1 

### STATE OF WEST VIRGINIA

SUPREME COURT OF APPEALS

Cunningham Energy, LLC

, Proposed Intervenor Below, Petitioner

v s

. ) No. 20

- 0346 ( Kanawha County 20

- P

- 20 )

Board of Education of the County of Kanawha, a Statutory Corporation

, Petitioner Below, Respondent



### MEMORANDUM DECISION

Petitioner Cunningham Energy, LLC , by counsel Gerald M. Titus III, Travis H. Eckley, and Wesley A

. Shumway

, appeals the March 10, 2020 , order of the Circuit Court of Kanawha County denying its motion to intervene in the underlying condemnation action

. Respondent Board of Education of the County of Kanawha , by counsel J. Nicholas Barth , filed a response in support

of the circuit court’s order. Petitioner filed a reply.

This Court has considered the parties ’ briefs and the record on appeal. The facts and legal arguments are adequately presented, and the decisional process would not be significantly aide d by oral argument. Upon consideration of the standard of review, the briefs, and the record presented, the Court finds that the court below erred by failing to apply the correct standard in ruling on petitioner’s motion to intervene

. Accordingly, we rever se the circuit court’s order and

remand this case for further proceedings consistent with this decision. Because this case satisfies the “limited circumstances” requirement of Rule 21(d) of the West Virginia Rules of Appellate Procedure, we find that a mem orandum decision is appropriate to resolve the issues presented.

The dispute in this case concern s a 34.66

- acre parcel of land (“the parcel”) in Kanawha County and the mineral interests underneath and adjacent to the parcel. Until her death i n March

of 20 11, Patsy Haas owned the surface of the parcel. She died intestate, and her children

, Kelly

Barnhart and James Ha a s, Jr.

, each inherited an undivided one

- half interest in the surface of the parcel. On August 11, 2011, by general warranty deed, petitioner obtained an interest in the surface of the parcel. 1 Beginning in 2010 and continuing through September 2018, petitioner a lso

1 Petitioner and respondent dispute whether petitioner obtained only Kelly Barnhart’s interest in the surface of the parcel or whether petitioner obtained both Kelly Barnhart’s interest

and James Ha a s, Jr.’s interest. Regardless, petitioner was assessed the county property taxes on the full surface of the parcel from tax year 2013 through 2019, and petitioner paid those taxes. 

### FILED

March 23, 2021

EDYTHE NASH GAISER , CLERK

SUPREME COURT OF APPEALS

OF WEST VIRGINIA2 accumulated various leasehold interests in the minerals underneath the parcel and underneath the property surrounding the parcel. 2 Petitioner is a business that owns and develops oil and gas

interests.

On November 29, 2018, petitioner and Vesta O&G H oldings, LLC (“Vesta”) executed a

l etter of i ntent (“the f irst LOI”), agreeing that Vesta would form a Delaware limited liability company for the purpose of acquiring and holding certain real property and leases held by petitioner (“the assets”). Among oth er things, the assets included petitioner’s interest in the surface of the parcel, petitioner’s leasehold interests in the minerals underneath the parcel, and petitioner’s leasehold interests in minerals underneath property adjacent to the parcel. Under th e f irst LOI, petitioner proposed transferring the assets to Vesta for Vesta to then transfer to a new limited liability company. Petitioner would be offered a minority ownership position in the new company, and Vesta would contribute capital to pay certain debts of petitioner and fund the drilling of seven

oil wells in West Virginia. Petitioner claims that, within days of executing the f irst LOI, Vesta began paying petitioner’s debts as agreed, and on December 4, 2018, petitioner transferred the

assets to V esta. Petitioner claims that although Vesta formed the new limited liability company as agreed, Vesta did not transfer the assets to that company.

I n December of 2018, petitioner applied to the West Virginia Department of Environmental Protection (“WVDEP”) for five “ w ell work ” p ermits for shallow horizontal oil wells. 3 The following February, petitioner applied to the WVDEP for two additional p ermits. The applicat ions for the permits proposed that a well pad would be located on the surface of the parcel, with

“ laterals ” extending through and beyond the parcel. WVDEP granted the applications and issued

the seven permits in February and March of 2019.

