Wolfe v. Encino Energy, L.L.C.

2025 Ohio 1584
Ohio Court of Appeals·Decided May 2, 2025·No. 24 HA 0010, 24 HA 011, 24 HA 0012, 24 HA 0014·Published·Cited by 1 cases

Opinion

IN THE COURT OF APPEALS OF OHIO SEVENTH APPELLATE DISTRICT HARRISON COUNTY

SALLY WOLFE ET AL.,

Plaintiffs-Appellees,

v.

ENCINO ENERGY, LLC ET AL.,

Defendants-Appellants.

OPINION AND JUDGMENT ENTRY Case Nos. 24 HA 0010, 24 HA 011, 24 HA 0012, 24 HA 0014

Civil Appeal from the

Court of Common Pleas of Harrison County, Ohio Case Nos. CVH 2024-0040, CVH 2024-0034, CVH 2024-0053, CVH 2024-0052

BEFORE:

Mark A. Hanni, Cheryl L. Waite, Carol Ann Robb, Judges.

JUDGMENT:

Affirmed in Part, Reversed in Part.

Atty. Ethan Vessels, Fields, Dehmlow & Vessels, LLC, and Atty. Richard Arnold and Atty. William Cline, Arnold Gruber, LTD., for Plaintiffs-Appellees and

Atty. Timothy B. McGranor, Atty. Ilya Batikov, Atty. Eric A. Parker, and Atty. Celina J. Needle, Vorys, Sater, Seymour and Pease, LLP, for Defendants-Appellants.

Dated: May 2, 2025

HANNI, J.

{¶1} In these consolidated appeals, Defendants-Appellants, Encino Energy, LLC, EAP Operating, LLC, and EAP Ohio, LLC (collectively Encino) appeal from four Harrison County Common Pleas Court judgments finding that the underlying claims in these cases are subject to binding arbitration but that the arbitration provision does not require either party to initiate proceedings with the American Arbitration Association (AAA) and stating Encino may procure a private arbitrator to arbitrate the cases.

{¶2} The trial court properly granted the stays pending arbitration. But the trial court erred in finding Encino could procure a private arbitrator. To the extent Encino claims the trial court erred in not requiring Appellees to initiate arbitration under the AAA rules, we disagree. Neither this Court nor the trial court can issue an order compelling Appellees to initiate arbitration since Encino did not file a motion to compel arbitration with the trial court. For these reasons, we affirm the trial court’s finding that the claims are subject to binding arbitration and affirm the stay pending arbitration. We reverse only that part of the judgment stating Encino may procure a private arbitrator.

{¶3} This appeal involves four separate Harrison County cases. Plaintiffs-

Appellees are Elite Land Management, Inc. (trial case no. CVH-2024-0034); Sally Wolfe (trial case no. CVH-2024-0040); Timothy R. Dunfee and Annie L. Dunfee Family Joint Declaration of Revocable Trust, Executed October 19, 2015 (trial case no. CVH-2024- 0053); and David and Mattie Glick (trial case no. CVH-2024-0052). Appellees alleged in in their complaints that Encino has been improperly deducting post-production expenses from royalty payments made to Appellees pursuant to oil and gas leases.

{¶4} The disputes here, involving the payment of royalties, arose under four separate oil and gas leases (the Leases), all containing an identical arbitration provision at issue in this appeal. This Court consolidated the four appeals.1

{¶5} The arbitration provision at issue reads:

1 These cases are also related to the cases of Johnson v. Encino Energy, LLC, et al., 24 CO 0035, and

Fligiel, et al. v. Encino Energy, LLC, et al., 24 CA 0979.

ARBITRATION. In the event of a disagreement between Lessor and Lessee concerning this Lease or the associated Order of Payment, performance thereunder, or damages caused by Lessee’s operations, the resolution of all such disputes shall be determined by arbitration in accordance with the rules of the American Arbitration Association. Arbitration shall be the exclusive remedy and cover all disputes, including but not limited to, the formation, execution, validity and performance of the Lease and Order of Payment. All fees and costs associated with the arbitration shall be borne equally by Lessor and Lessee.

