Court Opinion

ID: 4017866
Source: CourtListenerOpinion
Date Created: 2016-07-21 16:00:58.403336+00
Date Added: 2024-06-11T13:09:39.471099
License: Public Domain

RECOMMENDED FOR FULL-TEXT PUBLICATION
                               Pursuant to Sixth Circuit I.O.P. 32.1(b)
                                      File Name: 16a0169p.06

                    UNITED STATES COURT OF APPEALS
                                   FOR THE SIXTH CIRCUIT
                                     _________________

 JOURNEY ACQUISITION-II, L.P.,                           ┐
                                   Plaintiff-Appellee,   │
                                                         │
                                                         │
        v.                                                >      No. 15-5966
                                                         │
                                                         │
 EQT PRODUCTION COMPANY,                                 │
                                Defendant-Appellant.     │
                                                         ┘
                         Appeal from the United States District Court
                        for the Eastern District of Kentucky at London.
                No. 6:12-cv-00108—Gregory F. Van Tatenhove, District Judge.

                                     Argued: June 8, 2016

                                Decided and Filed: July 21, 2016

                    Before: BOGGS, CLAY, and GILMAN, Circuit Judges.
                                  _________________

                                          COUNSEL

ARGUED: Pierre H. Bergeron, SQUIRE PATTON BOGGS (US) LLP, Cincinnati, Ohio, for
Appellant. Elizabeth S. Kerr, FRIEDMAN, SUDER & COOKE, P.C., Fort Worth, Texas, for
Appellee. ON BRIEF: Pierre H. Bergeron, Lauren S. Kuley, SQUIRE PATTON BOGGS (US)
LLP, Cincinnati, Ohio, J. Kevin West, STEPTOE & JOHNSON PLLC, Columbus, Ohio, for
Appellant. Elizabeth S. Kerr, Walker C. Friedman, FRIEDMAN, SUDER & COOKE, P.C., Fort
Worth, Texas, Wayne C. Collier, KINKEAD & STILZ, PLLC, Lexington, Kentucky, Matthew
C. Blickensderfer, FROST BROWN TODD, Cincinnati, Ohio, for Appellee.
                                      _________________

                                           OPINION
                                      _________________

       RONALD LEE GILMAN, Circuit Judge. In late 2001, EQT Production Company sold
or leased to Journey Acquisition-II, L.P. an array of oil- and natural-gas-producing properties in

                                                1
No. 15-5966                    Journey Acquisition v. EQT Prod. Co.                  Page 2

Kentucky. Both parties thereafter continued to conduct oil and natural-gas operations in the
state, but Journey later concluded that EQT was operating on some of the lands that—under the
terms of the parties’ 2001 contract—had actually been conveyed to Journey. This caused
Journey to file suit against EQT in federal district court. Among other relief, Journey sought a
declaration that it owned or controlled the properties in question and that EQT was liable to
Journey for the oil and natural gas that EQT had removed from those properties.

       The district court concluded on summary judgment that the parties’ 2001 contract had
unambiguously conveyed the disputed properties to Journey. It then presided over a one-week
jury trial, with the jury finding that EQT’s trespasses on Journey’s lands were not in good faith.
The court subsequently entered a final judgment that required EQT to pay $14,288,432 in
damages and transfer certain oil and natural-gas wells to Journey.

       EQT now appeals. It argues that the district court erred before trial (when construing the
parties’ contract), during trial (when excluding portions of EQT’s proffered evidence), and after
trial (when crafting the remedy for EQT’s trespasses). Because we conclude that none of EQT’s
arguments has merit, we AFFIRM the judgment of the district court.

                                      I. BACKGROUND

A.     The parties and the initial transaction

       Both EQT and Journey produce and sell oil and natural gas. As of 2001, EQT had
property interests in several thousand acres of land located in Kentucky.         These interests
included properties owned outright, properties leased from third parties, and various pieces of
machinery and equipment, such as wells and pipelines.

       In 2001, EQT decided to sell many but not all of its property interests in Kentucky. To
that end, EQT vice presidents Joseph Morris and Lester Zitkus prepared several maps that
outlined in blue ink some or all of the properties that EQT intended to sell (the distinction
between “some” or “all” being a key dispute between the parties). These maps were later
included as exhibits to the final agreement between EQT and Journey.
No. 15-5966                    Journey Acquisition v. EQT Prod. Co.                    Page 3

       Journey was ultimately the successful bidder for EQT’s offering, and the two companies
thereafter entered into a transaction in which Journey agreed to pay $64,090,000 for various
property interests located throughout Kentucky. The contract memorializing this transaction
(hereinafter referred to as the 2001 Agreement) consists of three separate documents: (1) an
“Agreement of Sale and Purchase” (the PSA), (2) an “Oil and Gas Lease” (the 2001 Lease), and
(3) an “Assignment, Bill of Sale and Conveyance” (the Master Assignment).

       The PSA was executed on October 4, 2001. EQT agreed at that time that it would sell to
Journey its interests in some of its Kentucky properties, as well as associated pipelines and oil or
natural-gas wells. The PSA incorporates as “Exhibit A” a list of several hundred property
interests that were to be included in the transaction. Each entry on the list states the name,
acreage, and other information about the individual interest.       Also attached to the PSA is
“Exhibit N.” This exhibit includes “a map of each field” for the purposes of the PSA’s “Further
Assurances” clause.     It consists of the maps that Morris and Zitkus drew during EQT’s
preparation of its offering. The exhibit thus identifies at least the bulk of the properties to be
transferred to Journey by outlining them in blue ink.

       Exhibit A and Exhibit N are not coextensive. In particular, Exhibit A includes numerous
property interests that are located outside of Exhibit N’s blue lines. Exhibit A thus indicates that
EQT transferred a greater amount of property to Journey than does Exhibit N.

       Journey and EQT signed the 2001 Lease on November 30, 2001. This portion of the
2001 Agreement provides that EQT would lease certain properties to Journey for at least five
years. Attached to the Lease is another “Exhibit A,” which contains a list of the individual
interests to be leased to Journey. In addition, the 2001 Lease includes “Exhibit A-1,” which
contains several maps of the lands involved in the transaction. These maps are identical or
nearly identical to the maps included as Exhibit N to the PSA. As with Exhibit A and Exhibit N
to the PSA, Exhibit A and Exhibit A-1 to the 2001 Lease are not coextensive. Instead, Exhibit A
includes numerous properties that lie outside of Exhibit A-1’s blue lines.         Exhibit A thus
indicates that EQT transferred a greater amount of property to Journey than does Exhibit A-1.
No. 15-5966                      Journey Acquisition v. EQT Prod. Co.                     Page 4

       EQT and Journey signed the Master Assignment at the same time as the 2001 Lease. The
Master Assignment grants to Journey subleases in certain lands that EQT had already leased
from third parties. Included with the Master Assignment is a third “Exhibit A,” which describes
the various interests to be assigned to Journey.

