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Decided: March 12, 2014

The Fourth Circuit elected to certify the following question of law to the Supreme Court of Appeals of West Virginia:

Whether the proponent of his own working interest in a mineral lease may prove his entitlement thereto and enforce his rights thereunder by demonstrating his inclusion within a mining partnership or partnership in mining, without resort to proof that the lease interest has been conveyed to him by deed or will or otherwise in strict conformance with the Statute of Frauds.

The dispute involves a diversity action filed by the alleged owner of certain fractional working interests in four Ritchie County mining partnerships, Clifton Valentine, against Sugar Rock, Inc. (“Sugar Rock”), the operator of the oil wells. Valentine maintains that he purchased the working interests from the original leaseholder in the late 1950s and received his proportionate share of the net proceeds generated by the well operations for approximately 40 years. Those payments stopped, however, when the original leaseholder passed away and his son subsequently sold the majority interest in the partnership to Sugar Rock. In the current action, Sugar Rock maintains that the creation of the leaseholds transferred interests in real property and therefore any subsequent assignments by the lessee of the portions of its working interest similarly conveyed an interest in real property. Thus, Sugar Rock contends that the original transfer in the late 1950s could only be effected by a writing contemplated by the West Virginia Statute of Frauds. Conversely, Valentine argues that he possesses an ownership in a partnership arising under operation of law, and thus an indirect ownership interest in the working interests. He, therefore, contends that his interest can be proved by parol evidence and by the parties’ course of conduct. Perceiving that the answer to the certified question of West Virginia law may be determinative of the case, the Fourth Circuit, accordingly, availed itself of the privilege afforded by the State of West Virginia through the Uniform Certification of Questions of Law Act, West Virginia Code sections 51-1A-1 through 51-1A-13.

Full Opinion

– W. Ryan Nichols