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Michael Kilpatrick v. Midwest Energy Corporation, Martin A. Vaughan, M Gas, Inc., John Stephen Swab, Hsumy Oil & Gas, Inc., Howard G. Barnett and John Stephen Swab
Date: 01-31-2014
Case Number: cj-2011-630
Judge: Daman H. Cantrell
Court: District Court, Tulsa County, Oklahoma
Plaintiff's Attorney: Terry J. Barker, Joseph C. Woltz, Robert N. Lawrence and Kelly Jean Melina Tompksins
Defendant's Attorney:
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Description:
Michael Kilpatrick, Judy Nixon, Martha Ann Garrison, Roy E. Garrison, Jr. and Jean Marie Daniel sued Midwest Energy Corporation, Martin A. Vaughan, M Gas, Inc., John Stephen Swab, Hsumy Oil & Gas, Inc., Howard G. Barnett and John Stephen Swab on conversion, unjust enrichment, constructive fraud, breach of the Oklahoma Product Revenue Standards Act and declaratory judgment theories.
The first amended petition stated:
1. The Plaintiff, Michael Kilpatrick is a citizen of the State of Florida.
2. The Plaintiff, Judy Nixon is a citizen of the State of Alabama.
3. The Plaintiff, Martha Ann Garrison is a citizen of the State of Texas.
4. The Plaintiff, Roy E. Garrison, Jr. is a citizen of the State of Texas.
5. The Plaintiff, Jean Marie Daniel is a citizen of the State of Colorado.
6. The Defendant, Midwest Energy Corporation ("Midwestâ€) is an Oklahoma corporation with its principal place of business in Tulsa, Oklahoma.
7. The Defendant, Martin A. Vaughan ("Vaughanâ€) is an Oklahoma citizen and a resident of Tulsa County.
8. The Defendant, F & M Bank and Trust Company ("F&Mâ€) is an Oklahoma corporation with its principal place of business in Tulsa, Oklahoma.
9. The Defendant, Utica National Bank and Trust Company ("Uticaâ€) is an Oklahoma corporation with its principal place of business in Tulsa, Oklahoma.
10. The Defendant, Hsumy Oil and Gas, Inc. ("Hsumyâ€) is an Oklahoma corporation with its principal place of business in Oklahoma City, Oklahoma.
11. The Defendant, ARKLA, Inc. ("ARKLAâ€) is a foreign corporation doing business in Oklahoma.
12. The Defendant, Unimark, LLC ("Unimarkâ€) is an Oklahoma limited liability company with its principal place of business in Edmond, Oklahoma.
13. The Defendant, MGas, Inc. ("MGasâ€) is an Oklahoma corporation with its principal place of business in Tulsa.
14. The Defendant, Duke Energy Corporation ("Dukeâ€) is a foreign corporation doing business in Oklahoma.
15. The Defendant, Midwest Energy Companies, Inc. ("MEC, Inc.â€) is a domestic corporation.
16. The Defendant, Midwest Partners Limited Partnership ("Midwest Partnersâ€) is an Oklahoma limited partnership.
17. The Defendant, The Martin A. Vaughan Trust as Amended and Restated April 27, 2007 ("Trustâ€) is a trust formed under the laws of Oklahoma.
18. The Defendant, Howard G. Bamett, Jr. ("Barnettâ€) is an Oklahoma citizen and a resident of Tulsa County.
19. Venue is proper in Tulsa County pursuant to 12 O.S. § 134.
GENERAL ALLEGATIONS AND FACTUAL BACKGROUND
20. The Plaintiffs own 160 undivided mineral acres in Section 16, Township 5 North, Range 18 East, Latimer County, Oklahoma. Section 16 is known as the Kilpatrick Unit.
21. On information and belief, Midwest re-worked an abandoned well in the Kilpatrick Unit (the "Extra Wellâ€).
22. The Plaintiffs' mineral acres are not subject to an oil and gas lease and/or Oklahoma Corporation Commission forced pooling order. Therefore, the Plaintiffs are unleased mineral owners in the Kilpatrick Unit.
23. Midwest, Hsumy, Midwest Partners, MEC, Inc., the Trust, Barnett and/or Vaughan claim or have claimed an interest in the Kilpatrick Unit through a defunct 1927 lease (the "Defunct Leaseâ€).
24. On information and belief, F&M and Utica claimed mortgages on the Defunct Lease and received payment for the gas production from the Extra Well.
25. On information and belief, F&M and Utica received 100% of the revenues from the Extra Well for certain periods of production.
26. On information and belief, ARKLA, Duke, MGas, and Unimark (collectively, the "Purchasersâ€) all purchased 100% of the production from the Extra Well at various times. The Purchasers knew or should have known that there was no valid lease covering the Extra Well. The Purchasers also knew or should have known that no royalties were being paid for production from the Extra Well.
27. On information and belief, ARKLA and MGas both had documents in their possession demonstrating that Bamett, Vaughan, Midwest, MEC, Inc., Midwest Partners, and the Trust were not the owners of the right to drill and produce under an oil and gas lease or force pooling order. ARKLA and MGas knew that the proceeds of production were not being paid to the persons legally entitled to them.
28. A division order title opinion was generated by or for ARKLA which identified the actual mineral interest owner as Plaintiffs' mother, Ella Mae Kilpatrick, from whom they inherited their interest. The division order title opinion also set forth that the lease under which Vaughan, Bamett, Midwest, MEC, Inc., Midwest Partners, and the Trust claim an interest could not be verified as valid.
29. On information and belief, ARKLA, MGas, Duke and Unimark never received a division order from Ella Mae Kilpatrick or the Plaintiffs (collectively, the "Kilpatricksâ€).
30. None of the Defendants has paid royalties for production from the Extra Well.
31. On information and belief, Midwest, MEC, Inc., Midwest Partners, the Trust, Vaughan, Barnett and Hsumy have produced and sold gas from the Extra Well.
32. On information and belief, Midwest, Midwest Partners, MEC, Inc., and the Trust are all alter egos of Vaughan. Vaughan has operated this series of like-named companies in an apparent effort to confuse creditors. Prior to August 1987, Midwest was operated as the alter ego of Bamett.
33. Plaintiffs anticipate the necessity of adding additional defendants once discovery in this matter has identified the other individuals who are participating in the theft of natural gas from the Kilpatrick Unit.
COUNT I: CONVERSION
34. Plaintiffs incorporate the preceding paragraphs.
35. No Defendant has or had a valid lease to explore for or produce hydrocarbons from the Kilpatrick Unit.
36. All substances produced through the Extra Well become the personal property of the Plaintiffs upon being produced.
37. On information and belief, Midwest, Midwest Partners, MEC, Inc., the Trust, Vaughan, Bamett, F&M, Utica, and Hsumy received 100% of the revenues for sale of production from the Extra Well.
38. On information and belief, ARKLA, MGas, Unimark and Duke took possession of 100% of the gas produced from the Extra Well.
39. No Defendant was authorized to transport, process, purchase, use or sell any products produced from the Kilpatrick Unit.
40. The Plaintiffs did not consent to the production or disposition of any hydrocarbons from the Extra Well. No Plaintiff has executed a division order for this well.
41. Midwest, Midwest Partners, MEC, Inc., the Trust, Vaughan, Bamett, F&M, Utica, and Hsumy knew that the Kilpatricks were entitled to the proceeds of production.
42. Midwest, Midwest Partners, MEC, Inc., the Trust, Vaughan, Barnett, F&M, Utica, and Hsumy concealed from the Kilpatricks that they were producing gas from the well.
43. The Plaintiffs have been damaged by Defendants' unauthorized disposition of the Plaintiffs' personal property.
COUNT II: DECLARATORY RELIEF
44. Plaintiffs incorporate the preceding paragraphs.
45. The 1927 lease filed in Latimer County by Midwest expired under its own terms a decade before a well was produced on the Kilpatrick Unit.
46. The Plaintiffs seek a declaration from the Court that Vaughan, MEC, Inc., Midwest Partners, the Trust, Barnett, Midwest and Hsumy had and have no valid lease on the Kilpatrick Unit.
COUNT III: BREACH OF THE OKLAHOMA PRODUCTION
REVENUE STANDARDS ACT
47. Plaintiffs incorporate the preceding paragraphs.
48. Under 52 O.S. § 540, et seq. (subsequently renumbered as the Oklahoma Production Revenue Standards Act, 52 O.S. § 570.1, et seq.,) the Defendants are required to maintain all proceeds from the sale of production as separate and distinct funds until such time as such proceeds are paid to the Plaintiffs, the owners legally entitled thereto.
49. The Oklahoma Production Revenue Standards Act further provides that the Defendants were required to remit those proceeds of production in a timely manner.
50. Midwest, MEC, Inc., Midwest Partners, the Trust, Hsumy, F&M, Utica, Barnett and Vaughan, in violation of the Oklahoma Production Revenue Standards Act, have failed to pay royalties to the Plaintiffs. Instead, these Defendants received and kept 100% of the proceeds of production from the Extra Well in violation of the Production Revenue Standards Act.
51. On information and belief, Midwest, MEC, Inc., Midwest Partners, the Trust, Hsumy, F&M, Utica, Barnett and Vaughan directly received 100% of the Proceeds of Production from the Extra Well and failed to pay royalties due thereon.
52. The Defendants are all sophisticated participants in the natural gas industry and were aware of the requirements of the Production Revenue Standards Act to remit the Proceeds of Production to the royalty owners in a timely fashion. Each of the Defendants failed to remit the Proceeds of Production from the Extra Well to the owners legally entitled thereto under the Production Revenue Standards Act.
53. Midwest, MEC, Inc., Midwest Partners, the Trust and MGas are all alter egos of Vaughan. Upon information and belief, the formalities of separate corporate existence between Vaughan and Midwest, MEC, Inc., Midwest Partners, the Trust and MGas were not observed. Their alleged separate corporate existence has been and is continuing to be used to work an inequity on Plaintiffs. The separate corporate existence of these entities should be disregarded and Vaughan should be held liable for Midwest's, MEC, Inc.'s, Midwest Partners', the Trust's and MGas's debts.
54. Prior to August 1987, Midwest was an alter ego of Barnett. Upon information and belief, the formalities of separate corporate existence between Barnett and Midwest were not observed. Their alleged separate corporate existence was used to work an inequity on Plaintiffs. The separate corporate existence of these entities should be disregarded and Barnett should be held liable for Midwest's debts.
COUNT IV: CONSTRUCTIVE FRAUD
55. Plaintiffs incorporate the preceding paragraphs.
56. Under 52 O.S. § 540, renumbered as §570.10, ARKLA, MGas, Duke and Unimark were required to maintain all proceeds from the sale of production as separate and distinct funds until such time as such proceeds were paid to the owners legally entitled thereto.
