Scenicview Estates, LLC v. Eclipse Resources I, LP

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF OHIO

EASTERN DIVISION

SCENICVIEW ESTATES, LLC,

Plaintiff, :

Case No. 2:19-cv-39

v.

Judge Sarah D. Morrison

Magistrate Judge Chelsey M.

Vascura

ECLIPSE RESOURCES I, LP,

et al., :

Defendants.

OPINION AND ORDER

This dispute centers on a 2012 oil and gas lease, and whether that lease

continues in effect today. The case is before the Court on Plaintiff Scenicview

Estates, LLC’s Partial Motion for Summary Judgment (Pl.’s Mot., ECF No. 49) and

Defendants Eclipse Resources I, LP and IOG Resources, LLC’s Motion for Summary

Judgment1 (Defs.’ Mot., ECF No. 48). Both motions are fully briefed and ripe for

consideration. For the reasons that follow, the Court finds that the lease continues

in effect and that Defendants’ allegedly improper activities on the subject property

were authorized under its terms. Accordingly, Defendants’ Motion is GRANTED

and Scenicview’s Motion is DENIED.

1 Defendants request oral argument on their motion. (See Defs.’ Mot., 1.) The

Court does not find argument to be necessary. Accordingly, the request is DENIED.

I. FACTUAL BACKGROUND

A. The Lease

Sonja M. Taylor and Eclipse entered into an Oil and Gas Lease dated

September 19, 2012. (Lease, ECF No. 48-3.) Subject to the Lease terms, Ms. Taylor

leased to Eclipse “all the oil and gas . . . contained in, associated with, emitting

from, or underlying the” 43.919 acres of Monroe County land constituting the

“Leasehold.” (Id., § 1, Schedule 1.) The Lease provides, in relevant part, as follows:

3. LEASE TERM: This Lease shall remain in force for a primary term

of five (5) years from the Lease Date (the “Primary Term”), and shall

continue beyond the Primary Term (or any extension thereof) . . . for so

long thereafter as . . . operations are conducted on the Leasehold or

lands pooled or unitized therewith in search of oil, gas, or their

constituents[.]

* * *

4. NO AUTOMATIC TERMINATION OR FORFEITURE:

(A) CONSTRUCTION OF LEASE: The language of this Lease shall

never be read or construed as language of special limitation. This

Lease shall be construed against termination, forfeiture, cancellation

or expiration and in favor of giving effect to the continuation of this

Lease where the circumstances exist to maintain this Lease in effect

under any of the alternative mechanisms set forth herein. In

connection therewith, . . . the Lessee shall be deemed to be conducting

operations in search of oil or gas, or their constituents, if the Lessee is

engaged in geophysical and other exploratory work, including, but not

limited to, activities to drill an initial well, to drill a new well, or to

rework, stimulate, deepen, sidetrack, frac, plug back in the same or

different formation or repair a well or equipment on the Leasehold or

any lands pooled or unitized therewith (such activities shall include,

but not be limited to, performing any preliminary or preparatory work

necessary for drilling, conducting internal technical analysis to initiate

and/or further develop a well, [and] obtaining permits and approvals

associated therewith . . . ).

* * *

14. UNITIZATION AND POOLING: Lessor grants Lessee the right to

pool, unitize or combine all or parts of the Leasehold with other lands,

whether contiguous or not contiguous, leased or unleased, whether

owned by Lessee or by others, at a time before or after drilling to

create drilling or production units either by contract right or pursuant

to governmental authorization. Pooling or unitizing in one or more

instances shall not exhaust Lessee’s pooling and unitizing rights

hereunder, and Lessee is granted the right to change the size, shape,

and conditions of operation or payment of any unit created. . . .

(Id., §§ 3, 4, 14.) Attached to the Lease as Exhibit A is an “Addendum,” which adds

to and modifies certain terms in the base Lease:

CONFLICT BETWEEN TERMS: In the event of a conflict or

inconsistency between any of the terms and conditions contained in

this Addendum and the other terms and conditions contained in the

Lease, the terms and provisions contained in this Addendum shall be

controlling.

