Baile-Bairead, LLC v. Magnum Land Services, LLC

19 F. Supp. 3d 760, 2014 U.S. Dist. LEXIS 65787, 2014 WL 1917527
CourtDistrict Court, S.D. Ohio
DecidedMay 13, 2014
DocketCase No. 2:12-CV-00957
StatusPublished
Cited by4 cases

This text of 19 F. Supp. 3d 760 (Baile-Bairead, LLC v. Magnum Land Services, LLC) is published on Counsel Stack Legal Research, covering District Court, S.D. Ohio primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Baile-Bairead, LLC v. Magnum Land Services, LLC, 19 F. Supp. 3d 760, 2014 U.S. Dist. LEXIS 65787, 2014 WL 1917527 (S.D. Ohio 2014).

Opinion

OPINION AND ORDER

EDMUND A. SARGUS, JR., District Judge.

This matter is before the Court for consideration of competing motions for summary judgment. Plaintiff Baile-Bairead, LLC (“Baile-Bairead”) moves for summary judgment as to its Complaint and the two counterclaims of Belmont Resources, LLC (“Belmont”). Doc. 24. Belmont submits a cross-motion for summary judgment as to Baile-Bairead’s Complaint and Count 1 of its counterclaims. Doc. 23. For the reasons below, the Court GRANTS Belmont’s cross-motion for summary judgment and DENIES Baile-Bairead’s motion for summary judgment.

[763]*763I. BACKGROUND

A. Facts

The substantive facts underlying this matter are largely uncontested. The Plaintiff in this case is Baile-Bairead, a limited liability company that owns approximately 506 acres of real property in Washington County, Ohio. Doc. 24-15 ¶ 3. At the time of the facts underlying this dispute, Baile-Bairead had two members — David C. Barrett, Sr., who served as the managing member of Baile-Bairead, and his wife, Friedel L. Barrett (collectively “the Barretts”). See doc. 28-3 at 8. Each owned a fifty percent interest in Baile-Bairead. Id.

In September of 2006, Baile-Bairead entered into two oil and gas leases (“the leases”) with Magnum Land Services, LLC (“Magnum”). Each lease applied to a different tract of Baile-Bairead’s property in Washington County. Doc. 3 at 27, 31. The Barretts each acknowledged and signed the leases under the title of “Lessor.” See doc. 23-1 at 4; doc. 23-2 at 4. The Barretts then each signed two orders of payment — on the fines below “Lessor/Grantor” — that Magnum issued prior to the actual payment. See doc. 23-5. Based on these orders of payment, Magnum made two checks out to “David C. Barrett and Friedel L. Barrett” for a total of $12,682.53 as consideration on the leases. Doc. 23-6. Magnum subsequently assigned the leases to Belmont and a copy of the assignment was filed with the Washington County Recorder on March 28, 2008. Doc. 23^.

Save for the description of the tracts of land, the leases are identical. See doc. 3 at 27-34. The “Effective Date” of both leases was September 22, 2006. Id. at 27, 31. Both leases include identical “Term of Lease” clauses, which provide that each:

Lease shall be in force for a primary term of 5 years from the Effective Date, and as long thereafter as oil or gas or other substances covered by this Lease are produced in paying quantities from the lease premises or from lands pooled with the lease premises, or this Lease is maintained in force pursuant to any of its other provisions.

Doc. 3 at 27 (Ex. C ¶ 2), 31 (Ex. D ¶2). Each lease also contains the same “option” clause, which gives the lessee the option to extend the lease:

for an additional primary term of 5 years commencing on the date that the lease would have expired but for the extension. Lessee may exercise its option by paying or tendering to Lessor an extension payment of $25.00 per acre for the land then covered by the extended lease, said bonus to be paid or tendered to Lessor in the same manner as provided in Paragraph numbered 4 hereof with regard to the payment of shut-in royalties. If Lessee exercises this option, the primary term of the lease shall be considered to be continuous, commencing on the date of the lease and continuing from that date to the end of the extended lease term. Lessee’s option shall expire on the first to occur of the following: (a) the termination or expiration of this lease or (b) the second anniversary of the expiration of the primary term stated in Paragraph number 2 above.

