Baxter v. Reserve Energy Exploration Co., CASE NO. 2014-T-0113

• Decision Date: 31 December 2015
• Docket Number: CASE NO. 2014-T-0117,CASE NO. 2014-T-0113,CASE NO. 2014-T-0118,CASE NO. 2014-T-0115,CASE NO. 2014-T-0119,CASE NO. 2014-T-0114
• Citation: 2015 Ohio 5525
• Parties: MAE M. BAXTER, et al., Plaintiffs-Appellees, v. RESERVE ENERGY EXPLORATION CO., et al., Defendant-Appellants.
• Court: Ohio Court of Appeals

2015 Ohio 5525

MAE M. BAXTER, et al., Plaintiffs-Appellees, v. RESERVE ENERGY EXPLORATION CO., et al., Defendant-Appellants.

CASE NO. 2014-T-0113

CASE NO. 2014-T-0114

CASE NO. 2014-T-0115

CASE NO. 2014-T-0117

CASE NO. 2014-T-0118

CASE NO. 2014-T-0119

COURT OF APPEALS ELEVENTH APPELLATE DISTRICT TRUMBULL COUNTY, OHIO

December 31, 2015

OPINION

Civil Appeals from the Trumbull County Court of Common Pleas, Case No. 2013 CV 02205.

Judgment: Reversed and remanded.

Michael D. Rossi, Guarnieri & Secrest, P.L.L., 151 East Market Street, P.O. Box 4270, Warren, OH 44482 and Marty Nosich, The Law Offices of Marty D. Nosich, L.L.C., 143 West Main Street, Cortland, OH 44410 (For Plaintiffs-Appellees).

Mark W. Bernlohr and Sandra K. Zerrusen, Jackson Kelly, PLLC, 17 South Main Street, Suite 101B, Akron, OH 44308 (For Defendant-Appellant, Anschutz Exploration Corp.)

Timothy B. McGranor, Daniel E. Shuey, and Sean M. Kohl, Vorys, Sater, Seymour & Pease, LLP, 52 East Gay Street, P.O. Box 1008, Columbus, OH 43216 (For Defendants-Appellants, Reserve Energy Exploration Co., Chesapeake Appalachia, LLC, Beldon and Blake Corp., Chesapeake Exploration, LLC., CHK Utica, LLC, and Chesapeake Acquisition, LLC, a subsidiary of Chesapeake Energy Corp.)

COLLEEN MARY O'TOOLE, J.

{¶1} This consolidated appeal involves the grant of summary judgment by the Trumbull County Court of Common Pleas to various landowners in their declaratory actions to have certain oil and gas leases deemed invalid. Lessee oil and gas companies appeal this judgment. Finding their arguments with merit, we reverse and remand.

{¶2} Mae Baxter, Richard and Ladda Love, and Raymond J. Shaffer ("landowners"), all filed actions, seeking declarations that the oil and gas leases they had granted were void, since they were not properly acknowledged. All of the leases involved a payment for a primary lease term of five years. The lessee had a right to pay an amount equal to the initial payment, at the end of the primary term, extending the lease for a further five years. At the end of the primary term, all of the landowners refused to cash the checks tendered them. All of the landowners admitted they freely entered the leases. Eventually, each of the landowners sought summary judgment.

{¶3} Anschutz Exploration Corp., which had obtained the leases, sought to dismiss the actions against it, since it had assigned its interests in the leases to other entities. This motion was denied. Thereafter, Anschutz moved for summary judgment against landowners, again asserting it lacked any interest in the subject leases.

{¶4} The entities to which Anschutz had assigned the leases include Reserve Energy Exploration Co.; Chesapeake Appalachia, LLC; Belden & Blake Co.; Chesapeake Exploration, L.L.C.; Chesapeake Acquisition, L.L.C.; and CHK Utica, L.L.C. ("lessees"). Having answered the complaints against them, lessees counterclaimed, seeking, essentially, declarations the leases were valid, along with ancillary relief. Lessees all filed for summary judgment on their claims.

{¶5} The trial court consolidated the cases. By a judgment entry filed November 6, 2014, the trial court granted landowners' motions for summary judgment,and denied those of Anschutz and lessees. The basis for this decision was that advanced by landowners: the leases were invalid, since they were not acknowledged pursuant to the Statute of Conveyances, R.C. 5301.01.

{¶6} Anschutz timely appealed, assigning two errors. Lessees timely appealed, also assigning two errors. We consolidated the appeals for all purposes.

{¶7} "Summary judgment is a procedural tool that terminates litigation and thus should be entered with circumspection. Davis v. Loopco Industries, Inc., 66 Ohio St.3d 64, 66, * * * (1993). Summary judgment is proper where (1) there is no genuine issue of material fact remaining to be litigated; (2) the movant is entitled to judgment as a matter of law; and (3) it appears from the evidence that reasonable minds can come to but one conclusion, and, viewing the evidence in the non-moving party's favor, that conclusion favors the movant. See e.g. Civ.R. 56(C).

