Statoil USA Onshore Properties Inc. v. Pine Resources, LLC

UNPUBLISHED

UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT

No. 15-2099

STATOIL USA ONSHORE PROPERTIES INC.,

Plaintiff - Appellee,

v.

PINE RESOURCES, LLC,

Defendant - Appellant.

Appeal from the United States District Court for the Southern
District of West Virginia, at Charleston. Irene C. Berger,
District Judge. (2:14-cv-21169)

Argued: October 26, 2016 Decided: January 18, 2017

Before MOTZ, TRAXLER, and FLOYD, Circuit Judges.

Vacated and remanded by unpublished per curiam opinion.

ARGUED: David Allen Barnette, JACKSON KELLY, PLLC, Charleston,
West Virginia, for Appellant. Constance Hankins Pfeiffer, BECK
REDDEN LLP, Houston, Texas, for Appellee. ON BRIEF: Vivian H.
Basdekis, JACKSON KELLY, PLLC, Charleston, West Virginia, for
Appellant. Fields Alexander, Joel T. Towner, BECK REDDEN LLP,
Houston, Texas; Bridget Furbee, Bridgeport, West Virginia, John
J. Meadows, STEPTOE & JOHNSON PLLC, Charleston, West Virginia,
for Appellee.

Unpublished opinions are not binding precedent in this circuit.
PER CURIAM:

In 2008, Appellant Pine Resources, LLC (“Pine”), sold

certain mineral rights to non-party PetroEdge Energy, LLC

(“PetroEdge”), pursuant to the terms of a purchase and sale

agreement (the “Pine PSA”). In 2012, PetroEdge sold its mineral

rights to Appellee Statoil USA Onshore Properties, Inc.

(“Statoil”), pursuant to the terms of a second purchase and sale

agreement (the “Statoil PSA”).

In 2014, Statoil sought a declaratory judgment that it was

not in breach of the Pine PSA, and had no obligations under that

agreement to Pine other than to pay certain royalty interests.

Pine filed a breach of contract counterclaim, seeking damages

for Statoil’s alleged nonperformance of spudding obligations

outlined in Section 5.7(b) of the Pine PSA. The parties filed

cross-motions for summary judgment.

The district court granted summary judgment to Statoil, and

denied Pine’s motion for summary judgment on its counterclaim.

The court held that, under the unambiguous language of the Pine

PSA, the agreement’s spudding obligations extended only to the

“Purchaser,” which the court read to mean PetroEdge alone.

This holding, however, renders effectively meaningless a

successors and assigns provision in the Pine PSA. It is our

duty to read a contract as a whole, giving meaning to every

provision whenever possible. Because the district court failed

2
to properly do so, we vacate its judgment and remand for further

proceedings.

I.

A.

In 2001, Pine acquired mineral interests in a 565-acre

tract of land in Barbour County, West Virginia (the “Property”).

In 2008, at a price of $479,876, and pursuant to the terms of

the Pine PSA, non-party PetroEdge purchased from Pine the

Marcellus Mineral Rights on the Property. 1

The Pine PSA--drafted by PetroEdge--contains the following

relevant provisions:

• Introduction: The Pine PSA states in its introductory

paragraph that it is an agreement “by and between Pine

Resources Inc., a West Virginia corporation (‘Seller’),

and PetroEdge Energy LLC, a Delaware limited liability

company (‘Purchaser’).” J.A. 49. The Pine PSA further

provides that “Seller and Purchaser are sometimes

referred to herein together as the ‘Parties’ and

individually as a ‘Party’.” Id.

1 The Marcellus Mineral Rights include, inter alia,
hydrocarbon mineral interests of “those subsurface depths from
the base of the Elk formation to the base of (and including) the
Onondaga formation.” J.A. 50.

3
 • Article 5: Article 5 outlines the covenants of the

parties, and centers on their mineral production plans.

Section 5.5 calls for quarterly meetings by the “Parties”

to discuss drilling plans and operations. J.A. 56.

Section 5.6 enjoins cooperation between the “Parties” in

the event of parallel drilling or operations. Id.

Section 5.7(a) requires “Purchaser [to] apply for a meter

tap on a gas transmission line” within 60 days of

executing the Pine PSA. J.A. 56–57. Section 5.7(b)

provides that the “Purchaser shall spud not less than one

(1) well on the Contract Area” within a year of the

installation of the meter tap; it further provides that

the “Purchaser” shall have spudded at least three wells

within five years of the meter tap’s installation. J.A.

