Sound Energy Company, Inc. v. Ascent Resources - Utica, LLC

IN THE UNITED STATES DISTRICT COURT

FOR THE SOUTHERN DISTRICT OF OHIO

EASTERN DIVISION

SOUND ENERGY

COMPANY, INC., et al.,

Plaintiffs,

Civil Action 2:18-cv-1771

v. Magistrate Judge Elizabeth P. Deavers

ASCENT RESOURCES –

UTICA, LLC, et al.,

Defendants.

OPINION AND ORDER

With the consent of the parties and by Order of Reference (ECF No. 10), pursuant to 28

U.S.C. § 636(c), this matter is before the Court for consideration of Plaintiffs’ Supplemental

Motion for Partial Summary Judgment on Count Two of Plaintiffs’ First Amended Complaint,

ECF No. 79 (“Plaintiffs’ Motion”), Defendant Ascent Resources – Utica, LLC’s Motion for

Summary Judgment, ECF No. 80 (“Ascent’s Motion”),1 and Plaintiffs’ Motion for Leave to File

Supplemental Authority Instanter Relating to Pending Motions for Summary Judgment, ECF No.

85 (the “Motion to File Supplemental Authority”). Each Motion has been fully briefed and is

ripe for review. (See ECF Nos. 79-85.) For the following reasons, Plaintiffs’ Motion (ECF No.

79) is DENIED, Ascent’s Motion (ECF No. 80) is DENIED, and the Motion to File

Supplemental Authority (ECF No. 85) is GRANTED.

1 Defendant Ascent Resources – Utica, LLC (“Ascent”) requested oral argument in the caption of

Ascent’s Motion. (Id.) Pursuant to S.D. Ohio Civ. R. 7.1(b)(2), the Court will hold oral

arguments if “it is deemed to be essential to the fair resolution of the case because of its public

importance or the complexity of the factual or legal issues presented.” Id. Ascent did not

expand on its request, and accordingly has not demonstrated that this matter rises to a level of

complexity necessary to justify oral argument. Moreover, the Court finds that oral argument is

not essential to the fair resolution of this matter. Accordingly, Ascent’s request is DENIED.

I. BACKGROUND

This is the second round of summary judgment briefing in this action. Previously, the

parties filed competing motions for summary judgment on all seven causes of action in the

operative First Amended Complaint. (See ECF Nos. 41-44, 67-70, 73-75.) On March 23, 2021,

the Court granted summary judgment to Defendant Carrizo (Utica) LLC on all of Plaintiffs’

claims against it, and granted summary judgment to Ascent on Counts Four (Slander of Title),

Five (Tortious Interference), and Seven (Unjust Enrichment). (ECF No. 77 (the “First Summary

Judgment Order”).) The Court found, however, that the parties had not provided enough

information for the Court to analyze Plaintiffs’ claims against Ascent in Count One (Quiet Title)

or Count Two (Breach of Contract), and denied Plaintiffs’ and Ascent’s motions without

prejudice to re-filing on those issues. (Id.) The Court ordered as follows:

Accordingly, both Plaintiffs’ Motion and Ascent’s Motion are DENIED

WITHOUT PREJUDICE as to re-filing a motion which cures the defects

identified herein with regard to Count Two of Plaintiffs’ First Amended Complaint.

Should either party choose to re-file a motion for summary judgment as to Count

Two, such motion shall be filed on or before APRIL 23, 2021, and the briefing

shall confirm which of the Sound Energy Leases are relevant to the Londonderry

Wells; which of the Sound Energy Leases are relevant to the Carrizo Leases; which

of the Sound Energy Leases are relevant to the Ascent Leases; which of the Sound

Energy Leases are relevant to the Hoop Unit; which other parcels are at issue, if

any, and to which Sound Energy Leases such parcels are subject; and which of the

Sound Energy Leases are otherwise relevant to Plaintiffs’ breach of contract claim

against Ascent.

(Id. at PAGEID ## 4633-4634 (bold emphasis in original; footnote omitted).) The Court noted

that “any subsequently filed Motion should analyze both of Plaintiffs’ remaining claims.” (Id. at

PAGEID # 4634, n.15.