Meanwhile, res pondent was considering the parcel as the location for a new elementary school. On March 19, 2019, respondent purchased a special warranty deed from James Ha a s, Jr. purporting to convey to respondent a one

- half undivided interest in the surface of the parc el.

On May 15, 2019, petitioner filed a lawsuit against Vesta in federal district court, alleging, among other things, that Vesta had breach ed the terms set forth in the f irst LOI. Vesta asserted a counterclaim against petitioner. A few months later, on October 18, 2019

, they executed a second

l etter of i ntent (“the s econd LOI”) along with a Memorandum of Understanding (“MOU”). Through these two documents, petitioner and Vesta agreed to dismiss all claims pending in federal

district court withou t prejudice. The claims were eventual ly dismissed as agreed. Petitioner and Vesta also agreed to perform certain proposed transactions by November 15, 2019. The s econd LOI stated that, “[i]n the event the parties do not consummate the Proposed Transaction by [] [November 15, 2019], the [assets] shall be immediately assigned back to [petitioner].”

2 We note that while the appendix record includes information concerning the various mineral leases obtained by petitioner , such as when they were obtained and from whom , these details are not germane to the resolution of this appeal.

3 “ It is unlawful for any person to commence any well work, including site preparation work which involves any disturbance of land, without first securing from the [ WVDEP ] a well work permit. ” W . Va. Code § 22

- 6

- 6 (a) (in part)

.3 The s econd LOI and the MOU acknowledged that the parcel would most likely be sold or condemned so that a school could be built on the parcel. The MOU stated that “ [c] ondemnation and subsequent construction of the school would disrupt and effectively prohibit planned development of oil and gas resources underlying the [parcel], [and] the valuation of such development is projected to be $42,000,000 in present day term s.” In the MOU, petitioner and Vesta agreed that, upon sale or condemnation of the parcel, Vesta would receive the first $5,000,000 and the remaining funds would be distributed as follows:

(1) if Vesta and [petitioner] are able to finalize a deal for further development of West Virginia and Canada resources, the next $25,000,000 of proceeds from the [parcel] will be allocated to development and operation of West Virginia resources, with any remaining funds directed to Canada operations. (2) If, after good

- faith ne gotiation, a deal for further development in West Virginia

and Canada is not reached, the any [sic] remaining proceeds from the sale of the [parcel] (i.e. those above the first $5,000,000) will be allocated as follows: 80% to [petitioner] and 20% to Vesta. Additionally, all leaseholds and other interests previously transferred to Vesta from [petitioner] would be conveyed/transferred to [petitioner].

Petitioner obtained a report from a licensed professional engineer estimating the present

value of future re venue that would be lost if petitioner was unable to drill seven horizontal wells. That report estimated the lost revenue would total $58,800,000. The report also estimated that an additional $21,000,000 would have been paid to the royalty owners during th e estimated years of production. By letter dated October 31, 2019, Petitioner and Vesta jointly offered to sell their interests in the parcel to respondent for $42,000,000. Respondent did not accept the offer.

Petitioner alleges that Vesta did not comply with the s econd LOI and that Vesta failed to consummate the transactions proposed in the s econd LOI by November 15, 2019. Thereafter, in December of 2019 and January of 2020, petitioner made demands of Vesta to return the assets.

Vesta did not return the a ssets to petitioner.

On January 16, 2020, respondent filed a petition for condemnation of the parcel and the mineral interests underlying the parcel (“the subject property”) in the Circuit Court of Kanawha County

. Vesta was named as a respondent in that p roceeding . Petitioner was not.

