govinfo:USCOURTS-wvnd-5_22-cv-00035-0

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF WEST VIRGINIA
Wheeling
JOHN LEONETTI,
Plaintiff,
v. CIV. ACT. NO. 5:22-CV-35
Judge Bailey
SWN PRODUCTION COMPANY,
and EQUINOR USA ONSHORE
PROPERTIES INC.,
Defendants.
ORDER
Pending before this Court is Defendants’Motion for Partial Dismissal [Doc. 129] and
Memorandum in Support [Doc. 1301, filed May 27, 2026, in which defendants seek
dismissal of plaintiff’sclaims for fraud, conversion, and declaratory judgment as asserted
within the Amended Complaint. On June 9,2026, plaintiff filed his Response. [Doc. 138].
On June 16, 2026, defendants filed their Reply. [Doc. 145]. The Motion is now ripe for
adjudication. For the reasons that follow, the Motion will be GRANTED IN PART and
DENIED IN PART.
BACKGROUND
This case arises out of a dispute over royalty payments made pursuant to a certain
oil and gas lease held by plaintiff (hereinafter, the “Subject Lease”). Defendants are the
successors-in-interest to the original lessee. Plaintiff’sAmended Complaint, filed under
seal, generally alleges that defendants have breached said lease “through the retention
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and deduction of post-production costs from the royalty share and in their failure to
properly and accurately account for the total volumes and sales records for all of the ‘oil,
gas and constituents thereof’produced from the Leonetti property, as well as its failure to
pay the appropriate market values under the lease.” [DoG. 199 at ¶ 35].
This Court recently granted plaintiff leave to amend his Complaint in order to assert
his claim for fraud with more particularity and to conform his pleading to the evidence
produced in discovery. See [Doc. 1181. Specifically, the Amended Complaint includes new
allegations concerning affiliate sales agreements that defendants allegedly utilized to
disguise and conceal post-production costs which plaintiff contends were wrongfully taken
from his royalty share. See e.g., [Doc. 199 at ¶~f 22—24 (SEALED)]. In other words,
plaintiff asserts that the monies received by defendants from the sale of the oil, gas, and
constituents to defendants’ affiliates would account for certain midstream expenses
incurred by these affiliates in bringing the oil and gas to market, but these deducted costs
would ultimately not show up. on plaintiff’sroyalty statements. [Id. at ¶ 23]. In plaintiff’s
words:
23. Previously unknown and undisclosed to the Plaintiff, discovery in this
case has revealed that Defendants ... have entered into affiliate sales
agreements which expressly provide for their affiliates to buy oil, natural gas
and constitutents, including NGLs1 from the Defendants at a price that
provides for the express or implicit deductions of post production
costs, including, but not limited to, such costs or volumes charged by
1”NGLs”stands for “Natural Gas Liquids.”
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the affiliates andlor third-party midstream “partners”... in processing
and transporting the oil, gas or its constituents and in separating the NGLs
from the wet gas. The affiliate sales agreements and related documents
either expressly allow for these deductions of post-production costs or
include such costs under the name of marketing costs, marketing fees,
or administrative fees.
***
24. Consistent with such affiliate sales agreements, discovery has revealed
that the oil, gas, and NGLs produced and allocated to the Leonetti Wells
incur allocated post-production costs in the form of volumetric reductions and
fees. Certain fees are standalone charges and other fees are embedded as
reductions to or netted against the gross price for oil, gas, or NGL5. Other
than small NEGFLU addbacks, the field fuel use, plant fuel use, gas
transportation fuel, gas pipeline transportation capacity demand fees, gas
pipeline commodity fees and NGL fractionation and rail transportation fees
are not disclosed on the Plaintiffs monthly revenue statements.
[Id. at ¶~J 23—24 (emphasis added)].
Essentially, therefore, the Amended Complaint alleges that defendants have
wrongfully deducted post-production costs from plaintiff’s earnings and wrongfully
calculated his royalty share by utilizing third-party sales that are not true arms-length
transactions; accordingly, the proportionate share of proceeds received by plaintiff are not
reflective of the actual market price of the oil and gas products. [Id.]. While the Amended
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Complaint does not specifically delineate the causes of action it asserts, plaintiff appears
to assert claims for (1) breach of contract; (2) fraud/fraudulent concealment;
(3) conversion; (4) declaratory judgment; and (5) punitive damages. See [id. at ¶~J 34, 38,
40—41, 45, 49, 52].