On April 23, 2021, the parties filed the subject Motions. (ECF Nos. 79, 80.) On May 14,

2021, Plaintiffs filed a response in opposition to Ascent’s Motion, and on May 17, 2021, Ascent

filed a response in opposition to Plaintiffs’ Motion. (ECF Nos. 81, 82.) On May 28, 2021,

Ascent filed a reply brief, and on June 1, 2021, Plaintiffs filed a reply brief. (ECF Nos. 83, 84.)

Then, on October 28, 2021, Plaintiffs filed Plaintiffs’ Motion for Leave to File Supplemental

Authority Instanter Relating to Pending Motions for Summary Judgment, alerting the Court to

Browne v. Artex Oil Co., 5th Dist. Guernsey No. 21CA000002, 2021-Ohio-2239, appeal not

allowed, 164 Ohio St.3d 1461, 2021-Ohio-3594. (ECF No. 85.)2

The subject Motions are thus ripe for judicial review. As a preliminary matter, the Court

incorporates by reference the discussion of the relevant background as set forth in the First

Summary Judgment Order.3 (See ECF No. 77 at PAGEID ## 4344-4351.) The Court will not

rehash these facts here, and will instead focus on the relevant information and arguments

provided by the parties in the second round of summary judgment briefing.

II. STANDARD OF REVIEW

Under Federal Rule of Civil Procedure 56(a), “[t]he court shall grant summary judgment

if the movant shows that 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 burden of proving that no

genuine issue of material fact exists falls on the moving party, “and the court must draw all

reasonable inferences in the light most favorable to the nonmoving party.” Stransberry v. Air

Wisconsin Airlines Corp., 651 F.3d 482, 486 (6th Cir. 2011) (citing Vaughn v. Lawrenceburg

Power Sys., 269 F.3d 703, 710 (6th Cir. 2001); cf. Fed. R. Civ. P. 56(e)(2) (providing that if a

2 Plaintiffs indicated that they sought Defendant’s consent to filing the Browne case as

supplemental authority, but “Defendant’s counsel [had] not responded to that request.” (ECF

No. 85.) The Court notes that Defendant did not file a response in opposition to Plaintiffs’

request. Accordingly, Plaintiffs’ Motion for Leave to File Supplemental Authority Instanter

Relating to Pending Motions for Summary Judgment, ECF No. 85, is GRANTED.

3 This includes references to the relevant leases, which are defined throughout the Court’s prior

order. (See ECF No. 77 at PAGEID ## 4345-4346.) The Court incorporates these names by

reference and will refer to the relevant leases by these names throughout this Opinion and Order.

party “fails to properly address another party’s assertion of fact” then the Court may “consider

the fact undisputed for purposes of the motion”).

“Once the moving party meets its initial burden, the nonmovant must ‘designate specific

facts showing that there is a genuine issue for trial.’” Kimble v. Wasylyshyn, 439 F. App’x 492,

495-496 (6th Cir. 2011) (quoting Celotex Corp. v. Catrett, 477 U.S. 317, 324 (1986)); see also

Fed. R. Civ. P. 56(c) (requiring a party maintaining that a fact is genuinely disputed to “cit[e] to

particular parts of materials in the record”). “The nonmovant must, however ‘do more than

simply show that there is some metaphysical doubt as to the material facts,’. . . there must be

evidence upon which a reasonable jury could return a verdict in favor of the non-moving party to

create a ‘genuine’ dispute.” Lee v. Metro. Gov’t of Nashville & Davidson Cty., 432 F. App’x

435, 441 (6th Cir. 2011) (citations omitted).

In considering the factual allegations and evidence presented in a motion for summary

judgment, the Court “must afford all reasonable inferences, and construe the evidence in the light

most favorable to the nonmoving party.” Cox v. Kentucky Dep’t of Transp., 53 F.3d 146, 150

(6th Cir. 1995) (internal citation omitted). “When a motion for summary judgment is properly

made and supported and the nonmoving party fails to respond with a showing sufficient to

establish an essential element of its case, summary judgment is appropriate.” Stransberry, 651

F.3d at 486 (citing Celotex, 477 U.S. at 322–23)

III. ANALYSIS

Only two causes of action remain in dispute in this case: Count One (Quiet Title) and

