Acquisition-II, LLP v. EQT Production Co., 830 F.3d 444

Background

In 2001 EQT sold numerous Kentucky oil and gas interests to Journey under a three‑part agreement (PSA, 2001 Lease, Master Assignment) that included lists of properties (Exhibits A) and maps with blue outlines (Exhibit N / A‑1).
Exhibits A (lists) were broader than the blue‑lined maps; EQT operated outside the blue lines after closing, believing the maps defined conveyances; Journey later claimed the lists governed and that EQT had been operating on interests conveyed to Journey.
Journey sued EQT (filed 2012) seeking a declaration of ownership, damages and an accounting for oil/natural gas removed from the disputed tracts (Trespass Wells); EQT asserted defenses including laches, waiver, estoppel, and sought reformation for mutual mistake.
District court held on summary judgment the contract unambiguously conveyed the properties listed on Exhibits A (not limited by the blue lines), so EQT’s drilling on those interests was trespass; jury rejected EQT’s equitable defenses and found trespasses not in good faith.
District court awarded Journey $14,288,432 (including prejudgment interest) and ordered transfer of EQT’s interests in the Trespass Wells to Journey; EQT appealed.

Issues

Issue	Journey's Argument	EQT's Argument	Held
Whether the 2001 Agreement is ambiguous as to which lands were conveyed	Exhibits A (lists) unambiguously describe the conveyed Properties; maps are incidental and do not limit the lists	The blue‑lined maps (Exhibit N / A‑1) limit conveyance; the Further Assurances clause and cross‑document inconsistencies create ambiguity	Agreement unambiguous: Exhibits A control; maps do not limit conveyance; Further Assurances clause does not create a substantive limit
Whether district court erred by considering contra proferentem	Not necessary; court primarily decided contract was unambiguous and only relied on contra proferentem as alternative	Court improperly referenced contra proferentem, influencing interpretation	No reversible error; contra proferentem only used as alternative rationale and did not drive the unambiguous‑contract ruling
Admissibility of EQT testimony about its 2001 intent (Rule 403)	Testimony about EQT’s 2001 intent was highly probative of subjective belief/willfulness and would show trespasses were innocent	Evidence had limited probative value (most trespasses occurred years later), risked jury reinterpreting an unambiguous contract, and was confusing/prejudicial	No abuse of discretion: district court properly excluded testimony under Rule 403; exclusion was not prejudicial given other evidence and events post‑2001 that made any 2001 belief unreasonable
Appropriateness of remedies: prejudgment interest and transfer of wells	Prejudgment interest and transfer are equitable and appropriate given willful trespass and prolonged conduct	Prejudgment interest is rarely awarded in KY on unliquidated claims; transferring wells is punitive and impairs EQT’s retained deep‑drilling rights	Remedies affirmed: prejudgment interest within discretion given bad‑faith finding; transfer of Trespass Wells is equitable (not punitive) and does not impair EQT’s contractual deep‑drilling rights

Key Cases Cited

Frear v. P.T.A. Indus., Inc., 103 S.W.3d 99 (Ky. 2003) (unambiguous written contracts are interpreted by court using plain meaning without extrinsic evidence)
Harrod Concrete & Stone Co. v. Crutcher, 458 S.W.3d 290 (Ky. 2015) (measure of damages for willful mineral trespass is market value at well mouth without offset for extraction costs)
Meridian Leasing, Inc. v. Associated Aviation Underwriters, Inc., 409 F.3d 342 (6th Cir. 2005) (appellate standard: de novo review of contract interpretation)
Swiss Oil Corp. v. Hupp, 69 S.W.2d 1037 (Ky. 1934) (trespasser’s state of mind at time of entry determines innocent vs. willful trespass)
Jacob v. Dripchak, 331 S.W.3d 278 (Ky. Ct. App. 2011) (interpretation of contract is a question of law for the court)