Defendants now bring the instant Motion seeking to dismiss plaintiff’sclaims for
fraud, conversion, declaratory judgment, and punitive damages for failure to state a claim
upon which relief can be granted. [Doc. 129 at 1]; see also Fed. R. Civ. P. 12(b)(6).
More specifically, defendants first contend that plaintiff’sclaims for fraud and conversion
are barred under West Virginia’s“gist of the action” doctrine, which generally precludes
parties from asserting tort claims which are duplicative of a breach of contract claim.
[Doc. 130 at 1—2]. Next, defendants assert that plaintiff’sdeclaratory judgment claim is an
“impropertack-on claim” and should be dismissed as this claim is based upon the same
conduct which underlies plaintiff’sbreach of contract claim. [Id. at 2]. Third and finally,
defendants argue that, because plaintiff’stort claims are barred by the gist of the action
doctrine, then, by extension, plaintiff is barred from asserting a claim for punitive damages
because this type of damages is generally not recoverable in an action for breach of
contract. [Id.].
STANDARD OF REVIEW
A complaint must be dismissed if it does not allege “enoughfacts to state a claim
to relief that is plausible on its face.” Bell At!. Corp. v. Twombly, 550 u.s. 544, 570
(2007); see also Giarratano v. Johnson, 521 F.3d 298, 302 (4th Cir. 2008) (applying the
Twombly standard and emphasizing the necessity of plausibility). When reviewing a
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motion to dismiss pursuant to Rule I 2(b)(6) of the Federal Rules of Civil Procedure, the
Court must assume all of the allegations to be true, must resolve all doubts and inferences
in favor of the plaintiff, and must view the allegations in a light most favorable to the
plaintiff. Edwards v. City of Goldsboro, 178 F.3d 231, 243—44 (4th Cir. 1999).
When rendering its decision, the Court should consider only the allegations
contained in the Complaint, the exhibits to the Complaint, matters of public record, and
other similar materials that are subject to judicial notice. Anheuser-Busch, Inc.
v. Schmoke, 63 F.3d 1305, 1312 (4th Cir. 1995) (cert. granted, Anheuser-Busch, Inc.
v. Schmoke, 517 U.S. 1206 (1996)). In Twombly, the Supreme Court noted that “a
plaintiff’sobligation to provide the ‘grounds’of his ‘entitle[ment]to relief’requires more than
labels and conclusions, and a formulaic recitation of the elements of a cause of action will
not do. . .“ Twombly, 550 U.S. at 555, 570 (upholding the dismissal of a complaint where
the plaintiffs did not “nudge[} their claims across the line from conceivable to plausible.”).
This Court is well aware that “[m]atters outside of the pleadings are generally not
considered in ruling on a Rule 12 motion.” Williams v. Branker, 462 Fed.App’x.348, 352
(4th Cir. 2012). “Ordinarily, a court may not consider any documents that are outside of
the Complaint, or not expressly incorporated therein, unless the motion is converted into
one for summary judgment.” Witthohn V. Fed. Ins. Co., 164 Fed.App’x. 395, 396
(4th Cir. 2006). However, the Court may rely on extrinsic evidence if the documents are
central to a plaintiff’sclaim or are sufficiently referred to in the Complaint. Id. at 396—97.
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DISCUSSION
I. Plaintiff’stort claims are not barred by the gist of the action doctrine because
plaintiff alleges independent conduct that is violative of defendants’broader
social duty to plaintiff.
The West Virginia Supreme Court of Appeals (“WVSCA”)has articulated the gist
of the action doctrine as follows:
In seeking to prevent the recasting of a contract claim as a tort claim, courts
often apply the “gistof the action” doctrine. Under this doctrine, recovery in
tort will be barred when any of the following factors is demonstrated:
(1) where liability arises solely from the contractual relationship between the
parties; (2) when the alleged duties breached were grounded in the contract
itself; (3) where any liability stems from the contract; and (4) when the tort
claim essentially duplicates the breach of contract claim or where the
success of the tort claim is dependent on the success of the breach of
contract claim.
