Black Land Management, Inc. v. Postrock Eastern Production LLC et al
Filing
25
MEMORANDUM OPINION AND ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT'S MOTION TO DISMISS (DKT. NO. 5 ). The Court GRANTS IN PART PostRocks motion as to any claims premised on the additional acreage, and DENIES IN PART PostRocks motion as to any claims premised on the Clouded Acreage. Signed by District Judge Irene M. Keeley on 6/19/15. (mh)
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF WEST VIRGINIA
BLACK LAND MANAGEMENT, INC.,
Plaintiff,
v.
//
CIVIL ACTION NO. 1:15CV24
(Judge Keeley)
POSTROCK EASTERN PRODUCTION, LLC
f/k/a QUEST EASTERN RESOURCE, LLC,
Defendant.
MEMORANDUM OPINION AND ORDER GRANTING IN PART AND
DENYING IN PART DEFENDANT’S MOTION TO DISMISS [DKT. NO. 5]
Pursuant to Fed. R. Civ. P. 12(b)(6), the defendant, PostRock
Eastern
Production,
LLC
f/k/a
Quest
Eastern
Resource,
LLC
(“PostRock”), has moved to dismiss the complaint filed by the
plaintiff, Black Land Management, Inc. (“Black Land”).
PostRock
contends that, under the terms of an oil and gas arrangement, it
has no obligation to make the payments sought by Black Land.
For
the reasons that follow, the Court GRANTS IN PART and DENIES IN
PART the motion.
I.
In this case, Black Land claims entitlement to payments under
the terms of an amended and restated oil and gas lease (the
“Amended
Lease”)
and
a
settlement
agreement
Agreement”) entered into by the parties.
(the
“Settlement
The claimed payments
relate to (1) Black Land’s obtaining of quiet title to certain
BLACK LAND MGMT., INC. v. POSTROCK E. PROD., LLC
1:15CV24
MEMORANDUM OPINION AND ORDER GRANTING IN PART
AND DENYING IN PART DEFENDANT’S MOTION TO DISMISS
acreage, and (2) its identification of additional acreage not set
forth in the Amended Lease.
PostRock contends that Black Land is
not entitled to any additional payments under the terms of the
Amended Lease and Settlement Agreement.
A.
Black Land is an Ohio corporation with its principal place of
business in West Virginia.
PostRock is the successor in interest
to PetroEdge Resources, LLC (“PetroEdge”).
Its sole member,
PostRock Energy Services Corporation, is incorporated in Delaware
and has its principal place of business in Oklahoma.
In November 2007, Black Land and PetroEdge entered into an oil
and gas lease for the mineral rights underlying 1512.82 acres in
Lewis and Braxton Counties in West Virginia.
(Dkt. No. 9 at 24).
On November 10, 2010, PostRock, who had succeeded PetroEdge, filed
a
declaratory
judgment
action
against
Black
Land,
seeking
a
declaration that the lease remained in full force and effect (the
“State Action”).
Black Land counterclaimed, seeking a declaration
that the lease had terminated.
Presumably in an effort to resolve
their dispute before incurring additional expenses, the parties
signed the Amended Lease on November 11, 2010, the day after the
lawsuit was filed.
However, they did not sign the Settlement
Agreement until June 14, 2011.
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MEMORANDUM OPINION AND ORDER GRANTING IN PART
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B.
The Amended Lease “superseded and replaced” all terms and
provisions in the original lease, and permitted PostRock to extract
the oil and gas from five tracts of land totaling 1410.33 acres.
Id. at 1, 2, 38.
Among those five tracts, the three relevant to
the present motion are: (1) the “Brewster Tract,” which purportedly
contained 100 acres; (2) the “Goodwin Tract,” which purportedly
contained 125 acres; and (3) the “Pickens Tract,” which purportedly
contained 515.09 acres.
Importantly, the “Term” provision, or “habendum clause,” of
the Amended Lease stated:
TO HAVE AND TO HOLD said Premises for the purposes
aforesaid from November 12, 2007, through and until
December 31, 2012 (hereinafter called the “Primary
Term”), and as long thereafter as drilling or reworking
operations for oil or gas are conducted thereon as
provided herein and oil or gas is produced in paying
quantities therefore, or this Lease is extended by any
subsequent provision hereof, as hereinafter provided.
Id. at 2.
