Stonebridge Operating Co. v. Antero Res. Corp.

• Decision Date: 30 December 2020
• Docket Number: Case No. 2:19-cv-1714
• Citation: 510 F.Supp.3d 567
• Parties: STONEBRIDGE OPERATING CO., LLC, et al., Plaintiffs, v. ANTERO RESOURCES CORP., Defendant.
• Court: U.S. District Court — Southern District of Ohio

510 F.Supp.3d 567

STONEBRIDGE OPERATING CO., LLC, et al., Plaintiffs,

v.ANTERO RESOURCES CORP., Defendant.

Case No. 2:19-cv-1714

United States District Court, S.D. Ohio, Eastern Division.

Signed December 30, 2020

Geoffrey C. Brown, Christopher James Regan, Jeremy M. McGraw, Bordas & Bordas, PLLC, Wheeling, WV, for Plaintiffs.

Peter A. Lusenhop, Angelyne E. Lisinski, Ilya Batikov, William Glover Porter, II, Vorys, Sater, Seymour and Pease LLP, Columbus, OH, James D. Thompson, III, Pro Hac Vice, Nicholas Nathaniel Shum, Pro Hac Vice, Stephanie Lynn Noble, Pro Hac Vice, Vinson & Elkins LLP, Houston, TX, for Defendant.

OPINION AND ORDER

EDMUND A. SARGUS, JR., UNITED STATES DISTRICT JUDGE

This case is before the Court on:

1.Plaintiffs’ Motion and Memorandum in Support of Judgment on the Pleadings on Defendant's Counterclaims (ECF Nos. 24, 25), Defendant's Memorandum in Opposition (ECF. No. 26), Plaintiffs’ Reply (ECF. No. 29), and Defendant's Surreply (ECFNo. 31-1), which was permitted to be filed by this Court, and

2.Defendant's Motion and Memorandum in Support of Partial Judgment on the Pleadings, (ECF Nos. 27, 28), Plaintiffs’ Response in Opposition (ECF. No. 30), and Defendant's Reply (ECF No. 33).

For the reasons that follow, the CourtGRANTS IN PART AND DENIES IN PARTPlaintiffs’ Motion for Judgment on the Pleadings(ECF No. 24) and GRANTSDefendant's Motion for Partial Judgment on the Pleadings(ECF. No. 27).

I.

Stonebridge Operating Company, LLC, and Positron Energy Resources, Inc., (together "Stonebridge") and Antero Resources Corporation("Antero") move for judgment on the pleadings and partial judgment on the pleadings under Rule 12(c) of the Federal Rules of Civil Procedure.

A.Federal Rule of Civil Procedure 12(c)

The standard under a Rule 12(c)motion for judgment on the pleadings is identical to the standard for a motion to dismiss under Rule 12(b)(6).Sensations, Inc. v. City of Grand Rapids , 526 F.3d 291, 295(6th Cir.2008).To state a claim upon which relief may be granted, movants must satisfy the pleading requirements set forth in Rule 8(a).While Rule 8(a)(2) requires a pleading to contain a "short and plain statement of the claim showing that the pleader is entitled to relief," in order "[t]o survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’ "Ashcroft v. Iqbal,556 U.S. 662, 677–78, 129 S.Ct. 1937, 173 L.Ed.2d 868(2009)(quotingBell Atl. Corp. v. Twombly,550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929(2007) ).

"A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged."Id.(clarifying the plausibility standard articulated in Twombly)."Although for purposes of a motion to dismiss[a court] must take all the factual allegations in the complaint as true, [it][is] not bound to accept as true a legal conclusion couched as a factual allegation."Id. at 677–79, 129 S.Ct. 1937(quotingTwombly , 550 U.S. at 556, 127 S.Ct. 1955 )(internal quotations omitted).

B.Matters Considered

Because the Court herein considers motions under Rule 12 (c) of the Federal Rules of Civil Procedure, the facts set forth below are taken from the pleadings, and from the exhibits attached thereto, which are appropriately considered part of the pleadings.SeeWeiner v. Klais & Co. , 108 F.3d 86, 89(6th Cir.1997)."[I]n ruling on a Rule 12 dispositive motion, a district court‘may consider the Complaint and any exhibits attached thereto, public records, items appearing in the record of the case and exhibits attached to [a party]’s motion to dismiss so long as they are referred to in the Complaint and are central to the claims contained therein.’ "Bassett v. Nat'l Collegiate Athletic Ass'n , 528 F.3d 426, 430(6th Cir.2008)(citation omitted).

II.

Plaintiff Stonebridge and Defendant Antero agree that they negotiated and ultimately signed a document drafted by Antero titled "Purchase and Sale Agreement"("PSA"), which consists of fourteen single-spaced pages containing numerous provisions set out in thirteen Articles.(Compl. ¶¶ 10, 14, ECF. No. 1;PSA at 1, ECF No. 1-1;Counterclaim¶ 7, ECF No. 21, PSA at 1, ECF No. 21-1.¹ )The Court will review (A) the relevant portions of the PSA, italicizing for emphasis, and then (B)the parties’ allegations in their pleadings.

