v. 4:11 CV 1152 (JUDGE MARIANI) RANGE RESOURCES, INC., et al.,

Transcription

1 Case 4:11-cv RDM Documen 31 Filed 03/01/12 Page 1 of 11 GOOD WLL HUNTNG CLUB, NC. THE UNTED STATES DSTRCT COURT FOR THE MDDLE DSTRCT OF PENNSYLVANA Plainiff v. 4:11 CV 1152 (JUDGE MARAN) RANGE RESOURCES, NC., e al., Defendans MEMORANDUM AND ORDER. nroducion Before he Cour are he paries' cross-moions for summary judgmen. For he following reasons, he Cour will deny summary judgmen o Plainiff and gran parial summary judgmen for Defendans.. Saemen of Facs and Procedural Hisory The paries enered afive-year oil-and-gas lease agreemen ("Lease") on June 6, (Doc. 20, Ex. 1),1 The relevan porions of he Lease are as follows: Aricle 1.1 says he Lease shall remain in force for an iniial erm of five (5) years from he dae above saed (hereinafer designaed "Primary Term"), and shall coninue 'from year o year hereafer for so long as oil and/or gas or oher liquid hydrocarbons are produced in Paying Quaniies 2 from he Leased Premises or afer he developmen of he Firs Well in accord wih he provisions of Aricle 8 below, he 1 Plainiff enered he Lease wih Defendan Grea Lakes Energy Parners, LLC, which was laer re-named Range Resources-Appalachia, LLC. (Doc. 20, Ex. 3, p. 64, 11 2, p. 81). Plainiff laer conveyed by deed 91% of is righs under he Lease o a relaed eniy, G.W. Gas, nc. (Doc. 21, Ex. A). 2 "'Paying Quaniies' shall be defined as he sale of a sufficien quaniy of crude oil and/or naural gas produced from wells developed under he earned acreage of he leased premises o generae gross revenues greaer han 150% of he well(s) [sic) acual cos o produce."

2 Case 4:11-cv RDM Documen 31 Filed 03/01/12 Page 2 of 11 Lessee is engaged pursuan o Aricle 9 of his Agreemen in a bona fide aemp o secure or resore he producion of oil and/or gas or oher liquid hydrocarbons by conducing addiional drilling operaions on he Leased Premises, or Lessee is engaged in he plugging of wells or he removal of equipmen here from [sic] pursuan o he Provisions of Aricle 19 of his Agreemen. Secion 8.1 is eniled FRST WELL, and i provides: "[u]nless sooner erminaed as oherwise herein provided, Lessee shall commence a well on he Leased Premises... wihin five (5) years from [June 6, 2006] and shall drill said well wih due diligence." goes on o say ha "[i]n he even he aforesaid well is no commenced wihin such five (5)-year period, his Agreemen shall be auomaically erminaed in is enirey." Defendans performed he following acions o prepare for he well drilling. They saked adrill sie for he Good Will Huning Club Uni 5H ayear before he lease expired. (Doc. 20, Ex. 2, pp , n9). Defendans also enered several damage release agreemens and oher agreemens wih Plainiff and hird paries relaing o drilling sies and proposed pipeline locaions. (d. a pp ,40-44,46-47). On June 7,2006, Defendans enered anoher lease agreemen wih Samuel Breining who owned an adjacen propery. (d. a Ex. 3, pp ). The wo properies were pooled ino a uni wih he lease a issue in his case. Defendans also obained road righs of way and easemens o gain addiional access o he well's drill sie. (d. a Ex. 2, p. 16, n2, pp ). Defendans also procured permis and approvals from various sae and local regulaory agencies. 3 On May 11-12, 2011, Defendans re-saked he f 3 Specifically, Defendans obained a Drilling Permi from he Pennsylvania Deparmen of Environmenal Proecion on November 17,2010, and an Erosion and Sedimen Conrol General Permi on Augus 27,2010. (d. a Ex. 4, pp , 124). Defendans also procured waer use approval from he Susquehanna River Basin Commission on November 19, 2010, and zoning, sewage disposal sysem, and road bonding permis from Lewis Township on November 19, 2010, April 4, 2011, and May 27, 2011, respecively. (d. a Ex. 4, p. 99, ~l 7, pp , ,198,205). 2

