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Ky. court overturns $24 million royalty verdict

Published on NewsOK Modified: January 25, 2013 at 10:50 am •  Published: January 25, 2013

LOUISVILLE, Ky. (AP) — The Kentucky Court of Appeals on Friday overturned a $24.7 million jury verdict against Texas-based Atmos Energy stemming from a lawsuit by landowners who claimed they didn't get their rightful royalties from an oil and gas project.

A unanimous three-judge panel dismissed most of the claims brought by the landowners, including allegations that Atmos Energy of Dallas failed to pay promised royalties for drilling on their lands. The court ordered a new trial for the estate of one landowner.

Judge Joy A. Moore, writing for the court, concluded that the landowners failed to make a case against Atmos Energy on several fronts. The landowners argued that they did not receive royalties from the gas and oil produced on their lands. Moore noted that, under Kentucky law, landowners have no claim to own oil and gas found under their property once a lease is signed — the product belongs to the person who signed the lease to drill.

"Therefore, landowners had no ownership rights in the gas removed from their property and, to the extent that their conversion claim relates to that gas, their claim against Atmos fails as a matter of law," wrote Moore, who was joined by judges Donna L. Dixon and Glenn Acree.

An Edmonson County jury in 2010 awarded about $7.7 million to the landowners, and the rest to a company owned by Robert Thorpe, which acted as a third-party producer in the project.

The jury initially awarded $31.35 million, but post-trial motions knocked $7 million off the final judgment.

The case stems from a series of gas rights deals signed by the landowners in southern Kentucky. The landowners initially signed royalty contracts with two attorneys and an entity known as Park City. Park City later reached an agreement with Atmos Energy, which did the drilling and distributed the money.

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