* * *

POOLED PRODUCTION UNIT LIMIT: In the event Lessee desires

to pool or unitize the Leasehold with other lands and there is no

spacing order previously established by a governmental or regulatory

body, Lessee shall not have the right to form a production unit, . . .

with respect to a proposed horizontal well, that is larger than 640 acres

(plus a l0% variance) . . . without the express written consent of Lessor.

* * *

COMPLIANCE WITH LAWS: Lessee shall at all times comply with

all applicable federal, state and local laws and regulations relative to

its operations conducted on the Leasehold.

(Id., Ex. A.)

Ms. Taylor assigned her interest in the Lease to Scenicview in a Quit Claim

Deed dated July 14, 2015. (ECF No. 49-2.) Eclipse assigned its interest in the Lease

to SEG-ECR LLC, which later assigned the interest to IOG Resources. (See ECF No.

36, ¶¶ 36–37; ECF No. 51.)

B. The Shroyer Unit

In 2014, Eclipse pooled 19.84 acres of the Leasehold into a drilling unit

known as the Shroyer Unit.2 (Smith Dep., 17:7-21, ECF No. 43-1.) Later that year,

a well was drilled, and the Shroyer Unit began producing. It is undisputed that the

Lease continues in effect as to the acreage included in the Shroyer Unit. U/d., 17:18—

21. See also Pl.’s Mot., 3.) Accordingly, any reference to the Leasehold from this

point forward will be limited to the acreage not pooled into the Shroyer Unit (see

illustration below), unless expressly stated otherwise.

Leasehold — Property Tax Parcel ID 18-034005.0000

GO

mo

□

(ECF No. 48-12, PAGEID # 1042, modified to show the Leasehold and Shroyer Unit

boundary.)

2 According to Defendants, the Shroyer Unit contains only 16.712 acres of the

Leasehold. (Defs.’ Mot., 1.) The discrepancy is unexplained, but irrelevant.

C. The Ballpark Unit

By April 2017, Eclipse was working to create a drilling unit next to the

Shroyer Unit. (See Defs.’ Mot., Exs. 2–3.) The Ballpark Unit, as it became known,

was the intended site of two horizontal natural gas wells—Ballpark 2H and

Ballpark 4H—that shared a well pad with the wells located on the Shroyer Unit.

(See, e.g., Defs.’ Mot., Ex. 12.)

Eclipse planned the Ballpark Unit between two existing drilling units—the

Shroyer Unit and CNX Gas Company’s Switz27 Unit. (See Defs.’ Mot., Ex. 3.) In

late-March and April 2017, Eclipse negotiated with CNX to obtain a working

interest in CNX-controlled acreage it hoped to include in the Ballpark Unit and to

ensure adequate spacing between the proposed Ballpark wells and the existing

Switz27 wells. (See Defs.’ Mot., Exs. 2–4, 6.) Eclipse continued work investigating

title and working interest rights in the proposed Ballpark Unit acreage through

June and July 2017. (See Defs.’ Mot., Exs. 7–8.)

In late-July 2017, Eclipse finalized preliminary cost analyses on the Ballpark

2H and 4H wells. (Defs.’ Mot., Ex. 11.) The resulting Authorizations for

Expenditures (“AFEs”) projected the total costs for each well to be $11,164,125 and

$11,156,886, respectively. (Id.) Eclipse then sent the AFEs and “preliminary unit

plats” to two additional companies with working interests inside the proposed

unit—Triad Hunter, LLC and Hess Ohio Developments, LLC—seeking their

participation in the project. (Defs.’ Mot., Exs. 12–13.)

Also in late-July, Eclipse engaged Diversified Engineering to survey the land

comprising the Ballpark Unit and prepare a plat map. (Lambert Dep., 27:16–21,

ECF No. 47.) That process involved on-site field work3 (see, e.g., id., 17:3–25),

courthouse research (see, e.g., id., 22:5–10), and map drafting (see, e.g., id., 20:2–14,

23:7–15). Diversified Engineering produced a preliminary plat map for Eclipse’s

review on September 26, 2017. (Id., 27:20–21.)

On September 15, 2017, Eclipse filed a Declaration of Pooling and Unitization

(“DPU”) for the Ballpark Unit with the Monroe County Recorder’s Office.4 (Defs.’