On January 24, 2020, petitioner filed a second lawsuit against Vesta in federal district court, alleging breaches of the f irst LOI, the s econd LOI, and the MOU, and asking that Vesta be required to perform its obligations un der the f irst LOI or return the assets to petitioner. Four days later, on January 28, 2020, petitioner filed a notice of lis pendens in the federal action seeking to enforce an equitable ownership interest in the parcel, the leasehold interests in the mine rals underneath the parcel, and the leasehold interests in the minerals underneath the property surrounding the parcel.4 The lis pendens was recorded in Kanawha County’s property records on February 19, 2020. The

federal lawsuit is still pending. 4

Petitio ner filed a motion to intervene in the condemnation action on February 19, 2020, arguing that it has a right to intervene under Rule 24(a)(2) of the West Virginia Rules of Civil

Procedure and State ex rel. Ball v. Cummings , 208 W. Va. 393, 540 S.E.2d 917 (1999) . The circuit court held a hearing on the motion on February 26, 2020

. Although petitioner asserted that it was the rightful owner of the subject property pursuant to the second LOI

, r espondent opposed

intervention , stating, “ I would suggest it b e reversible error to allow a non

- deed holding party as a defendant in a condemnation action.” Vesta did not take a position as to whether petitioner should be permitted to intervene. The circuit court denied petitioner’s motion , explaining, “I believe tha t because at the time of the filing of this petition there was no notice other than this deed, that the motion to intervene is not proper in this case.”

The circuit court entered an order on March 10, 2020, memorializing its ruling from the hearing. The c ircuit court found that, as of the date the petition for condemnation was filed, petitioner owned no interest in the subject property because petitioner had conveyed its interest in the surface of the parcel and its leasehold interests in the underlying mi nerals to Vesta. The circuit court also found that the lis pendens was filed after the petition for condemnation was filed. The circuit court, in denying the motion to intervene, concluded that petitioner had no interest in the subject property and

, theref ore, was not a proper party to the condemnation proceeding

.

Petitioner appeals the circuit court’s March 10, 2020 order. 5 In its sole assignment of error, petitioner argues that the circuit court applied the wrong legal standard in denying its motion to intervene as a matter of right

. Petitioner asserts that it was not required to produce proof that it was

the record owner of the s ubject property at the time the petition for condemnation was filed

. Likewise, petitioner avers that it was not required to have record notice of a claimed property

interest in the subject property at the time the petition for condemnation was filed. Rathe r, petitioner contends that it was only required to show a direct and substantial interest in the subject

property and that it made such a showing in this case

. Accordingly, petitioner states that the circuit court’s decision to deny the motion was in erro r.

4 In the federal action, petiti oner asked the federal district court to grant its motion for “ a mandatory preliminary injunction requiring the specific performance” of the second LOI and requir e Vesta to return the assets. Cunningham Energy, LLC v. Vesta O&G Holdings, LLC , No.

2:20

- cv

- 0 0061, 2020 WL 6140463, at *3 (S.D. W. Va. May 21, 2020). This request was denied on March 21, 2020 , on the ground that a preliminary injunction would not “preserve the court’s ability to render a meaningful judgment on the merits.” Id. at *5.

5 The circuit court’s order contained rulings on issues other than the motion to intervene

, including respondent’s motion for an order of entry, petitioner’s motion to stay the proceedings,

and Vesta’s motion to inspect the property. As the only issue on ap peal i nvolves petitioner’s motion to intervene, the circuit court’s other rulings will not be addressed or disturbed in this

memorandum decision

.5 Rule 24(a)(2) of the West Virginia Rules of Civil Procedure describe s when intervention of right shall be permitted: (a) Intervention of right.

— Upon timely application anyone shall be permitted to intervene in an action: . . . (2) when the applicant claims an interest relating to the property or transaction which is the subject of the action and the applicant is so situated that the disposition of the action may as a practical matter impair or impede the applicant’s ability to protect that interest, unless the applicant’s interest is adequately represented by existing parties.

In S yllabus P oint 2 of Ball

, we held:

West Virginia Rule of Civil P rocedure 24(a)(2) allows intervention of right in an action if an applicant meets four conditions: (1) the application must be timely; (2) the applicant must claim an interest relating to the property or transaction which is the subject of the action; (3) disposition of the action may, as a practical matter, impair or impede the applicant’s ability to protect that interest; and (4) the applicant must show that the interest will not be adequately represented by existing parties.

With regard to the quality o f the interest claimed by a proposed intervenor, we have held :

T o justify intervention of right under West Virginia Rule of Civil Procedure 24(a)(2), the interest claimed by the proposed intervenor must be direct and

substantial. A direct interest is one of such immediate character that the intervenor will either gain or lose by the direct legal operation and effect of the judgment to be rendered between the original parties. A substantial interest is one that is capable of definition, protectable under so me law, and specific to the intervenor. In determining the adequacy of the interest in a motion to intervene of right, courts should also give due regard to the efficient conduct of the litigation.

