2016 Ohio 8030
Ohio Ct. App.2016Background
- Haverhill Glen, LLC is successor-in-interest to original lessors under a May 17, 2004 oil and gas lease (the Childs Lease) covering ~3,583 acres in Harrison County, Ohio; Eric Petroleum is the lessee's successor.
- The lease primary term expired May 17, 2009; Eric Petroleum planned to drill a well on acreage whose surface was owned by New Rocky Valley Farms, Inc., but New Rocky denied access and later demanded compensation for drilling.
- Faith Ranch, a large surface owner of other leased acreage, claimed ownership or exclusion of mineral rights and recorded an affidavit asserting exclusionary possession of the minerals since 1969.
- On March 25, 2009 Eric Petroleum declared force majeure under paragraph 15 of the Lease (lack of access); it also cooperated with Haverhill and the Hillman Heirs in preparing litigation to obtain access.
- Haverhill sued in 2013 seeking a declaration the lease expired for non-production; the trial court granted summary judgment for Eric Petroleum, holding the force majeure clause tolled the lease (alternative findings of obstruction and estoppel also made but not dispositive).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether force majeure tolled the lease | Force majeure inapplicable because only part of the tract (New Rocky acreage) was inaccessible, not the entire leasehold | Force majeure clause is broad (includes inability to obtain access) and was triggered by denial of access and disputed surface ownership; a complete denial of access to every acre is not required | Court held force majeure clause tolled the lease; summary judgment for Eric Petroleum affirmed |
| Whether third‑party obstruction prevented production | N/A (Haverhill contested tolling) | Eric Petroleum showed third‑party surface owners either denied access or claimed mineral exclusion, preventing operations | Trial court relied on obstruction as an alternative rationale (but force majeure dispositive) |
| Whether Haverhill is estopped or waived lease rights by conduct | Haverhill argued lease expired and not estopped | Eric Petroleum argued Haverhill’s conduct and cooperation undermined its claim; estoppel/waiver applied | Trial court found waiver/estoppel as alternative grounds; not necessary to decision |
| Whether Gardner v. Oxford Oil compels a different result | Gardner cited to argue lease should expire despite access issues | Eric Petroleum distinguished Gardner as factually different and not involving a force majeure clause | Court rejected Haverhill’s reliance on Gardner and found it inapposite |
Key Cases Cited
- Swallie v. Rousenberg, 190 Ohio App.3d 473 (7th Dist. 2010) (contract terms govern rights under oil and gas lease)
- Parenti v. Goodyear Tire & Rubber Co., 66 Ohio App.3d 826 (summary judgment de novo review standard)
- Doe v. Shaffer, 90 Ohio St.3d 388 (Ohio summary judgment standard)
- Alexander v. Buckeye Pipe Line Co., 53 Ohio St.2d 241 (construction of written contracts is a matter of law)
- Gardner v. Oxford Oil Co., 7 N.E.3d 510 (7th Dist. 2013) (distinguished—different facts and no force majeure clause)
- Stand v. Energy Corp. v. Cinergy Servs., 144 Ohio App.3d 410 (1st Dist. 2001) (party invoking force majeure bears burden to prove event was beyond its control)
- Harris v. Ohio Oil Co., 57 Ohio St. 118 (1889) (oil and gas leases are contracts governed by their terms)
- Great Lakes Gas Transmission Ltd. v. Essar Steel Minn., LLC, 871 F. Supp. 2d 843 (D. Minn. 2012) (force majeure overlaps with impossibility/impracticability doctrines)