57. 2 Section 5.8 discusses the scenario where a party

abandons a well and the non-abandoning party gets the

right to take over its operation. Id. Section 5.9(a)

discusses Pine’s 18% retained overriding royalty interest

on hydrocarbons produced from the Marcellus Mineral

Rights. J.A. 57-58. Section 5.9(b) establishes an

arbitration procedure for disputes between the “Seller”

2 After multiple delays and a purchased extension, PetroEdge
drilled one well, the Bumgardner 5-2H, in December 2011.

4
 and the “Purchaser” over the occurrence of a “Production

Termination Event.” J.A. 58.

• Article 7: Article 7 is the Pine PSA’s “Indemnification;

Limitations” section. J.A. 60-62. As relevant here,

Section 7.2(a), provides as follows:

[1] The representations and warranties of the
Parties in Articles 3 (except Section 3.7) and 4
and the covenants and agreements of the Parties
in Article 6 [sic] (except Sections 5.4 through
5.9) shall survive the Execution Date for a
period of two (2) years. [2] The
representations, warranties, covenants and
agreements of Seller in Sections 3.7 and 5.4
shall survive until the close of business 30 days
after the expiration of the applicable statutes
of limitation (including any extensions thereof)
provided that any proceeding or indemnification
claim pending on the date of any such termination
shall survive until the final resolution thereof.
[3] The remainder of this Agreement shall survive
the Execution Date so long as Purchaser holds any
interest in the Mineral Rights. Representations,
warranties, covenants and agreements shall be of
no further force and effect after the date of
their expiration, provided that there shall be no
termination of any bona fide claim asserted
pursuant to this Agreement with respect to such a
representation, warranty, covenant or agreement
prior to its expiration date.

J.A. 61.

• Article 8: Article 8 contains the remaining miscellaneous

provisions. Section 8.5 instructs that the Pine PSA is

to be construed in accordance with West Virginia law.

J.A. 63. Section 8.8 contains a successors and assigns

provision, which in relevant part provides that “this

5
 Agreement shall be binding upon and inure to the benefit

of the Parties hereto and their respective successors and

assigns.” Id.

• Deed: Pine’s deed to PetroEdge (the “Deed”) granting the

latter the Marcellus Mineral Rights is an exhibit

attached to the Pine PSA. (All exhibits to the Pina PSA

were expressly incorporated under Section 8.9, the

integration clause of the Pine PSA. J.A. 63.) Article

III of the Deed provides that, “[n]otwithstanding

anything to the contrary,” Pine reserves an 18% retained

overriding royalty interest on hydrocarbons produced from

the Marcellus Mineral Rights. J.A. 68. Article III adds

that if there is a dispute regarding the occurrence of

“Production Termination Events,” it shall be settled in

accordance with Section 5.9(b) of the Pine PSA. Id.

B.

By written assignment in 2012, PetroEdge sold its interest

in the Marcellus Mineral Rights to Statoil. That assignment

agreement is subject to and incorporates the terms and

conditions of a purchase and sale agreement--the Statoil PSA--

dated October 12, 2012, between Statoil and PetroEdge.

Section 10.1(a) of the Statoil PSA provides that Statoil

shall assume responsibility for the “performance of all express

6
and implied obligations” arising from “instruments in the chain

of title to the Assets, the Leases, the Contracts and all other

orders, contracts and agreements to which the Assets are

subject, including the payment of royalties and overriding

royalties[.]” J.A. 450. The Statoil PSA lists the Pine PSA as

a “Contract[] included in the Assets” that were sold by the

Statoil PSA. J.A. 447, 453. The Statoil PSA further

acknowledges that the obligation to drill “at least two (2)”

wells (in addition to the Bumgardner 5-2H well) is an

unfulfilled drilling obligation dictated by the Pine PSA. J.A.

449, 451.

By letter dated December 19, 2012--one day after the

transaction contemplated by the Statoil PSA closed--PetroEdge

notified Pine of its assignment to Statoil. The letter

specifically noted that “Statoil is now the Purchaser under the

[Pine] PSA.” J.A. 459. The letter made no reference to the

possibility that the duties of PetroEdge would not pass on to

its assign Statoil.

After the assignment, Pine sought performance by Statoil on

the Pine PSA. It is undisputed that Pine reached out multiple

times to Statoil to schedule quarterly meetings with it, and

that at least one such meeting took place. To date, however, no

well drilling beyond the Bumgardner 5-2H has occurred on the

Property.

