Court Opinion

ID: 2654448
Source: CourtListenerOpinion
Date Created: 2014-02-26 01:00:51.87805+00
Date Added: 2024-06-11T09:11:42.956650
License: Public Domain

PUBLISHED

                  UNITED STATES COURT OF APPEALS
                      FOR THE FOURTH CIRCUIT

                              No. 12-2553

TRANS ENERGY, INC., a Nevada Corporation; REPUBLIC PARTNERS
VI, LP, a Texas limited partnership; REPUBLIC ENERGY
VENTURES, LLC, a Delaware Limited Liability Company; PRIMA
OIL COMPANY, INC., a Delaware Corporation,

                Plaintiffs - Appellees,

           v.

EQT PRODUCTION COMPANY, a Pennsylvania Corporation,

                Defendant - Appellant.

Appeal from the United States District Court for the Northern
District of West Virginia, at Clarksburg.   Frederick P. Stamp,
Jr., Senior District Judge. (1:11-cv-00075-FPS-JES)

Argued:   December 12, 2013            Decided:   February 25, 2014

Before WILKINSON and GREGORY, Circuit Judges, and John A.
GIBNEY, Jr., United States District Judge for the Eastern
District of Virginia, sitting by designation.

Affirmed in part and vacated in part by published opinion.
Judge Gregory wrote the opinion, in which Judge Wilkinson and
Judge Gibney joined.

ARGUED: W. Henry Lawrence, IV, STEPTOE & JOHNSON, PLLC,
Bridgeport, West Virginia, for Appellant. James C. Ho, GIBSON,
DUNN & CRUTCHER, LLP, Dallas, Texas; Stuart A. McMillan, BOWLES
RICE LLP, Charleston, West Virginia, for Appellees.    ON BRIEF:
Amy Marie Smith, Bridgeport, West Virginia, John Joseph Meadows,
STEPTOE & JOHNSON, PLLC, Charleston, West Virginia, for
Appellant.   James E. Scott, BOWLES RICE LLP, Charleston, West
Virginia; Ashley E. Johnson, GIBSON, DUNN & CRUTCHER LLP,
Dallas, Texas, for Appellees.

                              2
GREGORY, Circuit Judge:

      This appeal arises from an action to quiet title.                                    The

parties make competing claims of ownership to the gas rights

underlying a 3,800 acre plot of land located in northern West

Virginia known as Blackshere.                      The parties filed cross-motions

for summary judgment, and the district court ruled in favor of

the plaintiffs.           The defendant, EQT Production Company (“EPC”),

appealed the district court’s decision on the merits, as well as

several    of      its    procedural         rulings.           EPC   also    makes    a   new

argument      on       appeal,          challenging           whether     subject      matter

jurisdiction existed in the district court.

      Finding no error in any of the district court’s decisions,

we   affirm     the      judgment       as   to       three   of   the   four   plaintiffs.

However,      in    order        to    retain      jurisdiction,         we   exercise     our

authority     to      dismiss         plaintiff        Republic    Energy     Ventures,    LLC

(“REV”) from the case, and we vacate the judgment with respect

to that party.

                                                  I.

      In 1892, John Blackshere and South Penn Oil Company (“South

Penn”),    which         would    later      become        Pennzoil      Products     Company

(“Pennzoil”), entered into an oil and gas lease covering the

Blackshere property (the “Blackshere Lease” or “Lease”).                                   The

transfer was recorded with the Wetzel County Clerk.                             In 1901 and

                                                  3
1902,     South    Penn   entered    into       two    indenture     agreements       with

Carnegie     Natural      Gas    Company        and    Hope   Natural       Gas   Company

(“Hope”).         The indentures purported to sever South Penn’s gas

rights     from    its    oil   rights     and    allocate     the    gas     rights    to

Carnegie and Hope. 1           It is undisputed that these indentures were

never recorded.

      In 1965, Hope conveyed all of its interests and rights to

any     property     in   Wetzel     County       to    Consolidated        Gas   Supply

Corporation        (“Consolidated        Gas”).        The    transfer,       which    was

recorded, did not reference the Blackshere Lease.                           Consolidated

Gas is a predecessor in title to EPC. 2                  As a result, the parties

agree that EPC’s alleged interest in Blackshere’s gas rights

derives from any right in the property that Hope transferred to

Consolidated Gas by way of this 1965 conveyance.

