Source: https://www.bakerlaw.com/alerts/colorado-royalty-litigation-20-dismissed-cases-is-there-a-good-faith-basis-for-filing-such-cases-in-district-court
Timestamp: 2019-04-25 22:33:55+00:00

Document:
On April 24, 2018, Colorado state district courts solidified judicial recognition of the Colorado General Assembly’s delegation of primary jurisdiction to the Colorado Oil and Gas Conservation Commission (Commission) over royalty underpayment disputes. Two judges of the District Court for the City and County of Denver dismissed royalty underpayment lawsuits for failure to exhaust administrative remedies before the Commission.
These decisions are significant because one judge vacated his prior ruling in the same case that had denied a substantively similar motion to dismiss, and the other judge had previously denied a similar motion to dismiss in a different case.
Retova Resources, LP v. Bill Barrett Corp.
[T]he Court holds that the [Colorado Oil and Gas Conservation] Act confers initial, primary jurisdiction to the [Commission] to determine (1) whether it has jurisdiction over the payment of proceeds dispute, and (2) whether a claim concerning payment of proceeds pursuant to § 34-60-118.5 involves a bona fide dispute over the interpretation of a contract, removing jurisdiction from the [C]ommission.
The court’s holding not only provides a thorough and complete analysis of why royalty underpayment plaintiffs must exhaust their administrative remedies before the Commission, but it vacates one of the opinions that plaintiffs had relied on to circumvent the Commission’s primary jurisdiction.
On April 24, 2018, Judge Elizabeth A. Starrs also dismissed a royalty underpayment case, marking a change in position from the court’s previous denial of a similar motion to dismiss in Retova Resources, LP v. Vanguard Permian, LLC. The court foreshadowed that similar royalty cases must first be filed with the Commission: “The Court agrees with Defendant, and with many other recent district court decisions, that this case, and cases similarly situated, must first proceed before the Commission” (emphasis added). The court’s holding not only indicates a reversal in the court’s previous position, weakening the persuasive value of another previous opinion upon which plaintiffs rely to circumvent the Commission’s primary jurisdiction, but it forecasts the court’s view that all similar royalty underpayment cases must first be filed with the Commission.
On June 11 − 12, 2018, the Commission is set to decide whether it has jurisdiction over a number of royalty underpayment cases.
The current tally of 20 dismissals and three denials − arguably only two denials, with Judge Starrs’s decision − raises the following question: Is there a good-faith basis to file royalty underpayment cases in district court? The Colorado General Assembly conferred primary jurisdiction on the Commission for payment-of-proceeds disputes − particularly over the amount of proceeds due. The Colorado Court of Appeals recognized such primary jurisdiction in Grant Bros. Ranch, LLC v. Antero Res. Piceance Corp., 409 P.3d 637, 643 (Colo. App. 2016). And the overwhelming number of state district courts have agreed. In light of this authority, what justifies filing royalty underpayment cases in district court?
Ignoring the courts’ previous dismissals, a handful of plaintiffs have refiled their cases in district court while their matter is still pending before the Commission. See, e.g., Energy Invs. Inc. v. Antero Res. Corp., No. 2018CV30068. This tactic met a terse reception and a prompt dismissal from the court. See, e.g., Shidelerosa, LLLP v. Antero Res. Corp., No. 2017CV30212.
Authorship Credit: L. Poe Leggette and Alexander K. Obrecht.
 The dates in the citations reflect the date the court issued its relevant order.

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