Count Two (Breach of Contract). With the benefit of the parties’ additional briefing, the Court

now appreciates that “[t]he only parcels at issue within Plaintiffs’ breach of contract claim

against Ascent are those contained within the Hoop Unit” and “[a]ll other parcels covered by the

Sound Energy Leases are at issue within Plaintiffs’ quiet title claim.” (ECF No. 79-1 at PAGEID

# 4396.) But as the Court observed in the First Summary Judgment Order, “[i]f Ascent’s

expiration theory is correct . . . then Plaintiffs cannot prevail on Count One or Count Two against

Ascent, as Plaintiffs’ ORRI will have expired,” and “[o]n the other hand, if Ascent’s expiration

theory is incorrect, then Plaintiffs may prevail on these claims.” (ECF No. 77 at PAGEID #

4383.) The parties have confirmed this summary in their briefing. (ECF No. 80 at PAGEID #

4724 (“Plaintiffs’ remaining claims . . . are both premised upon the continued validity of the

Sound Energy Leases[.]”).) Accordingly, the Court begins its analysis by reviewing Ascent’s

threshold argument that the Sound Energy Leases have expired.

As Ascent explains in the second round of summary judgment briefing, there are five

leases at issue that cover the subject wells:4 the McElhaney Lease, the Bond Lease, the Angle

Lease, the Merryman Lease, and the Downerd Lease. Of these leases, the McElhaney Lease

includes a habendum clause that keeps the lease in effect so long as “oil, gas, or their

constituents are produced in paying quantities thereon . . . .” (ECF No. 59-1 at PAGEID # 4360.)

The other leases contain habendum clauses with similar language, but also contain a clause that

keep the respective leases in effect so long as “the premises shall be operated . . . in the search

4 As discussed in the First Summary Judgment Order, the subject wells are the Dorst #1 Well, the

Camp Estates #1 Well, the Estep #1 Well, and the Downerd #1 Well (collectively, the

“Londonderry Wells’). (ECF No. 77 at PAGEID # 4350.) Plaintiff submits that a fifth well –

the McClelland No. 2 Well – also is a Londonderry Well, held by the Murray Lease, but argues

that “Ascent has raised no issue in this lawsuit” as to the Murray Lease, so “therefore [the

Murray Lease] is not in dispute.” (ECF No. 79-1 at PAGEID # 4394.) In response, Ascent

argues for the first time that “[t]he McClelland No. 2 Well ceased producing in paying quantities

on or before May 2014,” so the Murray Lease has long expired. (ECF No. 82 at PAGEID ##

5378-5380.) To the extent Ascent argues that the Murray Lease is at issue in this litigation, the

Court finds such argument to be untimely and inconsistent not only with the first round of

summary judgment briefing but also with Ascent’s Motion, see ECF No. 80 at PAGEID ##

4717-4718. Accordingly, the Court will only analyze the four Londonderry Wells discussed

above.

for oil and gas” or “operations are maintained” on the subject land. (See ECF No. 77 at PAGEID

# 4361.) Ascent argues that the “operations” required to satisfy such language “are affirmative

efforts to produce oil and gas in paying quantities (i.e. drilling operations)—not simply well

maintenance.” (ECF No. 80 at PAGEID # 4725.) Ascent further submits that while such

“operations” can “hold the lease in lieu of production in paying quantities, it means a good-faith,

reasonable effort to obtain production in paying quantities.” (Id. at PAGEID # 4726.) But

Ascent argues that “Plaintiffs have never done this.” (Id.) Thus, Ascent’s expiration theory boils

down to two issues: first, whether the wells covered by the subject leases have ceased producing

in paying quantities, and second, if they have, whether Plaintiffs have maintained sufficient

“operations” on the wells covered by the Bond Lease, the Angle Lease, the Merryman Lease, and

the Downerd Lease. But because Plaintiffs have tied their “operations” argument to their

“paying quantities” argument (such that there were no “operations” because there were no

“effort[s] to obtain production in paying quantities”), the Court need only address the latter at the

outset. (ECF No. 80 at PAGEID ## 4725-4728.)