Mot., Ex. 14.) The DPU—which lists thirty leases, including the Lease here at

issue—purports to “pool and unitize all rights and formations covered by the [listed

leases] in the [Ballpark] Unit to the extent of [Eclipse’s] rights therein[.]” (Id., 2.)

Marty Byrd, former Eclipse Senior Vice President of Land, testified in his deposition

that the company filed DPUs “as a courtesy and a convenience . . . to put . . . third

parties on notice that there’s a unit out here[.]” (Byrd Dep., 40:2–4.) Mr. Byrd

represented that it was his practice to “make sure that [a] DPU is [filed of record]

before we drill so we don’t have somebody in there buying our leases and

encroaching on our unit[.]” (Id., 40:25–41:2.)

Around the same time, Eclipse engaged Precision Rathole to install cellars for

the Ballpark wells. (Morris Dep., 18:1–5, ECF No. 46.) A cellar allows underground

access to the rig location and constitutes the “first step of a drilling operation[.]”

(Id., 18:14–19:3, 20:14–16.) The Ballpark 2H and 4H cellars were dug over

3 Diversified Engineering did not perform an on-site survey of the Leasehold

for its work on the Ballpark Unit, because the parcel had been surveyed in

connection with the Shroyer Unit development. (Lambert Dep., 34:2–14.)

4 The Ballpark Unit DPU was subsequently amended several times. (Byrd

Dep., 42:1–11. See also ECF No. 44-6.)

September 17 and 18, and cement was poured on September 19—the fifth

anniversary of the execution of the Lease. (Id., 23:9–24:19.)

II. PROCEDURAL BACKGROUND

Scenicview first filed this action against Eclipse and SEG-ECR in state court

on December 3, 2018. (See ECF No. 1.) Defendants timely removed the case to this

Court on the basis of diversity of citizenship. (Id.) Shortly thereafter, Scenicview

filed the operative Amended Complaint, asserting the following claims against

Eclipse and SEG-ECR:

• Count 1: Declaratory Judgment (termination of the Lease as to the

Remaining Property by its terms)

• Count 2: Declaratory Judgment (termination of the Lease as to the

Remaining Property by breach of the implied covenant of good faith

and fair dealing)

• Count 3: Breach of Contract/Implied Covenant of Good Faith and Fair

Dealing

• Count 4: Quiet Title

• Count 5: Ejection

• Count 6: Trespass

• Count 7: Conversion

• Count 8: Slander of Title

(Am. Compl., ECF No. 14.) Eclipse and SEG-ECR moved to dismiss the Amended

Complaint for failure to state a claim upon which relief may be granted. (ECF No.

19.) This Court denied the motion, concluding that the Amended Complaint pleaded

sufficient factual allegations to support Scenicview’s claims, when taken as true.

(ECF No. 33.) SEG-ECR has since been dismissed and substituted with IOG

Resources as successor-in-interest. (ECF No. 51.)

Eclipse and IOG Resources now move for summary judgment on all claims

asserted against them. (See Defs.’ Mot., generally.) Scenicview moves for summary

judgment as to Counts 1 (Declaratory Judgment—Lease Termination), 4 (Quiet

Title), 6 (Trespass), and 7 (Conversion). (See Pl.’s Mot., generally.)

III. STANDARD OF REVIEW

Summary judgment is appropriate when “there is no genuine dispute as to

any material fact and the movant is entitled to judgment as a matter of law.” Fed.

R. Civ. P. 56(a). The movant has the burden of establishing there are no genuine

issues of material fact, which may be achieved by demonstrating the nonmoving

party lacks evidence to support an essential element of its claim. Celotex Corp. v.

Catrett, 477 U.S. 317, 322–23 (1986); Barnhart v. Pickrel, Schaeffer & Ebeling Co.,

12 F.3d 1382, 1388–89 (6th Cir. 1993). The burden then shifts to the nonmoving

party to “set forth specific facts showing that there is a genuine issue for trial.”

Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250 (1986) (quoting Fed. R. Civ. P.