{¶6} On June 28, 2024, Appellee Elite Land Management, Inc. filed its complaint against Encino. Subsequent complaints were filed by Appellee Wolfe on August 5, 2024, and Appellees Dunfee and Glick on September 5, 2024.

{¶7} Encino filed a motion to stay proceedings pending arbitration in each of the cases on: August 16, 2024 (Elite Land Management); September 18, 2024 (Wolfe); and October 10, 2024 (Dunfee and Glick). The motions requested the trial court stay the proceedings until such time as the plaintiff in each case “has initiated an arbitration proceeding with the American Arbitration Association (‘AAA’), as required by the applicable oil and gas lease, and that arbitration proceeding has concluded.”

{¶8} Appellees filed responses to these motions. Appellees stated that they opposed the motions “as requested.” But Appellees had no objection to the trial court issuing a stay so that the parties could engage in arbitration. Appellees only disagreed with Encino as to how arbitration was to proceed. They argued the arbitration provisions in the leases did not require them to initiate arbitration with the AAA but only required that the AAA rules be used in arbitration, which could proceed with a private arbitrator.

{¶9} In the Elite Land Management case, the trial court held a hearing on the motion on September 12, 2024. Encino filed a reply to Appellee’s response in the Wolfe case on September 26, 2024.

{¶10} The trial court issued identical judgments in all four cases – on October 2, 2024, in Elite Land Management and Wolfe and on October 11, 2024 in Dunfee and Glick finding:

The Defendants, who ostensibly do not wish to waive their right to arbitrate, may require arbitration of the dispute. Nonetheless, the Defendants’ Motion is hereby DENIED to the extent that the Defendants seek an order requiring the Plaintiffs to initiate arbitration proceedings. The Defendant is requesting arbitration as they are entitled to under the contract. According to the contract, this arbitration must be done in accordance with the American Arbitration Association rules. Accordingly, the Court hereby STAYS this action pending potential arbitration. The Defendant may procure a private arbitrator to arbitrate the case, pursuant to American Arbitration Association rules.

{¶11} Encino filed timely notices of appeal in three of the cases on October 28, 2024 and in the last case on November 1, 2024. Encino now raises four assignments of error. For ease of discussion, we will address Encino’s assignments of error out of order.

{¶12} Encino’s third assignment of error states:

THE TRIAL COURT ERRED BY NOT REQUIRING PLAINTIFFS- APPELLEES – THE PARTIES CLAIMING TO BE AGGRIEVED UNDER THE OIL AND GAS LEASE – TO INITIATE ARBITRATION PROCEEDINGS WITH THE AMERICAN ARBITRATION ASSOCIATION, AS REQUIRED BY THE RULES OF THE AMERICAN ARBITRATION ASSOCIATION, AND INSTEAD DIRECTING THE PARTIES TO PROCURE A PRIVATE ARBITRATOR TO ARBITRATE THE CASE.

{¶13} Encino urges us to find the parties’ lease requires the AAA to administer the arbitration proceedings and the trial court failed to apply the AAA Rules. They direct us to AAA Rule R-2(a), as dictating the AAA must administer the arbitration. To the extent this assignment of error addresses who is to initiate arbitration under the parties’ lease, we consider that issue separately under Encino’s next assignment of error.

{¶14} Ohio law favors arbitrations and “directs trial courts to grant a stay of litigation in favor of arbitration pursuant to a written arbitration agreement on application

of one of the parties, in accordance with R.C. 2711.02(B).” Taylor Bldg. Corp. of Am. v. Benfield, 2008-Ohio-938, ¶ 27.

{¶15} Ohio's Arbitration Act is codified in Revised Code Chapter 2711. R.C.

2711.01(A) states: “A provision in any written contract, except as provided in division (B) of this section, to settle by arbitration a controversy that subsequently arises out of the contract, . . . shall be valid, irrevocable, and enforceable, except upon grounds that exist at law or in equity for the revocation of any contract.”

{¶16} Further, R.C. 2711.02(B) states:

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Wolfe v. Encino Energy, L.L.C., 2025 Ohio 1584 (Ohio Ct. App. 2025).

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Wolfe v. Encino Energy, L.L.C.
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