B.     The alleged trespasses

       After executing the 2001 Agreement, both EQT and Journey conducted their respective
oil and natural-gas operations in Kentucky. EQT interpreted the Agreement as transferring to
Journey only those interests that had been depicted as lying inside the blue lines on the Exhibits
N and A-1 maps. It thus refrained from operating in areas within the blue lines, but continued to
operate in areas located outside of those lines.        EQT contends that Journey also acted in
conformity with this understanding of the Agreement, evidenced by the fact that Journey
operated for eight years only in areas located inside the blue lines on Exhibits N and A-1.
Journey acknowledges that it initially operated inside the blue lines, but states that it did so not
out of any understanding that the blue lines limited the extent of the Agreement, but simply
because of practical necessities related to the location of the existing drilling infrastructure.

       In 2009, Journey began reexamining its property interests in Kentucky. This was a
lengthy process that occurred over the course of several years. During this time, Journey
concluded that the 2001 Agreement covered all the interests described on the three Exhibits A,
regardless of whether those interests appeared within the blue lines on the Exhibits N and A-1
maps. Journey then realized that EQT had been drilling and operating certain wells (now known
as the “Trespass Wells”) in some of the areas purportedly conveyed to Journey, with the
necessary implication that EQT had been trespassing on Journey’s properties.

       In 2011, Journey contacted EQT about the alleged trespasses. The parties exchanged
correspondence and attempted to amicably resolve the dispute, but these efforts were
unsuccessful. As a result, Journey finally filed suit against EQT in 2012 in the United States
District Court for the Eastern District of Kentucky.
No. 15-5966                     Journey Acquisition v. EQT Prod. Co.                    Page 5

C.     The proceedings below

       Journey’s lawsuit sought a declaratory judgment establishing that the 2001 Agreement
transferred to Journey all property interests described on the three Exhibits A. In addition,
Journey alleged that EQT had trespassed on Journey’s lands by drilling and operating the
Trespass Wells. Journey added that EQT’s trespasses were done “willfully” or in “bad-faith”
because they had been done “with knowledge that it was wrong.” As recompense, Journey
demanded an accounting of the profits that EQT had allegedly derived by extracting oil and
natural gas from Journey’s properties.

       EQT responded with various defenses, including laches, waiver, and estoppel. It also
argued that the 2001 Agreement should be reformed on the basis of mutual mistake because both
parties had ostensibly intended that the Agreement would cover only the lands within the blue
lines of Exhibits N and A-1.

       Both EQT and Journey eventually moved for summary judgment or partial summary
judgment on their various claims and defenses. The district court largely ruled in Journey’s
favor. In doing so, the court first concluded that the 2001 Agreement unambiguously conveyed
to Journey those properties listed on the three Exhibits A, and that the 2001 Agreement is not
limited to the properties depicted within the blue lines on EQT’s maps. This interpretation led
the court to conclude that EQT had in fact trespassed on Journey’s lands by drilling and
operating the Trespass Wells.

       The district court then concluded that genuine disputes of material fact precluded
summary judgment on two key issues. These two issues resulted in a jury trial to determine
(1) whether EQT’s equitable defenses of laches, waiver, and estoppel were valid; and
(2) whether EQT’s trespasses had been committed in good faith. The jury acted in an advisory
capacity on the first issue, see Fed. R. Civ. P. 39(c) (“In an action not triable of right by a jury,
the court . . . may try any issue with an advisory jury . . . .”), and it rejected each of EQT’s
equitable defenses. On the second issue, the jury acted in a binding capacity and found that
EQT’s trespasses had not been committed in good faith. The district court later interpreted the
No. 15-5966                    Journey Acquisition v. EQT Prod. Co.                   Page 6

jury’s verdict as establishing that EQT had “committed bad-faith trespass” or had trespassed
“willfully.”

        During the trial, EQT sought to introduce testimony establishing that, at the time that it
entered into the 2001 Agreement, it intended to sell only the properties located within the blue
lines on Exhibits N and A-1. The district court largely forbade the presentation of this testimony.
It noted its previous determination that the 2001 Agreement is unambiguous, and concluded that,
as a matter of Kentucky law, such a written instrument must be interpreted solely by the court
(rather than by the jury) and solely based on the terms of the Agreement itself (rather than with
respect to extrinsic evidence). See Frear v. P.T.A. Indus., Inc., 103 S.W.3d 99, 106 (Ky. 2003)
(“[I]n the absence of ambiguity[,] a written instrument will be enforced strictly according to its
terms, and a court will interpret the contract’s terms by assigning language its ordinary meaning
and without resort to extrinsic evidence.” (footnotes and internal quotation marks omitted)).

        The district court accordingly concluded that allowing EQT to introduce extrinsic
evidence of its intent at the time of the 2001 negotiations would have invited the jury to
inappropriately reinterpret the court’s prior construction of the Agreement. In addition, the court
explained that, under Rule 403 of the Federal Rules of Evidence, the danger of this inappropriate
reinterpretation substantially outweighed whatever relevance EQT’s proposed testimony might
have.

        After the trial, the district court entered a final judgment awarding $14,288,432 to
Journey. This amount included both (1) compensation for EQT’s unlawful extraction of oil and
natural gas from Journey’s properties, and (2) prejudgment interest of $4,988,133. The district
court also ordered that EQT’s interests in the Trespass Wells be transferred from EQT to
Journey.

        EQT now appeals. It maintains that the district court erred by (1) concluding that the
2001 Agreement is unambiguous, (2) precluding EQT from introducing evidence of what
properties it intended to convey at the time of the negotiations in 2001, and (3) crafting a remedy
that included the award of prejudgment interest and the transfer of the Trespass Wells to Journey.
No. 15-5966                     Journey Acquisition v. EQT Prod. Co.                       Page 7

                                            II. ANALYSIS

A.       The district court correctly concluded that the Agreement between EQT and
         Journey is not ambiguous

         EQT first argues that the district court improperly concluded that the 2001 Agreement
unambiguously conveys to Journey all the properties listed on Exhibits A to the PSA, the 2001
Lease, and the Master Assignment. Reviewing the district court’s interpretation and order de
novo, see Meridian Leasing, Inc. v. Associated Aviation Underwriters, Inc., 409 F.3d 342, 346
(6th Cir. 2005), we reject this argument.