57. ARKLA, MGas, Duke and Unimark knew that the Kilpatricks were the owners legally entitled to the proceeds of production.
58. ARKLA, MGas, Duke and Unimark knew that the Kilpatricks were not receiving said proceeds.
59. ARKLA, MGas, Duke and Unimark knew that the proceeds of production were being paid to the wrong parties.
60. ARKLA, MGas, Duke and Unimark had an obligation as the first purchasers to inform the Kilpatricks of the disposition of the proceeds of production.
61. ARKLA, MGas, Duke and Unimark all failed to inform the Kilpatricks that production had occurred and that they held funds belonging to the Kilpatricks.
62. As the party improperly receiving the proceeds of production, Midwest, Midwest Partners, MEC, Inc., the Trust, Vaughan, Barnett, F&M, Utica, and Hsumy all knew that the Kilpatricks were not receiving the proceeds to which they were entitled.
63. Midwest, Midwest Partners, MEC, Inc., the Trust, Vaughan, Bamett, F&M, Utica, and Hsumy had an obligation to inform the Kilpatricks that they were in possession of the proceeds of production.
64. Midwest, Midwest Partners, MEC, Inc., the Trust, Vaughan, Bamett, F&M, Utica, and Hsumy all failed to inform the Kilpatricks that they had possession of proceeds rightfully belonging to the Kilpatricks.
65. The Plaintiffs were damaged by the actions of the Defendants.
COUNT V: UNJUST ENRICHMENT
66. Plaintiffs incorporate by reference all prior allegations set forth above.
67. As a result of Defendants' conduct described hereinbefore in Counts I through IV, Defendants have been unjustly enriched and have wrongfully obtained monies and benefits which should have been realized by Plaintiffs. By failing to pay the proceeds of production to Plaintiffs, Defendants have unjustly realized a business profit. Defendants ought not be allowed to retain such amounts.
PRAYER FOR RELIEF
68. The Plaintiffs pray for judgment against the Defendants and in favor of themselves for the following relief: (1) money damages, the amount of which is presently unknown, but is believed to be in excess of $75,000.00, exclusive of interest and costs; (2) punitive damages as a result of Defendants' malicious, wanton, willful, intentional and reckless disregard of the rights of Plaintiffs, in an amount sufficient to deter Defendants from such future conduct; (3) a declaration by the Court that Defendants had no right, title, or interest in any production from the Plaintiffs' interest since there was no valid lease covering the Plaintiffs' interest in the Kilpatrick Unit; and (4) such other relief to which Plaintiffs show they are entitled.
Hsumy Oil & Gas, Inc. appeared and answered as follows:
1-9. HSUMY lacks sufficient information either to admit or deny the allegations contained in ¶f 1-7.
10. HSUMY admits that it is an Oklahoma corporation. HSUMY denies that its principal place of business is located in Oklahoma City.
11-18. HSUMY lacks sufficient information either to admit or deny the allegations contained in ¶J 11-18.
19. HSUMY admits the allegations contained in ¶ 19.
20-21. HSUMY lacks sufficient information either to admit or deny the allegations contained in ¶J 20-21.
22. HSUMY denies the allegations contained in ¶ 22.
23. To the extent the allegations contained in ¶ 23 are directed to HSUMY, HSUMY1 admits that it previously received, and subsequently assigned, interests related to mineral leases in Section 16, Township 5 North, Range 18 East in Latimer County, Oklahoma. HSUMY denies that the referenced 1927 lease is "defunct.â€
24-25. HSUMY lacks sufficient information either to admit or deny the allegations contained in ¶f 24-25.
26-29. The allegations of ¶11 26-29 are not directed to FISUMY and require no response from HSUMY.
30. FISUMY lacks sufficient information either to admit or deny the allegations contained in ¶ 30.
31. To the extent the allegations contained in ¶ 31 are directed to FISUMY, HSUMY admits that it previously received interests related to mineral leases in Section 16, Township 5 North, Range 18 East in Latimer County, Oklahoma, HSUMY lacks sufficient information either to admit or to deny that it produced and sold gasfrom the "Extra Well.â€
32-33. The allegations of ¶f 32-33 are not directed to HSUMY and require no response from HSUMY.
34. The allegations off 34 require no response.
35-37. To the extent the allegations contained in ¶J 35-37 are directed to HSUMY, HSUMY denies those allegations.
38. The allegations of ¶f 38 are not directed to USUMY and require no response from HSUMY.
39-40. HSUMY denies the allegations contained in ¶f 39-40.
41-43. To the extent the allegations contained in ¶f 41-43 are directed to 1-ISUMY, HSUMY denies those allegations.
44. The allegations of ¶ 44 require no response.
45. FISUMY denies the allegations contained in ¶ 45.
46. To the extent the allegations of ¶ 46 require any response, USUMY denies that Plaintiffs are entitled to the requested declaratory relief.
47. The allegations off 47 require no response.
48-49. The allegations of ¶j 48-49 state only legal conclusions to which no response is required.
50-51. To the extent the allegations contained in ¶ 50-51 are directed to HSUMY, HSUMY denies that it has taken action in violation of the PRSA, lacks sufficient information either to admit or to deny that it has paid not royalties to Plaintiffs, and denies that it has received 100% of the proceeds of production from the "Extra Well.â€
52. To the extent the allegations contained in ¶ 52 are directed to HSUMY, HSUMY denies that it is a sophisticated participant in the natural gas industry and lacks sufficient information either to admit or to deny that each of the Defendants failed to remit the proceeds of production from the Extra Well to legally entitled owners. 53-54, The allegations of 53-54 are not directed to HSUMY and require no response from HSUMY.
55. The allegations of ¶ 55 require no response.
56-61. The allegations of ¶ 56-61 are not directed to HSUMY and require no response from HSUMY.
62. To the extent the allegations contained in ¶ 62 are directed to USUMY, HSUMY denies that it "improperly†received any proceeds of production and denies that it knew Plaintiffs were not receiving proceeds "to which they were entitled.â€
63. The allegations of ¶ 63 state only a legal conclusion to which no response is required.
64. To the extent the allegations contained in ¶ 64 are directed to HSUMY, HSUMY lacks sufficient infornution either to admit or to deny that it received possession of proceeds "rightfully belonging to the Kilpatricks.â€
65. To the extent the allegations contained in ¶ 65 are directed to HSUMY, HSUMY denies that Plaintiffs were damaged in any manner by any act of HSUMY.
66. The allegations ofJ 66 require no response.
67. To the extent the allegations contained in ¶ 67 are directed to HSUMY, HSUMY denies all such allegations.
68. HSUMY denies that Plaintiffs can be entitled to any requested relief from HSUMY.
Defenses
1. Plaintiffs' claims are barred by applicable limitations periods.
2. "Conversion†of money or of debt is a legal impossibility pursuant to Oklahoma law.
3. HSUMY has no "special relationship†of any kind with any Plaintiff in relation to the alleged facts of this action.
4. Plaintiffs have failed to plead reliance upon any alleged omission by 1-ISUMY.
5. Plaintiffs' claims are bared by laches.
6. Plaintiffs are collaterally stopped from relitigating the issue of whether the 1927 lease was held by production in paying quantifies, as they have previously received an adverse determination upon the same allegations in Kilpatrick v. Atlantic Richfield Company and Vastar Resources Inc., No. 95,170 (Okia. Ct. App. 2003).
WHEREFORE, having fully answered, HSUMY asks the Court to determine that Plaintiffs are not entitled to any of the relief requested in their Petition against HSUMY, and that HSUMY should recover its reasonable fees, costs and expenses as allowed by law.
05-20-2013 CTFREE - 85512971 May 20 2013 3:01:20:443PM - $ 0.00 CANTRELL, DAMAN: THE COURT AGREES WITH THE ANALYSIS PROVIDED BY DEFENDANT BARNETT REGARDING WHETHER THE "SHALLOW WELL†WAS GOVERNED BY PREVIOUS LITIGATION. THE LATIMER COUNTY ORDER DOES NOT MAKE A DISTINCTION BETWEEN FORMATIONS BUT REFERS TO "THE ENTIRE SECTION.†HOWEVER, GIVEN THAT THIS CASE HAS NOT BEEN SET FOR TRIAL AND IS STILL IN FORMATIVE STAGES, THE COURT WILL ALLOW THE SECOND AMENDED PETITION TO PROCEED. PLAINTIFFS ARGUE THAT MOTIONS TO DISMISS ARE MOOTED BY AMENDMENT. TO THE EXTENT THESE SAME ISSUES APPLY, THEY MAY BE REURGED TO THE AMENDED PETITION. SAME RULING WILL APPLY TO DEFENDANTS MIDWEST ENERGY, VAUGHAN, UNIMARK AND F & M. MATTER IS SET FOR SCHEDULING CONFERENCE ON 6-10-13 AT 9:00 AM. NOTICE MAILED TO STEPHEN PETERS, ROBERT LAWRENCE, LEAH DALEY, JOEL WOHLGEMUTH, AND DAVID KEGLOVITS.
Howard Barnett sought dismissal of Plaintiffs' claims stating stating, in part:
* * *
This Court previously found in unequivocal terms that the "shallow well' was covered by previous litigation.†(See May 20, 2013 Order, copy attached as Exhibit A). This means that the 1927 oil and gas lease held the plaintiffs' lands by production at least as of 1996—years after Mr. Bamett ceased affiliation with Midwest Energy Corporation. But the Second Amended continues to allege—as a basis of all claims for relief—that plaintiffs were unleased mineral owners in the Kilpatrick Unit. (See Second Amended Petition, J 25). This allegation is disposed of by the Court's May 20 Order, and every claim, to the extent premised upon this allegation, must be dismissed as to Mr. Bamett.
Further, plaintiffs—baselessly and wrongfully—seek to pierce the corporate veil as to Mr. Barnett. They allege solely that he received certain funds from Midwest Energy Corporation.' Yet, the plaintiffs bring a claim for conversion against Mr. Barnett personally. Conversion will not lie for money, and the plaintiffs have not alleged, nor could they, that Mr. Bamett was ever personally in possession of any hydrocarbons at issue.
Plaintiffs' constructive fraud claim fails as the plaintiffs have failed to plead it with particularity, among numerous other flaws not at issue in this Motion. Finally, plaintiffs' unjust- enrichment claim fails as to Mr. Bamett because, even under the specious allegations plaintiffs make, any funds Mr. Barnett supposedly received came from Midwest Energy Corporation, not the plaintiffs. Of course, Midwest Energy Corporation was a substantial business in the 1980s, and the plaintiffs do not allege that any funds purportedly belonging to them were paid directly to Mr. Bamett. Rather, the plaintiffs allege that Mr. Bamett received funds from Midwest Energy Corporation—not them. Oklahoma law permits a claim for unjust enrichment only where the defendant was directly enriched by the plaintiff. Indirect unjust enrichment is not permissible.
