On Tuesday, April 16, 2024, the West Virginia Supreme Court of Appeals overturned a previous order from Monongalia County Circuit Court Judge Cindy Scott regarding a dispute between energy companies over a water pipeline partnership.

Pachira Energy LLC and Northeast Natural Energy LLC had been involved in an ongoing legal battle over their joint partnership to develop a water system to transport water from Dunkard Creek to natural gas wells they operated together. However, in 2021 Judge Scott ordered that Pachira be dissociated, or removed, from the partnership without its consent.

Pachira argued that the judge had exceeded her authority by granting a remedy – dissociation – that had not been requested by either party. Pachira had filed a motion requesting that the court judicially dissolve the partnership under provisions of the West Virginia Revised Uniform Partnership Act, since the relationship between the companies had deteriorated. Dissolution would have ended the partnership and allowed for an orderly winding down of operations.

However, Judge Scott declined to rule on the dissolution request and instead sua sponte, or on her own initiative, ordered Pachira’s dissociation from the partnership. Dissociation treats the departing partner differently than dissolution by immediately ending their rights and duties regarding partnership management but allowing the partnership itself to continue.

In its ruling, the Supreme Court of Appeals found that dissociation and dissolution are distinct statutory remedies with different procedures and consequences outlined in the Partnership Act. By granting a remedy that was not sought by either party, the lower court exceeded the bounds of its legitimate authority. The high court also noted Judge Scott’s order lacked the necessary findings to support Pachira’s involuntary removal from the partnership.

The Supreme Court of Appeals rejected the lower court’s reasoning that dissociation was an equitable solution, similar to other relief Pachira had requested earlier in the proceedings. It concluded Judge Scott’s order improperly forced Pachira out of the partnership and allowed Northeast to continue to use the Water System partnership for personal gain.

By overturning the dissociation order, the Supreme Court of Appeals vacated it and remanded the case back to Judge Scott’s court for further proceedings. It remains to be seen how the lower court will now address Pachira’s original request for judicial dissolution of the water system partnership.

Judge Scott’s courtroom is located at Monongalia County Justice Center, 75 High Street, Suite 31, Morgantown, WV 26505, and can be reached at 304-291-7216.

A copy of the original filing can be found here.