between Plaintiffs and Rodgers ultimately fell apart. Plaintiffs allege Rodgers failed to meet his obligations under the Refurbishing Contract Agreement. (Pls.' Mot. 7). The well was eventually filled with concrete and the permit necessary to drill was temporarily lost. (Pls.' Mot. 7). In this lawsuit, Plaintiffs assert claims against George because he failed to accomplish the transfer of the oil and gas lease to them from Rodgers as specified in the Escrow Agreement. (Compl. ¶¶ 56-65). Plaintiffs have moved for summary judgment on those claims.

         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 of stating the basis for the motion and identifying evidence in the record that demonstrates an absence of a genuine dispute of material fact. 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 specific evidence proving the existence of a genuine dispute of fact for trial. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986).

         While the Court must view the evidence in the light most favorable to the non-moving party, the non-moving party must do more than merely show the existence of some “metaphysical doubt as to the material facts.” Matsushita Elec. Indus. Co. v. Zenith Radio Corp.,475 U.S. 574, 586 (1986) (citation omitted). Rather, the non-moving party must present specific facts proving that a genuine factual dispute exists by “citing to particular parts of the materials in the record” or by “showing that the materials cited do not establish the absence . . . of a genuine dispute . . . .” Fed.R.Civ.P. 56(c)(1). “The mere ...


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