As a preliminary matter, the Court must unpack the state of Ohio law regarding “paying

quantities.” The Supreme Court of Ohio has defined the term “paying quantities” as the

production of “quantities of oil or gas sufficient to yield a profit, even small, to the lessee over

operating expenses, even though the drilling costs, or equipping costs, are not recovered, and

even though the undertaking as a whole may thus result in a loss.” Blausey v. Stein, 61 Ohio

St.2d 264, 265-266 (1980). “[T]he Court essentially defers to lessee’s judgment by allowing the

lessee to continue even though the operation as a whole does not profit as long as the income

minus current operating expenses makes a profit.” Paulus v. Beck Energy Corp., 7th Dist. No.

16 MO 0008, 2017-Ohio-5716, ¶ 77. As for what constitutes a profit, Ohio courts have held that

“the lessee has discretion to determine whether a well is profitable.” Burkhart Family Tr. v.

Antero Resources Corp., 68 N.E.3d 142, 2016-Ohio-4817, ¶ 18 (collecting cases). This

determination cannot be arbitrary, however, and “courts impose a good faith standard on the

lessee.” Id. Accordingly, “when bona fide, [a lessee’s judgment] is entitled to great weight in

determining whether the gas is in fact produced in paying quantities.” Id. (quotation marks and

citations omitted).

Against that background, the parties dispute whether the Londonderry Wells are

producing in paying quantities. In support of their position, Ascent relies on the opinion and

declarations of their expert Daniel T. Reineke, P.E., a Professional Engineer licensed through the

State of Oklahoma and the State of Utah, who possesses over 44 years of oil and gas operational

experience in various regions of the United States. (See ECF No. 49-1 (expert report); ECF No.

62-1 at PAGEID ## 4076-4077 (first declaration); ECF No. 74-2 at PAGEID ## 4307-4308

(second declaration).) The Court must note, however, the history of Mr. Reineke’s varying

positions on this issue. First, on December 2, 2019, Mr. Reineke opined that the Londonderry

Wells ceased producing in paying quantities as follows:

Total Net Revenue for 5-

Last Month Well Produced

Well Year Period Prior to

in Paying Quantities

January 2018

Dorst #1 October 2012 -$6,256.02

Camp Estates #1 May 2014 -$2,231.70

Estep #1 September 2017 -$3,757.24

Downerd #1 October 2017 -$40,749.87

(ECF No. 49-1 at PAGEID # 2056.) Then, on April 6, 2020, Mr. Reineke adjusted his

calculations and opined as follows:

Total Net Revenue for 5-

Last Month Well Produced

Well Year Period Prior to

in Paying Quantities

January 2018

Dorst #1 October 2012 -$5,501.23

Camp Estates #1 May 2014 -$2,982.05

Estep #1 September 2017 -$1,435.43

Downerd #1 October 2017 -$39,031.50

(ECF No. 62-1 at PAGEID # 4077.) Most recently, on May 18, 2020, Mr. Reineke adjusted his

calculations and opined as follows:

Total Net Revenue for 5-

Last Month Well Produced

Well Year Period Prior to

in Paying Quantities

January 2018

Dorst #1 October 2012 -$3,244.73

Camp Estates #1 May 2014 -$2,257.05

Estep #1 September 2017 -$1,168.76

Downerd #1 October 2017 -$586.70

(ECF No. 74-2 at PAGEID # 4308.) Thus, while Mr. Reineke’s ultimate opinion (i.e., that the

Londonderry Wells ceased producing in paying quantities) has never wavered, the calculations

supporting that opinion appear to be getting incrementally closer over time to undermining Mr.

Reineke’s opinion and disproving Ascent’s primary argument.

On the other hand, Plaintiffs primarily rely on their own determination that the

Londonderry Wells were profitable. Specifically, Plaintiff Levengood – who is the co-owner

and President of Plaintiff Sound Energy Company, Inc. – has submitted a declaration to this end.

