Darlene McWreath v. Range Resources Appalachia LLC, 645 F. App'x 190

Background

McWreath heirs own undivided partial mineral interests (33% in ~1,332 acres; 66% in 368 acres) but own no surface rights; the Estate leased those mineral rights in 2007 to Fortuna (assigned to Range).
Lease granted Range an exclusive conveyance of all oil and gas under the Leasehold and exclusive rights to explore, develop, produce, measure, and market using any methods.
Range obtained a surface-consent agreement from the surface owner, pooled the Leasehold with contiguous lands, and drilled two Marcellus wells; initial flow-back was paid under the lease, no ongoing production.
The McWreaths sued (trespass, conversion, accounting), conceding trespass and conversion; they argued the lease was a “non-surface development” lease and did not cover wells drilled on the surface directly above their mineral estate, so they claimed cotenant status and sought an accounting.
District Court granted summary judgment to Range on the accounting claim (lease applies), and denied leave to amend (no draft amended complaint, untimely, and futile); McWreaths appealed.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether the lease covers production from wells drilled on surface above McWreaths’ mineral interests	Lease is a “Non-Surface Development” lease; Paragraph 4 precludes Range from drilling on the surface overlying McWreaths’ minerals, so these wells are not covered and McWreaths remain cotenants entitled to accounting	Granting clause conveys all oil and gas and authorizes Range to explore/produce using any methods; Paragraph 4 acknowledges Range has no express surface rights from McWreaths but does not limit Range from obtaining surface rights from surface owner or pooling non-contiguous lands	Lease conveys exclusive subsurface rights to Range and covers production from the wells; McWreaths are not cotenants and are not entitled to an accounting (summary judgment for Range)
Whether Paragraph 4 creates a condition that prevents Range from drilling on the overlying surface and thus avoids the lease	Paragraph 4’s language and heading show intent to limit surface development to pooled/adjacent lands	Paragraph 4 must be read with the pooling clause granting Range discretion to pool with any lands; the provision does not create a drilling-on-adjacent-lands condition and is not a reservation of surface rights by McWreaths	Paragraph 4 does not create a condition avoiding the lease; even if ambiguously read otherwise, Pennsylvania law disfavors enforcing such a restriction here (surface owner consent, lessee rights)
Whether leave to amend complaint should have been granted to add a declaratory-judgment claim	McWreaths sought to add claim alleging Code of Conduct was not presented at lease signing	Range argued amendment was untimely, plaintiffs submitted no draft amended complaint, and the proposed claim was time-barred	Denial affirmed: failure to submit draft amendment, undue delay (late beyond scheduling order), and futility because applicable 4-year limitations period had run

Key Cases Cited

T.W. Phillips Gas & Oil Co. v. Jedlicka, 42 A.3d 261 (Pa. 2012) (oil and gas leases are contracts and interpreted by contract principles)
Belden & Blake Corp. v. Commonwealth Dep’t of Conservation & Nat. Res., 969 A.2d 528 (Pa. 2009) (owner of subsurface minerals has an implied right to reasonable surface use unless rights conveyed)
Lesko v. Frankford Hosp.-Bucks Cty., 15 A.3d 337 (Pa. 2011) (contract language not construed as a condition unless clearly intended)
Standard Venetian Blind Co. v. American Empire Ins. Co., 469 A.2d 563 (Pa. 1983) (contracts interpreted as a whole giving effect to all provisions)
Erie R.R. Co. v. Tompkins, 304 U.S. 64 (1938) (federal courts apply forum-state substantive law in diversity cases)
Trinity Indus., Inc. v. Chicago Bridge & Iron Co., 735 F.3d 181 (3d Cir. 2013) (standard of review for summary judgment)