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Judge dismisses lawsuit that challenged lease practices of oil companies

FPS staff report

A lawsuit filed in Carroll County Common Pleas Court last March by some 92 Carroll County landowners against Chesapeake Exploration LLC of Cleveland and 15 other defendants challenging oil companies’ lease practices has been dismissed by the judge assigned to hear the case.

In a journal entry filed Jan. 14, Judge Richard M. Markus, a retired Cuyahoga County Common Pleas Judge, denied and dismissed Count one of the complaint filed March 22, 2012, by Joseph Coniglio of 10142 Mecca Rd., Kensington, in Carroll County Common Pleas court along with 91 other party plaintiffs, against Chesapeake Exploration, LLC of Cleveland and 11 other defendants.

The claim sought a declaration by the Court that under Paragraph 14 of the leases, the plaintiffs would be permitted to proceed to consummate a transaction with a third-party if Chesapeake failed to match any bona fide third-party offer received by the plaintiffs.

In denying summary judgment motions, Judge Markus explained the Court’s interpretation of the disputed terms in an opinion of Nov. 15, 2012, in which he said:

“This Court concludes as a matter of law that paragraph 14 of the Amstutz lease gives the plaintiff-landowner-lessors a right to accept a competitor’s offer during the primary term and during the first year after all other lease rights end, if Chesapeake fails to match that competitor’s offer pursuant to paragraph 14, provided that the replacement lease cannot interfere with Chesapeake’s rights to maintain inactive speculation during the primary term, or its rights to maintain continuing operations or production under paragraphs 12 and 13”.

As a result of that opinion, the plaintiffs’ counsel filed a motion to enforce the Letter Agreement with a judgment that complied with its provisions, in order to facilitate the plaintiff’s appeal from that ruling.

On Jan. 2, 2013, counsel for Chesapeake Exploration, LLC and CHK Utica, LLC opposed that motion, arguing that the Court (Judge Markus) cannot enter a judgment regarding a landowner’s right to accept a competitor’s offer until there is a valid good faith offer which they are asked to match.

In disagreeing with the defense motion, Judge Markus noted the parties sought a judicial determination of the meaning and effect of disputed contract language to govern their past or future negotiations with other persons, if and when those negotiations were or are meaningful.

“The Letter Agreement demonstrates that the parties wanted an answer as soon as feasible. Accordingly, they need defer the judicial response while they litigate other issues,” Judge Markus said.

“This Court has not decided whether the plaintiffs submitted to Chesapeake any bona fide competing offer because that issue was not ripe for decision in the circumstances of this case,” he added.

Therefore, he denied and dismissed Count One of the plaintiff’s complaint  as amended and entered a final judgment that denies and dismissed Count one in a counterclaim filed by Chesapeake Exploration.

Judge Markus also noted the decision whether an order is appealable rests with the appellate court and not with his Court. “If the appellate courts ultimately rule that this is not an appealable order, any party can then refile any claim according to the terms of the Letter Agreement,” he said.

The letter agreement also includes suits filed by Cynthia Koonce et al against Chesapeake Exploration in Columbiana County Common Pleas Court and William R. Green vs. Chesapeake Exploration in Stark County Common Pleas Court.

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