United States District Court, S.D. Ohio, Eastern Division
JEFFREY T. BOND, Plaintiff,
ANTERO RESOURCES CORPORATION, et al., Defendants.
OPINION AND ORDER
KIMBERLY A. JOLSON UNITED STATES MAGISTRATE JUDGE.
matter, in which the parties have consented to the
jurisdiction of the Magistrate Judge pursuant to 28 U.S.C.
§ 636(c) (Docs. 16, 22), is before the Court on a
Partial Motion to Dismiss filed by Defendant Antero Resources
Corporation pursuant to Rule 12(b)(6) of the Federal Rules of
Civil Procedure. (Doc. 47). For the reasons that follow,
Defendant's Partial Motion to Dismiss is
putative class action was brought by mineral rights owners on
behalf of three subclasses of Plaintiffs who have entered
into leases with Defendant for the production of oil and gas.
Relevant here, Plaintiffs allege in Count Four of the Second
Amended Class Action Complaint that Defendant breached the
leases by improperly deducting natural gas transportation
charges from their royalty payments. (Doc. 45 at ¶¶
80-85). Defendant has moved to dismiss that portion of Count
Four. (Doc. 47 at 1-2). Plaintiffs filed an Opposition (Doc.
51), and Defendant filed a Reply (Doc. 54). Thus, the Partial
Motion to Dismiss is now ripe for resolution.
STANDARD OF REVIEW
Rule of Civil Procedure 12(b)(6) requires that a complaint
“state a claim to relief that is plausible on its
face” to survive a motion to dismiss. Ashcroft v.
Iqbal, 556 U.S. 662, 663-64, 678 (2009); Bell
Atlantic Corp v. Twombly, 550 U.S. 544, 570 (2007). In
reviewing the complaint, a court must construe it in favor of
the plaintiff and accept all well-pleaded factual allegations
as true. Twombly, 550 U.S. at 57. “A claim has
facial plausibility when the plaintiff pleads factual
content that allows the court to draw the reasonable
inference that the defendant is liable for the misconduct
alleged.” Iqbal, 556 U.S. at 678 (emphasis
added) (citing Twombly, 550 U.S. at 556).
other hand, a complaint that consists of “labels and
conclusions” or “a formulaic recitation of the
elements of a cause of action” is insufficient.
Twombly, 550 U.S. at 555; see also Brown v.
Matauszak, 415 Fed.Appx. 608, 613 (6th Cir. 2011)
(Plaintiff must give specific, well-pleaded facts, not just
conclusory allegations). In other words, while
“detailed factual allegations” are not required
under Fed.R.Civ.P. 8(a)(2)'s “short and plain
statement” rule, the law “demands more than an
accusation.” Iqbal, 556 U.S. at 677-78,
quoting Twombly, 550 U.S. at 555 (citing to
Papasan v. Allain, 478 U.S. 265, 286 (1986)).
well established that the substantive law of the forum state
applies to matters before the court pursuant to its diversity
jurisdiction. See Davis v. Sears, Roebuck and Co.,
873 F.2d 888, 892 (6th Cir. 1989). “Under Ohio law, an
oil and gas lease is a contract subject to the traditional
rules of construction.” Lutz v. Chesapeake
Appalachia, L.L.C., 71 N.E.3d 1010, 1011 (Ohio 2016).
The Sixth Circuit has succinctly explained Ohio's rules
Under Ohio law, “[w]hen confronted with an issue of
contract interpretation, [a court's] role is to give
effect to the intent of the parties.” Sunoco, Inc.
(R&M) v. Toledo Edison Co., 129 Ohio St.3d 397, 953
N.E.2d 285, 292 (2011). To that end, courts should examine
the contract as a whole and presume that the intent of the
parties is reflected in the language of the contract. In
addition, [courts should] look to the plain and ordinary
meaning of the language used in the contract unless another
meaning is clearly apparent from the contents of the
agreement. When the language of a written contract is clear,
a court may look no further than the writing itself to find
the intent of the parties. Id. Courts may examine
extrinsic evidence to ascertain the parties' intent only
if the contract is ambiguous. Shifrin v. Forest City
Enters., 64 Ohio St.3d 635, 597 N.E.2d 499, 501 (1992).
Eastham v. Chesapeake Appalachia, L.L.C.,
754 F.3d 356, 361 (6th Cir. 2014). Contract language is
ambiguous if it cannot be assigned a “definite legal
meaning.” Id. Or, put another way, a contract
provision is ambiguous if it is amenable to “more than
one reasonable interpretation.” Id. (citing
Lager v. Miller-Gonzalez 896 N.E.2d 666, 669 (Ohio
2008)). The Ohio Supreme Court has explained that
“[o]nly when a definitive meaning proves elusive should
rules for construing ambiguous language be employed.
Otherwise, allegations of ambiguity become
self-fulfilling.” Id. (citing State v.
Porterfield, 829 N.E.2d 690, 692-93 (Ohio 2005)).
Defendant contends that “[a]ll of the identified leases
and their respective Market Enhancement clauses specifically
and unambiguously authorize the transportation charges
Plaintiffs challenge” because they resulted in an
increase in the value of the product. (Doc. 47 at 3). Three
lease provisions are relevant to this argument:
Market Enhancement clause for Sub-Class
Market Enhancement Clause. It is agreed between the
Lessor and Lessee that, notwithstanding any language
contained in A) and B) above, to the contrary, all royalties
or other proceeds accruing to the Lessor under this lease or
by state law shall be without deduction directly or
indirectly, for the cost of producing, gathering, storing,
separating, treating, dehydrating, compressing, processing,
transporting, and marketing the oil, gas and other products
produced hereunder to transform the product into marketable
form; however, any such costs which result in enhancing
the value of the marketable oil, gas or other products to
receive a better price may be proportionally deducted from
Lessor's share of production so long as they ...