(See ECF No. 69-5 at PAGEID # 4251, ¶ 6 (“As shown in the Accounting and after factoring in

the royalty payments, which I have reviewed, the [Londonderry] Wells have been overall

profitable to the working interest owners of the [Londonderry] Wells and associated oil and gas

leases.”).) Plaintiff Levengood’s calculations supporting this conclusion are summarized as

follows:

Profit from January 2011

Well

to September 2019

Dorst #1 $8,243.33

Camp Estates #1 $3,401.27

Estep #1 $9,482.22

Downerd #1 $3,810.40

(ECF No. 69-5 at PAGEID # 4251.) Plaintiff Levengood states that these profit calculations do

not account for “non-recurring and capital expenditures for the Wells and factor[] in the lessors’

12.5% lease royalties on the gross revenue. (Id.) Accordingly, Plaintiffs argue that their good-

faith determination is consistent with Ohio law. (ECF No. 81 at PAGEID ## 5344-5351.)

Not surprisingly, the parties disagree not only on whether the Londonderry Wells ceased

producing in paying quantities, but also on how to reach that conclusion. To this end, the largest

dispute stems from the parties’ competing arguments about whether the “paying quantities”

calculation should account for Plaintiff Baker’s maintenance of the Londonderry Wells as an

operating expense. On one hand, Ascent believes that the calculation must account for Plaintiff

Baker’s labor because “a corporate operator cannot artificially deflate operating costs to reach a

profit.” (ECF No. 44 at PAGEID # 1307.) Relying on Plaintiff Baker’s own deposition

testimony regarding the rate that he and other independent well pumpers charged for well

pumping services, Ascent quantifies the value of Plaintiff Baker’s labor at $75/month. (ECF No.

83 at PAGEID # 5484 (citing ECF No. 59-1 at PAGEID ## 3460-3461).) In response, Plaintiffs

insist that “under Ohio law a lessee who receives free labor on its wells need not count the value

of that labor as an operating expense.” (ECF No. 81 at PAGEID # 5348.) Accordingly, each of

Mr. Reineke’s “paying quantities” calculations (on which Asent relies) include Plaintiff Baker’s

maintenance labor as an operating expense valued at $75/month, while Plaintiff Levengood’s

“paying quantities” calculations do not account for Plaintiff Baker’s labor as an operating

expense at all.5

The Court agrees with Plaintiffs that Plaintiff Baker’s free labor is not an operating

expense for purposes of the “paying quantities” analysis. The Court concludes that to hold

otherwise would be directly at odds with the Supreme Court of Ohio’s holding that “[t]he fact

that a lessee can keep operating costs at a minimum should inure to his benefit in a determination

of whether a well produces in paying quantities.” Blausey, 61 Ohio St.2d at 266 (internal

citation omitted). Indeed, as Plaintiffs correctly observe, Ohio courts routinely decline to include

a market rate where lessees have received the benefit of free labor. See Burkhart Fam. Tr.,

2016-Ohio-4817, at ¶ 27 (“Mr. Sulsberger testified that he has no employees, thus has no payroll

expenses. Instead of hiring employees, Mr. Sulsberger relied on the Burkharts and G–R

employees to tend to the well. Mrs. Burkhart and Cyrus A. Burkhart supported these statements

when they testified that Mr. Burkhart pumped the well at no charge and his son, Cyrus A.

Burkhart, continued this practice. Mr. Sulsberger testified that a G–R employee who lived

near the Burkhart property routinely checked on and maintained the well at no cost.”)

(emphasis added); Blausey, 61 Ohio St.2d at paragraph one of the syllabus (“In determining

whether an oil or gas well is producing in paying quantities for purposes of carrying out the

provisions of an oil or gas lease, it is not necessary to include the value of an individual

5 Interestingly, neither party discloses what their “paying quantities” calculations would look like

if they were wrong about how to account for Plaintiff Baker’s labor. Put differently, Plaintiffs do

not reveal what their analysis would look like if Plaintiff Baker’s labor was an operating

expense, and Ascent does not state what their analysis would look like if Plaintiff Baker’s labor

was not an operating expense.

lessee's own labor as an operating expense.”) (emphasis added). And unlike in Talbott v.

Condevco, Inc., 2020-Ohio-3130, 155 N.E.3d 84 (7th Dist.), on which Ascent relies, Mr. Baker

is not “an employee [hired] to perform tasks related to recurring well production activities.” Id.

Rather, Mr. Baker is a lessee providing his own labor, for free, which aligns this case with

Blausey.