      On October 15, 1996, Pennzoil assigned its rights in the

Blackshere        Lease   to    Cobham    Gas     Industries,        Inc.    (“Cobham”)

through an assignment and bill of sale (the “Assignment”).                             The

Assignment was recorded through a memorandum of assignment (the

“Memorandum”) filed with the Wetzel County Clerk.

      1
       Under the agreements, Hope received the rights to the vast
majority of the property, some 3,550 acres.
      2
       Consolidated Gas, after a series of name changes, conveyed
its interests to Eastern States Oil and Gas, Inc. in 1995.
Eastern States eventually became EPC.

                                            4
       On November 5, 2004, Cobham conveyed its interest in the

property (the “2004 Assignment”) to plaintiff Prima Oil Company,

Inc.    (“Prima”)        by    way     of     a       recorded         transfer     (the    “2004

Confirmatory Assignment”).                  Prima is a wholly-owned subsidiary

of plaintiff Trans Energy, Inc. (“Trans Energy”).                                       After the

2004 Assignment, Trans Energy assigned half of its portion of

the leasehold interest to plaintiff Republic Partners VI, LP

(“Republic Partners”).                REV’s interest in the matter derives

from    an    overriding        royalty       interest            in    whatever     production

Republic Partners obtains from the lease.

       In 2011, Trans Energy was granted a permit by the West

Virginia Department of Environmental Protection to drill a new

gas well on the property.               Prior to drilling the new well, Prima

discovered EPC’s alleged interest in the Lease resulting from

the unrecorded Hope indenture.                        The plaintiffs then filed this

action,      seeking     to    quiet    title          to    the       Blackshere    Lease      and

requesting declarations that they have rightful title to the gas

rights underlying the property, and that Prima was a bona fide

purchaser      for   value      (“BFP”)       with          no    actual      or   constructive

knowledge      of    a   competing          interest         in    the       property    when   it

acquired Cobham’s interest in 2004.

       EPC    answered        and    filed    several            counterclaims       seeking     a

declaration     that      it    held    superior            title       to    Blackshere’s      gas

                                                  5
rights, as well as tort claims for trespass, conversion, and

waste. 3

      After significant discovery was undertaken by both sides,

EPC   filed    a    motion    for    an   extension       of     time    to   complete

discovery     and     to     defer    consideration        of     the    plaintiffs’

anticipated motion for summary judgment.                  The parties then filed

cross-motions for summary judgment.                  The plaintiffs also filed a

motion in limine to exclude evidence of punitive damages.

      On   October     22,    2012,    the     district     court       informed   the

parties by letter of its tentative rulings.                     The district court

stated its intention to (1) grant the plaintiffs’ motion for

summary judgment; (2) deny the defendant’s motion for summary

judgment; (3) deny the defendant’s motion for an extension of

time to complete discovery and to defer consideration of the

plaintiffs’        summary    judgment        motion;     and     (4)     grant    the

plaintiffs’ motion in limine to exclude evidence of punitive

damages.      The court also advised the parties not to file any

further     motions    or     pleadings       with     respect    to    the   rulings

contained in the letter.

      3
       The plaintiffs then filed an amended complaint raising the
same tort claims and seeking compensatory damages but later
withdrew these claims.

                                          6
        The    next    day,       EPC    filed        a    motion     for   leave    to     file   a

supplemental          memorandum          in    support        of     its   summary       judgment

motion and against the plaintiffs’ summary judgment motion.

        On    November       26,        2012,    the        district     court      entered     two

memorandum       opinions          in    accordance          with     its    tentative       letter

rulings.         In     a    thorough,          well-reasoned           opinion,      the     court

granted the plaintiffs’ motion for summary judgment, denied the

defendant’s       motion           for     summary           judgment,       and    denied      the

defendant’s       motion          for    leave       to    supplement       the    record.      The

second opinion denied EPC’s motion for an extension of time to

complete discovery and to defer consideration of the summary

judgment motions, and granted the plaintiffs’ motion to exclude

punitive       damages        evidence.               The     court    then       entered     final

judgment in favor of the plaintiffs, and this appeal followed.

                                                 II.

                                                     A.

        Although not raised below, EPC challenges on appeal whether

the   district        court       had    subject           matter   jurisdiction       over     the

case.        Whether subject matter jurisdiction exists is a question

of law that we review de novo.                            In re Kirkland, 600 F.3d 310,

314 (4th Cir. 2010).                     The plaintiffs relied on diversity of

citizenship in filing the case in federal court.                                   See 28 U.S.C.

