Dwyer et al v. Range Resources-Appalachia, L.C.C. et al

Filing 42

MEMORANDUM OPINION AND ORDER GRANTING DEFENDANT CHESAPEAKE APPALACHIA, L.L.C.'S MOTION FOR SUMMARY JUDGMENT: Granting 31 Motion for Summary Judgment; and Denying as moot 35 Motion in Limine. This Civil action to be Dismissed and Stricken from the active docket of this Court; Clerk directed to enter Judgment pursuant to FRCP 58. Signed by Senior Judge Frederick P. Stamp, Jr on 1/26/14. (soa)

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF WEST VIRGINIA
CAROL G. DWYER and
ELIZABETH ELLEN FLUHARTY,
Plaintiffs,
v.

Civil Action No. 5:14CV21
(STAMP)

RANGE RESOURCES-APPALACHIA, L.L.C.
and CHESAPEAKE APPALACHIA, L.L.C.,
Defendants.
MEMORANDUM OPINION AND ORDER
GRANTING DEFENDANT CHESAPEAKE APPALACHIA,
L.L.C.’S MOTION FOR SUMMARY JUDGMENT
I.

Procedural History

This civil action concerns the assignment of the plaintiffs’
oil and gas leases, and interpretation of certain clauses found
within the plaintiffs’ respective leases.
plaintiffs

seek

a

declaratory

portions of the lease.

judgment

In particular, the

that

would

invalidate

The plaintiffs originally filed this civil

action in the Circuit Court of Brooke County, West Virginia. After
removing the civil action to this Court, both defendants filed
motions

to

dismiss.

ECF

Nos.

7

and

11.

Range

Resources-

Appalachia, L.L.C. (“Range”) filed a motion to dismiss, arguing
that

it

had

Appalachia,

no

present

L.L.C.

interest

(“Chesapeake”)

in

the

filed

leases.
a

partial

Chesapeake
motion

to

dismiss, arguing that: (1) the purported lack of a notice of
assignment is an invalid basis to void the leases because the
plaintiffs contractually waived the notice of assignment; (2)

allegedly improper notarization of the leases fails to invalidate
them; (3) the plaintiffs’ fraudulent inducement claim is timebarred; and (4) the plaintiffs received adequate consideration.
This Court granted both defendants’ motions to dismiss.
21.

ECF No.

The plaintiffs later filed a motion to remand, which this

Court denied.
The
summary

ECF Nos. 14 and 20, respectively.

remaining
judgment

defendant,

(ECF

No.

Chesapeake,

31)

regarding

filed
the

a

motion

for

plaintiffs’

two

remaining claims. Those two claims are the following: (1) “whether
the leases are void for lack of a definite term and therefore
unconscionable” and (2) “whether the leases expired by their own
terms after five years.”

ECF No. 23.

In support of its motion,

Chesapeake first points to the language in the lease. Early in the
leases, they state that the term of the lease is five years “and so
much longer thereafter as oil, gas, and/or coalbed methane gas or
their constituents are produced or are capable of being produced on
the premises in paying quantities in the judgment of [Chesapeake].”
Later, the leases each contain a clause (“Paragraph 22”) that
states “[r]egardless of any language to the contrary, this is a
paid up lease for a period of five (5) years”. ECF No. 31 (emphasis
in

originals).

Chesapeake

claims

that

Paragraph

22

fails

to

eliminate or cancel out the terms of the first clause. Because the
leases are governed by contract law, Chesapeake argues that the
plain language of the leases must control.

2

Further, because the

terms of the leases are clear and unambiguous, Chesapeake argues
that they are not void due to a lack of a definite term.

For those

reasons, Chesapeake claims this Court should grant its motion for
summary judgment.
The plaintiffs then filed a response in opposition.
33.

The plaintiffs first argue that Paragraph 22 contradicts the

identical habendum clauses found in their leases.
both

ECF No.

leases

contain

Paragraph

22,

which

In particular,

again

states

that

“[r]egardless of any language to the contrary, this is a paid up
lease for a period of five (5) years.”
originals).

ECF No. 31 (emphasis in

The plaintiffs argue that Paragraph 22 is clear and

unambiguous, and therefore it should be given its full effect.
Given its full effect, the plaintiffs claim that Paragraph 22
restricts the leases to a term of only five years.