While the exact fact pattern before the Court may be unique, that is where only one of

multiple lessees is the one providing the free labor, the Court does not share Ascent’s concern

that Blausey “must be construed narrowly (i.e., confined to its facts) in order to avoid chicanery.”

(ECF No. 80 at PAGEID # 4729.) Ascent is concerned about a slippery slope, and hypothesizes

that under Plaintiffs’ (and the Court’s) reading of Blausey and its progeny, “one hundred entities

could invest in a well and shift all operating expenses to a single investor who would agree to

take a loss on the well in exchange for profit on other wells — or the promise of future payment

from unconventional, vastly more expensive and labor intensive, well production by another

operator.” (Id. at PAGEID ## 4728-4729.) The calculus before the Court, however, does not

provide discretion for evaluating motives. The Court, therefore, declines to entertain Ascent’s

hypotheticals. Lang v. Weiss Drilling Co., 70 N.E.3d 625, 2016-Ohio-8213, ¶ 54 (7th Dist.)

(“Weiss’s financial motive for attempting to maintain the Lease is irrelevant to the issue in this

case, which is whether the Lease ended by its terms for lack of production in paying quantities.

Clearly, all of the parties involved in this litigation have a financial motive.”); Burkhart Fam. Tr.,

2016-Ohio-4817, ¶ 29 (“[W]hether or not Tri–County would profit from G–R's deep drilling

activities has no bearing at all on the [paying quantities] determination.”); see also Talbott, 2020-

Ohio-3130, at ¶ 38 (describing the “paying quantities” analysis as “a mathematical formula”)

(citing Blausey). Rather, this Court finds that Plaintiffs’ collective ability6 to keep operating

costs at a minimum should inure to their benefit, no matter the motive. Blausey, 61 Ohio St.2d at

266.

Accordingly, the Court finds that Mr. Reineke’s opinions are not supportable under Ohio

law, as he only reached those opinions by improperly accounting for Mr. Baker’s labor as an

operating expense. (ECF No. 83 at PAGEID # 5484.) Ascent has therefore failed to meet its

initial burden of identifying those portions of the record which demonstrate the absence of a

genuine issue of material fact. Moreover, the Court remains ill-equipped to resolve Ascent’s

expiration argument. Celotex Corp., 477 U.S. at 323. This does not mean, however, that the

Court necessarily agrees with Plaintiffs that the Londonderry Wells have been producing in

paying quantities. Rather, the Court finds that a genuine issue of material fact exists on this

issue. On one hand, as discussed above, the Court recognizes Plaintiff Levengood’s Declaration

that “the Wells have been overall profitable to the working interest owners of the Wells and

associated oil and gas leases.” (ECF No. 69-5 at PAGEID # 4251.) The Court is also mindful of

the great weight that it should afford to Plaintiffs’ position, as Ohio courts “have determined that

the lessee has discretion to determine whether a well is profitable.” Burkhart Fam. Tr., 2016-

Ohio-4817, at ¶ 18. But the Court cannot accept Plaintiff Levengood’s Declaration of

profitability as a matter of law, because doing so would necessarily turn a blind eye to some of

Plaintiffs’ other deposition testimony to the contrary.

6 At the end of Ascent’s Motion, Ascent alternatively argues that “[a]t best, only Mr. Baker’s pro

rata share of the fair market value of tending the [wells] can avoid the expense of his labor,” and

that “[t]he remaining Plaintiff-investors must account for [Mr. Baker’s] labor as a well expense

as to their interests.” (ECF No. 80 at PAGEID # 4729.) Ascent conspicuously provides no

authority for this suggestion, and the Court is unclear whether Ascent abandoned the argument

by not addressing it in subsequent briefing. Regardless, it is not well taken, as the Court finds it

at odds with the other case law discussed herein.

To this end, Ascent correctly points to deposition testimony that arguably undermines

Plaintiffs’ position that the Londonderry Wells are profitable. For example, Plaintiff DeMattio

testified about how unprofitable the Londonderry Wells were:

Like Chuck and I are good businessmen, like we're not, because we'll do things for

nothing. You know, for instance the Londonderry wells, we do it for nothing,

but we make money on other wells. And so we pull that, you know, hopefully

some days in Londonderry, we'll get it turned it around as the gas prices turn around

hopefully some day. But, you know, we make no money, per se, at Londonderry,

but we still have a job to do and do it and just go on and bite the bullet.

