Judge won't let plaintiffs out of oil and gas lease

WHEELING – Three corporate defendants, including Chesapeake Appalachia, have won dismissal of a case that sought to void an oil and gas lease agreement, though the decision is being appealed by the plaintiffs.

On Feb. 8, U.S. District Judge John Preston Bailey, of the Northern District of West Virginia, granted the motion to dismiss filed by Range Resources-Appalachia in a case brought by Joseph and Marjorie Ennis, property owners in Ohio County.

The Ennises sought an order that stated no lease existed because of conflicting commencement dates on it. With one year left on the lease, the Ennises were attempting to develop the land by placing a pipeline easement from another company on it.

“This court notes that had the contract remained in its original form with the language ‘this __ day of June, 2006,’ the court would have nevertheless supplied the Aug. 1, 2006, date as the most reasonable to define the parties’ rights under their contract,” Bailey’s decision says.

“Accordingly, this court finds defendant Range’s actions to be harmless, and the contract is fully enforceable in its recorded form.”

In May 2006, landman William A. Capouillez approached the Ennises about their interest in entering into an oil, gas and coalbed methane gas lease with Great Lakes Energy Partners. In June 2006, Great Lakes sent the plaintiffs a form lease with a commencement date of June 2006.

Before a notary in Indiana, the Ennises executed the form lease on Aug. 1, 2006. A month later, Capouillez and the vice president of Great Lakes executed the form lease before notaries.

The lease was identical to the one already executed by the Ennises except for a commencement date of Aug. 1, 2006.

On Sept. 25, 2006, a memorandum of lease was recorded with the Ohio County Clerk. Its commencement date was Aug. 1, 2006.

Great Lakes changed its name to Range Resources-Appalachia, which assigned 73.12 percent of its interest in the property to Chesapeake and 26.88 percent to Statoil USA Onshore Properties in 2010.

In 2010, the Ennises discovered the conflicting commencement dates during negotiations for a pipeline easement with a landman from Appalachia Midstream Services. They stopped accepting benefits from Chesapeake and Statoil when they did and filed a lawsuit on June 1, 2012.

The case was removed to federal court in July.

“In this case, the plaintiffs both reviewed the finalized contract which contained the August 1, 2006, date, and failed to challenge the same until approximately four years later. The plaintiffs enjoyed the benefit of the contract during this time,” Bailey wrote.

“Now, at a time when the assignees to the original contract attempt to exercise their rights under the contract, the plaintiffs seek a court determination that the same is void.

“This Court will not come to the plaintiffs’ aid on the eve of the contract’s expiration. Rather, this court believes the appropriate remedy in this case is to resolve the discrepancy by endorsing the date supplied by Range.”

Bailey added that the Ennises admitted that they received a copy with the Aug. 1, 2006 date, reviewed it and placed it in their safety deposit box.

The Ennises, after Bailey refused to change his mind, entered a notice of appeal on March 8, and the appeal was opened in the U.S. Court of Appeals for the Fourth Circuit on March 11.

Their opening brief is due by April 22. They are represented by Eric Gordon of the Moundsville firm Berry, Kessler, Crutchfield, Taylor & Gordon, as well as Michael C. Harris of the Chesterton, Ind., firm Harris, Welch & Lukmann.

All three defendants are represented by Kevin C. Abbott and Nicole Renee Snyder Bagnell of Reed Smith in Pittsburgh.

From the West Virginia Record: Reach John O’Brien at jobrienwv@gmail.com.