A group of Fort Worth area mineral owners, including members of the wealthy Bass family, prevailed this past week in a summary judgment ruling that supports one of their fundamental claims in their lawsuit against Chesapeake Energy entities.
The lawsuit, which goes to trial on Sept. 8 in Dallas federal court, claims Oklahoma City-based Chesapeake cheated the plaintiffs out of substantial royalty payments for oil and gas leases they own in Tarrant and Johnson counties. Plaintiffs are seeking up to $18.3 million in damages.
In his 18-page ruling, U.S. District Judge Ed Kinkeade determined that Chesapeake violated its leasing contract with the leaseholder plaintiffs by deducting post-production expenses from royalty payments. The ruling is believed to be one of the first summary judgment rulings in favor of plaintiffs in mineral rights cases since the June Texas Supreme Court decision, Chesapeake v. Hyder, which gave plaintiffs encouragement of prevailing in these kinds of cases.
Judge Kinkeade did not address damages in his ruling, so jurors will determine those at trial. They will also determine the plaintiffs’ two remaining claims.
One is that Chesapeake used an incorrect pricing method to determine royalty payments, which in turn caused the leaseholders to be underpaid. The other is that Chesapeake failed to act as a prudent operator for certain wells by connecting them in an affiliate-owned gathering system that lacked the ability to process gas, which diminished the value of the plaintiffs’ assets.
Judge Kinkeade denied nearly all of Chesapeake’s summary judgment claims.
“We’re looking forward to our day in court; we have two more very good claims that we’re eager to press forward,” said Daniel Charest of Burns Charest in Dallas, who is representing the plaintiffs.
Chesapeake’s lead lawyer, Christopher Sileo of the Austin law firm Scott Douglass & McConnico, and Chesapeake spokesman Gordon Pennoyer, declined to comment on the case.
In court documents, Chesapeake denies the plaintiffs’ claims and contends they owe the plaintiffs nothing.