Further,

because Paragraph 22 allegedly is so clear and unambiguous, the
plaintiffs claim that no extrinsic evidence should be considered.
The plaintiffs also assert that the parties intended for Paragraph
22 to be considered a provision separate from the habendum clause,
rather than read in conjunction with the other provisions of the
lease.

For those reasons, the plaintiffs request that this Court

deny the motion for summary judgment.

Following the plaintiffs’

response, Chesapeake timely filed its reply.

ECF No. 34.

In that

reply, Chesapeake restates its initial arguments, and also asserts
that the parties’ intent when crafting the lease is clear by the

3

plain

language

of

the

lease.

Accordingly,

requests that this Court grant its motion.

Chesapeake

again

For the reasons set

forth below, Chesapeake’s motion is granted.
II.

Facts

The plaintiffs each entered into separate oil and gas leases
with Range, formerly called Great Lakes Energy.

Each lease

contained the following clause (“habendum clause”):
[T]his lease shall continue in force and the rights
granted hereunder be quietly enjoyed by [Chesapeake] for
a term of Five (5) Years and so much longer thereafter as
oil, gas, and/or coalbed methane gas or their
constituents are produced or are capable of being
produced on the premises in paying quantities, in the
judgment of [Chesapeake], or as the premises shall be
operated by [Chesapeake] in the search for oil, gas,
and/or coalbed methane gas[.]
ECF No. 31 Exs. 2 and 4 (emphasis in originals).

According to

their respective leases, the plaintiffs each received a “paid-up
delay rental,” where plaintiff Fluharty received $5,200.00 and
plaintiff Dwyer received $7,018.50.

Id.

Both leases also contain

Paragraph 22, referenced earlier, that states that “[r]egardless of
any language to the contrary, this is a paid up lease for a period
of five (5) years.”

Id. (emphasis in originals).

Those leases

were later assigned to Chesapeake, the current lessee.

Regarding

those assignments to Chesapeake, the plaintiffs assert that Range
assigned the leases without notifying the plaintiffs or seeking
their consent.

The plaintiffs, however, did not assert that the

4

leases

either

prohibited

the

assignments

or

required

that

Chesapeake notify the plaintiffs of any assignment.
The plaintiffs made various allegations as to why this Court
should declare the leases and subsequent assignments void.

First,

the plaintiffs asserted that John Liggett, a representative of
Range, made false representations that drilling would begin on the
plaintiffs’ property within two years.

Further, the plaintiffs

claimed that Mr. Liggett fraudulently induced the plaintiffs to
sign the lease agreements.

They argued that Mr. Liggett said that

if the plaintiffs did not immediately agree to the lease, he would
reduce the lease compensation by one half.

The plaintiffs then

alleged that the leases were wrongfully notarized.

The plaintiffs

also asserted that the leases were void for lack of adequate
consideration, calling the amount paid to the plaintiffs a “paltry
sum.”

Lastly, the plaintiffs argued that the leases were void for

lack of a definite term and unconscionable on their face because
the language of the leases permitted the defendants to possess a
leasehold interest for an indefinite time in the future.
III.
Summary

judgment

is

Applicable Law
appropriate

if

“the

pleadings,

depositions, answers to interrogatories, and admissions on file,
together with the affidavits, if any, show that there is no genuine
issue as to any material fact and that the moving party is entitled
to a judgment as a matter of law.”

5

Fed. R. Civ. P. 56(c).

The

party seeking summary judgment bears the initial burden of showing
the absence of any genuine issues of material fact.
Corp. v. Catrett, 477 U.S. 317, 322-23 (1986).

See Celotex

“The burden then

shifts to the nonmoving party to come forward with facts sufficient
to create a triable issue of fact.”

Temkin v. Frederick County

Comm’rs, 945 F.2d 716, 718 (4th Cir. 1991) (citing Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986)).
However, as the Supreme Court of the United States noted in
Anderson, “Rule 56(e) itself provides that a party opposing a
properly supported motion for summary judgment may not rest upon
the mere allegations or denials of his pleading, but . . . must set
forth specific facts showing that there is a genuine issue for
trial .” Anderson, 477 U.S. at 256.