In a subsequent provision concerning “Events of Default
and Termination,” and commonly referred to as a “notice and demand
clause,” the parties agreed that,
[n]otwithstanding the occurrence of any Event of Default,
this Restated Lease shall not be forfeited or terminated
unless and until Lessee shall have been given an
additional notice in writing by Lessor that the Event of
Default exists or is otherwise continuing and Lessee
shall have been given: fifteen (15) days after such
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notice withint which to comply in the case of an Event of
Default of a character described in subparagraph (a)
above, and/or thirty (3) days after such notice within
which to cure or commence and thereafter diligently
pursue action (if compliance is not reasonably achievable
within thirty (30) days) to cure the Event of Default.
Id. at 10.
The Amended Lease provided that PostRock would pay Black Land
a one-time payment of $1 million to cover rent for the Primary
Term.
However, the parties agreed to adjust that amount by $2500
per acre “if [PostRock] determines, or [Black Land] proves, that
there is acreage within the Premises in excess of the acreage
recited herein.”
Id. at 3, 4.
Additionally, the Amended Lease identified “clouds” on Black
Land’s title relative to 62.5 acres of the Goodwin Tract, and the
100
acres
thought
to
be
contained
in
(collectively, the “Clouded Acreage”).
twelve
months
for
Black
royalty/mineral interests.”
Land
“to
the
Brewster
Tract
It provided a term of
attempt
to
acquire
said
Significantly, it further provided
that,
[i]n this regard, in the event that Lessor has within
said 12 month period initiated litigation in connection
with its effort to clear title and/or acquire said
interests, then Lessor shall have an additional period of
time until December 31, 2012 within which Lessee will not
make any efforts to lease or acquire said interests for
itself. Provided, further, that in the event that Lessor
has initiated litigation but the same has not concluded
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by December 31, 2012, then so long as Lessor has acted in
good faith in pursuing its claims and has diligently
prosecuted said action, then Lessor shall have an
additional reasonable period of time beyond December 31,
2012 within which to conclude said litigation and during
which Lessee will not make any efforts to lease or
acquire said interests for itself[.]
Id. at 11.
The
provisions
Amended
Lease
relevant
also
here.
included
Under
several
the
miscellaneous
“Surrender”
provision,
“[PostRock], at any time and from time to time, may surrender this
Restated Lease as to all or any part or parts of the Premises by
recording
an
appropriate
Notwithstanding
anything
instrument
contained
of
surrender
herein
to
.
the
.
.
.
contrary,
[PostRock] shall also continue to be bound by any obligation
specified herein to survive the expiration or termination of this
Restated Lease.”
Id. at 13.
The “Waiver” term provided that a
party’s failure to, or delay in, exercising its rights “shall not
operate as a waiver of any right or otherwise prejudice the party
from exercising any right in the future.”
Id. at 19.
Finally, the
“Confidentiality” provision prevents the parties from revealing the
financial terms of their agreement until June 1, 2016.
Id. at 20.
C.
In the Settlement Agreement, signed seven months after the
Amended Lease, the parties expressed their interest to “resolve the
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issues and controversies between them, including the claims and
counterclaims asserted or which could have been asserted in the
[State Action].”
(Dkt. No. 11 at 1).
As to the Clouded Acreage,
the Settlement Agreement provided as follows:
Black Land shall endeavor to clear said “clouds” and
obtain good and marketable title to the mineral interests
associated with said acreage. In the event that within
the period of 12 months from the date hereof [June 14,
2011], Black Land is successful in obtaining good and
marketable title as normally accepted within the oil and
gas industry to all or a portion of said 162.5 acres,
then [PostRock] shall pay to Black Land as an additional
lease bonus payment the sum of $2,461.54 per acre for
each acre concerning which Black Land in fact holds good
and marketable title –- up to a maximum of $400,000.
Payments to Black Land hereunder shall be made not later
than 30 days following Black Land’s delivery to
[PostRock] of evidence of good and marketable title. In
this regard, in the event that Black Land has within said
12 month period initiated litigation in connection with
its effort to clear title and/or acquire said mineral
interests, then Black Land shall have an additional
period of time until December 31, 2012 within which to
obtain good and marketable title to said mineral
interests and receive payment therefor from [PostRock] as
set forth above. Provided, further, that in the event
that Black Land has initiated litigation but the same has
not concluded by December 31, 2012, then so long as Black
Land has acted in good faith in pursuing its claims and
has diligently prosecuted said action, then Black Land
shall have an additional reasonable period of time beyond
December 31, 2012 within which to conclude said
litigation.