56). When evaluating a motion for summary judgment, the evidence must be viewed

in the light most favorable to the non-moving party. Adickes v. S.H. Kress & Co.,

398 U.S. 144, 157 (1970).

A genuine issue exists if the nonmoving party can present “significant

probative evidence” to show that “there is [more than] some metaphysical doubt as

to the material facts.” Moore v. Philip Morris Cos., 8 F.3d 335, 339–40 (6th Cir.

1993). In other words, “the evidence is such that a reasonable jury could return a

verdict for the non-moving party.” Anderson, 477 U.S. at 248; see also Matsushita

Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986) (concluding that

summary judgment is appropriate when the evidence could not lead the trier of fact

to find for the non-moving party).

IV. ANALYSIS

Although each of the eight claims asserted in the Amended Complaint has a

unique set of elements under Ohio law5, the parties seem to agree that none are

viable if Defendants are found to have conducted their business in accordance with

the terms of the Lease. (See Defs.’ Mot., generally; Pl.’s Mot., generally.) Because the

Court concludes that they have, a claim-by-claim analysis is not necessary.

Oil and gas “leases are contracts, and the terms of the contract with the law

applicable to such terms must govern the rights and remedies of the parties.”

Shutway v. Chesapeake Expl., LLC, 134 N.E.3d 721, 729 (Ohio Ct. App. 2019)

(internal quotation and citation omitted). “Under Ohio law, the interpretation of

written contract terms, including the determination of whether those terms are

ambiguous, is a matter of law for initial determination by the court.” Savedoff v.

Access Grp., Inc., 524 F.3d 754, 763 (6th Cir. 2008). “[A] contract is ‘unambiguous’ if

a reviewing court ‘can give a definite legal meaning’ to the contract’s terms.” United

States v. Ohio, 787 F.3d 350, 353 (6th Cir. 2015) (quoting Westfield Ins. Co. v.

Galatis, 797 N.E.2d 1256, 1261 (Ohio 2003)). Where a contract’s terms are not

ambiguous, the interpreting court must apply the plain language of the contract.

5 Federal courts sitting in diversity apply state substantive law. Erie R. Co. v.

Tompkins, 304 U.S. 64 (1938). The forum state’s choice-of-law rules determine

which state’s substantive law will apply. Miller v. State Farm Mut. Auto. Ins. Co.,

87 F.3d 822, 824 (6th Cir. 1996). Where, as here, “‘neither party argues that the

forum state’s choice-of-law rules require the court to apply the substantive law of

another state, the court should apply the forum state’s substantive law.’” Wilkes

Assocs. v. Hollander Indus. Corp., 144 F. Supp. 2d 944, 949 n.4 (S.D. Ohio 2001)

(quoting ECHO, Inc. v. Whitson Co., Inc., 52 F.3d 702, 707 (7th Cir. 1995)).

Consequently, the Court applies the substantive law of Ohio.

Savedoff, 524 F.3d at 763. “When interpreting a contract, the court must give effect

to the intent of the parties to the agreement which is presumed to be mirrored in

the language used within the four corners of the agreement.” Shutway, 134 N.E.3d

at 729 (citing Westfield, 797 N.E.2d at 1261)). “The meaning of a contract is to be

gathered from a consideration of all its parts, and no provision is to be wholly

disregarded as inconsistent with other provisions unless no other reasonable

construction is possible.” Henry v. Chesapeake Appalachia, L.L.C., 739 F.3d 909,

912 (6th Cir. 2014) (quoting Karabin v. State Auto Mut. Ins. Co., 462 N.E.2d 403,

406 (Ohio 1984)).

The Primary Term of the Lease was set to expire on September 19, 2017,

unless certain conditions extending the Lease were met. The question now

presented is whether, as of that date, “operations [were being] conducted on the

Leasehold or lands pooled or unitized therewith in search of oil, gas, or their

constituents.” (Lease, § 3(i).) The Lease defines “conducting operations in search of

oil or gas, or their constituents” to include “geophysical and other exploratory work,

including, but not limited to, activities to drill an initial well . . . on the Leasehold or

any lands pooled or unitized therewith[.]” (Id., § 4(A)(ii).) Such activities include,

but are not limited to, “performing any preliminary or preparatory work necessary

for drilling, conducting internal technical analysis to initiate and/or further develop

a well, [and] obtaining permits and approvals associated therewith[.]” (Id.)