         1.     Choice of law and contract interpretation

         The district court had jurisdiction over this controversy based upon the parties’ diversity
of citizenship, so we apply the substantive law of the state in which the district court sits—in this
case, Kentucky. See Pennington v. State Farm Mut. Auto. Ins. Co., 553 F.3d 447, 450 (6th Cir.
2009). Contractual interpretation in Kentucky “is solely a matter of law for the courts.” Jacob v.
Dripchak, 331 S.W.3d 278, 284 (Ky. Ct. App. 2011).                  Our goal is to interpret the
2001 Agreement in a manner that effectuates the intent of the parties.              See 3D Enters.
Contracting Corp. v. Louisville & Jefferson Cty. Metro. Sewer Dist., 174 S.W.3d 440, 448 (Ky.
2005).

         The process of interpretation begins by assessing whether the 2001 Agreement is
ambiguous. See Frear, 103 S.W.3d at 105-06. If the Agreement is deemed ambiguous, then we
may resolve the ambiguity by using extrinsic evidence, such as “the situation of the parties and
the conditions under which the contract was written.” See id. (citation omitted). In contrast, we
must interpret a contract that is not ambiguous “by assigning language its ordinary meaning and
without resort to extrinsic evidence.” Id.; see also Cadleway Props., Inc. v. Bayview Loan
Servicing, LLC, 338 S.W.3d 280, 286 (Ky. Ct. App. 2010) (“An unambiguous written contract
must be strictly enforced according to the plain meaning of its express terms . . . .”).

         A contract is ambiguous “when its language is reasonably susceptible of different
constructions.” Blevins v. Riedling, 158 S.W.2d 646, 648 (Ky. 1942); Cadleway, 338 S.W.3d at
286 (“[I]f the provisions in controversy are reasonably susceptible to different or inconsistent,
No. 15-5966                     Journey Acquisition v. EQT Prod. Co.                  Page 8

yet reasonable, interpretations, the contract is deemed to be ambiguous.”).        But not every
inconsistency or disagreement renders a contract ambiguous. See True v. Raines, 99 S.W.3d
439, 443 (Ky. 2003), as amended (Apr. 2, 2003) (“[T]he mere fact that a party attempts to
muddy the water and create some question of interpretation does not necessarily create an
ambiguity[.]” (internal quotation marks and some alterations omitted)). Thus, “[o]nly actual
ambiguities, not fanciful ones,” affect the interpretation of a contract. Id.

       2.      The plain text of the 2001 Agreement is unambiguous

       EQT contends that the 2001 Agreement is ambiguous because conflicts exist between
(1) the lists of properties on the three Exhibits A, and (2) the blue-outlined properties on the
maps on Exhibit N and Exhibit A-1. These conflicts purportedly create uncertainty about which
properties were actually conveyed, with the result that the district court should have used
extrinsic evidence—such as the proffered testimony from Morris and Zitkus—to assess the
meaning of the Agreement.

       We evaluate this argument by looking to the language of the 2001 Agreement itself. See
Frear, 103 S.W.3d at 105-06. The first document that the parties executed was the PSA, which
defines three categories of property. These include (1) the “Leasehold Interest,” which consists
of EQT’s “right, title and interest in and to the oil, gas and/or mineral leases . . . described on
Exhibit A attached hereto and made a part hereof” (emphasis in original); (2) the “Wells,” which
are EQT’s interests in oil and natural-gas wells on the Leasehold Interest; and (3) the
“Pipelines,” which consist of EQT’s interests in pipelines connected to the Wells. The PSA
refers to these interests collectively as the “Oil and Gas Properties” or the “Properties.” It also
states that EQT “agrees to sell” the Properties to Journey and that, at closing, EQT “shall
execute, acknowledge and deliver to [Journey] an assignment of the Properties.”

       These provisions establish that the 2001 Agreement transferred to Journey the assets
listed on Exhibit A to the PSA.        The “Properties,” in other words, were to be sold and
“deliver[ed] to [Journey],” and the “Properties” include, among other assets, the “Leasehold
Interest.” In turn, the “Leasehold Interest” includes “the . . . interests described on Exhibit A.”
No. 15-5966                    Journey Acquisition v. EQT Prod. Co.                   Page 9

The PSA thus plainly contemplates that all properties listed on Exhibit A were to be transferred
to Journey.

       EQT asserts that the proper analysis is not so simple. It points to the PSA’s “Further
Assurances” clause, which states as follows:

       Further Assurances. After the Closing, Seller and Buyer shall execute and
       deliver, and shall otherwise cause to be executed and delivered, from time to time,
       such further instruments, notices, division orders, transfer orders and other
       documents, and do such other and further acts and things, as may be reasonably
       necessary to more fully and effectively grant, convey and assign the Properties to
       Buyer and to otherwise carry out the transaction contemplated hereby. Without
       limiting the foregoing, if after Closing it is determined that Seller owns other oil
       and gas interests or fee mineral interests within the geographic areas outlined in
       blue on the map attached hereto as Exhibit N which were omitted from the
       Assignment or [the 2001 Lease] contemplated hereunder, Seller shall convey such
       interests to Buyer for no additional consideration, and the parties will otherwise
       proceed to take such actions with respect to such interests as would have occurred
       if such interests had been included in the Closing.

(Emphases in original.)

       EQT contends that this clause creates an ambiguity as to the assets being conveyed. But
this clause actually proceeds in much the same manner as the other clauses identified above. Just
as the previously quoted provisions of the PSA state that EQT will “deliver to [Journey] an
assignment of the Properties,” the Further Assurances clause states that EQT will carry out
whatever “other and further acts” prove necessary to “assign the Properties to [Journey].” The
“Properties” include the Leasehold Interest, and the Leasehold Interest, as noted above, includes
the assets listed on Exhibit A. Hence, the Further Assurances clause is entirely consistent with
the earlier-described contractual language because both sections of the contract make plain that
the interests on Exhibit A were to be transferred to Journey as part of the broader transfer of the
Properties.

       Nor does the reference to Exhibit N defeat this analysis. The PSA’s Further Assurances
clause mentions Exhibit N only after stating that EQT will in fact “grant, convey and assign the
Properties” to Journey, and it adds that any reference to Exhibit N operates “[w]ithout limiting
the foregoing.” Exhibit A thus plainly trumps Exhibit N, with the result that the PSA is not
No. 15-5966                     Journey Acquisition v. EQT Prod. Co.                    Page 10

“reasonably susceptible,” see Blevins v. Riedling, 158 S.W.2d 646, 648 (Ky. 1942), to EQT’s
argument that Exhibit N limits the extent of the transaction.

       EQT’s contrary position is based on its contention that not limiting the transaction to the
maps on Exhibit N would defeat the purpose of the Further Assurances clause. Such clauses,
EQT argues, are meant to ensure that the buyer receives the full benefit of its bargain by
requiring the seller to complete any miscellaneous tasks required for the transfer of the property
at issue. The Further Assurances clause in this case, EQT asserts, should thus be construed as
defining the entire scope of the parties’ transaction; otherwise, “Journey inexplicably only sought
guarantees that it obtained all the relevant property interests within some portions of the acreage
it acquired, rather than for all of the acreage covered in the contract.” (Emphases in original.)

