McCormick v. HRM Resources, LLC

The federal district court for the District of Colorado granted a motion by Colorado landowners for class certification to pursue claims based on allegations that the defendant companies took unlawful actions to escape the costs of plugging orphaned oil and gas wells on the plaintiffs’ land. Among the alleged harms of the unplugged wells were methane emissions. The court found that the plaintiffs met the prerequisites for certification in Rule 23(a) of the Federal Rules of Civil Procedure, i.e., that the class was so numerous that joinder of all members was impracticable; that there were questions of law or fact common to the class; that the claims or defenses of the representative parties were typical of the claims or defenses of the class; and that the plaintiffs would fairly and adequately protect the interests of the class. The court further found that the plaintiffs satisfied the requirements of Rule 23(b)(2) for certifying a class for declaratory and injunctive relief common to the whole class as well as the requirements of Rule 23(b)(3) that “questions of law or fact common to class members predominate over any questions affecting only individual members, and that a class action is superior to other available methods for fairly and efficiently adjudicating the controversy.”

The federal district court for the District of Colorado denied motions to dismiss a lawsuit brought by Colorado landowners who alleged that defendants that had owned orphaned oil and gas wells on the plaintiffs’ property had engaged in fraudulent transfers of the wells to escape the costs of plugging the wells. The court ruled that the plaintiffs did not have to exhaust administrative remedies and rejected the defendants’ argument that the landowners did not have standing. The court found that the plaintiffs pleaded cognizable injury with allegations of trespass, aesthetic injury, exposure to pollutants, and lower property values and also found that the plaintiffs adequately pleaded that the injuries were fairly traceable to the defendants’ allegedly fraudulent scheme of transferring the orphan wells. The court also found that the plaintiffs adequately alleged the elements of a claim under the Colorado Uniform Fraudulent Transfer Act as well as claims of civil conspiracy to commit fraudulent transfer, trespass, conspiracy to commit trespass, aiding and abetting trespass, unjust enrichment, and negligence.

A class action complaint filed in Colorado District Court by Colorado landowners alleged that the defendants “conspired to avoid millions of dollars of oil and gas well asset retirement obligations by fraudulently transferring hundreds of defunct and uneconomic oil and gas wells to a shell company, which then filed bankruptcy.” The plaintiffs sought to hold the defendants accountable for obligations to plug the wells on the plaintiffs’ properties and reclaim and remediate surface properties. They also sought to hold the defendants liable for “ongoing torts committed daily by virtue of the unplugged, defunct oil and gas wells and related equipment” left on the plaintiffs’ land. Among the alleged harms of unplugged wells were methane emissions. The complaint asserted claims of trespass, violation of the Colorado Uniform Fraudulent Transfer Act, civil conspiracy to commit trespass, civil conspiracy to commit fraudulent transfer, unjust enrichment, aiding and abetting trespass, and negligence.