3 Case 4:11-cv RDM Documen 31 Filed 03/01/12 Page 3 of 11 drill sie for he well o prepare for consrucion of he pad sie. (d. a Ex. 2, p. 19, ~ 9). On May 28, 2011, Defendans removed imber and consruced road access o he well sie. (d. a ~ 10). On June 5, 2011, Defendans began consrucing he pad sie. (d. a ~ 11). The primary lease was se o expire on June 6, Plainiff's Complain requesed he Cour o 1) issue adeclaraory judgmen finding ha he Lease had expired, 2) ejec Defendans from he propery, and 3) award damages for respass. (Doc. 1, Ex. B). Defendans imely removed his case from he Cour of Common Pleas of Lycoming Couny on grounds of diversiy, and his Cour has jurisdicion under 28!! U.S.C. 1332{a).. Analysis A. Sandard of Review for Cross-Moions for Summary Judgmen Through summary adjudicaion he cour may dispose of hose claims ha do no presen a"genuine issue as o any maerial fac." FED. R. CV. P. 56(a). Summary judgmen "should be rendered if he pleadings, he discovery and disclosure maerials on file, and any affidavis show ha here is no genuine issue as o any maerial fac and ha he movan is eniled o judgmen as a maer of law." FED. R. CV. P. 56{c); Turner v. Schering-Plough Corp., 901 F.2d 335, 340 (3d Cir. 1990). "As o maerialiy,... [o]nly dispues over facs ha migh affec he oucome of he sui under he governing law will properly preclude he enry of summary judgmen." Anderson v. Libery Lobby, nc., 477 U.S. 242, 248 (1986). The pary! 4 Defendans performed a number of oher operaions and compleed he well soon afer June 6, 2011, (see Doc. 20, Ex. 5), bu he Cour will no address hese acions because i concludes ha he erms of he Lease are ambiguous, hus precluding, a his ime, he need o deermine wheher Defendans "commenced a well" in ime o exend he Lease. 3

4 Case 4:11-cv RDM Documen 31 Filed 03/01/12 Page 4 of 11 moving for summary judgmen bears he burden of showing he absence of agenuine issue as o any maerial fac. Celoex Corp. v. Care, 477 U.S. 317, 323 (1986). Once such ashowing has been made, he non-moving pary mus offer specific facs conradicing hose averred by he movan o esablish agenuine issue of maerial fac. Lujan v. Na'! Wildlife Fed'n, 497 U.S. 871,888 (1990). "nferences should be drawn in he ligh mos favorable o he non-moving pary, and where he non-moving pary's evidence conradics he movan's, hen he nonmovan's mus be aken as rue." Big Apple BMW, nc. v. BMW of N. Am., nc., 974 F.2d 1358, 1363 (3d Cir. 1992), cer. denied 507 U.S. 912 (1993). n his case, he paries have filed cross-moions for summary judgmen. (Docs. 32, 40, 45). According o he Third Circui: Cross-moions are no more han a claim by each side ha i alone is eniled o summary judgmen, and he making of such inherenly conradicory claims does no consiue an agreemen ha if one is rejeced he oher is necessarily jusified or ha he losing pary waives judicial consideraion and deerminaion wheher genuine issues of maerial fac exis. Lawrence v. Ciy of Philadelphia, 527 F.3d 299, 310 (3d Cir.2008) (quoing Rains v. Cascade ndus., nc., 402 F.2d 241, 245 (3d Cir.1968)). Each movan mus show ha no genuine issue of maerial fac exiss; if boh paries fail o carry heir respecive burdens, he cour mus deny he moions. See Facenda v. N.FL Films, nc., 542 F.3d 1007, 1023 (3d Cir.2008). When reviewing each moion, he cour is bound o view he evidence in he ligh mos favorable o he nonmovan. FED. R. CV. P. 56; Unied Saes V. Hall, 730 F.Supp. 646, 648 (M.D. Pa.1980). A he ouse, he Cour recognizes ha here are no issues of maerial fac oher han hose arising from he inerpreaion of he Lease. B. Conrac Consrucion 4

