Benzel v. Chesapeake Exploration, L.L.C.
| Decision Date | 30 September 2014 |
| Docket Number | Case No. 2:13-CV-00280 |
| Parties | DAVID R. BENZEL, et al., Plaintiffs, v. CHESAPEAKE EXPLORATION, L.L.C., et al., Defendants. |
| Court | U.S. District Court — Southern District of Ohio |
OPINION & ORDER
This matter is before the Court on the Motion of Plaintiffs David Benzel, Kenna Heath, Samuel Heath, Mary Ann Hill, Peter Kale, Nancy Kale, George Konikowski, Joseph R. Koslik, Cynthia Koslik, Angela Semple, Ryan Green, Florence Jean Strahl, Wells Township Sportsman Club, John Vendetta, Debra Vendetta, and Courtney Yanok for Summary Judgment (collectively, "Plaintiffs"), (Doc. 38), and the Cross-Motion of Defendants Chesapeake Exploration, L.L.C., ("Chesapeake") and Statoil USA Onshore Properties, Inc., ("Statoil") (collectively, the "Defendants") for Summary Judgment. (Doc. 39). Because all but one of the Plaintiffs were either dismissed as parties or settled with Defendants, the sole remaining plaintiff in this action is Wells Township Sportsman Club ("Wells"), an Ohio non-profit corporation. For the reasons stated herein, Plaintiffs' Motion is DENIED and Defendants' Motion is GRANTED.
This case arises from a dispute over oil and gas leases (the "Leases") that Plaintiffs, originally sixteen sets of land and mineral rights owners in Jefferson County and BelmontCounty, Ohio, entered into between April 2007 and January 2008 with Great Lakes Energy Partners, LLC ("Great Lakes") or Range Resources-Appalachia, LLC ("Range"), the successor to Great Lakes. (Doc. 39 at 10-11). The Leases were prepared by Range. (Doc. 38 at 8).
All but one of the Plaintiffs were either dismissed or settled with Defendants. (Doc. 42, 43, 48, 50, 52-57). The sole remaining plaintiff is Wells Township Sportsman Club ("Wells" or "Plaintiff"), an Ohio non-profit corporation. Wells is, and was at all relevant times, the owner of approximately 164.156 acres of real property, and the oil and gas rights within and thereunder, in Jefferson County, Ohio. (Complaint, Doc. 5, ¶ 9; Doc. 39-2 at 33). Wells is party to a Lease originally signed in favor of lessee, Great Lakes, on or about September 1, 2007, encompassing the 164.156 acres of land in Jefferson County, Ohio. (Doc. 39 at 10).1
Each of the Leases included a "habendum clause," at Paragraph 2, which provided that each Lease would last for a term of five years (the "primary term"), and "so much longer thereafter as oil, gas and/or coalbed methane gas or their constituents are produced or are capable of being produced on the premises in paying quantities, in the judgment of the Lessee," or as the premises are operated by Lessee in search for such oil, gas, or coalbed methane in a manner provided for in Paragraph 7. (Doc. 5 at ¶ 27; Doc. 39-1).
The dispute in this case centers on Paragraph 19, another provision contained in each of the Leases. Paragraph 19 states:
In consideration of the acceptance of this lease by the Lessee, the Lessor agrees for himself and his heirs, successors and assigns, that no other lease for minerals covered by this lease shall be granted by the Lessor during the term of this lease or any extension or renewal thereof granted to the Lessee herein. Upon expiration of this lease and within sixty (60) days thereinafter, Lessor grants to Lessee an option to extend or renew under similar terms a like lease.
(Doc. 39-1).
On August 27, 2012, approximately 5 days prior to the expiration of the primary terms of the leases, Defendants executed and recorded a "Notice of Extension of Oil and Gas Lease" for each of the Leases in the Jefferson County Recorder's Office (the "Notices of Extension"). (Doc. 39-2). With the Notices of Extension, Defendants purported to invoke Paragraph 19 and give "public notice" that each Lease was "effectively extended" under identical terms for an additional five-year period. (Doc. 5, ¶ 30; Answer, Doc. 7, ¶¶ 17-19; Doc. 39-1). Defendants did not negotiate with Plaintiffs the terms upon which the Leases would continue. (Doc. 39 at 11-12). At or near the time the Notices of Extension were filed, Defendants also tendered checks as bonus payments for each "extension" in amounts equal to the up-front bonus paid when each respective lease was signed. (Id.; Doc. 39-2). Plaintiff did not cash its check. (Doc. 5, ¶ 31).
On February 21, 2013, Plaintiff commenced this action in the Jefferson County Court of Common Pleas as a state action. (Doc. 5). Pursuant to 28 U.S.C. §§ 1332, 1441, and 1446, Defendants removed the matter to this Court on March 25, 2013. (Notice of Removal, Doc. 1). In the Complaint before the Court, Plaintiff seeks declaratory relief and an adjudication of its rights under the Lease. (Doc. 5, ¶ 55-66).