7
 C.

In 2014, Statoil sought a declaratory judgment confirming

that--except for a duty to pay royalty interests upon

production--its duties under the Pine PSA were expired, and it

was thus not in breach of the Pine PSA and owed no duties to

Pine beyond making royalty interest payments. Pine filed a

breach of contract counterclaim, seeking damages for Statoil’s

alleged nonperformance under Section 5.7(b) of the Pine PSA.

The parties filed cross-motions for summary judgment.

The district court granted summary judgment to Statoil, and

denied Pine’s motion for summary judgment on its counterclaim.

Statoil USA Onshore Prop. Inc. v. Pine Res., LLC, No. 2:14-cv-

021169, 2015 WL 5304295 (S.D. W.Va. Sept. 9, 2015). The court

reasoned that because the introductory paragraph designated

PetroEdge as the “Purchaser,” and Section 5.7(b) only applied to

the “Purchaser,” Section 5.7(b) unambiguously applied to

PetroEdge alone and not to its assign Statoil. Id. at *5. The

court further held that by force of Section 7.2(a)’s residual

clause, Section 5.7(b) terminated when PetroEdge, as

“Purchaser,” no longer held any interest in the Marcellus

Mineral Rights. Id. The court rejected the notion that the

successors and assigns provision in Section 8.8 modified the

definition of the term “Purchaser” anywhere in the Pine PSA.

Id. This appeal followed.

8
 II.

We review a district court’s disposition of cross-motions

for summary judgment de novo. Libertarian Party of Va. v. Judd,

718 F.3d 308, 312 (4th Cir. 2013). “We view the facts and

inferences arising therefrom in the light most favorable to the

non-moving party to determine whether there exists any genuine

dispute of material fact or whether the movant is entitled to

judgment as a matter of law.” Pender v. Bank of Am. Corp., 788

F.3d 354, 361 (4th Cir. 2015).

We also review de novo a district court’s decision on an

issue of contract interpretation. FindWhere Holdings, Inc. v.

Sys. Env’t Optimization, LLC, 626 F.3d 752, 755 (4th Cir. 2010).

“The interpretation of a written contract is a question of law

that turns upon a reading of the document itself, and a district

court is in no better position than an appellate court to decide

such an issue.” Seabulk Offshore v. Am. Home Assurance, 377

F.3d 408, 418 (4th Cir. 2004).

III.

In our view, the district court read the successors and

assigns provision in Section 8.8 too narrowly. That provision

extends the contractual rights and duties of Pine and PetroEdge

to their respective successors and assigns, in a contract whose

provisions only speak about the rights and duties of the

9
“Seller,” the “Purchaser,” and the “Parties.” Thus, if Section

8.8 is to have any meaning, it must have the effect of extending

the application of the rights and duties provisions of the Pine

PSA from beyond Pine and PetroEdge, and to the parties’

respective successors and assigns in their stead (unless context

dictates otherwise).

We read Section 8.8 to have such an effect, and therefore

hold that the spudding obligations that Section 5.7(b) places on

the “Purchaser” extend to PetroEdge’s assign Statoil in

PetroEdge’s stead. However, the meaning of the term “Purchaser”

in Section 7.2(a)’s residual clause is a more difficult

question, because its context prevents us from concluding that

the term unambiguously encompasses PetroEdge, and in its place

its successors and assigns. We instead hold that Section

7.2(a)’s residual clause is ambiguous, but that extrinsic

evidence clarifies that “Purchaser” in Section 7.2(a)’s residual

clause is intended to encompass PetroEdge’s assign Statoil. As

such, the district court’s conclusions that Section 5.7(b) is

inapplicable to Statoil and also terminated by Section 7.2(a)

are both erroneous.

A.

The Pine PSA provides--and no party disputes--that the

agreement is to be construed in accordance with West Virginia

10
law. Under West Virginia law, “the function of a court is to

ascertain the intent of the parties as expressed in the language

used by them” in their contract. Zimmerer v. Romano, 679 S.E.2d

601, 610 (W. Va. 2009) (per curiam) (internal quotation marks

omitted). In performing this task, courts must read contracts

“as a whole, taking and considering all the parts together[.]”

Id. (internal quotation marks omitted).

Moreover, “specific words or clauses of an agreement are

not to be treated as meaningless, or to be discarded, if any

reasonable meaning can be given them consistent with the whole

contract.” Dunbar Fraternal Order of Police, Lodge No. 119 v.