       EQT’s argument, however, is based on the incorrect assumption that the Further
Assurances clause in the PSA applies only to the lands shown within the blue lines on Exhibit N.
The clause does reference Exhibit N, but the clause also refers to the parties’ broader transaction:
It states that “Seller and Buyer shall . . . do such other and further acts and things[] as may be
reasonably necessary to more fully and effectively grant, convey and assign the Properties to
[Journey].” (Emphasis added.) Because the Properties, as noted above, include the lands listed
on Exhibit A to the PSA without regard to whether those lands also appear on Exhibit N, the
Further Assurances clause is not limited exclusively to the maps on Exhibit N. As a result, the
clause does not limit the transaction solely to the lands within the maps on that exhibit.

       EQT’s argument also places undue weight on the purported importance of further-
assurances clauses in general. These clauses “are aimed at [the] purely ministerial actions”
necessary to complete a transaction. Michael B. Dorff, Selling the Same Asset Twice: Towards a
New Exception to Corporate Successor Liability Rules, 73 Temp. L. Rev. 717, 729 (2000). They
are accordingly “unlikely to be stretched by a court into a substantial substantive requirement.”
Id.; see also, e.g., Boyd Grp. (U.S.) Inc. v. D’Orazio, No. 14 CV 7751, 2015 WL 3463625, at *5
(N.D. Ill. May 29, 2015) (citing cases “in which courts refused to impose new or different
obligations on parties pursuant to further assurance clauses”). The record before us contains no
indication that the parties in this case intended for the Further Assurances clause to operate as a
No. 15-5966                     Journey Acquisition v. EQT Prod. Co.                 Page 11

substantive limit on the scope of the 2001 Agreement, and we consequently reject EQT’s
invitation to read the clause’s reference to Exhibit N as creating such a limit.

       Journey, moreover, explained in its brief and at oral argument why the Further
Assurances clause specifically references Exhibit N. In particular, the lands shown on the
Exhibit N maps were the most productive and valuable oil fields encompassed by the 2001
Agreement. The property interests lying outside the blue lines, but nonetheless appearing on
Exhibit A, might or might not prove to be productive fields, but the interests on Exhibit N were
already known to be highly valuable. So even though the Further Assurances clause, as noted
above, applies to all of the Properties that EQT conveyed, Journey apparently focused on Exhibit
N in particular simply as an extra safeguard to ensure that it would in fact receive the most
valuable properties involved in the transaction.

       EQT objects that considering Journey’s explanation for the wording of the Further
Assurances clause is improper if the 2001 Agreement is indeed unambiguous. For the reasons
explained above, however, we find that the Further Assurances clause in and of itself does not
support EQT’s argument. We recount Journey’s explanation for the clause simply to clarify
what might otherwise be a puzzling provision of the 2001 Agreement, but we do not rely on
Journey’s explanation in reaching our ultimate decision.

       EQT next turns to the 2001 Lease as support for its contention that the Agreement is
ambiguous. It relies on the following language:

       The lands covered hereby are situated in Leslie, Letcher and Perry Counties, in
       the Commonwealth of Kentucky and are more particularly described on Exhibit
       “A” and shown on Exhibit “A-1” (Map) each of which are attached hereto and
       made a part hereof (the “Leased Premises”). Exhibit A specifies the number of
       acres contained in each separate and distinct tract (“Tract”) comprising the Leased
       Premises and for the purpose of this Lease, such acreage designations shall be
       deemed to be correct, whether actually more or less.

       Because the above-quoted provision refers to both Exhibit A and Exhibit A-1, and
because those exhibits are admittedly not coextensive, EQT contends that the above provision is
necessarily ambiguous. We find this contention unpersuasive. The 2001 Lease specifically
states that (1) “Exhibit A” (not Exhibit A-1) describes the lands that “compris[e] the Leased
No. 15-5966                        Journey Acquisition v. EQT Prod. Co.              Page 12

Premises,” (2) “Exhibit A” (not Exhibit A-1) “specifies the acres contained” in the lands to be
transferred, and (3) the acreages on Exhibit A (not the maps on Exhibit A-1) “shall be deemed to
be correct.” The plain text of the Lease thus establishes that the list of the lands—as opposed to
any map—sets out of the scope of the transaction.

        In addition, the 2001 Lease and the PSA are—as EQT observes—“interrelated,” meaning
that we should construe the documents together. See, e.g., ABCO-BRAMER, Inc. v. Markel Ins.
Co., 55 S.W.3d 841, 845 (Ky. Ct. App. 2000) (“Under Kentucky law, . . . all writings that are
part of the same agreement are construed together.”). Here, the 2001 Lease provides that the
property interests to be conveyed are “more specifically described in [the PSA.]” And the PSA,
as discussed above, unambiguously establishes that the maps of the lands within the blue lines do
not limit the extent of the parties’ transaction. The reference to the PSA in the 2001 Lease is
thus a further indication that the Lease—like the PSA itself—is not limited to the property
interests within the blue lines.

        Further support for this conclusion comes from the Master Assignment. Clause (a) in
that document describes the lands to be conveyed to Journey as EQT’s “right, title and interest in
and to the oil, gas and/or mineral leases, royalty interests and overriding royalty interests
described on Exhibit A attached hereto and made a part hereof.” (Emphasis in original.) The
Master Assignment does not mention any map in connection with this clause, and Exhibit A to
the Master Assignment similarly contains no reference to any maps. Thus, much like the PSA
and the 2001 Lease, the Master Assignment uses the list of properties attached to the
document—rather than any map—to describe the lands conveyed to Journey.

        In sum, we are persuaded that EQT unambiguously conveyed to Journey all the property
interests listed on Exhibits A to the PSA, the 2001 Lease, and the Master Assignment. EQT
advances several arguments to resist this result but, as explained below, we find none of these
arguments persuasive.
No. 15-5966                      Journey Acquisition v. EQT Prod. Co.                  Page 13

          3.     The district court did not erroneously apply the contra-proferentem
                 canon of construction

          EQT first contends that the district court erred in applying the contra-proferentem canon
of construction. This canon provides that, if a contractual term is ambiguous, then the term
should be construed against the party that drafted it. Weinberg v. Gharai, 338 S.W.3d 307, 313
(Ky. Ct. App. 2011). But the canon does not apply if the contract is unambiguous. Florman v.
MEBCO Ltd. P’ship, 207 S.W.3d 593, 600 (Ky. Ct. App. 2006). In the present case, EQT
observes that the district court concluded that the 2001 Agreement is not ambiguous, but that the
court nonetheless mentioned the contra-proferentem canon at several points throughout its
opinions and orders. EQT thus maintains that the court “reversed” the proper analysis by using
the contra-proferentem canon “to aid its conclusion that there was no ambiguity.” (Emphasis in
original.)