GaddyEng’gCo. v. Bowles Rice McDavid Graft& Love, LLP, 231 W.Va. 577~586, 746
S.E.2d 568, 577 (2013) (internal block quotation and citations omitted). Accordingly,”[a]n
action in tort will not arise for breach of contract unless the action in tort would arise
independent of the existence of the contract.” Syl. Pt. 9, in part, Lockhart v. Airco
Heating & Cooling, Inc., 211 W.Va. 609, 611, 567 S.E.2d 619, 621 (2002). In other
words, to assertatort claim in conjunction with a breach of contract claim, the plaintiff must
establish that the defendant owed the plaintiff a duty arising independently of their
contractual relationship. See id. “Succinctlystated, whether a tort claim can coexist with
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a contract claim is determined by examining whether the parties’obligations are defined
by the terms of the contract.” Gaddy, 231 W.Va. 577, 746 S.E.2d at 577.
In support of their argument for dismissal, defendants cite multiple prior decisions
from this Court which have struck fraud or conversion claims in royalty dispute cases
because the alleged fraud (i.e., concealment and underpayment of royalties) arises from
the contractual relationship, not an independent duty. See [Doc. 130 at 8 (citing Southern
Country Farms, Inc. V. TH Exploration, LLC, 2021 WL 5147989 (N.D. W.Va. Nov. 4,
2021)(Bailey, J.); Mills Wetzel Lands, Inc. v. EQTProd. Co., 2019 WL 286748, at*4_5
(N.D. W.Va. Jan. 22, 2019) (Stamp, Jr., J.); Corderv. Antero Res. Corp. (“Corderf’),322
F.Supp.3d 710, 723 (N.D. W. Va. 2018) (Keeley, J.); Young v. SWN Production
Company, et al., No. 5:17-CV-82, (N.D. W.Va. Feb. 12, 2025) (Bailey, J.))]. As
defendants argue, “[b]ecause a finding of breach of contract is necessary to a finding of
fraud, Plaintiff’sfraud claims are clearly dependent on Plaintiff’sbreach of contract claims
and barred by the gist of the action doctrine.” [Doc. 130 at 101. In further support of their
arguments, defendants attach this Court’s prior decision in Young, wherein the
undersigned dismissed the plaintiff’stort claims as barred under the gist of the action
doctrine. See [Doc. 130-1, Ex. 1].
In Response, plaintiff contends that the doctrine is not a bar to his tort claims
because his “fraud claims are not based merely upon the Defendants’ breach of the
contractual obligations under the lease and addendum, but rather Defendants’ actions
omissions, and statements breach social duties and form the elements of separate torts
insofar as the Defendants sought through fraudulent representations and concealments
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to hide that they were taking any deductions for post-production costs from Plaintiff’s
royalty[.]” [Doc. 138 at 8—9]. In other words, plaintiff asserts that the defendants breached
independent duties owed to him by making misrepresentations to plaintiff in his monthly
royalty statements that no deductions were being taken, and by taking steps to conceal this
fact from plaintiff. See [id.]. As additional support for his argument, plaintiff points out that
“thevast majority of fraud claims, if not all, arise from and surround business transactions
in which the parties enter into written or verbal contractual agreements and involve a
party’stortious activity surrounding its performance or failure to perform its contractual
duties.” [Id. at 9] In plaintiffs view, therefore, defendant’sview of the gist of the action
doctrine is overbroad and would barthe assertion of many, if not all, claims forfraud and/or
fraudulent concealment. [Id.]. To sum up plaintiff’s argument: “Simply stated, the
Defendants have not merely breached the lease by mistakenly misinterpreting it and taking
deductions for post-production costs that are not permitted underthe lease pursuantto the
law of West Virginia ... Rather, Defendants through fraudulent misrepresentations and
concealment have attempted to hide that they are and have been taking anydeductions for
post-production costs from the Plaintiff’sroyalties.” [Id. (citation omitted)].
