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Deutsch v. Robro Royalty Partners, Ltd.

United States District Court, D. Kansas

June 24, 2015

KENT DEUTSCH, d/b/a DEUTSCH OIL CO., Plaintiff,
v.
ROBRO ROYALTY PARTNERS, LTD., et al., Defendants.

MEMORANDUM AND ORDER

MONTI L. BELOT, District Judge.

Before the court are the following:

1. Defendants' motion to dismiss (Docs. 4 and 5);
2. Plaintiff's response (Doc. 11); and
3. Defendants' reply (Doc. 12).

Background

Deutsch Oil Co. (Deutsch) is the lessee and operator of two oil leases located in Stafford County, Kansas: Morrison A#1 and Morrison A#2. Morrison A#1 has produced oil since 1970. Deutsch completed Morrison A#2 in 2013. Deutsch sold oil from both leases to Sunoco Logistics Partners, LP, (Sunoco) which is not a party. Deutsch, which presumably is supposed to know such things, did not know that the Trustee of the Batman Revocable Trust (also not a party) held mineral rights in Morrison A#2 and was entitled to royalty payments from the oil it produced. Sunoco, also apparently ignorant of the Trust's interest, paid royalties from both leases to defendants.

When Batman's trustee discovered the erroneous payments, she sued Deutsch in Stafford County District Court (Case No. 2015-CV-6) (Doc. 7-1). The suit was filed on March 6, 2015. Deutsch answered on April 15 and named defendants in a third party petition. The current status of 2015-CV-6 is unknown.

Two months earlier, on February 25, Deutsch had sued defendants in Stafford County (Case No. 2015-CV-4). Defendants removed 2015-CV-4 to this court and now seeks its dismissal for failure to state a claim.

When one reads Deutsch's state court petition, Deutsch's theory of recovery against defendants is not apparent. The petition merely alleges that the payments made by Sunoco to defendants were a mistake and that payments should have been made to the Trust. Not until Deutsch filed its third party petition did it allege a claim of unjust enrichment. Well, sort of. ("If the allegations made by [the Trust] against Deutsch are valid and [the Stafford County court] holds that the royalty for the Morrison A#2 well is the rightful property of [the Trust] then, by implication, [defendants] have been unjustly enriched by Deutsch.") This make it sound like Deutsch believes its unjust enrichment claim is dependent on findings which this court cannot make.

If Case No. 2015-CV-4 had stayed in Stafford County, it would have been consolidated with 2015-CV-6 and the state judge would have decided whether the Trust is the "rightful" holder of the royalty interest in Morrison A#2 and what should happen to the money. But the Trust is not a party here and the validity of the Trust's royalty interest is not before the court. It would have been better for defendants to leave 2015-CV-4 in Stafford County where all issues could have been decided in one forum. As it currently stands, the only issue before this court is the validity of Deutsch's unjust enrichment claim against defendants.

The court has not overlooked the absence of any assertion by defendants that they are rightfully entitled to the royalty payments.[1] Rather, their position seems to be that Deutsch didn't make the royalty payments directly to them and thus they are not obligated under a theory of unjust enrichment to send back the payments to Deutsch so Deutsch can satisfy its obligation to the Trust.

Discussion

The parties agree that in Kansas the elements of an unjust enrichment claim are: (1) a benefit conferred; (2) an appreciation or knowledge of the benefit of the one receiving the benefit; and (3) the acceptance or retention of the benefit under circumstances as to make it inequitable to retain the benefit. Suture Express, Inc. v. Cardinal Health 200, LLC and Owens & Mirror Distribution, Inc., 963 F.Supp.2d 1212, 1230 (D. Kan. 2013). Judge Rogers defined "confer" to mean ...


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