Id. at 3-4.
In addition, the Settlement Agreement contained an “Entire
Agreement” term, which provided that:
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AND DENYING IN PART DEFENDANT’S MOTION TO DISMISS
This Agreement and the Restated and Amended Lease
attached hereto and incorporated herein constitute the
entire understanding and agreement by and between the
parties, and no other, different or additional agreements
have been made. This Agreement may not be modified or
amended except by a written instrument signed by both
parties.
Id. at 7.
D.
In June 2012, Black Land advised PostRock that it intended to
pursue a claim for additional acreage.
On December 1, 2012, Black
Land commissioned surveys of the Brewster and Pickens Tracts.
The
surveyor provided the survey of the Pickens Tract to Black Land on
July 20, 2013, and Black Land provided it to PostRock on November
1, 2013.
The survey established that the Pickens Tract actually
contained 548.68 acres, as opposed to the 515.09 acres set forth in
the Amended Lease.
which
Black
Land
Similarly, the survey of the Brewster Tract,
provided
to
PostRock
on
December
5,
2014,1
established that it encompassed 153.4 acres, rather than the 100
acres identified in the Amended Lease.
Black Land also took steps towards quieting their title to the
Clouded Acreage.
On June 13, 2012, it sued the claimants to the
Goodwin Tract in the Circuit Court of Braxton County.
1
On August
The pleadings do not reveal the date on which the surveyor
provided the survey of the Brewster Tract to Black Land.
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13, 2013,
that
court
entered
an
“Agreed
Order
of Judgment,”
removing the cloud on Black Land’s title to the Goodwin Tract.
Likewise, Black Land sued the claimants to the Brewster Tract -allegedly before June 14, 2012 -- for quiet title to the acreage.
On July 9, 2014, the Circuit Court of Braxton County entered an
order awarding Black Land the relief sought.
At some unknown point in time, Black Land demanded payment
from PostRock for the newly surveyed additional acreage, as well as
the
Clouded
Acreage
for
which
it
had
obtained
quiet
title.
PostRock refused to make any additional payments, taking the
position that “[t]he underlying contract expired by its terms on
December
31,
2012
and
PostRock
[]
had
no
contractual
duty
thereafter to tender additional payments to Black Land.” (Dkt. No.
6 at 9).
PostRock’s refusal precipitated this action.
E.
On February 10, 2015, Black Land filed a complaint against
PostRock in the Circuit Court of Braxton County, asserting claims
for breach of contract (“Count I”), accounting (“Count II”), unjust
enrichment (“Count III”), and conversion (“Count IV”).
removed
the
case
to
this
Court
on
February
subsequently filed the pending motion to dismiss.
8
13,
PostRock
2015,
and
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AND DENYING IN PART DEFENDANT’S MOTION TO DISMISS
PostRock argues that “the breach of contract claims fail as a
matter of law because the underlying contracts [i.e. the Amended
Lease and the Settlement Agreement] terminated by their express
terms prior to the events giving rise to [Black Land’s] claims.”
(Dkt. No. 5 at 1-2).
Moreover, they contend that “[t]he remaining
counts set forth in the Complaint –- accounting, unjust enrichment,
and conversion –- are premised upon and dependent upon the breach
of contract claims and must therefore be dismissed as well.”
at 2.
Id.
Following several stipulations extending the response and
reply deadlines, PostRock’s motion is fully briefed and ripe for
review.
II.
In reviewing the sufficiency of a complaint, a district court
“‘must accept as true all of the factual allegations contained in
the complaint.’”
Anderson v. Sara Lee Corp., 508 F.3d 181, 188
(4th Cir. 2007) (quoting Erickson v. Pardus, 551 U.S. 89, 94
(2007)). However, while a complaint does not need detailed factual
allegations, a plaintiff’s obligation to provide the grounds of his
entitlement to relief requires more than labels and conclusions,
and a formulaic recitation of the elements of a cause of action
will not do.
(2007).
Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555
Indeed, courts “are not bound to accept as true a legal
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MEMORANDUM OPINION AND ORDER GRANTING IN PART
AND DENYING IN PART DEFENDANT’S MOTION TO DISMISS
conclusion couched as a factual allegation.”
Papasan v. Allain,
478 U.S. 265, 286 (1986). In considering whether the facts alleged
are sufficient, “a complaint must contain ‘enough facts to state a
claim to relief that is plausible on its face.’”