Here, it bears noting that this is not this Court’s“firstrodeo”on the issue presented
on this case:
[T]his Court has previously found that a fraud claim related to
misrepresentations about the royalties owed under the oil and gas lease are
barred by the gist of the action doctrine. See Corder v. Antero Resources
Corporation, 322 F.Supp.3d 710, 723 (N.D. W.Va. 2018) (Keeley, J.)
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[(‘Corder1’)]. In Corder, the complaint alleged claims for, among others,
breach of contract related to an oil and gas leases and fraud. The fraud
allegations concerned alleged misrepresentations about defendants right to
take deductions from plaintiffs’royalty, reducing plaintiffs’royalty payments,
misrepresenting the volume taken from plaintiffs’property, overcharging for
services, claiming plaintiffs’royalty due was less than the amount actually
due, and failing to report to plaintiffs that they were extracting and selling
liquids from plaintiffs’ natural gas. Id. at 721. The Court found that the
alleged fraud arose solely from the contractual relationship created by the oil
and gas leases and was thus barred by the gist of the action doctrine. Id. at
723.
The Court finds that the same analysis applies here. Plaintiff has asserted
a claim for misrepresentation, alleging that defendants misrepresented (1)
“thatthe sale prices reflected in its royalty statements were the true market
value of the oil, gas, and associated products;”(2) the volume of oil and gas
produced under the lease; (3)the costs charged before calculating royalties;
(4) the monetary reductions in royalty proceeds; (5) that the sale of the
products was to a true third-party in an arms-length transaction; and (6) other
unspecified misrepresentations. [Doc. I at 20]. As in Corder, the alleged
fraud arises solely from the contractual relationship created by the lease and,
as such, this claim should be dismissed.
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Insofar as Count Ill of the Complaint asserts a claim for conversion, it is
likewise barred by the gist of the action doctrine. Plaintiff alleges that
defendants are liable under a theory of conversion because they have taken
oil and gas and related products from plaintiff for their own purposes and
without consent or payment. [Doc. 1 at 21]. This claim is entirely dependent
on the success of the breach of contract claim because it is based on
defendants failure to pay the proper amounts under the lease. This Court
has previously found that the gist of the action doctrine applies to a
conversion claim when the alleged conversion is based on failure to pay the
proper amount under the oil and gas lease. Rodgers v. Southwestern
Energy Company, No. 5:16-CV-54, 2016 WL 3248437, at *3 (N.D. W.Va.
June 13, 2016) (Bailey, J.). Accordingly, the conversion claim should be
dismissed.
S. Country Farms, Inc. v. Th Expi., LLC, 2021 WL 5147989, at *2_3 (N.D. W.Va. Nov. 4,
2021) (Bailey, J.).
In contrast to the holdings outlined above, plaintiff cites (3) cases in which the
undersigned found that tort claims were not barred by the gist of the action doctrine in an
oil and gas case: (1) Hopper V. Jay-Bee Oil & Gas, Inc., 2022 WL 19403557 (N.D. W.Va.
Dec. 5, 2022) (Bailey, J.); (2) Kay Co., LLC v. EQTPr0d. Co., 2018 WL 11411389 (N.D.
W.Va. Nov. 1,2018) (Bailey, J.); and (3) Yoho v. Sw. Energy Co., 688 F.Supp.3d 345
(N.D. W.Va. 2023) (Bailey, J.).2
2Plaintiff also cites Glover v. EQT Corp., 2023 WL 5333798 (N.D. W.Va. Aug. 1,
2023) (Bailey, J.), which is discussed infra.
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After consideration of the multitude of cases cited by both parties, this Court holds
that plaintiffs tort claims should be permitted to go forward. This Court also believes that
its decision in Young is sufficiently distinguishable by its unique procedural posture and
the lease language involved. In this Court’sown independent research, the only on-point
appellate decision that it could find is Corder v. Antero Res. Corp., in which the Fourth
Circuit, in dicta, observed in a footnote that the district court’sdismissal of the plaintiff’s
fraud claim based on the gist of the action doctrine was “well supported.” Corder v.
Antero Res. Corp., 57 F.4th 384, 404 (4th Cir. 2023) (“CorderII’).