The Lease also sets out Eclipse’s rights with respect to pooling and unitizing6

the Leasehold with other lands. The base Lease grants Eclipse

the right to pool, unitize or combine all or parts of the Leasehold with

other lands, whether contiguous or not contiguous, leased or unleased,

whether owned by Lessee or by others, at a time before or after drilling

to create drilling or production units either by contract right or

pursuant to governmental authorization.

(Id., § 14.) This right is subject to any “conflict[ing] or inconsisten[t]” terms set out

in the Addendum. (Id., Ex. A.) Specific to pooling and unitization, the Addendum

provides that Eclipse would be required to obtain Ms. Taylor’s express written

consent to pool or unitize the Leasehold with other lands to form a production unit

for a horizontal well that is larger than 640 acres. (Id.) And, generally, the

Addendum provides that Eclipse “shall at all times comply with all applicable

federal, state and local laws and regulations relative to its operations conducted on

the Leasehold.” (Id.)

Defendants argue that, as of September 19, 2017, they were “conducting

operations” “on the Leasehold or lands pooled or unitized therewith,” sufficient to

extend the Primary Term. Defendants point to the planning (see Defs.’ Mot. Exs. 2–

4, 6, 12–14); budgeting (see Defs.’ Mot., Ex. 11); title research (see Defs.’ Mot. Exs.

6 “‘Pooling’ and ‘unitization’ are terms of art in the oil and gas industry:

‘[P]ooling refers to the aggregation of two or more tracts of land into a

drilling unit of prescribed size . . . . Unitization . . . refers to the

combination of most, if not all, of the separate tracts in the field into

one tract so that the reservoir may be operated without regard to

surface property lines.’”

Henry, 739 F.3d at 910, n. 1 (quoting Williams & Meyers, Oil and Gas Law § 901).

7–8, 25); surveying, mapping, and platting (see Lambert Dep., 15:14–24, 17:3–21,

18L4–6, 20:8–21:1, 21:3–8, 21:15–22:1, 27:16–21; Defs.’ Mot Exs. 10, 23–24); and

cellar construction (see Morris Dep., 12:1–5, 23:9–21; Defs.’ Mot. Ex. 17)—all with

respect to the Ballpark Unit—that took place between March and September 2017.

In their view, this is precisely the “preliminary or preparatory work necessary for

drilling” that the parties intended would trigger the Lease extension. (Defs.’ Mot.,

13–14.)

Scenicview does not disagree that these activities could constitute

“operations.” (Pl.’s Resp., 10, ECF No. 53.) Instead, it argues that the activities did

not extend the Lease because they were not conducted “on the Leasehold or lands

pooled or unitized therewith.” (Id., 9.) In particular, Scenicview notes that (i) the

operations were not conducted literally on the Leasehold (see id., 2 (“Th[e] fact of

where the operations occurred is crucial.”)), and (ii) the Ballpark Unit was not a

valid production unit under Ohio law as of September 19, 2017, because, as of that

date, the proposed unit contained acreage in which Eclipse did not own a working

interest (id., 12).

The Court finds that, under the clear and unambiguous terms of the Lease

(including the Addendum), Defendants “conducted operations” “on the Leasehold or

lands pooled or unitized therewith” such that the Lease did not expire on September

19, 2017. The Court’s analysis starts with the provision of the Lease advising that it

“shall be construed against . . . expiration and in favor of giving effect to the

continuation of th[e] Lease where the circumstances exist to maintain [it] in

effect[.]” (Lease, § 4(A).) See Lutz v. Chesapeake Appalachia, L.L.C., 71 N.E.3d 1010,

1012 (Ohio 2016) (quoting Skivolocki v. E. Ohio Gas Co., 313 N.E.2d 374, syllabus

(Ohio 1974)) (“It is a well-known and established principle of contract interpretation

that ‘[c]ontracts are to be interpreted so as to carry out the intent of the parties, as

that intent is evidenced by the contractual language.’”).