RELEVANT BACKGROUND AND PROCEDURAL HISTORY
1. As they did in the First Amended Petition, the plaintiffs allege that they own "160 undivided mineral acres in Section 16, Township 5 North, Range 18 East, Latimer County, Oklahoma,†which section "is known as the Kilpatrick Unit.†(Second Amended Petition, p. 3, ¶ 20).
2. The plaintiffs assert that Midwest Energy Corporation ("MECâ€) "reworked an abandoned well in the Kilpatrick Unit.†(Id. at ¶ 21). The Second Amended Petition refers to this well as the "Extra Well.†(See id.).
3. In 1996, Michael Kilpatrick, Mark Kilpatrick, Judy Nixon, and Jean Daniel brought a lawsuit in Latimer County against Atlantic Richfield Company ("ARCOâ€) and Vastar Resources, Inc. ("Vastarâ€) (hereinafter, "the Latimer County litigationâ€). The Latimer County litigation alleged that "an oil and gas lease covering the [SE/4 and the SE/4 NE/4 of Section 16, Township 5 North, Range 18 East in Latimer County, Oklahoma], executed by the Kilpatricks' great uncle, George A. Kilpatrick, on February 18, 1927. . ., had expired automatically.†(See Opinion of the Court of Civil Appeals in Appeal No. DF-95 170, at ¶ 2, copy attached as Exhibit B).2
Defendant F & M Bank offered to allow Plaintiffs to take judgment in their favor pursuant to 12 O.S. 12 O.S. 1101 in the amount of $100 each.
Defendant Hsumy Oil & Gas, Inc. offered to allow Plaintiffs to take judgment in their favor pursuant to 12 O.S. 12 O.S. 1101 in the amount of $1,100 each.
01-10-2014 CTFREE - 88008638 Jan 10 2014 11:10:04:287AM - $ 0.00
CANTRELL, DAMAN: BY AGREEMENT OF ALL PARTIES THE PRETRIAL CONFERENCE SET FOR 1-13-14 IS STRICKEN BY THE COURT. PRETRIAL CONFERENCE TO BE RESET UPON APPLICATION. 4. The Kilpatricks brought claims against ARCO and Vastar for conversion. (Id. at ¶ 3). "For their relief, the Kilpatricks sought immediate cash balancing or balancing in kind, conversion damages from and after their demand for cash balancing and notice not to sell gas, punitive damages, and pre-judgment interest.†Id.
5. Ultimately, following a trial on the merits, the District Court of Latimer County found that the 1927 lease was valid, and that it was held by production. (See id. at ¶ 19). The Court of Civil Appeals affirmed the finding that the 1927 lease was held by production by virtue of a producing well having been commenced during the primary term of the lease. (See Id. at ¶ 38). Moreover, the Court of Civil Appeals found that "the Kilpatricks were not unleased mineral owners in the [Kilpatrick Unit] and [thus] had no right to gas balancing and no claim for conversion.†(Id.).
6. On April 3, 2003, the Oklahoma Supreme Court denied the Kilpatricks' Petition for Certiorari in Appeal No. DF-95 170. (See Docket Sheet, Appeal No. DF-95-170, copy attached as Exhibit C).
7. The 1927 lease at issue in this case is the same lease at issue in the Latimer County Case. (Compare id. at ¶ 2 & n.2, with Exhibit D).
8. In the Second Amended Petition, the plaintiffs allege that Mr. Bamett received proceeds from production through Midwest Energy Corporation. (See Second Amended Petition, ¶ 37).
9. The plaintiffs allege that Mr. Bamett received "proceeds of productionâ€"through†Midwest Energy Corporation, not that Mr. Barnett ever personally received actual possession of any gas. (See id. at ¶J 37, 45).
10. All the plaintiffs allege for the basis of their so-called "constructive fraud†claim is that for the undefined period "[f]or all times prior to 1987†Mr. Barnett purportedly breached an alleged duty under the Production Revenue Standards Act to "inform the Plaintiffs that [the Defendantsl received and were in possession of the proceeds of production from the Extra Well, as well as all proceeds of production as separate and distinct funds to be paid to Plaintiffs.†(Id. at ¶J39. 71-72).
* * *
Outcome:
11-04-2013 CTFREE - 87358960 Nov 4 2013 2:29:47:547PM - $ 0.00 CANTRELL, DAMAN: THE COURT'S DECISION ON HEARING HELD ON 10-18-13. F&M BANK'S MOTION TO DISMISS SECOND AMENDED PETITION (COUNTS I, II, AND II) IS GRANTED. JOURNAL ENTRY ENTERED AND GRANTED BY THE COURT.
01-07-2014 DISPCVDMWP 2 F & M BANK AND TRUST COMPANY 87971584 Jan 8 2014 8:56:45:797AM - $ 0.00 DISMISSAL WITH PREJUDICE
01-07-2014 DISPCVDMWP 2 HSUMY INC 87971585 Jan 8 2014 8:56:45:997AM - $ 0.00 DISMISSAL WITH PREJUDICE
01-07-2014 DISPCVDMWP 2 Utica National Bank And Trust Company 87971586 Jan 8 2014 8:56:46:057AM - $ 0.00 DISMISSAL WITH PREJUDICE
01-07-2014 DISPCVDMWP 3 F & M BANK AND TRUST COMPANY 87971587 Jan 8 2014 8:56:46:087AM - $ 0.00 DISMISSAL WITH PREJUICE
01-07-2014 DISPCVDMWP 3 HSUMY INC 87971588 Jan 8 2014 8:56:46:107AM - $ 0.00 DISMISSAL WITH PREJUDICE
01-08-2014 DISPCVDMWP 3 Utica National Bank And Trust Company 87971589 Jan 8 2014 8:56:46:157AM - $ 0.00 DISMISSAL WITH PREJUDICE
Dismissed without prejudice as to Arkla, Inc., Unimark, LLC and Duke Energy and with prejudice as to F & M Bank and Trust company, Hsumy, Inc. and Untical National Bank
Summary judgment in favor of Midwest Energy and Martin A. Vaughan
Plaintiff's Experts:
Defendant's Experts:
Comments:
About This Case
What was the outcome of Michael Kilpatrick v. Midwest Energy Corporation, Martin ...?
The outcome was: 11-04-2013 CTFREE - 87358960 Nov 4 2013 2:29:47:547PM - $ 0.00 CANTRELL, DAMAN: THE COURT'S DECISION ON HEARING HELD ON 10-18-13. F&M BANK'S MOTION TO DISMISS SECOND AMENDED PETITION (COUNTS I, II, AND II) IS GRANTED. JOURNAL ENTRY ENTERED AND GRANTED BY THE COURT.
01-07-2014 DISPCVDMWP 2 F & M BANK AND TRUST COMPANY 87971584 Jan 8 2014 8:56:45:797AM - $ 0.00 DISMISSAL WITH PREJUDICE
01-07-2014 DISPCVDMWP 2 HSUMY INC 87971585 Jan 8 2014 8:56:45:997AM - $ 0.00 DISMISSAL WITH PREJUDICE
01-07-2014 DISPCVDMWP 2 Utica National Bank And Trust Company 87971586 Jan 8 2014 8:56:46:057AM - $ 0.00 DISMISSAL WITH PREJUDICE
01-07-2014 DISPCVDMWP 3 F & M BANK AND TRUST COMPANY 87971587 Jan 8 2014 8:56:46:087AM - $ 0.00 DISMISSAL WITH PREJUICE
01-07-2014 DISPCVDMWP 3 HSUMY INC 87971588 Jan 8 2014 8:56:46:107AM - $ 0.00 DISMISSAL WITH PREJUDICE
01-08-2014 DISPCVDMWP 3 Utica National Bank And Trust Company 87971589 Jan 8 2014 8:56:46:157AM - $ 0.00 DISMISSAL WITH PREJUDICE
Dismissed without prejudice as to Arkla, Inc., Unimark, LLC and Duke Energy and with prejudice as to F & M Bank and Trust company, Hsumy, Inc. and Untical National Bank
Summary judgment in favor of Midwest Energy and Martin A. Vaughan
Which court heard Michael Kilpatrick v. Midwest Energy Corporation, Martin ...?
This case was heard in District Court, Tulsa County, Oklahoma, OK. The presiding judge was Daman H. Cantrell.
Who were the attorneys in Michael Kilpatrick v. Midwest Energy Corporation, Martin ...?
Plaintiff's attorney: Terry J. Barker, Joseph C. Woltz, Robert N. Lawrence and Kelly Jean Melina Tompksins. Defendant's attorney: Tulsa Criminal Defense Lawyer Directory.
When was Michael Kilpatrick v. Midwest Energy Corporation, Martin ... decided?
This case was decided on January 31, 2014.
Description:
Michael Kilpatrick, Judy Nixon, Martha Ann Garrison, Roy E. Garrison, Jr. and Jean Marie Daniel sued Midwest Energy Corporation, Martin A. Vaughan, M Gas, Inc., John Stephen Swab, Hsumy Oil & Gas, Inc., Howard G. Barnett and John Stephen Swab on conversion, unjust enrichment, constructive fraud, breach of the Oklahoma Product Revenue Standards Act and declaratory judgment theories.
The first amended petition stated:
1. The Plaintiff, Michael Kilpatrick is a citizen of the State of Florida.
2. The Plaintiff, Judy Nixon is a citizen of the State of Alabama.
3. The Plaintiff, Martha Ann Garrison is a citizen of the State of Texas.
4. The Plaintiff, Roy E. Garrison, Jr. is a citizen of the State of Texas.
5. The Plaintiff, Jean Marie Daniel is a citizen of the State of Colorado.
6. The Defendant, Midwest Energy Corporation ("Midwestâ€) is an Oklahoma corporation with its principal place of business in Tulsa, Oklahoma.
7. The Defendant, Martin A. Vaughan ("Vaughanâ€) is an Oklahoma citizen and a resident of Tulsa County.
8. The Defendant, F & M Bank and Trust Company ("F&Mâ€) is an Oklahoma corporation with its principal place of business in Tulsa, Oklahoma.
9. The Defendant, Utica National Bank and Trust Company ("Uticaâ€) is an Oklahoma corporation with its principal place of business in Tulsa, Oklahoma.
10. The Defendant, Hsumy Oil and Gas, Inc. ("Hsumyâ€) is an Oklahoma corporation with its principal place of business in Oklahoma City, Oklahoma.
11. The Defendant, ARKLA, Inc. ("ARKLAâ€) is a foreign corporation doing business in Oklahoma.
12. The Defendant, Unimark, LLC ("Unimarkâ€) is an Oklahoma limited liability company with its principal place of business in Edmond, Oklahoma.