However, this Court has previously discussed its view of Corder I! and some of the
other cases at the district court level in this District:
As noted by EQT, this Court has previously held that the gist of the action
doctrine does, in fact, bar fraud claims alleging various misrepresentations
or omissions regarding royalties owed under oil and gas leases. Southern
Country Farms, Inc. v. TH ExpI., LLC, 2021 WL 5147989, at *2_3 (N.D.
W.Va. 2021)(Bailey, J.).
EQT also relies on Corder! and the Fourth Circuit’sconfirmation that the
Corder! ruling was “well-supported.”Corderv. Antero Res. Corp., 57 F.4th
384, 404 fn.12 (4th Cir. 2023 (hereinafter “Corder !f’). EQT somewhat
inflates the importance that the “gistof the action” doctrine had in Corder!!.
The only time “gist of the action” doctrine is discussed in Corder!! is in
Footnote 12.
Footnote 12 states:
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The district court also held that Lessors’fraud claim was barred by
West Virginia’s “gist of the action” doctrine, which requires that
alleged fraud be independent of a contractual relationship. See
Gaddy Eng’gCo. v. Bowles Rice McDavid Graff & Love, LLP,
231 W.Va. 577, 746 S.E.2d 568, 577(201 3) (explaining that the “gist
of the action” doctrine bars tort actions where “the alleged duties
breached were grounded in the contract itself”). Because Lessors
failed to plead fraud with particularity, we do not need to
resolve that question. At any rate, the district court’sanalysis
seems well-supported. In the Second Amended Complaint,
Lessors identified only one specific duty that was not grounded in
the contract: the “dutyto account for” the volume and sales of gas
extracted from Lessors’properties. J.A. 757. Lessors do not cite any
authority, either from West Virginia or other jurisdictions, that clearly
identifies a non-contractual duty to account. See Swearingen v.
Steers, 49 W.Va. 312,38 S.E. 510, 511 (1901)(describing a “duty
to keep and render a strict account of the output [of mining
operations],” but in a case where the litigants were parties to a
contractual agreement).
This footnote makes clear that the analysis Judge Keeley utilized is
“well-supported.”However, the Fourth Circuit did not resolve the “gistof
the action”doctrine question in Corder II.
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Based upon the evidence established in this case and the same legal
reasoning discussed in Corderl, plaintiffs’claims offraudulent conduct
constitute independent torts which are fully actionable under the laws
of West Virginia, in addition to plaintiffs’claims for breach of contract.
Glover, 2023 WL 5333798, at *4_5 (emphasis added). Accordingly, permitting plaintiff’s
tort claims to proceed in this case is in line with this Court’srationale expressed in Glover.
With regard to this Court’s holding in Young, a critical distinction is that the
sufficiency of the royalty language in Young was appealed to the Fourth Circuit, who then
held that it satisfied Weilman and Tawney and therefore permitted the deduction of
post-production costs. Young v. Equinor USA Onshore Props., Inc., 982 F.3d 201, 203
(4th Cir. 2020). Accordingly, the remaining issue following that appeal was simply whether
the deductions taken by the defendants were actually incurred and reasonable.
See [5:17-CV-82, Doc. 194 at 4].
Accordingly, when this Court issued its subsequent Order holding that the Youngs’
tort claims were barred by the gist of the action doctrine, this Court was necessarily bound
by the Fourth Circuit’s holding that the Young Lease was legally sufficient to permit
deductions. See Young, 982 F.3d 201, 209 (4th Cir. 2020) (“In sum, we are satisfied that
the lease suffices under Tawney to indicate the method for calculating the amount of
post-production costs to be deducted when calculating the Youngs’royalties.”). It would
therefore make little sense to allow plaintiffs’tort claims to go forward where the lessorwas
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expressly permitted by the lease to take deductions—the only relevant questions were
which ones and how much.
In their Reply, defendants attempt to analogize the instant case to Young with
particular emphasis on the fact that Young “involved the same defendants, the same
affiliate sales contracts, and the same fraud allegations penned by the same plaintiff’s
counsel” as in this case. [DoG. 145 at 7 (emphasis removed)].