Next, the Court considers whether, as of September 19, 2017, Defendants

conducted operations on the Leasehold or lands pooled or unitized therewith. The

Lease clearly and unambiguously defines “operations” to include “preliminary or

preparatory work necessary for drilling” and “conducting internal technical

analysis.” The Lease does not require that the back-office, technical, or

administrative functions that fall within these categories be performed physically

on the Leasehold in order to constitute “operations.” Such a reading of the Lease

(which gives “operations” a wide berth by setting out a non-exhaustive but still

extensive list of qualifying activities) would be unreasonable and inconsistent with

the Lease Construction provision. Accordingly, the Court finds that Eclipse

conducted operations on the Leasehold or lands pooled or unitized therewith

sufficient to extend the Primary Term of the Lease beyond September 19, 2017.

Scenicview makes several arguments in favor of a different conclusion, but

none is availing. First, it argues that the budgeting, mapping, and platting

performed in preparation for drilling on the Ballpark Unit did not “relate to” the

Leasehold or the Lease. (Pl.’s Resp., 8–9.) A review of the record evidence shows

otherwise. Eclipse maps created as early as March 2017 show the proposed

Ballpark Unit and well laterals respectively encompassing and traversing the

Leasehold. (Defs.’ Mot., Ex. 3.) Maps and budgeting sent in August 2017 to

neighboring-interest-holders, seeking their participation in the proposed Ballpark

Unit, show the same. (Defs.’ Mot., Exs. 12–13.) As further support for the

proposition that the preliminary and preparatory work relates to the Lease, the

DPU lists the Leasehold as one of thirty parcels intended to be included in the

Ballpark Unit. (Defs.’ Mot. Ex. 14.)

Scenicview further argues that the Compliance with Laws provision in the

Addendum required Eclipse to fully establish the Ballpark Unit as a drilling unit

recognized by the Ohio Department of Natural Resources (“ODNR”) for the

Leasehold to be considered pooled or unitized with other lands. (See, e.g., Pl.’s Mot.,

generally.) In other words, Scenicview takes the position that, because the Ballpark

Unit was intended to include lands in which Eclipse did not own a working interest

as of September 19, 2017, the Leasehold would not be a part of the Ballpark Unit

unless and until ODNR issued a mandatory unitization order pursuant to Ohio Rev.

Code § 1509.28.7 The Court disagrees. 8 The base Lease explicitly permits Eclipse to

7 Scenicview’s logic is circular; it demands that a process requiring significant

preparatory work be complete before the preparatory work can begin. The Court is

not persuaded that the Ballpark Unit was “not valid” under Ohio law as of

September 19, 2017—Eclipse had not yet applied to ODNR to test the validity of the

unit. Ohio Rev. Code § 1509.28, discussing the “forced unitization” of lands by

ODNR, cannot render invalid a unit for which ODNR has received no application.

8 To the extent this conclusion may be viewed as running counter to the

March 26, 2020 Opinion and Order on Defendants’ Motion to Dismiss (ECF No. 33),

the Court notes that the analysis therein was limited to testing the sufficiency of

the Amended Complaint. See United States ex rel. Holbrook v. Brink’s Co., 336 F.

Supp. 3d 860, 867–68 (S.D. Ohio 2018) (Marbley, J.) (rejecting plaintiff’s argument

pool or unitize “the Leasehold with other lands, whether contiguous or not

contiguous, leased or unleased, whether owned by [Eclipse] or by others, at

a time before or after drilling to create drilling or production units either by

contract right or pursuant to governmental authorization.” (Lease, § 14, emphasis

added.) The Addendum explicitly modifies that provision, adding only that Eclipse

must obtain written consent if the unit exceeds a certain size. Scenicview asks the

Court to interpret the provision of the Addendum requiring Eclipse to comply with

applicable law as implicitly requiring Eclipse to initiate and complete a specific

state agency-directed process before considering the Leasehold to be part of a

drilling unit for purposes of Lease provisions discussing preliminary or preparatory

work. The Court declines to do so.

