Katzin v. Central Appalachia Petroleum
39 A.3d 307
| Pa. Super. Ct. | 2012Background
- Katzin owns land under an oil and gas lease held by Central Appalachia Petroleum, later assigned to Chesapeake Appalachia, LLC.
- Lease obligates Katzin to receive one-eighth royalty on oil and one-eighth of revenue for gas, with monthly withholding of royalties until $25 threshold is met.
- Katzin seeks to invalidate the lease under the Pennsylvania Guaranteed Minimum Royalty Act (PGMRA), 58 Pa.Stat. § 33.
- The case was removed to federal court and then remanded to Bradford County Court of Common Pleas.
- The trial court granted judgment on the pleadings in favor of Chesapeake and against Katzin; Katzin appeals.
- The sole issue on appeal is whether the lease complies with the PGMRA.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does the lease comply with the PGMRA’s guaranteed royalty requirement? | Katzin argues the lease is vague on allowable deductions, risking lessor royalty below 1/8. | Chesapeake argues Kilmer allows certain post-production deductions; implied compliance with PGMRA. | Yes; implied promise to comply with PGMRA; judgment affirmed. |
Key Cases Cited
- Daniel B. Van Campen Corp. v. Building and Const. Trades Council of Philadelphia and Vicinity, 202 Pa. Super. 118 (Pa. Super. 1963) (implied contractual duties to carry out contract terms)
- Pennsylvania Financial Responsibility Assigned Claims Plan v. English, 541 Pa. 424 (Pa. 1995) (approval of implied obligations in context of contract interpretation)
- Kilmer v. Elexco Land Services, Inc., 605 Pa. 413 (Pa. 2010) (controls; 1/8 royalty rule under PGMRA)