§ 1332(a)(1).               The     case       was        originally     filed      against    EQT

                                                     7
Corporation. 4            By      mutual     agreement          of    the     parties,       EQT

Corporation         was     substituted           as      a    defendant       by     EPC,     a

Pennsylvania company.                It is undisputed that Trans Energy is a

Nevada Corporation and Prima is a Delaware Corporation.                                      The

complaint identified Republic Partners as a citizen of Texas and

REV    as    a   citizen       of    Delaware,       thereby      establishing       complete

diversity.         However, the plaintiffs now acknowledge that they

improperly alleged the citizenship of Republic Partners and REV

by referring only to the states in which those entities are

organized and do business.                  See Carden v. Arkoma Assocs., 494

U.S. 185, 195 (1990) (partnerships have citizenship of their

partners); Gen. Tech. Applications, Inc. v. Exro Ltda, 388 F.3d

114,       120   (4th     Cir.      2004)   (limited          liability     companies       have

citizenship of their members).

       A federal statute allows for the curing of jurisdictional

pleading defects on appeal.                      See 28 U.S.C. § 1653 (“Defective

allegations of jurisdiction may be amended, upon terms, in the

trial      or    appellate       courts.”).          In   accordance        with    this,    the

plaintiffs        filed    a     motion     to    supplement         the    record   with     an

affidavit attesting to the Texas citizenship of each member of

Republic Partners.               At oral argument, EPC conceded the accuracy

       4
       EQT Corporation is not to be confused with EQT Production,
the current defendant and to whom we refer as “EPC” throughout.

                                                 8
of    this    information.                Accordingly,          we   grant     the   plaintiffs’

motion to supplement the record, and we find no jurisdictional

defect with respect to Republic Partners.

       As    to     REV,       the    plaintiffs          now   concede      that    it   includes

members who are citizens of Pennsylvania, the same as EPC.                                          To

keep diversity of citizenship intact, the plaintiffs propose to

have    REV       dismissed          as   a   party       under      Federal    Rule      of   Civil

Procedure 21.              See Newman-Green, Inc. v. Alfonzo-Larrain, 490

U.S. 826, 836 (1989) (holding that the courts of appeals have

the    authority          to    dismiss         a    dispensable       nondiverse         party     by

virtue       of    Rule    21).           EPC       argues,     however,     that     REV      is   an

indispensable party under Rule 19 and cannot be dismissed.

       Under Rule 19(b), when joinder of parties is not feasible

because       of,    among       other        things,       nondiversity,       a    court      must

decide whether “‘the action should proceed among the parties

before it, or should be dismissed’ because the absent party is

indispensable.”                Yashenko v. Harrah’s NC Casino Co., LLC, 446

F.3d 541, 552 (4th Cir. 2006) (quoting Fed. R. Civ. P. 19(b)).

In making this determination, a court must evaluate:

       first, to what extent a judgment rendered in the
       person’s absence might be prejudicial to the person or
       those already parties; second, the extent to which, by
       protective provisions in the judgment, by the shaping
       of relief, or other measures, the prejudice can be
       lessened   or  avoided;   third,  whether   a  judgment
       rendered in the person’s absence will be adequate;
       fourth, whether the plaintiff will have an adequate
       remedy if the action is dismissed for nonjoinder.

                                                      9
Id.

      As an initial matter, we have previously admonished that

“[d]ismissal of a case is a drastic remedy, . . . which should

be employed only sparingly.”            Teamsters Local Union No. 171 v.

Keal Driveaway Co., 173 F.3d 915, 918 (4th Cir. 1999).                      Further,

the Supreme Court has stated that, “[o]nce a diversity case has

been tried in federal court, . . . considerations of finality,

efficiency, and economy become overwhelming.”                 Caterpillar, Inc.

v. Lewis, 519 U.S. 61, 75 (1996).                  Both directives strongly

caution against dismissing the case, which involved extensive

discovery and was pending before the district court for over a

year and a half.

      As mentioned, REV’s stake in the matter results from its

royalty   interest     in   whatever         production      Republic       Partners

obtains from the lease.         REV is seeking to be dismissed from the

case, assured that its interests will be adequately represented

by the remaining plaintiffs, all of whom are related entities

seeking the same result.             EPC, on the other hand, argues that

regardless of whether REV’s interests are protected, Rule 19(b)

concerns the interests of all the parties, not merely those of

the party proposed to be dismissed.                See F. Rule Civ. P. 19(b)

(asking   “to   what   extent    a    judgment     rendered    in    the    person’s

absence   might   be   prejudicial      to   the    person    or    those    already

parties”) (emphasis added).           In its answer to the complaint, EPC

                                        10
asserted several counterclaims that included REV as a defendant.