13. The Defendant, MGas, Inc. ("MGasâ€) is an Oklahoma corporation with its principal place of business in Tulsa.
14. The Defendant, Duke Energy Corporation ("Dukeâ€) is a foreign corporation doing business in Oklahoma.
15. The Defendant, Midwest Energy Companies, Inc. ("MEC, Inc.â€) is a domestic corporation.
16. The Defendant, Midwest Partners Limited Partnership ("Midwest Partnersâ€) is an Oklahoma limited partnership.
17. The Defendant, The Martin A. Vaughan Trust as Amended and Restated April 27, 2007 ("Trustâ€) is a trust formed under the laws of Oklahoma.
18. The Defendant, Howard G. Bamett, Jr. ("Barnettâ€) is an Oklahoma citizen and a resident of Tulsa County.
19. Venue is proper in Tulsa County pursuant to 12 O.S. § 134.
GENERAL ALLEGATIONS AND FACTUAL BACKGROUND
20. The Plaintiffs own 160 undivided mineral acres in Section 16, Township 5 North, Range 18 East, Latimer County, Oklahoma. Section 16 is known as the Kilpatrick Unit.
21. On information and belief, Midwest re-worked an abandoned well in the Kilpatrick Unit (the "Extra Wellâ€).
22. The Plaintiffs' mineral acres are not subject to an oil and gas lease and/or Oklahoma Corporation Commission forced pooling order. Therefore, the Plaintiffs are unleased mineral owners in the Kilpatrick Unit.
23. Midwest, Hsumy, Midwest Partners, MEC, Inc., the Trust, Barnett and/or Vaughan claim or have claimed an interest in the Kilpatrick Unit through a defunct 1927 lease (the "Defunct Leaseâ€).
24. On information and belief, F&M and Utica claimed mortgages on the Defunct Lease and received payment for the gas production from the Extra Well.
25. On information and belief, F&M and Utica received 100% of the revenues from the Extra Well for certain periods of production.
26. On information and belief, ARKLA, Duke, MGas, and Unimark (collectively, the "Purchasersâ€) all purchased 100% of the production from the Extra Well at various times. The Purchasers knew or should have known that there was no valid lease covering the Extra Well. The Purchasers also knew or should have known that no royalties were being paid for production from the Extra Well.
27. On information and belief, ARKLA and MGas both had documents in their possession demonstrating that Bamett, Vaughan, Midwest, MEC, Inc., Midwest Partners, and the Trust were not the owners of the right to drill and produce under an oil and gas lease or force pooling order. ARKLA and MGas knew that the proceeds of production were not being paid to the persons legally entitled to them.
28. A division order title opinion was generated by or for ARKLA which identified the actual mineral interest owner as Plaintiffs' mother, Ella Mae Kilpatrick, from whom they inherited their interest. The division order title opinion also set forth that the lease under which Vaughan, Bamett, Midwest, MEC, Inc., Midwest Partners, and the Trust claim an interest could not be verified as valid.
29. On information and belief, ARKLA, MGas, Duke and Unimark never received a division order from Ella Mae Kilpatrick or the Plaintiffs (collectively, the "Kilpatricksâ€).
30. None of the Defendants has paid royalties for production from the Extra Well.
31. On information and belief, Midwest, MEC, Inc., Midwest Partners, the Trust, Vaughan, Barnett and Hsumy have produced and sold gas from the Extra Well.
32. On information and belief, Midwest, Midwest Partners, MEC, Inc., and the Trust are all alter egos of Vaughan. Vaughan has operated this series of like-named companies in an apparent effort to confuse creditors. Prior to August 1987, Midwest was operated as the alter ego of Bamett.
33. Plaintiffs anticipate the necessity of adding additional defendants once discovery in this matter has identified the other individuals who are participating in the theft of natural gas from the Kilpatrick Unit.
COUNT I: CONVERSION
34. Plaintiffs incorporate the preceding paragraphs.
35. No Defendant has or had a valid lease to explore for or produce hydrocarbons from the Kilpatrick Unit.
36. All substances produced through the Extra Well become the personal property of the Plaintiffs upon being produced.
37. On information and belief, Midwest, Midwest Partners, MEC, Inc., the Trust, Vaughan, Bamett, F&M, Utica, and Hsumy received 100% of the revenues for sale of production from the Extra Well.
38. On information and belief, ARKLA, MGas, Unimark and Duke took possession of 100% of the gas produced from the Extra Well.
39. No Defendant was authorized to transport, process, purchase, use or sell any products produced from the Kilpatrick Unit.
40. The Plaintiffs did not consent to the production or disposition of any hydrocarbons from the Extra Well. No Plaintiff has executed a division order for this well.
41. Midwest, Midwest Partners, MEC, Inc., the Trust, Vaughan, Bamett, F&M, Utica, and Hsumy knew that the Kilpatricks were entitled to the proceeds of production.
42. Midwest, Midwest Partners, MEC, Inc., the Trust, Vaughan, Barnett, F&M, Utica, and Hsumy concealed from the Kilpatricks that they were producing gas from the well.
43. The Plaintiffs have been damaged by Defendants' unauthorized disposition of the Plaintiffs' personal property.
COUNT II: DECLARATORY RELIEF
44. Plaintiffs incorporate the preceding paragraphs.
45. The 1927 lease filed in Latimer County by Midwest expired under its own terms a decade before a well was produced on the Kilpatrick Unit.
46. The Plaintiffs seek a declaration from the Court that Vaughan, MEC, Inc., Midwest Partners, the Trust, Barnett, Midwest and Hsumy had and have no valid lease on the Kilpatrick Unit.
COUNT III: BREACH OF THE OKLAHOMA PRODUCTION
REVENUE STANDARDS ACT
47. Plaintiffs incorporate the preceding paragraphs.
48. Under 52 O.S. § 540, et seq. (subsequently renumbered as the Oklahoma Production Revenue Standards Act, 52 O.S. § 570.1, et seq.,) the Defendants are required to maintain all proceeds from the sale of production as separate and distinct funds until such time as such proceeds are paid to the Plaintiffs, the owners legally entitled thereto.
49. The Oklahoma Production Revenue Standards Act further provides that the Defendants were required to remit those proceeds of production in a timely manner.
50. Midwest, MEC, Inc., Midwest Partners, the Trust, Hsumy, F&M, Utica, Barnett and Vaughan, in violation of the Oklahoma Production Revenue Standards Act, have failed to pay royalties to the Plaintiffs. Instead, these Defendants received and kept 100% of the proceeds of production from the Extra Well in violation of the Production Revenue Standards Act.
51. On information and belief, Midwest, MEC, Inc., Midwest Partners, the Trust, Hsumy, F&M, Utica, Barnett and Vaughan directly received 100% of the Proceeds of Production from the Extra Well and failed to pay royalties due thereon.
52. The Defendants are all sophisticated participants in the natural gas industry and were aware of the requirements of the Production Revenue Standards Act to remit the Proceeds of Production to the royalty owners in a timely fashion. Each of the Defendants failed to remit the Proceeds of Production from the Extra Well to the owners legally entitled thereto under the Production Revenue Standards Act.
53. Midwest, MEC, Inc., Midwest Partners, the Trust and MGas are all alter egos of Vaughan. Upon information and belief, the formalities of separate corporate existence between Vaughan and Midwest, MEC, Inc., Midwest Partners, the Trust and MGas were not observed. Their alleged separate corporate existence has been and is continuing to be used to work an inequity on Plaintiffs. The separate corporate existence of these entities should be disregarded and Vaughan should be held liable for Midwest's, MEC, Inc.'s, Midwest Partners', the Trust's and MGas's debts.
54. Prior to August 1987, Midwest was an alter ego of Barnett. Upon information and belief, the formalities of separate corporate existence between Barnett and Midwest were not observed. Their alleged separate corporate existence was used to work an inequity on Plaintiffs. The separate corporate existence of these entities should be disregarded and Barnett should be held liable for Midwest's debts.
COUNT IV: CONSTRUCTIVE FRAUD
55. Plaintiffs incorporate the preceding paragraphs.
56. Under 52 O.S. § 540, renumbered as §570.10, ARKLA, MGas, Duke and Unimark were required to maintain all proceeds from the sale of production as separate and distinct funds until such time as such proceeds were paid to the owners legally entitled thereto.
57. ARKLA, MGas, Duke and Unimark knew that the Kilpatricks were the owners legally entitled to the proceeds of production.
58. ARKLA, MGas, Duke and Unimark knew that the Kilpatricks were not receiving said proceeds.
59. ARKLA, MGas, Duke and Unimark knew that the proceeds of production were being paid to the wrong parties.
60. ARKLA, MGas, Duke and Unimark had an obligation as the first purchasers to inform the Kilpatricks of the disposition of the proceeds of production.
61. ARKLA, MGas, Duke and Unimark all failed to inform the Kilpatricks that production had occurred and that they held funds belonging to the Kilpatricks.
62. As the party improperly receiving the proceeds of production, Midwest, Midwest Partners, MEC, Inc., the Trust, Vaughan, Barnett, F&M, Utica, and Hsumy all knew that the Kilpatricks were not receiving the proceeds to which they were entitled.
63. Midwest, Midwest Partners, MEC, Inc., the Trust, Vaughan, Bamett, F&M, Utica, and Hsumy had an obligation to inform the Kilpatricks that they were in possession of the proceeds of production.
64. Midwest, Midwest Partners, MEC, Inc., the Trust, Vaughan, Bamett, F&M, Utica, and Hsumy all failed to inform the Kilpatricks that they had possession of proceeds rightfully belonging to the Kilpatricks.
65. The Plaintiffs were damaged by the actions of the Defendants.
COUNT V: UNJUST ENRICHMENT
66. Plaintiffs incorporate by reference all prior allegations set forth above.
67. As a result of Defendants' conduct described hereinbefore in Counts I through IV, Defendants have been unjustly enriched and have wrongfully obtained monies and benefits which should have been realized by Plaintiffs. By failing to pay the proceeds of production to Plaintiffs, Defendants have unjustly realized a business profit. Defendants ought not be allowed to retain such amounts.
PRAYER FOR RELIEF
68. The Plaintiffs pray for judgment against the Defendants and in favor of themselves for the following relief: (1) money damages, the amount of which is presently unknown, but is believed to be in excess of $75,000.00, exclusive of interest and costs; (2) punitive damages as a result of Defendants' malicious, wanton, willful, intentional and reckless disregard of the rights of Plaintiffs, in an amount sufficient to deter Defendants from such future conduct; (3) a declaration by the Court that Defendants had no right, title, or interest in any production from the Plaintiffs' interest since there was no valid lease covering the Plaintiffs' interest in the Kilpatrick Unit; and (4) such other relief to which Plaintiffs show they are entitled.