City of Dunbar, 624 S.E.2d 586, 591 (W. Va. 2005) (per curiam)

(internal quotation marks omitted). Additionally, West Virginia

courts “will not interpret a contract in a manner that creates

an absurd result.” Id.

Generally, “[a] valid written instrument which expresses

the intent of the parties in plain and unambiguous language

. . . will be applied and enforced according to such intent.”

Arnold v. Palmer, 686 S.E.2d 725, 733 (W. Va. 2009) (internal

quotation marks omitted). “Extrinsic evidence will not be

admitted to explain or alter the terms of a written contract

which is clear and unambiguous.” Faith United Methodist Church

& Cemetery of Terra Alta v. Morgan, 745 S.E.2d 461, 481 (W. Va.

2013) (internal quotation marks omitted).

11
 By contrast, language is ambiguous when it is “reasonably

susceptible of two different meanings,” or is of “such doubtful

meaning that reasonable minds might be uncertain or disagree as

to its meaning.” Estate of Tawney v. Columbia Nat. Res., LLC,

633 S.E.2d 22, 28 (W. Va. 2006) (internal quotation marks

omitted). “The question as to whether a contract is

ambiguous is a question of law to be determined by the court.”

Fraternal Order of Police v. City of Fairmont, 468 S.E.2d 712,

717–18 (W. Va. 1996) (internal quotation marks omitted). Where

contract language is ambiguous, extrinsic evidence may be

consulted to aid in its construction. Yoho v. Borg-Warner

Chems., 406 S.E.2d 696, 697 (W. Va. 1991) (per curiam).

B.

The introductory paragraph identifies PetroEdge as the

“Purchaser” under the Pine PSA, and Section 5.7(b) of the Pine

PSA imposes a spudding obligation on the “Purchaser.” Based on

these points, the district court concluded that the spudding

obligation of Section 5.7(b) extends to PetroEdge alone, and not

to its assign Statoil.

We disagree with this conclusion, in light of Section 8.8

of the Pine PSA, which contains the agreement’s successors and

assigns provision. Section 8.8 provides that the Pine PSA

“shall be binding upon and inure to the benefit of the Parties

12
hereto and their respective successors and assigns.” J.A. 63.

We read Section 8.8 to extend the application of the rights and

duties provisions of the Pine PSA--unless context dictates

otherwise--from beyond Pine and PetroEdge, and to their

respective successors and assigns in their stead. 3 Thus, reading

the Pine PSA “as a whole,” Zimmerer, 679 S.E.2d at 610, we hold

that the spudding obligation of Section 5.7(b) extends to

Statoil, in its capacity as PetroEdge’s assign.

The district court rejected this reading of Section 8.8,

concluding that “Section 8.8 does not modify the remainder of

the contract; it simply provides that successors and assigns are

to be bound by the contract terms.” Statoil, 2015 WL 5304295,

at *5. Those two conclusions, however, are inconsistent with

one another. The Pine PSA is structured in terms of benefits

for and burdens to the “Purchaser,” the “Seller,” and the

“Parties;” thus, if those terms are not broadened to include

those parties’ successors and assigns, then it makes little

sense to say that such a contract binds and benefits those

3
In contrast, provisions of the Pine PSA that discuss the
parties as parties, rather than as promisors and promisees under
the agreement, are sensibly read to exclude the parties’
successors and assigns. See J.A. 49 (the introductory
paragraph); see also J.A. 51 (Section 3.1-describing the
“Seller” as a West Virginia corporation) J.A. 54 (Section 4.1-
describing the “Buyer” as a Delaware limited liability company);
J.A. 62 (Section 8.2-listing the addresses of “Seller” Pine and
“Purchaser” PetroEdge); J.A. 65-66 (signature page for the
“Seller” and the “Purchaser”).

13
parties’ successors and assigns. See J.A. 57 (Section 5.7(b)-

imposing a spudding obligation on the “Purchaser”); see also

J.A. 56 (Section 5.4-allocating tax responsibilities between the

“Seller” and the “Purchaser”); id. (Section 5.5-outlining

quarterly meetings for the “Parties”). Indeed, by reading

Section 8.8 to bind successors and assigns to a contract that

does not speak to them, the district court in effect “treated

[Section 8.8] as meaningless.” Dunbar, 624 S.E.2d at 591. As

such, the more natural reading of “Purchaser” in the rights and

duties provisions of the Pine PSA--in light of Section 8.8--is a

reading that generally encompasses PetroEdge, and in its place

its successors and assigns.