“The inquiry performed is the

threshold inquiry of determining whether there is the need for a
trial—whether, in other words, there are any genuine factual issues
that properly can be resolved only by a finder of fact because they
may reasonably be resolved in favor of either party.”

Id. at 250;

see also Charbonnages de France v. Smith, 597 F.2d 406, 414 (4th
Cir. 1979) (Summary judgment “should be granted only in those cases
where it is perfectly clear that no issue of fact is involved and
inquiry into the facts is not desirable to clarify the application
of the law.” (citing Stevens v. Howard D. Johnson Co., 181 F.2d
390, 394 (4th Cir. 1950))).

6

In Celotex, the Court stated that “the plain language of Rule
56(c) mandates the entry of summary judgment, after adequate time
for discovery and upon motion, against a party who fails to make a
showing

sufficient

to

establish

the

existence

of

an

element

essential to that party’s case, and on which that party will bear
the burden of proof at trial.”

Celotex, 477 U.S. at 322.

Summary

judgment is not appropriate until after the non-moving party has
had sufficient opportunity for discovery.

See Oksanen v. Page

Mem’l Hosp., 912 F.2d 73, 78 (4th Cir. 1990), cert. denied, 502
U.S. 1074, 112 S. Ct. 973, 117 L.Ed.2d 137 (1992).

In reviewing

the supported underlying facts, all inferences must be viewed in
the light most favorable to the party opposing the motion.

See

Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574,
587, 106 S. Ct. 1348, 89 L.Ed.2d 538 (1986).
IV.

Discussion

As stated earlier, Chesapeake’s motion for summary judgment
concerns the two remaining claims in this civil action, which are
the following: (1) “whether the leases are void for lack of a
definite term and therefore unconscionable” and (2) “whether the
leases expired by their own terms after five years.”

ECF No. 23.

Essentially, the two remaining claims can be construed as an issue
of interpreting the language of the leases, which contain identical
provisions at issue.

7

Under West Virginia law, mineral leases, including oil and gas
leases, are considered both a conveyance and a contract.

Jolynne

Corp. v. Michels, 446 S.E.2d 494, 499-500 (W. Va. 1994).

Because

of the contractual nature of oil and gas leases, principles of
contract law generally govern their interpretation.

See id.;

Iafolla v. Douglas Pocahontas Coal Corp., 250 S.E.2d 128 (W. Va.
1978) (applying contract principles to an oil and gas lease).
Accordingly, “[a] valid written instrument which expresses the
intent of the parties in plain and unambiguous language is not
subject to judicial construction or interpretation but will be
applied and enforced according to such intent.” Syl. Pt. 1, Cotiga
Dev. Co. v. United Fuel Gas Co., 128 S.E.2d 626 (W. Va. 1962); see
also syl. pt. 2, Orteza v. Monongalia County Gen. Hosp., 318 S.E.2d
40 (W. Va. 1984) (“Where the terms of a contract are clear and
unambiguous, they must be applied and not construed.”). As defined
under West Virginia law, an ambiguity “consists of susceptibility
of two or more meanings and uncertainty as to which was intended.
Mere informality in phraseology or clumsiness of expression does
not make it ambiguous, if the language imports one meaning or
intention with reasonable certainty.”
Harden,

58

S.E.

715

(W.

Va.

1907).

Syl. Pt. 13, State v.
Phrased

another

way,

“Agreements are not necessarily ambiguous because the parties
disagree as to the meaning of the language of the agreement.”
Orteza, 318 S.E.2d at 43 (quoting Richardson v. Econo–Travel Motor

8

Hotel Corp., 553 F. Supp. 320 (E.D. Va. 1982)); see also Syl. Pt.
3, Iafolla, 250 S.E.2d at 128 (“A written contract merges all
negotiations

and

representations

which

occurred

before

its

execution, and in the absence of fraud, mistake, or material
misrepresentations extrinsic evidence cannot be used to alter or
interpret language in a written contract which is otherwise plain
and unambiguous on its face.”).
It should also be noted that, within the context of oil and
gas leases, habendum clauses similar to the one at issue are not
new or surprising.

As the Supreme Court of Appeals of West

Virginia stated, “A habendum clause in an oil and gas lease (or
other mineral lease) providing for a short primary term and a
secondary term for ‘so long as’ production in paying quantities or
operations

therefor

continue,

or

similar

language,

conveys

a

‘determinable’ interest, that is, an interest subject to a special
limitation.