It argues that it is entitled to have REV remain as a possible

defendant for its counterclaims should this Court reverse the

overall merits determination of the district court.                           Given our

decision, explained below, to affirm the district court’s ruling

in favor of the plaintiffs, this argument is functionally moot.

In any event, we note that the defendant has failed to show – or

even suggest – a single, tangible way in which it will be harmed

by REV’s absence.          See Dore Energy Corp. v. Prospective Inv. &

Trading   Co.    Ltd.,     570    F.3d   219,    232    (5th     Cir.    2009)     (“The

factors under Rule 19(b) are concerned with whether actual harm

to   anyone’s    interest    will    occur      if   the    case    proceeds       absent

certain parties.”) (emphasis added).                 Instead, EPC merely states

generally that it has a right to have REV remain as a party

without addressing why the 19(b) factors weigh in favor of a

finding    of    indispensability.            Having    reviewed        the    parties’

arguments and the record, we are satisfied that there is no

reason    to    believe    that    any   party       will   be     harmed     by    REV’s

absence, or that the plaintiffs received an improper “tactical

advantage” by including REV as a party.                     See Parker v. Centre

Group Ltd. P’ship, 70 F.3d 1262 (4th Cir. 1995) (unpublished

table decision).          Additionally, to the extent EPC is concerned

about not being sued in a separate state action filed by REV,

the plaintiffs have asked that REV be dismissed with prejudice.

                                         11
Given these considerations, we deem this an appropriate case in

which to exercise our power under Rule 21 to dismiss REV from

the suit and preserve diversity among the remaining parties.

                                               B.

     Turning to the merits of the case, EPC raises three main

issues.     First, it argues that the 1996 transfer from Pennzoil

to Cobham conveyed only the oil rights to the Blackshere Lease

and not the gas rights.                Second, EPC contends that the district

court    lacked     a     factual      basis    on        which    to    find      that    Prima

received title to the lease by virtue of the 2004 Confirmatory

Assignment.        Third, EPC argues that Prima had notice of its

competing    claim       at    the     time    of    the    2004     Assignment       and   was

therefore not a BFP.             We address each issue in turn, utilizing a

de novo standard of review.                   Glynn v. EDO Corp., 710 F.3d 209,

213 (4th Cir. 2013) (“We review a district court’s grant of a

motion for summary judgment de novo, applying the same legal

standards as the district court.”).

                                               1.

     The     defendant         first     argues       that        the    language     of    the

Memorandum    did       not    convey     the       gas    rights       to   the   Blackshere

Lease.     Basic principles of West Virginia property law guide our

analysis    on     this       issue.      “A    valid       written      instrument        which

expresses the intent of the parties in plain and unambiguous

language      is        not     subject        to         judicial       construction         or

                                               12
interpretation but will be applied and enforced according to

such intent.”            Syl. pt. 4, Zimmerer v. Romano, 679 S.E. 2d 601

(W. Va. 2009).            “In construing a deed, will, or other written

instrument, it is the duty of the court to construe it as a

whole, taking and considering all the parts together, and giving

effect       to    the    intention   of     the    parties         wherever       that   is

reasonably clear and free from doubt . . . .”                           Syl. pt. 1, Maddy

v. Maddy, 105 S.E. 803 (W. Va. 1921).

       The        Memorandum     states      that           Pennzoil,          through    the

Assignment, “did bargain, sell, transfer, assign and convey unto

[Cobham], all right, title and interest it may have in and to

certain      oil    and    gas   leases    and     88       wells       more    particularly

described on EXHIBIT ‘A’ and EXHIBIT ‘B’, attached [t]hereto and

made    a    part     [t]hereof.”         Exhibit       A    is     a    list    of   leases

associated with the conveyance, including the Blackshere Lease.

Exhibit B lists both the leases and wells being transferred as

part of the sale.           Exhibit B includes a “rights” column for each

of the wells, under which is indicated “oil,” “gas,” or “oil and

gas.”        The rights columns for all the Blackshere Lease wells

indicate “oil.”           EPC contends that Exhibit B lists not only the

wells being transferred but also the ownership rights of each

lease associated with those wells.                  Thus, because “oil” is the

only    right      associated     with     the   Blackshere             Lease    wells,   the

                                            13
conveyance     must    have    been    intended        to     transfer        only     the    oil

rights to Cobham.

