Am. Energy Serv. v. Lekan

• Decision Date: 12 February 1992
• Docket Number: No. CA-986,CA-986
• Citation: 75 Ohio App.3d 205,598 N.E.2d 1315
• Parties: AMERICAN ENERGY SERVICES, INC., Appellee, v. LEKAN, Appellant. *
• Court: Ohio Court of Appeals

Page 205

75 Ohio App.3d 205

598 N.E.2d 1315

AMERICAN ENERGY SERVICES, INC., Appellee, v. LEKAN, Appellant. ^*

No. CA-986.

Court of Appeals of Ohio, Fifth District, Ashland County.

Decided Feb. 12, 1992.

Geiger, Teeple, Smith & Hahn and Bruce E. Smith, Alliance, for appellee.

Henderson, Harpster, Vanosdall & Vercillo and Damian J. Vercillo, Ashland, for appellant.

PUTMAN, Presiding Judge.

This is an appeal from a judgment of the Court of Common Pleas of Ashland County, Ohio, that granted summary judgment in favor of plaintiff-appellee, American Energy Services, Inc. ("appellee"), on its complaint against defendant-appellant, James V. Lekan ("appellant"), that contained five claims for relief with respect to an oil and gas lease encumbering appellee's property. The summary judgment granted by the trial court states:

"ORDERED, ADJUDGED AND DECREED that the oil and gas lease dated August 10, 1968, and recorded in Volume 59, Page 234, of the Ashland County Records, is hereby cancelled and plaintiff's title forever quieted against same free of any and all rights or claims of the defendant thereunder, and it is further

"ORDERED, ADJUDGED AND DECREED that defendant has by his conduct abandoned any and all right, title and interest in the well upon the plaintiff's premises and the associated equipment thereon and title to such is hereby vested in the plaintiff."

Appellant assigns the following as error:

Assignment of Error No. I

"The trial court erred in granting plaintiff-appellee's motion for summary judgment pursuant to Ohio Civil Rule 56 as said ruling was contrary to law and was not sustained by the evidence."

Assignment of Error No. II

"The trial court erred in overruling defendant-appellant's motion for summary judgment pursuant to Ohio Civil Rule 56 as said ruling was contrary to law and was not sustained by the evidence."

Assignments of Error Nos. I and II

As these two assigned errors raise the single claim that the trial court's judgment is contrary to law, they will be addressed together.

In response to our Loc.App.R. 4(D), appellant states that the trial court's judgment is inappropriate on the undisputed facts, and that "[a]t a minimum, the summary judgment of forfeiture and abandonment is erroneous because of genuine factual disputes."

When reviewing summary judgments, we conduct an independent review of the record and stand in the shoes of the trial court. Smiddy v. The Wedding Party, Inc. (1987), 30 Ohio St.3d 35, 36, 30 OBR 78, 79, 506 N.E.2d 212, 215. We review the same evidentiary materials that were properly before the trial court at the time it ruled on the summary judgment motion.

Upon review of this evidence, we find that the material and undisputed facts are accurately and comprehensively set forth by the trial court in its opinion of May 7, 1991 (a copy of which is attached as an Appendix to this opinion), and that based upon these undisputed facts, reasonable minds could only reach one conclusion, and that conclusion is adverse to appellant. We are in particular agreement with the trial court's observation that the oil and gas lease expired by its own terms, thus terminating any interest of appellant in the leasehold.

Accordingly, both assigned errors are overruled and the judgment of the Court of Common Pleas of Ashland County, Ohio, is affirmed.

Judgment affirmed.

SMART and GWIN, JJ., concur.

APPENDIX

May 7, 1991.

ROBERT E. HENDERSON, Judge.

This cause has come before the court upon motions for summary judgment filed on behalf of both plaintiff, American Energy Services, Inc., and defendant, James V. Lekan. The court heard oral arguments on the same, was favored with extensive briefs from both parties, has considered the deposition of James V. Lekan, and makes the following determination with regard to the motions for summary judgment.

Plaintiff in this case is the owner, in fee simple, of real estate located in Clearcreek Township, Ashland County, Ohio, which consists of 214.095 acres, more or less, as the same is described in the complaint filed herein. The evidence indicates that William R. and Nellie Ethel Moyers, husband and wife, were predecessors in title to the plaintiff. The evidence further indicates that on August 10, 1968, William and Nellie Moyers entered into an oil and gas lease with Oil & Realty Developments, Inc., as lessee. This lease was recorded in Volume 59, Page 234-235, Ashland County Lease Records.