Anderson, 508
F.3d at 188 (quoting Twombly, 550 U.S. at 547).
“A motion to dismiss under Rule 12(b)(6) tests the sufficiency
of
a
complaint;
importantly,
it
does
not
resolve
contests
surrounding the facts, the merits of a claim, or the applicability
of defenses.”
Republican Party of N.C. v. Martin, 980 F.2d 943,
952 (4th Cir. 1992).
“But in the relatively rare circumstances
where facts sufficient to rule on an affirmative defense are
alleged in the complaint, the defense may be reached by a motion to
dismiss filed under Rule 12(b)(6),” so long as “all facts necessary
to the affirmative defense ‘clearly appear[] on the face of the
complaint.’” Goodman v. Praxair, Inc., 494 F.3d 458, 464 (4th Cir.
2007) (quoting Richmond, Fredericksburg & Potomac R.R. v. Forst, 4
F.3d 244, 250 (4th Cir. 1993)).
Finally, courts may “take judicial notice of matters of public
record,” and may consider documents attached to the complaint and
the motion to dismiss “so long as they are integral to the
complaint and authentic.”
Philips v. Pitt Cnty. Mem. Hosp., 572
F.3d 176, 180 (4th Cir. 2009) (citing Blankenship v. Manchin, 471
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MEMORANDUM OPINION AND ORDER GRANTING IN PART
AND DENYING IN PART DEFENDANT’S MOTION TO DISMISS
F.3d 523, 526 n.1 (4th Cir. 2006)); see also Am. Chiropractic Ass’n
v. Trigon Healthcare, Inc., 367 F.3d 212, 234 (4th Cir. 2004);
Philips v. LCI Int’l Inc., 190 F.3d 609, 618 (4th Cir. 1999).
III.
A.
First, the Court must determine whether the parties have
validly incorporated the terms of the Amended Lease into the
Settlement Agreement, which, by its own terms, is governed by West
Virginia law.
(Dkt. No. 11 at 5).
Under West Virginia law,
parties may incorporate by reference separate writings
together into one agreement.
However, a general
reference in one writing to another document is not
sufficient to incorporate that other document into a
final agreement. To uphold the validity of terms in a
document incorporated by reference, (1) the writing must
make a clear reference to the other document so that the
parties’ assent to the reference is unmistakable; (2) the
writing must describe the other document in such terms
that its identity may be ascertained beyond doubt; and
(3) it must be certain that the parties to the agreement
had knowledge of and assented to the incorporated
document so that the incorporation will not result in
surprise or hardship.
Syl. Pt. 2, State ex rel. U-Haul Co. v. Zakaib, 752 S.E.2d 586, 589
(W. Va. 2013); see also Art’s Flower Shop, Inc. v. Chesapeake &
Potomac Tel. Co., 413 S.E.2d 670, 673 (W. Va. 1991) (“Nothing in
West Virginia statutes or case law precludes incorporation of prior
contract provisions by reference to an earlier contract.”); Ashland
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Oil, Inc. v. Donahue, 223 S.E.2d 433, 469 (W. Va. 1976) (“It is a
well-recognized principle of law that, even though writings may be
separate,
they
will
be
construed
together
and
considered
to
constitute one transaction when the parties are the same, the
subject matter
is
the
same
and
the
relationship
between
the
documents is clearly apparent.”).
Here,
the
Settlement
Agreement
makes
numerous,
specific
references to the Amended Lease, including the first provision,
which states that, “[c]ontemporaneously with the execution hereof,
[the parties] shall execute that certain Amended and Restated
Lease, a copy of which is attached hereto, marked Exhibit ‘2’ and
incorporated herein by reference.”
(Dkt. No. 11 at 2).
Moreover,
the “Entire Agreement” term provides that “[t]his Agreement and the
Restated and Amended Lease attached hereto and incorporated herein
constitute the entire understanding and agreement by and between
the parties.”
Id. at 7.
These provisions, and the ubiquitous
references to the Amended Lease, leave little doubt that the
parties assented to the incorporation of the Amended Lease into the
Settlement Agreement.
Consequently, the Court will construe both
documents as a single contract.
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B.
The essence of PostRock’s argument is that Black Land failed
to apprise it of the additional acreage, and failed to take the
necessary steps to quiet title, within the requisite time frame.