       We   disagree    with     this        reading,       and        instead    adopt       the

district     court’s    conclusion          that    the     Memorandum        unambiguously

establishes that Pennzoil transferred both oil and gas rights to

the oil and gas leases listed in Exhibit A, and that Exhibit B

simply lists the wells being transferred and the rights utilized

by those wells.        First, the granting language of the memorandum

plainly states that the leases being transferred were “oil and

gas leases.” (emphasis added).                There is no indication that any

of    the   leases    were    simply    oil        leases    or    simply        gas   leases.

Exhibit A lists the entire Blackshere Lease, as conveyed by John

Blackshere     to    South    Penn     in    1892.        Nothing        in   the      granting

language of the Memorandum or the list of leases in Exhibit A

indicates that the oil and gas rights were severed at any point.

       Second, the Memorandum states that Pennzoil conveyed all of

its interest in and to “certain oil and gas leases and 88 wells

. . . .” (emphasis added).              This indicates the transfer of two

distinct types of Pennzoil property:                   leases and wells.                Exhibit

A, which does not include reference to any wells, is clearly a

list of the leases being transferred.                       Exhibit B, on the other

hand, offers particularized descriptions of each of the wells

and    is   properly    understood           as    a   list       of    the    wells     being

transferred     and    the    type     of    production        associated         with       each

                                             14
well.     The fact that some wells produced only oil in no way

limits    the     rights   included      in    the   leases.        Moreover,    the

defendant’s position requires reading Exhibit B in isolation and

ignoring the remaining language in the Memorandum and Exhibit A.

When, as it must be, the instrument is “construe[d] . . . as a

whole, taking and considering all the parts together,” Syl. pt.

1, Maddy, 105 S.E. at 803, it is clear that Pennzoil transferred

to Cobham all of its rights in a series of oil and gas leases,

as listed in Exhibit A – including the unsevered 1892 Blackshere

Lease – as well as its rights to the accompanying wells, as

listed in Exhibit B.             We therefore affirm the district court’s

decision that the Memorandum unambiguously conveyed to Cobham

the gas rights in the Blackshere Lease.

                                         2.

     EPC next contends that because the plaintiffs failed to

offer    the    2004   Confirmatory      Assignment        into   the   record   the

district court lacked a factual basis on which to find that

Prima ever received title to the Blackshere Lease.                       As noted,

the 2004 Confirmatory Assignment recorded the sale of Cobham’s

interest in the Lease to Prima.                In the proceedings below, the

plaintiffs purported to attach this document to their motion for

summary     judgment;      however,      it    is    now    apparent    that     they

mistakenly      attached     a    different,    unrelated      instrument.       EPC

avers     that,    without       the   2004    Confirmatory       Assignment,     the

                                         15
district court simply had no evidentiary basis for concluding

that Prima held an unbroken, recorded chain of title to the

Blackshere Lease.

      This    argument     is   easily    rejected.         EPC’s     own      expert

mentioned the 2004 Assignment in testifying that the plaintiffs

held an unbroken chain of title going back to the original 1892

lease.   The witness, Arnold Schulberg, testified:

      Q. And we were talking about what the record chain of
         title shows regarding ownership of the Blackshere
         lease and we were dealing with –- I think we got up
         to Cobham; is that correct?
      A. Yes.
      Q. And what was your understanding after the Cobham?
      A. We have an assignment from Cobham Gas Industries,
         Inc., to Prima Oil Company, Inc.
      Q. And do you know the date of that?
      A. It’s, apparently, November 5th, 2004.
      . . .
      Q. Okay. Is it fair to say that based just on the
         record title, that there is a chain directly from
         the original lessor to Prima Oil?
      A. Yes.   There’s a chain.
      Q. Based on the record?
      A. Yes.

The   plaintiffs’      expert   also     testified    to    the     same      effect,

stating that Prima held record title to the Blackshere Lease.

Additionally,    the     plaintiffs    offered   into      evidence       a    written

description of Prima’s complete chain of title that specifically

referenced    the   2004    Assignment.       Clearly      then,    the       evidence

provided an adequate basis for the district court’s conclusion

                                         16
that Cobham conveyed to Prima its interest in the Lease via the

2004 Assignment.        The defendant has not directly challenged the

validity    of   the    evidence    regarding       the   2004   Assignment,     and

instead merely relies on a clerical error of the plaintiffs in

attaching the wrong document to their motion.                    Considering the

actual evidence that made it into the record, which is clear, we

reject EPC’s argument on this point.

