Lenau v. Co-Exprise, Inc.

• Citation: 2014 PA Super 207,102 A.3d 423
• Decision Date: 23 September 2014
• Docket Number: No. 780 WDA 2013,780 WDA 2013
• Court: Superior Court of Pennsylvania
• Parties: Nancy M. LENAU and Daniel T. Lenau and Kathleen Trieschock on behalf of themselves and others similarly situated, Appellants, v. CO–EXPRISE, INC., Appellee.

102 A.3d 423
2014 PA Super 207

Nancy M. LENAU and Daniel T. Lenau and Kathleen Trieschock on behalf of themselves and others similarly situated, Appellants
v.
CO–EXPRISE, INC., Appellee.

No. 780 WDA 2013

Superior Court of Pennsylvania.

Argued Jan. 29, 2014.
Filed Sept. 23, 2014.

102 A.3d 425

Daniel K. Bricmont, Pittsburgh and David A. McGowan, Pittsburgh, for appellants.

John K. Gisleson, Pittsburgh, for appellee.

BEFORE: BOWES, J., WECHT, J., and STABILE, J.

Opinion

OPINION BY WECHT, J.:

In this case involving subsurface mineral rights, Nancy M. Lenau, Daniel T. Lenau, and Kathleen Trishock (collectively, “Appellants”), appeal from the May 1, 2013 order that sustained the preliminary objections of CoeXprise, Inc. (“Co-eXprise”), and dismissed the Appellants' complaint. For the reasons that follow, we affirm.

The trial court summarized the factual history of this case as follows:

This litigation arises out of the conduct of [Co-eXprise], which, acting as an intermediary, encouraged property owners in Beaver County, Pennsylvania to pool their interests by joining [Co-eXprise's] “CX MarketPlace.” A property owner would join the CX MarketPlace by signing a form agreement prepared by [Co-eXprise] titled “MarketPlace Agreement.” The MarketPlace Agreement authorized Co-eXprise to competitively bid mineral rights on behalf of the aggregated group of property owners for the purpose of obtaining the most favorable lease terms for each individual CX MarketPlace member.

Property owners who entered into [Co-eXprise's] MarketPlace Agreement were organized into groups with each group comprised of landowners within a defined geographical area. [Co-eXprise] then sought bids from energy companies on behalf of each group of landowners,

102 A.3d 426

who as a group could command superior bargaining power and obtain more favorable terms in leases of their subsurface mineral rights, thereby maximizing each property owner's bonus and royalty payments.^{[ 1 ]} Under the terms of the MarketPlace Agreement, once Co-eXprise obtained a bid from an energy company which contained lease terms that met or exceeded a predetermined threshold amount for bonus and royalty payments (outlined at [Section] 2(f) of the MarketPlace Agreement, [see Complaint, 11/21/12, Exhibit D, at 1] ), each property owner in the group was obligated to execute a mineral lease with that energy company, which lease would reflect the terms the energy company proposed during the bidding process.

[Co-eXprise] initially promoted the MarketPlace program through mass [ ] advertising and by conducting meetings with groups of property owners during which Co-eXprise representatives solicited participation in the CX MarketPlace by assuring landowners that MarketPlace participants would obtain the best available bonus and royalty payments through the competitive bidding process. Promotional materials were prepared by [Co-eXprise] and provided to prospective MarketPlace members via regular mail, the Internet, and by hand during promotional meetings. [See id. at Exhibits A–C]. Among the materials that [Co-eXprise] supplied [to Appellants], either directly or through [Co-eXprise's] website, was a terms summary, which explained various terms commonly included in oil and gas leases based on [Co-eXprise's] legal opinion. [See id. at Exhibit C, at unnumbered pages 1–3 (Lease Summary) ]. [Co-eXprise] represented in the MarketPlace Agreement that any resulting lease agreement between the landowner and energy company would contain terms substantially similar to those contained within this [Lease Summary]. These terms were more favorable to the landowner than the terms of the standard lease agreements used by the energy companies.

The MarketPlace Agreement provided for [Co-eXprise] to receive five percent of the up-front bonus in consideration for its services. The money would be paid as soon as the landowner and the highest[-]bidding energy company entered into a lease agreement reflecting the terms of the bid.