5 Case 4:11-cv RDM Documen 31 Filed 03/01/12 Page 5 of 11 [W]hen a wrien conrac is clear and unequivocal, is meaning mus be deermined by is conens alone. speaks for iself and a meaning canno be given o i oher han ha expressed. Where he inenion of he paries is clear, here is no need o resor o exrinsic aids or evidence. Hence, where language is clear and unambiguous, he focus of inerpreaion is upon he erms of he agreemen as manifesly expressed, raher han as, perhaps, silenly inended. Lesko v. Frankford Hosp.-Bucks Cny., 15 A.3d 337, 342 (Pa. 2011); see also Seuar v. McChesney, 444 A.2d 659, 661 (Pa. 1982). "When, however, an ambiguiy exiss, parol evidence is admissible o explain or clarify or resolve he ambiguiy, irrespecive of wheher he ambiguiy is paen, creaed by he language of he insrumen, or laen, creaed by exrinsic or collaeral circumsances." ns. Adjusmen Bur., nc. v. Allsae ns. Co., 905 A.2d 462, 468 (Pa. 2006). Aconrac is ambiguous if i reasonably suggess differen consrucions and is capable of being undersood in more han one sense. Kripp v. Kripp, 849 A.2d 1159, 1163 (Pa. 2004). lil is clear also, ha every agreemen is made and o be consrued wih due regard o he known characerisics of he business o which i relaes; and hence he language used in a conrac will be consrued according o is purpor in he paricular business." Franklin Sugar Ref. Co. v. Howell, 118 A. 109, 110 (Pa. 1922) (inernal ciaions omied). n consruing a conrac, he provisions mus be consrued as awhole and harmonized, if possible, so ha all of he erms are given effec. Conrans, nc. v. Ryder Truck Renal, nc., 836 F.2d 163,169 (3d Cir. 1987). Aconrac should no be inerpreed in a manner ha renders provisions meaningless, superfluous, unreasonable, conradicory, or would lead o absurd resuls. Lesko, 15 A.3d a 43; Conrans, 836 F.2d a 169. f 5 f

6 Case 4:11-cv RDM Documen 31 Filed 03/01/12 Page 6 of 11 Plainiff inerpres Aricle 1.1 o creae hree discree condiions ha will renew he Lease. During he primary erm of he Lease, Defendans mus (1) produce oil, gas, or oher liquid hydrocarbons in paying quaniies, or (2) commence and drill he Firs Well in accord wih he provisions of Aricle 8AND engage in addiional drilling operaions o secure producion of oil, gas, or oher liquid hydrocarbons pursuan o Aricle 9 (eniled "Subsequen Wells"},5 or (3) plug wellslremove equipmen from he Leased Premises. This inerpreaion of he conrac makes sense wihin he conex of he paricular business aciviy a issue. Franklin Sugar, 118 A. a 110. n layman's erms, (1) he Lease is exended if a well is producing in "paying quaniies." Tha is, Defendans are earning royalies from he oil, and Plainiff, as lessor, is receiving aporion of Defendans' royalies; (2) he Lease is exended if (a) he firs well had been commenced and drilled bu eiher yielded nohing or depleed iself, and (b) Defendans were seeking oil elsewhere in asubsequen well; (3) he Lease is exended if Defendans are plugging wells/removing equipmen from he Leased Premises. n each of hese firs wo condiions, he Defendans are eiher producing oil or are acively seeking i in subsequen wells afer compleing he firs well, all wihin he five-year erm of he Lease. The paries concede ha he well is no producing in paying quaniies and ha 5 Aricle 9.1 says in perinen par: n he even ha he acreage of he Leased Premises exceeds he lands of he drilling... of he Firs Well and in he even ha he Firs Well drilled by Lessee on he Leased Premises is producive of oil and/or gas and he well is expeced o reurn he invesmen and operaing coss on ha well during he anicipaed producive life of he well o is economic limi, hen Lessee shall drill an addiional well on he Leased Premises,... as would be drilled by a reasonable [sic] pruden operaor acing under he same or similar circumsances. The addiional well mus be commenced wihin welve (12) monhs afer he compleion of he las well drilled. 6

