West Virginia Record

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Justices vacate default judgment in oil, gas rights dispute

By Steve Korris | Jun 13, 2008

CHARLESTON – William Groves and Harrolyn Groves of Spencer defied courtroom odds by winning a $704,000 judgment without a lawyer, but now the West Virginia Supreme Court of Appeals tells them they can't collect it.

The Justices on June 3 vacated a default judgment that Special Judge Robert Chafin granted against Nitro Energy of Saginaw, Mich., in a dispute over oil and gas rights.

Their unsigned opinion left a door open for William Groves and Harrolyn Groves to seek damages from Nitro Energy at trial.

"We find nothing in the record to indicate that circumstances have changed since the entry of the default judgment which would impair the plaintiffs' ability to prosecute its claim on the merits," they wrote.

The couple filed suit in Roane Circuit Court in 2005, against Roy Hildreth Jr., his company Roy G. Hildreth and Son, Nitro Energy, BNG Producing and Drilling, B&R Construction, Westside Exploration, GMH Gas and Boggs Natural Gas.

Suing "pro se," with no lawyer, they claimed conversion of their right to lease to other the rights to oil, gas or minerals under their property.

Hildreth, his company, GMH Gas and Boggs Natural Gas moved to dismiss, arguing that the couple didn't own the rights. They relied on language in a 1913 deed.

BNG Producing and Drilling and B&R Construction moved separately to dismiss, based on a release of a lease that Nitro Energy assigned to Westside Exploration.

Nitro Energy didn't answer the complaint. After 46 days the couple moved for default judgment and mailed the motion to Nitro Energy.

Westside Exploration executed a release to the Groves, who amended their complaint to drop claims against BNG Producing and Drilling and B & R Construction.

The couple didn't mail the amended complaint to Nitro Energy.

In 2006 they mailed notice to Nitro Energy that Chafin would hear the default motion.

Chafin, a retired Wayne Circuit Judge, presided by special appointment. The opinion doesn't explain why.

Chafin held no hearing. In March 2006 he granted default judgment as to liability.

"In the instant case, it appears to the Court that the defendant, Nitro Energy Inc., has failed to appear, answer, plead or otherwise defend the complaint," he wrote.

The couple set a hearing on damages and didn't serve notice on Nitro Energy.

Chafin held a hearing and granted final judgment for $704,000.

The couple then asked permission to withdraw some of their claims against Hildreth, his company and GMH Gas.

Chafin granted permission and wrote that their recovery against Nitro Energy satisfied their conversion claim.

He wrote that recovery against Nitro Energy reduced other claims to a nominal level.

When at last Nitro Energy appeared and moved to set the judgment aside, Chafin held a hearing and denied the motion.

The next day he granted summary judgment to Hildreth, his company and GMH Gas on all remaining issues.

His order confirmed ownership of oil and gas under the property in GMH Gas, not in William and Harrolyn Groves.

"There is no evidence shown or suggested by which plaintiffs could prove any rights in the subject oil and gas interests," he wrote.

For Nitro Energy, Larry Skeen of Charleston appealed and blasted Chafin's default judgment as speculative, premature, erroneous, arbitrary and capricious.

Skeen argued that the couple couldn't collect for conversion of rights they admitted they didn't own when they dropped Hildreth.

The couple responded that they dropped other defendants in consideration of the default judgment against Nitro Energy.

On that touchy point, the Justices decided not to decide. "This Court makes no findings with respect to the Groves' rights to the minerals at issue in this case," they wrote.

The 1913 deed suggests default judgment was "improvident," they wrote, but they barred Nitro Energy from introducing orders on other defendants at trial.

They dodged another touchy point about whether Nitro Energy owners believed all along that an attorney represented their interests.

Nitro Energy submitted an affidavit of Westside Exploration's William Boss, swearing he contacted an attorney and told him to answer the suit for Westside and Nitro.

"The Groves, on the other hand, submitted an affidavit from the same attorney which disclaimed the assertions in the affidavit submitted by Nitro," the Justices wrote.

"The scant record before us sheds little light upon this issue," the Justices wrote.

"While there is some merit in Nitro assertions," they wrote, "the record is somewhat confusing and contradictory."

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