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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

Atmos overestimated the amount of gas in the fields, which produced for about a year in 2008 and 2009, but not nearly in the quantities projected by the company.

On appeal, Atmos argued that there were issues with jury selection and the admission of evidence or at least it deserved a reduction in the amount of damages. The landowners also appealed, saying they were entitled to a greater amount of punitive damages.

Moore found that the landowners argued they did not receive the royalty specified in their oil and gas leases because of the relationship between Atmos Energy and Resource Energy Technologies, one of the companies handling the drilling and sold oil and gas to an arm of Atmos Energy.

When the promised royalties didn't come through, the landowners sued for fraud.

"However, even if Atmos or RET were obligated to pay the landowners their royalties pursuant to those leases, where a person promises to perform an act in the future — such as paying royalties — and fails to do so, that failure is a breach of contract, not a fraudulent or deceitful act," Moore wrote.

Atmos has a related federal lawsuit against Resource Energy Technologies, which filed for bankruptcy protection in 2009. The suit, which claims misrepresentation and unjust enrichment by Resource Energy and Park City's owners, is set for trial in 2014.


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