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BTU Western Resources, Inc. v. Berenergy Corporation

United States District Court, D. Wyoming

April 29, 2014

BTU WESTERN RESOURCES, INC.; and SCHOOL CREEK COAL RESOURCES, LLC, Plaintiffs,
v.
BERENERGY CORPORATION; ZAB, INC; DAVEN CORPORATION; ZALMAN RESOURCES, INC; and SPORT RESOURCES, INC., Defendants.

OPINION AND ORDER DENYING DEFENDANTS' MOTIONS TO DISMISS

ALAN B. JOHNSON, District Judge.

This case arises from the dispute between plaintiff federal coal lessees and defendant federal oil and gas lessees. Plaintiffs instituted this action seeking an order allowing them to mine through defendants' oil and gas wellbores. Defendants filed the instant motions to dismiss the action arguing that the United States is a required party who cannot be feasibly joined and that plaintiffs have failed to exhaust administrative remedies. For the following reasons, the Court DENIES defendants' motions.

BACKGROUND

First, the Court assumes all well-pleaded factual allegations are true, as required at this stage of the proceedings. Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009). Plaintiffs BTU Western Resources, Inc. and School Creek Coal Resources, LLC (collectively "Plaintiffs") operate, respectively, the North Antelope Rochelle Mine and School Creek Mine in Wyoming's Powder River Basin. [ECF No. 1 at ¶¶ 1, 2]. Both operate those mines pursuant to federal coal leases. [ Id. ]. Defendants Berenergy Corporation, ZAB, Inc., Daven Corporation, Zalman Resources, Inc., and Sport Resources, Inc. (collectively "Defendants") all own working interests in Federal Oil and Gas Lease WYW-4315 and the wells that are located on that lease. [ Id. at ¶¶ 3-7].

The conflict of this case arises because Plaintiffs' surface mining activity will shortly intersect the wellbore of Defendants' oil and gas wells. [ Id. at ¶¶ 15, 16, 27, 28]. Accordingly, Plaintiffs filed their Complaint asking this Court to determine the relative rights of the parties under the federal coal and oil and gas leases at issue. [ Id. at ¶¶ 37, 39, 40].

Defendants filed motions to dismiss the Complaint arguing that the United States is a required party who cannot be feasibly joined (an "indispensable party") and that Plaintiffs' claim is not ripe for adjudication because they have failed to exhaust their administrative remedies. [ECF Nos. 16, 22, 17]. Plaintiffs responded by arguing that the United States is not an indispensable party and that there are no prescribed administrative remedies that they must exhaust before bringing their claim to court. The Court will begin by analyzing Defendants' indispensable party argument and will then proceed to their administrative exhaustion argument.

DISCUSSION

I. Defendants' Motions to Dismiss for Failure to Join an Indispensable Party

Defendants argue that this case should be dismissed because Plaintiffs have failed to join the United States as a party. Fed. R. Civ. P 12(b)(7) allows for the dismissal of a case if a party fails to join an indispensable party under Fed.R.Civ.P. 19. In order for the Court to dismiss a case pursuant to Rule 12(b)(7), the Court must find that (1) the United States is a "required party" under Rule 19(a), (2) joinder of the United States is not feasible under Rule 19(b), and (3) dismissal is appropriate. Fed.R.Civ.P. 19; Davis ex rel. Davis v. United States, 343 F.3d 1282, 1288-1289 (10th Cir. 2003). Defendants bear the burden of showing that the United States is a required and indispensable party. Citizen Band Potawatomi Indian Tribe of Oklahoma v. Collier, 17 F.3d 1292, 1293 (10th Cir. 1994).

To determine whether the United States is a "required party, " the Court must consider:

(1) whether complete relief would be available to the parties already in the suit,
(2) whether the absent party has an interest related to the suit which as a practical matter would be impaired, and (3) whether a party already in the suit would be subjected to a substantial risk of multiple or inconsistent obligations.

Rishell v. Jane Phillips Episcopal Mem'l Med. Ctr., 94 F.3d 1407, 1411 (10th Cir. 1996).

First, the Court must consider whether complete relief is available to the current parties. In the instant case, Plaintiffs seek declaratory and injunctive relief. They ask this Court to declare that: (1) their and Defendants' mineral interests are governed by the Accommodation Doctrine, (2) they may mine through the area of the current wellbores, and (3) the wells must be plugged below the coal seam. Plaintiffs further ask this Court to enjoin the Defendants from further interference with Plaintiffs' coal mining operations. Thus, Plaintiffs do not seek any form of relief against the United States, and the Court, in equity, will be able to offer complete relief to all parties that are already in the suit. See Utilities Production Corp. v. Carter Oil Co., 72 F.2d 655 (10th Cir. 1934) (Circuit court affirmed a district court decree which resolved a dispute between a gas lessee and an oil lessee in which the sovereign lessor, the Osage Tribe, was not a party); cf. Texas Co. v. Wall, 107 F.2d 45 (7th Cir. 1939) ("when a plaintiff-lessee is seeking merely to ...


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