Id. at 29 (Ex. C ¶ 19), 33 (Ex. D ¶ 19). This “Option” clause directs the lessee to Paragraph 4, which provides that the lessee “shall be obligated to pay or tender ... an amount ... to Lessor, or to the credit of Lessor at Lessor[]s address above. Id. at 27 (Ex. C ¶ 4), 31 (Ex. D ¶ 4).

The leases also contain two clauses that address a potential breach or failure to pay. One clause is labeled “Notices”:

[764]*764Failure to pay or an error in paying any rental or other payment due Lessor shall not constitute a ground for forfeiture of this Lease and shall not affect Lessee’s obligation to make a payment, but Lessee should not be considered in default on account of a failure or error until Lessor has first given Lessee written notice of the non-payment and Lessee shall have failed for a period of thirty (80) days after receipt of the notice to make a payment.

Doc. 3 at 28 (Ex. C ¶ 8), 32 (Ex. D ¶ 8). The other clause, labeled “Breach or Default,” requires to the “Lessor [to] notify the Lessee in writing of the facts relied on as constituting a breach”; the lessee then has “sixty (60) days after receipt of that notice within which to meet or commence to meet all or any part of the breaches alleged by Lessor.” Doc. 3 at 29 (Ex. C ¶ 5), 33 (Ex. D ¶ 15). This clause also explains that serving notice of the breach “shall be precedent to the bringing of any action by Lessor,” meaning “no action shall be brought until the lapse of the sixty (60) days after service of the notice on Lessee.” Id.

The leases were set to expire on September 22, 2011. It is undisputed that no oil or gas was produced in paying quantities from either leased property during the primary lease term, and that the lease could not be extended on those grounds. See doe. 3 ¶ 14; doc. 5 ¶ 14. However, Magnum sent a letter to the Barretts, dated September 14, 2011, expressing its desire to renew the leases for an additional five-year period. Doc. 3 at 36. Attached to Magnum’s letter was consideration for the lease renewal, a $12,780.00 check made payable to “David C. and Friedel L. Barrett,” dated September 13, 2011. Id. at 35. It is undisputed that Friedel L. Barrett received the letter. Id. The letter and payment had two problems in Baile-Bai-read’s eyes — by this time, David C. Barrett, Sr. had died, doc. 24-8 (letter from David C. Barrett, Jr. to Belmont representatives noting that “David C. Barrett, Sr. died on April 27, 2007”); Magnum also sent the letter to 884 S. Barrett Rd. rather than the correct address of 844 S. Barrett Rd, doc. 24-15 ¶ 12.

By this point, David C. Barrett, Jr., David C. Barrett, Sr.’s son, served as the managing member of Baile-Bairead. Doc. 24-15 ¶ 1-2. He responded on September 26, 2011 by sending letters to both Magnum and Belmont. Doc. 24-6. The letters informed Magnum and Belmont that the oil and gas leases “have expired and been forfeited” in accordance with Ohio Revised Code § 5301.332 because “no drilling has occurred on the premises and there was no extension payment made to the named Lessor, Baile-Bairead LLC, on or before the September 22, 2011 deadline.” Id. Belmont responded with an undated letter, which Baile-Bairead received on October 14, 2011, doc. 3 ¶ 26, stating, “the payment has properly been tendered and it is Belmont’s position that the leases remain in effect,” doc. 24-7. It further stated: “if you desire that checks be reissued to the LLC we will accommodate that request upon confirmation of the lessor’s agreement that the leases remain in place.” Id. Five days later, Baile-Bairead, through. David Barrett, Jr., responded with another letter reiterating the position that the leases expired and had been forfeited.

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Cite This Page — Counsel Stack

Bluebook (online)
19 F. Supp. 3d 760, 2014 U.S. Dist. LEXIS 65787, 2014 WL 1917527, Counsel Stack Legal Research, https://law.counselstack.com/opinion/baile-bairead-llc-v-magnum-land-services-llc-ohsd-2014.