Hsumy Oil & Gas, Inc. appeared and answered as follows:
1-9. HSUMY lacks sufficient information either to admit or deny the allegations contained in ¶f 1-7.
10. HSUMY admits that it is an Oklahoma corporation. HSUMY denies that its principal place of business is located in Oklahoma City.
11-18. HSUMY lacks sufficient information either to admit or deny the allegations contained in ¶J 11-18.
19. HSUMY admits the allegations contained in ¶ 19.
20-21. HSUMY lacks sufficient information either to admit or deny the allegations contained in ¶J 20-21.
22. HSUMY denies the allegations contained in ¶ 22.
23. To the extent the allegations contained in ¶ 23 are directed to HSUMY, HSUMY1 admits that it previously received, and subsequently assigned, interests related to mineral leases in Section 16, Township 5 North, Range 18 East in Latimer County, Oklahoma. HSUMY denies that the referenced 1927 lease is "defunct.â€
24-25. HSUMY lacks sufficient information either to admit or deny the allegations contained in ¶f 24-25.
26-29. The allegations of ¶11 26-29 are not directed to FISUMY and require no response from HSUMY.
30. FISUMY lacks sufficient information either to admit or deny the allegations contained in ¶ 30.
31. To the extent the allegations contained in ¶ 31 are directed to FISUMY, HSUMY admits that it previously received interests related to mineral leases in Section 16, Township 5 North, Range 18 East in Latimer County, Oklahoma, HSUMY lacks sufficient information either to admit or to deny that it produced and sold gasfrom the "Extra Well.â€
32-33. The allegations of ¶f 32-33 are not directed to HSUMY and require no response from HSUMY.
34. The allegations off 34 require no response.
35-37. To the extent the allegations contained in ¶J 35-37 are directed to HSUMY, HSUMY denies those allegations.
38. The allegations of ¶f 38 are not directed to USUMY and require no response from HSUMY.
39-40. HSUMY denies the allegations contained in ¶f 39-40.
41-43. To the extent the allegations contained in ¶f 41-43 are directed to 1-ISUMY, HSUMY denies those allegations.
44. The allegations of ¶ 44 require no response.
45. FISUMY denies the allegations contained in ¶ 45.
46. To the extent the allegations of ¶ 46 require any response, USUMY denies that Plaintiffs are entitled to the requested declaratory relief.
47. The allegations off 47 require no response.
48-49. The allegations of ¶j 48-49 state only legal conclusions to which no response is required.
50-51. To the extent the allegations contained in ¶ 50-51 are directed to HSUMY, HSUMY denies that it has taken action in violation of the PRSA, lacks sufficient information either to admit or to deny that it has paid not royalties to Plaintiffs, and denies that it has received 100% of the proceeds of production from the "Extra Well.â€
52. To the extent the allegations contained in ¶ 52 are directed to HSUMY, HSUMY denies that it is a sophisticated participant in the natural gas industry and lacks sufficient information either to admit or to deny that each of the Defendants failed to remit the proceeds of production from the Extra Well to legally entitled owners. 53-54, The allegations of 53-54 are not directed to HSUMY and require no response from HSUMY.
55. The allegations of ¶ 55 require no response.
56-61. The allegations of ¶ 56-61 are not directed to HSUMY and require no response from HSUMY.
62. To the extent the allegations contained in ¶ 62 are directed to USUMY, HSUMY denies that it "improperly†received any proceeds of production and denies that it knew Plaintiffs were not receiving proceeds "to which they were entitled.â€
63. The allegations of ¶ 63 state only a legal conclusion to which no response is required.
64. To the extent the allegations contained in ¶ 64 are directed to HSUMY, HSUMY lacks sufficient infornution either to admit or to deny that it received possession of proceeds "rightfully belonging to the Kilpatricks.â€
65. To the extent the allegations contained in ¶ 65 are directed to HSUMY, HSUMY denies that Plaintiffs were damaged in any manner by any act of HSUMY.
66. The allegations ofJ 66 require no response.
67. To the extent the allegations contained in ¶ 67 are directed to HSUMY, HSUMY denies all such allegations.
68. HSUMY denies that Plaintiffs can be entitled to any requested relief from HSUMY.
Defenses
1. Plaintiffs' claims are barred by applicable limitations periods.
2. "Conversion†of money or of debt is a legal impossibility pursuant to Oklahoma law.
3. HSUMY has no "special relationship†of any kind with any Plaintiff in relation to the alleged facts of this action.
4. Plaintiffs have failed to plead reliance upon any alleged omission by 1-ISUMY.
5. Plaintiffs' claims are bared by laches.
6. Plaintiffs are collaterally stopped from relitigating the issue of whether the 1927 lease was held by production in paying quantifies, as they have previously received an adverse determination upon the same allegations in Kilpatrick v. Atlantic Richfield Company and Vastar Resources Inc., No. 95,170 (Okia. Ct. App. 2003).
WHEREFORE, having fully answered, HSUMY asks the Court to determine that Plaintiffs are not entitled to any of the relief requested in their Petition against HSUMY, and that HSUMY should recover its reasonable fees, costs and expenses as allowed by law.
05-20-2013 CTFREE - 85512971 May 20 2013 3:01:20:443PM - $ 0.00 CANTRELL, DAMAN: THE COURT AGREES WITH THE ANALYSIS PROVIDED BY DEFENDANT BARNETT REGARDING WHETHER THE "SHALLOW WELL†WAS GOVERNED BY PREVIOUS LITIGATION. THE LATIMER COUNTY ORDER DOES NOT MAKE A DISTINCTION BETWEEN FORMATIONS BUT REFERS TO "THE ENTIRE SECTION.†HOWEVER, GIVEN THAT THIS CASE HAS NOT BEEN SET FOR TRIAL AND IS STILL IN FORMATIVE STAGES, THE COURT WILL ALLOW THE SECOND AMENDED PETITION TO PROCEED. PLAINTIFFS ARGUE THAT MOTIONS TO DISMISS ARE MOOTED BY AMENDMENT. TO THE EXTENT THESE SAME ISSUES APPLY, THEY MAY BE REURGED TO THE AMENDED PETITION. SAME RULING WILL APPLY TO DEFENDANTS MIDWEST ENERGY, VAUGHAN, UNIMARK AND F & M. MATTER IS SET FOR SCHEDULING CONFERENCE ON 6-10-13 AT 9:00 AM. NOTICE MAILED TO STEPHEN PETERS, ROBERT LAWRENCE, LEAH DALEY, JOEL WOHLGEMUTH, AND DAVID KEGLOVITS.
Howard Barnett sought dismissal of Plaintiffs' claims stating stating, in part:
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This Court previously found in unequivocal terms that the "shallow well' was covered by previous litigation.†(See May 20, 2013 Order, copy attached as Exhibit A). This means that the 1927 oil and gas lease held the plaintiffs' lands by production at least as of 1996—years after Mr. Bamett ceased affiliation with Midwest Energy Corporation. But the Second Amended continues to allege—as a basis of all claims for relief—that plaintiffs were unleased mineral owners in the Kilpatrick Unit. (See Second Amended Petition, J 25). This allegation is disposed of by the Court's May 20 Order, and every claim, to the extent premised upon this allegation, must be dismissed as to Mr. Bamett.
Further, plaintiffs—baselessly and wrongfully—seek to pierce the corporate veil as to Mr. Barnett. They allege solely that he received certain funds from Midwest Energy Corporation.' Yet, the plaintiffs bring a claim for conversion against Mr. Barnett personally. Conversion will not lie for money, and the plaintiffs have not alleged, nor could they, that Mr. Bamett was ever personally in possession of any hydrocarbons at issue.
Plaintiffs' constructive fraud claim fails as the plaintiffs have failed to plead it with particularity, among numerous other flaws not at issue in this Motion. Finally, plaintiffs' unjust- enrichment claim fails as to Mr. Bamett because, even under the specious allegations plaintiffs make, any funds Mr. Barnett supposedly received came from Midwest Energy Corporation, not the plaintiffs. Of course, Midwest Energy Corporation was a substantial business in the 1980s, and the plaintiffs do not allege that any funds purportedly belonging to them were paid directly to Mr. Bamett. Rather, the plaintiffs allege that Mr. Bamett received funds from Midwest Energy Corporation—not them. Oklahoma law permits a claim for unjust enrichment only where the defendant was directly enriched by the plaintiff. Indirect unjust enrichment is not permissible.
RELEVANT BACKGROUND AND PROCEDURAL HISTORY
1. As they did in the First Amended Petition, the plaintiffs allege that they own "160 undivided mineral acres in Section 16, Township 5 North, Range 18 East, Latimer County, Oklahoma,†which section "is known as the Kilpatrick Unit.†(Second Amended Petition, p. 3, ¶ 20).
2. The plaintiffs assert that Midwest Energy Corporation ("MECâ€) "reworked an abandoned well in the Kilpatrick Unit.†(Id. at ¶ 21). The Second Amended Petition refers to this well as the "Extra Well.†(See id.).
3. In 1996, Michael Kilpatrick, Mark Kilpatrick, Judy Nixon, and Jean Daniel brought a lawsuit in Latimer County against Atlantic Richfield Company ("ARCOâ€) and Vastar Resources, Inc. ("Vastarâ€) (hereinafter, "the Latimer County litigationâ€). The Latimer County litigation alleged that "an oil and gas lease covering the [SE/4 and the SE/4 NE/4 of Section 16, Township 5 North, Range 18 East in Latimer County, Oklahoma], executed by the Kilpatricks' great uncle, George A. Kilpatrick, on February 18, 1927. . ., had expired automatically.†(See Opinion of the Court of Civil Appeals in Appeal No. DF-95 170, at ¶ 2, copy attached as Exhibit B).2
Defendant F & M Bank offered to allow Plaintiffs to take judgment in their favor pursuant to 12 O.S. 12 O.S. 1101 in the amount of $100 each.
Defendant Hsumy Oil & Gas, Inc. offered to allow Plaintiffs to take judgment in their favor pursuant to 12 O.S. 12 O.S. 1101 in the amount of $1,100 each.
01-10-2014 CTFREE - 88008638 Jan 10 2014 11:10:04:287AM - $ 0.00
CANTRELL, DAMAN: BY AGREEMENT OF ALL PARTIES THE PRETRIAL CONFERENCE SET FOR 1-13-14 IS STRICKEN BY THE COURT. PRETRIAL CONFERENCE TO BE RESET UPON APPLICATION. 4. The Kilpatricks brought claims against ARCO and Vastar for conversion. (Id. at ¶ 3). "For their relief, the Kilpatricks sought immediate cash balancing or balancing in kind, conversion damages from and after their demand for cash balancing and notice not to sell gas, punitive damages, and pre-judgment interest.†Id.