Such an interest automatically terminates by its own

terms upon the occurrence of the stated event, namely, expiration
of the primary term without production or operations at such time,
or the cessation of production or operations during the secondary
term.”

McCullough Oil, Inc. v. Rezek, 346 S.E.2d 788, 794 (W. Va.

1986)); see Wilson v. Xander, 387 S.E.2d 809, 811 (W. Va. 1989).
Therefore, under West Virginia law, including habendum clauses
within oil and gas leases is a recognized practice.

9

At

first

unambiguous.

glance,

the

habendum

clauses

at

issue

appear

As provided under Berkeley County Public Service

Dist. v. Vitro Corp. of America, “[t]he question as to whether a
contract is ambiguous is a question of law to be determined by the
court.” Syl. Pt. 1, 162 S.E.2d 189 (W. Va. 1968).
habendum

clauses

clearly

provide

the

“secondary” terms found in such clauses.

standard

Here, the

“primary”

and

The plaintiffs argue,

however, that the admittedly unambiguous leases still contain
conflicting and overriding terms.

In particular, the plaintiffs

point to Paragraph 22, arguing that it restricts the duration of
the leases to only five years.

See ECF No. 31.

The plaintiffs

allege that Paragraph 22 cancels out the “secondary” term within
the habendum clause, referring to the “or so long thereafter”
portion of the clause. Thus, according to the plaintiffs, the lease
has a duration of only five years.
The plaintiffs’ argument, however, is without merit.

Looking

at the record before this Court, Paragraph 22 and the habendum
clause neither conflict nor override any of their respective
portions. Rather, Paragraph 22 only pertains to the payment of the
primary period, meaning that no further payments are necessary
during the five-year primary term.

To read that Paragraph 22

directly conflicts with the habendum clause is inaccurate.

The

plaintiffs suggest that Paragraph 22 was not intended to be read in
conjunction with the habendum clauses and other provisions within

10

the leases.

See ECF No. 33.

Under West Virginia law, that is not

how this Court is supposed to read the lease, or any contracts for
that matter. As West Virginia law provides, “‘[a] contract must be
considered as a whole, effect being given, if possible, to all
parts of the instrument.’”

Moore v. Johnson Service Co., 219

S.E.2d 315 (W. Va. 1975) (quoting Syl., Clayton v. Nicely, 182 S.E.
569 (W. Va. 1935)).

Therefore, this Court cannot, as plaintiffs

suggest, read Paragraph 22 in a vacuum.

Accordingly, considering

the lease terms as a whole, the provisions contained within the
leases are clear and unambiguous.

Giving the terms of the leases

their ordinary meaning, the habendum clauses provided a primary
term of five years, followed by the secondary term for “so much
longer thereafter as oil, gas, and/or coalbed methane gas or their
constituents are produced or are capable of being produced on the
premises in paying quantities, in the judgment of [Chesapeake].”
Further, Paragraph 22 relates to the payment for that five year
term, identifying the lease as “a paid up lease.”

That means that

no further rental payments are due during that primary term of five
years.

Because of that, the plaintiffs’ claims lack merit, and

thus Paragraph 22 does not alter the duration of the lease found
under the habendum clause.

Therefore, based on the record before

this Court, no issues of material fact exist.

Based on the law and

reasons provided above, Chesapeake’s motion for summary judgment is
granted.

11

V.
For

the

reasons

Conclusion

described

above,

Chesapeake

Appalachia,

L.L.C.’s motion for summary judgment (ECF No. 31) is GRANTED.
Accordingly, all other pending motions are hereby DENIED AS MOOT.
Further, it is ORDERED that this civil action be DISMISSED and
STRICKEN from the active docket of this Court.
IT IS SO ORDERED.
The Clerk is DIRECTED to transmit a copy of this memorandum
opinion and order to counsel of record herein. Pursuant to Federal
Rule of Civil Procedure 58, the Clerk is DIRECTED to enter judgment
on this matter.
DATED:

January 26, 2015

/s/ Frederick P. Stamp, Jr.
FREDERICK P. STAMP, JR.
UNITED STATES DISTRICT JUDGE

12