Drillers Place Ltd. v. Mormack Industries, Inc.

2016 Ohio 167
CourtOhio Court of Appeals
DecidedJanuary 19, 2016
Docket13CA0056
StatusPublished
Cited by3 cases

This text of 2016 Ohio 167 (Drillers Place Ltd. v. Mormack Industries, Inc.) is published on Counsel Stack Legal Research, covering Ohio Court of Appeals primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Drillers Place Ltd. v. Mormack Industries, Inc., 2016 Ohio 167 (Ohio Ct. App. 2016).

Opinion

[Cite as Drillers Place Ltd. v. Mormack Industries, Inc., 2016-Ohio-167.]

STATE OF OHIO ) IN THE COURT OF APPEALS )ss: NINTH JUDICIAL DISTRICT COUNTY OF WAYNE )

DRILLERS PLACE, LTD. C.A. No. 13CA0056

Appellant

v. APPEAL FROM JUDGMENT ENTERED IN THE MORMACK INDUSTRIES, INC., et al. COURT OF COMMON PLEAS COUNTY OF WAYNE, OHIO Appellees CASE No. 12-CV-0699

DECISION AND JOURNAL ENTRY

Dated: January 19, 2016

CARR, Judge.

{¶1} Appellant Drillers Place, Ltd. appeals the judgment of the Wayne County Court of

Common Pleas that granted judgment in favor of appellees Mormack Industries, Inc. and Paul

McCloskey, Jr. This Court affirms in part, reverses in part, and remands.

I.

{¶2} Noah and Elizabeth Hilty were the owners of property, including 77 acres of land

in Milton Township, Wayne County. In 1973, the couple granted an oil and gas lease to

Mormack Industries, Inc. (“Mormack”). A well was completed on the property in 1980.

Pursuant to the terms of the lease, certain royalties were to be paid to the landowners/lessors

under certain conditions. In addition, Mormack assigned some royalty interests to investors.

Paul McCloskey, Jr. inherited such an interest. No other investor-interests have been identified.

{¶3} Marvin and Mary Hilty (“Hilty”) subsequently acquired ownership of the property

and became the lessors under the lease. In October 2011, Drillers Place, Ltd. (“Drillers Place”) 2

acquired almost 72 acres of the leased property and became the lessor under the oil and gas lease.

Believing that Mormack had breached express terms and implied covenants under the lease,

Drillers Place filed an affidavit of non-compliance at the end of February 2012. Edward Mack,

President of Mormack, responded by filing a lease affidavit in which he averred that Mormack

had not forfeited the lease.

{¶4} Drillers Place sued Mormack, alleging the following claims: (1) quiet title; (2)

declaratory relief holding the lease invalid as unconscionable and against public policy; (3)

declaratory relief holding the lease void after forfeiture or cancellation; (4) invalidating the lease

on the basis of mutual mistake of fact; (5) lease reformation; (6) slander of title; and (7) partition.

Drillers Place also sued Mr. McCloskey, (1) demanding that he appear to assert and prove his

interest or be forever barred, and (2) for partition. Drillers Place demanded a jury trial.

{¶5} The parties filed competing motions for summary judgment which the trial court

denied. The trial court scheduled the matter for trial. Mormack moved to bifurcate trial on the

equitable claims, which it argued should be tried to the bench, and the lone claim (slander of

title), which could be heard by a jury. The trial court granted Mormack’s motion to bifurcate

“[b]y agreement of the parties,” and scheduled a bench trial as to all claims except slander of

title. The court further ordered that “[t]he remaining claim for slander of title will be scheduled

for a jury trial at a later date.” At the conclusion of the bench trial, however, the trial court

rendered judgment in favor of Mormack and Mr. McCloskey on all pending claims, expressly

noting that “[a]ll counts * * * have been decided * * *, and there are no further matters to be

decided.”

{¶6} Drillers Place filed a timely appeal in which it raises eight assignments of error

for review. 3

II.

ASSIGNMENT OF ERROR I

THE TRIAL COURT ERRED AS A MATTER OF LAW BY NOT FINDING THAT [MORMACK] MATERIALLY BREACHED THE LEASE AGREEMENT BY FAILING TO RESUME PAYING DELAY RENTAL PAYMENTS WHEN THE SALE OF OIL AND GAS, AND THE PAYMENT OF ROYALTY TO [DRILLERS PLACE], TERMINATED FOR MORE THAN ONE YEAR.

{¶7} Although its argument lacks clarity, Drillers Place seems to argue in its first

assignment of error that the trial court misconstrued the terms of the oil and gas lease relating to

the payment of delay rental payments. Based on its citation to law regarding the standard of

review for and means of effecting contract construction, coupled with a lack of citation to the

parts of the record of the evidence adduced at trial1 which it vaguely references, this Court

constrains our review to consideration of the trial court’s construction of the delay rental

payments portion of the lease.2 See App.R. 16(A)(7) and 12(A)(2). Upon consideration, we

conclude as a matter of law that, given the nature of the well at issue, the delay rental payment

provision was not applicable. As the provision was not applicable, there can be no breach.

Drillers Place’s argument, therefore, is not well taken.

{¶8} This Court recognizes the long established legal foundation that

1 Although Drillers Place quotes extensively in its reply brief from the trial transcript, it fails to cite to any portions of the record on which it purportedly relies in its initial brief. Moreover, Drillers Place fails to identify with specificity the provisions of the lease which it argues are unambiguous and have been breached by Mormack. 2 Drillers Place sets forth vague allegations in its initial brief that Mormack ignored or applied its own interpretation to lease provisions without citing the provisions allegedly breached. Given the lack of clarity illuminating the issue at hand, we take our guidance from the text of the enunciated assignment of error which alleges breach for failure to pay delay rental payments. The assigned error indicates that delay rental payments were required under the terms of the lease when (1) oil and gas sales, and (2) royalty payments, both ceased for more than one year. 4

[t]he rights and remedies of the parties to an oil or gas lease must be determined by the terms of the written instrument[.] Such 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.

Kramer v. PAC Drilling Oil & Gas, L.L.C., 197 Ohio App.3d 554, 2011-Ohio-6750, ¶ 10 (9th

Dist.), quoting Harris v. Ohio Oil Co., 57 Ohio St. 118, 129 (1897). This Court reviews the

construction of written contracts de novo. Kramer at ¶ 10, citing Bath Twp. v. Raymond C.

Firestone Co., 140 Ohio App.3d 252, 256 (9th Dist.2000). To that end, “‘[t]he purpose of

contract construction is to discover and effectuate the intent of the parties. * * * The intent of the

parties is presumed to reside in the language they chose to use in their agreement.’” Firestone,

140 Ohio App.3d at 256. Where that language is clear and unambiguous, courts must apply the

plain language of the contract. AKC, Inc. v. ServiceMaster Residential Commercial Servs., 9th

Dist. Summit No. 27070, 2014-Ohio-2627, ¶ 5.

{¶9} The oil and gas lease at issue conveyed from the landowner/lessor to the lessee

the right to drill for oil and gas during a primary term of ten years, with such term being

extended as long as any well was producing “oil and gas, or either of them[.]” The lease further

provided, in relevant part:

In consideration of the premises the lessee covenants and agrees:

1st. To deliver to the credit of lessor, free of cost, into tank reservoirs or into the pipe line to which lessee may connect wells on said land, the equal one-eighth (1/8) part of all oil produced and saved from the leased premises.

2nd.

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2016 Ohio 167, Counsel Stack Legal Research, https://law.counselstack.com/opinion/drillers-place-ltd-v-mormack-industries-inc-ohioctapp-2016.