5. Ultimately, following a trial on the merits, the District Court of Latimer County found that the 1927 lease was valid, and that it was held by production. (See id. at ¶ 19). The Court of Civil Appeals affirmed the finding that the 1927 lease was held by production by virtue of a producing well having been commenced during the primary term of the lease. (See Id. at ¶ 38). Moreover, the Court of Civil Appeals found that "the Kilpatricks were not unleased mineral owners in the [Kilpatrick Unit] and [thus] had no right to gas balancing and no claim for conversion.†(Id.).
6. On April 3, 2003, the Oklahoma Supreme Court denied the Kilpatricks' Petition for Certiorari in Appeal No. DF-95 170. (See Docket Sheet, Appeal No. DF-95-170, copy attached as Exhibit C).
7. The 1927 lease at issue in this case is the same lease at issue in the Latimer County Case. (Compare id. at ¶ 2 & n.2, with Exhibit D).
8. In the Second Amended Petition, the plaintiffs allege that Mr. Bamett received proceeds from production through Midwest Energy Corporation. (See Second Amended Petition, ¶ 37).
9. The plaintiffs allege that Mr. Bamett received "proceeds of productionâ€"through†Midwest Energy Corporation, not that Mr. Barnett ever personally received actual possession of any gas. (See id. at ¶J 37, 45).
10. All the plaintiffs allege for the basis of their so-called "constructive fraud†claim is that for the undefined period "[f]or all times prior to 1987†Mr. Barnett purportedly breached an alleged duty under the Production Revenue Standards Act to "inform the Plaintiffs that [the Defendantsl received and were in possession of the proceeds of production from the Extra Well, as well as all proceeds of production as separate and distinct funds to be paid to Plaintiffs.†(Id. at ¶J39. 71-72).
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The first amended petition stated:
1. The Plaintiff, Michael Kilpatrick is a citizen of the State of Florida.
2. The Plaintiff, Judy Nixon is a citizen of the State of Alabama.
3. The Plaintiff, Martha Ann Garrison is a citizen of the State of Texas.
4. The Plaintiff, Roy E. Garrison, Jr. is a citizen of the State of Texas.
5. The Plaintiff, Jean Marie Daniel is a citizen of the State of Colorado.
6. The Defendant, Midwest Energy Corporation ("Midwestâ€) is an Oklahoma corporation with its principal place of business in Tulsa, Oklahoma.
7. The Defendant, Martin A. Vaughan ("Vaughanâ€) is an Oklahoma citizen and a resident of Tulsa County.
8. The Defendant, F & M Bank and Trust Company ("F&Mâ€) is an Oklahoma corporation with its principal place of business in Tulsa, Oklahoma.
9. The Defendant, Utica National Bank and Trust Company ("Uticaâ€) is an Oklahoma corporation with its principal place of business in Tulsa, Oklahoma.
10. The Defendant, Hsumy Oil and Gas, Inc. ("Hsumyâ€) is an Oklahoma corporation with its principal place of business in Oklahoma City, Oklahoma.
11. The Defendant, ARKLA, Inc. ("ARKLAâ€) is a foreign corporation doing business in Oklahoma.
12. The Defendant, Unimark, LLC ("Unimarkâ€) is an Oklahoma limited liability company with its principal place of business in Edmond, Oklahoma.
13. The Defendant, MGas, Inc. ("MGasâ€) is an Oklahoma corporation with its principal place of business in Tulsa.
14. The Defendant, Duke Energy Corporation ("Dukeâ€) is a foreign corporation doing business in Oklahoma.
15. The Defendant, Midwest Energy Companies, Inc. ("MEC, Inc.â€) is a domestic corporation.
16. The Defendant, Midwest Partners Limited Partnership ("Midwest Partnersâ€) is an Oklahoma limited partnership.
17. The Defendant, The Martin A. Vaughan Trust as Amended and Restated April 27, 2007 ("Trustâ€) is a trust formed under the laws of Oklahoma.
18. The Defendant, Howard G. Bamett, Jr. ("Barnettâ€) is an Oklahoma citizen and a resident of Tulsa County.
19. Venue is proper in Tulsa County pursuant to 12 O.S. § 134.
GENERAL ALLEGATIONS AND FACTUAL BACKGROUND
20. The Plaintiffs own 160 undivided mineral acres in Section 16, Township 5 North, Range 18 East, Latimer County, Oklahoma. Section 16 is known as the Kilpatrick Unit.
21. On information and belief, Midwest re-worked an abandoned well in the Kilpatrick Unit (the "Extra Wellâ€).
22. The Plaintiffs' mineral acres are not subject to an oil and gas lease and/or Oklahoma Corporation Commission forced pooling order. Therefore, the Plaintiffs are unleased mineral owners in the Kilpatrick Unit.
23. Midwest, Hsumy, Midwest Partners, MEC, Inc., the Trust, Barnett and/or Vaughan claim or have claimed an interest in the Kilpatrick Unit through a defunct 1927 lease (the "Defunct Leaseâ€).
24. On information and belief, F&M and Utica claimed mortgages on the Defunct Lease and received payment for the gas production from the Extra Well.
25. On information and belief, F&M and Utica received 100% of the revenues from the Extra Well for certain periods of production.
26. On information and belief, ARKLA, Duke, MGas, and Unimark (collectively, the "Purchasersâ€) all purchased 100% of the production from the Extra Well at various times. The Purchasers knew or should have known that there was no valid lease covering the Extra Well. The Purchasers also knew or should have known that no royalties were being paid for production from the Extra Well.
27. On information and belief, ARKLA and MGas both had documents in their possession demonstrating that Bamett, Vaughan, Midwest, MEC, Inc., Midwest Partners, and the Trust were not the owners of the right to drill and produce under an oil and gas lease or force pooling order. ARKLA and MGas knew that the proceeds of production were not being paid to the persons legally entitled to them.
28. A division order title opinion was generated by or for ARKLA which identified the actual mineral interest owner as Plaintiffs' mother, Ella Mae Kilpatrick, from whom they inherited their interest. The division order title opinion also set forth that the lease under which Vaughan, Bamett, Midwest, MEC, Inc., Midwest Partners, and the Trust claim an interest could not be verified as valid.
29. On information and belief, ARKLA, MGas, Duke and Unimark never received a division order from Ella Mae Kilpatrick or the Plaintiffs (collectively, the "Kilpatricksâ€).
30. None of the Defendants has paid royalties for production from the Extra Well.
31. On information and belief, Midwest, MEC, Inc., Midwest Partners, the Trust, Vaughan, Barnett and Hsumy have produced and sold gas from the Extra Well.
32. On information and belief, Midwest, Midwest Partners, MEC, Inc., and the Trust are all alter egos of Vaughan. Vaughan has operated this series of like-named companies in an apparent effort to confuse creditors. Prior to August 1987, Midwest was operated as the alter ego of Bamett.
33. Plaintiffs anticipate the necessity of adding additional defendants once discovery in this matter has identified the other individuals who are participating in the theft of natural gas from the Kilpatrick Unit.
COUNT I: CONVERSION
34. Plaintiffs incorporate the preceding paragraphs.
35. No Defendant has or had a valid lease to explore for or produce hydrocarbons from the Kilpatrick Unit.
36. All substances produced through the Extra Well become the personal property of the Plaintiffs upon being produced.
37. On information and belief, Midwest, Midwest Partners, MEC, Inc., the Trust, Vaughan, Bamett, F&M, Utica, and Hsumy received 100% of the revenues for sale of production from the Extra Well.
38. On information and belief, ARKLA, MGas, Unimark and Duke took possession of 100% of the gas produced from the Extra Well.
39. No Defendant was authorized to transport, process, purchase, use or sell any products produced from the Kilpatrick Unit.
40. The Plaintiffs did not consent to the production or disposition of any hydrocarbons from the Extra Well. No Plaintiff has executed a division order for this well.
41. Midwest, Midwest Partners, MEC, Inc., the Trust, Vaughan, Bamett, F&M, Utica, and Hsumy knew that the Kilpatricks were entitled to the proceeds of production.
42. Midwest, Midwest Partners, MEC, Inc., the Trust, Vaughan, Barnett, F&M, Utica, and Hsumy concealed from the Kilpatricks that they were producing gas from the well.
43. The Plaintiffs have been damaged by Defendants' unauthorized disposition of the Plaintiffs' personal property.
COUNT II: DECLARATORY RELIEF
44. Plaintiffs incorporate the preceding paragraphs.
45. The 1927 lease filed in Latimer County by Midwest expired under its own terms a decade before a well was produced on the Kilpatrick Unit.
46. The Plaintiffs seek a declaration from the Court that Vaughan, MEC, Inc., Midwest Partners, the Trust, Barnett, Midwest and Hsumy had and have no valid lease on the Kilpatrick Unit.
COUNT III: BREACH OF THE OKLAHOMA PRODUCTION
REVENUE STANDARDS ACT
47. Plaintiffs incorporate the preceding paragraphs.
48. Under 52 O.S. § 540, et seq. (subsequently renumbered as the Oklahoma Production Revenue Standards Act, 52 O.S. § 570.1, et seq.,) the Defendants are required to maintain all proceeds from the sale of production as separate and distinct funds until such time as such proceeds are paid to the Plaintiffs, the owners legally entitled thereto.
49. The Oklahoma Production Revenue Standards Act further provides that the Defendants were required to remit those proceeds of production in a timely manner.
50. Midwest, MEC, Inc., Midwest Partners, the Trust, Hsumy, F&M, Utica, Barnett and Vaughan, in violation of the Oklahoma Production Revenue Standards Act, have failed to pay royalties to the Plaintiffs. Instead, these Defendants received and kept 100% of the proceeds of production from the Extra Well in violation of the Production Revenue Standards Act.
51. On information and belief, Midwest, MEC, Inc., Midwest Partners, the Trust, Hsumy, F&M, Utica, Barnett and Vaughan directly received 100% of the Proceeds of Production from the Extra Well and failed to pay royalties due thereon.
52. The Defendants are all sophisticated participants in the natural gas industry and were aware of the requirements of the Production Revenue Standards Act to remit the Proceeds of Production to the royalty owners in a timely fashion. Each of the Defendants failed to remit the Proceeds of Production from the Extra Well to the owners legally entitled thereto under the Production Revenue Standards Act.
53. Midwest, MEC, Inc., Midwest Partners, the Trust and MGas are all alter egos of Vaughan. Upon information and belief, the formalities of separate corporate existence between Vaughan and Midwest, MEC, Inc., Midwest Partners, the Trust and MGas were not observed. Their alleged separate corporate existence has been and is continuing to be used to work an inequity on Plaintiffs. The separate corporate existence of these entities should be disregarded and Vaughan should be held liable for Midwest's, MEC, Inc.'s, Midwest Partners', the Trust's and MGas's debts.