Specifically,
PostRock
relies
on
the
habendum
clause,
which
permitted it to extract oil and gas until December 31, 2012, and
“as long thereafter as drilling or reworking operations for oil or
gas are conducted thereon as provided herein and oil or gas is
produced in paying quantities therefore . . . .”
Because there is
no dispute that drilling operations had discontinued as of December
31,
2012,
PostRock
contends
that
any
contractual
arrangement
between it and Black Land terminated on that date.
The issues involved here are more nuanced than PostRock’s
argument suggests.
Certainly, the Primary Term of the parties’
contractual arrangement concluded on December 31, 2012. That is to
say, PostRock could no longer enter Black Land’s property to
extract oil and gas as of that date.
However, not all of the
parties’ obligations ceased at the conclusion of the Primary Term.
For example, both parties agree that their obligation to keep
confidential the financial terms of their arrangement is ongoing.
Thus, the real question is not whether the Primary Term has
concluded, but rather whether PostRock’s continuing obligations
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MEMORANDUM OPINION AND ORDER GRANTING IN PART
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include an obligation to pay Black Land for additional acreage and
quiet title.
In analyzing this issue, the first question to be resolved is
whether any of the miscellaneous provisions relied on by PostRock
lengthened its time period in which to seek payment for additional
acreage and quiet title.
The second issue involves the specific
provisions affecting the parties’ obligations concerning quiet
title and additional acreage.
Court
remains
cognizant
of
In undertaking this analysis, the
“three
well-recognized
rules”
of
contract construction: “(1) that the intentions of the parties to
the agreement must control the obligations thereunder; (2) that in
searching for the intentions of contracting parties, the court must
examine the instrument in its entirety; and (3) that words are to
be considered in the context in which they are employed.” Syl. Pt.
2, Columbia Gas Transmission Corp. v. E.I. du Pont de Nemours &
Co., 217 S.E.2d 919, 920 (W. Va. 1975).
C.
Black Land points to the final phrase from the habendum
clause, which qualifies that the Primary Term of the Amended Lease
shall continue so long as “this Lease is extended by any subsequent
provision hereof, as hereinafter provided.”
It then points to
several “subsequent provisions hereof” that it contends extend the
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term of the Amended Lease, such that PostRock’s obligations never
terminated.
First, Black Land argues that the notice and demand clause
requires it to provide notice of default to PostRock as a condition
precedent to termination.
This argument, however, is contrary to
well-established law, holding that “[a] notice and demand clause in
an oil and gas lease (or other mineral lease) has no effect upon
the habendum clause or cessation of production clause of the
lease.”
McCullough Oil, Inc. v. Rezek, 346 S.E.2d 788, 795-96 (W.
Va. 1986).
And although the notice and demand clause does relate
to “contractual obligations (covenants) of the lessee under the
lease,” id. at 796, its purpose is to protect the lessee from “an
inadvertent breach of contract and an unexpected cancellation of
the lease.”
attempts
Id. at 795.
to
perpetuating
wield
the
PostRock’s
period of time.
Notwithstanding that purpose, Black Land
provision
payment
as
a
unilateral
obligations
for
means
of
an indefinite
The Court finds no support for Black Land’s
position in the notice and demand clause.
Next,
Black
Land
points
to
the
surrender
clause,
which
permitted PostRock to cancel the lease as to the entire acreage or
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any part of it at any time and for any reason.2
Although such
surrender would terminate the lease, “[n]otwithstanding anything
contained herein to the contrary, [PostRock] shall also continue to
be
bound
by
any
obligation
specified
herein
to
expiration or termination of this Restated Lease.”
survive
the
Black Land
excises this final sentence and argues that it is dispositive of
the
question
whether
PostRock’s
purported
obligations
had
terminated.
Such argument is misguided.
Under West Virginia law, courts
interpreting contracts apply the doctrine of noscitur a sociis,
which “dictates that language should be construed in accordance
with
the
words
which
are
its
associates.”
Change,
Inc.
v.
Westfield Ins. Co., 542 S.E.2d 475, 479 (W. Va. 2000) (per curiam).
Accordingly, the Court reads the final sentence of the surrender
clause as applying only in the event of termination by surrender,
rather than applying broadly to termination of any sort.
As a
result, because PostRock never exercised its right to surrender,
the final sentence of the clause was never triggered.
2
Typically, a lessee’s exercise of its right to surrender “releases
the lessee from further liability under the lease, except as to debts or
obligations existing at the time of the surrender.” 58 C.J.S. Mines and
Minerals § 296 (2015) (citing Hefner v. Light, Fuel & Power Co., 87 S.E.
