C&M Resources, LLC v. Extraction Oil and Gas, Inc.
No. 24-1311. 11/14/2025. D.Colo. Judge Federico. State Court Proceedings—Removal—Filings From Another Case—Notice of Right to Remove—Collateral Estoppel—Waiver—Forfeiture.
November 14, 2025
C&M Resources, LLC, and Winter Oil, LLC (collectively, plaintiffs) have filed three actions in state court, on behalf of a putative class, contending that Extraction Oil and Gas, Inc. (Extraction) underpaid royalties owed based on oil and natural gas production agreements. The first two actions were dismissed for failure to exhaust administrative remedies before the Colorado Oil and Gas Conservation Commission (the commission), as required by statute. Plaintiffs did not appeal the first two dismissals. This third complaint was filed in 2019 and alleges the same harm arising from the same set of facts. The parties jointly moved for a stay of the proceeding pending resolution of a separate case by the Colorado Supreme Court, Antero Resources Corp. v. Airport Land Partners, Ltd., 526 P.3d 204 (Colo. 2023). The district court entered a stay in 2020. About three months later, Extraction notified the state court of its bankruptcy filing in Delaware bankruptcy court, and plaintiffs filed a proof of claim detailing the existence of the state court litigation, which it valued at $30 million. Airport Land was decided in 2023. The state trial court lifted its stay, and the parties engaged in discovery, from which Extraction determined that the amount in controversy was greater than $5 million. Extraction then removed the case to federal court based on diversity under the Class Action Fairness Act of 2005 (CAFA), 28 USC § 1332, and answered the operative complaint, including the affirmative defense that plaintiffs’ claims were barred by res judicata or issue preclusion. Plaintiffs moved for a remand back to state court, arguing that (1) Extraction had waived its right to removal by engaging in substantive state court litigation and (2) the notice of removal was filed outside of the statutory 30-day timeline in 28 USC § 1446(b)(3). Plaintiffs presented the proof of claim made to the Delaware bankruptcy court in 2020 as evidence that removal of the case was not timely under 28 USC § 1446(b)(3). Extraction opposed the motion and contemporaneously moved for judgment on the pleadings. The district court disregarded the bankruptcy proof of claim that plaintiffs argued had put Extraction on notice of the amount in controversy when filed because the proof of claim was not referenced in plaintiffs’ motion for remand but was raised for the first time in its reply. The district court also held that Extraction met its burden to justify removal, so it denied plaintiffs’ remand motion. Lastly, the district court granted judgment on the pleadings and dismissed the putative class action complaint without prejudice.
As an initial matter on appeal, the Tenth Circuit sua sponte recognized that dismissal without prejudice for failure to exhaust administrative remedies is a final appealable decision, so it had subject matter jurisdiction.
Plaintiffs argued that the district court abused its discretion in denying remand because the proof of claim affected a nonwaivable jurisdictional question. Plaintiffs maintained that Extraction became aware that the case was removeable when the bankruptcy proof of claim was filed, because that paper met the definition of “other paper” in § 1446(b)(3), triggering the removal clock. Thus, the bankruptcy proof of claim began the 30-day clock for removal, so Extraction’s notice of removal was untimely filed. Here, plaintiffs presented the proof of claim as evidence that removal of the case was not timely, but the timeliness of a litigant’s notice of removal is not a jurisdictional question. In making its determination, the district court noted that considering the proof of claim would not have changed its ruling because plaintiffs cited no authority to suggest that a paper from a different case can satisfy the requirements of 28 USC § 1446 in this case. The Tenth Circuit held that “other paper” must arise from the removed case itself. Thus, a federal bankruptcy filing in Delaware will not trigger removability from a Colorado state court case even when both cases involve the same parties. Accordingly, the case was properly removed to and retained in the district court.
Plaintiffs further asserted that Extraction waived its right to removal by participating in the state court litigation before filing the notice of removal in federal court. Generally, a party waives its right to remove when it has adequate notice of such right. As discussed above, Extraction did not have adequate notice of its right to remove until 2023 at the earliest, so its prior participation in the state court litigation is irrelevant. The district court did not err in denying remand.
Plaintiffs also argued that Extraction untimely removed the case from state to federal court, asserting that they are not collaterally estopped by prior state court rulings requiring plaintiffs to exhaust their administrative remedies before filing suit. Plaintiffs asserted that the district court should have found issue preclusion inapplicable because Extraction waived the issue preclusion argument by failing to raise it in the state court answer to the second amended complaint. But even if waiver had occurred, the district court had discretion to consider issue preclusion on its own motion.
Plaintiffs also maintained that the district court (1) applied federal law on collateral estoppel rather than Colorado state law, (2) found there was a final determination on the merits where none existed, and (3) erred by not finding that exhaustion would be futile. The first argument was not raised or decided in district court, so it is forfeited. And because plaintiffs did not argue plain error on appeal, the argument is waived. Plaintiffs also failed to raise the second argument in the district court, and the district court correctly found that a court’s finding that it lacks jurisdiction precludes future relitigation of that jurisdictional question. So, the second argument failed on the merits or for waiver. Lastly, the futility argument relies on the preclusion argument, which is unavailing as discussed above. Thus, the district court did not err by rendering a judgment on the pleadings in favor of Extraction.
The Tenth Circuit also denied plaintiffs’ motions to supplement the appendix on appeal with the transcript of a case management conference because plaintiffs did not explain their failure to provide the transcript to the district court, and they seek to conflate the current matter with the same state court proceedings. Further, plaintiffs’ submission of supplemental authority failed to acknowledge that the orders they filed as supplemental authority could not affect the Tenth Circuit’s jurisdictional determination, which raises a concern about a potential lack of candor.
The judgment was affirmed.