The court further finds that the term of the oil and gas lease was stated in said lease described hereinabove as follows:

"It is agreed that this lease shall remain in force for a primary term of five years from this date, and if lessee shall commence to drill within said primary term or any extension thereof, the said lessee shall have the right to continue drilling to completion, with reasonable diligence and said term shall extend as long thereafter as oil and gas, or either of them, is produced by lessee from said land or from a communitized unit as hereinafter provided."

By an instrument dated September 27, 1971, Oil & Realty Developments, Inc. assigned to the defendant a drillsite upon the plaintiff's property of approximately 40.5 acres, more or less, as more fully described in said instrument. A full copy of the assignment was attached to the complaint filed in this case, and is recorded in Vol. 62, Pg. 71, Ashland County Lease Records.

In 1990, by instrument recorded with the Ashland County Recorder's Office, Oil & Realty Developments, Inc. released the aforementioned oil and gas lease as it affects the balance of the acreage.

The evidence further indicates that on October 8, 1972, the defendant, through his agents, commenced the drilling of the Moyers No. 1 Well upon the 40.5 acre drillsite. This well was ultimately completed in September 1973. To date, the defendant has never produced any gas or oil from the Moyers No. 1 Well since its completion in September 1973, and the well has never been hooked into a gas line for purposes of gas sales.

The court further finds that on February 5, 1990, plaintiff filed its complaint herein against the defendant alleging in its first claim that the subject oil and gas lease has expired by its own express terms and asks the court to enter an order terminating same and releasing it of record. Plaintiff, in its second claim, alleges that defendant has failed to pay to plaintiff the royalties to which it is entitled and to account to plaintiff for production if defendant claims he has produced oil and/or gas from the Moyers No. 1 Well. Plaintiff, in its third claim, alleges that the defendant's action in failing to produce the Moyers No. 1 Well, and for failure to pay rentals and/or royalties, and for failure to account to plaintiff for production, and failure to carry out the other obligations imposed upon him by the terms of the oil and gas lease constitute an abandonment by defendant of the leasehold estate and plaintiff is asking the court to forfeit title to the equipment remaining upon the leasehold and find that title thereto is now vested in the plaintiff. In its fourth claim, plaintiff again alleges that the oil and gas lease is terminated by its express terms and since defendant has failed to remove the equipment thereon within a reasonable period of time after the termination of the lease, plaintiff is asking the court to grant the same relief as requested upon the third claim. In its fifth claim, plaintiff alleges that the defendant, by his conduct, has failed to exercise reasonable care and due diligence in operating and producing the Moyers No. 1 Well and has thereby breached the implied covenant to reasonably operate the leasehold premises and the implied covenant to produce the well. In effect, the relief sought by plaintiff upon its fifth claim is an order forfeiting the rights claimed by defendant in the premises.

Defendant has also filed a motion for summary judgment in his favor, has attached an affidavit to such motion and his deposition taken by the plaintiff herein has been previously filed in this case. In defendant's affidavit, he states that he has commenced the drilling of an oil and gas well on this forty-acre drill site on or about October 8, 1972 and that he completed the drilling of said well on or about September 18, 1973. His affidavit states that it took this period of time to complete the drilling of the well because of mechanical problems with the equipment encountered by the defendant and because the drilling operations were shut down for the winter. Defendant also states that he has been involved in the oil and gas business since the mid 1960s, although not extensively involved. Defendant further states that he has always believed and continues to believe that the well in question is capable of production, but that it has not been produced. The reasons for such non-production include the fact that there has been no market for the products and it has not been economically feasible to produce the well.

Defendant further states in his affidavit that he placed equipment on the well site initially, including a tank battery, two 210 barrels, a separator and heater treater and that this equipment and his investment has cost him approximately $80,000, not including the purchase of certain pipeline.

The affidavit further indicates that in 1986 the well described above developed a leak which was repaired by or for the defendant at a cost of slightly more than $1,300. Defendant further states in his affidavit that while he was the owner and operator of this well that he acquired contiguous rights-of-way and purchased between twelve thousand and fifteen thousand feet of pipeline and had said pipeline run from the well up to a meter house which was a considerable distance away. Defendant further states in his affidavit that he did not cause the gas to be delivered through said pipeline because the transportation costs were too high and that the additional investment...