Furthermore, the Deed granted by Pine to PetroEdge, which

was attached to and expressly made part of the Pine PSA, makes

sense only if the term “Purchaser” in the Pine PSA is generally

not limited to PetroEdge alone. To elaborate, the Deed’s

Article III outlines an overriding royalty interest due to Pine

--an interest that even Statoil concedes it will be responsible

for paying Pine whenever mineral production takes place. See

Appellee’s Br. 17; see also J.A. 386 (establishing a royalty

interest scheme “[n]otwithstanding anything to the contrary”).

Article III, in turn, instructs that if a certain type of

royalty dispute arises, that dispute will be “settled in

accordance with Section 5.9(b) of the [Pine PSA].” J.A. 386.

14
Section 5.9(b), however, speaks in terms of “Seller” and

“Purchaser”--meaning that if Section 5.9(b) is to be of any use

in resolving a Statoil-Pine dispute, the term “Purchaser”

therein will have to be read to include PetroEdge’s assigns.

This reading avoids the “absurd result” of a senseless Article

III in the Deed. Dunbar, 624 S.E.2d at 591.

Moreover, a broad reading of the term “Purchaser” is

consistent with the Pine PSA’s apparent objective of promoting

mineral production. In addition to spudding obligations, the

Pine PSA’s Article 5 sets forth meetings to discuss drilling

plans, cooperation details in the event of parallel drilling or

well maintenance operations, abandonment and restoration

procedures in the event that a well ceases to produce, and a

mineral royalty compensation structure. This elaborate

production scheme would be frustrated if PetroEdge could simply

assign its interest to a party that would in no way be subject

to the scheme. Admittedly, a contract need not pursue its

objectives at all costs, and so the Pine PSA’s use of the term

“Purchaser” could be conceived as a limitation on the

agreement’s effort to promote mineral production. Nonetheless,

in light of Section 8.8’s directive, we are satisfied reading

the term “Purchaser” to be consistent with, rather than a

limitation on, the Pine PSA’s objectives.

15
 Our approach is also consistent with relevant federal and

state authorities within this Circuit. Those authorities

confirm the general rule that a successors and assigns provision

places a successor or assign in the shoes of its predecessor or

assignor with respect to the rights and duties given to the

latter under the relevant contract. See, e.g., Horvath v. Bank

of N.Y., N.A., 641 F.3d 617 (4th Cir. 2011) (applying Virginia

law); Cotiga Dev. Co. v. United Fuel Gas Co., 128 S.E.2d 626 (W.

Va. 1962); see also Cook v. E. Gas & Fuel Assocs., 39 S.E.2d

321, 326-27 (W. Va. 1946) (“Ordinarily the assignee acquires no

greater right than that possessed by his assignor, and he stands

in his shoes.”).

Cotiga, a decision from the Supreme Court of Appeals of

West Virginia, is instructive. There, “Cotiga, as lessor,

entered into an oil and gas lease with [Woods Oil], as lessee.”

Cotiga, 128 S.E.2d at 630. The court in Cotiga quoted three

obligations that the lease agreement imposed on lessee Woods

Oil, and all three did so using only the term “Lessee” (i.e.,

not “Lessee, its successors and assigns”). Id. at 630-31. The

lease agreement, however, contained the following successors and

assigns provision: “All the terms, grants, conditions and

provisions of this lease shall extend to and be binding upon the

successors and assigns of the parties hereto.” Id. at 633

(emphasis added in Cotiga).

16
 One day after the lease was signed, Woods Oil assigned the

lease to United Fuel. Id. at 630. Relying on the successors

and assigns provision, the court in Cotiga had no difficulty

holding assign United Fuel responsible for the above-described

obligations that the lease agreement by its literal terms

imposed only on the “Lessee.” “As a result of the lease

assignment,” the court observed, “United Fuel succeeded to only

such rights as accrued to Woods Oil by the terms of the lease

and thereby became burdened by all restrictions and obligations

thereby imposed upon Woods Oil. . . . To all intents and

purposes, United Fuel became the lessee in the place and stead

of Woods Oil[.]” Id. at 633–34. In reaching this conclusion,

the Supreme Court of Appeals of West Virginia adhered to a

practical approach with respect to successors and assigns

provisions, which we adhere to in this case as well.