          This contention lacks merit. The district court first mentioned the contra-proferentem
canon simply as an alternative basis for its interpretation of the 2001 Agreement. In particular, it
concluded that the Agreement was not ambiguous, and only then continued its analysis, writing
that, “even if any ambiguity did exist, ambiguities in a contract are generally construed against
the drafter.” (Emphasis added.) Hence, the court properly determined as an initial matter that
the contract was not ambiguous and then mentioned the contra-proferentem canon simply as an
alternative (but unnecessary) rationale for its ruling in Journey’s favor. The reference to the
canon thus did not affect the court’s judgment and does not supply a ground for reversing its
decision.

          Next, the district court mentioned the contra-proferentem canon in ruling on several of
the parties’ post-trial motions. The court noted at that time that it had previously “ruled that the
contract between Journey and EQT was not ambiguous, and that under basic rules of contract
law, a contract is construed against the drafter.” This was a passing reference to the court’s
earlier ruling, which, as noted above, addressed the contra-proferentem canon only as an
alternative basis for the court’s decision. Such reference does not supply a valid ground for
appeal.
No. 15-5966                     Journey Acquisition v. EQT Prod. Co.                    Page 14

          EQT then cites two implied references to the contra-proferentem canon in the district
court’s ruling on Journey’s motion for entry of a final judgment. In that ruling, the court
reviewed EQT’s assertion of the laches defense and observed that “EQT did not present evidence
demonstrating that Journey’s delay in asserting its rights was unreasonable, . . . particularly in
light of the fact that EQT was the party who drafted the conveyance documents including the
Exhibit N maps.” The court also assessed whether an award of prejudgment interest was
appropriate. It noted that EQT, “as the drafter of the contract and the seller of the property,” was
“in the better position to know what it sold, and thus EQT’s delay in ascertaining what property
it conveyed is perhaps equally culpable and at least cancels out any repercussions from Journey’s
delay.”

          These statements do not establish that the district court was applying the contra-
proferentem canon; instead, the court appears to have been balancing the equities to determine
whether the defense of laches and the remedy of prejudgment interest were relevant to the case at
hand. The references to EQT drafting the 2001 Agreement thus impacted the defenses and
remedies involved in this case, but they did not play any role in the district court’s interpretation
of the underlying contract. We therefore find no reversible error in the court’s analysis.

          4.     EQT’s course-of-performance evidence is irrelevant

          EQT next argues that the district court should have used the parties’ course of
performance to conclude that both parties believed that the 2001 Agreement covered only the
lands depicted within the blue lines on Exhibits N and A-1. This argument relies on A.L. Pickens
Co. v. Youngstown Sheet & Tube Co., 650 F.2d 118, 120 (6th Cir. 1981), in which the court
stated as follows: “When a contract provision is, as the instant provision, reasonably subject to
more than one interpretation, the Kentucky courts utilize the doctrine of contemporaneous
construction.” Id. (emphasis added). Under this doctrine, “courts are required to give great
weight to the interpretation which the parties have placed on an ambiguous contract. The
construction of the parties is best evidenced by their conduct with respect to the agreement.” Id.
(emphasis added) (quoting Billips v. Hughes, 259 S.W.2d 6, 7 (Ky. 1953)).
No. 15-5966                    Journey Acquisition v. EQT Prod. Co.                  Page 15

       The emphasized language establishes that course-of-performance evidence is relevant
only when the contract at issue is ambiguous. See id. at 120. As determined above, however, the
2001 Agreement is not ambiguous. The parties’ course of performance accordingly has no
bearing on the Agreement’s meaning. See id; see also Cantrell Supply, Inc. v. Liberty Mut. Ins.
Co., 94 S.W.3d 381, 385 (Ky. Ct. App. 2002) (observing that a court may consider “the conduct
of the parties” only when “a contract is ambiguous or silent on a vital matter”).

       5.      Journey’s contract with KRCC does not affect the interpretation of the
               term “Properties” in the 2001 Agreement

       Finally, EQT argues that the district court’s interpretation of the 2001 Agreement
inappropriately gives the term “Properties” different meanings in different provisions of the
PSA. This consequence purportedly flows from Journey’s transaction with a separate entity
known as KRCC Oil and Gas Company.

       Prior to the execution of the 2001 Agreement, EQT conducted many of its Kentucky
operations as a joint venture with KRCC. At the time of the Agreement, Journey accordingly
sought to acquire both EQT’s rights in the operations at issue and any rights that KRCC, as a
joint venturer, had in those operations. Journey thus entered into two transactions, one with EQT
and the other with KRCC, and the PSA reflects this fact because the PSA became effective only
after KRCC waived its rights and consented to the operation of the Properties by Journey. EQT
then notes that KRCC’s interests in the Properties were undisputedly located solely within the
blue lines depicted on the maps included with the 2001 Agreement. This means, according to
EQT, that the term “Properties” in the PSA must also be limited to the assets located within the
lines on those exhibits.

       EQT’s argument lacks merit. The PSA simply states that KRCC was required to waive
whatever interests in the Properties it might have possessed; the PSA does not state that KRCC’s
interests were coextensive with all the operations owned by EQT or that KRCC’s interests
otherwise defined or limited the scope of such operations. Put differently, the fact that KRCC’s
interests all happened to fall within the blue lines on the maps included with the 2001 Agreement
in no way forecloses an interpretation of “Properties” that includes additional lands located
No. 15-5966                    Journey Acquisition v. EQT Prod. Co.                   Page 16

outside of those lines. Reading the term “Properties” to include more than the lands within the
lines thus does not create any inconsistency with respect to Journey’s transaction with KRCC.

B.     The district court did not commit reversible error in precluding EQT from
       presenting evidence of the parties’ intent in 2001

       EQT next asserts that the district court erred by using Rule 403 of the Federal Rules of
Evidence to preclude EQT from introducing evidence of its intent at the time that it entered into
the 2001 Agreement. We review the exclusion of evidence pursuant to Rule 403 under the
abuse-of-discretion standard. United States v. Poulsen, 655 F.3d 492, 509 (6th Cir. 2011). The
evidence in question is viewed in the light most favorable to its proponent, but the district court
ultimately has “broad discretion” in ruling on admissibility.       Id.   Reversal is accordingly
appropriate only if we have “a definite and firm conviction that the trial court committed a clear
error of judgment.” Mich. First Credit Union v. Cumis Ins. Soc’y, Inc., 641 F.3d 240, 245 (6th
Cir. 2011) (internal quotation marks omitted).