                                          3.

      EPC’s third and final argument is that Prima was not a BFP

in   2004   because     it   had   notice      of   EPC’s   competing    claim   to

Blackshere’s gas rights.            Under West Virginia law, unrecorded

written contracts, such as the 1901 and 1902 indentures that

purported to sever the gas rights underlying the property, are

“as effective as a recorded deed” against purchasers with notice

of the unrecorded transfer.               Farrar v. Young, 230 S.E.2d 261,

265 (W. Va. 1976).           As a result, even if Prima can demonstrate

record title to the gas rights, EPC might nevertheless have a

claim as the rightful holder of those rights.

      Importantly,        though,     the       rule      regarding     unrecorded

transfers    also      provides    that    such     transfers    are   invalid   as

against BFPs.       See W. Va. Code § 40-1-9.                A BFP is “one who

purchases for a valuable consideration, paid or parted with,

without notice of any suspicious circumstances to put him on

inquiry.”    Stickley v. Thorn, 106 S.E. 240, 242 (W. Va. 1921).

                                          17
This     rule    protects         good    faith        purchasers           who      conduct      due

diligence prior to purchasing an interest in real property.                                       See

Gullett v. Burton, 345 S.E.2d 323, 327 (W. Va. 1986).                                       A party

alleging notice to a purchaser must show that the purchaser was

placed on actual or constructive notice of the competing claim

or defect in title.              Fanti v. Welsh, 161 S.E.2d 501, 505 (W. Va.

1968).     Such knowledge is imputed to the purchaser if it could

have been acquired through “the exercise of ordinary diligence.”

Id.     “[T]he burden of proving notice to a purchaser for value is

upon him who alleges it.”                 Alexander v. Andrews, 64 S.E.2d 487,

491 (W. Va. 1951).

        EPC asserts a variety of theories under which knowledge of

its competing interest should be imputed to Prima.                                       First, it

contends      that     language      in    the       Memorandum          and   the       Assignment

ought    to     have       put   Prima    on    notice          of   a   potential       competing

claim,    thereby          triggering     a     duty       to     conduct      a    title     search

beyond     the    record.           This       is      a        reference      to    a    form     of

constructive notice known as inquiry notice.                                   Inquiry notice

exists    “when        a    prospective        buyer        has      reasonable       grounds     to

believe that property may have been conveyed in an instrument

not of record . . . .”               Eagle Gas Co. v. Doran & Assocs., Inc.,

387 S.E.2d 99, 102 (W. Va. 1989).                               In such cases, purchasers

must     “use     reasonable         diligence             to     determine         whether      such

previous conveyance exists.”                   Id.

                                                18
       EPC contends that because language within the Memorandum

referenced        the     Assignment     itself,        Prima            was    charged     with

inspecting that document as well.                      West Virginia’s recording

statute     requires       only   the    filing       of    a       memorandum        noting     a

transfer of real property and not the actual assignment itself.

See    W.   Va.    Code    § 40-1-8.          As    such,       a    memorandum       normally

constitutes the complete notice of a transfer and is all that

prospective       purchasers      need    review       in       order      to     satisfy    due

diligence.        However, several West Virginia cases have held that

in    certain     circumstances,        references         in       the    memorandum       to   a

competing interest may require the purchaser to conduct further

review      outside     the    record.        See     In    re       Restaurant       Assocs.,

L.L.C., No. 1:06CV53, 2007 WL 951849, at *4 (N.D. W. Va. Mar.

28, 2007) (holding that if there exist “reasonable grounds to

believe th[e] property may have been conveyed in an instrument

not    of   record”      the   purchaser       “may    be       charged        with   searches

beyond the record”) (quoting Eagle Gas Co, 387 S.E.2d at 102);

see also Syl. pt. 1, Pocahontas Tanning Co. v. St. Lawrence Boom

& Mfg. Co., 60 S.E. 890 (W. Va. 1908) (“Whatever is sufficient

to    direct    the     attention   of    a    purchaser            to    prior    rights    and

equities of third parties, so as to put him on inquiry into

ascertaining their nature, will operate as notice.”).

       In In re Restaurant, the recording memorandum noted that

the    transfer         was    “subject       to      any       and       all     exceptions,

                                              19
reservations,        restrictions,               easements,            rights-of-way          and

conditions as contained in prior deeds of conveyance in this

chain of title.”         2007 WL 951849, at *4.                   One of the prior deeds

within the chain of title referenced unrecorded covenants.                                    Id.

