Conny Farms, Ltd. v. Ball Resources, Inc.
2011 Ohio 5472
Ohio Ct. App.2011Background
- Conny Farms owns land in Columbiana County subject to two oil and gas leases (Gibson and Thompson) dating from 1950.
- Leases were originally held by East Ohio Gas Company, now held by Ball Resources, Chowder Gas Storage Facility, and others.
- No wells were drilled; property used for gas storage; Connys purchased in 2005 and transferred title in 2006.
- Connys were aware of the leases before purchase and engaged independent counsel in the closing.
- In 2008 Connys sued, alleging nonpayment of royalties/rent and asserting leases expired under habendum terms.
- The trial court granted summary judgment for defendants based on a judicial ascertainment clause in both leases.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Are judicial ascertainment clauses enforceable against public policy in Ohio? | Conny Farms contends the clauses are void as against public policy. | Appellees argue leases are contracts and clauses should be enforced. | Unenforceable; against Ohio public policy; remand for merits. |
| Did the trial court err by not addressing remaining claims after invalidating the clause? | The court should decide breaches and habendum-based expirations. | Judicial ascertainment clause decision precludes addressing other issues. | Remand required to resolve remaining issues. |
| Do the leases' rental payments and habendum clauses independently affect validity? | Defendants breached by not paying rentals; leases may have expired per habendum. | These issues were not resolved and need full consideration on remand. | Not resolved on appeal; remand to address merits. |
Key Cases Cited
- Wellman v. Energy Resources, Inc., 210 W.Va. 200, 557 S.E.2d 254 (2001) (judicial-ascertainment clauses void for public policy; final resolution favored)
- Harris v. Ohio Oil Co., 57 Ohio St. 118, 48 N.E. 502 (1897) (oil and gas leases governed by contract terms)
- Mills-Jennings, Inc. v. Dept. of Liquor Control, 70 Ohio St.2d 95, 435 N.E.2d 407 (1982) (summary-judgment standards and burdens)
- Dresher v. Burt, 75 Ohio St.3d 280, 662 N.E.2d 264 (1996) (summary-judgment standard and burden-shifting)
- Swallie v. Rousenberg, 190 Ohio App.3d 473, 2010-Ohio-4573 (2010) (contract terms control rights and remedies between parties)
- Hurst v. Enterprise Title Agency, Inc., 157 Ohio App.3d 133, 2004-Ohio-2307 (2004) (respect for freedom to contract; public policy considerations)