Plaintiff alleges claims for ejectment (Count I), seeking to remove Defendants from its claimed lease interests; slander of title (Count II), arguing that Defendants' conduct represents willful and intentional action to deprive Plaintiff of its rights, which falsely and maliciously defames the properties of Plaintiff; and declaratory relief (Count III) requesting a declaration of the duties and obligations of the parties and that the lease be declared expired and/or null and void. (Doc. 5, ¶¶ 55-66). In particular, Plaintiff alleges that any purported "option language" in Paragraph 19 of the Lease is invalid and that the Lease expires at the close of the five-yearprimary term. (Id.). Plaintiff also demands compensatory damages in excess of $25,000. (Id.). A parallel case, brought in Belmont County, was filed on March 28, 2013 and also removed to this Court. (Batalo v. Chesapeake Exploration, Case No. 2:13-cv-00296, Doc. 1). On July 11, 2014 the Court ordered the two matters to be consolidated, and all pleadings and documents filed in this case. (Order, Doc. 18).
On April 15, 2013, Defendants filed a combined Partial Answer, Affirmative Defenses, and Counterclaim to Complaint for Declaratory Judgment, and Other Relief, asserting a cause of action for Declaratory Judgment (Count I). (Doc. 7). Defendants' Counterclaim seeks, among other things, declarations that Paragraph 19 allows the Defendants to extend the terms of each of the Leases for an additional term and that the Defendants validly extended the Leases under the clauses contained in each agreement and/or under other common law bases. (Doc. 7 at 9-11). Also on April 15, 2013, Defendants filed a Motion to Dismiss Count II of the Complaint, (Doc. 8), which this Court denied on December 6, 2013. (Opinion and Order, Doc. 37). On May 1, 2013, Plaintiff filed an Answer to Defendants' Counterclaim. (Doc. 10).
On January 13, 2014, Plaintiffs filed a Motion for Summary Judgment seeking adjudication of their claims. (Doc. 38). Defendants also filed a Motion for Summary Judgment on the same day seeking summary judgment in their favor on Plaintiffs' claims. (Doc. 39). The matter is fully briefed and is now ripe for this Court's review.2
Federal Rule of Civil Procedure 56 provides, in relevant part, that summary judgment is appropriate "if the pleadings, depositions, answers to interrogatories, and admissions on file,together with the affidavits, if any, show that there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law." A fact is deemed material only if it "might affect the outcome of the lawsuit under the governing substantive law." Wiley v. United States, 20 F.3d 222, 224 (6th Cir. 1994) (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48, (1986)). The nonmoving party must then present "significant probative evidence" to show that "there is [more than] some metaphysical doubt as to the material facts." Moore v. Philip Morris Cos., Inc., 8 F.3d 335, 339-40 (6th Cir.1993). The suggestion of a mere possibility of a factual dispute is insufficient to defeat a motion for summary judgment. See Mitchell v. Toledo Hospital, 964 F.2d 577, 582 (6th Cir.1992) (citing Gregg v. Allen-Bradley Co., 801 F.2d 859, 863 (6th Cir.1986)). Summary judgment is inappropriate, however, "if the dispute is about a material fact that is 'genuine,' that is, if the evidence is such that a reasonable jury could return a verdict for the non-moving party." Anderson, 477 U.S. at 248.
The necessary inquiry for this Court is "whether 'the evidence presents a 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.'" Patton v. Bearden, 8 F.3d 343, 346 (6th Cir. 1993) (quoting Anderson, 477 U.S. at 251-52). In evaluating such a motion, the evidence must be viewed in the light most favorable to the nonmoving party. United States S.E.C. v. Sierra Brokerage Servs., Inc., 712 F.3d 321, 327 (6th Cir.2013). The mere existence of a scintilla of evidence in support of the opposing party's position will be insufficient to survive the motion; there must be evidence on which the jury could reasonably find for the opposing party. See Anderson, 477 U.S. at 251; Copeland v. Machulis, 57 F.3d 476, 479 (6th Cir.1995). The standard of review for cross-motions for summary judgment "does not differ from the standard applied when a motion is filed by only one party to the litigation." Sierra Brokerage Servs., 712 F.3d at 327.
In a contract dispute, summary judgment is appropriate when the contractual language is unambiguous, or, if the language is ambiguous, when extrinsic evidence leaves no genuine issue of material fact and permits interpretation of the agreement as a matter of law. See Eastham v. Chesapeake Appalachia, LLC, 2013 WL 5274576 at *2 (S.D. Ohio Sept. 18, 2013) aff'd sub nom. Eastham v. Chesapeake Appalachia, L.L.C., 754 F.3d 356 (6th Cir.2014); Int'l Union, United Auto., Aerospace and Agr. Implement Workers of Am. v. BVR Liquidating, Inc., 190 F.3d 768, 772 (6th Cir.1999). Stated otherwise, contract interpretation is turned...
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