206 (W. Va. 1915)).
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Even if the final sentence applied broadly to any type of
termination, it simply reflects the parties’ acknowledgment of
certain
obligations
termination.
that
would
remain
viable
even
after
Importantly, the sentence limits the universe of
those obligations to only those that are “specified herein to
survive the expiration or termination of this Restated Lease.”
In
other words, any obligation that would survive termination requires
an independent basis for its continued viability.
Thus, the final
sentence of the surrender clause adds little, if anything, to Black
Land’s position in this litigation.
Finally, Black Land relies on the waiver and confidentiality
provisions.
As noted, the parties agree that their obligations
regarding confidentiality remain intact until June 1, 2016.
The
waiver clause (which is arguably unenforceable, see Lowe’s Home
Ctrs., Inc. v. THF Clarksburg Dev. Two, LLC, No. 1:12CV72, 2014 WL
1048521, at *7 (N.D.W. Va. Mar. 18, 2014)) simply provides that a
party’s failure to exercise a given right does not preclude it from
asserting its rights in the future.
It is unclear how this ties
into Black Land’s claim to payments, or bolsters its overarching
argument.
At
bottom,
Black
Land’s
contention
that
these
miscellaneous provisions afforded it an indefinite time period
within which to assert claims to payment is a red herring.
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D.
Unlike the provisions above, the “Quality of Title” provision
in the Amended Lease, and the “Contingent Additional Lease Rental
Bonus
Payment”
provision
in
the
Settlement
Agreement,
relate
specifically to Black Land’s claim regarding the Clouded Acreage.
Notably, the Amended Lease says nothing about any payments PostRock
would owe to Black Land concerning the Clouded Acreage. Rather, it
contemplates Black Land’s efforts to quiet its title as partial
consideration for PostRock’s lump-sum rental payment.
Regardless,
so long as Black Land “initiated litigation” within “a period of
twelve (12) months” and “acted in good faith in pursuing its
claims,”
the
Amended
Lease
extended
the
time
period
for
an
“additional reasonable period of time beyond December 31, 2012
within which to conclude said litigation.”
The
“Contingent
Additional
Lease
Rental
Bonus
Payment”
provision in the Settlement Agreement supplemented the “Quality of
Title” provision by stating: “In connection with the Amended and
Restated Lease, there are 162.5 acres . . . included in the lease
premises concerning which there exist some ‘clouds.’”
As to the
time period Black Land had to quiet title, the Settlement Agreement
provided a “period of 12 months from the date hereof.”
Payment for
the Clouded Acreage was contingent on Black Land being “successful
18
BLACK LAND MGMT., INC. v. POSTROCK E. PROD., LLC
1:15CV24
MEMORANDUM OPINION AND ORDER GRANTING IN PART
AND DENYING IN PART DEFENDANT’S MOTION TO DISMISS
in obtaining good and marketable title as normally accepted within
the oil and gas industry.”
As in the Amended Lease, the Settlement Agreement went on to
provide that, “in the event that Black Land has within said 12
month period initiated litigation . . . , then Black Land shall
have an additional period of time until December 31, 2012 within
which to obtain good and marketable title to said mineral interests
and receive payment therefor from [PostRock].”
It continued by
providing that, if litigation had commenced but not concluded
before December 31, 2012, and Black Land had prosecuted the actions
diligently, “then Black Land shall have an additional reasonable
period of time beyond December 31, 2012 within which to conclude
said litigation.”
Black Land alleges that it “initiated litigation to quiet
title on the Brewster and Goodwin Tracts before June 14, 2012.”
(Dkt. No. 15 at 8).
Notably, the Amended Lease suggested that
litigation had to be commenced by November 11, 2011; however, the
Settlement Agreement unquestionably extended this deadline to June
14, 2012, by describing the time period as “12 months from the date
hereof.”
Because Black Land initiated its quiet title litigation
within the requisite time period, and there is no indication that
it did not prosecute the action diligently, the only question is
19
BLACK LAND MGMT., INC. v. POSTROCK E. PROD., LLC
1:15CV24
MEMORANDUM OPINION AND ORDER GRANTING IN PART
AND DENYING IN PART DEFENDANT’S MOTION TO DISMISS
whether it “conclude[d] said litigation” within “an additional
reasonable period of time beyond December 31, 2012.”
