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Tera II, LLC v. Rice Drilling D, LLC

United States District Court, S.D. Ohio, Eastern Division

August 16, 2019

TERA II, LLC, et al., Plaintiffs,
v.
RICE DRILLING D, LLC, et al., Defendants.

          SARAH D. MORRISON JUDGE.

          REPORT AND RECOMMENDATION

          KIMBERLY A. JOLSON UNITED STATES MAGISTRATE JUDGE.

         This matter is before the Court on Plaintiff's Motion to Remand and for Attorney's Fees. (Doc. 25). The Undersigned RECOMMENDS DENYING the Motion.

         I. BACKGROUND

         This lawsuit involves rights under oil and gas leases between Plaintiffs TERA II, LLC, TERA III Honza, LLC, TERA IV, LLC, TERA Watson, LLC, and Thomas Shaw and Defendants Rice Drilling D, LLC (“Rice”), Gulfport Energy Corporation (“Gulfport”), Ascent Resources-Utica, LLC (“Ascent”), Phillips Exploration LLC, (“Phillips”), and XTO Energy, Inc. (“XTO”). The Leases address the rights to develop two oil and gas formations, commonly referred to the Marcellus Shale and Utica Shale.

         A dispute arose regarding the scope of Defendants' drilling rights, and Plaintiffs filed suit in the Belmont County, Ohio, Court of Common Pleas on April 24, 2019. In brief, Plaintiffs seek a judgment declaring the parties' rights under the Leases and seek damages from Defendants for trespass, conversion, and unjust enrichment. Defendant Rice Drilling timely removed the case to federal court, and the other defendants consented to the removal. (Docs. 6, 10.)

         Plaintiffs responded with a motion to remand, arguing that Defendant Rice “waived its right of removal when it agreed [to] a valid forum selection clause in the [Leases].” (Doc. 25 at 1). The forum selection clause provides:

Governing Law and Ohio Courts : This Lease shall be governed in accordance with the laws of the State of Ohio. Any actions or proceedings arising in connection with this Lease or performance thereunder shall be ascertained and determined by the Ohio state court in the county where the Lease is recorded.

(Id.). Relying on this language, Plaintiffs argue that Defendants waived their rights to remove, that “the Court of Common Pleas, Belmont County, Ohio . . . is the state court where the subject lease is recorded, ” and only that court may adjudicate Plaintiff's claims. (See generally Doc. 25). Plaintiffs further assert that are entitled to fees incurred as a result of the improper removal because Defendant Rice “knowingly refuse[d]” to follow the forum selection clause. (Id. at 12).

         Defendants counter that the forum selection clause is not a “clear and unequivocal” waiver of Defendants' removal rights. So, under Sixth Circuit precedent, their right to remove is still intact. (See generally Docs. 38-41). In addition, Defendants XTO, Philips, and Ascent argue that as nonparties to the Leases, they did not waive their removal rights. (Docs. 39-41).

         II. STANDARD

         Under 28 U.S.C. § 1441(a), a defendant may remove a state court action when a federal court would have original jurisdiction over the action. Here, Defendants sought removal on the basis of diversity jurisdiction. (Doc. 1 at 1). “The right of removal of a suit from state court to federal court is a statutory right, ” and if the statutory requirements are met, a defendant is entitled to removal. Regis Assocs. v. Rank Hotels (Mgmt.) Ltd., 894 F.2d 193, 195 (6th Cir. 1990) (citing 28 U.S.C. § 1441)). The statutory right to remove many be waived, but any such waiver must be “clear and unequivocal.” Cadle Co. v. Reiner, Reiner & Bendett, P.C., 307 Fed.Appx. 884, 888 (6th Cir. 2009). In determining what constitutes a “clear and unequivocal” intent to waive a right to remove, the Sixth Circuit has held that “[a] clause that does not even mention either removal or the party seeking to remove cannot be a clear waiver of removal.” Id. (quoting EBI-Detroit, Inc. v. City of Detroit, 279 Fed.Appx. 340, 347 (6th Cir. 2008)). Notably, the Sixth Circuit has set the bar higher than other Circuits have. See, e.g., LaSalle Grp., Inc. v. Tiger Masonry, Inc., No. 10-11328, 2010 U.S. Dist. LEXIS 110071, at *10 (E.D. Mich. Oct. 15, 2010) (comparing standards in the Third and Sixth Circuits).

         III. DISCUSSION

         The question before the Court is whether the Leases' forum selection clause is a “clear and unequivocal” waiver of Defendants' removal rights. Plaintiffs argue that by agreeing that “[a]ny actions or proceedings” concerning the Leases “shall be ascertained and determined by the Ohio state court in the county where the Lease is recorded, ” Defendants waived the right to ...


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