Rubin Resources v. Garold "Gary" W. Morris, II
237 W. Va. 370
| W. Va. | 2016Background
- Rubin Resources hired attorney Garold “Gary” Morris in 2000 to perform a title examination and issue a title opinion for a 120‑acre oil and gas leasehold it contracted to buy from WVE; the contract allowed Rubin to require WVE to cure any title defects or substitute acceptable property.
- Morris failed to disclose a recorded 1986 declaration of pooling (affecting the 120‑acre tract) in his title opinion; Rubin did not exercise its substitution remedy and drilled a producing well on the tract, investing about $200,000 and receiving over $270,000 in production income.
- In 2012 Antero offered Rubin $216,000 plus royalties to buy Rubin’s Marcellus Shale rights, but Antero’s title exam revealed CNX’s prior pooling/production holding the lease by production; the Antero deal was cancelled.
- CNX (successor to CNG) asserted claims against Rubin for producing without title; Rubin settled with CNX in 2013 for $32,455 and assigned a wellbore interest to CNX; Rubin then sued Morris for legal malpractice seeking $278,455 (CNX settlement + lost Antero proceeds).
- The Lewis County Circuit Court granted summary judgment for Morris, finding Rubin could have acquired title by adverse possession and that Rubin’s settlement/mitigation choices barred proximate‑cause recovery; the West Virginia Supreme Court reversed, entering summary judgment for Rubin for $278,455.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Rubin proved proximate cause between Morris’s negligent title opinion and Rubin’s CNX settlement costs | Rubin: Morris’s omission caused Rubin to drill and be exposed; settlement was reasonable mitigation and damages flowed naturally from the negligence | Morris: Rubin could have asserted adverse possession or otherwise avoided liability; failure to mitigate breaks proximate causation | Court: Morris’s negligence proximately caused CNX settlement costs; Rubin reasonably mitigated and settlement was recoverable |
| Whether Rubin proved proximate cause for lost profits from the cancelled Antero deal | Rubin: But for Morris’s failure to disclose pooling, Rubin would have invoked substitution or had the title defect cured and realized Antero’s offer | Morris: Rubin’s failure to acquire Marcellus rights was not Morris’s fault; recovery of lost profits is speculative | Court: Rubin established lost profits with reasonable certainty and but‑for causation; Antero damages recoverable |
| Applicability of Keister (limits on recovering value of minerals) | Rubin: Keister is distinguishable—here Rubin lost a contractual remedy (substitution) and an actual offer, not merely the opportunity to rescind | Morris: Keister bars recovery because Rubin didn’t and couldn’t acquire Marcellus rights independent of the lawyer’s negligence | Court: Keister is distinguishable; recovery is allowed where lawyer’s negligence deprived plaintiff of contractual rights and a concrete offer |
| Burden and scope of mitigation in legal malpractice | Rubin: Took reasonable steps—settled to avoid larger exposure and litigation costs; not required to pursue unlikely or costly litigation | Morris: Rubin had the option to litigate adverse possession and thus failed to mitigate | Held: Plaintiffs have a duty to mitigate but need only take reasonable, practicable steps; Rubin’s settlement was reasonable mitigation |
Key Cases Cited
- Painter v. Peavy, 192 W.Va. 189 (1994) (summary judgment reviewed de novo)
- Calvert v. Scharf, 217 W.Va. 684 (2005) (elements of attorney‑negligence claim and requirement to prove proximate cause)
- Keister v. Talbott, 182 W.Va. 745 (1990) (damages in legal malpractice must be proven and causally connected to attorney negligence)
- Humphries v. Detch, 227 W.Va. 627 (2011) (restating negligence elements against attorneys)
- Viner v. Sweet, 70 P.3d 1046 (Cal. 2003) (transactional vs. litigation malpractice causation framework)