The   court     reasoned        that    the      purchasers       should    have        inquired

further     about    the      unrecorded           deeds,      given     that     the    record

specifically mentioned their existence.                        Id. at *5.

      This case is readily distinguishable from In re Restaurant.

Although the Memorandum mentioned the Assignment, unlike in In

re Restaurant it did not reference other documents containing

information about competing interests.                            The Memorandum merely

mentions the Assignment in passing, noting that the Assignment

was   the   actual      transfer        document.           Without       more,    there      was

nothing to raise Prima’s suspicions about a possible competing

claim     and    give      it      cause      to       consult     beyond       the      record.

Accordingly, we agree with the district court that the reference

in the Memorandum would not have placed a reasonably prudent

purchaser on notice of EPC’s competing claim.

      Furthermore,         even        assuming         that     the     language       of    the

Memorandum      created       a    duty     to     consult     the     actual     Assignment,

nothing     within      the       Assignment          indicated    the    existence          of   a

competing       ownership          claim.             The   Assignment       contains         the

following provision:               “a portion of [the transferred] Land and

Wells are subject to certain contractual obligations with either

                                                 20
CNG     Transmission     Corporation        or    CNG   Producing    Company.” 5

Contrary to EPC’s assertions, this notation is insufficient to

require a purchaser to inquire further about the nature of these

contractual obligations.          There is no indication that the term

“contractual     obligations”       referred       to   potential     ownership

interests in the gas rights to Blackshere, nor does the language

state which of the many leases and wells conveyed along with

Blackshere might have been subject to such obligations.                We deem

these     non-specific     references        to     contractual     obligations

insufficient to cause a reasonable buyer to conduct a further

investigation outside the record. 6

      EPC also argues more generally that Prima’s title inquiry

was unreasonably cursory and fell short of due diligence.                 Prior

to purchasing its interest in the property from Cobham in 2004,

Prima     retained     attorney     Richard        Starkey   to     investigate

Blackshere’s chain of title.            Although Mr. Starkey testified

that he conducted only an “abbreviated” review, he did consult

      5
       CNG Transmission Corporation is a predecessor-in-interest
of EPC.
      6
       EPC also reiterates its argument, addressed above, that
the “rights” section of Exhibit B, which listed only “oil”
rights for Blackshere’s wells, indicated that the transfer did
not include the gas rights. From this, EPC contends that Prima
was on notice of at least the possibility of a competing claim
and therefore should have engaged in additional inquiry.   For
the same reasons explained above, EPC’s argument on this point
is not compelling.

                                       21
the relevant county records to ensure that Cobham had obtained

good       title    from      Pennzoil         in    1996.         Regardless       of      the

extensiveness of Mr. Starkey’s review, however, no amount of

searching would have revealed EPC’s competing claim, since it is

undisputed         that    the    1901        and    1902    indentures         were     never

recorded.          As   the     district      court    noted,      a    purchaser      is   not

punished      for       failing        to    conduct       due    diligence      when       all

reasonable inquiries would nevertheless have failed to uncover a

competing      claim. 7         That    is    exactly      the    situation     here,       and,

accordingly,        knowledge       of       EPC’s   claim       cannot   be    imputed      to

Prima.

       EPC offers three final arguments for why Prima had notice

of EPC’s competing claim and is not a BFP.                             First, EPC asserts

that Mr. Starkey was aware of the “legend and lore” among mining

interests in northern West Virginia that gas rights to large

tracts of property had been severed in the early 20th century

and    transferred         to     Hope. 8           This    argument      has    no      legal

       7
       EPC’s argument that had Prima consulted Hope’s chain of
title it would have discovered the 1965 conveyance between Hope
and Consolidated Gas is irrelevant given that the 1965 deed does
not mention the Blackshere Lease.
       8
       Mr. Starkey’s knowledge may be imputed to Prima.      See
Morgan-Gardner Elec. Co. v. Beelick Knob Coal Co., 112 S.E. 587,
591 (W. Va. 1922) (“The law imputes to the principal, and
charges him, with all notice or knowledge relating to the
subject matter of the agency which the agent acquires or obtains
(Continued)
                                               22
significance.       See   Pocahontas     Tanning,    Inc.,       60    S.E.   at   893

(explaining that “vague rumor or mere surmises are insufficient

in themselves” to create constructive notice).                        While Starkey

admitted having knowledge of these rumors, he testified that in

thirty years of working in the oil and gas industry in the area

he had never seen the alleged severance applied.                         Such non-

specific     conjecture    is    clearly       insufficient       to     constitute

constructive notice of a competing interest.