       1.      Kentucky trespass law

       EQT trespassed on Journey’s lands by drilling and operating wells that removed oil and
natural gas from that land. The appropriate measure of damages in such “mineral trespass” cases
turns on whether the trespass was “innocent” or “willful.” Harrod Concrete & Stone Co. v.
Crutcher, 458 S.W.3d 290, 294 (Ky. 2015). If the trespass was innocent, then the measure of
damages is “the value of the mineral after extraction, less the reasonable expenses incurred by
the trespasser in extracting the mineral.” Id. at 296. But when the trespass is willful, then “the
measure of damages is the reasonable market value of the mineral at the mouth of the mine/well,
without an allowance of the expense of removal.” Id.

       An innocent trespass is one that is “inadvertent or the result of an honest mistake.” Id. at
297 (internal quotation marks omitted). Willful conduct, in contrast, involves a trespasser “who
knowingly and willfully encroaches or enters upon the land of another and takes his mineral
without color or claim of right, or one who dishonestly or in bad faith mines minerals of another
and converts them to his own use.” Id. (citation omitted). The “Innocent/Willful Dichotomy,”
id. at 297, thus turns on the trespasser’s reasonable belief at the time of the trespass. See Swiss
No. 15-5966                      Journey Acquisition v. EQT Prod. Co.                    Page 17

Oil Corp. v. Hupp, 69 S.W.2d 1037, 1042 (Ky. 1934), abrogated in part on other grounds by
Harrod, 458 S.W.3d 290 (“The test is . . . [the trespasser’s] sincerity and his actual intention at
the time.”); see also Rudy v. Ellis, 236 S.W.2d 466, 468 (Ky. 1951) (“The test to determine
whether one was a wilful or an innocent trespasser is . . . his honest belief and his actual intention
at the time he committed the trespass . . . .” (citation omitted)).

        Once the jury determined that EQT had trespassed, the burden shifted to EQT to establish
that its trespasses were not willful. See Swiss Oil, 69 S.W.2d at 1041. Whether EQT has carried
its burden involves factors such as “whether [the trespass] was done under a bona fide mistake”
and whether there was “reasonable doubt of the other party’s exclusive or dominant right.” Id.
In addition, a trespass is more likely to be willful when the trespasser lacked “policies and
procedures” to assess the boundaries of its property or when it “continued or perpetuated its
encroachment despite cautionary indicators that property may have been misidentified.” Harrod,
458 S.W.3d at 298 (citation omitted).

        2.      EQT’s arguments

        EQT sought to establish that its trespasses were innocent by introducing evidence of its
intent at the time that the parties negotiated the 2001 Agreement. In particular, it planned to
elicit testimony from its vice presidents Joseph Morris and Lester Zitkus, who would have
explained that the maps on Exhibits N were the basis for the company’s determination about
what properties to sell.     This evidence, according to EQT, would have shown that EQT
reasonably believed that the lands located outside of the blue lines on the maps had not been
conveyed to Journey, making EQT’s subsequent drilling on those lands innocent trespasses.
EQT thus maintains that the exclusion of such evidence under Rule 403 led the jury to
erroneously conclude that EQT’s trespasses were willful.

        3.      Analysis

        To succeed on its Rule 403 argument, EQT must show both that (1) the district court
erred in excluding EQT’s evidence, and (2) this exclusion prejudiced EQT. See Nolan v.
Memphis City Sch., 589 F.3d 257, 264-65 (6th Cir. 2009) (“Even if a district court’s evidentiary
No. 15-5966                    Journey Acquisition v. EQT Prod. Co.                    Page 18

ruling is erroneous, a new trial is not warranted if the abuse of discretion constituted harmless
error.”). As explained below, EQT cannot prevail on either prong of this analysis.

                       a.     The district court did not abuse its discretion in
                              concluding that the probative value of EQT’s
                              evidence was substantially outweighed by other
                              factors

       Rule 403 allows a district court to exclude evidence “if its probative value is substantially
outweighed by a danger of one or more of the following: unfair prejudice, confusing the issues,
misleading the jury, undue delay, wasting time, or needlessly presenting cumulative evidence.”
Fed. R. Evid. 403. With respect to probative value, EQT maintains that the testimony from
Morris and Zitkus about their intent in 2001 was “[c]rucial” evidence that went to the “crux” of
the willfulness issue. But this characterization exaggerates the importance of the proffered
testimony. The more relevant inquiry is whether EQT had a reasonable belief in the legality of
its actions “at the time [that it] committed the trespass.” See Rudy, 236 S.W.2d at 468 (citation
omitted); see also Meece v. Feldman Lumber Co., 290 S.W.3d 631, 632-33 (Ky. 2009), as
corrected (June 22, 2009) (same). Of critical importance here is the fact that the majority of
EQT’s trespasses occurred not during 2001—the period about which Morris and Zitkus would
have testified—but instead between 2006 and 2011, when the great majority of the Trespass
Wells were drilled.

       EQT concedes as much, but it nonetheless asserts that the evidence from 2001 would
have at least given the jury an understanding of why EQT allegedly believed that it still owned
the disputed properties even up to ten years later. We find this argument unpersuasive because,
as described in Part II.B.3.b. below, events post-dating the parties’ negotiations should have
alerted EQT to the likelihood that its belief about the extent of the 2001 Agreement was
mistaken. These events should have caused EQT to question its initial understanding of the
2001 Agreement, with the result that EQT’s proffered testimony about that initial understanding
has little probative value. See Fed. R. Evid. 403.

       With respect to “unfair prejudice,” “confusing the issues,” and other factors, see id., this
court has noted that the exclusion of evidence may be appropriate when the evidence suggests to
No. 15-5966                    Journey Acquisition v. EQT Prod. Co.                   Page 19

the jury that it should decide the case “on an improper basis,” United States v. Poulsen, 655 F.3d
492, 509 (6th Cir. 2011) (internal quotation marks omitted). EQT asserts that its proffered
evidence presented no danger of such an “improper basis,” but we disagree. By seeking to
introduce evidence of what EQT perceived the Agreement to mean in 2001, EQT sought to
introduce evidence that the jury could have easily used to reinterpret the Agreement for itself.
And because the district court had already correctly concluded that the Agreement is
unambiguous (see Part II.A. above), such a use of EQT’s evidence by the jury would in fact have
been improper. See Jacob v. Dripchak, 331 S.W.3d 278, 284 (Ky. Ct. App. 2011) (“[T]he
interpretation of a contract is solely a matter of law for the courts.”). EQT’s proffered evidence,
in other words, invited the jury to usurp the district court’s role as the interpreter of the 2001
Agreement, so admitting that evidence would in fact have given the jury an “improper basis” for
its decision. See Poulsen, 655 F.3d at 509.