I

d. at S yl. P t. 4.

At the outset, we observe that the circuit court’s order makes no reference to Ball or the four conditions a proposed intervenor must establish to be entitled to intervene as a matter of right

. Of th ose four conditions, the substance of the circuit court’s order touches on only th e second condition: whether petitioner has claimed an interest relating to the property that is the subject of the condemnation proceeding. Because the circuit court limited its discussion to the second condition, we begin our analysis by examining whether the circuit court correctly denied

intervention on this isolated ground. Our review of this issue is de novo. See Syl. Pt. 3, SWN Prod

. Co

. v. Conley

,

_ __ W. Va.

___ , 850 S.E.2d 695 (2020) (“ The standard of review of circuit court rulings on the elements governing a timely motion to intervene as a matter of right under Rule 24(a) of the West Virginia Rules of Civil Procedure is de novo. ”).

This Court has never held that , as a prerequisite to intervention, a proposed intervenor must

have an owner ship interest in the property at issue at the time the action commence d

. W e addressed this precise issue in SWN Production Company

, e xamin ing the interests of a proposed intervenor6 in the context of an action to quiet title to a piece of property

. The p roposed intervenor

, SWN Production Company, LLC (“SWN”)

, argued that it should be permitted to intervene in the quiet

title action because it held a leasehold in mineral rights underlying the property. Id. at ___, 850

S.E.2d at 700. It was undisputed that SWN obta ined the leasehold years after the quiet title action

commenced. The lower court denied SWN’s motion to intervene, concluding “that the fact that there was no interest relating to the [property] when the complaint was filed was determinative as

to SWN ’ s ab ility to protect its interest .” Id. Th is Court reversed the lower court’s decision,

find [ing] no authority supporting [the] argument that the interest in the property

. .

. must exist at the time of the filing of the Complaint. The language of Rule 24(a)(2) does not impose such a requirement and we are unwilling to create such a requirement in the face of silence in the plain language of the Rule.

Id

. at ___, 850 S.E.2d at 705. T he Court ultimately determined that SWN had satisfied the second

condition of Ball because SWN established that its interest was “ direct, substantial, and legally protectable

. ” SWN Prod. Co. , ___ W. Va. at ___, 850 S.E.2d at 704.

Although SWN Produ ction Company involved a qui et title action, our reasoning in that case applies equally to this condemnation action

. W e can find no authority supporting the circuit

court’s conclusion that petitioner’s interest in the subject property must have existed at the time the petition for condemnation was filed. Furthermore, we observe that Rule 24(a)(2) imposes no such requirement. Instead, t o satisfy the second condition of Ball , petitioner must show that its

interest in the subject property is direct, substantial, and legally protectable.

Petitioner has done so here . Petition er asserts it is the rightful owner of the subject property

, petitioner has filed a lawsuit in federal court seeking a n order requi r in g Vesta to return the property to petitioner , and petitioner has filed a lis pendens that has been recorded in the property records of Kanawha County . Shou ld it be ultimately determined that petitioner is the rightful owner of the subject property, a deter mination in the condemnation action will result in petitioner “ either gaining or losing ‘ by the direct legal operation and effect of the judgment to be rendered between the original parties. ’” SWN Prod. Co.

, ___ W. Va. at ___, 850 S.E.2d at 705 (quoting Ball , 208 W.

Va. at 39 6 , 540 S.E.2d at 9 20, syl. pt. 4 (in part) ). Thus, t he specific facts of this case compel the conclusion that petitioner has a direct, substantial, and legally protectable interest in the subject

pro perty. Furthermore, it is clear that p etitioner’s participation in the condemnation action will promote the efficient conduct of the litigation. Accordingly, p etitioner has satisfied the second

condition of Ball , and to the extent the circuit court determi ned otherwise, the circuit court erred

.