The invocation of Filicky v. Am. Energy-Utica, LLC, 645 F. App’x 393 (6th

Cir. 2016) does not save Scenicview’s argument. Scenicview’s Response to

Defendants’ Motion aptly summarizes Filicky:

In Filicky, the plaintiff’s lease required the lessee to record a DPU to

unitize plaintiff’s land into a drilling unit. Id. at 394. The lessee, Hess,

filed a DPU unitizing plaintiff’s land into the “Smith Unit,” but no well

was ever completed. Id. at 394–95. Hess later assigned the plaintiff’s

lease and the Smith Unit to American Energy-Utica, LLC

(“American”). Id. at 395. American created a new drilling unit

containing plaintiff’s land called the “Eureka Unit.” Id. However,

American did not record a DPU for the Eureka Unit and did not record

an amendment to the prior Smith Unit DPU until six months after

plaintiff’s lease expired. Id.

Analogous to the case at bar:

that the court’s factual findings in an opinion on a motion to dismiss under Rule

12(b)(6) were binding for purposes of a motion for summary judgment under Rule

56(a), or that those findings established “the law of the case”).

the dispositive issue is whether [plaintiff’s] land was

included in a valid pooled unit for the Eureka well. If

[plaintiff’s] land was properly pooled with land on which

American spudded the Eureka well, her lease would be

extended because these “drilling operations” took place

before the expiration of the lease. If her land was not

pooled, American’s drilling operations had no effect on

[plaintiff’s] lease and it expired at the end of its

primary term.

Id. (emphasis added.)

The court found that the plaintiff’s lease required American to record a

DPU to unitize the plaintiff’s land and lease into a unit. Id. at 398. The

recording of the DPU for the Smith Unit was not sufficient to unitize

the plaintiff’s land into the Eureka Unit because the Eureka Unit was

not the same configuration as the Smith Unit. Id. at 397. Because the

plaintiff’s land was not pooled into the Eureka Unit, even the spudding

of the Eureka well, which occurred the day before plaintiff’s lease

expired, “did not extend [plaintiff’s] lease beyond the primary term.”

Id. at 398.

(Pl.’s Resp., 11.) But Scenicview’s added emphasis skips the most important part—

namely, the language of the lease itself:

The amended lease contained a “Pooling Clause” which outlined a

formal recording procedure to “pool” Filicky’s land into a distinct unit:

6. Lessee hereby is given the right at its option, at any

time within the primary term hereof or at any time which

this lease may be extended by any provision hereof, and

from time to time within such period, to pool, reform,

enlarge and/or reduce such unit or pool . . . . Each unit or

reformation thereof may be created by governmental

authority or by Lessee recording in the county recorder’s

office a Declaration containing a description of the pooled

acreage. Any well which is commenced, or is drilled, or is

producing on any part of any land theretofore or

thereafter so pooled shall, except for payment of royalties,

be considered a well commenced, drilled, and producing

on leased premises under this lease[.]

Thus, Filicky’s land could be pooled only by governmental authority

(via forced pooling), or where the lessee recorded a “Declaration

containing a description of the pooled acreage” in the Belmont County

Recorder’s Office.

Filicky, 645 F. App’x at 394.

Thus, the lease in Filicky explicitly required the lessee to follow a specific

procedure to successfully incorporate the subject property into a drilling unit. The

situation here is very different. While the Sixth Circuit gave effect to the express

terms of Ms. Filicky’s lease, Scenicview asks this Court to read an additional

requirement into its Lease despite (i) a broadly drafted pooling and unitization

provision in the base Lease, (ii) an explicit and narrow modification to that

provision in the Addendum, and (iii) a Lease Construction provision disfavoring

expiration where circumstances exist to maintain the Lease in effect. To read the

Lease in such way would run counter to established Ohio law on contract

interpretation.

V. CONCLUSION

For the reasons set forth above, Defendants’ Motion for Summary Judgment

(ECF No. 48) is GRANTED. Accordingly, Scenicview’s Partial Motion for Summary

Judgment (ECF No. 49) is DENIED. The Clerk is DIRECTED to TERMINATE

this case from the docket records of the United States District Court for the

Southern District of Ohio.

IT IS SO ORDERED.

/s/ Sarah D. Morrison

SARAH D. MORRISON

UNITED STATES DISTRICT JUDGE