Notably, this Court recently followed this practical

approach in Horvath. In that case, a borrower argued that

because a deed of trust defined the term “Lender” as company

“AWL,” a deed provision that vested foreclosure powers in the

“Lender” empowered AWL alone to foreclose--and not any

subsequent purchasers of the deed of trust. Horvath, 641 F.3d

at 624–25. This Court rejected that narrow reading for several

reasons: it would bring about the “absurd result” of a

subsequent purchaser “paying for a worthless document” that the

17
purchaser would have “no power to administer or enforce;” it

would contradict a provision stating that “[t]he covenants and

agreements of this Security Instrument shall bind . . . and

benefit the successors and assigns of Lender;” and it would go

against “good sense,” because “[i]f AWL were to sell its

interest in the deed of trust, it would no longer be the

‘Lender’ in any meaningful sense.” Id. at 625 (emphasis added

in Horvath); see also id. (citing with approval the maxim that

contracts must be construed “as a whole”). Instead, this Court

broadly construed the term “‘Lender’ as applying not only to AWL

but to any subsequent purchaser of the deed of trust.” Id.

For similar reasons, a broad construction of the term

“Purchaser”--one encompassing PetroEdge, and in its place its

successors and assigns--is likewise appropriate for Section

5.7(b) of the Pine PSA. Such a construction complies with

Section 8.8’s successors and assigns provision, avoids the

absurd result of a senseless Pine PSA and Deed, and respects the

reality that PetroEdge is no longer the “Purchaser” in any

meaningful sense for purposes of the Pine PSA or the achievement

of the agreement’s objectives. In reaching a contrary

conclusion, the district court erred.

18
 C.

Having decided that Section 5.7(b) applies to PetroEdge’s

assign Statoil, we must next decide whether that provision

retains any force or effect. Section 7.2(a) contains two

clauses that set deadlines for certain provisions of the Pine

PSA, with the first one expressly excepting Sections 5.4 through

5.9 from its scope. Additionally, Section 7.2(a) contains a

residual clause, which provides, “The remainder of [the Pine

PSA] shall survive the Execution Date so long as Purchaser holds

any interest in the [Marcellus] Mineral Rights.” J.A. 61. We

hold that the residual clause applies to Section 5.7(b). We

also hold that the residual clause is ambiguous as to whether

Section 5.7(b) survives so long as PetroEdge alone holds any

interest in the Marcellus Mineral Rights, or so long as any such

interest is held by PetroEdge, its successors or assigns. The

subsequent conduct of Pine and PetroEdge nonetheless clarifies

that the latter reading is the correct one.

1.

Before exploring the meaning of Section 7.2(a)’s residual

clause, we must address whether that clause even governs Section

5.7(b). Section 5.7(b) is not governed by Section 7.2(a)’s

second clause, and it is specifically excepted from the scope of

Section 7.2(a)’s first clause. Because Section 5.7(b) is not

19
governed by either clause, it is sensible to place it within the

scope of Section 7.2(a)’s residual clause (which governs the

“remainder” of the Pine PSA).

Pine resists this conclusion. According to Pine, because

Section 7.2(a)’s residual clause is a general catch-all, it

cannot govern Section 5.7(b), which is specifically excepted

from the scope of Section 7.2(a)’s first clause. Pine supports

this argument with a reference to the interpretive principle

that general language must usually yield to more specific

language when the two conflict.

Unfortunately for Pine, its reliance on this principle is

misplaced. In this case, there is no conflict between the

specific exception in Section 7.2(a)’s first clause and the

general language in Section 7.2(a)’s residual clause. Rather,

the latter clause simply picks up, inter alia, the provisions

specifically dropped out of the former clause. 4 Thus, we have no

difficulty reading Section 7.2(a)’s residual clause to govern

Section 5.7(b).

4
Cf. Shannondale, Inc. v. Jefferson Cty. Planning & Zoning
Comm’n, 485 S.E.2d 438, 498 (W. Va. 1997) (per curiam)
(rejecting the argument that a general ordinance provision was
superseded by a specific ordinance provision, because the two
could be reconciled).

20
 2.

Having arrived at this determination, we now turn to the

issue of how Section 7.2(a)’s residual clause impacts Section

5.7(b) following PetroEdge’s assignment to Statoil. If the

residual clause carries a terminating effect when PetroEdge, as

“Purchaser,” ceases to have any interest in the Marcellus

Mineral Rights, then PetroEdge’s assignment would give rise to a

termination of Section 5.7(b); if the residual clause carries a

preservation effect so long as PetroEdge, or its successors and

assigns, has interest in the Marcellus Mineral Rights, then

Section 5.7(b) is preserved even after PetroEdge’s assignment.

