850 S.E.2d 695
W. Va.2020Background
- 1959 Milliken Deed conveyed coal and rights to explore, operate, and drill for oil and gas in a 161.53-acre tract to Eli Rabb, reserving a 1/8 royalty. The tract was later subdivided.
- In 2000 Conley purchased a 3.763-acre parcel carved from that tract and in 2014 filed a quiet-title action seeking declaration that the Milliken conveyance did not vest fee-simple oil-and-gas ownership in Rabb (arguing lease/abandonment).
- Rabb had conveyed oil-and-gas interests in 2007–08 (Farmout/assignment) to Trienergy and reserved an overriding royalty conveyed to Trinity Health; Rabb later died and his trust claimed interests.
- SWN moved to intervene in 2016 (denied), leased from Conley in 2017, then filed a second motion to intervene in 2018 (denied by circuit court in 2019); SWN appealed the denial.
- The Supreme Court of Appeals reversed: it held the trial court abused its discretion on timeliness and erred on the three other Rule 24(a)(2) elements — SWN has a direct, substantial, legally protectable interest; disposition may impair SWN’s ability to protect that interest; and SWN’s interests were not adequately represented by Conley.
Issues
| Issue | Plaintiff's Argument (SWN) | Defendant's Argument (Respondents) | Held |
|---|---|---|---|
| Timeliness of intervention | SWN: motion timely given case status (no scheduling order, no trial date, limited discovery) and minimal prejudice | Respondents: SWN delayed and created its interest after suit to manufacture standing; waited ~1.5 years after leasing | Court: Trial court abused discretion; timeliness requires contextual, flexible inquiry (no prejudice shown; SWN may be prejudiced if excluded) |
| Whether SWN has an interest relating to the subject | SWN: its 2017 oil-and-gas lease gives a protectable mineral interest in the Conley parcel and related parcels in the Milliken chain | Respondents: SWN had no interest at filing and cannot create one post-filing to intervene | Court: SWN’s lease is a direct, substantial, legally protectable interest; Rule 24(a)(2) does not require interest to exist at filing |
| Whether disposition may impair SWN’s ability to protect that interest | SWN: judgment on title could extinguish its lease/rights and affect other SWN leases in the Milliken chain | Respondents: No pre-existing interest at filing, so no impairment to protect | Court: Disposition may practically disadvantage SWN (lack of participation at trial would impair rights); balancing favors intervention |
| Adequacy of existing representation (Conley) | SWN: Conley’s interests differ (limited to his parcel and bonus); lacks financial stake/resources and does not represent SWN’s pooling/development interests elsewhere | Respondents: Interests aligned; Conley adequately represents SWN | Court: Representation not adequate — interests similar but distinct; SWN made the minimal showing required to intervene as of right |
Key Cases Cited
- State ex rel. Ball v. Cummings, 208 W. Va. 393, 540 S.E.2d 917 (1999) (articulates four-factor test for intervention as of right under W.Va. R. Civ. P. 24(a)(2))
- Pioneer Co. v. Hutchinson, 159 W. Va. 276, 220 S.E.2d 894 (1975) (timeliness of intervention is within trial court discretion)
- Brumfield v. Dodd, 749 F.3d 339 (5th Cir. 2014) (denial of intervention as of right reviewed de novo)
- Stern v. Chemtall Inc., 217 W. Va. 329, 617 S.E.2d 876 (2005) (permissive intervention reviewed for abuse of discretion)
- Valentine v. Sugar Rock, Inc., 234 W. Va. 526, 766 S.E.2d 785 (2014) (an oil-and-gas lease is a mineral interest; lessee is the owner of the mineral interest during the lease term)
- McCullough Oil, Inc. v. Rezek, 176 W. Va. 638, 346 S.E.2d 788 (1986) (an oil-and-gas lease is a conveyance of an interest in the land)