On the basis of [Co-eXprise's] representations, [Appellants] entered into MarketPlace Agreements with [Co-eXprise] in January 2011.¹ [Co-eXprise] sought bids on behalf of [Appellants] and fellow MarketPlace participants, and, at the conclusion of the bidding process, identified Chesapeake Appalachia, LLC [ (Chesapeake),] as the highest bidder. However, the Chesapeake bid for the Lenau['s] group was lower than a bid that would be binding on the MarketPlace members under the provisions of the MarketPlace Agreement. A bid would be binding on the Lenau['s] group only if it provided for no less than a $3,000 per acre bonus, a 17% royalty, and the substantial inclusion of the sample

102 A.3d 427

lease terms. The Chesapeake bid provided for a $2,350 per acre bonus and a 15% royalty. [See Complaint, at 9–10 ¶ 26].

[Co-eXprise] notified the Lenau [Appellants] and the other members of their group of the offer from Chesapeake at a June 28, 2011 meeting, and represented that the terms reflected the best market terms available. These [Appellants] and the other members of the Lenau group received an email correspondence on July 15, 2011 encouraging them to accept the terms of the Chesapeake offer by signing an “Agreement to Accept Lease Offer from Chesapeake” [ (Agreement to Accept) ].² The Lenau [Appellants] signed the Agreement to Accept on August 1, 2011[.] ³

It appears from the record that [Co-eXprise] continued to recruit landowners into the CX MarketPlace and, pursuant to that recruitment effort, notified other landowners in the area that an offer had been tendered by “a major oil and gas exploration and production company,” which offer contained favorable lease terms and the best current market price available in the area. These prospective participants were warned that prices may decline, and, in order to take advantage of the offer, landowners should complete the CX MarketPlace and [Agreement to Accept].⁴

MarketPlace member landowners who elected to accept Chesapeake's offer were directed to attend a lease-signing event where the landowners entered into individual oil and gas leases with Chesapeake.⁵

Once a landowner signed a mineral lease with Chesapeake, [Co-eXprise] collected its transaction fee—five percent of the landowner's gross, up-front, bonus payment—directly from Chesapeake.

Trial Court Opinion (“T.C.O.”), 4/10/2013, at 1–4.

On November 21, 2012, Appellants filed a “Complaint in Civil Act Class Action,” which asserted various causes of action against Co-eXprise, including: (1) breach of contract; (2) unauthorized practice of law; (3) violation of the Pennsylvania Unfair Trade Practices and Consumer Protection Law (“UTPCPL”)² ; (4) violation of the Pennsylvania Securities Act of 1972; (5) breach of fiduciary duty; and (6) unjust enrichment/disgorgement. See Complaint, at 14–25. Specifically, Appellants asserted the foregoing claims as a class action:

102 A.3d 428

[Appellants] bring this action on behalf of themselves and the following Plaintiff Class: every citizen, or landowner, in the Commonwealth of Pennsylvania who has entered into a [CX MarketPlace Agreement] with [Co-eXprise] and paid [Co-eXprise] a transaction fee pursuant to said agreement, which arose out of a negotiation and consummation of an oil and gas lease through the [CX MarketPlace p]rocess.

Id. at 26 ¶ 88. Appellants sought certification of the class action, various forms of compensatory and restitutionary damages, disgorgement of Co-eXprise's transaction fee, and attorneys' fees.

On January 2, 2013, Co-eXprise filed a motion to assign the case to the Commerce and Complex Litigation Center of Allegheny County. That same day, the trial court granted Co-eXprise's motion. On January 4, 2013, Co-eXprise filed preliminary objections in the nature of a demurrer to Appellants' complaint and a brief in support of these objections. In relevant part, Co-eXprise argued that Appellants' claims were legally insufficient, or otherwise meritless. See Co-eXprise's Preliminary Objections, 1/04/2013, at 8–18. On January 28, 2013, Appellants filed a brief in opposition to Co-eXprise's preliminary objections. On February 4, 2013, the trial court heard arguments on Co-eXprise's preliminary objections. On April 13, 2013, the court filed a “Memorandum and Order of Court” sustaining Co-eXprise's preliminary objections and dismissing all of Appellants' claims.

On April 19, 2013, Appellants filed a “Motion for Reconsideration and for Leave to File an Amended Brief.” On April 26, 2013, Co-eXprise filed a brief in opposition to reconsideration. On May 3, 2013, the trial court denied Appellants' motion for reconsideration.

On May 8, 2013, Appellants filed a timely notice of appeal. The trial court did not direct Appellants to file a concise statement of errors complained of on appeal pursuant to Pa.R.A.P. 1925(b). Consequently, Appellants did not elect to file such a statement. The trial court has not issued a separate...