7 Case 4:11-cv RDM Documen 31 Filed 03/01/12 Page 7 of 11 Defendans have no plugged wells/removed equipmen. Thus, a firs blush, his inerpreaion appears o favor Plainiffs. However, he dispue is over wha he Cour has idenified as condiion (2). Defendans conend ha condiion (2) requires he Cour o read Aricle 1.1 in conjuncion wih Aricle 8 and o harmonize he wo aricles. See Lesko, 15 A.3d a 342. The Cour agrees wih his general rule of conrac inerpreaion, bu reading he wo Aricles in conjuncion resuls in ambiguiy. Aricle 8 says, "[u]nless sooner erminaed as oherwise herein provided, Lessee shall commence a well on he Leased Premises... wihin five (5) years from [June 6, 2006] and shall drill said well wih due diligence." Aricle 8 goes on o say ha U[i]n he even he aforesaid well is no commenced wihin such five (5)-year period, his Agreemen shall be auomaically erminaed in is enirey." Defendans seek o inerpre Aricle 8 as requiring only ha hey commence a well wihin he primary erm, and "hereafer," drill wih due diligence. 6 (Docs. 18, 28,30). Tha is, he drilling could occur afer he primary erm expired, so long as Defendans had "commenced" wihin he primary erm, because boh imes he five-year erm is saed, i perains o commencing a well only and does no explicily apply o he "and shall drill said well wih due diligence" clause.? Defendans' inerpreaion allows Aricle 8.1 o be inernally consisen. However, in ligh of he Cour's inerpreaion of Aricle 1.1, he wo aricles conflic. 6 For he purpose of his analysis, he Cour is assuming ha Defendans properly "commenced a well" wihin he primary erm. This is no ye a finding of fac and will be deermined a rial. 7 Had he paries inended for Defendans o boh commence and drill wihin five years of Signing he lease, a proper consrucion of Aricle 8 could have been, "lessee shall commence and drill a well wih due diligence on he leased Premises wihin five (S) years of June 6,2006. n he even he aforesaid well is no commenced and drilled wihin such five {S)-year period, his Agreemen shall be auomaically erminaed in is enirey." A grea deal of ime, liigaion, and resources could have been avoided by more careful consrucion of he lease, a is incepion. 7

8 Case 4:11-cv RDM Documen 31 Filed 03/01/12 Page 8 of 11 Wha did he paries mean by "afer he developmen of he Firs Well in accord wih he provisions of Aricle 8.1?" The word "developmen" implies boh commencing and drilling a well, whereas Aricle 8.1 seems o indicae ha only he failure o commence will auomaically erminae he Lease. "A conrac is ambiguous if i is reasonably suscepible of differen consrucions and capable of being undersood in more han one sense." Kripp, 849 A.2d a Aricle 8.1 could reasonably be consrued o require only commencemen of he firs well o avoid erminaion of he Lease. Aricle 1.1 could reasonably be consrued o require boh commencemen and acual drilling of he well before exending he Lease. Due o his paen ambiguiy, he Cour mus resor o exrinsic evidence o discern he paries' inen when enering he Lease. Because he paries did no submi evidence on he issue of inen ouside of he Lease, he Cour mus deny he cross moions for summary judgmen unil i can find facs supporing one inerpreaion over he oher.8 Finally, Defendans conend ha he Lease is on a form prepared by Plainiffs consulan, Appalachian Oil &Gas Advisors, L.L.C. (Doc. 28, n.4; see Ex. 1, p. 2), so any ambiguiies in he Lease should be consrued agains Plainiff. See Pomposini v. T. W. Phillips Gas &Oil Co, 580 A.2d 776, 778 (Pa. Super. 1990) (ciing Rusiski v. Pribonik, 515 A.2d 507, 510 (Pa. 1986)}. A minimum, his argumen suggess o he Cour ha his was no a sandard form conrac prepared by Defendans and signed by an unwiing and defenseless landowner. Raher, Plainiff hired a Consulan who drafed his agreemen which was hereby negoiaed 8 While Defendans cied a number of cases from ouside of his jurisdicion o suppor heir inerpreaion of he lease and o indicae how he wo conflicing Aricles could be reconciled, he Cour iniially finds he cied cases o be facually disinguishable from he presen case. 8