       For these reasons, EQT’s evidence both (1) had little probative value, and (2) carried a
substantial risk that the jury would tread into the forbidden realm of contract interpretation.
There was accordingly no “clear error in judgment” by the district court in deciding to exclude
the evidence. See United States v. Bell, 516 F.3d 432, 440 (6th Cir. 2008) (citation omitted).

               b.     The district court’s exclusion of the evidence did not
                      prejudice EQT to such a degree that reversal is warranted

       Moreover, even if the district court’s evidentiary ruling had been erroneous, reversal
would be appropriate only on a showing that the ruling resulted in prejudice to EQT. See Nolan,
589 F.3d at 264-65. This standard requires EQT to establish that the error “more probabl[y] than
not” had a “material[]” effect on the jury’s verdict. See United States v. Schaeffer, 626 F. App’x
604, 609 (6th Cir. 2015) (quoting United States v. Trujillo, 376 F.3d 593, 611 (6th Cir. 2004)).
For two reasons, EQT cannot make such a showing.

       First, even without EQT’s proffered testimony, the jury heard evidence of EQT’s
understanding of the 2001 Agreement at the time of its execution. Morris, for example, testified
about the maps on which EQT relied, explaining that “we had a set of maps that had the tract
outlines, and we outlined—Lester Zitkus and I, who was our land manager—outlined what tracts
we wished to be part of the sale. And that was back prior to the sale to Journey.” He added that
No. 15-5966                      Journey Acquisition v. EQT Prod. Co.                   Page 20

“[t]he lines were placed on maps originally when EQT was talking about the sale and what areas
they would sell. And so we had . . . drafted out, had drawn the tract outlines around the oil fields
that we wished to sell.” Other witnesses testified similarly, and although Journey’s counsel
complained about some of these comments, the district court did not strike them. So despite the
exclusion of certain testimony about EQT’s understanding in 2001, the jury still heard evidence
of that understanding.

       Second, the jury heard evidence from which it could easily have concluded that, by the
time EQT committed its trespasses, any belief that EQT had formed in 2001 about the extent of
its drilling rights was unreasonable. The district court, for example, noted that Journey had
presented evidence indicating that EQT did not conduct thorough title searches before drilling
the Trespass Wells. In addition, the jury heard extensive testimony about EQT’s drilling on
property known as the Fordson Lease. One of EQT’s own land managers, for example, testified
that the documents comprising the 2001 Agreement created a “question mark” about which
portions of the Fordson Lease had actually been transferred to Journey. EQT contacted Journey
about this ambiguity, but, as the district court noted, the ensuing communications failed to
resolve the issue and, “[i]f anything, . . . should have made EQT even more cautious about
drilling on the property at issue before taking affirmative steps to clear up that confusion.”

       So EQT carried out its drilling despite obvious indicators that its ownership of the
underlying property was doubtful, thereby giving the jury an ample basis to conclude that EQT’s
trespasses were not in good faith. See Harrod Concrete & Stone Co. v. Crutcher, 458 S.W.3d
290, 298 (Ky. 2015) (observing that a trespass is more likely to be willful when the trespasser
“continued or perpetuated its encroachment despite cautionary indicators that property may have
been misidentified”). In addition, these indications post-dated the parties’ 2001 negotiations.
EQT’s proffered testimony about its earlier intent therefore would not likely have changed the
jury’s assessment of EQT’s conduct at the time that the trespasses actually occurred, with the
result that a reversal of the district court’s evidentiary decision is not warranted.
No. 15-5966                       Journey Acquisition v. EQT Prod. Co.                Page 21

C.       The district court did not err in awarding prejudgment interest and transferring the
         Trespass Wells to Journey

         EQT finally challenges (1) the district court’s award of $4,988,133 in prejudgment
interest, and (2) the transfer of EQT’s interests in the Trespass Wells to Journey.

         1.     Awarding prejudgment interest was not an abuse of discretion

         The award of prejudgment interest in a case such as this one is “left to the sound
discretion of the trial court.”     See Denzik v. Denzik, No. 2004-CA-000944-MR, 2006 WL
3107110, at *2 (Ky. Ct. App. Nov. 3, 2006). In exercising its discretion, a court must base its
decision “upon the foundation of equity and justice.” Church & Mullins Corp. v. Bethlehem
Minerals Co., 887 S.W.2d 321, 325 (Ky. 1992). A court must therefore consider “all the
circumstances” of a given case, “including any deficiencies in the performance of the injured
party and any unreasonableness in the demands made by him.” Nucor Corp. v. Gen. Elec. Co.,
812 S.W.2d 136, 144 (Ky. 1991) (citation and internal quotation marks omitted). Other factors
to consider include “the length of time for which the trespass continued,” Church, 887 S.W.2d at
325, and whether the “the injured [party] has discouraged settlement . . . or has delayed in filing
suit,” Nucor, 812 S.W.2d at 144 (citation and internal quotation marks omitted).

         The district court in this case acknowledged that Journey had potentially “delayed in
filing suit,” see id., but concluded that other circumstances outweighed this factor. It noted, for
example, that EQT was the drafter of the 2001 Agreement and had retained the information
relating to the wells in question, such that EQT was the party that was in the best position to
ascertain which interests had actually been conveyed to Journey. The court also noted the
lengthy time period during which EQT’s operation of the Trespass Wells persisted and recounted
the evidence at trial that supported the jury’s finding that EQT’s trespasses were not in good
faith.   In light of these considerations, the court’s award of prejudgment interest was not
unreasonable. See Mich. First Credit Union v. Cumis Ins. Soc’y, Inc., 641 F.3d 240, 245 (6th
Cir. 2011) (“[T]here is no abuse of discretion unless the court has ‘a definite and firm conviction
that the trial court committed a clear error of judgment.’”).
No. 15-5966                    Journey Acquisition v. EQT Prod. Co.                    Page 22

       EQT nevertheless argues that the award was improper because Kentucky courts “rarely”
impose such awards. See Ky. Commercial Mobile Radio Serv. Emergency Telecomms. Bd. v.
TracFone Wireless, Inc., 712 F.3d 905, 917 (6th Cir. 2013) (“Kentucky courts rarely award
prejudgment interest on unliquidated claims on equitable grounds.”). We find this argument
unconvincing. First, the general trend in Kentucky caselaw says little about whether an award of
interest is appropriate for any particular claim, especially given the inherently fact-bound
analysis involved in considering “all the circumstances,” see Nucor, 812 S.W.2d at 144, of a
specific case. Second, although this court noted in TracFone that prejudgment interest is rarely
awarded, it also noted “that allegations of bad faith are often involved” in those cases in which
prejudgment interest is awarded. 712 F.3d at 917 (citation and internal quotation marks
omitted). The current case involved not only “allegations of bad faith,” but a jury finding and
final judgment that EQT had in fact acted in bad faith through its willful trespasses. Hence, even
though awards of prejudgment interest are rare in Kentucky, the finding of bad faith in this
particular case makes such an award appropriate.

