Roberts v. Unimin Corp., 1:15CV00071 JLH

• Court: United States District Courts. 8th Circuit. United States State District Court of Eastern District of Arkansas
• Citation: 214 F.Supp.3d 743
• Docket Number: No. 1:15CV00071 JLH,1:15CV00071 JLH
• Parties: Kathy ROBERTS and Karen McShane, Plaintiffs v. UNIMIN CORPORATION, Defendant
• Decision Date: 07 October 2016

214 F.Supp.3d 743

Kathy ROBERTS and Karen McShane, Plaintiffs
v.
UNIMIN CORPORATION, Defendant

No. 1:15CV00071 JLH

United States District Court, E.D. Arkansas, Northern Division.

Signed October 7, 2016

Benjamin R. Askew, John G. Simon, Kevin M. Carnie, Jr., The Simon Law Firm, P.C., St. Louis, MO, for Plaintiffs.

Barrett Moore, Robert D. Stroud, Blair & Stroud, Batesville, AR, for Defendant.

214 F.Supp.3d 744

OPINION AND ORDER

J. LEON HOLMES, UNITED STATES DISTRICT JUDGE

This action concerns a mineral lease. Kathy Roberts and Karen McShane, currently the lessors, seek a declaratory judgment that the lease is terminable at will under Arkansas law. Unimin Corporation, the current lessee, filed a motion to dismiss for failure to state a claim on September 25, 2015. Document # 12. The Court denied the motion and pointed out that the issue was one of first impression for the Arkansas Supreme Court. Document # 25. Unimin then filed a motion for summary judgment on March 3, 2016, asking the Court to decide as a matter of law that the lease is not terminable at will. Document # 53. The plaintiffs filed a motion for partial summary judgment on March 17, 2016, asking the Court to decide that the lease is for an indefinite term and, therefore, terminable at will. Document # 56. The Court has reviewed extensive briefing from both parties and heard oral argument on October 5, 2016. For the following reasons, Unimin's motion for summary judgment is granted and the plaintiffs' motion is denied.

I.

A court should enter summary judgment if the evidence, viewed in the light most favorable to the nonmoving party, demonstrates that there is no genuine dispute as to any material fact and that the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(a) ; see also Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 249–50, 106 S.Ct. 2505, 2511, 91 L.Ed.2d 202 (1986) ; Torgerson v. City of Rochester , 643 F.3d 1031, 1042 (8th Cir. 2011) (en banc). A genuine dispute of material fact exists only if the evidence is sufficient to allow a jury to return a verdict for the nonmoving party. Anderson , 477 U.S. at 249, 106 S.Ct. at 2511.

II.

The lease at issue is the third in a series of leases dating back almost a century. In 1918, J.W. Williamson and Lizzie Williamson entered into a lease that granted Odell-Daly Material Company the right to mine the property for siliceous materials for a term of twenty years. The lease contained a royalty provision that provided:

For the first Five (5) years of said term the royalty shall be five (5) cents per ton on all materials shipped in crude form and three (3) cents per ton on all materials shipped in milled or pulverized form; that during the remainder of said term it is agreed that the royalty shall be five (5) cents per ton on all materials alike.

In 1934, J.W. Williamson entered into another lease for the property with similar royalty language: "Five cents (5¢) per ton on all material shipped, whether in crude form or shipped in milled or pulverized form." When J.W. Williamson died in 1943, he left the property to his two sons, Ray Williamson and Collie Williamson. Then in 1961, after Collie Williamson's death, a new lease was entered into between Ray Williamson and the devisees of Collie Williamson, as lessors, and the Silica Products Company, Inc. Unimin is the successor in interest to Silica. Kathy Roberts and Karen McShane now own the subject property and are assignees of the 1961 lease.

The 1961 lease provides for the following royalty structure:

1. In consideration of the premises, the Lessee covenants and agrees to pay to Lessor the following royalties of all materials mined from or hauled over, across or under the above described lands ... and shipped by Lessee whether in crude form or shipped in milled or pulverized form, which amount shall be net to Lessors;

214 F.Supp.3d 745

(a) Five (5) cents per ton for all siliceous materials mined or quarried from the [subject property];

(b) Two (2) cents per ton for all siliceous materials mined or quarried from lands other than the above [subject property] and hauled over, across or under the above [subject property] ...

(c) Provided, however, that lessee agrees to pay to Lessor a minimum royalty of five (5) cents per ton of twenty five (25%) per cent of all siliceous materials mined or quarried from or hauled over, across or under the property of Lessors: and the royalty paid on the siliceous materials mined or quarried from Lessors property shall be chargeable against this 25% minimum royalty.

The provision establishing the term of the 1961 lease states:

TO HAVE AND TO HOLD ... unto the lessee and to its successors and assigns for and during the term beginning the 1st day of March 1961 and ending the 31st day of January, 2007, and as long thereafter as mining and/or mining operations are prosecuted on [the subject property] and/or siliceous materials are hauled, transported over, across or under [the subject property] ....¹

This provision of the lease is called "the habendum clause" because it defines the mineral estate's duration. BLACK'S LAW DICTIONARY 838 (4th ed. 1968); Gulf Oil Corp. v. Southland Royalty Co. , 496 S.W.2d 547, 552 (Tex. 1973). The language at the center of this dispute is the "thereafter" clause, which provides that the lease continues so long as Unimin is mining or engaged in certain mining operations on the property. The plaintiffs contend that after January 31, 2007, the lease term became indefinite and, therefore, terminable at will. Unimin disagrees.

III.

Under Arkansas law, "a contract for an indefinite term is terminable at will" Magic Touch Corp. v. Hicks , 99 Ark. App. 334, 335, 260 S.W.3d 322, 324 (2007). The plaintiffs maintain that the lease became terminable at will after January 31, 2007, because it is impossible to determine when the lease will end. Conversely, Unimin insists that the term is determinable–the lease ends whenever Unimin ceases to engage in mining operations or haul and transport siliceous materials across or under the property. The issue is governed by Arkansas law. The Arkansas Supreme Court has never decided whether such a provision creates an indefinite term that is terminable at will, so as a federal court with diversity jurisdiction, this Court must predict the rule the Arkansas Supreme Court would adopt. See Chew v. American Greetings Corp. , 754 F.3d 632, 635 (8th Cir. 2014).

Courts are divided on the issue of whether "thereafter" clauses such as the one at issue here create an indefinite term. The Alabama Supreme Court has held that a provision stating the lease may be renewed "so long as there is recoverable coal remaining in the lands leased hereby" was so...