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Knox Energy, LLC v. Gasco Drilling, Inc.

United States District Court, W.D. Virginia, Abingdon Division

August 14, 2014

KNOX ENERGY, LLC, Plaintiff,
v.
GASCO DRILLING, INC., Defendant.

J. Scott Sexton, H. David Gibson, and Michael J. Finney, Gentry Locke Rakes & Moore, LLP, Roanoke, Virginia, for Plaintiff and Counterclaim Defendants

Thomas R. Scott, Jr., Benjamin A. Street, and Jason Gallagher, Street Law Firm, LLP, Grundy, Virginia, and C.R. Bolling, Bolling, Hearl & Ratliff, Richlands, Virginia, for Defendant and Counterclaim Plaintiff.

OPINION AND ORDER

JAMES P. JONES, District Judge.

Defendant and Counterclaim Plaintiff Gasco Drilling, Inc. ("Gasco") has objected to an order of the magistrate judge requiring Gasco to disclose in discovery the general subject matter of communications with Gasco's attorney at or near the time of certain material events in this breach of contract case.Gasco does not presently contest the relevancy of this information, but contends that the disclosure ordered would violate the attorney-client privilege under Virginia law and that the magistrate judge's ruling was thus clearly erroneous or contrary to law.

For the reasons that follow, I will deny Gasco's objections.

I.

The basic facts are uncontested.

In 2008 Gasco and the Crossclaim Defendants Knox Energy, LLC, and Consol Energy, Inc., ("Knox/Consol") entered into a written contract under which Gasco provided gas well drilling services for Knox/Consol. In 2011, well after the work under the 2008 contract had concluded, a clerk with Knox/Consol sent Gasco what is referred to as the Addendum, a one-page form document, which Gasco filled in, signed and returned. Knox/Consol in turn signed the Addendum and returned a copy to Gasco.

Gasco contends that the Addendum had the effect of reinstating the 2008 drilling contract for a one-year renewable term. Gasco was never asked by Knox/Consol to do any further drilling, but because the 2008 contract had a "standby" provision (also called a "take or pay" clause) that required Knox/Consol to pay substantial amounts to Gasco even if it did not perform drilling work, Gasco claims that Knox/Consol now owes it more than $14 million in standby charges.

Knox/Consol contends that the Addendum was sent to Gasco by mistake and that Gasco knew that and fraudulently hid the mistake from Knox/Consol in order to obtain an unjust windfall based upon the clerical error.

Knox/Consol does not seek the substance of any communications between Gasco and its lawyer, but rather an identification of any communications between May 14, 2011, and August 16, 2012 - pertinent dates in the dispute - that concerned the Addendum.

The deposition questions were asked of Clyde B. Ratliff, Gasco's president, both individually and as the party's Rule 30(b)(6) witness, as well as Tony Roop, an in-house accountant with Gasco. Before any objection was made and the witness directed not to answer, Ratliff did testify that he had consulted with attorney Randy Bolling about the Addendum after Gasco had received it. (Ratliff Dep. 209-10, May 14, 2014, ECF No. 181-1.) He was also later allowed to testify that he had met with attorney Bolling three times between the dates in question, but he also stated, perhaps inconsistently, that he "communicate[s] regularly with Randy Bolling on business subjects and personal ones." (Ratliff Dep. 24, June 6, 2014, ECF No. 126-2.) At that time, Gasco's deposition counsel stated "for the record" that Gasco did not object to questions inquiring as to when Gasco met with counsel, what persons were in attendance, and a "general description of the purpose... [s]uch as that being Gasco business or seeking advice about Gasco business." ( Id. at 25-26.)

After Gasco refused to allow its witness to fully answer the questions posed, Knox/Consol filed a Motion to Compel, which was heard by the magistrate judge. On July 9, 2014, Magistrate Judge Pamela Meade Sargent entered a Memorandum Order granting the motion, to which Gasco has timely ...


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