Aukema v. Chesapeake Appalachia, LLC
904 F. Supp. 2d 199
N.D.N.Y.2012Background
- Plaintiffs allege their oil and gas leases expired at the end of their primary terms and were not extended by payment or force majeure.
- Leases include CAP, Phillips, Fortuna, and Fairman; Chesapeake owned the leases with Statoil holding interests.
- CAP and Phillips leases contain force majeure provisions or covenants equivalents; Fortuna and Fairman have different terms, with Fortuna containing a force majeure clause and Fairman lacking one.
- Primary terms ranged from five to ten years; extensions, if any, were disputed based on payment, force majeure, or other lease-specific triggers.
- State regulatory context centers on SEQRA updates, the 1992 GEIS, and Governor Paterson’s 2008 Directive delaying HVHF permitting.
- Defendants claim the Directive and related moratorium extended the leases; plaintiffs argue force majeure and related doctrines do not.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Do the leases expire at end of primary terms absent extensions? | Aukemas argues no extensions occurred; primary terms ended. | Chesapeake/Statoil contend extensions occurred via force majeure or delay payments. | Yes; leases expired at end of primary terms. |
| Does the Directive constitute force majeure extending the leases? | Directive does not excuse performance; cannot extend terms. | Directive renders performance impossible, constituting force majeure extension. | No; Directive does not extend the leases under force majeure. |
| Can delay rental payments extend the CAP lease beyond primary term? | Delay rentals do not extend the primary term; they only preserve during the primary term. | Delay rentals function as prescribed payments extending the secondary term. | No; delay rentals do not extend the CAP lease. |
| Is the New York General Business Law § 349 claim viable here? | Plaintiffs oppose dismissal claims under § 349; defendants argue premature/insufficient. | Good faith extension actions are not deceptive practice; § 349 not shown. | Dismissed; § 349 claim denied. |
Key Cases Cited
- Kel Kim Corp. v. Cent. Mkts., Inc., 70 N.Y.2d 900 (N.Y. 1987) (force majeure elements and contract interpretation)
- Phibro Energy, Inc. v. Empresa De Polimeros De Sines Sarl, 720 F.Supp.312 (S.D.N.Y. 1989) (force majeure scope and impracticality not sufficient)
- United States v. Gen. Douglas MacArthur Senior Vill., Inc., 508 F.2d 377 (2d Cir.1974) (frustration of purpose describes virtually cataclysmic events)
- Eternity Global Master Fund, Ltd. v. Morgan Guar. Trust, 875 F.3d 168 (2d Cir.2004) (contract interpretation and ambiguity against drafter)