54. Prior to August 1987, Midwest was an alter ego of Barnett. Upon information and belief, the formalities of separate corporate existence between Barnett and Midwest were not observed. Their alleged separate corporate existence was used to work an inequity on Plaintiffs. The separate corporate existence of these entities should be disregarded and Barnett should be held liable for Midwest's debts.
COUNT IV: CONSTRUCTIVE FRAUD
55. Plaintiffs incorporate the preceding paragraphs.
56. Under 52 O.S. § 540, renumbered as §570.10, ARKLA, MGas, Duke and Unimark were required to maintain all proceeds from the sale of production as separate and distinct funds until such time as such proceeds were paid to the owners legally entitled thereto.
57. ARKLA, MGas, Duke and Unimark knew that the Kilpatricks were the owners legally entitled to the proceeds of production.
58. ARKLA, MGas, Duke and Unimark knew that the Kilpatricks were not receiving said proceeds.
59. ARKLA, MGas, Duke and Unimark knew that the proceeds of production were being paid to the wrong parties.
60. ARKLA, MGas, Duke and Unimark had an obligation as the first purchasers to inform the Kilpatricks of the disposition of the proceeds of production.
61. ARKLA, MGas, Duke and Unimark all failed to inform the Kilpatricks that production had occurred and that they held funds belonging to the Kilpatricks.
62. As the party improperly receiving the proceeds of production, Midwest, Midwest Partners, MEC, Inc., the Trust, Vaughan, Barnett, F&M, Utica, and Hsumy all knew that the Kilpatricks were not receiving the proceeds to which they were entitled.
63. Midwest, Midwest Partners, MEC, Inc., the Trust, Vaughan, Bamett, F&M, Utica, and Hsumy had an obligation to inform the Kilpatricks that they were in possession of the proceeds of production.
64. Midwest, Midwest Partners, MEC, Inc., the Trust, Vaughan, Bamett, F&M, Utica, and Hsumy all failed to inform the Kilpatricks that they had possession of proceeds rightfully belonging to the Kilpatricks.
65. The Plaintiffs were damaged by the actions of the Defendants.
COUNT V: UNJUST ENRICHMENT
66. Plaintiffs incorporate by reference all prior allegations set forth above.
67. As a result of Defendants' conduct described hereinbefore in Counts I through IV, Defendants have been unjustly enriched and have wrongfully obtained monies and benefits which should have been realized by Plaintiffs. By failing to pay the proceeds of production to Plaintiffs, Defendants have unjustly realized a business profit. Defendants ought not be allowed to retain such amounts.
PRAYER FOR RELIEF
68. The Plaintiffs pray for judgment against the Defendants and in favor of themselves for the following relief: (1) money damages, the amount of which is presently unknown, but is believed to be in excess of $75,000.00, exclusive of interest and costs; (2) punitive damages as a result of Defendants' malicious, wanton, willful, intentional and reckless disregard of the rights of Plaintiffs, in an amount sufficient to deter Defendants from such future conduct; (3) a declaration by the Court that Defendants had no right, title, or interest in any production from the Plaintiffs' interest since there was no valid lease covering the Plaintiffs' interest in the Kilpatrick Unit; and (4) such other relief to which Plaintiffs show they are entitled.
Hsumy Oil & Gas, Inc. appeared and answered as follows:
1-9. HSUMY lacks sufficient information either to admit or deny the allegations contained in ¶f 1-7.
10. HSUMY admits that it is an Oklahoma corporation. HSUMY denies that its principal place of business is located in Oklahoma City.
11-18. HSUMY lacks sufficient information either to admit or deny the allegations contained in ¶J 11-18.
19. HSUMY admits the allegations contained in ¶ 19.
20-21. HSUMY lacks sufficient information either to admit or deny the allegations contained in ¶J 20-21.
22. HSUMY denies the allegations contained in ¶ 22.
23. To the extent the allegations contained in ¶ 23 are directed to HSUMY, HSUMY1 admits that it previously received, and subsequently assigned, interests related to mineral leases in Section 16, Township 5 North, Range 18 East in Latimer County, Oklahoma. HSUMY denies that the referenced 1927 lease is "defunct.â€
24-25. HSUMY lacks sufficient information either to admit or deny the allegations contained in ¶f 24-25.
26-29. The allegations of ¶11 26-29 are not directed to FISUMY and require no response from HSUMY.
30. FISUMY lacks sufficient information either to admit or deny the allegations contained in ¶ 30.
31. To the extent the allegations contained in ¶ 31 are directed to FISUMY, HSUMY admits that it previously received interests related to mineral leases in Section 16, Township 5 North, Range 18 East in Latimer County, Oklahoma, HSUMY lacks sufficient information either to admit or to deny that it produced and sold gasfrom the "Extra Well.â€
32-33. The allegations of ¶f 32-33 are not directed to HSUMY and require no response from HSUMY.
34. The allegations off 34 require no response.
35-37. To the extent the allegations contained in ¶J 35-37 are directed to HSUMY, HSUMY denies those allegations.
38. The allegations of ¶f 38 are not directed to USUMY and require no response from HSUMY.
39-40. HSUMY denies the allegations contained in ¶f 39-40.
41-43. To the extent the allegations contained in ¶f 41-43 are directed to 1-ISUMY, HSUMY denies those allegations.
44. The allegations of ¶ 44 require no response.
45. FISUMY denies the allegations contained in ¶ 45.
46. To the extent the allegations of ¶ 46 require any response, USUMY denies that Plaintiffs are entitled to the requested declaratory relief.
47. The allegations off 47 require no response.
48-49. The allegations of ¶j 48-49 state only legal conclusions to which no response is required.
50-51. To the extent the allegations contained in ¶ 50-51 are directed to HSUMY, HSUMY denies that it has taken action in violation of the PRSA, lacks sufficient information either to admit or to deny that it has paid not royalties to Plaintiffs, and denies that it has received 100% of the proceeds of production from the "Extra Well.â€
52. To the extent the allegations contained in ¶ 52 are directed to HSUMY, HSUMY denies that it is a sophisticated participant in the natural gas industry and lacks sufficient information either to admit or to deny that each of the Defendants failed to remit the proceeds of production from the Extra Well to legally entitled owners. 53-54, The allegations of 53-54 are not directed to HSUMY and require no response from HSUMY.
55. The allegations of ¶ 55 require no response.
56-61. The allegations of ¶ 56-61 are not directed to HSUMY and require no response from HSUMY.
62. To the extent the allegations contained in ¶ 62 are directed to USUMY, HSUMY denies that it "improperly†received any proceeds of production and denies that it knew Plaintiffs were not receiving proceeds "to which they were entitled.â€
63. The allegations of ¶ 63 state only a legal conclusion to which no response is required.
64. To the extent the allegations contained in ¶ 64 are directed to HSUMY, HSUMY lacks sufficient infornution either to admit or to deny that it received possession of proceeds "rightfully belonging to the Kilpatricks.â€
65. To the extent the allegations contained in ¶ 65 are directed to HSUMY, HSUMY denies that Plaintiffs were damaged in any manner by any act of HSUMY.
66. The allegations ofJ 66 require no response.
67. To the extent the allegations contained in ¶ 67 are directed to HSUMY, HSUMY denies all such allegations.
68. HSUMY denies that Plaintiffs can be entitled to any requested relief from HSUMY.
Defenses
1. Plaintiffs' claims are barred by applicable limitations periods.
2. "Conversion†of money or of debt is a legal impossibility pursuant to Oklahoma law.
3. HSUMY has no "special relationship†of any kind with any Plaintiff in relation to the alleged facts of this action.
4. Plaintiffs have failed to plead reliance upon any alleged omission by 1-ISUMY.
5. Plaintiffs' claims are bared by laches.
6. Plaintiffs are collaterally stopped from relitigating the issue of whether the 1927 lease was held by production in paying quantifies, as they have previously received an adverse determination upon the same allegations in Kilpatrick v. Atlantic Richfield Company and Vastar Resources Inc., No. 95,170 (Okia. Ct. App. 2003).
WHEREFORE, having fully answered, HSUMY asks the Court to determine that Plaintiffs are not entitled to any of the relief requested in their Petition against HSUMY, and that HSUMY should recover its reasonable fees, costs and expenses as allowed by law.
05-20-2013 CTFREE - 85512971 May 20 2013 3:01:20:443PM - $ 0.00 CANTRELL, DAMAN: THE COURT AGREES WITH THE ANALYSIS PROVIDED BY DEFENDANT BARNETT REGARDING WHETHER THE "SHALLOW WELL†WAS GOVERNED BY PREVIOUS LITIGATION. THE LATIMER COUNTY ORDER DOES NOT MAKE A DISTINCTION BETWEEN FORMATIONS BUT REFERS TO "THE ENTIRE SECTION.†HOWEVER, GIVEN THAT THIS CASE HAS NOT BEEN SET FOR TRIAL AND IS STILL IN FORMATIVE STAGES, THE COURT WILL ALLOW THE SECOND AMENDED PETITION TO PROCEED. PLAINTIFFS ARGUE THAT MOTIONS TO DISMISS ARE MOOTED BY AMENDMENT. TO THE EXTENT THESE SAME ISSUES APPLY, THEY MAY BE REURGED TO THE AMENDED PETITION. SAME RULING WILL APPLY TO DEFENDANTS MIDWEST ENERGY, VAUGHAN, UNIMARK AND F & M. MATTER IS SET FOR SCHEDULING CONFERENCE ON 6-10-13 AT 9:00 AM. NOTICE MAILED TO STEPHEN PETERS, ROBERT LAWRENCE, LEAH DALEY, JOEL WOHLGEMUTH, AND DAVID KEGLOVITS.
Howard Barnett sought dismissal of Plaintiffs' claims stating stating, in part:
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This Court previously found in unequivocal terms that the "shallow well' was covered by previous litigation.†(See May 20, 2013 Order, copy attached as Exhibit A). This means that the 1927 oil and gas lease held the plaintiffs' lands by production at least as of 1996—years after Mr. Bamett ceased affiliation with Midwest Energy Corporation. But the Second Amended continues to allege—as a basis of all claims for relief—that plaintiffs were unleased mineral owners in the Kilpatrick Unit. (See Second Amended Petition, J 25). This allegation is disposed of by the Court's May 20 Order, and every claim, to the extent premised upon this allegation, must be dismissed as to Mr. Bamett.
Further, plaintiffs—baselessly and wrongfully—seek to pierce the corporate veil as to Mr. Barnett. They allege solely that he received certain funds from Midwest Energy Corporation.' Yet, the plaintiffs bring a claim for conversion against Mr. Barnett personally. Conversion will not lie for money, and the plaintiffs have not alleged, nor could they, that Mr. Bamett was ever personally in possession of any hydrocarbons at issue.