{¶8} "When considering a motion for summary judgment, the trial court may not weigh the evidence or select among reasonable inferences. Dupler v. Mansfield Journal Co., 64 Ohio St.2d 116, 121, * * * (1980). Rather, all doubts and questions must be resolved in the non-moving party's favor. Murphy v. Reynoldsburg, 65 Ohio St.3d 356, 359, * * * (1992). Hence, a trial court is required to overrule a motion for summary judgment where conflicting evidence exists and alternative reasonable inferences can be drawn. Pierson v. Norfork Southern Corp., 11th Dist. No. 2002-A-0061, 2003 Ohio 6682, ¶36. In short, the central issue on summary judgment is, 'whether the evidence presents sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law.' Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 251-252, * * * (1986). On appeal, we review a trialcourt's entry of summary judgment de novo. Grafton v. Ohio Edison Co., 77 Ohio St.3d 102, 105, * * * (1996)." (Parallel citations omitted.) Meloy v. Circle K Store, 11th Dist. Portage No. 2012-P-0158, 2013-Ohio-2837, ¶5-6.

{¶9} Regarding declaratory actions, the court held in Herrick v. Kosydar, 44 Ohio St.2d 128, 130 (1975):

{¶10} "'[I]t is settled in Ohio that an action for a declaratory judgment may be alternative to other remedies in those cases in which the court, in the exercise of sound discretion, finds that the action is within the spirit of the Uniform Declaratory Judgments Act, that a real controversy between adverse parties exists which is justiciable in character, and that speedy relief is necessary to the preservation of rights which may be otherwise impaired or lost.'" Id., quoting Am. Life & Acc. Ins. Co. v. Jones, 152 Ohio St.287 (1949).

{¶11} For its first assignment of error, Anschutz states: "The trial court erred when it found the Plaintiffs-Appellees had a viable declaratory judgment action against Anschutz Exploration Corporation." Anschutz argues the trial court erred in failing to grant its motion for summary judgment, since it had assigned all of its interests in the subject lease to lessees. Landowners counter by citing to Civ.R. 19(A), which provides, in pertinent part: "A person who is subject to service of process shall be joined as a party in the action if * * * (3) he has an interest relating to the subject of the action as an assignor * * *." (Emphasis added.) Use of the verb "shall" in a rule or statute indicates the matter is mandatory. Aria's Way, LLC v. Concord Twp. Bd. of Zoning Appeals, 173 Ohio App.3d 73, 2007-Ohio-4776, ¶22 (11th Dist.) Landowners argue that as theoriginal lessee, and assignor of all the leases in question to the present lessees, Anschutz was a necessary party.

{¶12} We find the opinion of the court in Cameron v. Hess Corp., 974 F.Supp.2d 1042 (S.D.Ohio 2013), relied on by Anschutz, persuasive. Defendant Mason Dixon Energy, Inc., asserted it was not a proper party to an action concerning oil and gas leases, since it had assigned all of its interests therein to other parties. The Southern District of Ohio held:

{¶13} "In assigning the * * * Leases, however, Mason Dixon extinguished all of its rights in those contracts under Ohio law. In alienating property via an assignment, the assignee 'acquires' all attendant property rights, and the rights of the assignor are 'extinguished.' 6 Am. Jur.2d, Assignments § 1 (2012) ('an assignment of a right is a manifestation of the assignor's intention to transfer it by virtue of which the assignor's right to performance by the obligor is extinguished (* * *) and the assignee acquires a right to such performance (* * *)'); W. Broad Chiropractic v. Am. Family Ins., 122 Ohio St. 3d 497, 2009-Ohio-3506, * * * (Ohio) ('An assignment is a transfer to another of all or part of one's property in exchange for valuable consideration'). As a result, 'an assignee (* * *) stands in the shoes of the assignor (* * *), and succeeds to all the rights and remedies of the latter.' Inter Ins. Exch. of Chi. Motor Club v. Wagstaff, 144 Ohio St. 457, * * * (Ohio 1945) (citing 3 Ohio Jurisprudence, 275, § 32; 38 Ohio Jurisprudence, 300, § 51; 4 American Jurisprudence, 321, § 115; 50 American Jurisprudence, 752, § 110; 6 C.J.S., Assignments, § 85, p. 1142.). Thus, here, in assigning the * * * Leases, Mason Dixon has no remaining interests in the leaseholds that might be adjudicated in Plaintiffs' declaratory judgment action. See Ford MotorCredit Co. v. Ryan, 189 Ohio App. 3d 560, 2010-Ohio-4601, * * * (Ohio Ct. App.) (affirming summary judgment for defendant on breach of contract claims because defendant had assigned its interest in the contract to another party)." (Parallel citations omitted.) Cameron at 1055-1056.

{¶14} The record shows that, prior to the filing by landowners of their declaratory actions, Anschutz had assigned all of its interests in the subject leases to lessees. Thus, it had no interest in this matter, and its motion for summary judgment should have been granted.

{¶15} Anschutz' first assignment of error has merit.

{¶16} For its second assignment of error, Anschutz states: "The trial court erred when it found the plaintiffs-appellees could invalidate their leases due solely to a defective signature acknowledgment." For their first assignment of error, lessees state: "The trial court erred in granting Plaintiff's Motion for Summary Judgment, and denying Counterclaimant-Defendants' Motion for Summary Judgment, on Plaintiffs' declaratory judgment claims." For their second assignment of error, lessees state: "The trial court erred in granting Plaintiffs' Motion for Summary Judgment, and denying Counterclaimant-Defendants' Motion for Summary Judgment, on Counterclaimant-Defendants' Counterclaims."

{¶17} We treat these assignments of error together.

{¶18} The principal contention of appellants...