This Court finds this line of reasoning unpersuasive. In highlighting the similarities
between this case and Young, defendants overlook a critical difference between that case
and this one: the lease itself. Importantly, the Young lease specifically contemplated sales
to affiliates. [5:17-CV-82, Doc. 206 at 11]; see also [Doc. 145-1, Ex.1, atl[8 (reproducing
Young lease language, including definition of “postproduction costs”)]. Accordingly, the
same theory of liability for fraud alleged in this case would not apply in Young, as the
Young plaintiffs were, by virtue of their lease, aware that their oil and gas may be sold to
affiliated parties.
This Court also finds compelling the plaintiff’sargument that “the vast majority of
fraud claims, if not all, arise from and surround business transactions in which the parties
enter into written or verbal contractual agreements and involve a party’stortious activity
surrounding its performance or failure to perform its contractual duties.” [DoG. 138 at 9].
Nor is this a novel concept in relevant jurisprudence. See Bruno v. Erie Ins. Co., 630 Pa.
79, 103, 106 A.3d 48, 63, 68 (2014) (“merely because a cause of action between two
parties to a contract is based on the actions of the defendant undertaken while performing
his contractual duties, this fact, alone, does not automatically characterize the action as
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one for breach of contract ... If, however, the facts establish that the claim involves the
defendant’sviolation of a broader social duty owed to all individuals, which is imposed by
the law of torts and, hence, exists regardless of the contract, then it must be regarded as
a tort ....“);see also Good v. Am. Water Works Co., Inc., 2016 WL 5441035, at *8 (S.D.
W.Va. Sept. 27, 2016) (Copenhaver, Jr., J.) (“In sum, when duties and standards of care
not ordinarily required by tort law are created by contract, the action must be on contract.
When ‘abroader social duty’owed to all individuals is involved, however, the highest courts
in Pennsylvania and West Virginia agree that a cause of action in tort may be preserved.”).
Business partners, and certainly parties to an oil and gas lease agreement, have a
broader social duty to be not just accurate, but also honest in their business dealings.
While accuracy and honesty are similar concepts, they are not the same. A business party
can be inaccurate in its dealings while still being honest. It is the alleged violation of this
duty that controls in the circumstances of this case. See [Doc. 138 at 18 (“Clearly, the
broader social concerns involved in the torts seeking to protect people from fraudulent
misrepresentations and concealments are involved in the actions of the Defendants at
issue in this case.” (citing out of jurisdiction cases))].
Make no mistake; this Court is not attempting to make new law today. The gist of
the action doctrine still has a place in prospective contract/tort actions—including oil and
gas royalty cases. In that vein, this Order should not be read to imply this Court will give
a threadbare assertion of fraud (or other torts for that matter) a free pass to the discovery
stage simply because the complaint asserts a breach of contract claim along with it. As
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the case law cited above makes clear, the tortious conduct must be truly independent of
the contractual relationship in order to survive dismissal.
The above said, however, overly-strict application of the gist of the action doctrine
would foster an environment where ill-intentioned parties could avoid the enhanced liability
exposure of tort actions merely by virtue of the existence of a contract between them and
the prospective plaintiff. Where, as here, the plaintiff alleges that the defendants
fraudulently concealed the deduction of post-production costs by submitting ostensibly
accurate royalty statements and baked deductions into the royalty calculation via third-party
affiliate sales, this Court finds that dismissing plaintiff’sclaims simply because the parties’
relationship originated in contract would be inappropriate. See [Doc. 119 at ¶~[ 22—23
(SEALED)]. Yes, the defendants’obligation to pay plaintiff accurate royalties does arise
by virtue of the Subject Lease, but the conduct alleged by plaintiff alleges implicates duties
that would not arise due to, for example, a mere accounting error.
Ultimately, this Court finds that allowing the gist of the action doctrine to bar
plaintiff’s claims under these circumstances would essentially allow shady business
characters to defraud the parties with which they contract with impunity. Moreover, even
when these parties are called out for their malfeasance, the only consequence would be,
at most, a court ordering them to return the funds they had no right to in the first place.
This leaves the plaintiff with no other remedy to make him truly whole, nor would it
incentivize non-parties to do business honestly. As this Court has previously articulated,
heavy-handed application of the gist of the action doctrine would essentially give
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contracting parties a “license to steal.” See Kay, 2018 WL 11411389, at *6 (quoting
Grynberg v. Citation Oil and Gas Corp., 573 N.W.2d 493, 500—503 (S.Dak. 1997)).