Plaintiffs' constructive fraud claim fails as the plaintiffs have failed to plead it with particularity, among numerous other flaws not at issue in this Motion. Finally, plaintiffs' unjust- enrichment claim fails as to Mr. Bamett because, even under the specious allegations plaintiffs make, any funds Mr. Barnett supposedly received came from Midwest Energy Corporation, not the plaintiffs. Of course, Midwest Energy Corporation was a substantial business in the 1980s, and the plaintiffs do not allege that any funds purportedly belonging to them were paid directly to Mr. Bamett. Rather, the plaintiffs allege that Mr. Bamett received funds from Midwest Energy Corporation—not them. Oklahoma law permits a claim for unjust enrichment only where the defendant was directly enriched by the plaintiff. Indirect unjust enrichment is not permissible.
RELEVANT BACKGROUND AND PROCEDURAL HISTORY
1. As they did in the First Amended Petition, the plaintiffs allege that they own "160 undivided mineral acres in Section 16, Township 5 North, Range 18 East, Latimer County, Oklahoma,†which section "is known as the Kilpatrick Unit.†(Second Amended Petition, p. 3, ¶ 20).
2. The plaintiffs assert that Midwest Energy Corporation ("MECâ€) "reworked an abandoned well in the Kilpatrick Unit.†(Id. at ¶ 21). The Second Amended Petition refers to this well as the "Extra Well.†(See id.).
3. In 1996, Michael Kilpatrick, Mark Kilpatrick, Judy Nixon, and Jean Daniel brought a lawsuit in Latimer County against Atlantic Richfield Company ("ARCOâ€) and Vastar Resources, Inc. ("Vastarâ€) (hereinafter, "the Latimer County litigationâ€). The Latimer County litigation alleged that "an oil and gas lease covering the [SE/4 and the SE/4 NE/4 of Section 16, Township 5 North, Range 18 East in Latimer County, Oklahoma], executed by the Kilpatricks' great uncle, George A. Kilpatrick, on February 18, 1927. . ., had expired automatically.†(See Opinion of the Court of Civil Appeals in Appeal No. DF-95 170, at ¶ 2, copy attached as Exhibit B).2
Defendant F & M Bank offered to allow Plaintiffs to take judgment in their favor pursuant to 12 O.S. 12 O.S. 1101 in the amount of $100 each.
Defendant Hsumy Oil & Gas, Inc. offered to allow Plaintiffs to take judgment in their favor pursuant to 12 O.S. 12 O.S. 1101 in the amount of $1,100 each.
01-10-2014 CTFREE - 88008638 Jan 10 2014 11:10:04:287AM - $ 0.00
CANTRELL, DAMAN: BY AGREEMENT OF ALL PARTIES THE PRETRIAL CONFERENCE SET FOR 1-13-14 IS STRICKEN BY THE COURT. PRETRIAL CONFERENCE TO BE RESET UPON APPLICATION. 4. The Kilpatricks brought claims against ARCO and Vastar for conversion. (Id. at ¶ 3). "For their relief, the Kilpatricks sought immediate cash balancing or balancing in kind, conversion damages from and after their demand for cash balancing and notice not to sell gas, punitive damages, and pre-judgment interest.†Id.
5. Ultimately, following a trial on the merits, the District Court of Latimer County found that the 1927 lease was valid, and that it was held by production. (See id. at ¶ 19). The Court of Civil Appeals affirmed the finding that the 1927 lease was held by production by virtue of a producing well having been commenced during the primary term of the lease. (See Id. at ¶ 38). Moreover, the Court of Civil Appeals found that "the Kilpatricks were not unleased mineral owners in the [Kilpatrick Unit] and [thus] had no right to gas balancing and no claim for conversion.†(Id.).
6. On April 3, 2003, the Oklahoma Supreme Court denied the Kilpatricks' Petition for Certiorari in Appeal No. DF-95 170. (See Docket Sheet, Appeal No. DF-95-170, copy attached as Exhibit C).
7. The 1927 lease at issue in this case is the same lease at issue in the Latimer County Case. (Compare id. at ¶ 2 & n.2, with Exhibit D).
8. In the Second Amended Petition, the plaintiffs allege that Mr. Bamett received proceeds from production through Midwest Energy Corporation. (See Second Amended Petition, ¶ 37).
9. The plaintiffs allege that Mr. Bamett received "proceeds of productionâ€"through†Midwest Energy Corporation, not that Mr. Barnett ever personally received actual possession of any gas. (See id. at ¶J 37, 45).
10. All the plaintiffs allege for the basis of their so-called "constructive fraud†claim is that for the undefined period "[f]or all times prior to 1987†Mr. Barnett purportedly breached an alleged duty under the Production Revenue Standards Act to "inform the Plaintiffs that [the Defendantsl received and were in possession of the proceeds of production from the Extra Well, as well as all proceeds of production as separate and distinct funds to be paid to Plaintiffs.†(Id. at ¶J39. 71-72).
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Outcome:
11-04-2013 CTFREE - 87358960 Nov 4 2013 2:29:47:547PM - $ 0.00 CANTRELL, DAMAN: THE COURT'S DECISION ON HEARING HELD ON 10-18-13. F&M BANK'S MOTION TO DISMISS SECOND AMENDED PETITION (COUNTS I, II, AND II) IS GRANTED. JOURNAL ENTRY ENTERED AND GRANTED BY THE COURT.
01-07-2014 DISPCVDMWP 2 F & M BANK AND TRUST COMPANY 87971584 Jan 8 2014 8:56:45:797AM - $ 0.00 DISMISSAL WITH PREJUDICE
01-07-2014 DISPCVDMWP 2 HSUMY INC 87971585 Jan 8 2014 8:56:45:997AM - $ 0.00 DISMISSAL WITH PREJUDICE
01-07-2014 DISPCVDMWP 2 Utica National Bank And Trust Company 87971586 Jan 8 2014 8:56:46:057AM - $ 0.00 DISMISSAL WITH PREJUDICE
01-07-2014 DISPCVDMWP 3 F & M BANK AND TRUST COMPANY 87971587 Jan 8 2014 8:56:46:087AM - $ 0.00 DISMISSAL WITH PREJUICE
01-07-2014 DISPCVDMWP 3 HSUMY INC 87971588 Jan 8 2014 8:56:46:107AM - $ 0.00 DISMISSAL WITH PREJUDICE
01-08-2014 DISPCVDMWP 3 Utica National Bank And Trust Company 87971589 Jan 8 2014 8:56:46:157AM - $ 0.00 DISMISSAL WITH PREJUDICE
Dismissed without prejudice as to Arkla, Inc., Unimark, LLC and Duke Energy and with prejudice as to F & M Bank and Trust company, Hsumy, Inc. and Untical National Bank
Summary judgment in favor of Midwest Energy and Martin A. Vaughan
01-07-2014 DISPCVDMWP 2 F & M BANK AND TRUST COMPANY 87971584 Jan 8 2014 8:56:45:797AM - $ 0.00 DISMISSAL WITH PREJUDICE
01-07-2014 DISPCVDMWP 2 HSUMY INC 87971585 Jan 8 2014 8:56:45:997AM - $ 0.00 DISMISSAL WITH PREJUDICE
01-07-2014 DISPCVDMWP 2 Utica National Bank And Trust Company 87971586 Jan 8 2014 8:56:46:057AM - $ 0.00 DISMISSAL WITH PREJUDICE
01-07-2014 DISPCVDMWP 3 F & M BANK AND TRUST COMPANY 87971587 Jan 8 2014 8:56:46:087AM - $ 0.00 DISMISSAL WITH PREJUICE
01-07-2014 DISPCVDMWP 3 HSUMY INC 87971588 Jan 8 2014 8:56:46:107AM - $ 0.00 DISMISSAL WITH PREJUDICE
01-08-2014 DISPCVDMWP 3 Utica National Bank And Trust Company 87971589 Jan 8 2014 8:56:46:157AM - $ 0.00 DISMISSAL WITH PREJUDICE
Dismissed without prejudice as to Arkla, Inc., Unimark, LLC and Duke Energy and with prejudice as to F & M Bank and Trust company, Hsumy, Inc. and Untical National Bank
Summary judgment in favor of Midwest Energy and Martin A. Vaughan
Plaintiff's Experts:
Defendant's Experts:
Comments:
About This Case
What was the outcome of Michael Kilpatrick v. Midwest Energy Corporation, Martin ...?
The outcome was: 11-04-2013 CTFREE - 87358960 Nov 4 2013 2:29:47:547PM - $ 0.00 CANTRELL, DAMAN: THE COURT'S DECISION ON HEARING HELD ON 10-18-13. F&M BANK'S MOTION TO DISMISS SECOND AMENDED PETITION (COUNTS I, II, AND II) IS GRANTED. JOURNAL ENTRY ENTERED AND GRANTED BY THE COURT. 01-07-2014 DISPCVDMWP 2 F & M BANK AND TRUST COMPANY 87971584 Jan 8 2014 8:56:45:797AM - $ 0.00 DISMISSAL WITH PREJUDICE 01-07-2014 DISPCVDMWP 2 HSUMY INC 87971585 Jan 8 2014 8:56:45:997AM - $ 0.00 DISMISSAL WITH PREJUDICE 01-07-2014 DISPCVDMWP 2 Utica National Bank And Trust Company 87971586 Jan 8 2014 8:56:46:057AM - $ 0.00 DISMISSAL WITH PREJUDICE 01-07-2014 DISPCVDMWP 3 F & M BANK AND TRUST COMPANY 87971587 Jan 8 2014 8:56:46:087AM - $ 0.00 DISMISSAL WITH PREJUICE 01-07-2014 DISPCVDMWP 3 HSUMY INC 87971588 Jan 8 2014 8:56:46:107AM - $ 0.00 DISMISSAL WITH PREJUDICE 01-08-2014 DISPCVDMWP 3 Utica National Bank And Trust Company 87971589 Jan 8 2014 8:56:46:157AM - $ 0.00 DISMISSAL WITH PREJUDICE Dismissed without prejudice as to Arkla, Inc., Unimark, LLC and Duke Energy and with prejudice as to F & M Bank and Trust company, Hsumy, Inc. and Untical National Bank Summary judgment in favor of Midwest Energy and Martin A. Vaughan
Which court heard Michael Kilpatrick v. Midwest Energy Corporation, Martin ...?
This case was heard in District Court, Tulsa County, Oklahoma, OK. The presiding judge was Daman H. Cantrell.
Who were the attorneys in Michael Kilpatrick v. Midwest Energy Corporation, Martin ...?
Plaintiff's attorney: Terry J. Barker, Joseph C. Woltz, Robert N. Lawrence and Kelly Jean Melina Tompksins. Defendant's attorney: Tulsa Criminal Defense Lawyer Directory.
When was Michael Kilpatrick v. Midwest Energy Corporation, Martin ... decided?
This case was decided on January 31, 2014.