Black Land obtained judgments quieting its title to the two
tracts on August 13, 2013, and July 9, 2014.
PostRock does not
contend that this additional time was unreasonable.
Rather, it
cites a decision of the Supreme Court of Appeals of West Virginia
from more than a century ago for the proposition that, “if there is
no provision therein contained requiring and [sic] boring of
another well after the first unsuccessful attempt is completed and
abandoned, the least [sic] becomes invalid, and of no binding force
as to any of its provisions.”
Syl. Pt. 3, Steelsmith v. Gartlan,
29 S.E. 978 (1898).
PostRock’s reliance on Steelsmith makes little sense in light
of its concession that “the parties intended that certain, limited
rights and duties would survive the expiration or termination of
the Amended Lease.”
(Dkt. No. 22 at 7).
Based on the terms of the
Amended Lease and Settlement Agreement as discussed above, this
Court has little difficulty finding mutual intent to extend Black
Land’s opportunity to quiet title beyond the expiration of the
Primary Term.
Therefore, the Court DENIES IN PART PostRock’s
motion to dismiss as to the Clouded Acreage.
20
BLACK LAND MGMT., INC. v. POSTROCK E. PROD., LLC
1:15CV24
MEMORANDUM OPINION AND ORDER GRANTING IN PART
AND DENYING IN PART DEFENDANT’S MOTION TO DISMISS
E.
Turning
to
the
additional
acreage,
the
“Paid-up
Rental
Payments” and “Additional Acreage” provisions in the Amended Lease
relate specifically to PostRock’s obligation to pay Black Land for
acres not set forth in the agreement but subsequently proven.
In
this regard, paragraph 5(b) states that, “if [PostRock] determines,
or [Black Land] proves, that there is acreage within the Premises
in excess of the acreage recited herein, then the Rental Payment
will be adjusted proportionally in accordance with paragraph 6
below, and
discovery
an
adjustment
of such
acreage
promptly
paid
variance.”
to [Black
Paragraph
Land]
6,
upon
in turn,
provides that the amount of $2500 per acre “shall also apply to any
additional acreage as provided for in paragraph 5(b).”
In contrast to the quiet title provisions, the additional
acreage provisions do not contemplate any extension of time.
Indeed, the context within which PostRock’s obligation is couched
strongly suggests that the obligation expired with the Primary
Term. Paragraph 5(b) states: “This is a paid-up Restated Lease and
shall, subject to the terms and conditions of this Restated Lease,
remain in full force and effect during the Primary Term, with no
additional Rental Payment being due hereunder.”
(Dkt. No. 9 at 3)
(emphasis added). Moreover, paragraph 6, which primarily discusses
21
BLACK LAND MGMT., INC. v. POSTROCK E. PROD., LLC
1:15CV24
MEMORANDUM OPINION AND ORDER GRANTING IN PART
AND DENYING IN PART DEFENDANT’S MOTION TO DISMISS
PostRock’s right of first refusal to lease subsequently acquired
acreage, provides that, “[i]n all events, [PostRock’s] option as
described herein shall expire on December 31, 2012.” Id. at 4
(emphasis added).
PostRock
had
a
These provisions undermine any contention that
prolonged
obligation
to
pay
Black
Land
for
additional acreage.
Nor does Black Land’s pre-termination notification of its
intent to pursue payment for additional acreage save the claim.
The plain language of the Amended Lease required Black Land to
“prove” additional acreage.
No proof existed until both parties
received the surveys, which occurred after the expiration of the
Primary Term.
Therefore, the Court GRANTS IN PART PostRock’s
motion as to the additional acreage.
IV.
In conclusion, for the reasons discussed, the Court GRANTS IN
PART PostRock’s motion as to any claims premised on the additional
acreage, and DENIES IN PART PostRock’s motion as to any claims
premised on the Clouded Acreage.
It is so ORDERED.
22
BLACK LAND MGMT., INC. v. POSTROCK E. PROD., LLC
1:15CV24
MEMORANDUM OPINION AND ORDER GRANTING IN PART
AND DENYING IN PART DEFENDANT’S MOTION TO DISMISS
The
Court
directs
the
Clerk
to transmit
copies
of
Memorandum Opinion and Order to counsel of record.
DATED: June 19, 2015.
/s/ Irene M. Keeley
IRENE M. KEELEY
UNITED STATES DISTRICT JUDGE
23
this
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