At bottom, the mere fact that the parties in this case have a contract with each other
should not, as a blanket rule, preclude liability for fraud or conversion where defendants
are alleged to be cheating plaintiff out of royalty payments to which he is entitled and taking
convoluted steps to hide that fact. To limit plaintiff solely to contractual damages would run
the risk of leaving him without a remedy capable of making him truly whole.3
Accordingly, defendants’ Motion is DENIED to the extent that it seeks to dismiss
plaintiff’sclaims for fraud and conversion based on the gist of the action doctrine.
II. Plaintiff’s declaratory judgment claim fails to state a claim because it is
duplicative of his breach of contract claim.
In Young, this Court previously addressed the issue of a duplicative declaratory
judgment claim:
“The Declaratory Judgment Act, 28 U.S.C. § 2201, creates a remedy, not a
substantive cause of action: Its operation ‘is procedural only. Congress
enlarged the range of remedies available in the federal courts but did not
extend their jurisdiction.” Goodno v. Antero Res. Corp., 2020 WL
13094067, at *3 (N.D. W.Va. 2020) (Bailey, J.) (citing Skelly Oil Co. V.
Phillips Petroleum Co., 339 U.S. 667, 671 (1950)). “Its purpose is to allow
‘prospectivedefendants to sue to establish their nonliability,’ not create a
3This Order should be read to opine as to the legal sufficiency of plaintiff’s
allegations only. The issue of the sufficiency of the Subject Lease’slanguage to permit
deductions is reserved for another day, and this Court expresses no opinion as to the
actual merit or likelihood of success of plaintiff’sclaims.
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substantive tack-on claim for an already-existing plaintiff who is adjudicating
an already-live issue.” Id. (citing Beacon Theatres, Inc. v. Westover, 359
U.s. 500, 504 (1959)).
“When declaratory relief would be duplicative of claims already
alleged, dismissal is warranted.” Chevron U.S.A. Inc. v.Apex Oil Co., Inc.,
113 F.Supp.3d 807, 824 (D. Md. 2015) (Motz, J.) (citation omitted). A claim
for declaratory relief is duplicative “wherethe same conduct underlies claims
for declaratory judgment and breach of contract[.]” Geist v. Hispanic Info.
& Telecomms. Network, Inc., 2018 WL 1169084, at *7 (D. Md. Mar. 6,
2018) (Xinis, J.).
In Goodno, the plaintiffs sought a declaratory judgment from the
Court that “Antero is required to pay future royalties to Plaintiffs and the
Class members under the Class Leases at issue, based upon prices
received by Antero on its sale of natural gas and natural gas liquid products
at the point of sale, without deduction of post-production costs.” Goodno,
5:20-CV-1 00 [Doc. I at ¶[ 37]. The Court dismissed the claim as duplicative
of plaintiffs’ breach of contract claim, reasoning that “[t]he declaratory
judgment count ...seeks a declaration that Antero did exactly that with which
they are charged in the breach of contract count” and “is not a freestanding
claim” because “the issue it raises is already a part of what is squarely
presented in this case.” Goodno, 2020 WL 13094067, at *4 See also
Greenbrier Royalty Fund II, LLC v. Antero Resources Corp., 2024 WL
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4009665, at *5 (N.D. W.Va. Aug. 30, 2024) (Kleeh, C.J.) (dismissing
plaintiff’srequest for declaratory judgment as duplicative); Allen v. Antero
Resources Corp., 2024 WL 778396, at *4.....5 (N.D. W.Va. Feb. 26, 2024)
(Kleeh, J.) (same).
[5:17-CV-82, Doc. 206 at 14—15].
Plaintiff contends that his declaratory judgment claim is not duplicative because “this
is a civil action in which the Defendants are continuing to breach the contract in question
and in which the tortious misconduct surrounding such breaches is also still ongoing . . .The
doctrine sought to be invoked by the Defendants is only properly applicable in cases in
which the breach of a contract has occurred in the past and all damages have already
accrued; only then is the declaratory judgment claim truly duplicative of the breach of
contract claim and a mere improper and unnecessary add-on.” [Doc. 138 at 22].