Having concluded that petitioner has satisfied the second condition of Ball , w e now turn to
the third and fourth conditions : whether disposition of the condemnation action without petitioner

will impair or impede p etitioner ’s ability to protect its interest in the subject property and whether petitioner’s interest will be adequately represented by existing parties. As previously noted, in denying petitioner’s motion to intervene, the circuit court did not evaluate t he se conditions; however, because our review of these factors is de novo, we may proceed to evaluate them in this appeal. See SWN Prod

. Co

. , ___ W. Va. at ___, 850 S.E.2d at 697, S yl. P t. 3

.7 Petitioner asserts on appeal, as it did below, that disposition of the action without its participation will impair or impede its ability to protect its interests and that the existing parties to the action are unable to adequately represent petitioner’s interests. W e agree with petitioner on both points. I f petitioner is not permitted to intervene in this case , petitioner will be precluded from taking actions to protect its interest s , such as pursuing a motion to dismiss the petition for

condemnation

, filing a counterclaim for inverse condemnation , or parti cipating in the process of determining the amount of just compensation. Additionally, Vesta is unable to adequately represent petitioner ’s interest because , as is evident from the s econd LOI and MOU, petitioner’s interests are distinct from and potentially adverse to Vesta’s interests

. Vesta ’s counsel even acknowledged as much during the February 26, 2020

, hearing , stating that “in terms of whether we are virtually representing them, given the adversities, I certainly would understand [petitioner]’s feeling that [we] ’re not.” Therefore, upon our de novo review, we conclude that petitioner has satisfied the third and fourth conditions of Ball

.

Although the satisfaction of the second, third, and fourth conditions of Ball weigh in favor of granting petitioner’s motion to intervene, whether petitioner is ultimately entitled to intervene depends on whether the first condition of Ball

— timeliness

— is satisfied. We have recognized that

“t he question of the timeliness of a motion to intervene is a threshold issue .” SWN Prod

. Co

. , ___ W. Va. at

___ , 850 S.E.2d at 701. We review a lower court’s determination s as to timeliness for

an abuse of discretion. See id. at S yl. P t. 1 (“‘ While Rule 24 of the West Virginia Rules of Civil

Proced ure provides for the intervention of parties upon a timely application, the timeliness of any

intervention is a matter of discretion with the trial court. ’ Syl. Pt. 3, State ex rel. Ball v. Cummings

, 208 W.Va. 393, 540 S.E.2d 917 (1999). ”). Problematically , the circuit court failed to make any findings or conclusions concerning timeliness in its order , and we are unable to properly consider this issue on appeal . Consequently, we are unable to conclusively determine whether petitioner is

entitled to intervene in the condemnation action

. Therefore, we must remand this matter to the

circuit court to make a ppropriate findings of fact and conclusions of law addressing the timeliness

of petitioner’s motion to intervene. 6 S hould t he circuit court determine that the motion was timely filed, it shall grant the motion.

For the foregoing reasons, we reverse the portion of the March 10, 2020

, order denying petitioner’s motion to intervene. W e remand this case and direct the circuit co urt to make appropriate findings of fact and conclusions of law addressing the timeliness of petitioner’s motion

to intervene

. Should the circuit court determine that the motion was timely filed , it shall grant the

motion to intervene.

Reversed and remand ed

.

6 “[T] imeliness of the application to intervene is not subject to mechanistic inquiry. In other words, there i s no bright line delineating the point at which the passage of time, without more, is a bar to intervention as a matter of right. ” SWN Prod

. Co

. , ___ W. Va. at ___, 850 S.E.2d at 703. Furthermore, “ [w] hile it is axiomatic that parties often do not want oth ers meddling in their litigation, intervention should be permitted when there is no prejudice and greater justice could be

obtained with the inclusion of a non

- party who has a real interest in the matter being litigated. ” Id. at ___, 850 S.E.2d at 704 (cit ing McDonald v. E.J. Lavino , 430 F.2d 1065, 1074 (5th Cir. 1970)).8 ISSUED: March 23, 2021

CONCURRED IN BY:

Chief Justice Evan H. Jenkins

Justice Elizabeth D. Walker

Justice John A. Hutchison

Justice William R. Wooton

NOT PARTICIPATING:

Justice Tim Armstead