A.The Purchase and Sale Agreement

In the PSA, Plaintiff Stonebridge agreed to sell Defendant Antero oil and gas leases in Monroe, Noble, and Guernsey Counties, Ohio.Before the Articles are set forth, the PSA identifies the parties to the contract and its execution date:

PURCHASE AND SALE AGREEMENT

This Purchase and Sale Agreement (this "Agreement"),dated August 29, 2012(the "Execution Date"), is by and between Stonebridge Operating, LLC, an Ohio limited liability company("Stonebridge"), Positron Energy Resources, Inc., an Ohio corporation ("Positron"), and BT Energy Corporation, [addresses provided here]....(collectively "Seller"), and Antero Resources Appalachian Corporation, a Delaware corporation, [address here]("Buyer").Seller and Buyer are sometimes individually referred to herein as a "Party" or collectively as the "Parties."

(PSA at 1, ECF No. 1-1.)

The parties next establish through Recitals (1) the quantity of acres to which the PSA is directed, (2) the quality of the acreage, and (3) consideration.

RECITALS

WHEREAS, Seller owns certain oil and gas leases located in Monroe, Noble, and Guernsey Counties, Ohio, covering approximately 4,159 net mineral acres, held by existing production from the shallow formations; and

WHEREAS, Seller desires to sell and Buyer desires to purchase all of Seller's interest in such oil and gas leases, insofar and only insofar as to all formations below the base of the Ohio Shale formation (top of the Java formation) at a depth of approximately 4195 feet, as seen in the W J Lydic Inc., Rosenberg #3 Well (API Number 3111122656000) located in Section II, Malaga Township, Monroe County, Ohio, upon the terms and conditions set forth in this Agreement.

NOW, WHEREFORE, in consideration of the mutual promises contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Buyer and Seller agree as follows:

(PSAat 1.)

Article 1, "Purchase and Sale," contains provisions identifying the oil and gas leases to which the PSA is directed:

Buyer [Antero] agrees to purchase from Seller [Stonebridge] and Seller agrees to sell, assign and deliver to Buyer, effective as of the Closing Date, all of Seller's right, title. and interest in and to the following (the "Assets"):

(a) The oil and gas leases (including [specific] interests)covering the lands depicted on Exhibit A, as more particularly identified on the lease schedule to be attached hereto within ten (10) business days as Exhibit A-1(the "Leases"),.... insofar and only insofar as to all formations below the base of the Ohio Shale formation (top of the Java formation) at a depth of approximately 4195 feet [defining "Deep Rights" and "Shallow Rights"]....

(f) ...

The Parties shall work together to prepare a schedule of the Leases, which shall be attached hereto as Exhibit A-1, and a schedule of the Excluded Wellbores, which shall be attached hereto as Exhibit B, within ten (10) business days of the execution of this Agreement.

(PSA §§ 1.1(a), (f).)This provision in sum provides that the oil and gas leases to which the PSA is directed are depicted on Exhibit A that is attached to the PSA on the date of execution, August 29, 2012.Those oil and gas leases were to be more particularly identified on Exhibit A-1, which the parties were to work together to prepare within ten days of August 29, 2012.

The parties also included in Article 1 of the PSA a sub-section providing an option for Defendant Antero "to add additional Leases" from the same counties that contained the 4,159 acres.(PSA § 1.3).That provision is titled "Option to Add Additional Leases" and provides:

Until the date that is six (6) months from the date of this Agreement, Buyer [Antero ]shall have the option, in Buyer's sole discretion, to add additional Leases owned by Seller covering lands located in Noble, Monroe, and Guernsey Counties, Ohio, for $5,000 per net mineral acre and upon the terms and conditions of this Agreement.

If Buyer exercises such election, the additional Leases shall be added to Exhibit A-1 of this Agreement upon exercise thereof and shall become subject to the terms and conditions of the Agreement.

Id.

In Article 2, titled "Purchase Price,"the parties established the total purchase price for the 4,159 acres at "$20,795,000.00 (the ‘Purchase Price’), which is allocated among the Leases on the basis of $5,000 per ‘Net Acre’(the ‘Allocated Value’)."(PSA § 2.1.)This amount was subject to outstanding title defects, allocated value effected by title defects, and allocated value effected by outstanding environmental defects.(PSA § 2.2.)

The PSA also contained the following Articles: "Article 3 Buyer's Inspection,""Article 4 Title Matters,""Article 5 Environmental Matters,""Article 6 Seller's Representations and Warranties,""Article 7 Buyer's Representations and Warranties,""Article 8 Covenants and Agreements,""Article 9 Termination,""Article 10 Closing,""Article 11 Post-Closing Obligations," and "Article 12 Assumption and Retention of Obligations and Indemnification."The last Article, "Article 13 Miscellaneous," contains an integration clause and a forum selection clause.

B.The Parties’ Allegations

In its Complaint, Stonebridge alleges that it advised Defendant Antero "of additional acreage beyond the 4,159 acres" and that "Defendant Antero elected to include additional leases" on Exhibit A-1. (Compl. ¶ 21, ECF No. 1.)Plaintiff additionally alleges that it "timely submitted Exhibit A-1 to Antero,"(...