Here, plaintiff’sdeclaratory judgment claim is based upon the same conduct as his
breach of contract claim—defendants’ alleged underpayment of royalties. Adjud icating•the
issue of whether or not defendants have breached plaintiff’s oil and gas lease will
necessarily vindicate the parties’ rights under the lease as it relates to their respective
royalty obligations.
Plaintiff’s argument that declaratory judgment is not duplicative in these
circumstances because defendants’alleged breach of the contract is continuing in nature
is also without merit.
First, plaintiff cites no authority to support his position that the bar against duplicative
declaratory judgment claims only applies when “the breach of a contract has occurred in
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the past and all damages have already accrued.” [DoG. 138 at 22]. Plaintiff cites Hanback
v. DRHI, Inc., 94 F.Supp3d 753, 758-59 (E.D. Va. 2015) (Ellis, Ill, J.), for the proposition
that “a declaratory judgment is ‘unavailable in situations where ... claims and rights
asserted have fully matured, and the alleged wrongs have already been suffered.”(quoting
Trull v. Smolka, 2008 WL 4279599, at *8 (E.D. Va. Sept. 18, 2008) (Hudson, J.), aff’d,
411 Fed. App’x.651 (4th Cir. 2011)). It is true that “[d]eclaratoryjudgment ... is designed
to apply prospectively to prevent or mandate reasonably certain, future conduct.” Trull,
2008 WL 4279599, at *8. However, it does not necessarily follow from that proposition
that declaratory judgment is always available where damages are continuing in nature, nor
does it address the situation here—namely, when plaintiff has asserted another cause of
action (i.e., breach of contract) that is capable of supplying the plaintiff with adequate relief.
Second, regardless of the above, a district court’sexercise of declaratory judgment
is discretionary. See Centennial Life Ins. Co. V. Poston, 88 F.3d 255, 256 (4th Cir. 1996)
(citations omitted). This Court can see no utility in allowing plaintiff’sdeclaratory judgment
claim to proceed in conjunction with the breach of contract claim because adjudicating the
breach of contract claim will necessarily require a determination as to the parties’
respective rights under the Subject Lease, including whether the lease is sufficient, under
West Virginia law, to permit deduction of post-production costs. In other words,
interpretation of the Subject Lease is already a “live issue.” Therefore, even if plaintiff’s
request for declaratory judgmentwere, for some unseen reason, not duplicative, this Court
nevertheless believes that it is more prudent to decline exercising its discretion underthese
circumstances.
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Accordingly, plaintiWs claim for declaratory judgment is DISMISSED.4
Ill. Because plaintiff’stort claims are not barred, dismissal of plaintiff’sclaim for
punitive damages would be improper.
“Generally, absent an independent, intentional tort committed by the defendant,
punitive damages are not available in an action for breach of contract.” Berry v.
Nationwide Mut. Fire Ins. Co., 181 W.Va. 168,175,381 S.E.2d367,374(1989). Likewise,
“[ajttorneys’fees are generally not available for breach of contract claims.” Mills Wetzel
Lands, Inc. V. EQT Prod. Co., 2019 WL 286748, at *7 (N.D. W.Va. Jan. 22, 2019)
(Stamp, Jr. J.).
Here, because plaintiff’stort claims are being not being dismissed, dismissal of his
punitive damages would be improper. Accordingly, defendant’sMotion to Dismiss [Doc.
129] is DENIED as it relates to plaintiff’srequest for punitive damages.
CONCLUSION
Therefore, for the foregoing reasons, defendants’ Motion for Partial Dismissal
[Doc. 129] is DENIED IN PART and GRANTED IN PART. The Motion is DENIED IN
PART as it relates to plaintiff’stort claims and requests for punitive damages. The Motion
is GRANTED IN PART with respect to plaintiff’sDeclaratory Judgment claim.
It is so ORDERED.
The Clerk is directed to transmit a copy of this Order to all counsel of record.
4Because the Amended Complaint does not specifically delineate plaintiff’svarious
causes of action, this Court will not dismiss any particular paragraph of the Amended
Complaint.
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DATED: June ____,2026.
JOHN PRESTON BAILEY
UNITED STATES DISTRICT JUDGE
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