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Company Sued For $1 Million

May 12, 2012
By CASEY JUNKINS - Staff Writer , The Intelligencer / Wheeling News-Register

MOUNDSVILLE - Several Marshall County property owners are suing AB Resources for more than $1 million, claiming the natural gas company acted with "reckless disregard" in making improper deductions from their royalty payments.

The landowners also claim California-based Chevron - which has since taken over AB Resource's Marshall County operations - does not make the same royalty payment deductions that Ohio-based AB was making on the same lease agreements.

"We are not suing Chevron," emphasized landowner attorney Dan Guida, who joins Jonathan Turak and Eric Gordon in representing the landowners. "We are suing AB Resources."

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Photo by Casey Junkins
As companies such as Chevron, Gastar Exploration and Chesapeake Energy continue drilling and fracking in Marshall County, landowners are suing Ohio-based AB Resources for more than $1 million in royalty payments they say the company owes them.

Named plaintiffs in the case include Patricia Hoskins, Mary Jako, Clarence Rulong, William Standiford, Linda Standiford, Lewis Aston and Cathy Aston. Guida said there are additional plaintiffs, but they chose to be referred to only as "The Class of All Similarly Situated Individuals" on the complaint.

The plaintiff's case seems to center around a paragraph in the contract involving royalty payments. This paragraph states, in part, "... the royalty shall be one-eighth (12.5 percent) of the proceeds realized ... with no deduction of any costs incurred by lessee or its affiliates to gather, transport, compress, dehydrate, or otherwise treat such gas ..."

"It is our contention that they (AB Resources) violated this clause," said Guida, emphasizing that West Virginia law requires landowners receive at least 12.5 percent of the royalties for gas produced from their property.

The complaint states that AB Resources "entered into a scheme and design to intentionally mislead plaintiffs into believing they were being paid all the royalties due them." It also states that AB Resources conduct was "so outrageous as to shock the conscious."

"We believe about 12-15 percent was improperly deducted from their royalty checks," added Gordon, noting the practice probably took place for more than a year. The total amount landowners lost on the deal, the attorneys believe, totalled more than $1 million.

Officials with AB Resources did not return multiple calls seeking comment.

Since acquiring AB's lease rights in the local area, Chevron now controls thousands of acres for drilling. For the leases signed by the plaintiffs in this lawsuit, the complaint states they were originally signed by TriEnergy before being assigned to AB Resources.

Gordon and Guida said upon taking over operations from AB Resources, Chevron also initially took the same deductions out of the royalty payments. However, the company later reimbursed the landowners for that deducted amount, Gordon emphasized.

The plaintiffs want the court to find that AB Resources is in breach of contract, and that the company "intentionally concealed deductions from rents and royalties" on the landowners' lease contracts.

The plaintiffs also are trying to keep the case in Marshall County Circuit Court, as opposed to having it removed to federal court, citing the principal damages occurred in West Virginia with a company that was recognized as doing business in the state.

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