We acknowledge that there are persuasive arguments on both sides

of this issue.

According to Statoil, when the residual clause instructs

that it preserves the provisions within its scope “so long as

Purchaser holds any interest in the [Marcellus] Mineral Rights,”

J.A. 61, the clause sets as a deadline the date that PetroEdge

ceases to hold any mineral interests. For support, Statoil

references the introductory paragraph’s identification of

PetroEdge as the Pine PSA “Purchaser.”

Statoil rejects the notion that the term “Purchaser” in

Section 7.2(a)’s residual clause can include PetroEdge’s

successors and assigns, because under such a reading the

deadline that the residual clause purports to set becomes

21
illusory. They argue that if “Purchaser” in Section 7.2(a)

includes successors and assigns, then none of the provisions to

which the residual clause is applicable will ever expire and

will last into perpetuity.

Meanwhile, there are also arguments favoring a broader

reading of the residual clause--one that preserves the

provisions within its scope so long as PetroEdge, or in its

place its successors or assigns, holds any interest in the

Marcellus Mineral Rights. Although the residual clause refers

only to “Purchaser,” to the extent that the residual clause

shapes the rights and duties of the parties, Section 8.8 seems

to broaden “Purchaser” to include PetroEdge’s successors and

assigns.

This broad construction may impair the residual clause’s

utility as a deadline clause, but, one may argue, there is no

need for the residual clause to serve such a function. Whereas

Section 7.2(a)’s first two clauses set specific deadlines for

the provisions they govern, its residual clause could be read as

a clause intended to attach a longer effect to the provisions it

governs. Although this reading would allow PetroEdge’s

successor or assign to participate in the Pine PSA’s mineral

production scheme in PetroEdge’s place, there is no indication

in the Pine PSA that PetroEdge was irreplaceable in this scheme.

22
 In our view, both sides present reasonable constructions of

Section 7.2(a)’s residual clause. “The meaning of a word is to

be considered in the context in which it is employed.” Legg v.

Johnson, Simmerman & Broughton, L.C., 576 S.E.2d 532, 537

(W. Va. 2002) (per curiam) (internal quotation marks omitted);

see also Torres v. Lynch, 136 S. Ct. 1619, 1625 (2016)

(explaining that “many words” can “take[] on different meanings

in different contexts”). Although the term “Purchaser”--in

conjunction with Section 8.8--unambiguously encompasses

PetroEdge’s successors and assigns in the context of rights and

duties provisions, it is difficult to conclude that such a broad

construction is unambiguously proper in the context of a

residual clause of a limitations provision. On the other hand,

in light of the traditional rule that an assign stands in the

shoes of the assignor, the residual clause is inadequate to

indicate a clear intent by the parties to in large part depart

from this rule. 5 Because the term “Purchaser” is “reasonably

susceptible of two different meanings,” we hold that the term is

ambiguous in Section 7.2(a). Tawney, 633 S.E.2d at 28.

5
Cf. Tawney, 633 S.E.2d at 28 (finding an ambiguity where,
“in light of [West Virginia’s] traditional rule that lessors are
to receive a royalty of the sale price of gas, the general
language at issue simply [was] inadequate to indicate an intent
by the parties to agree to a contrary rule”).

23
 Having identified an ambiguity in Section 7.2(a)’s residual

clause, we now resort to extrinsic evidence for clarification.

Yoho, 406 S.E.2d at 697. In this case, we are guided by the

“practical construction given to the contract by the parties

themselves . . . subsequent[]” to its execution. Kelley,

Gidley, Blair & Wolfe, Inc. v. City of Parkersburg, 438 S.E.2d

586, 589 (W. Va. 1993) (per curiam) (internal quotation marks

omitted). As “Lord Sugden once said: ‘Tell me what the parties

have done under a contract and I will tell you what the contract

means.’” Watson v. Buckhannon River Coal Co., 120 S.E. 390, 394

(W. Va. 1923).

PetroEdge’s conduct shows that it read the Pine PSA as

carrying no provision that terminates Section 5.7(b) upon

assignment. In its post-assignment letter to Pine, PetroEdge

noted that Statoil was now the “Purchaser” under the Pine PSA,

but made no suggestion that Section 7.2(a)’s residual clause

freed Statoil of any of PetroEdge’s duties under the agreement.