      Next, EPC argues that its operation of two gas wells on the

property constituted constructive notice of its claim.                         Notice

may be established when a reasonable physical inspection of the

premises would have yielded information of a competing claim.

See   Bailey   v.   Banther,    314     S.E.2d    176,    181    (W.    Va.    1983).

Representatives from Prima toured the property prior to the 2004

Assignment, spending several days visiting Cobham well sites and

traversing numerous access roads and found no sign of EPC’s two

wells.     This is unsurprising given the nature of the property,

which consists of 3,800 acres of heavily forested, undeveloped

land.      As such, we agree with the district court that Prima

conducted due diligence in its inspection of the site and that

while acting as       such      agent    and     within    the    scope       of   his
authority[.]”).

                                        23
EPC’s operation of the two wells did not amount to constructive

notice of its competing claim.

       Lastly, EPC argues that Prima purchased its interest at

such a discount that it must have known it was getting something

less than clean title to the entire estate.                            Prima paid $250,000

and   250,000       shares       of    Trans      Energy      stock    for     rights       to   the

Lease, which EPC compares with the $6,000,000 Prima later spent

to    build   a     new   well        on    the       property.       To     the    extent       that

purchase price may be considered in determining BFP status under

West Virginia law, see Wetzel v. Watson, 328 S.E.2d 526, 530 n.

4 (W. Va. 1985) (“[a] valuable consideration, however small, if

bargained for in good faith in the absence of fraud will be

sufficient        to   sustain        a    contract”),        we     again    agree     with     the

district      court       that    unique          circumstances         in    the     price      and

estimated      abundance         of        natural      gas    in    the     region     offer      a

reasonable        explanation         for       any    increased      value     of    the     Lease

rights. 9     With this background in mind, we hold that the purchase

price fails to establish constructive notice.

       For    all      these     reasons,         we     affirm      the     district    court’s

decision      that     Prima      was       a   BFP     in    2004    and     therefore       holds

       9
       In 2004, the United States Geological Survey estimated
that 1.9 trillion cubic feet of gas existed in Blackshere’s
surrounding region.     According to the plaintiffs, a recent
estimate is 141 trillion cubic feet.

                                                  24
superior    title   to   the   Blackshere   Lease   by   virtue   of   its

unbroken, recorded chain of title.

                                    C.

     EPC has also challenged a number of the district court’s

procedural rulings.       Specifically, EPC contests the denial of

its motion for an extension of time to complete discovery and

defer consideration of the plaintiffs’ summary judgment motion,

and the denial of its motion for leave to file a supplemental

brief in support of its summary judgment motion and against the

plaintiffs’ summary judgment motion. 10        We review both rulings

for abuse of discretion, reversing only if there is a clear

abuse of discretion or the real possibility that a party was

unfairly prejudiced by the decisions.        See Ingle ex rel. Estate

of Ingle v. Yelton, 439 F.3d 191, 195 (4th Cir. 2006); Strag v.

Bd. of Trs., Craven Cmty. Coll., 55 F.3d 943, 954 (4th Cir.

1995).     We have reviewed the parties’ arguments and the record

and find that we are in agreement with the decisions of the

district court, as explained in its two opinions on the matters.

See Trans Energy, Inc. v. EQT Prod. Co., No. 1:11cv75, 2012 WL

5906649 (N.D. W. Va. Nov. 26, 2012); Trans Energy, Inc. v. EQT

Prod. Co., No. 1:11cv75, 2012 WL 5906603 (N.D. W. Va. Nov. 26,

     10
         The defendant also challenges the grant of the
plaintiffs’ motion in limine to exclude any evidence or argument
of punitive damages.   In light of our ruling on the merits in
favor of the plaintiffs, we need not consider this issue.

                                    25
2012).     Accordingly, we affirm the denial of the defendant’s

motions.

                                    III.

       For the foregoing reasons, we affirm the district court’s

grant of summary judgment in favor of Trans Energy, Republic

Partners, and Prima, but vacate the judgment with respect to

REV,   whom   we   dismiss   with   prejudice.   We   also   affirm   the

district court’s challenged procedural rulings.

                                                 AFFIRMED IN PART AND
                                                      VACATED IN PART

                                     26