(ECF No. 52 at PAGEID # 2720 (emphasis added).)7 Plaintiffs argue that this “offhand”

comment is “irrelevant,” but the Court does not agree. Plaintiff DeMattio’s testimony is directly

at odds with Plaintiff Levengood’s declaration. Yet, the Court is mindful that Ascent was not

able to address that tension because Plaintiff Levengood had not made his declaration at the time

Ascent deposed Plaintiff DeMattio. (Compare ECF No. 69-5 (Plaintiff Levengood’s

Declaration, dated May 4, 2020) with ECF No. ECF No. 52 (Plaintiff DeMattio’s deposition,

taken November 11, 2019).) The Court also notes that Plaintiffs’ counsel did not attempt to

clarify Plaintiff DeMattio’s testimony on this critical issue during the deposition. Under these

circumstances, the Court is hesitant to accept Plaintiffs’ ex post facto arguments at face value.

This is especially true given that Plaintiff Levengood did not “show his work” in his Declaration,

7 While the present discussion is otherwise limited to the parties’ “paying quantities” arguments,

the Court notes that this testimony also creates a genuine issue of material fact with regard to the

second part of Ascent’s expiration theory (i.e., whether Plaintiffs maintained sufficient

“operations”). Specifically, the Court finds that Plaintiff Baker’s testimony that he decided to

“bite the bullet” and “make no money” on the Londonderry Wells is directly at odds with

Plaintiffs’ argument that they “routinely worked to maintain the Londonderry Wells to achieve

production.” (See ECF No. 81 at PAGEID # 5355.) The Court also agrees with Plaintiffs that the

“operations” prong of Ascent’s expiration theory is heavily fact-intensive and is not fit for

summary judgment. (Id. at PAGEID # 5351 (“One . . . must consider the totality of the lessee or

lessees’ actions” in “deciding whether there are sufficient operations to keep an oil and gas lease

alive.”).) Accordingly, there remain several genuine issues of material fact regarding Ascent’s

expiration theory to preclude summary judgment.

as he instead merely referred to records without setting forth the actual calculations supporting

his conclusion. (Compare ECF No. 69-5 with ECF No. 69-4.) Accordingly, the Court concludes

that this is a genuine issue of material fact that must be resolved by a jury.

Finally, the Court must also address Plaintiffs’ alternative argument, asserted only in

passing in their Motion, that “the paying quantities analysis could not alter the Plaintiffs’

ORRI’[s] continued validity because, at a minimum, the Carrizo Leases and Ascent Leases were

‘replacements or substitutes’ for their corresponding Sound Energy Leases.” (ECF No. 79-1 at

PAGEID # 4401; see also ECF No. 81 at PAGEID # 5342 (“even if Ascent could prove lease

termination based on a lack of paying quantities, it cannot obtain summary judgment against

Plaintiffs’ claims because it has not proven the nonexistence of a replacement or substitute for

the expired leases.”).) Despite this appearing to be a potentially critical part of Plaintiffs’ theory

of liability, Plaintiffs did not substantively address the issue in the second round of briefing until

their Reply brief. (See ECF No. 84 at PAGEID ## 5501-5505.)

Making matters worse, the Court finds that the parties still have failed to connect the

Carrizo Leases and the Ascent Leases to their corresponding Sound Energy Leases in a

meaningful way, notwithstanding the Court’s prior directive to do so. (See ECF No. 77 at

PAGEID ## 4386 (directing the parties to “confirm . . . which of the Sound Energy Leases are

relevant to the Carrizo Leases [and] which of the Sound Energy Leases are relevant to the Ascent

Leases”).) While Plaintiffs purport to have supplied copies of the pertinent leases, nowhere in

the second round of summary judgment briefing do the parties explain how any of the leases are

related, or highlight the critical language in the relevant top leases to support their arguments. 8

8 The Court notes that in response to the First Summary Judgment Order, Plaintiffs simply

attached 225 pages of exhibits for the subject Sound Energy Leases and their corresponding

Carrizo Leases and/or Ascent Leases. (ECF No. 79-8, 79-9.) Many of these pages, however, are

Instead, the parties simply exchange interpretations of what “replacements or substitutes” means

without citing to any legal authority. While Plaintiffs acknowledge Ascent’s “lack of legal

support,” they also conspicuously fail to provide their own legal support and instead rely on

certain ordinary dictionary definitions. (ECF No. 84 at PAGEID # 5504.)