On the contrary, in the Statoil PSA, PetroEdge expressly

communicated to Statoil that the latter was acquiring

PetroEdge’s duties. The Statoil PSA expressly noted that

Statoil was taking the assigned assets subject to the

obligations arising from the Pine PSA, and it specifically cited

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the “unfulfilled drilling obligations,” J.A. 449, of “two (2)

additional wells,” J.A. 451, as arising from the Pine PSA. 6

Pine’s conduct is likewise consistent with a broad reading

of Section 7.2(a)’s residual clause. Following PetroEdge’s

assignment, Pine sought Statoil’s performance under the Pine PSA

(and under Section 5.7(b) in particular) through multiple reach-

out efforts and litigation with Statoil. This conduct comports

with the notion that Section 7.2(a) did not, post-assignment,

terminate Section 5.7(b).

In light of this conduct by Pine and PetroEdge, we conclude

that Section 7.2(a)’s residual clause was intended to preserve

the provisions within its scope so long as PetroEdge--or its

successors or assigns--possessed any interest in the Marcellus

Mineral Rights. Because Statoil, in its capacity as PetroEdge’s

assign, possesses such interest, we hold that the spudding

obligations of Section 5.7(b) retain force and continue to

6Statoil insists that, through this language, PetroEdge was
simply citing its own drilling obligations under the Pine PSA.
We disagree. If PetroEdge truly believed that its drilling
obligations were not being passed down to Statoil, then
presumably PetroEdge would have either omitted reference to
those obligations altogether, or would have at least appended to
its citation of those obligations in the Statoil PSA the crucial
detail that those obligations were not being passed down to
Statoil. PetroEdge did not do so, and so we reject Statoil’s
creative reasoning.

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govern Statoil. Again, we reject the district court’s contrary

conclusions. 7

IV.

Statoil presents an alternative ground for affirming the

district court’s decision to rule against Pine on its breach of

contract counterclaim. Statoil asserts that even if it was

obligated to spud, its failure to do so caused Pine no injury,

because spudding is only a preliminary development procedure

that would not necessarily lead to the production of

hydrocarbons and resulting royalty payments. Pine, meanwhile,

contends that Statoil understates both the requirements of the

spudding obligation, and the extent to which non-compliance with

those requirements impaired Pine’s prospects of ultimately

receiving royalty payments.

7
Although we rule in favor of Pine, we do so without
reliance on the contra proferentem rule that Pine urges upon us.
That rule dictates that residual ambiguity be construed against
drafter PetroEdge and in Pine’s favor, Evans v. Bayles, 787
S.E.2d 540, 541 n.1 (W. Va. 2016); however, in this case
PetroEdge and Pine do not disagree on the definition of
“Purchaser.” We acknowledge Pine’s citation to cases suggesting
that contra proferentem applies even to assigns, see Appellant’s
Br. at 56-57, but note that those cases do not deal with a
scenario where the assign’s construction conflicts with the
construction shared by both the drafter-assignor and the non-
drafting party. This case presents such a scenario, and so in
light of our ability to resolve this case otherwise, we do not
rely on contra proferentem.

26
 We acknowledge our discretion to affirm on any ground

supported by the record, even if it was never relied upon by the

district court. See Drager v. PLIVA USA, Inc., 741 F.3d 470,

474 (4th Cir. 2014). Nonetheless, we decline to engage in a

complex injury analysis here based on short passages from the

parties’ briefs. Instead, we leave the issue of injury for the

district court to address on remand in the first instance. See

Singleton v. Wulff, 428 U.S. 106, 120 (1976) (“It is the general

rule, of course, that a federal appellate court does not

consider an issue not passed upon below.”); Goldfarb v. Mayor &

City Council of Baltimore, 791 F.3d 500, 515 (4th Cir. 2015)

(“The district court is in a better position to consider the

parties’ arguments in the first instance, which can be presented

at length rather than being discussed in appellate briefs

centered on the issues the district court did decide.”).

V.

For the foregoing reasons, we vacate the judgment of the

district court. We remand this case with instructions to the

district court to grant summary judgment in favor of Pine on

Statoil’s declaratory judgment claims, and to consider in the

first instance Statoil’s injury argument in connection with

Pine’s breach of contract counterclaim.

VACATED AND REMANDED

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