9 Case 4:11-cv RDM Documen 31 Filed 03/01/12 Page 9 of 11 by boh paries. Before deciding he case, he Cour would be eager o hear any evidence of conrac deliberaions and negoiaions and wha each pary's undersanding of is righs and obligaions were under he Lease. C. Who are he Appropriae Defendans? The named Defendans in his case are Range Resources, nc., Grea Lakes Energy Parners, LLC, and Range Resources-Appalachia, LLC. Defendans have endered evidence ha here is no such eniy as Range Resources, nc., ha Grea Lakes Energy Parners, LLC changed is name o Range Resources-Appalachia, LLC in 2007 (Doc. 20, Ex. 3, p. 64, ~ 2, p. 81), and ha Range Resources, Corp. is he paren company of Range Resources-Appalachia, LLC. (Doc. 20, Ex. 3, p. 64, ~ 4). Range Resources, Corp. is no a pary o he Lease, and by law, a paren corporaion is no liable for he acs of is subsidiaries. Pearson v. Componen Tech. Corp., 247 F.3d 471, 484 (3d Cir. 2001) (ciing Unied Saes v. BesFoods, 524 U.S. 51, 69, 118 S.C. 1876, 141 L.Ed.2d 43 (1998)). Plainiff has no dispued any of hese argumens. Assuming ha Plainiff inended o sue Range Resources, Corp., insead of Range Resources, nc. (a non-exisen eniy), and because Grea Lakes Energy Parners, LLC is now Range Resources-Appalachia, LLC, he Cour will gran his porion of Defendans' Moion for Summary Judgmen (Doc. 17) and dismiss Range Resources, nc. and Grea Lakes Energy Parners, LLC from he case. Thus, he sole remaining Defendan is Range Resources- Appalachia, LLC. V. Conclusion 9

10 r Case 4:11-cv RDM Documen 31 Filed 03/01/12 Page 10 of 11 Therefore, for he abovemenioned reasons, he Cour denies Plainiff's Moion for Summary Judgmen (Doc. 21) and grans in par and denies in par Defendans' Moion for Summary Judgmen (Doc. 17). An appropriae order follows. ober D. Mariani Unied Saes Disric Judge 10 [! 1 f

11 Case 4:11-cv RDM Documen 31 Filed 03/01/12 Page 11 of 11 GOOD WLL HUNTNG CLUB THE UNTED STATES DSTRCT COURT FOR THE MDDLE DSTRCT OF PENNSYLVANA v. Plainiff RANGE RESOURCES, NC., e al., 4:11 CV 1152 (JUDGE MARAN) Defendans ORDER AND NOW, o wi, his 1ST DAY OF MARCH, 2012, upon review of Plainiffs Moion for Summary Judgmen (Doc. 21) and Defendans' Moion for Summary Judgmen (Doc. 17), T S HEREBY ORDERED THAT: 1. Defendans' Moion for Summary Judgmen (Doc. 17) is GRANTED N PART AND DENED N PART. Range Resources, nc. and Grea Lakes Energy Parners, LLC are dismissed as defendans from he case. Range Resources-Appalachia, LLC is he sole remaining Defendan in he case. 2. Plainiffs Moion for Summary Judgmen (Doc. 21) is DENED. ober D. Mariani Unied Saes Disric Judge f i f f f 11 [