The Court finds that Plaintiffs’ cited evidence demonstrates that a genuine fact issue

exists on this point. Specifically, Plaintiffs cite deposition testimony from Ascent’s corporate

representative that a Carrizo Lease “replaced” the Downerd Lease (over multiple objections from

Ascent’s counsel). (Id. at PAGEID # 5503 (citing ECF No. 40 at PAGEID ## 900-901).) But

Plaintiffs fail to discuss contradictory testimony from the same deposition in which Ascent

testified that, notwithstanding any privileged discussions that involved an attorney, it did not

conduct an “internal analysis” or have any “internal deliberations” regarding whether the Carrizo

or Ascent Leases were “replacements or substitutes” for the Sound Energy Leases. (ECF No. 40

at PAGEID ## 958-959.) Ascent’s representative also confirmed that Ascent’s decision not to

recognize Plaintiffs’ ORRI was because it “believe[d] that [the Sound Energy Leases] had

expired.” (Id. at PAGEID # 959.)

Plaintiffs also refer to evidence that they believe shows how Ascent communicated that

certain top leases had “become the operative lease[s].” (ECF No. 84 at PAGEID ## 5503.) In

presenting this evidence, Plaintiffs argue that Ascent “acknowledge[d] that the top leases are

replacements for the original leases,” but the Court disagrees with this characterization. (Id.) To

the contrary, all Plaintiffs’ evidence shows is that Ascent was operating under new leases, which

difficult (or impossible) to read, and Plaintiffs provided no guidance or direction for what they

consider to be the critically relevant sections. Wise v. T-Man, LLC, No. 1:14 CV 630, 2016 WL

3544715, at *9 (N.D. Ohio June 29, 2016) (“The Court will not parse through the record and

attempt to support plaintiff's claim. Rather, it is incumbent on the plaintiff to point to the Court to

evidence and law in support of her claim.”).

is entirely consistent with Ascent’s theory of the case (and its other deposition testimony). The

Court finds the communications from Ascent are not the smoking guns Plaintiffs present them to

be.

As it stands, because the parties have again failed to flesh out the details of the subject

leases, it is impossible for the Court to determine as a matter of law whether any leases

“replace[d] or substitute[d]” the Sound Energy Leases. Nerswick v. CSX Transp., Inc., 692 F.

Supp. 2d 866, 882 (S.D. Ohio 2010), aff'd, 441 F. App'x 320 (6th Cir. 2011) (“It is not the

obligation of the court . . . to comb the record to find evidence or testimony establishing a party’s

case.”) (citing Street v. J.C. Bradford & Co., 886 F.2d 1472, 1479–80 (6th Cir. 1989); Baker v.

Pfeifer, 940 F.Supp. 1168, 1183 n. 20 (S.D. Ohio 1996) (“The Court is not required to comb

through the record looking for [] evidence.”) (citing Street)). Plaintiffs have therefore failed to

meet their initial burden of identifying those portions of the record which demonstrate the

absence of a genuine issue of material fact, and the Court remains ill-equipped to resolve

Plaintiffs’ “replacements or substitutes” argument. Celotex Corp., 477 U.S. at 323.

Accordingly, the Court finds that genuine issues of material fact exist as to Ascent’s

expiration theory and Plaintiffs’ “replacements or substitutes” theory.

V. CONCLUSION

For the foregoing reasons, Plaintiffs’ Motion for Leave to File Supplemental Authority

Instanter Relating to Pending Motions for Summary Judgment (ECF No. 85) is GRANTED,

Plaintiffs’ Motion (ECF No. 79) is DENIED, Ascent’s Motion (ECF No. 80) is DENIED.

IT IS SO ORDERED.

Date: March 29, 2022 /s/ Elizabeth A. Preston Deavers

ELIZABETH A. PRESTON DEAVERS

UNITED STATES MAGISTRATE JUDGE