       2.      The district court did not err in transferring the Trespass Wells to
               Journey

       EQT next argues that the district court erred by requiring EQT to transfer to Journey its
interests in the Trespass Wells. This argument rests in part on a distinction between “shallow”
drilling rights and “deep” drilling rights. In particular, EQT notes that the 2001 Agreement
undisputedly contemplates that Journey would acquire the right to drill only in the “shallow”
portions of the lands in which Journey acquired an interest. EQT, in contrast, retained the right
to drill in the “deep” portions of those lands. In addition, EQT retained the right to go onto the
surface of the lands in order to construct and operate wells, so long as those wells were in fact to
be used for deep rather than shallow drilling.

       Based on this distinction, EQT maintains that it should be allowed to retain the Trespass
Wells. Those wells were admittedly designed for shallow drilling—and thus their operation did
in fact constitute trespasses on Journey’s Properties—but EQT now contends that the wells could
be converted for deep drilling that would not trespass on Journey’s Properties.
No. 15-5966                    Journey Acquisition v. EQT Prod. Co.                    Page 23

       Whether the Trespass Wells could be so converted is questionable. The wells were
designed for shallow drilling, and EQT raised the prospect of converting the wells only in its
reply brief in support of its motion for a new trial. EQT cited no evidence in the record
suggesting that such a conversion is technologically feasible, and Journey’s counsel explained at
a post-trial status conference that such a conversion is “not an engineering possibility” and that
“[i]t would be substantially cheaper to drill a new vertical well [than] to . . . deepen existing
locations.” In addition, the district court noted that EQT did not contest Journey’s assessment of
the infeasibility of the wells’ conversion. This undermines EQT’s claim that it should retain the
wells for such a purpose.

       The transfer of the wells, moreover, is consistent with the recent decision in Harrod
Concrete & Stone Co. v. Crutcher, 458 S.W.3d 290 (Ky. 2015). The Kentucky Supreme Court
explained in that case that “the measure of damages” for a willful mineral-trespass claim “is the
reasonable market value of the mineral at the mouth of the mine/well, without an allowance of
the expense of removal.” Id. at 296. EQT in the present case is accordingly liable for the value
of any oil or natural gas that it extracted from the Trespass Wells, and it is not entitled to any
offset for the expenses incurred in drilling and operating such wells. See id.

       By requesting that it retain the Trespass Wells, however, EQT is essentially requesting
just such an offset. EQT, in other words, incurred the cost of drilling and operating the Trespass
Wells. It now seeks to recoup those expenses by retaining the Trespass Wells themselves. EQT
concedes as much, complaining that—by virtue of the district court’s order—EQT “was not
permitted to offset the millions of dollars it spent to drill and operate the wells.” But such an
offset is inconsistent with Kentucky law, see Harrod, 458 S.W.3d at 296, so the district court did
not err in declining to grant such an offset to EQT.

       In addition, EQT exaggerates the effect of the district court’s decision. It asserts that the
court “deprived EQT of its deep-drilling rights” by precluding EQT from using the Trespass
Wells to drill in the deep portions of the properties in which EQT retained an interest. But the
court did no such thing. As both the district court and Journey observed, EQT may enter onto
the surface of the Properties in which Journey has an interest so long as EQT does so for the
purpose of drilling new wells that are designed to reach the deep portions of those Properties.
No. 15-5966                     Journey Acquisition v. EQT Prod. Co.                    Page 24

That EQT cannot use the existing Trespass Wells that were designed and built to drill in the
shallow portions of the Properties thus has no effect on EQT’s deep-drilling rights under the
2001 Agreement.

       EQT also contends that the district court’s transfer of the wells was a punitive remedy
that violates Kentucky law. See Harrod, 458 S.W.3d at 297 (noting that damages in mineral-
trespass actions do not include “an additional or separate recovery for punitive damages”).
It notes that the court awarded damages to Journey that undisputedly encompass the full value of
the oil and gas extracted from the wells. As a result, EQT concludes that any additional
remedy—such as the transfer of the wells—must have been a punitive measure designed to do
more than simply account for Journey’s harm.

       But EQT’s argument misconstrues the nature of the district court’s remedy. The court
explicitly stated that it did “not view transferring the Trespass Wells as a part of the monetary
damages” awarded to Journey. Instead, the court transferred the wells as an equitable remedy
designed to ensure that they would not simply lay idle. EQT’s observation that Kentucky law
does not countenance punitive damages awards in mineral-trespass actions is accordingly
inapplicable to the present case.

       In addition, although neither party has cited a Kentucky case directly on point, the district
court’s ultimate conclusion—that EQT as a willful trespasser had no claim to the Transfer
Wells—appears to be consistent with equitable principles governing such cases in general. See
Etalook v. Exxon Pipeline Co., 831 F.2d 1440, 1444 (9th Cir. 1987) (“[T]he common law rule
[is] that a trespasser who builds on another’s land dedicates his structure to the land’s owner.”);
Halley v. Winchester Diamond Lodge, 30 S.W. 999, 999 (Ky. 1895) (“It would seem inconsistent
with all rules to allow a trespasser to make the person trespassed against his debtor, for
improvements made without his consent and against his will, or to allow him to set them off
against the damages to which he has justly subjected himself by his trespass.” (citation and
internal quotation marks omitted)). These equitable principles support the conclusion that the
district court’s selection of the appropriate remedy in this case was not the sort of “clear error of
judgment” that would justify reversal. See Mich. First Credit Union v. Cumis Ins. Soc’y, Inc.,
641 F.3d 240, 245 (6th Cir. 2011).
No. 15-5966                     Journey Acquisition v. EQT Prod. Co.                 Page 25

       Finally, the parties dispute the effect of Kentucky’s policies towards natural resources.
Under Ky. Rev. Stat. Ann. § 353.500(1), the state’s official policy is “to encourage exploration
for [mineral] resources,” to “prohibit waste and unnecessary surface loss and damage,” and to
“encourage the maximum recovery of oil and gas from all deposits thereof.” The district court
cited this policy as support for its decision to transfer the Trespass Wells, but EQT challenges
this use of § 353.500(1). It notes that Kentucky law also provides that “[n]othing in KRS
353.500 . . . shall be construed as superseding, impairing, abridging or affecting any contractual
rights,” Ky. Rev. Stat. Ann. § 353.720, leading EQT to contend that the court erred by using
§ 353.500 to “supersede” its deep-drilling rights.

       As explained above, however, the transfer of the Trespass Wells does not alter EQT’s
contractual rights. EQT remains free to enter onto the surface of the Properties in which it has
deep-drilling rights and to construct new wells to exploit those rights.       This remains true
regardless of whether EQT or Journey controls the Trespass Wells.            The district court’s
interpretation of the statutes at issue was therefore not erroneous.

                                       VI. CONCLUSION

       For all of the reasons set forth above, we AFFIRM the judgment of the district court.